Alex Hormozi

Welcome back to the game. Today, I talk about how I made my first million. And the big difference was focus, honestly. There was a clear transition point in my life where I went from doing business, and I've been doing this for years, and becoming a, I mean, crazy to say this, but a millionaire. It seems so cringe to say it. I think even saying cringe is cringe now.

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So I just, boom, I'm back to zero again, but at least I like had a way of getting out of this thing. Right. So the next month, I think we did 150 or 180. I have the chart in my book, $100 million offers. I can't remember what it was, but it was somewhere in there. And so I processed that February, and we actually had a profit that month. So I was like, holy cow.

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like a lot of times i think the great thing that we have is sitting right in front of us after we let go of the things that are holding us down i'm a big believer in the theory of constraint which is uh you know a system will grow to up to it's basically its bottleneck right and then until you relieve that like systems will grow as long as they're not constrained and so most of us are constrained in many ways and we just do not recognize them which is why we have things called limiting beliefs it is a constraint right and for me in a very real way i had constraints in terms of

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I think we made like 30 or 40 grand. And I was like, oh my God, I think we might get out of this, right? But wait, there's more. There's more to the story. It gets worse. And so I think I'm in the home stretch, right? And so then March rolls around, all right? So at this point, people that we had sold in January, we were selling six week weight loss programs at local gyms.

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All of a sudden, I see this massive hit on the bank account for a hundred grand. And I was like, whoa, what's going on? What happened? And it turned out that two of the facilities that we had launched in January, and this is now end of February, beginning of March, they told a number of their clients, hey, if you refund, you can just sign up through me and I'll do it for less.

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And so we had already paid for the airfare, the flights, hotels, commissions, ad spend for all these sales. So, you know, the margin on this was lowish, right? I was probably running 20% margins. And that $100,000 completely wiped out all of the savings that I had had over the last month or two, right? And it was actually more than I could even handle.

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And so we had to sell more to cover the refunds. And so this is where things got even more fun. And I say that sarcastically. So this is what happened next. February, we do more money. March, I know that we have to sell even more. So I hired two more sales guy. We do eight launches that month. And that's to cover the refunds that are starting to come in from January. All right.

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you can probably see where this is going. The refunds start getting worse. There's more and more and more. It turns out after everything, 35% of all of our, of all of our sales that we were making, we're getting refunded, which is an astronomical number that is hard to even comprehend. And it was because we had no control over the fulfillment, right?

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So we were selling and then other people were filling on contracts that we had sold. And so, and there was a lot of, you know, Hey, just refund, sign up through me. Don't worry. Like, cause we'd be gone, right? We were already, we'd already left the location and these people were getting fulfilled on contracts. And so we didn't have the relationship with the customer, the business owner did.

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And so it was a really dumb model from that perspective. I learned, right? One of the lessons I learned there was control, like you want to control everything end to end. if you want a life lesson. And so anyways, the next month, uh, we're, we, we, we have to sell more. And so I think we did 280,000 the next month. And I was like, okay, cool.

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But all of the access cash that came from that, from like the profit went into funding these refunds from the month before. And then refunds just kept going up. And so I knew that in April I was going to have to sell even more to cover the refunds from February and March. And I felt like I was in a death trap. I was like, I don't know how to get out of this.

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Like every month I have to sell more to cover the refunds from them a month before, but then the cash from these things, somebody needed to cover the next month and sell even more. And honestly, I had no idea what I was going to do. And so, um, all of a sudden, uh, Layla at this point, cause she still has one foot out the door a little bit because she was like, I don't know about this guy.

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Um, and so this whole time she'd been living on like $3,000 a month that she was getting from her like online coaching business. So she had transitioned her personal training clients to online. Um, and she was doing like three grand a month from that. And I was like, Hey, why don't we take the middleman out of this? We know how to market and sell weight loss.

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Let's just sell it online, which by the way is a massive transition from doing brick and mortar. Um, but anyways, I was like, you know, I was in absolute desperation. And so I wrote one of the best sales pages of my entire life out of just sheer need took me two days to write the sales, the sales letter, maybe three. And I didn't even like get up from the computer.

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I was just writing the sales letter. And so, um, I started running traffic to it and we started doing a thousand bucks a day of just online. So there was no margin. It was all margin, right? Minus ad spend. And I was like, holy cow, this could work, right? And so we had eight sales guys. And so I was like, okay, we can tell these guys they don't have to sell at gyms anymore.

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They can sell from home. They can see their wives and we can do 8,000 a day. Because if we're doing a thousand just with her selling, we could do 70 more guys and do 8,000 a day. And so I told the guys the next month, the gyms that were lined up to launch the next month, Hey, we're not going to, we're not gonna be doing this anymore. Sorry. We're going to be going another direction.

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And they were like, Hey man, like we need this. And I was like, sorry, man. Like I, it's just, it's just, I'm not doing that model anymore. And they were like, well, can you show us what you're doing? Cause like my friend told me that you signed up like 200 people at his gym in like three weeks. And I was like, Nah, man, sorry. And he was like, dude, please.

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um, all the different things that I was allocating my attention to. I had, you know, I think literally like nine or 10 business businesses, I'll use quotes here, um, that I was trying to run at the same time. And I was spread so thin that I could barely allocate anything. And I was working every hour of the day and I was drinking half a bottle of Johnny Walker at night. So I just go to sleep.

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And I was like, I'm not flying out there, man. I'm sorry, I'm not doing it. And so anyways, push comes to shove. I was like, fine, I'll show you how to do it. I was like, but I'm not flying out there to save your ass if you can't sell. He's like, no, no, no, that's fine. He was like, well, how much to show me how to do it?

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And at the time I picked what was the highest number I could possibly imagine in my head, which was $6,000. And I said that because I didn't want him to say yes. And Because I didn't want to do it. I just wanted to move on. Because I was so, hopefully at this point you see how scarred I was by all of these experiences leading up to this. And the guy said, okay.

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And I looked at the phone and was like, you've got to be kidding me. And I was like, holy crap. And so it was $6,000. And then I had seven more guys that I was supposed to call to tell them that I wasn't going to do their launch the next month.

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And so the next conversation I had, I was like, well, shoot, if I'm going to do it, I guess I have to make it now that I sold one of them, this whole program. Next guy, same conversation went the same way. And he was like, well, how much? And I was like, eight grand. And he was like, okay. And I was like, holy cow.

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And then every single one after that said yes and ended up doing $60,000 in sales in a day. And I looked at Layla and I was like, we might be able to get out of this. And at that time, as much as people talk about the romantic like vision and strategy and and impact and saving lives and all this stuff like, It wasn't any of that.

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I was just trying to be able to not be in debt and pay the bills that were mounting every single month off. And so I knew that I needed to make like 150,000 in profit in the next like 30 days or so in order for this to work, right? And this was the only way I could do it.

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And so what I did was I called those guys, they all bought, and then I called up every gym that we had launched at that point, which was like 32, I think. And I called every one of those guys and was like, hey, you know how we filled your gym up? want me to show you how I did that? And they were like, yeah, that would be great. That's exactly what we did.

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And so I ended up doing like 300,000 in sales the next month, selling a digital product, which was actually more like a consulting type thing. And here's what's crazy. The next 30 days, the average gym that used the consulting program, Gym Launch, did $30,000 in collected cash. Not contract, not contract, not anything like that, but $30,000 in sales in the next 30 days.

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And so anyways, I, I got in the head on collision. I, uh, I decided to make the next, uh, the next move, which was going all in on gym launch. And this is, uh, the beginning of yet another hard road ahead. Um, and so at this time, for those of you don't know, I started flying around and doing, done for you gym launches.

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And then that is when everything took off like a rocket because every single one of those guys told every person that they knew that was in the gym space like, dude, I just did this thing and it killed. That was what gave birth to Gym Launch as it became the consulting company, the licensing company.

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where we license out all the materials, all the ads, all the copy, all the scripts, how to set up the lobbies. And the thing is, is that when people ask me about the story and this is, you know, now we're six months into 2017 at this point. So I've gone through like the hardest 18 months of my entire life. That is when we would just went from, I think we did,

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a hundred grand that first you know month or last last few weeks and then we did 300 then 480 then 780 then a million then one two then one five one eight two two two like we just kept we just grew like like a rocket and a lot of people think it was because of the marketing

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that I was running at that point, but it wasn't, there was a lot of, it was just the word of mouth and the actual product worked. You know what I mean? Um, and I use that as an example, cause like right now I launched the book, a hundred million dollar offers. It's 99 cents, um, with one post on my Instagram, which is not that big, um, of a following.

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And right now it sells about a thousand copies a day with no funnels, no ads, no whatever. Um, and it's because the product was good. You know what I mean? People talk if the product's good. And with this product, I was able to charge an egregious amount of money, but it was because we charge, because we were making people so much money.

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Like if I gave you a system that made $30,000 on average in the first 30 days, how much is that system worth, right? Most guys charge, you know, for franchises, they'll charge 500,000 for a system that does something like that, right? And I was just charging 16 grand, because I was like, holy cow, like, they're going to make double their money in the first 30 days if they just do this. Right.

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And I was, so I knew every aspect, every piece of this process, because I had done it not only for my six gyms, but for the 30 plus that we had launched. And so like, I knew the differences between different markets. I knew how to train sales guys to get them to do it. I knew how to position the offer. I knew how to do the layout of the sales room in the lobby.

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So you can maximize the amount of people that you could sell. I knew how to do the nutrition consultations the next day. So you can cover all the ad spend, um, just with product sales, right? Like I knew all these things because I did it. And so I tell this story to illustrate one thing. One is that what you are going through now doesn't mean like your work works on you more than you work on it.

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I was developing skills, character traits and beliefs through this entire three, four, five, six year period of just eating shit that I did not know was for me. And so we think that the first business, the second business, the fifth business you start is going to be the business that's going to be it for you. But like the journey is long, you know what I mean?

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And you accumulate these skills and these beliefs and these traits over time. And those become the things, those are your actual assets, right? The businesses are just manifestations of those assets in reality. And so as these things took off, right? my life radically transformed.

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And so what that was, was basically Layla and I would go and do a gym turnaround. I didn't like to use that word because I didn't think gym owners liked it. I was originally going to call it gym rescue, but no one wants to be rescued. So I called it gym launch and everyone was okay with that name. We would fly out to brick and mortar facilities. We'd sit at the front desk.

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And the piece that I get a lot of questions about is like, how can I do what you did in my space or in my niche or my whatever? And the thing is, is people want to skip the first five years of the story, right? The first five years was that I didn't sell a course on how to make $10,000 a month from a gym when I had my first gym. I didn't do that when I had a second.

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I didn't do that when I had a third. I didn't do that when I had a fourth. I didn't do that when I had a fifth. I didn't do that when I had a sixth, right? Um, cause I didn't feel like I was good enough and it was only, uh, and even then I started doing the launches as the next thing because I wanted to make sure that everyone always got way more value than they paid me, which was zero.

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They paid me nothing and then I would fill their gym up. Pretty good deal, right? No risk for them. And so I did that for almost two years doing the gym launches, right, where we'd fly out. And you already know how that went, which was difficult and hard for me, but I learned so much. I learned how to run a virtual sales team.

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I learned how to do all these things so that when I did have the next opportunity that lined up for me, we went from zero to 30 million in the next year in revenue because I had accumulated all of these skills and these character traits that I would not otherwise have had. And so a lot of people want to just jump to that part, but they don't have the skills. They don't have the character traits.

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They don't have the beliefs that align with what they want to achieve. And so I'm a big believer that the foundation that you set is going to dictate the height of the peak of the pyramid that you want to build within your life and the business that you want to grow. And so most people have a very small foundation. They took a course and then they want to start selling how to,

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you know, run Facebook ads, right? Or whatever. And so the reality is that they're just not good enough. And that's why. The thing that they have just doesn't work that well, which is why it doesn't make money, which is why they don't make money, right? Because the amount of money that you'll make will be predicted by the value that you provide to the marketplace. That's always what it is.

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I know this is a longer story, but I think that hopefully it illustrates one, that the path is not straight. Two, it is fraught with difficulty. And mind you, me telling you the quote end of this story is that like, oh yeah, then everything took off like a rocket. All of these types of problems, there was different problems that we had to solve then, which is like, how do you double every month?

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I would spend my own money on everything. So the offer was pretty simple. I said, I would fill your gym in 30 days for free. That was the offer. And I was like, I'll spend my own money on the ads. I'll spend my own money on the hotels, the food, the everything. And the deal is I just get to keep the upfront cash that I collect. And then everything afterwards that's contract value, you get to keep.

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and somehow keep up with high quality service and support and train talent while also bringing new people in and keep a culture and all of these things. But at the end of the day, the product brought us so much forgiveness from our customers because they were just all making so much money using the systems that we had laid out that we were able to build the infrastructure as the plane was flying

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you know during the journey and so anyways that was um that was the transition of me going from uh broke and looking at bankruptcy lawyers to uh we did three million in profit just in the last like four or five months of that year and then the next year we did 17 million in profit um and that was because i switched from a a service um to uh to media which has uh no cost of reproduction so there's significantly higher gross margins on it which is a better opportunity vehicle

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And what's interesting about this, and I'll hit this because I could probably make a video on this one concept alone, but I think it's worth highlighting, is that when I had my gyms, I had relatively the same skill set. I knew how to help people lose weight. I knew how to market. I knew how to sell. I had these locations, all of that.

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From there, I transitioned to a done-for-you sales model, right? And I made more money, right? Now, I had some issues. It's funny because I could look at that model now and fix it in two seconds because it's obvious what I would need to do to change the model. But I didn't do that. But I made more money in terms of revenue.

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And, you know, in terms of net margins, I was making more, but there was holes in the actual way the model was designed, which is why I had to do with all these other things. And then finally we switched to licensing, code and media, right? And that is where the highest gross margins exist. And so I had the same skills, right?

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But as my beliefs changed and my character traits changed and developed, I was able to switch into better and better opportunity vehicles for the same set of skills. And that is what that was what ended up creating the fortune that Layla and I were able to amass in this period of time. And it was because of of that transition through different vehicles, repackaging the same skills.

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And so the first step in this is getting the skills to to repackage. And I think most people just want to skip that part, which is the rocky cut scene that every single person that I know is successful does that no one wants to talk about every every single

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great big business owners that I know have had these years of thankless work where they develop these skills, these traits in these beliefs that end up setting them free. And everyone wants to just take the one course and thinks they're going to become a millionaire in six months. And it's just not the case.

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And so many people are far ahead of me in their entrepreneurial journey, you know, than I was in my first two years, three years, five years. And so I tell the story to hopefully give anyone hope who's like two years in and isn't making money. It's like, well, multiply that by three. And then that's about where I was, where I started making real money. So, um, anyways, lots of love Mosey nation.

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Uh, love you all. My name's Alex from Mosey. I own acquisition.com. We do about $85 million a year in revenue and I have absolutely nothing to sell you. Um, keeping awesome. If you did enjoy this, hit the subscribe button and I'll see you in the next video. And if you didn't like this, then I love you either way. All right. Lots of love. I'll see you then. Bye.

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It was a pretty compelling offer, right? They didn't have to do anything, right? They would just say yes. And then I would show up. I think I had to ask them for $500 to reserve the date just to make sure that they wouldn't like not be there. But I made it a refundable deposit. But anyways, I would fly out and...

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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we would spend all the money in marketing and we would sell on average when Layla and I would go, we'd sell on average about 200 people in 21 days. So we'd average about 10 sales a day. Um, and then we would take, you know, then we'd fly to the next one.

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This is kind of what we had been doing in 2016 and I was doing this while also having six gyms and two agencies and, and, and, uh, all these other things that were going on and I was spread wildly too thin. And that's when I got in the DUI and then decided to end everything except for gym lunch. We ended up basically

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I think it's like old people stuff now. Anyways, how I made my first million and there were significant changes in my behavior. And this podcast zooms in on that exact moment and the shift in behavior and then the resulting outcome. And I think you'll probably be able to take one, two, maybe more things from this episode that could potentially help you out.

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I sold five of the six gyms, I shut down the two agencies, and then I had one gym that was left over. And I put the money from the sale of those other businesses, which was not a lot, into kind of the last facility. The partner that I had at that facility ended up feeling like I had been taking distributions somehow from the business, which I hadn't.

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And then he took what he believed was rightful compensation for him not being involved in that gym anyways, and basically took the rest of the money out of the account. And so I basically was left with nothing. So I was truly at this rock bottom moment of just got into DUI. I just got rid of all my gyms. I put all the money from those gyms into this last facility. That money got taken.

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And I then decided to close that one gym down. And then when I did that, I couldn't sell anymore at that facility to generate cash flow because I wanted to close it down. I didn't want to be involved in that gym anymore. And so I basically stomached rent and payroll out of there with no new cash flow coming in. And I watched my bank account basically go from some money to no money.

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And so at the end of that, we shut the gym down. I got tons of refunds and things like that that ended up happening afterwards because people are weird when you shut a business down, so heads up. And so we just kept, but the coach that I had at the time was just like, just write the checks, do right by everyone, and you'll be able to escape this thing

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unscathed emotionally and and more or less I did I was able like that was some of the best advice I ever got like I just I didn't try and pursue anything with the partner I just wrote the checks for all the the customers who even if even if we had fulfilled the services which I just wrote the checks and I actually didn't Layla wrote the checks because I was I was so like destroyed by this entire decision you know process but anyways I was completely you know clean slate at that point I think all in all um

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I had $23,000 left over at that point. And so after selling six businesses and all that stuff, I had nothing left. And this was hard for me because I just spent four years building six facilities and all that stuff, and I almost had nothing to show for it.

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And that was one of the biggest lessons that I've had is that you have all these skills and experiences and character traits that you developed to show for it. The entrepreneurial journey is one that improves you, not anything else. And so that's why I'm such a big believer in that stuff, because like I had these things, these assets that I did not value.

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And what's crazy is that in the next, you know, 30 days or so, we did a hundred something thousand in sales. And so I was like, oh, wow, we we can do this. And so. Anyhow, actually, I think what ended up happening is I had almost no money, and then we did a launch, and then after all the costs and everything, I think I had 20-something thousand in money for me.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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I want to talk to you about how I made my first million dollars in profit. Mind you, the reason that I'm so big on profit rather than revenue is that at that point, I had already made, you know, I was already making a couple million dollars a year between all the different things that I was doing, but I was taking home basically nothing.

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The next month, Layla and I said we were just focusing purely on this business. She told all of her friends from high school to quit their jobs, right? So she had six friends from high school that all were doing MLM, Shake Mix stuff. And she said, hey, you know, you should quit that and start selling this stuff. We can make a hundred bucks a pop instead of, you know, making $5 on ShakeMix.

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And they were all like, awesome, let's do it. In between month, between, I think it was like November-ish going into January, which is when we wanted to slate the six gyms that we were going to launch at the same time, which of course makes sense, right? Why go from one to two when you could go from one to six? Because it's a brilliant idea of Alex's, right?

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And so we had one month in between where I was going to go launch a gym with Layla. We were going to do like a hundred grand-ish. And then I was going to be able to, that was kind of going to be the restart money, right? So here's what happens next. I get a text from a guy and he's like, hey, my brother lives in the same city as where you're starting your new gym.

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And I was like, not starting, doing a launch. I was like, okay. And he's like, yeah, he's a salesman. He really needs a job. He's got a baby and he's got another one on the way and it might be a good fit. And so anyways, I knew I needed to take a month to kind of put all the resources together to start doing the launches at six at a time and training those sales guys and everything.

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So I was like, okay, that might work because then I don't have to spend all day selling. And so anyways, I trained him and he crushed it. In the next 30 days, he did um, I think 120,000 in sales in December, which is like a, a hard month to do it in. And B, it was a great first, you know, launch for somebody who's new, which also kind of proved the model to me because I had done it.

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Layla had done it, but we never had someone else who wasn't like super tied to me doing it. Obviously Layla was more invested than just, you know,

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just an employee right at the time and so uh it was awesome so i was like super excited i was like sick this 100 grand is going to be the launch money for the next thing this will be great and so um at this point layla says this guy's a winner i'm gonna take him home to meet my family which is hilarious because i was not a winner at that time and so anyways i'm at her at her family's house

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Christmas Eve. And we had been selling for three weeks at this point. So we had, you know, 70, 80,000 in sales at this point. And what was weird was I was running all the, the money through just my gym processor. Cause I still, you know, maintain the processing, uh, like my POS. And, um, and so anyways, I always got deposits on Tuesdays and I was like, huh, this is weird.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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We haven't gotten a deposit since like, I didn't get a deposit last Tuesday. And I was like, okay, that's odd. And I called them and they're like, Hey, you know, I gave it like three or four days because I was like, you know, maybe it's delayed or something. And it had been a holiday because it was in the holiday season, whatever. And so the deposit is supposed to hit. It doesn't.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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Because I was so spread thin, I wasn't paying attention to profit, I was just looking at revenue, trying to beef myself up and feel status rather than thinking about what I was actually taking home. And I told you in a different video how I got in a head-on collision in a DUI at 60 miles an hour on the highway and walked away from it.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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I wait some days, keep checking, doesn't hit. I call them. They say, hey, you're in an annual review. It's standard, nothing to worry about. And I was like, that's weird. I've been with you guys for five years. I've never had an annual review. Interesting. And then waited a couple of days, called again, was like, Hey man, like we're really going to need these funds.

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Like I need you to deposit these. And they're like, yeah, we're just working through some final things, blah, blah, blah. I was like, all right. And so Christmas Eve, I call them and we're supposed to launch six gyms starting on the 26th. So two days later, I called the guys up and I was like, I'm not getting off the phone until you send me the money.

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Like, I'm not like I need, there's a hundred grand that's sitting there. Like I need that money. The guy was like,

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Throwback: How I Made My First Million (In Profit) | Ep 858

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sorry you know we're seeing some irregular activity uh in your account and this is because we had written all these refund checks for for uh clients when i was closing down the the gym the the last gym that i had so there's been some irregular activity this isn't the way that um you know you're not you it seems like you have a virtual business now that's not what this is intended for this is supposed to be for a single brick and mortar location so we're going to hold on to all the funds for six months and i i lost i lost it

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Throwback: How I Made My First Million (In Profit) | Ep 858

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And for those who don't know me, when I lose it, I don't actually get like explosive. I just get incredibly cold and very mean. And so I probably said some of the meanest things. Like I didn't cuss. I was just like, I destroyed the person's character that I was talking to on the phone. Like that person questioned like why they were alive.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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And so anyways, I got off the phone and Layla and I, his parents are supposed to go to the movies because it's Christmas Eve. And her dad was like, you know, he seems a little stressed. She's like, is she always this way? And, um, and of course I was a little bit stressed at that time. Um, and so here's what was crazy is that as we're going to the movie theaters, I'm just like completely numb.

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I just was like, I feel dead on the inside. And so we go to the theaters, the movie's playing in front of me. I'm not even watching the movie. Layla,

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holds my hand and she's like what's going on i was like i'll tell you later um she takes my pulse my resting pulse was like 120 in a dark movie theater at age 27 um i was stressed out of my mind and so we left the movies um and i told her i was like the money's not coming and she was like what do you mean i was like they're keeping it she's like can they do that i was like apparently like this was the first time i'd even known this that a processor can hold money

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Throwback: How I Made My First Million (In Profit) | Ep 858

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And so anyways, I got home, I still owed the salesman from the last month who'd done that huge launch, like this, this, all these sales that had happened to somebody had sold them. Right. But I didn't collect the money from it. And so I owed a $22,000 commission check and I had $23,000 left and it was on money that I never received.

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And so, um, in, in congruence with the lesson that I had learned from, you know, the clean exit of all these other things, which was like, just do right by everyone. And then you won't have any emotional scars that you'll carry with you. And so I wrote the check, actually I wired it for 22,000 and I had $1,000 left. And that's when we got home and I told Layla everything that I had done.

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And that was kind of the catalyst that ended up changing my life in a lot of ways. Mostly because I decided to confront decisions that I had been putting off and make hard calls that I didn't want to make to force myself to focus on one thing.

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I was like, I have $1,000 left. And we were supposed to launch, she had told her six friends to quit their jobs and we were gonna start launching gyms two days later on the 26th. And I was like, I have $1,000 and I have a credit card that has $100,000 limit. I was like, I will do this. I was like, but this could go horribly wrong. So you don't have to stay with me if you don't want to.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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And that was like this was the moment for me that I that I knew I was going to marry Layla. And she said, I would sleep with you under a bridge if it came to that. She's like, we'll get through it. And that was what I just like.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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I wanted to like, you know, I would I would have been teary, but I was so emotionally numb at this point that I just wanted to just like keep moving forward and keep keep keep getting through it. And so anyways, 48 hours later, I make all the ads. I set up all the campaigns, all the funnels, all the everythings.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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And I remember turning the campaigns on for all the six locations that we're going to do. It was like off to on, off to on, off to on, off to on. And I remember I was sweating. I was literally sweating when this was happening because I just felt such dread. I was like, this could literally just ruin me. Like right now I have no money, but I'm not in debt.

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And I'm going to be going in debt at a rate of $3,300 per day of money that I do not have. And so anyways, I turned it on and the six guys were at the locations. And it was $3,300 a day because I was paying for hotel, airfare, food, car, ad spend and commissions every single day for six guys. And I had, remember, I had $1,000, right? And so it was all coming out of a credit card.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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and the next 30 days, and we ended up getting canceled by the processor, right? I told you this at the beginning of the story. So I started all this, and I had no way to process money. So these guys are getting leads, they're making calls, they're closing deals, And I can't process the money. All right. And so, so we're sitting there, right. And, and, and these contracts are just coming in.

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Throwback: How I Made My First Million (In Profit) | Ep 858

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And so what I want to do in this video is talk to you about the result of that decision and what kind of happened and transpired in the next six to 12 months, which is anything but a Cinderella story. I made the calls. I went all in on gym launch. I basically fire sold my other businesses. And just as a quick tangent on that,

The Game with Alex Hormozi

Throwback: How I Made My First Million (In Profit) | Ep 858

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Right. And we had them scan them. So we had this mobile app and we had this central Dropbox, which of course is not PCI compliant. I had no idea what PCI compliance was. Um, and so we had this, uh, one lady that we used to work at my job that I was paying part-time to processes.

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Mind you, I didn't understand what like how much work this was because we were doing like 50 sales a day right between these locations at like 500 bucks a pop. And I was paying someone for part time four hours a day of contract work, which was just insane. It was like it was probably two people's worth of work. And I was paying somebody part time.

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It ended up that ended up blowing up because she couldn't do that in her full time job. So and and we didn't even have a way to process the money anyways. Right.

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and so anyways we're i'm calling everybody i know to try and figure out i was like hey can you process this and then you can keep 10 and just send me the rest of the money and people were like i don't know man like i don't know if i want to do that and so no one would process the money for me and so um i called you know every person i knew and then i finally got uh in touch with a guy named alex roy at the time uh who specialized in like high risk processing which is basically the category i was in at that time

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And he said, I can get you set up. And I was like, okay, cool. Um, he said, but given the record that you have right now, uh, because you just refunded all those, all those people at the last location, he's like, they're going to want a reserve, which means they keep a certain percentage no matter what. Um, and they're going to put a limit on how much you can, you can, you can charge.

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And I was like, okay, cool. He said, they'll give you a $50,000 limit. And I was like, dude, I need like four times that. And he was like, sorry, man, that's what I can get you. And so the last week of January. All right. So we were doing, you know, we're doing five, six, you know, thousand a day in sales, maybe more than that. and I had no way of processing it, right?

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And the last week I get this processor for $50,000 and I run $50,000 in a day, right? And he's like, okay, here's the good news is that it's per month. So it was the end of, he's like, so this week you can do 50 and the next week you can do 50. And then I'll see if I can get more lined up, more processors at 50K to allow you to start processing for them. And I was like, okay, fine.

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Hey guys, love that you're listening to the podcast. If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, you know, drawn out stuff. Sometimes it can help hit the brain centers in different ways. You can check on my YouTube channel. It's absolutely free. Go check that out if that's what you are into. And if not, keep enjoying the show.

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So next week we do 50 on that same processor. And then we set up another one and another one and another one. And I was able to like catch this, this falling plane as it's going. And we ended up somehow, I think we ended up processing a hundred grand actually that first month. I think he got two people. He got somebody like the last day of the month and I processed another hundred.

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sorry, another 50 to get a hundred for that first month. And then the next month I had three processors. So I was able to process 150 and things actually started working out. Right. So I, you know, we did a hundred thousand, which basically just covered my credit card bill, which is doing 3,300 a day. Right.

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Fast Beats Free Every Time | Ep 842

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What's going on, everyone? Welcome back to the game. I have an audio first episode for you guys today. This has been something that's been kind of top of mind for me. But it's about some things that you can immediately sell to make a lot more money in the business. And I think this is something that's wildly underused.

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Fast Beats Free Every Time | Ep 842

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I mean, if you are, then you don't understand how capitalism works, but maybe you're offended, but you still buy and you still don't use anything else. Right. And so I just, I would, I would encourage you to one, if you're a chicken about it, just change it for new customers. And then it'll slowly like new customers, you know, old customers will slowly over time cycle out.

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Fast Beats Free Every Time | Ep 842

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And then new customers will cycle in at the higher price. But I would encourage you to just say like, Listen, you can blame it on inflation if you want to. You can blame it on costs of goods going up. You can say that your rent got raised. Blame it on whatever you want. If you want, you can put it to an outside power because you're afraid of just saying, I decided that I wanted to charge more.

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Fast Beats Free Every Time | Ep 842

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But if you want to blame it on something else, you can. Fundamentally, I think that if you have more demand than you have supply at given times in your business, then it means that you were mispriced. And so you should consider maybe just raising prices at those times. So that being said, I hope this found value.

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Fast Beats Free Every Time | Ep 842

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If you are a business owner and you like this type of stuff, we have our advisory practice, which we set up last year, which has honestly been really amazing. The reception has been exceptional. I've been really stoked about it. It's one of the business I've been most excited about starting. But yeah, we have business owners out here.

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Fast Beats Free Every Time | Ep 842

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I think the last time, I think I took a, I looked at the data from four consecutive days and it was the average person in the room was 4.1 million. Median was 1.2 to give you an idea. So we do have big businesses in the room as well.

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Fast Beats Free Every Time | Ep 842

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And so if you're a business owner and you like these types of kind of profit driving tactics, you know, this is a podcast, but if we do two days and we know what your business is, we can probably help you out a little more. I'm sure you can find it online, acquisition.com. Just click around. If you can't figure it out, then it's not for you. I hope you guys have an amazing day.

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Fast Beats Free Every Time | Ep 842

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So you build, you know, customer A and then customer B and the customer C. Well, it makes basically no difference to cost for you if you do ABC or CAB, right? Like it wouldn't actually change anything for you. You're going to have the same number of people and you're going to deliver over the same time period.

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Fast Beats Free Every Time | Ep 842

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Share this with your friends. It's the only way that this podcast grows. And so thank you. Love you all and talk soon. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

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Fast Beats Free Every Time | Ep 842

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and across all eight functions of the business so you've got marketing you've got sales you've got product you've got customer success you've got it you've got recruiting hr you've got finance and we show the problems that emerge at every level of scale and how to graduate to the next level it's all free and you can get it personalized to you so it's about 30-ish pages for each of the stages

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Fast Beats Free Every Time | Ep 842

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Fast Beats Free Every Time | Ep 842

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But the thing is, is that customer C might be willing to pay two times more to get it done faster. And so for us as business owners, having the offer available for people to get what they want faster, I mean, and you think about this in the commerce world, like you can obviously always pay for faster shipping, it's almost like a, it's an obvious thing.

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Fast Beats Free Every Time | Ep 842

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But for some reason, in the services, businesses, people don't do this. And I'm still always lost to why maybe it's because they don't think about it, which is why I'm making this podcast. But But for this individual, when I was talking about the auto shop thing, it just felt like such an obvious thing.

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Fast Beats Free Every Time | Ep 842

15.632

And so I want to say a month ago, I had a business that came out to our headquarters. It's an advisory practice customer. And the gentleman had a very large business that had many automobile shops. And in talking to him more, it was a very razor-thin margin business as he was detailing it.

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Fast Beats Free Every Time | Ep 842

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Well, okay, well, if it takes you normally a week to get this stuff back and the vast majority of customers don't care, but a small percentage of customers do care very much about time and they're losing thousands of dollars every day or tens of thousands of dollars, then it would follow to have a speed pass that would allow them to get priority, right?

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Fast Beats Free Every Time | Ep 842

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Because somebody else doesn't really care if it adds a day to their service. And so they're willing to pay the standard rate, whereas somebody else, it does matter a lot. And so they're paying for fast shipping, right? Fundamentally, that's all we're doing here. I would say that for me, fundamentally, and I'll talk about the second way that you can use this in a second.

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Fast Beats Free Every Time | Ep 842

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But for me, fundamentally, I've really shifted. I mean, a lot of my thinking around creating products and services. I mean, I go back to the value equation because it's so core to how I do everything. But like, you've got the impact or outcome. You've got risk, you've got speed, and you've got ease. These are the elements of value. I have yet to find anything else that are not those four elements.

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Fast Beats Free Every Time | Ep 842

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The thing is that each of these elements can be traded in and out. In the services space, it's very common for people to add features or remove features of services in order to have different prices. That makes sense for a lot of people. But what they don't do is they don't actually change prices on speed or risk. And that sounds odd because those are huge elements of value.

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Fast Beats Free Every Time | Ep 842

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Just since I'm gonna keep this conversation focused on speed for today, I think a lot about like, what can I do to do something faster? And sometimes to do something faster will cost you more. Like if you're in home services, for example, and let's say you do kitchen remodels, it's like, okay, I could do your kitchen first, And so either I use, you basically have two options.

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Fast Beats Free Every Time | Ep 842

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You're either using resources from another customer and deprioritizing somebody else who doesn't care about speed as much, which is the simplest option operationally. You just change the sequence of delivery, but your actual kind of like fixed costs say more or less the same. You're just changing orders up. So that's pure profit, which is awesome.

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Fast Beats Free Every Time | Ep 842

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the second way of doing this is that you have surge support right so you say okay well what would it take if i were to try and get this person who normally i deliver this in three months to deliver it in one month and let's say for that person they're willing to pay two times or three times as much now you may be surprised by this and i want to i want to encourage you to not sell out of your own wallet which is a pretty common thing for business owners is they say well i would never pay for something like that well

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Fast Beats Free Every Time | Ep 842

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Well, good thing that you're not your customer because you probably already know how to fix cars or you probably already know how to fix or build decks or do a kitchen remodel or provide whatever service you have. And that makes you not your customer because your customer doesn't know how to do those things, which is why they're paying you, right?

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Fast Beats Free Every Time | Ep 842

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And for them, the value may be really big if it comes really fast. Let's just use a hypothetical here. Let's say that for you to build out a kitchen, right? It's going to cost you, if you wanted to rush, right, and say, hey, you know, Mr. Marble Supplier, Mr. Granite Supplier, or Mr. Cabinet Supplier, whatever, I need these things by, you know, next week or by two weeks from now.

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Fast Beats Free Every Time | Ep 842

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What would it take? That's the question you ask. What would it take? What would I have to pay in order for that to happen? I have a customer who's willing to pay whatever price. I can do it within reason to make it worth your while. And so then it's back to them.

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Fast Beats Free Every Time | Ep 842

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And so what you might find interesting is that they might say, well, you know, I could rush it and it probably cost about 20% more, might cost 50% more. And you might say, cool, done. Because guess what? If you have to pay 50% more for your cost of goods, and let's say you also pay 50% more for labor, fine, okay.

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Fast Beats Free Every Time | Ep 842

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But if you charge double or triple the price, not only do you make more absolute profit, if you try to charge triple the price, you're going to make more gross margin percentage too. So like you're going to make more money by percentage and absolute with this offer. And to make matters even better, you're going to be able to deliver something way faster than normal. And guess what happens then?

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And one of the things that he had was a certain niche type of customer that had tremendous costs incurred for the amount of time that their trucks or cars were off the road, something to the tune of like $10,000 to $20,000 a day in lost income. And what was interesting is I said, okay, I'm guessing these guys are not price sensitive. And he was like, no.

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You get more word of mouth. People are like, holy cow, this guy can deliver fast. And I'm telling you, having been You know, I mean, I would say having been in business for so long. It's not true. I haven't been in business that long. I've been, you know, 13, 14 years, whatever it is at this point. Shoot, it might be longer than that. Anyways, point is, is that speed trumps so much.

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Like when Spotify was competing with the internet of online downloads, which were free. Spotify beat free because it was fast. Think about how crazy that is. I remember another example of this. For Halloween, Chipotle does the, if you wear tinfoil or you dress up like a burrito, they give you a free burrito. They do it every year.

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I don't know if they still do it, but they used to do it when I was younger. And I remember thinking to myself, I went to it as a business owner later on in my life and it happened to be Halloween. For me, it was just whatever day of the week Halloween fell on and I just needed to eat lunch. And I saw this line out the door and I was like, my God.

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And I thought to myself, I was like, man, if I could just pay $30 to have my burrito now, I would so I don't have to wait in this line. But then it just got me thinking yet again of like how valuable speed is because fast beats free. And so the thing is, is that delay is the thing that people hate most. Like think about how Amazon won and Netflix won. They won because of speed.

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Like you want to look at movies. It's like instead of getting in your car and doing all that stuff, you just turn on your television. You can browse an unlimited selection. It was fast. It was right there. And obviously convenience and ease kind of factor into play there as well. It's immediately available. And so

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if you can try and sell speed now i told you there was two comp two two types of of speed that that uh or rather surge pricing that i wanted to talk about um the second is a little bit different okay so the second here is and now all of these are based on demand right so to be clear like you have some people who want things faster and so you give it to them faster in exchange for more money everybody's happy

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Another situation is where you have uneven demand cycles. So a very common example, this is like restaurants. And so I just did a Cash Cows episode this week. And if you don't know what Cash Cows is, it's the new kind of pseudo TV show that we've been producing. It's on my YouTube channel. I've been waiting to do this for like over... It's been more than a year.

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It's been probably almost two years now that I've been kind of like wanting to do this. And it just takes a huge amount of resources for every one of the episodes. But their first two episodes are out. Basically, I kind of do like a mini shark tank, except I don't buy the business. I just help grow it. So it's way more tactical.

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Like it's the most positive feedback I've gotten on anything I've ever made. Um, and this is specifically for business owners. So, uh, it's hardcore business content. I think you'll really like it anyways. I think some of you guys have heard the podcast version of it, but if you haven't seen the video version, I think the video is even better anyways. So we have a cash guys episodes coming out.

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Um, and it's, it's, it's my, it's my show so I can spoil whatever I want. the restaurant owners came in and there's a number of things we did to the business. But one of them was they had a lot of people come on on weekends and not as many people come during the week. And this is pretty common for restaurants, right?

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Is that they get more demand on, you know, Friday, Saturday, sometimes Sunday than they do, you know, the rest of the week. I said, well, do you have the same menu on weekends? And they said, yeah. I was like, well, have you considered just taking, just reprinting the menus and having a weekend menu that has, you know, 10 or 20% higher prices? And they're like, huh.

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And I said, well, do you price it differently for them? And he said, no. I said, but you have other customers or the vast majority of your customers that if it took a week to get their, you know, cars or trucks back, it wouldn't really make a difference to them. He said, right. It's like, okay. So what you're missing is basically a surge price or said differently, a speed pass.

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I was like, if you have a line out the door that lasts an hour, right, and you can't even service the demand, then when price and demand, sorry, when demand goes up on a price curve and it surpasses supply, you shift price up. Like that's just, that's fairly standard. But I say this, you know, quote, fairly standard, but the vast majority of businesses don't do it.

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So very standard from a theoretical perspective, less so from a practice angle. And the thing is, is in a business that's like food, where you're running usually paper-thin margins, you know, if you have... 104 days a year, so two days, you know, your two weekend days per year. And let's say that on those days, you do half your volume, all right?

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Remember, you're doing more volume in those days than you do the other five days of the week. So 50% of your volume, if we can add 10 or 20%, if a business is running 10% margins, then us running just a 10% price premium on those days adds 5% to the absolute margin. And so what does that mean to the business? It's a 50% increase in profit. If we had a 20% increase in price,

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then it would be a 10% absolute increase because it's 50% of the revenues coming on weekends, which would double the profit of the business. And so the thing is, is that there's all these tiny little levers that exist in a business that I think a lot of business owners underappreciate, or they're honestly just too afraid to implement.

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They're so afraid of, you know, what happens if someone says no? It's like, well, are you offended when you buy a physical product and it says fast shipping for an extra $2.99? No, if you don't want to, just don't take it. Right. Like if you're at the mechanic shop and he says, hey, how important is this for you? You know, how fast you need this done?

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Because we can basically we can prioritize your thing and do it like literally we can make yours next in line as in like it's the first thing we worked on. Or we have our standard turnaround, which is, you know, your fifth in line right now. And we'll probably get it to you by end of day tomorrow or whatever. Right. If someone says, end of day tomorrow is fine, then you say, cool, that's great.

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But if someone's like, no, I really need it back because I got to pick my kid up and it's the only car I have, then it's like, okay, well then here's the FastPass price. And they might be like, great, because I don't want to have to pay somebody else to do this and this actually saves me money. And so again, this is where like,

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You just don't want to sell out of the wall to the customer and assume that you know what they want, that you know what's best for them. I can say the vast majority of human error that exists from a politics perspective is people making rules for other people and assuming that they're the same. People are very, very good at allocating their own capital and their own time for their own benefits.

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Capitalism is built on this idea. We're pretty good at getting what we want for ourselves, and most people are very bad at determining what everyone else in a wide population that doesn't represent them do want.

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right this is why i'm an advocate of smaller government personally anyways every business so zooming back out whether you're in physical products whether you're in sas whether you're in services you should consider two different lenses for surge pricing one is the fast pass which we talked about first which is is there some way that we can either reorder our delivery for customers

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or drag our customer delivery up faster and be willing to pay maybe a small premium in cost in order to get a big premium in price, that would immediately drop to our bottom line because speed is 100% profit. Think about that. Speed is 100% incremental margin, especially if you just do the reordering of customers.

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If it makes no difference for some and it makes a big difference for others, all profit. If you have to do search support in terms of added cost, then sure, you eat a little bit of margin there, but you still can make more absolute money. and you serve those customers better. And I think you'll get more word of mouth.

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And so what I want to talk about is a couple of different ways you can implement this in any business. And the, and what's really cool about this type of kind of offer or value consideration is that it's a hundred percent margin. So think about it. Like if you deliver anything, let's say you build decks for a living, it doesn't matter. And

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And then obviously on the surge pricing side, if you have uneven demand or you're seasonal in the nature of how your business runs, or it's end of the month versus beginning of the month, things like that, every business is different, consider having pricing that affects that. And I'll give you a different example. So it can also be on a micro level from a day-to-day perspective.

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So in the gym space, the 5 p.m. class or 6 p.m. class is usually, those two classes are some of the most packed sessions, as you might imagine. But, you know, it was never crowded 7 a.m. It just was that it was the dead deadest time that we had. Right. And so when I when I think about that, I think, OK, well, then maybe there should be two memberships.

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We should have peak hours pricing and off peak hours. Right. And so for people who do care about I can only come in this time, then they can pay the premium. And for other people who have more flexible schedules or work from home or work for themselves or they have shift work or whatever it is, then they might be willing they might be happy to get a discount.

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to come to the less packed times, which is good for you as a business owner, because think about it like this. Let's say your 6 p.m. class is oversubscribed, right? So you only have, let's say, 30 bikes, you know, and so you can only fit 30 customers there. But let's say that if you had availability there, you could fit up to 40 people, all right?

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Well, the thing is is that there might be people who are in that class who could otherwise come at different times, they just have no incentive to. But if you gave them the incentive, then you would be able to service more customers because the 10 who can't make any other time go to another gym because it's not convenient for them.

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And so you make it convenient for the most amount of people by appropriately pricing your supply to meet the demand. And so again, this literally works in any business. If you're a hair salon girl, like everyone who's listening to this and it's like, well, this doesn't work for me. It works in every business. Like, stop. Speed is always a component of purchasing, period.

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If you're a hair salon girl, I'm going to bet that your Friday and Saturday probably is more busy for cuts and colors than, you know, Wednesday afternoons. And guess what that means? Your cut and color on Fridays and Saturdays should probably be 20% higher.

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And for people who doesn't matter or they're not doing it because they're going out that night, but they're doing it because they just need to get their monthly cut in color, then you charge normal and you charge surge pricing for Fridays and Saturdays. And for those of you who have this weird issue with thinking that, what will my customer say?

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It's like, well, your demand will go down on those days. And then that means that you will... not have to turn customers away. And then you can adequately serve everybody. The perfect pricing model, which is very difficult to do in reality, is that every single person would pay what their maximum willingness to pay is. Now, that is theoretically great, but practically impossible.

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you have your standard, let's say you have a 30% margin in the business after everything. Okay, fine. Great. If you build that in three months, cool. And maybe you can only take on a certain amount of projects. So you build them, let's say in sequence.

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And so this is where data is useful. So we can just get our best pockets where we know that these are indicators of high demand, like weekends or like peak hours at the gym. There's always these types of pockets that exist in any business. And we just try to... And you think Facebook doesn't, for example, when you're running ads, what do they do?

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Surge pricing is during Q4 when all the Christmas shopping happens. Cost per impression skyrockets. If you're an Uber, like if you... order an Uber at Friday night at 10, you're going to pay two and a half, three times more. So like, like, are you offended?

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I was talking to Mr. Beast about this concept and I was like, yeah, I know we need to work on our headlines. They're a little bit too click baiting. I remember he stopped and he was like, absolutely not. And I was like, what do you mean? He was like, you should absolutely have click bait headlines. He's like, they should just be true. They should be baiting the click.

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So if I have a doctor who I'm listening to and they tell me to do something, I can take it as fact because they're an authority. I will assume that I'm not going to, now I don't recommend doing that, but this is how people think. And so I'm going to not go through all the work of eight years of education or whatever it is and the subspecialty in order to figure out what to do.

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Instead, I'm going to listen to an authority. So it's basically just a little click where brain hijack of, oh, I don't need to think anymore, which, by the way, you totally should think. You should still think about what Warren Buffett says and say, do I believe what he says? Does it really apply to me? But most people won't. And we're talking about making money. So we don't fight with reality.

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If we want that, wouldn't it be nice if everyone just immediately did what you said? That would increase people's compliance with your request. This means that you'll be more persuasive. It means a higher percentage of people will do what you say, which is good. It tends to be very functional for making money. If we want to have authority, we can do the big thing.

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We can go build Berkshire Hathaway or... We can demonstrate it by how in-depth we understand a topic. Now, that can be demonstrated without as much. It would make sense, though, that if you're very good at something that you would have some aspirational outcome. But it does serve as a proxy for expertise. You are obviously pretty good at this.

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Have you ever heard somebody like get really I'm sure there's somebody, you know, or maybe it's you. Like if you get talking about some specific topic, people are like, geez, OK, I get it. I get it. Because at that point, they literally have told you, I think you're an authority. You can just tell me what you think, bottom line.

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They've literally elevated you within that tiny domain that you just demonstrated authority in or expertise in, that they will listen to what you say. So then around aspirational effort can be the inputs you do. So let me explain this. So you have the expertise that you can demonstrate.

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Big picture, a lot of the content that's out there has what I would consider too little pre and too little post, meaning basically no preparation and no post-production. meaning it's just shit.

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Now you want to demonstrate that expertise because it also serves as an approximation of the results or experience that someone would get after they buy your products. So people might read my book and be like, wow, that was a demonstration of expertise. I'll bet this guy can help me with my offers or whatever.

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And so then they would come into my rabbit hole and then maybe we'd invest in them or whatever, right? But that's the idea. Now, if that book on offers is mediocre, then they might have a much lower likelihood of thinking that whatever I could do could help them because they're like, oh, maybe a lot of stuff was obvious. And this is the second big problem is that many of your content is obvious.

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Like if you had, here's three ways to save money on groceries. If I can immediately guess what they are without hearing from you, then they're not going to be interesting, they're not going to be unique, and they don't show nuance. What makes content interesting is that someone can't guess what you're going to say.

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And if you're going to use lists, steps, or stories, you want to begin with the thing that is contrary to what they expect. which doesn't mean that you have to subvert the audience or like deceive them, but it should be something that they didn't expect you to say, which then should still be valuable, which makes it net new information.

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And one of the easiest ways to make net new information is to go deeper, not broader. So basically the broader you go, the more it will rely on your aspirational outcome that you have, that people will then take what you say as fact or truth. If you don't have that, the deeper you will need to go with your content so that people believe that you have expertise.

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If you look at some of the, I mean, I specifically make deep videos and wide videos on purpose. And I will tell you the nirvana between the two, which this is a side quest bonus for everyone who's listening, is that you can have videos that are both deep and wide. So let me explain this. So a wide video, by my definition, only serves novices or beginners in a particular field.

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A deep video only serves advanced people within a particular domain or field. Now, a deep and wide video provides value to both, more difficult. Now, if I talk about allocation of resources and strategy, that is something that will likely benefit someone who's a beginner because they have resources and they need to allocate them the same way who someone who's advanced is.

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If I talk about talent, that'd be something that someone who's a beginner and advanced would need to navigate. If I talk about scaling from 10 million a year in ad spend to 100 million a year in ad spend, that for sure will only apply to an advanced person.

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It is a demonstration of expertise, but the likelihood that someone even watches it or finds it is they're not going to find it relevant to them.

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On the flip side, if I talk about getting your first five customers, somebody who already has a business and has 100 customers, they're probably not going to be as interested in that unless I can try and frame it in how to get your next five customers for any new division, new product line or launch. Now, that would then allow me to maybe bridge some of that gap.

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On top of that, the actual content itself isn't really based on anything besides someone having some verbal commitment to themselves that they're going to, quote, make content rather than solve problems for their audience or their customers.

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But by and large, it's still probably be a wide topic. And so the idea is how can I be both deep and wide within my respective business? And in that back to the main quest.

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So if aspirational effort, which is demonstration of expertise, is something that can build our brands and can serve as a proxy, even if we don't have as many of those big aspirational outcomes, then one of the other things that we can do is literally demonstrate the effort we've put into it. For example, you talk about how you developed the expertise.

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And again, state the facts and tell the truth. If you are good at something, there's probably a reason you're good at it. And so most of you have a lot of really big marketing nuggets in your past and you don't talk about them. It's actually a really common thing that I've noticed in talking to entrepreneurs that they have, there's this great scene in Mad Men

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where Don Draper is talking to the tobacco company. And he asked them, they had some big campaign and he thought it sucked. And so he wanted to reinvent it. And so he asked them nuanced questions, step-by-step, how do you make your tobaccos? How is it different than anyone else's? And so as they go through, they're like, we pretty much do it the same way as everyone else.

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He keeps digging, keeps digging. And then finally say, OK, so we dry it out and then we we put it in the sun and we toast it. And he's like, oh, it's toasted. And so it being toasted, that unique moment in their process was a differentiator. And so many of you have an it's toasted in your past. You might be the only black belt in your local area, right?

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Now there might be many black belts, but within your little fiefdom of men over 40 or of people in St. Louis, Missouri, you might be only one of three. It's a much smaller space to compete in. Now we have this tiny mini outcome as outcome. What did we do to get there? Well, it's like, oh, well, I studied for 10 years. It's like, dude, tell people.

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Tell people the aspirational effort, the price you paid for the information, learning, education, and expertise that you have. And so right now, this is the takeaway here, probably the biggest one for most of you guys, is write through or write down all the things that you went through to develop the expertise you have. And so if you've worked with 100 customers, talk about it.

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Big thing number one that I'll state outright, which is that if you have customers, when you make content, if they get value from that content, they will still ascribe it to the thing they bought from you.

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If you did five years of studying, talk about what you studied and the nuances of what you learned. Because guess what? No one else is. And you certainly aren't. And that would then demonstrate, okay, maybe they haven't had this thing happen, but they've done a lot of work around this, right? And so if you think about what content provides people, it's typically compressed time, all right?

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Now, this is from an education perspective, not entertainment. Entertainment, different. But education-wise, we want to compress time. Like the reason humanity exists and that we pass generation to generation is that we learn stuff and we pass on that knowledge so people can start where we left off. Fundamentally, it's how education works.

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The first guy who figured out, Pythagoras figured out this theorem. We don't re-derive the theorem. We just learn the answer. And then using that theorem, we find out more information. And so it is so valuable because of how hard and how long it was to figure it out.

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But then we give the kernel that tiny little nugget of wisdom, and that becomes significantly more valuable because of the time and effort we save our audience. And so when we make these aspirational pieces of content from an effort perspective, we want to demonstrate the cost that we are saving them in effort and time. Now, the authority piece becomes the third component.

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If you're noticing common themes with the value equation here, it's because that's what makes things valuable. Things can be valuable that are also free. Duh. Actually, let me highlight that really quickly. The value equation applies to content. How do I get something valuable? They have a dream outcome. They have something they're trying to achieve. I decrease the risk.

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How do I decrease the risk? By demonstrating expertise, by having an outcome that they say, oh, that's aspirational. If it worked at that 10x level, it'll work at 1x level for me, right? They have other people who are like me that they tell stories about that are relevant to me. So this applies. These are all things that increase perceived likelihood. Then we've got time delay.

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So fun fact is that you can retain customers on a purchased product by providing more free content because your brain is not going to delineate where you've received value from, only that you receive value. So basically you continue to reinforce the positive association that someone in your audience has, customer or otherwise, when you make positive content. So that's reason number one, right?

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How long did it take them to learn this? How many different customers? How long would it take me to learn this on my own? Time that we're giving them. Fast. And then we've got easy, which is how difficult do you make it for someone to comprehend? Now, I'm going to give you two versions of this, a little bit more advanced.

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If you want people, like you will be more persuasive based on how well your target audience can understand you. There's a reason that I speak in a third grade reading level to the greatest degree possible. It's because I can be more persuasive because a higher percentage of the population understands what I'm saying. Now, if you speak...

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to an audience of, let's say, crochet people who knit, I may use analogies that would be about knitting to illustrate a point because it's something they understand. And so the more we can predigest the food, the more we can chew it up for them and then just give them just the nugs, we can pan the sand for the gold and then just give them the gold.

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The more we can predigest it, the more valuable it becomes. And so many of you have zero aspirational outcomes, not because you haven't done it because you don't talk about it. And you have zero aspirational effort, not because you aren't working hard, but because no one knows. It's about the perception of your audience. So until they perceive it to be true, it's just as good as if it weren't.

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And so I hear this as this continuous talk track when I do the school days and things like that, like people don't respect all this work that I put in. And I'm like, you didn't tell them. How would they know? And so we want to integrate that stuff in. You weave it into either what you're talking about inside the content or what you have around the content.

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But then when the person gets in, it's exactly what they thought it was going to be. The deception comes from when someone thinks it's something and it ends up being something different. The big question is, should you focus on getting more traffic? And for most businesses, the answer is yes, because the return on investments on increments are by definition incremental.

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So there's a reason that my origin story is in the YouTube description of every video because people are naturally asking, who is this guy? And so I just give my life story. Now, the reason I give it exactly like that is because it was the number one performing LinkedIn post that I had over the last year.

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And I said, oh, well, if it worked on LinkedIn, I might as well put it as my YouTube description, right? It also doubles as an autobiography. It gave people a fast track of relevance for me and why I might be an authority within a particular space. Now, we covered aspirational outcomes. We cover aspirational effort. We talked about increments versus order of magnitude.

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This is a way to increase the order of magnitude. Way more traffic that would come to you based on the content. OK, so the next one is pre versus post. So with this contextual foundation that we just laid is we have to we have to talk about stuff. We have to make it valuable. We have to make the value happen in the way that I just outlined.

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then what we need to do is make sure that we have basically as little of everything else inside the content as possible and clearly state that at the beginning. And the only way that you're going to do this is if you work more before you start a video or before you make a post on LinkedIn or X or whatever.

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The easiest way to do this is look at other types of high-performing content that exists on that platform and say, is there versions of this that I can model using my story? Because there are going to be formats. There are going to be packaging concepts that tend to perform better.

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And so all we do is we take that packaging or structure and we apply it to our truth, our reality, our history, our demonstration of expertise. And then that's what merges you outside of the platform with what works inside of the platform. And then you'll get more views, more shares, more leads, more traffic. The final question that I will lead you or leave you with is, what would it take?

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Reason number two is that it increases the likelihood that people who have not bought from you will buy from you in the future, whether they come from ads, they come from outbound, or they just come from the content itself because they will consume other pieces of content.

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It's probably my single favorite question of all time, which is a pretty bold thing to say, but it's probably my favorite question of all time because what would it take assumes success. So if I said, what would it take for you to 10X your audience? You will then start answering that question. And then you get to see if the resources required to answer that question are under your control.

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And if you have access to those resources, then the question, is there anything that you could do that would more than 10X your business given those resources? And if the answer is no, then you should redeploy those resources towards 10Xing your business. and using it in the way that you just saw.

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And so many of you have these micro titles, these things that can happen that are under your control that you're choosing not to because you just haven't actually tabulated what it would take. And you might find that what it would take is actually very much in your control.

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And I will share this with you, which is that a lot of very successful entrepreneurs started with the exact same amount of stuff that you have right now, which may be nothing. And so the only thing that they had that you might lack is resourcefulness more than resources. They were willing to look at whatever they could to assemble the resources to then do what it took.

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If you think about content from this perspective, I think that you will make far better stuff and people will believe you. The better stuff is going to come from using the value equation. How do I link to this dream outcome? How do I make this risk-free for them to consume or execute this content? How do I make their outcome happen faster? How do I make it easier?

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If you think about that with each form of content that you make, even put the little four box. Think about each four of them, right? And if you're like, man, that sounds like work. Welcome to winning.

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Probably one of my largest changes in how I've seen business overall is my understanding of marketing to quote logical and emotional buyers. And so if you were to listen to my stuff years ago, I would have talked about logic and emotional buyers. And I think for the most part, that was because I hadn't spent. a lot of time really diving into it.

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I'm sure Kirby, because he was making YouTube videos before this, like the amount of time that it takes to make a banger, banger video that's a million view video compared to 100K video might not be 10X. It might be 100X the time. You have to be okay with that. Oftentimes, though, it's more like it takes three times as long to make a million view video than 100K video.

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You actually get a very big arbitrage on working a little bit harder on making it that much better. Because a video that gets 10% more clicks and 10% longer watch time isn't just going to be 1.1 times 1.1 bigger. It's probably going to be closer to double the size In the beginning, you need to do a lot of reps because you probably suck.

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But once you understand it, almost all of them follow this path, which is like they start making some, they start making more, they make even more. And it happens as this accordion. So it's like, man, I got to 10 pieces of content a week and these two outperformed my other eight entirely. Well, I'll bet you I could make four pieces that good if I didn't have to make 10.

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So then you drop to four and then all four of those are good. And you're like, man, if I went from four back to 10 at this level, I would double my views. And then you do. And then you're at 10. And then two of those ones are the best ones. You're like, man, if I only made things like that. So you basically accordion in and out over your career. So this is a very common thing that happens.

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So I'm setting this as a precedent that you're not doing anything wrong and that there is no perfect ratio of content that you're going to make. It just comes down to how good it is. And most of it being good, it comes down to giving away your best stuff, which is giving away the secrets, the nuances that you know make a big difference in a customer's life and just showing them.

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This is where you demonstrate expertise. What most people do is give away fluff and are surprised they get fluffed back. If you give away meat, you'll get meat back. You'll get real contacts that are actually interested. And then it forces you to continue to level up how you can provide value. Because if that's the only value you can provide, guess what you need to do?

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Figure out how to provide more value. Because whenever you solve one problem, another problem will always emerge. That's the one fact that I can give you when it comes to capitalism is that customers will never be satisfied. Customers will always happily want you to solve their next problem if you just solve their last one the way they want it to be solved at a price they found valuable.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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I kind of just like heard that and sounded smart enough. And so I just kind of repeated and that's kind of how I went. The more I've looked into it, the more I think that it's actually a question of how much information is required to make a decision.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And so instead of being two people on either side, logical buyers and emotional buyers, it's actually a dollar sign on one side, which means that they've made enough They've learned enough information to make a decision. And then where they sit on this continuum, right? So on all the way furthest away from the dollar, some people require a tremendous amount of information.

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Some people require very little information. Now, the reason that the information space oftentimes is very incestuous, people buy thing after thing after thing from different people. So it's a lot, a smaller pool of multiple purchase buyers for multiple potential vendors, right?

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And I think the reason for this is that most of the information education space doesn't know how to advertise to anyone beyond low information buyers. And oftentimes this is also entrepreneurs. And so entrepreneurs tend to be a little bit more risk friendly. Like we are risk-philic, if you will, rather than risk-phobic. So we are okay with risk.

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And so we're willing to make a decision with less information. So this is the type of person who makes a decision after five minutes of watching a video and says, sure, I'll spend $10,000. where somebody else might say, hey, I need to check with my insurance. I got to check with my spouse. I need to consume 10 pieces. I need to look at Google Consumer Affairs.

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I need to do a whole bunch of research, right? Here's the thing that I think everyone misses out on is that the reason that most digital companies direct response info type businesses stay small is because they don't know how to sell to high information buyers. And there are significantly more higher information buyers than there are low information buyers.

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And so this is why most of them in general can't pass a certain revenue level. And it's because they basically sucked up all of the immediate six inch putts, the little tip ins that they can make, and actually haven't been able to take the ball from zero all the way to the end zone, right? They can just do five yard, 10 yard runs, and that's about it.

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Typically, that's because the nature of the marketing, the nature of the content that they put out is very offer-driven. Now, as the person who wrote the book on offers, I feel like disproportionately qualified to talk about this, which is that it is the fastest way to make money, which is make better offers.

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Now, when you're making those better offers, you will immediately tip in the people who are on the fence or ready or looking for something like this. These are the most aware customers. Eugene Swartz talks about this in his book, Breakthrough Advertising. Or he states that there's these levels of awareness, right? So at the top, you have unaware.

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So somebody has no idea you exist or the problem, whatever. Then you have problem aware. So they just know they have a problem. They don't know what's out there, but they just know they have problems. So if you ever hear like, do you get up to pee three times a night?

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Or like, are you like, it's playing with your kids, you know, making you ashamed of your, if you're being out of shape, that's problem aware. Now, each of those hooks could lead me down to buying ashwagandha root or buying supplements or buying a gym membership, but it's probable. The next is solution aware. All right, so this is the different types of solutions that exist.

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Whereas if you can increase inputs 100 fold, they are orders of magnitude difference. If you have a conversion rate, let's call it of 2% on your about page. And that would be a benchmark, right? That would be about normal. 4% is the one for everything on school. But let's just say, well, let's just say 4%. Fine. So your average there. Okay, fine.

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Underneath of that, you have product aware. So now you're comparing your product to somebody else's product. And then finally, you have most aware, which are typically people who are existing customers of yours who have purchased in the past that you try to get them to buy again. The last one is where most people stay in most aware and product aware.

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And what you need to do is make promotions, you make offers, and this ultimately gets people to buy stuff. For us with our content, we want to be able to make hooks to people further out in the awareness scale.

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And so the hook should be, if you want to go after a larger market, rather than what I see a lot of content is basically people just making an offer as their content, which is not content, right? Is that you want to make hooks relative specifically to solutions that already exist. That's a problems, which is going to be the biggest bucket.

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And then if you're like, how do you make a hook for the unaware people? It's usually based on curiosity. And so it's literally one of those, if you ever see those, the easiest place to look at this is like Google display, because that's usually where like the oceans of traffic exist. When you see those crazy clickbait headlines that are like,

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Nevada homeowners, something, something like you, you won't believe this. It could be something for, it could be selling solar. It could be selling insurance. Like you have no idea, but it's just the curiosity, which gets you to take down and go down that funnel.

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And there's typically a lot more education that has to occur to get someone from not even knowing this industry exists to being able to make a purchasing decision and call it 60 minutes. I will loop around to like, but okay, I'm getting this. How does this relate to content? Well, hopefully this is relating to content, but beyond that.

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If you're hearing this and thinking, okay, well, what do I do about this? Well, one is that the pre-search, the research you do prior to making your content, in my opinion, should one, be clear as to what stage of awareness you're going after. Are you trying to go after a problem? And those are the wider hooks for most people.

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And I would recommend if you're going to do stuff, that's a good place to be, or just solution aware stuff. Those are good places for you to make content around because it's a little bit wider, you'll get more reach on it. All right. Now, you still want to make it about your stuff or something at least adjacent to your stuff.

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Otherwise, you'll have a meme account that just has a whole bunch of views and no one cares about it, all right? Because the point here is still to build a brand. Here we are. Now we're catching up. If the question here, and the reason that we're even talking about this is because we want to 10x the traffic to our about page, to our site, rather than thinking in increments.

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then there are basically two positions that I posit create the best brand loops or the most reinforcement for a brand. So one is aspirational outcomes. The second is aspirational effort, which is inputs. So basically, you want a type of outcome that not many people in your space or that people who are your customers, more specifically, aspire to have. And this works both B2B and B2C.

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So I'll give you a couple of examples. Gymshark signed up CBOM. And CBOM, if you don't know who he is, he's the best bodybuilder in the world right now. He just retired, but he was basically the goat of the industry for the last six or seven years. He is aspirational for fitness people. They make an association with CBOM in making content. Now, they can obviously afford CBOM.

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You can still make an association with somebody by making content about CBOM. And so that's obviously not as strong, but it's still directionally correct. Now, the aspirational outcome, though, if you are the authority, is that you want to be the person who does it, obviously. Now, if you know the person who does it, that gives you some degree of transference to not 100%.

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Now, for example, imagine I get, you know, my podcast only has Elon, Zuck, Jeff Bezos, whatever, and no one else. It's like, well, you probably make very strong billionaire associations with me because they are all ultra wealthy billionaires or sense of billionaires at this point. That's the outcomes part.

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And I think that this is actually, if I had to be real real, most of you guys are missing this, right? Which is that you haven't done anything yet. You want people to respect you. You want people to listen to your authority, but you can't actually answer the question, why should they?

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Now, you can tweak a lot of things to try and go from 4% to 5%. That would be a 20% improvement. But most times, if you were to take your income and raise it by 20%, you'd probably be happy. But especially if you're earlier on, you want to increase in order of magnitudes.

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And I think if you can simply answer that question, which is why should I listen to you in your content and remind people on a regular basis of whatever that aspirational outcome is, they're more likely to listen. Warren Buffett gives very simple personal finance advice to people. Are there other people who are qualified to give personal finance advice and maybe even be better at it?

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I'll bet you Dave Ramsey is better at giving personal finance advice than Warren Buffett. Why? Because it's his whole business. So he knows what people struggle with probably more intimately than Warren Buffett does. But we will still listen to Warren Buffett because he's $100 billion. And so we figure if it works to get to $100 billion, I'm sure he can help me save up to pay my mortgage off.

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This is an important link that I'm trying to make here. North Face, if we know that their jackets can have someone stay warm at the tip top of Everest, then we can reasonably state that it'll keep us warm on our way to work while we're going from the house to the car and then the car to the place that we're eating or whatever.

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These aspirational outcomes basically serve as risk mitigation for your potential audience and customers. It worked at this super extreme level. It'll probably work for me at my not nearly as extreme level. So that's from the outcome perspective. And I think many of you need to double down on that part, which is what can you say that no one else can say?

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What can you show that no one else can show? These are the aspirational outcomes that people will then listen to your very basic content about. I can make content about personal finance because people are like, he's rich. Okay, he can probably help me save some money. I only get to say this very basic content sometimes because of the authority I have from this big outcome.

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And so a lot of people spend too much time, in my opinion, trying to work around facts. Instead of trying to warp reality and lie or posture or misrepresent yourself, just state the facts and tell the truth. And if the truth and the facts aren't that compelling, change the truth and the facts, meaning change reality. Don't warp it. Change it.

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Make reality different and then state the facts and tell the truth about this new, much better reality. And I'll give you a story that I had. So I don't think you'd mind me sharing this. So I was talking to Mr. Beast about this concept. And I was like, yeah, I know we need to work on our headlines. They're a little bit too clickbaity. And he just, I remember he stopped and he was like,

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And to be clear, if you're later on, you want to increase in order of magnitudes as well, because it will relatively be the same to you. And so going from $1,000 to $1,200 is the same as going from $1 million a month to $1.2 million. But much more fun to go from $1 million to $10 million or from $1,000 a month to $10,000 a month or more.

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Absolutely not. And I was like, what do you mean? He was like, you should absolutely have clickbait headlines. He's like, they should just be true, which is that they shouldn't, they should be baiting the click. But then when the person gets in, it's exactly what they thought it was going to be. The deception comes from when someone thinks it's something and it ends up being something different.

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That's where you have the conflict, right? And I think a lot of you do this. And part of the problem is when you make these outlandish claims, you actually decrease the audience's trust of you every time you make a claim and then you don't support it. So then why should they believe the 27th time you have an outlandish headline

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for a short or a long that you make in your content when the other 26 times they didn't believe you because as soon as they clicked, they found out you were lying, right? We're fudging. Either way, not good. Now, if you're like, well, Alex, I don't have an aspirational outcome. Well, big thing is almost everyone has an aspirational outcome. You just need to get narrower on it.

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All right, so let me explain, and then I'll explain the second half, which is aspirational effort, but let's just focus on outcomes right now. Aspirational outcomes, you can be like, I am probably, I am the fastest reader in all of Nevada in the second story of the acquisition.com building on the left wing. I'm probably the fastest reader. That's a world champ thing.

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So all we have to do is get narrower or more specific with our outcomes to make them more compelling. So we're still stating the facts and telling the truth. We're just leaning into our advantages. So if you happen to be, you know, like, I think Layla and I together are probably more unique than either of us apart, right? Otherwise, I'm just a 35-year-old white guy.

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I have basically nothing going for me in terms of being unique. There's plenty of 35-year-old rich white guys. But how many of them work with their wives, okay? How many of them are Persian? Probably fewer. How many of them are first generation? Probably fewer. How many of them were self-made? Probably fewer.

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How many of them came from one space and did it in multiple spaces in physical products and software and services? How many of them had brick and mortar experience? Not many. Right. And so I can have I can say things that no one else can say by just narrowing down and basically adding more color or nuance to the aspirational outcomes. What many of you will be relegated to do it.

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is first off, you need to talk about whatever that aspirational outcome is. And again, you want to be, you can still be mayor of a very small town. You just need to make the town small. So instead of trying to say that you make the best business content in the world, you're just not, you're not going to do it because no one's going to believe you, right?

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You got to be the best business guy in the world or top hundred, whatever, to make that kind of stuff. Now, most of the guys who are top business guys in the world, this is B2B, obviously, they're just actually independently famous because purely, and this is what I'm trying to, I'm sure this is what I'm trying to like get across here. They are famous because of the outcome.

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Bezos is famous not because of his content. His content is famous because of what he's done. Jensen Huang is not famous because of his content and his clips. He's famous because of what he's done outside of social media, inside of the real world. Then people want to listen to you. And so the outcomes still matter. I don't care what other people tell you. The outcomes matter. They are the proof.

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And so most of the large increases in revenue that occur come from order of magnitude implementations, things that change the dynamics of the game. And so one of the obvious ways of doing this is building traffic or increasing traffic through making content.

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They are the pudding. And so you have to double down on just niching down, just being narrower about what you can be exceptional at. Everyone can. It's just most people try to claim they're exceptional at too broad of a scope and it makes it unbelievable.

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Now, the more successful you become in whatever your particular endeavor is, the more general your fiefdom, your kingdom that you're in charge of can be. And so if you look at my evolution from like local fitness celebrity to or rather local fitness authority, going to gym, right? To then gym authority, okay? To a national education authority, right? To probably now international business, right?

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These are things that evolved in time and they're stair steps. One has to come before the next. They are contingencies. One cannot happen without the other. And so if you're going to come into whatever space you're getting into and you want to make content and be seen or perceived as an authority, The biggest way of doing that is accomplishing something.

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And then the next one, and this is now we can transition to aspirational effort, is going to be demonstration of expertise. What is the function of authority? Let's think about this for a second. What is the function of authority? The function of authority is to decrease the amount of effort that someone needs to think about before they make a decision.

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Let's do more work, but you have to in order to grow. So either you work overtime or you bring someone else in to work overtime or you do both, which is what I recommend. And that means it's going to be hard, which is why most people stay stuck.

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So you might be wondering, why doesn't the ratio still cover it for a super manual business versus a business that's entirely automated? The main reason is lumpiness. You have to bring people in for outbound that are not going to be proficient.

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So you're going to have to incur the cost of new SDRs that either aren't going to work out at all or aren't going to work out in the beginning and then eventually going to work out. So you have to incur that cost.

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But imagine incurring that cost and then also incurring the cost of new salespeople who are actually going to be trying to convert those prospects and they're going to suck and they're going to lose opportunities. And so you're going to be paying them while they literally close fewer sales for you. So you lose twice.

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And then also sometimes you spend all this money and time to get them hopefully to be proficient and then they aren't. So they just lost you money three different ways. Real quick, guys. Thank you. Thank you. Thank you. You guys are awesome. This podcast continues to grow. We had our highest month ever last month, which is huge. And we don't run ads to grow the show. It's just you guys.

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It's just you guys. And so if this podcast has provided you value, if you could text it to a friend or you could send it on Slack or share it on your Instagram, that is how this podcast grows. And that is why I continue to make them. It's because of you guys. So thank you guys, first and foremost. And if you have it in your heart, if there's somebody who could use this, then please send it.

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Lots of love. Enjoy the rest of the podcast. The third component of this is the delivery piece, which is like, okay, I'm going to have to onboard and hire all of these other people. And if you have anything that's like higher expertise, then forget about it. It's going to take even longer for you to both find these people and then also to train these people up.

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But again, recruiting itself can be a super expensive task. There's recruiting firms and it usually costs you 25, sometimes 30% of their first year pay. And if you're paying someone $300,000 a year, it's like, You're going to pay 80 grand just to get somebody, let alone hope that they're proficient and you still have all this onboarding.

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So you have this lumpiness of people that aren't going to be effective. And if you're at three to one, boom, you're done. Like that three to one disappears real fast. It's like you have this lumpiness of like, okay, boom, we got these new SDRs in. Okay, now this is coming back up. But then this starts growing down. So now we start at 20 to 1 or 30 to 1, but it's more like a wave.

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It undulates with the efficiency of the business and how stable it is as you're scaling. And the faster you're scaling, the more inefficient it's going to be. So that's why you need to have as much as you can in terms of LWD CAC. It's padding. The third piece here is that we just went over it, LTV to CAC. One, we wanna make sure that we're doing this off of gross profit, not revenue.

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But when I actually am honest with myself and I think, huh, how much is number one going to actually improve the business? If I say, well, I think I'd maybe get us a 5% improvement. Well, if I have a guaranteed 20% decrease or decrement in performance and I have a 5% incremental increase in performance, do I want to take a 20% guaranteed loss to have a potential for a 5% gain? Probably not.

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And secondarily, we wanna make sure that if we are highly leveraged, then we can be at three to one. But if we're low leverage, we wanna be at 20 plus, 21 or higher. And again, this sounds crazy and unrealistic for a lot of people. I get it. Fine, at the very least, be at 15 to one. Please, for the love of God, I promise you it's possible. You just have to work on it longer than you expect.

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Which brings us to number four. Let's dive into it. Number four, I've said a lot about this, which is that the one to three million area is a huge swamp, right? We call it the swamp, at least at acquisitions.com. And why is one to three million so hard? Now, we've noticed that it's hard, but we're like, why is that range hard? Now, for those of you who are like, this is not real for me.

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I'm just trying to make my first $10,000 a month. Just keep listening, because believe it or not, some of these things will apply to you. So if you're at one to three million dollars, why is this one of the hardest periods? Because usually from zero to a million, you can usually do it with like you and two, three people. It's not that hard for you to keep track of the team.

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You can usually run very high margins, especially if you're a sole proprietor. You're basically just selling your time, which is fine, right? You don't need to obsess about your passive income before you max out your active income. Good idea. By the way, a lot of billionaires, very high active income, FYI.

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Anyways, as you're scaling up, that first $500, $800, sometimes $1 million a year is actually, in some ways, somewhere more profitable than the next $2, $3, $4 million. Because you have to install this level of infrastructure because you're like, I just can't do it anymore. Now, you can always just keep jacking prices, and that's fine. And I'm a big advocate of that.

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But if you're like, no, I think this is the price that I want to service at, and I want to do more volume, then you're going to have to put in more infrastructure. But this is the math that I just realized is why it's so hard. So let's say you've got a $2 million business. You're right in the middle of the swamp, okay?

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And you probably noticed, anecdotally, for those of you who are kind of like in this business world, there's a lot of people in the $1 to $3 million range. Like a ton, ton of businesses. To be fair, doesn't mean they're making $1 to $3 million in profit, which means they're doing $1 to $3 million in revenue. Big difference. All right, but let's say we've got a $2 million business, okay?

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And let's say that they're doing 20% margins, all right? So they're doing $400,000 per year, in EBITDA or profit, okay? So we have $400,000 here. Now, here's the shtick. At this point, for the business to evolve, for the business to level up, the entrepreneur typically has what I would consider an impossible choice. You have to choose one of two things, and sometimes the option is both.

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which is path one, you say, I need more help. Instead of getting more help, I'm just going to work even more. I'm going to go from 12 hours a day to working 16 hours a day. I'm going to stop taking weekends off, and I'm going to basically get through this hump so I can push my way to $10 million a year, which you can do. It is hard.

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Or I'm gonna bring in somebody who's gonna help me get there and I'm gonna maintain a relatively long schedule, but still, you know, not the same as working 16 hours, seven days a week. Those are the kind of the two impossible choices, which is like other person. Here's the tough part.

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If you have $400,000 in profit that's left over, if you wanna bring in a stud who's gonna really help you there, you're probably gonna be looking at $250,000 per year in all-in comp, kind of at a minimum, to bring somebody who's a real star into the business. Let's look at that in comparison to what the profit is for this business.

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You're looking at risking more than half of your income on one person with the hopes that it's gonna work out. But what happens when this person comes in and then they aren't that good? They don't expand your capacity. It's like, well, shoot, I just lost half my profit for a year and then I'm still not further along. This is why this is the swamp.

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And I've just spent a lot of time thinking about that because I was like, why is one to $3 million so hard? You need the help, but you don't have the money to afford the help. And so you either just got to go overdrive and go nutso mode, right? Or you make a huge bet proportional to what you have in terms of net profit to bring this person in. And that's why it's so hard.

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And so if you're in the swamp right now, my encouragement to you is this. I have almost always been the like, I'm going to go into overdrive. And... I'm going to hire the person.

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And so what's ended up happening is that there's all these little 5% improvements that I think could happen, but there's only like one or two, 20, 30, 50% plus improvements I think we can do in the business. Some of these things I just choose to never do. And I'll try not to stay explicit here, but this is what reminds me of this concept, which is that some shit stays fucked.

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Because the idea is, what if I just do things that are more unscalable but still generate higher profits for the business so that I can afford to take two or three shots with somebody else who's coming into the business knowing that I'm not going to get it out of the park on the first shot. I mean, if I do, I'm stoked. But I want to win either way.

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And so either I'm going to win with more profit faster or less profit slower, but I want to make sure that I'm guaranteed to win. I kind of do this as a plus strategy. scenario. And then the fourth thing we just covered is why one to three million is the hardest. And the main thing is, is cash flow and time.

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You don't have the time and you don't have the cash flow to do more work, but you have to in order to grow. So either you work overtime or you bring someone else in to work overtime or you do both, which is what I recommend. And that means it's going to be hard, which is why most people stay stuck. So that's number four. Number five. So 2024,

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for, was probably the first year that I didn't have FOMO. So fear of missing out. It is the hardest part of business is staying focused. It's the hardest part. The reason you hear Bezos talk about it, you hear Zuck talk about it, you hear Jobs talk about it, you hear Elon talk about it. You have to be incredibly focused on what the points of greatest leverage are in the business.

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The reason that this was a big lesson for me, not the focus part, I obviously talked about that, but I was like, why was this year different? Why was this the first year where I didn't have FOMO? It's actually because the idea of rush is where the fear of missing out comes from.

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It's the arbitrary timeline that I set for myself that I just grab from thin air, and then I measure myself against this thing that I made up to make myself miserable at all times from whatever success I'm achieving. In thinking about that, I've coined the term for myself, which is that rush is imaginary. It's made up. It's completely made up.

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There's only one caveat that I'll make to this, which is, and if this is you, you probably already know, if you have a business that has a tremendous network effect, and there's a very small amount of people, or even a big amount of people in that network that you're trying to gather towards, then yes, it's likely that you have a winner-take-all business model, and in which case, you've probably already raised a ton of money, and you're probably trying to aggressively grow to capture that network so that eventually you can turn something into a profitable business.

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Fine, for everybody else who's not running a tech platform that's trying to build a network effect of some sort, you don't need to rush. There was Ani, actually I don't think her episode's come out yet, but anyways, I'm gonna give you a sneak peek. So I was talking to Ani Truong, and she has nail salons, okay?

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And so she has one core nail salon that worked really well, and then she decided to partner with other people doing like three or four other nail salons. And the biggest issue she has for growing right now is that her partnerships are kind of a mess. I'll just put it like that. Why did you do these partnerships? She said, because if I had more locations, I'd make more money.

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And I said, why didn't you just make more money with your existing location, save up the cash, and then open a second location all for yourself? The thing that I kept trying to tease out of her is I was like, she was just in a rush. Like that was the reason. She was just in a rush. There's no actual reason for have three or four other different random partnerships with each of these locations.

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And the thing is, is that some of you guys are, you do this. There was a guy who was here at our headquarters yesterday. He has a TikTok shop management thing, right? Where he just like helps people start their TikTok shops for e-commerce businesses. And he was like, but I also have this brand that I started on my own using TikTok shop and it's doing really, really well.

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i wanted to make a video about five business lessons that i just learned crossing 250 million in 2024 and i wanted to make this because like i think at all levels you're always growing like when i was at one million dollars a year you know i uh i had a certain amount of lessons that i had to learn i think it's a 10 million there's certain lessons i'd learned 100 million there's certain lessons i'd learned this last year there's five lessons that are i would say new but would have applied kind of retroactively to all

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But I also want to start investing in, and I'm like, dude, what's the rush? And so the counteraction, like how do you counter the rush? How do you counter the rush? And I think the way that I have countered the rush is to look at the people who have the ultimate version of my business. Who are the people who are 20 years ahead of me? What do their businesses look like?

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You just have to accept that the business will not be perfect, but your chase of perfection will actually make your current business worse because you're constantly changing things. But let me spell this out one more level. So let's say you have your 20% loss. Now, let's say you do something that is good. You start going up, right? 20% loss, it starts going back up.

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And what's interesting about this is that the vast majority of them have one massive business. And in seeing that, I was like, huh, almost none of them have multiple massive businesses they started. Elon is, of course, the one exception that everybody wants to bring up, right? For people who haven't just generated $100 billion in a year.

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If you haven't done that yet, then maybe consider every other person on the Forbes list that just did one thing for the entirety of their career. And it's like, basis has blue origin. Yeah, after 35 years of Amazon, you've got Mr. Panda, still doing, he's like, but wait, he owns the Cosmo. Yeah, but he also did that after 45 years of Panda Express, and Panda Express is still his cash cow.

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Okay, I've got this restaurant, it's working well, so I'm thinking about starting this agency, right, to help restaurants. It's like, dude, What is the ultimate version of this look like?

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The ultimate version of this look like either you go all in and you build an enterprise agency that only works with very large restaurant chains and those tend to be sticky and those tend to be valuable businesses. But if you're like, well, I'm only dealing with small SMB restaurant owners for my agency, show me one.

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One agency that service SMBs in that $1,000, $1,500, maybe $2,000 a month mark who has a $100 million plus business, even just like revenue. Just show me one. Why doesn't it happen? Because it's a bad model. Every single agency goes upmarket and they serve enterprise and it's become really big. Look at Ogilvy, look at Vayner, look at NP Digital.

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All of these are massive, massive companies that only serve as really the Fortune 500. Why? Because they're sticky. Because if you have volatile customers, you'll have a volatile business. If you have a volatile business, you're not gonna be able to weather the storms. If you can't weather the storms, you're not gonna last long. If you don't last long, you're not gonna get big.

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How do you counteract the idea of rushing? You have to look at the end state of the business. What is the ultimate version of my restaurant look like? It might be 2000 locations nationwide. What is the ultimate version of my agency look like? It might be Ogilvy and Mathers, right? It might be we're doing $5 billion a year and let's look at the number one person in the space.

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What is the ultimate version of my lawn care business look like? Maybe it's a franchise. Maybe it's you privately hold it. But no matter what it is, it's probably not three different businesses that you're trying to start all at the same time because you're in a rush. Because the thing is, is that rush is what guarantees you're never going to get big.

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And I'm saying this because this is something that has plagued me my whole career. And so it's just this last year was the first year that I didn't have FOMO. And I was like, why is that? And I just think that I've just failed and messed it up enough times to be like, I just have to stick with one thing. And here's the fucked up part about this.

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You have to accept that you can't sleep with every girl. We can't date every guy, whatever your preference is. The point is, our life is so limited. We just don't have that much time. If you want to do big stuff, you just don't have that much time. Because of that, it's like you just have to accept the fact you just got to pick.

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But what happens if you at the same time say, oh, well, now I'm going to start changing something else. Basically, you incur this permanent 20% decrease because you're always changing something. So you're always 20% below where you should be in the business. 20% is a lot. Oftentimes in the business, my business has done exceptionally well and I just let them breathe.

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And you could have had four other timelines where you could have done each of these other things all the way to their extreme. But the likelihood that you're going to do all four of those to the extreme when you start all four of them at the same time is zero. It's not going to happen. The first, business is built on hard choices. Business is built on the amount of no's that you're able to make.

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If you can't say no at the beginning of like, I'm not going to just pick one of these paths, right? One of my favorite little definitions of deciding comes from the Latin decadere, which means to cut off. Like if you want to decide, you have to cut off, you have to eliminate things. If you have three different paths or four different things that you're considering, pick for the love of God.

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And the reason and the thing is, is that you have made up some number because some person you know makes a certain amount of money or some person you know, you thinks that this amount of revenue is cool. And so you're like, well, I wanna be cool, so I wanna hit that amount of revenue.

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And because you don't know how to grow the business you're in, you only know how to get to 100,000 a year, you only know how to get to a million dollars a year, you only know how to get to $3 million a year, then your way of growing is doing more $3 million businesses, when the reality is that you have to confront, why is my $3 million business not a $10 million business?

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And you have to figure out that problem. That is the hard work. I talked to a lady yesterday. She was stuck at a million dollars a year for 10 years. I said, why haven't you gone to $3 million a year? Like, what stopped you? Because she had a very clear motto. I was like, why don't you just double how much you're doing? And she was like, well, it's a pain. And I was like, oh, because it's hard.

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Because it's hard. She's like, no, no, it's not because it's hard. And I was like, well, then why haven't you done it? She's like, well, it's just like, it's just like, it's inconvenient. And there's like, it's more, it's more time allotment and all this stuff. And I was like, yeah, that sounds like hard. It sounds like hard.

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It's hard for us to hear that we're not willing to do hard things because the hard changes. So the hard is constant, but the nature of it changes. Just like suffering as a human being is constant. It's not gonna go away. There's nothing wrong with you because you're suffering while you're in business. It's just that the nature of the suffering changes. In the beginning, no one knows you exist.

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And that's tough because you feel ignored and irrelevant. And then you start to let people know about your stuff. And then as soon as that happens, you have a different kind of heart, which is that no one wants to give you money. And then all of a sudden, people start giving you money. And then what happens? Then people start complaining because your thing's not that good.

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But all of these things are hard. And so we have this idea that it's this rocky cutscene that we're going to be fighting. It's like we've got to just keep gritting through it. But it's like, no, we are so equipped to save our egos. that we will come up with a hundred ways that our hard is not hard. It's different because we're special, right? But the reality is hard morphs.

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That's what makes people get stuck is because they learn how to conquer one hard, but not the next kind of hard. I think that a lot of the hardness is sometimes learning to say no. It's learning to focus. That's the hard part. It's not getting punched in the face. It's being willing to let one of your children die. to let the other one live. We get the Sophie's choice.

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We actually do have to do that in business all the time. And so you have to accept that there is a life in the future that you will not be able to live. And it's actually, it's honestly, it's acceptance. And this has just been a really good lesson for me, which is like, there are opportunities that I think I could crush. And I think they're amazing. And you know what?

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Because here's the other part that no one tells you. If you change nothing, you get about a 5% guaranteed improvement. Think about how crazy that is. If you change nothing, you just 5%, you can book it. Think about GDP. Partially, some people are like, oh, that must be in relation to education, which in the US it certainly isn't.

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I'm never going to be able to do them. because I still have the one that I'm working on right now. And I have to continue to say yes to this. And by saying yes to this, I have to say no to everything else. These have been the five big business lessons that I've kind of learned more recently. And I thought you might enjoy them.

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It could be in relation to technology in terms of GDP improvement, or it could be an increase because of population, which in the US, there's no population increase, or not really. For me, I just kind of see that across all businesses that if you just let people do stuff, they just get better at it, right? People get more efficient at it.

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I'll leave you one tactical framework that you can kind of use to think through this, which is, this is actually from the investing world that I borrowed as an entrepreneur, which is called ICE, all right? And so it's an acronym. I stands for impact, which is like how big, that's that 20%, that's that 50%. How big of an impact do I think this is going to make on the business, right?

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If I had to make, like, if this works, it's going to do this. The second is, well, how confident am I that it's going to work? That's the C, which is what's my confidence level? So I got this big thing with low confidence or this medium thing with high confidence. I'll probably take medium with high confidence.

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And then the third is ease, which is going to come into a combination of how many resources are we going to have to deploy to do this? And also what's the timeline that we're going to have to do this on? Impact, confidence, ease. And so we actually do this. Like I have this massive sheet that it's called growth and I have it in all caps. This is how I like...

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how I get my ADD out, is I put it all on this list, which would probably be the second big tactic, is that I have every big idea that I want to try, and I have to get it out and spell it out and say all the things that I want to do, and I just put it somewhere. Because the team can't handle the amount of ideas that I have, and probably your team can't either.

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You have to just scratch that itch in some way. I do it by documenting so I don't forget it, and then whenever the team has more bandwidth, I go back to that list and I'm like, all right, let's order this. Which one has the highest impact? Which one do we think is going to work? Which one's going to be the easiest?

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We tabulate those together and we're like, okay, this is the one that we're going to try. This one we know has a 30% shot or a 50% chance increase. That's basically thing number one. And it has, I've tried to teach this down our portfolio. And also what we do at acquisition.com is that you just need to be willing to

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to leave some things not perfect so that the business can incur as few guaranteed costs of change. And when you are going to make a change, make sure it's worth it. So, so far, number one, we cover the cost of change, right? So this is making sure that you are only taking bets that have 20% or higher upside to be worth the guaranteed cost that you're going to incur.

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And the framework that I use is ICE Impact Confidence Ease. All right, so that's number one. So the second thing is I used to have this idea about the virality of products. So I've talked a lot about referrals, talked a lot about word of mouth, and I still obviously believe in that.

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But I would say that I've had this big pendulum swing in the very beginning of my career, you know, and especially if you're, you know, sub a million, you just got to promote, right? You just got to let people know about your stuff. No one knows you exist. You got to advertise, right? You got to learn how to sell. Cool. That's zero to a million. No questions asked. That's what it is.

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Now to expand beyond that, I was like, okay, we kind of pendulum swing back to like, we got to, we got to make it super viral, right? Word of mouth is, you know, the best way to, to grow a business. But I've thought more and more about this, and I think that it's an it depends answer.

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Now, there are some products that you want for sure to have people who buy and then buy again, that you want them to, you know, reoccur with you, as in like if I buy a Coca-Cola product, I might buy, you know, a can today, and I might buy a can at a restaurant later this week. And so it's like, am I on a subscription? No, but I buy again and again and again, right?

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stages of business growth for me. So the first one was the cost of change. And so it's like, what does that really mean? So it was the first time that I've actually quantified how much does changing something in the business actually cost? So if you would imagine a straight line, right? It's saying, okay, this is normal business activity, right? Straight line is going across.

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Or you have, you know, your internet, which you just never cancel out of, right? Either of those are things that are recurring, they have high revenue retention. But that is different than virality, right? That's very different. So on one level you have, does it stick? On the other level you have, do people share it with other people?

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This is the nuance of understanding that's kind of shifted for me this year, which is that some companies, like especially B2B, There's sometimes disincentives for a customer to bring in a competitor of theirs, right? If you service two types of similar businesses, they have literally a disincentive to tell people about it.

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Like they don't want anyone to know how you're helping them in whatever way, right? So that's kind of like thing number one. So it's like you have a negative pressure on word of mouth.

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The second issue is that even if you didn't have negative pressure on word of mouth, there has to be some sort of density in terms of the frequency of communication that your customers have with other potential customers.

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So if I've got a guy who runs a metal shop that specializes in aerotech, for that guy to have very frequent communication with other aerotech companies that might use my software, my internal tech, or whatever it is that I help them with, why is he going to be talking to competitors? And if he is talking to competitors, like why would he want to share all my stuff?

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You can understand why sometimes it's not about word of mouth. And this is just a nuance of understanding that I would think is kind of my belief set is broken because I was very hardcore on like everything can grow on word of mouth, period. That's just not always the case. The gold standard should absolutely be revenue retention, bar none, full stop.

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And I can say that with absolute confidence, no matter what business you're in, if you're B2B or B2C, you want to be able to get recurring or reoccurring revenue. But the virality typically is going to be more on the consumer side. So if you have a really good soda, you as a customer is not like, oh, I don't want to tell my friend that this soda is really good. Yeah, I've got this shirt.

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It finally fits me. Cool. Well, do I know other guys who are built more like me? Yes. Do I have high frequency of communication with them, at least digitally? Yes. OK, cool. So I'm going to have there's some viral kind of coefficient there that goes in. And that applies to also consumer brands that are not tech. I want to be really clear about that.

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For those of you who have the dropshipping, e-commerce, retail products, it's like you still absolutely need to have word of mouth that grows the business. There are just some businesses that are just never going to have that. And for everybody, you want to retain. So that was lesson number two.

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From a tactical perspective for that lesson, the big thing I would just want to measure is what percentage of customers that I have at the beginning of this year that 12 months later are still buying from me. That's the metric that we look at. We have 100 customers at the beginning of the year. And at the end of the year, 50 of those people are still buying.

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So this is, you know, day zero or, you know, Jan 1, whatever. Jan 1. And then December 31. How many of them are still buying? If I have 50 versus the 100, then I have 50% revenue retention. Now, you can have logo retention, which is a second nuance of this.

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Logo retention is of the 100 customers, do I have 50 customers, or did I go from 100 customers to 25 customers, but those 25 customers really like me, and they now spend twice as much? So that's the difference between revenue retention and logo retention. For me, we look at revenue retention because that's what we care about.

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It's like, okay, if we just know that these 50, now that they're in, are just going to keep paying and potentially even growing between 50 to 100 next year, this is a monster business. This is what we look at and we obsess over in any business that we invest in.

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Number two is making sure that the highest priority for the business is going to be revenue retention, not necessarily virality because not all products are meant to be viral. But if you are in a business that is consumer focused or something that doesn't have one, a disincentive to share,

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Now, let's imagine we want to change something, right? So that's like our normal revenue. But then we decide, you know what, I'm going to change something in the business. So what ends up happening is this little line kind of dips down.

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and a high frequency of interactions between your customers with one another, people who have basically high overlap, so they talk to lots of people who could potentially buy your product. If these two things are, you have a high disincentive and you have low frequency, then you're just not going to have virality in the product and you don't have to worry about it.

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But if you do, then obviously you want to have both. Number three, I've been very obsessed with the concept of LTV to CAC. I've talked about it a lot, which is basically how much does it cost you to customer versus how much money you get from that customer over the lifespan, specifically in gross profit, not lifetime revenue.

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Now, the reason I like to always delineate this, and I say LTGP, which is a mouthful, is because most of the literature that exists on LTV, so lifetime value for a customer, how much they pay you in gross profit over time, is typically written in the software world. And software tends to be virtually 100% gross margins in most businesses.

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Many businesses look at that literature and then say, oh, well, let me just say someone stays with me for 10 months, they pay $100 a month, therefore my lifetime value is $1,000. Well, that's only true if you sell information, media, or software. Something that has zero incremental cost. But a lot of businesses don't have that.

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If you sell chocolate chip cookies, and the cookies cost you $20 for each of those $100 shipments. I mean, these are expensive cookies, but let's just go with it. So this costs you $20 for every $100 shipment. Your lifetime value is not $1,000. So we have our $100, right? Times 10 months. That's the revenue.

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And I've estimated just for my kind of like this, again, there's no science behind this, just my estimate, that I get about a 20% decrease in effectiveness across any function that I'm going to change, especially if it's manual. Now, if you split us a headline, that's different.

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What we're looking at is $80, because we have to take out the 20 in cost, times the 10 months, which actually equals $800, which is our real lifetime gross profit, which in the business world sometimes where people refer to as CLV or LTV, they all more or less mean the same thing, which is how much money you're gonna get from the customer.

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Now, I put this as a frame for the big lesson that I had, which is in the software world, the big rule of thumb is three to one. That's the big rule of thumb. I actually, now having worked with a lot of different businesses and invested in different businesses, I think there's nuance to it. So let me explain. This is actually pretty cool.

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So there's three components to a business that I think influence that number. So you have the attraction component, which is the advertising. How are we advertising? How are we getting people in? How are we letting them know? How are we generating leads? Then we have the conversion, whatever your sales motion is, right? Sales. And then finally, you've got delivery or fulfillment.

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How are we going to get people whatever they chose to pay for? So if we have these kind of three functions, the extent to which you need to have high LTV to CAC is predicated on how manual each of these processes is. So let me explain. If you have paid ads, which I would consider very high leverage and very, like one person could write a gazillion dollars of paid ads, high leverage, cool.

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That's number one. If we had a conversion process that's through a checkout page, so it's automated, then that's gonna be something else that's gonna give us leverage, okay? And then third is let's say that we have software as our backend that has unlimited, like we have no supply limitations, there's no logistics limitations, and pretty much it just works.

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If you're in one of those businesses, then you absolutely can be at three to one LTV to CAC over the long haul. Fine, you can even be at 1.5 to one. I mean, it wouldn't be ideal, but depending on the size and scale, you could still make money doing it. Put $100 in, get 150 back, do it over and over again. If that's only true for them, what is it for a construction business?

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What is it for a plumbing company? What is it for an e-commerce business? The other extreme, I'm going to just paint the extremes and you can kind of understand the middle. If I had, instead of paid ads, I had manual outbound. So outreach or whatever you want to call it. Outreach, reaching out to people one-on-one with a team. And then from a conversion process, I've got one-on-one sales.

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But if you're like, hey, we're changing our onboarding process, or we're changing our sales process, or we're changing our outbound process, or we're changing our...

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and then from a delivery process, I've got, call it concierge, one-on-one, or even many-to-one services, then I'm gonna want an LTV to CAC ratio that's gonna reflect that. For me, if I had a business like this, and this is gonna shock some of you, but just bear with me. I'm going to want this thing to be like 20 to 1 or more. Now, some of you guys are like, there's no way. It's impossible.

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I would say I've made the material, the vast majority of the material wealth in my life at 30 to 1. or a higher, and I've done it multiple times. And during those periods of time is when a lot of the, basically the wealth that I've accumulated has come in. But in the times in between, instead of trying to scale something that's at five to one or eight to one, I'm just gonna continue to tinker.

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I'm gonna stick with my one location. I'm gonna keep working on the model and just keep tinkering with it until eventually we get the economics that we need in order to scale. What if I'm doing paid ads, we do one-on-one sales, and we sell media or information or something like that? Then you're going to be somewhere in between.

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something that people are involved with we tend to get a decrease immediately of 20 in a performance right which is pretty significant as soon as i realized that we had almost this guaranteed cost of change which is about 20 i was able to quantify what things were worth doing because if you're anything like me i have like this big list of stuff where i'm like man we should need to improve this we need to improve this we need to prove this and i have all these ideas of things that i think that'll improve it but

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But I have this as my rule of thumb is that the three-to-one only matters at the companies that have 100% scale, 100% leverage across all three components here. If you have manual cost L3, you're going to be at, I would at least want to be at 20 to 1. I shoot for 30 plus. A lot of people can't even believe that. Fine. So, you know, fit it to whatever your goals are.

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I really do believe that you can just keep tinkering with the business, keep tinkering the offer, and find a way to get it so that you can have a huge discrepancy between these two numbers. Because that's what allows you to scale. If you want to scale a business that's more manual, which if some of you guys are listening, 78% of businesses in America are service-based businesses.

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So this applies to you. As you go into colder and colder markets, you will convert a smaller percentage of customers. These are customers who are less likely to purchase from you, but you have a bigger pool of people. So that's kind of the trade-off. But when you go into those colder and colder markets, smaller percentage convert, meaning it costs you more to get those customers.

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Basically, you sell more people, you're going to have more infrastructure that has to get built into the business. So you have layers of management that will start costing you and not necessarily always be alpha. There can be value added. With these two things that are working against you, you have to have

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this very large discrepancy between what it costs you to get a customer and what you're gonna make from that customer in order to weather that storm and allow you to kind of grow into that, you can almost like grow into your LTV to CAC, which is kind of how I think about it.

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So if you're thinking about this for you, number one, know what your true LTV to CAC is and make sure you're doing it off gross profit, not off of revenue. And then number two, if you want to scale, make sure that your LTV to CAC ratio is appropriate for the level of leverage that you have within your existing business across all three functions.

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Welcome back to the game. This is a throwback ep. Last year, after our $100 million leads launched, the top 10 affiliates had 10 hours to ask me questions about their businesses and do it for their audiences. And my team went through that whole period and compressed it down to the absolute best moments. Enjoy.

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But most people want to keep hitting these income goals rather than looking at the metrics of the business that are actually going to drive the long-term goal. Because anyone can market their way to $100,000 or a million a month, even with an app like this. If you blow enough money, enough people find out about it, you can do it.

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But then you can only maintain it as long as you're spending that much money. The moment your spend drops, your income drops. And that's not a business that I want to be a part of.

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I like that. And I mean, then at that point, I would just look at... I tried to model as closely as I possibly can the number one player in the US from a UX perspective, from the selection of titles, all that kind of stuff. And then I would see if my metrics change if I do that. If not, then it's like there's some assumption that I'm basing this business off of that's not right.

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But a lot of women like the going to the hair salon and having that exchange. And so I would probably build a business around services in general would be my way. And then I would continue to scale that. And you could do that at a local chain level and you can make a lot of money doing that. Or you could do it at a national level, which would be like professional services.

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A meta skill is a skill that helps you acquire more skills. Learning how to read is a meta skill. Learning how to learn is a meta skill. With the broadest brushstroke, all the way chunked up, learning to learn well, quickly, and retain information and be able to implement it is a skill. You give 100 people a course that's free.

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The difference between the people who are going to be successful and not successful are the ones who already have sufficient metaskills to be able to then use the information and implement it. At one polar extreme, you've got somebody who's completely incompetent, who you have to teach them how to turn on a computer.

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And on the other extreme, I can say, go build me a company and the person can do it. So this person can translate a directive into each of the sub buckets and knows how to do that. And so it's really like your success percentage basically is predetermined by how low you break down the skill requirements for someone to be successful.

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So like the reason that I write the books at the grade level that I do isn't so that people who are experts don't get value from it. It's so that it makes it even easier for experts And it makes it attainable for people who don't know.

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So I can get 70% of people who read the book to get leads versus 10% of people to get leads if I just cut out some of the steps and made assumptions about their skill level. The last 10% or 20%, the people who are experts are still going to benefit from. I'm just also going to include, turn on your computer. Here's how you do that.

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And from the software perspective with what you're doing, that's also how you get a way larger percentage of your clients to activate. typically we make assumptions because we assume that every customer is just like us. And so they have the same meta skills as us and they have the same interpretation or perception of the world and the UX. And so that assumption isn't true.

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Like all you have to do is, and I'm sure you've done this, like you look at people scrolling on your app and you see the heat maps and you're like, why are they clicking that button? Because they have different skills and experiences that they're bringing to the table.

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And so then we just continue to accommodate it, break it down to the level that you could show it to a three-year-old and they would immediately know how to use it. Like the fact that babies learn how to use iPods is an indication of how simple they have made it to humans to use. And that's why they have such mass adoption. How will you teach someone how to learn? We already know how to learn.

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It's just that most people don't know how to teach. Everybody learns stuff all the time, right? If you touch a stove and it's hot and it burns you, you learn not to do it again. Learning is natural. We all learn. But people who want to teach a specific behavior don't know how to do it.

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And so it really just comes down to three things, which is what do I reward, what do I punish, and what do I extinguish, right? So reward is you give a carrot right after someone does something. Punish is you zap them or you smack them after they do something. Or extinguish is you do nothing, right?

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So if your wife walks in and she got her nails painted neon orange and you don't like it, you might not want to punish her because that's probably going to have negative ramifications in the rest of your life. But you might extinguish it. So you might not say anything about the nails, right? Or you might say something different. She's like, do you like my nails?

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I might say something back like, I'm happy that you got what you want. What we're doing is what behavior are we training? And so if you think about teaching as training, I think it's a much more useful word to think through. Because at the end of the day, you have only taught someone if their behavior changes in the same context.

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As in, if I want you to say these words when the phone rings, if I say, cool, we're going to put you through this training, and then the phone rings, and then you don't say the words, you have not learned, and I have not taught you.

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And so it's how many times can I simulate this experience, this stimulus, the context, so that I can have them do the behavior I want within the context that's going to trigger it and then reward them immediately. And that's how you have a feedback loop that trains people to do something.

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No, you're good. You're good. I would focus almost exclusively on meta skills, teaching people how to learn step one, and then teaching people the things that are the next level underneath, which is learning how to write, learning how to read, learning how to speak, learning how to do math. Like those are the building blocks of everything else that follows.

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And in the school of Alex or the school of Formosi, everyone passes only when you learn. There are only 100% and you continue to do it until you learn. The arbitrary division of grades along age is ridiculous to me. And I think if there were a lot more clarity around the goal, which is like, until you can read 10 pages out loud without making a mistake, you do not move on.

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If you can do that in a day, fantastic. If it takes you a year, okay. I don't judge you on that. It's just how long will it take you to learn the skill? So a good buddy of mine, Dr. Kashi, taught an autistic kid how to read. He couldn't stay still reading. for more than one word at a time. And then he would like have fits or whatever.

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And so he came to train the child on how to read with a bag of Skittles. And so when the kid would read a word, he would give them a Skittle. When he would read more words in a row than he ever had, like a record, he would give him two Skittles. So he rewarded the behavior and then he had big bonus rewards when he would unlock a new level. And so he kept doing that.

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And within one afternoon, he had him reading a full page. What is the behavior that I want to reward? How can I reward more of it? Now, none of it was punishing. He didn't smack him when he messed up. When he read less, he still gave him one to reward him for the activity. And then when he read more, he gave him extra reward.

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As the kid becomes less full on Skittles and he's like, you know, sugar, he like doesn't want any skills anymore. The Skittles become a proxy for approval and they work just the same.

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We try very hard to almost exclusively reward because punishment changes behavior faster. Reward changes behavior longer. It just takes longer to work. If someone calls me Alex and I don't like that and I slap them and I say, never call me that again, I might change their behavior really quickly.

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If I leave the room and someone else walks in, they might say I was talking to Alex because I'm not there to punish them. And so punishment only works as long as the source of punishment is there and the person doesn't get accustomed to the punishment because punishment itself becomes desensitized over time. And so

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Yeah, it burns my reputation on the ground with it. So I actually have lost everything before. And so I know what I did and I probably would have done the same thing. So the easiest way that I did to like go make a hundred grand in a month when I had nothing was that I would go find a business that was local, that I understood, and that I could sell something expensive for.

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To effectively punish someone, if you want to consistently punish, then you have to increase the intensity and variety of punishment over time, because otherwise people get desensitized to it. If you're always mean and yell at all of your employees, eventually they stop caring. So you have to increase the level of your threats, right? You then have to say, I'm going to fire you.

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I'm going to kill you, right? You have to make these threats increase because you increase the intensity and the variety of how you claim to punish them. Reward, you can reward long enough that you can then extend the gaps between reward and to eventually you don't need a reward anymore and people will continue to do the activity because they have always done it.

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Yeah. I would imagine if he was doing this over and over again, he'd prove the point. He's not like a full-time reading teacher. The concept is that he would read and then maybe the next time he comes in, he gives him a Skittle every other time he reads. And the next time, every third time. And the next time, it'd be only when he hits a new record.

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If I can get the kid to read long enough that he actually starts to like the story, then the story starts to reward in and of itself, and then I can move away. And then the kid reads without me. And so fundamentally, that's what you try to do when you train any activity is that most people who are experts at anything get rewarded from the activity itself.

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Because once you develop a level of mastery in the skill, you enjoy it because you're good at it.

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Dude, I appreciate you, Christoph. Thank you so much. Thank you for inviting your community and hopefully your community got value from the event. And hopefully they use the books and grow the economy in Hungary and all get way, way better at whatever it is they're doing.

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We do everything off the theory of constraints at acquisition.com, which is basically that a system will grow until it's constrained, until it's limit. So it's kind of like the idea of the weakest link, right? So it's finding what the weakest link in the chain is, or the constraint of the system is so that we can decontrain it and then grow to the next natural constraint.

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It's a very simplistic look, but it's extremely effective because it just cuts down all the noise into like, if I had to pick one thing that is the big limitation of this business, what would it be? And so then we just get laser focused on solving that one problem, solve that problem, and then we move on to the next constraint.

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And if we solve their problem and the business doesn't grow, well, then we pick the wrong constraint. And so sometimes the constraint is your ability to judge what the constraint is, which is why wisdom is one of the hardest things to earn, which comes from experience, right? Is that you're able to recognize patterns.

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And so for me right now, to answer the other part of the question, I'm focused on learning about brand stuff right now. So brand is my big topic. that I've been diving really deep on brand and media.

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And I'll probably write a book on brand just from the findings that I have, because I don't think there's many good books on brand, because you can, I could read you 20 different definitions of brand and branding, and they all sound like cockamamie. And so coming up with an operationalized version of what that means, so that it can actually be useful.

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And I try to learn this stuff so that I can use it. And then whatever I learn, I just, you know, pass it forward. Because branding for me, despite being now quote known for this or like an organic content guy. I've only been doing this two years. Like this is brand new to me. Like I, you know, I have way more experience on the paid outside. That's what I did the last decade.

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I would front the capital to market, I would work the leads, and I would sit at the front desk and sell, and I would negotiate what they would be willing to do a big bulk of services at scale for. So for example, if I wanted to find a chiropractor and I'd say, hey, if I sent you 100 customers this month, What's the lowest rate you would do all 100 customers for this level of service?

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And I, you know, people got to see a tiny taste of that when I was launching the book, but that's, that's the big thing is fighting out with the constraint of the businesses. And if you need to chunk all the way up, it's, if you want to grow a business, you have to sell more clients or make them worth more or decrease risk. Those are the things that are going to grow the value of a company.

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And so just simply asking the question, why do we not have 10 times more customers? Or why are we not making 10 times more money? And then figuring out what the answer to that question is, oftentimes is the constraint.

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This is like a Pandora's box. If I start talking about it, it might be like 10 minutes. So I can riff on it, but buckle in the audience. So if we look at the origins of what a brand is, right? Where do brands come from? Brand comes when you brand cattle, right? That was the original use of a brand. And so why would you brand cattle?

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Because you want to change the behavior of people who look at the cattle. So if you have a cattle that doesn't have a brand and the cattle that does, the people who are looking at it will behave differently. If the cow doesn't have a brand, I might take the cow for myself or I might kill it or I might eat it. I might do whatever.

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But if the cow has a brand on it and I know the guy, I might return the cow to him, right? So it changes what I do, all right? That's an important point. So the point of a brand is to... change or elicit a desired behavior in the widest percentage of your target audience. Now, how do you do that?

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You do that by making associations between something they don't know, your brand in the beginning, with something that they do know that is positive and rewarding, if that's what you want. And so the index, it's a four by four box of what brand really is. You have the direction, so you've got away from and towards, and then you've got strength. So very high and very low.

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So if you have a really weak thing, That's away from it's like, I kind of don't like this thing, you know, slow Wi-Fi, you know, like bad brand. On the flip side, you might have a political party, which depending on the audience might be super strong and away from or towards. Now, Taylor Swift, for example, would be something that I would say has a very strong brand and towards.

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There's not a lot of people who really hate Taylor Swift. And a lot of people who really love Taylor Swift, right? So it's positive and it's strong, right? Somebody like Ray Romano, if you heard that, you know, or like Tim Allen from the old sitcom days might be someone who is positive, but weak. A lot of people know who he is. Am I going to show up to his event? Probably not.

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The idea is that in order to build a brand, we simply pair things that people know with things that they don't know. The things they don't know is our logo, our tagline, our company with things that they do know and think are positive. If you were to think about the brand as a bouquet of flowers, It's like having many flowers in a bouquet.

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And so if I were to break the bouquet and spread all the flowers, there is no bouquet. But simply by gathering them together, by making associations, I create something new. And that bundle of associations is the brand. Now, if I were to break one of the flowers or make it rotten, it would affect the appearance of the entire brand.

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And so that's why if you make a single mistake, a Dylan Mulvaney move for Bud Light... you can affect the entire brand. If I get a DUI or somebody you know gets accused of doing some sort of terrible, heinous act, it affects the entire brand. R. Kelly, bad brand now. Despite all the positive, the one broken rose or the one rotten flower affects the entire bouquet.

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And then I would just negotiate that down. And then I would spend as much as I could and sell it for as much as I can so I can make the spread. And then they would service the customers. And for them, it's a zero risk offer because they don't have to do anything. I front everything else. And then for me, I don't have to do anything but market and sell. And I can take all of that.

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We have to be very deliberate about what associations we want to make with our own brand so that we can continue to positively associate ourselves. And the point of the brand is that we get a desired action or behavior from a specific audience. The idea of growing the brand a lot of times is that you sacrifice some audience for other audiences.

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So like when I was starting making content, I did it in my closet, right? And there were some hardcore people in the OG Mosey Media days that are like, I appreciate you. That were like, man, I miss the closet videos. Now, I might have lost some of those people when we started making a little bit more polished videos, etc. Some people, not all. I traded losing some audience to gain more.

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When you're making a brand move, you're basically always making a bet that you will gain more of your desired audience than you lose by making a change. And so you can approximate or slowly move a brand over time by making more associations in one direction and fewer associations in the other. And so that's how you can move a brand over time. Bud Light made a wrong bet.

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They thought, and maybe this is just a corporate group think, right, that if they made an association with Dylan Mulvaney, that they were going to get more people to buy their beer. I mean, fundamentally, that's the only reason you would do it as a company, right? You'd believe that long-term you'd get more people to buy your beer. The problem was that wasn't true.

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Now, the interesting thing is that there probably are people who were a big fan of that move. It's just that there were more people who weren't. They were far away. Right. There were more people who were not a fan of that move. And so that became an away from association. And so that is what I am trying to encapsulate and put together into how to brand.

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Because now that I feel like I understand it a little bit, I see it as, in my opinion... It's kind of like Neo in The Matrix when he's talking to Morpheus and he says, so you're telling me that I can dodge bullets? Morpheus says, well, when you're ready, you won't have to. And so we learn all these tactics about sales and marketing and show up rates and CRO hacks and all this shit.

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But if you have a brand, if you see The Matrix... Everyone shows up to your calls. No one has price objections. Everyone is excited and refers their friends. It just takes longer to make associations because fundamentally, all branding is, is teaching. You are teaching someone to do something. You want them to behave a certain way and you have this red, red card.

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And when you see red, it means stop. That's all we're doing. So green lights have strong associate, strong brands. They're positive. Everyone loves green lights, right? Like it's a simple thing. Just no one owns it. But green lights are a great positive association. It's a great brand, right? And so that's the idea of what I'm kind of diving more into.

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And I see it as the ultimate cheat code for business. It just takes a long time to do and most people aren't patient.

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And so when I lost everything, I immediately was able to make 100 grand the next month by doing that playbook.

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I'm telling you that once you have a brand, they become irrelevant.

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Chunking all the way up to like, will this cost me number of sales, like sales velocity? Will this decrease the lifetime value of customers? And will this increase or decrease the likelihood that whatever I'm doing right now continues to occur? So we're trying to value a company, right?

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We look at what's the sales velocity, how many customers they sell, what's the lifetime value of every customer, because then you can extrapolate what their run rate is going to be at scale at max, unless we change something. And then you divide that by risk, which is how likely is it that there's going to be an outside event that's going to change the

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this thing from continuing to occur this box of making money how likely is that they will it will continue to grow or at least stay the same and so if i have a problem i have to be able to track it back to one of those three things and if it doesn't really track one of those three things or there's another problem that has a much higher likelihood impact in terms of it's higher likely and it has a greater effect size then i'm going to prioritize that it's just that oftentimes if someone's like man i really think we should change the colors on the site

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I would just say like, what's the likelihood? Like I have been notorious for having ugliest shit sites my entire career. And you can make branding, make associations. And I think there's an argument there. But what's the likelihood that it's going to affect how many companies do a deal with us? It hasn't up to this point. And so is it a constraint of the business? No.

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Is it something that I could improve? Absolutely. There's also a hundred other things I could improve. I could also send more emails, which I don't do. Like there's lots of things I could do, but what are the few things or the one thing that matters most, which then ladders back up to what is the constraint of the business?

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There's basically four positions in the market. You have luxury all the way at the top, which is technically a Veblen good, which means when I increase the price, demand goes up. And that's because there's an association with the price that makes it more valuable. So the fact that everyone knows how expensive it is affects the value that I get from it.

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The fact that everyone knows the Rolex is $100,000 the one that I'm wearing, whatever, then I actually, it makes the Rolex more valuable. So it becomes a virtuous cycle, which is why LVMH is one of the most valuable companies in the world. Then you have premium, which is basically the above average. So it's there you have to pair utility with the premium.

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In luxury, the extra price tag is the value. Whereas with premium, like BMW is premium. They're not luxury. They're a little bit better at a lot of stuff. And so you pay a premium because it is a little bit. They use better materials. It breaks less, whatever, right? And so then you have your run of the mill, your commoditized space, which sucks.

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And then you have your low cost leaders, which they make their entire business on how can I drive efficiencies and operations at all levels of the business so that I can be the lowest priced person in the marketplace. Right. And still make a profit to route to your question of like, when is enough enough?

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The key indicator for me and most of this, like the quote, higher ticket world, you're not luxury goods. The fact that it's expensive is not the reason that people want to buy it. Right. It's so it's actually technically a premium. I'm more extreme about the price to value discrepancy than anything else.

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And a lot of people get into trouble because they raise the price so much that it's just an excess of the value they provide. And so then they actually create a negative experience. Like if Chipotle were $50, people would probably not like Chipotle, even though the product is really good. But at $50? I don't know. And so the reason Chipotle is so viral, you know what I mean?

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It's like the price to value discrepancy is so good that they tell their friends, right? And so that's where this kind of marriage of how can I just short circuit people's brains from value perspective, which is what I try to do with the books and the courses so that it becomes viral on its own. And then my cost to our customers is zero. And so then everything after that is just gravy.

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Or the four variables when you're using this is you've got the price, the value at the top, which is what they get. The price is what they pay. You've got your cost of goods to deliver, and then you have your profit left over. And so it's playing with those four variables so that you can maximize the amount of absolute profit that the company makes. Pricing high has become shorthand.

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Well, those are the three big buckets. One is that leadership is just the internal bucket of getting people to do what you want them to do at scale. And then from a selling perspective, I include that in all things that are marketing, letting people know about your stuff, promotion, and actually converting people into customers.

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And where I think people get a lot of benefit from the offers book is that when you price higher, you automatically weed out shitty customers. And I think many times that is the real reason that a lot of people's businesses grow from that price. Now, obviously, there's more profit. You have access to things that you can deliver on.

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But a lot of people don't actually take that excess money to create a better experience. They do a gotcha. And then they never get anything from that customer again. And so that's the wrong way to use it. But if I had to think like, okay, what are the reasons that a company might be successful that does charge premium?

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It's that they actually reinvest the premium price into a superior product and...

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They are very clear about the avatar that they go after and what the quantitative requirements are that are black and white that they know from looking at their best customers, their top 20, top 5% of customers, and then saying, we're only going to cater to these customers in the future because the likelihood that we can give them a great outcome is higher.

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And then that can create, you know, you can merit or earn the premium that you have because you have data that supports that if you are this type of person, we can get you this type of result.

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A lot of professional services should look at Wi-Fi for inspiration. You're like, what does that even mean? You don't want to like clap when the Wi-Fi is working. You just notice when it doesn't. And so you just want it to be in the background. You just want it to work. And so a lot of companies are like that. There's a lot of services that people think they need to over communicate stuff on.

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I just want the financials to be accurate and I want them to be timely. That's it. And I want things broken down in a way that allows me to make business decisions. And that's where I think the top tier of accountants transform into fractional CFO and CFO kind of materials where they actually help you use this data to make informed decisions about the business.

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Is there a way that I can translate what we do into how it would affect a business owner's life? So I'll tell you a little story because I think this will be really relevant for you guys. Mosey Nation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to $50, $100 million plus, we would love to talk to you.

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And then the third piece of building product and services is so that at scale, if the product is good enough... then you won't lose customers. And if it's exceptional, the product itself will get you more customers. And so most businesses taken to their natural extreme on a promotional level, typically are leaky buckets because the product actually sucks.

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And if you like that or would like to hear more about it, go to acquisition.com. You can apply anywhere on the page and talk to one of our team and see if we can help you get there. So one of our portfolio companies has had a ton of growth. Three years, they went from one location to I think we're at 38 locations now, right? All self-funded, off cash flow.

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All right, so really, really tremendous growth in three years. And it's compounding, so it's growing faster and faster. And when we were at about 30 locations, we were stuck at 30 locations for like two quarters, right? And so I got on the phone with the CEO and he was like, dude, I just I just feel like I don't know how many locations I can open based on cash flow.

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And because they had net receivables were a little bit extended, things like that. Right. I like shook the screen for a second. I was like, I need you to freeze frame this feeling you have right now. I was like, okay. I was like, think about this feeling you have. I was like, what you are feeling is finance as the constraint of your business.

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You do not have a finance function that is operationalized enough. You are underdeveloped in the finance function. You have a bookkeeper who's not that good. As soon as I could see, it just clicked. I was like, that is the constraint of the business. Until we get the finance function in, you're going to just be operating blind. And then once you know... We have this much cash flow.

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We can open two locations a month or three locations a month. Then you can be more aggressive with everything else because you're confident that you're not bankrupting the company accidentally on your own. If I were an accounting firm, I would try and pinpoint the problems and relate them to how it's going to affect growth in the business.

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How is the constraint so that you can talk in the language that a business owner is going to understand? They just... How many, I'll bet you, like if I could see everyone's hands, how many people in your audience, all the business owners just go to the right, go to the bottom and say, so we made more money this month? Great.

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And so I think adding that level of strategy of like, by the way, I think this is a little fat compared to other companies that we're looking at. This is a little bit under compared to other companies we're looking at. And this might be an area of opportunity. Little things like that that actually add value to the business if I were somebody who is in charge of an account.

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Yeah, sales management, what you what you hit at is one of the hardest parts of business, you need to make an informed decision without context, which is why being an entrepreneur, you end up becoming a jack of all trades so that you can have enough context to make at least an informed decision. And so I'm going to steal a playbook out of oops, wrong shoulder, there we go out of Layla's book here.

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And I'll give you my tactic around this, which is You want to interview for people who are sales managers. And you don't want to hire anyone for a little bit, which sounds tough. But what you want to do is you basically want to interview for information. Now, if you meet a gold star, that's amazing. But you want to talk to people. And if you know more about it than they do,

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And most businesses suck in general, because most products aren't good. And most people want to cancel very quickly and don't want to continue to use them, which is why very, very good companies are very rare. Most of them generally are mediocre or not good.

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they should be teaching you. And once you talk to 10, 20 people, they're basically like expert interviews for what it should look like. And so then you get a very good idea of what the role should look like after listening to people, and you'll get an understanding of the level of nuance. And I'll give you this one little tidbit that is super powerful when it comes to judging skill.

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The quality and quantity of data that someone chooses to collect around their particular department is almost directly proportional to their skill. And so, for example, I have lots of marketers who are like, my product's amazing. And I say, cool, tell me your metrics are. I was like, what's time to value? What are the key activation points? What's churn? Just some of these metrics.

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And they're like, well, dude, our refund rate's really low. But I'm like, okay. I was like, well, what about the marketing side? They're like, well, CPMs are this. This is our click-through rates. This is our conversion on the page. This is our percentage of the schedule. This is our percentage of the show. This is percentage open rate. This is percentage click.

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They go through all this stuff and I'm like, right. So I can see very clearly that you're a better marketer than you are a product. And so simply getting an idea of the quality and quantity of the data that someone collects around their department is When we hired our director of people, it was the first time that I had someone actually tell me metrics I'd never heard of.

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And I was like, she's the lady. She's the gal.

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So coaching models in general tend to be very difficult to scale because the reason people come to you is for expertise. In order to get other people to provide that expertise, then you have to create lots of experts who then eventually walk off and start the business on your behalf and take your customers with them. I would say like there's a couple different approaches.

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And so I prefer to solve a business from back to front, which is like, can we find something that people actually like and want to continue to use and continue to pay for? And then the marketing is almost a commoditized skill. Like it's very easy to let other people know about your stuff, but And do so louder and louder and louder, provided the product is good.

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So the first is that there's a law firm and McKinsey kind of consulting model. There's a track to become a partner in the business. And then that's kind of the whole business structure. So there's a way to share in the profits. They do make lots of money, but the owners of those end up having to dilute themselves out. Not that there's anything wrong with that. You can make lots of money doing it.

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But that is that is a version of the model. The other way is to productize the basically get narrower on the solution that you're providing and productize it to the greatest degree possible so that anyone could do it, even if they have no knowledge of it in terms of like the implementation of the thing.

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That is more the direction that we went with gym launch because we had a very specific we don't even we didn't even work with all gyms just to show how narrow we were with it. We worked with only micro gym owners. We have now expanded to health clubs as well. The five or six years that I was doing it before we sold, we were only micro gyms.

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And so just to show how incredibly narrow that was, someone had to have at least 30 members, assigned leaves, one employee, and be running this type of model for them to be a customer. And then if they fit all those things, we could generate a lot of revenue using our playbooks. I could have somebody who had no gym industry, no expertise whatsoever, and still say, send this email, say these words.

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Here's 10 recordings of people doing this exact same thing. This is the expected value. And so that's like from the delivery perspective. Now, operating the business overall comes from talent and being able to find people who are just as smart or smarter than you.

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And people say that, but when you actually meet somebody who's smarter than you, and then they admire an aspect of what you've done so that they start to work for you, that's where you really start to have the magic happen.

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Okay, so what things should an agency owner avoid when they're trying to scale? Yep, yep. I mean, the same things that any business owner would want to avoid when they're scaling. Agencies tend to fall into the you know, they they tend to fall into the bucket of trying to be everything to everyone.

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So maintaining the discipline to be very focused about the problem that you're solving and who you're solving it for. And I think that solves 90% of the problems from a strategic perspective for any small business owner, including an agency.

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The second piece is that if you're in a service based business, the quality of your talent is going to be directly proportional to your growth because you're you're basically selling people, fractionalized people. That's what service businesses are, right? You're selling some level of training that you're able to give

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and having more efficiency than an individual business owner would have like the the classic you know small business owner lead gen agency that charges two thousand dollars a month the idea is that if they were to hire somebody full-time to run these ads it would cost them five or six thousand dollars a month but you have copywriters designers and media buyers and page designers who all work a fraction of their time for this one business and they can get it more efficiently and you can still do it

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at good margins, right? Like that's fundamentally what services are. And so the quality of that talent and the culture that you have at the business to attract and keep that talent are the kind of the key or the crucial pieces of the success of the model.

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And then the internal has to get run with a leader that can attract the talent to continue to do this. Because quickly, the business will bottleneck based on the founder and their expertise. Or usually they have a niche. They might be product people. They might be tech people. They might be finance people. They might be whatever.

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Creating the irresistible offer isn't necessarily about having a zillion products. It's more about explaining and communicating the many small things that you have to do anyways. And so rather than saying, like, I'm going to generate leads for you, that's like one outcome. But there's many things that have to happen along the way. You have to create landing pages. You have to write copy.

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You have to you have to have follow up sequences. You have to work the leads. You have to have scheduling. You have to you know, you have to split test. You have to make new creative. Like there's lots of things that have to happen in order to just get the single result.

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And it's just making sure that we're delineating those things because an unbeknownst or an ignorant business owner, I say ignorant in the technical sense, like they just don't know.

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um would have no idea what you're doing you're like yeah just go get me leads it's like well it's much easier said than done and if i was doing it from an outbound perspective i'd be like well i have to warm up domains i have to you know spin up different accounts i have to split test different email openers i have to split like you have to explain all the steps and they're like wow there's a lot more work that goes into this now i can i can appropriately value this price tag that you described to whatever the service is so that's piece one in order to be irreplaceable oftentimes you'd have to go after significantly bigger customers

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If you're an agency for Fortune 1000, for Fortune 500 companies, it would be so costly for them to spin up at scale the level of talent that's required to do like programmatic media buys across 100 different platforms in different countries. And then the likelihood that they want to leave or do this on their own is significantly lower.

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The idea that any service provider is going to become truly irreplaceable, like any business can do anything on their own. And I would prefer to put myself out of business and do it in a way that aligns my customers with me than have a model that I know is basically has a timer for obsolescence. Not everybody works with Fortune 500 companies, right?

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And the thing is, the small business owners are really tough because they're the problem. Like they're super erratic. They're super volatile. Their cash flow is lumpy. They don't know where their next paycheck is going to come from. And to no fault of your own, they can cancel because they just can't make payroll that month. Look at the biggest agencies that exist.

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Ogilvy, you have Vayner, you know, is up there now. Who do they service? massive companies. Why? Because the quality of the customers are higher. And so they know that when they sign a contract, they actually stick with the contract. We all know that if you have a small business owner who signs a 12-month agreement for agency services, he's good for three months.

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And then they have to be of the character to attract the talent that will allow them to get to nine figures or whatever it is that the goal is.

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The biggest model that I've seen for small business owners from a marketing perspective was an agency that was running $300 a month. What? $300 a month price point because they had figured out and like there's a key here is that like those business owners are so price sensitive. It's not whether you can sell them. It's whether you can keep them on their worst month.

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The price isn't based on the value that you can deliver on the best month, but how much you can keep on the worst month because that's where the churn comes in. The best model that I saw was doing SEO for small business owners. And they had completely automated every aspect of it. It was basically just a playbook. And I think it generated reviews and maybe a couple phone calls a month.

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But at a $300 a month price point, if they got one or two phone calls a month, it was worth it. So the bar to get over to ascribe value, and especially on something that I call like a nuisance business, where it's like, I know I should be maintaining my reputation. I know I should be doing some of this stuff. Okay, for $200 or $300 a month, I don't feel guilty about not doing it.

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Because this is being handled.

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You talk to basically one of the core problems of all B2B businesses, which is that you end up taking over the person's entire business until eventually they're like, yeah, if you could just send me a check every month and you run the business, that would be awesome.

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That's why being very disciplined about problem definition from the services that you provide, number one, and here's the one that everyone messes up. who you pick. It's not like, even if you work with chiropractors, right, as that example, you don't necessarily even want to work with all chiropractors.

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You look at the customers that you have right now that are the best customers, like the top 20% or the top 10%. You say, okay, what characteristics do these people have that other people don't have in my client list?

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And that's both from the soft, the hard perspective, what are the quantitative differences, they have a certain size business, they're over a certain amount of month, they have a number of locations, they have a certain amount of employees, number of customers, like you just get all that data on them. And then also, what was the experience that they went through when working with me?

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And was it different than some of my other customers? Because one of the things that happens oftentimes is that the first few customers you get are become really sticky. And then you start scaling. And then you have this front revolving door, but you still have your core business of these people that you had in the beginning, right? So why is that?

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Because these people got more help from you and actually got delivered more value. And then you basically tried to scale without scaling the value that you delivered to the original customers, right? And so if you're at whatever, 15,000 a month, and you've got five customers, and they're all like having a great experience, and you keep signing people on, they keep leaving.

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It's like, okay, well, instead of me trying to sell five this month, why don't I just sell one and do a great job and then not lose them? And that's the key to compounding in a service business once you pay down the inefficiencies of them not knowing what to do yet and being very specific about who you serve and who you don't. We didn't work with personal trainers.

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Cycling studios and yoga studios 100% could use our model. We didn't work with them because the founders tended to be psychologically different. Their adherence was super low because they just come from a totally different worldview than the guys who are more fitness, weight loss, transformation focused.

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Even though at the end of the day, it's just a membership with a backroom where people work out. But mindset wise, they had a very hard time kind of adopting a different model. Even though monetarily, it totally made sense. Which means you need to have discipline to say no.

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I have 13 companies. I get 1,800 a day who reach out. Right. So you have to say no. It feels weird to say no because a lot of the time I get... That's why most people stay poor. They can't say no. And what happens is you go for the short-term money and you sacrifice the long-term money because then you just get in this operational rat race.

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And then you scale up your costs to meet the fact that you took on all these customers that you shouldn't have taken on to begin with. And then you have to pay them every single month. So then you have to keep on taking on customers that you shouldn't have taken on to begin with. And you get in this vicious cycle that you can't get out.

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Until you downsize, you take two steps back, five steps back, fix your ego, and then say, I'm only working with these customers because ethically, I know that these are the ones that I have the highest likelihood of success with. Everyone else, I have mediocre success. And I can say it's their fault. I can say it's my fault. It doesn't really matter.

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All that I know is that the likelihood that they achieve what I think they should achieve is low. Period. So I'm not going to sell them. Aren't you afraid that the time will go smaller? Of course. You can build a niche an inch wide and a mile deep. There's 30 million small businesses. You don't need to service them. There's 50,000 gyms that fit the model that we have.

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Now, if you want to build a $10 billion company, then yeah, you're gonna have to go after a bigger problem. But if you want to build a nine figure company, you can do that in almost any industry.

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Honestly, it's just being authentic. 99% of the fitness market just looks at what other influencers are doing and say, I'll just copy that and I'll do stuff like that. But then you just do a worse version of what somebody's already doing. Zooming all the way out, fitness, like there's no secret. Work out more, stop eating shitty, you'll look better over a longer time horizon.

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Like that's what it is, right? There's going to be a subset of an audience that is like you, genuinely, and they could get fitness information from Alex, but if I'm a 45-year-old Indian mother, I'm probably not going to be her source for fitness information, even if I see the identical stuff as another 45-year-old Indian mother.

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Now, if that 45-year-old Indian mother looks at my fitness content and tries to make content like mine, it's going to seem weird. You can stick out by actually being yourself. I know it sounds trite, but this is real. There are so many unique aspects

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Like if you know that when you stay up late, like there are times when I will gas it and go past my red line in terms of work. And I know that I'm eating into tomorrow. But if I'm like in a flow and I'm crushing it and the muse shows up and the muse wants to work, then I work. You know what I mean?

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of someone's life and the things they're interested in compared to other people, that if you just lean into those differences, those unique, the things that you're actually into that are weird, right? Rogan's into aliens and mushrooms and comedy and fighting. Who would have told him like, you should be Joe Rogan?

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And you're going to have people who like some aspects, and then the super fans will be people who overlap on two or three of the interests that you have. If you picked my brand, it'd be like dessert, working out, philosophy, business, marketing, sales. They're people who follow me because they only like the business and money stuff.

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They're people who follow me because they only like the philosophy stuff. They're people who follow me because they just think the desserts and cav stuff is funny. Like it just depends on what someone's going to come in for. But if you're just you, then you can stick with it for the long term.

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And that's what's going to build over time and make you quote stand out because there is only one version of you that's lived your life. So just live it publicly.

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I hope you make so much money from the book and crush it. Because at the end of the day, there's more problems than any one person can solve. And I hope you build businesses to solve them. So explain to me how the franchise works.

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The franchise thing is interesting because I feel like you would be able to achieve that simply with a profit share rather than getting investment and equity and all. Because if speed is the goal, then you could basically do the makeshift because I'm assuming many of them aren't planning on selling.

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And so the only reason the equity would be valuable is if they're going to sell it sometime in the future. And buying, quote, more locations isn't really a thing either. I would imagine that it'd be a lot faster to just contract

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you know basically put put legal language around getting a profit share in the structure you know the cut that you have like many companies have scaled sales orgs you know i mean like insurance brokerages are just massive sales orgs like real estate agents are massive sales orgs and so um they don't necessarily have equity you don't need equity deals because those can just get litigious and there's lawyers and just take i'm sure you guys have already seen this like it just takes more time and i feel like there might be like you could probably remove a couple of components to get the same behavior which is ultimately what you're trying to do is get people who

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But if there's some days on the flip side where I wake up and I just feel foggy as shit and I just like for whatever reason, I ate too much Mexican last night and I don't have it that day, then I might call it earlier. Like the idea of me pushing through and punishing when it comes to the type of work I do. If I were doing a more brute force work, then I would care less. You know what I mean?

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I mean, based on the model you have, you guys can own 100% of the franchisor. But even if it was just like the main co., You can still have streams because you have the software. So tracking becomes the issue. But since you already have that infrastructure built, the ability to just make sure that they get overrides.

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Now, if you want to put a $10,000 buy-in or something just because you feel like that increases commitment levels, I mean, that's fine. But if you look at like a Chick-fil-A, for example, are you familiar with their model? Yeah. Right.

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And so that, you know, each location probably costs, I actually don't know the build out cost, but I would imagine it costs at least a million, probably one and a half to build a location for Chick-fil-A. And the operators put $10,000 in.

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And so it's more of a symbolic gesture than it is like them actually, you know, contributing capital to whatever the thing is, but they actually don't own equity in the business. So they get a 50-50 profit share after a royalty that goes to Holdco.

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Just looking at what they've been able to build, it seems that that structure works without the equity in terms of eliciting the behavior that you guys are going for. But from everything that you said, even right at the beginning, you were like, well, we needed something that was more scalable because obviously we had lots of people.

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There's many people who have scaled businesses with lots of people. And so it sounds like it's actually a talent deficit. Like you need to hire somebody or bring someone who's a high-level operator who has scaled a sales-driven org. What's revenue right now?

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Is that GMV? So like gross sales volume, and then you're getting whatever, 20, 25% on that. Yeah. So you'd be looking at somebody who's scaled a sales org from 10 million to 100 million and who's really ops heavy. So you'd want somebody who looks like, who's very leadership driven, not a systems person. That's not the right person. You're looking for somebody who you admire. Take this away.

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I mean, you need an adult, right? That's not a function of age. Just saying you need someone who has experience doing this. Because if I were looking at like, if I were going to go buy in right to phone sales, the first thing I would do is hire an operator. Because right now, all the things that you've described have been people issues.

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So if I'm operating on the theory of constraint, which is what we do, I'd say, okay, well, then people issues seem to be the main problem for this business. So I'm going to hire somebody who has experience in this particular domain in a sales org who has gone from X to Z.

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Where do you find such people? Well, you guys are sales guys, right? So it's outbound. Outbound is the easiest thing to do. You could also run ads, but the best people already have jobs. And I mean, you guys know this from your business, right? And so it would be outreach. Outreach is the easiest thing to do. Go to LinkedIn. And LinkedIn has so many tools now. Like

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If I was just doing reach outs, I was doing cold calls, I was training, personal training sessions, I was cutting hair, I'm just I'm just going to brute force my way through it because I don't need to have higher brain function. And that's not an insult. I'm just saying, like, you're not like thinking of creative things. You know what I mean? You're just you're working the work.

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Search for people who meet these three or four job titles, probably like a senior vice president or a VP of sales. Sales director might be a little too low, but probably a VP of sales or VP of sales ops, something like that. You'll have to play with the title. It is kind of like an ad in advertising. You have to play to figure out when you get the right avatars on the phone.

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And I have no money, right? I would probably build a boring business in services. And I would probably pick something around the body. You know, I wouldn't just start a design firm because I think that has a high likelihood of getting disrupted or, you know, in some way by AI.

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uh but as soon as you get to click then you're like okay these are the types of people i want and then you talk to as many as you can and the limits test that i have for high level talent is that i should be learning from them on the phone call so if i feel like i have to teach them stuff they're not the right person like if they're teaching me things which is also great because then you can keep taking notes and after 20 or 30 phone calls you're like okay i have a very good idea of what excellent looks like

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And I can make a more educated decision on the type of person that I want. But that person who's very operational should be a people-driven leader, especially in this type of org.

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I think it depends on the product that's being sold.

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I think you can do... So the way that I like building sales orgs is having repeated sales materials and then individualized. So repeated sales materials are going to be like the VSLs, the webinars, things like that. But you're not closing on those webinars. You're just qualifying and setting.

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And so I want sales guys to be doing as little information spewing as humanly possible and really being able to start the call with, so you're ready to buy? And then

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yes or no and then work your way so you have 60 minutes to close rather than okay great now like discovery like let me talk to you about how we might be able to help you because if you because then sales guys get really tired of saying the exact same pitch then they sound like robots then they get zoned out because they're saying something they're not listening and so the talk ratios get way off um and so i prefer having as much of the standardized information sharing being done before the call so that the closers time can be maximized to closing rather than just like teaching

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But I wouldn't be trying to pitch 30k stuff directly to a payment page. I'd probably be pitching that to qualifier set calls.

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But when it comes to like writing or making presentations or communication of some sort, it's more I try and optimize around how can I maximize over a week how much flow state I can be in so I can just get the most total quality output. So it's not about rules. It's more like which of these things has a highest likelihood of getting me the most. What's up, Kristoff?

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Correct. At the end of the day, there's a certain amount of information that someone needs to have or a certain amount of exposure that they have to have to a brand or a product for them to make a buying decision. And so that can be a long set and then a short close. It can be a set webinar close. It can be a long webinar, then a close. There's just a certain amount of selling.

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The runway for the plane has to be a certain length. It doesn't really matter where you slice it. This is the amount that the majority of people need to have before making a purchasing decision. Now, some people might need less, and that's okay because they probably got it beforehand from other things that they've consumed. So if you want to say, okay, how do I sell?

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I want to increase the likelihood that the highest percentage of people buy, then I want to create an experience that... The highest percentage people get all of the information that they need prior to the closing conversation. And so if you do a webinar as a big set thing, I mean, to me, that's the same. I mean, that's all the same.

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Like if you run ads to webinar ads to VSL, then they go to a scheduler. Or, you know, if you have a live call team where you have a number that becomes the CTA, and then the call teams answering calls in real time. operationally, I wouldn't, I wouldn't upend my entire business because of just a slightly different way of doing it.

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Because I think it's more happy to glad, um, as long as your throughput is good and you're, you know, like you're making money and you're growing right now, I would, I don't know if that would be the constraint of the business.

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So like, I think the stuff that we were talking about earlier, like that seems more of the constraint than kind of the, the, the individual tactics, you know, in the example you gave.

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Well, I mean, brand matters more than anything, like right off the bat. And the vast majority of the hard closing tactics and hard sales tactics have to exist in lieu of not having a brand. It's like we have to make up all this...

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hard stuff uh it's kind of like in the matrix when it's like uh when you're good enough you won't have to dodge bullets or like you're saying i can dodge bullets it's like well when you're ready you won't have to so like the brand is when you're ready you won't have to but if you don't have that which is the big thing that you should have but if you don't have that then it's the same things that you would normally do you're going to try and find common ground be relatable uh try like a lot of it just comes down to how well do you understand the avatar

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So I think a lot of sales teams underprepare by under-understanding the avatar, the prospect, and over-educate on the product. If I understand what a 45-year-old woman is suffering from, I can basically do the same sales call. And at the end of the call, say, I can pitch therapy. I could pitch weight loss. I could pitch a gym membership. I could pitch cleaning services.

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It doesn't really matter because if I understand the avatar really well, I'll be able to speak to her pains.

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Yeah, strong brand, strong product, for sure. Fair question, though. Yeah, relatability, common ground. What's been the number one reason you've seen show-up rates increase or decrease? It's 100 golden babies, no silver bullets. So when we go into a company, we have something called a lead nurture checklist. And so it's just like 17 things that we do. And each one of them adds like 2% to 5%.

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And so that's how we can get something from like 30%, 40% show rates to 85% show rates. It's just...

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doing a lot of little things so i would not look for like the one trick it's just like okay how quickly are we responding how how much information we provide them beforehand are we providing a personalized video like can we give them a gift card for showing up that they can share our coffee with us like just how many different things can we add in to increase the likelihood that they show can we can we create an open loop between the set and the close that they're going to get information that they are they have got their inter their their interest peaked is there a way that we can say that we're going to show them that we're going to do a certain amount of work on their behalf and we're going to give them the deliverable on the next call

The Game with Alex Hormozi

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right so they have a huge incentive they have huge curiosity so that they would want to show up like this is particularly true in insurance products so like we have an insurance company and so like we create personalized insurance plans it's like okay well how do we get more people to show up but we don't want to send them the insurance plan that we're going to make them before the call we just say we'll explain it to you on the call yeah we implement a lot of those tactics as well probably there's some stuff that you're doing now we currently don't have at the moment as well i don't know if it makes sense to share on this call but you said there's kind of like 17 things is it possible you can maybe like send it to us no

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All right. Honestly, it really depends on what the business is. If we're looking at an insurance business versus a weight loss business, it's more applying a principle across. But that being said, the big one that's probably missing, it's usually the big obvious thing, which is we can always do the hundreds of little tactics, but you're trying to dodge bullets.

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rather than like winning before you start, which is like, why, why do so few people trust you? Like that's the big, that's the big, like I see the matrix and then everything else becomes irrelevant. So for acquisitions.com, our show rate on calls is nearly a hundred percent. So if we call, if we say, Hey, we'd like to find out more about your business today is Tuesday.

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Our next opening is Thursday of next week. So nine days from now, show rates still a hundred percent because of brand, we actually don't need to do any of those tactics. Now, we have those tactics so that we can help the companies that don't have those level of brands. But you want to stack the deck. You want to answer the question, why does no one trust me? And solve that.

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Otherwise, you're always going to deal with these issues. Do the fundamentals, for sure. But the big things that will matter most is who you're choosing as your customers. So Vista, you guys heard of Vista Private Equity? So they're the biggest software private equity. They've got a gazillion dollars, whatever. The way that they look at a business is that they do a customer analysis.

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And so they look for the 80-20, right? They look for the 20% of customers that are worth more than everyone else. And they then do a customer analysis and say, what do these 20% have that the other 80% don't? And then they exclusively look for customers that are that 20%. And then they say no to everyone else.

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When you have nothing to lose, it also makes it the best time to make high risk decisions because you have a disproportionate upside. Not quitting if you want to do something else, like if you have this desire to do something else, is like not taking a stranger up on a free lottery ticket on the street. If they give you a free lottery ticket, and you lose, you're back to not having anything.

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And so then what happens is if the sales velocity remains unchanged, they 5x the business. So sometimes you'll make more money just by saying no so that you can have the capacity to say yes to the few guys that matter more. And if you're not getting more of those people, then solving that problem rather than saying like, how do I polish a turd?

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Instead of going from that perspective, just saying like, maybe I just should not try to polish turds because it's still a turd, right? And like, how do I get the people who are much better companies to be attracted to my business? And if you have a customer list that people aspire to be like, then you'll get more and more people.

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That's kind of the branding side for you guys, which is how can I associate with better quality brands so that other better quality brands realize that what we do is legit. You can try and optimize the shit out of something, but usually it's the big obvious stuff. And we don't look at the big obvious stuff because they're actually harder problems to solve and they take longer.

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But it's where the most value is unlocked.

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So I would say it's less about the topics of the calls and more about what you're training repeatedly and what you're rewarding. So sales is one of those really interesting businesses or departments that you can see very clearly. You guys have probably seen different sales teams and they have very different cultures. And so it'd be like, what are the cultures that create the highest performance?

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In our experience, you can go on either extreme. You can have a very punishment-driven culture, which is very individualistic, or you can have a very team-driven culture, which is typically reward-based. What you want to reward is adherence to the script, not closing. That's a huge shift for most sales teams.

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If you reward adherence to the script, then what happens is you get everyone to follow the script. Now, if they aren't closing, then you need to change the script. But it's much easier to change the script once you've taught adherence than it is to have a bunch of lone wolves who do anything they can to close the deal, which then impacts your brand.

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So like a really simple tactic we did at one of our chains was we just said, cool, we'll give them five bucks if they follow the script, whether they close the, now mind you, the tickets are smaller, right? It's just higher volume. We'll give them five bucks if they follow the script. And if they close or they don't close, they get paid either way. You know what's interesting?

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The thing they're most curious about when they send their managers is do I get the five bucks for the adherence, even though they make three times more on the close. So we still give them benefits for closing, but they want to know whether they got the approval of the manager because the $5 actually matters less than the approval from the manager saying you did a good job.

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The $5 is more of a token.

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And if you can imagine, because everybody here has sold before, if you got on a call and you knew that you could get paid no matter what just for following the process, it takes some of the pressure off. Think about it. You hop in the car like, I'm just going to make sure that I get my bone no matter what on the adherence. But guess what happens when everybody hears to the script?

The Game with Alex Hormozi

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You fucking close more.

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Because sales is one of the biggest issues where you have false positives, where someone goes rogue and then closes and basically gets reinforced for doing the wrong thing. And then they start doing the thing that they did that one time that worked and then it doesn't work over and over again. So they change the behavior. They learn the wrong thing. And so then you have to course correct, right?

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That's why sales, like it's all about adherence. And then we can be really strategic about really making sure the script is beautiful and crisp and concise. And we just drill the team on adherence.

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You don't sell emerging tech. It's selling the plane flight versus the vacation. If I could tell you that your financials would be absolutely accurate and updated in real time, would you want that? How much would you be willing to pay compared to what you currently pay? A lot more. Great. What if I said I could do it for less than what you're currently paying? Are you interested? Great.

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This is what I need. The fact that I'm using AI is irrelevant. You just sell the outcome and then you're not really... Yeah, no one cares. AI is great for YouTube clickbait, but for sales, it's irrelevant. That was like one of the main... What else do you want to do for the next 16 months?

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The vast majority of AI businesses that I look at are dog shit. And so either they're not real AI, which is 99% of them. They're basically just built on chat GPT, which is fine. There's nothing wrong with that. But I'm just like, let's not claim that we're creating AGI. On the other hand, it's people who have no business acumen. And so they're like, it's totally different.

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If you win, then your life changes forever. And so I think a lot of people place a disproportionate amount of weight on the opinions of other people who are going to judge them in the short term because quitting your job is short-term pain for long-term fulfillment.

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Like the normal laws of business don't apply. It's like they have always applied and they will always apply because they're just how business works, right? Those are the vast majority of people that I see in that. I do think that... AI implementation for Main Street is an enormous opportunity. So AI-ifying, if you will.

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And I don't think, I think your first conclusion is right, which is being the custom guy is tough. You know what I mean? It's just, it's all things to all people, which is nothing to no one. If I'm talking to the audience now, if you guys want to get into this world, what you want to do is look at an industry or an avatar that you understand well.

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And so one of the things that like Y Combinator and some of these great, like, you know, legendary investors look at is how much time a founder has suffered and lived through a problem. I can talk about breathing because I've had two nose surgeries. I've been falling asleep on my hands since I was in eighth grade so that I could breathe.

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So I've lived with the problem for a long time, and I've tried many different types of solutions. So I have tons of industry knowledge if I were to start a company like that. If you have a job right now or have had any type of job, you've worked in a business. That's a great baseline of background knowledge that's difficult to just jump.

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Even if you were a server at a restaurant for two years, you still will probably know more about restaurants than 99% of people who aren't in the restaurant industry. I don't know anything about how restaurants work because I've just never really worked in one.

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You could probably be aware of, because you now also have this understanding of what AI can do, to think, okay, there's 100 problems in a restaurant. Is there one very specific problem that I can solve well and is very similar between restaurants? Because as soon as you get the point A to point B, you can create the clear value prop and you can message around that.

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Getting extremely specific, which is I think what you were saying that you give the advice to, is super smart. And it makes the problem set really narrow to solve. So you can become an expert that's an inch wide and a mile deep. The exact same thing. The reason that most people don't do that when they're starting out is because you don't have enough demand.

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You have so few leads that come to you that you're like, well, I mean, shit, I need to pay rent this month. And I only got four leads this month and all four are completely different, but I need the money. And so I get it.

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If that's what if that's what you want to pursue, because the short term pain comes from the judgment of others and likely a back, you know, back step in income. But long term, you're working on the thing that you want to be working on. Now, if you like your job, and you know what I mean, then that probably doesn't apply to those people.

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Redeploy that cash into getting really concentrated on your marketing, which is what offers and leads is all about, so that you can find that specific avatar that you can over and over again repeat, which is also why referrals are so strong, because if you do a good job, they will send you other people just like them.

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So yeah, I definitely wouldn't do it as a consulting relationship. The thing that you're going to be selling is the product. And so having a consultant who's the one who's in charge of the primary value that you're driving is not a good idea.

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And so you'd want somebody who's long term incentivized to continually improve the product, continue to innovate the product, see the things that are coming around the corner to keep it up to date, make it better, make it stronger, etc. It really just comes down to how to have a normal business partnership. So all the normal rules of business apply.

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And this person has some specific knowledge you don't have. And you should ideally have specific knowledge they don't have. They should be asking the question, like, why do I partner with the people in your community? If I'm an AI developer, right? If you're trying to figure out which of the problems to solve in an industry, it's just value created times ease of implementation.

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That's the equation, which if you chunk it up, it's number of potential customers times gross profit per customer. If I have six different problems I could potentially solve, which one has way more people who have it? Which one's easier to do? Which one unlocks the most value?

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But like, if you're in that situation, it's really a long term, short term sacrifice, which a lot of people aren't able to make.

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Okay. I mean, we were thinking the same thing. So I was glad to know you agree on that. It's the product. Like if you're in a service business, the quality of the people that you use to provide the service is the product. And so those people usually want to be compensated well, because if they are really good, then the places that they're coming from will want to pay more to keep them.

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And so you have to give them a great place to work and a financial incentive or some upside that they get exposed to that they wouldn't otherwise. Like you want them to feel like owners. And the best way to do that is for them to actually be owners. If you're trying to get on the cutting edge of technology, then actually having the people who are good at that is the business.

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Because we don't know it. It's easier for you to do the marketing stuff because you're good at it. So you know if someone's full of shit on the interview. You just don't know if anyone's full of shit on the interview because you have no context. The most important hire, which is why I say this, is you need a technical co-founder.

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You need somebody who has a real stake in making sure that the people who are coming in are actually good. Not that you're checking a box and saying, hey, I have 14 people on my development team. Anybody in the true high-tech world knows that one amazing developer is more valuable than 100 B developers.

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This is the hardest part of business, is hiring people who are really good at something without knowing the in-depth knowledge. And that's where leveraging somebody who might not want to work for you that you do think is brilliant to at least interview or double-check on how good they are

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um is really valuable that's where like building a network becomes important and getting even some tests like of aptitude for them to take so that you can at least get some sort of baseline but it's all going to be about how skilled that person is because ideally if they were as good as you are at marketing then you guys would probably have a really successful business

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All right. Appreciate you guys. Thank you. And appreciate the community. Thank you guys for showing up. Hopefully the book serves you guys well.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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So Layla had quit her job to join me to start Gym Launch. This is when we were doing turnarounds, so we're flying around the country. So she quit her job after knowing me for only a month and then started basically living with me in motel rooms. She had built up a book of business. So she was actually giving up something that she had spent two years building to pursue this thing with me.

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If I were, you know, it's as silly as it sounds, like a nail salon or a lawn care service, things that, I mean, especially body ones, you know, dentist stuff like you still have to go in and get your teeth taken care of. And many times people value the human exchange more than something robotic. So, for example, in the fitness world, like this is my like my data point around this.

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And we were new, like we had just started dating. About six months into that, I told her that I needed a break. and the she actually asked me she was like it sounds like you don't really want me to be here do you want me to leave and i was like yes that would be great i had just lost all the money from the partner i had this location that i had to either shut shut down and had no cash to do it

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And I had to service all these contracts that didn't have the money to service. And I also had like three other businesses that I was trying to run at the same time. I had a chiropractor agency. I had my gyms. I had Jim launch the turnaround business. I had a dental agency, all of those with different partners. And I was the one who did marketing sales for all of it.

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And so I was just so spread thin. And so I needed to generate money. to basically pay the bills of the gym that the money had just gone out the door for. Right after me saying, I don't think we should be together, she had to leave the next day to go to Hawaii to launch a gym for this guy that she's no longer dating, that she quit everything to leave.

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Tough situation that 99 out of 100 girls would have just said no. They would have been like, I'm just going to go back home and you know, try and get all my clients back. But she didn't do that. So she flew out to Hawaii. I didn't have enough money to give her like a nice place. And so I had her split an Airbnb with five guys, five dudes and Layla, not ideal.

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And so she worked out of the Airbnb and well, realistically, she worked out of the gym most of the time and did the biggest launch that we'd ever done. And so like when my world was crumbling around me and I really needed her to come through, she stood tall and she did it in a time that I probably didn't deserve that level of loyalty because I hadn't shown her any. And so she did that.

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And then I made enough money from her launching that gym that I could pay off all the bills of the gym that was going under that I just lost all the money on to basically come out breaking even so that we could actually go back all in on gym launch and get rid of the other companies.

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Well, when she did that, I wanted to be with her. She had extended me loyalty that I had not given her. There was probably a few defining moments in our relationship. That was the first big one.

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The offer is a strategic question that influences all aspects of the business and is also a mental exercise that people can feel like they're making progress on their offer a lot faster.

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leads is a lot more about activity and implementation and so people can get ideas from like the lead magnet chapter but then you have to start reaching out to people posting content or running ads to start getting leads in the door right and so there's a little bit bigger of a hurdle with leads than there is offers but it's also the the main driver of business is letting people know about your stuff and so i think that many people will mentally masturbate to the idea of making these amazing offers but i think former people make money

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by actually letting people know about their stuff, which is leads.

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Unless I can work once and have something provide value on an ongoing basis, which is a high leverage activity, then it makes no sense. I think most people shouldn't write books because the amount of work it takes to make a great book that actually lasts the test of time is extremely difficult.

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It's exactly that. There's diminishing marginal return, but an increase, an exponential increase in absolute returns. The gold medal sprinter in the Olympics versus the silver medalist. From a business context, the person who's at the gold medalist might have worked 10 times more to get this much more out. But what's the difference in absolute of gold versus silver? Everything.

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There was a brand called Cocoa Fit, and they struggled a ton and then eventually went out of business because they tried to automate personal training. So they created these all in one machines that would you'd have a key fob and it would count your reps. And every time you went to the machine, it would say how to do more and what you did last time. It's a really cool concept.

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Just being this much better, people are like, well, I don't want to work 50 more hours to be this much better. But being this much better might make you the best at that, whatever the blog post is or that business or that solution. And the amount of winner takes all the economy has shifted towards, people want the lowest risk solution.

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And so if you have the best solution, then it is the lowest risk thing to buy. And so to be number one versus number two, 80% of the economics, sometimes 90% of the economics go to number one. And so it makes absolute sense to work 10 times harder, even though you might only be this much better from a marginal perspective on the chart of rankings that might make you 10 times higher. Some context.

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Did you use them before? I don't read many book summaries, mostly because you rely on the person who's doing the summarizing to find what they think is the most viable thing for you, right? Because a lot of times what I find if I read a book, the nuggets that I find are not the main concepts. It's actually the details.

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If you don't know anything about a topic, then the summaries are great to give you a latticework, a framework to understand the rest of the information that you're going to consume. But once you have a basic understanding, it's in the edges, which is where you can expand your knowledge, right? And so there's not a lot of shortcuts to getting really good at something.

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At the end of the day, everything's going to be capped LTV. So like if there was one single metric that I'm going to look at a business, it's capped LTV ratio. So how much it costs me to get somebody and how much I make from them over the lifetime. Until that metric is better than the competition. So like Blinkist, right? I think that's one that's like that.

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I would have to look at their LTV and what are the things that they're doing that like, why am I, why are people going to come to me versus them? So either I have to be more niche in my selection of books so that I'll have a wider selection for a narrower audience. Competing against Amazon is very tough.

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But if you niche down into a specific topic, then you can actually have a wider selection because Blinkist is just going to take the bestsellers for every category because that's going to be the most people. And they're VC backed and they're funded and they can acquire customers at a loss for a long period of time, acquire a market share.

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The problem was their theory was that the reason that people were getting results is that they didn't know what to do when the reality is that no one was showing up at the gym. People hire personal trainers because they want another human to talk to and to hold them accountable to showing up. Same reason like if you had a robot cutting hair, there might be a percentage of the population that do it.

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And unless that's the game you're trying to play, then you have to play it different, which is I want to be really specific about the avatar that I want to go after. And so that's where you do a little bit of research ahead of time and say, okay, is there an underserved market that might actually, A, have a big reading preference?

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So like salespeople is one of the most common professions on planet Earth. From a personality perspective, how many sales guys read all the time? I don't know. I would have to look into that. And so you might be like, okay, well, sales guys aren't the guy, but maybe HR specialists read a ton.

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OK, well, if they read a ton and there's like Blinkist might have one book on HR, but I could put 100 different things that are related to that or one degree separated. And then I can create the illusion of a wider selection of topics, but around a narrower, narrower avatar or concept. Right. I would start there.

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And then over time, you can expand if you if you want to and just reach, you know, you go adjacent, you go to finance, you go to whatever. Like this is me just spitballing again, like I did the no strip thing. From the economics perspective, you have to get LTV to the point where your churn should be under 3%. in order to make this really work. Once it's under 3%, monthly, yeah, monthly.

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I mean, ideally you want to maintain 80% annually, at least. If you want this thing to be a big thing, all of my attention would be only focused on that. Like until you fix that, there's no point in acquiring customers because they're just going to fall out the back end. Like there's literally no point because then you're also getting lots of people in that will then say that that thing sucks.

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You know what I mean? I'm not saying it sucks, but I'm just saying like a friend of theirs is going to say, hey, I signed up for this thing. They're going to be like, oh, I tried. I didn't like it. And then they're like, oh, okay, maybe I won't. I won't stick on it. I want to be so quiet about what I'm building until all my metrics are right. And then I want to blow the doors off.

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The last three companies I founded and sold grew so fast it felt illegal. UseAllen got to $1.2 million per month at the end of the first year. Prestige Labs got to $1.5 million per month by the end of the first year. And GymLaunch got to over $2 million per month by the end of the first year. And I'm going to show you the strongest growth levers I used to get these results so that you can too.

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It is the one thing that you prioritize. Before I enter any new space, launch a new product, the first thing that I do is try and get beta users. I get people to do I work for free in exchange for testimonials, reviews, and feedback, and sometimes referrals if I'm lucky. But in the beginning, that is the highest, most valuable thing that you can do.

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People will say things like, never work for free, and you only hear that from people who don't make that much money. If you make a lot of money, you will know that you spend so much time in the free phase because getting the product right is so important and is such high leverage.

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The proof process both makes you convicted because you get the opportunity of many feedback loops to make your product better so that you then can collect the positive feedback that you can then advertise to get more people like those customers. The most compelling way to advertise anything is show, don't sell.

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If I just stand here and said nothing, and I just stated the facts and told the truth, and I said, I have 11,382 reviews, and our average review is 4.7, and I make pasta really good. Or, I have one review from my mama, and I make super-fragicalistic, expialidocious pasta, guaranteed. Which one do you like better? Obviously, this one. You don't need to say much more. The proof is the pudding.

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So the most important part of a message is the messenger themselves. They're inextricably linked from the thing that's being communicated. And this is what people seem to miss when they're making content, which is why I'm a big advocate of do epic stuff first. then talk about what you did. And if the stuff that you didn't do is epic, focus more on the doing epic stuff, not on the talking about it.

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I started this channel with a commitment to a vendor saying, I'll make three YouTube videos a week. And I was busy and I was like, I'm just gonna hit a webcam and I'm gonna talk to the camera. And that is how this channel was started. The only reason, in my opinion, that people decided to listen was because I just so happened to have sold a company for just under $50 million.

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And so because of that, there was proof that I was able to deliver on the promise. Whereas somebody else might have a totally beautiful studio and have all these things, but they just forgot the one most important thing, which is why should I listen to you? either is gonna have to be proof that you generated for yourself or proof from other people saying that you helped them achieve that thing.

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So the next big thing is the hook. Now you're like, okay, I've heard about hooks before. Not the way that I'm gonna talk about it, all right? So the hook is greater than everything. Now, you're like, wait a second, I thought proof was greater than everything. Well, the proof is gonna be contained in the thing, but no one's gonna see the proof unless you have a good hook.

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The one thing that I think has consistently been reinforced, and it's just like a greater and greater percentage of my time is allocated towards this one part of my advertising that grows my company the most, is I search for the best hooks, and then I don't convince myself that I'm more creative than I think I am, and I just keep using the ones that work. So think about it like this.

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And so you think that as these people enter, you're losing market share, but the reality is you're this tiny little speck, and most people don't even know you exist. Now, the reason that I talk about advertising more so much is that advertising is a boom. And if you're like, what's a boom?

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These are the only four things that you can do to advertise any business. You can warm outreach, so reaching out one-on-one to people you know. Cold outreach, reaching one-on-one to people you don't know. You can run paid ads, which is going one-to-many to people you don't know. Or you can post content which is one-to-many to people you do know. And in each of these four situations,

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You can double, triple, 5x the amount of people who open and respond, who click and watch your ad, who watch your content all the way to the end. And if you do something like that, and you do increase the click-through rate by, go from 1% to 5% or 2% to 10%, which absolutely can happen. When you do that, you in a very real way can 2x, 3x, 4x, 5x your business. with just that one thing.

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Remember I talked about earlier that advertising is a boom, it's an order of magnitude change? Well, what other one thing can you just tweak that then opens up the flow to the entire business based on how good the first five seconds are, or the first one second?

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In thinking about hooks, I think about both the visual hook, as in what's happening, what that people can see, and then there's the auditory or verbal hook, which is what are the actual words that are being communicated. Right now, we've reviewed our top YouTube videos of all time, and I made a video about six months ago saying what we found, which is our hook formula is proof, promise, plan.

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And this is a force multiplier on any kind of advertising you do. And so when I think about all the different things, all the effort that goes into advertising a business, if I can just do one thing, and the crazy part about hooks is they're the shortest part. They're the shortest part of the whole darn thing. This is where David Ogilvie says, if you...

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have written your headline, you've spent 80 cents of your advertising dollar.

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The more advanced the advertiser is that I meet, whether it's a content creator, somebody who's on Outbound, somebody who makes paid ads, the more obsessive they are on the first frame, the first impression that someone gets because they know, one, it increases the likelihood that the person's gonna watch the rest of it and then potentially buy, and then two, it changes their entire perception of what follows.

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We actually looked at this for speakers at an event, which was if we changed the intro, the one to two minute intro that we had for a 60 minute talk, the person's net promoter score, so what people rated them in terms of how good they were, changed massively, even though the actual presentation was the same. So simply how we framed the presenter, the person hadn't even gotten up on stage yet,

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changed how everything they did afterwards was perceived. If there's two minutes that could influence the score that you get, the customer satisfaction, the amount of prospects, the one thing to focus on is nail the hook. Let me show you the force multiplication of this.

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It's actually a term that I started using internally for our business, which is a business order of magnitude change. Fundamentally, if you think about a business, there are many things that you can optimize. You can increase your close rate by 10%. You can increase your conversion rate on your opt-in page by 10%. You can increase your email follow-up. All of those things are optimizations.

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We just started reviewing short form content on the content team and just doing a more regular activity of seeing what are the things that make content do well. And there was a video that we were like, we think this thing is good.

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All we did is we took the same video that got like 40,000 views and then we just chopped out the first three seconds that was kind of like getting into the video before the actual real hook was delivered. And by snipping those three seconds and then just starting where the hook really was, it went from a 40,000 view video to a 780,000 view video. So you're talking about a 19x improvement.

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So I'm talking about 1%, 2%, I'm talking 19x. that is why obsessing over the hook is so important so the next big growth lever that gave us the super fast growth was more so i talk about more better new in the leads book as one of the you know the three strategies that you can use to grow any business so i talk about more better and new as the three primary strategies of growth.

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You either do more of what's already working, you do what you're doing to make it work better, or you do something entirely new. Now most entrepreneurs love doing new stuff and that's why it's called shiny object syndrome and it's a cancer and you should get that looked at. The very boring answer is the mundane more. You have to master more.

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And it's going, instead of zero to one, which is what most people love doing, oh my God, I finally got it to work, but actually doing one to end, which is, how do I do this thing as many times as humanly possible without wanting to kill myself? Here's the actual math explanation of this, is that more is typically the highest risk-adjusted return strategy. And so what that means is, if you

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can do something and you already know it works, the likelihood that the next thing you do works is much smaller. And so this is why once you have a control, meaning you have a specific landing page or ad or copy or email that you know converts, Whenever you deviate from a high converting advertisement, the likelihood that the variant is going to beat it is typically low.

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And so you have to try a bunch of variations because all you're doing is messing something up that actually already works. And so let me give you an example. If you had one sales guy and he's closing at 30%, Well, you could try and obsess to get him to 35 or 40%, and that would be material. You get a 25% lift overall, 30 to 40%, it's a 25% improvement. But you know what would be even cooler?

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Just hire three more guys, and then you have a or a 300% improvement. It's like I could get a 25% improvement or I could get a 300% improvement. And me trying to change up the sales script also has a significant shot of me taking it from 30 down to 20 because it's a change. And so here's the thing is that when you change anything,

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And so the problem is, with optimizations, you can only go to 100%. They're capped. But with advertising, you can, in a very real way, 100x the amount of people who find out about your business. And one of the keys that small business owners get stuck in is they get in this little optimization mousetrap where they're like, I need to move this.

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You guarantee you incur the cost of change, but you do not guarantee that you get the benefit of change. And so in each of the core four methods, you do more outreach, which is cold or warm. You go from 100 reach outs a day to 200 reach outs a day. Paid ads, you go from $100 a day to $200 a day. You go from posting content, you go from posting once a day to twice a day, right?

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Those are how you do more. Again, when I talk to the most experienced advertisers that I know, the most experienced business people that I know, The most common thing we talk about is we kind of laugh in the back room of like, people just don't know how much more they can do.

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That's the real, is that when I have conversations with small business owners, they're like, hey, I don't think I can do any more ads. I'm already running $1,000 a day. I'm like, I mean, dude, there's businesses that run like two million a day. you usually have so much more runway than you think you do.

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Sometimes you just need someone ahead of you to be like, dude, you can like 10x this and nothing's going to change. But they think because of whatever mental limitation they have are like, you've never spent that much money on an ad before. You've never made that amount. Is it going to hurt my account? No, they want you to make good content. Is it going to hurt my ads?

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No, they want you to spend money. Is it going to hurt my outreach? You're going to people who've never met you before. So why would they know that you've sent it to another 100 people? is that there's these perceived fears, but most of the times it's just between your ears. Yeah, I'll tell you guys a quick story about this.

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So when I had my first, I would say real business, which was my first location in my first gym, I had a mentor and he was a really good local marketer. He had a strategy for his tanning salons where he would bring in, I mean, thousands of customers every single quarter. And what he did was he would put out flyers.

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He just put flyers on cars and then had like a free VIP gift card and people would come in, redeem them, and he'd flip them into memberships. And so I figured, okay, I'll just run the same play. I did the flyers and I put 300 flyers out and I waited by the phone being like, oh my God, I'm going to get 300 people in here. It's going to be sick. What happened?

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Well, my phone only rang once from the flyers. And when I picked up the phone, the guy was like, hey, did you put the flyer on my car? And I was like, yeah, I did. Like, what time do I need it? But he cut me off and he was like, you damaged my Mercedes. And I was like, oh, Click. And I didn't know what to do.

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And thankfully, he never called me back because I definitely didn't have the money to fix any Mercedes at that time. I called my mentor back up a week or two later once it was clear that no one else was going to call. He said, hey, how'd the flyers work out? And I was like, well, they didn't work out at all, actually. I was taking some attitude with him.

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He was like, oh, well, what was your test size? And he didn't take the bait. He was like, oh, what was your test size? I said... Well, what do you mean? He was like, well, like, would you test with before you like did the real campaign? And I was like, oh, why? I mean, I put 300 out and he was like 300. He's like, you can't know anything with 300. I was like, what do you mean?

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He's like, I test with 5000. He's like, and then we put out 5000 a day for 30 days. I was looking at his results. from 150,000 flyers over 30 days and comparing them to my results of 300 in a day. And once I saw that juxtaposition, I was like, got it. I will never make this mistake again. It was very embarrassing for me because I was on the right path. I just didn't do enough.

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Oh, I was at 10.1 to one and now I need to be at 10.2 to one. It's like, dude, just get 100 times the leads and your business will grow. And if you're under $1 million in revenue, I can virtually guarantee that basically everyone on earth doesn't know you exist. And so the first four hours of every day should be dedicated to solving that problem and going from obscurity to being aware.

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And so one of the big meta lessons of this is that what presents as volatility is typically a symptom of low volume. So if you're like, man, I only get a sale every week or every other week, it's kind of like most days I don't get a sale and then every once in a while I get one. It only appears volatile because you're doing so little per day.

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But if I looked at your year and saw that you closed about, let's say, 12 customers in that year, you closed one a month, for example, every three or four weeks you get a customer, Well, all I would do is look at your entire advertising activity for the year and say, okay, if we wanted to get 12 customers a day, we would have to do 365 times more advertising than we currently do.

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And if we did that on a daily basis, we would get 12 customers a day. And so you just take your calendar horizontally, and then you flip it vertically for a day, and that is how much volume is required. And so most people just think that it's like, oh, they can't be doing more than like twice as much as me.

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But in my experience, the people who are crushing it literally are doing a thousand times more than you. And that's the part that like until you sometimes you hear it or you have someone ahead of you say it, it doesn't become real for you. And it's why I make these videos is to try and like push as much out of my brain and history so that you can just get the story without the scar.

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And that's the whole point. So once you're like, okay, I have something that's working, I should just do way more of that, awesome. Well the next thing, the next power lever here is word of mouth. And it's not the way that you think. So word of mouth, people are familiar with referrals, you know, customers tell other customers or tell other prospects that your stuff is good.

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What a lot of people don't understand is that negative word of mouth is significantly stronger and faster than positive. Disney did this big study where they found that it takes 37 tragic moments to make up for one magic moment. Versus, there's basically like a 5X versus 37X on, if someone has a good experience, they tell five people. If someone has a bad experience, they tell like everybody.

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A new business owner often will get customers pretty cheaply. And then, all of a sudden, costs start going up.

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And part of the reason that costs go up faster, because you can actually put math to this, which is understanding the difference between CPM, which is cost per impression, and if it's like, why is it M, it's mille, which is French for thousand, so cost per thousand impressions, versus CPL, which is cost per lead, all right?

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And so, if your CPMs more or less stay the same, but your cost per lead has two X'd, or three X'd, or four X'd, Well, if it's not costing you more to reach those people, then it means that fewer of them are responding.

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And if that's the case, and you're just going to still relatively warm markets, the issue is that instead of having positive word of mouth working for you, which should be actively lowering the amount of cost that it takes to get a new customer, you have

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word of mouth working against you and so people who would otherwise purchase from you heard something negative and then choose not to and so now all of a sudden you have to reach three times the amount of people because two out of the three people who would have gone and bought your thing heard it was bad and then now you only have one person who's just heard nothing

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over time, the percentage of the audience that's neutral or hasn't heard of you gets smaller and smaller and smaller. And so it's way harder to grow off word of mouth that's positive, but it's really easy to get crushed on negative word of mouth. And for whatever reason, no business owner ever claims that they have negative word of mouth. But I can tell you, half of you are below average.

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And so we do that by doing the core four more, which is you have to do more outreach, cold or warm, you have to make more content, or you gotta run ads. But the thing is is you don't need to do all of them. You pick one, you go all in, and that's what you spend your first four hours every single day on.

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That's a fact. And this is why I emphasize the proof over promise earlier on so much. Because if I'm going to get negative word of mouth, which I know I am if I'm starting out, I want to keep that as concentrated and quiet as possible. I don't want anybody to know, right?

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And so of course I'm not going to charge them money because the last thing I want to do is also have their money when they're upset. So it's like, hey, I'm making this trade. You're going to get stuff. It's probably going to not be that good. My only ask is you give me feedback. Tell me how I can make this right. Tell me how I can make it better.

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And when you ask those types of questions, you get the types of answers that can ultimately create more value for the customer. And then once you get positive feedback, positive feedback, positive feedback, now you have something that people actually want. Then you can introduce strangers to it. And of course, you're going to roll into the next issue, which is, OK, how do I keep that consistent?

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Because now it's not me doing everything. I've got a team. And we'll get into that. So the next big growth lever is steal from yourself. And so everyone's like, oh, he's gonna steal from his competitors. No, so think about it like this. All of your competitors are copying your stuff and taking what's working. When you find something that works, keep doing it.

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Deviation from what works is more likely not to work. Think about it like this. If you demolish a building, so let's say we build a building and it takes us two years to build a building. Demolishing it might take five minutes. Just put a bomb, boom. Because the place of the bricks and the steel in that building, every other potentiality that those bricks could go to create not a building.

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But there's only one placement of that brick in steel that creates a building. And so you have unlimited options for destruction and only one for solution. And so when you do find something that works, the likelihood that when you change it and you move the brick and you move the scaffolding, that you destroy the building is very high.

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Something can literally go anywhere except for the right place. And so you can have more options and all of them be wrong. So one of our portfolio companies, which is very large, hired a new advertising director. And that advertising director came in with lots of new ideas.

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And so the founder, because he wanted to teach an important lesson to the advertising director, said, sure, let's do all of your ideas. And so he sat there, he said the scripts, he recorded all these ads, he took multiple days to do it. And what ended up happening is that they ran all the ads and they didn't work. And so he said, hey, crazy idea.

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So the next growth principle is instead of trying to beat your competition, shrink your competition. What you want to do is overwhelm the marketplace so that you drown them out. You want to be so loud that no one else can hear them. You shrink them into irrelevance by comparison. There's two ways that you can become the tallest building, right?

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What if we use the same hook that's been working for three years? And they used the same hook and the ads worked. Think about it like this. Nike on its second year after Just Do It wasn't like, hey, Just Do It's kind of old. Let's switch it up. It's like when you find a message that converts, you keep hammering the message.

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When you find the ad hooks and you find the processes that work well for you, most times you'd be better served just continuing to reuse it because you will get bored of it far before your customers ever do. So believe it or not, there's actually math to support this.

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So Sergey Brin and Larry Page, I can't remember which one of them, is like a brilliant mathematician and actually was able to prove this ratio out. So when you're stealing from yourself, you want 70% of all of your effort to go into basically carbon copying the thing that works. And this works across all functions.

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This works for a sales script, this works for product, this works for reinvestment activities, like this rule works. The second is adjacent. So something that's just like one degree removed. So it's close to the core of what you normally do. So instead of saying, starting a school community is the fastest way to start an online business.

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I could say that would be a hook and it's a hook that worked. I could say, one of the fastest ways to start an online business is to start a school community. That would be a variation of something that we knew that those words weren't, but it would be adjacent to it. Not the exact carbon copy, but similar. Now 10,

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is that means that one out of 10 of the things that you're putting your effort towards would be something that's brand spanking new, completely out of left field. And when you look at your effort in your business, I can almost guarantee you that you have this flipped. And I only say this because I speak from experience. is that this is what I would do.

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I would spend 70% of my time on new crazy things, new ideas, all the stuff that excited me, and then 20% I'd be like, oh yeah, I'll do something kind of different from what I was doing before, and then 10% I'll be like, fine, I'll maybe, and this is a maybe. Most of the time it's like, oh, I already used that. Used that hook once, I don't want to use it again.

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I don't want to use the same hook that worked before in another ad. It's silly. Also, a different version of this from an advertising perspective of the 20% is you use the exact same hook but you have a different background. So it's just like a different variation. So it's like I could wear a different shirt, I could have a different setting, and I could still deliver the same hook.

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And to me, that would still be kind of a 20% variation. So once you're done stealing from yourself, then let's talk about emotional versus logical buyers. This was a huge, monstrous increase in business for me.

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have you ever heard from from the marketing world there's logical and there's emotional buyers i had heard it growing up and i kind of repeated it over and over again because i hadn't really thought about it i don't actually think that's true and so let me explain i actually think that there's a continuum of buyers that people sit on and you've got people who require more information so they're high info buyers and then you've got people who require less information

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there's two elements this one is their information requirement and secondarily how much info they have received and so you could have a high information buyer that's further closer this little this dollar sign here that only needs a little bit more information in order to buy and then you have some people that just generically buy lots of stuff everybody loves those people of course but guess what everybody fights over those people the thing is is that the amount of low information buyers is like this the amount of high information buyers is

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is an order of magnitude or multiple orders of magnitude greater. Only crazy people buy immediately. It's very normal for people to want to have more information before making a decision.

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You can knock everyone else down or you grow so that they become smaller in comparison to you. And so everyone sees their little building and thinks, oh no, I should knock all my competitors down, right? When in reality, all you need to do is build the biggest absolute building there.

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When we think about our advertising, the reason that the direct response community typically can't grow very large businesses most of the time is because they only advertise to these people and this pool of buyers is significantly smaller. But the reason building a brand, for example, and investing in an audience, is because you're trying to move them down this line.

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Now, when I heard this in the earlier days of my career, I was like, I don't have time for that, I need to make money. I get it, sure, in the beginning you just advertised the six inch putts. But when you want to scale, you have to educate a higher percentage of the audience. Because they will require more to buy. The way to move people through this,

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Let's start with the first one, which is nobody knows you exist. So here's what most people think when they think about their given marketplace. So let's say you're a local dry cleaner, all right? You see that you're advertising on Facebook. And so you see you have the whole pie and so you're happy. So that's just you. Then you have you plus one other person.

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is something that Eugene Swartz pioneered in his book Breakthrough Advertising. And he talks about the five levels of awareness. So he has unaware people, so people who have just no idea about anything. The next is problem aware, so they have some sort of some sort of pain, you have solution aware, you have product aware, and then you have most aware. So, those are the five stages.

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Now, a customer will basically move in this direction, going from unaware to most aware. If you want to go to broader and broader audiences to get their attention, the unaware audience you typically have to go off of broad curiosity. And so if you've ever seen those crazy like ads that are like weird articles like you know Arizona State blah blah blah has this new blah.

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Like they're trying to go after a massive audience of people who have no idea what's going on. That new, you know, scientific breakthrough could lead you to buying a supplement. It could lead you to buying a weight loss thing. It could lead you to buying some sort of equipment. It could lead you to buying insurance. Like it could go in any direction, but it's the curiosity that gets them in.

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Problem aware would be something to the extent of like, do you wake up to pee three times a night? Does it hurt when you bend over to tie your shoes? Do you get out of breath when you play with your kids? Those are going to be problem aware. Now they, again,

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that could lead you to a supplement, that could lead you to insurance, that could lead you to whatever, but it's a slightly more aware person. At least they're problem aware. Solution aware is that somebody knows of the potential things that they could buy and you're helping them select between them. Product aware is at even more micro level. And most aware is typically your existing customers.

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So here is where you just make offers, right? This is why the book Offers is where I started because The people who are here is the tiny audience here, and so you just make an offer to get them to buy. But that only works for this tiny audience. So you will make money quickly doing that, but you will also cap yourself quickly.

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And the thing is, is that you're going to block out the sun and your shadow will be so big that no one can even see these people. And let me tell you a story about this. When I launched my last book, 100 Million Dollar Leads, I spent a tremendous amount of time and effort across, I think at the time we had seven-ish million subscribers or audience size across all platforms.

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In an effort to figure out, okay, well, how much should I allocate between these most aware, less info people, and the maybe problem, unaware, high information people who require more education in order to make a purchasing decision?

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Well, I had one of the most enlightening conversations I've had in a really long time with Ben Francis, who's the CEO of Gymshark, and then he introduced me to Chris Davis, who's the CMO of New Balance. And so we had an awesome conversation talking about what Chris had done at New Balance and helped them just skyrocket their sales. What they did is that when he took over,

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30% of their advertising budget was going to here, was going to the broad awareness level, storytelling, emotional stuff. And then 70% was basically geared towards buying shoes, saying, hey, go buy these shoes. What he did when he took over was that he flipped them.

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That he ended up with 70% going to big, high level pairings, endorsements, specific athletes that they wanted to recruit that they felt represented their brand. And only 30% of their advertising budget went towards actually telling people that they had shoes and that they were for sale. After he made that flip, here's the crazy part. It took 18 months for them to see the return on that budget.

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And so if you're in a rush, this isn't gonna work. But if you're in a rush, you're never gonna get big anyways. keeping this ratio made this concept tactical for me.

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And so when I think about my marketing effort, my marketing dollars, and most importantly how I measure it, my marketing impressions, I wanna make sure that 70% or more of the advertising impressions that someone's going to get are gonna be around the pairings that I want of me giving something rather than asking. So when we look at this ratio,

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This is actually super well studied between 70 and 30% here. Because right now, it's actually three and a half to one is the ratio that has been studied to basically not lose audience. And so if you look at television, for example, and they've already studied how many commercials can we jam into the show before people stop watching. And so they figured it out that it was

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Every three and a half minutes of content, they could basically put one minute of advertising in. If you look at your Facebook newsfeed, for every three posts you get when you scroll, you'll get one ad. And the platforms that grow the fastest have a larger percentage of this give and a smaller percentage of ask.

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TikTok for years had zero ads on the platform and just wanted to grow as virally as possible and they acquired more users because they had a give first, give all the time strategy. The fact that they settled on this ratio and it has been corroborated, fancy word for it, it's worked in multiple other places, made me think,

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wow there's something to this and so this makes this concept of how do i balance high information buyers people that need more brand people that need more education prior to purchase with me making money is that you basically start with that ratio add patience and time and then it becomes a snowball that compounds unto itself and then you will get to a point in the future where you're still you're doing so much more than you

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could ever possibly do if you only focused on the direct response, on the less information, but you're actually still digging the well for what you're gonna do next year. And so basically you can see when a founder stops running a business and then the corporate execs come in, because what they do is they flip the ratio, they basically pull forward demand from the future.

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The founder dug the well, and then they just suck all the water out of the well, but then they didn't dig the next well. And so you're always gonna be ahead of demand. B2B businesses and B2C businesses do this differently, and this was something that took me a really long time to figure out.

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I emailed a bunch, I made a ton of content, we spent money on ads, we did outreach, we had affiliates going. We had all these different channels going to get as many people as possible to the launch. And when I walk around Las Vegas, because I live here, I will usually get stopped about three-ish times when I do about a 60-minute walk.

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And so B2C businesses, so like business to consumer businesses, will typically do these types of pairings in terms of high information buyers by telling emotional stories, making associations, getting endorsements from athletes and influencers or organizations that represent the values that they think resonate positively with their ideal audience.

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Once they do that, they then can place the product next to those associations so that they can then pair them and then the person wants to buy the product as a consequence. That is what it looks like in a B2C business. But it took me a really long time to think through, well what does this look like for a B2B business? And so I break this down into several tactical things.

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So number one is aspirational outcomes that you have achieved or the business has helped facilitate. Secondarily, people like this person, like your avatar, that you have helped facilitate. So just to be clear, stuff that you did, stuff that you help other people do.

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The third is stuff that you help them do, the prospect themselves, which you can only facilitate, at least in my opinion, in two major ways.

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One is that you give them free content and education, which is why I make this stuff, and the second is that you give them free products and services, which is why the books are free, they're on my site, you can read them, you consume them, there's a scaling roadmap there, personalized, all that stuff is free. Because fundamentally, it's, Two degrees of separation if some person does it.

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Alex had a big exit, now he has a big portfolio. Cool, that's two degrees of separation. There's other companies in the portfolio or other businesses who look just like mine that he helped scale. One degree of separation. I used his stuff and made more money. Zero degrees of separation. And so we wanna, and this is always gonna be stronger than anything else, but it'll take longer.

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And so in understanding the difference between B2C and B2B in terms of what do I do top of funnel here, how do I allocate my resources, it means that I'm spending time putting together the course in my spare time so that you guys can go consume it on how to make offers, how to get leads, how to scale a company from zero to 100 million.

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That's time, that's effort, that's my team who's behind the camera right now, that's budget that goes towards that because I'm not looking for demand today. I'm looking for those of you who are gonna scale your companies and in five years hit me up. Here's the thing, let's say Acquisition.com went public tomorrow and I got ousted for being rude, which I probably would.

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And then they put in a new CEO. And that new CEO says, I need to hit quarterly earnings. So what would he probably do? He'd probably switch to lots of direct response. And he'd probably cut down all the budget on the gives and the books. And all of a sudden be like, well, there's no ROI in a book. Like, books don't make any money. It's like, yeah, not today. But they bring people into our world.

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And when they do have the next billion dollar company, they will hit us up first. And that's the goal. But that guy will just say, well, you know what? Screw all that. I'm going to recapture all this marketing spending effort. We're going to focus it all on these direct response ads, tell people to buy, buy, buy. And you know what? For a quarter, it'll work. Maybe two quarters, it'll work.

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Mind you, I walk in a crowded area, so it's not like I'm just walking in the neighborhood, because then that would just be weird. Anyways, and of course you should be recognized by your neighbors. But I'll get stopped by three people, and every time for the month leading up to the launch, I would be like, hey, you going to the book launch?

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But all of a sudden, it'll start slowly going down, slowly going down, slowly going down. Then what happens? They call the founder back up and they're like, hey, help us fix this. And then the founder is going to say, I can't do it in a quarter.

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it's gonna take me a year, year and a half to basically right size the ship because you sucked all the wells dry and I'm gonna have to start digging again. So the next one is some of my marketing laws.

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So I'm gonna give you a few of them and I'll start with the first one that you, if you've heard my channel then you should know this one, it should be ingrained in your brain, which is state the facts and tell the truth. And the reason this is so important to me is that it forces me as a advertiser, business person, to change reality.

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And so rather than try and exaggerate, it makes more sense to put all of the effort into doing epic stuff and then telling a truthful story, rather than telling an epic story about something that was underwhelming. And I think the vast majority of marketers in marketing do the second thing.

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They have something normal and then they try and tell an exaggerated story of it rather than having something absolutely insane and just stating the facts and telling the truth. And I can tell you that the second, this one, stating the facts and telling the truth, is the best long-term strategy. How do I actualize this? So number one is that we make the truth more compelling.

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We actually change reality. The second is that we show only what we can show. I remember I was talking to a martial arts guy and he's like, there's all these other martial arts studios in my area, how do I stand out? And I said, well, what's your specialty or whatever? And he said, I'm a double secret black belt of something. And I said, okay, well, how many double secret black belts?

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He's like, well, there's only six in the nation. And I was like, okay, well, do any of them live in your area? And he said, no. And I was like, well, why don't you say that, right? Why don't you say that? So every business, if you get narrow enough, has something that's unique about it. You might have the best parking. You might have the fastest introduction to getting somebody to sit down.

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You might have the most gyms, whatever it is, the most customers, the most customers at a certain price point. You just need to slice the data of the business to figure out what is unique about your business. And I remember this moment in Mad Men, which is an advertising show. It's like an old 50s show. Well, it's a new show about the 50s.

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And Don Draper, who's the lead character, who's an advertising guy, is pitching a client who's a cigarette company. And they're trying, they're like the third or fourth in the category. They're highly commoditized. They're competing on price and they're losing. So he asks them to explain how cigarettes are made. And they kind of roll their eyes. They're like, why is this important?

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19 times out of 20, the people would look at me and be like, what's the book launch? And I was like, how do you not know about this, right? But it was this wonderful reminder that most people, when you get tired of your advertising, most people don't even know your first name.

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He's like, okay, well, first we have the plants and then we take, and he keeps going through it. He's like, and then we, you know, we let it sit out in the sun. He's like, what do you mean? He's like, you know, to dry out the leads. He's like, so you toast them. He's like, yeah, we toast them. He's like, it's toasted. And so that was a unique part.

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He just sliced down and got really narrow about one particular part of the process and was able to pull that out and emphasize it so that people were like, oh, this is different than other things. And the really important part about this is that maybe some of the other cigarette companies also toast it. but they don't say that they toast it.

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And so the perception is still that it's different, even if it is the same. The best version of this is finding something that's truly unique. The second best version is to just say something that's unique about something that everyone else already does, but that your customers don't know. The core layer to that is say what only you can say.

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So you show what only you can show, and you say what only you can say. So the showing part is gonna be like, okay, with the toasting thing, how do we display that visually? With the super secret black belt, then how do we display that? Now you could show the black belt, you could show you shaking your hands, getting the certification, you could show you winning some tournament.

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If you're toasting, you could show the bed of all the tobacco that's getting toasted and the smells and the wafting through the air, whatever. And then you describe it in a way that only you can say. To do this, it's more important that you are the best than what you are the best of.

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I would rather be, from a marketing perspective, not absolutely, I'd rather have the 10th biggest company in the world than the first biggest company in Indiana. But from an advertising perspective, it is more compelling to be the best. And I'll tell you a story that I haven't told. John Rockefeller, when he was early on in his oil empire, bid to buy the biggest oil refinery in Cincinnati.

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And he was the second biggest. He ended up overpaying for the business. And the business owner of the oil refinery laughed at him and kind of laughed his way to the bank. He's like, you completely overpaid for this thing. And so then what John D. Rockefeller did after he bought the first biggest, and he already had the second biggest, is that he then was able to say he was the biggest.

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And then in the next 30 days, he had over 20 M&A deals in the next 30 days to consolidate the entire rest of the market because he became the gorilla. He was willing to overpay for the asset to get the story.

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If you have deluded yourself into thinking that you should only have to say something once and somehow everyone in the entire world has heard you say that thing, you are kidding yourself. You need to become a master of variety in terms of how you can re-say the same thing in different ways.

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The difference in value between what he should have paid for those 20 deals and what he was able to pay by strong-arming those smaller competitors, because he was now the gorilla, more than made up for what he minorly overpaid or maybe even majorly overpaid for the one company that he bought.

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And when he recants the story, when he tells the story again, he talks about how that competitor didn't see the bigger picture. I remember reading it in the letters that he wrote to his son and thinking to myself, that is powerful. he was willing to overpay for the story. He saw it as an investment in his brand, in his reputation.

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And so the guy who sold it just saw it as him overpaying for a product, but he wasn't appropriately valuing how much true brand value that would give Rockefeller as a result. The next big growth lever is all about the list, all right? So when I talk about the list, people immediately think that I'm talking about email list, direct mail list, and sometimes that's true.

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But I'll give you a hypothetical example. So let's say I am selling winter coats, and I advertise an amazing offer on some killer coats that people love, they look amazing, and nothing comes back. What could have happened? Well, if I showed my advertisement to people who live in South Florida, the likelihood that they buy my very expensive, really heavy and hot winter coats is very low.

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It has nothing to do with my offer, nothing to do with the ad creative, nothing to do with my pricing, nothing to do with anything. It's just the wrong people are seeing it. Many smaller businesses think that marketing doesn't work, when in reality they were showing it to the wrong people. And so the first thing that you have to get right in marketing is targeting the correct audience.

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This is different by method of advertising. If we pull up our core four here, you want to reach out to people that you know are suffering from the problem that you solve or have a high likelihood of suffering from the problem that you solve. And the narrower the problem, the smaller the list. From a paid ads perspective, this is where the targeting by platform gets more important.

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And this is why some ad platforms tend to be more profitable than others, because what makes an advertising platform successful is how well targeted it is. In fact, Facebook was so good that they had to roll it back because of privacy laws. But it was so effective at targeting people that people complained because it was so good it felt creepy.

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Posting content, this is where the algorithm itself, based on what you look like, and how you talk and what you say will impact what the AI serves your content to. The same works with paid ads. And so if I wanna get more women to buy a product, guess who I'm not gonna have in the ad? Because this is not what attracts lots of ladies, right?

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Taking the natural extreme, there's this fallacy that most small business owners think, and myself included for years I thought this, was that repetition in and of itself is somehow bad. So let me explain. There's probably people on the internet, I personally follow a bunch of philosophy accounts, most of the philosophers are dead.

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This is just usually a bunch of entrepreneurs who tend to have beards and like fitness or whatever else, right? But like my audience is like 89% male. And sure, for my 11% females, keep rocking, I appreciate you. But by and large, I have a male driven audience.

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Now, maybe it's because I talk about money, but there's tons of female entrepreneurs who talk about money and don't have predominantly male audiences. And so it's just that my way of saying things and or the algorithm just tends to display it to dudes.

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One of the easiest ways to make sure that you're displaying your ads to the right avatar is make sure that the person in the ad looks like the avatar. And I'll tell you a funny story. So when I was running the gym launch 1.0 version, which is where we used to fly out to gyms and do the turnarounds,

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I found out that when I put the thank you page, this is before automated schedulers even existed, so it's kind of wild. I remember when I had my first automated scheduler, put it on the thank you page, I thought I had cured cancer. I was like, this is the coolest thing. People can automatically book. I don't have to call them and work the lead.

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The thank you page that I set up was just like, hey, text this number. And then the second version of the thank you page was, hey, my name's Alex, I'm gonna be the one calling you. So I put a picture of me and I said, I'm gonna be calling you from this number. So I tried to put some visual to it.

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Then when I put Layla's picture on the thank you page and said, Layla's gonna be the one contacting you, what do you know? Our response rates went through the roof. People were immediately responsive. They were showing up to appointments. oh yeah, sure, I can make five o'clock. For me, they're like, oh no, I don't give a shit.

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And so if you want to attract a certain avatar, try to make sure that what is in your content, how you talk, matches the way they talk. Because fundamentally, all marketing works as long as you get the targeting right. Think about it this way. If you walked into a room, this is how I like to visualize marketing because people overcomplicate it.

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If I walked into a room and I got on stage and there was 1,000 people in the room, if those 1,000 people were my ideal customers, then even if I had just like a really mediocre offer and Something that they like kind of wanted I would get some response now. It might not be efficient It might not get me the return I want so I might lose money, but I might I would probably make something and

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I would get some clicks, I would get some leads. And so it would allow me to start the feedback loop so I could improve. But if nothing is coming through, it's typically because the wrong people are seeing it. And so one of the highest leverage ways of getting more from advertising is just making sure that the right people are seeing it.

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which is a perfect transition into the next one, which is how do you know that you've mastered something? Which is that masters have more ways to win. Now, what does that actually mean? They understand the many different ways that you can measure progress. So if you were to talk to an HR professional, okay, you ask them, what do you do?

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A lot of times they're going to give you a couple of vague answers like, you know, I'll payroll and I'll make sure that people get in their benefits and whatever. But when you talk to someone who's a master at this, and I remember the first time I had somebody who completely improved my understanding of talent and acquisition and recruiting.

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In the interview, the candidate said, oh, well, what's your time to fill? And I was like, what do you mean? She was like, well, the average time to fill a role. I was like, I don't know. She was like, oh, well, what's your two-sided fit? I was like, I don't know what you mean. She was like, okay, what's your cost to acquire talent? I was like... I don't know.

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She had all of these different metrics that she was using to measure, which completely made sense to me. I have cost to acquire a customer, I should have cost to acquire a talent. What's my cash conversion cycle? How quickly do I get my first sale? How quickly do I fill a role?

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And yet, I still love to see the quotes they have because they remind me of the things that I want to follow, the way that I want to live. And it's not like, oh, another Seneca quote. Does this guy never give up? It's like, he's dead. He hasn't come up with a new quote in 2,000 years. And yet, I still like seeing the quotes even though I know I've seen them before.

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And then in terms of customer satisfaction, it's basically employee satisfaction of how likely is it that the manager and the employee both say at day 90 that this is a 10 out of 10 fit.

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And so when I started looking at that, I was like, oh, wow, there's a total, there's a whole nother level of understanding this that I had no idea about because masters have a higher quality and quantity of metrics that they use to measure progress. If I am trying to fix this function, I have nothing to know how well I'm doing.

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And so a beginner will try to advertise or will try to sell and they will have binary outcomes. They'll just say, I didn't sell or I did sell or I got leads or I didn't get leads. But there are so many nuanced steps between that. When you have the milestones, the progress markers, it allows you to fix things so you can keep moving the buck along until you get the outcome.

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And so I'll tell you a story about this. When I was starting Outbound way back in the day, it was a new channel for us and I'd never done it. And about 90 days or four months in, my executive team kind of did like an intervention. So they came together. It was like I was getting like a drug rehab, right? They were like, we think this is a problem. We think this is a shiny object.

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We think you're distracted and we should double down on what works. I was like, how dare you use my words against me, right? And the thing is, is that strategically, I knew we needed to have a second acquisition channel for us to sell the business. I was like, no, it's because... They could only see that we'd only done one sale in four months and 100% of my time was going towards this.

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But what they didn't see was all the progress that we were making. And so I had higher degrees of mastery in this. Now, to be fair, it was just because I had learned it along the way. But when it started, it was like, okay, well, we have to get a list. So where do we get the list? So we looked at, you know, we bought a bunch of different lists. A lot of lists didn't work. One of them did.

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We're like, okay, this is a good provider. And then we start, you know, like, oh, we gotta enrich the day. So we start learning how to enrich the day. Then we started calling them, but then no one was picking up. And then we had to learn how call wrapping works. So we get local numbers. And then all of a sudden people start picking up and then start hanging up on us.

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And then we had to fix the hook in the script. And then we fixed the hook in the script, people would make it a minute, but then they'd hang up on us. So then we got, we fixed the hook and then we fixed the offer. And then people would then go to the second call, but then they weren't showing up for the second call. And so it's like, we have to just keep moving the buck along the way.

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But if you looked at it, Two months in, it's like, you know, a heart surgery looks like murder to somebody from the outside who doesn't understand the milestones. As you master something, if you don't know why something's not working, look closer.

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Look for the smaller attributes that you can actually zoom in on and say, okay, well, we'll get a sale eventually if we just keep moving in this direction. And so look for directional correctness rather than binary. And so this is a perfect example of masters have more leading indicators to success than beginners to. Beginners typically look at purely the lagging indicator.

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They just say churn is up. Sales are down. Revenue is down. Cash collection is down. Those are all lagging indicators. If I looked at you and said increase revenue, you can't do anything. If I said decrease churn, you can't do anything with that. You would then have to do something else and then the result would be a decrease in churn. The result would be more revenue.

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The result would be more sales. We have to identify what all those steps are that are high correlates or increase the likelihood Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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And oftentimes, you serve that role for your audience more than anything else. We think that it's like, oh, I've said this one thing, therefore they have all changed all their behavior immediately and they never need to learn that again. But the biggest lesson that I've learned is that people need to be more reminded than they need to be taught.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And in the off chance that you've received hate or you have a competitor who's talking crap and it happens, This counts double. So instead of trying to beat them or prove them wrong, you only have two options. Option one is you grow so big that no one can even hear them. The alternative is that you kill them with kindness, which is that you do not beat them by proving that you are right.

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you beat them by proving that you are kind. And then by comparison, they will look bad. The only thing I can tell you about having dealt with plenty of it in my day is that on the occasion that I do choose to respond to hate, I try to respond with kindness. And so someone can just absolutely tear me one and just say like, this guy sucks, he's terrible, whatever, right?

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Then all of a sudden you've got half of the pie. Then it's you plus three other people in the marketplace. And now you feel sad. But the reality is the marketplace is significantly bigger than you ever give it credit for. There are so many humans on Earth. And so this is what it looks like in reality. You're actually only advertising on one of four different methods.

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I will then usually say, hey, you're right. I'm a super flawed person. That being said, it seems like you've developed like a big audience here and they seem to like you. And so congrats on your success, right? When someone sees that, it's very hard for everyone to be like, man, that guy sucks.

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It's just like now, if I were to try and like list out all the points, all I do is invite more back and forth, which I don't want to do. And it's a waste of my time. And so instead, you start all hate responses with you are right, because it's all they want to hear. And there's really nothing else to say after that. Eminem has responded to hate in two ways publicly that I absolutely love.

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So the first is that when Will Ferrell confronted him about some things that Afrojack had said to him, he said, hey, Afrojack's been talking trash. Do you have anything to say about it? And Eminem just said, who? And he said, and then Will Ferrell repeated the statement. And then he just looked at him and he was like, who? And he was like, okay, yep, that's what I thought.

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And so the first is, I'm so big, I can't hear him. The secondary is that you kill them with kindness, right? So you either grow so big that no one can see them or hear them, or you meet them where they're at on a different game, which is you play on kindness. and grace. And so in 8 Mile, Eminem tries to claim all of the flaws that he has so that no one else can say anything.

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And so I get hit on a lot, not like that, for talking about working a lot. People are like, that's not healthy. And of course, I try to put disclaimers in every video. I'm like, do whatever you want. I get hit on for like, oh, I think he's trying to make money. Duh, I try to say it all the time. But people assume that I am trying to hide this from my audience. Of course I'm trying to make money.

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I'm in business, that's the whole point I do this. And that way, if I always start with I'm here to make money, when I do something nice, then people are like, oh, well that was nice of him. Rather than me claiming that I have to be this super kind whatever person, then when I try and make money, people are like, ah, shake their finger at me. Like, it's not good.

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I try and learn from Eminem and just take all of the negatives that I can think that somebody would possibly say and then just claim them as my own. Because yes, we are all flawed and none of us are perfect. And so for some reason we are bothered when someone else points out our imperfections that we would readily state ourselves we know we have deficiencies.

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If I had one thing that I wanted my life to represent, it's do what you want, but don't complain about what you've got. So if you're not willing to do the things to get what you want, don't complain that you don't have them. You know, in this particular incident, it's like, could I have tried to say, hey, you know, we make your annual revenue every other day. I could say that.

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I could say that our goals are not the same. One billion is not the same as a million, right? It would be the same as you making $200 a month at a lemonade stand versus somebody who's doing $20,000 a month to give a proportional comparison. So of course the effort that I have is outsized. And so what's interesting is that oftentimes hate, if you boil it down, comes down to I

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do not prefer the way this person does things. I have a different preference. And it's like, great, right? Like I make money one way, he makes money another way. And therefore he is wrong. It's like, no, you just do the way you want, which is awesome because you do it your way and they do it their way. And the people who are attracted to that will do that.

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And the people who are attracted to you will do yours and great. I mean, of course there's engagement baiting and things like that because people wanna get views and all that. And I respect it, I get it. But big picture, I think you can't take it

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And the way that you're doing it is only on one slice of the medium. And then within that, you have your tiny little quarter. that you are taking up. And so the marketplace has so many different ways they can communicate using each of the methods of communication. So for example, if I'm talking about content, I'm like, oh, there's somebody else in my marketplace who's marketing on Instagram.

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You can't take it personally, because whenever I fall into that little trap, I think to myself, I'm a relatively developed monkey that is sitting on a little blue marble in a solar system that's in one of a billion galaxies, and I'm worried about some screen that has words on it out of made-up language that we had in the last 1,500 years of how we communicate face noise to each other.

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And when I think about that, I think, you know, this would be pretty silly for me to, like, ruin a day over. So the third big growth lever, and this one's massive, is clear, not clever. Alright, so what do I mean by that? Well, when I looked at the highest converting ads that I had run, and I do this pretty regularly, I look for different components. Sometimes I'm like, what's the hook?

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Sometimes I'm like, what's the color scheme? What's the visuals that are being displayed in the first however many seconds? In this one particular pass, I just looked at the grade level of the language that was being spoken.

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And the reason I looked at that, I think it was one or two election cycles ago, I had heard this research study that had stated that the president who spoke in the lowest grade language was the one that won the election over and over again. And when I heard that, I see presidential elections fundamentally as massive brand campaigns. I see that as...

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They were able to communicate a message to a higher percentage of the population because they lowered the barrier to entry of comprehension, meaning more people got what they said. And so when I hear that, I thought, man, I like to use all these big fancy college words and no one knows what I'm saying. And so all I do is feed my ego, not my bank account.

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I made one of my big marketing rules clear, not clever. And so you want to take whatever communication is, look at your landing pages, look at your ad copy, look at the words you're saying in your content, and say, does a third grader understand this? And the point that some people try to make as a counter is like, oh, I don't want to talk down to my audience. No.

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When you speak in a more broken down manner, you help the experts understand it more easily, and you help the beginners understand it for the first time. And so it's not that experts are all of a sudden saying, oh, no, I don't believe that. Because listen, we get tons of very big companies that come to acquisition.com for investment. And the guys who run those companies, very intelligent.

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I try to make my videos in a way that people can't understand them because who do I prove when I use a big word and then all of a sudden three quarters of the audience can't understand it? And if the point of me making these videos is to make real business education accessible for everyone, part of making it accessible is making it interesting, making it fun, and making it comprehensible.

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which is just a fancy word for understandable. What you guys don't see behind the scenes is that I will typically self-edit. And so I said distilled earlier in a sense that then I said broken down for experts is because I said distilled and I was like, I have to use a different word, broken down. And then I said comprehensible and then I said fancy word for understandable.

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And so I try to constantly catch myself in this and it's also made me a significantly more effective leader. So if I'm trying to communicate with my team, I'm not trying to say big words. I don't want to impress them. I want to change what they do. It's a great litmus test to show whether you actually understand what you say you understand.

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Because if you can explain it to a third grader, and this is Richard Feynman who said this, this famous physicist, he said if you can explain it to a third grader, then you understand it. If you can't, you don't, and you need to understand it better so that you can break it down. And so the broader the audience, the broader the analogy, and the simpler the language. I'll give you an example.

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One element of this is the grade language of the words you use. The second is what visuals or stories you use to depict them. If I'm talking to mechanics, I might use an analogy where I relate something they understand cars to something they might not understand a business, right, if I wanted to teach a specific concept.

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Okay, cool. So there's that. but isn't there also other platforms you can do it on? And don't you think that maybe there's enough people in your marketplace to satisfy your business? Probably. The amount of times that I would have a gym owner, for example, who'd come to me and say, hey, there's this other guy in the marketplace who's now running Facebook ads.

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If I was talking to the same, I was trying to teach the same concept, but I was teaching it to realtors, then I would probably use a house analogy. If I was teaching it to baseball people, I would probably use a baseball analogy, right? If you have a narrowed down audience, you will increase comprehension by using analogies that they all understand.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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If you're talking to a broader audience, then you need to have a broader slice of the market probably a more human experience that all of them have. So if I'm talking to everyone, I might talk about food, I might talk about sleep, I might talk about driving, right? Because most people do that assuming I'm not talking to children.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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You have to match the analogy to the history of learning from the people that you're trying to communicate to. And this is what takes your marketing and your advertising and puts it on steroids. And to put this to the test, this is something you can do right now. Look at whatever emails you send, run them through a reading grading level app,

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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Keep working on it until it's below fifth grade minimum, third grade if you're awesome, and then send it. I did this to our email follow-ups and had a 50% increase in conversion. I didn't change anything about what I said, but I saw that as I got 50% more people to understand. Because the goal here is to decrease the friction of comprehension.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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So if we think about the elements of value, speed, ease, time delay, these elements are all impacted by complexity. And so something complex takes longer to understand. It takes more effort, right? And it's harder, right? And so instead what we want to do is say, okay, how do I make it easy and faster? Okay, well, then I'll just speak in a way that everyone understands.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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The next massive growth lever is proof over promise. And so what this means is that in my earlier days, I would spend so much time on my promise. I wrote a whole book on promises, which is basically offers, and I would obsess about the offer. And the offer is super important, but the only thing that's more important is proof. All right, so let me give you two hypothetical examples.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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Let's say that you've got business one that's selling thing one, and business two that's selling thing two. Well, let's say they still compete for more or less the same audience, and business two says, we'll do X, we'll do Y, we'll do Z, we'll do W, and we'll guarantee X, Y, and Z, right? And you look at their reviews, and they've got a five-star rating, and they've got one review.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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I'm like, you only need 200 people in your gym to be incredibly profitable. And right now, the last time I checked, you've got one million people in your city. And so you just have to get 200 of them. And so if there's 10 others, or 100 other gyms that are advertising your area, even on the same platform, you still just need to get .00002% of that audience to just come to you.

The Game with Alex Hormozi

How To Make Money So Fast It Feels ILLEGAL | Ep 808

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The other company says, we'll do X, and they've got 11,382 five-stars, and they've got a 4.7. Who do you buy from? this guy, obviously. But why? This guy has a better promise because you believe this guy. And so you want to have proof up to your eyeballs. Proof is your single highest priority as a business owner or marketer or advertiser or promoter for your business.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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You're about to see a fascinating conversation I had with Dave Ramsey, where we talk about how he makes money, the advantages of in-person versus remote, a project that he lost millions of dollars on that I think has underlying lessons that any business owner can take from them. And finally, five stages of scaling all entrepreneurs go through. I think you're gonna love it. Enjoy.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And pay payroll and pay taxes.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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I get this question a lot, so I'm curious your take on it. Equity packages, stock shares, anything like that, or is it all pure based on bottom line profit? Is that kind of the performance compensation component of the leadership that you bring in for either business units or C-suite?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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That's it. Oh, I love that. Um, I'd say Layla and I have a similar perspective on acquisition.com in that it's kind of our forever business. You know, we plan on just continuing to own it and continuing to operate it. You know, we will, we'll enter, we kind of see it as the goose versus the eggs.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Uh, at least how, how we think through it, which is probably like we use a different analogy, but similar, you have 14 profit centers. Those are the eggs. And then the goose is like, why would we get rid of acquisition.com? It's, it's the mothership to, to use your language. Um, So that brings up two different points that are probably somewhat related. So one is, is 100% of Ramsey in person?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Is anyone remote? No, we all work at work. Yeah. So you don't have exceptions where editors for social media or maybe some of the coaches or something like that could be remote. Everybody moves to Tennessee. Okay. Yes.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Yeah, of course.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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I think you might like this. I think it was either Uber or Airbnb. Someone can correct me in the comments. But they did a research study because I think they were trying to prove or at least definitively know whether in-person versus remote, which one is better, et cetera. And they found an it depends answer, which is – and I talk about this because obviously we're in-person.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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We have a big headquarters here in Vegas – That especially, especially for the first third of someone's career. So basically like call it 18 to 35 is where those people get a disproportionate upside for being in person because of all of the unstructured learning that occurs. That's not on your, quote, career path.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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You know, like if you're sitting right next to marketing and you're in sales, you know, you overhear, you know, what's going on in terms of the organic stuff. You overhear what's going on in the paid side. You start learning a little bit more about funnel, you know, about landing page and conversion rates and things like that.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And then all of a sudden, when you are on a sales call, you know, with a business owner or whomever, and they bring something of that up, you're like, oh, I actually know something about that. But if you were in an only Zoom environment, you lose out on all of that.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And so I'm a big advocate because I obviously have a big percentage of the audience that I have that's in their early 20s beginning their career. I would encourage you all to work in person. I really mean that.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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There's a couple of dovetails that I'll hit on that. So one is you talked earlier about bench depth. And I would imagine that one of the best ways to build the bench depth is having more people cross-functionally learning in person from other leaders at cafeteria, at the water break area and what have you. You also spoke about trust, the speed of the companies based on the speed of trust.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And I would I would I would. I 100% agree, and I think that translates into faster decision-making. And so I'm a big believer in the speed of decisions is the speed of the company, which can only be based on the trust that people have. If you have to double-check every single thing, then all of a sudden an approval process has to get put in place, and then bureaucracy kills everything.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Well, and it interferes with delegation.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And I think you spoke to two things there. You spoke to both competence and intention. Are they good at their job, and do they mean well, which I think it kind of ladders up to on-brand versus off-brand. Is this a Ramsey thing to do? Is this the Ramsey way? Yeah.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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So if just because I think everybody loves the good story, what's the most what's the biggest goof up you've had in 35 years on something that was off brand for Ramsey that you're like, man, I can't believe we did that. Right. Like and what what then would you do about it afterwards? Because I'm sure every business owner's had a big goof up and been like, shoot, that was bad.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Okay.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Welcome everyone to the game. I'm here with Dave Ramsey, the man, the myth, the legend.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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I feel like a lot of people have had that same, like, this is such a good idea on paper. Why is this not working the way I want it to?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Oh, yeah. I mean, I see it. I mean, it's compelling.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Yeah, it got hairy. Well, let me pivot from the super tactical of that to zooming all the way out. So a lot of entrepreneurs, myself included, you start to build a lot of wealth. And then there's also the biggest percentage of your wealth sits inside of the enterprise that you run, right? And so how do you think about...

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Family office, it's like, you know, you start getting this money, right, that comes into the business, or comes out of the business, excuse me. Do you have any kind of mental framework that you work through in terms of percentage reallocation to new, you know, new investments within the overarching structure?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And where this gets more tactical for me to you is Layla and I have run almost everything inside of acquisition.com. And that means like we own buildings, we own apartment complexes, all that stuff. It still sits there. in acquisition.com. Obviously, there's entity structures and things like that.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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But in terms of the team that helps run it, because, you know, acquisition.com primarily is an investment, you know, it started as a family office, but it just it spun up these other profit centers to use your language over time.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And so I'm curious, have you do you do you completely separate church and state to use that language in terms of, you know, Ramsey personal versus Yeah, can you just walk me through how you think through that?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Well, that's exactly that. And that really teases to the heart of it, because for sure, the entity structure from a risk protection perspective, then, you know, from from a succession planning and avoiding estate taxes later, that 100 percent makes sense. I was curious about the actual team. So, like, would the same legal team that does Ramsey stuff do some of these other deals?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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This is me selfishly asking because my estate attorneys who manage all of that stuff, and I have our M&A attorneys that handle a lot of our deal flow, a lot of times I share the same resources, same people for things that are, quote, personal versus acquisition.com. And I was curious if you had any, like, basically, if you had had a mistake from that that I don't know about, I would love to know.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Man, that was super helpful. For those of you who are further along in the path, some of this stuff that we're talking about with asset protection and entity structure, although it's something that you don't... I don't wake up every day and be like, man, I can't wait to learn about asset protection. Right?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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I love this so much. I could talk probably another hour on this, but I'm going to pivot for the sake of the audience. Can you walk me through the six stages of scaling that you talk about in your book?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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What revenue level would you say this is around? I'm sorry? What revenue levels would you say, like treadmills, like zero to a million?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Well, Dave, I think we're close to time. But I wanted to personally say thank you for the impact that I think you've made on millions of lives. I'm sure you hear it every day. But I want to say thank you because I think sometimes when you're at the top, you don't hear it as much. And so I think it's real good stuff. Well, thank you, brother. No, for real. And I think your heart...

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Well, thank you. We're trying to follow in the Ramsey footsteps. There's so much stuff that I had written down and prepared for today, and I doubt we'll get to all of it. But if you could walk me through just kind of lay of the land in terms of Ramsey Solutions as the business exists today, because I think it'll be helpful for the audience to give context.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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is clear i think people see what your intention behind it is i mean the man owns a 600 million dollar campus in cash he doesn't need your money um it's nice right but uh but but he doesn't need it and i think um i think it's really cool what you've done i would love to talk for another hour on even like going from personal finance to the entrepreneurship brand. But I know our time is limited.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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So anyways, I want to say thank you again for coming on the game. And I'm sure my audience will definitely have a couple moments of PTSD hearing some of the stories we went over and maybe hopefully avoid future PTSD by taking a right and then a left. Very cool. Well, thank you for having me. Let's do it again. Yeah. No, awesome. Thank you.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Hey, if you enjoyed this conversation, there's actually a second long form conversation I've had with Dave. I had one, I think two years ago. It's one of the top videos on the channel that people seem to love. And so if you like this, you'll love that.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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You have 14, and it's been how many years? 35 years, 40 years since you started? About 35 years. 35 years. So it's roughly like one profit center per two and change years, right? Two and a half years almost on the nose. That gets started. Maybe more than that because we've killed some along the way. Yeah, even better. So what makes something worth pursuing versus what makes something a no?

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Is it just it's on mission? Because I would imagine that there's... You have resource constraints. You can't do everything that you would love to do. So what makes something, quote, worth doing versus not worth doing?

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you take more of a test quickly, lots of ideas kind of strategy. And if something hits, then you double down on those things. That's kind of how you think through kind of new product or expansion of kind of like profit centers, I think is what you said. Exactly.

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Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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So with these new endeavors, the first thing I wrote down when you started when you brought it up was, was who does new. And the reason I bring this up, because I'd imagine a lot of business owners have many ideas, you know, you said it earlier on to like shiny objects, like, Oh, this looks exciting. This looks exciting. This looks exciting.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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But for something to work, you typically have to have talent overseeing it. And I would imagine at the point that you're at now, you're probably not overseeing each of these kind of new profit centers or new ideas, maybe they're, you know, brought to you and you review the metrics, but you're not really driving, unless you are, in which case this is an open question. Who does new?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Because are you going to take resources from something that's working? Are you bringing somebody new in? Or do you have a specific testing department that's all they do and then they hand it off to somebody else? Can you walk me through that process?

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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so when you put a new leader on it that so that was the who does new that was kind of the heart um so when you put a new leader on is that you typically pull like a junior like if your vp is head of a division you pull somebody who's kind of one of their right hand they get the opportunity from a career pathing perspective that they can run this new thing or like how do you think through through bringing those leaders in are you mostly yeah i just love to know how do you think through that part

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Light wet wood. That's a great analogy. When you start these new... And I think I want to the reason I'm hitting on this is because I think if you asked 100 entrepreneurs, what's the number one thing that you wish you could do would probably be more new stuff. And so this feels like a very, very relevant thing to talk about.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And I think that happens at all levels, because, you know, in the beginning. You're just barely figuring out what's going on, and so you're just trying and seeing what sticks. Later, you have more resources, so you think you can do more, but oftentimes you also distract the team.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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They feel whiplash, and then sometimes the core business starts to falter because everyone's looking at the new shiny toy rather than the main game.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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Well, this is a great segue. So with each of these VPs, I would imagine these are among the most valuable people in the business, right? Because they're fundamentally running a business unit.

The Game with Alex Hormozi

Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 871

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And then the C-suite, I imagine, gets kind of compensated from the company overall.

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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When I was doing gym launch, which is when I started the original gym launch version of my company, this is after I had my chain, I would fly out to facilities and fill them up, right? And then we scaled up to a team and then we'd fly out to those facilities and scale them up. And what's interesting is

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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Um, some of the gym owners told all of the clients that we had sold to refund and then, and then buy it again through them. Um, which you might be thinking that sounds dishonest. And the answer is you are right. It is dishonest. And so I think in a matter of a week, I had like two gyms do that. And I think I had like a hundred or $150,000 in refunds. And mind you, like,

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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I think I had a total of $150,000 saved up. And so this was like everything I had. And it happened in a week. So just imagine losing everything you have in a week. It was horrible. And this is just after I had kind of come out of my barely... barely getting out of bankruptcy situation. So I'd gotten rid of the gyms. I'd started the new enterprise.

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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That money had disappeared because a partner had taken it out. And then I was basically left with $1,100. And I started gym launch the way this company had grown. I was able to grow it back up at $150,000 in savings. And then boom, it's all gone again, right? And so I said, I share this with you because I know what it's like to lose everything.

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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But what's interesting, though, is that when that happened, the reason this got worse and worse is that even before I had those two gyms that told everyone to refund, there was still a high percentage of people that were refunding, like an egregious amount. We were at like 25%. And the reason was...

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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When I had my chain of gyms and I built them not to make money, I built them to build a business, right? That was kind of the mindset. I was like, I want to build a business. And so what's interesting is I continued to grow the business, but I didn't make much money. I mean, I made it enough, but I didn't make a ton of money. But I will say this, is that whenever I got into a hard spot, right?

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Building Wealth While Building A Business | Re-Air Ep 290

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Because we had a satisfaction guarantee with the program, but I had no control over the fulfillment. So I had gym owners who were coming to us who were struggling. So they probably weren't that good at fulfillment. And then we would sell people into their gyms, and then they weren't that good at fulfillment. And so people would just say, like, just give me a refund. I don't want to do this, right?

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And the thing is, is they had no skin in the game because it was all my money, not theirs, right? And so they were like, yeah, whatever, refund. And so we still had a huge refund rate. And what ended up happening was... the refund rate basically surpassed the margin of the business. And so let's say I had a 25% refund rate and the margin of the business was 12 and a half, right? And so

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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all of my margin was gone based on these refunds. And so in order for me to make up the additional 12.5%, I had to sell more in advance to cover the deficit. And if you're thinking ahead here, you know where this is going. Basically, every month I had to sell more to cover the refunds from the last month. And so this is what is called a death spiral, right?

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I didn't know how to get out of this trap that I had woven for myself, and it was horrible. It was horrible. I was stress sleeping. It was really not fun. And honestly, I was like, I went from having nothing to now having less than nothing and not knowing how to get out of it. It was just an unbelievable feeling of being trapped. And so anyways, I thought, I was like, I just have to make money.

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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I was like, I just have to make money to get myself out of this. And so what was interesting is I made the shift and I said, you know, and this is where Layla, she had a little side business selling fitness online. And I said, why don't we, why don't I put all my marketing and sales efforts towards your business instead of this business? Because we can basically cut the middleman out of it.

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We'll just sell direct to consumer and it'll be fine. And so believe it or not, we ended up doing about $1,000 a day within 14 days directing all that attention to her business. And I was like, this is awesome. We've got these eight guys. We can shift them over and we'll do $8,000 a day. And this could work. We could make this pivot.

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Building Wealth While Building A Business | Re-Air Ep 290

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But I still needed to cover this huge deficit, which at this point was probably like $100,000 that I was going to have to come up with. And I had nothing because I just covered the last month. So I had to come up with $100,000 of profit, right? Not revenue. I'd have $100,000 of extra juice to be able to put towards this, you know, throw in the logs of this fire, right?

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A refund monster that was growing. And so the thing is, is that when I thought from that perspective, I ended up coming up with a solution really quickly, which is like, well, you know what? I'll just bundle all the stuff. I'll call all those gyms back up and say, hey, you remember how I put all those people in your gym? Want me to just show you how to do it?

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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And then you can just buy the information from me. And I did this as like, I'm getting out of the gym industry concept because we were doing well with the online thing. And what was crazy was when I thought from the perspective, and this is the entire point of this podcast, all right? When I thought from the perspective, Man, I really just need to make money. I made the money.

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Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can have more entrepreneurs, make more money, feed their families, make better products and have better experiences for their employees and customers.

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And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world of someone else.

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And it was one of the most profound lessons that I've learned as an entrepreneur, is that most entrepreneurs don't think about it like that. And so, what I mean by that is, I'm sure there have been times, like I said earlier, that you needed to make payroll, or you needed to make rent, or you needed to buy something, and you had to go generate cash, right?

The Game with Alex Hormozi

Building Wealth While Building A Business | Re-Air Ep 290

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And you may identify with this. Whenever I got into a hard place where I was like, I didn't have enough money and there was payroll coming up, I always found a way to make money, right? And like never failed. I never missed payroll. I never missed rent. You know what I mean? Like I always found a way. And the same thing happened with Gym Launch. When we were flying out, we always found a way.

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And then you, boom, you went and generated the cash. What I can tell you between the people who I've observed who are very successful, who have lots of money, and people who have businesses but don't make that much money, is that the people who are... really successful always are in that mindset. They're always trying to think about how they can make more, right, from the business.

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And I'm not saying that from a selfless standpoint or anything like that. Obviously, you have to do that, provide value, you know, et cetera. Like that's a foregone conclusion in this conversation, all right? But simply making the extra effort, right? So this is like when you're, you know, if you have a business and, you know, you run a flash sale or something like that and it works well.

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Building Wealth While Building A Business | Re-Air Ep 290

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Well, why aren't we doing this once a quarter? Why isn't this systematized? If we know that doing this extra little promotion and we do this on a 12-week cadence, we can get four times these amount of pops and we can do this on a regular cadence, then we're going to make a lot more money.

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Building Wealth While Building A Business | Re-Air Ep 290

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And so it's like, think about the thing, and this is a good exercise that I do a lot, which is like, if I really needed to make money, like I had to make money, what would I do? Think about it.

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If you can think about that within your own business, like right now, if you had to go pay for something that's a lot of money relative to whatever your income is, let's say it's three times what your normal monthly owner cash flow is, like what you take out of the business every month, whatever that number is, think about if you had to double it or triple it, what would you actually do?

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And what's interesting is that for me, I think very differently when I'm posed that question rather than, how would you grow the business? And what's interesting is that they shouldn't really be separate questions, but they are because growing a business versus making more money are, for some reason, at least for me, separate concepts. But the thing is that it takes money to grow a business.

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And so when I start from that perspective and when I lead with, OK. If I had to make money, I had to because my life depended on it, what would I do? Oftentimes that focus and clarity cuts through all the noise of all the extra doodads and BS and productivity stuff that we just put on our calendars to just get straight to the gold, right?

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That you cut straight to the middle and grab what you need and then it's that mindset at least repeated

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systematized over the span of a business will make you significantly more money and so um ultimately obviously we made that shift um and we made a tremendous amount of money what was ironic to me was that when i started gym launch i had learned the lessons from my gym business and from the gym and and from the first version of the gym launch business which was building a business does not make you wealthy

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Building Wealth While Building A Business | Re-Air Ep 290

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Now, sure, I had enterprise value, but what I had forgotten about was the massive operational risk that I was taking on, right? So whenever you're running a business, you are always exposed to operational risk, which is, I mean, every gym owner and every small business owner who's brick and mortar in COVID experienced this, right?

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Building Wealth While Building A Business | Re-Air Ep 290

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Is that there are risks that are unforeseen that you are exposed to unknowingly that you take on while you perform business, which means that next month something might happen that could cost you everything you have, right? And so this is where I transitioned from

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I'm going to spend everything I have to reinvest in the business to, I'm going to pay myself and I'm going to make money while this grows. Because if I don't, it could end and I could be left with nothing, right? And that's exactly what happened after I had, you know, my chain of gyms. I mean, I wasn't left with nothing. I had some money, but like it wasn't a lot.

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Building Wealth While Building A Business | Re-Air Ep 290

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And what's interesting is, When Gym Launch was growing, I got into this horrible position. And so what ended up happening was when I was selling, we'd fly out and I'd talk to the gym owners and we'd kind of help them with their business, shift everything around, et cetera.

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And then I ended up making a poor decision and then losing it, right? And so at that moment, I had built, I'd put all my energy and my sweat and my tears and my time and sleeping on the floor and all of these memories, right? For nothing. But it wasn't for nothing because I got the experience.

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Building Wealth While Building A Business | Re-Air Ep 290

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And so this is why I'm telling you this is that hopefully you don't have to do that for four years and have nothing right to show for it except for one lesson. Right. And that's what I'm trying to explain right now is like if you can keep this lesson of like I should. pay myself, right?

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Building Wealth While Building A Business | Re-Air Ep 290

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And I should think from that perspective, how can I actually make money from this thing rather than just building this thing? Then I think you'll be much better off. And so I didn't even learn it the first time, right? I had to learn it after two really big failed businesses failed. You know what I'm saying? It didn't make me independently wealthy.

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Building Wealth While Building A Business | Re-Air Ep 290

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And it was when I started this business that I came into it with the perspective of, OK, I'm going to grow this thing, but this thing has to feed me too. I'm not just going to take on all the risk for everyone for everything and have no upside for me. Because hoping and dreaming that you're going to sell your business as your way of profiting Less than 1% of businesses sell.

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It's such a small percentage, it's laughable. And so if you think that you're going to bet everything on the 1% chance that you're going to be that 1% that sells your business, and I don't even know the metrics. To be fair, I'm quoting a quote that I was given. But I would bet if it's that 1%, then I would say it's the 1% that the sale is meaningful, not just an asset sale or a garage sale.

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Building Wealth While Building A Business | Re-Air Ep 290

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So if you're betting your entire business or your entire future and your income on this 1% shot, I don't think it's the right mindset to take. And so you should get paid while you grow. And this is a concept that Warren Buffett talks about a lot, which is he calls it owner earnings, which is how much money

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after reinvesting in the business to keep its competitive advantage can i take home his profit right and that is what he values a business off of which is how much owner earnings from now until infinity right until the end of time uh will this business produce right because it's not fair to just say well this business produced a million dollars in profit but i have to reinvest a million dollars into new r d you know research and development to keep us competitive

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But then as I scaled up and then I had sales guys flying out and doing the sales at these facilities, for 30 days we'd fill their gym up. And the thing is, is they didn't really have the same, you know, rapport with the gym owners. They weren't gym owners. They're like, hey, I'm here to close deals. Which is fine. That's okay. You know what I mean? It happens.

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Well, if that's the case, then you're not really making anything besides your salary. And so then that business doesn't have really much value. And Charlie Munger and Buffett talk about this extensively. And I think it's like you have to experience it firsthand for these things to be real for you. But I'm trying to hopefully give you the experience via this story so that you don't have to.

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But if the best investors in the world think about owner earnings, and when you need to make money and actually take cash out, you know how to do it, you have the ability. You just don't have the belief. And if you can make that shift, it wasn't like I became more skilled.

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I mean, literally, I started going from launching gyms in person to showing gym owners how to launch their gyms within a week or two. It wasn't like I got that much smarter. It was simply because I had a shift in beliefs. And as soon as my belief shifted, I was able to make $100,000 something in profit in the next couple weeks to cover all these refunds. And then I was like, holy cow.

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Building Wealth While Building A Business | Re-Air Ep 290

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wait, I can have a business and make money? And that was kind of the light bulb moment for me. And I was like, oh, I'm never doing business the other way again. And so I tell this story to hopefully share that experience with you so that you don't have to go through it like I did. But anyways, if you are a business owner, you have it within you.

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You already know how to make the money because every time you need it, you always do. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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Building Wealth While Building A Business | Re-Air Ep 290

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Building Wealth While Building A Business | Re-Air Ep 290

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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But the problem was, what would happen is, they would sell people on, you know, a challenge or a program. And the gym owners would, after they left after that, you know, we'd already fronted the cost of the marketing, the hotels, the commissions, everything, and sold all these people in their gym.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

Welcome back to the game. Today is a guest spot on David Perel's podcast, How I Write. And so this is a super deep dive on writing. And I would say probably about 30 to 40% of it's on copywriting. And so the book and the books that I've written, the process, how I think through it.

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uh all the other titles and so he because he's like i don't even really believe in like just only working four hours a week but it just it murdered and so that's what the book became and obviously became a bestseller and i read this um there was this uh like white paper that was released by this uh publishing company or that helps self publishers and they talk about this uh dating help book that sold like no copies and this okay yeah and then all they did was they changed the cover and they changed the headline or that you know the title of the book and they became like an international bestseller

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And when I saw that, I was like, all right, this is important. I should take the time to actually like make sure. Now, the big picture, that was basically how I picked the headline and then the image. And then the subhead, I also tested a ton too, which is how to get strangers to want to buy your stuff.

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And how do you test that when you say... This, what I would assume as I go to Google and Facebook and I see what drives the most traffic, but how do you test the subtitle?

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The idea of like if you have something later on in the day, like it messes with me a little bit because I feel like I want to be able to lose myself in the writing and then like come up for air whenever I want to come up for air. rather than think like I have to be done by this time so that I can prep for this meeting or take this call or do this thing.

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I can tell you. I have the actual tests here. So it's like, okay, I have the realistic versus the cartoon version. So I tested that out. And so the real one did better. It also was aligned with the real image out of the first one. So I was like, okay, that's good. advertising crush promotion. So I was like, okay, advertising is the winner.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then I did advertising versus leads, then leads was the winner. Then I did leads versus marketing. Now that one was really close, but leads still won. So that's why I ended up doing leads. In terms of subheads, I only showed two of the tests here, but I ended up doing like probably five or six, how to get more people to want to buy your stuff, how to get strangers to want to buy your stuff.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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So strangers narrowly beat out more people. Now, this is the one that I thought was the most interesting test of the whole thing. So how to get more strangers to want to buy your stuff, how to get strangers to want to buy your stuff. 71% to 29%, like just one word. And so when I saw it, it's like, it's so sensitive. And I just come in with like no ego about what I think it's going to be.

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And even because some people are also like, hey, you should do a shorter version. So just get strangers to want to buy your stuff versus how to get strangers to want to buy your stuff. 70 to 30 with how to in front.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And so even word concision wasn't necessarily the thing that people kind of like optimize for. Right. And so anyways, yeah, I tested the title, the image, and the subhead. Because fundamentally, anybody who's in my audience who has read the first book, they have a high likelihood of buying the second book if they got value from the first one. I'm not making that for them.

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I could just call this book two, and they probably would have been willing to at least take a shot on it. I have to make this for all the people who don't know who I am. And I have to optimize for that one split second decision where they're like,

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it's like you know actually it sounds pretty good like and it's clear like what does this book do get strangers to want to buy your stuff okay what's the output of that leads okay this makes sense i need leads so i'll buy this book on how to get strangers right back cover talk to me about that so this is like my little mini sales letter so i just wrote this as like kind of like blind bullets um of the stuff inside of the book and so i basically just took the chapters and tried to translate it into a bullet that doesn't say what it is but gives kind of like the benefit of it

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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But hold on. When you say this is my mini sales letter, that is like uber Hermosi brain going to that. So what matters in a sales letter?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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So you can get 2x, 10x, or 100x more leads than you currently are without changing anything about what you sell. That I think is a fairly compelling promise. And so then it's like, okay, I want to learn more about that. Now the next kind of like bigger fun is I wrote this book just to solve your leads problem.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And if you talk to small business owners, the largest reason that people will say, if you look at like the small business surveys, why they go out of business, they say lack of, lack of lethal, lack of marketing, lack of new business, whatever. Second is running out of money. But I see that as.

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Lack of leads.

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Right, man. Chicken, you know, chicken and egg. And so then I put a little bit of proof. So it's like today our companies generate 20,000 new leads per day across 16 different companies, sorry, 16 different industries. And they do it using eight never go hungry playbooks inside. Once you see them, you can't unsee them. They're so powerful. They work without your permission.

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And so I almost exclusively write on days where I have nothing on my whole calendar. And so I optimize a lot of my calendar around when I'm in a heavy writing season around not having anything at all on it.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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So once you use it, you don't have to believe it's going to work. It just works better, period. And so the easiest way to get another five customers tomorrow. So that's warm outreach. That's the first of the core four. So what's the benefit of the core four? That's warm outreach. It's how you get first five customers. the hook retain reward system, so that's contents, that's the second chapter.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And so I just talk about the media's part of it for the six part ad framework that gets more people, especially strangers, to want what you sell. That's gonna be the paid ads chapter. And so I just took the chapters and turned them into the benefits of the chapter.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Those are super specific.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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That's what strikes me. The bullets?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Yeah, right? Because if I look at these bullets, right? The six-part ad framework that gets more people, especially strangers, to want what you sell. How to get people to want what you sell would be like, ah. But you're like, there's actually a lot of things going on. Six-part ad framework. The specificity leads to credibility there. More people, especially strangers.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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To me, that nuance is like, yo, I've thought about this. I know how you think well. And these are just very concrete. But yeah, so that's how I thought about the front and the back cover of the book. I like it. How is your writing different for when you're writing for books like that versus video? And what comes first? The books lead to the videos? The videos lead to the books?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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How do you think about that?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Totally different process, yeah. So... Namely because of the volume that has to go out. If I'm on camera, I'm not very scripted. It's more like these are bullets that we'll probably make sure that we nail the introduction because that's very important. So nailing the introduction, nailing what the roadmap is for the movie, for the video.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then it's almost like, I'd say this, the YouTube videos are far closer to what my writing outlines look like than my final product. Because if I were to write the YouTube videos as they were writing the book, it would take me probably a week of sure, five days, five full days to write just the video, to make it, to air, you know, airtight, air seal all the words.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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But we can do, you know, a writing outline in like 30 minutes or an hour, you know, for a video. And that's much more manageable given like I actually do other stuff for a living.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then when you sit down to write and say it's 6 a.m., are you like, I want to write for six hours. These are the things I want to get done. I'm going to get to do list. How do you think about that?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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How do you think about those hooks?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

1395.026

So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

1411.771

Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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So we will look at other industries that have higher performing videos typically and look at packaging that seems to have performed well. And we say, is there a business version of this that we could do?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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So what's an example of that?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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There's this one where this girl said, like, my system so that you can outlearn anyone or something like that. And I think we made a version of that. It was like how you can outwork anyone. And I think that's what we ended up doing for the video.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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So then as you think about the interactions, the hooks, the frame for the videos, what matters? Because it's interesting. You basically said, I'm pretty unscripted except for the very beginning, which a lot of work goes into.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Man, I feel like I'm incredibly unstructured with the writing besides just like violent effort. But that's about it. Like I write what I write. I never had writer's block in my life. I usually have a game plan of what I'm going to write. So like I would say from a writing process perspective, I outline a book with what the table of contents is first.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Kind of like the book. Except the book is very scripted all the way through. But like 80-20 on the effort of where is the biggest... The biggest bang for the buck is always going to be It's, you know, hook, packaging, title, thumbnail, first, you know, 30, 60 seconds is going to be where you have probably the biggest leverage on performance for a video. And this is just something we learned.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Obviously, average view duration long term is going to be something that lifts a video, but right out the gate, it's hard, not impossible to overcome a video that's just tanky. We want to make stuff that people want to consume. And so I think that like solving for making sure they want to consume it is the title and the packaging and the introduction. And we have to just solve for congruence.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Like is the thing they clicked on the thing that they're going to get and making sure that they feel like they're going to get it. Like that that promise is going to get delivered.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And how do you think about when you're delivering a story, how that is different in video versus writing?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Yeah. So here I am in the middle of nowhere, right? Like, you know, like, and a guy pulls a gun. Stephen King. Like, if you're not sure what to do with the story, just bring in a guy with a gun. Yeah. Same kind of idea. But I just, I tell it like I would be telling it to a friend. There are probably different styles of writing. I assume you would know this better than I do.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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But I tend to try and get everything out as fast as I can. Yeah. And then I kind of look at it as like coats of paint. And that's the description I like. It's just like I let it breathe, then I come back to it, and then I do another coat, and then another coat, and another coat.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And for me, most of the kind of coats of paint, I'd say the vast majority of my editing that's not socialized is me crunching. It's crunching things down, crunching things down, crunching things down. How can I use fewer words? How can I use simpler words? How can I use fewer words? How can I use simpler words?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And I keep doing that until I feel like anything else that I would remove would materially detract from the substance of the book. Once I do that, and that process right there is usually like 10 drafts. So I do a lot, a lot of drafts. You did 19 for Leeds. Yeah, Leeds was unbelievable hard. And I basically started from scratch at about halfway through those. So I think it was draft 12.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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If you write for a living in any way, so you write emails, you write blogs, you write books, you write webinars, you write video sales letters. You write Slack messages. If you write words, then you might get value from this. I weirdly am not considered a writer, but it's the thing that I probably enjoy most in the world. And I actually got a full scholarship to college for writing.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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I feel like I remember it. It was draft 12. I was like, I'm done. This is it. This book's awesome. And then that's when I socialized with 10 or so readers. It was like, okay, let me know what you guys think. And the feedback that I got, I was like,

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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i have to rewrite the book and so i rewrote the book um but most of the time um the editing from the socialized post um is i actually use stephen king's kind of like method there which is if people have like little tidbits i'll usually clarify those pieces add those in that's easy If I have many people who have different comments about one section, their comments usually don't matter.

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It's more that there's something wrong with the section. And so in the third book that's coming out, there were like two chapters that were short that I put at the beginning, which is prime territory in terms of people falling off. I'm super sensitive to front end feedback. And there was just like every reader had something to say about this chapter.

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And I just cut the chapter entirely and then just like edited the book to not reference the material in that chapter. And I thought of the chapter as a pretty core chapter to the book. And so then I was like, okay, how can this book exist without this chapter?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And I ended up being able to do it by literally just doing control R, control F for a word that I basically hardcore defined as this as one of the core concepts. And it was like, I just will fully explain it every time I have it throughout the book. And as soon as I cut, it was actually, I think it was three chapters, one section. It was like the book was just, it's like reading downhill.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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I think we were talking about that before this started. Like the table of contents is the hardest thing that I spend my time on. Once I have that, that's like basically the game plan. And so each of the chapters, I tend to have the same structure because I write the way I would like to read. And so I like to have some sort of narrative or story that kind of puts context to what I'm talking about.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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You know what I mean? It's just like you just keep rolling. Totally. And that's kind of how I see it. So little things, I'll just, if I agree with them, I'll quick fix. If I don't agree, I'll just ignore them. But if many people come in one section, I'll strongly consider deleting it entirely or I have to just delete.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Well, I'll delete the whole thing and then rewrite it or I'll just delete it entirely. Most times I'll just delete it if I can.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then when you say the pain is the pitch, I mean, I understand what that means conceptually. But tactically, when you're sitting down to write copy, you're working with a business and you're trying to get more leads or something like that.

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What do you do with that sentence? So you fundamentally have two methods of persuasion, right? You could go forward. I can go into that. But like you have more good stuff, less bad stuff. Fundamentally. So you got promise and you got pay. These are your two weapons, right? And so my goal is to highlight both of those.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Now, from a selling perspective, you make an offer at the point of greatest deprivation, not at the point of greatest satisfaction. And so, for example, let's say you're incredibly hungry and you come to my steakhouse and I say, do you want a steak? And you say, yeah. So you have a steak. And after you have the steak, I'm like, how was it? And you're like, oh my God, it was amazing.

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Thank you so much. And I say, awesome. Do you want another steak? And you'd be like, no, I'm good. And I'd be like, what, you didn't like the steak? And you're like, no, I liked the steak. I'm good. And that's because I'm trying to sell at the point of greatest satisfaction, not at the point of greatest pain.

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Whereas if you walk in the second time, a week later, and you're starving, and you walk in and say, hey, You're really hungry? And you're like, yeah. You're like, want two steaks? You might be like, yeah, I want two steaks hungry, right? And then you buy more. And so we sell at the point of greatest pain, not the point of greatest satisfaction.

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Now, the caveat to this is people are like, wait, you should sell when you provide value. Only when the value that you deliver creates a new problem that you can then solve. And so, for example, if you are a marketing agency, whatever, and you help a customer get a whole bunch of leads, right?

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you once you solve their leads problem if you say hey do you want even more leads they're like no i can't even handle them so at that point you solve the first problem but now they need somebody to help them work the leads they're now hungry for dessert right right or whatever so they have a new deprivation that we can then sell the next day and so i see that as a big mistake from a copywriting perspective is actually the timing of when the copy is being delivered in the in the larger context uh rather than the subcontext of the of the prospect and so when i'm thinking about the pain is the pitch to bring this full circle

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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is I want to think about as many very concrete examples that someone would experience pain. And so I remember when I was, uh, so when Layla and I were really poor and I just lost everything and we decided that we weren't going to actually do the gym business anymore. So there's, there's this like, you know, 30 day period where we decided we're not going to do the gym thing.

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I also write obviously nonfiction. And so this just gives color to that. I give a very short description of what this thing is that I'm going to be talking about. And then usually plentiful examples. And then I will basically put all of my Alex notes basically as the end. And I pretty much stuck with that setup for all of the books that I've written.

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And so I said, OK, she had lost 100 pounds and done a fitness competition, all that stuff. And I was like, all right, I'm going to write a sales page of your story because my story isn't compelling. I've had a six pack my whole life. No one cares. And so but her, she had all this weight loss. And so I wrote her life story. And she was like, this is more compelling. And I'm the one who lived it.

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And I didn't live any of it. But I just thought about like how she would wear a coverall when she would go to the beach and she would get chafing between her thighs when she was walking all day. She was overweight. Back to that specificity. And not wanting to be in pictures and just be always in the second row or to the side because she didn't like having a picture taken.

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And I'm like, how many of these moments, right? And so like pain happens in moments. And so it's, I want to capture the moment because anyone who's had that pain is like, I never want to live that. I would never want to have that happen again. I think that if you can,

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accurately describe a prospect's pain in their own language, in their own experiences, you can persuade them to buy whatever your product is based on how well and how knowledgeable they believe you to be as a function of how specific you were about the pain they're experiencing.

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And so if I'm talking to a business owner that's doing $10 million a year, and I'm like, this is what's going wrong in IT, right? And this is what's going wrong in sales. And this is what's going wrong in your marketing. And this is what's going on. And if they're like, okay, I get it. I get it. You know where I'm at. I'm like, right. Do you want my help? I don't have to make a promise.

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If I can describe the pain so acutely and they're like, he can't know that pain this well and not be able to deliver. Sure. And so that's where the pain is. The pitch comes from.

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And so oftentimes, um, when people are trying to write sales pages or if they're trying to do a sales pitch, um, they, I think many people will overemphasize promise and there's nothing wrong with having promise per, you know, private, it's compliant, all that stuff. Um, but the thing is pain is what motivates a lot of people to take action.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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It's cool to hear you speak because what really stands out is how much of an engineer you are. And you have this almost mathematical, not formulaic way of speaking, but you are in search of formulas in the way that engineers are. And basically trying to break down reality into formulas to basically say, yo, I'm trying to figure out how things work.

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simplify it, get it to a place where it's super clear, concrete stories, examples, and then I'm going to share it for you so that any problem that you have, here's an answer. I feel like that's a lot of what you're going for and you're right.

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It's 100% what I'm going for. It's actually very well described. When I get in my deep emotional places, I'm like, I just feel like I want to understand the world better. And a lot of times I feel like I don't understand it well at all. And so a lot of my writing is an attempt to just understand one tiny quarter of it. And that just happens to be the quarter that I spend a lot of my time in.

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And so I spend a lot of time thinking about business. And so a lot of my frameworks, a lot of my writing, a lot of my content is in search of simplified formulas of seeing the world accurately. And so fundamentally, if you can predict, you can control.

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What do you mean?

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If you know all the variables that you can influence to create an outcome, right, which means that if you have a perfect predictive model, so this would be like from a science perspective, like if you have all the variables that predict an outcome, then if you reverse that, it means you can also control the outcome. Okay. If you can manipulate the variables.

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If the weather is one of the variables, fine, if I can control the weather. But if I can put someone indoors and mimic the weather, then I can in a very way, in a real way, control the outcome.

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So what you're saying is that businesses have these similar equations and you can say, I'm Sherman with this. I can pull the lever on leads and then I know what's going to happen here or there.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Yeah. We don't have enough demand. Okay. Well, demand is straightforward. Are we going to talk to people one-on-one or are we going to talk them one-to-many? Hmm. Well, how many customers are we going after Fortune 100? So it's probably going to be a one-to-one approach. Are we going after mass market weight loss? It's probably one-to-many. Okay, cool.

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If we're doing one-to-many, are we going to do paid ads or are we going to be making content? Okay. Well, we could use one-on-one to get affiliates who then are doing paid ads or doing content on our behalf. Well, then we can use that strategy. But fundamentally, the only four things that you can do as the entrepreneur or whatever is cold outreach, warm outreach, paid ads, content. That's it.

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And I think that that setup has just gotten cleaner and clearer between the books. Um, because they fundamentally are like my notes brought to life in a book format. Um, but the hardest part for me is usually picking what story I want to tell, um, in each chapter that best embodies whatever the principle is or whatever the, the, the core message of the chapter is.

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It's the only thing you can do. But what about affiliates? Well, you do one of those four to get the affiliate. You reach out to them. You make cuts and say, hey, I'm looking for affiliates. Or you run ads saying, hey, I've got an influencer program. You're going to still have to do that first core four to get other people to come do the other stuff on your behalf.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Here's the other. Dude, there's two lines that I feel like I've really... that I think you really nailed. The first is... We'll talk about this one first. That... If you put in 10 times more work into a book, because the quality is better, you end up with 100 or 1,000x the word of mouth. Talk to me about that.

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It's kind of the difference between gold medal and fourth place. The real difference is small. The practical difference is enormous. So what's the difference in terms of someone's life when they're the gold medalist of something? They get endorsement deals. They're forever the gold champion, all that stuff. Fourth, it's like you get nothing.

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And so I think a lot of people don't even get fourth to be real. They're like number 100. But the thing is they still try pretty hard.

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It's just that all of the best returns come at the end of work. It's the 16th coat of paint that really just makes it that little bit better. And I think in an increasingly connected world, more things are winner take all.

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Well, the way that I put it is that the curse of the internet is global competition. The gift of the internet is global reach. And because of that, your stuff has to be way better in order to stand out. But then the rewards on the other side are way bigger.

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Yeah. I think Naval has a good quote on this. He says, technology democratizes consumption and consolidates production. And so it means that if you're the best in the world, you get to do it for everyone.

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And so then it's like, if you get to do it for everyone, then it's like, then trying to become the best in the world and the best in the world, definitely not going to do it on four yards a week. It's higher leverage to work more, which sounds ironic or counterintuitive, right? Because then that's kind of the point of like, I think why you like that statement.

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It's like, how are you telling me that this unscalable effort where I'm putting in N equals whatever, many more repetitions, like I'm getting diminishing returns here, right? How can that be more efficient than doing half the work or having a ghostwriter? It's like, well, if I have a ghostwriter, no one's going to talk about my book, right?

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right like i'm just going to have a marketing campaign i'm going to sell whatever it is before people read the book and that's it but the long tail on time is huge and so the fact that like rich dad poor dad still sells a hundred thousand copies a month 40 years ironing 50 years later than when he originally wrote it i'm like i want to build assets not magazines with hard covers

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And that's also why I spent a long time on all the books to try and make them evergreen. Think about writing a book on advertising without talking about any single platform. Facebook is not in there. Instagram is not in there.

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So as you were thinking about these, you were like, in 2080, I want this book to be as useful as it was when I wrote this.

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And the easiest way I do it is I back test it.

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What does that mean?

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Does this make sense 2,000 years ago? People still want things to be risk-free. They still want them to be fast. They still want them to be easy. You can reach out to people one-on-one that you know, that you don't know. Reach out one-to-many that you know, that you don't know. Like reaching out one-to-many is standing on the corner of a street and shouting. Right. That's what it is. Right. Right?

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You can put a billboard up. You can have a sign. Like this works 2,000 years ago. So rather than try to predict the future, I just look at the past and say, does this still work?

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Um, and what visual framework I can tie to that, that, um, kind of like melts everything together or like ties it all together in a really clear way. That's what I spend. Like, and I usually do words first and I'll then put these highlighted caps marks where I'll say like a picture that looks like this and then I'll move on.

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This one's good too. It's from Michelangelo. If people saw how much work I put into my art, they wouldn't think it's as exceptional as it is.

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I love this visual, which is that if you look at a marathon, if you've ever gone with somebody to some marathon that they're running and you wanted to support them, 95% of people are in two places, at the beginning, at the end. But the marathon's everything in between. And so we, as a society, the highlight reel is only these two places.

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And so what happens is most people in their mind assume that that is the race, starting and then finishing. But the 26.2 miles that happens in between like the mundane middle, right? Master the middle is the part where the champion's made. And so I think that to the same degree, like if people saw that I wrote 19 drafts of this book, they wouldn't think it was that special.

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Can we do this? Can we open up to that table of contents? And once again, I just want to remind you, take as much time as you need. to find, so it's the second sticky note here. So if you go right here, it should be opened up right to it. But take as much time as you need to go through the table of contents. And I think it'd be really cool to walk us through how some of these ideas changed.

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And also, I just want to emphasize before you start here, this table of contents, it's not like, oh, Alex made a table of contents. No, no, no. The table of contents is the outline for your book. And so it does a lot more than a standard table of contents.

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And I feel like that's how Alex's opinion, I feel like that's how books should write. Like if you want to figure out, if you want to read a book, I feel like you should read the table of contents and be able to make a good decision. Sure. And I try to make my titles and chapter headings like pretty descriptive. Like this is about or my reach.

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So what's going on here? So when you start, what am I looking at?

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So believe it or not, this book was, the original through line was going to be about leverage. And I ended up cutting all of the leverage concepts from the book for the most part, except for one chapter right before lead getters. Because I just, it was so difficult to try and weave it in that it felt forced. I still believe it to be like the actual essence of that.

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But because it's like, how can I as one man get 20,000, 30,000 leads a day? Like how? Well, I can't do it. I do it through leverage. Sure. And so that was kind of like the catalyst for wanting to even like begin writing about this. Yeah. But anyways, so this was kind of like my rough ideas. Like, okay, you know, I have to define some terms, right?

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I have to define media, lead gen, leads, content, promotion, the three contact types, which is not even a thing. I thought it was going to be a thing and it wasn't a thing. Promotions, I ended up just cutting entirely from the book and using somewhere else. I'll just leave that there.

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You know, and, you know, I was going to take this very like, like everything we used to talk about marketing is wrong. Right. And I do believe that to a great degree that that is somewhat true. But it's like, OK, now you got to define the target. So it was like the market, you know, deeper up, down, adjacent, different market types. I ended up cutting that from the book.

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So but what I see you doing here is you're kind of trying to do a full pass. Give yourself time. enough fidelity to see where you're going, but you're not married to this. I mean, we did 19 drafts here and we completely rewrote it after number 12, but you're not married to this, but it's crucial that you're actually putting enough on that you're like, I can at least start walking now.

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Yeah. And so I would say that one of the biggest filters that I use for utility is whether it can be operationalized. And so the fact that it's unsurprising to me now, because this was however many years ago that I wrote that, The activity box is what I call this. I don't even have the name of the core four yet. But the idea that, like, what can I tell someone to do?

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If I can't change their behavior, they cannot learn, which means that there's no point in writing about it unless it changes their, what they do, right? And so that has pretty much been the biggest lens that I use from a cutting perspective, what I'm making the book.

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And so I think the reason a lot of people are like, man, the books are, from what I understand, people say that they're really digestible, they're really easy to use, really easy to understand. It's because I talk almost zero about theory.

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So I basically do words first, then I'll go back through, I'll keep cleaning words and then I'll put rough doodles in and And then only at the very end will I come in and put the final doodles. Because sometimes my orders change and I'll put numbers in a doodle that if I move the paragraph around, I have to redo it. But that's been my overall process for writing. But I just write.

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I only talk about what you do. And by talking that way, it demystifies a lot of it. I will eventually write a book on branding, but I looked up all the definitions of branding on the internet from different marketers. And I was like, I don't know what any of this means.

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They're all fluffy.

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Yeah. It's all like the feelings, impressions, experiences that a prospect has and associates. And I was like, I don't know what any of this is, right? I was like, well, if I want a brand, I have to... figure out what I do, what would I do to brand, right? And answering that question has pretty much been how I try to answer everything within business. It's just like, okay, what is sales?

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Sales is just having a conversation that increases the likelihood that someone purchases, right? It's like, okay, cool. So then everything that increases the likelihood that someone purchases within the context of a conversation is sales, right? And so then it's like, okay, now I can start working through this, right? Okay. So this is the first version.

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And what I will say that often happens is like, I'll write all these ideas that I want to have in the book. And I'll probably end up being able to make the book like 10% of it. So like, if I look at all of this, I cut out, like I cut out so many people, like I have this, just this one line was the second half of the book.

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like just this one line um like operational drag reliability method platform all of that was cut uh more do better i actually put at the end of section one around the activities like anyways so actually this is really interesting that you don't actually have a very good sense of what ideas are going to be the best ones like you love more new better you absolutely love that idea but look where it is it's section six bottom line almost looks like an afterthought yeah

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So that this idea right here, that's like an embryo that then really grew through the process of writing this book.

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Oh yeah. So like once I get tired enough of something, I'm like, all right, I'm going to rewrite it from the top again. And so this is me rewriting it, the sections, right? And so I'm like, okay, now it's actually just to find the target where, when, give, ask, evaluate, scale. So I thought it was going to be this like incremental process that I'm leading someone.

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Because again, leverage was like this through line that I wanted to have through the book. And so then I got to like, okay, maybe I can try and visualize this a little bit better. And so, you know, marketing, like where do people actually come from, right? Because people exist, how do I get them to find me? Like I want to force them to find me, which fundamentally is what I think advertising is.

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You force people to find out.

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It's also just striking that you're doing a lot of drawings to basically work out the high level thing. This isn't you're writing and then you're drawing. It's like you're drawing and that's how you kind of get the conceptual map of where you're going to go.

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Yeah, I do almost all doodles in the beginning. Yeah, so doodles are at the beginning at the end.

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And this is an iPad thing?

The Game with Alex Hormozi

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Yeah, yeah, just like, just notes or whatever. I mean, there's a huge amount of time that I was like, you know, media different, this is a book on advertising. So I'm like, okay, well, media is a huge thing. Platform's a huge thing. Audience selection's a huge thing. And so the whole time I'm thinking like, okay, maybe that's media section one, platform section two, audience section three.

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And I'm like,

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that's not that's gonna be so boring like it's gonna be a terrible book um and then i was like okay what about the process like how do people buy now real quick when you get there you're like oh it's gonna be so boring it's gonna be a terrible book are you down on yourself are you at this point like you know what i'm gonna work through this i need to find another way so right here this right here these four little lines end up being the second half of the book

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Right. So like it totally like it just keeps and a lot of times it's like this cutting away process, right? This is actually just continued from the one before. So this is all leverage. All this stuff was leverage. So I'm like, okay, this is the first time I'm like, really, I've got this attract attention, interrupt attention. So I was like, maybe that's going to be.

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like an angle yeah because i didn't i didn't i didn't but see this is the mosey method which is like you're always trying to find either mutually exclusive collective collectively exhaustive or these contrasts we're either on this side yeah or you're this side which i think is how you can make the misis yeah like if you draw like if you draw one line it's going to be valid if you draw two lines it's much harder right not be valid right because are they all true mutually exclusive right um yeah so this is me trying to put sentences in place of all the different ways you can get customers okay um

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And I write as much as I can until I can't write anymore, where I feel like my words per unit of time starts to drop pretty precipitously.

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And then I tried to make it in this like leverage equation of like you times promotion times offer times the medium times the platform. Like that's all the variables that exist. This whole thing ended up being one paragraph in the second half of the book.

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That's absolutely striking to me is how you just don't actually have a very good intuition for which one of the ideas are going to be good. And that's not, I think that that's all writers. We just kind of have to wait.

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And I was like, I'm supposedly good at marketing. So that was a little humiliating. This has been my big filter is like, what, what do I, what do I, yeah. What does someone do as a result? And if I can't, if I can't clearly define that, then I probably either just need to break it down more or I just need to cut it. It's just not a thing.

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That's been probably my number one filter for everything. Like, what does it change about someone's behavior? And that's why defining learning was so important for me. Like, if I want this book to educate, educate is about changing behavior. Fundamentally, if you don't change your behavior, you didn't learn. Just like in the simplest, like, that is how you define learning.

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And the speed of the rate of learning is intelligence. So if I have to show you the same storyline multiple times before you change your behavior, then you are done with it. So you can change it immediately. Sure. Right. So growing, you got do more, pay more, new platforms, more frequency, more uniques, more impressive. Like I kept like working through this.

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Tell me about those notes. Where do they come from? Is that like a note on your phone? Is that stuff that you've written in emails?

The Game with Alex Hormozi

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And so this was actually just continued there from that same, that same page. And I'm like, okay. Scrap all of that. Let's start with just like, what about the basic questions of like, okay, maybe it's just who, what, where, when, how, how much, how long.

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And what's crucial is you don't get here unless you have all these pages.

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And so for a minute, I thought this was going to become the table of contents. And then what it really became is this became the action at the end of every chapter for, yeah, go for it. Yeah. So that's the final result of me being like, oh, this isn't the table of contents. This is what I need to show for every way of advertising.

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I have so many books to write. Like right now, I have like 20 more books that I have outlined. My books are limited by my ability to promote and launch them more than they are limited by my ability to write them. Because I have what I know what my other books would be. Like I already know what my next two books are going to be. Yeah. And...

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So when you're posting content and you make your action checklist, you just have to say, okay, who's my customer? What am I going to do? Where am I going to do? What medium or platform? What am I going to make this post? So this is basically how you make your list of this is what I'm going to do.

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nice i love how messy all this stuff i don't know i find that to be so gratifying you know because it's so clean in the output and it's just that this is a train wreck thanks yeah three ways i mean i could keep going on this but do this go to the very last one or the table of contents in here yeah let's go to the final

The Game with Alex Hormozi

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Yeah. And so I got to here and then I thought, and this, this is what was so painful. I thought this was going to be a thing forever. Like I thought that I had this like friction framework thing, like filters. Cause I thought it was like, maybe it's like a distillation process. Like you just still like raw attention is the input. And then leads is the distilled output of that.

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And so I kept doing that lead distillery distillation process. Yeah. And so then I was like, maybe I can make an acronym around this. And then I'm coming back to this method medium thing. That took forever to try to work through. And I was like, can I do peace? Like, if I can find an acronym, I'll use it. I kept going. I don't even know where the end of this thing is.

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Right. So right here, I see start here. Get understanding. Get leads. Get lead getters. Get started.

The Game with Alex Hormozi

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Yeah. And then this became the final. So this was like a couple of versions before the final. And then that was the final. Nice. That very messy process got me to here.

The Game with Alex Hormozi

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Wow. I mean, this is the work, man. It's draft after draft after draft.

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So we look at how much stuff is here, right? The amount that actually made it to here is like this, this line, this became one chapter, and that's it. Everything else I more or less threw up. So that's how I came up with the table of contents. And then I was like, all you gotta do now is just write the book.

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Right, so then once you did that, then it was basically game time. Yeah, then it was easy. Tell me about this. How do you think about who you're writing for? Because one of the things I learned from you is there's this difference between being known and being respected. And it's really easy to look at the analytics and say, number go up, therefore good.

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But no, you're trying to reach a specific kind of person. So how do you think about that?

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I think it's the validity utility piece. Like, is this useful? And I think that people will consume things that are useful for them. Like, does it make their life easier? Does it make things happen faster? Does it make things less risky? Depending on who you talk to, like, if I talk about food, then that applies to everyone.

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If I talk about leads, it's only apply to people who are advertising, which is usually business owners. And so I think about this in context of deep and wide.

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Versus wide. And so wide, I define as something that is only useful for a beginner. And deep I define as something that is useful for anyone. Like in a vertical. And so how to get your first five clients is useful really only for a beginner. Because anybody who already has customers is like, I know how to get my first five clients. But if I talk about strategy,

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that's useful for somebody who's starting out and somebody who's got a billion dollar company. Because I don't think they're mutually exclusive. I can have something that's deep and wide. And that's kind of our sweet spot for what we try to do.

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Now, we don't always succeed, but that is the intention, is that I'd like to have something that a beginner can get value from and somebody who's super advanced can also get value from independent of their context.

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And how do you think about the general strategy of what you're doing? What was the genesis moment of... we're going to make rocking business content. And then that'll be the first domino that then makes all these other ones fall.

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I write a lot of stuff down because I don't want to forget it. Like I have this Excel sheet that has like 600 stories of my life. And when I go back through them, I'm like, oh yeah, I forgot what that happened. And it's like, in some ways it's kind of scary because I'm like, man, this was my life and I barely remember. And I have to like retrace the synapses to like go back into the experience.

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Tim Ferriss has his concept of like the big domino. So you kind of like, I don't know if you're purposely referencing it, but basically like, is there one thing that is so important that I can do that if I do that, it makes the rest of my to-do list irrelevant.

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And so it's like, if you have a hundred things on the to-do list, it's like, there's probably not one that's important enough because if it were important enough, it would make the other ones disappear, either shrink into irrelevance or accomplished by consequence. Right. And so we're investors, right? And we have capital. And so what does every investor want?

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They want proprietary deal flow and you want to shift the supply demand in your favor. And so if I can have unlimited people coming towards me who have good businesses and that want to do deals only with me, then I can decrease the likelihood that basically I can decrease my skill at picking and negotiating and still probably do well.

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I saw the ultimate way of maximizing my luck surface area as building our hope is the most viable business brand out there to business owners. And if we can build that, then I don't need to worry about all the negotiation tactics. I don't need to worry about having the most capital. I don't need to worry about having the best term sheets.

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I don't need to worry about any of these things if I just have more people who want to do business with me than I can possibly do business with. And then after you match the supply demand of like, okay, there's more people who want to do business with me, then it's what quality of person, like basically then you can just consistently continue.

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And that's kind of an unlimited, I think, continue to raise the bar of the quality of company and entrepreneur that you work with. And so like the companies that we invest in now don't even look close to the companies that I invested in four years ago.

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Talk to you about this. The number one creator mistake is building new products for their audience rather than building more audience for their product.

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Okay, I'm going to tell you this little side story and then I'll ask the question. So I'm really a pretty big stickler with written word. And so it's been very difficult for me to have anyone write for me at all. And so as a result, basically, the only thing that's fair game that my team can use to put captions on stuff is stuff that I have said in a video and they can just transcribe it.

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or tweets okay that's it anything else that you've seen that's written is me okay and so like just put context on like if all the words that are out there like i have written all of them or i've said them that's it and so um to your question this is more of a business mistake than i think it's just creators fall in the same traps and so let's say they they spend this time growing their audience and they get to call it you know a hundred thousand followers whatever

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and then they come out of the product and then they sell the product and they make money and then they're like huh i should come out with another product to make more money but what it did was it reinforced the wrong activity because it was late so the activity that made the money was building the audience not coming with the product and so what happens is you find these creators who have like six businesses essentially which is really just like six different products that each of the businesses in of themselves could be 100 million dollar plus businesses

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but they don't have enough audience. And so they do the short-term fix, which is come up with another thing, but long-term you end up drowning in the fact that you have six businesses and your attention split. And so there's two components to this.

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And I think that a great fear of mine is forgetting.

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So one is that if you just launch a product on its own and there's no repurchase rate or it's not consumable and there's nothing recurring about it, then you're going to have to keep coming up with products, which means that's kind of a strategic mistake, right? You should have just thought of something that like, If we launched it, people were going to buy it quickly, but then keep buying it.

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Now you have a regular stream of income and you can take that income and keep doubling down on the audience to grow it or pay for other people's audiences or pay for ads or like all the other strategies that are in the book of like expanding, expanding your reach.

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But fundamentally that's the trap is that rather than saying, cause like you just think about a long enough time, Rosen, do you just keep starting new products? And then you, in 20 years, you have 30 products that you're doing. Or when I say products, a lot of times it's businesses because the products are actually not, they are too differentiated to be like a second product in the same line.

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If someone has two different t-shirts, I don't see that as a different product. If someone goes from t-shirts to selling consulting, that's a different product, right? versus the alternative, which is like, I just make t-shirts and I keep advertising. And all I do is I keep getting more and more people to find out about my t-shirts and my brand. And that's how I grow my sales.

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um and so i write to crystallize um the memory but also whatever the finding was so i feel like if you can't remember the lesson you might as well not have lived it and learned it and so i spend a lot of time trying to crystallize uh the knowledge into like artifacts that and i refer to my own stuff like i i use my own books for reference i think there's an indiana jones quote that i like a lot it's a it's sean connery it says i think it's indiana jones three um and he says uh

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And it's going to be more steady, less pops, but that's how you can build a really big company. Whereas if you have seven businesses, which like the most common thing that I see, you end up just going to be split thin and all the products are going to be crap.

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Yeah.

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And I see it all the time.

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So when you say, hey, I'm a real stickler about words, how does that show up?

The Game with Alex Hormozi

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We have, by and large, solved this problem by me having lots of video content and the team being able to take any snippet from anywhere if it's appropriate to use it as a caption or something like that. LinkedIn is the only thing that I don't write right. So captions and LinkedIn are basically things that I don't manually write. But they are taken from either tweets or they are taken from videos.

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But emails, I write. Books, I write. Copy, I write. Not ad copy. That's one that I don't write as much, but that's a problem, so I'm fixing it.

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So tell me, what is the business model of these books? Break it down for me, because you sell them for cheap. You spend a bunch of time on them. I mean, the sort of naive person could be like, what are you doing?

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Yeah, it makes no sense. So that's part of it, is that it does make no sense. But the other part is that long term, I think that I'll die, and my hope is that these will still be around.

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But I don't think that's true. Isn't this the thing that sort of initiates everything else, kind of gets you the domain expertise?

The Game with Alex Hormozi

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Yeah. So from the asset perspective, I write these because I really want them to be assets. I want them to help a lot of people. I think that anybody who reads my books can feel my intention behind what I'm trying to do. If it were just a lead magnet, which is why I think it would cheapen it to describe it that way, they wouldn't be best-selling books.

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I think they would just be lead magnets and suck. And so I think the ultimate lead magnet should be timeless assets. And I think that's where a lot of people mess up when they do. Like 99% of people will never buy anything from you. But 99% of people are what create your reputation.

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And so I would want them to consume something that is still exceptionally valuable because they are ultimately the ones who will create the reputation you have. Now, of course, we're like, well, you don't know him or you've never done business with him. It's like, yeah, but the internet doesn't really deal in nuance. And so, yes, this is the gateway drug.

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But really, before this, the gateway drug is the content. And so the content is really the first thing that someone consumes. And we want to make that really, really good. And then if they got enough value from the content, they're like, maybe I'll give one of his books a shot. And if they read the book, then they get way more value.

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Then, you know, maybe they come into my world, my show about our headquarters, come to, you know, come to one of our, you know, advisory events.

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And when you speak to people who come to the advisory events and whatnot, what kinds of people, what kinds of businesses do you recommend that the founders be writing like you do? And then if they do that, what do you tell them so that they can be successful?

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Honestly, I basically try to dissuade most people from writing a book. And I think that's because it's people who aren't writers who don't love writing see my book and think, oh, I'll do that. And it's just like, it's the Michelangelo quote. You don't understand how much work it is. And I can already tell you if you've never written before, you aren't willing to do it.

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Like, I've been writing for a long time. I haven't been writing as publicly from a book's perspective, but I have four books. Like, it's not like I'm... And before that, I loved writing, you know. I've loved writing since I was a kid. And so it's something that I can do and can...

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immerse myself in and really lose myself to the to the craft and a lot of people can't do that the amount of people who are entrepreneurs who i know who are like hey man i wrote my i wrote my book in in 12 weeks and i'm like that's amazing um but it's it's probably not that good uh and i try to like god say that in a mean way but it's like yeah i'm like first draft they're like yep just knocked it out i'm like that's

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Okay, sure. Good one. How you launch a book determines how good you are at marketing. How well the book is selling two years later determines how good the book is.

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Is there a tactical way that you get more Amazon reviews or is that just one of those things? If the book is good, people are going to review it, but you really can't influence it that much.

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I'm always scared to make a review ask because my own insecurity is like, well, what if it sucks and they remember to leave a bad review, right? But I think that in some ways it's almost a litmus test of how confident you are about the quality of the product. Like if you're willing to ask everyone to leave a review, then you're really confident that people will like it.

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He says, I wrote it down so I wouldn't have to remember it. And because he's like, you don't remember it? He's like, that's why I wrote it down. But it's funny because people write things to remember things, but they also write them because they think they'll forget them. So it's just kind of this really interesting dichotomy of how writing serves people in different ways.

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And so I have a review ask in the middle of both of the books. And I figured I put it in the middle. So it's like if someone got to the middle, then they probably liked the book. Right. Enough to get to the middle, right?

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Not on page five.

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Yeah, exactly. Not exactly. By the way, you know, like I haven't given you any value yet. So like, no, I put it after they hopefully have gotten a significant amount of value. I do think that making an ask increases the likelihood that they leave a review. But I think if you have a crap book, then we're like, no. Or they'll leave you a bad one, which is, you know, arguably worse.

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Okay, I don't know anything about your love for writing as a kid, and I want to hear about that.

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Yeah, I wrote short stories, I wrote poems, and I enjoyed that. I enjoyed that stuff, the free, that's why the literary magazine is probably where I spent, like that's where I wrote more of my stuff. So it was all student submissions for short stories, poems, and so I managed them.

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and art and art too like kids who put art so like the cover art you know we'd get a bunch of paintings and we'd be like okay which of these is going to be the cover and then between stories and between poems we'd put other art from you know the art department from the kids who are you know making painting or whatever they're doing you know pictures of sculptures and things like that and so we you know we do a review every week and so

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That helped me get better at writing, just being able to look at other people's writing. And so I enjoyed it. I enjoyed that writing significantly more than everything that was assigned to me. I didn't enjoy that writing. And that was actually a really interesting breakthrough for me is that I didn't like reading that much. And that's not common. Usually writers like reading, I think.

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I didn't even know that nonfiction was really a genre until after I graduated high school.

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because everything you read just about everything you read in high school is fiction or a textbook right textbooks suck and fiction i felt was useless and so i enjoyed making my own fiction but like think about like from a learning perspective what does this change about my life nothing like okay some person some random way i just did some thing and whatever it doesn't affect me because i never really understood the point as soon as i became an adult

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or whatever, I got introduced to nonfiction. And I was like, oh my God, this is useful. And so then I got more into reading for specific purposes, but I'd still almost separate that as like, I was trying to learn a specific thing, not analyze the writing. And so, yeah, I just, I really liked writing.

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And I just, it was one of the few things, I feel like I can get the flow really easily with writing. Like writing and drawing, which is why all my books have lots of drawing, lots of writing. And I like doing my brainstorming with a pen because I don't know if it feels more tactile. I lose myself in it more easily. That was pretty much my experience.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And I did take a bit of a break from writing when I got into the business world. And it was only like, gosh, it was probably... Was this like the gym launch days? Yeah. Well, I wrote the Jim Munch book, but getting, I think I wrote that book in 2018. So writing the Jim Munch book was the first like real writing that I had done.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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That wasn't like copy or things like, you know, like writing, writing that I'd done. And I think as soon as that happened, I was like, oh, I missed this. It was like, I'd forgotten how much I liked it. And so then I pretty much haven't stopped writing since.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Last question. So you get a call from UNLV. They're like, hey, Alex, we want you to teach a writing class. How do you structure the curriculum? What are the core things that you want to teach people?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So then when you're writing your books, it seems like you're really good at crystallizing ideas in your head. So when you sit down to write leads or offers, how much fidelity do you feel like you had before you started the writing project versus how much of writing is a process of discovery for you?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I'll bet you the first day I would probably define terms or first week. I mean, I could bring this into sections rather than the sessions, but like the first section would be the definition of terms. The next one would be clarifying the objective of why are we writing? What are we writing for? How does writing serve us? Why does it matter?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then I would probably transition from there to the rules of writing.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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What are the rules of writing?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So there's, at least as I see it, and I would probably be parroting a lot of Stephen King's on writing, if I were to say, but I think that's one of the best books on writing out there. As few words as possible. If you can use a simpler word, use that word. you know, very sentence structure. So there's a rhythm to it, you know, short, short, long, you know.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then from a stylistic perspective, I purposely try to use lower grade language because I want more people to understand it. I don't think there's, I don't have any ego to people thinking that. I'm sorry. I also have no, nothing against people who use bigger words. It is like alternate word concision uses more complex words, right?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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But I want maximum comprehension rather than maximum word concision. So I use concision only as a tool to increase comprehension. at large. So short words, short sentences, big promises.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So you have rules of writing, anything else?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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that would be, yeah, that would probably be the next section. And I would probably practice super constrained writing for people. So if the objective of the course was to teach people to write, then it would be like, I want you to write an entire paper on this thing in one page.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And really force people, because I think, like Twitter, I think is, or X, I think is a wonderful platform for learning how to write. Because it just, you have to force, you have to keep crunching them down. And I think that's, Honestly, I think X is one of the best tools for learning to write because you get fast feedback.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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The other one is I would probably use Hemingway because that also gives you real-time feedback. Typing into there is so helpful because Stephen King pretty much says this. It's like, just don't use adverbs. By and large, just don't use them. There's a better verb that you're not using. and Hemingway would probably be the vast majority of the remainder of the time that I had.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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It would be repetition of them getting fast feedback on the writing that they're doing under specific constraints. And I would probably have a lot more free, like freedom in terms of topic and far less in terms of rules. Like you have to obey these rules, but you can write whatever you want. You have to do it in page or you have to do it in half a page.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I'd say it's two thirds discovery, one third getting the stuff that I already have out. Okay. Yeah. Like as I'm writing it, I'm like, Ooh, I didn't think about that. I'm going to have to clarify that. And that's kind of like, I feel like the most exciting part.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And you can write whatever topic you want, but you have to obey these 27 rules. Now write. Because fundamentally when I'm writing, for the most part, now they're like a lot more or less ingrained in how I write.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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um but if like a section still doesn't seem good i'll paste it into having way and be like oh that's why like and like i you know long sentences like there's just there's things that you just learn that you're like oh this might have sounded good in my head but no one can read this and so not to get super writing tactical but that's

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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that's why we do this how i write maybe it's called how i write yeah that's probably how i'd like that so definition of terms uh why this matters and how it's useful for you and i basically sell them on why they should even do this uh rules the game and then practice and that would probably be everything the rest would just be practice

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I decided not to take the scholarship and go to Vanderbilt instead. But writing has been a part of my life for decades. as long as I've had a brain in hands. I don't get to talk about it often, and I think you might find some value from it. That's right.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Rock on. Well, I just want to thank you because I've read a lot of your stuff, consumed many, many, many of your videos, had a lot of questions, and I feel like you answered them well, but also you've been a big inspiration. So thank you.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Oh, I appreciate it. Hopefully they were useful.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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That's the fun part is when I like encounter some apparent conflict between two ideas that I know are both true, but seem to be conflicting. Yeah. That's where like, all right, Where's the nuance here? Under what context? Where's the through line for this that can create some framework that actually applies to everything?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And so the two modes that I use for the frameworks or even the writing that I have in general is utility and validity. So is this true? And in how many situations is it true? And is it useful? And so, for example, if I say sometimes things happen and sometimes things don't, incredibly valid, not very useful.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Now on the flip side, a lot of like, at least in the nonfiction world, a lot of like sales and marketing lore, very useful, not valid. So I can prove a time when there's some sort of tip or trick that works maybe in this scenario, but not that scenario. And so trying to distill out like what's the fundamental principle that applies to all scenarios is what makes that interesting for me.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Like I have tons of anecdote and that's what creates some of the stories that are like in the books that I have. Um, but I, I call it like, how do I break this? So I'm like, how do I break this model? How do I break this truism? And if I can't break it and I can't think of a way that I'm like, it's done. Like it's good.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Yeah, my challenge when I do that is I kind of fall in love with my ideas, especially after I've just written them. And so like, if I'm 2pm, I did a morning writing session. I mean, it's like, I mean, it's like my mom, like, you can't say anything bad about her. But like, it kind of takes time. And so I'm pretty dependent on other people to help me break ideas.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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It doesn't sound like you have that same challenge, though.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I definitely rely on my editor, but I feel pretty strongly in saying that I have very little loyalty to my ideas. I'm very willing to be like, okay, this is probably not right. I'm absolutely married to the truth. Zero about how we get there. And I think that's at least how I approach this.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So what do you do? You enter these intense writing seasons. And is that like a season of no type thing where it's like an official thing?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Alex Ramosi has written two killer business books that together have sold more than one million copies. And all that obsessive writing has gotten him to nine million followers across social media platforms. And this is the first interview he's ever done that's all about the writing process.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So I let everybody know I'm going to be writing and I do say it's a season of no. So, um, REA team knows that basically like I'll probably cut my calendar down significantly and maximize for full free days. And typically during that season, I'll only have two days where I'll take meetings. And so I have five days a week that are completely empty.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And one of those days will probably get hijacked. But I would say I'm pretty good about keeping that schedule. Because I also really like writing. Writing has definitely been a guilty pleasure. I love writing. And it doesn't make the most monetary sense for me. But I really enjoy it. Like I was the VP of the school paper. I was the editor-in-chief of the literary magazine.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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When I was in high school, I got a full scholarship to Tufts for writing. When I was in high school, I didn't go to Vanderbilt, but like that's, so like I really love writing. And I think that a big part of it is I love learning. And I feel like if I really want to understand something, I write a book about it. Yeah. And that's been the process. And so I love business.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And so I love the components of business. And I come in with like my preconceived ideas. These are these anecdotal frameworks that I, when I have four, five, six, eight, 10 frameworks that all of a sudden start have like a through line that I see, I'm like, ooh, there's a book here. But then when I dive in, sometimes it goes great. And I'm like, wow, I was right.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And then sometimes I'm like, oh, my God, I was wrong. That's when it's like really going through the muck, sometimes not as fun. But I want to like get to the other side. I don't know the value of getting to the other side because that's where I feel like you get the most fulfillment where you're like, this is true. Like you either talk to people one-on-one or you talk to people one-to-many.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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They're either people who know you or they're people who know not. Fight me. It is valid and it's useful.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I love the idea when you're writing and you feel like you've just gotten x-ray vision on how reality works. It's like I've looked at a hundred sales letters and I just saw like the core component that just went in all those. That for me – the line that people say sometimes is I don't like writing. I love having written. That's how I feel about the craft.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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It sounds like you enjoy the process a lot more though.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I like both. I really do think I like both. I really enjoy writing. I do enjoy writing and I enjoy having written. Those moments where you have those like little mini breakthroughs or whatever, we call them, or at least my editor and I would call them like fight me, fight me statements. We're just like, we say these things like, like that is true.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Like there's nothing you can say about that, you know? And when it's also useful, that's when it's like we create these, at least these little monikers to live by.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Tell me about usefulness. You've mentioned this a lot. Usefulness, utility. How do you think through that?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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when someone uses this thing, because I write nonfiction, right? And so when someone uses this framework, this tool, this tactic, do they get the desired outcome? And so if it is valid, then it is true.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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But if it's not useful to anyone, there's no context under which they would actually use it and it would materially change the decision-making process or their behaviors in a way that would ameliorate or make their lives better. And so the value equation is probably the core framework of the offers book. That was the meat. That actually took multiple years before I actually crystallized that.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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One of the things that super distinguishes you is you just like go into Hermosi Cave every morning and you just write, write, write. So tell me about how you do that.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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But that framework is useful all the time everywhere. It's useful for ads. It's useful for sales letters. It's useful for making offers. Because fundamentally, it's what do people want? They want things that are fast. They want things that are easy. And they want things that are risk-free. And if you try to find another component, that's, that's, that's not one of those variables.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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It's like, it probably is one of those variables I have yet to see, and maybe we'll see it later. Um, but I, I've seen many people republish the value equation either as their own or they like change the icons, but like no one has changed the four, like they are the four. Um, And so I see that as like, it is valid.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Now, when I see, like, I think bad frameworks, because you can make a framework of anything. You put a triangle, you put three things on it, it's a framework, right? Yeah. But that's not a good framework because I can break it pretty easily. If I see lots of people starting to morph things around, then it means that it's not correct, right?

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Whereas the value equation has like stood the test of time, at least for now. Yeah. Only a few years.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Do you know the concept of MISI?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Mm-hmm.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So this is, they use this a lot at McKinsey and different companies like that. So it's mutually exclusive, collectively exhaustive. So an example would be, ah, we're struggling with our content strategy for the business. All right, well, we got three options. We can do more. We can do better. We can do different.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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But actually, there's no kind of content improvement plan that isn't part of those things. And every single thing would slot into one of those buckets. So when they teach people to break down problems and stuff, they'll use the word MISI. And then that's how they think about it. So it can hit all the options, but also all the options are different from each other.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I wake up and then I caffeine and then I put earplugs and headphones on. I close all the windows and I really only write on days that I know have at least like six hours or more uninterrupted. sometimes eight, like I definitely suffer from like Ziegernick effect, which is open loop, right?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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wholeheartedly agree and that's the that's 100 how i think about it i can't think of something that's where i think of breaking the model like if i can think of an example that doesn't fit in this the model's wrong and i just keep doing it until i get those i mean more better news or more better different or um is a great moniker that i use a lot just in business too um but it's like are there are there other of those in different sub segments or subcategories that don't exist or that that people aren't using and that's that's what i enjoy trying to discover

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Let's do this. Take $100 million leads and I want to walk through how you think about book marketing. So let's just focus on the cover and then just show it to the camera. And what I want to hear is as you talk through it, how did you think about leads, the icon, the subtitle, and then we'll talk about the back of the book after.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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Okay, so the cover, I basically had to make the decision. So this is the first book. I was like, am I going to do something totally different? Or am I going to just basically make this into a series?

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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So immediately, what we see is $100 million the same that you took out the testimonial. That's what I see.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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yeah um and so i just went with another color there was really no rhyme or reason for blue i was like blue sounds fine yeah in terms of uh the the icon i'm pretty sure i wanted to do a magnet i just kind of was like you want to attract leads and i couldn't think of it was either going to be fishing or a magnet

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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I think I saw somewhere that you A-B tested the heck out of this.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Yes. So I A-B tested the heck out of this. I A-B tested probably like three or four of the image of basically different back-end variations. But the word leads, I tested the hell out of. And so I had $100 million promotion, $100 million advertising, $100 million leads, $100 million marketing, and leads was the one that won.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And so I was like, okay, if leads, and kind of interesting though, because leads is the output of advertising. And so no one wants to advertise. People want leads. I mean, that's Alex's conclusion. I could be wrong. I haven't tested it. But if someone said, why do you think that? That would have been my answer.

The Game with Alex Hormozi

Why My Books Go Viral (David Perrell Interview) | Ep 885

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And so I tested it because what's really interesting, I mean, and to be fair, it's like kind of the contents of the book, is people do judge a book by its cover.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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Of course.

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Why My Books Go Viral (David Perrell Interview) | Ep 885

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And if you're going to go through all the work of writing the book, which is significantly harder than testing the cover and the title, like, do that. Right? You know what I mean? And I think the first time I heard about this was when Tim Ferriss tested a four-hour work week for his book, and he hated the title, but it crushed...

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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Hey guys, so this is a throwback of when I needed to start all over again and had basically no money and no employees and got to $100,000 a month in the first month. This has been my forever, never go hungry plan. Like if I lose everything tomorrow, this is what I would do. And I walk you through the framework of how I think about creating high leverage...

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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All right, all you gotta do, no matter what industry you're in, is learn one, how to make a Grand Slam offer, two, how to run a basic ad to get people to raise their hand, and three, how to upsell those people into a service. The key points of leverage are that you're not getting commission. That's why this is such a profitable opportunity.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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You're getting everything minus what you negotiate because you are the one taking the risk of capital and time. That's the key point here. You're not a salesman here, you're a rainmaker. It's a very different skill set. And so if you have a high return on advertising, This is a license to print money. This is what I did. Every time I needed money when I was broke, I would go do this.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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I'd go find a facility, I'd sell in front of it, and I'd go print myself money. This was like my get out of jail free card. It was worn down from the amount of times I used it. It gave me second, third, fourth, fifth chances. When you know how to get leads and you know how to sell, you have unlimited chances to get it right. This is a skill worth having.

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Throwback: $100K Per Month, with No Employees | Ep 836

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The only limit on this business model is the actual capacity of the facility. So if I'm picking better partners, I pick the ones that could handle more patients, more customers that I could sell for for a longer period of time, et cetera, et cetera. Like that's what I would do if I could do this all over again.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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And if it's only you, you could only have three or four facilities that you're doing this for. And you just do one a month and then you go back to the beginning. Like you wouldn't even have to have... zillions like I did. Like you could just go like, there's three months and a quarter and I'd have facility one, two and three. And then I go back to facility one and do my rainmaking thing.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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And they could all be in the same area. It doesn't matter. Right. But most of the times you'd probably just sell. The issue I had is I'd sell them to such capacity that like they'd be full and I had to go find another one to fill up. And that's why this model was what it was for me. But there's probably a balance between those two extremes. So bonus number 10.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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I would have run maybe $250 in ads in every market before I decided to take them on. So some markets perform better than others. And so I could have spent like a grand to test four markets, like 250, 250, 250, 250, to figure out which ones were going to get me the most leads for the cheapest price, right?

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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And so imagine I've got a bunch of different gyms or chiropractors or dental offices or real estate agents, it doesn't matter, right? That I'm selling for, cleaning services that I'm selling for,

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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And I could have been like, okay, well, if I spend 250 in all these markets and this market gets me, you know, one third of the price leads, then I can just ignore these ones and focus my time on the opportunity, right? So then I would have only worked with the facilities in the absolute best markets, right?

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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So it would have given me more leverage, aka more money per unit of time and effort that I spent. And then finally, I would try and find the most expensive stuff to sell, right? So think thousands, not hundreds here. So like I could have made a lot more than a hundred grand a month if I should have the balls to charge more and find a more valuable service or product.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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So this is a random thing, and I had never been asked to speak for anything at all, ever, and so this was kind of weird to me. I was just doing my own thing. And I didn't do any B2B stuff, I just sold weight loss. And so they wanted me to speak about how I was using Facebook ads to get leads for Brick and Mortar in 2016. So anyways, I wasn't sure, but I decided to accept anyways.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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And you can do this in any industry, right? I like, you can do it in insurance. You can do it in pest control. You can do it in solar. I need to give you gym, chiro, dentist, et cetera. Like if people have expensive stuff, you can get leads and you can sell them locally, all right? So if you want to sell stuff in the thousands, market a cheap or free thing that's zero to $99.

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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sell that thing as a lead magnet and then upsell them into a multi-thousand dollar thing. This gets you better lead quality in general, able to dramatically cut no-shows and reschedules for appointments, because if you bill them, you know, 20 bucks, 50 bucks, like people are much more likely to come in, right? That's what I would do, okay?

The Game with Alex Hormozi

Throwback: $100K Per Month, with No Employees | Ep 836

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Now, I promised that at the end, I would give you the tech setup in the last three minutes. So here it goes as fast as I can, all right? So this is crazy simple. So if you're not a tech person, like I am not a tech person, I was able to figure this out. So you can do this, all right? So just as a reminder, it takes 20 hours to learn most things, but most people spend years delaying the first hour.

The Game with Alex Hormozi

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So don't be that person. All right. So like I said, I'm not tech savvy and I've got you covered. So you can figure out how to do all of the tech that I'm about to explain in less than 60 minutes. So like put a timer on 60 minutes from right now, this moment, you can know all the tech that you need to know. All right. So here's what you got to do. First, Google how to run a Facebook lead ad.

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This is how you're gonna get leads. Give something away for free, the crazy guarantee, and you'll get leads. Your skill will be upselling them into something more expensive. That's number one. Facebook lead ad, you just Google how to run one. Number two, Google. Zapier Facebook lead ad to Google Sheets. All right, this will give you a makeshift CRM. This will just give you a big old list of leads.

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So now the ad, which you know how to run, then zaps over the lead to a Google Sheet. That's step two. Third, you Google Zapier SMS notification setup. with Facebook lead ads. So third, Google Zapier SMS notifications set up so that when you get notified, so that you can get notified whenever you get a new lead. It's the quick and dirty way anyone can set this up for your business.

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So I'm gonna recap this real quick. You're gonna Google how to run a Facebook lead ad, and you're gonna give some amazing free thing away, that's what's gonna get you leads. To make sure you actually capture the leads, you're gonna go Facebook lead ad to Google Sheet. Note, you don't even have to build a webpage. It's like, we're making this crazy easy here. No landing page, no nothing.

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You literally just have to learn how to run the ad, and then you put a Zapier over to a Google Sheet, and then you get a Zapier SMS notification that every time you get a lead, you get notified so you can call them and text them. That's it. That's the tech setup to make this work. Isn't this amazing, right? Now, this is how you become a Rainmaker.

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And I get asked all the time on podcasts, et cetera, like, if you lost it all, what would you do? I've lost it all twice. I know exactly what I would do because I've already done it. This is what I did. And this is what I fell back on when I lost everything. And to this day, it's a skill that I have and you can have it too.

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I was like, this is a challenge, I'll go speak. And so I went up and, you know, I gave my, I gave my spiel and I just went step by step. This is how I did it. Right. And what I want to do is I'll explain to you exactly what I said on that speech. And then we're going to quit in Tarantino. And then I'm going to circle back to why, why it's going to be important to you. All right.

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And if you're wondering, how do I figure out what offer to sell and what service? Go to a business that's local that sells expensive stuff. Offer to sit at the front desk and try out a few different offers until you get the one that works. Once you keep configuring the price to get 10 to one or more, you can then copy or paste it in any market.

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Mind you, you might be able to do this and not have as favorable of a setup with the first location. So you learn, right? You can learn before you earn. So learn, get all the kinks out on someone else's money. You can make significantly less and just say, like, I'll give you all the money. If you can spend it, I'll work everything for free just to learn.

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Once you get the model, right, and you figure out a way to get 10 to 1, 21, sometimes 30 to 1, then you scale and you copy and paste it in other markets, right? And then you can make a much stronger deal for yourself. And as an aside, it's way easier to actually get 10 to 1, 21, 31 returns in local advertising compared to online because you have implicit trust.

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If it's whatever your micro local market is, you automatically trust it. You don't need to watch some long, complex video sales letter. If it's Towson Chiropractor, he's around the corner. You trust them. And so you're able to sell high ticket packages with significantly less automation and selling before that just because people are like, I can touch and feel this place.

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There's the location, they're not gonna go anywhere. And to be amazed, it still matters. Most commerce still is not done online. As much as YouTube will make you think that everybody's online, still the vast majority of commerce is done in person, okay? And so people trust people who are local to them. And so if you sell in person, it's even easier.

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And if you learn to sell over the phone, as a side note, You'll actually make more money because it's more efficient to sell over the phone, like in terms of sales per hour. So it's a higher level skill. It's harder to sell over the phone. But if you do, then you can actually sell for all these different markets from home, as I know.

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But I recommend if you're starting out and you've never sold before, start in person. Do the first one for some sort of negotiator that's basically you getting nothing and them risking more. And then once you get the model down, then you can copy and paste it, negotiate with more leverage, and you'll make more money.

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As an aside, again, with the phone thing, like the reason it's, you make more money is that you spend more time selling and less time waiting for appointments. So like you don't get no showed on the phone because you can just keep calling other leads and selling them. Whereas in person, you might just have to sit there for 30 minutes and it happens a lot. Just be real.

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And so you may actually close a lower percentage of people you speak to, but you'll talk to twice as many prospects because you don't have to, they don't have to get in their car, you know, get the appointment, show up. It's like you take that whole step out. And so it's basically like when you would normally be the person confirming the appointment, you actually just sell them right there.

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That's the 201 version of this, right? Like 101 is, really 101 is go to a local place and do it for basically free and have them front some of the risks so that you can learn the model. 201 version of this is that you now fly around or you go to the local places and you negotiate your split so you get a majority of the upfront because you're risking the capital and the time.

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So here's how it worked and pay attention here. Cause this is the part that you will copy and run the same model I did. If you want to model that business that I had that was making a hundred thousand a month. All right. And this business model works for any brick and mortar business, not just fitness. Okay. So here's how it worked. I would run ads for a six-week weight loss challenge.

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301 is that you learn how to sell this over the phone so that you can be central and then you can sell it in any of these locations. All of these require no employees, basically no money to start, and you can make hundreds of thousands of dollars a month in profit.

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I hope you guys see the opportunity the same way I did because this is literally, people are like, how would you make, this is what I would do. This is how I did it. Like, it's not like a hypothetical for me. Like I've lost everything I've had multiple times and every time this is what I did to make money again. Like how do I print money with no risk? This is how I did it.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Now, you could run it for whatever you want, but I was running it for a challenge. I'd run those ads and I'd send them to a landing page. At the landing page, they would opt in with their name, phone number, email, and on the thank you page, they'd have a scheduler. So they'd book a time to meet with me at the facility, which is where I would sell them.

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Now, I would call the leads to confirm their appointments who did schedule, and then I would call the ones who didn't book to get them to schedule a time. Morning of, I'm just giving you a little hack here, I would send a personalized video, be like, hey, Sarah, I've got this T-shirt with your name on it. What size and what color do you want?

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And so then they would respond back with a color or size, and it massively increased my show-off rates, and I got some goodwill, right? So when they came in, I would sell them the challenge, right? When you could sell whatever promotion you want and I would sell it for five or 600 bucks. Side note, and I'll get to this more later, but I want you to sell really expensive stuff.

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So if I do it again, I'd sell more expensive stuff, but I was selling five or 600 bucks. And so the idea was, and this was my big offer. So you need to come up with something sexy is that I lost 20 pounds in six weeks. They give the money back, right?

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zero dollar opportunities for income generation. And I think it's one of those easy things that you can think about your own business, even through that lens. But having lost it all multiple times and gotten it back, this is the actual thing that I would do because it's what I did. Being a Rainmaker is a skill that can feed you for life.

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And I offered a satisfaction guarantee so that even if they didn't lose the weight, if they wanted their money back at any point in the six weeks, I didn't give service. That was amazing. I'd give it back to them. All right, so it was a no-risk Grand Slam offer, and as you can imagine, it wasn't that hard to sell, right? Which is a key point here.

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You'll notice both offers that we will make, one to the business owner and one to the prospects, is not hard to sell, all right? So here's how the math worked out. So I'd pay about 10 bucks a lead, and I would sell one out of five into the $600 challenge. So if you're doing your math here, that's 12 to one. So if I put five grand into marketing, I get about 60,000 out.

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And the nicer part was that I got that money up front, so I could put it back in ads, and this is why the no money down thing's important. So I didn't even need five grand or $10,000 to start this. As soon as I made my first few sales, that became my marketing budget for the entire month, right?

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And just a side note, I know gym launch gyms still get these numbers today, so it's not like this stuff changes that often. People just, I mean, people still need to lose weight today as much as they did a few years ago, right? And challenges haven't really gone away.

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And so the nice thing is that once you crack one of these for a brick and mortar business, you can run this $100,000 a month profit, zero cost to start, zero employees business model on your own for life if you wanted to, all right?

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And the way that I stumbled onto this was that I started launching my gyms and realizing quickly that I actually made more money launching the gyms than running the gyms. And the reason for that was that once everyone converted from my front-end program to my back-end program, the average revenue per week per client went from $100 a week to $50 a week.

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So they would pay $600 for six weeks versus $200 a month, which would be about $50 a week on the back-end. And so at full capacity, I'd make half as much money. So I actually made more money launching and filling the gym than I did after it was at full capacity. And so that was one of the big aha moments I had, which is how I accidentally stumbled into this business model.

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So let's Quinn and Tarantino back to when I stepped off that stage, right? So as soon as I showed my whole model, I was like, this is the ads, these are landing pages, this is the thank you thing, blah, blah, blah. I got bum-rushed by all these folks asking me to help them do what I was doing, right? And they're like, can you do this for my business? Can you do this for dry cleaning?

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Can you do this for whatever, right? And I had a bunch of gym owners too, obviously, and I didn't sell to gyms. So I was like, sorry, out of luck. I just do this for myself and I hope you enjoy the presentation. But being the budding entrepreneur that I was at the time, I figured... Maybe I could make some money doing this, right?

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Maybe I could launch their gyms like I did my own and work out some sort of deal to get a percentage of the revenue that I was bringing in, right? Makes sense. So here's the offer that I made some of the guys who rushed me off stage. Now, I got all their business cards, then I would call them up the next week because I didn't even know what I was doing. And so this is the offer I came up with.

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I said, I'll fly out to your gym, I'll spend my own money, I'll market your gym for you, I'll work the leads, I'll schedule them, and I'll sell them. And I'll even do nutrition orientations, which by the way, is where I would sell another 100 to 150 bucks a head in supplements. And if you're doing the math, that would also cover my cost to our customers on its own.

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And all they had to do was just fulfill the six weeks of service, right? And then they got to keep whoever they converted into a membership. So it was a no risk offer for them. Remember, like I spent all my time and my money. They didn't have to do anything. And I got to eat what I killed. That was the deal. All right. So here's the important part.

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All right, all you gotta do, no matter what industry you're in, is learn one, how to make a Grand Slam offer, two, how to run a basic ad to get people to raise their hand, and three, how to upsell those people into a service. Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning.

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If you are a single guy or gal, or heck, I mean, if you're married, it doesn't matter. If you know these three things, you can make this business model work for you. All right. So number one is you have to have a very compelling offer for brick and mortar business that gets leads. So for me, it was the challenge. It could be any number of things, right?

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All you have to do is give something very valuable for less, right? It could be a free thing or a discounted thing. And then if you're giving a heavily discounted thing, you just have to learn how to upsell something. If it's not that, then you can just sell the core offer. Either way, a very compelling offer upfront. Number two, you got to learn how to run ads. Not that complicated.

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Nowadays, you can run lead ads. You can watch them on YouTube. It's not that complex to do. And then number three, you learn how to sell. If you can do those three things, you got an offer, you can run ads, and you can sell the leads, you can make this business model work in any local market, all right? Now, so here's how you get the business owners to agree.

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So you go into the groups and you ask folks in the groups and say, hey, can I bring you customers for free, no risk? All right, here's how I'll do it. I'll fly out, I'll spend my own money, et cetera, et cetera. And then here's the key part. You then ask them what's the absolute cheapest that they would fulfill customers for during this thing that you're selling.

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So whether it's chiropractic things, whether it's dentist things, you say, hey, if I were to bring you 100 of these, what kind of discount could I get here? Right? And this works especially well with services that have low marginal costs, which means that adding an additional customer doesn't cost the business that much.

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And remember, the big contingency for them is that, and you can negotiate hard here, is that they're going to get the customers for the lifetime, right? And it costs them nothing. So it's like, hey, even if you broke even on the thing, you get customers for life and you keep making money after that, right?

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Like I'm the one who's, I'm the one who's throwing all the risk and doing all the labor here. So ideally you can set it up like I had it, where they agreed to do it for close to free for X period of time, because all the customers cost them is nothing. And so once you do that, because for me, they didn't get anything that I collected for the first six weeks.

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Then after that, they could keep whatever they wanted. But that was the deal that I had set up. So once you do that, you can run the ads and you sell to people. So for example, so I'm going to talk about a different industry. So if I were to do this with chiropractors, I might set up a $20 consult, which is normally $200. And there'd be an assessment, whatever, that I would market.

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And then I would get the doc to do the x-ray. And then the person would meet with me again. And I would sell them a treatment plan for like $2,500 for six months. And if you can sell longer for more, by all means, do so. The deal that you make with the doc would be something like negotiating with him to see what he would fulfill that for.

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So if you can get him down to say like 500 bucks and you'd be surprised here, you'd make the spread minus the cost to acquire, right? So if you charge 2,500 and it costs you five, there's 2,000 left, then whatever it costs you to acquire is what the cost is and everything else is yours. More money, good.

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So you'd run the ads, call the leads, sell them the $20 consult, just make sure they show up, just FYI. And when they come in, the docs team would do the X-ray, you do the follow-up meetings, then recommend the session package, right? Cool. So let's talk money math. So if you sold 48 of these a month, all right, that's two a day for 24 working days.

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I'm trying to build a billion dollar thing with acquisition.com. I always wished Bezos, Musk and Buffett had documented their journey, so I'm doing it for the rest of us. Please share and enjoy. I built $100,000 per month profit business with no employees for less than $1,000 when I was 26. And anyone could start the exact same business with little to no money at all and no employees, all right?

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So 24 working days in a month, sell two a day, it's 48, all right? And you sold them at 2,500 bucks a pop with a $500 cost to fulfill. Remember, we pay the doc 500 bucks, 2,500 is what we get. And so let's say it also costs you 50 bucks a lead, all right, with one out of five buyings, 20%. That means your cost to acquire is $250, right? Five times 50 is 250, all right?

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And if you ran this play for a month and spent $400 a day in ads, that's $12,000 total, Remember, you make money quickly so you can reinvest it in ads. You'd make $120,000 in gross revenue. Mind you, that's not profit, that's revenue, all right?

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So we still gotta take out your 12K in marketing and your 24K that you have to pay the doc, but now you got $84,000 left over as a single person that has no employees, that's all profit, all right? So you can stop there and you can make a million dollars a year in personal income. Not bad for no money down to start, no degree, no employees, right? But if you're a smart cookie, you can do better.

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So this is what you do. You also meet with all those leads again and then sell them retail products. So think like cream, supplements, oils, orthotics, et cetera, right? Which you could pre-negotiate that you keep all your product sales, which is what I would do. And so then you make another 500 bucks ahead in profit with those product sales. So that puts another $24,000 back in your pocket.

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And that now covers the dock. So now you're back to 108,000 minus your cost of living, which when I was doing this, it cost me about $3,000 a month in extended stay, because I would stay at a motel, food, gas, et cetera. So $105,000, boom. 100 grand plus in profit, no employees, 1,000 bucks to start.

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But before you run off and do this, I told you at the beginning that I would tell you the good and the bad, but I still haven't told you the ugly. All right, so here's what I would do different if I could do this again. Now, I ran this model for a while. Here are 11 things that went wrong for me that I would have changed, all right? Number one, I massively overwhelmed the facilities.

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I would have spent far more time really planning out how they would fulfill another XX patients or clients or customers, et cetera. I would have really been like, okay, well, if we get you 100 customers, what times are you gonna put them in? How can you fill the slot? I go to spend more time doing that with them. Number two, I partnered with struggling facilities.

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And so this was a double-edged sword. They're really easy to sell, but at the same time, they had a bad reputation for a reason. They weren't that good at fulfilling. And so if I could do this again, I probably would have tried to find good people, not just anyone who would just let me sell in front of their door. I was young. I was inexperienced. I've made mistakes. That was one of them.

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Number three, in retrospect, I would have explained all the costs I would incur up front. Hotels, airfare, food, rental, ad spend, et cetera. So they wouldn't think I was just like taking all this money to their facility. I'd be like, I got costs too, right? So I'd explain that so they understand like I have to make money to do this, right? Make it worth my time.

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Mosey Nation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to $50, $100 million plus, we would love to talk to you. And if you like that or would like to hear more about it, go to acquisition.com. You can apply anywhere on the page and talk to one of our team and see if we can help you get there.

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Number four, I'd also explain how much I plan to make revenue and profit from the facility. So they wouldn't be shocked when I crushed it, as they all were, right? So half of them tried to get me to stop selling and I would refuse because I needed to sell a certain amount to hit my target. And that's why it's so important to explain the cost upfront.

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It's like, hey, this is how much it cost me just to break even. So I got to sell,

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40 people just to like cover my nut whatever it is right you're like and then i gotta sell another 40 if i just want to like hit a 50 margin so i want to do more than that so you really got to prepare for this right so it's like it's setting expectations but i was young and i was like so afraid of scaring somebody off that i just didn't want to set good expectations all right

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So I'm gonna explain what I did, how it worked, the good, the bad, the ugly, and what I would have done differently and how I think you can use the same model for yourself no matter how old you are or how much money you got, all right? And I did all this stuff using skills that anyone can learn for free, all right?

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And mind you, I said it, and none of them believed me, and I knew they didn't, so I was like, whatever, I'll just prove them wrong. Ultimately, it ended up hurting me. So all in all, I would have been more transparent up front, made sure they really understood how this was going to happen, like the mechanics behind it. Five, I'd have an agreement, which I don't have, to spell this stuff out.

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So this would further clarify expectations. This is important. This is the contract. So this would clarify the expectations and hold them accountable for their own behavior. These are the words spelled out in front of you. These are the terms. You're accounted for this. I'm accounted for this, right? If I had done that, I didn't even have contracts. I was a kid. I didn't know. Have contracts.

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Next, I would have filmed as much as humanly possible. This is probably my biggest regret through this entire thing. I filmed literally nothing. And I would have had 30 plus gyms and thousands of sales calls and in-person documented for training. I have none. Think how sick this would be if I was like, here's a thousand fucking sales recordings. That would have been awesome.

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And you could have that. So if you do this model, please, for the love of God, do that because you'll have the extra margin and it's worth having someone be with you. You're going to probably need that for the ads anyways if you wanted to do it instead of your iPhone. I did it on my iPhone. But the point is that I would have filmed stuff.

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I would have documented this because this is going to be part of the story that you tell one day. And that's what I would have done. And as a side note, me just showing all the contracts that I was selling, imagine how easy it would be to market and sell this. Organically, I'd be like, another month, another 100, 200 sales. Like, it would have been so easy to market this. And I just didn't.

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I didn't think about content. It just wasn't a thing for me. And honestly, I think I would have been booked year-round. Like, no matter what, I wouldn't even have had to run an ad or do a reach-out. I would have been booked inbound. And at that point, this is the cool thing, is that if I had done that, I would have had more negotiating power.

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So I could either negotiate a piece of the back end, like what the continuity was going to be, like if they converted, or they could have made me like an upfront cost to go out or they cover my marketing for me, not me. Like there's other things that I could have been able to leverage if I had had more brand, more content, you know, and I didn't have that.

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So if I could do it again, I would have done that. It would have made even better deal for me. Next is I'd include a clause in my contract that I'd have them sign separately for added transparency and accountability that if any customer said they were encouraged to refund, so if they told a customer you should refund or you should sign up again through me, right?

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So I'll even give you a step-by-step setup in the last three minutes of what you would need to do to get this running. And if you don't know who I am, my name's Alex Ramosy, the founder of acquisition.com, portfolio companies that does over $200 million a year.

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So like if I sold somebody at a chiropractor's office for $2,500 and then I find out that the customer refunds and says they signed back up through the doc at half price, that they would owe me twice what the person paid. I would have done that. And

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Big picture for me, that was actually the thing that drove this business into the ground for me, was that I had a couple of bad actors, which is why I said earlier I would have done deals with better people, less shady, who just basically said, one guy was like, there's too many people here, just refund. Because it wasn't his money, right? He didn't care. And so that hurt me a lot.

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I also got slammed on a bunch of reviews because I was the one who would sell someone into a location and the location would suck. And so it was my reputation. I mean, there's two, but my reputation, because I was the one who was like, this is going to work. Right. And I definitely had rose colored glasses on in the beginning being like, oh, no, it's good. They're just scrappy, you know.

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But I think ultimately people were not as well served. I should have picked partners that I really wanted to sell their product. And I just picked partners who would let me sell their product. And I was better at selling it than they were. And so, I mean, you know, you learn a lot. It's been a decade. It's been a while.

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So the biggest problem is that when I had this, I had a few bad gyms that ruined it. Some acted really sketchy. Others sold clients to refund and sign back up. And unfortunately, since I was the one who sold them, I was the one left holding the bag. And I was the one associated with the decision, which sucks. I made mistakes.

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I definitely put this with my rose-colored glasses on when I was selling these gym packages. I just pretended I couldn't see all the crappy stuff that was going on. But I was desperate, and I wanted to make money. And that's something that I own. I would have done it differently now, which is why I make this stuff. So my goal is motivation, you guys don't have to repeat my mistakes.

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And I make these because I want you to use the stuff, grow your business to three to $100 million in revenue and allow us to invest in your business and scale beyond that. All right, so that's my self-vision 10 here. For everybody else, enjoy the stuff, go make money. That's the whole point. All right, so let's dive in. So when I had my chain of gyms, I got asked to speak at this marketing event.

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So I think a lot of my pain could have been avoided with three things, clear expectations, clear agreements, and better picking your partners. But all in all, being a Rainmaker is a skill that can feed you for life.

The Game with Alex Hormozi

Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

This is Ben. He's a cocktail consultant who helps restaurants and bars optimize their drink menus to increase profits. But his revenue is unstable. Sometimes he has a great month and then other times he sells nothing and sometimes that goes down. I'm Alex Ramosi. I own Acquisition.com, our portfolio of companies that generate hundreds of millions of dollars per year in revenue.

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Okay.

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Yeah.

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So I wouldn't stack them. I would just test one versus two. Got it. So if we were to just test 97 versus 47, you might think, okay, well, maybe, you know, just from the front end, $97 in the test that we've run, actually, it converted almost the exact same amount, but it was twice the money, so that was a good idea.

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But where the real money was was the fact that people who bought this were way more likely to spend money. Now, for me to answer why, no idea. Just know that. And so this is why we test all the way through LTV, not just which one gets more opt-ins or which one gets more sales in terms of volume up front.

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What you might find though is that maybe the cost, and this is why it's important to track all the way to the sale, is that you might find that the profit-driven one costs three times as much to get the lead, but you close more sales. And I'm gonna break down some more funnel stuff in a second, because I'll show you how we need to reorganize yours, but I would just run that as an ABA.

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All right. Yeah. So who do you help?

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So you're gonna run some ads where you're like, hey, so you'll do the same exact intro, And then the transition will be like, and if you want the top 10 drinks that you shouldn't be serving that actually hurt bars and their profitability, download my thing and I'll show you 10 different ways of making them that are more profitable and faster. Got it.

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And then the other one is like, and if you want to see how much revenue you could potentially be missing out on, I have a tool that we use internally that I'll just give you for free. You can plug in your numbers and then it'll spit out exactly what the opportunity is. And if you're like, you know what? I'm not really a big Excel guy. That's fine.

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On the thank you page schedule call, we'll walk you through it specific to your bar right now.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Right. So I think both those work. And I would just split test that. Like, I don't know the answer to that question. They will. But lead magnet for sure is one of the things that's missing from these ads. And also probably why you're not getting the conversion you need to on the online page. So why don't you click.

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So we're going to swap this ad out for an ad that talks about the lead magnet, has a pain-based hook and kind of mirrors some of the copy that just went through. Okay, go for it. Okay. So right off the bat, like the most expensive real estate on this page is top to bottom, right? And so you having your logo at the top, nix it, doesn't matter.

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No one knows who you are yet, they're coming from cold ads and like, this isn't the branding opportunity. So yeah, this is direct response. So better bar program, I would take that out because they don't know what they're opting in for yet and that doesn't mean anything. Launch an elite high profit bar, I would split test the hell out of that. It might be become the hottest bar in your town,

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Yeah. No, a hundred percent. And then beautiful cocktails, professional team and seamless operations. I would mix that. So I would want the sub headline to be basically the single largest concern someone has about the promise of the headline.

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So here's this amazing thing. And here's that thing that you're thinking about now that you don't believe me. And so let me tell you why you should believe me in the next line.

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How do you help them?

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Yeah. I mean, it could be like with or without. Right. Right. So launch an elite high, you know, high profit bar. Yep. without having to redesign your existing location, without buying expensive ingredients that go bad, or having a really expensive training process. This is just me thinking if I were a bartender.

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So here, there's a lot of pieces to this, and I don't think you need any of them because I've already gone through your funnel. I would basically drop this to just, I'll tell you why. So I'm okay with all of these if, basically you collect this information twice in this funnel. I don't know, have you gone through it?

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Okay, so let's go through it. Let's just go, you know, A, A, A, just put whatever in. Okay. A at AOL.com. So that was me.

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We got a hot one. So let's say we click here. Now just click whatever time. All right. So now I got to put it all in again. Right. I'm like, God, this sucks. So this is a really classic business owner mistake, which is that a lot of business owners haven't even gone through their own sales process. They set it up two years ago and they haven't like gone through it.

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You would be amazed at how many times you change a couple of things and then you go through it again and you're like, God, this looks horrible.

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except you're like running traffic to it and this is what customers are saying and I like I'm guilty of this too so I'm not saying I'm immune to it and so having some regular cadence of actually going through clicking the buttons because this is obviously ton of friction and this is bad friction good friction is you add qualifications you make sure the right people are coming in the bad people are going out but this friction of just having people like repeat opting in for stuff or like very slow load times that's bad friction that gets both good and bad people to stop opting in so fundamentally marketing comes down to having the sweet spot on friction

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Because if I were to advertise, hey, here's my phone number and this is how much it is, call me to buy, that would have the least amount of friction in the process possible. But the issue is I'd probably get a ton of people to call or maybe not. And it's just like, it's too fast.

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On the flip side, if you make people jump through 30 hoops, you might have a perfectly qualified customer, but you're missing out on 90% of the people who would have bought if you just made it a little bit less frictiony. And so it's all about the sweet spot between both extremes. And in general, the more expensive the product or service, the more friction you'll generally need to add.

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And so my little moniker for this is the bigger the plane, the longer the runway in order to get it to take off. Okay, so now that we're back here. So first off, this needs to not be on YouTube. So you need to get somebody because otherwise it looks hokey. Get it on any third party, get it on a Vimeo, whatever. Yeah, you don't want other recommendations.

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It's just like it's taking people off the site and I don't think it looks good. Right. Whatever. This is what your new funnel is going to look like. So you're gonna have, hopefully this looks like a book. And then we have your email, we've got our headline, sub headline, and then we've got our image, right?

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Phase one is Better Cocktail Consulting. Phase two?

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So then, that's then gonna go here, which you have congrats, and then we'll have our secondary headline. Now here's where we put the video. above the scheduler, and then the scheduler's gonna be here. So this'll be VSL, then they'll have the booking, and then post-booking, we'll have a separate thing here, which will one, have the VSL, and the lead magnet.

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So it's just like, that way, they can go to their email to get it, but they also can click here to get it. Just makes it convenient for them. But what we have here, though, is basically how to prepare for your call, and just more selling. I'm a huge advocate of having videos or kind of sales materials prior to a human intervention.

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Okay.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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And the reason for that is if you've ever done sales on a consistent basis, you end up kind of repeating the same presentation, if you will, over and over and over again. And so then it starts to sound rehearsed. The other person zones out, you zone out because you've said it so many times. I like taking all of the stuff that you kind of repeat over and over again in a sale and front loading that.

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And so when you're on the call or when you start the call, you can start it like, okay, how's everything sound? And now we can basically start from the beginning to making a decision rather than like just like another prerecorded vomit of a salesperson. And the other benefit of a video is that there's a lot more visuals, right?

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Like if you're talking on the phone, you're talking on Zoom, you'll be limited in the amount of visuals you can probably provide. Whereas here you might be able to provide charts and graphs and statistics and visuals that make it more compelling and easier for somebody to understand.

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I would rather have the perfect pitch delivered every time in an automated format and then have the customization be what the conversation is after the fact to get them to decide to buy or not. This is the new funnel. This is what we advertise.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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It's just a different one, but yeah.

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Think about all the things that people present with on the call early that are their biggest concerns. That's what you put there.

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So you might be wondering this. You might be wondering this. So let me put your minds at rest. So these are the things you need. You don't need this. You do need this. If you're concerned about these four things, I'll break them down one at a time. So first things first and then walk through it. And I'll be on. So, you know, have a computer.

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It's going to be a Zoom call or expect it from this number, whatever.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Yeah. If we, honestly, like if we just do this, you're probably going to like significantly increase your sales. Awesome. And we do it, like we could probably do nothing else today and like that's all that has to be done, right? Is that the ads need to go to the right avatar. Yep. Which is called out.

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We're actually going to give them a reason to go to this page that they can immediately get value from. They're going to opt in. Then we have our, now if you want to do more of the, you want to add more of the information that you were collecting over here, you can. Yeah. That's fine with me. As long as it's, fully integrated into here so that they don't have to do it twice.

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If you want, you can put a little on this side, like a black banner across the top of this that has, you know, for $4 million plus only.

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This is a big part of this, of what we were talking about earlier. Sit my brain juice for a second. Hold on, I'm gonna spill it. I got a lot of stuff in here. Okay, so you're confident about the $4 million avatar. Is there any reason that $2 and $3 million avatars don't work?

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cocktails we want to maintain the training and so we have a quarterly training program where we fly out there and we train the team for two days you don't mind flying that's good because i have an idea for you so i have an inkling that ben needs to go up market restaurants that make over a certain amount of money they're gonna think about like a business not just like their passion project passion project business owners are kind of tough to deal with when you come from a business perspective they're not willing to make like sometimes really obvious clear good business decisions for whatever limiting belief they have okay so that's how you help them um how do you make money

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So then let's get to the offer part because this is the funnel and process. But now let's talk about the offers that we're selling here. All right, so let's put this because now this is going to go to the phone. This is a phone for everyone who is born before. Mm-hmm. Sorry, after 1995. So these are the offers, okay? So Ben has a clear offer problem.

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I wrote my entire first book on this issue because it's one of the most common problems that limits businesses. And the offer is a strategic thing that you do in that it affects the entire business. If you change your offer, it changes the advertising, it changes the conversion process, it changes your pricing, it changes your deliverables. So it changes everything.

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But because of that, if you nail the offer, that's where you can have these massive upticks in growth seemingly overnight. And so I'll just read this little piece for you. No offer, no business, no life. Bad offer, negative profit, no business, miserable life. Decent offer, no profit, stagnating business, stagnating life. I would say he's right now between two and three.

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Good offer, some profit, okay business, okay life. And then what we want to build is a grand slam offer, fantastic profit, insane business, and freedom. That's what we want to get to. So let's break this out. So I think that that offer, straight off the bat, selling $30,000 up front, really tough sale.

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Very, very hard sell. So I like that he's charging premium prices for premium services. That makes sense. The problem is how he's selling it and when he's selling it. The right offer at the wrong time is still the wrong offer. That's the problem he has. And so this $30,000 thing absolutely should be and maybe we need to change that. Maybe that should be a $60,000 or $90,000 thing.

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But selling it right off the bat is kind of like he's getting people who've never met him before. to just get on a call and then just try and buy.

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Rather than try and go for that, I'd rather go for a much easier sale that with that first product or service, we can give them the information so that now our entire business is about upselling customers into our 30, 60, $90,000 thing, rather than spending six phone calls to close somebody on a $30,000 thing and having people drop off at each of those steps.

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This is how I, if I owned your business, I would have my front end thing be like five or six grand. I would have it solve one very specific problem very well that more than, you know, gives them a 50K or a while on a $5,000 thing.

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But it's built in purposefully just to get the quick sale, transition from prospect to customer, one call close, not three call closes, which I'm sure you're having to do right now just to close. Right, yeah, your arm wrestling people get 30 grand. We're missing the point of even having this simple sales funnel. And so get the 5K. Yeah. Do the three calls you were gonna do as a sale anyways.

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What I suspect Ben needs to work on is optimizing his funnel, fixing his offer. He's trying to sell a $30,000 thing to strangers who've never even worked with him before, which is pretty tough. And then once all that stuff's fixed, spending more on his actual marketing.

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So what can we split off that's like, five or six grand that would be immediately valuable to them that doesn't require a huge amount of work, but they could just like, they could use your calculator, they could make these changes and immediately see like a return that would then create the necessity for your main thing.

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Okay.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Which of those is easier for you to deliver on?

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Then I would go pricing audit first.

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Because also there's immediate value in that what I would do is like, let's back calculate how much more profit you would have made last year if you had these prices. Yeah. And then they're like, holy shit, I would have made a hundred grand. And you're like, cool. So pretty good return on the five. Yeah. Great.

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If you like that, you're going to love what I have for you next, which is how do we actually make sure this happens consistently quarter over quarter. This is actually what we do with our, you know, with our premier, our premier customers.

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It's too cold of a sale right now.

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So either we have to have a much longer sales process or we lower the bar so we can just get them in the door and then we can upsell.

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We're not selling 30. It's five. It's like, dude, if we just fix this one thing, I'm more than. I know what your market looks like. We have comps in the area. We can tell you what this market can sustain, and that way, the question is, what's it worth to get it right on the first shot? So for sure, I could say, hey, just bump your price up by 10%, but you'd probably freak out about that.

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Of course you would, and rightfully so. So what we're going to do is remix a couple of the things, get the prices appropriate to your area that we already know are working, so you don't have to sweat about it. Done. So it's like the only real cost to you is reprinting your fucking menus.

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And the reason I want this one is because this is fast and easy, which I like selling those things first. You have to do this in order to do this. So you might as well sell this first.

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And the fact that it's easy and fast and profitable, like that checks all the boxes for fast, easy, risk-free. There you go. I think we make this $5,800 on the phone for the pricing booster, whatever you want to call it. And then what we do is that then leads to the quarterly retainer at, I think you had $9,000 per quarter, right? And that's probably high pricing.

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Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth. If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love.

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Thank you.

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I'm trying to think about the easiest way to do this. I would probably end up doing a rollover upsell. So we're selling step one of a multi-step process. That's what this is. And I would seed that up front. So when you sell the thing, it's like, listen, I'll be real with you. My whole goal is to give you this pricing audit. I'm just gonna easily ROI myself and everybody will be happy.

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What I really wanna do is help you really transform the bar because you can only do a pricing change once. And then after that, what do you do? But even if we make this pricing change, great, we made you an extra 100 grand. But wouldn't it be cool to make an extra million? Now, I'm not promising that, because obviously your results will vary, depends on your market.

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But what I can do is basically walk you through what it takes to truly build this into a staple that then also drives people into the food side. So it becomes a virtuous cycle. And so what I want to do is take your 5,800 and I'll credit towards the year. So if you're wondering, should every business have a back end and a front end or multiple offers? The answer is it depends.

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And I know that's a terrible answer, but I'll tell you what it depends on. There's a certain amount of information that is required for somebody to make a decision. Depending on where they come in on that continuum of needing a little bit of information versus needing a lot of information, then there has to be more selling that must occur.

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Then the next constraint that comes up in the business is cash flow. Well, if we're spending money to get these people in, we want to recruit that cash as fast as we And for somebody to buy maybe a $100,000 thing, it takes more time and more information to make that decision. And during that time, we're spending all this money in labor and advertising, but we're not seeing any return.

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The idea of sometimes having a front-end and back-end offer is mostly just to pull cash forward, offset the cash outlay, which is another way of saying decrease the payback period or increase the cash conversion cycle. Lots of fancy words, but basically just get money back faster.

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Okay, what percentage of people go from the core offer or the upsell?

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so that then everything after that's all gravy, you recruit the money, now you can go get another customer, and then this person's all in the ascension process. For example, his advertising was all brand-based and all inbound, then he could probably get away with just going straight to a more expensive thing because they've already consumed so much information prior to that.

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But since he's almost entirely based on cold traffic ads, we have to lower the bar to get people to just take that small jump so that he can then prove himself to then take the big jump. Got it.

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Ding, ding, ding. So my little alarm went off. When I hear, you know, barely 20%, that's an indication for me that there's probably an offer issue on the back end, maybe even the front end, or a combination of the both of how they work together. So what's the main problem? What's holding you back?

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Yeah, because it works. Yeah. And you do it, but it's like you only get that if you do that during the two to four weeks that we have. Right. So that's the time window we can apply it towards. Right. And if you want, I'll apply it to your first payment. So the 9K becomes 4K for your first quarter, and then you go into 9K after that.

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Or if you want, one of my personal favorites is just knock off $1,500 per quarter. So make this 10K per quarter, but if you do it now, it's $8,500. Got it. and we knock it out. That way we spread the discount over four quarters. I gave Ben two different ways of applying the discount.

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I prefer spreading discounts because I don't want an easy yes and then go from 4K to 9K and then them say, oh, actually, I'll just get the quarter and then I'll cancel. I'd rather spread the discount out and get the commitment over the long term And so if someone's willing to pay the $8,500, they're like, okay, well, that was nice of him to credit the $5,800 or $6,000 towards my payment.

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So it's like a nice gesture. It encourages people to take action, but it's not so much so that it's getting the wrong type of customer in because the price is going to double. That way you're not, you know, crushing your first payment.

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How sticky is it? How are people re-upping?

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Are people churning out of this?

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Okay, why?

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You're not doing it?

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So there's a little warning alarm that's going off for me right now, which is that if people are turning out in two quarters, basically two payments, that's not a good sign. You know, he nailed it. He's not providing value. That's a kind of amorphous big term. But underneath of that, it's like the question is why?

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One of the difficult parts with consulting or education is that if you are what I would consider a one-trick pony, I'm not saying Ben is, but if you are, then once you've kind of like implemented your thing, it's like why should someone keep paying you?

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So I like to figure out ways that we can have some sort of consumables or something that is always changing the business that is required for you to keep providing value. One of the benefits of a bar or restaurant is that they're always getting new staff in. And so new staff needs to get trained up consistently.

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Now, the downside is if they learn how you train, then they'll just say, well, I'll just train them myself and not pay you this money.

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Paster day.

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We have to figure out a way to make the back end stickier or just accept that it's not and then charge an appropriate amount of money for it so that you deliver that value, you have a good margin and you just understand that that's the nature of the business and the good news is there's a gazillion restaurants and bars and so you'll be able to do that for a very long time.

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Well, some people try to create recurring revenue for recurring revenue's sake, but some products and services are not really meant to be recurring. There's a reason that after four years of education in college, you graduate. After high school, you move to the next thing. Education in general tends to graduate people. They learned, and because they learned, they no longer...

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you know, should continue. Now, how does the education system deal with this? They just give you more and more majors and you can become a master and you have a PhD and you can be with double secret PhD, right? They'll just always give you something else.

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It's more common in it, like an education and consulting business like his, but the businesses that are most valuable, obviously are businesses that once someone comes in, they never want to leave or stop paying. But it doesn't mean that you can't make a ton of money in businesses that you do just one-time services on. So I don't think there's anything wrong with that.

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There's just less enterprise value. Why are they doing it?

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From them?

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Is there a way that you can just get a login to their system and then collect it?

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I'll bet you, if you logged into their system and once a month they had a meeting with you where you showed them their numbers, it would almost be like, this guy knows all my stuff, I have to... You know what I mean? And so I think that would be worth... the extra time cost me was two hours per account or whatever it carries. Right. That to me feels worth improving.

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Because if you can't fix churn, there's no point in doing anything else.

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Because otherwise you just have people falling off the back. It's like we have to start with people staying and then we can fix all the front end stuff. Because why would we pour more into a leaky bucket?

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So how does this process feel overall?

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Okay, good.

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Any reason to not just push them into continuity?

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Yeah. There's an offer structure that I like a lot called the wave fee offer. So basically I could say, listen, this thing I charged $30,000 for. Yep. If you commit for the year, I'll waive it, but you're committing for it. Now, if you want to cancel two quarters in, you have to pay me this. So it's like, if I take the risk on, you make the commitment.

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That's the risk you take, and I'll front you all this work. If you take the risk, so you don't want the commitment, then pay for that, I'll do it, and then it's quarter to quarter. Which one would you prefer?

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But now it's an A-B close.

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That help?

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Okay. I'm going to talk about a session in a second. But I think big picture, we have funnel redo.

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So we got that going. Number two is add call outs. Three is we have new lead magnet. Four, we have inside of funnel redo, we have three step. And then Vimeo, video above scheduler. And then we have integrate scheduler with opt-in. All right, let's pull this page up again real quick. So I'm gonna design this as though it were the second page, because the first page is really simple.

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It shows headlines, sub-headline, image, opt-in, that's it. All right, so basically the first half here, you could peel off and make that the first page, but you'll have a picture of the thing. that you're going for.

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And you're gonna remove the top two, you know, you remove your logo, you're gonna remove better bar program, take that out, beautiful cocktails is gonna be the, without X, Y, and Z that you're, you know, your biggest concerns. Now let's scroll down. All right, cocktails that capture, highly trained bar teams, functional product.

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I would think about it like this, like create drinks that create regulars. Get staff that customers can't wait to come back to and tip like crazy, you know, parentheses. And then functional operating processes.

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Yeah. I want to think about functional operating processes. What I think about when I'm writing copy is what are the moments? So if I have functional operating process, what's the moment for me as a restaurant owner or a bar owner that I would experience the benefit of? of functional operating processes?

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Is it when I realized that I didn't have to throw out all this inventory that I, like all these old pineapples that I thought I was gonna need and then toss out? Like what's the moment or moments?

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Well, then tell me what the pain is.

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Like, no more disaster back of bar. You can do the negative or the relief of the positive. Okay, now let's scroll up. Okay, a lot of consistent proven results. I would say, like, we drive quarter over quarter alcohol sales growth. Because that's what, to me, proven results doesn't mean anything as a word. 30% cocktail sales, 40% return to beverage. 50% boost in speed of service.

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I would actually use the numbers as the subtext and I would use the benefit as the primary text. So speed of service is like, get rid of waiting lines. And then it says underneath 50% boost in speed of service. That's me personally. So I referenced earlier in the ads around the copy, but now we're applying the same frameworks from who, what, when to the landing page.

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I like to speak in terms of moments because people don't really, like they have to translate or unpack a word of like a process or some specific improvement. It just takes mental effort. And every piece of mental effort you ask someone to use, a certain percentage of people say, nah, I've got other things in my life and they'll dip. I want to pre-digest the food.

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I want to pre-digest the pain and explain the moments that they've probably recently experienced that will then make them believe that I have complete context on their problem and therefore a high likely to be able to solve it. So there's a number of really small things that you can do at a page that can have a really big improvement.

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First off, like everything that someone sees above the fold, like that's the most important part of the page. Like what happens on someone's mobile device or their desktop before they scroll? That's above the fold is kind of what they say in the marketing world. If you've got like the name of your business And it's cold traffic. They don't know. They don't care.

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So like take that out because they don't know who you are. And so then the headline itself, it's like we want it to be some sort of very clear like reason for them to move forward. And then I usually have sub headlines that clarify or add context to the headline. And so oftentimes that'll be like without X, Y and Z or without pain, it qualifies it.

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Underneath that, it's like I want it to be as simple and clear as possible what they're going to get. And then basically everything below the fold is just if you're still skeptical, let me just give you more information to make the decision. But I want all of the information I'm providing to be relevant to why someone should move forward, not just like a whole bunch of stuff about us.

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And then make sure that you have disclosures around results to make sure you explain how these things are calculated and otherwise it could just be an unsubstantiated claim. So with the new lead magnet, we have the new funnel. We have the new ad call outs. This is great. We're going to have the $5,800 pricing offer, which I like. And then Ascension. Good. which is going to be a rollover.

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I think there's a C in there somewhere. Ascension via rollover plus waived 30K offer. All right. Also, the thing is this in-person onboarding is going to serve as such a good first experience for them because you're going to fly out of your fixed month. They'll be like, wow, this is so worth it. And right now your team does all of this stuff, right? Not you?

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Okay, the people flying out is your team?

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So what I want to do, yeah, so what I want to do is add an ultra high ticket with you.

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So just 5X the price.

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And you can present that first. Yeah, get the gas. And be like, or I can just have my team do it. To me, the exact same process is just, I got a wife and kids. Do you want me out there? I'll do it. Happy to. And it's just obviously, you know, this is what we do. But they're going to run the same playbook.

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Ding, ding, ding. Number two, we have a super expensive cost to our customer, and this is a customer that probably be 1500 bucks, 2500 bucks, maybe $3,500 to acquire. So there's definitely an offer mismatch between what is being advertised and what they're selling if CAC is so high, or they just have atrocious sales processes.

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Instead of taking three calls or four calls like you are right now, just get paid, deliver the value. And then once you have an exchange, they get more than what it's worth. Customers versus prospects are like 10 times more likely to buy again. Of course. And so just make them customers so you can increase the likelihood so then they buy again. Right.

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And it's easy because this is just pricing related, right? It's pricing, you know, 15, 30-day fix. They immediately see the value and you're like, dude, if you like this, you're going to love that.

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I think you do it first just to get a feel for it.

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And because what I want to make sure that we nail is this.

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Because we're not in it for the $5,800 thing, right? We're in it because we want to see... I would want to see at least 50% upgrading into that.

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And I would say the way that I operate is that I never want to ask you for money I haven't already made you. Got it. And you'll notice that's a common theme of how I roll. Right. And so it's like, let me go make you $100,000. We make you that with the new bar program. Right. And then with the next thing, it's going to cost you a third of what I already made you.

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Okay. So you're good. I've already made room for you to afford me.

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So it's a much easier sale.

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Right.

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And you want to make sure that you make that offer before the end of that 30-day period. Totally. So it's like you want to offer it at week two, three, again at four if you need to. And the way that I offer those things is either I'll do immediate upsells if I don't have that, which in this one it doesn't make sense. So you'd have the milestone moment.

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So they implement it and they have their first weekend after the pricing audit and their sales are the same or their sales go up and they're like, holy shit, I made way more money. So that would be a moment that I would immediately ask for the sale. The next one that I would have is basically like the next week, because this is a pretty short time. And then finally you have last chance.

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So you have three shots at the sale for this. Now you were taking sales calls before.

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But now you're talking to a customer.

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And they've already delivered them value. Right. Easier. And they're making money. Exactly. Okay. I mean, big picture if we're looking at this like... The funnel redo on its own could very well triple the lead volume that you're getting right now. Honestly. Just the combination of the funnel redo, the ad call out, and having a lead magnet that actually resonates with that specific avatar.

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So the first thing I'm gonna do is dive deep into the business, and then I'm gonna break down all the tactics that he and you can use to scale your business to your dreams.

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This alone could probably just triple. Just these things. This is going to dramatically improve sales velocity. Let's talk about sales real quick. Walk me through how you structure the conversation for sales. You already have something.

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So it's either an offer or sales process issue or both, and we're gonna figure it out.

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Yes. Fill out the form.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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What percentage of them have been watching the video?

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No, what percentage of them have been watching the video after, like when they get on the phone with you?

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Okay. That's like brand new.

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Well, this last month you've taken sales calls. Have any of them mentioned the video?

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Okay, so they're not watching it. So this, the way that I structured it here where they're gonna have to see the video before they, well, they'll see it and they'll have to scroll in order to get to the scheduler will probably increase the likelihood that they should actually watch it. But the other thing is, is that that's set call. So I'm gonna make this number seven.

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Set goes to then video to then close. So your director of ops is going to say, awesome. So I'm going to set you up with Ben. But before you get on, I'm going to send you this video. Make sure you watch it. And I'm just going to say, do that because the first question he's going to ask you is, did you watch the video?

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And if you haven't, he's just going to say, okay, I'm going to grab a coffee and you watch the video. So you're going to do it either way. So you might as well just do it now.

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And also for you, when you hop on the call, I'll be like, did you watch the video? If they say no, it's like, great, watch that. And I'd be like, and the reason we do that is because I already have a lot of facts and figures and things like that that I could describe with my words, but it'll take us three times as long as you just watching it.

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And so then that'll give us good context rather than me just spewing stuff at you, which most people are like, okay, fair enough. But you don't want me to just give you a lecture for 10 minutes. I don't want to either. This has some graphs, it has some figures in it. That makes it a little bit more digestible for you. Totally. And so, yeah, that'll be the sales process there. Proposed call.

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And you'll be like, honestly, if you do these things at this price point, I think you'll be able to start closing like a lot. Yeah. Because if we, if you were closing like 50%, which I think you could, if you're an owner operator and you're at this point after this kind of process, you'll, you'll, I mean, I think you could close some, some people owner operator close like 80% on these calls. Yeah.

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So I'm a big believer in founders selling the product in the beginning. And I think there's a number of reasons for that. One is it keeps you close to the customer. You can understand how the marketing is doing.

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You can see who's coming in and that will give you a very rapid feedback loop in terms of what you need to adjust on the front end and how you can kind of get feedback on your offer and your pricing. And It takes out one very important variable, which is that if you have a salesperson in there, you might not know if they're doing a good job. So you might be like, ah, they're not closing.

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What's the problem? And they might be like, I don't know. These leads suck. But like, is it a pricing issue? Is it a copy issue? Is it an avatar issue? Being closer to it, you would be like, oh, no, these are the right people that we're talking to. And they're just shocked at the price. So they're not shocked at the price, but they're just not getting it.

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What could you sell for like $8,000 to $10,000?

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And so each of those would kind of offshoot into different types of solutions. The big thing is, though, I like founder selling the beginning as well, because when you're the founder, you're the most convicted. And so you will typically be able to outperform any salesperson.

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And in the beginning, when you have fewer resources, you could use the extra conversion percentage and the decreased cost of not having a salesperson or paying the commission. So think I can close twice as many sales and I don't have to pay the commissions for it. It frees up cash flow so that we can make some of these big bets early on that are going to build the foundation of the business.

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There's so few leads that are coming in that I think he should be taking these calls basically until he can't take these calls anymore. And by the time he can't take these calls anymore, he's already completely blown past his revenue level. He'll have a whole bunch more revenue and cashflow to then solve the problem of him not having time. And that's the game of business.

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With that being said, that would be like, if you just did that, it would be more than a 5X in sales because if you get to 30% close rate would mean that you make the same revenue.

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without your actual $30,000 back end. Right, but if you're at 50%, you're making 40% more revenue, and then you still have your back end. One last thing is that I understand why you're not spending that much money, but you are spending too little money. With the fixes that we're at now, it would be okay to keep the spend that you have.

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But if I were selling a $30,000 thing, you're barely advertising enough to get enough volume for something of that ticket. And so for me, if I test stuff, I usually test it two times CAC for a campaign. So, sorry, two times allowable CAC.

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Yeah, right, exactly. That's kind of my benchmark per campaign though. So I might run multiple campaigns to figure out which one's working. But for you, your funnel process was messed up and that's why your numbers aren't good.

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So what I'm referencing here is that I budget two times the cash I collect from a customer in 30 days when I'm testing new ads. For example, if I make $100 in profit from a customer in the first 30 days, I will let an ad go to $200 in spend before shutting it off as long as I'm getting leads.

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And the reason for that is usually because there's a certain amount of inefficiency in the beginning that you have to be willing to stomach to find the ads, the copy, the hooks, the creative variations that are going to ultimately perform.

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I have to be able to stomach bad ads that don't convert and make up for it in good ads that do convert and then be like, okay, so this is working, not as efficiently as I want, but it's working. Now let's double down on this and make 10 more variations that are more similar to this messaging.

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Yeah, and once he finds the messaging that converts, it's like, by all means, blow the doors off and spend as much as you can, or at least as much as you can while being able to take all the sales calls. That's it. This really fixes this. The good thing is this, you wanted to hit your triple. I make no guarantees. These are high-likely shots.

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Yeah. No, you've got it. And I think this is the key. Because also think about all the calls you're not going to have to take. All the ones that are three calls and then don't close. Right? Right. You're spending all your time on these wasted calls when it could be one call closing 5800, 5800, 5800.

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I would think, is there a different thing that could be sold that was still in that price point that wasn't DIY? I mean, basically I wouldn't position it as DIY. I would just be like, we're not gonna fly out. The good news is I think this is super fixable. Let's do the quick recap of all the numbers you got so far.

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Not even a question.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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That's like you should be expecting one call. And you should set that as the agenda. You'll say the four things you have to say legally. Hey, this is X calling from Y in regards to Z. By the way, this call is recorded. Before we get going, I just want to say, how are you doing today? Great. Let me set the agenda. I'm going to go through the lead magazine that you just got.

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I'm going to understand some of the metrics about your bar. And then at the end, if it's a good fit, I can explain to you how we might be able to help you out. Sound good? Great. And then we just go through. I almost forgot because Michael wants me to do this. Oh, yeah. This could be. This could be. I mean, it actually could be your triple. It could be right here.

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You could definitely two to three extra call outs in terms of CTRs with the ad call out. I'll bet you your conversion rate. Do you know what your conversion on your landing page is right now?

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Okay, so 7% could probably go closer to 30%, which is my benchmark for a lead magazine page, which would be like a nice little chill 4X here. I think you going from 6% close rate to like 30% to 50% is super reasonable, given the fact that you are the one who's going to be selling it and the price point is what it is.

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So I think in a real way, you might even make more money just selling this than you're currently doing with none of the extra work. And then all of this. God bless. This right here is just going to be gravy.

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So you're basically going to be able to stack potentially probably a double of your current revenue from this source, but then stack 100% of your current revenue from this. How do you like this plan?

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I would do it pretty much in this order. You're going to redo the funnel.

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Once the funnel's redone, technically the lead mag would happen at the same time as the funnel. So one and three happen together.

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Add call outs. You then run the ads. This is basically your phone process. So this happens up front. Four and six would happen together because this is sales process.

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The extension happens after they buy. This is also going to happen again with sales process. So basically one and three together. Two happens next. Four, six, seven happen third. Then you go back to your ads guys and say, hey, go spend more. Go find more keywords.

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There you go. Hold on. Let me, let me.

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So I really like Ben's business. It's clear that he understands the bar business well, which is one of my big requisites, like actually be good at the thing before trying to sell the thing. I think if he makes some of the changes that I outlined, it's very likely that the business does well. And I like to be clear, this is in no way a promise that you who's watching this is home.

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If you do this in your business, that you'll get the same results because His results are completely up to him and the effort that he takes and his background and his knowledge. So your results may vary. That being said, if you enjoy this type of stuff, these business breakdowns, these Cash Guys episode, you'll definitely wanna check out this one.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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So come here real quick, check this out. This is the $100 million scaling roadmap. Ben is at stage four, prioritize. And let me know if this sounds familiar. He's saying yes to anyone who would pay. He's got all these different types of avatars. He's getting way too many unqualified leads.

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But he's getting people who are clicking, he's getting people opting in, but they're not the right types of people. Here's his next problem. The result of all this stuff is that he's got to specialize his product. He's got to make better free stuff and have better creative to boost the volume and add qualifications and friction, sounding familiar.

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And so the thing is, is that as much as it always feels like this unknown journey when you're a business owner, Businesses behave in patterns. We broke out after studying our portfolio companies, seeing where they got stuck and how we broke through and put it in 10 stages. If you're curious about where you're at, this is absolutely free.

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Just go to acquisition.com forward slash roadmap, plug in your business information and our automation thingy will tell you what stage you're at and what you need to do to get to the next level. So it's absolutely free. Go check that out.

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And if you want our team to like double check the work and make sure that it's the right one and give you more tactics around it, you can hop on a call on the next page and we'd love to help you out. The nice thing is that like, I feel very confident that your business will grow because there's some really obvious holes. I think I honestly have what I need.

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Why don't you come on this side and then we'll probably, we'll powwow through it together. Does that work? Yeah, that sounds great.

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Ah, all right. I'll be saucy for our cocktail.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Tell me about the business.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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I am. Matt, can I bring it over? Yeah, by all means. Let's do it. Thank you. All right. Oh, look at that. I got full experience. There we go. Wow, man. Enjoy. Thank you. Cheers. Cheers. Oh, that's great. Awesome. I can definitely see how the kombucha would take off the edge of the drink, like it could hide a spirit really easily with that.

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Okay, so there's a lot of things. So I think that we need to actually talk about the offer, which is something that I don't always get the opportunity to talk about, but I think that you have a clear offer issue. I think we need to talk about avatar. That'll be as it relates to the offer. Number three, and this is going to be a big one, is going to be the funnel.

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There's a lot of stuff that, like a lot of missing things there that I think we can like really quickly fix. And then sales... And then finally, maybe Ascension. And so that's kind of the big overarching theme. So right off the bat, I think that you have an offer issue.

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So either that means that we're getting the wrong avatars on the phone or we're getting the right avatars on the phone and we're offering the wrong thing. So I would say $30,000 is super expensive for just a straight, literally just a straight call funnel. Very tough.

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For what you're looking at, CAC for a small business owner restaurant, I would imagine should probably be in the neighborhood of $1,500, $2,500. Okay. That's where, that's like if you were up at $3,000, $3,500, I'd be like, okay, fine. But it's going to be in that kind of range. And so I think there's a, you can probably cut it by at least two thirds compared to the...

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$12,000 or whatever that you're spending right now. So I think there's a lot of opportunity from that perspective. God, there's so much stuff. I'm just trying to think, okay, why don't we just start tip of the spear and let's open up the ads since that's the one that we can control the most. So right off the bat, we need to have clear call-outs.

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So we need to be talking about what avatar are we really looking for? So struggling to get the most out of your cocktail program. I don't know if that's necessarily even the language that would matter. I also wouldn't restate my name unfiltered hospitality because we already have it above there. So it's like, it's some of the most valuable advertising real estate.

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And so I would probably have something to the degree of like restaurant owners, asterisk, asterisk. You know what I mean? And then like second line, like is your, like, are you doing over X million dollars per year? Or it could just be $4 million plus per year restaurant owners is call out number one. And then the question would be pain-based hook. All right, so check this out.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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So what's the goal? What do you want to do?

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So I'm on page 136 of the leads book. The first part I'm talking about here is the call out. So we have to get the right people to notice the ad. And it is by far the most important. And so I'm trying to compress the things that he's looking for in his ideal avatar into just one line. So they're like, oh, I'm a $4 million plus per year restaurant owner or bar owner. Just put it there.

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And then like, this is for me. And once I do that, 80% of the work of advertising is actually done. As crazy as that sounds. What I'm getting into further after that is, okay, let's see if we can ask a yes question or an if-then statement or talk about some ridiculous result. All of these things are kind of the line after actually calling out the prospect, right?

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Big goals.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Now, once we get a little further into the copy, I like using the what-who-when framework. So this takes the value equation, which I talk about in my first book, this guy, and tries to like explode this into many different copy variations. And so what we want to talk about is both the dream stuff, which is what's the good outcome? How do we make it fast? How to make it likely? How to make it easy?

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And then on the flip side, the pain, which is what's your nightmare scenario? And so this gives you a lot of different angles to approach the copy for a customer, whether it's a B2C customer or a B2B business owner. And the reason I'm such a big proponent of pain in advertising is one, is it super compliant?

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Yeah, triple this year, all right.

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Two, I have the belief that the more precisely you can articulate the pain of a prospect to that prospect and even describe it more accurately to themselves than they can articulate it, they will believe that you can help them almost better than any promise that you can make them. So if you're like, hey, did Sally say this yesterday? Did you have this problem that showed up?

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Rock and roll.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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And are you consistently running out of your most expensive ingredients, but then sometimes they go bad? All of a sudden, like, God, this kind of is exactly where I'm at. And now I'm far more likely to take the next step. Has cocktails been less than 10% of your revenue year over year? Something like that.

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Or, because I know you said in the messaging, they're not as receptive to like profit money related stuff.

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And being cool. Yeah.

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So people have different histories of reinforcement, meaning they've had good things that happened in the past from different things that they've done. And so if somebody did really well in school, they like getting A's and maybe the score matters more for them. Other people, it's like they like the applause. Other people, it's like they like showing up and having people flock to them.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Okay.

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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Everyone has different drivers. We want to describe what it's like, the experience of success in as many varied ways as possible. to attract the most varied avatars, as long as they meet our requisites. Like, is your cocktail program flaccid? Would probably do great. Has no one ever posted anything good about your cocktails in the last two years?

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If you look at your reviews on Yelp, do you just have Long Island iced teas and, you know, vodka sodas? Like, you might need a insert, you know, a bar rehaul. Instead of saying, because what this is is super feature heavy, data-driven menus designed to get more orders, team training that delivers, because all that sounds like work.

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For me. Sure. And so what I want is what occurs as a result, right? And so I'd be talking more about like, clients see typically 10x their investment in the first year, 30% increase in menu orders. I'm not sure if it like bites at me. You know what I mean?

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Building a $3,000,000 Business for a Stranger in 57 Mins | Cash Cows | Ep 867

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And so it would be more like what the experience is like from people just ordering the things that they know off the top of their mind to getting excited when they open up your menu. And then all of a sudden saying, oh man, I want to try so many of these and then ordering two or three times more. So it's like dial into the experience of what the avatar is going to go through.

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and then I would translate it, okay, what about the restaurant owner? Having your restaurant featured in some of these types of magazines, which honestly doesn't take as long as you'd think as soon as you make these types of changes.

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What a lot of restaurant owners don't know is that one of the largest profit drivers in the business is alcohol, and it's the one thing that they're the least focused on. If you want, you can book a call, but even if you don't, what I did was I took the top 10 worst drinks to serve, and I'll show you how to replace them with 10 drinks that are better than that that work for just about any bar.

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Now on the thank you page, so you can download that on the next page, but on the thank you page, if you want us to personalize it to your bar concept, we'll show you how to organize the bar so you can get way more drinks served, you can do it with higher margins, and you don't have to train people for nearly as long because if you set it up the right way.

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If that's interesting, we'll call the next page, right? And so that would be more or less my ad, right? At least my ad structure. And so the big thing, number one, is that A, is that we need better ads.

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So that's gonna be both the copy, so we want call-outs to avatar, we wanna have pain-based hooks, we wanna be more benefit versus feature-driven. B, we wanna bang in lead magnet. What we wanna do ideally with a lead magnet is demonstrate authority and expertise with something that they didn't know that they should know.

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Because either you reveal a problem, you give a sample of a solution, or you give a one step of a multi-step process. Those are the three types of lead magnets you can give. So check this out real quick. So this is a perfect example of an offer and lead magnet mismatch. So kind of what I was saying in the beginning, like we're honing in here and I'm pretty sure this is the problem.

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So what I explained here, this is page 30 of the leads book. He's trying to do this. He's trying to go from low trust straight to a sale, right? And in that scenario, he might sell a couple people, which he is. But instead, what I'm trying to get him to do is put some sort of valuable lead magnet first, which goes getting people from low trust to high trust.

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And then that increases the number of people be more likely to buy from him after demonstrating value. This is probably the first big jump that we're going to do in the business that I think is going to have a huge impact on the growth. And what I was referencing for him is under lead magnets, there's always a continuous problem-solution cycle.

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And so the three types of lead magnets are just like I named. Real problem, have a free trial, or one step of a multi-step process. It's almost like I wrote the book on this shit.

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You just keep, you know, people just become endless students. And so do you want to sell the business eventually or do you just want to make money?

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But the businesses that you're buying are too small. And so if you're exiting founders, then the problem that you're having is like, oh my God, I have to build this entire business, which is why most private equity institutions start at 5 million in EBITDA as their basically minimum that their check size that they're willing to write because of the problem that you are dealing with right now.

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And so I would encourage you to not try and reinvent the wheel. And I say this coming from like with arrows in my back and lots of scars. In the first 24 months of acquisition.com, I did 24 deals. I had many, many smaller deals because I thought, okay, I'll just do, I'll use the brand that I have.

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I'll attract entrepreneurs that are kind of emerging and I'll take a minority stake and kind of help them grow, whatever. The issue with that is that a lot of businesses that are small are small for a reason because they don't have good entrepreneurs who are leading them.

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And now you're like, okay, well, either you remove the mediocre entrepreneur and now you have just a bunch of basically nothing that you're now like, oh, now I just bought myself a job.

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No, that's fine. No, I prefer the truth. Yeah, I mean, the easiest thing to do is just double the amount of events you're doing. You either go one a quarter or you can do two at $1,200.

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right and maybe you got it for no money down because they were willing to leave and you didn't have a lot of capital that you had to put to work fine but i would in my opinion you have basically two paths that you can pursue here from where you're currently at i don't think buying more companies is the answer unless you raise a lot of money so that you can buy actual companies and not like someone's big bucket of risk right which is what we if we if you took the companies that you bought through the the scorecard i'll bet you that they probably fail a lot of those checkpoints

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Two of the three have, yeah. Yeah. And for that reason, they wouldn't be deal-ready businesses, right? They're just basically a person with a job that has a couple of people helping them out. And then that person steps away. And now what? Right? And now you're just responsible. So basically two paths. So path one is that you raise money or get enough money to buy legit businesses.

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Option two is that you decide one of these businesses is the business that you want to do as your main thing. And you use your M&A skills to basically bolt on stuff to using that as a platform rather than having all these disparate businesses. Does that make sense? So it's like the e-commerce one is the best one.

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It's like, okay, can we acquire some sub brands or some sub product lines underneath that, fold them into the brand and then flip that? That makes sense. And that allows you to not have as much capital and you can organically grow it and then you can keep your focus. But there's a reason that most private equity firms only take on, call it five to eight investments.

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And that's after they raised half a billion dollars to make those deals if they're in disparate industries. If they're a private equity firm that has a thesis based around basically a roll-up strategy where they're like, we're only buying plumbing and that's our whole thesis, fine.

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And that's more akin to what you were doing in terms of alpha, a little bit more boring, more ops heavy, but you don't have to have as much capital. And the more entrepreneurial you are, the more organic growth you can be able to drive in the original platform business. Does that help? Thank you. Yeah.

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Is that where you run them now?

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So you're going to bring a mortar?

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No, are you going for the glasses business?

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Yeah, I would do East Coast, West Coast.

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I think it depends on your strengths. So Layla has a really good frame for these types of decisions, which is what problem would you rather have? Because you're going to have a problem in either of them, right? The problem that you described with the first one is basically the affiliate problem, which is how do I attract them? How do I keep them motivated? How do I train them?

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I mean, you have a really simple solution. Just run the same playbook more times. If you were like, I want to build a more valuable business, then I would say take the year to figure out revenue retention, which is how do I get these people who pay me $12,000 to pay me another $12,000 or pay me $30,000 next year? or even downsell them to something that's $5,000 a year, but they stay. Right.

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How do I keep quality high? How do I make sure that they're representing the brand the right way? That is the problem with affiliates. But the nice thing is that if you solve that problem, you get paid like 50 or a hundred million dollars. And so like, I feel like there's an appropriate price tag ascribed to solving it.

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And that's what gets me through honestly harder times when you guys, because sometimes you're like, man, I just can't figure out how to get these conferences to work. It's like, yeah. And then as soon as you do, you make $10 million. So yeah, solve it. Like, that's how it works.

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When it comes to the direct to consumer side, if you feel like you're more skilled with call it, you know, map, basically. the business, like what business you're really in. So if you get into the direct to consumer business, you're competing against like snow teeth whitening. And like, if you look at the business model there, it's all media, it's all, you know, advertising driven type business.

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This is with glasses. likely very transactional. So it's a super direct response heavy business, you'd probably be recruiting affiliates for brand associations and be able to whitelist for them to be wearing your you know, your your glasses and whatnot. And that's the business that you're in.

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So it's going to be the problems that you're solving, or I have to be creating shit loads and shit loads of ads all the time. I have to be up to date on the best media buying stuff and have a really good at CRO, so conversion optimization. And I should probably over time develop a strong influencer affiliate strategy so that I can actually build a brand rather than just a ROAS arbitrage business.

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That's that path. The other path is the brick and mortar affiliate path where you still are centralized. You're just using doctors as your distribution base. If I had to pick which one I would rather have, I would rather do that one. That's me personally. And you're also a physician, which I think gives you a little bit of leg up or at least foot in the door, figuratively and literally.

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I think that that one actually, if you want to sell a business in the future, would probably be more likely to be sellable.

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uh just because the direct response nature of that other business is so volatile that any kind of like wrinkle of volatility in a year prior to a sale sales done sales off the table and so whereas once you develop a strong affiliate base of basically referral network from physicians though it is complex and challenging literally you just solve that one problem and you have the business

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I think given your experience from just the limited amount that we've interacted right now, if you'd said, I'm a hardcore direct response marketer, I make tons of media, I really understand that well, I'm really good at building sites and know people who can CRO really well, then I'd be like, okay, maybe that's the play. But you didn't jump at any of that. And so this one feels like the right path.

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All right.

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You do, sorry. So chiropractic services to members of Lifetime Fitness. Okay. Got it. Are you within Lifetime? Yes. Got it. Okay. Right. This year we're going to do. I was like, that's a niche. Like your ads are like, are you a Lifetime Fitness member? You're the only people we take. I understand. Okay. Got it. I got it.

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Yeah, but I think considering for the model that you have, downselling the upsell, I actually like a lot. So if they paid you $12,000, maybe they'll stay for three or three to five just to have access to the network and some of your vendors and the stuff that you kind of like provide. And I think that's something that people would be far more likely to stick with.

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I think you'll probably, one is I think Chick-fil-A, the head of people there has a really great framework on this, which is basically like a lot of teams will lose in the playoffs and think they lost in the playoffs when they lost in the draft. And so you might just have the wrong docs.

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And so if I think about like, you know, you have your customer avatar characteristics, you should be more selective about your chiropractor avatar characteristics. These are the beliefs you have to have about the world. in order to function well within this business model.

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For the same reason that I didn't work with Yogi's and Spin Studios, even though it's literally this exact same business model as large boot camps. It's the same business, but they were so like woo woo that my like raise prices and sell shit was like, whoa. And so I didn't work with them because they were just too big of a pain.

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And so to the same degree, I would say there are two ways to solve this. One is just pick the docs right up front. The reason that I would prefer that one is that you already have a business model that clearly works. And so I would be like hesitant to try and like change something. The second, well, sub point under that is probably just significantly more frequent training.

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And that's in the form of role playing.

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like i have yet to find anything that is more effective than modeling and role playing uh when it comes to transferring skill the nice thing is that sales can be transferred relatively quickly especially because they're you know they're they're smart they can figure it out what they get lost in is all the medical stuff and they try and like techno juggle you know people and then they have no idea it's like hey you're in pain i'll get you to be not pain by this thing right um but i think uh reading testimonials of patients who were undersold or not sold

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and telling them that they are hurting them by not providing solutions to help them. And so I think to be clear, I would also position this as like, we're not selling here. We're making offers available to people who need them. That's all. So that's what I would try and do to like immediately try and fix the existing thing.

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If you feel like this is some structural thing, I'm not sold on the fact that it is. But I have seen models where they have patient care coordinator and they just leave the doc in the back and they've just found it easier to just find salespeople and just be like, cool, you're the manager of this location, which really just like Lifetime Fitness, the manager is just sales manager, right?

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Okay.

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Because there are definitely some chiropractors who love selling. And so one other thing that I think you can do tactically to kind of operationalize this besides the role playing and constant feedback is because of the benefit of being one in person and two a physician, having a clipboard that has the script on it with check marks makes it really hard to mess up.

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And so then you can basically think about your business as... from a zooming all the way out perspective is that the $12,000 is actually like an offset CAC, which is like, you could break even on the $12,000 if you know that someone gets into a $3,000 a year membership that's pretty much all margin, that doesn't leave.

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It's like, so what brought you in today? Tell me where it hurts. On a scale from 1 to 10, how bad does it hurt? A lot. Tell me all the things that you can't do as a result of this pain. Tell me all the things that you wish you could do that if this pain were resolved, you would now be able to do. All right. So what have you tried so far? Oh, that's interesting. We're not like that.

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You didn't like that. Oh, you like that? We're a lot like that. Great. Wonderful. And so basically for everything that you've told me, if you really hated this stuff and you really like this stuff, I think you're going to love what I have to tell you. Can I talk to you about it? Great. I have permission for the close. And then I just say like, great, there's three options. Let me go into the pitch.

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How long is it taking you to get from zero to 20?

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Heard. Well, what problem would you rather have? Slower growth or faster growth?

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So faster growth and dilution of culture are probably more fires for finding wrong people that aren't good leaders and then mishire underneath of them and having to lay those kind of branches off and then bring new people in or continue to grow on the path that you're currently on, which seems to be working pretty well.

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Can I just get the best of the fast growth and the great culture?

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So I'll bet you right now that you're probably pretty good at training sales. Yeah. Okay. You have to get good at training leadership. Okay. So right now you're a sales training. Fundamentally, like you're in the business and I've had lots of various sales driven organizations. Like your business is a sales driven organization.

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So it's like, that allows you to spend way more than your competition, because they need to make money on the 12, you can break even on the 12, and then you just have this stack of $3,000 bills that just keep stacking up. That's like low, low effort to maintain.

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You're in the recruiting, onboarding, and training of salespeople business. And you just happen to sell roofs, right? Yeah, solar. And if you needed tomorrow to sell roofs, you'd fucking sell roofs.

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Right, exactly. Of course. Couldn't leave money on the table. I'm kidding. But basically what it is is that you have really operationalized how to get someone to do a specific set of behaviors that increase the likelihood that someone gives you money, period.

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So now you need to have a different set of behaviors that you have to standardize around leadership that increase the likelihood that people follow directives.

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Yeah. Cause they're like, I'm taking for the, for the leaders.

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So I'll tell you this in my experience, the best leaders, especially in sales organizations are not the best closers. Yeah. And the best closers in every business that I own, uh, make more than the sales managers. Yeah. And so if you have a killer, let them kill, let them hunt. It's the guys who were like three out of tens worked really hard to get to a six or seven out of 10.

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Those guys I found have been exceptional sales managers and leaders. And so I would be trying to identify that because the thing is, is like some of the best basketball coaches were not the best players, but they were guys who loved basketball, loved their teammates, loved learning how to get better. So they could point out what someone else needs to do, even if they're not as good at it. Yeah.

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And so you probably have a little bit of a pick them issue, which is that you might be picking the wrong horses because now you're hurting yourself twice. You're losing a sales guy and don't have a good leader. Yeah. Right. Yes. And so I would say leave the best sales guys alone. Yeah. And then look for the middle of the pack guys that everyone loves.

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Like, you know, those guys, like they're not the best closers, but like everyone loves them. They're like spiritual leaders of the team that they're on. Those guys are the ones that make banger sales managers. And this is a pattern recognition thing. I'm sure like you'll get it. And then really, because the thing is, is those guys eat up the leadership stuff.

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And then basically the way that you train sales, I'm sure it's really militant. You train leadership the same way. So leadership development path isn't like once a month we do a fucking training. No, I'm being real. Because some of you guys have that. You're like, oh, we're pouring to our people. Once a month, we spend an hour with them.

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Make sense? Yeah, it's good. But yeah, the nice thing is that you're honest about just wanting to make more money. It makes this a lot easier. Yeah.

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Great. And then when that takes, you know, 25 years for them to become a leader because they've forgotten between each one hour where they just have a random Zoom call, then maybe you'll teach them how to lead. Right. And so you have to train it the way that you train sales. Okay.

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There will literally always be money on the table. Like you, you can't sell everything as much as you want to. You just, you just can't. And the thing is, is like, if this company can go from six to 15 and the next year goes from 15 to 30 and the next year goes from 30 to 60, if you hit the same numbers and have two different product lines versus one, which would you rather have?

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And I'll also tell you that if you just do with one, you'll increase the likelihood, not decrease the likelihood that that occurs.

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Which is intense, many hours, lots of shadowing, full days, like one day a week you're with the other sales manager for a month or two. Because the thing is, is they know what to do. They lose it in the how. And a lot of that gets there. Obviously you want to get as good as you can operationalizing the smaller skills, but there's a hundred things that someone does.

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You might operationalize the 15 most important ones, but the other 85 still make a big difference.

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Yeah. But like, but you own a $20 million business. Yeah, let's go for it. Why can't everyone be me? So player coach is bad? If I had 20 of me, oh my God, I would bring so much, but you're not. So player coach is good or bad idea?

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I prefer, it depends, because you're a bigger organization, so this applies to us.

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Now, smaller sales teams, you have three guys. One guy's a player coach. You don't have the bandwidth to have somebody who's managing full-time.

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Yeah. So basically the core, so there's two, a chunked down version and chunked up version of the core economic engine that makes a business successful. So LTV to CAC is the most, the smallest version of that engine. You put some money in, you get more money out. That's the gross profit you run the entire business off of. At a higher level, it's return on invested capital.

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So it's like, okay, that's what the core machine is, but then there's also equipment, there's leases, there's build-outs, there's all that stuff that goes into it that's not typically included in LTV to CAC. And then how much does it cost us to build this machine again and again? So that's kind of how I think about it.

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Like micro level, it's LTV to CAC, return on invested capital is what it is at the macro level. When you're like opening more and more locations and saying, it costs me 500,000 to open a location, the location makes me $500,000 within the first six months. Okay, cool, I've got a two to one return on capital within a year, which is awesome, right? So let's tackle for you.

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In home or? In home. Okay, got it.

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So the nice thing about the music business is that it's actually identical to the gym business, so I know a lot about it. And so the models that I've seen works unbelievably well have been semi-private models, number one, or... The 30 minute, multiple times a week, much higher ticket. People stay three, four, five years with music lessons with their person.

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I prefer semi-private because I think you get more loyalty to the brand and it's less about the music teacher who can then leave and then take all of those students to go private. And so I like semi-private in general. Also, I'm sure you could sell around the idea that they get a little bit more socialized and it's probably good for them and all that jazz.

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Okay. Is it like guy drives out or is it you sending machines?

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And in terms of pricing, I want my gross margins to be at least 80%. ideally 90. And so now you can do that when you're one-on-six, harder one-on-one. And so if let's say you have six kids, right in a class or four, I mean, you can you can you can, you know, level into it. But let's say it's one on four, keep it math simple.

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And you charge $200, sorry, $50 per session times four kids is 200, you make $200 per session, right? Well, for you to pay for an hour of music teachers time, what does that cost?

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So that's 80% right there. So 240. So 80% gross margins right there. Now, if you charge 60 bucks a session, you'd be at 240. So then you'd be at like 84, whatever, in terms of gross margins. So you're above that. But that's my rule of thumb for brick and mortar service businesses is I want it to be over 80. Ideally over 90, but I will not do a business if it has lower than 80% gross margins.

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Okay, got it.

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Some people do. I just don't like to. Cause you don't have enough cash to do anything. Right. And so then the question is, okay, how do we, how do we create the sales process and the positioning so that now you already are working with a special class of customers. And so I would imagine that you would be able to probably even more easily than a traditional music academy sell at a premium price.

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Because if I'm a parent who had a neurodivergent kid, I would be willing to pay for a specialist. And so specialist prices are premium. So I think that would work. And in terms of the model, you can, I mean, it's just headcount divided by teachers, basically. But you have to get the core gross profit right in the business, and then everything else kind of flows from there.

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So we have to get more margin. You have to get more cash flow. Cash flow allows everybody to breathe better.

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Sell one on four and say and just sell around the fact that it's a better experience for them because you don't want them to be married to a teacher. You want them to be married to like this is how I would sell it.

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I would say, listen, Mrs. Whatever, like if your child becomes really attached to a single teacher, then if that teacher leaves, then all of a sudden this skill that they spent all this time on, they'll associate with the teacher. And then all of a sudden they stop playing violin after five years. You don't want that. I don't want that. What we want is to create a...

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a positive relationship with the skill. So they just continue for life. Right? Right. And so we facilitate that by having other people in the sessions and so that the teachers sometimes do change so that no one really goes too attached to anybody, but they really grow attached to the craft. That's how I would sell it. Whether that's true or not, no idea. But that's, I don't know.

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But like, that's how it's, does that make sense? It does. Yeah, so that would be my positioning. And I think if you just switch the ratio to one on four, and so, okay, everybody. So if you are capacity constrained, so some of you guys are in that position, like you can barely handle the customers that you have right now, you have three solutions. The easiest solution is you just raise prices.

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Because if you have supply constrained, then that means that you have more demand than you have supply, prices go up, right? And most people just don't do that and just suffer. So just raise the prices, make more money. That's solution number one. The second solution is change client delivery ratio, which we just covered. So instead of going one to one, you go one to four.

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So you get more out of what you already have. This gives you leverage and it gives you cashflow. improves your growth margins. The third way is to bring other people in who can do what you do, which is then delegating the responsibility to somebody else. So that's the ultimate leverage. So you don't have to do any of it. Does that make sense?

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So those are kind of like the three steps that I think about when I have somebody who's supply constrained and they don't have any time. They can't grow the business and they can't sell more customers, but they need to sell more customers to grow the business. And so the rock and hard place. And the nice thing is we start with price because it's the fastest and easiest one to do.

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You don't have to do anything. You don't have to change anything. You just say a different word, and then you make more money.

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So what would the... You can still have one-on-one. You can still have one-on-one. I would predominantly sell somewhere private. And if someone's like, well, I want the special snowflake treatment, then you're like, awesome, I'll give you the special snowflake price. Right.

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So I would have, so you know this, you would know the outcome better than I do, but it would be something, whatever, whatever the fast outcome that you can deliver to a kid who's neurodivergent, who picks up a violin or whatever the instruments that you teach are, right? It's like, they'll be able to play this, like a song in this period of time. Right.

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Yeah. So what stops you from just doing way more of the doctor stuff?

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No, it might not be good, but like you'll recognize it kind of. Right. But like I would want some sort of discrete outcome and that would be like an outcome. You could also do some sort of subjective thing, which is that like they rate X or they like you could have a survey, the beginning survey at the end. That would be kind of more of an internal thing.

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But yeah, typically you'll sell some sort of package upfront. I'm going to guess that the price point for what you're looking at is going to be between $600 and $2,000 is what the upfront package would be. And then you'd upsell or at least let people go into continuity on the backend. And it'd probably be somewhere in the neighborhood of like six weeks to six months.

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You would know that range better in terms of how long to sell for it.

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Yeah. You just need time, man. Like, I think what's interesting is that like the more stressed you are, the lower, this is not me. This is not a slight, just to be clear. I'm saying in general, the more stressed anyone is, the lower your IQ is. And so I'm saying this to say that, um, I got it. This isn't a you.

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I'm saying that the problems that you struggle with when you are stressed, when you have a good night's sleep and a little bit of time, you solve in like five minutes. And so if you want to increase your capacity, it's like, let's solve for capacity. And then a lot of these things that are keeping you up at night, you're like, oh, we'll just run a six week thing or run a 12 week thing.

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We'll sell it for this. I can see how the margins work out. And like, we already have more demand than we can handle. So it's okay if people say no at our higher prices, because we'll make it up and profit anyways on the people who do say yes. Does that make sense? That wasn't a slight, to be clear. I wouldn't say for anybody.

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Yeah, you bet.

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What do you do? So you're banking 50% margins, right? So what's the cost to acquire a physician?

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Who refers your business? Cost of acquiring affiliate.

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Okay. So you're getting 12 to 1 there, and you already know how that works. So what stops you from doing 10 times more of that? You're saying they don't pay well, but that's the part I'm not sure. I don't understand. Because you're getting 50% more.

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Like you've, I mean, you've only really talked to 200 in terms of like reach outs and, and, or yeah, 200 who signed up as affiliates kind of thing.

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In the twins.

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Yeah. Do you have an active affiliate manager who's like regularly reminding them? Yeah. So with so the way that I think about affiliates is it's basically a second tier of customer. And so you need to have somebody who's regularly kind of like stoking the affiliate fire to keep them activated and continue to get them to continue to refer business. So I'll give you an example.

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So there was a roofing company, for example, it was a restoration company. They had one star, star salesman. And all he did was he'd go around to other tradesmen and get them to refer them business. And so they would get a thousand bucks to refer the restoration business to

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business but the sales guy got 500 for every time they referred and so that guy all day long was knocking on doors walking to the front door with donuts asked them how they're doing bringing coffee to the guys and then reminding them that they existed and that's all he did And so I think you're doing the hardest part, which is getting them to refer. You just didn't have the consistent referrals.

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Because if you had 200 active affiliates who were consistently referring your business, and most of these physicians, especially like GP, things like that, I mean, they see thousands of patients. And many of them could probably benefit from the services you have. And so the activation is both getting them to refer consistently, but also percentage of customers that they see that they refer to you.

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So it's kind of both sides of it. And so I think that the missing link with what you were already doing was just that the, you didn't have basically the continuous affiliate marketing strategy to get them to keep sending you business. So that's probably like right now today, I would fix that first because you already have the acquisition system. You already have the network.

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And so for me, like reactivating that affiliate base would be the first thing that I did. The second thing, maybe, because you might just reactivate the base and all of a sudden you're like, I got 200 guys referring to business. Holy shit, we're at 10 million. The second thing I would consider probably, I would still probably focus most of my time on the B2B because you already have it.

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But for this business, I think that it lends itself for, what's the price point?

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Per treatment. Okay. Wait, so, so, uh, the average doctor will send you one $6,000 patient per year. When you said it costs you 500, they'll send you one patient. Interesting. So do you have a process for once the patient gets the thing, calling the physician up? So like I'm Dr. Smith, I send you Sandy. Sandy goes and gets the, well, you come to Sandy and Sandy gets the treatment.

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Is there a cycle where you call back me, Dr. Smith and say, Hey, we just dealt with Sandy. Here's some of her stuff.

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For sure. Yeah.

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Okay.

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Yeah.

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Yeah. I would systematize the hell out of that. Because it's like, hey, you just sent me this person. Like, let me close that loop for you. She's awesome. We did this thing. She loved it. By the way, and then we have the, you know, the opening to the others. Like, what customers, or customers, sorry. What patients did you see this week who you think would be a good fit? Right?

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And rather than saying, do you have any? It's which ones would be is the question. Small training stuff, but it matters. So I feel like there's so much on the B2B side that honestly, that's probably where I'd be ripping apart.

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it's not that I wouldn't, it's that when I think about, so this is the difference in like theoretical and actual, like I would, given the fact that you, like you're already running good margins on this thing, basically doing it and take this the way I mean it, completely unoptimized, like right now, right? And again, I'm not, this is not a slight.

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Then I'm like, there's so much juice left in this thing. I don't want to now start something new. It's like, I barely got this one going. I want to like crush this. And when I'm like, no, we follow up with every single person. I've got a full-time affiliate manager who steps by our affiliates. I'm calling them affiliates, but drops by the docs once a week just to remind us, say nice things.

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Hey, by the way, like that is happening all the time. And we've already covered like literally every single physician in the Twin Cities. Then I'm like, okay, let's go B2C. But if we haven't completely squeezed the hell out of this thing and it's already working at the level it is right now with like, Like you're only getting one patient per doc.

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It's like, so yeah, so you getting B2B customer is the same as getting one B2C customer. I understand why you'd be frustrated because you'd be like, well, fuck it. I'll just fuck. I could sell one customer on my own without having to deal with the doc. But the whole point is that like, I want them to be sending 20, 50 a month. And they can because they have the volume.

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And I think that first one has to be like a beautifully choreographed experience because that first patient's the test run for them, for you. Right. They'll refer you one and we'll see what happens. Right. And so one, it's like Sandy's got to be blown away. Right. She's got to come back and be like, oh, my God, that place was amazing.

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And then you also have to go back to the doc and be like, we blew Sandy away, by the way. And so I think you have to tackle it from both sides. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

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Sure.

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and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you.

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So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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That's what I would do. Getting into the ad side, you absolutely could do it and we could walk through a whole strategy there. But if we swap places, that's where I would be focused.

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Honestly, no. If I crush my B2B play, then I just run my B2B playbook in the new market. Once I find something that works, I just want to just... Do more. Yeah, pillage.

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Yeah, no, you bet.

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I just wouldn't.

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I wouldn't do it. Okay. You're going to go from 6 to 15 this year. Do that. Okay. Like, I'm not trying to be, like, short to, like, these are the mistakes that we make.

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there will literally always be money on the table. You can't sell everything as much as you want to. You just can't. And the thing is, it's said differently, if this company can go from six to 15, and the next year goes from 15 to 30, and the next year goes from 30 to 60, if you hit the same numbers and have two different product lines versus one, which would you rather have? One, right?

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You're good. You're in education. Yeah. And education graduates people. That's how education works. So if you look at the education system overall, the way to create continuity in education is just always have something else to learn or to teach. Like first year, now you're an undergrad. Now you're a graduate student. Now you have a master's. Then there's a PhD and you get a second PhD.

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And I'll also tell you that if you just do it with one, you'll increase the likelihood, not decrease the likelihood that that occurs. And so like, that's all the, that's the focus and discipline stuff that you hear all the Steve jobs and all that. Like, it's just, it's a, he called it the, the quantity of unbelievable ideas that you know, you could crush that you say no to. That's what focuses.

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But if it's like, I want to grow, why would I, like, why, like, then let's just grow with the thing that already is working and is really profitable. And we know everything about it rather than this, you know, crazy girl in the red dress that like walking by and like has a crazy boyfriend, has crabs. You're like, what's going on? You know? So like, why bother? It's like, we have this girl.

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She loves us. She knows me. I know her. Let's go.

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So you have a holding company right now. Yeah. And what are the three businesses that you bought?

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And the other ones are smaller.

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And so the founder... So are you funding them and finding a founder? Or are you buying businesses that are existing and exiting founders?

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What do you want to do with your life? No, because what I'm about to say is going to be a dramatic change from what you're doing.

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Right.

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So, so there's basically you have, how much do you know about private equity? I've read a couple of books. Okay. So the problem, I can tell you what the problem with the existing model is, is that you don't have enough operating leverage. And so it's actually, in my opinion, a foundational issue with the business model. Like I don't think it's going to work.

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Now, to be clear, I think you can make some money. I don't think it's going to accomplish the goal that you want. And so if you're trying to treat this like private equity, where you hope to have exits later and then gain liquidity versus if you were like, I'm just a holding company and I just want to continue to buy cash flowing businesses, I'd have a slightly different answer.

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And if you disclose that, they will believe you more. The second place that this will occur is on the landing pages and on your school about page. Is what am I putting in there? What images am I showing? And I should be clear about, hey, I will show you these stories.

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Now, if you guys want a life hack of life hacks on this stuff, essentially in the United States, the Federal Trade Commission has essentially made earnings claims illegal. They have made them more or less illegal. This was news to me, which is why I'm sharing it to you. And so there are four things that are required for an earnings claim. I will share them with you. And so you can make them.

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If you can do all four of these things, you can. But let's just pretend you can. So number one is that you get permission from the person. That sounds about fair. You're like, okay, that feels okay. That feels legit. That feels right. The second is that you disclose the context under which this has occurred. Now, this is all the stuff I'm talking about. What are the unique situations?

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Our bodies, for instance, are usually hotter than the surroundings, and in cold climates, they have to work hard to maintain the differential. When we die, the work stops, the temperature differential starts to disappear, and we end up at the same temperature as our surroundings.

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What are the circumstances? How is the data collected? What kind of experience did they get? Was it different than everyone else's? Okay, that's the disclosures. The third piece is substantiation. Now, you might think, well, I have a screenshot. That is actually not sufficient substantiation. Even if they gave you a screenshot of their Stripe account, not sufficient substantiation.

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you would actually have to show three things in the substantiation. Number one is you'd have to show their bank account or actual downloads from their Stripe, actual PDFs from their processing or their whatever, right? That's thing one, before your intervention. Second, You'd have to show the PDFs and actual downloads from the bank account or their processor after the intervention.

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And number three, a causal relationship between the two gaps that shows that what you did is the reason that it went up. That's number three. But wait, there's more. Number four is that, is it typical? And if the answer is no, and if you're like, well, how would I show typicality?

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you would have to substantiate those claims for everyone, which means that you would have to track that for every customer you have. Now, one of the advantages that school has is that we are a platform. And so we can substantiate the claims because we own the processing. Very unique for us.

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But if you're trying to... So essentially what I'm trying to say here is that earnings claims, likely the way you're making them, are probably not legal. Okay. Now, there's obviously... Some of you right now are like, you're hyperventilating. I won't say more about that. I'll just leave that there. Now, you might be asking, well, then how can I show proof that my stuff is good?

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Great follow-up question. How? The way that you do that is that you show satisfaction. And so the way you do this from a persuasion perspective is that you say, you might want to know ROI. But I don't want to talk about that. What I want to really talk about is the question behind your question. This is an intention close, by the way.

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Not all animals work so hard to avoid coming into equilibrium with their surrounding temperature, but all animals do some comparable work. For instance, in a dry country, animals and plants work to maintain the fluid content of their cells. They work against a natural tendency for water to flow from them into the dry outside world. If they fail, they die.

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Someone asks for an answer to something that you can't answer, either for legal reasons or for whatever reasons. And so rather than saying no, you say, I'm guessing the reason you're asking that question is because you want to know intention. Because you want to know, will you be happy after you made this purchase? And if that's what you want to know, let's talk about that. Here's Sarah.

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Sarah's in a similar situation to you, and she's very satisfied with this purchase. This was the best decision of my entire life. It totally changed how I saw painting. I see it as an artist now. My painting skills have completely transformed my life. Phenomenal. No earnings claims, no specific outcomes, entirely subjective. Who can argue? Alex is the best painting teacher on the planet.

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Who best is subjective? Who can argue that based on one, right? Amazing, exceptional, tremendous, huge, whatever. All of these things are subjective. And then what do you have to say? But her experience is probably not typical because her experience was influenced by the past things that she came in on. And so your results and experience might vary. So I promise nothing for you.

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But there are people who've had exceptional experiences. And you can say as many of those as you want. And with each time you say, hey, to be clear, Sarah's superior is a social snowflake. She had a different experience coming into this than you did because she lived a different life than you. And so your results will likely vary.

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You can't have the same experience as Sarah because you're not Sarah. And the world has changed, right? And so this is how you can still layer in proof and do it in a compliant way. So I said there's the advertising component. There's the about page component. This obviously factors into those of you who have videos on your about pages. Same thing to be true there.

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And then finally on the actual sales calls themselves. And the way that you do that is you would still say the same, the same, the same pieces, right? And I'll walk you through the three places that you want to watch out for the most, or maybe four. Okay. Is that all right with you guys? Is that okay? All right.

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I want you to set up this frame because what it does is it gives you the moral high ground. It's a very strong frame. That's why I'm bringing this up. All right. So the first thing you have to say on a call, if you want to follow the law in the United States, is you have to say four things. You say, this is my name calling from this company in regards to topic.

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And by the way, this call is being recorded. All right. You can say for quality assurance and that's to protect you that I don't say some crazy shit. All right, that's how you train your guys to say it.

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If you want to say it a little shorter, because if you want to get it out faster, you say, hey, this is Alex Crawford from Acquisition on a reported line in regards to the thing that you just said you wanted. How are you doing today? That's it. We got all four of them out. Not a big deal. You say that first. That's the first thing you say on the call.

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In the United States, anything that happens prior to you saying it's recorded, you are liable. Number two, once you said they say, hi, you say, hi, you say, great. Do you mind if we just jump in? They'll say, sure. You say, hey, here's the agenda for the call. One, two, three. This is what we're going to do. Sound good. They're going to say yes. At that point, you put in disclosure.

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You say, hey, before we get going, before I talk about your metrics, before we talk about your history of painting or your history of weight loss, I just want to make sure that we're 100% clear. We at insert company one, two, three. We don't promise that you're going to lose weight. We don't promise you're going to get a specific outcome.

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And the reason we can't do that is because we can't control what you put in your body. We're not the ones who are going to be doing the work. You're going to be the one doing the work. And all of your results are going to be completely dependent on the effort that you put in. Does that sound fair? Does that sound reasonable? Yes. They're going to agree. So what do we do here?

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More generally, if living things didn't work actively to prevent it, they would eventually merge into their surroundings and cease to exist as autonomous beings. That is what happens when they die. While the passage is not as tended as a metaphor, it's nevertheless a fantastic one and very relevant to Amazon.

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One, that's compliant. Two, it sets the frame for the conversation. So they're not going to come out later and be like, can you, how many, how many, it's like, Sarah, I said at the very beginning, I'm not going to promise something that I can't control. Do you think it would be reasonable for me to do that? Would you trust me more if I promised you something I can't control? Of course not. Right?

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Now, the third thing. So that's one, intro. Two, disclosure. Three, here's what you do on the third thing. The third thing you're looking for, and I want to be clear here, check with whatever attorneys you have in whatever countries you have to make sure that whatever you're doing is compliant. These are just some rules, some tips, okay? Number three, this is where you get in trouble, right?

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Is that someone or a salesperson will get down the line and they will say something to the degree of, okay, so you're saying if I did this thing, I could lose weight. So they're going to reframe what the salesperson said. They're going to restate it back to them with an implied claim. They're basically going to try and get you to promise it. And so there's a three-step answer to this.

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I'll walk you through it. Number one, that would be amazing. But I just want to remind you, we promise nothing. I make no guarantees about your specific results because they'll vary based on the stuff, the work that you put in, and your background and other experiences. But that being said, What we can do is state the facts and tell the truth.

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We will give you access to our painting mentors and you'll get three one-on-one sessions with them. And you'll have access to our library of painting materials. And we'll be with you over the next 12 weeks to help you out. So I'm not saying that wouldn't be amazing. It would, but I'm going to promise absolutely nothing there because it depends entirely on you.

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So let me just restate again what we actually are going to do. And you have to just exactly, Arden, It's about the inputs. So you will talk about what you can do, not about what might occur as a result. We talk about inputs, not outputs from a compliance perspective. Now, that's thing three. Thing four is false urgency, false scarcity, things like that, false qualifications, etc.

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Most people claim that they're qualifying people, but really they're just looking for a credit card and a pulse. If that's you, then that's also considered not. It's another. All right, so I'll just put that in there. If you want to just say, I just want to see if this is a fit, totally fine. But don't say, hey, why should I accept you into my thing? That frame, if not true, is highly suspect.

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And the other part of it is like, It may be true. Maybe you do deny some people, but it's still a red flag and probably just worth avoiding overall. So that's, you might be like, well, Alex, what can we talk about? Well, you know, there's two sides of persuasion, right? There's promise and there's pain. Pain is compliant. Talk to someone about where they're currently at.

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I would argue that it's relevant to all companies and institutions and to each of our individual lives too. In what ways does the world pull at you in an attempt to make you normal? How much work does it take to maintain your distinctiveness, to keep alive the thing or things that make you special? I know a happily married couple who have a running joke in their relationship.

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Talk to them about their current struggles. If you can articulate the pains that they are going through better than they can, they will trust that you can help them solve them. Imagine if I said to you, your exact issues that are going on in your business, and I just said them to a T and you're like, man, he just like, he knows exactly what's going on.

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If I said, I think I might be able to help you. And I think you might see some value from it. That being said, I can't promise anything. You might be like, shit, I just, I mean, you know these so well, I feel confident that he could help me out. And so I would lean more, and I feel like this is a forgotten thing in the world of advertising.

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And I talk about this in the offers book, is that a lot of people talk about the top side, right, of the value equation. They talk about outcome. They talk about perceived likelihood of achievement, right? But the more time I have spent in advertising and persuasion and selling, the more I look at the bottom side of the equation, which are basically the antitheses of pain. Delay.

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It's effort and sacrifice. And so if we can pinpoint the things that they're very, very, they're experiencing pain on it. So it's like, okay, let's think through this. What are the things that cause someone to have motivation, right? So if you think about what a salesperson is, is they're fundamentally a one-on-one motivational speaker. It's what you are.

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Because you're trying to get someone to take action, right? Trying to change their behavior. So if we're trying to motivate somebody, which is what we're doing as salespeople, Then what is, how do you motivate? You have to show deprivation. And so you can show deprivation in two ways. Let's say that they are a point on the map here, right?

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We can say, look how far away this thing that you really want is. And then we create deprivation between where they are and where they want to go. The other way is that we can say, you're actually not here. You're way back here. And that's based on pain.

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And so this is why in most selling scripts that I have, I have something called the pain cycle, which is where in seat closer, I see L-O, the O is pain. a nice little cycle there, where you ask the same questions. You say, what have you tried so far? How did that work for you? What did you like about it? What did you not like about it? Got it. What else did you try?

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And you keep asking those four questions. So what we're doing is we're increasing the relevance of the pain that they have experienced getting here on the phone or here on the webinar or here on the whatever conversion event you have, right? And so what we want to ask are questions like, what have you not been able to do as a result of this pain in your life.

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And to be clear, I'm not promising that you will be able to do that. I just want to understand, all right? Second, what have you had happen that you didn't want to have happen because of this issue? So think about it. I think a lot in plus, plus, minus, minus, and plus, minus, minus, plus. And it's like, what the hell does that mean?

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So when I'm thinking about persuasion, I have these four boxes in my mind, okay? So plus, plus is more good stuff. So as a result of this decision, we want to talk about more good stuff. We're in the hope that more good stuff could occur, right? So if you didn't have access to me, now you have access to me.

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Not infrequently, the husband looks at the wife with faux distress and says to her, can't you just be normal? They both smile and laugh. And of course, the deep truth is that her distinctiveness is something that he loves about her. But at the same time, it's also true that things would often be easier, aka take less energy, if it were a little more normal.

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If you didn't have, you know, you didn't have these materials, now you have access to the materials. These are plus plus, right? Minus minus is less bad stuff. What is, and if we're thinking through this, what is this, what is some of the bad stuff? overwhelmed, confusion, not knowing where to start. Less of that now. So if you're suffering from those issues, we might be able to help remove those.

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Okay? Again, we make no promises, blah, blah, blah. Okay. What is the plus minus and minus plus part? How does that work in? That's what I call selling against the don't, right? Which is the path not taken. And so a lot of marketers, a lot of salespeople, they get lost because they spend too much of their time only on the decision in front of them rather than looking at all the alternative paths.

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So if you get off the phone today, plus minus, you might have more overwhelm. You might have more confusion. You might have more delay between where you are and where you want to go. That might be a riskier path. And then minus plus is if you decide not to move forward, you might not get these outcomes that you wanted.

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And so when I'm thinking about writing copy, I use that as basically framework one. And then in the book, I talk about who, what, when as framework two. And when I layer those two things on top of each other, that gives me endless variety of things that I can bring up that can be persuasive. And if you're like, what book am I talking about? This is the Leeds book in the... I'll find the section.

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I think it's in the paid ad section. I think it's section one for paid ads. And in there, I talk about writing copy. And it's the who, what, when framework. So what we're looking at right now is looking at page 140, this framework. 140 in the leads boat. All right, what, who, when? And so what I just went over was the what side. That's my plus minus box, right?

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Now I've got my who side, which is, okay, well, we talked about how this could affect you, but how does it affect your family? How does not doing this affect your friends? How does not doing this affect your colleagues or your rivals, your frenemies? How are they affected by this decision to do or not do? And then third is when.

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is, okay, well, we're talking about present, but let's talk about the future. Let's talk about the past. What will your wife think about you under these new conditions? Would that be valuable? And so, all of that being said, if you're like, well, what do I do if I don't promise everything else in persuasion? And so hopefully that gave you guys a little bit of context.

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This has been top of mind for me because I'm, I don't know, I feel really, really passionate about this because I think that, I mean, I'm a gym owner, guys. Like I came up as a, I went online training and then I started a gym. Like it's not like I went through some branding school or some marketing school to figure any of this stuff out.

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Like I found this out by reading books and buying courses and attending conferences and going to masterminds and doing all sorts of stuff that right now gets shit on. And frankly, probably rightfully so because of the things that I just described, because there's a lot of people who promise high and deliver low. They do the opposite. And some of you guys are listening to this right now.

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This phenomenon happens at all scale levels. Democracies are not normal. Tyranny is the historical norm. If we stopped doing all of the continuous hard work that is needed to maintain our distinctiveness in that regard, we would quickly come into equilibrium with tyranny. We all know that distinctiveness, aka originality, is valuable. We are all taught to, quote, be yourself.

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And so if you want to stand out in a very crowded marketplace, just tell the truth. And the thing is, is that prospects know. They already know. They know. And so when you tell the truth, all it does is get them to trust you more and it increases the likelihood they buy from you. But here's the best part of all of this. When you sell this way, you get better customers. You get fewer refunds.

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You get fewer chargebacks. You get people who get better results because their expectations were lower. They're not expecting you to save the world for them. Anybody who asks you for a guarantee on something that they control is asking for you to be their savior. They're asking for you to eat the food for them and work out for them.

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Now, to be clear, I'm not saying there's anything wrong with the satisfaction guarantee or whatever. But that, again, satisfaction guarantee is that you're going to like this experience. And so I put that out. Take that how you want. We probably won't have time for the breakdown, so we'll probably have to push it until next week. But this felt...

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Being believable is more persuasive than being persuasive. If you demonstrate and speak forth your biases prior to making a claim or making some sort of teaching thing, more people will believe you. And I would encourage you that if you want to stand out in this marketplace, the thing that you can do above all else to stand out is to actually tell the truth. I have exciting news for you today.

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super timely to share with you guys because it's been really top of mind and i i feel really passionate about it i think i think if if this if everybody on school like if we collectively decided like we're going to advertise differently um and all it really takes is for you to do this one time and realize the same amount of people buy and they're better that you transition for life you transition over and you're like i'm just going to do this that way from here on out

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It's also what gives you kind of a big brand feel. There's a reason that Blackstone doesn't say, here's John. John invested $1 million and he's got $10 million. Have you ever seen that? Of course not, right? Of course you haven't. But it's not like Blackstone's struggling to make money. And so there's this big fear that exists that if you were to operate this way, you would make less money.

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But what I find really fascinating about that is if you look at the biggest companies in the world, they all operate this way. And I'll give you a fun little corollary. There was a business owner I was talking to not that long ago who was like, hey, I want to come on Cash Cows, which is the show we've been putting on on YouTube. I don't know if you guys have seen it.

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It's where we do these big breakdowns of businesses. It's a lot of fun. Anyways, so there's a guy who's going to come on and he's a restaurant owner. And he's like, you know, I don't really want to share my numbers because I think my employees will leave if they know how much money I'm making. And I'm like, okay, so big picture, your goal long-term is to keep opening more locations.

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Do you think when you have 10 locations that they haven't figured out that you are making money? And taken to the natural extreme, has this limited businesses in the past? Well, every publicly traded company is literally forced to be transparent about all of their metrics and yet people still work there. And so there's a lot of these limiting beliefs that exist.

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One of them is that if I share my financials, everyone will leave and maybe some people will leave. And guess what? Maybe they shouldn't be there because eventually if you do succeed, they will find out that you make money. And guess what? So what? Find somebody who's happy about you making money instead of angry about it. That's probably a great first place to start for people on your team.

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But second to that, if the eventuality is that everyone's going to find out anyways, and you're going to have to work this way, and that's what the biggest people in the world do, why not start now? I see that as a measure of success. And so I promise you, you can absolutely advertise and sell in a way that is compliant and truthful, and it will improve your business.

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What I'm really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical. In a thousand ways, it pulls at you. Don't let it happen. You have to pay a price for your distinctiveness, and it's worth it.

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And it will make you stand out in a marketplace full of scum and sewage. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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The fairytale version of be yourself is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don't expect it to be easy or free. You'll have to put energy into it continuously. The world will always try to make Amazon more typical, to bring us into equilibrium with our environment.

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It will take continuous effort, but we can and must be better than that. So I felt particularly moved by this passage. And I'm sure that at least some or maybe all of it may have resonated with many of you.

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And I know this to be true at all levels, because as I've continued down the entrepreneurial path, which I believe is the single most efficient path at personal development, is that the market will always give you direct and unkind feedback, right? There is no political correctness with results. It will tell you whether your stuff is good or not.

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Customers will shout at you for not being good enough. And you may shout at yourself when you aren't making the amount of sales that you want, or you're not getting the amount of advertising, or your ads aren't working, or people aren't saying yes on the phone, or at the end of the month after spending all your money, there's nothing left.

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That stark contrast of reality is what makes entrepreneurship, in my opinion, a driver of change and ideally improvement. And so I see this letter. It's really great. You can find it on my ex. It's one of the pages of the shareholder website. And you can scroll down a second too, look. Ah, little Jeffy B action. That was kind of cool. I actually forgot.

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And that exciting news is that it's Monday. And for those of you who are brand new, welcome. Now, before we get going, I actually wanted to set the tone with something that I shared on Le Twitter, which is French for Twitter, actually French for the platform formerly known as Twitter. So Le X, maybe just Lex. I don't know. We'll go with it. All right.

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I honestly was just really moved by the thing, but I did forget that. Kind of dope, right? Anyways, no big deal. Me and my compatriots, we exchange tweets sometimes. Me and Jeff, we go back and forth. Jeffy is what he likes to be called behind the scenes. No, but anyways, very, very cool.

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I thought it was really distinctive and it caught my eye and I figured I would share it with you because it's definitely like the energy that I have right now. is that it takes a tremendous amount of effort to be you. And I know we're going to do a breakdown, I think, but I want to talk about something that's super top of mind for me right now.

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Being believable is more persuasive than being persuasive. Said differently, if you demonstrate and speak forth your biases prior to making a claim or making some sort of teaching thing, more people will believe you And so many people in the info world rely on unsubstantiated claims and sometimes outright lies.

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And I would encourage you that if you want to stand out in this marketplace, the thing that you can do above all else to stand out is to actually tell the truth. And the people that tell the most true thing will stand out the most. And so imagine a world where you got on a phone call and someone said, if I buy your thing, will I learn how to paint? If I buy your thing, will I learn how to code?

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If I buy your thing, will I learn how to make $5,000 a month extra? And then to that, you would say, I think that would be amazing. But to be clear, I promise you no guarantees and no outcomes because I cannot control what you do. And would it be reasonable for me to promise something or guarantee something that I have no control over?

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With that being said, what I can help you do is state the facts and tell the truth. I will give you access to the materials that are the best breakdowns of how to paint, how to X, how to Y. And there are people like Sally who says that this was amazing, but her results might not be typical. There are other people who haven't been satisfied. How different of a frame

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Would it be on your sales call to state the facts and tell the truth? How different of a frame would it be on your webinar to start that way? How different of a frame would it be in the ads to say that? And so this has been something that's been very top of mind for me, which is like, to what degree? Because truth, like, obviously there's objective truth. One plus one equals two, right?

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But there's also degrees of truth, meaning I could say some people have been satisfied and other people haven't. But I could take it a step further and say 98% of people have rated this a four and a half or above. How true can I make it? I would say that the second statement is more true than the first. Or rather, how precise with our truth can we be?

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And I think this was a really exceptional read and I think probably applies to many of you today. All right. So I will begin and then we'll get into the fun and shenanigans. All right. So differentiation is survival and the universe wants you to be typical. This is my last annual shareholder letter as the CEO of Amazon. This is by Jeff Bezos, by the way.

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And I think that in a world where everyone is promising the world and guaranteeing everything, you will stand out by simply telling the truth. Because the truth is, especially everyone who's listening to this has education and community as the primary things that they monetize. And the truth is that you cannot control the outcome for your customers.

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You can increase the likelihood that these things occur, but you cannot promise them. And I think that you would do well to state that up front. And I think on top of that, this is what will happen. And this is what you don't believe, but let me borrow some of my conviction. Let's say that there's a spectrum of customers, which there is.

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On one hand, you have broke-ass people, brokies, serfs, plebeians, the poors, muggles, non-magic folk, normies, these folks, one-star reviewers. On this side, you've got rich folk, the elite, the superior, those whose credit cards do not decline, Amex black holders, all right? This is our spectrum. Currently, right now, the more you promise, the more you guarantee, the more you sell these people.

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The less you promise, the more upfront and transparent you are, the more you will sell these people. But here's the really fascinating thing about this. You will probably sell the same amount of people. You will just shift what slice of the demographics you convert with. Because I can promise you the more experienced a business owner is, the higher and more finely tuned their bullshit detector is.

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And nowadays, the reason that the info space has the terrible reputation that it has, I would say, is two factors to it. Factor one is that some people deliver terrible stuff, meaning it's just absolute nonsense. There's nothing valuable inside of it. It's just not good, straight up. That's a thing, for sure. The second category is people who promise a lot.

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And you basically have four outcomes there. It's a four box. High promise, low promise, good shit, bad shit, right? And so the worst scenario is high promise, bad shit. I would say the next worst scenario, and this is where it gets really interesting, is high promise, good shit. The next worst or second best, it's a four box, so there's only four, is low promise, low shit, or bad shit.

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And then finally, the best combination is low promise, good shit. And so you might be wondering, why would I say that big promise good shit is bad? The reason I say that is because the nature of education, no one has cracked the fact that there is differential outcomes in cohorts among education. You probably haven't cracked the code. You have not cracked the code to human motivation.

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You probably haven't cracked the code to everything they have in terms of a history of knowledge, skills, and experiences that they come into your sales call or your funnel or your advertising with. And so when you set very low expectations, if you set low expectations, then you basically promise nothing. And if nothing occurs, then you have met expectations.

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And I have one last thing of utmost importance I feel compelled to teach. I hope all Amazonians can take it to heart. Here is a passage from Richard Dawkins' extraordinary book, The Blind Watchmaker. It's about a basic fact of biology. Staving off death is a thing that you have to work at.

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And so there's really only one realistic way long-term solution, which is and has become a marketing moniker that is quickly ignored, under-promise, over-deliver. But a lot of people say that, but they don't actually do it. They literally say under-promise, over-deliver, and then in the next breath, promise like crazy.

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And so reality is that you just get head nods and high fives and likes on Facebook for saying under-promise, over-deliver, but in no way do you change your behavior based on that statement. And so I believe, and I'm going to try, you will see this over the next however many months, I'm going to try and become the epitome of this. So you guys will see this.

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Some of you guys might have seen it with the last YouTube video that I put out. I'm putting it everywhere. I am going to try and become the world's most compliant advertiser. And the way that I believe that, like my goal here, honestly, like for real, for real, is that my life was changed by the alternative education world.

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I have learned so many of the skills I have from what many would consider under the pejorative term of guru, of info marketer. But I've learned a lot of what I've learned, some of my most valuable skills from other people who have been in this space. Now, that being said, my results are not typical. I am not typical. And so me saying that doesn't guarantee that you will have those results either.

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But I think that if all of us collectively, everyone on school, If we were to advertise in a way that was more truthful than anybody else, we would collectively raise the conversion of this platform. And here's the fucked up shit. The first people to do it will stick out the most. You will get first mover advantage.

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Because the thing is, is that so many people, many of you who are listening to this right now, are afraid. You're afraid of telling the truth. But when you think about it from a customer's perspective, you would always be more inclined to believe somebody who told the truth and disclaimed up front, gave damaging admissions. It's one of the most fundamental ways of persuasion. I teach this.

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Say all the things that are bad and then say the things that are good so that when you say the good things, they're more likely to be believed. It's to your benefit. to disclaim the things that are not true or could potentially not be true. And what I mean by that is saying the reality is not 100% of the people who join your community are going to lose weight.

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Not 100% of the people who are joining your community are going to get a six pack. They're not going to learn how to paint like Van Gogh. They're not going to even learn how to paint like you. Why is that? Because their backgrounds, their effort, their experience will differ. Their results will vary. So say it and you will become significantly more compelling.

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Left to itself, and that is what it is when it dies, the body tends to revert to a state of equilibrium with its environment. If you measure some quantities, such as the temperature, the acidity, the water content, or the electrical potential in a living body, you will typically find that it is markedly different from the corresponding measure and its surroundings.

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The people who state their biases up front are more trusted by people despite the fact that they have disclaimed their biases. So if someone says, hey, Alex, do you think Layla is a good CEO? I would say I am biased because she is my wife. And so that will weigh in my decision. That being said, I care a lot about making money.

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If I didn't think she was the best CEO, then I would probably make moves to not have her as CEO. And so if you deem me an intelligent individual who's motivated by external goals and trying to achieve things, then you might reason that I would have maybe even a higher bar potentially for my spouse because it's a reflection of me.

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But by me saying that, and by beginning with my bias, it makes what I say afterwards more believable. it also happens to be true. And so what I want you to think about here, okay? What I want you to think about here is there's a few situations where you can correct these things, all right? So the first is in the advertisements, all right? Number one is how people find out about your stuff.

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That's in the outbound messages, that's in your YouTube videos, that's in your paid ads, right? Or whatever, your Instagram, your TikTok, whatever. That's place one. And by the way, you telling your story despite it being true, is also still a claim. You are testimonial number one.

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And so your story is actually to be treated the same way as anyone else's, which is that your results are not typical because the likelihood of the amount of things that you did to get the result is different than what you're selling your customers, right? They're not going to go through what you went through to figure this out. So they're going to have a different experience.

The Game with Alex Hormozi

They Lied. You Don't Need Money To Make Money | Ep 832

If you believe the shit that you're reading, if you're listening to poor people and advised it on how to be rich, you will stay poor. They have no idea. You don't need money to make money. The wealthiest people in the world see business as a game. This podcast, The Game, is my attempt at documenting the lessons I've learned on my way to building acquisition.com into a billion dollar portfolio.

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world, and then attach an audience to it. And so you create scarcity for a good or service or asset, and then you blow an audience on top of it, which then jacks the price up of whatever the thing it is that you're selling. So you have a scarce resource. So you have five of the thing and then you get a million people to want the thing.

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And then you sell only those five, and then the price that you can charge for anything when you have a million people bidding on it, and if there's only five of them, is a lot. So it's another way that you can make a million dollars, and that's on a digital asset, which costs you nothing to do. Another way is literally reverse engineering this. So this is a little bit more tactical.

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but I think it's important, is that most people don't even know the math around making a million dollars, all right? And so in a big picture perspective, you can just sell something for a million dollars and that may make you laugh, but like that is also a way to make a million dollars. Underneath of that, you could sell a hundred things that are $10,000, right? Which is two a week.

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So two people a week for 10 grand, you have a million dollar business. Now you're not making necessarily a million dollars unless you have no employees, but you have a million dollar business. Underneath of that, you can also think about it from a monthly perspective, right? Which is, okay, if I have people who are paying me $200 a month, right?

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That's $2,400 a year, assuming they stay for that period of time. And in order for me to make a million dollars, I have to do 400 people who are paying me $200 a month, roughly. It's 83,000, but you get the idea. 413 or whatever the number is. On recurring revenue, every single month, makes you a million dollars, right? You can sell a thousand people a thousand dollar thing.

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And a good way to think about this is not even necessarily the ticket price, but the lifetime value. All right, I'm gonna get real with you guys right now. This is how I analyze every business that I look at. I look at sales velocity against LTV. And you're like, what the fuck is that? I'll tell you right now. Sales velocity is the number of units sold per month.

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All right, so if you sell 20 people a month on your thing, your sales velocity is 20. It's the number of units sold, okay? And then you multiply that by the lifetime value of the customer, okay? And so for me, I know I have a long time horizon. And so even if something's $10 a month,

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and I know that this person over time is going to be worth $1,000 to me, then I know that at this sales velocity at 20 times the lifetime value of $1,000, I'm going to be at $20,000 a month if I change nothing about this business. It'll increase quickly, and then it'll slow down as you start to reach near equilibrium at the top, where you have 20 people per month and $1,000 in LTV.

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It's fundamentally what real estate is. You borrow money to buy an asset, you put tenants into the asset, they pay off the money that you never had. That is what real estate is, right? And if you can get the asset for free, which is going to be the next bullet I'm going to make, you can get a contract on something for less than it's worth. And then you get the bank to finance the whole thing.

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It just depends on how long it takes you to get that $1,000. If it takes you a year, you'll get to that balance point in about a year. If it's actually probably takes two years because you have a year to assemble that amount and then a year later, but it doesn't matter. And so big picture,

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When you're thinking about how to make a million dollars, multiply the number of customers you have by the lifetime value. And that will give you your predictive index of where you will hypothetically max out. So right now you're stuck, right, at 10 sales a month. And the average person who pays you is worth $1,500 of lifetime value.

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And if you're stuck at $15,000 a month, because you got 10 people times 1,500, you're stuck at $15,000, you're not going to grow up. because your lifetime value is 15 and you're selling 10. Unless you make them more valuable or you sell more of them, you're not gonna grow. And so if you want the million dollars, you have to figure out how to make that math work.

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So either you got to sell, whatever that is, five times, six times more on the front in terms of total units, or you have to make them worth five or six times more on the back end by selling more expensive stuff, by getting them to stay longer, upsells, cross-sells, et cetera.

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And so reversing your way into a million dollars from a business perspective, it just comes down to number of units sold and then lifetime value. That's it. Another way to make a million dollars with no money is that you can combine things that make money for no money down. I'll give you an example. So there's a company that we're looking at in our portfolio that's trying to come on.

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And they actually, this guy went through a course on M&A. He got four small guru businesses to give him their businesses. He's seller financed it. So let's say, you know, I'll give you $200,000 for your business. Your business makes $200,000 a year and I'll give it to you over the next year. year, right? So you just give me the business. I'll keep running it. You get your, your $200,000.

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And after the end of that year, I get it back where you can spread the debt over two years, whatever. Right. And so he did that and he combined four different businesses and he has a business now that does 4 million top line, a million and a half and bottom line. And he didn't build any of it. He just combined it by getting all of them to sell or finance their own businesses to him.

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And now he's a business that does four and one and a half, which might be worth four or 5 million bucks combined. Right. And so he was able to create that value because of skills. He didn't need money to do it. He needed skills. And that's exactly what he did. And in that instance, he didn't just make a million dollars. He made something that makes him a million and a half dollars a year.

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And he just has to wait a year to pay off his debts. And then he can start realizing that. But day one, even with the debt on the books, he has the asset that is now worth more. Now you probably want to show a run rate to that like, you know, it's stable and it's not going to all go to shit. But fundamentally, it is now a much more valuable thing than it was before.

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So when you combine small things into a bigger thing, things become more valuable. If you've heard the term a roll up in private equity, that's when they take lots of little things, they combine them together, they make it into a big thing. And the big thing is worth a lot more because of the effort it took to combine all the little things.

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And so a guy who's got a bigger check, Carlisle can't write checks for less than $100 million. It's not worth it to them. It's not worth the time. And so they let these small operators make the purchase more efficient for the big sellers and get the arbitrage. So at the smallest level, people will just give their businesses away for free, by the way, if you didn't know that.

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Like every day, like 10,000 old people retire and they just give up their businesses because their kids don't want to be plumbers or whatever it is. They just give up their businesses. So there's huge opportunity right now.

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to do that and so people can mop these up for basically nothing they roll them together and they sell it to the first kind of tier of private equity now those tiers of private equity like the guy that was telling you he's just mopping up the bottom here right he's got four million five million bucks of top line now another guy is going to take four or five of those guys and mop them into 25 million dollars of top line and six or seven million dollars of ebita and he's gonna be able to sell that for 60 to 70 million

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And then from there, there's a guy who's mopping up 25s and putting them together to be 125 million top line with 30, 40 million. And that guy's going to get an even bigger multiple. So you get the arbitrage on the multiple that is given to the business that you're buying. That's the arbitrage between the two things. The guy who gets it for free...

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So if you're like, but I don't know if they'll do that. They will if it's priced low enough. So if you have to go talk to a thousand building owners, then you will probably get one of them who's willing to depart for their thing for significantly less than it's worth. And a bank will loan the difference and you don't have to put any money down out of pocket.

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He gets a huge arbitrage by percentage, but his absolute amount is lower. At the end, the arbitrage in terms of multiples is not as high, but you're getting an enormous amount of money. And so everybody makes money down the chain. It's just on different ways. Here on the bottom, it's on the multiple. On the top, it's just on the fact that it's such a huge amount of money.

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If you get one more, if you go from a 10x to a 12x on $100 million, well, then you just made $200 million, even with that 10 to 12 difference, right? That's the idea. Another way to make money is that you lend money between two parties. So if you get access to money between one person and he's like, I'll give you money at this rate. And these people are like, I'll pay you money at this rate.

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You hand the money to this person, you make the difference. And you can do that at every level of business, whether it's $100, whether it's a billion dollars. You're arbitraging price, but now you're actually just arbitraging money. Another way to make a million dollars is to promote stuff that other people sell.

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So rather than you try and figure out how to like build a supply chain and build products and do all that stuff, you find stuff you like and then you promote their stuff and you just get money and it costs you nothing. All it did is cost you the time to build the audience. And so if you're like, well, I don't have an audience. It's like, well, I didn't say that it was free.

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I said it wasn't costly money-wise. You can do that if you don't have money, if you have the audience. If you don't have the audience, get the skills. That's the point. And the last one is arbitrage of a different kind, which is arbitraging between two things. And so think about it this way. So I talked about the option thing, right?

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That might seem like a little bit amorphous to some of you, but think about this. Imagine you look on walmart.com and see a product that's selling for 10 bucks and you go on Amazon and it's selling for 14 bucks. You can market and have the difference between those two prices and never touch anything, right?

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And you can do that as many times as you want to make a million dollars and it costs you no risk, right? Now, whenever you take on inventory, take on these other things, you incur more risk, but you have more upside. But the thing is, is that with scale, you can make anything big, right? So if you sell a million units of something, you tend to make money. in general.

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And so I want people thinking in orders of magnitude in terms of like, not just how do I make a hundred thousand dollars a year, but how do I make a million dollars on a single transaction? If you're like, I don't know how to do that, then solve for that problem. Like it's going to take you the same.

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And honestly, it might even take you less time to learn what to do to make a million dollars than it does to learn what to do to make a hundred thousand dollars. Like the time it takes to learn the thing is the same. You just change the goal of what you're trying to learn.

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And so what ends up happening is that people go up the entrepreneurial ladder and they give themselves permission to learn the next level. When I'm giving you permission to learn the top level day one, you can just go for learning the skills at the top. You don't have to learn how to make $100,000 a year.

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They'll also be willing to sell or finance a portion of their house to you. So if you get a house for, let's say, let's say you have $100,000 house, okay, and you get it under contract for $80,000 from them saying that they're willing to give you the house for $80,000. And then you say, cool, I can give you $70,000. And then you got to sell or finance me the 10 over the next five years.

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You can just go straight for learning how to make a million dollars on a single transaction and learn how to do that. And I'll tell you a quick story on this. A buddy of mine got into real estate, was flipping houses, didn't think there was a lot of money in it. It was like, oh, this sucks. There's so much work and there's all those fixings and all this stuff. He didn't like it.

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He ended up buying a 14-unit apartment building with someone else's money and he didn't have any. Bought the apartment building and then sold it four months later for $500,000 more. And he made 500 grand in one transaction. And he was like, holy shit. And so then he realized that the more expensive the building he sold, the more money he made.

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And so then he started getting into commercial real estate, which is even more expensive than residential on average. And so he's like, wait a second, I can buy something for 10 million and then I can flip it to somebody for 13 and not even hold onto it for that long in a few months. And then all of a sudden he started flipping 30 or 40 of these a year with just him and a couple of VAs.

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And just like that, the man's making many, many millions a month. And I say many, many, I'm saying many, many with a very small team because he learned a skill that he could do at scale because he's not actually selling a ton of units. Just each of the units he sells is worth so much. And so he sends out 250,000 letters a year to make 40 deals.

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People are like, oh, well, how can I find a deal like that? Knock on 250,000 fucking doors. And that's how you find deals like that. But people dramatically underestimate the amount of effort it takes to be really successful. They're like, I sent 100 letters out. It's like 100 is not even a test size. It's literally just an irrelevant number.

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The statistical efficiency of that number is so small, it's irrelevant. It doesn't even matter.

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And they say, sure. And now all of a sudden you just got to get the bank and the bank finances 80%. And now you actually just made the difference if you wanted to. And you can take that number and you can do it at a hundred million dollars. You can do it at any of these levels. That's number three is you refinance something for more than you bought it.

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My hope is that you use the lessons to grow your business and maybe someday soon partner with us to get to $100 million and beyond. I hope you share and enjoy. I want to break the myth that you need to go make a million dollars and that you need money to make money. All right.

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Number four is that you get a contract for something for less than it's worth. And then you sell that contract. And so for example, in the refinancing thing that I just went over, if I got that contract for eight hours, I could not even go through with the purchase and just sell the contract to somebody else for nine. And I make the difference between those two prices.

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Again, add as many zeros or as few zeros as you want to this example. But if you understand how it works, then you'll stop asking how to make six figures a year. Because fundamentally, the fact that you're attaching it to a year means you're thinking that you have to trade time for the money. And that's how poor people think. And that's why most people stay poor.

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Because they're trying to think about what they have to do over a year to make $100,000 because they're not thinking in terms of value. They're thinking about themselves. So if you want to be selfless, you have to think about the value you're providing somebody else, not about the money you're going to get, the time that you're going to spend.

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So if you can make somebody, like the CRO example, conversion rate optimization example at the beginning, if I can make someone $5 million and it takes me 10 minutes, I can charge a million bucks for it. Why would I ask, how do I make a million dollars a year? I would try to do 100 of those every year, right? Doesn't matter. How many of those would I do? As many as I possibly could.

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People think differently. If you want to have more than you have right now, Now, the next one you can do is that you can sell something that's really expensive and get a commission. Sounds really simple. If you sell a skyscraper that's $100 million skyscraper, you'll get three, 4% of that deal. You'll get three or $4 million on a single transaction.

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If you sell a $20 million residence and you might be like, that's crazy, they exist, look on Zillow. It's fine, believe me, they exist. The realtor gets five-ish percent of the transaction. That's a million dollars and they never own the asset. And so you absolutely can make a million dollars with no money down if you have skills. That is the point. That's the point I'm making.

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The next one is that you can find somebody who has an audience and buy whatever they're about to launch early and then sell it later. Now that one does take some money, it's less, but the value of the thing later, that's how it balloons.

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And so I'm going to show you 10 different ways so you can make a million dollars and you can apply this to a thousand dollars, a hundred dollars, a hundred million dollars. The concepts is what I'm trying to translate to you because you can do any of these things and add or detract the amount of zeros that you feel comfortable with.

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This is how the entire NFT thing worked, is that you have tremendous demand for a scarce resource, they have the scarce resource, and then it balloons the price because there's so many people bidding against each other to get it, right?

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And so getting in early on those types of things, which is why if you buy into something pre-IPO, it tends to almost always go up simply by the fact that there's way more eyeballs that are competing for it. The next one is selling units of stuff. All right. If you wanted to make a million dollars, you've got 52 weeks in a year.

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You got to sell something that's about $20,000 a week is what you got to make right over a year. So there's a million bucks, 20 times 52. It's technically a million, 40,000 for the internet trolls, but we're going to go with that. So if you got to make 20 grand a week, how many different ways can you make 20 grand in a week? Well, you can sell 20 people, a thousand dollar thing.

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You could sell two people, a $10,000 thing. You could sell One person every four weeks, an $80,000 thing, right? Or you could sell on a weekly basis, 20 people who have $1,000 lifetime value. And so, for example, if you have $100 a month membership and the person stays for 10 months on average,

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Then if you sell 20 of those every week, over time, those will stack up and then you will cap at a million dollars. And the only way to grow from that new million, that's your new cap or threshold, is either you got to sell more units or you got to make the thing that you're selling worth more. That's it.

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And so right now, for example, if you've been capped at your current revenue level, your current income level, this is for small business owners who are listening, you either got to sell more units in the same period of time or you got to make the units worth more. That's it. If you've been stuck, those are the only two levers you got. So you just got to figure out which one it is for you.

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The next one is that you can get people to give you their businesses for no money down. All right. And so a good friend of mine actually did this. And he combined four different information businesses into one business. And they were all small businesses. They were all doing about a million-ish a year. I get small is relative.

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And so he combined them all to be a $4 million top line, million and a half bottom line business for no money out of pocket. He literally said, hey, I know you don't want to do this business anymore. Just give it to me and I'll pay you the income that you were going to make for this business for the next two years. That's what he said. And they said, sure.

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And so he combined all those businesses together. And then overnight, he owned an asset that was doing a million and a half a year in profit and 4 million in top line. And it cost him nothing to do it. So not only did it make a million dollars, he made something that made him a million and a half dollars a year per year.

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So if you want to make less money, by all means, take more zeros off. All right. Now, the first thing that you can do if you want to make a million dollars is that you can sell something for a million dollars. And as crazy as what I'm saying sounds, you absolutely can sell something for a million dollars.

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Now, he has to pay the debt service back, which is the loan that those people said that he would pay them over time back from the profit from the business. But he owns the asset now. And so if he turned around and went to say, hey, I'm going to go sell this, he could probably sell the thing for $5 million put together.

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And so he got no money down and he said he would sell it and he could sell it for 5 million bucks. And let's say that if the seller financing all those was two times earnings over time, because at small numbers, the deals aren't very good for sellers, right? It might cost him 2 million bucks.

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over the next however long and he can flip the whole thing for five and he makes the three and he could still just choose to slowly pay him off over time where he could probably have an early sale bonus and pay even less. Like he made more than a million dollars with no money out of pocket. And if you're like, I don't know how to do that. The point is not to teach you how to do it.

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They Lied. You Don't Need Money To Make Money | Ep 832

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The point is to get you to recognize that you don't know how to do it and understand that the people who are making money don't constrain themselves by time. They're not thinking, how do I make X dollars per hour, X dollars per year? They're thinking, how do I provide the most value to somebody so they'll give me a percentage of the value I provide?

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And so the reason a good buddy of mine was able to make so much money selling and flipping commercial real estate was that he realized that if he bought for very little money down, that he could basically take 100% of the cash that someone put as a down payment for a commercial building and make it into a write-off.

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Which means that if you made $100,000, let's assume you're in the highest tax bracket, a million dollars a year, and you had $400,000 in taxes, you could take the $400,000 that you were going to give to the government and just give it to him and

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And then he'd put it into a building because of the amount of leverage he was able to get in his deals, because he would get them to sell or finance half of the down payment. So you only had to put 10% down on these buildings. So when you put 10% down on the building, he could take the depreciation on the whole building and hand it to the guys who gave him the money.

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And so they got free buildings. They didn't even care about the return on the building because it was bought with free money. And so he figured that out. And so he was able to get these big buildings under contract under the terms that he knew his investors would like, because it basically exited them from the tax system. And then he was able to make the difference on every one of those deals.

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And so it was because he understood the value. that he was providing to the building owners who'd owned the buildings for many, many years and wanted to get cash. He would lease it back to them after he bought it from them. And then he would flip it to an investor who wanted to get a tax write-off. So he understood the needs of multiple parties and was able to make the difference.

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And if he does one of those deals and he makes $4 million, how does he make $100,000 a year? I have no idea. He probably wouldn't answer the question because he's like, why would I bother? And so that's the thing is people are asking the wrong question. And so you always answer the questions you ask. And so the point of this is to get you to ask different questions.

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I'll show you the last one right now, which is that you might be like, okay, well, I don't have any money, et cetera. And I gave you a whole bunch of examples that don't require any money. But here's another one is that you can go find stuff that you really like and go promote that. So you don't have to go find and make your own products.

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You can find products that you really like from other companies and just become affiliates of those products. And the nice thing is that I just recommend you be honest. Be like, hey, I tried 100 fucking different soaps. This is my favorite one. And here's why. People don't want to go through the time and the money of figuring out which soap is the best for your audience.

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If you go to an e-commerce store and they're doing a hundred million dollars a year and you say, hey, if I can increase your conversion across your entire site, rewrite your emails, redo your landing pages, et cetera, and I can get you a 5% lift site-wide, can I get 1% of that? So you make them an extra 5 million a year and you get one. Do you think you can do that? Yes.

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And if you make the rec after you do that, they're like, oh, well, shoot, he just saved me time. He provided me value. And so then I'll go buy from him through his link or whatever. And so you can affiliate other people's products and make money in that way without any money out of pocket.

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And then finally, arbitrage in general, which is a fancy word, but it just means that you sell the same thing between two different markets because they're priced differently. So the simplest example is if Bitcoin is $19,000 in Japan on the Japanese market, it's $19,100 in the US market. You buy the $19,000 Bitcoin over in Japan and you sell it in the American market for $19,100 and you make $100.

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That's all arbitrage is. And it happens with physical products. It happens with lending money between two parties. If you can get money for 1% and you can sell the money for 6%, you make five is the difference. And you can put as many zeros as you want on that transaction. It works the same way.

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All of these are different versions of arbitrage, which is just same thing, two markets, two different prices, you make the difference. And so if you're looking for ways to make money, look for arbitrage opportunities because that's where you can make tremendous income.

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So the next way to make a million dollars without any money is that you find something that is undervalued or that you believe will be undervalued in the future. And then you ask for a contract to buy it. So I was talking to Caleb about this because he's like, oh, it's kind of like flipping.

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I was like, it's not because the difference between flipping is like you go to the garage sale, you buy something for a buck and then you find out that it's worth 30 online and you make the difference.

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The difference here is that when you get an option, it's like you go into the person who owns the garage and saying, hey, I would like the option to buy this thing for a dollar or rather two dollars if they're marketing it for a dollar for the next 30 days. That's what I would like. And I will pay you a penny for that option. And then you sign an agreement and they say, sure, you have that option.

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And then now you take that piece of paper. the agreement that you can purchase it at a fixed price over this period of time. And then you say, hey, anybody who's got $30, I know you want this thing because you're willing to pay me 30. Why don't you pay me 20 for it? And I'll just give you the rights to buy it. And then you sell the paper for 20 bucks. And it costs you a penny.

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And then the person who bought it from you makes the spread on the 10 because they're happy because they're going to get it for less than they probably would have paid for it. And you get rewarded for finding something that is worth more than you got secured the option to purchase it for. And you made the difference. And in that instance, you made a lot of the difference, right?

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And you're like, how is that possible? I'm making these to break your beliefs about what is possible because it is a farce when you think that you have to have money to make money. You have to have skills to make money. If you can find an asset that's undervalued, like a house, like a building, like a WhatsApp, whatever. And if you're like, well, these aren't all over the place. Duh.

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That's why it takes skill to do it. That's why everyone's not a millionaire. I'm not saying it's easy, but I'm saying you don't need to have money to make money. That's what I'm saying here. And so if you go find a house that's worth $10 million and you can get it for seven, you can get the bank to pay you eight for the house because they'll do 80% loan to value. Right? Right.

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And so if you bought it for seven and the loan will be for eight, it's like refinancing out the money. So you make the spread from the bank with no money down. So Manny Koshman was able to make his first million dollars in real estate, if you've ever heard his story, was because this is literally what he did. He went from broke to a millionaire on his first transaction.

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Why are you going to be able to do so much? Not because of you, but because of who they are. All right. So you make a million dollars by selling someone else five to ten million dollars of value. That's how you make a million dollars. Like real talk. The second way. And you're like, I don't know how to do that. That's fine.

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The reason I'm telling you this is because if you believe the shit that you're reading, if you're listening to poor people and advice on how to be rich, you will stay poor. They have no idea. You don't need money to make money. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything.

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And so the only ask that I can ever have of you guys is that you help me spread the word so we can have more entrepreneurs, make more money, feed their families, make better products and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review.

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It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world for someone else. Another way to make a million dollars is to sell something that's expensive that you never owned and be the salesperson like a $20 million house and get a million dollar commission. That's how you do it. You never own the house.

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You literally find something that's very valuable. You go to the owner, you say you can sell it. You have the skill of sales and you sell that very expensive thing and you get a small percentage of the thing. And the bigger the thing that you sell, the more money you will make. The same thing can happen for a business. So when we sold Prestige Labs and Gym Launch, we sold for 46.2 million.

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The bankers got $2 million for facilitating the transaction. They never owned anything. They signed an agreement with us, which cost them no money. And then they did work, which cost the company money, but didn't cost the individuals money. They had skills. They applied those skills. They got paid $2 million. You can make money, lots of money, without having lots of money.

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And literally all you do to all of these examples I'm giving is you add zeros. Like it works the same way. You can get an option to buy a company. What do you think? We're options traders? That's what they're doing. They trade options to buy companies. So they buy an option to buy a company, let's say. They get 100 options because they have limits on them. It's not an unlimited option.

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They get 100 options that they can choose to exercise, right? And so let's say that the stock price that they're getting the option for is $40. And at the time, it's $50 in the future when they secure the option in the past. And so they paid 1% of the total option, which would be 40 times 100, which would be $4,000.

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They pay 1% of that as typically the price for acquiring options, 1% of the total purchase. So they pay whatever, $40 for that. And then... Later, if it does go up and it's 50 bucks, they make the difference on the 10 times 100. So the $1,000 they made on 40 bucks, right? That's how opt-in trading works at a high level. There's a million other things. I don't want to get into it.

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but accept that you don't know how to do that and then say, I want to learn how to do that and then go get the skill of doing that and then you can go sell it. But you can't say that you don't have the money and that's why you can't make money. That's why I'm making this video. The second one is that you can borrow a million dollars and then buy something and have someone else pay it back.

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But the point is like, they're doing that just on companies, right? So you can do that on a house. You can do that on a business. You can do that on a company. The concept of trading a future value. That's what it is. Another way that you can make a million dollars is that you can put a small amount of money into something that's extremely risky, which is the NFT, crypto, etc.

The Game with Alex Hormozi

My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

Welcome back to the game. This is a guest spot on Diary of a CEO with Stephen Bartlett. This is going to be a two parter. And so part one is a little bit more on the what are the key decision points for making pivots in a career? Number two is what kind of fuel you use in order to make, basically to continue to drive on after you've seen success.

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I might live in inferior living conditions for a short period, which by the way, when you're later on in your life, you'll look back and think of as the good old days because I can't believe I was couch surfing. I was pursuing my dreams, right? It's only like in the moment that it feels bad.

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When you look back, like even I find this hilarious, like how long after you do something embarrassing is it funny? Right, like at some point for almost all of us, with enough time, the shameful experience becomes funny. And so if it is going to become funny eventually, it might as well become funny now.

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And so it's just like pulling the time horizon up. But all of that's prefrontal cortex decision making. And so, no, but I think that's exactly, I think that nailed it. Because when I thought about this decision, obviously I had my very emotional statement around, like his dream has to die for mine to live. Yes. Also, logic downside risk here. I'll have a story, and I can always get my job back.

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And I remember thinking, like, I didn't want to be alive. Because I was so afraid. But once you get over the fear, it unleashes this whole new realm of possibility of being able to do what you want. And that is when you can learn the real game of entrepreneurship, such as knowing that business ideas typically come from one of three Ps. And you only need one of those three.

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Okay. And if I can't get that job back, I'll have other ones that will be available. Fine. And if I have a downgrading and some people think that I'm not as successful as them, okay, I'll not stop though. And so I think that that demystifies a lot of the fears. I think that applies not just for entrepreneurial fears. I think it applies for any fear. Like, I can't tell this person this bad news.

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All right, let's play it out. I say something and then they're going to kill me? Probably not. So what's going to happen? I'll say these words and then they'll flip the table. They'll flick me off. They'll maybe just feel hurt and maybe they'll cry and maybe they'll shout. Okay. Okay. If they shouted at me, what'd I do?

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Like, and you just kind of play it out and you're like, okay, I think I have like most of these conditions prepared for. And then all of a sudden you can like have those things.

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It's delay discounting. What's crazy is delay discounting happens both ways. So you set your alarm for 5 a.m. at night, and you're like, I'm going to wake up at 5. But that's because you're delaying the pain of waking up. And when it's immediate, when I have to quit the job, like I'll quit my job tomorrow for 20 years.

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And so it's just like, we delay the fact that we're going to be miserable into the present. We massively discount what a whole lifetime of misery would be.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Man, this is a really good question. So there's a tweet that I love by Andrew Wilkinson, which is, every entrepreneur ever, colon, here's the winning number for my lottery ticket. And so it's like, every entrepreneur will say, here's the winning lottery ticket, but it's like, that game already, that drawing already happened.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Right? And so like, you can't cash that ticket in, it's already done. Yeah. And so people say the word first principles, no one really knows what it means. I mean, some people do, but I think far more people say it than know what it means. And so basically there are foundational truths of business that exist and the conditions of the environment will change.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And so you have to apply those truths to whatever the current condition is. And so that's what I try and tease out with the books and the stuff that I put out in content. But at the end of the day, you have an input of time, like zooming all the way out.

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And then there's the four Rs for customer success, how to learn new skills quickly, how to stand out in a competitive market, the winning strategy for 2025, and so much more.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Assuming that your goal is to make money, and this is just a purely economic business goal, then you have time, which is the primary currency that you trade it, and you make dollars over a period of time. And so I tend to reject the idea of never trade time for dollars or anything like that because... Everyone trades time for dollars. It's just some of us are more efficient at it than others.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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But even exchanges that occur that just are not denominated in time still occur over time. And so you have this foundational unit of time, which you're going to give in. What we're seeking is the highest return on that time. And so there, you know, within a business context, there's kind of three levels of things that have to occur in a business.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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You have to, you know, attract attention, you have to convert attention, then you have to deliver something for that attention. And in each of those things, you want as much leverage as possible. So you want as little time as possible required to get the most output. And so I have built acquisition.com on basically two primary theses, which are in the logo, which is, this is a fulcrum for leverage.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Yeah, so it's like a triangle. Or the Illuminati, because that always gets brought up. So we've got the fulcrum for leverage, and then inside of it, you have supply and demand. And I see those as the two foundational principles of business. Which is, you need supply and demand to have a business, and then leverage to get as much out of it as you possibly can.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And so when you're looking at the assets that you have, assets can also be skills, resources, what you have available to you. Now, if you have nothing, then all you have is your brain, your hands, and the time that you have that you can put towards learning something, which is why I'm a big fan of skill acquisition as one of the primary things that you can do is educating yourself.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And not formally educating, but informally or alternatively educating yourself on super tactical things. Once you get over the fear, then you start asking, okay, how do I let people know about my stuff?

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and what do i let them know right and so you have to have something to sell which is the offer and ideally you want the offer to have as much leverage as possible like so if you sold software or you sold media those are things that you can uh cut once sell sell a thousand times um

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If you have a conversion mechanism, it's like you can't have it be automated like a checkout page or some sort of video sales letter or something like that where people just buy without a phone salesperson. If you add a phone salesperson, there's less leverage. Not to say this wrong, but you want to have the highest leverage opportunity.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And then from the deliverability perspective, I kind of talked about deliverability first, but from the advertising perspective, yes. If you reach out to people one-on-one, that's lower leverage than being able to make one piece of content that a million people see, right?

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And so over time, you go from low leverage to high leverage where you have the same inputs, but you just get significantly more for your output. And that fundamentally is like, if we're reasoning out from first principles, how do I get the said differently? The question someone I think is really asking is how do I get the most for what I put in?

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And you have to reason within your current context of your skills and your resources and your assets in order to derive that solution for you. So if someone walks up to you in the street and they say, Alex, what idea should I pursue?

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Yeah, right. So I would say business ideas typically come from one of three Ps. So it comes from a pain that you're currently experiencing, a past profession, so the thing that you just quit or some of the jobs that you just quit, or passion. So something that you're inherently interested in that you would spend your time doing anyways.

The Game with Alex Hormozi

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Some skill that you learned while you were in the workforce, which, by the way, is one of the most proven ways of making money because... The economy has already showed you that people are willing to exchange money for that specific job. And so in the world of gig economies and solopreneurs, every business can be dismantled into just jobs being done. And all of those jobs can be fractionalized.

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So we look at any business. You've got sales. You've got marketing. You've got customer success. You've got customer support if you want to differentiate that. You've got product. You've got design. You've got web pages. There's so many different components to a business. You just need to learn one of them. Mm-hmm.

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And then it's like, boom, you have a skill that you can trade for money that you don't have anybody else to report to. And then pain is usually, I think, in some ways, sometimes one of the biggest drivers. It's like you had an eating allergy and you couldn't find pancakes that... dealt with your specific eating allergy.

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And you bet that there's a decent amount of other people with that allergy that also like pancakes. And so then you make pancakes that are delicious and amazing that also cater to people with that food allergy. And then all of a sudden, like you have a business based on pain.

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At acquisition.com, we scale businesses. The content that I generate that we put out, conversations like this, helps people who are going from zero to one, just getting off the ground, to helping people go from 1 million to 10 million, to helping the entrepreneurs going from 10 to 100 either get there or exit along the way.

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I think that deep knowledge of the prospect is paramount or very important for creating exceptional products. And you can either do that by doing a ton and ton of research or by being the prospect. And there's a certain amount of like visceral feel that you'll know. Like if someone wants to make a nose product for breathing, I have tried every product since I was in eighth grade.

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So it's been 20 plus years, 30, whatever, a lot of years that since then, and I've tried everything. And so I know the pros and cons of every product that exists in the market. And I've done, it's not like, oh, I tried it for a day. It's like, I'll try things for a month at a time.

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And so I have so much time exposure to this problem that I have a lot of nuance in my opinion on what's wrong with the solutions so I can formulate a way better hypothesis on how to fix it.

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I met the guy who invested in Regal Cinemas, which is probably the biggest chain in the U.S. And it was when I had just one theater. And it became obvious COVID has disrupted that business. But for 20 years or whatever, they crushed it.

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And he said, it was so weird to say that, oh, cinemas are going to make a comeback because they've kind of been on a downturn or something like that during the time that he was making the investment. And he said, the reason I decided to invest in it was because this guy knew everything about the business down to how much the cost of a kernel of popcorn was.

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And he just knew it so like the back of his hand that he was like, this guy can't fail. Like he just knows too much about this business to not have it work. And so in investing in, you know, making a gazillion dollars.

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And so, but I think that deep understanding, and if you look at all of these, the passion things, you'll have deep understanding because you're spending all of your discretionary time pursuing this passion. The pain, you have a deep understanding of the problem and the prospects going through it because you've experienced it probably for years.

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Now, the professional one, I would say is a bit of a shortcut. Because if you're quitting the job because you don't like it, and then you say, I'm now going to do this for myself, well, you're okay. I mean, well, the one proven point about that is that that one is proven to work from an economic perspective. You will be able to make money doing that because you already have made money doing it.

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These other two are less proven, but sometimes have a significantly more upside.

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And there are frameworks that cross all three of those that I consider both deep and wide. that help any business navigate whatever strategic decision is in front of them to get the highest potential return for their time.

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Yeah. So Bezos has this great framework where he talks about missionaries and mercenaries. And so it's kind of like you have the guy who says, okay, I looked at market trends and this is a growing category. And, you know, I surveyed people and this was the, you know, the result that came back.

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And so I believe that if we time this product right at this point in the market, we'll achieve huge, you know, a mass adoption, blah, blah, blah, blah. And it's like lodging your way through. And to be fair, some people do make it work.

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But the missionaries are the ones that end up making the most money because they do it, sure, for the money because the business has to have some economic engine behind it. But really because they viscerally experience this problem and don't want anyone else to deal with that problem either. And so if I were to tell that story like you're saying, like,

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when I was in eighth grade was the first year that I started really noticing I couldn't breathe at night. And so I learned how to fall asleep with my hand on my face like this so that my nostril would, so I could fall asleep and my hand would stay. Because you, there's no actually other, because you can't hold your, because you fall asleep, right?

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And so if I fall asleep with my hand like this, right? Like I'm on the couch and I fall asleep like that, it keeps my nostril open and I can fall asleep and it doesn't move. And so that's how I learned how to sleep for years before founding like, just like simple nasal strips and things like that. But there's tons of problems with those solutions that exist right now that I won't get into.

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But maybe someday I'll make a nasal product. I think... I can tell you, if you put every product in front of me that exists right now, I can tell you what's wrong with it. Because I've tried literally all of them. not like I'm pretty obsessive. And so like, I've tried all of them. You're missing an opportunity here. I've tried, I've tried the ones from Europe. I've tried the one, like not just us.

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Like I've tried, I've tried every product that exists on Amazon. I've tried all the ones from foreign countries. Every, every fan or follower who sends me a product that is a nasal company that's new. Um, I will try the product. I still do. Um, and there has yet, there's, there's yet to be one that has truly solved it.

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But I think in some ways, so this is actually a really good meta concept here, which is that if you want to be compelling, a demonstration or a model is always more compelling than anything else. And so me even going through that entire narrative, right, is taking everyone else who's been listening to this on some journey.

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It's like, if you want to make a compelling pitch for a business, it's like, we pretty much just kind of went through one. And so... That's really what it comes down to. It's like, well, what do I do with my business? It's like, create your narrative of why you're even doing this.

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And so if you're listening or watching, then if one of those frameworks applies immediately to your business and allows you to pull five years forward in your career, I would say that's a pretty good return on time.

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And if you can explain to somebody why they should care about this problem, or more specifically, why you care about this problem, I'll tell you this, more investors will like, I might be like, I don't care about kitchen utensils, but this girl certainly does. And I'm sure there's other women who do too. And what everyone wants to see is obsession.

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And unfortunately, in some of the world, I know more in the UK than the US now, that kind of perspective of just being all in obsessed with stuff has almost been bastardized or been chastised. But the people who are obsessed are the ones who change the world, at least change their world. And I think that...

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So a very close friend of mine did all the Olympic teams, nutrition and supplementation stuff for a country overseas. And he said, you know the difference between champions and everyone else? And I was like, what? And he said, everyone always looks at them and says, what do champions have that I don't have? And he said, they have it backwards. He said, it's what do champions not have that I have?

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It's what do they lack? And it's an off button. They just don't stop. And so in dealing with the gold medals, he's like, they just never stop. They just can't stop. Everything in their life is geared towards one goal. And so finding that thing, and they approach everything in their life that way.

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And I think that that level of obsession around like everything that you touch on a daily basis is required for really getting to where you want to go.

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I've had two surgeries. Both of them didn't really work. I mean, I've got the story.

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What? Oh, really? Yeah.

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I feel like I may have published some of the natural stuff.

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Yeah, ideally you have all three if you have all three then you're I mean my god you're set like if you if basically pain created an obsession and for some reason you also were doing something like that in your work like I feel like the likelihood that you don't succeed is almost nothing. You only need one of those three. You just pick one.

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Like if you just had one pain that you had that you wanted to overcome or one passion that you were just inherently interested. Because sometimes passion has nothing to, like you might just be really into model cars. It's okay. Well, there's a lot of businesses that you can build around model cars. It's like you can manufacture model cars.

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You can have services around model cars, making them faster because some people race model cars. You can be a collector and start flipping model cars. Like you can just make media around cars. how to build them and then have a media company around it. Like there's so many different components of any obsession or interest that you can make.

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I was talking to, on one of the future episodes of Mosey Tank that's coming out, we have a guy who's, he loves Dungeons and Dragons. So he's an IT, he's an IT guy and just loves Dungeons and Dragons. And he was like, I just want this to make enough money that I don't have to do IT anymore. But it was so pure, you know what I mean? And so I was like, we're going to help you do this.

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And so we kind of walked through the business plan for it. But like, is he going to be a billionaire? No, but I also don't think that's his goal. And so I think being really clear on what you want is important. So if you're like, I want to be the richest person in the world, I think it's a terrible goal. But if you want that, great.

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I think there's what they think they want and what they actually need, which are two different things. And so I think what they think they want is some tactic that's going to immediately help them start a business. What they typically actually need is... the courage to be willing to be wrong and to be willing to have shame by failing at things in front of people whose opinions they care about.

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Well, you have to have a multi-trillion dollar idea because now, because by the time that occurs, there's already multi-trillion dollar companies now. So you've got to be looking at like decatrillion dollar opportunity. And so believe it or not, basically the bigger the goal, the narrower the scope of the path to get there.

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If you're like, I want to make $10 million, I'm like, you can literally do that in almost any business. You want to make $100 million? Probably still almost any business, you can do it. On a long enough time horizon, you can do it. A trillion or decatrillion, it's going to be some sort of tech. It's probably going to have some sort of AI.

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And so you get basically the bigger the goal is, the narrower the scope of how to get there. But the vast majority of people are like, I want to be the richest man in the world just because they don't know how to really think through it. And be like, all right, well, after like 100, there's really nothing you can't do. except buy more big things.

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But like in terms of your actual consumption, maybe even 20 is like, you can only eat at restaurants that go so expensive. You can only stay at the best hotels. You can only drive the nicest cars. You can do that with about 25 million.

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So I'll tell you what I wouldn't do first, which is I don't think I try and out-science the science people. Because unless you have some PhD, there is a PhD guy who's already jacked, who's making content. And so he's more knowledgeable and more jacked than you. So you're not going to win there. And so I think in the game of attention, it's trying to find what is unique, right?

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And so how do you, quote, stand out when everyone's loud? And this is going to sound trite, but... Your fingerprint is unique, literally from a biological perspective, but so is your life and your experiences. And so there's real alpha or benefit to be had above normal level of effort by leaning into you. And so what makes every person unique is what makes their content unique.

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And so trying to be like, oh, I want to make content like Alex is probably not the best way to do it because you're not going to beat me at being me, but you'll beat me at being you. And so it's basically your flavor of media. So like for me, it's like, you know, what is my brand to model this? It's like, well, I have elements of philosophy that are in my brand. Well, do I need that?

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No, but that's like kind of me. I obviously talk a ton about business, marketing and sales, promotion, conversion. Those are all things that I spend a lot of time thinking about. And so a lot of my content's about that. Fitness is a component of my life. And so there's light sprinkling of fitness in my content. Also, I come from a background of fitness.

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um, with the, the, with gym launch and, and the companies that I owned before that. And so that would make sense that, and I've, my wife Layla and said that sprinkled in. And so like, those are basically the components of my life. Um, and so that's what kind of shines through my content. I consume a ton of comedy. And so sometimes you'll see some dry humor and dark humor that, that shines through.

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Um, but that's me. Now you have all of those little buckets of you, um, And not only are those buckets unique, but also the proportions of those buckets will be different. And so maybe your philosophy is way bigger or maybe fitness part is way bigger. But I think what makes the truly unique personal trainer fitness brand is leaning into people being interested in you for being you.

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And then being like, by the way, I have fitness stuff if you want to buy it from me. And I think the key part is The vast majority of products and services are commoditized. You're probably not going to be significantly better than other trainers, just being real, you probably aren't. But you will be different than them. And we want to lean on, I want to buy fitness from somebody

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And so I might as well buy it from her or I might as well buy it from him. So you're taking basically the audience that would buy from anyone, but your brand premium gets them to want to buy it from you. We think about Prime, for example, with the drink company. It's a drink that there's other products that already exist in the marketplace that satisfy the same thing as Prime.

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But if you are agnostic to that brand and you have brand affinity with that creator, then you're like, well, then if I have two things that are basically equal and I just like this guy better, as long as the prices are comparable, I'll just vote with my dollars here. And so I think that if you're a personal trainer in 2025, it's going to be long-term, it's going to be building the content.

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Short-term, it's going to be outreach to people that you know and making a compelling offer to get people to try to work with you.

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Number three, how to get other people to do stuff for you, either within the business or if you were the entrepreneur running the business. Some things that we found that increased the likelihood of compliance with requests, which is just the fancy way of saying the same thing I just said, which is get people to do stuff that you want them to do. Enjoy.

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And I think that's, if I rewind the clock for me, it was probably one of the hardest things that I had to get over. And so I think that's why maybe my message resonates with a lot of people is because it was so hard for me to get over. And what's interesting is basically anybody who's listening,

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And it is the winning strategy for 2025. And it's, I think, it's leaning into it. And the thing is, is that everything in you wants to not do that. I'm not really sure why. But I was having a conversation with Layla, I want to say two nights ago or three nights ago. I got a bunch of flack for some ex posts that I made. And she just looked at me and she was like, never dilute yourself.

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Because I was like, maybe I shouldn't talk about this stuff. Maybe I should just lean off. And she was like, never dilute yourself. There are so many more people who need that message than people who are hating that message.

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And she was like, and if you're actually going to make a difference in a lot of people's lives, there's going to be an equal and opposing force of people who want to reject that. Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you. And she's like, this just comes with the territory of like how big of an impact you want to have.

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And it was just such a great, you know, wife talking to husband, you know, conversation. That I guess for me at the end of the day, I'm like, as long as she thinks I'm cool, like, you know, I'll keep doing it. But yeah, it's just because the diluted down version all of a sudden becomes everyone else's stuff.

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The harder it is for you to break free of whatever kind of mental prison you've made for yourself, whether that's real or just in your head, the more compelling your story will be when you break through it. Because it will resonate with even more people. For the people that it was easy, that... Their story doesn't have a lot of, like, I was immediately an entrepreneur. Like, I wasn't like that.

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You know, what's really interesting is navigating the gray. And so there are contradictory ideals. And this is what I kind of come back to when I'm like worried about these types of things, which is like, you've got mercy and you've got justice. They are somehow opposed, and they are both ideals. So how can we believe in justice and also believe in mercy at the same time?

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And so, I mean, you can have variety and consistency. There's tons of examples of this, right? And so we have these diametrically opposed ideals, which means that if you ever say, by the way, I'm a little bit more of a justice guy. Like, I understand they had a hard time, but at some point you got to take your own personal accountability.

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So like, no, you're not going to get out of the speeding ticket. You're going to get like, that's what's just. On the other hand, it's like, hey, single mom gets pulled over for driving too fast. you know what, maybe we let her off today.

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Both of those stories, fair, but you're going to get attacked by the other side that has an ideal that all humans try to strive for, and it will feel terrible because they are right, and so what?

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And so I think that like understanding that that conflict will always exist between two apparent ideals that, and this is fundamentally what politics is, is that there are two apparent ideals that all of us, I would say 99% of people would say, justice is good, mercy is good, variety is good, consistency is good, right? Respecting values is good, so is innovating and doing new things.

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How can we have both of these contradictory ideas and at the same time, like navigate that without conflict? You can't because how much becomes the question. And so I think that your thumbprint as a creator is that when someone presents a scenario and says, does Alex choose mercy or justice in the scenario that your audience says gets it right?

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And so I think about branding in general as basically a mosaic that you get to create. And so like each piece of content is a little tile that has a single color on it. And if you just see one piece of short content of Stephen Bartlett, you don't really have an idea who Stephen Bartlett is. But if you see a thousand of them, all of a sudden you zoom out and you get to see the whole picture.

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And I think that the colors that are in those mosaics and the proportion of how many yellows, how many reds, how many greens, and where are they is what ultimately creates the brand. And so, because people want to try and turn this into, okay, so I make one post about family. I make one post about finances. I make one post about whatever, right? It's like- I don't think that's how it works.

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I think you just be you. And then those proportions will naturally shake out. And also over time, you will change. And so it also makes sense that your brand will change. And that was also another thing that I had to reconcile, which is like, wait, I don't know if I agree as much with some of the things that I said 10 years ago.

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Because the thing is in the digital world, like my first podcast was 2017, July of 2017. Episode eight is called Stop Branding. I have changed my views on branding, to be clear. But that first podcast is 90 days from when I lost everything. And so the entire Hermosi journey, if you want to call that, from zero to billion, is actually documented 90 days from zero. It's all there.

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I had a job when I was in high school. I had a job immediately out of college. Some people were like, I was selling lemonade out of the back of my, you know, thing when I was 13. I didn't do any of that. Like, school failed me. I actually was pretty good at school. Yeah. I didn't have any of those issues. You know what I mean? And so I had a pretty clear career path.

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And so you can see how my views on business have changed and what I was thinking about at every kind of portion of my life. And so I had to just be okay with the idea that like, I will change my mind because I will get new information because let's take the alternative stance. If I get new information, do I just keep parroting what you did before? This is also an issue with politics, right?

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Is that like, he's flippy floppy. It's like, so they're not allowed to learn? Yeah. You've been in politics for 20, like you haven't learned anything, like no stances change. Like, I feel like we should be able to do that. And obviously brands don't work that way. So it has to be gradual over time, which I think if you were always you at all times, it will be gradual over time.

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You know, I find myself falling into the trap of— So what's interesting about the 20% is that, like, I was thinking about this today. So no matter who you are, you're going to be disliked, period. Because no one's liked by everyone. So if we can accept that as a premise, right? No one's going to be liked by everyone. You might as well be disliked for being you than being somebody else. Amen.

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Right? Amen. That's the most basic level. The being disliked is a fixed cost. Yeah. And I think to take the opposite perspective, I think it is far better to be disliked for being who you are than love for someone you're not.

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And so I had what many would consider like I had a real opportunity cost. So I had a white collar job and I had a GMAT score above Harvard's mid score. And so I had a really clear path of what my life could look like in the next 20, 30 years. And it was fairly well defined. Like I'll go to Harvard or Stanford or one of the top business schools.

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You have to. If you draw a line, there's a side on either side and you have to say like, I'm on this side. Did you see that Nike ad? Dude, I was just going to say that. Yeah. I was just going to say that. Yeah, the Willem Dafoe ad. Yeah. Like, what's yours is mine and what's mine is mine. Yeah.

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Just like, it was actually the first time that I'd seen something from Nike in a long time that I was like, this is what built this brand. And I think they had lost their way for a while. Yeah. With like the wokeism and all that stuff. And I think it's like, Nike means victory, which means people have to lose. Yeah.

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Yeah. I mean, it was the first time I actually felt like I had positive brand affinity towards the brand in a long time.

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Yeah. So I'll start with one thing and then I'll answer the question. So I was talking to a mentor of mine and he said, when I was in my 20s, it was all about the destination. He said, when I got to my 30s, I realized it was all about the journey. He said, when I was in my 40s, I realized it was about the company. And I was like, I can't wait till you're in your 50s. The next one, right?

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But I thought that was such a profound shift in terms of how he thought about his business success. Because he was like, I don't need to be a deca-billionaire. He's like, I'm cool where I'm at. And now I just want to do it with people that I like. And so to the question about people overall...

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I believe that the potential of an organization is directly correlated with the aggregate intellectual horsepower of everyone contained within it. And so if you are the smartest person in the business, and you can do everyone's job better than everyone in your company, then it means that the limit of the business is purely based on one person's horsepower and one person's life experiences.

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And that will be the cap. And basically, it doesn't matter how smart you are, you can't live 100 lifetimes. Like, you can learn quickly. Sure, there's some people who can learn faster than others, but you're not going to be able to live 1,000 lifetimes. And so... As a business grows, more expertise is required.

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And I think the easiest litmus test for this is if you look at the richest people in the world, almost none of them own 100% of their business. So number one. Most of them don't even own 50. Most of them are small percentages. Jensen Wing's at 4% for Nvidia. Basis is at 7% or 9% for Amazon. I think Elon's at 20% for Tesla. Small percentages.

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And then I will either go back into management consulting or I'll go into investment banking and then eventually end up in private equity. And that would be the path, right? And then all the flowers would be set at my feet and everyone would say, we approve of you, you're an excellent person. But when I saw the people who were 20 years ahead of me, I really didn't want their life.

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And it's because it takes a lot of horses to take a chariot to the moon, right? Basically, as you put in more intellectual horsepower, the potential peak of the business goes so much higher, so much faster. Keith Rebois from, he was one of the original PayPal mafia guys, has a really good analogy for this. And he talks about it in terms of barrels and ammunition.

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And he says, so as soon as you get some product market fit, the business starts to grow and you say, okay, we need to start shipping things faster. And this works the same with a services business, a physical products business, software business, the concept's the same. And so what happens is you then hire a lot of people, and you assume that your throughput is going to increase proportionally.

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So we have 10 people. We hire 50. We should 5X our output. And then you quickly realize that that is not the case. And so what happens is there are people who are rate limiters for an organization, and those are the barrels. So think about like a Civil War barrel, you know, old cannon, and you've got these cannonballs next to it. He said most people are in munition.

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And so you bring more ammunition, but you're still gonna be limited by the one barrel capacity of how many shots can get taken by the barrel. And so you need to find more barrels. So you have to go from one barrel to two barrels, two barrels to three barrels. And that becomes an increase in capacity or throughput for the organization. And there are very few of those.

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In a different, I can't remember the law, but it's some organizational law, but the square root of the number of people in a company generate 50% of the work. So if a hundred people in an organization, 10 people are responsible for 50% of the value that's created. Facts. Right. Anybody who's been in a, like, you're like, like preach.

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And so the thing is, is I think the real game of entrepreneurship is that your standards rise over time.

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and it's unfortunate because we we hear things that other entrepreneurs tell us it's all about the people stupid and then you're like sure but look at my and it's like not you're not hearing it and i don't know there are some i think williamson talks about this how there's like some lessons that for some reason it's like we have to learn for ourselves i still believe that that was like we can operationalize this at a lower level so that we don't have to learn it for ourselves but like i'm convinced i haven't figured it out yet but um

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So every entrepreneur can resonate with this, which is every business that I've started, I've gotten to the success of the business prior way faster. And I kind of liken it to a video game where it's like you beat level one and then, you know, you get to level two and it's like you spend months trying to beat this boss and you finally figure out how to beat the boss. And it's like, great.

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And you spend another three months getting beating boss three. And let's say you start the game over with a new character. It's like you just zoom through level one, two and three. And then you get to level four and you're like, shoot, now I got to spend time. It's like virgin land. Like, I don't know how to beat this yet.

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And so I think that that happens for archetype finding for skill and talent within an organization. And so- Say that again. So if you have functions across an organization, there are people who are going to drive results within that function. And the first time you hire a salesperson, for example, you don't know what you're looking for. And so you just hire a human who says they can sell.

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And then it started making me look at my life and I was like, I don't even know if I really want my life. And so the big decisions that I've made in my life, unfortunately, have almost always come at the doorstep of apparent death. And I think maybe in some ways that makes me a coward for having needed death to make decisions.

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And maybe they can, maybe they can't. And then you cycle, you try to train them. That doesn't work, does work, whatever. And then finally you, let's say you cycle through three sales guys and finally you find a killer. And then you have this pattern recognition. You're like, okay, that's what I'm looking for. And then all of a sudden you try and approximate that person or that archetype

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as much as you can. And so when you start your second company, you're like, oh, I can quickly staff up sales because I know what I'm looking for. But then you're like, shoot, I've never really nailed sales manager yet. And so then you cycle through, you start, you start whacking away at the boss and then you have to end up firing the boss at level because you're like, oh God, this didn't work.

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And then six months are gone because you had to find them, recruit them, hire them, train them, and then find out they sucked, and then start over again. And maybe it takes 18 months to really find the right sales manager. And then you're like, okay, I know what that looks like, but I still don't have a director of marketing. What does that look like?

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And so it's basically developing this pattern recognition across all functions of the business so that you know what exceptional looks like. And then over time, what happens is as a business grows, your ability to attract talent increases. And so then your standards also grow.

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And then you find out that there's even more nuance to this, which is that there's a director of sales at a $1 to $10 million level, which is a different looking person from $10 to $100 million level. And it continues to go all the way up. And so it's basically building this repertoire of identifying patterns.

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And if you talk to, I would say, more experienced entrepreneurs now, they don't talk about building businesses. It's like assembling them. You just assemble the pieces and you just know that this is how it's all going to flow together. And That fundamentally is basically what I try and decode within the content that I have so that it's like, here's a pattern for how you recognize this.

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Here's a pattern for how you recognize this so that you can just move faster through the levels to get to where you want to go. And so to loop back to the original question, which is how important are people in an organization? People are the organization.

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And so if you ever want to build enterprise value, it's building the collective consciousness of the organization, the skills, and how they collaborate together towards a specific outcome. And so knowing how to staff that up is the job.

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The simplest way of doing it, so the simplest way of attracting somebody to your business when you don't know how to do the job or know who to look for is to unfortunately do the job yourself. And then once you can break down the job, we follow three Ds, which is document, demonstrate, duplicate. That's how we train anybody.

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So first, you have to document everything that you do to successfully do the job. And that's step-by-step into a checklist. Then you demonstrate. So you do this checklist in front of the person that you're trying to bring on. Then they duplicate. They do the checklist in front of you.

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And so operationalizing that has been something that has helped me move faster to make decisions that I know I need to make but don't. And so the first big kind of like... what felt like a death decision was I was a consultant, 22-ish years old. I had a paid for, you know, condo that I bought overlooking the city. And I remember thinking like, I really hope I don't wake up tomorrow.

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What's interesting about that three-step process is that you'll often find when you try to demonstrate following the checklist, you don't follow your checklist. And so then you have to adjust the checklist until you actually follow the checklist. And then when you can consistently follow that checklist and get the output, then you can have them do that checklist.

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And so I think this is why Bootstrap founders... I think oftentimes will find they tend to know more about more things because they had to learn them in order to teach them. Now, what's really interesting about what you said about accidentally finding that star at three or four years in is that I think that happens to almost everyone. Well, hopefully it happens.

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The people who end up making it, it happens to almost everyone. Because then you realize, oh my God, like if I had four of these people, like we could change the world.

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So as you go up in the organization with hires, the risk and reward goes up.

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And so that's something that a lot of people don't like talking about, but I will, which is if you hire somebody, and let's say that they're not a cultural fit, maybe they have the skills, or they are a cultural fit and they don't have the skill fit, and they're a leader, what you find often, and it sucks, is that everyone, it's almost like it's like a tree that has an entirely rotten branch.

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It's like you end up having to scoop out three quarters of what was underneath because you realized that they were ineffective or they just were against the actual mission of the business. And it's harrowing and it's horrible. But... I try to give this analogy to my team because we've had to do it in every business. Like, it happens. It's just part of business.

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Is if somebody goes to the bar and you're at the club and somebody racks up, you know, just ordering shots for everybody, shots, shots, shots, shots, shots, shots. And then that guy dips. That guy leaves. We all have to pay the bill. In the moment, when we pay the bill, when we scoop out the deadwood, when we scoop out the rot from the organization, it feels horrible.

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But that pain isn't because the scooping out the rot is bad. It's because we planted it on bad ground or because that guy ordered all these shots but couldn't afford it. And I have a different analogy because I really want to drive this home because I think it's important, is that in the relationship world, if one spouse tells the other spouse, hey, I cheated on you. I had an affair.

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that moment is incredibly painful for both parties. And so what it makes you think is, oh, this was wrong to tell the truth. but it's not wrong to tell the truth. What's wrong was cheating. When you tell the truth is when you make it right.

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And so the pain that you often have to encounter in the organization feels wrong, but is right because you're writing a wrong and that's where the pain occurs. And that's why so many businesses stay stuck is because they have this affair, they have this person, and they're unwilling to have that hard conversation or multiple in order to make it right. And they stay stuck for years.

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Yeah, right. A year later and you're like, it's still John.

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And that, and I don't mean that to be melodramatic. I just, for a period of time, I just always just like hoped every night. I was like, I just really hope I don't wake up tomorrow. Like, I just don't want to do this. And what was difficult about that was that at that time was when my father was most proud of me. Uh, because I was doing everything that was according to plan.

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Right. And what no one wants to discuss is the fact that everyone else knows John sucks.

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And that that becomes the minimum standard for what is acceptable for excellence in the organization. And so I think like, so if brand is what your reputation is externally, I think culture is kind of what reputation is internally. And so I define culture operationalized because I think culture is a very fluffy word. What does that mean? Right?

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It's the rules that govern reinforcement within an organization. What do we reward? What do we punish? And so the thing is, is that there's realistically, there's like people have values because they're bundled terms that ladder up many behaviors. If I said... Rolls-Royce probably would have some value that's quality over speed, probably, right?

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And so they would have that, but somebody would have to say like, well, what does that mean, right? Well, we hope that we use this as a decision-making filter for how it affects behaviors on every situation so that when you're in the, should I go fast or should I make it right? You make it right. And there are other organizations kind of like the speed, justice and mercy, speed and quality.

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Both of them are important. And sometimes they sit diametrically opposed. And so we have to say, where do we sit in the gray so that we can duplicate decision making across the organization so that we can maintain the culture? And so culture, you know, Layla says this a lot, but culture, I think this is a Drucker quote, actually. Culture trumps strategy like twice a week and every day on Sunday.

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If you have a mediocre strategy but an unbelievable culture, you will crush somebody who has a great strategy and a terrible culture. Because culture ladders up to performance and execution. And almost every business is limited by execution, not strategy. Most business strategies isn't that complicated. Like, let's do a really good job. So good that people tell their friends about us.

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And as long as you have enough gross margin, we'll make money. It's not that hard, right? It's just that the doing it is the hard part. And so... So when we have these, they are the spoken and unspoken rules, mostly unspoken.

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If someone shows up three minutes late to a meeting and there's 10 people in the meeting and it's supposed to be a marketing meeting and I'm there, if I don't say anything, I have now said, we have an unspoken rule that if someone shows up three minutes late to a meeting, it's okay. I've reinforced that rule. Now, I've reinforced it by not punishing the behavior or at least calling it out.

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On the flip side, if someone comes in and I berate them, that's also a way of changing behavior, maybe not the right way to do it. But I could then, like, what do you do in that situation? Someone shows up three minutes late. First off, you would probably sideline with that person and be like, hey, I don't know if you realize that you were three minutes late, what happened?

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And they're like, I was on a client call. It went late, I'm really sorry. Or I was on a sales call. For me and my organization, clients and sales will take priority. So if you have a meeting and you're on a sale and you're about to close it, close the sale. But if you were just doing nothing and we have this meeting, then this is the priority.

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And so the next time we hop on, I'll be like, hey guys, I just want to address something. John was late. He was late because of a sales call. Or when I DMed him right as he got on late, I would say, hey, make sure you say that. And he'd be like, hey guys, sorry I was late. I was on a sales call. And then I would say, that's fine. You're good to go. Always go make money.

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And then I'm reinforcing the right thing. And so I think we're very big on rapid feedback in the moment because that's how you train behavior. So if you look at, so there's tons of studies on this, but basically if you want to train a dog and you want it to sit, if you have it sit and then immediately give a biscuit, it learns really quickly. If you have it sit and then wait,

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You know, he could talk about like his son who graduated in three years from Vanderbilt had the, had the good job, like everything was, we're following the plan. Um, and it was upon realizing that, uh, My ultimate expression of living out his dream was me feeling like I didn't want to be alive. And so in, and it took me time to get to that point to even articulate that.

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10 seconds before you give a biscuit, it takes like three times as many repetitions for it to learn that the sitting gets the biscuit. If you wait more than a minute, it never learns.

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You can see the learning curve. The amount of repetitions just skyrockets until eventually there is no amount. But here's where it gets crazy. That biscuit is still reinforcing something, just not sitting. it's reinforcing the thing that just came before it. So if we want people to do something, we have to change it in the moment.

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And so when we train, and I think that we're a training organization, we're very good at training whatever skills, is engineering ways to give many feedback loops in a short period of time around specific skills. So I use sales because it's one that everyone understands. If you're training a script with someone, at the

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if you let someone read through a script and then at the end you say, hey, you know, here's the things you could have done better. This is how 95% of people train. It's also doesn't work. we set the premise with, you're going to read through the script and in the first 30 minutes, we might get through a third of it. And I'm going to probably stop you like 30 times.

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And if that happens, it means we're doing it right. So we set the premise that I'm going to interrupt you a bunch of times. And as soon as you say the first line, I'm going to be like, stop, say it again, say it like this, go again. And then they're like, okay. And then they say it and I'm like, awesome job, do it again. Awesome job. Do it again. So I reinforce it as many times as I can.

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Okay, go to the second sentence. Now do first and second. Do second and third. And you keep working your way through until eventually they just say it like a whistle. They can sing it. Because they've also had so many repetitions and so many feedback loops that they're like, this is what it sounds like when it's right.

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And I think that the vast, vast majority of organizations have no idea how to train. And their entire training... Their way of getting talent is just, let's hire 10, and we'll just see who works out, rather than being able to take someone and level them up. And I think that the ability to train is one of the largest alphas that exist in organizations.

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Because if you can buy talent at B skill and get them to A+, then you net the delta in profit. between what you had to attract and pay the person to come and what they perform at. If you have to use a picking strategy, then you have to pay for current market rate of the skill. And so you actually eat into margin because you don't know how to train.

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There are advantages to speed and sometimes it still makes sense to bring in the talent because maybe the training requires so much time that it's not worth it. And so from a hiring perspective, because we were just talking, this is the theme, We always want to hire for the smallest skill deficiency.

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And so in low skilled labor, for example, if we have a cupcake bakery and I need somebody to work the counter, that is pretty low skilled labor. And so if there's a number of skills that are required, being able to be on time, smile, be nice, those things are bundled terms that have many skills underneath of them, right? Whereas teaching someone how to use the register might take like 30 minutes.

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And so it makes sense to hire for attitude and then train aptitude when you have low skilled labor. When you have really high skilled labor, I can't teach someone 10 years of being a CFO for M&A. This is an extreme example, right?

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And so in that instance, we still hire for the smallest skill deficiency, but I can probably teach someone to be nice under these circumstances faster than I can teach them to be a CFO if they have everything that I want here. Obviously, you would want both, but the world isn't perfect. And so we just try to hire for the smallest skill gap. And Attitude is a series of skills.

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And so instead of thinking of things in attitude and aptitude, just think of everything as skills. And then we hire always for the smallest efficiency.

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Yeah.

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Because obviously you never want to kind of like admit failure of like, I have really messed something up here. But I was living my life to win someone else's game. And when I realized that, I realized that one of our dreams had to die. either his or mine.

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Dude, kind, not nice. It's one of our cultural, you know, I wouldn't say it's not the one on the site, but things that are repeated internally all the time, kind, not nice, is one of the big ones, which is that you're actually being unkind to someone by not maximizing the likelihood that they succeed in their role. And people don't lose jobs typically because of one thing.

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It's usually 100 small things. And so if we can immediately fix those 100 small things, most people want to do a good job, and most people want to succeed, and most people want to move up. And we can maximize the likelihood that those things occur if we help them. This is where the culture is there.

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If on that first day, like I said, we say, we're going to work through the script and we're only going to get through a third of it. I'm going to stop you 30 times to correct you. We've already kind of set the expectations of how things go here. Like we will fix things and we will fix them fast. And it's understanding the difference.

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And we teach our teams this, is what is the difference between an insult and criticism? So criticism is a discrepancy between actual and desired. So you were supposed to be on time and this week you were late twice. And so that is discrepancy. And you're lazy is the insult. And so the judgment that's associated with the discrepancy is insulting someone.

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Pointing out the discrepancy is purely criticism, and that's objective. And so if you want to improve the team, remove insults, focus on criticism, and tell them what to do instead. And so the easiest way to think through this, I think, is stop, start, keep. So I'll tell you a real story. So we had a director level, so a relatively high person in the organization who was having behavior issues.

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If you want to make more money, you might want to consider doing this. So number one is hold that thought for just a second, because the thing that comes before that is misgraphy. Oh, God. This is the entrepreneur life cycle. And there are six stages. Now, the vast majority of people get stuck on stage three. That means one of the biggest career mistakes at this point.

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Said differently, everyone thinks you're a dick. And so he ended up making his rounds of the executive team and having a sit down with all of them because he was really proficient at the scale. He was a high performer, like good at what he does, just no one liked him. And so he talked to four different executives and the behavior didn't change.

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And so he finally came to my office and he was like a little bit worried and he was like, am I going to get fired? And I was like, no, HR will fire you if you're going to get fired. You're not going to meet with me. What are we talking about? But when we sat down, I said, okay. I want to be clear. I want to decrease the likelihood that people call you a dick in the future.

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I was like, does that sound like an agreeable goal? And he said, yeah, I want that. I was like, okay, good. I also don't care if you are a dick. I just care that everyone else thinks you are. And so I just want to minimize the likelihood that I get drawn into this ever again. So...

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And when I realized that his dream must die in order for mine to live was a statement that I kind of crystallized when I was at that point in my life. Like I had to keep repeating that, like his dream has to die in order for mine to live.

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The reasons that they are calling you a dick, we need to dive into that because every other conversation you'd had with, you know, some of the leaders was just like, hey man, stop being a dick. And the thing is, is what do you do with that? Nothing. You just get insulted and then you have nothing to do.

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And so instead it's like, okay, when you cut people off when they talk, stop, start, keep doing. Do this instead. Shut up. So when someone else is talking, wait until they finish. And if you're not sure, ask if they're done. He's like, okay, when you give unsolicited advice on how they should run their department, don't. Or ask if they want it. If they say no, don't say anything.

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And so we identified three or four behaviors that he was doing. And I said, just do this instead. And literally the next week we were like, what happened to him? He's like a new man. And the thing is, is that he wasn't a dick. He just didn't know how to behave. And so if you want to teach, teaching has to come from conditions and a behavior.

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And so if you're trying to get someone to be different, you have to give them the conditions under which they need to change. So when someone says this, if this occurs, there's a condition, and then this is what you need to do. And so the vast majority of training that exists does none of that. It's just people shouting at each other, insulting them, and saying, hey, you need to level up.

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You need to increase your performance. What does that mean? And so I think one of the easiest ways to identify the actual behavior, because that's actually the tough part, is like, why do I think he's a dick? Why do I think she's lazy? Because I want to insult them, but that's not, so how do I help her? It's like, okay, why am I describing her this way?

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Okay, so when I Slack, she tends to be slow in her response. So sometimes it takes an hour, sometimes it takes three hours. I'm like, okay, so I'm going to gather that data and be like, okay. So when I talk to her, I'm like, I'm going to have this branch of data. The next thing is when I get stuff, you know, projects from her, they are incomplete. I feel like they're not all the way fleshed out.

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I'm like, okay, that's a second bucket. The next one is that when she shows up on Zoom, she looks disheveled. I'm like, okay. So now when I talk to Sandy, I'm not going to say, hey, Sandy, you look lazy, need you to level up a little bit here. Otherwise, we're going to have issues and have to put you on a PIP, Performance Improvement Plan, right?

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And so to put this in perspective of how afraid of my father's judgment I was, I left the state and drove across the country halfway through before calling him to tell him that I was gone. And so I bring this up because I'm not trying to be dramatic here, but I'm saying that if you feel a lot of pressure, I get it.

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Instead of saying that, just put her on the Performance Improvement Plan without saying it's Performance Improvement Plan and just say, when you show up on calls, change your background to like the standard company setting so we don't see your bedroom, right? And make sure that from the waist up, you look professional. And what do I mean by look professional?

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Have a collared shirt and put your hair back, okay? Now, some people are like, how does that work in woke politics? No idea, deal with it in your country. But like, you should have a culture where you can say stuff like that. The second thing is that right now, I need you to turn on Slack notifications and I need you to respond within 10 minutes, okay? During work hours, okay?

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After work hours, fine. But nine to five, you have to respond within 10 minutes. Do you think you can do that? Yes. And so the end goal here is like, I will get everyone to stop calling you lazy.

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I think it sits great. And I think that the amount of references that you go for is proportional to the importance of the role. Okay. So Sam, the co-founder of Skool, so he was a non-technical founder. Who's Skool? What is Skool, sorry? Oh, so Skool.com's a platform for building communities. Right now it's online, but we have an in-person component so that people can meet online and meet in person.

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It's awesome. And so that's the... only investment that I've publicly associated myself with outside of acquisition.com. So it was a very big deal. It's something that I believe in a lot because it's education. It's where education and media meet. Um, Sam is the founder of Skool, and he is not technical. And so he knew that to build an exceptional software product, you need world-class talent.

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And so he interviewed 600 developers to find Daniel, who had become the CTO of Skool. And he asked everybody to know who the best coders were. And then he talked to all those people and he asked them who the best coder they knew was. And he talked to those people. And then he asked them who they thought the best coder they knew was. And eventually like Daniel's name came up as like God tier.

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Like, I tried to leave the job that I was at to pursue just literally anything that wasn't that. Just, I wanted to start a business at some point. I didn't know how I was going to do it. I just knew that what I was doing was not the path I wanted to be on. And everybody around me wanted me to be on that path. And so, I went to go be like, hey, I'm thinking about doing something else.

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And he's like, if you can ever get this guy, he'd be amazing. And so he ended up finding a way in to find Daniel. And then he ended up becoming a co-founder of school as well. And what's interesting about that process is, is that it actually ladders into rapid learning.

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And so when I was a consultant, I was 22 years old, and I would go and have to give presentations to four-star generals about weapon systems that I knew nothing about because I was chugging beers like 12 months earlier, right? And so how do you sound intelligent in front of somebody who has 30 years more experience than you do? And so this is the consulting process for rapid learning.

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First is you find five experts. So you ask the one person, you're like, hey, tell me the five people you know who are the best at this thing. And then you ask them, who are the five people you know who also know a ton about this thing? And for each of the interviews, you take all of their information down of like, what do you think about this? What do you think about this?

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What do you even think of this? And what happens, you start mapping kind of like the information ecosystem. And the reason you talk to experts first is that there's no lack of information. Like you can Google whatever you want. The problem is there's too much. And so the filter becomes where the highest point of leverage is. And so experts have spent years filtering out for what's important.

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And so then you basically rapidly consume the most filtered information. And then you reorganize the information. And so this is what a typical analyst will do as a consultant. It's like I would, so for the Space and Cyber project that I did, we had 600 pages of notes from all the interviews that we did. First step is you re-categorize all the notes by category.

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So it goes from raw notes to categorized notes. Then from there, you distill and consolidate notes into what are the truths or the most distilled beliefs that we have about these particular, in this case, weapon systems, but it could be whatever.

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And then from there, you're able to generate your inferences for what it looks like when it's right, what the problems are, what potential solutions might be. And then that's fundamentally how you say, this is what we need to do next. That's if you're trying to learn something.

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But in talking to all those people, it actually works the same way because the interview process, the higher up the talent is, the more I would encourage entrepreneurs to use it as a learning process as a consultant. And so I present... somebody who wants to come in for this role, the actual problems of the business for which they would have control over and say, how would you solve these?

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And so then they tell me all the things that they would be considering and what they're thinking about. And then I'll ask the next guy what he thinks and what he thinks and what he thinks or she thinks. And then all of a sudden, one, I get free consulting, which is amazing. But secondly, you can tell by how the quality and quantity of metrics that someone tracks are

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And, you know, it would always be that, ah, you know, later, later. Like, everything's good later, you know. And I remember when I called my dad and I told him that. He said... understand, why don't you come home? Like, come home. Well, I didn't tell him that I was gone yet. Like I said, hey, I want to go pursue this fitness thing. He said, cool, come over for lunch. We'll talk about it.

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how good they are at a particular skill. And so this is fundamentally what separates beginners from experts. And so beginners typically have binary thinking in terms of outcomes, either it worked or it didn't work. An expert, for example, for a marketing campaign, isn't going to say, oh, marketing doesn't work or ads don't work. They're going to say,

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this particular campaign didn't work because our click-through rate was too low or because it was sending traffic that wasn't qualified and we weren't converting enough on the page or we didn't have enough people who were taking the second step in our four steps. And they can break down any part of that continuum. If I'm interviewing a salesperson and the person says, and I say, okay,

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how are you going to affect these metrics? What behaviors are you going to do? So to the same degree about vague versus specific, if they give me vague things back, I'm going to dial in and say, no, but what are you going to do that's going to change that? And by the way, this is a wonderful way to teach in the organization how what they do makes a business money.

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And so if you have like a customer support rep, for example, and you say, hey, how do you make our company money? if they can't explain it to you, they probably aren't doing it. And it sounds as simple as it is, but if someone says, well, you know, I answer customers' questions, and it's like, how does that make us money? Now, if they're able to say,

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when I answer customers' questions, I increase the likelihood that they refer us to other customers and I increase the likelihood that they stay and continue to pay for us. So I help us get new customers by delivering an amazing experience and I get the customers that we have to continue to pay us.

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And if it makes sense, I recommend other products and services that we have that I can introduce them to sales guys who can explain that so we can generate even more revenue from them. I'd be like, one, if you can articulate that, you're probably not just a frontline customer service rep, you're probably a director, right? And so that level of nuance, the specificity is what shows, expertise.

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And so when I look for and I'm interviewing for candidates, first, I want to gather as much information as I can. I want to drain as much knowledge as possible. But I'm also really looking for the quality and quantity of metrics they track and behaviors that they do to influence those metrics. So in the hypothetical problem that let's say we're trying to solve, we have low click-through rates.

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I'd be like, okay, this is the problem we have. How would you approach changing it? And then that actually gets me to understand what they would do in the organization. Because it's very easy to say, I'm going to come in and let's say a sales director, I'm going to come in and I'm going to improve the sales team. I'm like, okay, cool. What are you going to do? I'm going to coach the guys up.

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I'm like, okay, what does that mean? And so just continuing to ask, what does that mean? How do you do that? Until they're like, okay, Well, I'm going to meet with the guys every single morning and we're going to do role play. All right. Well, how do you role play?

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Well, we're going to start with the script and we're like, the more detailed they get, the more I believe they can do it because they've actually explained what actions they will take. If someone can't dial it into actions, then it's very unlikely that they're going to take them. And so what I just outlined is basically three core things.

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So one is the quality and quantity of metrics that they track. The second is the behaviors that they're going to do to influence those metrics. And then laddering up to third, how do those metrics and these behaviors influence the revenue in the business? If they can explain that clearly, you have a winner.

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And I was like, I'm already gone. And then obviously his tone changed a lot. And our relationship struggled for years after that. And I also bring that up because sometimes there's this illusion that you get on the Oscar stage or whatever it is, and you're like, hey, I just want to thank my mom, my dad, my friends for always supporting me. And I can't say that. And I wish I could.

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I think having them explain it as though you were a fifth grader. And so I make the same joke, because you do this enough times, you make the same joke. It's like, hey, I need you to explain this to me like I'm a golden retriever, which is a type of dog. So assume I know nothing. Let's start there. What do you think customer service means? And so...

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If someone really has expertise, so Richard Feynman was famous as the physicist, which is if you can't explain it to a child, then you don't understand it well enough. And so if they do confuse you, then it means that they don't understand it or they're doing it purposefully, neither of which are good scenarios.

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Well, I think there's the soft and the hard side, right? So the hard side is compensation. Maybe you don't have as much cash. So it's like you're going to have a few levers at your disposal. So you have, what do you pay them in cash? What's their upside if there's equity or shares that you're going to give them? This is obviously if it's a software business.

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And it's probably worth segmenting this. So if you're not in a software company, which is probably the vast majority of people listening to this, There are four elements within equity that exist. You have control, so who gets to call the shots. You have risk, what happens if everything goes wrong, who's liable. You have profits, which is the cash flow of the business, who gets distributions.

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And then basically, sale or enterprise value, when we sell or if we sell, who gets to participate in that upside. Those are kind of the four elements of equity. Now, the thing is that you can obviously grant shares or you can give stock in a company, that's one way of doing it. But you can also basically contract around any of these things.

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Now, most of the times they don't want the risk and they probably won't get the control if it's your company. So you really just have profit and you have upside in terms of a sale. And so you can contract these things and there's lots of structure, so I'm not going to get into the legal around this. But asking somebody, what do you want? Sometimes it's just a very powerful way of beginning this.

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And my favorite question for these types of scenarios is asking, what would it take? So when you have this guy, it's like, man, it would be amazing. Like, how do I sell this guy? I just ask him, what would sell you? So I say, what would it take? Because I don't know. He'll tell me. And I love that frame because it assumes yes.

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it assumes you're going to come. So what would it take?

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I think it's the amygdala story that we started with the nasal strip thing, which now has actually reared its nose multiple times, poked its nose in a few times here. But I think that pitch that you're giving to a potential co-founder or potential early hire who's going to be a leader is the same, more or less, that you'd give to an investor.

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It's almost the same pitch, except instead of investing capital, they're investing time. They're investing their life. They're investing their expertise. But fundamentally, you're asking for investment. I'm just asking you.

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Yeah. I have actually fairly strong opinions on this. Oh, great. So I actually think it's, and I was talking to the CEO of ButcherBox about this particular thing last week. I think it's a barbell strategy where you have people on either ends and very little in the middle.

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And you might not be able to say that either. And I also don't think that's a reason not to do it. And so we did struggle for years after that to kind of like, because I was basically living as what was once his prodigal son goes and takes a minimum wage job as a personal trainer at a gym, like cleaning floors and stuff to learn, just to learn the gym business.

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So I love lots of young, hungry people who are here for growth and want to learn and are ready to work long hours and just go all in. And the people at the, call it the back half of their career that are here, that they've made enough money. They know they can get a job wherever they feel like. You're not doing them a favor by giving them a job.

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And they're not what I, a term I hate, which is careerists. They're not obsessed with their title. They're not obsessed with their career path, what their promotion plan is going to be. They basically have a litmus test, which is like, I have to make about this to get to come in and do this with you. But they actually just really love the work. And so these people are learning.

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So the young people are learning everything. and overcompensating with tons of hours and reps. And these people are bringing their experience to the game and creating significantly more leverage with strategy. The people in the middle are the ones that tend to be the pain in the ass for everybody. And I don't think, and be clear here, I don't think this is actually an age thing.

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I think it's a perspective thing. So it's just, are you here for growth or are you here to share what you know? And I think that it's the people in the middle that are like, well, I'm bringing something, but I need something. It's like this kind of tit-for-tat relationship that I would say the vast majority of people that don't work out are in that bucket.

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you can fundamentally, you can disrupt any industry if you don't know how it's supposed to go. And so, but that's, I think that really teases out something that we said at the very beginning, which is starting from first principles, which is what are the few things I know to be true? and then basically forgetting everything else.

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And when you build from those assumptions up, you end up building lots of different paths up the mountain that may or may not have been trodden before. I think one of the most corroborating things that can happen sometimes is that you re-derive a solution that already works. And you're like, okay, well, now I know why this works.

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But I think that's actually, then you have more confidence in the path and you're like, okay, that's fine. But now I know why we're doing this, not just because other people did it, but because I understand why it works. And so I think it just comes down to what are the few truths that I know to be true and going all in on those things.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Like I know that if customers love my product, they are more likely to tell other people about it than if they hate it. That I feel very confident. So then we say, okay, what are the things that must occur in order to get someone to quote, love my product, AKA increase the likelihood that they tell their friends about it or post about us. And so now there's, and you can break this.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And again, this is where quality and quantity of metrics matter. So it's like, how much more nuance can I break this up into small pieces? So it's like, okay, at what time do we deliver these messages around what experiences that have high likelihood of them posting? Can we decrease the friction around them sending friends? How can we make it both easy and how can we incentivize it?

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And so all of these components, whether it's a service business, a physical products business, a software business, it still works the same way. And for each customer, for example, as we're taking someone through this, I have four milestones that I look for, which are the four R's. So how do I get them to review my product? How do I, well, in order it'd be, how do I retain them immediately?

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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How do I get them to review my product? How do I get them to refer somebody? And then how do I resell them? And so they're basically, those four R's is what I try and take every customer through. It's a very simple framework, right? What do you think? I was like, oh man, customer success, what does it mean? It's just like, well, these are the four things that I want to occur.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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But that was ultimately like how I broke free, literally, physically leaving the area and mentally. But I think that I had to accept that there was a timeline where my father would never talk to me again, and I had to be okay with that to pursue what I wanted. And I think that when you asked the original question, what are the people from zero to one really looking for?

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And so all I'm trying to do is reverse engineer what activities increase the likelihood that each of these four R's happens.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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I read tons of business books at that time, but I couldn't use any of them because I was so afraid. And what's crazy is that, like, I think about it now in retrospect, and it's like, it's crazy how large the perceived monsters can appear. And Layla has this quote that I love, but it's, um, Fear is a mile wide, an inch deep. And so you look at it and it looks like this ocean.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And then you take the first step and you realize you don't drown. Because it's like, oh, there's ground underneath of this, right? There's other people who are more on my path. And the friends you lose, you gain new friends, right? And so that fear... was the hardest decision that I've had to overcome in my entrepreneurial career.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And you end up living the same six months for 20 straight years suffering until you learn how to break free from it.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And I think of all the split paths in my life, that was the one that if I had many timelines or many universes that existed, that was probably the one that is the most likely that I would not have parted from. So I think in like 90% of universes that Alex Ramos exists, I'm just a consultant somewhere. And so I would encourage you, if you do feel that, you're not gonna die.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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Like you won't die and you might just live.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And I think, and I used what I consider a very non-palatable word of coward purposefully, because no one wants to say they're afraid, because if you say you're afraid, then it means you're a coward. And I think that it only means you're a coward if you allow that fear to to change your behavior in an aversive way, as in not towards what you want.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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This is going to be f***ing awesome.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And so, the inverse of that, many people have heard it, courage is not acting without fear, but despite fear. And I think that when you act When you allow fear to change your behavior the wrong way, that is when you can give yourself that title of coward. And I think that that is a title that I have feared my whole life.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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And that label is almost, I'm more afraid of that label than the label of failure. I'd rather be a failure than a coward. Is there a framework for knowing when to quit? Hmm. So I think there's the math behind it. And the math, I think, is pretty straightforward. So when do you quit your business? I like you've saved up three to six months of personal savings, number one.

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Number two is that you have started something, because nowadays in the digital age, you can begin a business on the side that can generate income. And that income in the small amount of time that you're not working replaces or at least matches the existing income you have from your current job. And you've been able to do that or demonstrate that income for like three to six months.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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If you do that, that's a very like math way of approaching it. That also is basically never the reason that people aren't quitting their job. That's a really – I have backlog. I have matched my current income with my part-time work. And if I just put my full-time work, I would probably make more. Very reasonable, but never actually the reason that people don't do it.

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My Framework For Knowing When To Quit (on DOAC with Steven Bartlett Pt. 1)

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He's an entrepreneurial powerhouse. Whether you're starting out or want to go from 1 million to 10 million, there are certain behaviors and actions that will increase the likelihood of success that we're going to go through. But here's the really hard truth that a lot of people don't like talking about.

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So what's really interesting about that is the guarantee. And so a lot of times we don't look at what I call the don't, which is like the alternate path. And so if I had played out my existing path, I had a guarantee of outcome I didn't want. It was just added delay. Whereas here, there's a chance that I can make it.

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And so one of the final kind of frameworks for making the decision was guarantee bad, chance at good. And I was like, well, I might as well take a chance. And I strongly encourage thinking about playing it out. And so what I mean by that is like, I think fear exists in the vague, not in the specific.

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Entrepreneurs must be willing to make impossible choices, have the courage to be willing to be wrong, have shame by failing at things in front of people whose opinions they care about. And that fear keeps people stuck in a job and a life they don't want for years. And that was my path. I had a white-collar job, a condo overlooking the city. Everything was according to plan.

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And so when you say, I'm gonna quit my job and then what if this doesn't work, I'm gonna failure, tons of fear. If I say, I'm gonna quit my job and then I'm gonna try and start a business. And if the business doesn't work, I'll probably have a compelling story that I could tell for business school if I wanted to, to show that I had some entrepreneurial slant.

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In the meantime, I could use that experience plus my job experience to probably get another or maybe even better job in the meantime and match or supersede my existing income. And the actual loss would be maybe the savings that I had saved up.

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But if I'm younger or I haven't made as much money as I want, then that's never been the amount of money that would be material anyways on the grand scheme of what I would like to make.

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And in terms of living situation, I will, worst case, go back to my parents' house with my tail between my legs or sleep at a friend's couch because I have enough people that would be willing to put me up in a garage if I had to. And so it's like, okay.

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So my actual worst case scenario is just like, I have a cool story and maybe some shame that is self-inflicted because it's not like no one else cares really. But it's self-inflicted shame and maybe a detour or a different story that I have to tell later on in my career. Not as much fear there, right? But like the first one, like I'll fail, everyone will hate me and I'll die.

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So I think you nailed it and said it way better than I did. But I think going from vague to specific basically disengages your amygdala because it can't reason the logic chain of causation and causality of what's going to happen next in a chain of events. And so when you get into the specific of it, all of a sudden you're like, okay. Yeah. I'm not going to be homeless and then shamed and die.

The Game with Alex Hormozi

My Blueprint For Setting Goals | Ep 818

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So a lot of you guys are setting goals. You know, we're coming on the new year. And so as somebody who has set many goals in my life and achieved at least some of them, I figured I would maybe give you a different take than you might consistently hear across social media.

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You have more resources. That's not a bad thing. If you prioritize relationships and love, maybe at the end of the year, you don't have the monetary thing yet and you don't have the health thing yet, but you actually found somebody who's really improved your subjective well-being.

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And right now, by the way, if you didn't know this, the strongest correlation by a mile for subjective well-being, how happy you are, how content you are with your life, has to do with the strength of your relationship with your significant other. It's a 0.71 correlation. Nothing else is even close, like not even close. And so you might get to the end of the year and be like, this was a W, right?

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Now let's say the third path. Let's say that you get to the end of the year and you have your six pack. You're in way better shape. You look good. You feel good. You have way more energy. Well, what do you think that's going to do? It's probably going to attract better mates. It's going to help you do better in business.

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And so we have this either or perspective on goals, but almost all goals help achieve one another. The problem is that most people start on none of them in the attempt to achieve all of them. And so if you just think about it as like, I'm just going to chip away and attack one and know that by just focusing on this one, I'm still going to get a half step up on the other two.

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But I want to actually achieve it. And so I think a lot of people are very unskilled in making trade-offs. And life is about trade-offs, right? As I say, me as my very young man self. But it's about making bets. Like we have to make trades. Like nothing's free. Everything costs time. It costs money. It costs opportunity. It costs the paths not taken. Everything has a price.

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And so I think the people who do much better understand the price that they're paying for the thing that they want more, so much so that they actually pick more appropriately and are more selective. Because when you really, I think when you really appropriately see or assess how expensive a goal really is, all of a sudden you realize that you can achieve far fewer than you think.

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And so when you set your goal, Think about this big sacrifice, like the magic. What are you going to put on the altar? What are you going to sacrifice on the altar to achieve it? And I remember when I was, I had six locations and I wanted to scale to 10, but on my gyms. And I made this live. I'll see if I can find it. Where I was beat. I was beat. I was doing, you know, 20 plus consults a day.

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I'm launching my sixth gym at that time. And I had spotted out my like seventh, eighth, ninth, tenth locations. I knew where I wanted to open them. And I remember looking at my calendar and being like, I don't know, I'm gonna do this. Like I spend all my time. And so that was when I made a live and I was like, I'm giving up Netflix and football and fantasy football. That's what I'm giving up.

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Which was a lot of stuff and I liked a lot of it. But when I was honest with myself, At the end of the year, I can't really remember anything meaningful about the Netflix shows that I watched. And I couldn't really remember anything like, do I really care about the fantasy league that I'm in? Now, some people, if that's like your biggest thing of joy, then do it, all right? I'm not talking to you.

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then it will be the same immediate benefit in a month. It'll just be today, a month from now. And so fundamentally, I have to be able to start working on the goal or the benefit of working on the goal must exceed my action threshold today or it will never happen.

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But for everyone else who just does it as a pastime, just recreationally, If the outcome of that a year from now versus the outcome of the goal a year from now, if that goal means more to you looking back, then do that, right? And be willing to pay that price. And I think there's a lot of like, but what about smelling the flowers? What about enjoying life?

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I think that the more you work towards your goals, the more you start enjoying working towards your goals. And so you end up smelling the flowers along the way regardless, right? And so that's just been my personal experience that I share around that. And I work a lot. I work a lot. I work more now than I did when I had less money, which is hard to imagine because I just work all the time.

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And I'm just better at working. I remember in college, a 20 page paper was like a semester long project. And now I can bang on 20 pages in a day. You know what I mean? And so it's like you just get better. Like your output just goes up. So I said there was three components of time with relation to goals. So the first was the start, right?

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Is that people delay the start for some arbitrary reason when in the reality is we have to figure out whatever way to make the benefits beneficial enough today right now to begin now. Because otherwise, if they don't work in the future, they're not going to work now, right? When the future is now.

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The second is that we have to understand the difference between the price of our goals and the value of our goals. And we have to appropriately judge those so that we can actually make a trade-off and say, I cannot achieve all of these goals. But one of these goals is more important than the others. And if you can't make that decision, guess what your number one goal is?

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learning how to pick and being super real. If you can't pick and commit to one of your goals, then your number one goal is to learn how to pick and commit. And I define commitment as the elimination of alternatives. It's like when you're married, you make the ultimate commitment.

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And so you eliminate all other people than the spouse that you have, as long as you have what I would consider a traditional marriage. I don't know what these new age kids are doing. But that's how it normally works. And so if you think about you getting married to your goal, like you're getting married to the goal and you're eliminating any alternatives to that goal.

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And I can promise you, if you eliminate everything but something, you tend to do it. So Jerry Seinfeld had a writing process that I really liked. And this is actually really common with writers. Because I study a lot of writers, obviously, because I write a lot. And many of them have these dedicated periods at the beginning of the day where they say, I'm going to start a clock.

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I don't have to write, but I can't do anything else. And so it's like an empty room and a keyboard or a yellow, like Jerry Seinfeld uses yellow scratch pads. And he just has to sit there. And he's like, and you know what? When nothing else to do, he's like, I get bored enough that I'm like, hell, why not? I'll just start writing.

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And so I think even just walking through that logic for yourself, pretty much from that point going forward, if I have a goal, I begin immediately working on it the moment it becomes clear that it is a priority. And so I would like, right now, if you have a New Year's resolution goal, start now, right? Like actually start on the 30th, you know, start on the 31st even. Just start a little ahead.

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And so I think a lot of us and myself included, in the beginning, I thought a lot about focus was like, ah, like gritting my teeth and like just trying to zone everything out. I don't think that way at all about it anymore. It's just, I would eliminate all potentialities of things that could disrupt the one thing.

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Like focus, if said differently, focus is the quality and quantity of things that you say no to. And so the more things you say no to, the better the things you say no to, the more focused you are. And so take it to, again, the natural extreme. If you said no to literally everything, except for one thing, then you would be 100% focused.

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And so again, it's not, are you focused or you're not focused? It's how focused are you? And so for many of you, I think you're like 5% focused on your goal. And then you're surprised that you don't really get that far. So if you were 100% focused, you didn't sleep, you didn't eat. Now, of course, you start adding some of those things in because you're like, oh, long-term, I do need to sleep.

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I need to eat. Okay, cool. But I would start at zero. Like be as extreme as that. I mean, do whatever you want. I'm trying to lean a little bit away from telling people what to do. I will just share, like, that's what's worked for me. If that's extreme for you, then do whatever you want. All right. Third part of goals. Time. The time to achieve.

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My Blueprint For Setting Goals | Ep 818

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So there's the time to start, what we're willing to pay, what we're willing to sacrifice, and how long we expect. And so really it's the expectations of the goal achievement that I see as the third big bucket of goal problems. And so what's crazy about this is that almost everyone on here, whatever goal you put in the chat, I would bet you is achievable. Just not on your timeline.

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My Blueprint For Setting Goals | Ep 818

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And so like, you might have amazing goals, but a really shitty timeline. And so what happens is, is that you expect a 10-year outcome in 12 months. And then every 12 months, you keep restarting. And 10 years from now, you're still at ground zero. And that's what I want to help you avoid. And so the, like...

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My Blueprint For Setting Goals | Ep 818

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The more big things that I've set out to accomplish that ended up working out, the more I've just realized it takes years, plural, to do big stuff, like years. I started building this, my personal brand, in 2019, content-wise. You guys now see my stuff, but 2019 is nothing. We're 2025, six years. I still see all the road ahead of where I want to go.

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My Blueprint For Setting Goals | Ep 818

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And same thing with acquisition.com and the portfolio companies in school, right? Like all of these things are like, like if you were to ask Sam or I like, well, you know, where's school going to be in a year? I was like, I don't think either of us are even thinking like a year. We're like, we know where we want to go.

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My Blueprint For Setting Goals | Ep 818

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And it's more like you set where you want to go and then you just start walking, right? And it takes what it takes, right? Like you see some of these big companies, like you want to hear something crazy? Facebook is like 25 years old. Like it's a new hot, it's old. It's not new at all. I think it's 20 years. But like you look at Amazon, 35 years old. Old, right? These businesses take time.

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Microsoft is like a thousand years old, right? It's older than Gandalf. I bring this up because we have these big aspirations. We have these heroes. We have Elon Musk, right? Elon's like 55 and also the smartest person on the fucking planet. But besides that, this is his third season. Think about that. This is his third entrepreneurial season.

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And I'll just say like, the more you do this, the more you'll start noticing that you're in October and you're like, man, I really wanna do this next year. It's like, well, if it's gonna make sense for you next year, it'll make sense today. So then just start doing it now. And so, like, why would you not want to enjoy the benefits sooner? Think about it.

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My Blueprint For Setting Goals | Ep 818

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His first season, he sold Zip2, which was like a little website thing. Then he did PayPal, and that was many years. And then from PayPal, he started his next season, which is the season he's in now. And like, I don't even, I'll look it up right now. Let's see. Tesla, no, let's do SpaceX. SpaceX founded. 2002, 23 years old. So again, it's like, I just, I say this because like everyone's so green.

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And there's always gonna be more people who are green. There's always gonna be more people behind the starting line that haven't stepped up to the plate yet. And it's because they're like, how am I gonna run this marathon in 26 minutes? It's like, no, bro, it's 26 miles, not minutes. It's like, oh, but can I just run it in 26 minutes? It's like, no. No, you can't.

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My Blueprint For Setting Goals | Ep 818

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And so I think the vast majority of goals are not achieved. because of a incorrect expectation. And a lot of that is because when you're new, you just don't know any better. You just think things should happen fast because all we see is the finish line, right? All we see is Elon now. And so we see Elon now, and the moment you see him is like, okay, well, I've known him for 10 seconds.

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My Blueprint For Setting Goals | Ep 818

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And so he's really successful and I've only known him for 10 seconds. Therefore, it takes 10 seconds to be successful, right? We reason that way. It's wrong, obviously, right? But like, that's how our brains work. And so

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My Blueprint For Setting Goals | Ep 818

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I think this is probably one of the root reasons of the misconceptions that most people have around the goals that they set out to achieve is that the people they see who achieve them, they meet them after they achieve them. They just don't meet them during the many years it took to get there. And so when I said the triple your timeline thing, I meant it.

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My Blueprint For Setting Goals | Ep 818

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Even if you know to triple your timeline, you still have to triple it again. It still happens that way. It still takes longer. And so I'll tell you a fun one to make this very real for you. It took me... It took me years. I mean, technically I lost everything again at like year five or six. So like, if you want to see like back to zero, right? But like, it took years, right?

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My Blueprint For Setting Goals | Ep 818

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To get back to where I was as a consultant in terms of my income. And so like, you just make mistakes. I mean, like, I would say like when I really started making the same income again, it was like four years in or five years, it was a lot. Right. And so and I'll say sustainably, obviously, I had some big months and things like that, but like really reliably.

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My Blueprint For Setting Goals | Ep 818

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Like, why would you not want to begin the process to get you closer to your benefits today so you can get those benefits that much faster? Right. And if there is and this is the key part. If. the benefits are not good enough to begin working on them, you either need to change the dynamics of how you want to achieve the goal so that you can remove latency.

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And I think that if you had told me when I quit my job, I was going to take yours. I don't know if I would have quit. Because I had expectations. And so maybe it's good to have the unrealistic expectations because it gets you to start. But I don't want you to stop because it's not achieved by the time that you thought it would be.

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My Blueprint For Setting Goals | Ep 818

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I don't want you to grow disheartened because I will say this is that a lot more of my, so let me give you a definition that'll be helpful. The difference between a beginner and an expert in a given domain is the number of ways they can mark progress. So I'll give you an example. If you've never run ads before and you start running ads, you are only going to know

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My Blueprint For Setting Goals | Ep 818

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outcome-based thinking, which is like, did they work or not? An expert can think in nuance. There's a hundred steps that have to occur between when we start running the ad and when they're profitable. And what they care about is whether we're making progress towards that. And so, I mean, there's the whole progress, not perfection. And as much as it is a little aphorism, I agree with it, right?

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Which is that we just need to make sure we're moving forward. That's it. And so if you have your goal, and my friend who's trying to get a six pack, as long as he's getting leaner, he will get there eventually. As long as you close more people over time, you'll get there eventually. As long as you just continue to decrease churn, you'll get there eventually, right?

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As long as you keep making content and you just keep getting a little better every time, you will eventually get good at making content. And so the... The big misnomer is the amount of volume that's required in order to be proficient or even very good or competent at a skill is a lot of times like not like two or three times what you thought. So different than the other kind of expectations.

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A lot of times it's like 50 times or 100 times bigger than you thought. And volume negates luck. And that's what I tell all the sales guys who enter any of the portfolio companies. I almost always weave it in is that volume negates luck. Like if you don't want to be lucky, do more. And so here's the big asterisk on it that people forget about.

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In order to really do 50 or 100 times more than someone else does, you often can't do 50 times more than someone does, 100 times more than someone does in a day. You just can't. And so that's where the sticking with it comes into play. It's still a volume game. You can pull the future forward by doing more reps faster. Like 10,000 hours of work can absolutely happen in five years instead of 15.

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But you still can't get around the hours. Now, the price for the person who does the $10,000 in five years versus 15 years is that they gave up more of the other stuff on that calendar. when they looked at their time block, it's 16 hours a day they're awake, okay? They had to give up twice as much, sorry, three times as much as the guy who does it in 15. So will both of them get there eventually?

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So is there a way that I can pull up some element of reward from this goal that makes it beneficial for me to work on it today? Or is maybe this goal just like the equivalent of a complaint? which is, it'd be nice, it'd be nice to have a six pack, but if the benefit of beginning that work today is not worth it for you, it's not gonna be worth it in a month.

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Yes. And I think that big picture, that's what's important. But even the idea of annual goals, I almost find silly because like nothing that I want to accomplish now I can do in a year anyways. That's real. Like think about that for a second.

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And I think society's annual thinking, like Bill Gates says this, a lot of like people underestimate what they can accomplish in a decade and overestimate what they can accomplish in a year. And so like a lot of goals are really like two, three, four year goals. Like big picture, you get your business to where you want it to be to get you financial aid. Most people, that's a life goal, right?

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Not a year goal. It's just because society tells us that these are how goals need to be made. But the time component, I think, is the reason that most people don't hit their goals. And it's because of the three components that I outlined. Is that they push off starting because they don't know how to see the benefit immediately.

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And if you can't see it immediately, it's always going to be immediately when you start. No matter how far in the future you're going to kick it off to. And so you might as well figure out how to make it worth it now. The second is that people don't understand the tradeoff, that you can't accomplish all your goals. You cannot do it.

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And you only have a certain amount of budget and you have to then be selective, strategic. You have to prioritize the things that matter most and do that understanding that when you fully accomplish one goal, you will still partially accomplish some of the others. But by trying to accomplish all three, you will accomplish none.

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So this will not be your mama's, you know, smart goals, you know, specific, measurable, actionable, something, timely, whatever they are. Not that at all. I actually, I think I'll give you how I've thought about goals. And for some of you, maybe it'll be useful. And for those of you who it isn't useful, I apologize. So big thing number one is

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And then the third part is that the expectations of how long it will take to get to where you want to go is typically three times longer or more than you expect. Even knowing that it will take three times longer, it is, again, three times longer. And so I think that if we put those together, start today, you're willing to sacrifice a lot. You eliminate the alternatives. You commit fully.

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And you kick out the timeline to say, I'm just going to keep walking. And I know where I'm headed. I know the direction I'm going. I may adjust along the way, but I'm just going to keep walking and I'm going to keep getting better. And so the only commitment you have is to progress, is to feedback, is to improvement. Make that commitment, make that the goal.

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And then the outcome-based goal will just take care of itself. Because like, imagine if I said, I have to make a billion dollars by next year, right? will force me to do all sorts of stupid stuff. But if I said, I want you to billion dollars eventually, then I know that these things will eventually get me there. And whether it takes 10 years or takes 20 years, whatever, right? Whatever.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And so the reality is you're not going to be able to achieve all your goals because it takes five seconds to set a goal and sometimes five years to achieve it. And so your goal to achievement ratio is always going to be you're going to have more goals than you have achieved. And so it's normal. And so I think that what can be helpful is deciding which goals you are not going to do.

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What fires am I going to let burn? I have wanted to start working out. Well, I've also wanted to start doing these other things. Well, which of these goals is most important? Because goals have a cost, which is the second element of time that I think goals have misconceptions around, which is that you, everybody here who's listening to this or watching this has the same time, right?

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We all have the same 24 hours, right? Everyone's heard that. What's interesting though, is that people will set goals but they will not remove anything from their calendar. So you're saying, I have 24 hours. I'm going to achieve these four things. These four things will probably take me an extra four hours a day in order to accomplish. And I'm going to add that into my existing 24 hour schedule.

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So I will do 28 hours worth of work in 24. And then of course you're shocked when it doesn't end up happening. And so what I would recommend doing is not only listing out the goal, number one. Number two, listing out the approximate time you think it will take. And then number three, multiplying that by three and creating a sacrifice for that goal.

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that is equivalent to three times the time duration of what you believe it will be. And I can't remember what razor it is, but there's some razor that's like everything takes three times longer than you think it will. And even knowing this razor doesn't change the fact that it will take three times longer than you think it will. Elon Musk talks about it, but

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The reason that I say this way is that you think that the goal will take you this long. There was somebody in who's a friend of mine in March and I was making fun of him for being fat. It's fine. We're guys. I can do it. He's my friend. And if he's not your friend and you don't know who he is, then get over it. All right. Anyways. So I was poking him about being pudgy.

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Now, he's in the fitness world. So I had double reason to do that. Right. It'd be like a dentist having bad teeth. Like I had to poke him a little bit. I'm like, hey, man, you're trying to help people lose weight and you look like you barely work out. Right. And so, of course, you know, we were we were joking around, but he took it seriously.

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And so he said, my goal is to get a six pack by the end of this year. And I said, you're not going to do it. And he was like, what do you mean? Why don't you believe me? I was like, no, no. It's like you're too far away. You're not going to do it. You can't do it. Like it's it's it's super unlikely. And so as the months kept going forward, I was like, where's my six pack? Where's my six pack?

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Where's my six pack? Yeah, I'm a great friend. And I will say being real, he said, I always appreciate the fact that you're real with me. And that actually ended up helping him change. I define good friends as people who make us better. All right. Not as people who are nice to us. Anyways. So here we are, December 30th. He does not have a six pack, but he's way closer.

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But the big thing is that it took him significantly longer than he expected. And he's a professional in this space. And so I say this again to say that your goal that you have will probably take three times longer than you think it will. Now you have how long you want it to take, how long you think it's going to take, and then how long it will actually take. Right.

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And they actually take because like on some level, you know that what you hope happens versus what you think will happen are two different things. Right. Well, the thing will happen is still one third less than will actually happen. All right. And so I say this to set expectations properly in terms of the time commitment required to achieve almost any goal worth achieving.

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And so there's a third component, which I'll get into, but I'm going to I'm going to hammer to the second because I think it's important. I. I love the thought that achieving goals is like doing or practicing magic. Now, I don't believe in magic, but if you watch any magic movie, almost all of them have a price to magic, right? There's like magic isn't free. You have to sacrifice some life.

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You have to crumple a flower in your hand so that you can do the thing, whatever it is, right? And if you don't, it like takes it out of your flesh or some crazy stuff, right? But the point is, is that I see goal achievement much the same way. You can't practice magic and just get magic for free. You can't just get goals for free. All goals have price tags.

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I think that people think about goal setting the wrong way. The first issue I see with goal setting has to do with time. There's the time to begin and the time to achieve. I think there's actually fallacies and misconceptions along both of those components of it. Let's start with starting. So around beginning the goal, a lot of times people have goals.

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And so this is the big thing that I think everyone misses is that they look at value completely disassociated from price. And so price to value is a relationship between both variables.

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And I think this, honestly, this perspective is the reason that many people stay poor, the reason many business owners stay small, and the reason, I don't know, I don't have a third one there for the rhetorical device, but I don't have one. But those two, right? Yeah.

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The point is, is that you have to analyze them together because fundamentally you have a risk adjusted return on your time and effort and energy. There's a hundred million things you could do with your life.

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You have very finite resources and the people who get the furthest in life or the furthest towards their goals are the ones who allocate that time and effort and energy towards the things that get them the highest returns. Right. And so it's not just value. There's a million things that you like. It's like, I will, I want to spend all my time on marriage. I also want a six pack.

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I also want to be a gazillionaire. I also want to be a monk, right? Like there's all these things that you want to do, but there's huge price tags that were just saying like, yeah, yeah. You know what? I'll have, I'll take them all. I'll take them all. But you can't take them all without running up the bill, right?

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And so a lot of you guys are putting things on your platter, but when you're getting to the checkout line, you're like, oh, I don't have enough money for this, right? And so the first kind of realization that I think is worth having is what's your budget? What's your goal budget? How much time and money do you actually have available to dedicate to achieving the goal you have? Things super real.

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And I also don't think it's likely that you'll conquer multiple domains in the same year. I remember the first year I wanted to get a six pack. I got a six pack. That was like my whole year and I got a six pack. And then maintaining is a lot easier. Maintaining that, I maintained a six pack the rest of my life. But maintaining it is much easier than achieving it.

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Learning how to do business and making your first dollar and making sales and marketing and scaling, all of those things, really tough. Once you know how to advertise and learn how to sell and learn how to deliver something, it's easier to maintain your business level and you're maintaining your current level of income versus growing it. All right.

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And that's why a lot of people also stay there, to be fair. But right now, I think if you're real with yourself, this would be the exercise, like probably the first tactical exercise that I would give you as you're going into the new year is, what are the goals? How long do I want it to take? How long do I think it'll take? Multiply that by three. These are the value.

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These are the things I want on the shelf, things at the buffet. And then the other side has to be our budget, which is you look at everything you spend your time on. There's two big investments that you can make that are usually pretty well documented. The first is your money. Look at your credit card statement. What you vote with your dollars is what you care about.

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You can say you care about these things. How you spend your money is how you actually care. And a lot of you might be surprised

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care about being healthy but you spend a huge percentage of your income on cheap food fast food whatever else right you care about you care about your personal development but you spend a huge amount of your time and energy on junk consumption on netflix on social media you're just consuming junk right care about this brain but you're feeding the junk all day right

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And so you're going to have all of the things you currently spend your money, you currently spend your time on. Now the well-documented part has two components to it. Documented in terms of like your devices, almost all the devices we have nowadays have like screen recordings. They tell you how your time will split up. If you don't have them, they're free apps that you can get online.

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computers, but your phone tracks it. And then if you are a little bit more organized, then if you live on a calendar, your calendar will tell you what your priorities are in terms of your time. And so between your screens and your calendar and your wallet, your credit card statement, if I just saw that about somebody, I could probably tell you what their life is like.

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So really fun fact, they did a research study where they had men and women pick their mates by going into their rooms, not meeting the person. There's no pictures removed and they just got to pick them off of the rooms and their living situation. Interestingly, they had better matches and predictive power about the people by just looking at their environment and not meeting them than meeting them.

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There's typically two times a year that goals occur and they typically are anniversaries. So there's anniversary for everybody, which is a new year. And then there's your personal anniversary, which is a birthday. And so most people make their biggest goals around when they turn a certain age or the world turns a certain age, right? And so...

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We think like we're very good at deceiving people, but these things are the facts, right? Like what you spend your time, what you spend your money on, how you consume your attention. That's your budget, right? And so we have our goals. That's what we want. And we have our budget. And so when you look at all of your expenses, right?

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Now we have to look at which ones of these am I willing to give up? Number one. And then secondly, and this is the one that's ugly, which ones of these am I likely to give up? Now, I would recommend it's easier to swap things. So for example, if you're like, you know, I watch a lot of Netflix and I wish I didn't. Well, I'll tell you something that worked really well for me.

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I just listen to audio books before I go to bed rather than watching TV. It's a very easy swap in terms of habit, but I sleep better. I'm not looking at a screen. I could use my imagination. I can read nonfiction if I want to. I can read fiction. And so just a very small, little, small tweak, little tweak. And so it's much harder to stop something than it is to replace something.

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All right, and so if you think about this in terms of human behavior, right, you have a reinforcing stimulus. You have something that rewards you for doing it. That's why you keep doing it, right? That's why, for example, in a relationship, and people may disagree with me, and that's amazing. Isn't it cool to be in a free country where we can disagree?

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I have the belief that if you're in a relationship, it doesn't matter how long it is, if you get out of that relationship, you're going to have a reinforcing stimulus that's going to be gone, whether you broke up them or they broke up you. Either way, there's going to be some positive aspect of your life that's gone.

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And so people are like, well, you need to spend time to heal and trauma, whatever. You have to get over that person. What that translates into behavior is you need to find an alternative reinforcing stimulus. And so there's basically two ways to think about it. One is that you can find something in your environment so you can start gardening, you can start working out more.

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You find something else that is a positive reinforcement that takes up the place of this person. Now, if you spend a very long time being single after that, you find hobbies, you find friends, you find other things that fill that gap, right? The alternative is that you just find another person. Now, people don't like that, but also the same people who don't like that, this happens all the time.

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You're like, why is that not good? Like, what czar of how to live decrees that this is not good? To get over one person, you just date somebody else afterwards.

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right now some people are like well there's rebounders well i just think that that's just the likelihood of regression to the mean you think the likelihood that you're just the next person you date is going to be the one is probably the same likelihood of you dating anybody after that person that's going to be the one and so there's this misconception around rebounding when in reality it's like now rebounding maybe you low your bar for getting some reinforcement right if you want to get really technical on it but in terms of the likelihood that this person is going to be the one

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I mean, I got out of a really long relationship, met Layla and was like, hey, I'm not into anything serious and here we are, right? And so I bring this up to say like, I just don't think a lot of these things are planned. Now, zooming back out to goals. We have the stuff we want, we have what it's gonna cost, we have what we're willing to give up and what we're likely to give up.

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What's interesting about that is that I think you become more aware of it, but I have always taken the belief, and I remember thinking about this, is that I used to set a lot of goals when I was younger and I would not get started on them. And one day I realized that if the benefit of the goal that I have is not good enough in the immediate moment today to begin working on it,

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So I would start with the things that you are likely to give up that you're like, I think I want to get rid of these things and I believe I can get rid of these things. Now, then you have to look at that value list, that goal list and think, okay, of these, which is the most important?

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Which of these will bring me closest or furthest along on my path, closest to the ideal version of me that I want? Now, some of you may have the question of like, well, should I prioritize a health goal or should I prioritize a relationship goal? Should I prioritize a monetary goal? I think that's honest. Like some choices in life you just have to make. Like I'll say it differently.

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If you prioritize your monetary goal and let's say you achieve it, right? Well, prioritizing the monetary goal might help you with your relationship goal because you can go on better dates. You can attract better people, whatever, right? You can dress nicer. You can, if you're a girl, you can inject your face with all this stuff, whatever, you know, like whatever it is. Okay.

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What you complain about is the price, the price tag. No one says, hey, I don't want to make money. They say, hey, I don't like the price of making money. Hey, I don't like the price of this influence that I want to have. I don't like the price of gaining this subscriber base. I don't like the price of running ads profitably, making $5 every dollar I put in.

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You've got people you need to see. And you can't get into the office. And no one wants to let you in, right? You can imagine the drama, right? And so at this time, he has no way of... of doing anything, right? And so he then is like, well, what can I do? And so he doesn't have that much money. And he's like, okay, I guess I'll have to start my own office.

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But as a surgeon, you have to have a surgery center. You have to have a place that you can do surgery legally. To have an office that had a surgery center, he got quotes and it was $250,000. And that was in then's money. So $250,000 that he didn't have.

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He then takes it upon himself to learn what the legal requirements are for a surgery center and builds a goddamn surgery center himself by going to Home Depot back and forth and builds the fucking thing. And then he finally has his office and he can start practicing medicine. And he's been in that office for 35 years. I would go to him and I would be frustrated because

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by the lack of progress that I felt in my career or my life, right? As a student, then as an employee, you know, I'm not getting promoted fast enough. I don't see opportunities here. And then when I started my gyms, like this isn't going fast enough, right? He said, listen, I wasted two years when I was in Europe.

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And when I came to the US, I wasted another three years before I could even start practicing. And then when I started practicing, I had to start over after two years because I didn't have an office and my reputation got smeared. You know how many people ask me about that now? No one. You just look at me and be like, life is long. He's like, you've got time. And it's not linear.

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And I bring this up because I hear the comments of this is so hard. And I'm like, guys, come on. Like, we're talking about six inch putts. We're not talking about, you know, trying to trying to launch a missile into space and catch it with chopsticks here. You know, we're just trying to advertise our stuff, let people know about it and get them to exchange money for goods and services.

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This is not, we're not curing cancer here. The lack of effort that I see drives me nuts. And so I tell that story to provide context to like, if you look at yourself in the mirror and say, am I really trying as hard as I think I could? Am I really leaving everything on the field? Am I emptying the tank? At the end of the day, are you like, you know what? I could have done more.

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He's like, well, this chicken that laid the eggs on your plate that you're eating right now, he said, that chicken was interested, right? He's like, but that pig that gave the bacon, the pig's committed. And I just love that as just a great visual representation of what it means to be committed.

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Because if you are, then you need to fix that first. Like you must first become consistent before you can become exceptional. It's the prerequisite. There's not a single person who's exceptional who is not consistent. You have to keep sticking with it. And a big part of this is figuring it out. Because if you can't figure out the basics, you're certainly not going to figure out the advanced stuff.

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And everything that's on the internet now makes it available. It's all accessible. There was no YouTube when my dad was trying to figure this out, right? There was no Instagram. There were no influencers. Right. And to be fair, there was no one who's trying to help him out. If anything, the system was set against him.

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You know, the guy had he had a thousand dollars when he came here and didn't speak English. But what he did have, my grandfather would say this. He said he had one brain and two hands. So he used them. It's like you have one brain and two hands. You got one life, you know, use it. And I just I you could probably hear it in my voice.

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I just I get very frustrated because figuring it out is the is the journey. Like that's that's the point. And the failure that comes along with figuring it out is what leads to the success and the feeling of figuring it out. Like you never get the benefit of, oh, my God, I got it to work unless you go through the pain of why isn't this working?

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I think a big part of it is expectations, is expecting that it's going to work the first time. It's expecting that it should happen in six weeks. Show me any company, show me any great anything that's happened in six weeks. literally anything. A year even then is tough to think of anything great. You can't become a doctor in a year. You can't build a massive company in a year. You can start.

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That's what you can do. You can start. You can start and you can figure out one piece at a time. I want to encourage you to stick with it because the years aren't wasted because you are the product of those years. Right. And my dad learned how to build a surgery center because he had to. And I can promise you starting an online community is easier than that. Right.

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And doing it when you don't speak the language is also hard. Part of this is I share my upbringing that I don't share as much. But like you got to feel that, you know what I mean? Like it's you like you got to do that. Like no one's going to do it for you. Like no one. I'm not going to do it for you. I can't. No one can.

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And so I think many of you are looking for saviors when you need to look in the mirror. And for the few of you who are like, you know, the people in my family don't support me and, you know, my wife or my spouse is not, you know, is not supportive. How bad do you want it? Like, what are you willing to give up?

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I'm not saying give up your relationship, but I'm saying you can give up approval for a short period of time. Okay, I need you to take this in. One of the toughest parts about being human is the social construct. is how we learn. We learn through shame a lot of times. You do something wrong, someone yells at you, you feel shame, you want to be in the in-group, and then that corrects your behavior.

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Honestly, it's a pretty good system. It gets a lot of productive human beings out of it. The problem is when that system works against you. The reason for that is because that system has a short feedback cycle. Right. It's very immediate.

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And so it's very good for getting people to not jump into traffic or getting kids to not put their fingers in electrical sockets for kids to not try and look at the pasta when it's boiling. Right. From below, like all of those things, like those immediate feedback loops of punishment are very good. They change our behavior in a good way.

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The problem is that those feedback loops are far too short for the for the level of accomplishment that you want. And so most of you could accomplish all the dreams you have if you just said, I'll give it 36 months. That disapproval, that shame, this is where you need to start decoupling your ego and your self-worth from what other people talk about because they're going to disapprove of you.

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I think many of you, and to be clear, I'm not saying you shouldn't put food on the table if this is something that's brand new for you, right? If starting a business is brand new, then I'm not saying that. That's not my point here.

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So rather than seeking approval, be willing to be misunderstood. And this is the second part of that statement that I started this with. you must first become consistent in order to become exceptional. In the beginning, becoming exceptional is being an exception, which is sliding outside of societal norms. You're going to get feedback that tells you that this is a bad idea.

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And that's because a lot of times people aren't willing to take the risks that you are. And this is where they will chastise you for doing something that they're unwilling to do to get something that they know they can't get. If you want something that they don't have, then don't do what they do and don't listen to what they say.

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By definition, you will have to be an exception, especially if you're the first person in your family that's made any kind of wealth or wants to make any kind of wealth. You want to kind of break the generational tree that you have and plant anew, start anew. In order to do that, your self-worth has to come from the work that you do, from who you are.

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And the who you are only comes from the actions you take. For many of you, I think that you treat this opportunity the life you have, the time we have. Like the chicken, you're interested, but you're not committed. And I think if you were just committed and you were consistent, you eliminated the alternatives and you showed up every day, it would happen significantly faster.

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But I think a large part of the entrepreneurial journey in the beginning is learning what commitment even means, is learning exactly how much volume it takes in order to get that first ding, that first dollar, and how much more it takes to get the next one. I say this because I think there's this mismatch of expectations. And I want you to win. I think that the world does enough coddling.

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I try not to coddle. I just try to tell the truth. It's tough. It's hard. You're not going to know the answers. And battling the unknown is par for course for entrepreneurship. This is entrepreneurship. And one of my favorite stories, which I'll tell you right now. So years later, right, my father had me. And then I ended up going to college and I ended up, you know, joining a fraternity.

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And then they ended up electing me president, which I was very grateful for. And every year, every pledge class would have a revolt. And the thing is, is that every pledge class thought they were unique in revolting at some point. But every single class, every time, would have this moment where they would say, this isn't what I signed up for. This is not fun. I can't talk to girls. I can't drink.

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My point here is that there's other things, there are other alternatives that you're either entertaining mentally or that you're actually entertaining that are not this thing. And the difficulty is that there's an inherent fallacy in that belief set, which is that I will work on many things and I will see which one works when the reality is all of them can work if you do. And

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You guys are just having me clean up all the time. You're driving me all over the place. I'm just mopping floors and doing errands. This sucks. When I was president, unsurprisingly, the pledge class that we had, 20-something guys, revolted. And they said, we don't want to do this anymore. We're out. I said, OK. Um, and they said, we, we want to negotiate the terms of our, of our like settlement.

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And so they asked me to meet them in the freshman campus. So I was, I was on the other side of campus. I came over to the freshman dorms and all the guys are in one dorm and these dorms are not big. All right. So like they're, they're climbed, they're all others. There's a four, four bedroom bunk at four bucks. There's guys all over the place. Right. And it's me. And I took my VP with me.

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And it's like, you can imagine the setting, right? A ton of dudes and then just like me, right? And I walk in. You could cut the tension. Everyone's, you know, angry and riled up. And, you know, they all kind of, you know, their pledge class president said his bid of like, this isn't fair, blah, blah, blah.

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And I remember just like taking all of it and just taking a deep breath once they were kind of done airing their grievances. And I paused and I was like, raise your hand if you thought this was going to be easy. No one raised their hands. I said, okay. I said, everything you just described, the feeling you have right now. I said, this is what hard feels like.

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And they all kind of like internalized that. I said, the complaints that you have are not new. They're very old. And I'll ask you the next question, which is, if this were easy, would it have been worth it? And they said, no. And I said, would you respect all the guys in this house if they hadn't gone through something in order to earn these letters, this brand, this logo? They said, no.

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I said, okay. So wouldn't it be befitting that a very great achievement would be worthy of sacrifice? And they were like, yeah. And I was like, then this is the sacrifice you make. And in that setting, I said, you got to give eight weeks, give eight weeks, and then you have three and a half years of enjoying the benefits of pledges.

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You give eight, you give eight, you give one semester and you get seven. It's a pretty good trade. And so, of course, the guys all got back in and everything was fine and it went forward. But I think that many of you, when I see the comments and the complaints, honestly, the gripes, the grievances, What you complain about is the price, the price tag. No one says, hey, I don't want to make money.

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They say, hey, I don't like the price of making money. Hey, I don't like the price of this influence that I want to have. I don't like the price of gaining this subscriber base. I don't like the price of running ads profitably, making $5 every dollar I put in. I don't like the price of learning how to do that. But the price is the suffering that you go through not knowing.

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and embracing the uncertainty of not knowing how long you'll have to suffer. It's not about not suffering. I think it's about finding something worthy of suffering for. And I think many of you have dreams that I would hope you believe are worth suffering for.

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I want to leave you with this, which is to encourage you that if you want what you say you want, then pay the price that you said you'd be willing to pay when you started. It's easier to say you'll wake up at 4 a.m. every day when you set your alarm But it's much harder when you actually have to hit the alarm and get out of bed. Many of you know the price. You know logically what the price is.

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But when you actually have to pay the price is when the bill comes due is when you guys don't want to take your wallet out. And so I would encourage you to push through that because you are not alone. You're not following a path that others haven't trod before you. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

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And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

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I don't like the price of learning how to do that. But the price is the suffering that you go through not knowing and embracing the uncertainty of not knowing how long you'll have to suffer. It's not about not suffering. I think it's about finding something worthy of suffering. My number one tweet of all time happened in the last month. It was November, I think.

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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The second part of it is that none of them will work if you try to pursue them all. And so you may have heard the saying, you can have everything you want in life, just not at the same time. And I tend to be a believer in this, in that people have an unwillingness to make trade-offs and they try and speak in absolutes.

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And I think a lot of the content that I make, for example, snippets will be taken out of context and that's the nature of the internet and decried or people will get upset about it. Because I will speak of a trade-off, and they will say, I am not willing to make that trade. And I'm saying, don't. Don't make that trade if you don't want to make that trade.

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But there is a price tag that is associated with the things that we want. And I think my biggest pet peeve is when people say, I want the thing, but I don't want to pay the price. And so the price in the beginning is commitment. It's consistency. You must first become consistent before you become exceptional.

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Consistency is one of those, as Charlie Munger put it in one of his seminal talks on, it was a graduation speech that he gave. And he talked about inverting success. He said, so how would I guarantee failure? And among the rules of guaranteeing failure is to be inconsistent. He said, it's very difficult to be unsuccessful if you are consistent.

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So for sure, you want to make sure that you are inconsistent, that you start and you stop, that you interrupt the flow of growth, that you switch tracks as many times as possible. And I see this as a common theme, especially for those of you who are starting out. And I can speak viscerally to it because I understand it well because I've been in the same position.

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And it wasn't until I was willing to accept that I cannot have it all that I started to get something. What I would like to kind of reinforce is the elimination of FOMO. So fear of missing out. I think FOMO happens when we do not understand the trade that someone else makes and we simply see the outcome of their inputs, but the inputs are invisible.

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And so when we look at social media and you see the ads or you see content, you always see a curated highlight reel. You only see the outcome. You don't see what goes into it. And so it gives a false conception of what it took to get there.

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Many people joke about the 10-year overnight success, but I have really yet to meet anyone who's been in business that didn't take basically five years to figure out what the hell is going on. You basically just want to pay down that five years as fast as you can. Now, some of you are two years into that five years or three years into that five years. I want to be clear here.

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If you're not making a dollar within 12 months, then you have a problem. Like you're not doing a very basic part of business. But if you and the solution to that is likely take more action. But for the people who have made some money, but not as much as they want to make, it's typically because you have some level of skill set, but not nearly enough volume.

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I think I might have said this last week, but...

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volatility is a symptom of insufficient volume and so if you feel like you're not getting as many leads or as many customers as you want it's simply because you're not doing enough and the reason you're not doing enough is either you're distracted doing many things that aren't actually adding to the sufficient volume and so in your mind you see yourself or you feel yourself working all the time you sit in front of your computer

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And it was, you must first become consistent before you can become exceptional. And I thought I would start with that because I feel in reading some of the comments and posts inside of the community that I don't think this is understood. And so I wanted to break both of those pieces apart. So first is, what is commitment? And the second is, what is exceptional?

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You know, like you're at home and you feel like you're like, this is work time, right? I've got my timer on, I've got my earplugs in, I'm working. But if you look at the nature of what you're doing, you're skipping between tasks constantly. And so you never actually move the ball forward on the things that matter. The elimination of alternatives is what you can do to show commitment.

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Like, how do you see if someone is committed? You look at how many alternatives they have given themselves, right? There's the old saying, I think it was the Vikings that did this originally, but the saying has been pervasive at this point, which is when they would go try to sack a city, the Vikings would land on the enemy shores and then they would burn the boats.

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And there's a very different level of commitment when you burn the boats and you can't go home. And the only way that you can go home is that you sack the city. You tend to fight differently. You fight as though your back's against the wall because you've eliminated alternatives. Some of you probably do have alternatives. But the thing is that those alternatives don't serve you.

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Because they are draining the resources that you have to hit sufficient volume. And the big part about hitting sufficient volume isn't intensity of one day, right? Like you can work out as hard as you want one day every three weeks and you're not going to look different. And you can do that for years. That's the thing that's crazy is you can do it for years. You can say that I work out.

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I've been working out for years. And I look the same. My genetics suck. My workout regimen sucks. But you could do 10 minutes, seven days a week and get significantly better results. And you would have results that would improve. And as crazy as that sounds, it's also true. And the thing is, it's also true in business.

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And so the question comes down to what are the things that we're doing instead? Every person has the same time allotments. The only thing that we have is the great equalizer. We all have the same amount of time right now. We don't know how long we all have. But in terms of one second for me is one second for you and is one second for somebody across the world. And so it's not that you lack time.

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It's that you have priorities that are mismatched. And I think if I had one objective for this little podcast, whatever you want to call it, is for you to really look at the things that you're doing and determine whether they are actually reflections of your priorities. If you were to show me your schedule and your bank account, I can tell you what your priorities are.

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Because I can see what you vote with in terms of your dollars and your seconds. And those will be the things that you truly care about. And so the thing is, it's very easy to say, I am committed. It's very hard to be committed. Because being committed has to happen every single day. You have to continue to keep the alternatives at bay. you have to eliminate the boats of rowing home.

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And so many of you, it could be your jobs is the boat that is right there. It could be the next shiny object that you're considering. But each of these are boats that you kind of keep one foot on shore, one foot on the boat, and then you're kind of trying to throw rocks a little bit at these cities thinking you're going to sack them. But you're not.

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And your rocks aren't even hitting the city because you're not even getting close enough because you're so afraid of commitment. And the thing is, is like, we have to make bets. Like, you got to take risk. The amount of risk that you need to take to win is honestly very little. But Jeff Bezos recently said this, and I like this from an interview, and he doesn't do many of them.

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He said that, I think as humans, we systematically overestimate risk and underestimate upside. or potential or opportunity. And I think that that is very true in entrepreneurship. That bias that we have is what has kept us alive, but it does not serve you to help you get to the next level. I think it would behoove you to look at what worst case scenario actually is.

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Worst case scenario might just be like, I mean, are you really gonna be homeless? Probably not. And when I see homeless people, it's really that they are friendless.

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so they have no one who wants to help them and so many of you i would consider are socially normal people and i say that in this very rare instance not as an insult right like you have a social circle you have people who care about you and the likelihood that you actually become homeless if you are hard working and just have a bad you know a bet that goes wrong is very unlikely but

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From the commitment perspective, I define commitment as the elimination of alternatives. For example, if you get married, you commit by saying that you will not be with anyone else. So you eliminate alternatives. So it's the ultimate commitment. There's a story that I really like of a young lad who was talking to his grandfather and he said he wanted to make the football team.

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And I've never said I was, quote, homeless in my life. But when I made the bet on the gym, I slept at the gym. Some people would be like, I slept out of my car. It's like, I mean, I didn't really. I never slept in my car. I just slept at my gym, right? Now, did I have a home? Technically, no.

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And to the same degree, there was a period of time when I was launching the gyms and we lost everything where I went back to Layla's parents' house. Was I homeless? No, I was just staying at someone else's place. And so these are like the true worst case scenarios. And so let me tell you a story. So my father, I think when he was 17, he left Iran on a student visa.

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So they had a program before the fall of the Shah, which is when the revolution in Iran happened, when it went from Western to super fundamental religious. where they would pay for you to go to school as long as you came back and took the learnings back to Iran. And so that was basically the plan that he was on.

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Now, while he was away, the revolution occurred, and then obviously that deal was no longer valid. And so he went to Paris to study medicine. Now, wrinkle number one in this plan, he didn't speak French. And so medical system in Europe, if you're not familiar with it, is everyone is accepted and few people pass.

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It's kind of the opposite of the American system where almost no one gets in and then everyone passes once you're in, right? The hardest part about most colleges, at least in the US or universities or medical schools is getting in. The hard part is not passing. There it's inverted. Anyone can start, but few people graduate.

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And so I think in the first year, it was something like, it's something like 70% of people fail the first year. My father was in that first 70%. It's because he didn't speak French. And so imagine trying to take organic chemistry in Chinese, like hard, because he's a persevering guy. He started again the next year at zero again, and he took the grade again.

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And then the second year, he also failed. So then he calls to his brother and his brother lives in Paris, too. And he says, hey, you know, I don't know if this doctor thinks for me. And his brother said, you know what? Why don't you just just just go somewhere else, like get a fresh start. And my father was thinking about going to Brussels, which is in Belgium.

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He said, why don't you just start over there? You know, and this is now your third year of being a French speaking country. Just see how it goes. So my father tries a third time. And he, you know, he ends up passing that year and then, you know, ends up continuing. He graduates top of his class by the whatever, sixth or seventh year, because it's a much longer system there.

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College and your degree are one there. In school, he meets my mother. My mother is French and she was also an American citizen, but she was born in Paris and then immigrated there. But she went to school in Belgium. And so she says, you should come back to the United States with me. And so he goes with her, knows no one. Also, doesn't know English.

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So he gets to the US and of course his MD is not valid here and he can't pass the test because he can't speak English. He then tries to apply to just get a residency so that he can learn English and then begin that process. He doesn't get any residencies because he doesn't speak English. And so my father watches television during the day and takes, it was like phonics or something.

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I can't remember what it is, but there's some English thing back in the day. And he took that during the day. And he was able to get a minimum wage job as an x-ray tech. And so he basically ran slides for people like back and forth between the development room and the doctor's office. Meanwhile, he's a fully certified physician and surgeon.

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And so then while this is happening, it takes one year, nothing. It takes a second year, still working minimum wage. Now his wife, mind you, is like going on the path. And then finally, he's able to get my mother's father to pull some favor to get him to get a residency at a medical place in Texas. So he then goes from Baltimore to Texas without my mother to try and do this residency.

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And so they're out to breakfast and they're just a normal diner. You know, he's got some bacon, he's got some eggs, right? And he says, I wanna make varsity this year. And his grandfather looks at him and he's like, I mean, are you interested or are you committed? And he's like, I'm committed.

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And so he finally gets the residency and he ends up being a physician finally. So he gets back to Baltimore, which is where I'm from. And he starts the practice out of the same office as my mother. And so they decided, you know, joint rent, that makes sense. But he wanted to start a cash practice with no insurance. So he had no flow of patients that were coming his way.

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And so about a year or two later, it's slow. It's not really working too well for him. Again, he still has a pretty thick accent. But right as it's about to start working, his income starts to get close to my mother's. They then get divorced. And so she changes the locks on the doors without letting him know. So you imagine you go to work, right? You've got patients that day.

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Hey guys, welcome back to the game. This is part two of the Impact Theory guest spot with Tom Bilyeu. We go deep on a ton of topics. It's me, so it's going to be business related. Tom talks about a lot of stuff, but in terms of this podcast, it's mostly business. And so I think you'll enjoy the exchange. I don't get to go this deep on stuff. often. And so it was enjoyable.

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And I think that if you can reconcile that reality, which is that you will have, like for me it was super tough because everybody at Vanderbilt was, all the guys I knew were pretty successful. And so a lot of people were like, oh, back home. Now high school friends sure are different.

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But like my college friends, I went to a good school, like almost all of them are investment bankers, management consultants, private equity, like they all make good money. You know, they're like head in some software thing. Like they all are successful. And so when I went to do this personal training gym thing, it was like, oh, Hermosy gave up. He's out of the race.

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You know, he's not he's not playing the game anymore. And I would have these almost like these fan, these shame fantasies of what they were saying about me before. while I was sleeping on the gym floor, not being successful, having literally kids above my roof. Cause it was, I was in a garage. So kids would like party at night while I was trying to sleep. It's really tough.

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no worries he's like just you know come over we'll talk about it at lunch because he would always talk me off the ledge you'd be like hey you've got the you did you did vanderbilt you did in three years you got the good consulting job he's like you aced the gmat he's like you're gonna go to harvard you're gonna get your mba there or stanford you'll pick one of them he's like and you're set like you're good just just follow the plan um and i was like i i don't i don't want to do that and uh when i was like i'm already gone then like the flip you know then the thing that i was most afraid of was that he was freaked out which is exactly what he did

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Um, but like literally in front of me demonstrating the life that I could be having while I actively was on the floor. Um, but they weren't thinking about me to begin with, and nor do they really care. And they're going to all die eventually. And so if they were to die before me, then their opinions wouldn't matter. And if I'm going to eventually die, then what happened to me won't matter either.

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And so then it's like, wow, I'm going to change my entire present existence to satisfy the fictitious idea of what other people are saying behind my back when they aren't thinking about me. That seems silly, but it's hard, but people don't do it. And so I'm saying, don't be ashamed of the lingerie job or the Uber or whatever it is that you're doing, as long as

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You're using it to build towards the thing. Now, if you're driving Uber all day long and you're making $70,000 a year and then you spend 100% of it, then what are you doing? You're using all your time up and using all your money. You have to be banking something. You either be banking time so you can work or you'll be banking money so that you can invest in something.

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When I say invest, I mean invest in skills, invest in opportunity, not trying to play the crypto market or become a day trader because you will lose.

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yes you will uh speaking of things that people may lose at and that might be giving them existential dread what do you think about ai for entrepreneurs oh it's a great question um i i'm not worried about it at all from a what will it change about what i do so i have seen i basically see the history of humanity as humans then humans plus tools and then tools beat all humans

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And so AI for now is a tool just like the Internet, just like computers. And we will use the tools. So I, as an entrepreneur, will use all the tools available to win. And so AI will come online and we'll do that stuff until AI can do everything better than everyone. And at that point, it doesn't matter. Nothing matters. And so again, me dreading that changes nothing about what I do today.

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And so what I will do today is what I've always done, which is do the best I can with the resources at my fingertips, what's available to me. And so I absolutely, across all portfolio companies are pushing, how do we incorporate AI into this? How do we put it into a streamlined process? How can we incorporate in sales and marketing, whatever?

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Um, and we will continue to do that until an AI is starting and running businesses without us. And at that point we will try and do that. And if, if AIs or AIs own AI businesses and they're just out competing humans at everything, then the world is different. And I have no ability to predict that. And so I'll just keep playing the game until I can't play anymore.

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Uh, we're getting really close to being able to have, uh, it take calls. Whoa.

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No, AppOn works too. Whoa. Sales? Setting. I think it will get sales.

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Yeah, I think end of next year it'll be able to do sales. Whoa. But like setting, I think we're basically like three months off. So main thing, the only issue right now is lag. So the actual responses are perfect. They're on script. They are reasoned. All that stuff works.

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The only issue is the lag time between someone saying something in the response or if someone says something, the person starts, the AI starts responding and then they say something else. It can kind of like jumpstart it. And so the next big iteration is going to happen is voice to voice.

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So right now what happens is Prospect says something, it goes to a satellite, which then goes down to a database, which then transcribes it. AI takes that as a text prompt, responds in a text prompt, beams it up, translates it to voice, and then beams it up to the satellite to then say it to the other side. That takes like a second and a half.

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As soon as it's voice to voice, it eliminates like three steps. And so it'll probably be like a half second. And at that point, that's just human latency. And so that's close. I think that's three months off, four months off. That'll be end of Q1 next year.

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And so it's like we were talking earlier about the platform of like, are we, you know, are we a dev company? Acquisition.com is a holding company is not is not an AI company. We want to utilize the tools that are available to us. And most of the AI companies that we've

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started vendor relationships with, et cetera, there's usually a training period that you wanna train your specific model agent, whatever. And so we've been going through that process.

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And the thing is, is that a lot of people would expect the story to be like, oh, my dad understood and he was super supportive. But he wasn't. We didn't talk for a few years after that because I was the prodigal son and I did everything to his plan. And I was living the most successful version of his life, not mine.

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It's tough. I'll give you three. I'll take them. So, I mean, marketing sales. So marketing is like, how can we get the content stuff to be like truly top 1%. The thing that's tough is that whatever, whatever, the thing that I hate and like about it is that whatever skill AI can do for you, it can do for everyone. And so it has a massive equalization.

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So the ability to execute is going to be not nearly as much of a competitive advantage, which I'll just say, transparently, I'm bummed about, because I'm pretty good at it. But I'd say marketing and sales, both of those. And then the one that people might not expect is decision making.

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Like if it can get better at prediction than me for outsized returns, then of the three, that would be the highest return thing that we could do. And so I think that, again, but if it can do that for me, it can do it for everyone. And so that's where, again, this is where I struggle with it. So I just think of like, what can I do today?

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And then I don't spend any time on what might happen in the future with it because when it changes, I'll be there.

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And it was one of those realizations where you're like, I'm winning at a game that I didn't design. And so I'm actually by default the loser. And so me quitting my job to then pursue fitness was the hardest thing I've done. The second hardest thing I've done was actually getting my gym to work because I had so little understanding of how anything worked.

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Say more. How you structure statements to make them more interesting or compelling for an audience.

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Um, the single greatest training grounds for this is Twitter or X. I, I started tweeting, uh, I can't remember. You probably look at my profile probably three, three years ago. Um, and I think Twitter is one of the best writing tools that exists because it gives you real time feedback immediately for how good the quality of your writing and thinking is.

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And so there are basically sentence structures that resonate better with people. And so that would be like having three things in a row where you have they all start with the same letter. If you have basically like a reverse sentence, like it's not about... It's not about listening to people who are closest to you. It's about listening to people who are closest to your goals.

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And so it's like there's repetition there. And you change one variable. If you can't do it in a decade, or if you wouldn't do it for a decade, don't do it for a day. So there's alliteration. And I would say some of this has been probably subconsciously intuitive because I've tweeted probably 6,000 times over the last three years. And so I've had a lot of reinforcement loops.

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And this is where AI will do better than I will eventually. But right now, And I can look at I want to record this because there was this time where Layla and I were driving and she wanted to like tweet while I was driving. And so she would read me what she wanted to say. And then I would tweet it back to her. And they ended up like they just banged it. And you kind of get in the flow.

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I was like driving on the road. I could just like kind of like zone out and think about it. And like that, that's something that I'm, I've gotten significantly better at over the years and making more content. So it's like I have verbal practice and feedback loops, which are more delayed. So I don't think it's as strong as the Twitter feedback loop.

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And that's probably been, I think that's, that's the, from, from a, from a copy and content perspective, that's where I think I've put more emphasis. I love it because this is really interesting for persuasion is that if you make the statement more memorable and, people have a higher likelihood of remembering it.

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If people have a higher likelihood of remembering it, then they will think it was their idea. If they think it was their idea, they're more likely to do it. And so the best persuasion is when someone doesn't feel persuaded, they just think it's their own idea and then they do it. And so if you make things memorable in a very real way, you will influence and change more people's behavior.

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And so if we look at the best orators of our time, the last hundred years, they were very skilled, uh, rhetoric, rhetoricians or whatever. Um, and, and, and they use specific sentence structures that people tend to like. And same, it's like probably chords in music. I think it's the same thing happens, uh, with words.

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I had $50,000 saved up when I was 23 from the consulting job. I lived on basically nothing and almost banked all my pay. And I basically bet it all on the gym. I had $5,000 left after paying for all the equipment and everything else. And I had $5,000 a month in rent and I had never sold anything to anyone. And so the idea of making $5,000, having never really sold anything to anyone is,

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Do a bunch of things and see which one works. Why is that terrible? God, so many reasons. Well, first off, trying to do many things at once, you already have such limited resources. The easiest analogy I can think of is imagine you've got one cup of water and you need to overflow another cup to get it to be an effective dose, right? Enough volume for you to see an outcome.

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The visual I can give is, okay, let's line up seven shot glasses because millionaires have seven streams of income, apparently. And so now we're going to pour that water into all of those glasses and then hope that it somehow overflows, but it's not going to. And so what ends up happening is you just have insufficient volume of action on seven things, and then you accomplish none.

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And the fallacy is thinking that you'll see which one will work, which won't. assumes that the environment, the circumstance is going to be the thing that makes it work rather than you. And so better stated is that you can make any of them work, but none of them will work unless you focus on one of them. That's all rhetoric, right? That's the idea.

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And so I think that is a very insidious piece of advice. I think that you can try many things if you want. If you are going to do that, do it in sequence, do one at a time. But I say that knowing that if you actually try hard at the first one, you'll probably make that work.

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So try the first one that you think is the best one first, in which case, why do you even have six through, you know, six through two or seven through two? And so that and I think there's this big idea. This is one that I remember talking to a portfolio company about.

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He was like, I'm not really sure if I'm passionate about this anymore, like about like this, this, this product or the company, whatever. And so he was like, I think I want to consider starting something else. And I said, what do you think the natural extreme of this looks like at the top?

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Because in my opinion, all businesses at the top look the same, which is you're going to have a head of marketing, you're going to have IT, you're going to have a sales, head of product, head of customer success, whatever. And so if you win and you win all the way, it looks the same. And so where your entrance point to the maze is doesn't really matter if that's what the hypothetical extreme is.

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And so I have this story about a friend of mine who started a cookie store actually here in California. So he started this cookie and he was in fitness, right? So that was kind of hilarious. Like it's the really fit guy who starts a cookie store. And I remember I asked him, I was like, are you passionate about cookies? And he was like, no. And I was like, huh, weird.

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He's like, well, I looked at the market. There's, there's a lot of people. And this was before cookie for crumble. So he had a, he had a good inclination that like high end cookies were going to be a thing. So he, he did his, he did his, his homework. But what he was passionate about was being excellent. and it did amazingly well.

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And so I think that you can be passionate about ideals and translate that to anything. And so I had a conversation with Ben Francis from Gymshark this year, probably the most, the best day that I had from a business owner perspective was hanging out with him.

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Just had a really good conversation and there's not a ton of people that you can talk to about like revenue levels and problems that come at that. And we had a great discussion and What was interesting, he was like, I can't believe that you're doing all these different things because he saw each of the portfolio companies as a different thing.

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He's like, I can't imagine doing anything besides Gymshark. This is all I want to do. And I thought about it for a second. I was like, acquisition.com is the only thing that I'm doing. Right. These are just like fundamentally like you have different types of clothing. I can't believe you have all these different types of clothing, all these different types of apparel.

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So it's really chunking up and chunking down. And so if anyone hears that and thinks, wait a second, I thought you told me that I should focus on one thing. How are you doing all of these different things? There's a very big misconception when you are starting out that CEO and owner are the same thing and they are not.

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in a local business which I'd never had in California, which I was from Baltimore, I knew no one. So it wasn't like I could just get on my immediate friend group to come and at least pay the rent. I had no one. And so I think when I was like sleeping on the actual floor of the gym because I couldn't afford two rents was when it like really hit me that no one was coming to save me.

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And that's because in the beginning they are the same because you're the only guy. But if you look at, you know, Berkshire Hathaway, for example, Warren Buffett is not CEO of Coca-Cola. He's not CEO of Geico. He has operators who are in charge of each of those companies. Now, those guys couldn't run three companies. They can only run the one they're at. And he can only run Berkshire Hathaway.

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And so it's really chunking up or chunking down a level to understand how do you have multiple things? Because you can always go down and say, okay, well, if you have an agency, then you have 10 clients. How can you have 10 clients? You should only have one. Well, the logic doesn't carry. But it's really just that one person has limited resources.

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And so by limiting the scope of the problems that we have to solve, we get more leverage, as in we get more for what we put in, in my opinion. And so that was how I reconcile those two kind of styles of doing businesses that I am not CEO of any of them. And I'm not even really CEO of acquisition.com, if at all.

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And so that was how I made sense of that, because that's the only one thing that I think about.

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I was gonna give the obvious answer, which was scale. Uh, that's like the first, what's the knock on. Yeah. Um, So we have only one theory of how we grow everything. And so that's kind of been our unifying principle, which is the theory of constraints. So a system will grow until it is constrained and then will grow no further.

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And until you relieve the constraint, whatever the bottleneck is, it will stay there. And so the difference between a million dollar business and a hundred million dollar business is typically if you're a million dollar business, you're still...

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you're doing a lot of everything still at a hundred million, you're predominantly making decisions and SWAT teaming in on high leverage problems that need to get solved. So kind of like the Elon, like we jump in and Layla and I have both, uh, kind of championed this methodology of close CEOing, which is, um, rather than having somebody who's kind of like running the, basically driving.

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So driving objectives on a regular basis, we see as like traditional operations and management versus kind of like CEO as saying, okay, the single most important thing that we need to solve right now is this product ascension piece, or we need to solve this sales constraint, or we need to solve this CS issue, whatever it is. And then

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basically CEO goes in is now on every huddle for that because the operators who are running each of the divisions or functions are continuing to drive the ball forward. And so, The TLDR is in the very beginning, you're doing everything. At the end, you're doing one thing very well. And your understanding of talent will dramatically shift over that time period.

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And so right now, you can't imagine having anyone else do anything because everyone who works for you probably isn't that good. And that's because you don't know how to recognize talent and or you can't compensate them well enough. And unless you're giving away big chunks of equity to people, which is a strategy, there's nothing wrong with that. But

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Either you're building a dream team or you're bootstrapping it. If you're bootstrapping it, you're going to be doing a hell of a lot of work. If you build the dream team, then you're going to have to give slices of the pie away. Again, cool either way, expecting a different outcome from different decisions where the problem comes in.

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And so that's kind of obviously like at a very high level, you're doing a lot of stuff with no help to you're doing a few things with tons of help so that all of the normal day-to-day activities continue. And you're just thinking, what's the highest leverage move we can make?

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And, like, if I failed, I would have to go back and tell my daddy he was right. And that felt like worse than death for me. And so that was incredibly hard. I remember that I was... I have a pretty decent work ethic. But at that time, I was... My first session would start at 4.30, so I'd wake up at 4. And then my last morning session ended at 10. And then I would do the marketing, sales meetings.

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Um, so this is probably, so if I had to say like the three things that have changed in terms of me as an entrepreneur for the year, um, or like last two years, like big, big moves. One is my understanding of brand. So probably four. So understanding a brand has, has deepened. My understanding of focus has deepened. My understanding of talent has deepened.

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So it's not like, Oh, I learned about talent. It's just my understanding of it has grown more nuanced. And, um, the arbitrage that exists between B and A plus. And so I still think that one of the greatest returns that you can make as an entrepreneur is paying someone who's exceptional, exceptionally well. And Steve Jobs gives this. I'm not going to claim credit for it.

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But he says, if you look at the best cab driver in New York compared to the worst cab driver, it's probably a three X difference between that's the best and the worst. But the best marketer and the worst marketer, it's not a three X. It's really a hundred X difference. Same thing for the best engineer. And now that's the best and worst. What about good and best or good and top point one percent?

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Well, the difference between those guys is probably still like 25X. It's huge, huge, highly leveraged. And so the arbitrage is that you don't typically have to pay the best guy 25 times more than the good guy. You can just pay him three times more. And then all the increase in throughput goes to the company. And that has been my shift and moving away from...

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So basically headhunting happens in level. In the beginning, you start running ads to get, first you talk to friends and family, right? And then you start running like Indeed ads and Craigslist ads to get people. And maybe you post in communities you own or you make public posts, whatever. That's how you get your next level of talent. And then from there, you start networking.

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Maybe you hire headhunters and recruiters to help you out. Maybe you get an internal resource who starts doing outbound, looking for specific types of candidates. And this also follows with the functions of the organization. If you're finding a low level role, you can still do the lower leverage ways.

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The higher the role, the more individualized the approach, just like a whale would be if you're trying to go after a big client, a high value client. Like, OK, I want to sign Amazon for my warehouse services. Like, OK, we're going to have a really tailored approach. You're not going to run an ad to get Amazon. You're going to have to know somebody. You're going to have to work your way in.

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It's going to take a while. And so I would say that now my thinking has rather been like, let's go find a unicorn. Two, I need John from this company to work for me. And I don't know John, but I know he's really good and I need him. How do I, what would it take for me to get him to be here?

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And so I'd say that that has been the shift and I am more okay with getting, I'm basically being involved in some of the highest level recruiting. And those roles take six, 12, 18 months to actually come to fruition because it's like a courting process. It's more like a marriage. They don't need your company. They have a career. You're not giving them an opportunity. They're giving you a company.

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Because they can drive an entire division of growth. They can take you international because that's what their Rolodex is. Or they can take you public if that's what their specialty, whatever the thing is. And so that's kind of how I see it as a very high leverage use of my time, despite the fact that it's a very slow process that has very delayed reinforcement.

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So Layla, so I'm stealing this from Layla. Her frame is talk to as many really smart, basically reach out to people who you would want to hire, ask them if they know anybody, hop on calls with them. And she uses the interview process as her learning process. And so from there, if you only talk to one customer success person, you have no idea if they're good or bad.

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I would clean the gym. I would set up the next thing. I would get the workouts. I would get the music prepped. And then my 4 o'clock would start showing up. And then 4 until 7.30 or so, people were at the gym. And then after that, I would run the billing and make sure the contracts are right and then reset up for the morning and do it all over again. But I had zero employees.

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If you talk to 20, you have a really good idea. And so, because then by the 17th, you're like, but what about this? And what about this other thing? And the way that I think through this is a couple of razors. So razor number one is the quality and quantity of metrics they track and how they influence those metrics.

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So if I talk to, let's say I wanted to find a sales manager, I might say something like, okay, so, you know, how do you, how do you think about running sales and improving sales performance? Now, if the guy says, you know, got to get in there, get the team riled up, you know, make sure, make sure the culture is good. Uh, you know, drive, drive outcomes. I'd be like, okay, how do you measure that?

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Now, if the guy's like, you know, make sure the close rates are good. And, uh, and yeah, and I'd be like, okay, how do you make that go up? Hmm. Now, the best guys would say, well, they would have every metric all the way down. So it's like, what's our contact rate? What's our offer percentage? What's our close rate? What's our cash collected? What's our back out rate by rep? What's LTV to rep?

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So because some reps will have higher LTV because they'll have lower return because of how they're sold and what expectations were set. And so if these are the metrics that I'm doing, they would then say, well, which metrics do you want me to improve? I'd be like, okay, let's say that offer rate's low. What do you do?

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Like, OK, well, then that's probably going to be a lead nurture issue, which is we're not qualifying people on the front end. We probably need to fix the headlines that we have in the ads and maybe the offer that we're doing for whatever giveaway we have that's generating these leads. And then I would probably add in some sort of disqualification process earlier.

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So if the guys can look at the stats, I could remove them from the calendar so they can open up a slot and then increase throughput. Now, if someone said that, then I'd be like, okay, that's clear. I zoomed in on a metric because he had many and he had quality metrics and he knows how he can influence them.

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And so if you have a very good idea, because I remember the first really good HR person that we brought on, they introduced all these new metrics to me that I had no idea about. And I was like, this is great. She was like, well, what's the cost to acquire talent here? And I was like, I haven't thought about it. She's like, oh yeah, well, we need to know we can spend this much to acquire talent.

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And this is our average cost to acquire a role at each level. And then what's our, what's our two way fit percentage? And I was like, what do you mean? And I was like, well, at 90 days, what percentage of people are saying it's a 10 out of 10 from the manager to the person and the person to the manager. So it's a two way fit. Both people say that this is a good, a good thing.

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And then what's our average time to fill? And I was like, I don't know. Right. And so all of a sudden she had all these different metrics. I was like, this makes complete sense to me. And I've never mentioned this.

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And then all of a sudden, from that point going forward for every single head of people or director about whatever it is we're doing, if they're in charge of some sort of recruiting function, then if they're not bringing up those metrics, then I know that they're already not at that caliber.

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And so again, and this is where I think entrepreneurial pattern recognition is so valuable, is every entrepreneur that I know who has had something successful and then started something else with the assumption that the first thing wasn't because of luck, because we have probably both seen some guys that got richer than they should have. I'll just put it that way.

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And so I didn't know you could hire employees. It was only when a member of mine who was an entrepreneur came up to me and I'd been short with the class that morning. And she was like, you can't treat people like that. And I was like, what do you, but I knew that if she was saying it, like I was really off base. And I think I was sleeping right around fourish hours a night.

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Because I remember I had a dinner with somebody once who was like, and I'll loop back, but he said, isn't it crazy that gym launch could be the biggest thing you ever build? And I was just like, that is not true. I just was like, I wholeheartedly reject your premise.

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I was like, I know exactly what we did to build Gem Launch and I know all the reasons that it was not as big as I want it to be and I know what I'm gonna do next and I know how to win. And that guy never ended up building something bigger than the exit that he had. And it might've been because of his view of the world or because he got lucky or whatever.

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But that pattern recognition for most entrepreneurs that truly are self-made, that forced their will into existence, their ability to get it again after losing it all, or just when they take their second or their third or their fourth swing, they almost start like for me, every company I've built has gotten to each revenue level faster than the company before.

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And it's because it's like, oh, I already beat the boss at this level. I know what has to happen here. Oh, I know what has to happen here. And then you finally get into virgin territory. You're like, I don't know what's going on. And then your rate of progress slows again. And so it's like you want to crystallize the artifacts of the knowledge of beating the game at every level.

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so that when you get to that level again, you're like, oh, this is another one of those. I know. Good sales managers look like this. They know these metrics. They say these things. They interview this way. This is the best source for them.

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And then all of a sudden, when it takes someone 18 months to find a sales manager because they hire wrong the first time, and then it takes them a year to figure that out, and then they go back into the process, and then they have to do sales manager themselves, and then they finally on their third try, and that was the constraint. They can't fix it. And so they stay stagnant that whole time.

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Whereas if you think about how much faster it goes when you're like, all the roles are right. And it's like, boom, you just go to the next level. That's the order of magnitude. I think that's the that is the those are the scars and the lessons that we collect as entrepreneurs so that we have our cheat codes for when we get to that level next time.

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If you like the first one, you'll like the second one. Enjoy.

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So I'll start with tax. I don't think much about it. I have always been of the belief I should just make more money and that's more under my control. Now we'll be sensible if we buy a building, we'll depreciate it. We'll donate a certain amount to charity because we can write off 30% of adjusted gross income. It's like, okay, well, that takes me from 37 to 29.

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We work our way down, but we still pay taxes. And I'm still waiting for this. I'm like, what is this no taxes that billionaires are paying? I'm still trying to find this loophole that all these politicians are talking about.

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But the big realization that I had around taxes was realizing, and this was when Elon still lived in California, that all the richest people in America lived in California, or many of them did, and New York. And I was like, if they're the richest people and they're in the highest tax state, what do they understand that I don't understand about making money?

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And so the big misconception that I had is that my understanding of making a billion dollars, which was a goal that I had for a very long time, And to be clear, for anybody who has that goal, it wasn't always a billion. It was first a million, and then it kind of moved its way up. But the first way I thought of making a billion dollars is that I had to make $2 billion in net income.

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And then after taxes, I would have a billion. And then the second version was, oh, I just need to make enough, and then I'll invest that money. And then if I make maybe...

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And people say that, but I did it for, I want to say, I want to say like close to six months. Oh God. I was like delirious. I felt I'd fall asleep on the, like leaning on things. Yeah. I was very, very tired. And I used to tell people that it was the kind of, kind of tired that a good night's sleep couldn't fix. Yeah. Like I needed a lot of time.

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400 million over 10 years with appreciation of the stock market and things like that i could get to i could get to a billion okay that was my like 2.0 version and then the 3.0 version um was oh you the thing the asset itself has inherent value and so i only need to get to like 100 million in ebitda with a conservative 10x multiple

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uh, to have a billion dollar asset, which I can then take loans against, or I could sell portions of it or whatever I want to do there. And so that's kind of like how my evolution of, of getting to a billion kind of changed over time. I know, you know, this is obvious, but like for me, I, I didn't, I didn't even understand how it worked.

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Um, so that's the, the, the tax component, um, and some of the, the enterprise value component. What was the other part of the, you had two, two questions.

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Oh yeah. Um, no that's my simple answer i who is in government the regulations that they put in place i will only be affected by those regulations or changes in tax code like you know like we just said if it was something that affected me disproportionately maybe like elon uh then it might make sense for me to change my behavior in a way to try and influence the outcome of the election

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Cause then it's like, I have high, you know, we, I think we all try to have high agency. Like what can I do about it? But as a rule, I try not to think at all about things that I cannot control. And so, so we're like, sure you can vote. Okay. But you know, the one vote I have in the, in the one state of the County, that's already whatever color you're in, whatever. Um, but.

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if I really wanted to get into it, it's not your vote that matters. It's how many votes can you influence? Like that's the game. Um, and so the, the easiest limit test I had for this, I remember this was like a formative experience for me is that when we went through COVID, I was in the gym space, which is right.

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A hundred percent of my customers were not allowed to do business legally in 24 hours. And so, um, That year, we went from 37 million in revenue to 31 million in revenue. So we did 31 million in sales in an industry that was not legally allowed to do business. And I think is one of the biggest entrepreneurial successes I've had, despite the fact that we shrunk that year.

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And I remember managing the team during 2020 saying, if we cannot control it, we do not talk about it. Period. only talk about the things that we can control. And whenever there's a disadvantage, it means all of our competitors are screwed. And so that means there'll be more for us because we'll work harder while they get disheartened.

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And so they're going to be talking about all the things that's not fair and blah, blah, blah. But we're going to advertise our asses off. We're going to sell our asses off. We're going to deliver like crazy. And we're going to find a way to make it through this because everyone, I was like, gyms will not stop existing.

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So if we believe that to be true, then we need to find a bridge for them to get from here to there. And so we can build that bridge. And the nice thing is we have more resources than our competitors, which means we can build a better bridge than anyone else can.

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So we came up with something in seven days called the hybrid gym. And so basically what we would do is you could meet with people one on one in person. That was loud. You couldn't do workouts.

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But that was probably the second hardest thing that I did. A lot of it was just because I made up for a tremendous lack of knowledge with just I just have to make rent and then everything else is mine. So I didn't have any understanding of like I just I spent money on nothing. My first gym had sandbags that I wrapped in duct tape as the equipment that I started with. It was crazy.

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And so what we did was I got all the gyms together to teach different classes and different variations, the whole gym launch community, so that we had 12 hours a day of sessions that were being streamed by different gym owners. And so everyone was able to maintain their membership and have way more classes than they did before and do them at home. And so we pulled the resources. Very smart.

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And so we we cobbled together the streaming thing so that because we, you know, we paid for all of the baseline tech that was required to do that. They supplied the talent to lead to lead those sessions.

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And then from marketing and sales perspective, they either sold over the phone, which we had more ramped up sales scripts, which was more reasonable at the time because people understood it, or you'd meet in person one on one to do it. And some people were able to meet one on one, just do one on one training, things like that.

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And we lean really heavily on supplement sales because we saw Prestige Labs. And so Prestige Labs, a lot of gym owners were able to get more people to take supplements during COVID because they're shipped straight to their door and not have to come to the gym. And so the combination of those two things allowed the majority of gym owners to get through.

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Now, what was really interesting, now I think you'll dig this. So about, I can't remember the exact number, but I want to say between eight and 10% of all gyms went out of business in 30 days. Oh, my God. Yeah. And my theory around this. Whoa. Yeah. My theory around this was that they were waiting for a good enough reason to give up. Interesting.

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And so they were waiting for a reason that they could look at their friends that they're like, yes.

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They were looking for a socially acceptable reason. People would own a gym for eight years, 10 years. And then when the second wave of shutdowns happened, like nine months later, whatever it is, when they were like, maybe we'll open it and shut it down. That was when the guys who really wanted to, but could, who literally couldn't pay the bills anymore, went out of business.

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So it happened in two waves. The first ones gave up. The second ones had no, of course you always have a choice, but like those guys ran out of resources. And so, um,

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I think the number one thing that I get from the people who work with slash for me is that I have a much lighter sense of humor when they see me kind of day to day. I do like to poke fun and make jokes. illicit jokes and things like that, that people are like, is that HR compliant? I'm like, definitely not for sure. You should talk to them, but they work for me.

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So I guess it doesn't really matter. So that side, but I think it depends on the stakes and how far in a deficit people are. So like high performers, I think like me in general, like I'm super encouraging and very rewarding, telling great job, et cetera. I want to create an environment where people can win. And if you win, you will love me. And if you don't win, you will be very uncomfortable.

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And so I see the job of the manager is to create the best possible environment for the best performers and a terrible environment for low performers. And a lot of people don't like the second half of that.

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That, that is, and so I want, and, and I think a problem that has happened in a lot of management, I think some of this is in the wokeism stuff is like the idea that we should accommodate everyone. And I heard this from someone, I can't remember where I heard it, but it was like, this company is a dangerous place to work.

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And when I opened the gym, I was selling people into a gym that had no equipment because I thought that you should open as fast as possible to start making money. Now, if I knew now, I would have said I would have three months of pre-sales, only collect money and have no classes. That's what I would have done, but I didn't know any better.

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And I just love that saying now, I don't think like Layla would probably be like, you know, shiver, it would be not happy to me saying this, but, um, I want a place where winners want to win. And I want to build a company where ambitious people can build world-class products.

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And whether your product is consistently delivering a sales script, or it's making amazing content, or it's just the actual companies themselves, if you're an entrepreneur, like I want to create an environment where ambitious people can build world-class companies. And if I believe that, which I do, then my actions need to be aligned with that, which means that if you don't like

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metrics, if you don't like being held accountable to your performance, if you would rather have a political environment where people jockey and backstab and gossip, this is not the place for you because I will root that out quickly and ruthlessly. I prefer, in my opinion, the perfect organization has zero managers. hypothetical ideal.

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Of course, you need to align people's, I mean, in that hypothetical ideal, everyone works, period. That's all they do every day is they produce. And so if that's the hypothetical ideal, then every layer of management fundamentally acts as waste.

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Now, we have to orient that behavior so that it's aligned within whatever the objectives of the department or the company are, but that should be the only real role. And rewarding people who do well and providing feedback for people to improve. And so I see fundamentally that is the role of the manager.

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And that means that the manager most of the times also should probably work on stuff besides like, I do all this stuff. And if we see a good manager, then they should increase the overall output of the team. Now, if I add a manager and performance stays flat, then I don't need you. I could not have a manager in performance stay flat, right? Like, and if performance goes down, even worse.

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And where I hate is the outside cause, you know, pointing outside to external circumstances. And I tell the story of COVID to my company as well, which is, hey, if we have a company that relies on financing, let's say you're in home remodeling, whatever. So financing is a big part of our car sales. Hey, credit, you know, interest rates are higher. It's harder for us to do sales.

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And so I was trying to get open as fast as I could, which then meant that eight hours a day at baseline is me with a microphone in front of customers training, doing all of that before I could work on the business. And so like it was very real 16, 18 hours a day.

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Can we control that? No. Why are you talking about it? It's just a very easy razor to drive. What can we control? Well, good. More for us. Because other guys are all... They all have all these disadvantages. We don't live with it. They do. Because they'll talk about it. We won't. And I... I think the world needs a little hardcore and I'm okay being that.

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If you listen to podcasts, then I have a podcast called The Game. You can check that out. I have, I think it's like 580 something. You'll probably find it. I have two books that I give away for free on my podcast, $100 million offers, $100 million leads. So it's dollar sign 100M and then offers dollar sign 100M leads. Those are the book titles.

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They're on Amazon too if you like physical copies, but they're free if you like consuming them. And if you still can't find it, just Google it and you'll find it on my podcast. That's probably the best thing you can do.

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And I think setting that standard for people who are new is useful because when you start, you don't have enough money to pay other people. And so you either have to raise money, which you can do. I wouldn't recommend, especially if it's your first shot.

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or you have to work three jobs and and basically throw out all of the opinions of everyone who has no idea how business works because the only people you probably know when you're starting out don't have businesses and so they will tell you all these things you should be doing and you should take more time off and you should have more balance and this isn't healthy and they will tell you all these things but they are not where you want to be so don't listen to what they say completely ignore them and instead

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I like this little ism, but it's listen to the opinions of people. Don't listen to the opinions of people who are closest to you. Listen to the opinions of the people who are closest to your goals. And a great approximation of that is If I had known that when I was doing the decision to quit, then I would have known that this is where I want to go eventually. I want to start a business.

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And if it's hard for me now, it's never going to get easier. As I have more responsibilities, kids, wife, whatever, that's only going to get harder. And the people that I looked up to the most were the most aspiring entrepreneurs, and they would have said, go for it. But everybody I knew was saying, don't go for it. Don't throw away what you have.

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But I think sometimes you have to trade good for great. And there's always going to be a J curve. There's going to be a dip where instead of being immediately rewarded for the decision, you're immediately punished and you think that you're making the wrong move because of what immediately happens after, which is how humans learn, which is why it's so tough. But it's like the first week of the gym.

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Yeah. Because actually, weirdly, I think about this a lot. Like, what are the hardest things that I've done? Hard thing number one was quitting my job. The decision of quitting my job and then leaving Baltimore.

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Just because you haven't seen results doesn't mean you're doing the wrong stuff. You're probably measuring on the wrong time horizon. And so quitting the job, starting the gym was the second hardest thing that I've done. I would say that the third hardest that I've worked has been now, the season that I'm in right now. This is probably close to the hardest I've worked, but it's different.

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There is nothing urgent. Everything's important. And I am taking fewer days off than I ever have. and basically working at all hours that I can physically. And so the times that I'm not working is active rest so that I can increase my total output over a longer period of time. There's a long winded answer, but those are the two things that I feel like those were hard, hard calls for me to make.

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And those were real struggles for me. But those those are the times when I feel like it was I'm very proud of who I was then to do it.

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Oh, I think the pendulum has swung back and I'm so excited. I do think that it's going to swing back too hard.

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Oh, hustle porn. Oh, that I, I don't mind about hustle porn. So no, I meant societally, like from the political realm and stuff. I think that the pendulum definitely reached his pinnacle on the other side and then is going to swing back.

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And there's going to be, and the thing is, is that when the way pendulums work is that we have, we start swinging back and everyone agrees it's not everyone, but it's, more people than not agree that the it's better coming back to the middle and then it's better. And then it's better. And then all of a sudden, but Hey, more of that was good, but then at some point it stops being better. Right.

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And so, and this is, I think cycles is why humanity lives in cycles. And so I think it's likely that we will over crack, but it might take 10 years for that to happen. So I think right now we're going in the right direction, um, which is, uh, basically pushing away from the political correctness and leaning more into reality, uh, which I am, I am a heart staunch proponent of reality.

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Because to give you everybody an idea, like, you see me now, but I was so afraid of my father's judgment and the few people that I knew from back home that I was going to, like, quit my white-collar job to go start a gym and be a personal trainer that I actually drove across the country and called them when I was already there. Because I basically left in the dark of night, like no one knew.

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Because I think that's what's required to get where you want to go on the timeline that they want.

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I... have a 88% male audience or something like that. And so I feel like it's my place to speak to them. There are obviously women who follow my stuff. And if that's you, then you can assume that when I say men, I mean men and women. But I think that if a message is going to hit people,

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If I say men, I will have a stronger reaction and a higher likelihood that it changes someone's behavior than if I said people or men and women. And so if I look at my effect size of my message, if 88% of the people who hear my message are men, then I'd rather make it as potent as possible. That's why I do it though.

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I think being really clear on trade-offs So I, and I think you, I think I'm speaking for you here, I gave up my 20s. I would say I sold my 20s. Yeah, sure. Yeah, I sold my 20s. I'll say that. Well, I actually ended up losing everything. And so I did have to start over at zero again. Hey, with way more knowledge.

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All day long. So I traded my 20s. How about that? And that perfectly mixes with the trade-offs. Is that you can have... the nights out, the fantasy football league, the rec dodgeball team that you want to go to, beers on Tuesdays. You can do that. You just can't also build your dream unless that is your dream. And I think that's the big part. It's like entrepreneurship isn't for everyone.

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And as much as I talk about entrepreneurship a lot, I think there are plenty of people who don't want that, in which case, great. You've already won. Congratulations, right? It's simply the complaining about reality that's my problem. And so I think that most young men could accomplish all of their goals if they extended how long they would be willing to give themselves to accomplish it.

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Now, not to anti Peter Thiel here, because I'm a huge Thiel fan as well. But I think that when you are a novice, you have no approximation of reality. And so one of the difficult parts with how we observe success. A lot of it's social media driven. And this is the best analogy I have. If you were to look at an Olympic marathon, look at where the people in the stands are situated.

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They're situated at the beginning of the race and they're situated at the end of the race. But watching someone start a race and watching someone finish a race has almost nothing to do with running a

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that is the closest approximation that people think that's why everyone's really excited to start a business and they're really excited to sell a business but everything in between the the mundane middle as i like to call it they're just okay if i if i'm four miles in it's this times six okay i'm five miles in it's this times five plus one like you just keep playing these mental games with yourself to learn to endure

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And I think that that endurance is if I had to pick one trait for a young man to have, it would be resilience. And I define resilience as the amount of time after an aversive experience that you return to baseline function. And so if you have a series of behaviors that you do under certain conditions and then something bad happens, how quickly you return back to the original behavior set.

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And so in doing that, like if someone can not give up and learn, Then on a long enough time horizon, you guarantee victory. Like if you only had those things, you don't stop and you get better. That's it. And I think that if those are the two hypothetical extremes, that's what I would want young men to have.

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And if you know that, then I know for me, because I've been asked before, like, did you always know you're going to be successful? And I don't really like the question because. I only knew, and to my core believe this, I knew I would never stop. And that was the only thing I could commit to. I just knew I would never stop.

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And I knew that I wouldn't go home to Baltimore if the gym failed for whatever reason. And so my plan B, and this is super tactical for anybody, is that I think you should look at your plan B in excruciating detail. Now, Arnold has this whole thing of don't have a plan B, make plan A work. And I understand both sides of this. But

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I basically was a stowaway to my own fear. And so I had to just, I just had to, I just drove there and I, I called my dad. I think when I was going through Texas and Texas is like forever when you're driving across it. Yes, it is. And I called him. I was like, Hey, I'm going to, I'm going to do the gym thing. And he was like, yeah,

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Me knowing my plan B allowed me to pursue plan A. It allowed me to take the jump. But I think the day that I decided to live for me was the day that I allowed my father's dream to die. And so I think that you either live out your own dream or you live someone else's and one of them has to die.

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I think it's worth, for those of you who are young men or young women, there you go, who are listening. I think planning out what B looks like and not being ashamed of it. Because the thing is, is people will judge you based on the career path that you're making. But you're not making that as your career path. You're making that as the launch pad for what you really want to do.

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Learning and becoming the best version of ourselves, at least for me, is kind of the purpose of living. If that is at least part of your life's purpose, then I think having somebody who supports that goal rather than someone who is neutral or detracts from it is probably a good

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So when I come home and I say I'm stressed about work, I don't want you to tell me that work isn't cool. I want you to just listen, or I want you to help me solve it, but tell them what you want. And then they can behave in the way according to that.

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And so in a lot of ways, you can make that person who's neutral and supportive because maybe, and very likely, they do want to support you, but they just don't know how. And so if you haven't communicated that, then you absolutely like, you don't need to do any of the stuff that I talked about if you haven't even done 101, right? Which is telling.

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But if you have told them and it's not of interest to them, then I think you have to look at other options. If you want, you can obviously just be dissatisfied and just be in an empty relationship for the rest of your life. So that's obviously something too, and you can just not achieve your goals. So always, always a path and a path that many people often take.

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Your dreams, your dedication to your dreams is your dedication to yourself. I think that learning and becoming the best person If that is at least part of your life's purpose, then I think having somebody who supports that goal rather than someone who is neutral or detracts from it is probably a good thing.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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The question that we have to ask ourselves is, does this increase or decrease the likelihood that I hit my goals? And I see hitting one's goals as essentially your relationship with yourself, which is why I see goal achievement as the most important thing that you can do in your life. Because it's really just, do you keep your commitments to yourself?

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And before anyone jumps down my throat, the analogy that I would give is the very classic one, which is that when you're on an airplane, what do they say? You put your air mask on before you help others. And I think that your significant other was likely attracted to you to some degree based on your aspirations, what you want to do with your life.

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And what's interesting is that they will be attracted to that thing and then also be the source of that demise, right? They will do things and take actions that make it less likely that you achieve your goals and then complain about the fact that those goals have not been hit. And that's tough. And it's usually because they do not see that what they do hurts you.

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So I wanted to talk about something that's a little different than probably my normal topic, but I think really important for a lot of you. It's actually about your significant other. So here's the deal, Layla and I,

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And I say hurts you not because, again, out of malice, but out of what happens, what occurs. And so this has been something I've been thinking a lot, so much so that we are considering putting it as a part of our interview process for people coming in. And so if you look at how supportive a spouse is or your significant other, I think that it's not a binary. I see it on a continuum, right?

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On the absolute worst case, you have somebody who's like, you need to quit that job, you need to quit that place, whatever. Now, under the right circumstances, that can be super encouraging because they're saying you should go pursue your dreams, in which case that's amazing and they're over here, right?

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But if that's the main vehicle that you have to provide for the family and that's your dream or that's your goal, then how terrible is that? And now every time you go home, you're reminded of this and basically talking about work is punished, which then associates a negative and aversive stimulus with the thing that you need to keep doing in order to hit the goals as a unit.

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which is kind of a secondary theme that I have around spouses that are on the good side of the continuum, which is that they see you and them as one. And so it's like, we are achieving this goal. We are like, I am taking these sacrifices. I am making money too. And I'm allocating some of my money so that my spouse can do what they want to do. He or she wants to do.

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That type of unit tends to, I'll say, I'll say tends to, tends to outperform. The people who are kind of solo dolo, right? Like on, again, the extreme of somebody who actively tries to destroy. One degree, you know, to the left of that is somebody who's passively destroying, which I would say is the same in terms of outcome. Like, hey, don't worry about it. Kick your feet out.

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Hey, let's just go out this weekend. Let's not think about work. Well, it still results in the same thing, which is you work less and you don't talk about the thing that you care about. Now, if you care about your work, then it would make sense that you should be able to talk about that with the one person who matters most in your life. Right. But if you can't, it's very lonely.

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And I think it makes it less likely that your goal is that you stick with it because it no longer becomes an us thing. It's just a you thing. And then work becomes something that's a take from your relationship. Super tough because now you have conflicting priorities. You have conflicting reinforcement contingencies.

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You've got the spouse that whenever you do this other thing, it's taking away from that person. And that's because of how they have framed it. And so if you can have a spouse who frames you working as you loving them, then you win. Because they see you working as you feeding the unit, you feeding our goals, what we want to do with our lives, what impact we want to make as a family.

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had this realization that the number one kind of multiplier or amplifier on someone's effectiveness inside the business actually had a lot to do with what was going on outside of the business. And what's difficult for that as a business owner is that you want, or rather, I want to be able to predict how well someone does over the long haul.

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And a family can still be two people. But nonetheless, on the left, right, you've got the actively destroying. Second, you've got passively destroying. And the only difference I see there is intention, not as outcome. Now, to the middle of that, I think you have neutral. And so these are the people that are just like, you do your thing, I do my thing. Right.

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And I think there's kind of two flavors of this. One is you've got a spouse who has their own career or their own business and they're just running on their path and you're running on yours, which can actually be a very successful pairing as long as you both give each other space to go pursue both of your goals, which then both of you are achieving your best version of yourselves.

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And then as each of you levels up, you become more and more attracted to the other person because like your stock goes up and so does theirs. Cool. The other version of neutrality I see is that they will not detract. They will not interfere with you achieving your goals. Now, very different from supporting. They just won't get in the way. If you have to work, they say, OK.

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Now, they're not going to say, hey, honey, don't worry about it. I got it at home. I got the kids or I got the whatever is going on. Like, I got this. Go do what you got to do. Right. That's supportive. Neutral is understood. Right. I'll go figure out what I need to do in the meantime. And you can already guess where the next version of this is, right?

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Is supportive, which is not, they increase the likelihood that you hit your goals. That's how I define support, is that they take interest and they increase the likelihood that you hit whatever goal you set out to do. I think many people, some of you guys right now, if you're being honest with yourselves, if you were to answer the question,

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Does having this person in my life increase or decrease the likelihood that I have my goals? I think some of you might have a very tough, tough set of questions to have. So I'm going to give you five questions that I think are just destructive and just nuclear bombs. Number one, if someone tells you that you're a lot like your ex or your current, would you take that as a compliment?

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Think about it. Number two, would you allow your future kid to date someone like your spouse? Three, Were you able to unapologetically be yourself or do you have to act like someone else when you are with them? Four, do you like the real them, just their good side or the idea or potential of them? And then finally, while you are with them, are you fulfilled or are you simply less lonely?

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And so I think if you can think through those, Those are tough questions to answer. And I'll be clear. I think that every day, like sometimes there are moments where a relationship can get in the rocks. But I think what's interesting about this particular, this set of questions is that they zoom out a lot. It's would you want your kid to date someone like this?

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If many variables exist, many variables must be studied, right? If we think about your subjective well-being, so your happiness metric, the strongest correlate to that of all variables is the strength of your relation with your significant other. Believe me, this is about making money and not being happy. That's not my shtick. So I will stay to my lane.

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If someone describes you like them, would you take it as a compliment? That's usually going to take it into like their character, the behavior traits they do on a regular basis, right? Do you like the real them or the idea of them? Are you fulfilled or just lonely?

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The Number One Multiplier We've Seen In Businesses | Ep 812

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These are, I think, really good questions when we're thinking about this because I've been fortunate with Layla and by no means do I stand here on a pedestal. I want to be very clear. But she has made it more likely that I hit my goals. And fundamentally, the reason that I ended up marrying her was from that frame. And we actually got married. I probably won't go too much more to this.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

513.839

I don't want to talk about relationships very much. I had a, I had a, you call it a mindset coach. I think it's technically was an executive coach. I had an executive coach when I was like 26 or seven. And it was before Layla and I got married. And I said, I don't know if I want to be with this girl.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

528.386

It's not like, it's not like we have this like chemical fireworky chemistry, you know, relationship, but like, I think she's really cool. And I like her a lot. I like being around her. And I feel like I'm better when I'm with her. And he said, well, look at your stats. And so he just went, he went category by category. So he's like, how about, how about fitness? Are you working out?

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

547.713

And I was like, yeah, she goes to the gym. And so I, you know, basically if I don't want to go, I'll still go with her. It was like, okay, so you're working out more than you were on your own. I was like, yeah. He's like, okay. He's like, what about, what about food? Are you eating healthier? And I was like, yeah, she, she's actually, you know, she did a year of culinary school.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

561.502

She likes, you know, cooking for me. She likes baking. She likes doing all that stuff. And, but she's like in fitness. So she knows how to make like the kind of stuff that I want to eat. And he was like, That's great. Cool. He's like, okay, what about financially? He's like, does she spend a lot of money? I was like, no, actually she makes me money.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

579.651

She not only doesn't spend money, she makes me money and she helps me go make more money because she handles things that I would normally have to do so that I can go sell more. And he was like, okay. And so we just keep going down this list. And basically all my stats were up.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

594.372

And so that conversation was one of probably three moments in my life with Layla that I was like, huh, what if I use the frame of like, does this person help me become the person I want to be rather than do I have the butterfly tingles and fireworks, which is basically the litmus test that I used for every other relationship that I'd been in in my life.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

613.823

And the nice thing is, is that there's a lot of humans. And I think that it's kind of like mediocre employees where like the dangerous ones, Frank Slootman talked about this. He's like a serial multi-billion dollar CEO. He said, the thing that will destroy your company is B players, not C players. C players are obvious and everyone's happy to kick them out. A players are winners.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

632.15

He said it's the B players. They're good enough to not get fired. And they're really just along for the ride. And I think many people, myself included, have been stuck in B relationships with B players for extended periods of time. And maybe they don't. Now, maybe they don't have negative intentions. But when we ask the question, does it make it more likely?

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

653.993

that I have my goals with this person in my life? Is it more likely that I become the person that I want to become? Am I better as a result? If I had them rub off on me, do I see that as a compliment? Do I see that as a pro? And I think many of you guys want to succeed here. And I think many of you have a shackle around both of your feet and you're trying to run a marathon.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

676.479

And you're wondering why you can't run as fast as other people, but you're carrying this weight behind you, making it virtually impossible to run and compete.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

68.779

I do think that a significant part of that is whether your significant other helps you achieve your goals. And so the reason that this is so nasty is is that I have had people who came into our companies and were what I thought were going to be stars. And then their significant other derailed them. And the reason that I think it's so insidious is that it's not done out of malice.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

687.699

I know this one is as a tactical as what I normally talk about, but it's kind of one of those big picture things that the reason Layla and I brought it up is that when we looked at the people who have come into our company and then we only measured them based on the relationship and support they have with their spouse, it was a hundred percent. And that was why it was so freaky to me.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

705.89

Like we just went through couple after couple, after couple, after couple, and we could predict where they would end up. And what was interesting is that it didn't have a ton to do with where they started.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

715.456

So some people who are lower in the organization and had all-in spouses who were like, would wear gym launch gear, wear acquisition.com gear, even though they don't work at the company, they're like, whatever they need to do. And I've seen this on the husband's side and the wife's side, right?

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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Those people disproportionately perform compared to the opposite where you have a star who comes in, but then you meet the spouse, you meet the significant other, and it's like, ooh. And here's the thing, is that that person doesn't make you a worse runner, right? It just means that you have to use up so much of your energy on something that doesn't propel you forward.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

749.068

If you've got this weight around your ankle, you still have to be strong to run the race, arguably stronger just to compete as a normal person. The idea is that you're wasting a huge amount of your potential just managing this relationship so that you can do what you want to do with your life. And I think this has just been just a theme.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

766.121

And even, you know, I've met some of the school day winners and things like that. I get, you know, questions during the lunch and people are just asking more personal stuff. And I just see it as this theme. If you want, if you're like, Hey, I'm in, I'm in a B relationship. I do think I just have somebody who's along for the ride. If you want to not be a coward, let them go for two reasons.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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One, because what it says about you and the other is for what it does for them. One is you are a coward for being afraid of being alone rather than wanting what you believe you deserve. It's settling. And you will always know at the end of the night when you're in bed and you're looking up at the stars or the dark ceiling.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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And you'll know when they're asleep whether or not you feel like you are equally yoked. Do you feel like you are with someone who makes you who you want to be?

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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The second piece is that if you truly care about this person, which you claim to, I'm betting, then do you think it's fair to them that if they knew what you felt about them being a B player, that they would still want to be in a relationship with you? And don't you feel like you owe it to them to give them a chance to find somebody who does think that they're an A player for them?

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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And to be very clear, I don't think that these are actually intrinsic to the person. I think that dynamics between two people are very unique. I've had relationships in the past that were wonderful people, and I still hope the absolute best for them. I just wasn't the right person for them. And that's okay. And so I think that we need to raise the bar on ourselves and to be kind, not nice.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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Like being kind is maximizing the benefit of the other person, not supporting their feelings and getting agreement in the short term. It's very easy to get agreement. You just basically do whatever they say. But if you think that it's in their best interest that somebody else would love them better than you, then I think you owe it to them. I also think you owe it to yourself.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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I get what I call trade-off questions. which is like, hey, so how do I get my girlfriend to be into my work? It's never going to happen. Layla and I talked about business the first day for four hours. All she cared about was fitness marketing. When we talked, it's literally what we talked about. Talk about ads, funnels, offers, and conversion processes. That was our entire first day.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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We didn't talk about kids. We talked about anything. We just talked about that. And so it felt like it was just a business meeting. And I was like, well, that was fun. I was like, I didn't have to pretend to talk about something that I didn't care about. I was like, this was wonderful for me, right?

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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Instead of having to pretend for an hour over, you know, fro-yo that I give a shit about whatever you're doing, right? Much better. So if you're in that trade-off, like how do I, you're not going to, you're not going to. It's very unlikely. Unless you create some sort of rewarding stimulus that gets them to be addicted to work. Difficult, not impossible, but very difficult.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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And I think that's why it's so tricky is that let's say you have a tough day at work and you go home and your significant other says, ah, like, you know, enough about your day. Let's talk about my day. And, you know, here's a big bowl of ice cream or, hey, let's, you know, let's go out to dinner or, hey, let's go see friends. Right. Right. All of that seems well-intentioned.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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Second to that, you get the trade-offs of like, okay, well, I want to spend time with my kids. I want to spend time with my wife. How do I balance that with work? You just, you balance it. And that's fine. It's just understanding that you're going to make trades. Like if you worked every hour of every day, you'll probably do better than if you didn't. And that's okay.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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Because also it's relative to you, not relative to everyone. Jeff Bezos was married and had kids and then grew Amazon. Many of the richest people in the world are married and have lots of kids. Would you go as fast as you could if you spent all your time? No. Is it a trade-off you're willing to make? Probably. I think that's fine.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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I think a lot of people get in these trade-off questions, but where I think you get into issues is where you're making the trade, but you're not getting either. You're trading your goals and you're not getting the fulfillment. You're not getting the person that makes you better. You're not getting the person that you would feel like a compliment if someone were to describe you like them.

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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You're being with the person that you wouldn't want your kid to date. You're being with the person that only is there to keep you less lonely, but in no way makes you fulfilled. And I think that's where you get the worst of both. And that's what compromise means. You just get neither person goes as they want. And so I think some of you guys might have a hard conversation or two

The Game with Alex Hormozi

The Number One Multiplier We've Seen In Businesses | Ep 812

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And sometimes it could just be this simple conversation of being like, hey, I would like it if you increase the likelihood I have my goals. The way that you do that is in these three behaviors. And instead of this, do this. So if you want to give feedback, don't tell people to not do stuff. Tell them what to do instead. So under this condition, change your behavior in this way. It would help me.

The Game with Alex Hormozi

My New Book Is Coming

2.429

August 16th, 2025, 9 a.m. Pacific, 12 p.m. Eastern. Block your calendars. Expect fireworks. The next book in the $100 million series is coming out.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

Welcome back to the game. Today, I'm going to do something brand new that I'm really excited about. And this is a podcast first episode, which is a business critique. Something that I don't share as often as I probably should is that I spend a lot of my time looking at what significantly larger companies are doing and trying to think like, what can I do that they're doing to make money?

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

101.977

It's limited by the collective intelligence and experience and knowledge set of the people contained within it. Now, that means that in the beginning, if you're a smart entrepreneur, then you can bring a lot of things to the table. But over time, you can only really live one lifetime. You can only learn so many things.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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On their birthday. I think it's a brilliant idea on many, many levels. And obviously, the nice thing with underwear or something like that, it costs almost nothing. Now, the next thing is they get early access. So I see this as a speed or time delay thing. So they get early access. It's exclusive for new products and new drops.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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So some stuff that sells out fast because she has such a large audience, they get access to it as a member, which is great. Okay, now I'll give you one more and then I'll give you the kahuna. So the one more is they give a free gift after your fifth purchase. So they probably figured out, because they're smart people, that their churn was probably right after the fifth month.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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They give a bonus right before or after the churn point. Now, research typically suggests that you add this additional value prior to the churn point. And I think part of that is because if that's the churn point, like if that's the average churn, then there's people who are doing it before that, right? And so you want to capture before the churn point.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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In this instance, there's kind of this idea of trying to get someone to stay until after. I don't know, but I'll just say this. Wherever they gave the gift is likely right around the churn point, either right before or right after.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1074.56

And if you're not sure, at least having something around that point is probably going to benefit at least half the audience in terms of the people who are likely to churn. I'll just leave it there. So they have that. Now, here's the kahuna. All right, here's the big boy. And this is the one that I thought, I was like, I hadn't heard of this.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1087.368

Now, maybe some of you have heard of this, but I hadn't, which is they make the recurring membership skippable. All right, now hear me out. Now, some memberships say, yeah, you can skip this month, but they wove it into the membership and they're very deliberate about it. highlighting it, all right?

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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Now, the reason that I think this is so interesting is that because the nature of the subscription is that it is not, and people aren't trying to buy, I mean, maybe some people are trying to buy stuff every month, but a lot of people aren't. Between the first and the fifth of the month, they will then personalize a basket of things based on your preferences,

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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So they have a lead magnet, a Mondo lead magnet, which I'm obviously a Mondo fan of, which is to get more traffic to convert, rather than trying to get someone to buy immediately, they just say, hey, you know, they ask them like seven questions and then they ask for their contact information. So they ask, hey, you know, what type of stuff are you looking for? What colors do you like?

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1138.02

What size are you? And they kind of go through this questionnaire, right? And Then it finishes with, you know, asking for their information. And after you have that commitment and consistency bias, and you kind of, the sunk cost of your time, you're like, ah, screw it, I might as well create the account.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1150.989

But on top of that, they give a cookie right at the end for creating the account, which is they immediately give a discount on purchasing. So all of this is with the intention of obviously driving conversions. And so they give an immediate discount. And what do you think the likelihood of somebody who just selected, went through a seven question questionnaire, and has a discount is on buying?

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1165.242

Probably pretty decent, or at least higher than somebody who's cold. They collect this data up front, and then that allows them to personalize the shopping experience every month thereafter, in addition to whatever they're buying on a regular basis, right? And I'm sure they have some algorithm that weights those preferences. Now, back to the credit. So they...

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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Being able to attract people who can help you and sometimes partner, because sometimes the people who bring a lot to the table want a piece of the pie, and the best people often do, you need to be comfortable with that. And I think it's something that's going to be a really long time to make. And this is just like a great reminder. And so if you don't know, she partnered with LVMH.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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present this box of personalized goods, and they say, hey, would you like to buy some or all of these things? Now somebody can look at that box and pick and choose what they want, and then they can also take that credit and then buy other stuff. So you're not fixed to that box. It's almost like they give you an inspiration box to kind of like whet your appetite to buy stuff.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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And it's almost just like a reminder, hey, buy from us, hey, buy from us. But from a logic perspective, if you figure that you're going to buy from her at any point, right? Then you're probably going to want a discount.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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And so as long as you have the wherewithal to just hit skip every month, except for the months that you want to buy stuff, then you don't have to pay any more for being inside of this membership discount option. Now there's, but wait, there's more, there's one more thing. So what are we on? We're on like 10 bonuses that she has here. So here's bonus 11. All right.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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So bonus 11 is that she has a community and an app online where she shares exclusive content behind the scenes fashion shows to that hardcore following. She's actually combined in the element of community really thoughtfully into a physical product membership, which I still think is one of the most underutilized opportunities for any business owner, especially

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1245.519

physical product but like if your Thank You page or your email that has the product doesn't say hey by the way join our community where we have all these exclusive benefits most times you would pay to get the feedback that you get from a community right you would pay to get that kind of brand loyalty you'd pay to find out what customers want get feedback on how to make your products better be able to have a hot audience where you can pull things and get immediate feedback on your ad

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1268.83

on your marketing, on the products itself, design layouts, anything that you can think of, you can get that, and you can get it proactively. So valuable. And obviously, I think every business should have community, but she's leveraging it really well within this business. And they're smart business owners, which is why they're doing it.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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She's leveraged media, which obviously costs nothing to distribute, as yet another added benefit. And the cool part is if you skip, you still get the benefit. And so she has basically 11 benefits for being a member, and it's so beneficial that they add it on the checkout page. And underneath, from a disclosing perspective, I'll just read it to you.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1305.019

She says, After your first purchase, you'll be billed $59.95 each month to unlock a member credit and other rewards unless you skip the month between the 1st and the 5th. Member credits never expire, cancel any time, and then you can learn more. They never expire, which I'm sure is a...

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1319.088

is a legal thing, because she got dinged by regulators for that, which I won't get into regulators just creating alternative taxes for anybody who's just making more money. That is beyond the scope of this episode. But anyway, so they had those disclosures.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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And so LVMH is a conglomerate owned by Bernard Arnault, one of the richest men in the world, a sense of billionaire. And he's also, and I think this is unique, he's a sense of billionaire in a non-tech, non-technology sense of billionaire. And so he owns many brands,

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1336.559

And all in all, the big five that Rihanna did really well is that she partnered with someone who had already had the distribution, the retail knowledge, and the manufacturing knowledge.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1347.408

She picked a market that had a high CAGR, so compounded annual growth rate, and her messaging was aligned with it and authentic, which leads to third, is that she overnight built a 20-year brand, right, of positive sentiment that was, and she picked products that were authentic to her,

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1362.666

Fourth, she leveraged affiliates exceptionally well to create even more leverage on her brand and create a brand to affiliate kind of positive reinforcing loop and made it brand accretive for them. So it was actually a gift to their audiences to make this association rather than an ask. And so they got to associate with them.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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So they got to associate with her, they got to associate with LVMH, they got to associate with the Emmys, they got to associate with Hi-Fi Fashion.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1384.989

All of those things are brand new creative and she priced it in a way that I think catered to the vast majority of her audience and it was around a pain point that she well understood because she was a mom, she was pregnant, she did have different body sizes and her background is diverse and her audience is diverse and so she attracted affiliates to kind of hit each of those verticals.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1401.383

And then finally, I think she has a banging offer in what would otherwise be a very non-traditional membership structure, but she stacked this thing full of 11 bonuses and a really unique monetization model that I think we can all learn something from. is a Mozy Business Breakdown. Hope you guys enjoyed this.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1421.109

If you did, tag me, because I'm going to do more of these, because I actually really, I loved this. I loved making this for you guys. I think this is fun, taking the theories, making it practical. There's many things. I'm going to take some stuff from this business, especially from that stack of like, okay, what elements of community can I add in here? What...

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1437.597

Is there a way that I can add some sort of skippability to any of my memberships to increase the likelihood? Having some dramatic same day discount. So she gives them that discount and they don't get billed that 59 upfront. They get billed on the next month. So they get the discount today and they get the bill the month later. Basically paying someone to enter your continuity.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1457.668

Like a lot of really clever things and obviously she has some smart people on her team and that's why I think, well, between both of her brands, I think she did 600 million last year. Mama don't create a almost $3 billion brand without having some intelligent design. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

1490.596

Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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that you have heard of, so Louis Vuitton, Christian Dior, Givenchy, I think I always pronounce it wrong, Hennessy, Tiffany, and like a hundred other ones that you've heard of, right? Birkenstock, they actually bought. Moet, which is a champagne company. I think they have Dom Perignon. They have a bunch, right? They have a lot of stuff.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

167.89

The thing that they brought to the table, which basically enabled this from even being a thing, is that they brought brick and mortar distribution, number one. Number two, they brought retail and online sales experience. And then third, they brought manufacturing expertise globally. So they have 118 factories, they have 6,000 retail locations in aggregate.

The Game with Alex Hormozi

Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825

187.206

And so they know how to move product and they know how to create product. So basically click to close from thread to someone's hands, they're vertically integrated. They know how to do the whole thing. Rihanna trying to relearn that from day one was really unlikely.

The Game with Alex Hormozi

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But the fact that she was able to go from basically zero to a, right now I think it's valued at around $2.8 billion in two, three years, is just, gives testament to how much the value of having a good partner that manages your deficiencies is. I want to be clear. Somebody's either got to have money you don't have. They got to have time you don't have or some sort of experience that you don't have.

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And I would say I would put this kind of basis, some sort of experience or asset rather. Maybe I should alter that because I've always said money, time, experience. I might have to add asset to that list. I think I might have to add asset. Huh.

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What I want to do is break down Rihanna's Savage X Fenty. The big thing here is what is she doing that has created this massive wealth? So if you didn't know this, Rihanna's now worth $1.7 billion. And the vast majority of that is not from her music. It's actually from her companies. And so she has a skincare slash makeup line.

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there you go we discovered that live they they have one of those four things uh that they can bring and also lvmh brings a nice uh brand boost to because it's largely luxury goods and so that's a really good association for rihanna now the second big thing that i think that she did really well i thought this was really clever was that she serves a really good market so she picked a growing market in a number of different kind of categories

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So if we measure growing market by CAGR, so compounded annual growth rate, Loungewear is a 23% plus annual growth rate. So just to put that in context, if she just keeps the same market share, it would double in between four and five years. So like pretty impressive. So much faster than GDP growth at a nationwide level.

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So if your market's just stable, it's going to grow at GDP, which is, you know, 2% to 3%. Whereas here at 23%, you're talking double-digit, multi-double-digit growth rates. Now, lingerie, which is kind of, I think, the entry product, the wedge product that you started with, is a slower growth rate in a much smaller market. So, lingerie is about an $80 billion market.

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Activewear is just under $600 billion, it's $567 billion market. So much bigger in activewear, right? Versus lingerie, and so she got into both of those. But I think the real genius behind this, besides those obvious picks, is that she came into it, she was able to actually find a unique angle, which I thought was kind of interesting.

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I think a lot of celebrities who try to create their brands, sometimes they fall on flat ears because they're not authentic to the celebrity. It's clear that it's a money grab. Now, to be fair, I don't think there's any issue. I don't think people have a problem with people making money.

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I think people have a problem with people making money in a way that's not authentic to the brand that they grew to love, right? For her, she ran into a problem. So A16Z has this framework that I like a lot, which is that they want to find a founder who has lived with the problem for five to 10 years.

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And so Rihanna is a mixed ethnicity, and she's super diverse background, and she has a super diverse audience. And one of the things that she realized was that nudewear, or nude underwear, there was only one color of nude. And she was like, wait, there should be a color of nude for super pale girls and super dark-skinned girls, and everything in between. And so she came out with 40 shades of nude,

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And that was kind of like one of the big kind of pillars or brand builders that she was able to build this whole business on. She picked a growing marketplace. She picked a unique entry point. She found a pain point that she knew.

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From a pricing perspective, if we're following the $100 million offers framework, right, which is pain first, purchasing power second, she priced it at actually really, really good prices. And so I think this was a really smart strategic decision, which was probably a huge discussion.

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with LVMH, right, because they're obviously luxury, and she could have priced this higher, but I think it would have been a mistake brand-wise, and I think she did it beautifully.

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The next piece is easy to find, so this is the asset she brought to the table in her deal with LVMH, is that she has this massive audience globally, and so she could bring that distribution to the table so they were easy to find for that target avatar.

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And then finally, the growing, which I kind of covered first, she went after a marketplace that overall the demand for these types of products is going up year over year. So that's the second thing that I think she did really well. Now, the third thing is that she has a brand.

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And she has a lingerie slash activewear slash loungewear line, which she started. She's done a lot of really clever moves recently. that I think are worth breaking down. Notwithstanding, I think the most impressive one is actually her membership offer altogether. So let's dive in.

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Now, rather than just say, yeah, she has a brand, I think it's probably more relevant to talk about what she did differently to build her brand. So Rihanna has a gazillion followers across her channels, but I think SavageXFenty, what she did that was brilliant about it, she did a WhisperTea Shout launch, which is the same framework that I have in the $100 Million Leads book.

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And so she whispered it with just having one company that she was following, which she hadn't posted anything. So it was all this curiosity. And then when she teased it, she gave kind of an idea of what the product line was going to be about. And then obviously she made her shout component when she kind of officially released, you know, the first line.

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She's been platform specific with her content. She's made native content for each platform. So IG, she does way more aesthetic, hi-fi, high production. And the only BTS stuff, so behind the scenes stuff, is on Stories. YouTube stuff, she does more like try-ons and fashion shows, and so people kind of get to see it being used.

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And TikTok, she talks more about the product, more UGC stuff, more casual, right? And so she's very platform-specific with the types of content she's making on SavageXFenty for those platforms, which I think was wise. But I think it's also worth highlighting here that the corporate brand's significantly smaller than her personal brand, but it's catching up.

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And the reason it's catching up is that she's leveraged affiliates in a really big way, which is the fourth big thing that she did. So obviously leverage is a huge talking point for me at Acquisition.com. I think supply and demand and leverage are the two greatest forces in business. And so from a leverage perspective, leverage, big lever number one she did was she did the partnership, right?

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She got to tap into existing distribution, existing branding, existing manufacturing prowess, and existing retail and online sales knowledge. All of that she got to tap into day one, right? Now, what she brought to the table was obviously her initial boost of distribution. But what I think was really clever is that she didn't stop there.

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Thank you.

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then you bring in more champions. The best brand, in my opinion, in the world that leverages influencers is Nike. If you want to compete with Nike, it's like you've got to compete with LeBron. You've got to compete with Michael Jordan. You've got to compete with so many different huge, massive goat brands that other people don't.

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If you're just like, man, I'm an influencer and I have my own shorts, but I can't get them to grow. It's like, yeah, because it's just about you. And there's only going to be a certain amount of audience that's going to mess with you. Now, obviously, that can grow over time, but But what she did is like, she's got the Hadid sisters. So she's got Gigi and Bella Hadid.

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I think there's five things that I kind of identified that I thought are worthwhile for us as business owners to kind of examine. The first one is she partnered with somebody who basically managed all of her deficits. And I think this is something that took me way too long as a business owner to kind of like wrap my head around. I always wanted to do everything. I wanted 100% of the pie.

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So she's got supermodels, right? And they have a very specific look. She's got Demi Moore, an older, right? She's much older. Demi is like 60 plus, right? And she has a different look. And then you've got like Izzo, who's younger and has a different body shape, right? And then you've got Normani, who's also a different skin tone and look and feel.

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And so I could keep going on the list, but she has a lot of A-list celebrities that she was able to. Cindy Crawford, right? She brought in so many different age groups, different skin types, different beauty ideals. But I think the through line for all of them is that many of them are considered beautiful.

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And so whether or not you agree or not, one of the people on the list you might consider beautiful. And then that would be the brand's entry point to you. Her message around inclusion and body positivity, because she's obviously gone through her weight loss and gain with pregnancy, et cetera, was a relevant factor in both the product line and also the affiliates that she chose to associate with.

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And so what happens is there's this brand affiliate loop that gets created where the brand attracts certain influencers and affiliates who want to make that association. And then the affiliates then represent the brand and then reinforce, or obviously if you do it poorly, detract from the brand.

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And so there's this loop of the brand gets reinforced, it brings in more affiliates and influencers, which if you create correctly, get the right influencers in, and then that then reinforces the brand, and then the virtuous cycle continues.

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Some of the things that she did, and I think this is a highlightable thing before I get to the final portion, which is going to be about the offer itself, which I think was really brilliant, is that she tried to make it brand accretive, meaning she wanted all brands to benefit from the association. So what does that mean?

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So one, everyone benefits from the LVMH Association, which is probably one of the highest tiered brands out there in terms of luxury, right? It's super ultra premium. And so everyone benefits from that association. So that's number one.

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Number two is that because of the price point that she chose, because of the inclusive messaging, there's a wide percentage of the audience that would resonate with that. And so it wasn't an ask for, as hard of an ask rather, for her affiliates or influencers to make the association.

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And a bonus piece that she did, and this I thought was really, really classy, is that she put on these fashion shows with these influencers. And when she did that, like she did really hi-fi shows so much so that they actually got an Emmy award, right? And so this is brand accretive for everyone. Everyone wants an association with Emmy because the Emmy has status.

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Emmy is in itself a brand and that's an association that many, I mean, think about it. People want to win the award because they want the association. And so this is a way that they almost got to collectively win that association for everyone.

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And she made it easy for them from a tactical perspective, not only by curating the show, obviously she had help, but beyond that, the actual promotional materials, this is on a really tactical level, but she gives the images, she gives the links, she gives the banners, she gives the promotions, so that it's very easy for them to make the asks and the gives of their audience on a regular basis.

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But when I look at the wealthiest people in the world, none of them, like Mark Maron, none of them have 100% of their business. And so that's such an interesting lesson, like literally none of them have that.

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So I think she did that really, really masterfully, and it shows in the sales. They're doing hundreds of millions of dollars a year. Now, last piece, and this is the one that I was really excited to break down for you guys, because this is one that I'm, and maybe I'm not, maybe I'm not shopping for enough lingerie.

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She has a bonus stack of bonus stacks, and she did something really clever here, right? Which is that she took what would otherwise not be considered a recurring item, product, right? Most people are like, oh, you know what? I buy lingerie every month. I buy activewear every month. Maybe some people do, right?

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But the vast majority of people, if I were to say, you know, blank slate, hey, name a membership, right? The first thing that came to mind probably wouldn't be, you know, G-strings, right? And thongs, right? It'd probably be like my internet connection, my cell phone, right? My, you know, gym membership, whatever.

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Like these are traditional memberships, whereas this is a very non-traditional membership. And so she has done, first off, they emphasize the membership above everything else. If you look at the site, the button just says member add to bag. It basically assumes the close. And they do a price drop on the site where they show guest and then member and then first time guest or new member.

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excuse me, new member. And so it's like a 60% discount between guest and new member. So there's a giant incentive to take action that first day. I would bet that they're willing to lose money on that first transaction because they know what their LTV is. What are the other components that they made about this membership offer that make it unique?

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Okay, so number one, let me just tell, let me outline what the actual offer is. So it's 59.95 a month, so just under 60 bucks, and it's subscription, but it's subscription for credit.

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So rather than saying, oh, you're gonna get a box of stuff every month, it's you're gonna get a credit and then you can spend it on whatever you want, which is crazy, because basically this is just like a recurring subscription to buy stuff, right? Which is just like getting a gift card every month, functionally. But the question is, how is she getting so many people to take it?

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And this is where all the other benefits she's including are making this a compelling offer. Number one is that it's a discount. All right, so every member gets a discount on all products. That's not that uncommon, but it's up to 25%, so it's relatively significant.

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And so that means that if I have a business that I have 100% of, that it means that I'm fundamentally don't, I'm not capturing as many stallions as I otherwise could, helping achieve this big goal. Because I have this kind of working thesis on the, hypothetical maximum size of a business.

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To put that in context, I think like, I was clicking on her site, so it was like $12 and some change for some underwear, which then if you're a member, it's like $9.95, so it's $13 to $10. And then if you're, so that's 25% off, or that's more than, I think, 25% off, so pretty significant. Now, back to the bonuses. So number one is she's got the discount. Okay, cool.

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The next thing is that they have exclusive sales and offers only for people who are members. So they get even more discounts from that. Number three. they have free shipping on all orders over $59.95. And so if they use the entirety of the gift card or the credit that they got that month, it's free shipping. So that's another bonus.

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On top of that, so to reduce risk, remember, let's think through the value equation, right? You've got dream outcome, you've got perceived likelihood of achievement, which is reduction of risk, like the likelihood that they get what they actually want. We've got time delay, and then we've got effort and sacrifice, ease, convenience. If we're thinking through this, right?

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The free shipping is a dream outcome thing. It's actually... In some ways, I think people probably consider free shipping probably an ease thing more than anything. I don't know why, because free shipping is kind of like an amorphous, like it takes on, there's so much association with shipping costs, I won't get into it, but it definitely removes the negative.

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The next one is for reduction of risk, it's a 90-day fit guarantee. So probably traditional people, I probably should look it up, but I'm guessing it's 30 days. For members, it's 90. So the likelihood that you get what you want is super high. You got three months to return it. So that feels good. Now, on top of that, now, I'm not even getting to the big, the kahuna.

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The kahuna, I'm going to tell you in a second, all right? And it's the last one. The next one is they get a cross discount on her skincare line and her makeup line. So you get 15% off that as well.

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So that's one of the benefits when you start having conglomerates is that you can start off in cross-company promotions, which then just cross-sells customers, which is a great way to just make more money, right? It's basically being affiliate of one another. The next thing is that she gives an annual gift to everyone on their birthday, which I think is super clever.

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I talk about this, actually it hasn't come out in my emails yet, which if you're not subscribed to the email, you should be. It's a one minute read. They're literally just money making tactics. And so this one is, she's giving a gift at people's birthday month. And so what's really interesting about this is that People are in their peak emotional state.

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They're thinking about their last year, they're thinking about themselves a lot, like their birth month, their birth week, their birthday. I have obviously contrarian views on people who celebrate this a lot, but people do. If you give a gift in that moment, it's almost like you're a friend. Who gives people gifts on their birthday? Their friends.

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What more valuable position could you have in a prospect's mind than their friend? I think it's really, really clever. And of course, it's a reminder, and when are people going to spend money on themselves? On their birthdays. When is there a special occasion that someone might dress up in lingerie? On their birthdays. When do you think someone's going to start a new fitness routine?

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You want to present your offers at the point of greatest deprivation, not the point of greatest satisfaction. So if I walk into a restaurant and I'm starving and I say, I want a steak, I eat the steak, waiter comes back and they're like, how's the steak? And I'm like, oh, it was delicious. Thank you so much. They're like, great. You want another steak? I'm like, no, no, I'm good.

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What? You help who do soft skills?

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Okay, got it.

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So project-based isn't bad, right? You just need to demonstrate. So this is the concept of recurring versus reoccurring, right? And so if you go project to project, there's nothing wrong with that as long as you can demonstrate that you have a high renewal rate between those things.

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And so I'm, in general, I do like having kind of project-based stuff because typically you can price two to three times higher than you can for a subscription.

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And so you have usually way better cashflow because people are willing to commit to a certain amount for this period of time versus, you know, this forever, which is what a subscription feels like, even though realistically we know that it's not that, that, that case. So you want to get to a hundred million dollar subscription business. You have a $1.3 million non-subscription business.

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I would say, I don't think the limited to your business is the, So we'd have to dive a level deeper and say, like, what's stopping you from getting to 10 million with your current model? Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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It's breaking scaling into 10 stages and and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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yes is subscription already or that's the goal no it's the aim of this okay got it and you said you have whales yes and you have small companies smaller yes what percentage of companies are in either bucket revenue wise nowadays it's like 80 20 so the whales have are almost everyone every just do more whales okay i'm serious so how do you get whales

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Okay.

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Okay. HR, HR is a well. So recruiting. Yeah. Okay. Got it. So if you had twice the outbound team you have now with equal skill, would your business double? Yes. Great. So what stops you from doing that? You don't have a recruiter?

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Okay, so you have a bad recruiter.

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Okay. So hopefully this line of reasoning was fun for everyone, but that's what we have to work on. The rest of the stuff that we talked about is basically irrelevant, and you need to go get another recruiter who's good and can get you outbound, guys. Basically, my advice is to continue increasing the outbound team until you can't handle the sales anymore. Okay. That's it.

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And whales, and whales fundamentally, like it's not uncommon for them to be working on projects for just extend the terms. So if you, if you sign, you know, they're currently doing six month engagements, try to go for 12 or 18 month engagements. Okay. Does that make sense? Yes. Yeah. And that's, that, that's just as valuable.

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Like if you have like a five-year contract with a fortune 500, it's recurring as far as like an investor would be concerned. It's the same thing. Make sense? Yes. All right. Hopefully it's simpler.

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I have a great product that I would love to tell you about. Self-cracking.

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Are you doing installs or no?

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Sorry, I'm a bit nervous. Thanks. So you're 35, 65 referral versus meta. You did 48 customers per month. Yeah. The issue that you have 750, you want to get to 2.3.

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Interesting. Got it. Then who are the decision makers? Well, right now it's been primarily residential is what it sounds like.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1408.918

And if you made more money, you'd definitely be happier. Not necessarily. That was a joke. Okay. So you have a location, you're doing 750. What does it cost to open a location?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1420.899

Well, outside of real estate, what's the cost of outfit allocation?

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1449.346

Well, what's SDE? So seller discretionary earnings. So what do you make plus the profit of the business?

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1456.132

Each? No. Total? Yeah. You have 13% on 75. So another 100. So 200K on 750. Yeah. Okay. Got it. So whatever that's 20, 30, 30% ish margins. Okay. So you want to get to 2.3. Why 2.3? Because this is what we worked out for our build, like our practice. If we were at capacity... Okay, so that location can do 2.3 million. Okay. So the issue is we have to solve retaining customers.

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1484.854

Now, if you keep 50% of customers... Like if let's say you lose half your customers, you're one, but then after that, they stay forever. That's fine. We just have, we just like in next year, you'll double. If that isn't the case, then, and you lose half of those customers the next year and then half of those the next year kind of thing. I would see what we could do to improve that.

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1502.645

That being said, you're in a business that traditionally is marketing heavy, right? it's kind of like weight loss because like people get fixed and then they're like, yeah, deuces. So the, the strategy that I've seen that has worked really well in the chiro space is basically going significantly higher ticket, number one, and number two, niching down in terms of the different problems you solve.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1521.677

So this is like neuropathy, you know, diabetes stuff,

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1525.68

those types of like kind of segments yeah and having more targeted advertising for those avatars and selling significantly higher price packages and that's typically how those businesses will get to like a few hundred thousand dollars a month just with one like very small store and so typically that that model is a you run ads for some sort of free workshop free dinners free whatever pretty much how we did we built our business okay like because we really what's the ticket price that you're charging

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1552.207

it's different based on the we've done 50 customers a month and you're doing 60k so the the average is around like it depends because every plan is different for the client so we don't just give like a here's your plan no i know but if i just did simple math i'd say six thousand dollars a month 15 new customers average customer is 1200 bucks yeah okay so it's not the same model because i'm talking ten thousand dollars right does that make sense yeah more

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1577.777

Yeah. So I think you have to get niched down in terms of, so like if you're doing all those things, I think you probably need to add a zero to your price tag.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

16.51

They're like, oh, you don't like the steak? And I'm like, no, I love the steak. It was great. It just seems weird. That's where you get these weird sales conversations.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1603.451

So again, you're pretty close to three. If you keep half your customers.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1611.714

I mean, are there things that you could do to improve it? Sure. I think you have more of a model issue. Okay. Like you obviously can acquire customers and you're doing a decent enough job keeping them. If we need to improve how much money this thing makes, it's either a pricing thing. Basically, it's an offer and pricing thing is that you need to charge more so that you can make more money.

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163.877

Well, this is a fundamental change in business strategy. So you're aware of that. So with that comes risk because like if the, obviously the lowest or the highest risk adjusted return move or lowest risk, I guess, is to probably add in, like if I were like tomorrow, what would I do? I'd probably just add PPC in right now.

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1632.128

And then once you have the cashflow, then the expansion becomes pretty straightforward. That goes for basically everyone. Like a lot of times it's like, you know, we're doing 20% and you have what I would consider like a normal business. It makes money. We work hard, but there's no, like, you never feel like you really can like get ahead. Yeah.

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1648.831

It's usually because there's some significant hole in the business and you're decent at both sides. And I think that the issue is that you just need to be making way more money. Okay. which is, I think you need to add more. Do you sell physical products and consumables?

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1674.987

Yeah, so the key is there's two models that have worked really well. One is where you basically upsell them some sort of machine that they can take home and do other work. And there's a big markup on that. And the other is supplements.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1688.852

Because you can sell a year's worth of supplements or six months worth of supplements upfront, make a really good bit there, and it doesn't increase your operational drag at all. Because you just make the sale, give them the product. Does that make sense? Yeah.

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1701.554

That's what I would add in to justify the higher price so that you could make more money per customer, which will then make you more money overall, which then fixes the model, which then allows you to scale. Gotcha. Does that make sense? Yeah. Cool. Thank you. Rock and roll. All right. Thank you.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1759.249

Yeah. Well, it's definitely not at the end of the year. So you have four. So there's four places that you can do Ascension upsells. I'll walk through these. Okay. So these are kind of the spaces that you can do the upsells. And this is the order for your business.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1775.038

If you already sell something expensive up front, which I'm guessing is now the annual, then you can ignore... Well, I mean, honestly, no, I'm going to say it. So... You can immediately upsell people. Hey, now that you bought this thing, do you want to get something else? That's if you want fries with your Coke. So that's that type of upsell.

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1792.407

Now, if that's not the nature of the upsell that you have, then this is where you'd begin offering it. So you can ignore the first one and the other four will apply. Okay. So 24 to 48 hours, that's probably when you have some sort of onboarding call, right? Boarding. There you go. And so the best upsell that you can tag with this is more help with that thing you just bought.

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And so either that more help or better help. So that would be like a higher qualified coach. This is a master's level three coach. He only coaches people who are whatever. And so if you want, it sounds like you might be a good fit for that. Do you want me to set you up with a call there, right? So you can immediately ascend people who just bought.

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Number one, that'll also help you offset cash, bring up cash forward. The next one is when you have some sort of milestone. So they get up on their board for the first time or they do their first flip or whatever, you know, whatever big milestone that somebody might have, you know, within the first 30 or 60 days of being inside of your thing, right?

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because you already have something that's working on SEO, I would probably see how can I get way more articles written so that my SEO traffic can go up? Can I tackle more, you know, more keywords? That's like the for sure will work and make you more money play. The going after whales is, for sure can make more money because why not add zeros to things?

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At that point, you say, hey, we'd love to hop on a call. Let's see what else we can do to help you capitalize on the momentum. And that's when you say, cool, let's take this next level. So milestone, you know it's a milestone. For them, you're saying, let's capitalize on the momentum. Let's keep the party going.

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The halfway point is what we position as a feedback meeting, which is like, hey, we want to check in. We want to make sure that things are going all right. And the nice thing with the feedback meeting is that you have one of two options. So they're unhappy or they're happy. Here's the cool part. If you're unhappy, then it probably means that you need more help from us.

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So you should buy our other thing that has more help than the thing that you have. If you're happy, then if you like that, you're going to love this. Seriously. And then finally here, what's this last chance? So this is going to be the smallest percentage of sales. And so for many of you right now, this is where you try to do your ascensions.

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And the reason that you're not getting as many as you want is because you're waiting till here. That is literally the last chance. You've already lost most people. So there's these buying windows that occur for a customer. And you want to present your offers at the point of greatest deprivation, not value. I'll say it again.

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1916.583

You want to present your offers at the point of greatest deprivation, not the point of greatest satisfaction. So if I walk into a restaurant and I'm starving and I say, I want a steak, I eat the steak, waiter comes back and they're like, how's the steak? And I'm like, oh, it was delicious. Thank you so much. They're like, great. You want another steak? I'm like, no, no, I'm good.

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They're like, oh, you don't like the steak? And I'm like, no, I love the steak. It was great. And they're like, why don't you another steak? You're like, I'm good. I'm satisfied. It's, I'm fine. And they're like, well, then why don't you, you don't like my restaurant? What's wrong with you? Right. And all of a sudden it just seems weird. That's where you get these weird sales conversations.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

1946.89

But if I wanted to sell two steaks, when the person walks in the door, I'm like, are you starving? They're like, dude, I'm famished. I'm like, cool. You want two steaks? That's when you sell two steaks. Now, once I have a steak, I'm satisfied with my steak, but I have some deprivation around sweets. And so I'm going to be like, oh, how was the steak? It was delicious.

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Oh, you know what pairs really great with that? Our lovely flambe, right? Or I don't know what dessert name, ice cream and brownie. That's what goes well with this, right? You want one of those? Sure. You know what? I'll take two. So we want to make sure that we sell, and this is a huge misconception in the sales world, is that they're like, sell at the point of greatest value.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

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Sometimes the point of greatest value creates deprivation for the next goal. So if I solve your leads problem, I'm going to create your lead nurture problem. And so it makes sense to then sell the next thing at that point if the next thing I sell is lead nurture, not more leads. Does that make sense?

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2000.831

Okay. So for you right now, it's going to probably be an ascension where you can have the quality upsell that you can immediately do. And then you basically make the ask at these different occasions and it's open-handed. So it's like, hey, long-term, where do you see yourself? Cool. It sounds like you're ambitious. I think you might be a good fit. Can I set you up with, he's amazing.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2019.695

He's helped 17 people who look just like you accomplish what you want. You'll love him.

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It'll just be a completely different sale and you'll have two levels of sales. So sale number one is going to be for the affiliates and then figuring out what's going to make it worth it for them. And then the second level is what's the actual sale to the whale customer. So who's the decision maker with the whales?

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2028.297

You said it for the closer.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2037.148

So I, I get it. I've tried to skin this a hundred ways to Sunday and no, I have, I've tried every permutation of this and I've had everything work. Okay. So you just have different problems. You can have your kind of team of people who are doing the education get trained on kind of the upsell.

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2056.065

They're going to benefit from the fact they have more rapport, more trust, and they're going to talk to them more times where it's not a sales conversation. So that's one option. Second option, and this is my favorite of the options but requires somebody with more talent, is that you have one back-end sales guy.

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And that guy's positioned as the master coach or whatever, the master educator, the level 17. And so when they see that guy, he's so well positioned that he's like, hey, I'm checking in on the team. I want to make sure that they're doing a good job. How's everything going? Great. And then that guy has the positioning to just close everybody. And it doesn't feel weird.

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I have done the front end sales guy talks to you again, and I also still had that work, but it's a little bit more sales heavy. And so I would prefer if I were you, I would probably find if you have one guy who's like the best guy, what happens is you've got all these leads that funnel to front end closers, and then the people who do the delivery then funnel them to one guy.

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And so you only need like one given the fact that they're not working leads, they're working customers. So for you to actually book out somebody who's one guy, you're gonna be doing 20 million a year. Does that make sense?

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2148.36

Yeah, you bet.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2151.224

I know we talked about this. Dentist, yes. $3 million, 5% profit margins. You have five different ones. Three are part-time.

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Yeah, you're in Dallas. It's a 30-year-old business. It was inherited from your father.

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2164.416

Yep.

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2207.345

Yes. I don't think it's the train of your business. So number one is you're going to want to make sure that that time is the right time for them. And we ask questions like, is there anything that will possibly get in the way of you showing up for your meeting? And so we call this an integrity tie down.

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But so you just want bigger homeowners.

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2225.942

And so after you get a time slot, you want to ask that right afterwards because it shakes them out of their mind. For whatever reason, it works. So I could come up with some narrative for it, but it works.

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Number two is, I think I mentioned this yesterday, but I think it might be worth considering pulling up appointments to basically, can we bring them up sooner so that we have increased shop rates? The next one is, let's see here. You want to make sure that you have automated reminders, which you probably do. But then you want to have manual reminders on top of that.

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So if you have, I would have an office iPhone and you want to send manual text at three times. So you want to send the manual text at 24 hours. So basically think night before. Second text is going to be morning of. And then the third text is going to be 60 to 90 minutes prior. Basically when they have to like get your shit together, get in the car.

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2278.039

Mm-hmm. And those are manual. So you want those to be blue iPhone messages if possible. Now, ideally, we like to have some sort of selection that they pick that we've like some cost we have incurred. So this works exceptionally well for brick and mortar. So I'm sharing it with you. And so in the gym space, obviously, like we'd say, hey, Sharon, I've got this shirt. Tell me what size you're at.

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2301.71

And I'll pull it aside for you. And so when you come here, I'll give it to you. Or it's like, do you want red or do you want blue? Like just do some sort of AB ask for them. And so it could be as simple as like, you're going to pull, I mean, because it's a dentist office, right? And so you're like, okay, what can I give them? Well, I always get free shit when I go to the dentist's office.

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And so just like have them pick the free stuff that you put in their goodie bag. And then I would send them a picture with their name on it so that they're like, oh man, they incurred this cost just for me. I have to show up now, right? So that's another one. The, okay, we got that.

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Because you're having the issue because someone books and like six months later is they're cleaning or whatever, right? That's the problem here.

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2357.397

I think you're reminding too far out. Okay. Like if I schedule an appointment on Saturday, Monday morning is a different universe for me.

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2365.976

No, I'm just being like super real. And so I think, I think a lot of people are that way. And so all of the manual reminders are like, if you want to, like I use the automated ones for the far out, like, Hey, you're seven days away. Hey, you're three days away. Okay. But I would have the ones that you're putting the real effort in 24 morning and right before.

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2385.151

And then have the incentive, have the personalization. And I will bet you dollars to donuts that that on its own would work.

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2392.877

No, you bet.

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242.404

So both of them were architects that sent you these.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2444.201

Okay. How do you acquire questions right now?

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2446.789

primarily meta so it's all paid ads yeah okay so all paid ads and you're running to what a webinar 2k webinar okay are you are you have a low ticket offer for the webinar are you charging like something as like a self-liquidating offer on the front free webinar no never done a self-liquidating okay so free webinar on the front end you have a two thousand dollar offer okay then what two thousand dollars or 12 month payment plan for two hundred dollars a month which is why our aov is like nine dollars got it

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247.446

Okay, yeah. So you're going to have to go B2B outreach. Basically, when you look at core four, that's going to be what you're going to do. And then they're going to be your affiliates. And so the million-dollar question is, what's in it for them? So my...

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2491.789

That's why I'm here. Yeah, no, your ascension rate is too low. You will probably have to bring the sales team in-house if you want to really fix it. It's very hard to influence the team. You'll want the ascension to be integrated into the onboarding. And so you sell the $2,000 thing. You have your onboarding call.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

2508.059

The onboarding call, the finish of the onboarding call is they set their goal setting call.

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2513.482

with what would become a setter and then that setter sets for a closer so they actually get three calls so they have webinar buy they have an actual onboarding call because you want them like you want to make sure you deliver one-on-one or that's a group one event you can do well you can start with uh uh group you can start with group and then you will make more money if you go to one-on-one it is more ops but like we actually did this and i have a video that breaks down everything that you need to know

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2541.001

Okay, yeah. And so one-on-one is better, but if you're going to start, start with the group. And their way of getting off the call, like saying like, okay, you're dismissed, is that you show me that you have confirmed your booking with your next call. So that way you have 100% through line to the next. Now they're customers, so they're going to show up. The goal setting call basically sifts

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for who like what's your goal cool what's that basically just do another sales call again and then you push people into the ones you can afford it that makes sense into a closed call with basically an invitation to join something that has more help or work associated yes okay great you'll probably need to get third-party financing in place oh yeah for the for the sales calls Yeah. And front end.

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2585.429

Like you should definitely have some BNPL options. So buy now, pay later. You should probably have a few.

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2591.534

Yeah. Also with the webinar, I would recommend split testing the first five minutes. So retest two or three different intros and look at LTV. That will make you money. But the biggest issue is that you're upselling 7%. Like you need to be at, you want to be at at least 25 and you should shoot for 50.

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You need to hire one person, really good sales director. And then you hire six recruiting firms that do sales and say, I need 10 guys from each of you. And you can get a 60 person team in four, like two weeks.

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proposition would be so there's three ways you can do affiliates at least you know in the world of alex so you have they sell you for you and they and they get a commission that's option one that's typically my least favorite option but it is an option option two is that you give them some morsel of something that you sell that they can sell for a hundred percent markup they could keep all the money but you get the introduction this is my favorite way of doing it the third way is that you basically

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We just added 40 guys in two weeks to one of our companies. You just paid a bunch of... If we're doing that kind of volume, we're just going to go to somebody who has a big network of people. That's their full-time business recruiting sales guys. So it's like, great. These are requirements. Go get them. And I'm willing to pay for the speed.

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And you can also negotiate if you're doing multiple, like the same of multiple. So it's like, hey, normally it's 10 grand per head, but I'm going to buy 20 from you. So I'll do it for five. So you pay 100 grand, all of a sudden you have an apartment.

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Realistically, if you spend less, you will typically... ROAS will increase, typically. YouTube's not that way, though. Kind of random. The more you spend, the more profitable it gets. It's wild. Yeah, it's the shit. Anyways, but all that to say, if you have a cash flow issue right now, it's self-inflicted. You can just spend less and improve the returns, but your CAC is appropriate.

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$1,500 to acquire a customer in that space.

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Yeah, it's like you're not going to get below $1,000. And so this is a backend issue. Like you just have to increase the ascension rate and that's it.

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2725.999

You bet. Awesome. Okay. Okay.

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allow them to just bundle in your free thing with their services. Now with architecture firms, it's not like they're going to bundle in a railing for their service, but just for everybody else. Like those are the three things. So it's like they bundle your, your basically your lead magnet in for free with their thing they sell. So it makes, it enhances the value of their overall package.

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We wanted them to be stupid to say no. Yeah, because like the generic, like you get 20% kickback. It's just like everyone does it. Like who here does 20% kickbacks for anybody who refers you business? You can raise your hand. I'm not going to be upset. Okay. And so the point is, is that, and you probably no one here has referred anyone else business. And it's because no one cares.

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348.538

That's, that's kind of the point. And so it has to be an irresistible offer. And so if we give away the lead magnet or something, think about it as like my CAC, for a $50,000 customer is the cost of the lead magnet. And if I close one out of three introductions, then it's three x the cost of lead magnet is my cost to acquire a customer, which is usually pretty darn good.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

369.469

But it sounds like an irresistible offer to the architecture firm because they're like, we can just sell this and keep 100%. You're like, yep, just make the introduction and I'll deliver that. And then when you talk to the customer, you're like, yeah, I'll deliver that. Here's one rail, but you need 10 more. And then you make the sale. Does that make sense?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

388.44

Okay. It's not like you can just, like, I can't just ship you a sample and be like, Hey, look, here's a, then you're going to have to do the commission based structure, which is not my favorite, but that's probably the way you're going to have to do it. So either you can do the discount. I mean, I would say, guys, I have 20% that I can play with here.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

402.406

So you can take all 20 and give them no discount. You can take a 10% discount and then they get, and then you get 10% kickback. Like, this is what I got. I'll make it work whatever way you want, but this is my bare bottom price. Okay. And I think that's what, like, that's the outbound strategy.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

421.106

Yeah, I love that. Okay. Thank you. Love that for you.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

445.135

Gross. What's net?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

447.637

Okay. Got it. Do you want to sell it or do you just want to keep it forever? Well-

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

457.883

So are you the platform? Yes. Okay. So you're the platform and how many tuck-ins have they done?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

463.047

Got it. How long has it been since they started?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

474.056

Yeah. Got it. Okay. So sorry. Go back to the original question. If I have like better context on this, whatever.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

493.358

Well, the question is, is that the constraint? Is that the thing that's limiting the growth of the business?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

507.966

And is everyone insurance-based?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

512.15

So you're the only guy selling just new roofs. Everyone else is doing storm chasing and damage repair and shit like that?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

530.266

Centralized sales virtually. Right. So you want an irresistible roof offer. I'm going to blow the roof off. I feel like if I were in your position, the first thing that I would do would be centralize everything first without trying to change. Basically, I would take the model that I already know works. What was your revenue before you were acquired? Okay, you're doing 20.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

549.466

So I would like, in terms of introducing levels of change, so this is actually pretty good for everybody, like... I will typically not try and change like five things at once. And so you centralizing all sales is going to get cost efficiency improvements and you're going to be able to have a higher sales utilization.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

564.975

So you probably cut off the bottom third of the sales force that's low performing. That alone might give you a 25% lift in general because you're The best sales guys will take more of the sales and you'll have centralized all the costs like we have centralized all the costs, right? And so you'll have an increase in revenue and a decrease in cost that's paired. That would probably be my first step.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

585.411

Part of the acquisition deal, that's the only way I did the acquisition is if they were going to give me full control and centralize all the sales.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

590.136

So, but like, I wouldn't, I mean... I know the question was about roofing, but like, that's what I would do first. And that will probably take you six months or more, realistically. In terms of the offer to roofs, an offer that's worked really well in home services is instead of being a money back guarantee, I position it as a profit guarantee.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

609.087

So it's like, listen, you want your thing to be on time and on budget, probably. And so I guarantee that I will deliver it on time and on budget, or I'll give you my profit, which is 20%. And that way it's like you're not underwater and you still have 40% gross margin. So you're not really losing on the deal. But then people are like, okay, so he's got skin in the game.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

61.774

So where did you source the single whale this year?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

628.184

And so that's a way of closing significantly more deals because the two biggest obstacles that, well, you would know this, but in most home services, it's on time, on budget. And probably for roofs, it's like, and how much am I going to be displaced? How much is it going to interrupt my life? And so I would put my guarantee around those items and then just have a marginal amount that's back.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

646.275

But it's really just because all they don't. So the big thing that just with guarantees is that people don't want their money back. They want the roof. And so they just want to know that you care enough to make sure the roof gets delivered. And so that's really the solve for the guarantee is it just pays down risk of them not getting what they want.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

661.805

And so as long as that gets accomplished, you don't have to do with money back. You can just do it with some money back that gets them to say yes. Does that help?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

68.115

Okay. So SEO or PPC?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

683.294

Okay. And you say tools like software?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

70.556

Okay.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

701.101

Now the issue here is. What's the split between the three in terms of revenue?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

712.881

And the brand side is you basically being an agent to do- Exactly, connecting at both.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

78.368

So if you want to go whale hunting, then I think your initial thought strategy of finding the architectural firms and engineering firms and whatnot is a good one. I would probably try the outreach method as my primary way because you can be hyper-targeted in terms of who you're reaching out to. And the key to making it work, though, is what's in it for them to refer you to business?

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

825.679

Okay.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

828.399

Sure.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

833.24

Okay. So switch to a subscription. Switch to a subscription. Yeah. Okay.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

840.548

Right, and it's free to sign up, and you only get paid if they get paid. Yeah. So you're in a prosumer audience. So if you look at Shopify, for example, if you look at the amount of people who've tried to build marketplaces, almost all of them fail. And it's my opinion that the best marketplaces do run as SaaS. And then once they get to scale, they can kind of push more marketplace.

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Make Your Offer So Good They Feel Dumb Saying No | Ep 884

865.787

So like Shopify, for example, like it's 29 bucks a month or whatever it is, because they know that the vast majority, like they make more money charging $29 a month than getting 4% on zero for the vast majority of stores. But people continue to pay for the hope that someday they will make money. And so I think the idea of switching to SaaS is not a bad one.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

885.463

I am concerned about the four businesses that you have. Because in order to win at SaaS, you have to be all in on software. And so the alternative to that would be instead of letting creators come on for free, you would charge them to come on, which you could do. It has a one-time setup fee and then maybe increase the likelihood that they win. Either path would work.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

909.181

But if the ultimate goal is that you want to build a network of creators, then you want to have the lowest barrier possible on the creator side.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

925.191

Yeah. Yeah. You'll have to play with the feature set because that's always a bitch. Yeah.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

934.362

Yeah, so I think adding the subscription for the base and then still maintaining the revenue that you get from the sponsors makes sense. I would maybe push back slightly on the hypothesis that they can't convert anything because it dramatically decreases the value of the network from the sponsor side.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

951.287

Because some people will pay for impressions.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

953.868

And so... Those guys can for sure deliver those. And so maybe there's like two tiers that you can sell. You have another product on the ad side or the media side. That's just something to consider.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

969.388

No, I think it makes sense. Basically, you have to position as higher ticket and do premium awake level onboarding and then select only for the really good creators. And that would be like you charge $5,000 or $10,000 and you really get them set up.

The Game with Alex Hormozi

Make Your Offer So Good They Feel Dumb Saying No | Ep 884

980.97

Or you basically flip the other way, go freemium, and then it's all based on basically media arbitrage where you're just running tons and tons of ads to get people onto the platform and you just know what your average revenue per platform user is.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1.465

So like if you guys take anything from me when it comes to advertising stuff, demonstration, demonstration, and the third rule is demonstration. Like you describing something with your words is so much less powerful than just showing it. And so if he says, hey, I'm going to talk about this guy, like click in, share screen, pull the guy up, show the group. It's such a visual platform anyways.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1012.805

Okay. 2.3 vision conversion churn. Okay. Nothing really pops out. Obviously the, I think our average right now is 4%. So it's a little bit lower, but I think it's because what we're talking about, we're just, you're not, you're not getting the benefit of all the school traffic because it's not meant to. And like, that's one of the biggest benefits of being on schools that we send you traffic to.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1030.671

So I would, I would consider like, I would show it to people who don't know anything about Neville Goddard. How can I explain who this guy is in three sentences for everybody else? Cause basically like the edification that occurs there is very like, this guy's a big deal. This guy's my grandfather. And then you're going to learn lessons that he learned from somebody.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1051.04

It's like, it's, it's very like two, three steps removed. And so we need to make sure it's rock solid, make sure that we prioritize cold. Okay. So right now is all the conversion being done on the page or is there calls or what?

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1083.14

Do you push for annual on the webinar?

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1086.081

Yeah, I would push for annual if you guys are going to do webinars. I do think that doing the webinar is a good idea. And so I would repeat that. So if you guys do a webinar once a month or every other week, I think that would be a good idea.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1119.266

So basically, so you can't do the same webinar. So what you would do is it'd probably be like 80-20 in terms of the structure. So the first 80 is going to be more or less, that's going to be the content. And then you're just going to have your CTA at the end. I talk about this with people who have free communities. Run your weekly webinar where you teach something that's valuable, whatever.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1140.683

And then you make your soft toss to the paid side. If you're running like a true perfect webinar, something like that, I think that would get... You can't really repeat that unless you're going to new traffic. Now, I will say this. His YouTube channel is bringing in new traffic all the time.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1155.91

And so you could conceivably just run only to people who are opted in the last 14 days and have a much smaller webinar. And in that case, you could repeat the same webinar over and over again. If I were a smart cookie, what I would do is I would probably do a webinar... for all new only every seven days. And then twice a month, I would do one to the whole list.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1178.221

And then the new one to the whole list would be more like content-driven, soft CTA. The other one is just the RAM rod. It's the thing that you know converts.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

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Hey, if you're brand new here, I've got an onboarding webinar that I can take you through that'll give you all the fundamentals and get you up to speed. So if you don't know who Neville Goddard is, you don't know who this is, you don't know what this is, you don't know what this is, I can get you up to speed in the fastest way possible and I'll be live with you.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1207.277

And if you have been around and you've been like, ah, you've been on the fence, you've been like, you know, you've been lurking, then get over there, you know, get over to the community and, you know, we'd love to see you and here's a free gift. which is a lead magnet. Sweet.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1221.067

So what was the convert? Like how many people showed up? What was the conversion?

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1241.763

So a hundred out of a thousand who started.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1245.367

You got 10%. Okay.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1252.673

So 140. That sounds a little lower than you'd want given the price point. So I would have expected the fact that it's warm audience and $60 as a price point. I think I would have been targeting something closer to 20% for something like that. Maybe 25 to follow up. I do think that you guys should just basically go for... go for the annual and your churn is 18.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1277.175

So call it, you know, five times monthly. So it's a 59, right? Yeah. So 60 bucks times five. So $300, I think the, make the annual, uh,

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1288.32

300 or more so 300 or 400 399 whatever um and then add in some spicy bonuses that only annuals get which you'll be able to explain on the webinar he'll certainly like it more if he gets paid you know a bunch up front because if you had if you had a hundred and they all paid 400 make 40 grand i feel like he'd be like that was fun we should do that again right yeah Right.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1310.906

So I think that, and obviously churn on annuals is going to be significantly lower.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1342.984

Yeah, and just add in one or two key bonuses that only people who are year-long people get. And I would just say like, and this is the benefit of committing, right? Like the biggest issue that you've had, like if I were trying to sell this, I would say some to the degree of, you've probably been wishy-washy for a lot of stuff in your life. You haven't been able to commit.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1361.955

You've been on the fence, right? Like I think maybe the reason that you're on this call today is because you haven't been able to pull the trigger. And so maybe the first step towards living the life that you want to live is taking action. is actually making commitment and saying, I'm actually going to change my year.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

137.304

I'm going to answer that fourth question first, and then we'll dive into the way that I would normally approach this. So this goes for everybody. I don't know if you know this, but inside of this lovely book, the last chapter is on naming. And inside of the naming, we talk about having rotating seasonal, basically deadlines. It actually might be in the urgency chapter.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1375.244

I don't need to wait till January to change my life and just waste the rest of this year. Is that what you're going to do? You're going to waste the next 10 months because it's not January 1st? Next nine months, next eight months? Of course not. You can start now. You can change your life in a second.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1387.111

And I would demonstrate it by saying, listen, who here believes that you can change your life in an instant? Some of you guys don't believe me. I'll prove it to you. Right now, go drink a bottle of Johnny Walker, right? Get in your car and drive. You absolutely can change your life in an instant. And so the thing is, is you believe the negative, but you don't believe the positive.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1403.298

This is if I wanted to pretend to be woo woo, right? Which I'm not. But if I wanted to pretend to be, this is how I'd sell it, right? The positive is just as believable. It's just that you plant the seeds now and then the tree grows later. You can cut a tree down much faster than you can grow it. And the best day to plant a tree was 20 years ago. Second best days right now.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1419.105

So that's probably how I'd position getting people to commit and getting people to take action. Okay. So annual plus bonus, you're doing that. That'll help cashflow. I'm guessing you guys aren't thinking of doing ads yet, correct?

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1430.955

No, that's good. Master this. I think it's a good idea.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1434.258

So let's scroll back to conversion. So from a conversion perspective, the webinar is the primary conversion vehicle you have. And then you obviously have the page there. The to and change percent, I think the changes to the VSL would be the things, I think the way you position the guarantee, the way I outlined, those things would be helpful.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1453.773

Putting more meat in it, making it position like a trial, explaining more about the success rate, adding benefits to each of the features so that people understand what this is even about, because it's very vague. Like a lot of the words are right, but there's, it's like, it has the framework of a VSL, but it doesn't have the thing about like a Christmas tree where you hang ornaments.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1472.067

It has the, it has the structure. It just doesn't have the ornaments on it. All right. So we talked about the urgency thing. We talked about traffic. So you want to talk about conversion? I'm sorry. I'm sorry. Ascension.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1487.7

All right. So then what, so what Ascension, where are we talking about Ascension wise?

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

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I've already got it. Make this the benefit that people get for doing annual subscription. So when you sign up for the annual, the first thing we're going to do is run you through a 30-day self-challenge. And this is an entirely custom program. Let me show you the proof. People bought this for $300. They bought it. It's done. Look at all this proof.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

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I'm going to give it to you for free just when you become a member because I want you to succeed long-term. Savage, right? That's cool.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1584.86

But it's just a lot of... Dude, you want to have that rotating promotional thing, the new 30-day accelerator? That's the new wrapper you put for every annual promotion.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1596.008

Yeah. So listen, guys, you got two options. You can just pay for the 30 days for $300 or you can pay $300 for the year and get it for free and get everything else. It's up to you. Yeah. Of course, everyone's going to take the annual.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1617.262

I mean, you should try to up to everybody to annual. I mean, annual has lower term period. You'll get more committed people, et cetera, et cetera. You'll get cashflow in advance, which is helpful. But beyond that, the conversion. So there's, there's, okay. I want to make sure that I'm, I'm, I'm, I'm tracking.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

162.575

But basically, I like to think about things as a fraternity party planner. So that means that every month there's always a reason, right? And so like, you know, my buddy got his wisdom teeth taken out, therefore we should drink. So that's what fraternity party planners, they're like, oh, I guess we shouldn't party tonight. because I guess there's nothing special.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1631.554

So the ascension you're talking about is just from these 30 day things that are one time into the membership, correct? Yeah.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1652.597

Yeah, I think the play that I just outlined is the one that I'll convert on a regular basis. And then all you have to do now, this is the point that I was talking about with the naming thing, right? Is that just wrap it into a season. The structure of the challenge is going to be the same. Just wrap it into a different season.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1668.149

And you seem skeptical, so I'm going to break the belief for everybody else who's on here. So in a gym, I marketed the same fish, same pond, very tiny pond. what is my actual delivery going to be? You're going to stop eating shit and you're going to move. This is like, this will not change, right? Like I have classes and I have meal plans. That's what I have.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1686.785

And so how do I make this sound new and interesting? And so for 30 days, basically what we're going to talk about for the challenge or for the 28 day transformation, it's the same thing for weight loss, the same exact shit, right? What we're doing is we're just putting a word in front of it. So it could be fall, it could be spring, it could be season, it could be the reason why, whatever it is.

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Demonstrate, Don't Describe | Ep 850

1705.694

You know, if, you know, if COVID had been going on, it'd be like, get, get out of that, you know, get out of the house, get into your head or whatever. Like you just, you just put a little ism in front of it. And then all you have to do is basically swap the first video or first onboarding thing that makes it contextual to whatever the, you know, the promo was.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

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And then everything else after that is still going to be like, you're going to have a meal plan and you're going to work out.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

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I do that for everybody else too, just so you know. I was just doing it for everybody else too.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

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If they want to do it in May, then one of the benefits is if I run a future challenge, you also get to participate in that for free.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1777.378

We're using the challenges as perpetual conversion. You're like, how do I ascend? This is your conversion mechanism. And you run an AB offer, 300 one time, 300 annual, and you get everything else unlimited. It's a decoy offer.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

179.602

Like there's always something special. It's someone's birthday. It's the business's anniversary. It's the founder's milestone for something he did, you know, a year earlier when he started his YouTube channel. It's a milestone for how many people he hit on his subscriber base. It's the first of spring. It's Easter. It's Halloween. It's go back to school. It's new year, new me.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1792.823

Sweet. Okay, so that's the ascension piece. You feel okay there? Okay, so that ascension thing also tackles churn to a large degree. Because if you got half of your group to ascend, then your churn will cut in half, virtually. Are you guys doing onboarding of any kind right now?

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1818.02

Great. Well, I think what would make sense there too is like with the 15-minute onboarding, you can give them a script to sell the $300 or $400 annual. Then they'll have a reason to do it and they'll get a commission. So that way you have multiple conversion mechanisms. So you have one on the onboarding call. You also have that, you know, one that you're sporadically doing to the whole community.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1836.672

And you can say if you buy right now, you can get it for 300. If you buy it any other time, it's 400. So that's our little incentive to get you going.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1849.927

Yeah, it works.

The Game with Alex Hormozi

Demonstrate, Don't Describe | Ep 850

1895.325

I would try to get very clear on the problem that people are trying to solve. So one of the things, like the reason that I had, like it said success rate 93%, to me, I'm like, I don't know what that means. Like success or what?

The Game with Alex Hormozi

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And so I think one of the really nice things that I like that Jack does, I don't know if you guys watched that, but like he had people say like, what's the one automation you want help with, right? And I think asking people like, what's the one obstacle that you're dealing with? What's the belief that you want to have broken?

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right and i think that if you could use that then we can take this very uh amorphous deliverable and make it more tangible and if you want to get if you want to if you want to cross over to the side of hermosi in the in the world of pragmatism you could even say what are you doing that you want to stop doing or what do you want to start doing that you're not doing that's it just very simple what behavior do you want to change

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It's either going to stop or it's going to start. You stop a bad thing, you start a good thing. And I think if people got really concrete, then what would happen is that you would frame the value of the community based on the value of changing that behavior permanently. That is a significantly more valuable thing than like the secrets of the past.

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Like if you tell someone I can help you quit smoking, the value of the community is going to be relative to quitting smoking to that person, which might be significantly more valuable.

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The more levels of translation someone has to do between the messaging and their problem, the lower your conversion is going to be because you're basically asking them to chew the food and digest it for them when really you need to chew it. They're little baby birds and you got to feed it right into their mouth pre-chewed. You need to do the thinking for them.

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So I think it's actually like you will be able to probably change less about your actual deliverable and change two core things. One is that you're very clear about the problem that they're trying to solve. And number two, the path that they need to follow to solve it. So on that onboarding call, I would say you're trying to quit smoking. That's amazing.

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Like there's always a reason that you can come up with in order to justify giving people some sort of incentive, uh, to take the next action. All right. That being said, I like big picture from a continuous basis, as much as I just explained that whole thing, do I think it matters? No.

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You demonstrating the actual thing. I mean, AI Jack, if you've seen that whole thing, like I think a big reason why he gets a huge amount over is because of the demonstration that he's doing by doing the share screens. Let's, let's rip. Why don't you, why don't you tell everybody real quick? What's, what's the group? Give it a, give it a, give it a 60 second. Who do you help? How do you help them?

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So obviously we can't promise anything because we can't do it. You can, but what I can do is I can walk you through a path that'll help you kind of like, look, there's, there's a ton of stuff in here and I don't want you to feel overwhelmed. No more than recent people cancel, right? It's just do this. Just do this and then post when you're done.

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Yeah. You need a meta frame. That's what I'm saying. There's no meat. Like it's, it's a lot of ancient secrets, but like, there's no, there's no meat. There's no framework that this is based on. And so the way that I would think through this, this is why I'm a big behavior change guy, right? Which is that fundamentally, there are things that you were doing that you don't like that you do.

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There are things that you want to start doing that you're not doing. And whether your goal is that you're trying to lose weight, whether you're trying to get the girl, whether you're trying to start a business, fundamentally, it's always going to boil down to what you're doing, right?

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Now, if I wanted to go woo-woo, which I wouldn't, but if I did, then I would be like, all that starts between your ears. Like you literally cannot move your body without it starting in your brain. And so that's where we start. All right. Now, that being said, this can be really amorphous. And so I want to make this very concrete.

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When you apply or when you submit your information, I want you to put down the thing that you want to start or stop. There's going to be two sides. And I'd like you to do both. And the reason for that is that you cannot start doing something without making room for it. And that's one of the number one reasons that people fail is that they try to add something to an already full plate.

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It doesn't work. So we have to take something out in order to put in the types of behaviors that you want. And so we have to have both. It's almost like this is compelling. That's because I don't do manifestation shit. I'm saying this with love.

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behaviors that they don't want to do what they do want to do shift the identity like that's actually it and we can just apply it like that can be the focus that can be the meat and then it can apply it to whatever it is i'm gonna give you the meat of how to do personal development that will get you to know the secrets of harmony people i hope people i don't think it'd be you alex but fundamentally we want to we want to hit on that as the core thing and then what you want to do is explain how it applies to different scenarios

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And then, and then again, we chunk up to once. And the reason this is so, so valuable is that once you know how to change your behavior, what are you going to like? This is why I like future pacing a little bit. So be like, what do you want to, once you, once you lose the weight, what are you going to do? You don't, you're going to want to get the job, right?

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Once you get the job, you lose the weight. What do you want to do? You want to get the girl. Right. Like there's always going to be other behaviors. There's always going to be new mountains that you have to climb. But you have to learn how to climb to begin with first. And so there's a there's a Haitian proverb.

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This is before they were eating cats and dogs that behind mountains are more mountains. And so it's just a great it's just a great visual for the idea of like you had you can only see the mountain in front of you. But once you get to the top of that mountain, you will be able to see more mountains because you have the perspective to see them. Right. And so we have to master climbing.

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So like whenever you have some of these kind of like deadlines, in my opinion, a lot of what you do is you just pull forward demand. So people who would have probably otherwise bought in a month, just buy now. And so does it necessarily, like there's this very famous case study in the U S with GMC, which is a big car manufacturer here.

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And so I would probably if I was making this VSL, I would probably do it as some sort of analogy like climbing a mountain, like something that that could translate. That's much more tangible that people can kind of hold on to. And so the idea is once I teach you how to climb, then you can climb whatever mountains you want.

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But we'll start with the mountain that you need to start climbing first because we've got to solve that. So let's solve that. Let's get you out of pain. Let's get you, you know, stop being confused, stop being overwhelmed and just boil this down to the things you need to change in your life. The things you got to start, the things you got to stop. Period. And that's what we're going to focus on.

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And when you start, if you join annual, the first 30 days that we're going to do is just me to kick this one thing. Obviously, you can do it on your own and I'll make a whole plan for you. Or my recommendation, this is what the people who have the most success do, is just start with the Kickstarter. You've struggled to commit in the past. Make this be the first.

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You draw on the line in the sand and say, today's the day I'm going to change. You've had many opportunities in the past. You haven't done it.

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I'll be real with you. Mr. Elmer, I don't mean this as an insult. The reason I don't like the woo-woo world is because it's so... And I just want reality. And so I think that if he focuses on clarifying his language so that people can understand it, because I think there's a little bit of mysticism that not a little bit, a lot of mysticism that gets appealed to and mysticism is misunderstood.

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People don't get it. And so I think that actually you'll lose conversion because people don't know what we're talking about. Now, I'll bet you if he has the following that he does, he does have elements in there that people are able to hold on to. It's just not being translated in the market material that I saw. Does that make sense? So this isn't me dissing him.

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I'm just saying like, it's me watching that. It had the structure of a VSL. It just didn't have the meat. Because all that I heard was basically like the fundamental argument, like we boil everything down. Guys, I'd recommend you doing this. Everybody's listening. You have to boil down the core arguments. Like, what is the argument that I'm making?

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The core argument that I heard is my grandfather knew some secrets. He passed those secrets on to me. I have two expensive cars. And therefore, I know these secrets. I also went to prison and am no longer in prison. That to me, and the only reason because of that is these secrets. That was the argument. To me, okay. But like, I would want more to the argument. I think we got what we need. Okay.

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I'll do a little recap because I think other people are probably taking notes. I'll recap my stuff. So on YouTube, first comment slash pinned. Make sure that the CTA is integrated first third. Do that via demonstration. I would do that with share screens when you're pulling up the specific stories. Talk about the tactics this person employed and the support they were able to get.

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Success rate in the VSL needs to be defined. What does success actually mean so that someone actually can internalize it? Translate all the features into benefits of what that actually means. Add the meat of some sort of framework that is getting applied rather than just generic secrets. The guarantee should be positioned as a trial. And I think it would convert a lot better.

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And there was a while some of the older people who are listening to this might remember this, where they ran this thing called the employee discount, which is basically they sold cars at the same price to the public as they do to their employees. And it was like the biggest success of like of all time. Comma.

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The copy on the about page should be basically translated into something that works for cold. Because if it works for cold, it'll work for warm. The webinar cadence, I think implementing that. So you do one live webinar only for new people every week. That'll maximize conversion.

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The primary offer being annual and the benefit, the bonus of being annual is the 30-day kickstart that you guys run at the beginning, which you have proof that you have charged $300. And from a rotational perspective of doing the other two times a month where you hit the whole list up,

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On those ones, you just basically hit on the season of basically whatever the seasonal flavor is, and that'll keep it relatively fresh, but you're still 80, 20, 80% value, 20% ask on the internal launches. The external ones, you can do kind of a more structured pitch. For the onboarding calls that you guys are doing, I would give a little commission and I would make that 300 and I make annual 400.

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So any other time besides today, you said you want an urgency on the onboarding call. I'll give you 50 bucks off or I'll give you a hundred dollars off if you choose to do it now. And with that, I'll be able to toss you in, you know, at the next cohort starts in seven days. Let's get you going.

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Well, right now your churn, your LTV right now is a little above 300. So we don't want to trade. We don't want to trade. We don't want to lose money on the annual. So the right price should be, I can do the math, whatever. What is it?

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Yeah. So $59.99, right? Divided by 0.18. So $333 is your actual LTV. So anything below that, you lose money. So I would say let's go $399 as the offer. And then when they're on the call, you're going to send people at $350 or $349, something like that.

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Happy to help. And hopefully if you were in the chat, if that was helpful for y'all, throw some fire emojis so that I can feed the hole that is my soul that seeks outside approval so that I can feel better about myself. Dude, I manifested these fire chats.

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You bet. Just to everybody who's in the woo-woo world, I met with a founder this weekend who wanted us to invest in the business. And I spent three hours with him and he started the conversation by saying like, it's really all about mindset. And he just, he didn't know what he was getting into. And three hours later, he walked out like he was drunk. He was like, I don't know what just happened.

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He's like, I think you just destroyed everything beautiful in the world. And I was like, or you're just incredibly free now. If anyone can define mindset, I'm thrilled to hear what you think it is because people use the word left and right and no one knows what it means.

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I don't even know what mindset is.

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And then they realized that all they did was as soon as they stopped running it and they looked at the next four months, their sales offset and they just pulled forward four months of sales, basically. And so they were like, okay, well that didn't work and they no longer run their promotion, right?

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I'll walk you through the logical proof that I walked this founder through. Change in mindset, no change in behavior equals nothing, right? Change in mindset, change in behavior equals something. No change in mindset, change in behavior equals something. Which variable doesn't matter?

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If you can define change in mindset, I'm all ears. But as soon as you try to define it, what you're going to do is you're going to describe a behavior. In which case, change in behavior.

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No, not even. No, not even. Let me say it differently. How would I know a change in mindset had occurred?

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Which is why I don't appeal to mysticism or magic.

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In the observable universe... What will I have changed? Now, if you're like, I believe in psychic powers and that's amazing. And I wish you the best. But when people are like, I manifested my husband, you might've decided that you wanted to have a spouse. And then as a result of that, you then started working out and you started like going out more.

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And I would argue that you working out and going out more because we got the husband, not you standing in your shower doing this. Because if we take the equal opposite, just do the thinking, don't do the doing and see what happens. You guys, I know, I know, I know everybody who's, who's in here was not, was, you know, you didn't come for a, for a, for a Hermosy personal development talk.

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But I say this as somebody who like, this is like, I want to, I want to put this in context. When I was younger, I believed so heavily in this stuff that I believed I could move things with my mind. If I just, if I just ascended to a high enough fucking frequency, I thought I could do it. And so it's not that it's not that I, I like have always cast the side.

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It was that when I saw that nothing in my life changed, despite me thinking really fucking hard about stuff that I was like, I must be missing something here. And so I read self-help after self-help after self-help book. And then this is when I had my job before I quit. And I was like, my life, I remember there's the 10th book that I read. I was like, my life is the same.

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And so then I changed my perspective. Now you might say, that's what happened. It was the change in perspective. Well, I had already changed my perspective a bunch and nothing fucking happened before that. What really happened was I said, okay, from here on out, I will not read another book until I do the things that are in the book from an action perspective.

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and so again i think in a local marketplace sometimes it's helpful to have it as a little bit of a wrapper for like why you're advertising something in a paid ads perspective but since you guys are organic for the most part the platforms are generate are bringing in new demand on a regular basis and so simply making the offer available to a new audience will typically be good enough and on the on the return audience it's just reminding them it's reminding them that you exist reminding them that this offer exists and not kind of shying away from it i think

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And then when I started doing the things and not reading new books is when my life changed, which is when I became an absolute advocate for doing shit rather than thinking about doing shit.

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And I see Jamie in there like, what's really tough about this, where you see things like law of attraction, is that unfortunately, many people who are in positions of power say words that other people nod their heads to and sound good, but mean nothing. So like law of attraction has been repeated so many times that people think it's a law. It's a movie made by direct response marketers.

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And obviously a really good one. from a compelling and persuasion perspective, because the meat in that story is this law. And boy, does it sound better to just attract stuff than go out and get it. So it's, in my opinion, it's selling a victim frame. It's selling that things happen to you rather than you happening to them. And I would prefer to live my life as source.

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Like I am the world's consequence. not the other way around. And there's a great little analogy that I heard a rabbi say recently. He said, there are people who are thermometers and there are people who are thermostats. Some people just have the temperature, they react to the temperature. Other people change the temperature of the room. I would prefer it to be cause.

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And for me, at least, it has served me well. which is why I'm an advocate for it. Now, if you like the manifestation stuff, by all means, if you're listening to this, then do it. Like, I promise you it makes no difference in my life. I wish you the best. I want you to win. I really, I really genuinely mean that. I want you to win. And if that's what makes you feel good, then do it.

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But if you have tried that stuff and it hasn't worked for you, then consider just changing your behavior anyways. And there was a very long period of my life where I didn't feel like I deserved success. Now, a lot of people would say you have to change your mindset about that.

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But what actually changed my mind was realizing that I could do stuff that successful people did, not deserve it, and get it anyways. And so I always identified, like this is real, I identified as the villain I identified as the oppressor when I watched stories, when I watched movies. When something bad happens, I'm like, well, what did they do? I'm like, they did something to deserve this shit.

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I've always thought that. And because of that, it actually was something that I was like, man, I don't know if I'm a good person. I don't know. I don't know if I deserve success. These guilts, these shames, things that I would carry with me. But the thing is, is that all that stuff kept me very handicapped.

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And so when I realized that I could just do the stuff and not deserve success and get it anyways, all of a sudden I just started doing things and then things started happening. And so the whole deservingness got thrown out the window because I was like, who gives a shit? I don't have to deserve it. I don't have to vibrate at a certain frequency. And I'll prove it.

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I can vibrate at a super low frequency. And if I make a hundred calls and you don't, I'll fucking sell more shit than you. All right. And with that, go manifest your destinies. I'll see you later. Bye.

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Like taking your CTA seriously, but not too seriously. I think it's the goal. So sometimes you've probably seen these YouTube channels that like two minute long CTAs. It's like, dude, this is too much. Like this is going to kill the video. On the flip side, if you barely say anything about it at all, it's like, it doesn't, they don't think you're taking it seriously.

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So they don't take it seriously. So I think it's being like very purposeful, like 15 seconds. And I'm going to really explain what this is. You should take, you know, go do it. 15 to 30 would be my max for the CTAs that are in video. All right, so that's the urgency piece. Let's start from the way I would normally do this, which is where customer's coming from. It's YouTube, so let's pull that up.

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So he's doing a video every two or three days. Great, okay, so he's got some volume. Do you know how he's picking his topics?

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His own spin. I would recommend the same. So, I mean, that's obviously he's not on the call, so I won't spend too much time on this because you don't have as much control over it. Can you just click into one of those videos just so I can so I can look at the actual video itself? Click in, I'm just gonna look for CTAs, pause real quick. Okay, so right above the fold, so that's good.

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Let's see, does he have first comment? Scroll down. Okay, so opportunity there is that you should own the first comment because you'll probably change the description on a regular basis. So that's kind of tactic number one. First comment. Let's make sure that we have that. And if you're first comment and you're the person, then you almost always get upvoted. So you can do that or you can pin it.

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Either of those would work and you will get clicks from it. So I can promise you that. Okay, so that's number one. Get my book on Amazon. Connect with me on Instagram. Self-describer. Okay, that's fine. Do you know where the CTAs normally are?

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Oh, no, no, in video.

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So I would recommend because I didn't see it when he just when Kirby just went through that. But I think it would be massive for you guys. And this goes for everyone. If you're doing any kind of video content is demonstration. So like if you guys take anything from me when it comes to advertising stuff, demonstration, demonstration. And the third rule is demonstration.

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Like you describing something with your words is so much less powerful than just showing it. And so if he says, hey, I'm going to talk about this guy, like click in, share screen, pull the guy up, show the group. Like it's such it's such a visual platform anyways. You demonstrating the actual thing.

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I mean, AI Jack, if you've seen that whole thing, like I think a big reason why he gets a huge amount over is because of the demonstration that he's doing by doing the share screens. So that's that's number three. Okay.

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I'm not going to talk more about it besides make sure that it's in the first third because you're just going to get probably double as many people who are going to see the CTA versus putting it kind of near the end. So share screen demonstration. All right. So now everyone clicks over. So let's follow the click path.

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Uh-huh. Uh-huh. And maybe school will have something like that coming in the future. It might. I don't know. I don't know. You know, your guess is as good as mine. That would kill the game for us. It's actually probably not as good as mine. Let's watch this thing. We can watch it at 2x. It'll take us two and a half minutes and I think it's worth it.

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Are you personal development?

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Okay, cool.

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Must be nice. Must be nice.

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Well, let's start with, so what are the features of the offer?

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So a couple of things. Number one, success rate is very broad. Like, I don't know what it means. And so I think that if you were to define that a little bit clearer, it would probably do a little better. The second thing is I would want to make sure that the guarantee is described in a better way.

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And so I would probably copy word for word the script that's right here inside of the offers book that I have for a satisfaction guarantee. which is like, and to be clear, I'm not asking you to say yes or no today. I'm just asking you to make a fully informed decision. That's it. And the only way you can do that is by doing it on the inside, not the outside. So get on the inside.

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And if you see if everything's what we say right now, it's true and it's valuable to you, then if it is, then that's when you decided to keep it. If not, no hard feelings. You will then, after clicking the link and following through, be able to make a fully informed decision if this isn't for you.

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But you can't make this decision right now for the same reason that you don't buy a house without first looking inside of it. And just know this, whether it's five minutes from now or five days from now, if you're not happy, we're not happy, right? And so for any reason whatsoever, you want your money back, you can get it back because I only keep your money if you're happy, right?

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And he can put his manifestation stuff on top of that. All you have to do is just go to XYZ or just message me and just say, hey, give my money back or I'm good, I want to leave. And you got it. And in short order, we'll send it right back to you. And we can only make that kind of guarantee because we're confident that what we have is the real deal.

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And I'm fairly confident when you sign up, you're going to get exactly what you need to insert benefits. The thing is, is we want to position like what makes a guarantee stronger is positioning it like a trial. So I would include that. There's two more things that I think are missing or could potentially enhance this. In my opinion, it's a little too blind bullet.

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And so if you're listening, you're like, what does that even mean? It's like I fail to get the meat. Like I want to have I want to have a belief broken. And as of right now, that doesn't. So and the belief breaking is say what they believe, say why it's wrong, say what's right, provide proof. Right. And that's the four step framework for just kind of breaking two or three beliefs that he can do.

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He mentions pain at the beginning, but not like the belief that potentially led to that pain. I, you know, you know, my beliefs on manifestation. So I'll just I'll keep this purely to the marketing. But I would want to have a little bit more meat there so that I have something to kind of hold on to.

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And then the last thing is there's a lot of featuring features, but I would love to hear like what the benefit of that feature is for each of those things. So it's like I do three calls a week. It's like so that you won't get stuck. And if you have questions about your specific circumstance, we can actually just tailor it to you in real time.

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And it's like, oh, okay, now I understand why three calls a week. Otherwise, like, who cares, right? And so I would describe that in more detail. And the courses that we have, they're purposely designed to be self-study so that you can do it at your own pace. So if you're somebody who's like, I want to go all in, I want to zoom really fast, you can do that.

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But if you're somebody who's like, you're working nine to five and you just have an hour a day or 30 minutes a day or 30 minutes a week even, you can do it and you won't feel like you're getting behind, right? And so that way, we do it that way and people seem to like it, right?

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And so it's just like, we just want to translate those things to make it more compelling so that they know why this even matters, right? Okay, so that's the VSL. Let's pull the page up and we'll talk about the lead magnet thing too in a second. So there's two videos. Okay, I don't want to watch the second one, but let me just see what it is. Okay, let's do the next click over.

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I'm guessing is that other video just proof?

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Okay, got it. Okay, got it. Claim these bonuses if you join before February 31st. Is it a leap year this year? There's definitely no February 31st ever.

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Yeah, okay. One-on-one coaching with a head coach. Ongoing one-on-one DM support. Welcome to the world. This is a simulation. I want to teach you how to become the person you truly want using techniques, okay? Same mindset shift step. Okay, here's what you get. I don't know anything about this guy, Neville Goddard. So maybe people who are coming know who this guy is, but I have no idea.

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Yeah, understood. So I'll say this. So I make all marketing, and this is just a rule for everybody. I make marketing as though no one knows anything. Because if it can convert cold, it'll convert warm. But if it can only convert warm, it won't convert cold. Subset, superset. Does that make sense? And so I always structure it that way.

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And I think this is actually a big mistake that a lot of especially organic creators make is they treat every video like they're talking to their audience. But the whole point of the video is to reach new audience. So we have to not make it feel like it's an inside joke.

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want people who on the outside so they can as quickly as possible understand what's going on so they can make a purchasing decision just big picture all right so i'm not going to spend too much more time to like i could i could work on the about page but i'm guessing why don't you show me the other funnel that you guys are sending your traffic to because the links though are sending to school though are you just right there yeah right now we're testing it yeah okay got it well then why don't you show me the other funnel and what metrics do you have right now behind the scenes for the conversion so that's the dashboard

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I'll put it on the screen for anyone to see.

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There's also something in that entrepreneurs don't go into starting a company with the belief that their hypothesis is wrong. So in year one or seven months in, when they realize that their initial hypothesis was wrong, they think that means abandon ship because my hypothesis was wrong.

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Whereas successful entrepreneurs that I've met, especially second time founders, realize that their hypothesis is almost certainly wrong from the jump. And that the process of starting is to correct and to find a new hypothesis. I think about Mark Zuckerberg in his room with FaceSwap or whatever, was rating people's attractiveness. And now Meta is this virtual reality AI company.

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But understanding that your hypothesis is wrong from the jump, and that this is a process of finding a new hypothesis, I think will give you a little bit more patience as well through these cycles of... the crisis of meaning and so on.

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Well, this is it. When I started my first business at 18 years old called War Park, social network, whatever, I thought the game was to be right. I came to learn from businesses that came after that actually the game of entrepreneurship is to be successful. And they're two very different things. To win. Yeah.

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Because when you want to be right, you not only want to be CEO and you want your hypothesis that you put in that first pitch deck to come true. And even when customers are telling you that you were wrong, you try and force the fucking hypothesis. Yeah. But when your game is to be successful, there's a couple of really interesting things that I observe happen.

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One of them is you, I watch founders say, actually, maybe I'm not the best person to be CEO.

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Even though I founded this thing, maybe I should be chief brand officer. When I think about some of the top companies in the UK represent just valued at 100 million, Gymshark, Ben's business valued at 1.5 billion, Julian's business probably valued at a billion. I'm involved in some of these businesses in different ways.

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But the thing they all have in common is that some early point, the founder put their ego secondary to the success of the business. They said, actually, I'm not the best CEO. I should be head of brand or marketing. A product, right. A product or whatever it is.

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And that's that mindset shift from being, I need to be right and I need to be at the helm of being right versus this thing needs to be successful.

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One of my favorite videos of all time is where Steve Jobs, who you just mentioned, talks about hiring truly exceptional people. And he says words to the effect, I'll play it on screen. He says, people think the success of Apple is a consequence of me and my talent and my skills.

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But what I've actually done is I've built my career, quote, on hiring truly exceptional people, doing the extremely hard work of finding them and hiring them. And this crazy thing happens when you do that is it propagates. I a players then want to work with a players. They also hire a players and it spreads. I think it was this video.

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I've built a lot of my success off Finding these truly gifted people and not settling for B and C players, but really going for the A players. And I found something. I found that when you get enough A players together, when you go through the incredible work to find five of these A players, they really like working with each other because they've never had a chance to do that before.

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And they don't want to work with B and C players, and so it becomes self-policing. And they only want to hire more A players. And so you build up these pockets of A players, and it propagates.

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It's so interesting to see your journey through that and how you ended up at skill acquisition because as you went through, there was three things that I was thinking about and I managed to write them down. The first at the top of it was you detailed three reasons why hiring the exceptional person when you're faced with that paradox of what do I do with my profits? It makes so much sense.

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One of the big things I hear from founders that they don't appreciate is... To go for a long period of time, you have to have some kind of emotional regulation. And as you were talking about the different levels of business and every level you have more problems, what I often see is a young founder hasn't hired those levels in between to deal with all those different types of problems.

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And they are like burning out and thinking of quitting. I had someone in my office last week and she's on the route to build about a $50 million business this year. And the first question I said to her was, what's your executive team? And she just like rolls her eyes and she's like, I don't have an executive team.

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She'd done a post on social media, basically in tears saying that she was going to quit. She's got a 30 to $50 million business. It's growing like wildfire, but she's about to almost quit it because she's dealing with every single problem.

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And often founders say to me, they think because they're experiencing so much hardship in that like one to three million phase, that forever it's going to be just huge pain. And I talk to them about this thing I call the promised land. I love this. Because in the first two, three years of my business, I thought that forever I'm going to have to deal with every fucking problem.

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Jenny in the office is pissed off at Dave. And on Saturday night when they were drunk, they did something which they shouldn't have had enough. And I realized the problem was I hadn't solved for hiring these levels. So everything was coming to me. And the emotional toll on my nervous system of dealing with every problem was not sustainable. And then I accidentally hired someone good.

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Katie, who I mentioned. And then she dealt with all this. And then I could think again as a founder. So I wanted to just give a moment to that and your thoughts on that.

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The other really interesting thing, as you were talking about your friend who was doing blogs and missed YouTube, was the idea that our success traps, the old innovators dilemma, that success traps us in the past. So your friend probably missed YouTube because he didn't want to reallocate headcount. to something that was working and paying the bills.

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And this, I guess, ties into your point about failure being so unbelievably important because what me and you both do right now is going to get old. And we probably both watched the people that came before us fade into irrelevance. Look at these dinosaurs. And we're part of some kind of new school of content creation, but we're going to become part of the old school if we don't... Yeah.

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What's in that gap?

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On the car example you were talking about with the flyers, what I was thinking is so many businesses try and win on the game of creativity. So we'll create something more creative and appealing as an advert. And I see this in my portfolio because they'll send me something and they'll go, Steve, one particular business I'm thinking about.

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A major national supermarket has given us a display slot in 400 supermarkets. Which display should we use? And they'll say to me, this one or this one. And I remember replying to them and saying, I don't know. And you don't know. But here's the system to find out.

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We're going to create 100 displays and we're going to run them as ads on Facebook or we're going to create some kind of environment where we're not going to try and win on being the best creative guesses. We're going to win on our rate of experimentation.

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We're going to conduct more experiments. And I think this is a real shift in so many regards, because especially if we've gone through university and we've been trained as a copywriter, we have the old problem of wanting to be right, not successful. And being able to, as a creative, even as a podcaster, say,

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I don't know what the right answer is, but I'm going to create a system where our rate of experimentation is going to be so much higher than our competitors that we're going to stumble across the right answer more than they do is a shift in thinking.

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I mean, amen. It's our whole philosophy. So it's so wonderful to hear that. And I didn't realize that you'd done that with the book.

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When people look at you, Alex, you're a guy that knows a lot about a lot. And one of the questions that I often get as well is, I need a mentor. People, kids will come up to you and say, I'm sure they say it all the time. Will you be my mentor?

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Do mentors matter?

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Can you get that now for free?

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That's right.

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Parrots versus practitioners. This is an idea that I've thought about a lot over the years because I look at someone like you and I can tell, based on everything you say today, that you are a practitioner. In this analogy, what I call a parrot is someone who hears what Alex said and then starts saying it.

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But your lessons and wisdom have come from going through that shit and being able to distill the essence like Richard Fryman and then share it. there is a group of people that just spend their whole life reading books, posting about it, et cetera. They never take the jump. Parrots versus practitioners. Is the best way to learn being a practitioner?

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And business is the same.

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It was from Brian Chesky. I actually messaged him about it after.

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It's so timely because it weaves into something you said earlier, because my girlfriend came to the recording yesterday. And as I went into the green room and I sat down, she went, babe, look, I found this new app. And I said, what is it? She goes, it's an app that summarizes books. And it's called like Head Something. And she showed me it. And I go, look at my book.

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Because I know the laws, I know the chapters, I know all of the principles that lead up to the point. So show me my book. And law two, my book's called 33 Laws, so it's these 33 laws. I got it, yeah. And law two is about the Richard Freiman technique you talked about.

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And I explain why that process of learning something, simplifying it to its essence for a 10-year-old, teaching it to someone else, if they understand it, move on. If they don't, go back to the top and learn again. And it summarized law two of my book, like writing is the best way to learn.

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And I said, babe, if you just read that summary, the top of the pyramid, and you don't have the story and all these agreeable foundations, which I then explained to her, would you be able to then translate that and truly understand the nature of the problem so that you could apply it to lots of different settings and so on?

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And then I told her what that second line in my book actually meant, and she deleted the app. Because there's no point knowing the conclusion.

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Yeah, like the punchline when you don't know the story. And without the story, you can't, I guess, get to the first principles of the thing.

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Another point for founders who are getting their work copied. Because everything you've just said actually should give a founder who's having their work copied, their t-shirt designs, their content copied, huge amount of peace.

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Because if I need to know steps one, two, three, four, five, up the staircase to success to be able to predict step six, then if someone's just copying your step five, you should be at total peace because they don't know. Yeah. the foundations that would lead to the next step. And that's what we see as podcasters. Podcasters copy you, they'll copy your thumbnail, your title, your whatever.

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But the piece that I have is, honestly, I say to the team all the time, if that's the thing that makes us special, we're fucked anyway. Like if it's the thumbnail or the this or the how we do this, if it's the trailer that made us special, we're fucked anyway. But also there's a set of principles. We call it the iceberg. The 99% of what we do, you can't see. It's the culture, as you said.

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Amen. I have nothing more to add. The last thing I want to talk to you about is, it's really like a three-part thing. It's hard work, love, and happiness. And I put them together intentionally. One could say work-life balance, love, happiness. I think these things are kind of fundamentally intertwined. But how do you think about it? You're someone that's known as being very obsessive.

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um very into your work to say the least um you have a wonderful partner who seems to be aligned i know oh super okay good she's hardcore so let's go through it work-life balance hard work love and happiness okay if we start with work-life balance there's that shit question beliefs on it yeah

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The goal clearly for you then is the hard work itself and not a certain place you're trying to get to necessarily.

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Yeah.

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There's so much there. There's so much there, but it's such an important point. So where shall I start? So at that moment here, this crisis of meaning moment, what I see so much of is entrepreneurs not necessarily quitting the old thing, but just taking on something else. And I get...

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Earlier on when we were talking about... Sorry that was a long rant. No, it was beautiful. So a couple of takeaways from it. But earlier on we were talking about being a great content creator is a byproduct of having the courage to be yourself. And from that, everything you just said... My soliloquy. Yeah, I also gleaned something similar, which is...

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Being happy requires the same thing, which is the courage to be yourself. And in both, in the previous analogy, you said everybody is unique and that is their value as it relates to showing up in marketing or with whatever product they have. But also...

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When I think about Alex's story, your story, and all you went through with your father and the early experiences and that consultancy firm, the gym, the fur place you worked, logically, from first principles, the thing that's going to make you happy, because you are completely unique, is going to be completely different from everybody else.

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Like, to varying degrees, depending on how you're sort of defining your early experiences are, but I actually think we talked about the courage of being...

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yourself there's also the courage of being happy and with the courage of being happy you have to withstand public pressure the shoulds you said from your parents whatever from social media especially as you become a bigger creator to actually just listen to how you feel every day

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entrepreneurs will come up to me in the gym and they'll say, hey, Steve, just want to let you know what I do and see if you can offer me any advice. And then they'll list three things. They'll say, I'm starting this crypto thing with my friend Dave. I've got this hair business where we're selling on e-com and I've got this other thing.

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And they almost assume that the more things they're doing, the higher the probability that they'll be successful in something. My mum was that. My mum has started 30 businesses. And I watched from my whole childhood how she would start a hairdressing salon. And then the person down the street running an estate agent would come in and say, we're making loads of money as an estate agent.

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Alex, thank you. That was such a beautiful way to end. It's so interesting because if people attack you for that, I just wanted to give my own perspective. When I hear you say these things about not enjoying holidays and things about your relationship with Leila and how that happens, for me, I feel even if I don't agree with 100%, I probably get to 95% to be honest with you.

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The fact that you're telling me that you're different makes my difference, whatever it might be, feel acceptable. Do you know what I'm saying? I 100% know what you're saying. Because when I heard you say these things and I go, oh my God, Alex feels like he's different from the normal two. We might not be, me and Alex aren't the same, but we both feel inherently like we're...

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not playing by the rules and therefore in some way getting life wrong based on this like public narrative of the way we should live our lives. I thought, oh, amazing. I remember watching the video where you talked about not liking going on holidays and being like absolutely obsessed. And me thinking, oh my God, I'm so fucking glad he said that. Because deep in my heart somewhere, I felt a guilt.

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A guilt. And I'm like, where did the guilt come from? Right. I'm doing something that I love every single day, but I feel guilty. Well, I feel guilty because of other people's shoulds, right? So please, Alex, despite any critics that might be out there, please continue to have the courage to be yourself.

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Because you have no idea how it's making a group of weirdos that feel like they don't fit in, feel heard and understood for their variance.

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The Entrepreneurial Life Cycle That Will Make You Poor Or Rich (on DOAC Pt 2) | Ep 866

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We have a closing tradition on this podcast, as you know, where the last guest leaves a question for the next guest, not knowing who they're leaving it for. I'm laughing because it's so ironic.

The Game with Alex Hormozi

The Entrepreneurial Life Cycle That Will Make You Poor Or Rich (on DOAC Pt 2) | Ep 866

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What is the meaning of life?

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The Entrepreneurial Life Cycle That Will Make You Poor Or Rich (on DOAC Pt 2) | Ep 866

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She'd start that. That business would suck. She'd hit this moment of crisis of meaning. She'd then start a furniture business. So she jumped... between 20 to 30 businesses, and it's kind of still happening now, where they last six months, they eventually go bust. She sort of like, you know, like the monkeys that swing to the next branch, swings to the next thing.

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The Entrepreneurial Life Cycle That Will Make You Poor Or Rich (on DOAC Pt 2) | Ep 866

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I highly recommend people go and check out the new format you launched on your YouTube channel. It's titled Building a $1 million Business for a Stranger in 56 Minutes. It's kind of like a new take on Shark Tank, but it's more actionable, more practical. It's what you referenced earlier. And I know it took you many, many, many, many hours to perfect it.

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But it's a really interesting format that I think YouTube is seeking because it's so actionable and practical. And I highly recommend, I'll link that below, but I would also highly recommend people go and check out these books. I mean, they've been, to say they've been smash hits is a massive understatement. Thank you. I mean, I just see it everywhere.

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I feel like it's a prerequisite of any entrepreneur's toolkit when they're starting and they're trying to figure out frameworks for scaling a business, making sales, generating leads. And I know there's another one on the way, which you won't tell me about, but I know it's coming this year, which is volume three of this format. And I'm exceptionally excited to see it.

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The Entrepreneurial Life Cycle That Will Make You Poor Or Rich (on DOAC Pt 2) | Ep 866

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And for any entrepreneurs out there that are looking to get in business with you, I highly recommend they go check out acquisition.com. Because there's so much there, regardless of where you are in the cycle, whether you're starting out, whether you're scaling up, whether you're looking for advice, acquisition.com is the place to be. Thank you, Alex, for your generosity. I appreciate it.

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And thank you for all that you do. Thank you for being weird and different. Because like that's, again, that's the value. That's all the value in the world. We don't need more of the same. We need people that have the courage to be themselves and the courage to be happy. And that's exactly who you are. And I really, really appreciate it.

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And there's never been the escape velocity that comes from this informed optimism part. So yeah, it really rang true for me in every sense of the word. This idea of like a focus going against all of your instincts and your emotions, but being pivotal to achievement.

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Yeah.

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Well, I want to go through the four R's, but I also, I think that what comes before the four R's is knowing how to get customers in the first place, which was a tricky one. And actually, maybe even the thing that comes before that is being psychologically prepared for the toll and the rollercoaster that business is. I found this graph of yours.

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Yeah, yeah, yeah. At the same time. And when you walked in today and you sat down on the chair, I said, like, what's going on with you professionally? I remember what you said. You said more of the same and better, which clearly comes from your wisdom.

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And I think for any founder starting a business, it's important for them to understand this cycle. I think you call it like the crash-burn cycle or something. Because if you're not aware of this cycle, when you hit certain parts of it, you're probably going to think that there's something wrong with you. Yeah. But there's a certain inevitability to this crash cycle.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

If we can't clearly state our goal, we certainly won't hit it, right?

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Anyways, okay, so people will buy the book and then they'll find me later somewhere and they'll be like, oh, that's the guy that wrote that book that I like. And so Amazon actually gets me customers. There's this whole misnomer that you will have to have an audience in order, you have to have an audience to have a big launch.

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But if you have a good product, which it sounds like you do, then when you have 10,000 five stars, I buy books. If there's any business book that's 10,000 five stars, I'll just buy it. And so number one is I would do Amazon for sure. Like for sure, it's where 90% of people buy books. It's like you're not on the biggest platform that people buy and sell books from.

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Now, you can still do your launches. I still launch through Shopify, so I can still own the customer base and all that stuff. But between, by all means, like kick it up there and do it in multiple formats and multiple languages. Like right now, I think we have like, 30 or 40 SKUs from two books.

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If I say, hey, we're gonna go to one on four, one on eight, I pour that glass of milk into a shot glass and I say, do you still want it? Now, if the milk's amazing, they're still gonna take the shot glass. The alternative here is where I have that glass of milk and I have an equal size glass of milk, but I pour a little bit of milk in there and then I just pour a lot of water in.

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So it's like we have all four formats, and we have two books, and then we have them in five languages, and we have them on 13 platforms. So we have it on Kobo Digital, or Kobo, we have Draft2Digital, we have like, it's kind of funny about publishing, so it's fresh on my mind. Ingram, if you've heard of that, Spark. If you Google it, it'll come up.

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And so all that to say, I think you just need to, the first thing I would do this quarter is maximize all distribution of the books on all platforms that people buy books on. The first thing. The second thing I would do was try and expand my audience. Like right now, let's just use all of the distribution that already exists. Let's do that first.

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And then you can do TikTok strategy or whatever you want to do to basically market any other product that this works. Now long term, once you get your third book out, it actually unlocks a bunch of stuff because you will be able to be profitable with ads because you'll be able to sell bundles. And you can sell three books at a time.

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And you can sell really three, but it's like six books because you're gonna do audio. And audio, digital, and hardback times three is nine books. And so you can get away with like basically a $99 or 125 or 149 in terms of price tag. And you'll be able to arbitrage the traffic that way.

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Yeah. No, but like you'd be surprised. My workbooks are audio, but they're workbooks.

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And a lot of times people are like, okay, just having the background. Because what's interesting, like I get a lot of people who tell me like, oh yeah, I've listened to your book six times. Right. And it's just because like listening, your comprehension is significantly lower than visual because it's a second attention stream. You're doing other stuff too.

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And so it's like every time they listen to it, they get something else. It's the same book. And so it might, dude, it'll take you a half day to narrate it. Like throw it up. If people hate it, you can take it down.

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Practical Ways To Grow Your Business | Ep 821

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Appreciate it. Yeah, you bet. And 50% of, um, it's, it's increased. It used to be 25 and it's a slowly increased. I think not 50. I think it's, it's like maybe like 40% of our sales or audio.

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Yeah. I mean, uh, I think I've talked to like three different businesses that do what you do recently, so it's very top of mind. So big picture, the model that seems to work the best is, and it is similar to Jim Mullen's Prestige Labs, which is the, we will show you how to, do the thing and then you can also sell our thing once I've taught you how to do the thing.

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And I said, you want this really diluted glass of milk, but it's the same amount as what you had before. And so I found that I think more businesses do a better shot going this way. thing going this way. Now the third path is what I think is the best version of this. And so if you think about knowledge businesses, there's tons of massive knowledge businesses.

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And when I say that, so year over year, they continue to sell. Right, and so the smart cookie move is to, what are you pricing the front end at?

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Practical Ways To Grow Your Business | Ep 821

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Great. I would even care about the education. The majority of the enterprise value will come from... Is the hair side bigger than the info side?

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Oh, is it? Okay, yeah. Well, then I, in some ways, would almost lower the barrier because... If that's the monetization, then the question to solve for is how do we get the absolute most amount of people to sell hair? And so you could think about it as offset CAC for the hair business more than its own business in its own right. And don't get me wrong, I'm all for it.

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If I had to make money or not make money, I'd rather make money, right? But when we're talking about penetration of market share because you're trying to flip people into selling your stuff,

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then if I could prove that for $300, I could get somebody activated and they actually would sell hair, and I would sell 20 times more people, and I make all my money on the hair anyways, then I would, it basically, it's almost like creating artificial friction. I'm not saying go to 300 because they might say yes at 300, 1,000, 2,000.

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Go to the highest that sells the most without getting into that next tier of losing buyers that you otherwise would have had.

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It's a good way of doing it. We did that with Prestige Labs. We would have them buy, it's a little bit different because it's consumable, but we would have a salon, for example, or a gym, buy supplements, a stack for each of their trainers. I'm a little high if they can turn this down a little bit. And so all the trainers at the gym would all go, you know, do a 30-day challenge or whatever.

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They'd use the products, and then they would be, they would have conviction that it actually worked. And so then it made the sales on the back end so much easier. Like, hey, I just did it. Look at my before and after pictures. Like, this stuff's really good. And so in order to activate them, we had them buy something like $5,000. Ed would probably know, I think around $5,000 for the product.

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So Ernst & Young, McKinsey, Bain, all started by people who put their name on the building, right? Accounting firms, law firms, consulting, all of those fundamentally have the same thing. There was a guy who was really smart and really good at some stuff and was able to get people to give him money. The difference is that these models, are predicated on basically a career path.

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And then he gave them basically the education for free. So you still have that like, you still have that buy-in. Yeah, you still have that buy-in. And you know what's crazy is that you'll probably, you'll be amazed, you'll be able to sell way more product. Well, you probably already know this. It's way easier to sell product than it is to sell info. Way easier.

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Because you don't have to, like, they get it. Like everybody here who sells info, like when you start, if you ever sell like physical stuff, you're like, oh my God. Because we're so used to selling like an empty box of hair, being like, this is very valuable. But when you actually have something in your hands, it's like, oh my God, this is so much easier. Like you can see it.

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And look, put it on your hair. So anyways, does that help?

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Yeah. Don't like break your business tomorrow. But like I would experiment with just what allows me to spend the absolute most amount of money to get the most people selling hair. That's the problem to solve.

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Hello, Julia.

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Cool.

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Oh, okay. I would have thought over 30, but okay. That's fine.

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I wouldn't worry about the revenue retention piece for your business. So this is a really good exercise for anybody. I try and think of what are the biggest people in the space do? What do those businesses look like? And so Weight Watchers, Jenny, I'm not saying you're the same thing, but just in the space of weight loss, which is the space you're in. almost none of them have revenue retention.

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And so like Tinder, for example, I don't know if it was them, but one of them was like, the point of this app is to get deleted. Not all businesses have to have revenue retention. But this is where, because people get single again and then they come back. Or they get fat again and come back. So it becomes more reoccurring than recurring in terms of revenue.

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But I think all of this comes down to, or bubbles up to, what your goal is.

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Well, you already have the impact when you're already making lots of money, so it has to be different than that.

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Me neither.

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Well, then make it free.

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Then just make it all free.

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Okay, so then what's the goal?

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Okay, fine. So do you want to make money by selling it or do you want to make money by growing the revenue of the business?

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Well, I was pushing back on the impact, whatever thing, because I also talk to business owners all day. I'm like, I hear that shit all the time. Because if that were true, then you wouldn't be like, okay, I want to sell even fewer people at a higher price. I don't care, to be clear. Make money. I'm all for it. If we can't clearly state our goal, we certainly won't hit it.

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You're not going to hit it by accident, for sure. So if you just said, hey, Alex, I want to triple the profit of this business, I'd be like, cool. Well, now we can actually pull this apart and take this. Now you might have your own things around that, but it's just much easier for me. So what's revenue right now? What's bottom line?

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So they are supply constrained. And so the problem with most coaching businesses is that like, hey, you have a pulse and in seven days I'm gonna get you to, you know, give you a roster of clients so I can keep selling them. But the problem is that if you can teach somebody in seven days how to teach somebody else, either you didn't teach them fully what you do

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Okay. What's bottom?

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You're good. Can I just say it's not super high?

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You're good. That's fine. So you have something that's working, right? So people are paying you $1,000 a month. Okay, so the issue that you have, I'm guessing, is marketing.

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No, advertising. Not enough people know you exist.

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Right. So I certainly would not advise you to do anything new right now. I think you need to sell more. Can you handle more customers?

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Okay. Then I would be trying to sell more.

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Do you have decent margins on what you sell now?

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Practical Ways To Grow Your Business | Ep 821

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So you actually have the classic small influencer issue where which is anybody who's organic typically wants to create many products because they only have one base of customers. And so the only way they can think to make more money is to sell them something else. But you should really just see your organic audience as the jumpstart to then continuing to sell to colder and colder traffic.

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Because otherwise you start five businesses and every single person here has probably seen the influence that has five different revenue streams. They all add up to, in total, a million dollars a year. But they're like, you know what I should do? Add a sixth. And so this will be different, right? So it's just that you only know one way to advertise.

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And so you're looking at all these things that need to change about my business, but you just need to advertise more.

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Yeah, that's honestly, I wouldn't add any complexity to the business that you already have. Now, if you wanna add an anchor product that's 100 grand, I'm all for adding super high anchors, why not? So when you add an anchor, by the way, the way this works, so I learned this technique when I went to a suit shop. and I was poor and I was told that I needed a nice suit.

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And so I went there and I said, I'm gonna pay $500, that's my max, for getting a suit. I go in and a friend of mine set up the connection. So he's like, this guy's awesome, blah, blah, blah, blah. So I get there and he does my measurements and he lines up this big rack of suits. And so he puts the first one on and I was like, man, I feel like a boss. And he's like, so you like that one?

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I was like, yeah. And so I pull, you know, I look at the tag and it says $16,000. And I was like, oh, I like my, the blood just drained from my face. And I was like, this is a car. And so I was like, ah, and he saw that I like shit my pants in his nice new pants that I was wearing. And he said, do you care about the brand? And I was like, no, don't care about the brand.

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And he was like, I got you, sport. He took one off and put another one on me in one move. And at this one, I didn't even look in the mirror. I just looked at the tags. And it was two grand. And I was like, OK, I can... I can swing this, at least I'm not going to, you know, because my friend made the intro, I didn't want to, you know, be an idiot, which now I would give zero fucks about.

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But anyways, and so I ended up spending like $500 on like socks and handkerchiefs at this place and I walked out spending $2,500. And only after I walked out did I realize that I spent five times what my budgeted amount was. And this guy was a fourth generation tailor. He knew exactly what he was doing. Because he had the one that was one eighth the price already there.

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And so when you have an anchor upsell, the way you want to do it is there's something called primary and secondary features. And so the primary feature of the suit for me is to look cool. The secondary features of the suit would be what's the material, what's the brand, like all of those things. And so what you do is you have your anchor at 25,000, 50,000, whatever you want.

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or what you do is so simple that it's not valuable. More often than not, it's the first thing, which is like I taught you 10% of what I know, but I'm still gonna charge more or less the same price either way, and then that's what creates this churn factory. And so the reason all of those companies have our supply constraint is that finding really intelligent people

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And then you get the gasp and people shit themselves. And one out of 10 people are like, awesome, that sounds great. And you're like, holy shit, this guy just spent 50 grand on this. And he probably would have been like, holy shit, this kid just spent 16 grand. I was like 24. Of course I didn't have 16 grand, right? But he still put it on me.

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The secondary features are the things that are not material to most people, so that what you can do is basically deliver 90% of the same product for 1 tenth the price. And then people are like, I'm pulling one on this guy. He doesn't know that he sold me a suit that's almost the same as his $100,000 suit.

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And you're like, this guy is about to buy a $5,000 suit that's really a $500 suit, because I showed him a $100,000 one first. And so you just change the things that aren't material to most people. And you want to come to the rescue. It's like, hey, do you care if you have my cell phone or you could just with Slack? It's like, oh, Slack's fine. Yeah. It's like, okay, cool.

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Well, then we can still pretty much get you there. Vacation, plane flight, just a slightly differently. So I think if you add the anchor upsell in and then all of the cash that you get from the few people who take that, pour it all into advertising.

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You bet. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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You're not going to hit it by accident, for sure.

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And then they have a career path where it will take them 10 years to get to partner or whatever managing director status. And they start as analysts, then become senior analysts, then become VPs, then become principals, and they work up the ladder. But they have huge earning potential.

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So somebody who is intelligent and hardworking and could actually do a job as good or better than you doesn't want to work as a coach. So there are people like, Neil's not here for this one, like there are people who are very, like you guys are on my team, like they're very intelligent people, but they don't want to be, they're not coaches, right?

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And they're very siloed experts for these particular things. And so this is actually many to one. So instead of one on one, it's many people who are experts for one customer. And so I see these as the three kind of delivery models that evolve over time, pros and cons. This one just doesn't, scales quickly, but then it stops because churn becomes too big.

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This one is much slower because it's supply constrained. But if you get really smart people, you can build a really big firm, which is evidenced by all the massive firms. This one, you have models like Tony Robbins, who, Tony Robbins, even if you're on a, you know, there's 10,000 other people watching, it's still valuable. To zoom back into...

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to your question, I would probably be thinking of a, is the goal to sell?

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The goal is for the company to be around after I die. Okay. But I don't want to sell it. Well, the, wait, but you do want to sell it.

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29.733

Yeah, I think it can, I mean, it can't, it's very unlikely it becomes a billion dollar a year sales business. The biggest problem with it, so the two big problems of that business are revenue retention, number one, and number two, depending on the model, if you have like coaches, because coaching doesn't scale.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

295.55

I mean, I don't have the immediate desire to sell it. Sure, okay, got it. You want to be enduring, I got it. So then the only thing that I'm solving for is revenue retention. That's really it. It's just revenue retention. And so obviously the hair solution we were talking about earlier, like if there were products that became the core business, then that becomes a very interesting model.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

314.261

The problem with that for gym launch specifically is that people were able, like gyms who use our process sell their services for so much more than they make on product. And so that was the issue. And so it was just like always a bolt on. And so if they got distracted, they would just keep selling services, which I didn't make anything on.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

333.516

With the hair business, they make so much more on hair than they do on their cut and color, whatever, like small services, that they immediately just start switching to selling hair. And so it becomes the core economic engine of the business. And that's what creates the revenue retention for them, but not as much for supplements, for example.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

351.341

And so for your business, it's either figuring out is there hair that they can sell that they won't stop selling, which means it has to be the core business, which I feel like is tough because almost all your people are practitioners given what you just said.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

363.444

Or I have to give some sort of tool that they all have to use on a regular basis, which would be SaaS or some sort of hardware that helps them make better assessments that then they can charge more or whatever the hell, right?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

372.468

So it almost becomes like build the Kindle but get them on Prime type of thing.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

375.969

Oh, that's 100% the model. Yeah. And so like gymowners.com is what Gym Launch is going to become or already is in the process of transitioning into. And that's, in my opinion, the only way to transition those things into One, we don't do it to build enterprise value, we do it to retain customers, which then creates enterprise value. And it's also really hard.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

423.649

It's not just YouTube ad revenue. Most of it's YouTube ad revenue.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

435.354

Interesting. Then you just get a crazy amount of views. How many views do you get a month? 10 to 15 million long form. Something doesn't add up there.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

450.862

If it's 10 million views a month, Time, so that's mil, so that's 10,000 times 30. I guess, no, that's right. It's long form. Long form. Oh, got it. Okay, that makes sense. Got it, got it, got it, got it. Okay, cool. So, super cool. That's great. So, that's the main ad revenue. What are the people on your channel selling?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

474.257

What are the advertisers who advertise on your channel sell to your customers? I don't know. Okay, so literally, today, in five seconds, make a community post and say, hey, what are the ads that you see on my channel? Comment below. And you will get, because fundamentally, the people who are advertising on your channel are the ones who are getting the highest return.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

48.206

I mean, you can get to whatever, 20, 30 million a year, but it kind of like, it becomes very difficult typically after that because, yeah, Getting somebody to be as good as you, this is actually what I made my whole podcast on this morning.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

496.656

They're the ones who are paying you three and a half million dollars a year, not YouTube. And so it's like, if it's worth three and a half million to them, then it's gotta be, sorry, if they're willing to pay me three and a half, they're probably making at least 10, probably 20 off of that. Now, you would be able to get even more than that because they trust you rather than just some random slice.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

513.508

And so then I would look at the product mix of what things are being sold and I'd look at which of these ones is one that either you could go directly to them and say, hey, I know you're advertising on my channel. Why don't we figure a little deal out here? So...

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

528.069

So you've got, you can have products that you own, you can have sponsorships, or you can just run an affiliate, which is similar to these, but just kind of different in terms of the characteristics. So, oh shoot, and then partnerships.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

541.535

So if somebody has like a really expensive thing that's very hard to do, like let's say somebody's got, they've figured out how to build mini motorcycles or something, whatever. It's like, I might say like, how can we partner on this so that I can push you traffic and promote and endorse and whatever? And then you have some element of cash flow, but a huge chunk of equity of that business.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

563.208

Basically, you would pitch them, this is how I position it. I would say, And you've got some cash too. So I would, the magic here is putting money and brand behind something. So it's like you have three people in your marketing department. I am the marketing department of a business that's 20 times bigger than yours.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

580.754

And so I'm gonna bring my entire marketing department, it's like a reverse acqui-hire. I'm like letting you acqui-hire me. but I'll put some cash in the deal too, and let's split this, or whatever, and we can go to whatever this next level is. So that would be like, this would be maybe the most complex, but the biggest bet for you, that you could get crazy returns.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

6.734

So I'm wondering, like, you know, yesterday when we looked at the VAM, like, can the business model itself be a detractor? Like, I'm trying to think of how big can we grow this in the current model before we have to look at SaaS or products or people become, you know, obviously a big issue in this type of business. So how big can this go in this type of model?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

601.443

These things are all, I would say, smaller bets. If you're not spelling sponsorships, you probably should, just from a media company. So it's like, do you want to optimize for how much profit you make? Because you could just become, if you're just motorcycle media, then you just sell ad space. So not only do you get ad revenue, you just also sell ad space.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

617.528

And I'm guessing you could probably do, probably double the revenue that you have right now, maybe more, just by selling ad space. And that would just all drop to the bottom line. That would be it. But the first step of still getting who are all the people advertising is a great first, like that's my leads list of hitting those people up. And the nice thing is it's like really warm reach outs.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

62.54

So if we scale, let's just say a one-on-one business as a most rudimentary version of this, you can then go down to one on four, one on eight, one to infinity, right? So you scale that way, basically more and more fractionalized access to you or your knowledge, whatever. This way we have other people. other people, right? More other people.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

635.32

You're like, you already advertise on my channel. So, Let's make this official, right? The affiliates is like if they're not willing to trust you that you can get a percentage of the revenue that you send. I'm not as big of a fan. I'd rather you do sponsorships. But if you need to like prove it out early or something, you can do that.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

651.765

And then this last category is just like if you were to develop a product, what would you sell? If that's not your space, then I would rather you just find what's the thing that makes the most money on my channel and then how do I make a deal with them that makes sense? That's probably what I would do. Because I don't want to go build school.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

670.208

I was like, I'll just bring a bunch of money and then buy it. That made more sense. But I'm not going to start another software company. That's a huge distraction for me. But I have all these people who want to start a business and I should put them somewhere.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

707.601

This is physical therapy, right?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

710.603

Yeah, just for everybody else.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

746.213

And this is all automated, right?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

750.397

Yeah. How many sales is that translating into per day?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

760.807

Yeah. You just immediately make so much more money if you just got on the phone and sold them something for three grand for a year. I told you that yesterday too.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

773.886

I made a whole podcast about that this morning.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

776.707

About you. Just increased the value. Just about you. Yeah, which is like, you're trying to make something scalable rather than trying to make it valuable. Make it valuable first. And the thing is, is like, when you make something really valuable, the premium price that you can attach with it gives you the resources to then make it scalable.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

795.282

When you try to make something scalable before you make it valuable, you just keep running into these issues where no one wants to buy my thing. But I got it all automated. It's like, yeah, no one cares. You know what I mean? I'm not saying you, but I'm just saying in general.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

804.39

I'm just saying like, you would be able to probably 5X your business if you just get on the, like once people do that 3% level, I would just have them book a call. Talk to one of our experts. If you do that, you'll make more money. That's the thing.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

844.049

So you have a publishing business basically?

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

87.043

Where you still have one-on-one, but it's other people who are doing this. And so here you templatize fractional, like break apart the pieces into constituent parts, and then you train people on the smaller pieces that they can replicate in theory. In practice, I think what ends up happening is that, let's say I have a glass of milk.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

896.544

Yeah, TikTok shop is kind of interesting.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

932.831

Okay, so there's like basically no revenue between launches.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

952.41

Oh, it's just as silly to me. You know what I mean? Silly. Ridiculous. The books are free.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

961.214

You don't have to buy them. They're like, we'll buy them.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

971.578

Because here's what's really interesting is that, did you watch my traffic ranking video? I put it out like three videos ago. It's very recent.

The Game with Alex Hormozi

Practical Ways To Grow Your Business | Ep 821

980.905

I don't think so. So what's really interesting is that people don't think about Amazon as a traffic, like a social media or traffic source. But I think like 13% of customers that, well, let's just test this. Watch my theory just flop on this. Did anyone buy my book first? One, two, look at this. Cool, okay, that's cool for me.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

Welcome back to the game. This is a guest spot on Rachel Hollis' podcast. Main things I talked about in this podcast are the reality of hard work and sacrifice. You can't get around it. Learning from some of our failures and investing in companies in the early days of acquisition.com. And I also mentioned a little bit, as is the Hormozy way, talk about death to gain freedom of mind.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1013.727

It's a really good question. It's a really good question. I'll walk through how I think about it, which is you have, you know, in degrees of expertise, right? You have people who you have your close friends, right? These are the worst people to listen to because they have no idea. And they'll just give you opinions.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1029.489

And if let's say if you're in the in the wanting to make money space, if they are poor, they will likely give you more poor person advice, which is probably not the good advice. After that, you've got strangers on the internet. Above that, you have people who have done what you want to do, which I think is at least the first real foothold into this of maybe some good information here.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1049.878

And then you have above that people who have helped people like you get to where you want to go and have repeatable metrics around how they've helped people do that. And then I think the ultimate version of that is someone who has both been there themselves and helped other people

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1065.865

just like you get to where you want to go in a way that's measurable that you can see like okay this percentage of people do this you know it works out and so that's probably from a how i would look for vetting the second thing is a totally different take on this which is that expect that you will not succeed the first time and that you will need to learn from multiple people in order to kind of make it your own

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

108.719

And I still think to this day that was the hardest decision I've ever made. Because I think in the beginning it's like you have to forego what you know for something that is unknown. And so you can quantify what you have to lose but not what you have to gain. And I think that's what makes the decision so hard. Now, obviously, on the other side, it's very easy in retrospect.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1092.152

And the easiest kind of visual of this is like, if you imagine you've got a bridge and you have to like assemble all these bricks on the bridge to get to the other side, it's unlikely that the first person that you talk to will give you, let's say there's 100 bricks to get to the other side. It's going to give you all 100. They might give you 80 because you know nothing.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1110.105

So it's really easy for them to get you a bunch of bricks. But you might be like, wait, but I didn't get a dollar to the other side because the dollar's got to walk all the way across the bridge. The dollar can't jump. It's And so then it's like the next person you go to, you pay and get help or you just watch their stuff, whatever. And it's like – and they give you another 10.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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So now you're at 90. But you're like, man, I haven't – I still haven't made anything yet. And then all of a sudden, somebody gives you the last 10 and you're like, this guy is a genius. But really – it's kind of like saying, oh, well, I hate my arithmetic teacher because once I learned calculus, I was like, oh, this guy's an idiot. It's like, he just laid the foundation.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1147.705

Yeah.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1148.006

No, but it's ridiculous. But like, I see it all the time on like internet stuff. Like I used to consume this guy's stuff and now I consume this guy's stuff and the other guy's bad. It's like, You needed this guy to get to this guy. Absolutely. They're requisites. And so the meta concept for me is directional rather than exact.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1165.986

So I ask myself the question, will this person get me closer to my goal or not? And if it is closer, then I'll start walking in that direction. When I get a little bit more information, I'll course correct. And I think that that series of approximations is a much faster way than trying to have what I call the fallacy of the perfect pick.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1184.216

which is that people will just stay for years trying to pick perfectly when really it's like, well, I know it's not that way. So let's go north. And then as we go there, we'll ask more people and they're like, well, it's kind of this way. And you're like, okay, it's Northwest. And then you start working your way towards it. And that's, that's how I kind of wander towards my destination.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1244.398

Yeah. It's interesting when you said that. My immediate thought was a different direction. So I'm going to circle around. So one, what's interesting is that When I have been made a fool of for assuming that my goals are everyone's goals.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

125.747

Like, I can't believe it took me so long. It's like, yeah, but you didn't know.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

127.987

Yeah.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1270.083

No, crazy.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1270.964

But personally and then business-wise. What's interesting is that the reason someone buys is not the same as you sold, not always. And so sometimes people come. I remember I was having this conversation with a lady who was in the same position, right? So she's been here for six months, and I'm like, Janet – what the hell? Like you look the same, you know?

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

128.387

It's like saying, oh, I should have just, you know, invested into the stock market for every year for 20 years. It's like, yeah, but every single time you're about to do it, it's like, oh, but it's down now. It's about to go. Like, there's all this uncertainty. Maybe it's different now. But just for context for the audience so that I don't seem more heroic than I am, I ended up –

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1288.115

And mind you, she's been paying me for six months and she was like, I, I, I love coming. And I was just like, yeah, but like you wanted to lose weight. You came here to lose weight. You're not losing weight. Like, you know, what's going on? And I was almost a little bit aggressive.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1300.459

I didn't have as much, you know, tacit knowledge of navigating the situations as a 23 year old talking to a 40 year old woman about her weight.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1308.742

Um, after her second child, whatever. Um, And then it kind of dawned on me. I was like, she's not here for weight loss. I sold weight loss because that's what I assume I would want.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1317.97

But she was here. Like there's a saying we have in the gym world, which is they come for the bikini, they stay for the community. Right. And so, you know, community is one of the things that someone might want. The other is like some people just like want to feel good. So they just want to get their sweat on and they just want to feel good or whatever. Some people, it's their penance, right?

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1332.842

It's like, I went out last night and I'm going to work out just so I can cancel it out. And that's their version of it. And so I have over time been like, if you want to come to 100 events, then you might be coming for a different reason. And so to the same degree, I think through like, okay, how a customer derives value from a product or service is their choice.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1354.409

And so it's been helpful also from a product perspective in thinking about different customer archetypes in terms of what their goals are so that we can maximize value across all archetypes. Because if we only solve for the person who just wants to lose weight, there's actually a smaller percentage of people who actually want to lose weight versus respond to weight loss advertising.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1374.505

which is a different thing. And so anyways, that was like immediately where my head went. Obviously I've dissected fitness goals for a little bit.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1403.004

Yeah, typically, at least in a revenue situation, but I would say the same thing for a fitness goal or relationship goal. I think it's more or less the same is that so under the assumption, and this is a big assumption that you are working all the time, which when we look under the hood, I would say that that is not often the case. There's the perception or the feeling that this is hard.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1422.408

And therefore, because it's hard all day, I must be working all day. But that those two are not the same thing.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1436.799

Yeah. I'll probably be canceled in the culture that we have today for how I work. I get it all the time. I get a lot of hate for it, which is ironic because I'm like, you don't need to work the way I work.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1446.769

You can do whatever you want.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1458.954

So I'll give two answers. So the first is that, so really tactically, I'll give the tactical answer first and then I'll give the larger answer. So I work seven days a week. I take off days when I feel like I need to take off. I don't subscribe to the five-day, two-day setup or even like holidays in general. They are almost entirely manmade.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

147.597

quitting my, I'll say quitting my family, not hardcore like that, but more so like the harder discussion was getting my family to be on board with the idea that I was going to quit my job more so than me quitting. Like quitting the job actually felt like the easy part. The telling everybody else that I was changing my life was the hard part. And so I drove across the country.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1478.725

The weekend system is only in the last hundred years that that was a thing. And so I reject the vast majority of kind of like societal norms for working. to the same end, I know that I can work usually pretty well about I can work 12s pretty much straight through. But I would say that I usually work from like 5am to call it like five, like five to five works fine for me.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1505.722

And on the weekends, maybe it's like five to three, something like that. And that works well. And if I feel a day where I'm like, man, I need a day, then I take a day. And so that's just like how I work. And I've done that for a long time.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1525.553

Oh, yeah.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1562.779

Yeah, someone will take their context and then project it onto your situation and say, I could never do that. That's terrible. And because I could never do that, I have to find something wrong with you and your character in order to make myself feel okay that I didn't take that step.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1574.79

From a little bit also more tactical is I tend to organize my day. For me, I work best in the morning in terms of like my brain's freshest. And so... I will work use like, I call it maker manager time. And so maker time is like, there's nothing on my calendar. And I make stuff. There's manager time, which is meetings and everything else, slacks, whatever, I think that you cannot mix the two times.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1596.262

And the unfortunate part is if you want to start something, I recommend like a 444 schedule. So it's like four hours of promotion, which is letting people know about your stuff. Because otherwise, like your biggest threat to your business is that no one knows you exist. The second four hours is delivering what you promised to those people who find out about your stuff.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1614.629

And then the third four hours is figuring out what you need to do next. Now, you can change those four blocks about where you do them. The figuring out what to do next is probably the first four hours. The promotion might be the second four hours, and delivery might be the third four hours. But fundamentally, that's how I would divide it up if I were starting out.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1628.776

And then the more leverage you get, the more you can have kind of – more maker time. Like Layla and I have kind of shadow images or like contrast schedules. So I would say four or five days a week for me, I have basically nothing on my calendar. And then I have two days where I just tell our team, I was like, just load me up, just put as many things on my calendar as you can.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1648.948

Because if you think about the nature of management, the goal of a manager is Is to have no blank space on their calendar and to maximize – have as many interactions as possible to make as many decisions as they can to move things forward.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

1662.092

But that is like super – I mean it's an effective – that's how you manage, right? And so – The problem is the alternative is makers where a manager can have time blocks as small as five minutes on their calendar where they can move things forward. For a maker, the time blocks are you have like two a day. And so you're looking at four to six hour blocks is one block.

The Game with Alex Hormozi

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And there's memes about this, but there's nothing worse than a 10 a.m. meeting and nothing else on the calendar. Because it's like, okay, well, that's my morning. Because you're not going to really get into whatever you're trying to do.

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And when I was in like halfway point, I called my dad to let him know. that I'd quit my job and that I was going to do this other thing. And he was like, well, just come over. We'll talk about it. Because he'd like talked me off the figurative ledge a bunch of times over the last however many months. And I was like, I'm gone. And then that's when obviously like he was upset about it.

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Because if you're doing maker stuff, you want to lose yourself into the work.

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And so the problem is when makers and managers have to work together. Because the manager says, hey, it's only five minutes. Why is this a big deal? And the maker's like, well, that's half my day. And so you have to protect that. kind of at all costs. And so if you're like, well, Alex, it must be, it must be nice to not be able to have things on your calendar for many days in a row. First answer.

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Yes, it is nice. Second answer. It wasn't always that way. And so what I, the reason I, I mean, partially that I wake up so early is because I come from the fitness world and it's just like, I think that habit dies hard. But the guy that I, that I did that little mentorship with, and I came from a job that started at 10 AM. So there's a totally different like shift for me.

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And I got to the gym at four and So it was a totally different perspective. And so he worked 12 hours a day and he had multiple kids, but he was a family man too. And so he just figured out, he's like, I need to work 12 hours a day though. And so he would work four to four and then he'd go home, pick the girls up from school and then have dinner with them and be present and be dad or whatever.

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And so I would get to the gym at four. And so I basically just would know that between 4 a.m. and noon, I would get all of my moving stuff forward done. And then afternoon, I just knew my day was shot. I was like, I'm just going to be doing fires and doing everything else. And so I think that split has worked really well for me.

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And like to this day now, if for whatever reason something has to get booked on the calendar and it's like on an empty day, they book back to front. And so it'd be like the first appointment would be at like 4.30 in the afternoon so that I have uninterrupted time until then. And the second one would be like at 4 to 4.30. And so they book me back to front.

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And so those few things have helped tremendously for getting things done. The larger, so I said that was gonna be really tactical in terms of like the work. Bigger picture, I think what's really interesting about entrepreneurship is that it is always hard. And I think what makes it hard is that you don't know the nature of the sacrifice that you will have to make to get to the next level.

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And so a lot of people, myself included, I always and I still I always like make this fallacious thinking process where I think like, oh, whatever I have to do to get the next level is just more of what I'm currently doing. And it's just what's hard about the next level for whatever it is, is you have to sacrifice something different.

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And so the currency changes to get to the next level. So it's like you're paying in pesos and then you're paying in dollars. You're like, I have to pay more dollars. It's like, no, no, no. Now you have to pay more. So you have to pay more euros. And you're like, wait, I have to pay more euros? I didn't think I would have to give euros up.

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Like I have to pay – so it's like you actually – the currency of the thing you pay for changes. And so like in the beginning, you know, the first person you have to conquer is you, right? And I don't think that ever really ends. But like, you know, you have to get over yourself. And then the next one is like you have to conquer, you know, not being beholden to the desires of friends and family.

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But like it's a different currency. You're like, I thought it was going to be all about cold calls and advertising. It's like, well – You have to first get over the fact that everybody is around you doesn't want you to do what you're doing.

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Because it reminds them of the risk that they were unwilling to take. But anyways, but it's like you have that and then it's like, okay, what's the next thing that's going to come? Then you have like the mechanics of the business. It's like, okay, now you switch into that mode. You have to learn all this, all this new language and like it's a whole new field, right?

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So you start learning that and you're like, okay, so I think I'm going to have to learn a new field. Well, you have to keep doing that. But then the next level is like, okay, we'll now have to deal with people. And so you have employees and you have management, you have all that stuff. And you're like, oh, my God, okay, so this is a whole thing.

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And then like, at another level, it's like, then you have legal stuff that starts happening. You're like, oh, God, this. So like, it just it does. But the thing is, is you have to keep paying in dollars. And then you start now also paying in euros. And then you start also paying.

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And I think that because most people who I've seen who either quit entrepreneurship or what I would consider like stop the good fight, they're like, I'm good here, is that it gets to a level. And I want to be clear. I don't think there's anything wrong with this. They get to a level like, I don't really want to pay in euros. And I think that's fine. And I think people mistake my message.

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I'm like, I'll talk about what it takes. You can decide whether that's worth it for you.

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So I'll speed run this. So I, you know, I took all the advice that I could. I found a place that was 45 minutes from his place, maybe an hour from his place in Huntington Beach, California. So do you know his Huntington Beach? Like I'm not competing for that for anyone who's worried. And I didn't have enough money to pay for two rents.

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And so I slept at the gym, which seems like more hardcore than it felt. I just felt like it was like a fun adventure. I was 20 something. I was like, I'll sleep at the gym. But at the start of the gym, I found out two weeks before the gym happened, I was supposed to have a partner who's going to be 50-50 with me. He backed out.

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So then all of a sudden, I was going to have some savings, but I had already signed the lease. So I was like, all right, so all of my savings are going into this. And so I had basically the $50,000 that I had went into the gym, and I had basically no money, and rent was $4,972 a month. Woo! And I never made money before. Not really.

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I only found this out a year later that I looked at my processing for my first month of business and what was settled post fees, like not in payment plans, like what actual cash was processed was $4,972. I found it out a year later. Like I'd never pull up my processing stuff. Oh, that's amazing. Isn't that wild?

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Yeah, so I slept at the gym and I went to this little thing two weeks earlier that was this new marketing thing that was cutting edge. It was 2013. It was called Facebook Ads. And so I went to a two-day workshop on Facebook ads in 2013. And that is honestly like if I had not gone to that workshop, I don't know if I'd be here.

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Now, on one level, you'd be like, well, I would have tried again and I would have maybe. But having a big massive first loss would have sucked. And so I learned Facebook ads and I started running ads and it worked. And by month nine, I had managers and trainers and all that stuff and it worked out. And by month 15, I had my second location.

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And every six months after that opened a new location, I decided I wanted to do a turnaround business. So I was like, you know, I'm really good at filling these gyms up. I could fill the gyms faster than I could build them. So I was like, you know, it'd be easier if I just went to gyms that already existed and just filled them up and just figured out something around that.

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And so I spoke on a stage for showing what I was doing with my gyms. And to this day, kind of weird, I've never been more bombarded afterwards, which is weird because it was not a huge stage. And I had people for two days around me nonstop.

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There is a little bit of my story in this one. And so if you are somebody who's heard my story, then I would, you know, skip forward a little bit. And then you can get to the mini stuff that is not my story that you've probably already heard. All right. Rock and roll. Love you. Enjoy.

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No, it was like an internet marketing conference.

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And so – but there were fitness people there. And I had 120 people give me their contact information. I've never had this happen. One guy gave me his credit card and just said, charge me and tell me what I get later. And I was like, I'm a gym owner. I don't like – I have gyms. Like I just got asked to speak. And so anyways, I got home and I called the guy up and I was like –

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do you really want me to charge the cart? And he was like, yeah. So I charged the cart for $5,000. And he was like, what do I get? And I was like, I don't know, but I'll make you more than $5,000. And so it just so happened that he had a gym that he was about to open. And I was like, perfect. I'll fly out and I'll launch a gym for you. And so that was when Jim Launch was born.

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Flew out to his gym and launched his gym and launched a couple others in the area while I was there. Just reached out to people and was like, hey, want me to just send more people to your gym? And the deal is I get to keep the money and you get to keep the customer for free. Like that sounds like a pretty decent deal. And people said yes to that. I started doing these launches, started working out.

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The guy that I did that first launch with was like, hey, man, we should do more of this stuff together. I'm a really good entrepreneur. And I was like, oh, cool. I'm young and I have six locations, but I I'm insecure and so I don't value that. And so I was like, yeah, I should partner with you. And he said, yeah, but here's the deal. I have, you know, I'm a little illiquid right now.

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Yeah, so the biggest decisions I've had in my life have always been in the face of imminent death or what feels like it. I don't want to go into this like it's a sappy moment or something, but when I say I had that rock-top moment, there was a period of time while I was in that job where I just hoped I wouldn't wake up the next day. And so like there's like levels of being sad about things.

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And so, you know, my credit's a bit weird. Divorce, you know, misunderstanding. You should sign and personally guarantee all the stuff and fund all the new locations and we'll just split it 50-50. And then you can also work them. But like, I'll come behind you and, you know, operate them. So I ended up being like, okay, this launch thing works.

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So I sold my six, put all the cash into this new like launch and go model where he was going to come behind me. And the first gym crushed the launch that we were going to do together. And one morning I wake up and all the bank account is just empty. And I was like, hmm, that's not good. And it was just a deposit straight to him. And I was like, that's weird.

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And so I hit him up and I was like, hey, like, what's going on? And he was like, hey, I was just taking my half. And I was like, that was all of it. And he was like, well, I figured you're just skimming. And I was like, so you're accusing me of stealing? I was like, you haven't even been here. Like, first off, you haven't been here. Second, like, what?

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And so I was like, I'd never been accused of anything. I was like, I can't even imagine this. And so I had a mentor who I was talking to at the time, and he was like, might have been a misunderstanding. He was like, print out the bank statement, go line by line, and just show them where all the expenses were. And I was like, okay, I'll do that. So I printed it all out. I highlighted everything.

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I annotated it. And I went to go meet with him. And I remember being like, let's just figure this out. I've got the stuff. We'll go through it. And he pushed it off. He's like, I don't need to see that shit. And as soon as that happened, I just remember my stomach dropped. I was like, oh, I just got robbed. And I was like, oh, fuck. Because I had six gyms.

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So it was years of work that went into this new thing. And then it was gone. And I was like... What do I do? Anyways, very stressful time for me. I got into a head-on DUI collision, walked away, 60 miles an hour. Walked away. Layla picked me up from prison or jail or whatever, whichever one it is.

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I was drunk.

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I was stressed. Oh, wow. I was at a low point, you might consider. And so she was like, hey, you know, we're dating at this time. We're six months into dating.

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Yeah, and she came with me a month after we met. I was like, I'm going to do this launch thing. And mind you, when she met me, I have multiple gyms.

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Yeah, you're crushing it. I'm crushing it. Just got off stage.

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All these people want to do business with me. I'm the man. And then fast forward six months, she's coming out with me to do these launches because I wanted her to learn how to do it so that we could do more of these together.

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And she was like, hey, we should go back to doing that thing that worked instead of this whole partner thing. And so Layla went and launched a gym in Hawaii. I had to keep this gym running, but I didn't want to sell any more customers because it was clear that he wasn't going to run it.

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And so I had to watch the very small amount of savings that I had left go to payroll and rent, but I couldn't generate sales because if I sold, then I'd have to keep pushing out when I would close the gym. Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And I think trying to operationalize sadness, like what is sadness? It's a perceived lack of options. That's why I feel so hopeless. You just don't know what to do. There's nowhere to like, you're like, you just feel very trapped. And so basically the conclusion that I made was if I would rather not be alive than what I'm currently doing, one of our dreams must die, his or mine.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap. I ended up closing the gym and basically losing everything else that I had at that point in paying for all like refunds and things like that. But everyone talks about how hard it is to start a business. Much harder to shut one down.

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I had Layla write the check. So I was like, I can't do it. Like this is years of my work, like my whole everything I have. And so anyways, we're back at zero again. So that's you can consider that big failure number one.

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And so at this point, we're starting the launch business. And so we're like, we're going to go all in on this. She's like, focus, please. Because I also had a chiropractor agency, a dental agency. I had this launch business and I had my six gyms. And so when I had the DUI, my mentor was like, your stress will kill you.

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And so from the beginning of this, I said, I only make my decisions when confronted with apparent death. And so this was the second time that I made one of these big decisions, which is I basically ended all my partnerships. So I called up, I was partnered with a guy on a couple of locations back home. I said, hey, I'm out.

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And then I talked to the people I was partnered with on the chiropractor and the dental agency. And I was like, I'm out. The problem was that I was the one that was bringing all the business in. And so like, they're like, what are we going to do? I was like,

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your half yeah you know like to figure it out those all failed eventually which was sad but i was i was i was out we started the new launch business and so layla's like okay this is what we're doing i'm gonna get all my friends from from high school to quit their jobs and we're gonna go all in on this and so she got her six friends from high school to quit all of them to quit their jobs and join us in this like we're gonna launch gyms now and of course because i'm

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dumb. I was like, yeah, we'll go from one to six a month immediately. Because I was like, we got to make up for a lot for lost time, we would be here if I hadn't been an idiot. So we have to start there. We had one we had one month in between when when I basically lost everything. And when I'd set up these next launches, and when her friends were going to quit.

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And in that month, one gym came up and I was like, this is perfect. Like, this will replenish the bank account so that we can fund these new launches. And so a launch for context would make about $100,000 in a month. A guy hits me up out of nowhere and says, Hey, I saw you speak at this thing years ago. I've got a newborn baby on the way and a two month old and I need a job.

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Crazy. Like he met me at not there, like just random. I was like, all right, this actually might work because he could just, because it's all day when you're set, like when you're doing a launch, like it's, you know, 12 hours, 14 hours a day of sales all day long. And so I was like, if I get the 14 hours back, I could build all the materials that I need for this, for the real business.

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And that could be great. And so we launched the location. It does awesome. The guy crushes it. We do $100,000 in sales. But what's weird is that all of a sudden I'm like, where's the where's the money? Like I'm spending money on ads. I'm looking at the payment processor and it's saying successful, but there's nothing coming in. And so I call Heartland, which is my processor.

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And I was like, hey, like it's too, my deposits come on Tuesdays. Like I've been doing this for many years. Like, why is it not there? And they're like, Oh, it might've just been like something. I don't know. It'll come in the next few days. Didn't come. Next Tuesday, nothing again. And I was like, okay, it's been two weeks. Like what's going on?

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So I called back up and they're like, oh, the person you talked to, you probably didn't know. We're doing an annual review of accounts. And I was like, I've been with you for like five years. Like, what do you mean annual review? And they're like, ah, it's just a new policy, blah, blah, blah. And I was like, okay. So now the next Tuesday hits. And so there still hasn't been anything.

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This is now Christmas Eve. And I'm now at Layla's parents' house because I've lost everything, and I'm a winner. And I get on the phone with them, and I was like, I am not getting off the phone until you send me the money. I was like, it felt weird being like, it's my money. But it was my money. Just take your fee and deposit it, whatever.

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And so I think my father's dream for my life had to die in order for mine to live. And so I guess upon realizing that, it made the stakes of the decision so much larger. And at the same time, it made my for lack of a better term, give a fuck around his perceived judgment of the decision, it minimized it a lot. And so that's what allowed me to kind of move forward.

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And they were like, well, we've seen some irregular activity. And the issue was, one, we'd done all those refunds at the gym that I had to shut down.

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The second issue was that I was processing payments for different states and areas out of my local gym processor.

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I was 20-something, right? So like I'm processing transactions in Virginia. Yeah.

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in a gym in california and it just like didn't make any sense and so they were like we're gonna we're gonna shut your account down and we're gonna hold on to all of this for six months and i was like that's what do you what do you how i was like how is this legal like i was like this is like theft i was like just i was like if you need to keep some of it to cover whatever like fine keep it but like give me like give me give me half like give me something yeah

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And they said no. And so at this point, I had $23,000 left in my bank account from the launch that Layla did to cover our asses during all the refund period. I owed $22,000 in commissions.

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To the sales guy. For sales that I had not collected on.

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And so it was kind of one of these like moral, like, what do I do? And so I sent him $22,000 because he was with the kid and the baby and whatever. I just didn't want to give myself the opportunity to not. I just was like, just send it. That was the screenshot that I have of $1,000 left in my bank account in December of 2016. So I still have that screenshot because I was like, remember this.

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Yeah.

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And so that was tough. That was the second time that I kind of lost everything. Big mistake there. And then so then, you know, Layla has all of her friends quit her quit their jobs, but I have no money. So they all quit their like real jobs to do this with me. And I have nothing. And so this is when I told Layla that I am.

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thought that she should probably leave me it would be a wise choice I was like this is probably not going to go well statistically this is really low likelihood like I can appreciate like I still have some brain power like I don't think this is going to work but I was like but I'm not I'm not I'm going to do it but I don't think it's going to work and so I still had my gym credit card that had a hundred thousand dollar limit on it I went to go turn on the ads because it was for New Year's so it's 26 this is Eve right I was like we can make it all back you know like come on and so we're we're

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So here we are. So I turn on all the ads the next day after getting off the heartbreaking call on the 24th. And the 26th is when I turn all the ads on. And I was like, I'm going broke at $3,300 a day of money that I don't have.

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to make this work because i have six guys hotels airfare per diems for food and then marketing spend for the location every day and that was shoestring like those guys were living in hovels i'll just put i'd be honest like they were young dudes too they they stuck it out but within the next you know month we made exactly the amount of money that my credit card bill was

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So I basically broke even, but like we had payment plans that were coming after that. So I was like, okay, this could work. The next month I made like an extra, we did like $100,000 the first month. The next month we did like $170,000 or $80,000 or something like that. And I was like, this might work. I made like $30,000 or $40,000 in profit. Like, holy cow, like this will work.

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The next month we did another, a little bit more and made a little bit more profit. I was like, this could be a thing. But then all of a sudden, Layla hits me. She taps my shoulder one morning. I'm working early. And she was like, she just turns her laptop towards me. She was like, what's this? And it was just like this never-ending waterfall of negative transactions.

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And I was like, what's going on?

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and so it turns out that the gym owners that we had sold all these people into we had one guy get on a chair inside of his gym and just say like this is too many people i can't handle this just refund and go home and we'd already left the gym like we'd already launched the gym filled it up and our guys at the next gym but like the way business works is that you don't run 100 margins and so if you have to refund 100 of your sales you had costs like the credit card company will take 100 but you had costs that you spent that you don't have that money

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So that happened. And then word got around. And then the second gym owner did that as well. He did a little bit more cleverly. He said, Hey, I saw how much you paid that guy. I'm the one delivering the service refund with him.

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Basically, I had to accept the fact that I would be dead to my father for an extended period of time. And so I was like, well, I'd rather be dead to him than dead to me. And I think that's what allowed me to really make the decision. But I basically went into it with, I will accept the fact that he will not talk to me again.

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You can sign up for me with for half after I already paid the price of basically the cost of our customer paid the commissions, paid the marketing, paid the hotel for the sales guy, all that stuff. And so I learned a very important lesson, which is that you need to control the money and the delivery. And so that was my big lesson there.

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I think it's always been looking at the don't, I call it, which is like the other path. So I teach this with sales too, which is that like someone will present with some sort of obstacle.

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And a lot of times it's like, I mean, you can obviously overcome the obstacle, but I think it's a lot more powerful to be like, I understand this is your concern, but what about all the other things you could do that aren't this? And it's just selling against the don't. It's like, so like the biggest competitor in fitness is not the guy down the street, it's the couch.

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like that's who you're competing against for me like in these situations it was like this sucks but the alternative is what like i stopped and like that was just like not really an option i used to repeat this stuff to my myself a lot which is like you'd be amazed what you can accomplish when you have no choice and so just like wasn't a choice it wasn't on my on my my menu of things that i could do yeah i was like i'll just try again yeah you know i'll just try again

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And I will accept the fact that most of the people that I know will not be around me. Now, as you play it out long term, some people come back, some people don't, whatever. But in the moment, I had to be, I think, willing to lose it all on the emotional side in order to do what I wanted to do with my life.

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I see a lot of it as like chapters in a book where like this isn't where I want the story to end. And so we just get to – it's like I think if you continue, it's like I'm just going to keep writing. Like we're just going to add another chapter. And another chapter has – and here's the interesting thing is that regression to the mean is normal. So like –

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if things are good, it's likely that they'll be less good in the future.

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Yeah.

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If things are bad, it's likely they'll be less bad in the future. And so I'm like, okay, well, things are, I mean, it's hard for things to get worse than this, but like, you know, I have high probability that it'll get better. Yeah.

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And I think Joe Rogan has this really great way of framing it, but it's like a lot of video games, you kind of like wake up as a character and then you have a backstory. Yeah. But then it's like, at that point, you decide what you want to do with the character. And so in a lot of ways, it's like, this is just my backstory.

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And in a very like weird, you know, weird way, it's like the past doesn't exist. And so if I had started at zero, I had already started at zero before. And I've started at zero multiple times now. And so it's like I know what to do because I've been at zero before. And I was really excited the first time I was at zero. Why should I be heartbroken now?

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Except now I have way more experience than the kid did in the beginning. So I probably have a way better shot than he did, and he was stoked. So why shouldn't I be stoked?

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There's a friend of mine, Brooke Castillo, you might know her. She asked a really good question on bad situations, which was like, how could this be awesome? So it's like, I'm about to get divorced. How could this be awesome? I'm about to get sued. How could this be awesome? Like in what storyline or what timeline would this terrible thing be awesome?

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And what do I need to change about myself and my surroundings so that that becomes the pivotal moment to basically become the foundation for the next thing? And so, yeah, I'll close the loop for everybody. We ended up basically having to make $150,000 in profit in the next 30 days. And I never made $150,000 in profit ever in a month.

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I worked 48 hours, asked Layla, I said, you know, she had these side clients that she was doing fitness with because she had a personal training business before that. And that was basically paying for the groceries. Layla was basically supporting. So like Jim Welch was making all this revenue, but like no profit and like making money, just losing everything, making money, losing everything.

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And I was like, How long does that take you? And she's like, I don't know, four hours a month. She's like, why? Because she thought I was like attacking her. And she's like, why? Like, hey, it pays for our food. And I was like, I'm not saying it's bad. I was like, four hours, that's not bad. You're making four grand a month. I was like, you know, four hours, 40.

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I was like, if we did 40 hours, we'd make 40 grand, you know, a week. That's not bad, right? And so I like took a bunch of prescription stimulants and like didn't sleep for two days and banged out like one of the best sales letters.

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I made up one of the best sales letters ever written. And it was, and it was, it was Layla's story of how she lost a hundred pounds and then did a fitness competition. She was like, this is ridiculous. She's like, this is so heart wrenching. And you don't even know my story. She's like, I would, you know, I was like, I was like, my, my thighs are rubbing together because I was overweight.

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And I was like, and I would always wear the coverall. Like when I was on the beach with my family, because I didn't want anyone to see it. I would always be on the edge of pictures. I just tried to think of all these like terrible moments. Anyways, I start running ads to it. We just started doing sales and doing like $1,000 a day in sales.

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And I was like, okay, at this point we had eight sales guys because I had to sell more to start. I had to keep selling more every month to cover the refunds from the month before if these gym owners were doing this because I didn't know a way out. So that was how I started doing that.

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And then that's when it was actually really stressful because I was like, I have to just keep selling more to cover refunds from the month before. Like this is not sustainable. And so that's when we started doing this, $1,000 a day. I was like, great, I can take the eight guys, bring them in. We can do $8,000 a day, almost all profit. we could get $150,000 profit, so I got really excited.

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And so I had eight more gyms that were supposed to launch the next month, and I was calling them up and I was like, hey, we're out, we're changing our model, like, you know, wish you the best. And that's when, you know, I said, I'll just, I'll show you how to do it, rather than me flying out there and doing it myself. And then the guy was like, well, how much?

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And I said, I just picked a big number because I wanted to get him off the phone. It was like $6,000. And he was like, 6K? He was like, done. And I just remember like floating out of myself being like, because I'm used to selling memberships here. Like I'm used to making $300, $400, $500 sales, $200 supplement sales.

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So me 10X or 12Xing what I'm used to collecting was like just like an unfathomable number. And he said, yeah. And I was like, holy shit, six grand. And I had seven more calls that day. So then I was like, okay. He's like, well, when do I get my login? And I was like, it was Friday. I was like, Monday.

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and so and he was like okay cool call the next guy same conversation and he was like how much and i was like eight grand and he was like yeah done and i was like holy shit and so by the end of the day i collected sixty thousand dollars and i was like and leila came in from doing all these sales doing weight loss sales i was like how's your day she got so two for two and i was like that's awesome i was like i think i think we're still in the gym business and now she's like you just told me yeah

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You just told me we're going all in on queen transformation, which is what we called it. Like you wrote this whole sales letter. You sold me on how we're not doing the in-person thing. We're doing the online thing. And I was like, Yeah, I think we were just doing it wrong.

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I then called back all the 30-plus gyms that I'd done turnarounds for and was like, hey, remember how I just made $100,000 out of your gym and you're really upset about it because I'm just some kid and you're an experienced gym owner and I still filled it up? Want me to show you how I did it? And they were like, yeah.

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And so I just went back, got 30 more sales, and I was able to cover the $150,000 in basically refunds I was going to have to pay for within 30 days and got like – back to neutral, back to zero. I was, I was, I was $150,000 poorer than zero. Yeah.

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And so, yeah. And so then, uh, and then that's when, that's when Jim Welch took off. And so that's when it, so I'll give you the, I'll give the rest of the story is the, is, is, is less fun. Less fun. It's like we went from, you know, zero to four, four and a half million a month.

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Yeah. Hopefully the audience is bored to tears.

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Layla and I had probably taken about $40 million in distributions from Jim Launch during the time that we owned it, and then the sale was for $46. And so we had a decent enough amount of money to start a family office. Well, from investing perspectives, that's small. You need about $50 to really start a true family office. Otherwise, it's like fractions different.

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We're like, I think we can do this. And so we started making investments in companies that were – When we started this, it was going to be e-learning businesses to try and basically run the same playbook that we did with Chipmunch. It turned out that was not a good model for a variety of reasons. We have now just transitioned to taking larger and larger stakes in companies.

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Yeah.

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And we now really just look for revenue retention, which is the only thing that we really care about. And then because we know how to do the marketing and sales. And so it's like we just want to find products or services that people never want to stop buying.

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And I will tell you, for anybody who's listening to this, one of the big pieces of advice that I can give you is that instead of trying to find a product and then being like, how do I get people to not stop buying this? Just find stuff people already don't stop buying.

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It's like, I promise you that there's nothing that you can do to a gym membership to get someone to stay more than their insurance or their internet.

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It's just the dynamics of the service or business. And that took me probably like two years to learn that. So there's two years and one minute.

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The first deal was 2020. Okay.

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I would say investors usually are like 10-year cycles. So I'm like halfway through a cycle basically. Learned a lot. Most of the things I learned will probably not be interesting to the audience. But yeah.

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I'm pumped for this.

The Game with Alex Hormozi

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So there are five. that I see that happen on a regular basis.

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And they come from apparently impossible choices. Overcompensation of employees structurally. It's like, for example, I've got people at my chiropractic clinic and I pay the therapist 50% of revenue. Tough to scale. Underpriced, my facility. I'm using brick and mortar, but this works for, it could be digital, it doesn't really matter. I'm at capacity, and I'm not making profit.

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And with each of them, though, there's an apparent rock and hard place scenario, though. If I pay people less, I'm going to lose all my therapists, and I'm going to lose my business. If I raise my prices, I'm going to lose all my customers. And the next one is woman in the red dress. So more commonly known as shiny objects in the room. Yep.

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multiple rabbits and catching none and spinning your plates. And if you're at least backtracking to the story there, like I had a chiropractor agency, a dental agency, I had six gyms, and I was doing a launch business. I made no money. I mean, I made revenue, but I didn't have enough attention to go deep enough on anything.

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So Epictetus has this really good quote.

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So all I was doing was pure fires all the time, which is one, a miserable existence, but two, you just make way less money. And the guy you're competing against who's beating you is only doing that. And that's the thing. And I think it's actually, believe it or not, I actually think it's arrogant. to believe that you can do multiple things and beat somebody who's only doing one.

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He says, if you're ever tempted to look for outside approval, realize that you have compromised your integrity. If you need a witness, be your own. And so I think to the same degree, it's like how do I get my husband or my whatever, my kids, my cousin, my uncle, that person who I give all the power in my life to, how do I get them to approve of me?

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Well, Elon does it.

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And he, yeah, we wouldn't even talk because he's an alien. And so it doesn't really matter. But like for all of us mere mortals. And this, I'll tell you this little framework. So if you're like, well, Elon did it, it's like, well, did you, you know, drop out of whatever Ivy League school that he dropped out of and then code from scratch zip to when you were 21? No, you didn't do that.

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So you're probably not Elon.

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Yeah.

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Well, I'm going to be the next Warren Buffett. Did you buy your first stock at age seven? Did you make a huge purchase right after Pearl Harbor got bombed when you thought the nation, like when people didn't know if America was going to be here?

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No, it's just like, okay, I'm going to have a holdco and, you know, I'm 30 years old.

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The next is overexpansion. I just opened my second location. And I'm just talking brick and mortar terms with the supplies for everything. And it's almost like the shiny object one, except the businesses are interrelated and it was the correct next step, just not now. And so typically overexpansion is actually a function of being under-talented. And so, yeah.

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And so, and when I say under talented, there's two components to that. One is there's you, right? The other side of it is that the talent on your team is just insufficient. And so like, could you have gone to the second location? Could you start that second product line or the second service line? Absolutely.

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If you had enough bandwidth for you, which you can only get back with somebody else who's good, right? And so that's, it's usually a who issue for overexpansion. Number five is you're serving too many different types of customers. And I want to be clear. It's super normal in the beginning for you to have one qualification for a customer, which is credit card impulse. So I guess that's two.

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Very normal. The problem is as soon as you start selling a little bit more, you're like, oh, my God, I have so many different things that I have to deliver. And this guy's a little bigger. This guy's a little smaller. But my product's not that. Whatever. You have to pick. But, and obviously this, again, these are rock and hard place scenarios, but this is half my business is this type of avatar.

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At some point, I'm fast forwarding a little bit, but usually it's between one and 3 million is where you have to start being like, I have to be narrow on my avatar. And the fear is, and for each of these, the fear is logical and also wrong.

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How do I get them realistically what you're asking for is permission?

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And that's what's really interesting. So like, so Roy Sutherland, a big app marketer that I love, he's chairman of Ogilvy. He talks about psychological and logical solutions. And so like, for example, if I want people to like the elevator ride better, so people are complaining, for example, that the elevator ride is too slow.

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You could then think, okay, we'll have to reinstall a new elevator that has a bigger engine and make it go faster, right? And that would cost us lots and lots of money. An alternative is just put mirrors inside the elevator so they can stare at themselves and no one notices the fact that it's slow. Psychological solutions.

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And so what's interesting is that like all logical solutions, if you have a logical problem, sometimes you have to use a psychological solution rather than logical ones because the logical ones have already been tried and don't work. And so when you have the apparent rock and hard place, there's usually a different way around it, which is that like, how could this be awesome?

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Which means that you're actually not in control of your life.

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So what if when you change your compensation structure, your team feels more at ease because the business actually has a profit and has a chance for expanding so that they can have a career path?

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What if that was how you positioned it? I've had to do this myself, but also for other people. If you're underpriced, it's like, well, what if when I raise my prices, I attract better customers? And because I have more profit, I can attract better talent. And I can ultimately provide a better service. And they're lower maintenance. And all of these things cascade down from this higher price.

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And so I think a great frame for anyone who's in this spot is asking for support, not permission, number one, and number two, being willing to accept the fact that they will not support you.

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If I focus all of my attention on one thing, I remember I met a business owner who... was telling me, I don't know, all the businesses he had. And I was like, and I knew roughly, I think, how much money he was making. And it was not a ton. And I think he had 78 things that he was involved. It was the biggest thing I've ever seen. And he couldn't name them all.

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And he's like, I have an Excel sheet that has them all. And I think he was doing about eight figures a year, which I know some people were listening. This is like, oh, that's a lot. I promise you between 78 businesses doing that would be unbelievably stressful. And who knows what the profit is, right? And so then I said, if I had a magic wand,

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And I said, which of these 78 is the one that you're like, this is my baby. This is the one that I think could go all the way. I was like, do you know which one it is? He was like, yeah. I was like, if I waved a magic wand and I cut the other 77 and you just did that, I was like, how easy would it be to double the business? He's like, oh my God, I could do it in my sleep.

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And I was like, then why don't you do that?

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That's how you handle that one. The overexpansion is, and this is the tough one, you either got to, and it usually happens at that same million, two million-ish level. And I have a theory around it, which is that if you think about the cost of talent, right? So let's say you have a 20% margin business and you're doing a million dollars a year. So you're making $200,000 a year in profit.

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You either have to work double time or you have to not have a profit and bring someone in who's really good. Those are basically your two choices. And they're both tough.

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Right. I mean, by the way, this is why you get compensated as a business owner, outsized returns, because you take outsized risk. That's why we get paid what we do, because we're willing to lose it all. Right. But it's usually right at that size, one to three-ish, because your margin almost equates to one or two good employees. Right. And so you have to make this bet. Or you just work like crazy.

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It's one or the other. And so when you're in that overexpansion area, it's like you just have to work like crazy and then train someone up. Or you have to bring someone in and then obviously they can help you take it over. The third path is that you just accept the fact that you don't have who you need.

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You cut the short-term loss for the long-term gain so that you can get the one location or one product or service right. So that... I like this framework of scale zero, which is like every business that I've had that's been exceptional has been a business that I didn't start to become a business. They were things that I just was like, I'm just going to make some money.

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And I don't want to work a lot. And when I do that, because you actually solve for zero ahead of time. And so you're like, I'm solving for something that is super profitable, that doesn't take a lot of time. It's like, well, shoot, then why can't I do a ton of that? And that's what ends up happening. Whereas every time I've been like, I want to just build a huge business.

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I was like, I end up building something that doesn't like actually work.

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Yeah.

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And so it's just very weird that every time that like, when I look back on my life, the times that I've like, I've had to make money or wanted, you know, to make money and not build a business is when I build a business. When I build a business, I don't make money.

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It's just kind of like interesting. So that's solving the overexpansion issue. The avatar issue you solve with data, which is you look at all the customers you've sold up to this point, and you're like, okay, look at the top 10% and say, what did these people have in common? And so I think about it in terms of demographics, like what do they look like? Where are they from?

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Oh, it's huge. It's like you have this massive exhale. Yeah. And everyone who's had one of these hard decisions that's pending in your life, whether it's quitting the boss or telling the husband or whatever it is, it's like as soon as you do it, you're like, why did I wait so long? You don't realize how heavy it is.

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I think about it in terms of psychographics, which is like, how do they think? What are their beliefs and values? And then I think about actions. So what things did they do while a customer that other people did not do that caused them to be successful? And so then I start selecting for those people in the advertising and the offer so that we just only get those people.

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And so if you're in that spot, my recommendation is you don't have to kill your business. Just start advertising only to the one avatar, which is usually the higher-up avatar. I'll just give you the cheat code. It's probably the guy who's probably the one that you have fewer of but that are better. It's probably that one. You advertise to them.

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And what happens, though, is that you will still get the – the minnows that are coming, but you'll get a greater proportion of the better ones by just saying, I'm only working with these better ones.

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And you can basically slowly shift the percentage of the pie so that a smaller and smaller percentage are minnows until eventually you can, you know, maybe when you're at 80%, you just say, I'm not taking minnows anymore because of distraction. I just want to work with whales.

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And so that's the transition there. The bonus sixth problem that small business owners have is no data daddy, as I like to call it, which is that they don't know anything about their business. And so, I mean, if you've seen like Shark Tank or anything like that, the thing that they always tell you is just know your numbers. Because if you don't know what to do, it's because you have no data.

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And so the actual constraint of the business isn't the action you need to take, or rather the action you need to take is to get the data. Because when you have really clean data, The next step actually is usually pretty obvious. So you look like a genius from the outside because you're making these good decisions and the business continues to grow.

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But you know that deep down it's just because you collect good data. And so it's like you should be able to know what happens from click to close and from close to renewal. And you should know what all of the metrics are between those steps.

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And I mean, at the most minute level, because that's where all the alpha, to use an investment term, like that's where all the huge gains in business growth come from. It's like, okay, let's say we've got, you know, a 2% CTR on our ads, fine. We've got a 20% conversion on our landing page. Okay, it's a little bit low, but fine. And then we've got a 7% schedule rate. We're like, ooh, okay, well...

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we could probably go from seven to 30. And if we did that, we would 4X the business. ooh, that feels like that's worth tackling. But you're like, I don't know how to grow.

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One of my favorite kind of little isms is the heaviest thing in the world isn't iron or gold. It's an unmade decision.

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And I think that a lot of people are carrying around too many of them.

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And for – I'll just say that if you're sub a million in revenue, the answer is almost always more. And there's a math reason behind that. And so like improve, you know, because if you're sub a million and you are actually, you know, making, you are making sales and you are making a profit, you have priced it such that you haven't, you're not selling $5 bills for $4.

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Let's assume that that's true here. All right. If that's the case, I'll give the simplest example I can, which is that if I have one salesperson who works for me, and let's say that guy does outbound and he generates business for our IT services, whatever, I could probably try and take his close rate from 30% to 40%. I could probably do that. How much time would that be? How risky is it?

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How likely is it to happen? We can go through all that. But it would probably be better to just hire a second sales guy to do the outbound because that would have a high likelihood of doubling my business.

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Now, later on, when you have 20 sales guys, you then have to see, okay, if I'm at, you know, we're at 30 to get to 40, okay, that would be a 33% improvement in revenue if we just got everybody to go from, you know, 30 to 40. Okay, that sounds reasonable. But the alternative would be to get that same increase with 20 guys that have to hire seven more sales guys.

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And so then you look at the risk-adjusted return from each of those actions and say, okay, well, I think there's a higher likelihood that I could just improve the sales guys from 30 to 40 than onboard, hire, train, recruit seven more productive sales guys that are at the same KPIs as the rest of the team. And so you'll actually notice it's a little bit like a –

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a pinball or like an accordion where it's like you'll do more and then you do better and then you do more and then you do better. But in the beginning, you're usually just not doing nearly enough. And I'll give you this little ism that I end up repeating a lot, which is that volatility is a symptom of low volume.

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So if you're like, man, it's word of mouth and I get a sale every month, I get one or two sales that come in. So The reality is that there's a certain amount of advertising that is occurring. So a certain amount of people are telling other people, a certain amount of posts on Facebook, a certain amount of outreach attempts that you make are creating one to two sales per month.

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The businesses that are doing one to two sales a day are doing that amount of advertising activity per day.

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And so I'll tell you the story because I think it'll resonate with the audience. So when I was younger, when I started my gym and there was a period of time where like lead costs went up because some Facebook change, whatever. I talked to a mentor of mine and I said, you know, how are you advertising? And he was, he had 22 locations and it was tanning stuff. And he said, I use flyers.

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Then I show up at a gym owner's front doorstep because I'd found him on the internet.

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And I was like, okay, I'll use flyers. I'll try that. And so I printed out flyers and I put 300 flyers out on cars or whatever. And, you know, I waited to go collect my money. And one guy called and he said, are you the guy who put the flyer in my car? And I was like, yeah. And he's like, you dinged my Mercedes. And then I was like, oh, and I just like, and he never called again. Thank God.

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But anyways, I called my mentor back and I was like, hey. And he's like, hey, how'd the flyers work out? And I was like, I was ready to like give him like a talking to. I was like, it didn't work.

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huh you know like what are you gonna say about it now and he took it really well he was just like really great he gave me a lot of grace he was like wow what was your test size and i was like what do you mean he was like well would you test like how many did you put out that you test first and i was like well i put out 300 and i was like 300 and he was like oh man um we test with like 5 000 and i was like oh he's like and then after that we do 5 000 a day

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Because I wanted to be an entrepreneur. I wanted to start a business. I had three different ideas. So I was either going to do frozen yogurt,

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So he was doing 150,000 flyers a month. And I thought that 300 was a campaign. And so a lot of times when you're starting out, you have such a dramatic misunderstanding of the sheer volume that people who are ahead of you are doing. So like Mosey Media, us, we put out 450 pieces of content per week.

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It's a lot. It's 60 or 70 a day. I can't do the math. Somewhere in there, right? And so when people are like, well, I won't even get into the like, it must be nice, but like you're making one post a day on Instagram.

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And you have seven and I have 450. And I've also been doing it longer.

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And so I have 450 a week times years.

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And so it is a volume game. And in order to accumulate more volume, you have to allow for time to pass. And hypothetically, could I get to 1,000 a day? Probably. We're just not there yet. And I'm sure five years from now, I'll look back and be like, I remember when I was doing 60 a day. My God, I was so cute. Like, boop.

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Yeah. I think we have like 13 or 14 million.

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I mean, who's counting? Uh, but yeah, no, but, and, and, and I, I like to bring this up, which is that, uh, just like Rich was saying earlier with like, you'd know if you were the guy or, you know, if you were the girl, uh, I think we're making this for everyone who's not that.

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No, it's fine.

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And so I didn't have a clip go viral and then all of a sudden become this person.

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This was a deliberate choice that I was like, I'm going to try and do this. I started by making three, I mean, I started in July of, well, if you're on the podcast, like my, so this is actually kind of probably the coolest thing I think about my story, hopefully in the future that will be cold, is that

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90 days after I had lost everything, the last time, clarity on dates, 90 days after I lost everything, the last time is when I started my podcast. And so one, if you're like, I'm at zero, like, what do I have to say? Well, there's that. Number two, my rule was that I only talk about things I know. And so the first 300 episodes are just like, how to run a gym, because that's all I do.

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And I'm, hey, in a different timeline I might be. I wish I was, like, in Cincinnati. So I could be, like, the froyo king of Cincinnati. Like, I want to have a city associated. The froyo king of Chicago. Yeah, exactly. Like, I want... Frozen nation.

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So it was called gym secrets. And it was like, And I had six locations. So I had some stuff that I could talk about, but I just didn't go into topics. I was like, when someone walks in, this is how – I just talked about what I knew. And for years, it was at 100 downloads, and then it went to – I think it took like four years to get to like 2,000 downloads an episode.

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Not a lot of people were listening to Gym Secrets. I bring this up because the whole thing is documented from zero to here. Yep. And I think that's like that. I think to me, that's like the coolest thing. And so, you know, a couple years ago, I started doing the YouTube. That was like my next big commitment. I was like, I'll make three YouTube videos a week.

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And then I had a guy randomly reach out to me and say, hey, these shorts things are going to be a thing. And he was like, you already have longs. I'll just take the stuff you already have and make them into shorts. And then that did really well for us. And then we're like, and then we started bringing it in house. And that's pretty much what we've done ever since.

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It's just do more, do more, do better, do more, do better. And we just keep doing it.

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I think so. This is just something that I feel like I've seen across a lot of business owners because I talk to many of them. That's basically my full-time job. It takes about five years to figure something out. And it takes about 10 for you to probably realize the success that you were hoping for in one or two.

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So just as a baseline for anyone who's listening to this, it's like you're like, okay, let's say you have some corporate job that's, you know, you make $150,000 a year. You will for sure make less money for the next two, three years. Now, you might make revenue very different than what your take home is. Very different. Right?

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Like you might start making sales, but you imagine that you're going to immediately, like one, that revenue is profit and it's not. And that you're going to immediately have more time. You're going to have less. Right. To be fair though, sometimes it's good to be ignorant of it so that you take the jump. But it's literally just harder. It takes longer and you make less for a while.

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Because the insider peeps would know I can I can talk about frozen. I'd know a lot about.

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And I say this as somebody who was a management consultant before this. Like I had saved $50,000 when I was 22. And it was just because I made decent money and I was prudent with my spending. But it took... five years before like we figured out the gym launch thing. Now I had the locations that made money, but then you make mistakes and you will lose things and you will take back steps.

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And so I think, you know, I talked to a really close friend of mine last night and he said this and he said, you know, in my, in my twenties, it was all about the destination. And he was a Goldman Sachs guy. Like for those who don't know, it's probably one of the most prestigious investment banks.

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Guys there make $10, $20 million a year at the higher levels, like very smart people and very type A driven area. And he said, in my 30s, I realized it was about the journey, right? He said, and in my 40s, I realized it was about the company.

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And so I was like, I can't wait to see what it is when it's 50s. But I really like that process. And so I think if you solve for forever, you can go for a very long time. Like when I started YouTube, I told the vendor that I was working with, I was like, I'll make a call whether I keep doing this in 10 years. And he was like, at six months, I was the fastest growing whatever that he'd had.

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And he said, I just want you to know that I've never in my whole career had anybody say that they were going to do this for 10 years. He said, everybody is always like, 30 days, 90 days if they're like, you know, long-term thinking or whatever. And I was like, I just figured if I do so much of it that it would be unreasonable that I suck, I'll probably be better than average.

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And so there's a certain amount of volume that's required to get good. And so my approach has always been like violence is the answer, which is just unbelievable amounts of execution. And just trying to get – I remember I read Outliers when I was in college, I think, which is Malcolm Gladwell's book. You talk about 10,000 hours.

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It was such a pivotal book for me to read because it set the bar for what I expected volume to look like. And so it's like, well, if I want to be a master at something, one, I have to start now. Like, oh, my God, I'm so old.

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But secondly, the part that I thought was really interesting was that like Bill Gates, he considered like a genius or virtuoso coder at like six or seven years, whereas some people would take like 10 or 12. And so that one little nugget for me gave me the realization that like, oh, I can cram. I can take 10 years of normal work and cram it in four or five.

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So test prep was the was the third business. And that one, I was good at standardized tests. So it kind of didn't require a ton of startup costs. And so between the three, I actually was leaning towards doing first, I looked at the Froyo thing, I only had $50,000 saved up. And it costs like $200,000. Or at least that's what I found online. And I was like, Oh, no, I don't know if I can do it.

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And so that's where... saying like, you know, I have the rule of 100 for people who are starting out for getting their first customers. So you make, you know, 100 outreach attempts per day, you spend $100 in ads per day, or you make 100 minutes, you work for 100 minutes on content and you post it. And if you do that- And you post it is the key.

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And I'll tell you why you have to do it in a second. And then you do that for 100 days. And I promise you, if you do that, you will have a customer.

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Period. You will have a customer. And what's crazy is that I get these screenshots of people who are like,

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holy shit dude I'm on day 31 and like and they show me their stats on like TikTok or Instagram or whatever and they're like and look at the leads that like they just do it you know I mean and like if you actually count it out and you actually do the whole like I've never to this day had somebody do the full hundred all three and not have customers yeah and the reason you have to put it out and do the do the outreach test the ads if you're going to do ads or just do or do the content is that

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The only, at least my favorite way to learn is to do a huge amount of effort, a lot of repetitions, and then look at the data of the last hundred and say, what were the top 10%? What do these have in common? Okay, my next hundred are going to be just like those.

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And then you do a hundred more of that. And then because of variability and variety of life, you're going to have another top 10% of those and say, what did those have in common? How do I do more of that? And this is the process of learning that you won't get in any course because it'll also be specific to you.

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Now, as a visceral example, if I go up to a stranger and slap them, and then, like, I will probably get a lot of views.

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Does that increase or decrease the likelihood that someone will purchase something from me? Probably not. Right? It just sounds like, sometimes I just like asking the simplest question. When you look at this meme that you're posting, does this increase or decrease the likelihood that someone's going to buy from you?

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In all likelihood, it just does nothing. It does neither. Right.

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And so that's always been our litmus test in terms of basically what we're – I think what we're really teasing out here is the difference between getting views and building a brand. And building the brand is what are the pairings and associations that I want people to associate me with? And that's the people that I appear with. That's the subject matter that I discuss.

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And everything else that surrounds that, what are the values that I have that come through in the content. And I will say that me personally – the more I just try to think like, and this is probably useful, if you have a customer that is your favorite customer, and if you don't have a customer, think about who that customer might be. Make content for them.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And so then I was like, Okay, maybe I'll do the test prep thing. I spent like four months to like basically creating like curriculum and like all this stuff. And I was going to partner with one of my professors from Vanderbilt to like do it together. The long story short is that like, I flew back in, I presented all the stuff. And I was like, so this is what we'll do.

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And if you just do that, you will be already like in the top 10%.

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Well, I appreciate it. And I would love to respond if that's okay. And if it ends up sucking, you can take it out. This has been something that I think is so interestingly in the last 24 hours, I had like two massive accounts try to like take a tax on me because of this.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Yeah, no, it's fine. Not a big deal. My worldview allows me to deal with these things.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Wholeheartedly agree. So stupid. And I feel like I can actually like make this as about like I will not make content that insults people.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And I think there's and it's probably useful for anyone who's listening. The difference between an insult and criticism. So criticism is a discrepancy between actual and desired. Yeah. hey, Sandy, you didn't show up. You haven't shown up on time three days in a row. The expectation is that you show up at 9 a.m. This is criticism. And because of that, you're a lazy piece of shit. That is an insult.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And so basically making a judgment is where insults come from. Pointing out to an observable discrepancy is what criticism is. For those of you who are like, How do you deal with criticism? It's like, well, make sure that it's criticism and not insults. I had most people insult me. It's fine. I survived. About this, and I really want to take the opportunity, if you'll allow me.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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I'm just the ultimate believer in freedom of choice. And many people... There's both sides of this. On one hand, there's many people who don't start because out of fear of what other people are going to say about them. And that ends up paralyzing them.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And he's like, this is awesome. And then he just like took it and he stole it from you. I don't use those words. But, you know, I know like he used it and I didn't have it. And so, yeah.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And so when I talk about death and the fact that most people will move on in weeks, not years, and they're going to go from the funeral and go to a pizza place and they're all just going to have dinner and then they're going to go to school the next day. It's crazy, but it's also reality.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And I think in minimizing that for me, when I stay this message, it's so that people, it decreases the perceived fear around taking the action and potentially failing.

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No one's going to care anyways.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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On the other extreme, I think that there are many people who want a legacy. And I tend to take a universe look at it, which is, you know, if I try to make it real, I'll say, okay, do you know who your great, great, great grandfather is? You probably don't know their name. And they're the reason you're here today. And so that's not that long ago.

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And so we have this, and I think it's just, we all have a desire to matter. We all have that. And I, in my life, that obsession handicapped me, which is why I make so much kind of countering that, which is that I think I've had deep-seated fears around judgment of others and things like that. And so I have to constantly remind myself that these people will not even be at my funeral.

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And if they're not going to talk about me at my funeral, why should I give them the power to speak over me in my life? And so that's the essence of what I'm getting at. And I can understand that when I make these comments about how people at your funeral are going to argue over your belongings and that they're going to talk about the food and the venue.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And some people aren't going to make it because something came up because they were busy. Some of the people that you love and care about today aren't even going to be there because they haven't even been there in 20 years in your life. And your friend's family won't even know to have invited them. And it doesn't even matter if they're invited because you're already dead.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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A lot of people get very triggered by that. And I think it's because humans have a fear of death and that makes sense. But I think that for me, trying to use death as my ultimate motivator insofar as

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Horrendous. Yeah. So, yeah, I used to tell Layla that my big red flag with her is that she was into me.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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If I can embrace the idea that I will die, and I will eventually be forgotten, call it now everyone's 10,000 years, 100,000 years, eventually, right, there'll be a start, you know, the sun will have a mega death and who knows, right? Like, whatever. And, and when I mean, who are we really paying attention to the people in the 1100s? Are we really? You know what I mean?

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Like, okay, there's six people who we've had that one book. You know what I mean? Like, okay, maybe, right? And that's not that long ago, right? The reason I solve for like, or try to really look death in the face and become comfortable with it is because if I can accept that as zero, then everything that I get to do in my life is free range. It's carte blanche. I can make my own way.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And I think that that has been something that has given me tremendous freedom of action and agency around being able to make up my own damn mind for my own life. And I think that, that is why I hit on that. And I, and I, and I push on that button because that also, cause I have so many people who messaged me being like, I was borderline suicidal.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Yeah. I was like the big thing. I was like the thing that really throws me off about you is that you like me. I was actually really disheartened at that point because I was like, this was going to be my thing. I had the whole business model worked out and everything. And I was always into fitness. And so that was kind of the third bucket.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And when I, when I really thought about it, the way you broke it down, I was like all these people that I, that I, I cared so much about their opinions. Like they don't even, they're not even going to remember me.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Like they're, they were like, they're going to have like a couple jokes too soon about my death. Too soon, bro.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Yeah.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Like they're going to say it like, you know, like it's going to happen. And I think that that allows me to not take my failures as seriously or my successes.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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If you're like, screw this idea, then by all means, do you.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Yeah. Instead of leaving a legacy, try living one.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And the guys that I worked with were like, dude, you do nothing but talk about fitness. We're tired of you talking about fitness. They were like, we'll chip in to help you start a gym. And so that was when I started looking into the fitness business stuff. I found a guy who had a fitness business mentorship program. And it was for gym owners.

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And so I drove across the country and I showed up at his front door and he was like, what? Everyone has this idea in the movies that people were like, oh my God, this is going to be it. He was just like, I've got meetings right now. You can like hang out at the gym if you want. And I was like, he's like, well, where are you staying? I was like, I don't know.

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And he was like, what do you mean you don't know? I was like, I just got here. I was like, there's my car. That's all my stuff. He was like, all right, well, you can stay at my place tonight, which is super generous of him. And so I stayed at his place.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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I was in Chino Hills. So I went from Baltimore to Chino Hills straight through, 36 hours. I packed all my food, didn't stop.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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I didn't wear diapers. What I did do, the secret is I just didn't drink fluid. And then I was like, I just got my fluid from the food and called it a day. I'm just being real. I wanted to leave Baltimore behind me. I was like, this is, I'm going.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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And so anyways, I got there, started being basically, I think this is kind of interesting, so I'll bring it up, which is I joined this mentorship for gym owners. I didn't own a gym. I'm also 22, just per context here. And this is like a lot of old grizzly dudes who own gyms. It tends to be the archetype. And I'm like, hey, guys.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Some of the best money I ever spent because the first time they had like a meetup, I was like, yeah, so I'm trying to start a gym, and I'm thinking about this. And they were like, oh, no, rent has to be below this. And I was like, well, this is how many square feet. And they're like, oh, you don't need that. You need this. And I was like, okay, well, this is the equipment I was buying.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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They're like, no, that stuff, that brand breaks. This one has just great marketing, terrible product. This one, although good, girls will slip and break their shins on it. Don't do it. And I'm like, oh my God. And they're like, oh, you know, you should get is these ones.

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These ones, you can get them at like these auctions that are like, so they just, I saved like $200,000 or probably like three years of mistakes from that first, just like all the things that they had made mistakes on. I just was sitting there just taking notes.

The Game with Alex Hormozi

How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Yeah. And I will highlight my exceptional proclivity for finding a way to lose everything. You know, pulling defeat from the jaws of victory. Yeah. The quick story is that I was a management consultant out of college, got to what I would consider a rock top experience where I was 22.

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And zooming out even one level to push on this for anybody who is worried about helping a competitor out, I have found that a business will fail or succeed based on how good the business owner is. And let's say that there are three event planning business owners that you know in an area.

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There are probably like 500 event planning businesses in that area and you probably will never know any of them. And if all three of you help each other, there will just be three good event planning businesses and the other 497 will not have an advantage. And so I would encourage you to disregard the idea that there really is competition.

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And I now, you know, I'm friends with a lot of the people that some people might consider like, I mean, like in the M&A world for private equity, it's like we share a deal flow. Like, hey, this is a company that's probably not as much of a fit for me. Like maybe like you might want to take a look at it. And I think

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You just get a lot more out of collaboration, and I think the world's significantly larger than most people give it credit for.

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How I Lost Everything Twice and Kept Going (Rachel Hollis Interview) | Ep 880

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Yeah.

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So I learned all this stuff. I spent three months kind of being like a mini apprentice, just like watching everything, soaking it in. The guy who sold the mentorship group just allowed me to be his like EA essentially.

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I got paid minimum wage.

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And I've repeated this process over and over again in my life. And so I think I actually do. I am grateful for the work that I did as a management consultant, which was the first job I had at a college, the one that I was miserable at. But I am grateful for doing it because it taught me the learning process. And so. as a consultant, if you want to, you have to like, I'm 22.

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And I have to go into a room with like, four star generals, and all these, you know, lieutenants and colonels and all this stuff, whatever, I have to then go present or compile information in a way that has to be better and some interesting insight that they don't know as 30 year, you know, literal veterans of the career of the of the path. And so and you have to do that in like three months. And

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I owned my own condo on like a pretty nice high rise, had a balcony, I was looking over the city and I was like, is this it? Like, I just do this until I die and maybe marry somebody. And I was like, this feels terrible. And so I quit. That whole quitting process took me six months from when I decided that I didn't want to do this anymore until I actually quit.

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And so the process of like rapid learning for consultant is you go and talk to experts and then you ask them every question you can about what they think about everything. And then you say, can you give me like three to five other people who you respect, who you think have really good insight on this? And they give you three to five people. And so then you do the same thing with them.

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And then you ask them for three to five people. And so eventually you kind of like map the network of like expertise. Because the same names will start coming up over and over. You're like, I already talked to Tom. I already talked to, you know, Jack. And then you'd have like 600 pages of notes. And then you recategorize the notes by topic.

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And then you basically you take that and then you distill the notes down into kind of the clearest like this is what the kind of priorities are. And that's how we would go into, you know, how do we, you know, use satellites to kill the most bad guys based on resources, like between different, you know, armed forces, like just wild stuff. And I'm 22. Yeah.

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And so I was doing like space cyber and intelligence for the military back. That was my first thing out of college. And so taking that idea, though, of like, experts already consolidate information for you ahead of time. So no one has a lack of information. It's everywhere, right? The problem is sifting through it.

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And so when you go to an expert, they've already done a huge amount of the lifting to sift through the information for you, so that you can just get the best information as fast as possible. And so that's why I was willing to pay as a 22 year old to go to this gym mentorship thing, because I was like, well, they know more about gyms than I do.

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And I'd rather not waste five years trying to figure it out.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

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Yeah, for sure. Okay. Because I wonder if, um, in some ways you have two businesses, let alone like if you were like, forget about the third one, you're thinking about buying, like you already have two and I'd rather have one. I'm not saying cut the one that you have. It's obviously a 40 year old business, but like it really have to make that decision. And that's actually not a me decision.

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It's a you decision. So I'll say it the way that I think Layla loves framing opportunities. Because I always think about upside, she always thinks about downside. And so it's like, what problem would you rather solve? So in the gag gift path, the problem that you're gonna have to solve is you're always gonna have to find new cheap forms of media.

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So it's gonna be like TikTok shop is what it does today and live shopping, and that'll probably be good for another year or two. And then it's like, that'll start to get more expensive and other people will compete. And it's like, then you're gonna be in the next, whatever the next game is. And you're just gonna have to get really good at

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paid ads and creative and conversion optimization on the site, increasing average order, that kind of stuff.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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The other path is you build either an outbound sales team so that they can sell these kind of B2B offerings that are, you know, or B2C if you want to consider the fantasy leagues and or just like a meta, just like a simple meta ad strategy that would lead people to call the number functionally.

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and then there you're saying cool our goal is to be your trophy provider for life um and i think the fact that your 40-year-old business sounds really good it's like hey we're 40-year-old business our goal is to be your manufacturer for life and so of course we're going to do this one but if you want we'll also give you 20 off next year um if you make the order now or something i don't know like i i i play around with that but which of the two paths

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

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Sounds like the life you want to live.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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Because if you wanted to hit 3 million next year, I was like, we could do 10 million next year. I would just say, we're going to take all of our resources. We're going to go all in on TikTok.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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viral organic and you're going to deploy everything into tiktok shop and get influencers to do lives for you showing all these funny gag gifts because like the the trophies are so built for shareability yeah like and so that's i mean 20 million views is a monster video i think if that was all you focused on you would be able to figure out because these are funny right

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And I think having like little skit scenarios where people, you know, walk in and they see the boss is thick or they change their plate or, you know, someone loses and then it just says like biggest loser, you know, like the negative versions. I think that would just make for really viral content.

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The leagues thing is like, that's the very stable version of this business. And if you did ultimately want to sell it in the future, you being able to go to a potential buyer and saying like, I have 5,000 leagues that buy our trophies from us every year. And leagues on average stay for 12 years. You know, like guys who do fantasy or whatever it is.

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It's like, that's fairly, you know, that's a pretty reoccurring business. You know, that's a pretty good business. Harder to build though and slower. Right. That's also why it has more value. So that's the, so if, if between those two paths, the like, I would like to just make more profit now and potentially scale faster, then we can talk about the media version of this.

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I think that's probably where I would. Okay, cool. So first things first is we're going to consolidate attention. So we're going to shut down losing location. So that should right off the bat be a plus 50% improvement to profit, which is great. And I think it could be more than that because your attention is going to not be split anymore by two locations. Okay.

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The second thing, you have basically something called a cost plus model. You look at your costs and then you add a margin in and whatever. And a lot of businesses do it because it seems very logical. The problem is every business I know that does a cost plus model doesn't make a lot of money.

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and so you want to switch to value-based pricing which is purely based on what someone's willingness to pay is and that could be unlimited and it doesn't matter what your stuff costs because why do they care what it costs right and so

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basically like as your vendors increase their costs to you, in some ways it shouldn't have any effect on the price of what you sell because the price of what you sell is completely divorced of that and based on what somebody is willing to pay. So in terms of how we can do this, there's a couple of thoughts here.

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So a, which will seem a little bit less scary is I would consider this to sound crazy, but like, monthly, like 5% price increases, like just keep going and just keep going. That is like path one. Yeah. And the thing is, is that every time you raise the price by 5%, you double your profit or I'll say 6%. If you want to be like, hey, I doubled my profit this month.

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Then the next month you can raise by 6% and then more than double because it's 6% times the 6%, right? So that is one way. The other way is that you just start immediately split testing kind of like 80-20 on your highest sales velocity items. And so this is simple, right? This is simple to do. You don't have to do any thinking. You just add it, and that's what it is.

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This one will probably get you more profit faster. It just takes a little bit more thought. So you'll take those four-foot, five-foot, six-foot trophies and just start, like, just keep bumping the price and just seeing what conversion rate looks like. Because what we're trying to optimize for – did you have an engineering background? Okay, you said you were good at the manufacturing side of things.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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Yeah, so what you're trying to optimize for is gross profit times units sold. And so if you think about it, it's like, you know, down here, it's like I'll have a ton of sales velocity, but I'll have low margins versus here I'll have fewer, you know, fewer items sold. But it's like, where's the sweet spot where I get the most amount of units sold at the highest gross profit?

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Oftentimes, it's higher than you think it is. Because where I think a lot of entrepreneurs get stuck is like, Sales velocity goes down and then they get afraid. But the thing is, is that you will usually make more money before you make less money when sales velocity drops, usually. So it's like we sell 10 people at, you know, with $100 of gross profit.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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And then when we, you know, move the price up, it's like we sell 80 people, but we're at 150. But you're like, oh, the sales team's like, I don't know, dude, the price seems really high. Or, oh, the conversion on the page dropped. It's like, yeah, but we're making 50% more money. We lost 20% of sales. If it were me, I would 80-20 this.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1406.484

And this is what I'm solving for for pricing on the most sold products.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1410.928

You can have a much faster feedback loop for the testing. And so in terms of cadence for price tests, would you do it on the site more or do you think you would be doing it on the phone? It'd be on the site. Okay.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1426.094

Yeah.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1433.257

I'll bet you what's interesting about this is that your recurring revenue business is very price sensitive. It makes me lean more towards the gag gift side anyways because it's like we can get customers for free and we have far more pricing power because they're in the moment. They think it's funny. Whether it's $8 or it's $12 or $16, like I kind of just want to buy it.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1451.387

But that's, you know, the difference between $8 and $16 is monstrous, right?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1455.83

For the business. So site price test, and I would probably start with the gag. Okay. gifs here and then i'll make three let me try one six percent on uh boring side Now, this is the major part, is if your focus is going to be media, that's going to be the direction that you're going in. Was there an influencer or something who made the video that had the trophy in it? They got tagged.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1498.287

Okay. Yeah. Cause the thing is, is like your Amazon and Etsy, I would imagine are fairly passive. Normally I would consolidate it. If you were like, I'm running all these things, I would say like, let's, let's focus. But if that's like kind of on autopilot and I am familiar with like Amazon handles a lot. So the direct site traffic right now comes predominantly from SEO. So talk to me about that.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1516.899

Do you have an SEO firm or you're going to SEO?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1520.58

How long have you been working with them?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1538.047

And then when these guys came in, it started going back up again? Mm-hmm.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1540.911

what stops you from like doing more seo or rather what stops that like if you were to say hey because i mean when i see you 13 to one right i'm like that sounds interesting if you were to say hey i want you to give me like three clients worth of focus so that you can give me three times the backlinks and three times the articles or whatever it is that they're turning out for you i is there anything that's because if you get 13 to one it's like we should spend as much as we possibly can on that and that's why i started meta is

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1570.626

But it's different though, right? Because it's interruption-based ads versus SEO where it's intent-based. Because it's also like these things are things that are not taking your time. So this is like media one is SEO max out. And the SEO company wants me to do Google ads. Yeah. Throw into that mix? Okay. Mm-hmm. Yeah, especially, like, these are both intent-based, right? Yeah.

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Building a $3,500,000 Business for a Stranger in 42 Mins

1592.455

Like, at the very least, you should own your own terms, which is, like, all your names and derivatives of your names. Like, I've rarely seen anyone in any business just own their own terms and not make money off of it. And some people are like, why do I want to pay for a click I was going to get? The thing is, is, like, you're not always going to get the click, and so having it there, I'm like...

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1609.785

you're going to make the money. You know what I mean? But then the second version of that is associated terms. That's where the long tail keywords. And because the boring side, so this is all the boring side of the business,

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1625.163

because trophies are so like oh i have to get trophies for the team this year it's like they're in this window and they're just going to buy whatever is like pretty much immediate yeah so i think this all makes sense i don't know if people i mean you're running the meta ads uh to get the boring trophies i would bet that that's probably

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1644.375

and you could do it, but this feels like it's less interruption-based, more high-intent-based. Now, gag gif's 100%. No one's like, hey, you know, fuck your moon, follow the plan, you know, trophy, right, or whatever. So this is the, like, if we're looking at this, these are all what I would consider, like, Black and white, very low lift, almost guaranteed to make you more money moves.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1667.277

Almost all of these will just make you more money. This is 13 to one. This is probably gonna be high return. This could double the profit. This adds $50,000 to the bottom line. The price sets for sure are gonna increase on the gag gifts. So now we can talk about the media side. So you're gonna go from one to three a day. I think that's a good idea. What I would suggest you do

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1690.303

is look for, so there's going to be you. So there's going to be you. So we're going to go from one to three a day. And I think that you should focus on trends and memes. So like, cause this is a gag gift brand. So it's okay for you to just like be silly and ridiculous. And so like just hire a 17 year old.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1711.235

Yeah. I just feel like what's like, what's trending right now. You know what I mean? Like some, what's interesting is that a lot of these TikTok ones also do well on Instagram. So you could repurpose there. Do you, do you post on Instagram? Yeah. Okay.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1721.561

So started. Yeah. At least you're getting, you'll, you'll get double, you know, you'll get double usage on that. But yeah, TikTok is like the perfect platform for you for the SBI gifts. Like it makes complete sense to me. They did 250,000 in a month. And so when I, the reason I said the 10 million is like, okay, well that happened on accident. Let's do it on purpose.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1736.509

And if you can do 250 a month, just from that, it's like, well, there's 3 million. I think you getting really ridiculous with the volume will get you a lot better. And I think this is one of those things that you should live close to. Like you, like these things are all things that you can do probably the week you get back. You know what I mean?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

175.38

No, I love that.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1751.273

This one is going to be the, this is like the big commitment of what's the bet we're making. The bet we're making is that mastering TikTok, live selling, et cetera, is going to be the way. Now, the second part of kind of like TikTok mastery is going to be influencers. What's nice with TikTok Shop is that your stuff is automatically going to be listed there and other people can make videos for it.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1773.596

And you're in the price point that's perfect for TikTok Shop. Like 20, 30, 50, like it crushes for that stuff. And it's such easy videos for people to make. And I mean, fundamentally, like these are basically one-time work. This is the only ongoing work that you do. And so trends and memes, and I'd be posting one to three times a day there, repurpose on IG, right? That's just free traffic.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1800.139

And then the influencers will also kind of, it'll be like a loop here. So it's like, they'll give you, like they'll do something that works well. And then that will feed, like it'll just be this nice loop where they're also creating content for you. And then I'll put, I'm going to put number seven on here because I think this is worth it.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1818.491

The TikTok ads, which you said you just started, you make the ad, right? Or sorry, you make the content. You already know where I'm going. You're making content. That TikTok content, 10%, go viral, whatever. And then 90%, flop. Right? Then this... you put ad money behind it and you send this to influencers and say, make stuff like this because this is what's converting.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1848.368

And then they'll make versions of this that'll also inform your content, which you'll then try to make iterations of what they're doing. And so like you're kind of your source, like you're starting, here's the TikTok content. Some does well, great push ads behind it. By the way, guys, here's the ones that are working well. They make stuff.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1864.301

You can take theirs, push money behind it as well and model it and make for permutations of it. And so for this stuff, I would be kind of hook centric. Meaning like for, well, for most short-form platforms, like the hook is everything. And once you have a winning hook, I would like reuse it over and over again.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1885.783

And so like, if you have, you know, whatever your winning hook is, and then you could just basically sell down the line of SKUs once you know. Yeah, exactly. Over and over and over again. I told you, you actually have a really simple one. The nice thing is that I have a lot of confidence in your, like there's basically no like,

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1903.431

not really sure like site price tests could easily like 2x profit yeah like on its own because the margins are so sim right now right uh 6x this is the 2x on profit for sure seo max out um well right now it's 50 of revenue is coming from that so it's like if maybe we get a 50 boost from them doing a better job on it. PPC will just get you good returns. This might give you like a 10 to 20% boost.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1928.897

So I don't think it'll be huge, but it's like, it's free and it's a one-time setup. So it's not hard to do. TikTok's gonna be the big lever of like, how do we go from 1 million to 10 million? It's like, if you did nothing else, but just say like a year from now, if all we did was master TikTok and TikTok shopping, we would win.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1949.178

Like if you did nothing, this is just going to take all of your existing business and make it more profitable so that you can take all of this cash and float into here. And the fact that you have such low margins excites me because when you make five or 10% improvements, you double or triple.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1965.692

And the fact that you haven't liked that there was no pricing discipline, like there's no, there's no like process to pricing besides like, we'll just keep raising it when our costs go up.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1975.1

Usually there's just like, when I see a business like that, there's like massive unlocks. Like I'm saying 6% on boring trophies, but like you might be able to push 25. And that 4X is 5X's profit. Right. And gets very interesting. Yeah. And the gag gifts have much higher margins too. Yeah. And let me add something else in. What's the offer that you have in the box?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

1995.889

Usually it's a little code that says like 10% something to order here. Why don't you give something much better than that? So you have to come up with a really compelling offer to get people who are buying. Because the nice thing, the important thing is, so are you doing fulfillment for Amazon sales?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2.168

If you wanted to hit 3 million next year, I was like, we could do 10 million next year. I would just say, we're going to take all of our resources. We're going to go all in on TikTok viral organic, and you're going to deploy everything into TikTok shop and get influencers to do lives for you showing all these funny gag gifts. Cause like the, the trophies are so built for shareability. Yeah.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2013.838

Okay, great. So you're fulfilling most of it. That's wonderful. Okay. So, and Etsy, same thing? Etsy, we fulfill everything. Yeah.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2019.801

great okay so that means that we can put something in the box to be really compelling to get them to to buy something so if now amazon and etsy the purchasers who are buying there are they more bread and butter people are they more gag people i would say more gag more gag okay because they're more like funny death signs funny sayings stuff like that i would put a bogo offer in or a

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2044.235

So I would buy one, get one to two free, and then just fix the pricing of the one so that it makes sense. But then I would basically have this little thing here. So that would be the headline on the top of my little doodad. You got your QR code. And then I would have my top one, two, and three gag gifts, because they just bought one.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2070.186

So it's like, let me tell you the other gag gifts that people buy the most of. And I would put that into every one of the boxes for them.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2086.596

It's a good question. Well, to make that offer, you'd probably have to bring them back to the site. Yeah. Well, they're kind of not as worried about, we just got to fix the pricing, but like either way, I mean, it would be an interesting test, but I think this is the better, like, cause you can make a far more compelling offer. The other thing is, what do you, how big is your email list?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2104.98

For trophy side, I think we have like 10,000 contacts. Okay. Well, guess what? We just found ourselves another couple hundred grand. So let me tell you a stat that'll blow your mind. Most mature e-commerce businesses get between 30% and 50% of revenue from email. We're missing out a lot on that. So there's probably like $1.5 million sitting there.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

212.637

Well, how many customers have you sold so far?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2128.503

And that's all profit because there's no ad spend. Most e-commerce businesses basically break even or lose money on spending ads to get customers, and they make it up with their email follow-up. Nine is going to be email. Follow-up. Okay. So what do you use? You use BigCommerce? So they probably have – so there's going to be two different types of email that you're going to do.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2150.457

So number one is going to be flows. So these are based on user behavior. So when someone visits a specific product, they should get like a five – email sequence, I'd be like, hey, saw that you were looking at the goat, whatever. Right. And that should just that should happen for anybody who ops in or does a two step or abandoned cart. Right. The the other piece is we need the long term. All right.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2172.209

So what I'd recommend is three times per week. The question is, it feels like a lot for trophies because trophy is a less frequent purchase. The gag I feel like is it's like if you buy one gag gift, you'd be willing to like buy them for many people because you just think they're funny.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2188.18

they are separate brands though because you have like okay so I would say this I'm cool with on the gag gif side because right now you're not making any return sales anyways right so you might as well get we don't really have an email list for the gag side because it's all through oh because it's easy does TikTok not give you email Okay.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2205.892

So I think we'll go one time a week and we'll not worry about the gag gift. Okay. I think just one time a week of, and if, if you were basically domain score, your domain health, your domain authority stays healthy and your open rates stay. Okay. You click the rate, stay. Okay. I would increase frequency. Okay.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2221.551

So you start with one a week and you're probably thinking, OK, what am I going to what am I going to email them about? Right. So when you have customer stories, cool trophies, because I'm sure there's every week there's like one trophy or something that's just like interesting that you guys have. Right. Probably stuff about recognition, status and cheapest compensation.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2240.377

So I think if I were to if I owned your company. Right. So I'd be like, OK, are we in the trophy business now? No, trophy is what we sell, right? But it's really just the vehicle for giving people recognition status and compensation, right? And so the things that I would email would probably be about how you could either give your team a pay raise or you could give them a trophy.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2263.562

And believe it or not, here's this research, the trophy is actually even more meaningful. So they like it more and you like it more as a business owner, right? So it would be that kind of stuff that I'd be, you only have to write 52. It's not that many emails, right? You could literally probably do it in like a day and a half or two days.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2278.197

And I would be hitting this and then I would just weave in examples and the examples will do enough modeling for people to basically click and then go back to the site. All we're trying to do is just bring them back to the site. Now, on every one of these, these emails, I would have a PS, funniest trophy of the week. So think about like newspapers.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2296.355

Like they have all the articles that are serious, but then people just buy them to read the funnies or they read the cartoons. And so we do the same thing here because you probably have some hilarious trophies that get made, right? Yeah. And then just be like explicit. You know what I mean? I think that people would find it hilarious. Okay.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

230.709

So do you carry all those or is everything made to order?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2311.665

And if you're worried about the explicit, then don't put those ones. But like, I still think that you have funniest trophy the week. And even if, and like, this is me taking the complete extreme stance. People, people may care about this. People might just think this is funny. And if you just did this, it's like, you're almost just sending them jokes and memes.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2327.834

It's the same as making content on the internet. And so if they're like, oh God, what's the, like, what did they, what did they make this week? Right.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2332.976

right and then again it's just like i just want to stay top of mind i want to remind them and i think about this also seasonal so what are all the things that are coming up that like that are coming up next season because you know what the buying cycle is for trophies so it's like what are like okay christmas is coming up okay so there's gonna be end of year bonuses for people there's gonna be okay fantasy what what fantasy league ends in october so probably like

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

234.671

OK, so it's not like you're carrying a ton of inventory. You've got raw materials.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2354.591

Hockey ends or whatever. Right. Like best costume. Exactly. So it's like we have to remind them of what people get status and recognition for using trophies. That's the job of the long term nurture. What things are people going to be rewarding next month that we get to have to be people by this month? And we just every month we'd like you look at your calendar.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2373.547

You're like, I have to think of four emails that apply for next month or next month. Right. And I would probably, I'd put this as like, okay, I've got my business one. I've got my, you know, season one. I've got my sports one. So these are like my buckets for my emails.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2388.578

So every email, it's like, it's almost like you're hitting from a different angle and reminding people of different components of their life. And so that's, that's probably how I'd have my long-term strategy and provided all of the metrics look good. I would just increase frequency. Yeah. So keep it low in the beginning just to get a feel for it.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2407.038

The first couple of emails are going to shake out because you're going to have a super responsive list. And we want to keep these all text. You can have, I would say, link to the image because then the curiosity is going to drive the click. And also image-based tend to get lower deliverability rates than like full-text one.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2423.995

And when people opt in, or when people purchase or opt in the abandoned cart, the first one I would have is reply back for funniest trophy of all time. And so as soon as someone opts in, it's a double opt-in, so to increase your deliverability. And so they'll reply back and then it's an automation. You don't have to do anything. And then you'll send them the link for the clickable picture.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2463.652

Just not in the email. Yeah. They see it, and if they want to buy it, it's right there.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2468.699

Well, I think we found a few doubles in the business. Absolutely. Feel all right? A little money, Matt? I think you will significantly more than double profits. Well, that gives you 50, and that's the first thing we do. Yeah. This could easily double profits if we just add the 6%, right? That's all we'd have to do. If you increase SEO, you will make more money. How much more, we'll see, but more.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2491.096

This is free money, but this is actually the biggest, I think this is actually the biggest finding we have.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2496.843

Yeah. 30 to 50% of revenue by clockwork. Yep. Especially. And so it's interesting is the, the less ad dependent your business is, the higher the percentage will come from email. So like, if you have a fast growing company that's spending more and more money every month, then the percentage by math would be smaller.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2513.314

When you have a more stable, older business that's coming from email, like it'll be greater and greater. Like I know a company right now that is eight, uh, 90%. They do a billion a year. 90% comes from email. Yeah. Okay. And I would say also in that kill Facebook ads for trophy outlet trophies. It just, it wouldn't have been my, I mean, right now it wasn't profitable if I'm not mistaken.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2533.81

I'd rather redirect resources to the things that will make us more money. I'd rather just do TikTok ads instead of ads, given that's like you did 250 for free. Right.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2543.14

Right.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2544.862

Feel all right.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

2545.822

I feel really good.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

272.395

Do you want to sell this company eventually? Or what's the... I mean, so do you want to double?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

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Okay.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

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Just like walk-in traffic and whatever.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

311.614

Okay. So you have a manufacturing facility and one retail? Yeah, which also does some manufacturing as well, yeah.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

328.878

I mean, online retails, I don't think it's going anywhere. And I don't think many people are like, you know what, I'm going to go to the trophy store today. Yeah, I've never heard somebody say that.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

337.742

Yeah, return some videotapes and then go to the trophy store.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

377.138

How do you come up with pricing?

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

425.892

Not too bad, no. Because if you have half the business comes in from word of mouth, I would expect the margins to be higher, like the net margins. Because I wonder, I just think of this as big hypothetical. It's like if we got rid of all of the new customers and we just sold the 500 and something thousand from return customers, that should be free customer acquisition.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

447.46

And then we should make money.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

450.961

Right. But looking at this, I'd be like, I don't know if we would make money.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

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Yeah.

The Game with Alex Hormozi

Building a $3,500,000 Business for a Stranger in 42 Mins

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OK, this is good. But your LTV to CAC's pretty strong.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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That's not like some revenue. That's where it's profit.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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So with pricing, I'm going to I'm going to hit on this one because I'm almost positive there's a big pricing issue. Who is in charge of pricing that whole time? Like you took it over from your old, I guess he took it from his old man. So like your third generation.

The Game with Alex Hormozi

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And on an annual basis, do you review all prices?

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Building a $3,500,000 Business for a Stranger in 42 Mins

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And so you don't have LTV metrics on TikTok? No, couldn't quite figure that out yet.

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So, okay. So 20 bucks. That sound about right? Average, yeah. Unless they have a shorter value, right? We just don't know how many times they've...

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purchase right which is one as of this point you know thing is that might be artificially inflating your altivity calculator because you have zero cac there okay or did you not did you know that's actually skipped it all entirely from the calculation yep so you want to double revenue yep got it uh what's this i hear about you wanting to buy another business yeah so i had a business reach out to me that's in the same industry um

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Building a $3,500,000 Business for a Stranger in 42 Mins

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Yeah.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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I would try and find out, if I could, who the vendors were that he has in China for his connections for his raw materials.

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So that I could try and use those vendors.

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Building a $3,500,000 Business for a Stranger in 42 Mins

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It's monstrous customer risk. And especially if you have somebody retiring, that one customer might be...

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Well, part of it is what kind of business do we want to build, right? So you just want to, like, you're considering closing down the first location. We have to, basically, there's a bet that we have to make, which is like, do we think that the future of this business model has lots of brick and mortar locations?

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If so, then we have to look at the brick and mortar model in a lot more detail with the unique economic return on capital. Or it's, we're going to be online. And if you're online, then why bother?

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I mean, it's not brick and mortar.

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One, there's the customer risk. The other thing is it's like, it's not the business that you're, even though you're obviously in the trophy business, it's like, it's not actually how, it's basically all net new. It's like B2B versus B2C. Because we have to think about all available moves on the board, not just like this.

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Because like, said differently, if he hadn't emailed you, would you have approached him?

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Well, I'll zoom out from the back forward, which is like, what do we want to be when we grow up? Basically, this is going to become a media slash marketing business that monetizes through trophies. Right. Or you can go the B2B wholesale route, which is probably like outbound sales team that's calling wholesalers and whatnot. Yeah.

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From what it sounds like, it sounds like you're better suited for the e-commerce direct-to-consumer side. That's what it sounds like.

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You might have one of the simpler plans that I have. Yeah. Yeah, which is, I mean, simple doesn't mean bad. Simple is good. You know, sometimes you have like 10 things to do. It's better to have three that move the needle a lot. And I think you're kind of in that situation. There's three big things, but I think we'll, why don't you come over here and then we'll net it out.

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What percentage of customers are gag gifts?

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I hear you. With this business, like fundamentally you just have, it's you've traffic in a conversion pitch. Like, and then if you already have, let's call it for right now, not a constraint on manufacturing or anything like that. The three big kind of levers that I want to go off of is number one is consolidation. Okay. Pricing, which also instantly adds to profit. Absolutely.

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So from a consolidation perspective, we have the SKUs, right? And then we also have the brick and mortar locations. And then we kind of have like model. So like in terms of like how I'm thinking through this. So from a SKUs perspective, if you're not carrying that, like normally I'd be like, we need to massively cut down on SKUs.

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But like, if you're not, if you don't have like this warehouse full of stuff and it's just like more options for people to purchase, I don't think we need to like get rid of anything. And a lot of this used to, it's the same product, just maybe for football versus. Yeah. Right. It's a, it's a goat trophy and you just put a different plaque on it. Exactly. That doesn't bug me.

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And if you were like, man, it's, it's, it's super hard for my team to, to build all these different things that I'd be like, all right, well then we should, we should look at that. But if it, it doesn't seem like you're stressed on the manufacturing side.

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No, that's good to know. Where's the constraint, right? So the second is the brick and mortar, right? Yeah. So if you have this retail location and it's basically breaking even or losing money, and that's not even the future of the business, then to me, I would say, let's just save our 50,000 a year in rent and then just add that to the bottom line.

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I feel like that would be a good idea because that would increase profit by 50%. Yeah. Which is like chill. Pretty much instantly. Yeah. And also there's just like the headache of like, it's this thing over here. Yeah. And you've got, and you probably just take the couple of good people from there, bring them to bring them home. Right. You know? Yeah. So that feels good. So the next one is model.

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So this is the thing that I'm really like, I don't know, torn on, at least for me, what appears to be the obvious solution is to go on the, where, where the fast growth is, right. Which is the gag gift thing. The problem is that there's zero kind of reoccurring nature of that. Right.

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So it's basically like when you have that business, you have essentially a media arbitrage business where it costs you almost nothing. You get a customer, you make a spread, and then that's the business you're in. And every month you're going to be looking for, how do I make new media? And that's, that's the game you're in. Yeah. If you want to go, I want to just get every league in the nation.

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If I wanted to make this the most valuable version of the business, not necessarily make the most money today, but the most valuable version of the business, it would be, I'm going to be really targeted with the few avatars you have left.

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leagues event organizers whatever and say like these are the four avatars we have and we're going to be targeted with our ads for those people and our seo and the whole business is around like we only deal with customers and i would probably even say do you have phone sales or anything like that or some or email to place the order what's the average order value for the for the like a league

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And I think a lot of that is because people don't have the emotional maturity to say like, hey, I'm going to break up with this girl and she can be a great person, just not a great person for me.

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most people can't do that most people have to in order to justify their decision talk their ex-girlfriend talks their ex-boyfriend or whatever in order to feel okay about that decision because they probably did have some conflicts right if they work there for an extended period of time and then they ultimately decide not to work there they have to like feel good about it and so to their way of feeling good about it is making everyone else feel bad and this is something that we've worked uh pretty hard on is like when we when we hear it now we actually just get them out i would rather suffer

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the hole or the vacuum, then have the cancer kind of like take even more root and plant more seeds while it's gone or while it's on the way out the door. So that's a tactical nugget that I would say that I've changed about my behavior with relation to the parables that I was telling earlier.

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The Parable of the Drowning Ship So a merchant owned a ship that sprang a small lake. The repair would cost him a month's profit. I'll fix it next quarter, he decided, taking on more cargo instead. The leak grew. Now repairs would cost six months of profit, significantly more. I'll fix it next year, he reasoned, taking even more cargo to make up for the lost speed because it was leaking.

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So hopefully that can at least save one of you guys a massive headache when it comes to running your business. I also saw you had the parable of the bread maker, if you wanted to go into that. Well, I'll tell you guys that one pretty quickly. I mean, for everybody who's like starting out, it'll probably be a little bit more applicable for you. The parable of the bread maker.

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So bread maker sold the best bread in town for one copper coin. He worked 18 hours daily, but barely survived. So one day, an old merchant walks up to him and sees him turn away customers when he runs out of bread, which he does all the time. And so the merchant goes to him and says... Hey, double your price. And the baker says, that's impossible. I'll lose all my customers.

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And the merchant, who's much wealthier than the baker, says, just try it. And so reluctantly, the baker decides to listen, and he does. So he doubles his prices. And so then the next day, he loses half his customers. But he made the same amount of money working half the time.

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And so now that he had half of his time back with his free hours, he experimented on new recipes, new ways to bake the bread, new ingredients, and the bread got even better. So all of a sudden, over time, now the customers that he lost, he got some of those back, but he got even more customers. So now he's selling out yet again, but at double the price. But now he's working 18 hours a year.

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So the merchant goes up to the baker and says, hey, double your prices again. So he does. Yet again, he loses half his remaining customers, but the profits now rise. Because he's now done two doubles. He's at 4X. And ultimately, at this point, the customers just devalued the quality over the price.

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And so by a year later of this process of continuing to improve the product, he ended up selling the same amount of loaves as he used to, but at four times the price. And to people who really loved and treasured his craft. So he worked less, he earned more, and he loved his work again.

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And so the moral of the story is that basically the price you charge, you tell the world to value your product at that price, and the world will believe you. And so for some of you, and I've overheard this, there's been an unwillingness or like a fear around raising prices. So I want to like put some of that, quell some of those concerns.

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So number one, worst case scenario, you can just change it back. All right, like not a huge deal. You can just change the price back. Not a big deal. Second, the risk of not raising your price. Everyone's talking about the risk of raising your prices, but what are the risks of not raising your prices? The risk of not raising your prices is that you work all the time and make no money.

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You attract the worst customers. You attract people who demand even more for every dollar off that you give them. Fundamentally, what I'm going through is the virtuous versus vicious cycle of pricing. And the thing is that your conviction also goes up. And because you have higher gross profits, you can spend more on the product and on the experience to make it even better.

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You can also attract better talent because you may have more money left over. So there's all these cascading downstream effects. Now, if you're a technology platform, Fine, it's a little bit different, right? But if you have any kind of services that you're rendering, it's almost always in your best interest to try and be the premium seller rather than a budget dealer.

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The only way to be in the service business and try to win on price is that your entire competitive advantage has been built on the lowest cost basis possible. And if you didn't start that way year one, you're basically just at a race to the bottom to go out of business.

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So the counterintuitive thing, which is raise your prices, often feels like it's the riskiest, but it's actually the least risky thing to do. Because you will attract people and you will signal to the marketplace that you are like other premium providers who sell fewer customers and ultimately provide a better experience. The thing that's a mind game

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By year's end, the ship could barely stay afloat. Repairs would cost everything he had. He then said, I can't afford to stop now, mortgaging his house to add yet more cargo. The ship eventually sank. Staying on the shore, a wise trader told him, the best time to exit a bad deal is when you first realize it's bad. The second best time is now. And so...

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trying to be PG here, but it's a mindfuck, is that when you raise your prices, you will hear no more, more often, but you will make more money. And that's what I think gets people really twisted. You will have more people turn you down, but you will make more money. Think about the equal opposite.

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If you make it free, you never hear no, or just about never hear no, and then you just want to end everything because it sucks. And so at the absolute extreme, you only have one customer who's 100% of your business. And so for sure, there is a sweet spot, right, as you continue to raise prices.

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But if you had some sort of certainty that that one customer would never leave, then it would be the most efficient business model in the world. You'd find the person who could pay you the most, who valued the thing the most, and then that's the business. And then you could just absolutely over-deliver like crazy to that person. obviously there's a sweet spot.

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And the parable exists really just to point out that when you have fewer customers, it doesn't mean you have a less healthy business. It often gives you back resources, not just money, but time to improve their experience and ultimately reinvest with your focus and attention into making the product or service better.

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And so for the vast majority of you, there's so many businesses that are mispriced. So I'll give you a couple of like little telltale signs here. If you're getting on the phone with prospects, and you're over 50% close rate, you're probably mispriced. Now, if you're the founder and you're the one selling, it's normal for it to be a little inflated.

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But if your team's selling over half of people they get on the phone with, the price is probably too low. And so I'd say the sweet spot, this is just my rule of thumb, is about 30% to 40% is kind of the benchmark. And so big picture, you just need to do the math. You can't always do the math when you have small data.

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And so this is me just giving you a rule of thumb of what I have found is that usually closing about 35 ish percent is kind of like, okay, we're doing okay here, right? You get much above mid forties. It's like, maybe we're a little high. If you're like in the 70 to 80%, you almost certainly have a double or triple in pricing capacity available to you. A double or a triple.

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very a huge amount of pricing is kind of it's kind of there. Does this depend on the elasticity of the good? Sure. But for most services, consumer and business services, that is a good rule of thumb to go by that that I use.

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With both of those parables, I find them really telling because I want to now translate that into kind of real world stuff for me. So one of the most difficult and painful things that you have to do as an entrepreneur is that you have to replace anybody on your team.

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But the further up they are in the organization, the more painful it is because typically if they are not a culture fit or there's a performance issue or a combination of both, the people that they hired underneath of them will likely also suffer some form of deficiency related to that leader. So it's almost like an entire tree branch of the company becomes rotten.

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And it's not that they're bad people. It just might not be that they're a fit for the culture that you have at the business. What makes this so painful, and this is the thing that I find really interesting. I remember a pastor was telling this story. He said he was talking to a husband, and the husband had cheated on his wife. And so he was saying, you know, you have to tell your wife.

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And he was like, I feel like it's really selfish for me to tell my wife and hurt her. He said, why should I hurt her? That feels like the wrong thing. Basically saying it would be almost a sin to hurt his wife. And so then the pastor said, the sin occurred when you cheated on your wife, not when you told the truth.

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And so I kind of see it that way within a company, which is that when you have somebody who works for you or is especially a leader, You basically incur this debt, right? And so this is operational debt, leadership debt, management debt. There's different ways of saying it. But basically, you have somebody who's not there.

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And then I kind of want to just, like, juxtapose that against a lot of different scenarios. So... I will tell you the first parable now. You guys ready? So this is the parable of the infected tooth. So a CEO has a talented but toxic executive who drove short-term results but poisoned the culture. Her board and employees warned her repeatedly, but she kept this executive.

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And for every day that you don't replace that person, you incur more debt of what's going to come later. And that debt comes due with interest. And so it hurts even more. And that's something that I would say that it's taken me a long time as an entrepreneur to just come to terms with. It's just like when you see something bad, the moment to address it is immediately.

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Because when you wait, it literally just gets worse. And so sometimes we wait until our hand is forced. But wouldn't it be better to not have your hand forced and then never have to get to that moment? And so I was giving this example to a new leader in the business who took over a department yesterday.

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And he was going through some of the pains of having to like basically raise the standard, raise the bar, you know, cycle some people out who weren't really aligned with kind of the direction of just like high performance. And I said, so if I walked around here and I told everybody that they didn't have to use the bathrooms and they could just shit all over the building, they could literally shit.

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And that's what I said. That was the expectation that I said. Well, the day that I come in and say, hey, guys, stop shitting in the building and use the bathrooms. Everyone needs to be like, what the hell, man? That's not how we've been doing things. You know, why are you changing the expectations? Why are you changing everything? Right. And. The reality is, who's the one whose fault it is?

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Now, ultimately, it's always the entrepreneur's fault because everything within a business is your choice, either directly or indirectly. But under that assumption, the fault was from the manager prior, not the person who's basically paying the bill. And so it's like this person, whoever they are in the business for you, will basically run up this tab. They're just spending.

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They're spending, and it can be money, but a lot of times it's spending goodwill, it's spending culture, right? You're basically doing this work at the cost of culture. And the thing is, is that the bill will come due. And the thing is, is oftentimes the person who runs the debt up and spends lavishly and gets everyone to love them is not the one who pays the bill.

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And that's where it's really tough. Because like, if you're, for example, and here's the real, real, you may be this person. Like this may be you. And so you're going out there and you're splurging, right? You're saying everything's great. You guys are doing awesome when you know they're not doing awesome. All you're doing is kicking out a bill that you're going to have to pay later.

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And the bill comes due with interest. And that interest is usually just the entire culture of the team has suffered. And so then you have to, it's like, it is like a decaying tooth. You have to pull it out, but then you got to scoop out all the gunk and all the root and everything else around it so that you can start fresh. And it's just been this was just top of mind for me.

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And that's why I had these two parables that I I tried to put together around this. And and I guess that's the that was the moral of the of the story for this morning is that you you probably know who that person might be in your business. And, you know, the best day to root out cancer is the day it happens. The second day is right now.

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And so I think that some of you may have some people on your teams and it may just be you that you need to have that talking to and say, like, I'm no longer going to stand for this. Because if we think about the job of the CEO or job of the entrepreneur, our job, in my opinion, above, I'd say we have two primary kind of roles overall. Number one is that we are chief allocator of resources, right?

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We have limited resources in terms of time, money, human capital, people. And we have to allocate that limited amount of time, money, effort against unlimited potential things. And so the best entrepreneurs get the highest returns for the limited resources they have. Fundamentally, it's an exercise in resourcefulness rather than resources. The second job, in my opinion, is holding the bar.

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And so fundamentally, this is a combination of the vision of where we're trying to go, but the bar is more about how we're going to get there. What are the ways that we choose to deem valuable? What are the behaviors that we say, this is how we want to do it? And your culture is a direct reflection of you.

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Like, what's been top of mind for me has been parables, all right? And I think the reason parables are so interesting is that they're very memorable, right? Like, remember stories better than just about anything else. And there was a parable that I've been thinking a lot about. It's two different ones, and they apply a similar lesson.

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fearing the pain of removal and the dip in performance that would inevitably ensue after the removal. So quarter after quarter, you know, she would rationalize. She would say, well, next year, or after this big contract, or once I onboard this new customer, or after I hire, you know, fire replacement, et cetera, et cetera.

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And I think it's one of those really true, very harsh realities that if you don't like the culture, there's really only one place to look. You have to look at the leader. And it trickles all the way up. Whatever you deem acceptable,

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what everyone will deem acceptable because there's no place realistically that you're going to be able to house 200 rules of behavior right and so what we do is we try to abstract that into a you know a few pithy aphorisms a few little quotes that say you know we're customer obsessed we're you know speed over everything whatever right but it's more so because if i look at somebody and say speed over everything

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There's some inferences I can take from that, but it's not actually very good directions in terms of how do you act, how do you behave, right? And so we're expecting that someone uses their second brain cell to then reason for themselves in this situation, how do I balance all three of these values? And then what behaviors would ensue?

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And so fundamentally, the reason that values can decentralize decision-making across an organization is that it's supposed to be a very high-level filter for what to do in situations that have not been prescribed, right? Like a traditional rule has a condition and then a behavior, if this, then that, right?

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And so if we want, I mean, fundamentally, we could write a rule of behavior around everything that exists in the business. There's a couple of problems with that. One is it would take forever. Two is that it would then we'd expect everyone to then refer back to this book of rules, which would also be a pain. Three, the rules would be constantly changing and dynamic.

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And so instead, we try and chunk up to values and we hope that in the gray, in the nuance, people can reason. But we're always, you know, flabbergasted at people's inability to use the second brain cell, as I like to say. And so it's like, what do you do? What do you do in this situation?

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So I think that the biggest thing that happens as you continue to move on in your entrepreneurial career is your understanding of what talent means and what talent looks like. And so if we look at how quickly an entrepreneur will, like anybody who's listening to this, if you've had more than one business, which if you're an ADD entrepreneur, you probably have,

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Um, your first thing compared to your second thing, I'll bet your second thing happened way faster than your first thing. As in like you got to your old first things level in half the time, a third of the time, a 10th of the time, right? Because you knew how to beat all the bosses. And then you got into quote virgin territory where you're like, I don't know what to do from here. Right.

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And in my opinion, especially if you build an organization, The where do I go from here part, a lot of it comes down to who do I hire from here and what do they look like? And so if we think about a company as the output of the collective intelligence of the people contained within it, which is one of my beliefs, I think Elon said something to that degree, not that like a couple of days ago.

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So then when she finally needed to fire him, she had to, morale then plummeted. And then project stalled, three key employees quit. And so she goes to her mentor and she says, see, removing him wasn't a good idea. And so then the mentor replied, the pain you feel isn't from removing the tooth. It's from letting it rot so long that it infected the jaw.

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But I've long held this belief. If you think about a business as a Christmas tree, let's say that there's four heads across and that's like the second rung of the tree and then the peak kind of goes a little bit above that. In many smaller businesses, the person who's learned everything is you, the founder. You did every single person's job, and then you try and buy some of your time back.

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But what ends up limiting the business is that it's limited based on one person's skill and experience, because you know how to do everything, and you can do it better than them. But the limit of that business is purely based on your, basically, intellectual capacity.

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And so you can make a significantly larger business if you can visually imagine, like, beefing up the, you know, the top part from, call it, four people to 20 people. All of a sudden, the hypothetical peak goes way, way, way, way, way up if that was the width of the peak, right? So the width of the part before the peak, the peak rises.

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And so if you're adding people to the organization, you want it to be a net increase in overall intellectual capacity and or skills and experience so that every person who comes in actually adds to the peak, right? Adds more knowledge that other people didn't already have. And by doing that, it's just a really good razor.

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It's like, does this person know things that other people don't know within the organization? Now, I want to be clear. Sometimes there are roles that are front level. It's likely you have the third sales guy. Then that might not be one of those.

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But when we're talking about leaders, which are going to be the people who are going to increase the rate of growth of the business, because they're actually the people who can take things off of your plate or start new divisions, start new revenue, revenue streams. What most of us lack is a high enough standard.

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And that's what I think really develops most over time as an entrepreneur is that like what happens is you just hire a bunch of people in the beginning. They have a pulse and they seem like they can speak a language that you also speak. And you say, oh, that must be all that is required in order to do my job or do this job. And then by pure dice roll.

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pure chance you will hire somebody who's actually pretty good. And then all of a sudden you're like, man, if I only had five Sarahs, like this company would be so much bigger. And so what happens is your bar raises. And one of the most difficult things about transferring from one entrepreneur to another kind of like between generations is pattern recognition.

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And so there are some lessons, and I think Williamson talked about this, and I actually really liked the frame, which is like, why is it that some lessons – we have difficulty transferring, whereas other ones are immediately accessible. I'll give an example.

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Like if I needed to teach you how to cold call or teach you how to do outreach or teach you how to sell, it's a very easy to transfer skill, right? But if I had to teach you, let's say that money isn't going to make you happy, it's like you hear it, but you're like, well, I'm going to find out for myself. Right.

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And so it's like what separates these types of and that's more of a statement than it is a skill. But anyways, the zoom out thing here is that pattern recognition amongst people, I think, is one of the harder things to transfer from one quote generation to another or for me to transfer via zoom. Right. Is that like, hey, you know, I remember I met.

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I mean, I've met a lot of number twos, people who have, they're like, hey, this is my COO, this is my whatever. And within like one minute, I'm just like, yeah, this isn't the guy. But it takes the entrepreneur two years to figure that out. And so this is, in my opinion, where people stay stuck.

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The extraction just revealed the damage that was already there. And so she realized that every day she delayed had made both the problem and its inevitable solution more painful. And so then the mentor added, remember, the mistake wasn't pulling the tooth. It was washing it decay and calling that patience. That's parable one. Parable two.

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This is why they stay at the same level for an extended period of time is that they don't know what they don't know. It's the unknown unknowns that kill you. It's not the known unknowns. It's the unknown unknowns. It's the what is the sales director supposed to look like? What is the VP of finance supposed to look like? What is my first sales guy supposed to look like? You don't know.

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And so then you waste six months hiring somebody, training them. Maybe it doesn't work out. And then you have to start all over again. And then you do it again. And then it doesn't work out. And then you start again. And then finally, on the third shot, you get it right. And you're like, oh my God, this is what a salesperson should look like. And it takes you that 18 months to do one thing.

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Recognize a pattern. It's a set of behaviors, a set of skills that somebody exhibits that you can say, ah, this person has this. And that is now what I'm going to look for, this archetype. And so you level up as an entrepreneur. And so I think a lot of the levels of entrepreneurship are about who not how and figuring out what does this person look like?

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And I would say conversely, how quickly can I get people out when I know they're not it? And I think that speed on both side is what ultimately dictates the growth of the company.

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Because taking a hypothetical extreme here, if you're the absolute best people in the entire world in each of the positions or functions within an organization at your stage of growth, your company would grow probably insanely fast. And so then the question becomes like, if that's true, then who do you need to become in order to get those people?

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And what skill sets and behaviors and even what vision do you have that people who are high quality find compelling? So those are my two little parable anecdotes for the day. Just food to think on for you guys. It's something that was kind of top of mind for me. And I think a lot of the mistakes that I've made as an entrepreneur have been

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betting too long on someone that they were going to be different, or recognizing that someone was insufficient and then keeping them for a long period of time. Leyla and I have also worked recently to eliminate two-week notices. So basically, if someone says that they want to quit, we just want to let them go immediately.

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Because we actually suffer more as a business with a cancer of somebody who doesn't want to be there, just poisoning everyone around them once they've basically, it's like, they're like, I'm out the door and let me tell you how much, you know, this place sucks, whatever.

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There are a few things that every founder has to learn at a basic level. You have to know the core business. You have to know how to get customers. You have to know how to deliver customers. Just about everything else you can outsource, but those two things are core to every business. And so if you don't know how to get new customers, you need to fix that. Wanna hear something insane?

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And then sometimes the answers surprise you because you do have the resources to do it, you just haven't yet. And the reason this question is so powerful is actually from Stephen Schwartzman. So in his book or his autobiography, I think it's What It Takes, I think it's what it's called. He has this really amazing opening couple of chapters, and he talks about this idea of thinking big.

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And he says, Building a really big business is hard. Building a small business is hard. So basically, it's just about as hard to do anything because hard is a constant. So you might as well go after something really big with the equivalent amounts of hardness. Now, we can get into difficulty levels or whatever, but basically, The upside of the incremental increase in hardness is outsized.

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If you want to build a really successful restaurant, it's going to take you a really long time. You have to manage lots of people, and it's a tough business. And if you want to build one of the top software companies in the world, it's also going to take a long time and be really hard.

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There's a number of different things that you could do. And so the question is, how many hours, let's say, would it take me to add 20 backlinks from someone else's site to the prospect's site? Okay, well maybe that would take me, I don't know, let's call it an hour. Now I think it would take less than that, but let's just say it's an hour.

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But one of those could get you into the many billions, and one of them will probably cap at $1 million or $2 million a year. And so in thinking about that, both of them required the same internal resources from you, but very different external resources. And so it's like you might as well solve for the biggest thing. And this is about resourcefulness, not resources.

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All right, this next one is huge, which is, Pre is greater than post. An ounce of pre is worth a pound of post. So as I've advertised in many different ways in many different channels for different industries, I have seen this consistently be reinforced for me.

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What happens for most people is they forget to advertise and then they try and play catch up and they hop in front of the camera, they sit in front of the computer, they start typing things out, and then... They hit post, they hit submit, they run the ad, they post content. This then gets propagated as the process. And so they hire more people and then they more or less do the same thing.

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And then when the stuff sucks, they say, we'll fix it in post. But the problem is, is that post has very low leverage and very high cost. Whereas pre has incredibly high leverage and very low cost, but it just takes more mental work. And so I'll give you an idea. An idea for a video, for example, has tremendous leverage, more leverage than just about everything else.

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If there is a video concept that more people would click and watch to see, that idea itself even poorly executed, will get an order of magnitude greater amounts of people to watch the content or watch the ad than otherwise. And so putting more time into pre is the highest leverage activity that you can do.

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More of my time now, when I make ads, for example, for school, I will spend on the pre-production. That will be looking at past ads that performed well, looking at the hooks that continue to do well, making sure that we have some props and things like that that we can use as visual aids. And then, when we actually do the recording, it's very short.

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And the post-production, because all of the work is already in the video, there is very little that must be done afterwards. And so what happens is the rate of progress and output increases, to use a big word, tremendously. The only reason for post-production, especially in education, is to enhance comprehension, meaning to make it easier for people to get what the video is about.

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And this is different than an entertainment where a lot of the emphasis is on post. But for the vast majority of businesses, their advertising and marketing comes down to educating the customer or potential customer. And if education is the type of advertising you do, which is what most businesses do, then You need to put more into do people find this interesting?

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And let's say that it's an hour of one of your employees' time and you pay them $25 for that work. Okay. The question is, if you're trying to just give away an assessment or something like that for free, which is what everyone else gives away, not that many people would be interested.

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Can I make it simple rather than I'm just going to hit record and see what happens? Yeah. And the thing that shifted my perspective on this was I think it's called Calculus Wallah, but it's this Indian channel where there's a guy who's like 20 million subscribers and he teaches like physics wallah and like calculus and these different classes.

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And his videos get like 10, 20 million views, just like crazy, crazy numbers. And it's just a dude in a whiteboard. And when I saw that, I was like, I am missing the boat here. Like I am doing it all wrong. And so we have consistently stripped back more and more of this post-production and put more and more of it into pre.

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So this video, for example, like I have notes rather than just kind of like winging it and then having the team just like cut everything that was not as good out. Right? Instead it's like, okay, let me be more purposeful about the points that I want to hit.

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Make sure that they actually make sense in sequence so that afterwards they don't have to reorder the video and then cut out this thing and then say, hey, could you re-say this part? It was unclear. It's like, I have examples.

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I have clear language that I've already thought about ahead of time so that I can ultimately make a better video for you and also an easier video for my team to be able to produce so that we can make more faster.

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So this next one is a really high leverage concept, which I overheard this for the first time from a marketer named Perry Belcher, and it was, I don't think he even used this term, but need-to-believes, all right? And so need-to-believes are basically like you want the fewest amount of need-to-believes for a customer to make a purchasing decision.

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And so I'll give you a bad example of a business that I had, and then I'll give you a good example. With Prestige Labs, one of the difficulties that I had was that I had to convince someone of two things. I had to convince gym owners that they should sell supplements. Not all gym owners want to sell supplements. Some gym owners are against supplements.

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But I had to convince them that selling supplements was not a bad thing. Then I had a second thing that I had to convince them of, which is that Prestige Labs was a supplement company that they should use. And so I had two need to believes. And so it made it a very difficult sale to get someone because it was just too much basically education in too short a period of time.

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Now, over the long haul, could you do something like that? Yes, knowing what I know now, I'd probably have a multi-layered campaign, one that basically gets the first big decision, and then a second kind of campaign later for a warmer audience, kind of like middle of funnel, that would then convert people into specifically Prestige Labs affiliates or sellers, retailers.

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But that's a lot of work, and you're definitely not going to make sales quickly. An alternative to that is that if you look at most of the real estate investment space, right? So anybody who has funds, who invests in real estate, who flip real estate, who help people flip real estate, find their first properties, whatever.

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There's this need to believe that doesn't really exist that real estate helps people make money. Most people generally agree that real estate is an asset class. Many people have made money in real estate. And so there's just not a lot that has to be believed for someone to say, OK, well, you are good at real estate. I will buy your thing to help me get good at real estate.

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And so, let's say that you spent $100 to get leads with your old way, and then you add this new thing that you give away for free that costs you $25, but all of a sudden, you get three times the amount of people who want that free thing per dollar of advertising, meaning that your new lead cost is $33. But for each one of those $33 people, we now have to give a $25 thing away.

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And by buying it, it means either I give money to your fund and then you do it on my behalf or you help me source deals or whatever it is. Right. And when we think about like the ultimate business opportunity of all time, which I think is Amazon. Amazon itself fundamentally had the proposition to anybody who wanted to sell anything.

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All you have to do is upload your product onto our site and you can make money. There's almost no, like you don't need to know how to market. You don't need to know how to sell. You don't need to handle customer service or customer support. They took away every conceivable reason for someone that they would have to believe in order to be successful.

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They were like, you just need to follow this tutorial and then just upload your product. Like, that's it. And so as a result, Amazon has made a tremendous amount of money. And so the only real need to believe is that someone else might buy my product on Amazon. And so people believe that and then they buy. So it's like they barely even have a need to believe. It's like a half believe, right?

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And so when I think about products and offers, I think what must a customer believe in order to make this purchase? And do I have multiple humps or hills that I have to get over? And ideally, I want to reposition or repackage the product and offer in such a way that there's either no beliefs they have to believe or only one.

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And so if you're struggling to get more customers and you wanna get crazy amounts of customers quickly, you wanna limit the amount of things that they need to learn or need to believe in order to buy.

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The reason that giving away tons of free stuff, like I mentioned at the very beginning, is powerful is that it will basically move more people from someone who needs more information to someone who needs less information.

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And so fundamentally, this is what branding is on a large scale, is that you're educating a large percentage of the audience and conquering some of the need to believes before they make the purchase.

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If you try to go cradle to grave in one move, you will usually sell a smaller percentage of the marketplace unless you have figured out how to make that six inch putt a six inch putt for everyone like Amazon has. Same thing with Uber. It's like, what do you have to believe in order to make money on Uber?

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You just have to be able to download an app, you know, upload your driver's license, not have DUIs or whatever the requirements are, and you have to have a car. And so as long as you believe that when your phone dings that you will get paid, It's not a huge hill that you have to get over in order to make money. This next one is nasty. So I am a big fan of split testing, right?

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And you've probably seen it with my thumbnails on these YouTube videos. Because fundamentally, why would you not want to get more for what you put in? You take all this time to to put together some notes, think about examples, make sure that it's easy to understand, put together a thumbnail.

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It's like, why would we not just test the thumbnail image when we could have two things and one of the thumbnails could 3x the views on the video? That's a high leverage activity. And so within the business that you have, in terms of getting more customers, I am all about thinking in terms of orders of magnitude.

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But when you can get 10, 20, 30% boost and you can do it in three or four parts of the funnel, you can double or triple the amount that you're getting from what you're already doing. And when that happens, your revenue will increase, sorry, your profit will increase disproportionately to your revenue.

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So if you double revenue and you keep your costs the same, you could very well three or four X profit because that additional revenue might not have nearly the cost of the first set of revenue that you had to incur with your fixed costs. I want to rank for you the most important split tests that I do with a business. The first is going to be offers. That's the big obvious thing.

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What's the thing that you're giving away or that you're giving them? The second is going to be the packaging, which is going to be the headlines and sub-headlines. The third is going to be the images associated with that headline and that packaging. Now the fourth one, and this one's really The biggest split test winners I've had have come from one and four.

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Now, the reason four is fourth is because it's actually really hard to do. But the biggest personal gains that I've had have come from this, which is third party integrations. You're like, what does that even mean? Well, a lot of businesses use other technology. You have a software stack, you have a CRM, you have a scheduler, you have a form thing on your site.

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But at the end of the day, we still net less cost per lead from $100 to $58. And so fundamentally, this is the 101 of how giving stuff away works. Now the 201 version of this is that you want to only give the $25 thing away, or $100 thing, or $1,000 thing, depending on the size of the ticket of the thing you sell. to qualified customers.

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All of these different pieces typically exist. But what those third party apps and tools don't typically report on is what the conversion rate is of their UX or their user experience. And so I have found some unbelievable unlocks.

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Some of the biggest absolute split test winners have come from just saying like, oh, we're not gonna use this software to capture this stuff, we're gonna use this software. And even though the aesthetics were basically the same outside of the third party integration, I have had this happen

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four times in my career where this test was like a company explosion in terms of increase in sales and profit. Like, really big. The reason most people don't do this, though, is that it's hard. So, if you have to split this different tools, it's like, okay, well we got some customers here in this system, we got some customers here, it's kind of messy.

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But it's one of the most viable things you can do, and what's interesting to me is that almost no third party provider ever reports on conversion rate data, because honestly, how could they? Because everybody's different. But by having that and testing it for yourself, you'll see some of the biggest gains that you've ever had. And one of the cool things with all of these is that

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When you implement these things, you get permanent lifts, for the most part. So, meaning, like, if you change the offer and then everything crushes, it's like, great, that's the offer. If you change the headline, you find out that's the headline, it's like, cool. Like, this just keeps converting for us. So it's like, it's one-time effort for ongoing gains.

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And like, those are my favorite types of things to do in the world, like, Build once, sell a thousand times. Fundamentally, a book, same idea. You write a book once, it's a lot of effort once, but then after that, you can just keep selling the book over and over and over again. And same thing when you give away free products.

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It's like you build it once, and then that can get you unlimited amounts of leads. Last week for Black Friday, I spent 200 plus hours, not on that day, but leading up to it, to come up with a scaling roadmap, basically taking a company from zero to 100 million. It's 14 hours that breaks 10 stages of growth for any company, and it divides it across eight different,

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functions of the business so marketing sales customer success product it hr recruiting finance and so all of the functions of the business what the problem that you're dealing with right now and what you need to do to graduate that whole thing took me a really long time to put together but now that it's there and everyone can just like fill out questions and get a personalized solution for them and it's free and it's better than other people charge for

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then that can just consistently get more businesses into my world. So it's worth it. If we wanted to be number one in the market, part of having proprietary flow comes with two big advantages. And this works the same if you're selling customers, the same idea, sell in a vacuum. But there's two different ways that you can sell in a vacuum.

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And the reason selling in a vacuum is so important is because when you sell in a vacuum, you no longer have to compete on price, or in my instance, terms. And so the first is you sell where no one else is selling. So that's you find the little pond where there are no other fishermen and then you fish there and you get all the fish you want. The second

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way is to sell something that no one else sells. And so one is a where thing and the other is a what thing. So either you create something unique that you have some sort of feature or service that no one else can do because you have some sort of technological advantage. Fundamentally, this is what Elon does in every one of his businesses.

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He's happy to go where it's super competitive, but he just sells something that no one else can sell. And then he can command a premium price for it. The alternative is to be good at providing value at scale to people so you get inbound demand. And then at that point, they're not choosing between you and six other people. They're saying, I'm either working with you or I'm not doing it.

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So it's no longer, oh, you want my SEO backlinks, it's okay, well, I'm only gonna do that if you meet qualification one, two, three. And then at that point, then I can look, I can sift through my leads and say, oh, well, I'm only gonna incur that $25 cost on one of the three leads, which then brings my average lead cost down to probably around $40.

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So the next big way of getting customers so fast it should feel legal is spend more. Wait, that's not what it is. It's be able to spend more. So let me explain the difference. So spending more is just cool, you increase your budget. Sure, and that can work.

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But most businesses, like if you ask businesses why they fail, so they do surveys in the Census Bureau, and I think the number one reason that small businesses say that they can't succeed is because they have a lack of customers, they have a lack of leads, they have a lack of demand.

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And the reality most of the time is not that they have a lack of leads, but that they don't have a good enough business to be able to afford them. And so this is where you have to solve the business from back to front. And so there was a company not that long ago that came out here to the headquarters and they were like, we need help scaling. And I said, so what do you think your constraint is?

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And their constraint was leads cost too much. By the way, leads costing too much is rarely ever an issue. The issue is usually that you don't make enough money per customer. And here's a fun factoid for you that I can share. I look at a lot of different companies every single day. And that's because we sift through deals and we look for patterns between markets.

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And so right now, for example, I'm really interested in the med spa space and I would really like to get into a chain there. So if you are a med spa owner and you have, you know, call it five-ish million in EBITDA, hit us up. One of the things that's not unique between different MedSpot chains is their cost to acquire customers.

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So the range of the cost of getting people in the door is usually actually not that different. So the benchmarks are usually maybe 1x, 2x of one another, not huge. But where the major differences that exist between chains in terms of their success is their LTV, which is how much customers are worth to that business over the long term. And this is usually where the rich get richer.

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Every six seconds, acquisition.com portfolio companies get a new lead. So I'm gonna show you how to get new customers so fast it feels illegal. And just while I was saying that, we got one lead in the first second, one at second six, a third at second 12, and we'll get one in just right now. And that's exactly what I'm gonna show you how to do.

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This is why the biggest companies in the world are the biggest companies in the world. Starbucks has a $14,000 LTV. Now for Starbucks to acquire a coffee customer is probably not gonna cost that much more. If anything, they're probably wildly inefficient because there's this massive corporate behemoth. compared to the local coffee shop down the street.

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But if they're going to head to head from an actual per dollar per customer basis, usually the small local guy should be able to outcompete the big national guy. Where the big national guy gets them is that they've got 40 or 50 years of optimizing lifetime value per customer.

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So they know every single thing that gets customers to come back, what gets them addicted, what types of products on what seasons, what pumps of flavors to give, what options to provide, which ones to cut. They know all of these things. And that is how they out-compete.

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And so right now, if your cost to acquire a customer is about the same as your industry, which by the way, you can totally just Google this, it's not that hard. You just say like, average cost to acquire customer, insert industry, right? And you can find it very quickly in a couple Google searches. That will then tell you, oh, maybe I'm not that far off. Oh, my business is broken.

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And so this often happens a lot too, where a small business owner will be like, those guys overcharge. I'm gonna come into the market and charge less. It's like, well, there's a reason that they charge more and why they're bigger than you. Because they make more money, so they can charge more because they've already figured this out. In my opinion, the ability to spend more is LTV.

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And LTV is the arms race of advertising. And if you can spend more than anyone else can, you can outlast them. Because here's a fact that will make a lot of you uncomfortable. Advertising only becomes more expensive over time. The cost to get a customer literally only goes up. The cost of impressions, cost of eyeballs only goes up over time.

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You need to have a force in your business that also concurrently goes up over time, which is your LTV. Customers should continue to pay for the services from you, continue to buy your products, and you should be continually expanding LTV so that as you go to colder and colder markets on more and more expensive media channels that you can continue to outspend and earn a profit.

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And so this is the idea, is that you can give something significantly better away for free than everyone else does. Ideally, something that other people actually charge for. And if you really want to be a savage about it, which why wouldn't you want to be a savage about it, you make it even better than what they have.

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And you might be wondering, why doesn't anyone do this? Well, it's usually an entirely different skill set. And there's usually fear associated with the actions that most strongly increase LTV. So changing or raising prices, something that most business owners are terrified of. It's one of the strongest levers on lifetime value. And yet no one does it.

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And so they instead are like, how can I get cheaper leads? Because they had this one campaign, this one time that kind of worked. And then they're like, I wish it was like that time. It's kind of like they're heroin addicts. They're chasing the first high, and every marketing campaign after that, they're trying to get lead costs that low. It's never going to happen again. Just get over it.

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The first time you send any kind of ad in a new market or you've got a new offer, it's always going to do the best. That's not going to be your stabilization point. It's going to get worse. And so you have to build the business to accommodate that rather than stomp your feet and wish that leads were cheaper. So we're talking about getting customers stupid fast.

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One of the highest leverage things you can do is go to somebody who's already spent years developing your audience and then just ask to be promoted in front of it. Now, there's a number of ways of doing this. Of course, you can go for the mega influencers and things like that.

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The way that I have built every affiliate business that I have run has been not going after the super affiliates, but instead trying to aggregate many smaller businesses or nodes of new revenue. So there is a business right now that already has all the customers that you want and they don't have your product and you would both benefit from collaborating rather than competing. Here's the issue.

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If I were to get on stage in front of a thousand business owners and say, raise your hand if you have a deal or if someone refers you a customer, you give them 20%. Half their room would raise their hand. They'd be like, oh yeah, I do that. And I'd be like, okay, everybody's raising your hands. Why don't you go refer a customer to one another? and then the hands go down. Because no one cares.

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No one's gonna say, okay, I spent all this effort, all this time to build trust, advertise, sell, create a relationship, and I'm just gonna hand them to you for 20% of your ticket. What do I care, right? I'd rather just not even introduce the variable, just keep living my life. And so if you really want affiliates to work, you have to make it so good that it hurts, all right?

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And when I say that, I mean, you gotta give the affiliate so much that you're like, man, they're gonna make a killing on this, all right? And this is how I like to do it. So let's say that you've got a product and you've got kind of four components to it. And you sell this thing for whatever, $1,000.

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So what we want to do is we're going to say, we want to take this corner and we're going to peel this thing off. So this is just going to be a little side project that we have here. Just pretend that's a cube. And instead of saying, hey man, I'll give you 20%, give them 20% of your product and give them 100%. Hear what I'm saying. If I were a masseuse, and what are all the things that I do?

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This feeds into one of my favorite business models in the entire world, which is look what everyone else does, make it better, make it free, make money another way. And so if you wanted to figure out what this would look like, your cost to acquire a customer, so you can either break it down to the cost per lead that increases or you break it down to the cost per customer.

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Okay, I might do sports massage, I might have the lotions and the oils, I might do the hot stone thing, right? Or I might be selling 10 massage packages or 20 massage packages, whatever. I would go to a business owner, and instead of saying, hey, I'll give you 20% if you send me somebody who gets a massage, I would say, hey man, why don't you sell all your customers three massages?

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and you can sell it for whatever you want from me, and you can keep all the money. Oh, wait, so this is like a, well, how much can I charge? Whatever you want, but it's got to be at least this. So that minimum is whatever your price is, because you don't want to get cheap customers in. So let's say that your price is $100.

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So you say, you have to be able to sell those three massages for at least $300. You can sell for $500, you can sell for $300. You'll keep the whole $300. I just need to make sure the price is right so it's the right people. So let's say these guys are like, oh my God, these guys are nuts. I'm going to sell these three massage packages for $500 and I'm going to keep all of it.

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You know what I would think to myself? What's my cost? So the cost of a massage, let's say that you pay your massage, maybe it's you, right? Let's say you pay $30 per massage and hard cost in terms of labor. Okay, so would I pay $90 to get somebody to do three sessions with me that paid $500 for those three sessions. Well that sounds like an incredibly qualified lead to me.

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And not only is it $90, it's $90 and no other work. I'm not making ads, I'm not running them and buying media, I'm not building landing pages, I'm not working leads, calling them, sending them, I don't have any of that. They already paid, they're gonna show.

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And so all I have to do is just have an easy handoff where they can just schedule them onto my calendar, and then they've already paid, so the likelihood they show is fine, and the rest of it's automated. When that happens and then you make this offer, hey man, and you do that to 100 businesses, there's a lot of businesses that are like, oh, I'm down to sell something for $500 and do no work.

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And there's something mental about, you don't split it with me. Just take all the money. It's a very different vibe. And so what ends up happening is they either use it as an upsell or They include it in their $1,000 thing and they put your thing in and they charge the $1,000 and give them the three massages. You don't care.

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Either way, you have a $90 cost of getting somebody who spent a lot of money and is perfectly qualified for whatever your next thing is. And so then you just do the math and say, okay, well I know that I convert one out of three of these people, one of three, into my $2,000 thing. which means that my cost to get a customer here would be three times 90, which is $270.

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So would I pay $270 to get 2,000? Hell yeah, I would. And without any of the work? Of course. And this is how you build an affiliate model that gets you customers stupid fast and gets you affiliates who are trying to fill up your calendars because it actually makes sense for them now. So if you're gonna have affiliates, Do it like you mean it.

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Now, where this gets extra nasty is that maybe you closed one out of five leads before, but maybe with this new lead magnet where you provide value first, you close one out of four of the leads. Well, all of a sudden, not only are the leads that you're getting cheaper, you're also closing a higher percentage of them.

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It has to be enough, it has to be incentivizing enough to change their behavior or it's useless. It's kind of like these coupon codes that I see people give out to like influencers. It's like 10% off, it's like, Who cares? Either I'm going to buy the jacket or I'm not. 10% is probably not going to move the needle for me at all.

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Now, for me, discounts have to be 50% or higher, in my opinion, for a real change in behavior. We get a massive increase in demand. And so I don't want to take that off my main thing. I want to peel my main thing and then give 100% of that. And so this next one is truth. And you're like, what does that even mean? How is this gonna get me customers really fast?

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Well, lies will certainly get you customers pretty quickly, but it'll also ruin your reputation. So you want truth to be your greatest ally, not your greatest liability. Because I will tell you a secret about advertising. Nothing sells like the truth. And so one, people talk about being authentic. Well, if you want your advertising to be authentic, just say what's true.

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And what's interesting is that a lot of people won't tell the truth about the things that actually could help them. So like if you're a small business and you're getting started, say so. If you If you don't have a huge amount of capacity because you're small, say so. Not having a lot of capacity increases scarcity. It means that there's fewer slots available.

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Not having a lot of capacity indicates that there's probably a high level of personalization and personal touch. Being a small business for many people is a pro. There aren't as many people who are like, buy big corporate, buy big corporate. No, people were like buy local, buy small business, right? They support small business.

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And so like a lot of what people think are negatives are actually things that make their offer or their business more compelling, especially to the right audience.

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you want to arm yourself with truth and think about how many different things are true and if you want to get really nasty with it you want to tell the truth that also isn't as exciting up front so that when you sell your second piece of truth they will then believe you that much more so i'll give you an example so i remember we had a location that had bad parking

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And so we would say stuff like, listen, we have, you know, we don't have the biggest parking lot or we're not the biggest gym in the neighborhood. You know, we don't have more equipment than the guys down the street. But you know what? When you walk in this door, you're going to forget about all of that because you're going to have so much fun. You're not even going to care.

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And so if you know that you're going to tell the truth and that people are going to find out about this anyways, you might as well be the one who controls the narrative and you can frame it in a way that that bad truth helps amplify your good truth.

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And so now you have two things that help you get even more customers from one badass move. Now, number two, these kind of bets are hard for an employee to make because they're going to be coming at you saying like, hey, I just want to give away a bunch of money. And maybe your gut response is to say no.

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I obviously come from the fitness space, and so the examples that I think of are there, which is sometimes, one of the gym owners was not super in shape. They'd be like, hey, I'm not the most in shape guy, but we have more fun at our gym, and people get great results, even though I like donuts a lot still. What happens is people are like, man, this guy's so authentic.

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And if you don't say it, they're going to think it. So you might as well account for it up front. Answer the why should I listen to you or what about this big flaring problem that I can obviously see. You want to control the narrative and make that thing into a weapon for you. Make it into an asset that serves your purpose rather than something that casts doubt in the prospect.

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Because if you claim it, they... They like, I don't know why this works this way, but it's kind of like Eminem when he said all the negative things in 8 Mile that anyone else could say about him so no one else could say anything bad. It's like if you claim them, then people can't hold it against you. And the hardest thing in all of marketing is getting someone to believe you.

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And so everything that you can do to increase trust is one of the best investments you can make in an advertising campaign in general, and ultimately in building a brand. The truth isn't just a good strategy, it's the only long-term strategy. And it just takes people a different amount of time to realize it.

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And once you've activated affiliates, once you've given away crazy amounts of stuff for free, once you've doubled down on the right people who are high leverage in the position,

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Once you've made the truth your ally and you put your negatives out in the marketing so that people believe the good stuff that you say and you focused on doing more and doing better, you're going to start getting more customers than you can handle. And at that point, you're going to want to have a playbook for making so much money that it should feel illegal.

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If you want that scaling roadmap, it's personalized, it's free. You can just hit the link in the description and you'll find it. Hey, real quick, guys. I have no paid sponsors for my podcast. So be a bro and share the show or be a pal and tell your gals. Thank you. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

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and across all eight functions of the business so you've got marketing you've got sales you've got product you've got customer success you've got it you've got recruiting hr you've got finance and we show the problems that emerge at every level of scale and how to graduate to the next level it's all free and you can get it personalized to you so it's about 30-ish pages for each of the stages once you enter the questions it will tell you exactly where you're at and what you need to do to grow

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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But if you were the one who thought of it, you would have the authority to do that and actually make sure that the math worked. And so if you're a marketing founder, you want to stay as close to it as possible. So one of the stories that I love to think about this is my litmus test for knowing if I'm too far away from something is that I want to know where the bodies are buried.

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And so if I don't know what's wrong in an apartment, I don't know what could be better, it means that I'm too far away. It's the easiest way that I've found in my life for me to stay in touch at the appropriate level of distance. Now,

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If you are somebody who's an awesome marketer or that's your primary skills, you're good at promotion, you're good at advertising, then I have made this mistake before and I've gotten too far away. What happens is this distance basically dilutes down my marketing skills And I end up basically having a department of people that are using their best skill set rather than mine.

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And so the business loses the biggest asset it has, which is me or you. I have been talking to our portfolio founders about this specific thing recently. And one of them, after a long conversation, was like, this has completely changed my outlook, which is why I wanted to make this video. I told him, your instinct is right. I think that traditional setups are dumb.

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He had, this particular founder had a team of 18 people who were inside of his marketing division. And I said to him, right now, if you had to get rid of everyone except for two people, do you think you could run the advertising for the business? And he said, yeah, probably. And I said, okay, then it means that the other 16 people are just people that we brought on who are here for the ride.

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And so Keith Rebois has this really amazing analogy for this that I really like. He says, imagine a Civil War cannon. All right, so you've got your big cannon here. And he said, imagine that you've got this big ammo of all the cannonballs next to it. He said, most people start a business and it starts working, right? So you start getting customers, you start getting leads, fine.

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So number one, every business wants more leads, but none of them want to give good stuff away for free. And so my favorite marketing strategy for getting tons of leads is step one, look at what other people are charging for. Step two, look at the hard costs of what it would cost for you to deliver it. Step three, give that thing away for free. Step four, see how many leads you get.

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Then you say, okay, well, I'll go from five people to 20 people and that should 4x the size of the business. And then of course you find out quickly that when you 4x headcount, you don't necessarily 4x the business. And he said, that's because most people are ammunition. And so you still only have one barrel. There's only one cannon that's doing the firing. We just added potential here.

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He said, but instead what you need to find is more barrels. Because if you can double the barrels, you can double the rate output. And so I see barrels, as Keith does, as incredibly rare. But they are the ones who move the needle.

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And so I was explaining to this founder, and this is something that I've, it's a mistake that I've made many times in my life and it's one that's hard to not make because as things grow, more things come up and you get further away, but it's like you have to make sure that you hold onto the things that matter most. Like Mr. Beast is still involved in the creation of his videos.

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Steve Jobs still approved every final ad that went out for Apple, or at least so legend says. And so I think that the traditional setup is for the most part made by corporates who aren't founders, who aren't driving output. They're just like meeting quarterly earnings. They're not really changing the world. And so I have put my big kind of words on this. Fewer, better.

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And what that means is that you're going to have to back up your investment in talent with finances. And so what I mean by that is if you were to build a department and say, OK, I need to hire a few people for $75,000 a year. OK, just use it as simple math. Well, those may be A players, B players, C players, who knows?

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But an A player may be able to do quite literally five times, 10 times the output, 25 times the output of a B player. And so marketing is one of these roles that has tremendous leverage. And so in thinking about this, I think I've changed the way that I see building marketing departments

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phenomenally, which is the most similar role in a business that I can think of that we have in the portfolio is actually a developer. So hear me out. Developers typically have technical career paths, which means that you can be a level one, level two, level three, level four, level five, all the way up. And as they go up, they make more money.

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And the reason for that is because one amazing developer can make something that millions of people see. So one of the old legends of Google is that there's a particularly amazing coder. They had bought some old version of Google Maps as an acquisition. They kept trying to deal with the code. And then one really high leverage coder remade the entire product over a weekend.

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And then that is ultimately what became the code base that we still use today as Google Maps. And so one man made that. That's how much skill he was able to bring to the table. Now, here's where it makes sense from a business perspective. that one guy, maybe you have to pay him 10 times more than a traditional coder.

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But if that guy can make a million times the output of one guy, then it's still an amazing deal. And so the thing is that there is outsized returns on talent at the top end. And there's a reason that the biggest technology companies, the biggest companies in the world are in a war for talent.

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I was thinking about this as it relates to marketing because in many of the businesses that I've started, marketing has been traditionally understaffed or overstaffed, rarely appropriately staffed. It's understaffed when it's really just me and like a couple people. And when we do that, it's because I have a ton of skills in marketing. And so we can get away with very few people.

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On the flip side, when I get too far away, I usually bring someone in and they just bring a lot of bodies. But what ends up happening is that the output goes down a lot. And so at Gym Launch, there was a period of time where we had 17 people in marketing. And once I got rid of the leader, I moved in and I took the team from 17 to five. And then output tripled.

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And so I say this because the people who have skills are the ones that are moving the needle. And so if I have three guys for 75K, and they create 3x output. One of the really interesting things about KnowledgeWorks, specifically marketing, coding is one of these, is that the difference between the best guy and the worst guy in marketing isn't like,

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Step five, see how many you convert. and then the hard cost divided by the percentage conversion equals how much it costs to get a customer. Don't worry, I'll walk you through the math. So let's say that you have a competitor who's willing to do some sort of SEO service, whatever. Now, SEO services will typically have multiple components to it.

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the best guy who can cut a lawn and the worst guy who can cut a lawn. The worst guy who can cut a lawn, maybe it takes him an entire day. And the best guy, maybe it takes him a third of a day, because he's sprinting the whole time. So maybe you get a 3x increase because somebody is better. And so you'd be limited by how much you'd be able to pay someone more for that quality and that speed.

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Whereas with somebody in marketing, somebody who's a zero marketer versus a 10 marketer, the 10 marketer might literally be able to do 100 million times more of the output. Because one guy with skill and an iPhone can get 100 million view video. And that kind of leverage is why it pays to pay better.

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And so this is something that I've been obsessed with of late, and I'm trying to relay this to each of the portfolio founders in making sure that we're keeping the marketing divisions tight so that we have the highest leveraged people in the highest leveraged positions with incentivized performance so that we access their discretionary effort to maximize their skill sets.

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Yeah, the most important thing that you can take away from this is that the best advertisers don't need many people. And if you have no one who's in your, quote, marketing department, that means you. And it's a game that you have to learn. There are a few things that every founder has to learn at a basic level. You have to know the core business. You have to know how to get customers.

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You have to know how to deliver customers. Just about everything else you can outsource. But those two things are core to every business. And so if you don't know how to get new customers, you need to fix that.

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So the next big one that can get you more outsized customers than anything else is answering a specific question, which I ask as a great thought exercise with our team is what would it take to be number one? And another way of asking this question is, what else would have to be true for us to be number one in our market?

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And so, when we actually hypothesize about this, we think, okay, what would it look like for us to be number one? What else would have to be true? What else would have to have occurred? What's interesting about this question is that it circumvents the traditional incremental thinking.

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Meaning, instead of saying, okay, we're just gonna do 10% more, we're gonna do 10% better, we're gonna do 20% better, when you start with the

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in mind from a what would it take for us to be number one we assume the goal outcome and the crazy thing about this question is that you might be one one hundredth the size of the number one player in the market but it assumes what it would take to be a hundred times bigger and then it gets reverse engineered into the present and so what happens oftentimes when I ask this question is they usually state one or two key big things that would have to happen for the business to be number one and then I ask

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what would it cost for us to do that? Do we have the resources in order to make that happen? And more times than not, we actually have the resources to make that happen. Then the next actual question is, then why are we not putting every one of the resources we have right now towards making that come true, rather than just continuing on the path that we're on?

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And so this is an order of magnitude increase in terms of business growth and ultimately what generates the most leads and customers. And so when I asked myself this question years ago, it was what would it take for me to be the number one business channel? What would it take for that to happen?

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And most businesses that either have products or services have many things that if you were to go zoom in on it, you could do for somebody. You could compress files on someone's page to increase the page lead time. You could change headlines around. You could redesign it. You could fix the metadata so that it ranks differently. Whatever. You could create link backs.

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The question beyond that was, what would it take for us to be able to have one of the best investment firms in the world? And I was like, well, I would have to have many, many, many more years of experience. I was like, I don't know if I can do that. I was like, okay, that would be harder, that would be, I can't make time happen faster. What else would it take?

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And so then it came to the number one, so I'm gonna cut from there. So what would it, so then I followed with, okay, so for me to be the best investor, then what I would want is the most deal flow. So what are the different ways of creating deal flow? One of them is you can just go to broker networks. So you go to investment bankers, you get them to send you deals, and then you bid on those deals.

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But if I wanna be the best investor in the world, then I need deals that only come to me. I was like, okay, well thankfully, I'm pretty good at marketing. And so I was like, why don't I, what would have to be true for me to get lots of inbound deal flow? And I was like, okay, well probably building a massive brand around business.

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And so then the question was, how do I build the number one brand in business online? And so, it's these series of questions that I asked and then it was, okay, well, I should probably start making content around this.

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And I should probably write a book or something that would do really well that is in the business space that business owners would read and then think, wow, this guy knows what he's talking about.

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And so by doing those things, by publishing the books, by making the content consistently, and the moment I realized that that was what it would take, I basically put all of my resources towards doing that despite the fact that in the moment, it basically meant nothing.

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It meant that I had to go write a book, it meant that I had to start making content, but I did all of those things because I thought, for me to be number one, I need to have proprietary deal flow. For me to have proprietary deal flow, I need to have a big business brand. For me to have a big business brand, I need to make more content that's better than everybody else.

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And so that's what I'll start doing now. And that's where I'll allocate my resources. Even though I could have done a lot of different things, that was the one that I felt at the time would be the most leverage. And so far it has worked out. But asking that type of question, you don't get to that type of solution unless you ask the what would it take to be number one.

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Over my career acquiring and scaling businesses for acquisition.com, I've done a lot of deals. I want to put the five most brutally effective tactics that I know in one video for you. A lot of these things I didn't actually learn from books. I learned them from mentors and actually seeing them do it and learning it like in the streets, in the real world.

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There's other terms that we can basically weave into the deal that I'm not going to play all those cards at once. Now, this one is a real estate, so it's much more straightforward. But a transaction like this, it's like you want to think, what are all the variables? We want to use all the value equation variables. Speed, how can I deliver this faster? How can I do it slower?

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We've got the actual price, obviously. On top of that, we have the risk associated. So who's going to be taking on more risk in this situation? And what are the different types of risk that someone's taking on? Then we have ease. How can we make this easier or harder for the other person?

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For each of these components, you want to take whatever you're offering, whether it's an employee or whether it's a vendor or whether it's a deal, I want to look through each of these lenses and think, how can I have more variables at my disposal so that when it comes to the horse trading, I can make a small concession in ease and they only have two variables and I've got five.

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And when I have five, I can give without changing my price and say, hey, I'll do 15 with ease. They'll come down from 17 to 16. And I say, cool, I'll do 15 with ease and risk. And then they come down from 16 to 15.5. And I say, cool, I'll do 15 with ease, risk, and speed.

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And so when we do it like that, then all of a sudden it's like, I'm still keeping the reciprocity, but I just have more arrows in my quiver. When you're sitting down at the table, you want to think through all of these different variables that you have at your disposal.

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For me, I have this big deal sheet that has 80 different things that I can change about a deal, so that when I go into the conversation, I have so many things that I can move

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flexibly to make my offers more compelling without the unstated assumptions that people all have because things they're assuming the deal just says these two things then everything else is the way they want and for you you have 80 other variables you're like oh I can change this one I can change this one I can change this one and that allows you to stay in reciprocity with the other person that ultimately gets you a better deal long term so as we're thinking through this it's if we sit down at the table and we have

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It's kind of like a source of power. It's a decision standard that you only accept deals that are better than your best alternative. You can think about this in any setting. So if you're with a girl and you know that you can only date tens, if a seven comes along, you're like, Well, my alternative is a 10, so I'm only dealing with 10s.

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one or multiple other offers that we think are really compelling and interesting. And we use that as our psychological power so we can anchor super high and we anchor low in terms of our counters, right? Anchor high in terms of our initial, anchor low in terms of our counter offers.

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And then we have multiple simultaneous offers that are either presented to us or that we can present to somebody else using more variables. And then horse trade with reciprocity so we can stay in the pocket but still more or less stay at the same initial offer, then we're probably going to increase the likelihood that we get a good deal done. Number five, is framing.

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I would say this is most important, especially for employees and vendors, less so for partnership type or like M&A type stuff. But it can probably also be important here too, but I'll just give more use cases in these two right now. So if we're talking about framing, then how we position something is going to matter a lot.

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So if I'm an employee selling to an employer, which is fundamentally what we're doing, I would probably say something to the extent of we want to make investments in these places, and I see me coming in as an investment, not a cost. And ideally, if we frame this as how am I going to get a return on this investment, then I'm no longer a cost center in the business at all because I'm

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just a percentage commission, essentially, on what I'm bringing in the business. If I'm a vendor, to the same degree, I'm gonna try and frame something as an investment. I'm gonna frame it based on return, not based on overhead.

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On the flip side, you always wanna reframe the other way, which is you wanna reframe this as cost, you wanna reframe this as overhead, so that ultimately you have more, basically, negotiating power because you're pushing them down, they're aching themselves up. A lot of times people don't even understand framing, and so they'll just accept the frame that you present.

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So rather than saying, hey, this is gonna cost you five grand, we just say like for $5,000 investment, you can see $15,000 in maintenance cost savings. That's very different than this is gonna cost five grand. If that's the reality, then it's gonna be far more compelling and far more likely the person's gonna accept your offer, even though functionally it's the exact same thing.

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I was talking to a few home services businesses that do kind of construction stuff. And so I talked to a pool guy, talked to a patio guy, talked to an awnings guy who did like awnings on top of patios. And I said, do you have any data that shows resale value of homes that have awnings versus not?

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Or do you have any data on resale value of the specific neighborhoods that you're going to go into of pool versus not pool? If someone knows they spent $100,000 on a pool and adds $100,000 to their house, I'm like, the pool's free, except you get to enjoy the pool the whole time.

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If someone says, hey, I'll be willing to buy all of your inventory for 10 bucks a piece, and somebody else comes along and says, I'll do it for nine, instead of just saying no, you're like, I'll do it for 10.50, or I'll do it for 11. You can edge them up, but if you know that it's not gonna matter, then it doesn't matter. So I'll tell you something that recently happened.

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So we shouldn't even be talking about that because you're really just taking it from one pocket and putting it into another. You're the one who gets to keep the pool. I don't keep the pool. It's all for you. So the idea here is how we frame it. If you're going into these things that cost you $100,000, that's a very different frame than your house is currently worth a million.

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The other houses that are selling at $1.2 all have pools. It's going to cost you $100,000 for the pool, but you're going to add $200,000 in home value. What are we talking about? It's a very different conversation. So tactically, when you're in one of these situations, we want to have the data to support our argument for whatever our framing is.

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And typically, it's going to be some sort of return, especially if it's a monetary thing, right? We want to frame it in terms of what the is. And so the strongest business is to say, look at the other 10 houses that sold in this neighborhood. Look at however many deals that have been done. They all had these components, the ones that didn't suffer this sort of loss. And you know what?

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Maybe it's not a one-to-one ratio. It costs you $100,000, and the houses with pools, it's an extra $50,000. Okay, let's not frame it as 100. We can frame it as half off. But you also get to enjoy the pool for that whole time. And so if you think you're going to sell this in however many years, do you want to enjoy it and barely pay much at all over that period of time? Probably. Rock and roll.

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If you like this video, you're going to love the 13 years of brutal business lessons that I have learned over my career. Enjoy.

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I'm right now negotiating to buy a home. It's something that Layla wants and it's aggressive. We already have a home that we like a lot. I really like the house we have. My best alternative to buying this house is doing nothing and just enjoying the home that I already have.

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They're in a terrible position because right now I know that they haven't had anyone else who's bid on the property because it's aggressively priced, I'll put it that way. It's them versus me and it's who wants it less. The reason bad is so important, because you're like, okay, I get that. How do I have a best alternative to a negotiated agreement?

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Most itty bitty tactics like don't actually drive the needle, but these five actually have gotten deals done and improve my situation or standing in the deal. So let's dive in. There's three contexts that you're going to use each of these skills with. The first is with employees, and this goes both ways. If you're an employee trying to negotiate with an employer, then that applies.

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You win negotiations, and I'm starting with this one, because I think it's all five of this, or six or ones that I'm going to show you are going to be so important. But this one is probably the greatest source of psychological power. And you do this before you sit down to the table. Me going to look at these homes, I know I don't have to buy the homes.

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When I was selling gym launch and prestige labs, I was like, I can just keep the businesses, and they'll just keep making me money. I don't need to sell them. And from negotiating for that position, you only want to sell when you don't want to sell. You want to buy when you don't want to buy because you have something else.

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If you're looking for jobs as an employee, you want to negotiate when you already have another offer. So if you're going to your existing employer, get another offer and then negotiate with that. You can only do that so many times before you start losing goodwill. So you have to make sure that you're balancing that well.

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If you're dealing with a vendor, then you're like, okay, I'm going to get multiple bids before I'm going to decide to work with you because these are what I'm considering. You'll get so educated from actually negotiating four, five, six of these vendor agreements that you'll learn other terms that other people include that you can use, which is a later strategy that I'll explain.

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Getting multiple offers before you sit down increases your bet. So for sure, don't take the first offer because even if you have first offer within the negotiation with one guy, but then you have that offer compared to all the other offers you're ultimately going to get to do the work. On the vendor side, it's reversed. What's my best alternative? What are my other customers?

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If I've got 20 other customers, I've got people banging on the door, it's a supply-demand thing. So I've got more demand for my services than I have supply. And so if you don't want it, don't worry, I've got another customer behind you. And so this is the leverage that we go back and forth in negotiations. And then finally, with partnerships, it's the same idea.

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How can I get multiple offers from people wanting to buy my business? And to the same degree for me, if I'm trying to buy a business, then I want to not have to buy the business because I've got other businesses I'm looking at. So no matter what, all of this is won before you sit down at the table.

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Right now, if you sit down and you need this deal and you have no other offers, all the little tactics that you can try, sure, you can try to do it, but the thing is that it's just trying to win at poker only on bluffing. It's a bad position to be in. I would rather have pocket aces. If you have other offers, there's two different ways of thinking about this.

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So one is you can be overt about it and say, listen, this is the counteroffer. If you can beat the offer, beat it. If you can't, no worries, we don't want you to waste time. The other way is that you just have it in the back of your mind and then you just see what you can get. Because the thing is, somebody else is giving you a $10 offer.

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If you say, hey, I've got a $10 offer, maybe this person will just beat it by $10.25. But if you have the confidence that you know you're going to sell the inventory no matter what for a profit, shoot for $11. Shoot for $12. Shoot for $15. Like you can shoot way higher because you know your plan B is not bad.

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And so when you show it, they're just going to basically marginally edge it versus you having the confidence to basically swing big. Real quick, if you are a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift.

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So my team and I put together the $100 million Scaling Roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through, and more importantly, where they got stuck and how they got past it.

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And so we broke it into these 10 stages, and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at, and the most important part for you, what to do for each of the functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance.

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The second is going to be vendors. Now, this also applies if you're a vendor who's dealing with customers. And then third, you've got what I would consider partners. This is when you do deals, M&A, things like that, investment. So these are kind of the three big vectors that all of this stuff applies to. So if you're like, I'm not sure if this will work for me,

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And so no matter what you're struggling with, someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free. You can go to acquisition.com forward slash roadmap, plug in your business information, And if you want us to actually help you de-contrain the business and you're trying to scale, we'd love to help you out on the Thank You Bay Juniors.

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Book a call with my team and we will look into business, see if we can help. And if we can, we'll invite you out to Vegas and we'll do this in person live. So if that's cool, hit the link. Otherwise, enjoy the rest of the video. Now, the second is a big one. And a lot of negotiation books and courses and stuff talk about this. And people are like, hey, I'm not trying to anchor here.

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It doesn't matter if you say I'm not trying to anchor here. It's an anchor. An anchor is the first number that is set in a negotiation. If you're like, hey, what do you think you'd be willing to do this for? And someone's like, ah, I was thinking I could maybe do it for $2,000. That's now the anchor. You want to get less than that? And you were like, shoot, I was hoping for $500.

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Well, you should have said $500 first because now their $2,000s seem ridiculous. There is a strategy called counter-anchoring, but it's typically not as effective as anchoring, but it's the only move you have left. Now, the flip side is the reason a lot of people don't want to put the anchor out is because they don't want a short change.

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If someone was going to say yes to $5,000, you put $2,000 out there, you're like, damn. Because whatever happens, if someone gives you a fast yes, you're like, no, I left so much money on the table. So I'll give you a little pro tip that I've learned being on the other side of this. If I have somebody who comes to me and says, hey, I'll do it for $2,000. And I would have paid five.

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And I say, yeah, $2,000 works. The next thing I do is I say, hey, and if you were curious of whether I would do it for $2,500, I wouldn't have done it. And the thing is that it puts them at ease that like, you know what, you wouldn't have done more. And what happened is I bought a super expensive penthouse a few years ago.

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And after I bought it, the guy who sold it to me, obviously a wealthy guy too, he said, hey, we accepted your first offer and you're probably wondering if we would have done it for less. He said, I wouldn't have sold it for a penny less. It felt so classy. Maybe he would have sold it for a penny less. I have no idea. But in the moment, actually like I was like,

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Okay, it just made me feel a lot better. So if you're in the reverse situation, I would put someone at ease by just saying, hey, I wouldn't have done it for any less. I wouldn't have done it for any more, whatever.

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What's interesting is that Daniel, Nobel Prize winner, figured out that people give excessive weight to the initial information and make insufficient adjustments from that starting point. It's a psychological bias. Basically, it's like you want to anchor as high as possible. That's why I'm a big advocate of getting the gas.

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You put the big number out there because it completely shifts the whole negotiation numbers to way, way higher. And the thing is people think in different increments. And that's what we want to change. If you say, I'll do this work for $100,000, whatever, you're in construction. If someone was thinking 10, their increments now become the entirety of what they were willing to pay.

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They're going to be like, can you do it for 80? All of a sudden, we're thinking in $20,000 increments. As a side note, you can also incur increments. So I'll explain what that means. I'll actually walk you through the house negotiation that I'm actively in right now. The house was listed at $25 million. Then they dropped it to $20 million because the markets changed and things like that.

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You for sure, even if you don't have a business, you are an employee, and if you are an employee and you don't wanna use that, you certainly have vendors that come to your house and do things for you. This is the fruit of life. You have to negotiate, and you get what you negotiate, not what you deserve. That may sound not fair, but it's also the truth.

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Okay, so now they're at $20 million. So I made an offer for $15 million. They countered and said, we'll do it for 16.9. So big move on their part, right? They're moving aggressively, they're trying to sell the house. They moved a lot towards me because they're trying to get a deal done. The natural thing that some people might think is, okay, they're at 17, you're at 15, counter with 16 here.

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So what I did is I countered with a 15.25. So they moved three million, I moved up 250 grand. The thing is that there's this idea of movement of you make an offer, I make an offer. So if I say 15.25, what am I indicating? I'm not willing to move very much.

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I'm going to, out of reciprocity, which we'll cover later, I'm willing to move a little bit, I'm going to make some counteroffer, but I'm not going to give a lot. Then I can stack in other terms that make it more ameliorable for them. My initial offer, I had two other things that I was like, okay, I can offer cash. My first offer is not going to be cash.

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I can also say, hey, it has furnishings in the house, which are super expensive. I don't want to have to deal with refurnishing the house. What I did was when I moved up to 15.25, I sweetened the deal by making it all cash. But then I also said, I also want the $4 million of furniture that's in the house.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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which is technically a worse second offer than my first offer. But the thing is that I moved the number up. And a lot of people are always way too fixated on the price and not enough on the terms. One is we anchor with our original price and also in the increments that we move in. This was something that took me actually a while to figure out. And so let me tell you a story about this one.

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So one of my partners at my gym, way back in the day, I learned this from him. We had to get this big custom front desk built. So it had like multiple cutouts. We had multiple salespeople. Big, impressive thing. You get a custom built. The guy came out, they built this whole thing.

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He was like, hey, when we went to do like the final inspection, we noticed that they had kind of like nicked a corner of it just from moving it around or whatever happened, right? It was a small nick, but it was noticeable. My partner goes to the guy and he says, hey, how much would it cost you to replace this?

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And the guy, of course, because he doesn't want to rebuild the whole thing, he's, oh, my God, it would be a huge deal for us to have to, like, just this little thing. We'd have to go back to this job. We'd have to do this stuff. It would probably cost us $1,500 just to replace that. And he says, that sounds like a pretty good place to start it for a discount. Nasty.

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Number one, this is actually from a Harvard Business School thing that I learned from Sharan Sarvata. It's called BATNA. Now, I didn't know the fancy term for it, but it means best alternative to a negotiated agreement. So what does this really mean? Research has shown that having strong BATNA, basically a strong alternative, gives you significant leverage in negotiations.

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I was like, oh, I'm gonna use that. If there's ever someone who messes something up, instead of saying, hey, what can you knock off the price, ask them what the big inconvenience would be for them, ascribe a price to it, and then they have a hard time backing down from that because they just said that's how much it would cost them to fix it.

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Then you should probably discount us by that much because that was the size of the mess up. So you get them bidding for themselves and then you flip it. So number three, I learned this from a different mentor. They call it MISOs, but basically multiple equivalent simultaneous offers. So what does that mean? That means that I present offer A, offer B,

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And offer C. Or just offer A and B. It doesn't really matter. You can have two offers. You can have three offers. And each of these have different prices and terms associated with them. And so what happens is when you make multiple equivalent offers, it's like embedding reciprocity. It's like, hey, I'm trying to be reasonable. I just want to figure out what works best for you.

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Because all three of these work for me, but which one's better? This is a way of actually teasing out what someone else's priorities are if they're not willing to tell you. Because a lot of times, you want to hold your card close and not say, what are the things that are most valuable to you?

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Now, over time, you build some trust, you build some rapport, and you will be able to share because, ideally, something that's important to you is not important to them, and they give you this one, and something that's important to them that's not important to you, you give to them. And that's fundamentally a good negotiation.

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And one of the big things that I misunderstood in the beginning is that I assumed negotiation was a zero-sum game. And it's never a zero-sum game. Because you're a different person, you have different needs. You're always going to have some things that will be more important to you than other people.

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And in that situation, it's like you want to just interlock the things that matter most to each person. That's where it becomes a positive sum game. Both parties are better off from basically giving and taking in places that are less meaningful to them and more meaningful to the other person.

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Journal of Personality and Social Psychology showed that presenting multiple equivalent offers simultaneously increases the likelihood of finding mutually beneficial solutions. This approach demonstrates flexibility while also maintaining your core interest because you're the one who's presenting all the offers. It's almost like a reverse assumed close.

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Hey, I'll do any of these three things and you just pick the one that works for you. And then the thing is they're picking all any of these I said already worked for me. Let me give you like a real world example. So let's say option A is lower monthly fee with a longer commitment. Option B is a higher monthly fee, but has premium support.

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And then option C is kind of like a pay as you go with slightly higher rates, but maximum flexibility, right? So all three options will give you similar overall value, but you might look at them and be like, I just want to know which one meets your needs better. From their answers, you'll be able to understand their motivations. Now, let me tell you some knowledge from the street.

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If someone gives you multiple offers, if you're on the other side of the table, what I like to do is say, I like the best part of this one, and I like the best part of this one, and I like the best part of this one, and why don't we make an offer that is the best of all three? And I learned this from my friend Sharon. Guy's done more deals than anyone I know. I was like, ooh, that's good.

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So the flip side is you could ask someone, hey, can you give me two or three versions of what this deal might look like? And then they come up with their versions of the deals. And then you say, great, I like this piece. How about we do option D? And what's nice about this is it also shows some active listing for you.

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You countering with something like this or even taking two of the three components, two of those components might be meaningful for you and not for them. Again, because they put them in the different deals. You might find out that you can get more of the things that you want just by asking. So, number four, reciprocity.

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Now, reciprocity is key in all sorts of persuasion, and I'll say this one caveat that I believe. Reciprocity only matters in cultures where reciprocity matters. There are cultures where reciprocity is not nearly as important. This is where sometimes when cultures mix, people take advantage of systems because that's not as important in the culture they came from.

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Negotiation is all about leverage. London Business School did a study and they found that negotiators who know their alternatives set higher aspirations so they ask for more, they make more aggressive first offers, and they negotiate ultimately better outcomes. So your BATNA serves as almost like an anchor, a counter anchor that you have in the back of your mind of what you're negotiating with.

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And so the culture where the person is giving first in order, because they expect something back, the other culture will just take advantage. and be like, look at this idiot. He just gave me some free stuff. And so you have to make sure that basically you're within a culture or society that reciprocity is the norm.

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But if it is the norm, there's huge amounts of things that you can use from a persuasion perspective. So the beauty with how we structure reciprocity is that people are more sensitive to the fact that they gave something and you give something. What's more difficult is ascribing the relative value. So let me give you an extreme example.

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Let's say that I take someone's order from the counter and I bring it to the table where we're both eating lunch. The person might say, thank you for doing that. If I then said, hey, can you pick me up and drop me off from the airport tomorrow? I mean, I did get you your lunch yesterday.

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The thing is that it poses, it looks like, it smells like reciprocity, but the value of those two concessions are wildly different. And so the idea is that we're trying to trade concessions in a way that is still advantageous to us.

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What I like to do in terms of my thinking, like the example that I gave in terms of multiple simultaneous offers, which is why I think this works well post that, is that I try and break each of my things into as many different pieces as possible so I can trade more times.

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So like this house example that I gave you earlier, if I have $15 million, but this thing is going to be financed, can I go cash or financed? I can do closing period. I can say it's a 90-day close or a 30-day close. That's going to be significantly more valuable. I could say furniture versus not.

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I think demonstration of expertise is more valuable than talking about expertise. I prefer to do business than talk about business, as ironic as that may seem. Today, AI Jack joins us to do business rather than talk about doing business. Welcome, AI Jack. Thank you for such a warm introduction. Good to be here.

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Yeah, that's how greatness is. Okay, here we go. So everybody can see it. And so you're doing, okay, so you're doing a decent amount of volume. So you're doing what, three or four a week right now?

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So I would do entrepreneurs as the headline, because that'll cover both, right? People identify with it, even if they're not, you know, whatever. And then I would probably go for promise. And then the pain side, I basically, you're going to go individual and then business. So it's like individually, here's all the pains you solve by having these automations.

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At a business level, these are all the things that that translates to.

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So it's like, if I help you do this one thing, that's great. At a business level, that one thing translates to this, which then is future pacing for somebody who's aspiring and present day for somebody who's at that level.

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Yeah, that's really tasty, actually. Okay. So that's just on the copy stuff. I'll look at the video in a second. Let's see here. A lot of these. I would do... I hate saying this, but I would probably... Let's see here, hold on, I'll give you my actual, I love the meetup pictures, that's really cool. I actually really like this.

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I would probably cut out the social, like all of this underneath of this stuff, because it's really noisy in terms of like eyes. And I would probably use some marker or something, not actual marker, but like digital marker to highlight what I want someone to read. That would just be like a small thing that I would consider doing. I think this is really strong. I would probably put this first.

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Well, OK, because it's real life, you know, I mean, like like and I would probably put like some banner here that says the best community in the world, something like that. You know, I think that because this is like cool, like real people, artificial intelligence.

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Okay. Got it. I get, I get, I get little, little trends here. Okay. Let's talk about the good stuff and we'll talk about, you know, potential, potential ideas. So right off the bat, having, having link above the fold, you saw before I even clicked it, it was there. So if everybody else is watching or listening, that is great thing. Number one, what are all these ones?

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This podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth. If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you. Okay.

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So big picture. I don't think it's bad. So just a big exhale there. I think it's actually a little overwhelming. The thing that I keep thinking about is like, so by the way, for everybody who's listening to this, like the way that people buy is like they are interested and then they immediately have an objection and it just sits in their brain until it gets answered.

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And if it gets answered, they buy. Because rather than try to edit this or something, I think if I try to ask myself, what would I do to try and advertise this? What would I try and do? I would probably have some sort of metaphor or analogy that gets brought up. And I would probably also promise their first automation can get done in less than five minutes.

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Because the big thing that I have is like overwhelm and this seems complicated. You're like, if you think about value equation, right? Like the big ones for you are going to be, I mean, honestly, there's a lot of them because you have risk, time and hard. I would be thinking about that from this bucket, which is like AI is incredibly intimidating, right? if you don't know what you're doing.

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And this group is to help you know what you're doing. And so there's three components to making AI work. One is to actually do stuff that helps you in your life rather than neat tricks. That's the risk component. The second thing is to do it in a way that doesn't take you oodles and oodles of time or make you feel like you have to become a software programmer.

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And the third is that everyone should be able to start as long as you can watch this on a phone right now and you have an internet connection, we can walk you through it. With the first one, the first automation I'm gonna show you how to do is gonna make this group even more valuable for you. And you can do it in less than five minutes.

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And the first thing we're gonna have you do, because a lot of this is we wanna take something that feels really intimidating, raking it into tiny chunks so that you can actually start taking steps. Now, in the spirit of talking about steps, we can go all the way through these levels, which I'll show you,

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Like, I won't get too much into that because right now you haven't made your first automation yet, or maybe you have. But let me just talk to you about the types of automations or the types of problems that we help you solve.

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And by the way, all these problems that we will help you solve for a business are things that if you're a business owner are valuable to you or if you want to sell these to a business are valuable to sell. Right. So it works the same whether you're trying to sell these services or you want to use these services. it works the same way. So like this, I'm just thinking like, how would I pitch this?

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Okay. Build your first AI employee. Let's see how it goes. So since you're primarily YouTube, I'm going to spend a little bit of time on the actual videos and then we'll go like, we'll follow kind of the link, the link path over. All right. Let me actually, let me share it so you guys can hear volume.

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Right. And listen, you probably just saw me on the internet. So let me just show you some of the pictures of our meetups of people who've been in the community. And this is me showing the pictures and like, and that's me, right? Yeah. Real person.

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But the next thing is that you're probably wondering about is like, this is me literally cuff off the cuff, but that that's probably what my introduction would look like, which is okay. Well, you're probably wondering, well, how many people like actually do stuff that works? Well, like, here's one. And like, instead of being shorter about it, I would tell the narrative a little bit more.

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Like, this is Sandy. She struggled with X. She had tried Y. It didn't work. And then I'm Guru on the Hill comes in. Story changes. She used this automation, which you can find right here. And this automated her front desk. This is John. Now, can you imagine selling to the business owner or being a business owner and having that? Amazing. And here's her saying, oh my God, this changed my life.

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Now, here's John. John was trying to solve this. He struggled. And then he used this plugin, which I'm now showing you. And this is what he was able to help him do. And then I would basically show that. And it's like, listen, I just told you 10 of 100... different automations that we have.

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And so whether you're trying to automate marketing, sales, front desk, customer support, conversion rate optimization, topic searching, any of these things, I can show you how to do it so that it's like having a minimum wage employee, except you don't have to worry about sexual harassment, unemployment, interviews, all this stuff, right? And so that's probably how it's structured.

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And so now I probably have someone in consideration mode and it's like, cool, listen, I know that there's a lot of stuff on the internet and we pride ourselves on having a really good community. It's really tight. Here's the deal. Come on in. We have a hundred percent solution guarantee. And so the first thing you're going to do, and I would show them.

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So in the video, I don't know if you show it or not. I didn't watch the last 10 seconds, but like, so what you're going to do is you're going to click the button that's over here. I'm going to share my screen to show you what it's going to do. Like what you're going to have to do. You're going to click this button and then, you know, the thing pops up.

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And what I want you to do is I want you to put in the automation that you want us to help you with. All right, what automation you put there, as long as it's with one of these five categories, we'll make sure that you hit it. And if you don't, just ask and we'll give you your money back if you're dissatisfied with what we have.

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Because now you're saying, I will literally help you solve this problem. And I think in your onboarding, you can point them to those, to like, to where, you know what I'm saying? Like you can point them to where that automation lives. And then you say, so the first thing we're gonna do when you get in is two automations.

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The first one is to get your first automation out of the way so we tear the bandaid off. The second is we'll help you start working on what you need to get the one big problem that you have solved.

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And this is super common because you're very familiar with the topic. But the person who's coming like might have just seen one video and was like, I need to learn some shit about this, right? Like I'm that I'm that type of user right now. I'm actually I'll tell you more about it offline, but I'm in the market.

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And so like this is very it was it was just fortuitous that Kirby brought your thing up. But like this is what I'm thinking about. I'm like, how much time is this going to take me? How hard is this going to be? Like, how likely is it that I have a bullshit thing that doesn't actually work? Or is this really going to solve the problem completely? Right.

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So it's like it actually provides value to me. Fundamentally, AI is very easy to sell that it can help you make money and that and that it can save you time. Like so like you don't need to promise anything because anybody who's coming into this already knows the promise of an automated human being. Everything is going to be around the downside, which is going to be how long, how hard, how risky.

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And so that's what basically the majority of this is going to be about. And then you hit the narratives for kind of specific case studies. And I think you can get out of income claim and things like that by just having like narratives where they're like, man, my life changed, man, my life changed. Because the thing is, is that $67 a month, you don't need to promise.

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You don't need to promise anything. really any income claims. If you can just convince someone that they can learn something, they can use that learning and then go make money. Yeah. And then the very end is going to be risk reversal and then being very specific about the problem that you're going to help them solve. Okay. Excellent. Okay.

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So that's going to probably, the VSL is going to be the biggest lever here. Let me, I'm going to finish it just so we... Are you guys finding this useful? All right, let's see this. Here we go.

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right and you want to demonstrate this is for everybody every ad every vsl you want to tell them exactly what to do next so you say like so we reset into video if you want to help solve that problem and you would like a guarantee from us that we can help you solve it watch i'll show you exactly what you need to do so you're going to click the button that says join group it's going to pop up a thing you're going to go in there you're going to put your information in click here now let me show you what the inside is going to be about

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All right. So the first thing you're going to do as soon as you get on the inside is you're going to book your onboarding call. And that's where we're going to hop on the phone with you to help you solve that problem that you just said you had. And we're going to point you in the right direction so you know what things to do.

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And then after that, we can basically keep hopping on with you on all of these scheduled calls to make sure you solve it. So now that's like a it's like it's a journey. Right. We're leading them through. And all of this has been around the problem that you're going to help them solve. I do think that your guarantee is the most compelling part of the offer right now. Okay. Which is great.

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So let's see here. In terms of copy, I would probably take the word bonus out and just put bonus at the top and then just put these underneath. Cause it gets kind of repetitive. Like my eyes don't want to read the whole thing, if that makes sense. So it's like put bonuses and then put it like, you know what I'm saying? Like stack them down. Yeah, exactly. Yeah. Yeah. Lifetime membership.

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So the thing is like lifetime membership level nine, like I don't know what it means. Like I'm, I have no idea what lifetime membership at number nine means. Weekly tech support calls. Cool. Automation requests. Yeah. not actually sure what that means. Exclusive make apps, not super sure what that means. Weekly calls, how is that different than these?

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So try and translate these into the problems they solve. So it's like weekly tech support calls so that If you get stuck throughout the week, we can help you move forward. I would say like personalized automation requests so that if there's something that we don't have in there, we'll add it to the queue and we'll help you build it out live.

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Each of these, we just want to translate into, what's in it for me? WWFIM. Why do I care? I think you can probably eliminate this one. Yeah, because level nine, no one even knows what it means. So free lifetime membership. I think the purpose I'm getting there is like a journey with rewards. It's like, that's kind of like... I'll say this. This doesn't get me to buy. This gets me to stay.

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I would take this out of the sales page because it's not like I don't buy because I might someday get it lifetime free. I'm trying to decide whether I want to spend $67 today right now. So put that in the onboarding. Does that make sense? So I take this out. I put that in the onboarding. We stack these bonuses, weekly tax support.

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Yeah, it's actually so fortuitous that Kirby picked you out because I have some things I'll follow up with you on some AI stuff. But this is all about you. The whole kind of process I want to go through is let's just go click to close. So let's start with how to be like, basically, like we'll take people through the customer journey.

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I would even be willing to cut out this worth thing and just say like what it actually gets them like so that you don't get stuck. I would say three times a week. I would put the word personalized here, personalized automation requests, so that if we don't have something, we'll make it for you. Cool. Exclusive make apps. I don't know what this actually means. Why would I need this?

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Okay. So I would probably use the first half of that and say like, we have custom built software that you would either have to build yourself or you'd have to buy both of which would cost more than the entirety, you know, a year's worth of doing this.

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And we have 11 of them so that out of the box, you can use them to solve specific problems like parentheses, this, this, this, this, this, and have to translate it in a way that somebody who doesn't understand anything about this would get.

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Yeah. It presumes a lot of knowledge. Some of these things. Dude, most of this presumes knowledge. That's the thing. So I think you're coming with a lot of warm traffic, but I'll bet you if you break this down and you do these things like this, I would put near the end. That's like around the money back guarantee thing is where I put that. I would eliminate lifetime because that's about sticking.

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I would change this to entrepreneurs. We'll get your light years ahead. I would cut because it's not going to make me buy. I would probably, I honestly would probably cut this. And then I would have, You want to have pain and you want to have promise, right? So this is pain. We're going to solve your pain, right? Second, it's like, we're going to help you promise.

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Yeah, because the thing is, a lot of this is features. I would just be talking about what I could help them do as a result. So this is classic plane flight versus Maui.

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Like, I want to talk more about Maui. and this is kind of, I would say throughout the sales page and this videos in general, like show me what I can do now. Like I'll bet you, if you took one of these slides over here and made it and put one of these as things like costs you can replace,

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And then you put a stack of like 10 costs that you can replace that are monthly costs for a business or a person. And it's like icons with costs. And if you want, you could put one testimonial around how someone replaced that cost. That would be very compelling. And then probably another card that's like things we can teach you, like things we will teach you to do. Right.

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Like tell me what I'm going to learn. I want to know what I'm going to be able to do. Like, I know I literally have a list of these are the automations I think I want to build. Like right now, I have it. If yours match up any of mine, literally one of them, I'd be like, cool. It's like if you can help anyone do one automation, it's worth it. Yeah. It actually automates any real thing in business.

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Yeah, because mine reads like the how, not the what. It's like how I get you to. Yeah, it's all vehicle, not destination.

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So if you're going to do vehicle, include so that destination, right? But I think that if we're looking at the meaty bits here, I think a lot of this is because you have good traffic from YouTube, that this is why this is still working. And I don't want to make you feel bad or anything. That's not my point.

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It works in spite of... So these are me just saying, and not all of these things might work, but this is how I would be thinking about it. We already talked about the changes that I would probably make conceptually to the video instead of lots of little things. I think big picture, you could probably just take the transcription that I basically spoke out loud and probably model that.

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I think this is fine. I would cut out the distractions, highlight the parts I want people to know. I would highlight that this is the best AI community, that these are actually community members. It sounds obvious, but I'm not sure. So just spell it out. I would use two of these slides. I would probably save, because we already gave proof.

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I would replace these with proof around the problems that are being solved and the savings. And then, so one of them is savings. The other one is skills. If I could TLDR this whole thing, it's like, what would I say? It'd probably be like a few statements in a row and a conclusion. So it'd probably be like, businesses that don't use the internet are fucked.

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I would say that businesses that didn't adopt the internet got left behind. The problem with AI is that it's going to be adopted at 10 times the rate of the internet. And so overnight, it's going to feel like industries will change. And as intimidating as this may seem, you have to learn it.

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Whether it's from us or someone else, we just happen to have made, we think, one of the best curriculums for getting anyone at any starting point to solve the most pressing problems of their business with AI. And then I'd probably just make my final CTA, which is like, go sign up for the group and schedule your call. Can't wait to meet you and help you solve your problem.

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No, you bet. Okay, so YouTube is pretty much all the traffic, correct? And that's where all the traffic is going to. Nice how simple the business is, right? Is there any other monetization or that's the whole thing?

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You just get an AI agent.

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I guess there's three, but at least that I would consider. So one is that you could just buy someone, I'm sure there's probably a community on here that like teaches LinkedIn strategy and you can probably just join that. And that's, that'll probably give you a good start. The second idea is that you could just hire an agency.

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And that's how I tend to do these things is I hire agencies and then I just figure out what they're doing and then I just deconstruct it and then I do it myself. That's I like agencies.

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They cost more, but they're faster because I like I immediately get the result and then I can get the skill as time goes on rather than having to learn the skill for however long it takes and then begin getting the result. So it's like I get results faster and then I can learn faster, too, because they're already to start me on the right path rather than me having to go trial and error.

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So that's that's obviously it's a it's a money it's a money decision. It's money for for time. But that's usually the path that I go. Option three is that you find somebody who you can bring in who does LinkedIn really well. I would bet the first two paths are probably going to be your better bet.

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Okay, so I would probably repeat title as soon as humanly possible rather than starting with the Nando's thing. Just because if I'm coming in cold, I'm like, wait, what did I just click into? So I would just look for congruence. We push on that a lot. I've also added another P to my kind of like P's framework of proof of promise plan. There's two more. One is picture.

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Because for somebody who's really good, it's going to be a decent chunk of change. And at that level, I think you'd be better off with one or two.

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Oh, I think there's a ton of opportunity on YouTube. I think it's packaging. I didn't even talk about that. So packaging, we're still going to use winners as the primary... Um, so you are, you're not putting too many words in, so that's good. Yeah. Um, game changer, AI agents.

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Yeah. I have no idea what it means. Yeah. A hundred percent. Yeah. A hundred percent automated. I wouldn't use that because it doesn't like tell me a hundred K. I don't know what any of this shit means. Yeah. Seriously. I have no idea what any of this means.

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so unlimited real so look look at this this is the only one i understood it has the most it has the most views right so like yeah like that that made sense right that made sense to me um i don't think you need like i'm not sure if the icons are necessary um because they do add a lot to the visual i also think you might want to consider changing the background instead of having so many colors because it's a lot usually because like you never want to have more than three visual elements

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just for a thumbnail. And so it's like, you're one, words are two, and it's like, and something, right? And so the background is now, is already one, we want to cut that out. All right, we have 17 people. Let's see here, personal assistant, Yeah, I think this one is compelling. The only problem is that it's not believable because I've seen like a hundred of these, you know what I mean?

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So I think talking about the tasks that someone will be able, that's like unlimited reels. Like I think the talk about the tasks that would allow you to have endless variety because there's a gazillion human tasks that exist and that immediately promises the benefit of the video. Yeah.

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But yeah, I would simplify the background to one color. Okay. I think the number of words you're using is right. I think the words you're using themselves are not, but I think the number of words you're using is right. And then in terms of headlines, yeah, because like steal this micro AI SaaS and 100% automated, 100% automated, that's duplicative.

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Like you never, the thumbnail only serves to compliment the headline. It should never be repetitive of the headline. Okay. you know, a sales masterclass. And then the thing is it shouldn't say like how to sell. That's just duplicative, right? As your thumbnail. You'd want the thumbnail to say something like three second opener. So it's like, oh, it's a compliment or like everyone is wrong.

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So it's either contrarian. It's like, oh, it's not like spinach is bad for you. You're like, what? Like, it's gotta be something that's either contrarian to the headline. Like everyone expects you're gonna talk about this, but you're actually like, it's not that at all. Or it's a nuance that adds texture to the headline that you have. Does that make sense? Yeah, yeah, don't make them duplicative.

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Yeah, that makes sense. But yeah, you have a lot of automation in the headline, like 100% automated, 100% automated, right? Yeah, you have a lot of duplication here. This AI system creates unique lead magnets.

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So I want to add basically a visual roadmap that goes along with this so that people know what's happening, because like I think you pulled up this this this little guy here. I also probably wouldn't mention the last video because it's not as relevant for me as a new viewer. So here we go. So was this the is this supposed to be the roadmap? Yes, that's right. Yeah. Okay.

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yeah because you wouldn't know at a glance what each of them do like from this home page i'm getting that um yeah and you can barely you can barely see them too in terms of how big they are yeah and so i think the the the chat gpt icon is recognizable And so you can use that a bunch, I think, but I probably wouldn't do much else.

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I would probably experiment with you and like a robot or something like that to see like, if I could have a version of this thumbnails, like you and a robot, and then the task is clear that they're doing. Cause the thing is, is the task is going to give you the visual that can make these unique and different. Cause otherwise it's like all of them would just be a computer screen.

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So it's like, we have to talk about what the automation does, not the automation itself. And I think that that's probably the biggest shift that has to happen across everything is like, what does it get me?

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That make sense?

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Yeah. I can jump, but hopefully you guys dug this and this was a helpful, uh, the, the deep dive experience and, uh, and Jack appreciate you.

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Real quick, the rumors are true. $100 million scaling is live on my site at acquisition.com forward slash training. It is the full 14 hour saga of going from zero to 100 million across eight functional departments at 10 different stages in the business. There's so much time went into putting this together for you. And yes, it's absolutely free.

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So if you're a business owner and you're trying to get to whatever the next level of scale is for you, whether you're trying to go from 50 to 100 employees or 100 to 250, or you're just going from five to 10, there are clear things that you have to do at each stage. Having done it multiple times in a row now, I feel really proud of this and it's all yours.

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So if you want that, you can go to acquisition.com forward slash training and enjoy.

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So I think, I think if you can, if you could at the very least highlight, like even just using your, you know, your cursor, it like just from a lo-fi perspective, if you could highlight each of the points that you're talking about, because I see this and I didn't know this was the roadmap.

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This is also way too much text for somebody to comprehend. And so normally, a couple words is all that people can actually take in per time, right into repetition of the headline, which also means that you're going to probably start with your headline and packaging first, which are you doing that right now? Yeah, yeah. Okay, cool.

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Yeah, so you'll have your packaging, you'll have your headline, and so you'll know that that's how you're going to start it. But I would think ahead of time of...

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if these are going to be the benchmarks that I have in the video, like I want to say, so I want to say that and show them that roadmap basically as soon as I can, after I hit the other piece, the proof part, I think that you had with the Nando's thing. I think that I'm guessing that was an element of proof. I would just put it a little bit later.

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Cause I mean, I'm talking like 15 seconds, you know what I mean? Just a little bit later. And as anal as this sounds like, you know how much intros matter. Like intros are everything. We spend like an ungodly amount of time on our introductions. The other piece is that you can mention pain. I've updated mine with five P's instead of three.

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And as we're going through it, I'll take notes and then we'll go back through it and kind of like go through some of the considerations that work.

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So this proof promise plan was what I started with originally. I've since then added picture and pain. And so pain and promise go hand in hand. So it's not just here's the good stuff you're going to get, but here's the bad stuff this will help you avoid. So it kind of hits both sides of motivation.

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And just for everybody else who's listening to this, this is just like kind of like general persuasion. It's general persuasion and makes good content. So those are like, it's the same laws of behavior. We want to reinforce them staying along with us. More good stuff and less bad stuff are both good, you know what I mean, in terms of outcomes.

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And so a lot of this is what we're leveraging is clarity over like cleverness. Okay, cool. Let's go. I'm going to watch a different one real quick.

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Yeah, so same thing here. I would be highlighted. I'd zoom way more into it and just say like, here's where we're going to go. It's a small thing, but I think it'll help people with milestones in the video. I would experiment because I'm guessing you always start with this demonstration up front.

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Okay. The integrations that you're making right now, do you know where they are?

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Do you mean like... So you showing the school community?

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Okay, so I would recommend before you make the videos, figure out what integrations you're going to make. So here's the difference. So for everybody who's listening to this, especially if you make content, the difference is not that we're going to make a call to action. So we're not making a call to action. We just want to demonstrate your concepts using your tools and products.

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Right, and so if you, for example, you saw the recent, probably if you've looked, if you've seen any of the last like 12, 10 videos that I put out, I used to do this like, hey, by the way, I have these books, you can go check them out, right? I was like, why am I doing this? I talk about the shit that's in my books.

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I just started pulling my books over, opening to the page and being like, hey, so what I'm talking about right now is one of these three frameworks. This is the framework we're talking about. Here's how it applies. And then I don't need to say, hey, go buy the book. It's just like anybody who's like watching,

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immediately was like, oh, wow, I kind of want to know what's inside, what else is in the book, right? I think if you were to say, like, just be like, yeah, so I'm going to go over to my school community. I'm going to grab this file. This is kind of the roadmap that we're going to use. And then like unclick over and then you go into it. It'll be really seamless.

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And the nice thing is you can add it like you can add way more of these than you can have like a right hook. As soon as we started doing this, my book sales tripled and I'm not even making any CTAs.

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And so I think integrating it like that and like every video, I don't know if you have a checklist for your videos, but I would, I would encourage you to have one or your team or whoever helps you out of like, and then as you get into it, it's like, what are going to be my one or two integrations?

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If you know what you're going to talk about, then you can just plan when you're going to, you'll have the page, you know, you'll have the page pulled up. When you get to that section, you pull it up, you click it and then you're right back. Right. So it's not, it's not like, it's not right hooky. It's not weird.

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Yeah. I think adding it like being discreet about it, being purposeful about being subtle. Yeah. I think it's kind of the goal. Okay. Um, okay. So you got your pin comment. That's good. You have this one, which is great. Okay. So we have these two, which are, those are the two big ones. Obviously the integration is actually gonna be the one that drives the most in my opinion.

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Um, but these two are, are, are key. Okay. So without going through more of this, cause I want to be mindful of time. Um, okay. So let's click over. So let's say I like this thing. Great. Do you have, you have a universal description for all your videos? I'm guessing. Um, I just changed the description. Um, yeah, it's like just the tools change.

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So the advantage is if you keep it unique, like you don't mass change your descriptions, you can make your, your call to action in the description contextual to the integration. It's just like in the video, it's like you're, you're gonna, you're making the integration contextual because it's not, it doesn't feel like an ask cause you're talking about whatever this topic is.

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And so that it naturally leads to the product that you have that includes that thing. And so we just want to basically keep it congruent with the other CTAs that you have. If you had told me, just for everybody else, if you had told me that you mass changed them, which, by the way, if you don't know, you can do that, which is great.

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How To Scale A Profitable Membership Community | Ep 828

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The pinned comment is where you can keep it contextual because that's not going to get changed when you do the mass deletion and then substitution on your descriptions. Does that make sense?

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How To Scale A Profitable Membership Community | Ep 828

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Yeah. So it's like, Hey, if you liked that map version of this, it's in the second module of my community era. And it's like, cause now it's like, cause people aren't, people don't wanna join the community. They want whatever you just showed them. So it's like, hey, here's that thing I just showed you. Go here if you want it. It'll convert better because you just made it relevant.

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How To Scale A Profitable Membership Community | Ep 828

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That's really nice. Okay. So those are just like very quick off the cuff things that we can do to improve it. If I were to do any more time, how are you picking your topics for YouTube?

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How To Scale A Profitable Membership Community | Ep 828

760.527

like the topics and the ideas if you guys are curious by the way all we're all i'm looking for here um so the search here there's another one called one of ten dot com um that's a little better than view stats i pulled this up because it's free um but uh one of ten dot com basically you can just search in there for the categories that you do and it'll show you the top

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How To Scale A Profitable Membership Community | Ep 828

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videos on like an endless scroll. It'll give this endless scroll of packaging and headlines. And so what we do is I'll show you what it looks like for us. So I see they give me this and they're like, OK, these are outliers. We can see these are 16.6 X outliers, 27.8 X outliers compared to the channel average.

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How To Scale A Profitable Membership Community | Ep 828

798.757

Like we just they pull these together and they're like, OK, is there a version of this that we can that we can do? Right. Can we can we pull off some like don't like don't watch a second product without watching this video. Don't buy a new iPhone without watching this video.

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How To Scale A Profitable Membership Community | Ep 828

812.53

So we just look at this and try it like how to make the greatest comeback of your life, how to make the greatest comeback, like revenue screenshot, maybe something business related. And so they'll put their notes in here. okay, these ones are working really well. Like 10 rules for making your first million was an adaptation of these videos where we see these outliers.

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How To Scale A Profitable Membership Community | Ep 828

830.65

Okay, so for everybody, as you guys are going through this, like the order of operations, if you're making content is you pick your big idea first. A lot of people are like, what am I going to make today? It's like, start with the topic, figure out the packaging, and then you make the video. And then for you, you'll have it planned out, and then we'll do the integrations.

The Game with Alex Hormozi

How To Scale A Profitable Membership Community | Ep 828

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So AI Jack doesn't come up. So what do I search for?

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How To Scale A Profitable Membership Community | Ep 828

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You'll know what your two or three integrations are going to be. And then when you put your pinned comment, make it relevant. Okay. So I think that was a detour, but I think it was important enough for people who make content. Okay. I would probably not call them by the name of the community because they're not there yet.

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How To Scale A Profitable Membership Community | Ep 828

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I'd probably call out business owner or whatever you want to be more specific about the avatar. I think I would probably use as my thing here. I would probably put this price increase lower, probably around the CTA at the bottom because I'm not considering buying yet. I'm seeing if this is for me right now.

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So I would have headline around the avatar and then I would probably have, I would still follow the same kind of proof promise plan set up, which is like, and it's not in that order. So it's like promises, you know, we're gonna help you do this thing. The proof is we have one point, you know, we have, we have a bunch of people. I think this is actually really strong.

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How To Scale A Profitable Membership Community | Ep 828

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This is me being a not super tech person like that. that's super interesting. Um, I think if you can talk about, cause you, do you have a lot of business owners? Yeah, a lot. Yeah. Yeah. Dude. Cause right now I would be talking about money saving. So like, what are the pains that a business owner experiences is like, you can cut down your low labor, your, your low, low cost labor by 50%.

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If you just learned some of these tools, I wouldn't put that number in, but I'd be like, you can, you can dramatically decrease the amount of employees that you need to have. And yeah,

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they'll do better and they'll never get sick and they'll never have sexual harassment claims and they'll never ask for work you know workers comp or liability right so it's like what are the pains associated like imagine having all of the things that you need without having endless meetings like so get more into the the perspective of like the business so like what are all the pains business owners go through so this is kind of like in the in so this is me doing integration right so inside of the the offers book right i would pull it off and be like we talked about the list of all the problems

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How To Scale A Profitable Membership Community | Ep 828

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I love it, though.

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How To Scale A Profitable Membership Community | Ep 828

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think listing out the problems would be really valuable and i would probably split test a version of this where it says problem arrow solution so it's like for for like to get rid of meetings and all that stuff this is the like i would want to be specific about the problems i'm going to help them solve because i think the more specific you can be the more compelling this copy will be because like generic automation in general like i understand i should do it but i don't know what things i can automate

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So one way is you look at the Halloween store, which you've probably heard of, and they, you know, they run for 90 days or two months, whatever it is leading into Halloween. And they every year just do more and more of it. And that's the model. And he just sticks to that and he just takes off the rest of the year. And so then the question becomes, okay,

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It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap. So I think, let's say you're on stage here. What do you tell you?

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What do you tell you if you were on stage?

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You know what to do.

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So I think you have. So let's get real for a second. So you have a question of what you want to do in your life.

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So you can continue to work in your father's business. So you have basically three paths. One is stomach it. I don't think your dad's going to change his mind. How old is he?

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I think it'll be five years away for the next year.

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It's a whole family affair.

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Okay. It's getting so juicy.

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So this is one where there's high drama, very simple solutions. Sure. Other ones, you have like no drama and very complex solutions.

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Wait for your dad to retire in five years. Know that it's not going to be five years. Or I'm leaving. That's what you start with.

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How do I continue to gain access to a scalable workforce that I can basically turn on overnight and train up in a weekend to deliver all these services? So that is not an unattractive business, to be clear. I mean, a lot of people would love to own a business that they only have to work 90 days a year and they just, I wouldn't say chill, but like kind of. Right.

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Under these terms, I'll say.

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But you just said he's pushing them back.

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Did you sign something?

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An agreement?

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I put it in paper. And I know this sounds wild because it's family. The thing is that... I don't think he's going to take you seriously. You're his baby girl.

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Right. And this is big, rough construction. They're going to take advantage of you. You don't know. I've been doing this longer than you. Right. And you're like, and in the short time that I've done it, I've made more. So my units of, you know, my income per unit times actually way higher than yours is. You don't need to say that, I'll hate you. So, but honestly, you have life choices right now.

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The business decision is actually really easy. You know the construction business is what you should be doing. Stick to the one that you have really good margins in. You have all these growth opportunities that are sitting in front of you. And you have, you're throwing good money after bad, right? That's like a pretty standard thing that happens in the entrepreneurial journey.

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But you just have that choice to make. Now, if you're like, well, I already did three. It's like, then you didn't do it right.

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And so fundamentally, he doesn't believe you. Now, there is a world where he will just never relinquish power. And then you've got to figure out what you want to do with your life.

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But you have to take it seriously, though. So here's how I would do it. This is how I do it. I want to buy the business from you. Because you saying, wait until you retire, it's like, what am I going to do with my time? You're like, I got to do something. So it's like, I'm going to buy the business from you, effective today, and I will pay you over the next five years.

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Then you have a clear date or three years, whatever. And then you work essentially for free. And then you take the profit that you agree on a price and you start paying it. Like you have to have an agreement and you have to send, money has to change hands. Either way, it's going to have to change hands. Otherwise you're going to have a tax event regardless when he gives you a business.

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So you might as well do it now. You've talked to the estate attorney, right? Like there's a way to do this in a tax efficient manner. But if he is going to transition the business to you, which I'm sure he does want to do, then we need to put a clock on it when you start making payments towards it. That's how three actually works. If it's just like, Hey, I'm the boss now.

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It's like, you're just going to keep doing this loop for the next 20 years.

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And you seem like a very kind person. And so I need you to put your, take your teeth out a little bit.

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Yeah.

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But this is it. There's no, there's really no more to go over on this one.

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Agree on a price and then agree on the terms and then start the car.

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And if he says no, then you'll actually be able to say, this is like, I'll give you a totally different example. Girl dates guy. Guy promises to marry girl. Girl asks for engagement ring. He says, I'll give you a promise ring. Wait, when are we getting married? Don't worry. I got to close up some things at work first. Two years pass. When are we getting married? He's never going to marry you.

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And so you just have to, like, you have to, there's a decision that has to get made. And so, and if you want to use this quote, you can, which is, decision comes from the Latin root of decadere, which means to cut off. Which means that we have to cut off one of these paths. Otherwise, you haven't made a decision. I define commitment as the elimination of alternatives.

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Right now, you have three alternatives. You have to eliminate two.

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And so the other nine months of the year for that business would be you building out the inroads and laying in all of the basically building out the rapid work infrastructure so that when people come in, it's just like, boom, this is the training or like, boom, we send our messages out. You guys have 14 days to respond.

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Cool?

The Game with Alex Hormozi

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1451.634

What stops you from taking one person from your current locations and giving them the opportunity to own a small chunk of that one?

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So either you can take your five location and bring it down to four and then backfill within that location that's already cash flowing positive, has the culture there and bring somebody else in. Or do you think it'll be harder to get somebody who's brand new, not surrounded by anyone to get up to speed?

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So I'm, I'm, I'm leading to where I, where I, I think that it is lower risk to take one of the five. and bring them over to the other location and have them seed that with all the values in the culture that you know, they already know how to run the business. And so now you only have one new variable, which is the location.

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You know the guy's good, you know he's going to do your values, and then you can spin that location up. And then the location that you have that is your mothership, it can take a little bit of a dip, right? If it needs to, because it can weather that. You've got cash flow, you've got existing contracts, you've got premiums that are coming in. If you do new guy, new location, everything's new.

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And you're not sure, is it the market that's bad? Is it this guy who's bad? Maybe he's good, but he's not a culture fit. But now I got to turn the whole location over because he ends up hiring two other people underneath of him that also aren't culture fits. So like, to me, it's a pretty straight, like,

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And you know that every year you get verbal commitments around the year from 100 people. And you know that that translates into 20 people who are actually proficient in work. And so then you just work your basically work backwards from the model. Does that make sense?

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I think the risk on going from five to four, taking one of the best guys, giving the opportunity for his career to advance, which also paints a picture for everyone else in the organization that, hey, you do a great job. You might be able to have your own office that you can lead. I think that's a really good story. And you're in the talent business. It's hard to find good guys. Right. For sure.

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I own an insurance company, so I get it.

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Yeah. And this is career pathing. I think it's actually really good for the business. Because people do eventually, they build a big enough book. I'm thinking about hanging my own shingle. It's like, cool, let me just take care of that for you. Hang your own shingle, but under our bigger flag.

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And you get all of our systems, all of our infrastructure, all of our support, our lead generation, everything that's in that area, we'll just immediately send to you.

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Yeah, and I think that paints a really compelling picture.

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That's what I would do. I also would just, this is for everybody. A lot of the problems that you have are based on timeline. which is just like an arbitrary line in the sand that it's like, I must get to this point by this, you know, by this date, which is basically irrelevant, just made up.

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And so I think at the end of the day, if you thought, well, what would it take to make this, you know, insurance company, one of the biggest in the, in the U S in 20 years, you probably grow very strategically off of this culture that has worked really, really well and trying to seed each location with the best, best seeds from the ones before.

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So that's the Halloween store path, which I don't think is necessarily a bad path. Like when I have something, you're like, okay, I'm making 310 on 500. I'm like, cool, let's do like 5 million and make 3 million. Like that sounds chill.

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So you just keep those values kind of all the way through. So I think that's the much lower risk path.

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100%.

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1678.751

Hi again. Yes.

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My name is... Seller Ukraine, number one seller in all Ukraine, spends lots of money on ads. You've gone to Poland and you haven't been able to get the market to convert. We talked last night. You take the words, look at the cultural differences on ChatGPT, translate your existing marketing copy back into the Polish cultural norms so that the right language is used so that it converts there.

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17.208

okay hello how are you sir my name is kyler i sell landscape lighting and exterior lighting basically to homeowners north of half a million dollars for the home i'm at 310 revenue 310k 142 ebitda and what's stopping me is i literally make all that money from that lighting division Temporary lighting. So holiday lighting.

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What's the question?

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Right. Rather than like, how do I start another business? to like give my people something to do in the meantime. So if I'm you, I would probably try and say like, and Layla has a great frame on this, which is when we're looking at two business decisions, there's always problems on either side. And so we ask the question, which problem would we rather solve?

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So are you doing a million dollars a year? I remember the 20. Million dollars, more over a million dollars per month.

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Per month. Okay. Okay. That makes me feel better. Okay, because you're like, we're the biggest in Ukraine. I'm like, a million bucks a year? I don't think so.

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Yes.

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Maybe in crypto at, you know, maybe at 12 in Ukraine. I don't know. I don't know what the proportional GDP is there. And I know there's war and all sorts of stuff. So I'm sure it's tough over there. Okay, so if the goal is to get bigger, either, I mean, the simplest thing to do would just be to add an upsell to the existing Ukraine market. That would be the simplest thing to do.

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Highest likelihood impact. That would just make you more money. That is for sure the easiest money button. If you wanted to expand front ends, then I think the idea of like trying to hit the people who are not on Google and Meta is not the framework that I would use. And the reason for that is one, everyone's on it. Secondarily, the people who aren't on it probably aren't buying crypto.

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Like if you're not on Google. You're probably not buying crypto. You're not on web two. Web three is going to be like, what is going on? And so I think that like the first thing I would do is probably add the Ascension path. I'd be like thing one. And then in terms of expanding into new markets, it was kind of what we talked about last night, which is I think that

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The marketing that you're doing is just simply not resonating in these other markets because it's not your first language. And so marketing is so nuanced in terms of how copies written, how, like what analogies are persuasive, what visuals resonate within a given, a given audience that that's in my opinion, what the highest likelihood gap is for why it's not converting those new markets.

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We are not some... Well, everything crypto-related, there's a lot of Yeah. Yeah. So, I mean, fundamentally, the business as it is today is just going to be a cash business. It's not going to be something that has enterprise value. And so you're running a basic arbitrage business, which is just I buy media for a buck, I make $8 on gated media, and I just run that as much as I can.

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Or which problem do we feel like we're more equipped or more likely to solve? given our current resources, skill sets, et cetera.

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1951.468

And so really, the only way to grow that business is to just market more, spend more. That's it. And the only way that you can do that is that you continue to increase LTV. And so you're going to reach a natural cap based on the amount that you make per customer and the cost of eyeballs.

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And then over time, that gap is going to shrink and your margins are going to compress, which is why like right now you have, when I remember I did company one, company two yesterday, I walked across here and I said, you're company one. you're a marketing machine and you're, you know, blowing tons of cashflow in the door. And that's a good thing. I call this a smash and grab opportunity.

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It's unlikely that it becomes something that has like sustainable long-term enterprise value. When I say long-term, I mean like 10 years, like you can for sure run this for more years than now, but it's just going to be a more thing. Like, how do we spend more money and how do we make better ads?

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But if you have converting language, if you like auto webinars or whatever is converting really well for you, then there's lots of little things. So which is probably out of the scope of what I could answer in a verbal Q&A. But it's like, have we split test the first 30 seconds of the VSL with three or five, you know, three to five different hooks?

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And so if we're looking at this path, the path would be like, do I believe it's within my skill set to build the network nine months a year and build the training out so that when I send the mass blast out, like we're about to go into high season, ready to rock and roll, I can get this percentage of people and I can get them trained up in a weekend and then we're off and running.

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you know, on the ad side, like how many new pieces of creative are we putting out a day? I don't know how many putting out, but like if you get up to, it's basically about 50, 50 pieces of creative per $10,000 per day.

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2030.842

Yeah. Five pieces per day. Hundreds per month.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2033.959

Yeah. So that would be from a creative perspective. So it would really just be looking at every step of it and just looking against the checklist. All we're going to be doing with that business is just improving it. There's not going to be a big order of magnitude change that's going to happen. It's just going to be a hundred small things because it's already profitable.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2049.425

You already have a client acquisition system. So it's just like, how do we go from eight to one to 12 to one so that we can then double ad spend and be at eight to one again, but at twice the spend. And that's literally the process. You just do that over and over again.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2063.01

Yeah, you bet.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2147.939

What do you want to do with this business?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2165.001

Yeah. Very small business owners will never build a stable business because they are not stable. So it has nothing to do with you. And this took me a very long time to figure out. And I kept trying to bang my head against the wall, being like, how do I fix churn? How do I fix retention? Like Shopify has best in class retention for VSMBs, so very small business owners, prosumers, if you will.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2189.254

And they keep 50% per year. That's best in class, a hundred billion dollar company. And so I have only seen one model work with small business owners, and it's ultra low priced. And you build the entire business around having high gross margins, but low prices. Right.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2207.164

Yes.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2208.785

Because I feel like I'm trying to push a high... The only thing that happened is you just got impatient.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

221.86

Do I want to solve that problem or do I want to build out basically the ascension path from temporary lighting to permanent lighting and kind of build that whole other business?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2212.748

You had 700 customers paying you $200 a month. You're making $140 a month. Yeah. Probably good margins.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2219.848

Right. And so I think honestly, like, you know, the best thing that would have happened would have been that you didn't take the last four months and build this other thing. And you would have just kept doubling down and taking all that extra energy and said, what were you doing in sales per month with the WAAS? I just like saying WAAS.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2247.908

Yeah. 85% annual revenue retention.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2257.253

Well, you're certainly not making transformations now. They leave in four months.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2260.795

So here's, okay. So instead of thinking about transformations, just think, so Elon has this really good frame around this. He said, either we can have a very small amount of people, a ton, or we can help a lot of people a little bit. And he's taken the perspective to helping a lot of people a little bit.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2276.284

And so I think with this business, like they have demonstrated with their dollars that they value what you give them. They don't cancel it. They like it. When you give them the other thing, you think you're selling out of your own wallet. You're saying, I wouldn't want this. I would want this. And then you're saying they're not like me.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2303.376

You know what would be even cooler?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2307.253

No, like, hear me out. So, no, this is like, I will keep the entertainment for entertainment purposes, but I want you to really think about this. So, okay. There is going to be, I didn't explain one of these other frameworks, but crash course. So with every one of the implementations that you do, you have limited resources, time, effort, money, right? And so strategy is prioritization.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

232.714

okay the way i asked the question seemed one-sided but like that's that's a that's a it's a real question yeah no it's a real question because i could spend nine months doing that but i'm not gonna lie i think i may just get like a little bored you know yeah through the rest of the nine months yeah get a dog you know well one of the things you can do and like okay so Okay.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2335.62

It means how do we take these limited resources and allocate them against unlimited options? And so if you're not sure, it's because you're not doing the job of the entrepreneur. There is always only one thing that is the most important in the business. And if you can't decide, that's on you. And so you've got your team, you've got your money, you've got whatever.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2352.154

And so instead of being like, man, we should start this Ascension thing, because you probably have really good else to beat a cack on this other business, the WASP business.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2360.463

Yeah, yeah, yeah. Right. And so instead of saying, hey, let's start this whole other business, right? Because it's a totally different service, totally different price point, whatever, right? Just say like, what if we took all of that energy of starting this other business and just said, how do we get to 200 customers a month?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2378.128

Yeah. That would quadruple the business.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2380.008

And if you did that, you'd be at $500,000 a month in six months.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2383.489

And it would be really good $500,000 a month. Amazing.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2460.395

Yeah. I'll be honest. It's very tough. Like you can't, you actually can't really change your offer. Right. And so the only thing that you can do is change the terms, but it's a zero sum game. So every dollar you take out of your pocket, you put it into, you know, like every dollar you give the customer, you're taking out of your pocket because you can't control the variables. Right. Yeah.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2479.219

So what were the margins that you made on the 800? We made half of that. Okay. Yeah. So I'll say this. I don't think the constraint of the business is that it's commoditized. So although it may be frustrating, you're running 50% margins on a business that you have very little operational complexity around. And so if you want to hit 10 million, you absolutely could hit 10 million.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2499.017

There's tons of solar companies that go from zero to 10, zero to 20 in like 12 months, 24 months. Not that uncommon. But the business that you're really in is the recruiting, hiring, training of salespeople business. And that's the game, right? The business is not super sellable. I mean, it is sellable.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2514.892

You can sell it one times and then you can basically meld your team into some other guy's distribution base and it all gets aggregated. And that's kind of how that industry is going. But basically, you don't have enough control over the business to really... materially changed the offer.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

252.12

So I define patience as figuring out what to do in the meantime. Right? So we have to figure out something for you to do in the meantime. And so the question is, what can I do in the meantime that can make my core business money during that high season? Yeah, well, I could probably pre sell that season all year.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2532.874

And so I don't normally say that, but essentially, and like, this is probably not taken as a slight, it's just like, you're a hired gun, you know what I mean? And so you've got two hired guns and you guys are both really, you're mercenaries. You're both really good at sales and you're making basically the same amount that a top tier sales guy would at. at a sales org.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2547.941

And so the only leverage that you're going to get is training your ability to train onboard recruit other guys who can do the same thing as you and you get an override on their commissions. And so if anything, I would say that, so we're getting to the answer. So basically where you can have a competitive advantage is not on the customer side, but on the salesman side.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2567.992

And so I would reorient all my attention to being like, how can I make the best offer to salespeople? How can I get more salespeople onboarded? How can I have superior training? How can I have better data and analytics and better lead gen for them so that their job of selling is made easiest with me for everything else minus the core offer?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2598.286

As long as the credits are there. What's that? As long as the credits are there.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2606.053

I divested from the solar company. What was that? I divested from the solar company. Oh, did you really? Interesting. For this exact issue.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2627.786

Dude, I'd rather you just like, so let's say, so when we're going zooming all the way out strategy stuff. Yeah. What you have is an ability to sell. Correct. And you know how to generate leads. Yeah. And if tomorrow you said, I'm not selling solar, you'd have to fill out the, you know, the next 180 days max of contracts and make sure that the shit gets installed, whatever. Right.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2646.831

Then for that, you can do whatever you want. Right. How many employees do you have? We have four. Yeah. So it's not, I mean, it's you, your partner and two other people. Yeah. Yeah. Or three. Three. Okay. Yeah. So I think that it just might be, you might be better served.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2661.443

And I don't normally give this kind of advice, but like you might just be better served taking that skill set and putting it in a different opportunity at home. Interesting. And just like, you were like, how do I do this solar thing with HVAC? It's like, just do HVAC. Just go to door to door, sell HVAC. And HVAC has phenomenal multiples and has great revenue retention.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

267.222

So I did do pre-sales basically last month. We do our pre-sale, just, you know, get cashflow and just real quick side tangent. Basically I went to a permanent lighting training and the last month they actually said you can lease that permanent lighting, essentially, you know, year round lighting for all y'all that don't really know.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2679.038

Once people do the HVAC, the person comes back every year, services again, upsells more stuff. Cool. And there's problems in that business, getting HVAC, you know, people, the fixers, the technicians. is the constraint of that business. Usually getting customers is actually not the constraint. So it might be kind of fun for you to be like, oh, my phone's ringing. This is weird.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2694.706

People are calling me because their AC is broken. Not like, hey, can you sell me solar? Like no one does that.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2698.929

Right? And so I think like if the goal long-term is to build something that has true enterprise value, given the fact that you have so little control over the existing process, you're basically just an acquisition machine, which I respect. I came from that in the gym world. Then recombine it into a business model that actually has enterprise value. Got it. Cool.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2716.788

Probably not what you expected, but.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

2719.031

All right. Thank you. Sure. Sweet. Was that helpful? Was that cool? Interesting. All right. Good.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

285.895

Year round lighting, but basically, you know, have that just recurring every single year. So they're leasing it basically. And then if they want, they could buy it out. So I was thinking about upselling those customers. One-year, three-year, five-year contracts and then upselling the people that are on those contracts for just year-round lighting and say, hey, do you want this thing all year?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

305.165

And it's not going to cost you the $6,000 to $10,000 if you don't want to pay that up front. Of course, we'd like that. But then offer that same exact price every single year.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

314.468

I don't think it's a bad model. Which one would you rather do? I think both will work.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

321.738

Honestly, I'm leaning towards just figuring out the landscape lighting because I don't think it's that hard. Great margins to add on to the business. In my long-term play of making this scalable potentially to other markets, I would like a full year-round business instead of just seasonal.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

338.285

So I'll say this. It's not that it's not a year-round business in the first year. This is me trying to convince you. This is kind of for everybody else too. It's not that it's not a year-round business. It's just that you do delivery for 90 days. The fact that you're not working the other nine months is the problem.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

352.759

You're right.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

353.94

Because could we take 500K and make it 5 million if you worked the other 75% of the year? Yeah. Rather than creating this other business to keep yourself busy.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

364.79

Okay.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

365.911

That's how I think about it. You're like, man, if I work a little bit, I make 300 grand at a quarter. If I work a lot of it, maybe make 1.2 million in the next year. That's with zero changes in current capacity.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

378.123

Yeah. And honestly, you answered my question. If Sammy's in the room, really sorry. I tried to ask her a question. She's like, I need literally 98 other data points, but you just figured it out. Cause that's literally the problem I run into is like, I had to pull all my advertising, all that stuff last season because I hired on all these people.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

396.73

Half the people don't know what they're doing all the way. There's no time to train. So that makes a lot of sense.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

4.436

Very small business owners will never build a stable business because they are not stable. So it has nothing to do with it.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

401.474

What will happen, what would happen next is like if you went the other path of if you decide to do the temporary leasing thing, the demand that you'll be able to generate for temporary lighting will still exceed your capacity with your existing workforce on the recurring work. So you're going to have the problem either way. Yeah. So which problem would you rather have? Okay. That's a you problem.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

42.41

So now I know I need to add on landscape lighting, permanent lighting to be sustainable all year round. I haven't started advertising for landscape lighting except for the warm outreach that I've done to my temporary lighting customers. So now I need to start working on a proven acquisition channel for new customers. And that's what's stopping me.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

423.253

Business-wise, either model works. I would recommend not doing both. Yeah.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

427.977

Okay. Cool. Thank you.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

429.718

Yeah, you bet. Thank you. A little round of applause. These have been easy ones. These have been fun ones.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

483.288

Well, I don't want to understand why we weren't making money.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

485.729

So I would probably be tackling that first.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

488.031

I think we were talking about y'all's restaurant yesterday. You need to fix the core model. I'm pretty confident because I understand the business fairly well. There isn't some massive fixed cost. Your cost is people. It's payroll. It's not like you have some machine that you have to pay or some massive rent that must get paid before you can make incremental revenue.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

509.023

And so I would probably be looking inwards first at basically how I'm compensating people and how I'm pricing. So it's likely that, so are you at capacity right now with your current team?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

521.758

They think we are, but I'm feeling there's more room to grow.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

525.38

Yeah. So you have a pricing issue. So you're either underpriced or overpaying or a combination of both.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

532.404

And so I would fix that first because then you'll fix cash flow and then that freed up cash flow will allow you to get more aggressive on the front end. Got it. But for me to say, hey, let's go get more customers is probably not the solution right now. Makes sense. We have to free up cash so you can breathe.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

545.231

Yeah, absolutely. Appreciate it. Thank you.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

547.292

Yeah, you bet.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

554.128

I own a company that... Are you having the best day ever because you have that name?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

575.761

That's what I did for a living for two years.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

62.327

okay and it's usually like christmas lighting type stuff yeah okay when you when you spin that up every year do you just hire a bunch of temps and then you guys put them all up and then you fire everybody kind of thing unfortunately yeah but we also have a washing side i talked to ed about that we might kill that so i didn't really want to get into the week that but i keep a couple on that do washing with me washing exterior cleaning concrete house washing gutter cleaning

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

632.194

Okay. So... Let's say this is a customer journey. This will be trivia. All right. So where do you sell ideally on this life cycle? Where do you sell? Where do I sell? What's the best time to sell? This is our value line. At the bottom, at the pain point, right? Yes. Okay. So you're delivering trivia notes, right? Yes. We have now provided value. and we're selling here, but they're already full.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

667.651

So I give the analogy of, if I go to y'all's restaurant, right, and I say, hey, I want a steak, I'm starving, right? And sorry, I go to the restaurant, I say, I'm starving. You say, would you like a steak? And I say, sure, I eat the steak. And you guys come back over and you're like, how was it? I'm like, oh my God, it was amazing. And you're like, awesome, do you want another steak?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

682.78

I'd be like, no, no, I'm good. Like, I'm good. And they're like, oh, you don't like the steak? I'm like, no, I like the steak, but I'm good. It's like, well, then why don't you have another steak? You're like, ah, right, it gets really awkward, right?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

695.051

that's actually kind of the situation a lot of business owners are in and so but after i have my steak i might have the desire to have something sweet and so now i'm i'm full on my value vector for steak eating but i'm empty on my value vector for dessert eating and so then i'd be like ah you should try our apple cobbler it's delicious whatever and so what we want to figure out is sometimes the point of greatest value also on another vector

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

719.827

becomes the point of greatest deprivation. And that's why sometimes they overlap, often they don't. And so I think it's one of the big mistakes that people make is when they time their upsells. And so for, I'll give you a B2B example and then I'll circle back to the bar. So if I help someone get more leads, right? I have now provided value.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

737.856

But now that I've provided this value, they're like, shit, now I have to work all the leads. And so then that creates the opportunity to sell the lead nurture services or the other things that they need to go with this problem that I just created by solving their first problem. And so upsell timing is one of the big mess-ups, I think, in a lot of businesses. Okay, back to the bars.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

756.24

So trivia nights is the core. So what stops you from just having, basically just continue to do trivia nights with them? What do you mean? So you do a trivia night. You bring a bunch of people on Thursday. Next Thursday, I still want a bunch of people. Why don't I do a trivia night?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

778.153

Okay, and that's sticky, though. Right? Yes. Okay, then what's the problem with just doing more of that?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

811.123

25. Oh, 25. Okay. I was like, 25 is fine. Okay. Yeah. I think you're just in a, you're in a more situation.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

826.605

Cool. So, and that's, I can understand that because they're not trying to refer the bar down the street because it's like, I get it. So we had some of the issues with Jim Walsh. They only refer somebody who's like out of state. How many outbound actions are you taking per day to generate your sales velocity?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

846.533

Yeah. So, I mean, that guy should probably rip like 300, but just as a baseline. But I think hiring like three more guys and having all those guys do 300 a day would probably get you a bunch of sales. Because the biggest thing that I would want to solve if I'm you is how do I make sure that bars that do trivia night just keep doing trivia night with me? Yeah.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

865.832

If that's not a problem and they are just all continually doing that, then you have solved the hardest problem in business, which is that you have revenue retention. We just don't need to be fancy. We just need to do a shitload more of it. Cool. Thank you. Rock and roll. Yes, ma'am.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

88.114

That's actually a pretty decent business side note, but okay. You're like, I'm selling water, you know, like not a bad, not a bad gig. Okay. But you prefer the lighting business because it has higher margins and okay. So two potential ways to think about this.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

915.317

Who founded this business?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

917.639

So you founded both of them. It says family business. Family. Your father here?

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

921.482

Okay. All right.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

947.6

So I was- So you have one business that makes you money and another business that loses money.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

952.063

Okay.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

958.536

Oh, yeah.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

975.534

Mm-hmm.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

980.217

I want to just give you this, which is that your father's logic is sound. The practicality of it tends to be different in reality. And so the vast majority, this is super, I would say it's more common than it's uncommon, is that people who get into construction, they make some money and they're like, oh, I'll just start also doing construction and real estate. And then I'll start flipping things.

The Game with Alex Hormozi

Fix These Bottlenecks to Scale Past $1M | Ep 891

998.831

And then all of a sudden, they've got like four businesses that are kind of real estate adjacent. And they're like, well, it's actually an ecosystem. And you're like, oh, God. Anyways. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

The Game with Alex Hormozi

STOP Following Your Passion | 854

1010.282

In my 20s, I thought it was about the destination. In my 30s, I thought it was about the journey. And in my 40s, I realized it's about the company. And I thought that was so profound. It's like in the beginning, you're always focused on how do I get there, how do I get there, how do I get there? And then a little later, you're like, you know what? It's about enjoying the process.

The Game with Alex Hormozi

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But then later, you're like, well, how do I enjoy the process? Well, if I've got the people I like around me, it makes almost any process enjoyable. And so there's other components that factor into the overall soup of what you want to do in your life and what you actually spend your time on. And so I'll give you two examples.

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So imagine you've got one career where you do what you like, but it's terrible work environments. You hate all the people. You actually don't like the thing you're producing, but you like the work that you do, but not what the outcome is, right? So it's removing purpose. And it doesn't allow you to do some of the other things that you enjoy. Well, that would probably be pretty painful.

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So there's a great book by Angela Duckworth called Grit, and I'm going to summarize that entire thing in the next like two minutes so you don't have to read the book. And so she's this fancy PhD professor, did a bunch of research about why do successful people succeed? Because it's obviously not intelligence. It's not all these other things that they try to isolate.

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On the flip side, if you had a job where you're like, okay, I don't like this component of my job, but I like literally everything else. Well, you'd probably have a more fulfilling life that way. Now, I will zoom out for a moment if we want to break the world for a second. You don't need to have a fulfilling life. Who made that demand of the universe?

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Anyways, so I'll give you something we're like, well, life should be fulfilling. Life should make me happy. Right? You just demand of the universe. And by doing that, by the way, you create space between you and the outcome, which means you'll never achieve it. Anyways. So, eighth reason why follow your passion is terrible advice. Is that it doesn't allow flexibility in a changing world.

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This is a big one. All right? And a changing you. So, think about it like this. What did you like when you were 12? probably different things than you like when you're 22, which I can promise you is different than things that you like at 32 and probably different than things that you like at 52. And so the thing is, is that the world cares also about different things 20 years later.

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And so you are going to change and the world is going to change about what you like and about what it likes. And so if you say follow your passion, what if you change or the world changes as that's happening? And so being obsessed with your one thing doesn't give you the flexibility to evolve.

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Like, for example, you probably will date different types of people in your 20s versus what you do in your 30s or 40s if you're not married at that point. On the other hand, if you were really into making MySpace pages and that was something you're really passionate about, well, the world moved on. And so either you're going to move on or the world moves on.

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And if you always obsess about that one thing, then it's like, that might change. And if you burn all these boats around this one passion, it assumes that it will be there forever. And that's not reality. Here's the ninth reason that I think follow your passion is terrible advice. It's self-focused rather than others focused.

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And there's tons of research that says that people who focus on others are the happiest. And so we tend to look back and are proud of the hard things that we overcame, especially in service of other people or a larger mission. So for me, I would make real business education accessible for everyone. And the thing is that I don't always want to record content.

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I don't always want to think about what we're going to talk about today or what we're going to put out. But the service of that mission is very valuable for me. And there's a different body of research. I can't tell you where it is, so you can choose to believe it or not. but that people can actually endure a significantly larger amount of pain for other people. So hear me out.

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So if you got hooked up to an electric shock machine and they said, cool, we're just going to turn this up and just tell us when to stop, people stop. But if you tell the person that their loved one is in the other room and that every shock that you take, they don't have to take, People's tolerance for pain goes up like tenfold.

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It's not how good they are at sports or academia or arts or business. She tried to look at all these different things and found that there was something that was unique that she was able to identify. And she referred to it as grit. And so there's four stages of development for grit. So number one is that you have some sort of initial discovery. So that's exposure, usually by chance.

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And so to me, I see that as an allegory for how we can choose to live our lives. So that person who's experiencing the pain for let's say their loved one, their wife, their spouse, their daughter, their son, do you think that in that moment when they feel like they're shielding the storm from the people they love, that they don't feel like they have purpose? But objectively, they're suffering.

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See how there's layers to this? And so the idea is, I think that saying follow your passion is very self-interested. It actually doesn't allow you to plug into a much stronger motivation or fuel. And so I would prefer follow your purpose. And so the fancy, if you want to Google that and find out more about it, it's called the martyrdom effect.

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But basically, you can handle way more pain in the service of others, which is wild. But the thing is, if you're like, man, I'm struggling to get motivated, it's because you're trying to get motivated for you. rather than get motivated for other people. And I know that sounds a little foo-foo, but at the end of the day, like the research is the research, right? Like we are built this way.

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We're social creatures. And it would make sense that people get applauded for sheltering and protecting and serving the community. And I think that that's so woven into our culture or most cultures that we're willing to do so much for it. I can tell you right now, I absolutely can take more pain for Layla than I can for me and just replace Layla with whatever that thing is that you love.

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I want to tell you this story because I think it's a parable that really resonates deeply with me. And it's similar to that Japanese man who sweeps the floors, which is a traveler came upon three stonecutters working at a quarry. And so he asked them what they were doing. The first stonecutter replies, I'm cutting stone. I'm exhausted. It's backbreaking work. I'm miserable.

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He goes to the second stonecutter and he says, what are you doing here? He says, I'm earning a living to support my family. And cool. He goes to the third stonecutter and he says, what are you doing?

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The third stonecutter smiles and he says, I'm building a cathedral that's going to inspire people for generations, that my grandchildren and their grandchildren are going to be able to go to and worship our Lord. And the thing is, is that all three stonecutters, all three men are doing the same work. but fundamentally having an entirely different experience of what that work means to them.

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And so that same work that you do that right now might feel terrible can be a job, that work can be a career, or that work can be a calling, simply depending on your own perspective. And so maybe just do what the world wants that you're good at it, and then allow yourself the time to become passionate about it along the way as you get better.

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And so passion happens as a consequence, not a requirement. So if you're like, that's all well and good, Alex, but what do I do? Well, big operationalization fan. And so what do you do instead of following your passion? So here's a practical action-oriented framework that will invert that advice into positive steps that anyone can take. Number one, start with curiosity, not passion.

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So begin by exploring things that pique your interest, even mildly, all right? Just like Duckworth's research showed, most big successful people didn't start with a burning passion. They began with just simple curiosity that they were willing to investigate. They were willing to follow up. A different way of saying that is just something that you might be interested in. right?

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The second is embrace the learning process. So commit to developing the skills and competence first. Get good first. Recognize that mastery precedes passion. Getting good precedes enjoying it, not the other way around. And set skill-specific building goals rather than kind of waiting for motivation to strike because I promise you, you're going to wait for a long time.

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Maybe your brother's into cars, or your friend really likes Pokemon, whatever, right? You have some chance discovery of something. Then you develop some sort of competence through deliberate practice. The key word there is deliberate practice, meaning you start, you get feedback, you get better. You change and iterate what you do.

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Number three, value your existing abilities. So assess what you're already good at and then consider building from there. Like Warren Buffett says, look at the circle of competence. Focus on the areas of natural advantages. Some things you naturally have done more early on in your life, just do more of those things. Four, commit to the deliberate process. Burn the boats.

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And I define commitment as the elimination of alternatives. Meaning, accept that meaningful progress requires hard work and fundamentals might not feel exciting, right? Like Olympic athletes do so many repetitive drills. Phelps used to talk about eight hours of swimming. Can you imagine that? Just lap after lap after lap after lap. After lab, after lab. It's just so many repetitions.

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And just understand that excellence requires practice and the boring parts are included. Five, set realistic expectations. So recognize that all work involves tedious aspects, stuff that sucks, right? So instead of expecting constant enjoyment, aim for overall satisfaction and meaning. And just remember that even dream jobs, like Bezos said, have administrative tasks, challenges.

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They have overhead, right? They have stuff that sucks. It's just part of the life. Six, take the reality of money seriously. Money will not bring you happiness, but it can help you avoid pain. Now, I also have a little bit of a nuggy on this, which is that people do get happier up to a certain amount of money, and then it stops. Alex's theory on this, spending money is a skill.

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Most people can only learn how to spend money up to here, and then they don't learn how to spend it effectively. I believe that money can continue to make you happier as you develop the skill of spending it in a way that gets you better returns on intangible returns rather than tangible returns.

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So if you have to pick between two different things, follow the path that might have higher income earning. If you're about even on both, follow the money. Next, prioritize other environmental factors, all right? So if you want to change your life, change your environment. I've said this a hundred times.

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But if you want, if you're like, I'm really getting, I'm struggling to do this, you know, to find this passion, go to a place where other people are passionate about it, all right? That environment in and of itself will create multiple feedback loops because all we're really looking for here, guys, like just be very real, is you just want to find a feedback loop. That's all we're looking for.

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You just want to find a place where you can do something and get someone that says, that sucked, that was terrible, this is what you need to do better or different. And so finding a place where you have supportive colleagues or you've got supportive people who are all kind of in pursuit of the same thing, all trying to get better, it will change your life. Next, allow your passions to evolve.

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So stay open to developing new interests throughout your life. You don't have to be stuck with one thing. If you change your mind, that's okay, right? Your 40-year-old self will likely have different passions than your 20-year-old self. They probably will find different people interesting at 40 as you do as 20. And the world will also change too. So having that flexibility is important.

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Then, and this is key point number three, is that you start to recognize the value of your new skills that you're developing. And then because you recognize the value of those skills, you start a second feedback loop, which then deepens your passion. And then from that passion and those continuous loops of you going deeper and deeper and getting more and more repetitions creates mastery.

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And so committing to this one passion forever, it's too heavy of a decision, I think. And so if you come into it saying this might change, we'll allow you to take the first step because it's not, this has to be the perfect pick. This has to be the one thing forever. It's like, it's too big. Just shrink it down like, all right, well, I'm kind of interested in this for now, so start.

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And then finally, connect your work to serving others. And I think this is arguably one of the biggest ones, just because there's so much research that supports it, is that you just want to find ways on how your work benefits other people. You look and think about the stonecutters. All three guys are doing the same work.

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one of them feels like so incredibly passionate about this because it's helping the world it's helping his family out and he's getting paid while he does it and the crazy part is that all of them are doing the same work and so the easiest way to become passionate about what you do is to choose to become passionate about what you do and find a reason that's larger than yourself to pursue it and that passion and your ability to withstand the pain because the pain now has purpose behind it rather than being meaningless

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And guess what? Now you have passion. And so competence plus time leads to passion. And so that's what a very fancy PhD person came up with, even though, here's the crazy part, You will hear people say, follow your passion. You'll hear really smart people, very successful people say that. And think about why they might say that. They're like, well, let me look at myself.

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I'm passionate about what I do. So just do what I do. Be passionate. The thing is, is it's just like saying, hey, if you want to be rich, fly private. Or if you want to be tall, go play basketball. It doesn't work that way. You get rich. And then as a result of being rich, you can fly private. It's not that flying private is the reason that you're rich.

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Hey guys, I heard a great little snippet from Ben Horowitz, where he talks about how follow your passion is bad advice. And I started thinking a lot about it. And I've been a big advocate of not following your passion, but I wanted to take the time to break down a logical argument for why I think it's a bad idea. I feel like the argument is fairly compelling and it's not what you think.

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right so you will do the work to become passionate not that being passion is necessarily the thing now here's the thing some people are like well some people just naturally have a passion no they found the thing earlier they had their chance experience when they were in their early toddler years or their five six seven they start painting and it's like oh god so they follow the same process they had some sort of chance encounter they start doing a little bit of deliberate practice

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It's not me just saying, Hey, just go make lots of money. And that's the only thing that matters. It's not that, or maybe if that is what you think, then you don't understand me well at all. Anyways, Please enjoy this. I think that it really applies to anyone at all levels of business. Because even this morning, I was talking to a good friend of mine who's very successful.

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All of a sudden, they realize there's value in their skill. Their parents, their friends are like, oh, you're good at drawing. Oh, you must really like this. And then boom, all of a sudden, deeper passion emerges. They start identifying as it. And then boom, competence, skill, and then passion.

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And so I say this to say that some of you, myself included, like never really had something that just magically occurred. You have to start stuff that you're not necessarily as good at and have broader exposure so that you can have a loud chance to take root. Number two, it's too vague and assumes everyone has a clear passion and many people have no idea, right?

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So it's hard to say that you like X more than Y. You might like both, right? And so it's very hard to quantify. It makes it hard to decide. And so how good you are at something is a little bit easier to make an AB decision on, right? So if I said, you know, do you like pizza more than you like tacos? You would be like, I don't know. Like I kind of like both of them, right? But if I said,

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are you better at english than you are at math it's probably easier for you to make a call there right and so preferences versus skills are easier to determine a decision path which then gives you clarity on what next steps to take so even examples of bill gates tried a bunch of different things so he tried law i tried mathematics he tried programming before he found his direction and he wasn't following a clear passion but he was exploring his abilities and opportunities and i'll give you a personal example

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So I was interested, like back in the day before I started business, I was like, well, I kind of like Froyo and I learned a little bit about that. I was like, I like fitness and I like test prep. And so I kind of had these different skill sets in these different domains, but I was only able to have clarity once I started and then took action on it because then the feedback loop begins.

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And so the objective of developing passion is to get a feedback loop started. So third reason that follow your passion at the onset is terrible advice. Liking something doesn't make you good at it. All right, so think about it like this. Being passionate doesn't even guarantee that you have the skills for it. And sometimes it's better to have a career and enjoy your passions in your free time.

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My dad used to tell me, well, if I did what I was passionate about, I'd be a bartender at a ski slope. I mean, he used to say it in jest, but like the point rang clear to me. He was like, listen, there's things that you do to provide for your family. There's things that you do to provide for yourself, build a future, have security. And there's things that you do with your free time.

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Now, some people are like, those things can be one in the same, but I'll tell you what, My dad loves what he does. I'll tell you that he didn't start it because he loved it. He started because he wanted to be a productive member of society. Maybe it's a little bit that immigrant in me, but like the rest of the world isn't so comfortable that they're sitting in sunshine and rainbows.

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They reached out to me and said, like, why do you still work? They're struggling because they're just like, I don't need to do anything anymore. And I'm just kind of struggling to find my why. But I think that these stopping points happen at all points in life. And so sometimes it's good to reflect. And so that's why I made this pod.

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But here's the crazy part. Many of them are more fulfilled than we are because they don't see anything wrong with doing the work. Doing the work is seen as a very, like it's seen as a dutiful responsibility. It's seen as a good thing. Guy provides for his family. Nothing wrong with that. So I'll give you a little example here.

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So Warren Buffett follows a philosophy that he calls the circle of competence, which is focusing not on what excites you, but on what you understand best. And his passion follows his competence, not the other way around. So for example, me personally, all the gym owners I know love fitness. But many of them were very broke.

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And so they said, hey, I should start a business around fitness because I'm passionate about it. And then made no money because they had to realize, oh, wait, I don't know anything about business. And so it's like understanding fitness is like 5% of the fitness business. It's just kind of like, oh, I like cooking. I should start a restaurant. It's like, well, it's about 5%.

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And what's crazy is the thing that you're actually passionate about cooking or doing fitness has almost nothing to do with monetizing that skill. So here's the fourth reason I think it's bad advice. Follow your passion skips the hard work part. So getting really good at something means practicing the boring or the hard parts too.

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So for example, I actually really like playing ping pong, something that I enjoy. So I decided, I was like, oh, I'm going to look into what it would take to get better at ping pong because I do like it and I play it a lot when I can. And I started watching what some of the teams do and they're like, all right, 500 forehands, 500 backhands in a row. And I was like, oh yeah, I don't want to do this.

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And so I may be passionate about it, but I don't want to do the work that is required to go from passionate to like world-class or state level or whatever, right? And so, like I mentioned earlier with grit, all of the research on deliberate practice shows that it's not an enjoyable process. I want to say this again.

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The research on deliberate practice, which is what is required to gain competence, which competence is required to become passionate. Okay, cut that out because that's not true because we just made the point about being passionate.

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And so all the research on deliberate practice, which is required for competence, and competence is certainly required for making money in whatever career you want, is that it is not an enjoyable process. This is what the research showed. I was actually kind of blown away by that. And so when you're repeating the same sales script over and over again, it's not that fun. It's very tedious.

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Or you do the same basketball shot over and over again. Or you do the same presentation, the same speech, you do it over and over and over again. So it's not novel. It's just focused on tiny iterations on feedback loops. It's just sanding off the edges over and over and over again.

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And once all of the first level of roughness is faded off, you take a lower grade sandpaper and then all of a sudden you do it another level of smoothness. Like you just, you approach it in levels of feedback. a lot of skill development is like running a marathon where you have a couple of people might cheer you on in the beginning for making a decision to start.

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And then for 26.1 miles, basically no one cares. You're running and you're like, wow, this is really long. And then you're like, oh my God, I have to do four more of these one-fifths, right? And you're like, holy God, this is, or five more of these one-fifths is tough.

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Following your passion keeps people poor or at least poor than they ought to be. And maybe you feel lost right now. I get it. I've been there. I was dead broke in my early twenties and I read all the self-help books I could get my hands on. And a lot of them said, follow your passion. And ironically, that didn't help me. Then I started changing what I did and my life changed as a result.

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And then at the very end, right as you're about to accomplish, people just see you sprint the last bit and they're like, oh, congrats. Congratulations. But you're like, it's the mundane middle. You have to master the middle. That's where all the gains come in. So I'll share a rule that has worked very well for me for developing skills. And so this is the $100 million leads book.

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Step four of Outbound, I talk about this, which is reach out to them 100 per day. And so I call this the rule of 100. I talk about it at length a little further in the book. But when I did my book launch, actually for this book, I practiced the presentation that I did 90 times before I actually did it live, right? Now the rule of 100 is about doing 100 per day, right?

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So it's hard for me to do the entire operation 100 times a day because there's literally not that many hours. But I did it three full times per day and it was a 90 minute presentation. So about four and a half hours of deliberate practice per day. And I would watch the recording and then I would tweak the presentation where I stumbled or I felt like I needed a better visual, whatever.

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And I did that every single day. And so the idea is that it just requires significantly more work and it's also not going to be fun. And the more practice you have at practicing, the better you get at it. Because I know that practice precedes excellence.

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And so the more times you start practicing and realizing that that practice leads to winning, you start to get excited to practice, not for the practice itself, but because what practice means to you, because you know what comes after practice, which is winning. Here's the fifth reason that I think follow your passion is terrible advice. It also sets false expectations.

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So it makes you feel like work should always be fun and exciting, and it isn't. An early mentor of mine told me, and I will never forget this, he said, Never try to make money out of something you love. He said, because then you'll just ruin it and turn it into work. And he was so interesting because he was a very successful guy. And of course, you're going to have people on both sides of this.

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And again, I want to be clear. I think that you want to do things you enjoy. I just think that it takes time of not enjoying it to get to the part where you enjoy it because it takes time to get good. And so for anybody who's going to like try and blow me up on this, by all means do it. We're all going to die. No one's going to remember us.

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But like the point is you have to develop passion rather than follow it. You have to create it. And so I'll give you a different example. Many Hollywood actors realize that it sucks and that many acting careers involve more waiting, rejection, and business administration than actually creative fulfillment. And so Jeff Bezos talks about this where he said, everything is overhead.

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You basically have like maybe 10% or 20% or 30% of your day. Like if you have 30% of your day that you love, I feel like you're winning at life, right? Because the other 70% is stuff that is required in order to get that 30%. Because the thing is, is let's look at the alternative. You could just do nothing.

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And I think that if you do nothing or you hate everything you do, that there's probably a middle path. And I'll also say something that I think most people will disagree with, but I'll just shoot, I'm gonna shoot my shot. I think that the way that you approach the work you do can fundamentally change the work itself.

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And so there's this great, I think it's a parable or analogy, maybe it's a story, basically of this man who basically swept floors for like 35 years. And he just did an amazing job. It's a Japanese story. And the way that he approached this and was like, how are you, like, there's no way that this is fun or interesting.

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So today I own acquisition.com, a portfolio of companies that makes more money than I could ever possibly use. And I have this gazillion dollar, I'm gonna say laboratory, but it's not a laboratory, it's a studio.

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And he ends up saying, I imagine that they're paying me a million dollars every single day to sweep the floors. And so I think, how would I sweep them if they paid me a million dollars every day to sweep? And so it changed his entire perception of how to approach the work. I saw this little post that went viral the other day of a waiter that had a tip that said, do better.

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Right, so instead of having money there, it said basically zero dollars and the person said, do better. And he said, normally, you know, I could, you know, take this and be like really offended or say these people sucked, but he decided to take it to heart. And so the next day he showed up to work and was like, I'm just gonna try and be the best. He's like, I'm gonna try to remember names.

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I'm going to try and smile, be charismatic. He's like, and the craziest thing happened. All of a sudden people were telling me I was so nice and they started giving me bigger tips and they started talking to me about other opportunities. And the thing is, is that he was still doing the same job, but he was, the way he approached it was different.

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And so like, would you say that you're, was he, did he become passionate about his work or did he just decide to see the larger picture that the work we do works on us more than we work on it? That leads me naturally to the sixth reason that I think follow your passion is terrible advice. It also just ignores money realities, right?

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Just because you love something doesn't mean you can make enough money doing it. So just look at American Idol tryouts, right? Ain't nobody trying to see them sing, right? Even though those people love it. And so I remember for me early in my career, I wasn't driven really by a specific passion. I just didn't really want to be broke anymore.

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Anyways, and nobody cares, but what I can help you with is potentially explain a different path that might help you if the following your passion thing, or not knowing what your passion even is, is something that's gotten in the way. So problem number one with follow your passion, it gets cause and effect backwards. So often we become passionate about things after we get good at them, not before.

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As terrible as this sounds, like people used to ask me like, what's the mission of Gym Launch? The mission of Gym Launch when I started Gym Launch was Alex not being broke. That was the mission of Gym Launch. Now, here's the thing. As I developed the business, it did become to take an industry from its knees to its feet.

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But at the moment when I started Gym Launch, I just lost everything for the second time. And I was like, I am not doing this again. I was like, this has to work. And so I say this, that a lot of people have a lot of romanticism, but it's just not based in reality. And people doctor their memories. They look back and it feels different than when you're going through it.

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And I'll give you a simple example of this. When you look back on some of the hardest things you've gone through, you probably have a sense of pride for having gotten through them. But the thing is that when you actually think about what it was like when you're doing it, it sucked. But you're proud in retrospect. And so if someone says, hey, you know, what's it like? It's like, oh, you know what?

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You just got to enjoy the moment. You got to revel in it. It's like you're not reveling in it. It sucks. But you keep going. You persist because of what you know it's building inside of you. The skill sets so that you can persevere at a higher level. So I'll give you a business example. So there's a very harsh reality of supply and demand.

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And so if your passion is something that a lot of people like to do, there's probably a lot of people wanting to do it. And so that means there's a lot of supply. And so it's going to be super, super competitive. Think acting, think singing, think painting. And so it might not be the most realistic path for making money.

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And like one of my early mentors said, it's like, well, what stops you from just painting when you want to paint and then making money when you want to make money?

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Hey guys, if you know somebody who's trying to figure out some season of life, like they're about to make a career change, they're about to start a new business, maybe they're five years, 10 years into business and they're deciding whether they want to keep doing it. A teenager, perhaps.

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I do probably curse, so maybe it's not the best person to refer to, but it would mean the world to me if you sent it to them. This podcast only grows off word of mouth. And so your word of mouth matters to me. So thank you. Seventh reason, I think that follow your advice is, follow your advice. Follow your advice is bad advice, is bad passion. Follow your passion is bad advice.

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All right, is that it misses often more important life things. All right, so good work needs decent pay, good coworkers, good recognition, security, and purpose. All right, and so the environment you work in will absolutely affect how much you like it and how long you can endure it. All right, so this is a quote from my good friend, Sharon Sravazza.

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The highest percentage of sales across any market come from word of mouth. It's from people telling other people about stuff and people seeing other people use products and being like, hey, what is that?

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If you want your team to actually implement one of these four tactics, it would mean the world to me if you shared this podcast with them. Yeah, so please share it. That's it. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

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and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you.

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So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And that's okay, but if you want to build a system that becomes an asset that can grow itself, then what you want is something called a flywheel. And so a flywheel is a self-reinforcing system where every action or component builds momentum and drives the next, creating sustainable growth over time. And so in business,

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welcome to the game every business needs a growth flywheel and in this podcast i'm going to show you four different tactics to basically building the growth flywheel within the business so that eventually it doesn't require you to put the effort and money to advertise and promote it to drive growth but let the business itself create the inputs that then create the outputs

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It refers to a strategy where activities like customer satisfaction, word of mouth, referrals, and product improvement, so this is what they get from the result, improve and feed each other, making the whole system stronger and more reliable. So, let's talk about the four tactics to actually make this happen.

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So, tactic number one, before I explain what this very poorly wrapped gift is, I'll tell you a story. When Layla and I were out in a different area traveling for some speaking thing, she had to go get her hair done or something. And so she quickly was looking on Yelp to try and find a good hair person. And when she was there, she looked at the reviews, unsurprisingly.

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And so there was one that had a five star but had like 20 reviews, and another had like a 4.6 stars but had 1,000 reviews. Which one do you think she went to? the 4.6 stars with 1,000 reviews. And so the question is that how much was each of those incremental reviews worth if the person who has the most reviews ends up getting 90% of the search volume? Well, a hell of a lot.

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Should we be willing to pay for reviews, not directly but indirectly? And the answer is yes. Provided it's legal within your area, obviously laws apply for advertising. Here's the two-part tactic.

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So number one is that after you've delivered service for whatever it is, so whether you're a plumber and you go to a house or you're a waitress and you just served a customer, after you've delivered the value that you deliver with your core product or service, you then offer a free gift. Now that gift is gonna be relative to the amount of money that someone spent.

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If we've done a good job, we will have banked a little bit of reciprocity. And so then at that point, and this is the key part, the person who gives the gift is not the person who necessarily asks for the review. So then either the manager of the restaurant, the shift manager, somebody who is representing that person then says, hey, by the way, if you leave a review, we give this person $50.

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So instead of incentivizing the customer, we're actually just saying this person who did you good and gave you this gift, We're going to pay them if you leave a review. And so this allows the customer to say, you know what, I kind of want to pay back that server. I want to pay back that plumber. I want to pay back that person who helped me out and gave me this surprise gift by leaving a review.

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And the further away the person who makes the ask is from the business, the more compelling I believe it is. And so this completely works with physical products. Obviously, you could just include inside of the box some sort of QR code or link saying, hey, leave a review and give the gift in exchange or you can give it up front. I wish they would do some research on this. I've tried both.

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And to be honest with you, they both work. The amount that you're willing to pay for the gift and a bonus that you pay your team should be proportional to what a review is worth to you. If I have a new business and I have almost no reviews, each additional review is worth significantly more than once I have 10,000 reviews, right?

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But I should still have that review system in place to grease the groove and basically continue the growth loop along its path. So if you happen to live under a rock and not believe that reviews are a very valuable thing in business, the highest percentage of sales across any market come from word of mouth. It's from people telling other people about stuff and people

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seeing other people use products and being like, hey, what is that? Or who do you use for? Right? When you bought a house, you probably didn't respond to an ad. You probably did ask your friends for what realtor they used in that area or ask your neighbors. And the higher the stakes of the purchase, the more referrals are important. The lower the ticket, the less it can be dependent.

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But the conversion on the first sale will still be dependent on the proof that you demonstrate. And so I like to incorporate proof in all aspects of my business because the advanced tactic here is that once you do start getting these reviews coming in, what do you think you should do? Display them everywhere you possibly can.

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So every business begins with effort and money from the founder or investors that begin the business. And this is kind of the initial call it the spark that starts the business. So this goes into the business long term. You don't want effort and money to go into the business. If anything, you want those things come out of the business. But it starts with the inertia. We have to get it going.

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And if you have an in-person business, you have a double effect compared to everybody else because you can just literally have someone walk into your lobby of all five star reviews and it just anchors what type of business you are, which is that you over deliver to customers and you do a good job.

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And so if I were a waitress, I might say, hey, here's some mints if it's really cheap, the type of food that I serve. But more realistically, I'd probably be willing to pay whatever the cost of a slice of chocolate cake is or whatever the dessert is and say, hey, it's on me. You guys were awesome. Thank you so much. When my manager comes through and says, by the way,

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Jessica, or I'd say, by the way, our staff gets a $10 bonus if anyone leaves a five-star review if you mention their name. It would mean a lot to us and it would obviously mean a lot to Jessica. So, you know, thanks so much.

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If Jessica does it and then asks for the review, it would still probably work if they like Jessica, but it's so much cleaner to have the manager come afterwards and then say, hey, if you leave a review, Jessica gets 10 bucks. It's probably worth saying. So like my team asked me like, well, how, like that's going to take time for the manager.

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And I was like, okay, well think about the hypothetical extreme here. So let's say that your restaurant turns 10 tables an hour. Okay. For a manager to go and deliver that line will take maybe five minutes to hit all of those 10 tables. And that's like, if that. If you've ever had a manager come over, it's usually like 20 seconds. It's not a very long time.

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Imagine the effect of that, which is that that restaurant every day gets 10 five-star reviews. Because that means that 10%, let's say they're open for 10 hours, they turn 10 tables an hour, it's 100 tables that they turned. It's like, okay, one out of those 10 leaves the review. 10 five star reviews a day, at the end of the year you've got almost 4,000 reviews.

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And if the team knows that they're gonna be measured on reviews and you can obviously track what percentage of them get five star reviews, you have another really high quality metric for customer satisfaction is what percentage of tables that this person served actually did the review. What percentage of homes that this particular home services guy does leaves a five star review.

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So it just gives you a second metric to look at customer satisfaction in the realest way possible that generates revenue. And if you do all of a sudden find one waitress or one guy who's going out in the field and he's getting way more reviews than anyone else, just ask what they're doing differently and then teach everybody else.

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And that also means that over time, if I boost the hell out of my Yelp, then I'm like, okay, now I'm going to boost my Google reviews. So I can shift my QR code. Now I'm going to boost my Facebook and meta reviews, right? Like each one of these, I can shift over time. And it might just be, you know, and then eventually it's just like, hey, just follow us on Instagram.

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Or it could be, hey, give us your phone number and we'll give you this thing, right? And then they're on our text list.

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so the second tactic to reinforce that review flywheel that then grows the business and gets more customers is merch now hold on what do you mean by that so i realized that my first gym i was there all the time and you know we got a decent amount of five-star reviews and when i opened my second location it was like starting from scratch again i had no reviews no one knew me in the area and i was like man i gotta jump start this thing

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I had all these t-shirts that I had bought and I probably had overstocked the amount of t-shirts that I was gonna sell in the lobby. But I noticed that the shirts didn't sell that much. I mean like they hung up and I'd move a couple every week, but it wasn't a huge amount of volume. And so I was like, man, these shirts would be so much more valuable to me if two things happened.

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One is if people actually wore them. Two is if they, turned into something more valuable than just wearing them, which is, well, what if I could accomplish both at the same time by just giving them away in exchange for three reviews? And so I made this post inside of the group that I had for all my gym members, and I said, hey, I'm opening up my next location.

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If you guys have loved the service, go get a workout at the new location, and if you do, I'll give you a free t-shirt. And so the t-shirts cost me five bucks. But then what they had to do to get the t-shirt was they had to leave a review on Yelp, on Google, and on Facebook, and check in. And so I had them do four things in exchange for the shirt. But guess what happened?

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And so from there, you begin to get customers, right? So you advertise, you sell, and people come in the door and they buy your stuff or they go to your site or whatever. Now, once customers come in, they get some sort of result. Now, after they get the result, you then have some sort of reviews or word of mouth that those results will generate.

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Overnight, I had like 155 star reviews for my new location. And I had all these people that were rocking my merch. So when they're out grocery shopping, when they see their friends, they're like, oh, what's that? And then I get some word of mouth from that.

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And so it was a two bird, one stone, one organic word of mouth, other digital word of mouth that I was able to do by simply saying, hey, if you want some merch here, you want one of these jackets that has this nice logo on it, Just leave a review. Most people, especially if you have a recurring revenue base, will be more than happy to leave a review for you.

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So obviously, brick and mortar, you can just give merch straight up, right? So if you had a gym or anything that people are in a recurring membership with, you could do that. Now, what if you're like the plumbing business? Well, the first tactic would probably work better for you. So if you're B2B, merch might not be as meaningful to your customers as

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if you're B2C, because if they are frequenting your business on a regular basis, they probably have some brand affinity, they're okay wearing it, and they would do stuff in exchange to get that kind of merch. Now, the other two tactics I'm gonna share with you will help you if you are in one of those B2B situations.

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And if you're less comfortable with giving out the, like if you're like my brand's not that strong right now, then you can have just an inspirational quote or saying on the shirt. So when I did my shirts, I think I had like a beast mode engaged shirt. My customers were wearing that rather than my logo, but my logo was on the back or the side.

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So you can put it on the sleeve or you can put it on the back if you want to have like some cool factor that goes with it. So what's the third tactic? Boom, you give them a big pile of money. No, not exactly. But instead, we actually just offer a discount. And so the amount that you can offer the discounts can be proportional to whatever your gross profit is in the average ticket.

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And so I was talking to a restaurant owner not that long ago. He needed to get new reviews for a new location. And so the strategy we came up with was really simple. I said, well, would you give somebody a dollar off their meal? And he was a very budget diner in terms of the type of establishment he was running, very high volume. And I said, would you give a dollar off?

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So it was about 5% of the average ticket of somebody who's walking in the door. And he said, yeah, I would pay a dollar. I was like, right, because that means you'd pay $5,000 for 5,000 reviews. That's a good deal. And so what we decided to do is that when people came with the check, they would put the, hey, if you want to save a dollar on each person, each person can leave a review.

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And we put the little QR code on top. And then the waitress, when she delivered the check, also basically drew attention to it and said, hey, if you do that, I'll go bring your check back with the discount included. And so if you think about this as a meta concept, the first two examples I gave you were things where you add something good. You add some sort of incentive.

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So the first one is you add something, but not in exchange for anything, based on reciprocity. And then the goodwill goes to the person who did the service. The second one is where you give a direct exchange with the customer. You say, you did this, do this for me and I'll do this for you. Very quid pro quo, very straightforward. This one with the discount is about removing bad stuff, right?

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And so bad stuff being the price of whatever they had to pay. The most effective way to do this, in my opinion, is as the check or as the invoice is being delivered. And this is where people mess this up, is that they will say, hey, if you leave us a review, we'll give you 20% off your next one. It's like... you will be able to give significantly less off if you just say it's available right now.

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And so latency is one of the strongest multipliers of a persuasive tool. Risk and delay actually work very similarly in people's minds. So the further out it is, the less powerful the thing that you give. You say, hey, I'll give you $100 in a year if you leave a review. Most people would rather have $2 off today. So, number four, keys.

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Well, the fourth tactic is a bonus tactic for you, but it's any kind of unlockable. Now this works particularly well with any kind of B2B service business, anything that's national or digital, rather than in person. So the first three that I gave are very IRL driven.

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So discounts you can use whenever, but like giving a real in person gift or giving merch sometimes can be a little bit harder online versus in person. If you have online, what you can do is you can unlock either media, which is, hey, we're gonna give you some sort of training that's associated with this, or VIP trial. So what does that mean?

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And then that can then in turn get you more customers. And so this initial effort of money goes into the system. That gets you customers, those customers get results. Those results drive reviews and word of mouth, which then get you more customers.

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And this is why this is extra, extra nasty in a good way, which is if you have multiple levels of service, your cost to deliver that service is typically not overwhelmingly high, right, when people do these add-ons. So like if you're an SEO agency, for example, maybe you'll rank another domain or you'll start, you'll spin up extra backlinks or whatever your core service is.

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And you say, hey, by the way, If you do this, I will unlock a trial of a higher level of service for a 30 day period, something like that. The benefit of this is that not only do you get the review, you also give the customer a trial, a taste of the higher end version of the service that you deliver.

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And so this becomes extra powerful because it starts with goodwill and you may just end up converting these customers into more valuable customers over time. You literally get paid to get reviews. Now, if you have a media thing that you want to unlock, call it a training, call it an event, call it something like that, you can do that as well.

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In the IRL version of this, you can have, call it an annual event that people are invited to and their ticket to get in is that they left a review. And you can do this both virtually or in real life.

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And so anything that you can give away that is remote would obviously work, and I also like having trials of services or pieces of a higher level to encourage people to one, taste it, and then maybe, just maybe, give us money for it later.

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If you don't do this, what's going to happen is that you're going to have a linear business where you have to keep flowing effort and money in, and then money comes out, and you have to keep doing this over and over again. When you stop doing this, you stop getting this.

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4 Ways To Build A Growth Flywheel For Your Business | Ep 809

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But when you set up a system like this, where you have a loop where customers get results, results turn into reviews, and then those reviews get you more customers, the business over time becomes self-sustaining. Every business has to have this in place if they hope to separate themselves from the investors or founders who breathed life in it to begin with. You want the engine to run without you.

The Game with Alex Hormozi

4 Ways To Build A Growth Flywheel For Your Business | Ep 809

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The problem is, most businesses don't have a good process, and so all they have to do, their wheels look like this, effort and money, customers, result, more effort and money, customers, result, and they end up dumping a lot of effort out this way. And so this creates a linear system where all you do is you have to put more in and you get more out.

The Game with Alex Hormozi

4 Ways To Build A Growth Flywheel For Your Business | Ep 809

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If you're a business owner, you want to be the lighter fluid, not the log that keeps the fire going. And so the lighter fluid begins the spark. And so that's the effort and money that goes into the business to get you customers. This is the advertising, this is the promotion, this is you reaching out to people who you know and people you don't know to get them to try your stuff.

The Game with Alex Hormozi

4 Ways To Build A Growth Flywheel For Your Business | Ep 809

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Now, if you do a good job, those customers are going to get some sort of result. Now, this is where most businesses stop. They just then go back to here and then keep doing this over and over again. But this is a linear model, which means that you have to just keep fueling the business rather than just being the spark.

The Game with Alex Hormozi

4 Ways To Build A Growth Flywheel For Your Business | Ep 809

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Because if you can build it the right way, this result then leads to more reviews and those reviews then lead to more customers. And then you are not required anymore because then the business self-sustains. And it'll keep spitting out cash, but not require you. Because if you don't do this, you will be the log and you'll eventually get burned out. Hey guys, real quick.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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It's interesting how stressful entrepreneurship can be because of uncertainty. And so like right now, if we were to look back the last 15 years, we'd say something to the degree of, man, the stock market just went up 15 straight years. Like this was amazing. What a time to have invested, right? And Morgan Housel wrote a little blog about this. And so I thought it was so interesting. He said,

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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The actual tactics of business are relatively straightforward. And so I say this just as a reminder almost to myself that It's, you know, the future is likely going to be better. The past is not as good as we remember it to be. And so I think that's relatively a hopeful message for entrepreneurs. The second thing, and so this is a little bit more strategic, is...

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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I do a lot of quarterly and annual planning with the portfolio companies. I have gone through that motion a lot of times. I've distilled this down into a little mini framework that's worked really well for me because you go through 10 or 20 or 50 or 100 of them and you're like, okay, I think I know how this is going to go.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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I define strategy as prioritization of resources, and if I wanted a longer definition, it'd be prioritization of limited resources against unlimited options. Fundamentally, the people who move fastest, or the businesses who move fastest, are the people who are the best allocators of those resources to the things that get the best returns.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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For many of you here, you'll have this big list of things that you're thinking about doing. And the objective of this Q&A session, hopefully not just necessarily for your question, but for someone else's question, is that when you go home or when you fly back, you're going to have all your notes on one side, and you're probably going to have a fresh piece of paper or document on another screen.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And you're going to be like, OK, I have nine pages of notes. What am I actually going to do? And then you're going to write three to five things on that other page. I just want to make sure we get those three to five things right because that is what makes this worth it or not. So I break this into what, how, and who.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And although this seems really simplistic, I've also found that simple frameworks are the ones you actually end up coming back to and using. And so fundamentally, every single what that you got from today and yesterday should ladder up to one of three objectives. So number one is it should increase the number of customers that we get, so number of new customers, number of sales.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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It should increase the lifetime gross profit per customer, or it should decrease risk. So fundamentally, these are the things that make a company more money. This is what makes a company valuable. So if we are going to consistently sell more customers, and they're going to be worth more in the future, and we believe that that future is incredibly certain, that is very valuable business.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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wait a second, that's not true. Like we had a 20% dip in 2011. We had a dip in 2016. 2020 obviously happened in that period of time. We had wars that didn't end. And so all of these things were kind of happening. And I say this not as a political statement, but more so that everything seems better in retrospect because there is no uncertainty. We know how the story ends.

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Expect Uncertainty | Ep 826

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If you just erase this and save a very high risk way, and you sell tons of customers that have tons of profit, it's a zero value business. And so these are kind of the three components. And so I would teach this to your team because it'll give them a framework so that they can better understand your decision making process.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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So let's say the team comes to you and says, hey, I think we should redesign the website. Maybe some of you have had that. I think I have it every day. It's like, I already did it last year. I don't feel like doing it again. It's so ugly. Just deal with it. But then we'd ask the question, OK, so let's redesign the website. Fine. Where does that fit here?

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Expect Uncertainty | Ep 826

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They would say, OK, well, I think it's going to help us get more customers. I'm like, OK, how? Well, I think maybe it could help us convert more of our traffic. OK, how much more do you think it's going to convert versus the control right now? Because the control's pretty tested. 5%, okay, great, how long is that gonna take? It'll probably take eight weeks. How much is that gonna cost?

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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Say we hire a design firm, whatever, 25 grand, okay, fine. Now, and this is the kicker question, is there anything else that we could do for eight weeks and spending $25,000 that could increase the amount of money that we make in this business by more than 5%? If the answer is yes, although that is a good idea, it's not the best idea. And so that's why we're not doing it.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so I think helping people understand that it's not that they have a bad idea, it's just what are we gonna trade to execute this? And so let's just say, we say, you know what, our objective in our business right now is we need to get more customers. That's kind of our biggest level constraint that we have right now to grow the business, fine.

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Expect Uncertainty | Ep 826

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Then it comes down to, okay, how are we gonna solve this issue? Are we gonna do more? Are we gonna do better? Are we gonna do new? So there is some math behind this. I was talking to Dickie about this last night. If you have a smaller business, call it let's say less than $3 million a year, almost every time the solution is more. And so I'll give you a really simple example of this.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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So let's say you have one salesperson who does outbound and generates leads for you and you make whatever, five sales a month. You could probably improve the conversion rate of your funnel. You could probably improve the conversion rate of the emails that you send or the calls or the script. All those things are things you could probably improve.

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Expect Uncertainty | Ep 826

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But if you just doubled the amount of sales guys you had, you'd probably get pretty close to doubling sales. Now, when you're bigger, let's say you've got 20 sales guys, you'll have a close rate, let's say, of 30%. That's your sales team's close rate. Okay, so at this point, do I think that I can get a 20% lift in total sales by getting the entire team up from 30 to 36?

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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I don't know, we're doing pretty well on sales. Or do I think I should hire four more guys, or maybe six and then know I'm gonna lose two, and have four that stick and hit KPI? So then both of these ways will get us more customers. I could hire six more guys and train them up, or I could try and drill the team harder, maybe tweak the script so I can get a 20% lift in close rates.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so the difference between which path you take is the discrepancy between actual and benchmark and the likelihood that you'd actually hit it. So how likely is it and how much effort is it going to take for me to get six more guys on the team versus me drilling the sales guys to get that 20% lift in close rates? Now, if you're below KPI, then don't hire more guys. Get the team ready.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so what often happens is there's this ping-ponging that goes back and forth between more and better. And so it's kind of like this accordion of you grow the tree, and then you prune it, and then you grow the tree, and then you prune it. And so there's no right answer here. But for almost everybody, More is very boring and also the mathematical right answer. Reason I say this.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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It is the lowest risk adjusted return lever you can pull. Said differently. If you have, let's say you've got a, like imagine you've got a Jenga, you guys know Jenga, like the little wood blocks, right? So if you've got a Jenga building that's this high, and it's standing, so it's fine. And let's say there's some holes missing to make this realistic.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so I think in some ways it's like, that can give a certainty that our current situation, despite the fact that it feels terrible, it always resolves or we die. And so like, if you die, you don't have to worry about it. And if it resolves, you don't have to worry about it.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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If I take any one of those bricks, there's a chance that I could put it somewhere else and make the building taller. But of all of the other unlimited possibilities for that brick, which is like I could put it on the floor, I could throw it over there, the likelihood is that the building actually gets weaker.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so once you have something that's very tested, more of that thing that works is the highest likelihood thing that will work. Because changes to the control, once it is very tested, in all likelihood will be things that actually make it worse. And so this year for schools, homepage for example, we ran 16 very prominent split tests that we ran on the page. 14 of them made it worse.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so probably because I spent a really long time on the beginning of the page and trying to guess what we thought would work really, really well. And then basically most changes from the control just made it worse. And so I say that because there's unlimited things that are not the thing that's working and the vast majority of the things that are not the thing that's working also won't work.

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Expect Uncertainty | Ep 826

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And so we have this idea around, oh man, I have this idea for something better that I might be able to do in the business. And some of you guys have some of these things here. But what we don't include is the cost of change. And so the cost of change is guaranteed in any implementation, even the things that work. But the upside isn't.

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Expect Uncertainty | Ep 826

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And so I would say that as I've kind of matured as an entrepreneur, my willingness to do new things has diminished.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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I want to take fewer very big swings, but a lot of the everyday bets that I used to be willing to make, I'm just not willing to do anymore, because I know the cost of them, and that likely it's not going to be as good as I thought it was going to be in my head, and my team is always going to feel like I'm constantly changing things.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so Layla said this to me, and it really, I don't know, for whatever reason it hit, but basically, If we know, and this is just my rough estimation, that we get a 20% decrease in execution in any function whenever we make a change. It seems pretty consistent. If we change the sales script, we're gonna have a decrease in sales by 20% for them to learn the new script.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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If we change customer success process, we're gonna have a decrease immediately 20%. which then actually gave me a litmus test for, okay, if we're going to try and improve something, it has to be over 20% in terms of what I think is going to happen, like very reasonably, in order for me to actually even enact the change.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so the sub-point underneath of that is that your business will never be perfect. And so there's a hundred things that I think I would want to change about yesterday and today that you guys went through. I can think of a million of them, right? But some things just, the thing I wrote down is some things stay fucked.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so, and comma, and that's okay because it actually still yields a better business. Because if you think about the fact that you always want to change things, then change becomes a constant, which means that you have a 20% decrement of performance across multiple functions of the business at all times because you're always changing things.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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And so that's kind of been a helpful framework for me because I think a lot of the stuff of what makes entrepreneurship difficult isn't really the tactics. Like learning the things that you have to do, those are just kind of knowledge deficiencies and we have to learn those for sure. But I think everyone here would agree that that's not what makes your job every day hard.

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Expect Uncertainty | Ep 826

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Because in the pursuit of I always want to do something better, you actually always do it worse. And this has taken me a very long time to learn. So along with our example, I'm going a little long on my preamble, but hopefully you find it valuable. So once we have our what, okay, this is what we need to have happen. Let's say our strategy is we want to do more. Okay, fine.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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So if I see every quarter that we said, hey, we need to hire more sales guys, and two quarters in a row that thing hasn't happened, it's usually because I have a who issue. And so I've seen a lot of you, and I've had many conversations where you have what would otherwise be considered a pretty sound, reasonable strategy, and it's like, no, we tried that and it didn't work.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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Well, a lot of times, it's not because the strategy was wrong. It was just the execution of the person who was owning it was wrong. Either they didn't have enough bandwidth, right, or they just weren't good enough. And so I would say that my tolerance for mediocrity has gone down over time, and I think that that is a one-way direction with almost all of us.

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Expect Uncertainty | Ep 826

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And so I try to think to myself, OK, 10 years from now, I'm going to think everybody that's on my team, myself included, is inadequate. And so how can I try and screw with my mind's perspective so that I can raise the bar for the people that are coming in? because they're the ones who are ultimately gonna like build the people, build the business, right?

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Expect Uncertainty | Ep 826

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And so I just would use this as my little moniker for how I think through this when you're making the decisions. Is the thing going to increase the amount of customers? Is the strategy we're gonna use more, better, or new? And then finally, who's gonna own it? And I walk through this at a very high level with a lot of the companies in the portfolio, and this is how I walk through it.

The Game with Alex Hormozi

Expect Uncertainty | Ep 826

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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Expect Uncertainty | Ep 826

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Expect Uncertainty | Ep 826

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Expect Uncertainty | Ep 826

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Learning how to set up a landing page, maybe you don't know how to do it, but it's not gonna kill you to learn it. It's when your manager leaves and takes half of your team and all of a sudden your payment processor shuts down and you've got leads that are coming in but you can't make payroll. That's the stuff that makes it really stressful.

The Game with Alex Hormozi

How to Turn One Restaurant into a National Brand | Ep 886

This is Calvin and Air, a husband and wife duo that run a Thai restaurant that does $3.5 million a year and has lines out the door. But they're opening up their second location next month and they're not ready. If they mess this up, they could lose their savings and the reputation they spent years building. Hi Alex, how are you doing? My name is Calvin and this is my wife, Air. Hi.

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How to Turn One Restaurant into a National Brand | Ep 886

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That's just me personally, because it's like we're not even changing any of the characters. You're already kind of like paying the fee of being at $16. I don't think anyone buys 16, doesn't buy 16.99. That's just my opinion. Yeah, so this is a monster moment.

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How to Turn One Restaurant into a National Brand | Ep 886

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It's like, yeah, one change that probably has no effect on your sales velocity could have a dramatic effect on your profitability as a business. When we're talking 20 bucks, 10 bucks, like this is a high volume business, those tiny little dimes and nickels and pennies, they add up in a huge way. And like I said at the beginning, restaurants are notorious for having small margins.

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How to Turn One Restaurant into a National Brand | Ep 886

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If we can have a 30% lift from one tiny change in terms of reprinting the menu, We should do that. Let's just use simple math. If every person who walked into their restaurant last year only bought two items, that would be $2 extra per person. They served 100,000 customers last year. That would be $200,000 dropped to the bottom line.

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How to Turn One Restaurant into a National Brand | Ep 886

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The next one is because you have, you're turning people away on weekends, right?

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How to Turn One Restaurant into a National Brand | Ep 886

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Have you considered having weekend pricing? Saturdays and Sundays or Fridays and Saturdays, the menu that you hand them is different. So you've got weekend menus and then you've got weekday menus. And so then the weekend menu can add $2 per dish. It's the surge pricing fundamentally. It's just like Uber. Like if it's really busy, they charge more. If it's less busy, they charge less.

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How to Turn One Restaurant into a National Brand | Ep 886

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And so I'd rather you just add it on the days that you have it. And the day when we feel like it's being added, you're just giving them the weekend venue. Right. It's just like different places have like a lunch menu and a dinner menu. The dinner menu is more expensive than the lunch menu. No one's offended by that. It's just kind of a standard practice. How does that feel?

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How to Turn One Restaurant into a National Brand | Ep 886

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No, I don't think you necessarily should.

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How to Turn One Restaurant into a National Brand | Ep 886

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This is why I lay these out, and it's a lot about you and how you feel. It's your business, right? And so if this feels light to you, you're like, I think we could just, you know, literally the cost of this is reprinting the menu. That's it, right? So check this out. So this is the $100 million scaling roadmap, and they are at stage five product size.

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How to Turn One Restaurant into a National Brand | Ep 886

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So they've got probably 20-ish people who work for them. And if we look at the constraints of the business for them, let's look at the things that I'm talking about them with. Most of the scaling roadmap, I tailor more to service-based businesses. And the reason for that is because 78% of businesses are services. And so I tend to skew in my language about that.

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How to Turn One Restaurant into a National Brand | Ep 886

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But the actual things that are happening are the same, right? And so a CS playbook to onboard, all of that is going to be around how are we getting customers this consistent experience? We talk heavily about training, right? Connecting CS to product. That's getting feedback loops based on what people are eating and what they want.

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How to Turn One Restaurant into a National Brand | Ep 886

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spinning that make something new to sell them i mean they functionally had alcohol but they weren't selling it so now we're pushing that a little bit stronger and from a finance perspective like we need to get better at their finances which is why a lot of the improvements that i had were very pricing centric probably because they didn't have good enough financials to be able to see oh wow when we sell this you know this product we're almost breaking even but when we sell these ones we make a ton

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How to Turn One Restaurant into a National Brand | Ep 886

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they didn't have that kind of information, which would have helped them reconfigure their menu to be the most profitable menu possible that also brings customers back.

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How to Turn One Restaurant into a National Brand | Ep 886

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And if you're like, man, that would be useful to know what stage of scaling I'm at, all you have to do is go to acquisition.com forward slash roadmap, put in your business information, and we have this little automated thingy that'll tell you what stage you're at, what problems you're facing, and most importantly, how to solve them.

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How to Turn One Restaurant into a National Brand | Ep 886

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And if you want my team to take a look at the business and reaffirm those things, or you'd like to come out to our headquarters in Vegas, and potentially be on the Cash Cash app. On the thank you page, you can schedule a call and we'd love to help you out. So the next thing that we'll go over is the actual menu itself.

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How to Turn One Restaurant into a National Brand | Ep 886

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So with the menu, how did you think about laying out what they get when they open up the menu at your establishment?

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How to Turn One Restaurant into a National Brand | Ep 886

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Sure.

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How to Turn One Restaurant into a National Brand | Ep 886

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Okay. Okay. So on the menu, do you have highlighted boxes for the key items? Yes.

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How to Turn One Restaurant into a National Brand | Ep 886

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Yeah, good. So there's two components to it. So let's say you've got your sides, you've got your appetizers, you've got your carbs, whatever. Within each of those boxes, number one is I would rank them from gross profit, top to bottom. So which of these is the most profitable? We'll put that first because that's the first thing people are going to consider.

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How to Turn One Restaurant into a National Brand | Ep 886

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And then the second thing is I would have your highlight box, which is the, and I put at the bottom of the menu, like, if this is your first time visiting, this is the one you can't miss. Right? That way it's like, that way people, because no one wants to make the decision. It's fine. What's good? What's good? Yeah. Exactly.

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How to Turn One Restaurant into a National Brand | Ep 886

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Okay, so who do you serve?

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How to Turn One Restaurant into a National Brand | Ep 886

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So that way, if you have each of the highest gross profit margin things that also happen to be the things that most people love, then those should be the same, ideally. That we want to make sure that it's really clear and it's prominent on the menu per box that they're kind of working through.

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How to Turn One Restaurant into a National Brand | Ep 886

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So any kind of business that has a menu and the term having a menu comes from restaurants because many people have eaten at restaurants. But you go to a mechanic shop, there's a menu, right? And so in general, I like having a couple things to be true about my menus. One is that I prefer to start at the highest prices. And the reason for that is anchors.

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How to Turn One Restaurant into a National Brand | Ep 886

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And they've done research studies on this in terms of how they lay out wine menus. If you put the most expensive on the top, it anchors the remaining prices underneath of it. And so number one, I like having higher prices higher. Number two, I like higher gross profit margins because two things could be $16, but one of them might cost the restaurant $6, one of them might cost them $1.

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How to Turn One Restaurant into a National Brand | Ep 886

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And remember, that $0.99 that we added added 30% to the profit of the business. If executed, no sales velocity drops. And so us having just get more people to buy a thing that has two or three more dollars of profit could make an enormous difference to this business. The third piece that I want to hit on is what's the stuff that brings people back?

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How to Turn One Restaurant into a National Brand | Ep 886

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What's the stuff that's so good that they're like, God, I have this again? And so balancing those three priorities is how I think through laying out a menu, whether it's a services business or it's a restaurant. So the next thing that I have for you, this is just menu. We're going to get into training stuff in a second with like how do we increase alcohol sales and things like that.

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How to Turn One Restaurant into a National Brand | Ep 886

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But what I want to do is increase the likelihood that people are already thinking about it, right? And so there's two things that I want to think about. Number one is with each of the dishes, you could put underneath of it pairs well with.

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what drink this would go well with. And if they're reading it, they're going to be thinking, oh, well, they're saying it goes well with this. You will get more than 1% of people to buy alcohol just from just adding to what it pairs with.

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How to Turn One Restaurant into a National Brand | Ep 886

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Yeah, and this is all profit, right?

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How to Turn One Restaurant into a National Brand | Ep 886

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Pairs with. Does that make sense?

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How to Turn One Restaurant into a National Brand | Ep 886

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So this may be a wink-wink from my next book that's coming out, but there are a number of ways that you can make a customer more valuable. There are eight of them. One of them is a cross-sell, which is, do you want fries with that? For them, it's going to be, do you want an alcoholic beverage with that?

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How to Turn One Restaurant into a National Brand | Ep 886

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And so what I want to do is make it as easy as possible for the customer to say yes, and I want to make it as easy as possible for the staff to not forget. And so both of the tactics that I'm going to lay out for them are going to mirror those things. How to make it easier for the customer, remind them to do this thing.

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And the thing is, is they're getting 1% of their sales from alcohol, which is super high margin, right? So if we can get that from like 1% to 6%, so just adding 5% to the business in terms of total revenue from this very high gross profit product line, then again, we have another 25% increase in profitability. And that's just going from 1% to 6%.

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Awesome. Well, how do you make money? Let's go through the numbers.

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If you flip the table from no one's getting an alcoholic beverage to every person buys one, the profit of that table jumps through the roof. And so we only need like one out of 10 tables to do that.

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Do you have specials in terms of drinks? Okay, so I would recommend having one special that's a drink. So just say like, hey, we also just freshly made a Thai mint Mai Tai, whatever, you know, whatever cocktail you want. It's made fresh here on staff. It's super refreshing for the summer or whatever months, you know, make it seasonal for, you know, whatever time it is.

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And that way, some people were coming back, it's like, oh, that sounds good. Like all we want is like, that sounds good. And then it's like, great, we have the purchase. So I would include that as the first thing. So basically there's have, hey, before we get into drinks, can I say the drink special? We make one every week and we spend a lot of time.

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We taste test a bunch in the back and we come up with the best one and it's freshly made here, blah, blah, blah, blah, blah. And I think people would really like that. So rotating one drink special. There we go. So tell me about the actual tabletop. Do you have anything on the table at all? Do you have like one of those little A-frames or one of those spread open? You know what I'm talking about?

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Like where the- The table? Yeah. You don't do that? Okay. Okay. Is that too below where you want to be in terms of vibe of the dining? Yeah.

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So I would probably do that because people like the visual.

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Because also I'm thinking about the servers, right? Like how can we help them do their job easier? And so if they can just point and then the visuals right there and they can see it. I think that's pretty compelling, right? And I think the way that you make that look is what will determine whether it looks cheap or whether it looks nice.

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Obviously, I wouldn't go lots of neon colors with the tropical background, right? Like that would probably not be that, right? So, you know, keep the look and feel of it upscale, but we still want to have the really nice elegant descriptor underneath of, you know, once a week, the entire team tries, you know, five different drinks. We pick the best one.

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And then that's what we decide as a team to offer for the week. Because if we can get the team bought in on it, they're like, oh my God, it was so good. Like you guys should try it.

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One.

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Yeah, exactly. For me, this is me as a consumer now talking. When I see like 10 things, it just is like another menu, right? I want to draw attention to one specific thing, really clear image. You know, the benefit is underneath and then they draw my attention to it. And to me, that's really good. Now the back of it, we're going to save for some review stuff. So I'll get to that in a second.

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Ding-a-ling-a-ling here. So right off the bat, they have beer and wine. And the fact that they have 1% of sales from arguably the highest margin item that they sell, there's probably more we can find out and some big opportunities there. How do you get customers? How do they find out about you?

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On table one item special. Okay. We good on this so far? All right, good. So let's talk about getting people to come back, right? So we want to have a way to identify who the new customers are. Like, hey, it's your first time dining with us, right?

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Is there something that we can do to identify to everybody else that, like, if someone says yes to that, can we put, like, just a drink coaster on their table that's a certain color or a napping that's a certain color, whatever? But the reason it's so important is because then the whole staff knows, hey, these are first-timers, right? And so obviously you want to give everyone a great experience.

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But just knowing it's someone's first time helps. Yes. Right? And so one is identify first timers. And B, I would give them some sort of surprise free thing at the end since it's their first time. So that's if they have a dessert or something like that, whatever the cheap dessert is. Yeah, something that would be. But people remember things, something called peak end bias.

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And so people remember things, two key moments of every experience. They remember the peak emotional experience and they remember how things ended. And so if we can just really make that ending really nice, I think that would be something like surprise dessert for first timers. And what I would want to do is then give coupon of some sort.

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And the way that you can do this if you want to do it classy is that you have the manager put their card and then write free dessert on the back and then hand it to them. Okay? It's way better than a coupon, right? Because then it feels like it's a personalized gift, right? And so you say, hey, next time you come in, just bring this and I'll have another dessert for you in the house.

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And so now it's like we're creating that loop. We want to bring them back in. Does that make sense? Does that feel okay? All right. So this is for first timers, okay? For existing customers, I think you can offer the free dessert in exchange for reviews. Now, I know you guys do something like that now, correct?

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I'm a huge fan of free drinks slash free dessert for review. And the time that I found it to be most effective is really at point of sale. So basically when they get the check. Now, I have a couple ways of doing this. So I want you to tell me which one feels, just kind of like I said, the pricing thing earlier.

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I'm going to give you two or three different ways of doing this, and you tell me the one that feels better for you. Okay? So the first way is, hey, if you guys want, I can take care of one of the drinks. If you're just willing to leave us a review, it would mean the world to us. We're a small family-owned business. And if they do that, then you say, cool, let me take the check back.

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I'll take it off, and I'll come back with it. Mm-hmm. And so then it's like, great, every one of these, and it's at the point of sale. So you want to give the discount now. The whole idea of like, if you leave a review, next time you'll get, it's like, no one cares. They'll just pay, no one gives. So it's like, it has to be immediate. So that's the first version.

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So free for review is thing one, okay? That's the first version. The second version of this is when the check gets delivered, The manager comes after when it's sitting there, whatever, before it gets scooped up and says, hey, by the way, your server's name was Judy. And just so you know, Judy gets a small bonus if she gets over 10 five-star reviews in a month.

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That way, it's like we're doing it for Judy. So then you don't have to give anything away for free. But then you kind of just have the reciprocity of if Judy did a good job, you can give her a $50 thing. So this is the manager ask. Those are probably my two favorite ways of doing it. So either the immediate one, in exchange for something, or, hey, can you do it because of the staff that you liked?

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Either one of those feel better to you? The first one.

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Yeah. So that'll get into training, which we'll get into in a second. But because of the business that you're in more than anything else, it's so reviews driven, like online reviews. If you took your reviews from 1,300 reviews to 13,000 reviews, the amount of people that are coming through the door. And all we have to do, you served 100,000 people this last year total. Just last year. Yeah.

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So if we got 10% of people to leave a review, it would change things for the business. Oh, definitely. And the thing is you have multiple people at the table.

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And so where this gets kind of interesting, hear me out, is that you could say, hey, if you each leave a review, then I can get all your drinks. And in one table, we can get five reviews.

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And so mind you, you don't have to do this forever. It's just, and this is obviously you're thinking about the next location too. Would I be willing to give up the cost of a drink in order to get a review? For sure. Not even, wouldn't even think about it. Right. And so, right. And so that's, that's, you're willing to make the trade. And the thing is, it's because it's on the check right now.

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They're like, sure. I like this place. This was great. I'll save five bucks, whatever. I would have, I would have done it for free, except they wouldn't. But right. But like that little incentive helps out. So for brick and mortar services or restaurants, just local Main Street businesses, the vast majority of people make their decisions by searching online before they go.

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I mean, when you're about to go to a restaurant, what do you look at? You just look on Yelp, you look on Grubhub, whatever, and you see the reviews. And so I don't know about you, if I'm looking at a dessert place and it's got three and a half stars, I'm not going. I'm not going to go. I'll just go to one that has four and a half stars. Like, why would I risk it?

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People only go out certain amount of times per month and they're not going to blow their one time out on a three and a half star place. They're just not going to do it. And so we need to boost the hell out of that so that not only do we have good reviews, but we have a ton of them. And so let me give you a different example.

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No question. Because you know, this is a business, like 13,000 reviews, like, holy cow, like this place must, this is probably iconic. This is probably a destination, which if you're a small business owner, what higher praise could you want?

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I was thinking about a way to increase the average order value, right? And so in the e-commerce world, it's like you get free gifts over a certain amount of spend or you get free shipping.

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I'm trying to think of a way that we could tastefully do that within this business, which is like, it'd probably be better for takeout than I think in dining, which is like at $50 or at $100, wherever, you know, if the vast majority sit at $60, right? $60, whatever it is. It's like, then we want to put the free gift at like $75. Or 80. And so maybe on weekends, you make it 100.

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Right. And you'd say about half of them come from... Yeah, my mom was here yesterday.

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On the weekdays, you make it 80. So you just push that extra $20. It's like, hey, just so you know, you get an extra full, whatever I just said, for orders over $80. And I think that'll nudge a decent amount of people. Just put it right above where they're currently at. And it's like you get a full another order on top. And you guys have good gross margins on the food.

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Because I just want to bump it up. And you saw with the 99 cent thing. Yeah.

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a dollar or two in this business makes all the difference in the world. And so this is basically an AOV, so average order value increase with break points above current average threshold.

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So the reason I said takeout is because if you're on the phone or something like that, or if it's on an order page online, it doesn't feel weird to me. Like, because we have to think about the, obviously the servers, right? Like they can only remember so many things.

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Oh, sure. Yeah. But because what we're going to think about this is from the experience of the guest, right? So they're going to come in. Are you new? Yes. Great. Cool. So they know if they're new or not.

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Then they're going to say, you know, can I tell you about the drink special? Yes. Then they walk them through the drink special. And then we get way more people to do it. People are also going to ask questions because it says it pairs well with.

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And so a lot of people are going to ask questions about that, and then you're going to get more upsells, which they're going to want because their tips are going to go up. So they're going to want to sell the offer. So they have an incentive to learn that stuff. And then basically from that point, there's really nothing different except at the very end, they're going to do this.

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Got it.

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So there's not a huge amount that we're really at. We just have to know, are they a first-time customer? We're going to make sure we do the drink special. And then at the end, we're doing those three things.

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That's it. So as much, I know we talked about a lot, but in terms of what they have to do, it's not too much.

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I would say almost for food more than almost any other business, word of mouth is just huge.

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So one out of three strategies actually succeed in a business. And that's a McKinsey study that they did. And some businesses have two out of three strategies succeed. And the big difference is culture, which is the reward and punishment that exists within a business, which is fundamentally like how do people behave? How do people do stuff? And so this is a people heavy business.

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And so I wanted to not just give them a bunch of, you know, here's all the stuff that you can do, but I wanted to translate that into real world. How are you going to get your staff to do it? Right, because if they don't ask people what beverage they want or ask them if they wanna get dessert, very simple lines, but if they don't do it, it's a huge cost to the business.

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And so we had to make sure that they went home with clear items of like, this is how I'm gonna train the staff and make sure that they do this every time. Otherwise, this is just a lot of fun entertainment, but nothing's gonna happen to the business.

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I like the physical card a ton. And if you're like, hey, if you're worried about losing this, just take a picture of it. and just show it to me on your phone when you come back. That way the people can bring it. But what if, what if they share it and people who came got the picture of the back of the card? So they brought new customers in. Oh no. Right, so it's okay.

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Yeah. Yeah. No, that's great. On a long enough time horizon, the product of the business is the only thing that matters. Marketing just pulls up your timeline forward. It gets more people introduced to your product faster. And so marketing can accelerate growth, but it cannot create a good business.

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So you can have them take the picture of it and be like, hey, if you feel like you're gonna wash your jeans and it's gonna get torn to shreds, you can take a picture of it too and that way you have it. It's a little thing. The only reason I hesitate with the loyalty thing is just like, how many people are actually part of loyalty programs for restaurants?

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Yeah. No, no. Oh, so they have like the punch card and they have all that stuff. Because you said you wanted to be more on the upscale side, I have a whole thing on loyalty programs. I didn't get into it because I didn't feel like it was necessarily the best feel. I can talk about it and then you guys can decide. So I know you guys right now, you do three.

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On their third one, they get free sticky rice, right, when they come back?

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So I think you'd have to sell me on the benefit of the loyalty program. And I probably would even, I just hate that. All I think of when I think loyalty program is somebody's just going to spam text me all the time. And so I never like it, right? And so for me, the loyalty program would be like, you get three things. Is it on your birthdays? We're going to send you free stuff.

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We're just going to give you a coupon for coming in. When you're here, you get your first alcoholic drinks free or something like that. You know, because if someone has one, sometimes they're more likely to have a second, right? One per table or per party. And then number three, when we have a week, which you do on weekends, we prioritize you.

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Now for me, that third one alone would be enough of a reason. So I like that. I mean, I think a lot of people would do it for that benefit alone. So I'll put F. I'll let you guys work the specific details of what you want in there. Because also when they fill that out, you can also get what their lead source was. Like, how'd you hear about us, et cetera.

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Big picture, I am split on loyalty programs in general. Main reason, the food is the loyalty program. Your food's good, they're gonna come back, right? And they're gonna tell their friends. And so other businesses, I think loyalty programs can make a much bigger difference. Like if you have a med spa or something, like a loyalty program is like the business, right?

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For them, I was just thinking through, OK, well, this clearly meant a lot to them because they brought it up a couple of times. And so I wanted to give them something. If I were to do it, this is how I'd approach it. And these are just based on things that I've seen work across industries. So running starts, which is where you have, let's say, you have 10 punches.

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If you give people two or three punches on their first go, they feel like they got free stuff. But it's really like you just make the amount of punches that you need to do free, and you just give them that start ahead of time. They've already proven this from a bunch of studies

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And so I think this is one of the big things that a lot of marketers don't understand, and this is something that took me years to figure out, which is that being good at marketing and sales can absolutely make you money, but it just accelerates how quickly you decline if you don't actually have a good product.

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that running starts are like two or three times more likely to actually finish out their punches than people who had the same amount of punches remaining on a shorter punch card. And so it's like, well, if you're gonna do it, do that, obviously. But beyond that, I think through the same value drivers that I mentioned in the offers book over and over and over again.

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So this is page 56 of the offers book. Check this out. So whenever I'm trying to improve any product or service, I always think through the same value vectors, which is what do I want to have happen? How do I make it less risky? How do I make it faster? How do I make it easier? Those are the value vectors. And so I'm thinking as a restaurant, I'm like, how do I make it faster?

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And as soon as I was thinking through it, I was like, okay, well, you know, trying to say that they're going to get their food first when they walk in, like when they walk in the door, that's probably not going to be realistic. Like the cook takes a certain amount of time and some people don't want to be rushed to dinner. So like in that instance, speed's probably not the right variable, right?

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But waiting in line and being able to have first access, okay, well we can make that part faster given the fact that they already have more demand. So I'm like, okay, well that's a good one. The decreasing the perceived likelihood, the risk factor, that's what all the reviews are for. Right? You know, how do we, you know, decrease effort and sacrifice?

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Well, we're going to make it really easy for them to buy the alcohol because it's going to be right in front of them. And we're going to pair it with the food that we think would pair best with those specific drinks. So they don't have to think, oh, I'm not sure. Like, again, this friction. I'm not sure which beverage to have. Boom, it's already solved. Right?

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I'm just trying to remove friction from a lot of the parts of the process. And if someone's willing to pay more or get some sort of benefit for giving us their information, then we'll happily pass those things on as a reason to do it. Good on this? Don't worry. I know you'll be able to watch the episodes. You'll have it.

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But if you take the other natural extreme, which is that even if you had zero marketing and one person eats, but it's so good they tell five people, and then those five people come, and it's so good they tell five people, you can quickly get to capacity if the product is good. And that works for services, that works for SaaS, that works for anything. Okay, so how many customers do you help?

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So now we're going to talk about team and operations, okay? Okay, so this is the training. What we really need to train them on is kind of the upsell process. Number one, they have the greeting. And so when I think about training people, you want to think of it as almost like skits.

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Because whenever you teach something, you have a condition, you have something that happens, and then you have a behavior. So when this, then that, right? So it's a rule. If this happens, then you do this. And so each of these are basically behavior rules. And so it's like, we're only going to teach you four rules. And the first one is that when someone comes in, You ask if it's their first time.

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If they say yes, you take this thing out of your pocket, you put it on the table, now everybody knows. That's thing one. Let's practice. You sit down at the table and you go back and forth and the next person comes up and you drill it with them. Next person goes up, you drill with them and you just keep going through, do it for an hour. They'll have 20 reps in an hour of just doing skit one.

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Tomorrow we'll do skit two. And that training just gets so ingrained. If you do that on a regular basis for them, I'm sure before the shift starts, they have a 30 minute little powwow or 20 minute powwow. You just do this. And so you have the greeting for first-time customers. The second is going to be the beverage, which is we're going to be practicing getting the alcohol upsell.

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So let me tell you about our one beverage of the week. So in the back, we try out every week. We get together, and we try out five different cocktails. And the one that we say is our favorite is what we make for the week. And so it's made fresh, home here. We did it just a couple hours ago. It's freshly squeezed mint, blah, blah, blah. And a lot of people love it. Would you like one of those?

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That's it. That's all we do. And then the next person goes up and you say, do it again. And so you want them to get five, 10 repetitions per practice session. And so it's that way you can hold them accountable to it. Because if you do this on a regular basis, they'll do it.

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Then we have the pairings, which is when people are ordering their mains, just reminding them that that goes really well with, would you like, a lot of people like it with, and just doing that little reminder. So it's going to be sides plus alcohol. So with every one of these dishes, I mean, there's a reason McDonald's has, do you want fries with that? Do you want to supersize your meal?

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It's two, three questions after every time somebody says they want this thing. So yes, I want the Pad Thai. Awesome. Do you want to have extra noodles on the side? A lot of people do. No? Okay. It pairs really well with this. Do you want to go ahead and take one of those? And even the way I'm saying it, like, do you want to go ahead and take one of those?

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I'm telling them to say yes by how I'm asking the question. A lot of people do that. You want to go ahead and do one of those? They're like, okay, you know, I'll do it. And so we just want to practice that. So the practice piece would be, I order, and then you ask me question one, question two. An experienced salesperson will know those tiny little nudges.

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And in a rapid sales conversation, which is what a waiter or waitress has to have, let's say you have a table of five people. You're going to have five sales interactions. And so So we're talking like one sentence or one phrase that we're adding on per kind of exchange back and forth.

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What's the sales velocity of the business?

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And so we just have to get the team to practice those little nudges, which is like, would you rather have chocolate or vanilla? I like chocolate, right? Or most people like chocolate, or that's what a lot of people do here. And this matters more, especially with first time customers, because they're like, I don't know how it works here. And so then you're like, well, this is how it works.

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This is what most people do. This is what maximizes your experience while you're here at this restaurant. And so what we're doing functionally from a value perspective is we're paying down risk. We're increasing the perceived life of achievement. We're saying, you wanna have this amazing experience?

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I'm gonna help you have the best experience by just helping you navigate this menu and ordering process to get the best stuff. And I'm incentivized to do that because I want you to have a good experience so you tip me well. For every alcoholic beverage, what would you charge for the drinks right now?

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Super affordable. So they're going to get about $1 at it. So it's like when you're looking at the table, just think every question you ask, you have $1 just sitting there. And you have five people at the table, and you've got $2 at each one of them. It's just right there.

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And so, okay, you get three of them. Great. You just got $3 from just taking orders. I would translate it into what it means for them. Does that make sense? Yeah. Okay. From a team perspective, I would put a little leaderboard in the back for the server that got the most alcoholic beverage sales. And then you can give them $50 or $100, whatever.

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Okay. So weekends are significantly bigger. When you said the average order was $80 on the weekend, $60 during the week. Yes. Is that off the same menu? Just people are ordering more? We only have one menu.

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Or maybe they just get priority to pick what schedule they want for the next month. Just little things like that I think work really, really well. So the last step is review slash comeback offer. So if it's a first-time customer, they're going to get the comeback offer. If it's any other customer, it's going to be the review offer. Slash loyalty if you want to do your loyalty offer.

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And that's why we set this up so that we can do this. And if they forget, they can look down at the table and remember what napkin they put there. That's why we do this, right? This is how we make a little system out of it.

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Does that make sense? Do you feel like they could do this?

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So I think if we just do these things that we just outlined, there's a lot of points, but not, I think it's doable is kind of my point, right? Like we just kind of went through almost most of the things that they have to handle. The rest of it is menu, you know, moving the menu stuff around, adding the 99 to the price, like very small things that could be big differences to the business.

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So the last thing we'll do is I'll cover the next location and then we'll wrap it up as one list and we'll prioritize it.

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Okay. I think when you do your pre-opening, what I would do is I would do an influencer night. And so you make it a VIP event. They can videotape it and they could share it to their stories and that you can give them the promotional offer of the free dessert, the free sticky rice or free drink, whatever that you can trace back to them. And I think that would be a great first launch.

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And then you can also use all of their creative. That's the deal for getting the VIP experience. So it's like you get all these influencers and they make these little videos about your restaurant. And then you can basically run an ad after the fact and people recognize them because they're influencers, but they're talking about your restaurant. All right, so check this out.

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So what I'm talking about is affiliates and partners, all right? And so the big key here is an affiliate is a lead getter. They're an independent business that tells their audience to buy your stuff. And so if we're gonna have a full night, right, we don't just want any kind of customer in the door. We want customers that can bring us boatloads of customers.

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Like their normal business is one customer tells two or three people, and then those people come in.

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But the value of an influencer or somebody who's a local celebrity or a local influencer who runs a forum or whatever it is locally, or they're just another local business owner that has exposure to many other people who are walking in their shop, their auto shop every single day, then you invite them out and they can then tell 100 people on your behalf.

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And so it's simply that it just gives you a lot more leverage and you're willing to make a little bit of a trade. And so you might do it for free or might do it at cost. You might give them half off because it's pre-opening in exchange for them videotaping it or making a post or something like that.

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Those types of things are great ways to kind of launch the word of mouth from the people who have the biggest megaphones. So number one thing we're going to do is we're going to do plus 99 on entrees. Number two is we're going to reorder menu in order of profit. Three, you're going to add pairings, alcohol, with entree. Okay, number four, drink special with table top pick.

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All right, so we're going to do first timers. training, which is napkin plus comeback offer. And then for returning customers, we're going to do manager card for VIP treatment. And then seven, you're going to have daily training on five scenarios. Doable? Yes. Okay, so let me show you how this actually adds up though.

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So if we see no change in sales just by adding the 99 cents, we get plus 30% of profit from this. Now, reordering the menu could actually have a really dramatic effect because if we just got a higher percentage of people to just buy the things that have the highest margin, that can have a really big effect on the bottom line because they're buying the stuff that costs the least, right?

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What's holding you back?

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That has the most markup. And so this, I would estimate, might be somewhere in the neighborhood of like 10 to 20%. If this succeeds, this one I feel really good about. This obviously is gonna be huge for you. I mean, this could be somewhere in the neighborhood of like 40% plus increases. Like this is really big, both of these together.

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First timer training, I think this is gonna be more important for the second location because you're already at relatively full right now. So getting people to come back, I think is gonna be really important for the second location. But this might also help with some of the weekday. Because if you just get more people to come back, especially...

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If they come during the weekdays, then those are the ones we really want to incentivize because it's like, we'll come back again during Tuesday. Right? So this might be some, I would probably estimate this might give you like, and again, 10 doesn't sound like a lot, but it's 300, 400,000 a year. You know what I mean? Given your revenue. So it's not, it's not nothing. Right?

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Manager card, this is going to be reviews. You know, I would bet this is probably a 20% lift somewhere in that neighborhood. And then this is just going to be overall the execution. But these... are the three that I think will really move the needle the most, and you don't have to do a lot to implement them. How's that for you?

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That's my favorite kind of implementation. Fast and easy is way better than slow and hard.

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Good. How do you feel about this whole plan? Great? Doable and it's going to make a big difference.

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Okay. Well, you know what we have to do now? We have to hug and then I have to finish your food.

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So Calvin and AR seem like amazing people, incredibly humble, very hardworking. I love the immigrant story, obviously. And it seems like they actually have a very good restaurant.

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And so I'm very excited to see them implement some of these changes and potentially dramatically enhance the profitability of the business to hopefully set up their expansion strategy so that they can go on and dominate and the entire world can have lots of amazing Thai food.

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So increase alcohol sales, increase takeout sales, attribution for sure. I think with this business particularly, it'll be more difficult to do attribution than maybe a traditional business. That's okay. I'm not as concerned about that. I'll introduce a couple of things that I think might be able to help us out.

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So looking at the problems that they presented, I think, number one, we can increase sales during non-peak hours by actually changing pricing during peak hours. Second, how can we increase alcohol sales? Well, that's going to be through recruiting, hiring, and training staff. I would say takeout sales and attribution I would put as kind of like the third priority for me going into this.

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What kind of promotional offers do you run to kind of attract customers?

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Big fan. So real quick, one of my big beliefs in business in general is not to give discounts. Basically it's either full price or it's free. I'm a big fan of that, especially for food establishments. Like you don't want to have people who become like discount seekers. Like that's not good, which I do want to be clear. I separate from, you know, if you have a prepayment discount,

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for services, or you have some sort of incentive for someone to buy like on a sales call or within 24 hours. That I see is different than like running a promotion that's like 20% off. Not a huge fan of that. I'd rather give a free item and then have a clear ascension path to how I'm going to get that person to become a full paying customer.

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So mostly seasonal, nothing that's standing or rotating. Do you have a process in place right now for basically what recommendations your servers recommend, number one? And then number two, what things they can add on to their orders?

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Okay. There's going to be a really big opportunity there. Okay. And then in terms of encouraging people to come for that second visit, is there anything that you do special for first-time customers?

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Yeah. No, no, it's okay. I have ideas.

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No, you're good. You're totally fine. I know you want to increase your weekday volume.

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What have you done or tried so far? We're thinking about doing a happy hour on the weekday. Okay. And you haven't done that yet. You just, it's an idea that you have.

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First impressions, restaurants have the highest failure rate of all businesses. So the fact that they're at, you know, 19% margins, I would say that's good. I would love to see if we expand it. Now, some people might hear that and be like, I thought the average restaurant margins are smaller. Yeah, they sure are. And that also doesn't mean that we need to be constrained by that.

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So it's a surcharge of rice on the weekend. Is that what you're saying?

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Okay, so tell me about this new store that you guys are thinking about opening.

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Yeah, I was curious about that because, you know, one of our big things is nail it and scale it, right? And so I know that you guys are trying to, obviously trying to hit 80 million. So if you're going to try and do multiple locations, we have to make sure that the model is super dialed.

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Got it. Well, do you want to improve this location though? The main location for now?

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And what's the plan for the grand opening for the next one?

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You mean you'll soft open?

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So one of our internal mottos is nail it, then scale it. And the reason for that is that a lot of times small business owners will get really aggressive and really excited and want to expand faster before they've really solidified their core model. Basically, it's like, it might take you less time to get your second location, but it'll take you more time to get your 10th location.

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And so I want to make sure that those fundamental unit economics are right. How much does it cost to open? How quickly can we get to be profitable? How long does it take for that location to pay for itself entirely? What does our grand opening promotion look like? How do we recruit, hire, and staff a new place and get the culture to be what it needs to be?

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And so these are a lot of the questions that happen, especially in a heavy staff business like restaurants, where there's a lot of people that work under one establishment. Okay, well, I have buckets and buckets and buckets of notes. So I have lots of stuff for you guys that I think we'll be able to help with.

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I'm going to focus primarily on this location, and then I'll talk kind of at the end about kind of what we can do to hopefully set up the second location to succeed. Cool? Cool. All right, awesome.

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It's customary, yeah. I rushed into the business too fast.

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So what is the goal?

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So I'm going to eat all of this, and then we'll start. Thank you. Mm, that is great. OK, so what is this?

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River prawns? I don't even know what that is. Really good. Thank you. Really good. All right, I have to try this. All right, you won't be insulted if I just don't finish everything, right? No, no, no. Okay. I am going to try all this. I can see why. It's doing so well. That was delicious. That was unbelievable. This was, obviously everything was good. That was exceptional.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Oh, the river prawns were fire. Really, really good. I mean, it was obvious why the restaurant's done well, because the food is good. And this is just like the simplest thing in the entire world. And I use restaurants as a simple analogy because everybody gets it. It's like a lot of people obsess about all the marketing and all the sales hacks. At the end of the day, if you have good food,

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people will come back and tell their friends. Like, that's really what it comes down to. And they focused on the thing that mattered most. I'm happy to help with all these kind of little things that can maybe improve the business model, but they had the thing that matters.

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Because if they had bad food, it didn't matter how many taxes I was gonna give them, they were just gonna get people in the door and they were gonna leave and never come back. And so they'd have to become a marketing business in order to stay alive because their product was inferior. They don't have that problem, and so I'm stoked to see what happens.

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The kind of four categories, actually I'm gonna split it into five. So you've got pricing, we'll talk about. Number two is the actual menu itself. So I'm gonna ask you a bunch of questions about the menu, because I think this is gonna dramatically affect average order value. Number three is gonna be training. So this is kind of the staff stuff that we're talking about.

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Number four is gonna be alcohol, so I'm gonna split this out specifically. And then five will go to the next location, okay? So those are kinda gonna be the big overarching topics. So what I wanna do is kind of like, are there ways that we can immediately potentially increase the profit of the location without dramatically changing the operations? And so there's two things that we could do.

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One thing that you can do, and I remember seeing this at a restaurant, is that you can just add your processing fee, and you just put that on your menu. which says plus 3% processing fee for credit cards, right? And you can do 2.9, you can do 3.9, whatever you want. And then that way when they get the bill, it'll just say processing fee, whatever.

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And it doesn't usually affect anyone's take rate from like what they choose to order and whatnot. But for you guys with a 3% increase would be like a 15% increase in profit from one thing. So we don't need to do that. I'm just like, that's one consideration you can do. The second thing that you can do is I noticed that you were at 0.00 in terms of your pricing.

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How'd you start the business?

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Was there a reason for that versus doing like 1699?

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Well, I'll briefly push back just because where you're at pricing wise, if you were, you know, I would say higher end, I think you guys are upper middle, right? You're not like here, right? Yeah. I would say, yes, if you're serving $29 to $50 entrees as the primary, then I think having .00 could make sense. Typically with luxury brands, they don't have 99.

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But I think that you're in a spot where I don't think it would detract from your brand to have $16.99. And the reason for that is like most people make their judgment off of that character in terms of pricing, right? Yes. And so this, though it may seem really small, if your average ticket is $16, this is 6% absolute, which for you guys is plus 30% in profit margin for the business.

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So if you went from 19% currently, because that's a 6% increase in total in average revenue, that would take you to 25% margins. from that, which is a 30% increase in profit. So that 600 and whatever it was, $670,000 in profit would be an extra 100, 200-ish, 220,000 a year for one move. I don't think it's going to affect your sales.

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I'm Alex Ramozy and I'm an investor and I own Acquisition.com. It's a big portfolio of companies, makes me more money than I'll ever need in the rest of my life. I had a hundred business owners who flew out to our headquarters to scale their companies. And so they asked me questions for an hour.

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I try to do my very best to make the solutions as tactical as humanly possible so that you can, watching from home, immediately use them in your business.

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She said a lot of people are trying to fix process when they really lost the championship in the draft. And so a lot of people are trying to figure out what playbook they should be using with a team that's never going to win. So the big framework that we use for training in general is document, demonstrate, duplicate. And so first, you figure out exactly what the checklist is.

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And I like checklist more than quote SOPs. That's a personal preference. And you want to be able to break it down into behaviors. And I think this is where a lot of training goes wrong. I think most companies aren't very good at training. They basically hire a bunch of people, see who's got the skill, and then fire the rest. But if you do get good at training, it's like, how do you train kindness?

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Well, you say, OK, well, people who are kind, when they come on a phone, they smile, right? And they nod their head when people are listening. And they repeat back what someone says. And they raise their voice when they walk into a room, right? And so if you boil it down to some of the behaviors, then the onus is on us as leaders to be more specific with what we tell our subordinates to do.

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And I think a lot of times, if you're struggling to train some of these key traits with leaders, it's because you're not being specific enough about what you want them to change. And so it's like, you're just not getting it. It's like, well, no one can do anything with that. And so it's like, you have to, and this is where the work comes in from the top down.

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We're like, OK, when you do this, and so the easiest way to bucket this That's a key. There we go. Is Sarah, I need you to stop doing this. I need you to start doing this. And I need you to keep doing this. And so just being more granular about what behavior you want them to stop or what behavior they're not doing that they need to begin or a combination.

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But if you do find yourself in a tragic situation, here's an interesting thing that Layla taught me, which is that, believe it or not, the people that you wrong and then supercompensate to make it super right become your biggest ambassadors.

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And so giving someone the feedback of I need you to do this instead of this has been some of the most effective way that I've been able to change people's behavior. And it's around the specificity. And so if your leaders aren't doing what you want them to do, document, demonstrate, duplicate, this is the step process. Let me show you how I do it. Now you do it in front of me.

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And this is what we're going to have you stop doing. You're going to now do this instead and keep doing the other stuff that's good.

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This is the best explanation for a revenue goal I've ever had. That's great.

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So what's the input? So what's the thing that drives the business?

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You're doing all the acquisition channels?

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What's the greatest percentage of your customers? What channel they come from?

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Okay, now you put that both in organic content, but also like speaking and things like that. Okay, how many speaking things are you doing on like a monthly basis?

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Okay, so I have an idea. So I would ask the question like, I think I might have told this in a short, but a really close friend of mine, he took over Real, which is a publicly traded real estate brokerage. Their primary way of getting more agents is him speaking at real estate events. And so in Q4, he did 66. And in 24 months he took from 200 million to 1.2 billion in revenue.

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He flew back out and he gave such a heartfelt story that it took somebody who was negative and I think, from at least what it sounded like, he was super positive towards us. And I think that that's, in some ways, as terrible as it is, when you do have one of those tragic moments, just see it as an opportunity to flip someone from a hater into an ambassador.

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And so he's doing 270 plus events per year in person. We were having dinner and he was like, no one gets it. He was like, no one understands how much more we do than them. And I'm only telling the story not to make, hopefully it comes across the right way. Because I think you just, and I'm guessing if that event generated business for you,

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Well, yeah. So I'd be like, how do we go from one a year to one a week? And start there. Just target 50 next year. And so he rightly identified that he simply needed to do more. The next natural question I was going to be asking is, what are all the ways to get customers? Which he obviously answered.

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And so then it was like, OK, the next follow-up question I'm thinking is, where do we have the most leverage? So either that's going to be, which thing is taking you the least amount of time that makes you the most amount of money? Or, which one's the thing that costs you the least amount of money that makes you the most amount of money?

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So it's either time leverage, or it's money leverage, or both. Now, the fact that he said, I always make a bunch of money after I speak, I was like, okay, that's a positive indicator. And as soon as he said, I only do one speaking event a year, I was like, I don't need to know anymore.

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If that's a significant amount of revenue, and it's one day, once a year, I see that and think, okay, well we could 50X the business if we just did 50 of those. And so then the constraint then becomes, okay, how do I get booked on these stages? But then that's, you follow the same core four. You do the outreach, you post content, and then you reach out to people to find out.

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And sometimes you have to pay to be on the stages. Sometimes you get a booth and then they'll give you a speaking slot. There's always ways to get on if you need to.

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Yeah, so you're in a very classic kind of PE no man's land. So you have more companies than most funds would ever have and you didn't pursue a synergistic strategy in order to accommodate volume. And so on one extreme you have like Constellation, which you're probably familiar with in Canada.

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It's like they only buy vertically integrated SaaS and they go sub 3 million and they just do 100 deals a year, right, and they just know their playbook. On the other side you have traditional PE that would have a variety of different businesses.

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They buy detail shop and then a supplement company and then a whatever, but they only have 68 companies in a fund and they have a decent holdco team to add value to the company. And so if I were in your position, first thing I would do is probably ask myself who do I want to be when I grow up?

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in terms of what you want the actual day-to-day of the business to be, because you can hit 50 on either of those paths, right? And so it's which of these do I feel more, like, more me? Like, do I feel like I do have a couple of these businesses that you're like, I really understand these ones?

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And if you don't feel that way, then I would probably look at these and go 80-20 and say, okay, what's the 20% that's driving 80% of the enterprise value? And trim. Honestly, I would just go completely passive on those ones or just return equity or do some sort of deal so I could get my attention back and then double down on the ones that you are good at.

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So this gentleman who had a PE firm suffered from a classic issue that I cover in the offers book, which is that he had not committed to the niche. So this is page 38 of the book. And I tell the story where I try not to niche slap people, which is that they need to pick one niche ideally. Now, this gentleman had basically two paths that he could follow.

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Rather than being like, oh, we gotta give these people refunds. It's like, no, we actually get to build our reputation and decide what kind of company we wanna be.

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He could follow a more concentrated path of just a few companies that could be disparate or different in nature, but because of a team of five-ish people, he could probably preside over those, call it six companies that are the better ones of the portfolio, double down on those, inject capital, recruit higher level talent, maybe improve the strategy, and then grow the companies.

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The alternative path was that he just gets really vertical, meaning he tries to get as many companies that are of the same type so that he can see, trying to use fancy words, but synergies between the companies. So that they all together, kind of the sum of the parts is greater than the whole. Because you can centralize some costs, which adds profit to all of them.

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You can have cross-business learning. So if you have 10 HVAC companies started by 10 different founders, all of them are gonna have a few things they do well. So you take the best practices from each of them individually, and then you implement them across all of them. And so you get this cost savings off the bottom line by centralizing costs, and then you distribute out best practices.

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And so that is a typical kind of private equity play, which is a roll-up play, where you can buy 10 things for a million dollars and sell all 10 together for 50 million. And so he was obviously shooting for a $50 million exit. And the crazy thing is, and this is true of entrepreneurship, is there's a lot of ways up the mountain. The bigger the goal is, the fewer the ways up the mountain there are.

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So you want to get to a trillion dollar company? Well, you're going to have to do some crazy new technology that probably doesn't exist in order for you to get there. If you want to have a $50 million exit, you can do that with just about any business by just getting it to a decent amount of size. And yes, that includes chains of brick and mortar. That includes online business.

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You can absolutely do it in any niche, no matter how small it is.

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Your supply constraint.

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Well, I'm glad you did that as the thing you decided to do. So that's fine. You're like, I started another business on e-commerce. Yeah. Yeah. So to start teaching people to...

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Do you have any issues on getting customers?

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Okay. Yeah. So, um, Have you heard my story about a buddy of mine who's in the cleaning business? All right, I'll tell you. So former gym owner, crushed it with gym launch and then decided he started making enough money that he started investing in real estate, as all entrepreneurs do.

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And then after he was crushing in real estate, he was like, you know, I should probably start a cleaning company, because he started doing Airbnbs out of his real estate. He's like, this is costing me a ton of money, I should vertically integrate. And so he started the cleaning company to clean his Airbnbs.

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And he's like, well, now that I have the cleaning company, I might as well start selling other customers. Don't want to leave money on the table, right? And so you can see how this spindles, right? The moral of the story though is that I called him up and he was telling me, he's like, dude, it's crazy. He's like selling cleaning customers. He's like, CAC is like 25 bucks. It's insane.

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It's so easy to get customers. And I was like, oh, you should scale this to the moon. He's like, yeah, you know, it's kind of hard to get English speaking maids who don't take stuff from people and do a good job and show up on time and are willing to work for $15 an hour. And I was like, OK. So the nice thing that you have is you have a supply-constrained business.

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So he was used to fitness, which is typically demand-constrained. So it's hard to get people to want to show up to the gym, right? Not hard to get people to say they want somebody else to clean their house. And so basically the reframe that I gave him is what I'll give you, which is you're not actually in the physical therapy business. You're in the recruiting physical therapists business.

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The whole paradigm that I would have around this is what does the career path look like for the physical therapist so that I can make this really enticing? On top of that, I have to still think through the same, you still have the same core four, right? You've got warm outreach, you've got cold outreach, you've got paid ads, and then you've got, I should know these, I wrote the book.

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Okay, organic content, right? So these are the four things that you can do, right? And then you've got headhunters, right, which is basically recruiters. And you have word of mouth from your existing, oops, word of mouth from your existing staff. And so these are the ways that you can get physical therapists. And so we have to approach this the same way we approach getting customers.

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They are just now the customer. And so maybe running Indeed ads is probably not the way that you're going to get them. But I'll bet you that Outreach will work exceptionally well to get therapists. And I would probably bet that if you had a really good referral incentive, over time that would compound. Now small, not as much. You'll probably need to do this to start.

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As you get bigger though, there's gonna be enough of a base where a few percentage every month of referrals is material. And so let me just put this in math for you so that you can, so this will motivate you to do it. How much do you make in gross profit off of a physical therapist per year on average?

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What's the onboarding look like?

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Okay. So if I told you that I could add $350,000 in growth profit per year to your business, how much would you be willing to pay for that in the first year?

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Right. And so giving someone $500 for referral, not that motivating. If you said, I'll give you 20 grand for a referral, I'll bet you'll get them to move. Most businesses are either supply constrained or demand constrained. Now, if you have a business that's both, then it's like you don't have customers, you don't have employees. That's a tough place to be. Most of the time, it's one or the other.

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What's interesting is that entrepreneurs will often try and solve, basically like not solve the real problem. And this was kind of exactly what she was presenting with. She was like, should I do this other thing or should I change my model altogether? But the crazy thing is just like her model was doing great. She was making good margins. She's doing good revenue out of two locations.

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It's like, why are we gonna break the model? Like the constraint of the business is that you just don't know how to recruit. So let's just solve that problem. because her other path of just raising prices, which to be fair, I'm all in favor of, at some point, it's like you can't raise the prices anymore.

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You're becoming a luxury business, and it's just like you're changing all the dynamics of the business, but her business worked already. And so for me, the lowest risk thing to do is not change the business model, but just figure out the problem of the business and solve it. And for her, the biggest problem was, I can't get people.

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But I don't think she had quantified how much she should be willing to invest in getting more talent. And I think this is wildly underrated. It's like, think about it from a return on profit. I only did it on gross profit, right? It was $350,000 per employee. So I'm like, why would you not pay, I mean, just being real, why would you not pay $50,000? or $100,000, right?

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People are happy to put $100,000 in the stock market and get 10% back and make 10,000, but in their businesses, they're hesitant to give a commission of $10,000 for a $300,000 thing, right? And so if you're like, well, what if that doesn't work out? Then push it out where there's a contingency that you're happy to do it. And if you want, keep raising the price until you get people to prefer.

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Like with enough incentive, you can move the world. And so speaking of this physical therapy brick and mortar business, I did a brick and mortar breakdown of five locations a chiropractor that had done through M&A on how to accelerate the growth of the business. And it's super tactical and it works whether you have a single location or you're even virtual.

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A lot of the tactics will carry over to any business to help it grow. Enjoy.

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There's two there's two kind of like. different angles to attack this. One is the kind of like logistic side, which I'm going to cover first because it's easy and just process stuff. And the other is kind of like the bigger, more amorphous stuff, which is like, how do I make our thing easier and more enjoyable for people to kind of experience?

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On the logistic side, I'm sure that you're on my email list. If we had dinner, you better be on my email list. By the way, have you got anyone here read the Mosey Minute? Anyone? I think it's some of the best stuff I've put out. Anyways, it's really good. I think it's really good. I spend my Sundays on it. Anyways, so BamFam is a way of life. So book a meeting from a meeting, right?

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And so the sales guy should obviously book to the onboarding call, right? Or the whatever. I do think that you probably need to add one onboarding call that's specific to the person, not just have them drop in. How much do you want this to work? Okay, so this is what I would recommend doing. You'll probably want to do something in the neighborhood of four to six sessions that are one-on-one.

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I'm just being like, now if you need to adjust price in order to do it, fine. But it's four to six sessions of one-on-one before they kind of like qualify to go into the kind of the group setting. And so it's like you will personally onboard them so that they have this way better buy-in. They don't feel like they're just like in no man's land and just getting tossed in the middle of a conversation.

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But you kind of like on-ramp them. After you have the onboarding, which should be, and you can cut, I mean, at the very beginning, just do two, you know what I mean, just to start, and then you can kind of see how it goes. From there, you basically want to keep bamfamming

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Can you tell the story of what happened?

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per session, so all the people are showing up, the last five minutes I would say, okay everybody, let's pull up the calendars, when are you guys showing up again? Great, and I would book it with everybody so that I'm keeping people forward. And you have to back that up with probably the reminder sequence that they're going to get because it's actually a scheduled session.

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So they should get automated reminders and they should probably get a manual reach out from the person who's running the session of the people who are supposed to attend. at the very least do the automated one, and that would probably get a huge amount of, that will probably do a lot. And so this is actually, believe it or not, this is an onboarding process for a gym.

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We had an event that was scheduled, had to get moved. The memo got passed down and everyone found out except for one sales guy. And he sold six people into an event that didn't exist. On like a random Monday, we had six people showing up, came from Israel. And he was like, hey, I'm here for the workshop. And I was like, this looks awesome for us. I'm really happy that we're in this situation.

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So if you have large group training, if you take people and just toss them into the group, it's much harder than having kind of a more dedicated onboarding experience. The ideal is you do like six one-on-one sessions with someone, they feel more comfortable in the gym, they understand people, they understand how the vibe, the culture is, and then they kind of graduate into the group sessions.

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And so what happens also is that the group sessions are now on a pedestal. It's like you're not ready for that yet, right? It's like you gotta earn that. And all of a sudden it becomes the prize that they earned and now they got onboard. Does that make sense? Can you see how that would work? Yeah, so this would probably be the... Yeah.

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And the question that you'd ask if you want to give an A-B close for this is you would say, would you rather train, you know, start your thing in a group or one-on-one with me? That's if you're selling. If it's somebody else or one-on-one with John. And a lot of times they're going to be like, well, I'd rather do it with John. And you're like, great. So this is the price for that.

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And then you just go for that sale. If it sounds like, no worries, we can just start you here, not a big deal. And then if you want, if normally you sell six, you can say, you know what? I'm still going to give you one if you do that, because it's going to be way better of an experience for you.

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So then it feels like a gift and doesn't feel like they're like, well, now I don't want the group thing, right? So just give them one or two if you sell the six, for example. Does that make sense? So he presented, obviously, with a low consumption issue, which then probably translated into low renewal and probably high churn. And so the issue that typically precedes that is low consumption.

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And so in order to first get consumption figured out, I like to get attribution in place. And so I don't know what kind of tracking he had, but I think he said like 7% or something like that. And so he had some level of tracking which allowed him to even take action on the problem.

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But most times when I ask more questions, I'd say nine times out of ten the entrepreneur has a problem but doesn't collect any data that precedes the problem. And so then the first step is to just go collect the data. And once you have the data, typically the solutions become obvious.

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And so a lot of time is wasted in this space of like trying to ideate and figure out this hypothetical solution without any data. And you're like, I don't know, is it this or this or this that we could do? It's like, well, you have no data, so you have no idea. And so you just keep circling. And so when you don't know what to do, get data first, and then it makes the path easy.

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Amazing.

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Why do you want to do B2B? So this entrepreneur is obviously doing well. He's doing multiple millions of dollars a year. And he's got something that says decent margins. And he said in order to scale, he should do B2B. But he was in a consumer-based market. And consumer markets are huge. There's way more consumers than there are businesses.

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So he had a proven product with a proven acquisition channel and was profitable and was growing. And he was spending $3,000 or $5,000 a day. I was like, this is nothing in terms of the amount of scale that's available for the product that he had.

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And so when he said he wanted to do this other new thing, I had an inkling that it was for no actual reason besides he probably encountered some sort of difficulty that he assumed the new path wouldn't have. And so this is just a classic woman in the red dress. Why can't you just do more of what you're currently doing?

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I'll tell you what my initial reaction is, which you're already probably guessing, which is like, I will exhaust more before I look at anything new. And so someone would have to make a very strong argument for me why I can't do more of what I'm already doing. So if I were to like buy your company tomorrow, I'd be like, yeah, don't worry about that.

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Just what are you, what are you currently doing to get, to get customers?

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Okay. So what are you spending a day?

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Right. I'd be like, okay, so how do we get to a hundred thousand a day and spend? Yeah. Like what stops us from getting to 100,000 a day? Okay. And the answer to that question is the constraint. So what stops you from getting, so let's say 10,000 a day. So it's a triple. So like what stops you from doing that?

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We've always tried to come from the perspective of when you have something that gets messed up, you can't just refund somebody, because they're still net negative. He still flew from Israel. If I'd said, hey, my bad, here's the money back, he'd still be like, screw this guy. And so we had the team spend the day with the six, and then we took them out to dinner.

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But those costs are fixed, because you'd have that cost of the B2B. Right. OK. So what stops us? The problems that exist in the B2C scenario also exist in the B2B scenario. And so he's like, hey, I've encountered this problem I don't know how to solve, and so my way of solving it is to not solve it and start something else that will create even more problems in my business.

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And so when you say it like that, it sounds ridiculous. But this is a decision-making process that, or rather a mistake-making process that a lot of people follow. Fundamentally, you want to ask, why can't we do more? And the answer to that question is the constraint. And the only, in my opinion, proper constraint for deciding to go after a new avatar is that you run out of the existing avatar.

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So think about this. Have you ever done B2B, like enterprise? OK, so the thing is that they are higher leverage, but you're also going to have like 10, 15 touch points. And so the number of deals per guy is going to go down a lot. There's also going to be multiple stakeholders that you have to get involved on their side and multiple stakeholders that you're going to introduce on your side.

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So just in general for B2B, like enterprise level sales, You increase conversion rate and stick of a customer by increasing the number of people that are involved in the transaction on both sides. So basically you want to have as many of these ties as you can to do enterprise sales. The lowest risk adjusted return move in any business is to do more of what's already working.

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and answer the question, why can't we do more? And so if you have a sales efficiency issue, then solve the sales efficiency issue, because it's holding you back from tripling. The things that you brought up are all fixed problems, as in they're problems on both paths.

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So to forego the path you're currently on for a new path that's completely unproven with the same problems that you know already exist is a much higher risk move than just saying, yeah, why don't we just get to $30 million?

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We're doing everything. Well, not even that you're doing everything. That you have exhausted the market of Cs. Okay.

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So if you want diversity, then I'd still, I would rather you go diversity of channel rather than changing customers. The riskiest thing you can do, it's a new business, basically. You have to have a new offering, you have a new acquisition, like everything's new. And so I would rather, if you have the itch for new, just get a second channel. But I don't think you're even close to that.

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You're at 3,000 to 5,000 a day. I think you can totally spend 50, 100,000 a day for sure, just on that. What will likely be the next thing that gets in your way is that your ROAS is gonna drop. And so typically you're gonna need to have Option one, better lead magnet. Option two, better creative. Option three, superior CRO, conversion rate optimization, just on the pages.

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And I bring that up just because it was a great example of something that took me too long to learn, was that you can't just make it right. You have to make it more than right in order to actually make it right. That was obviously a super unfortunate situation. And every business, if you have humans, you make mistakes. And so that was a mistake that we had made.

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Option four, improved sales efficiency. Option five, all four. And then that allows you to scale. And fundamentally, the difference between companies that can spend $100,000 a day and $5,000 a day profitably is how good they are. It's literally just making all of those pieces better. And that takes time, because you're going to change one of those at a time.

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And this is why business takes time to grow.

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Congrats.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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So how do you train leaders? So this is a good question that I'm going to chunk up one level, because I think it'll be valuable in general, which is that fundamentally, when we're hiring anyone, we look for the smallest skill deficiency possible. Fundamentally, you've got traits, as people call them, and then you've got skills. Now, based on Alex's worldview, this is not a thing. It's just that.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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A trait is just a series of skills, right? When you hire a CFO, for example, you're gonna try and hire for the smallest skill deficiency. And so if the CFO is a dick, for example, but they're exceptional at all these other things, then you're like, maybe I can teach them to be kind in these ways. Now that'd be a big, that's a lot of skills to just have some like go from not kind to kind, right?

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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A lot of sub-skills underneath of that. And so if it's two days to train sales and two months to train kindness, take this person who's kind and then train them on sales.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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Later on, sometimes you have people who you're like, okay, this person's a little different than our vibe, they're not going to be oil and water, but they have this massive skill set that we can use and this tiny deficiency that is around this stuff that we can be transparent with them up front that they need to fix.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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I've seen this happen again and again and again where a manager or a leader talks to somebody else and says, hey, and then uses amorphous terminology that's very hard to pin down to basically say, change your behavior. And they're like, but how? And they're like, change it. And you're like, OK, I don't know what that means.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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And so the reason I'm so obsessive about operationalizing terms like what is patience, what is courage, what is humility, what do these terms actually mean in terms of behaviors? Like patience is figuring out something to do in the meantime. Like if you do figure out something to do in the meantime, you're by default being patient.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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And so it's telling someone what they actually have to do, not who they have to be. Stop being lazy is very hard for someone to solve. It's like I keep telling her to not be lazy and she just keeps being lazy. But you have to break the term down into what behaviors you describe as lazy. Because when you talk to your partner or you talk to somebody else, you say, hey, Sarah's kind of lazy.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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Have you noticed that? there are things that she did that you observe that you ascribe the label lazy to. And so you have to think more deeply, like what did they do to deserve the title? And it might be like they don't respond quickly to Slack messages.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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These are things that if you said, hey Susan, instead of insulting her and saying, hey, you're lazy, instead we'd say, hey, you don't respond to Slack messages quickly enough. You aren't responding after hours and our hours keep going until 9 p.m. and you're not responding until after five. And so, for this week, I want you to focus just on responding to Slack messages.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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I remember hearing the stat from Disney, which is that it takes 37 magical moments to overcome one tragic moment. And so the moral of that statistic is not let's do 37 magic moments, it's avoid the tragic moments if at all possible.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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So let's turn on notifications, let's turn it on both of your phones, and turn it on your computer so that you can see it. Is there anything else that's gonna get in the way of you responding quickly? Now, when we ask that question, we might find out that Sarah's overwhelmed because she's doing somebody else's job who we laid off, and we haven't backfilled.

The Game with Alex Hormozi

Answering Your Top Business Questions for 1 Hour | Ep 851

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It's like, okay, well now we have context. Until we get to there, we can't appropriately measure Sarah's inherent value or traits, rather behaviors, to give her a label. So to your question, how do you train leaders? I think that attracting good leaders, so one of it's recruiting, right? So Chick-fil-A's head of people said this.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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So this is a throwback episode of the things that limit entrepreneurs within the business. And so if you think of each of these four, you might check off one or more of the boxes. But big picture, it's you're not growing as fast as you want because you don't know that something is possible, but it is.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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I would actually fly out, get someone's gym to full capacity and go to the next gym. And I did that for almost two years. We did 30 plus turnarounds of gyms, right? Do it, fill the gym up in less than 30 days, collect all the cash and move on. And it was only when I talked to a mentor of mine that he said, Alex, you're too good at this stuff. You need to be showing other people how to do it.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And he introduced me to the concept of licensing. I didn't know that that was possible. So for me, my deficiency was number one. It was an ignorance around what is possible in the universe. And so that's the same degree. It's the biggest threat most entrepreneurs have is they don't even know what they can do. And that's because, and this is the biggest handicap

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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for poor people or people who were born in lower socioeconomic status or their parents didn't make a lot of money. So if that's you, listen up. The way that you do that is by getting around people who make more money and watching and consuming the content of people who are wealthier than you and wealthier than your parents and wealthier than your parents have ever been.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And ideally as wealthy as you wanna become or beyond that. Because they will tell you the things that are possible that you didn't know were. Like you probably didn't know that insurance isn't a taxable thing. Huh? You didn't know that was possible. You didn't know that the guy who sells your mortgage makes $5,000 to $20,000 on the mortgage itself. Really? Just for selling an interest rate?

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Number two is that you might know that, but you don't know how to do something in order to make it possible. Number three is you don't know how to get someone else to do that thing. And then number four is you don't know how to get them themselves to do it. And so as in you yourself. And so each of these situations can be a limiter and you can have more than one.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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You bet they do. You didn't know that on average, 35% of the average American income goes towards interest expenses to banks. So people don't know, why do banks own the world? Because they have a rev share on everyone's paycheck of 35%. Because when they get you to take a loan out for a car or a house or a boat or whatever, Most of what you're paying is not principal, but interest.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And interest, just a fancy word for fee. And you know what it costs them to actually give you the money? One click of a button. And all of that is margin. So even though it looks like 1% or 2% or 3%, the actual gross margin on it is very high. And so as I'm saying these things, you might be like, wow, I didn't know that was possible.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And that is the ignorance debt that all entrepreneurs have to pay down, especially if you were born poor. The second thing is they don't know how to do something. So these are the tactical skills that people don't understand. So they don't know how to build a website. They don't know how to integrate a payment processor into their site. They don't know how to set up an entity.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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They don't know how to send an email to a list. They don't know how to do many different things. They don't know how to build a product. They don't know how to source things from China. They don't know how to set up things for drop shipping. They don't know how to click buttons to run a Facebook ad. They don't know how to do something.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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The good news is that stuff is actually the easiest thing to solve. And I'll tell you the most technical thing that I learned and how I learned it. So when I was transitioning to my turnaround business, I realized I needed to learn more about ads. I'd done a workshop for two days and learned the basics of running Facebook ads in a local market, but I knew I needed to level up my skill.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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That had been a few years earlier and I hadn't learned anything since. And so I talked to a couple of friends and said, hey, do you know anybody who's really good at Facebook ads? Mind you, this is six years ago or seven years ago, something like that. And they said, well, I've got these agencies that did a pretty good job. Maybe you could talk to them. So talk to the agency owners.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And they're like, I don't do, you know, fee for service. Like I'm, I'm only an agency and that's it. You can become a client or not. So, well, I don't really want you to run my ads. I want you to teach me how to run ads. And they were like, I don't do that. I said, well, it's America. Everything's for sale. So just name a number. And finally, one guy said, I'll do it for seven 50 an hour.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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I was like $750 an hour. And he was like, yeah, I was like, all right, just, you know, just making sure. And so I said, sure, sign me up. I said, every week I'll meet you for an hour and you can show me how to do that. Now, if you're doing the math here, that was $3,000 a month. So like a pretty penny, but guess what? Within eight weeks, I knew everything that he was going to do on my ad account.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so the terms that I had were, You can't control the mouse. I control the mouse. You tell me where to click and why you're clicking it that way. And then very quickly, I learned how he was doing what he was doing in about four weeks. And the next four weeks I was like, okay, so this is what I'm doing. This is why I'm doing it. Does that make sense? He said, yes.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And then eventually I was like, I don't need you anymore. And so all in all, it cost me about $6,000 to learn how to run Facebook ads just by paying someone for one-on-one tutoring. And I have done this over and over and over again to acquire skills in my life. Now, mind you, again, YouTube didn't really exist that much then, or like

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Not nearly to the extent that is now, where you can learn just about anything by looking online for free. But if you still need help, just offering to pay people way above market in order to have them stand over your shoulder and show you how to do something is one of the easiest and fastest ways that I've learned any skill in my life.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And in this podcast, I break down what to do about it. At acquisition.com, my private equity firm, we talk to 600 entrepreneurs doing over a million dollars a year every single month. And 300 of them are over $3 million a year. And 100 of them are over $10 million a year. And so we talk to a lot of entrepreneurs every day. And over time, we've developed kind of a rubric or framework

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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So if you don't know how to do something, phrase what you don't know how to do as a deficit of, I don't know how to insert problem. And then that's what you Google. And that's what you can try and find a business owner who knows how to do that thing and sells it, pay them two times or three times they would normally make to show you and transfer the skill.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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The third type, and I've done these in reverse order of difficulty. The third type of difficulty is they don't know how to get other people to do stuff, all right? So they don't know how to get other people to give them money. They don't know how to get other people to work for them. They don't know how to get other people to continue to work hard on their behalf, right?

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so we have different words for that. There's recruiting, there's sales, there's leadership, there's management. All of these words are fundamentally about one thing, which is getting other people to do something. And so...

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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If you think about that as a meta skill, if you know how to get people to do stuff, you could actually only learn that one skill and get everything else in your life done for you.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Because if you could get somebody else to figure out how to do the website and someone else to figure out how to do the LLC and someone figure out how to do your finances and someone else to figure out how to market and someone else to figure out how to do the product and get people who are experts at all that stuff, because you had the meta skill of being able to lead and cast a vision to get people to want to work, then you would have the highest leverage of the ones that we just talked about.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so when we're looking at an entrepreneur, we think to ourselves, will this person be able to attract high level talent? Will this person be able to manage an enterprise that continues to grow with higher and higher level skillset people? And many times you can see the cap of the entrepreneur by their character traits, right?

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And this character trait is an amorphous word, but it's really just personal and interpersonal skills, all right? And I'll get to the personal skills in a second. But interpersonal skills, which is how to get other people to do stuff, oftentimes become the limiter. And so usually we have to find operators to compliment the entrepreneur to help continue to scale the business.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Now, they might not be able to get that type of talent, which is why we have a private equity firm so we can attract talent that otherwise wouldn't be available to the types of businesses that we work with. So many entrepreneurs who've done $100 million exit don't want to come work at something that's doing $10 million a year.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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But if we cast the vision that we've done many exits like this, then they'll be far more likely to do it. Now that's where we transfer our skill of getting people to do things to the entrepreneur or on their behalf. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so the only ask that I can ever have of you guys is that you help me spread the word so we can have more entrepreneurs, make more money, feed their families, make better products, and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world for someone else. The final deficiency is getting themselves to do something. And this is both the hardest and the ongoing one that goes for the rest of your life. Because in the beginning, you can't get yourself to do anything.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And then you get yourself to do something. But over time, the things that you have to get yourself to do is over and over again, gets harder and harder to resist your impulse. And so if you've ever heard of character traits like honesty or loyalty or patience or focus, those are just fancy words for a bucket of activities or behaviors that exhibit or manifest themselves circumstance or condition.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so if you have a loyal person, you know that they are loyal if when presented the opportunity to betray you, they don't do it.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so if you want to practice loyalty or develop the trait of loyalty, which is just a skill like everything else which can be learned, then you go into environments or you wait for the environment that presents itself with the opportunity to prove that you have the skill and then you exhibit it. You show it.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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for how we analyze the skill of an entrepreneur. And so what I'm going to do today is break down how you can think through yourself as an entrepreneur and the four elements that we look at to say how good of an entrepreneur this person is and how much we're willing to bet on the fact that they're going to be successful.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And what happens is if you do that over and over and over again, eventually you develop a reputation as the type of person who does this type of thing.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so when you're looking at yourself as the entrepreneur and you have these four categories, the hardest one to determine that you're lacking is that you don't believe something is possible because the hardest thing to know is what you don't know. That's an unknown unknown, right? The rest of these, for the most part, are known unknowns.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so these are the ones that are mostly under our control. The unknown unknowns are to a degree under our control because we can go seek out other people who are further ahead of us to have them break our beliefs about what's possible.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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But the rest of these are under your control in that you go find the skill tactically, you go figure out how to persuade the people tactically, or you figure out how to get to persuade yourself tactically to do things the way you want them to be done. And that's how you can develop humility, develop focus, develop loyalty, develop honesty. All of those things are skills.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And as soon as you make them that way, they become things that you can learn and develop. Otherwise, it's like, I wasn't born that way. This is just how I am. And that's how if I hear a founder talking like that, I know that they will be significantly less coachable. They will not be able to develop that skill set, which I know automatically will cap their business.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so if you can look at yourself as the person or the asset that runs the bigger asset, which is your business, you can figure out, do I have a problem of not knowing what to do or how to do it? Do I not know how to get other people to do the stuff? Or do I continue to exhibit erratic behavior? Am I unfocused? Am I undisciplined?

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And then you define the circumstance where you exhibit the thing you don't like. On Saturday mornings when I should be working, I don't. So then you say, okay, if I worked on Saturday mornings, then I would tell myself that I had exhibited discipline that day. If you string enough of those days in a row, you are a disciplined person.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so it's really about stacking up that proof for yourself that you have the trait from what you've done rather than claiming some amorphous thing. Because that breaks this amorphous idea of focus down into what can I do today to develop it? And that is what everyone else will notice.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And that's how you can attract better talent, who can do better things, who can accomplish things that are impossible. And the craziest thing is that the most expensive thing that's costing you the most money in your business right now is ignorance.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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It's ignorance around four things, but before I tell you what they are, the reason that it's costing you so much money is that right now, not knowing how to make a billion dollars a year costs you a billion dollars a year, which is why the biggest debt you have to pay down as fast as possible is what you're paying to the universe, what you're paying to other people, what you're paying to yourself, to not know how.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And if you're the person who's going to be successful for yourself, then it's about how do I increase the likelihood that I'm successful by looking through these four frameworks. So every entrepreneur isn't successful because they don't know how to do one of four things. They either don't know that something is possible altogether. Number two, they don't know how to do something.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Which is why knowledge is the number one asset that you have in your business. Because what happens is your business can disappear and a billionaire can make it again because they have the knowledge. They know how to do all of the things.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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If the government comes and takes all of your assets, which happened to my family in the revolution of Iran, the only thing they were able to take with them was their knowledge. They were to come to the United States and rebuild again. And within two generations, we had the same wealth as we did when we were in Iran through knowledge.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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If you don't pass knowledge to the next generation, then they will eventually, statistically, squander all of the wealth. Because what wasn't passed was the knowledge to keep the asset rather than the asset itself. So there are two ways to figure out what's possible. The hard way and the easy way.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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The easy way is to find people who are way ahead of you, talk to as many of them as you possibly can and cross collaborate the things that they are saying. Meaning you listen to this guy, you listen to this guy, look at the things they have in common and say, this is the thing that the most people think is true. And so that has the highest likelihood of being true.

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Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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If you talk to 20 people, you may get 20 pieces of advice, but there may be threads that all of them share and there will be fewer of those, but those few threads are the things that you can count on. That's the easy way to figure out what's possible.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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The hard way to figure out what's possible is using Aristotelian thinking, which is called first principles thinking, which is basically you break it down to most foundational unit of physics and think, why isn't this possible? And if it is possible, then it is believable. That being said, many people have a hard time with first principles thinking.

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Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And so in my opinion, for most people, go to other people who are further ahead than you want to be and further ahead than all the people you are. And if you don't have access to them, get that indirect access, consume their content, read their stuff. Like that is the education that will break your beliefs about what you can do in this universe.

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Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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The beliefs tell you what direction to take your action in. Once you have a belief, it now orients your direction into a higher leverage opportunity. A belief will change your action because it will orient it rather than changing what you necessarily do. So if you have the correct belief, then you'll be headed in the highest leverage opportunity boat or direction in your career.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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And then the other three frameworks will apply to that with more outcome. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

The Game with Alex Hormozi

Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Throwback: 4 Critical Traits of An Entrepreneur | Ep 868

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Three, they don't know how to get other people to do something. And four, they don't know how to get themselves to do something. And so we'll break down each one of these. When I had my chain of brick and mortar gyms and I was transitioning to flying across the country and helping other people do gym turnarounds. So I had six gyms of my own. And then I started doing that as a service.

The Game with Alex Hormozi

How To Get So Rich You Realize Money Isn't The Point | Ep 822

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When I was 27, I had just over a million dollars in my bank account in cash. By the time I was 29, I had over 20. By the time I was 31, it was more than that. Here's how to get so rich you realize money was never the point. But first, you have to get rich. There's three strategies, and the first one is building a brand.

The Game with Alex Hormozi

How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And you spin that wheel as many times as you can. Where this gets important is you have to understand the inputs into this system. And you have to break it down to activities. And I can't explain to you how incredibly powerful this is to both understand this for yourself and explain it to your team and be able to revisit it on a regular basis because the inputs will change.

The Game with Alex Hormozi

How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And so, for example, if I were to say, hey, Alex, what are the inputs in the Acquisition.com money-making system? There's many things that occur in Acquisition.com, but you as the founder or the entrepreneur, you're basically pushing the first domino over, and then there's many subsequent activities that happen after.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And sometimes there's two or three dominoes that are occurring that you're pushing. But what happens is when we describe what we do, we use lots of amorphous words that have very little connection to what we actually do. And so for example, my inputs for Acquisition.com. So I script stuff, okay, cool. I record, that's something that I do. I check in on status of stuff.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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I review things and give thumbs up or feedback. I review deal metrics for deals that we're considering doing in ACQ.com or ACQ Ventures, which is our venture arm we just started. I present to the team when we have kind of like new direction that we're taking.

The Game with Alex Hormozi

How To Get So Rich You Realize Money Isn't The Point | Ep 822

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When we look at this, I also review Portco metrics and decide where the money goes, both within acquisition.com and then within the portfolio companies. And when I say money, I say generically like the resources that we have. So we're gonna allocate this person here, we're gonna allocate these resources here. And so this is like what it actually is, and this is today.

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And so how do you measure this in dollars and cents? And so there's basically three things that brand translates to in terms of economics for a business. And so the first is conversion rate. Now, what does that mean? So conversion rate is the percentage of people who, when presented with your offer, choose to buy it. And so let's say that you have a bad brand or no brand at all.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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Now these things shuffle over time, but you can notice here that these are me describing actual activities, right? So what you need to do is now if I'm gonna look at this, there's going to be some things that feed this machine, and then there are gonna be some things that are me actually doing the stuff in the machine.

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Big picture, we've got these feeders that feed into this machine, and then we kind of have what I would consider, these are all the things of delivery. These are how the actual machine works and makes money. The reason that defining the inputs is so important is that many times, when you look at what you actually do,

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you aren't doing things that drive an increase in number of customers or an increase in LTV. If you think about this, like this is the LTV, this is the number of customers, and you can basically drive growth in only those two ways. And so you have to dial in what is actually the thing that makes money here.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And whenever you have a deadline, for example, all of a sudden your ability to focus gets really clear. And I think the reason for that is because you have no time to waste. And so most people spend like 90% of their time on stuff that doesn't actually drive the needle. And then only 10% of the stuff, when they actually need to make money, that does it.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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But what would happen if you actually spent all of your time on the inputs that mattered most? For example, I write two emails a week for the Mozi Minute, which is what I send to the whole list, which is kind of like very tactical business concepts. It's very high leverage for me.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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It takes me about an hour-ish per email that I send, and that is something that drives awareness, it drives business, it drives value, it drives portfolio companies, it drives everything, right? And so that's an input, right? And so it's betting very clear on most of the things that people do that are just not that.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And so whenever you scale an input, or like the inputs that you have in terms of your money-making system, or the inputs of what you do in order to feed that system, you essentially have three options for scaling. Option number one is you can automate. So you can get a machine to do it. Now, some things are very difficult to automate. AIs can automate a lot.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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Now, sometime in the future, there will be an AI version of me that can probably make content better than I can. We'll cross that bridge when we get there. But that would be something that could happen. The second is that you get other people. So that means that I'm having somebody else then make this content for me. Now, I want to be very clear. There's degrees here.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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A lot of people like to think in binaries. It's like, okay, well, can I get somebody else to script this stuff? Can I get someone else to check in? Can I get someone else to record? review and give feedback, so then the only thing that I would have to do is record. Yes, of course I could.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And so the idea is you don't necessarily need to replace every single part of what you do, but you can just basically chunk down the inputs into, okay, this one someone else can handle, this one someone else can handle. And then the final component of this is that you can do one to many. Now, what does that mean?

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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if this is already a very leveraged acquisition system, right, because it's me, one to many, you're watching this, it takes me one time to say it, but many people can see it.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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But if you had a one-on-one method of reaching out to people, say Cold Outbound, as your way of getting people in, or maybe you get affiliates one-on-one, then you're either going to have to automate that way of getting affiliates one-on-one,

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you're gonna have to get a team of people to do it, or you're gonna have to switch to a mechanism that allows you to continue to do it, but do it to many people at once. And so I think through this whenever I have to kind of scale any kind of delivery or marketing is, is this something that I can get other people to do? And this also works on the back end, right here.

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So it's like, okay, can I get other people to review portfolio metrics? Can I get other people to decide where the allocation is? Again, these things are very high leverage for me, meaning I don't have to put a lot to get a lot from it. And so it's worth me developing that skill set even deeper rather than potentially delegating it. But long term, in my opinion, every business can be delegated.

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It's just that you have to find stars and you have to find people who are better than you. And oftentimes that's tough. Could Steve Jobs delegate being Steve Jobs? Well, I don't know. I mean, they have yet to really make anything as good as what he made. If Elon died, would all of the companies do as well without him? I don't know.

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And so that's where it's like, OK, he has to automate or get other people, as many people as he can, to do all the other stuff. And the stuff that matters most to him, like for example, he says, all my companies have zero marketing. except for the fact that they have the most popular man in history being the person who's running them.

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So that would mean that a bad brand would be that you have a past history. People trust you to do bad stuff, right? So you have lower than neutral. If you have no brand, then they would act as though you are some, basically, it would be based on their experience with other businesses that look like yours.

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And when I say popular, I just mean it from an absolute perspective. People know who he is. And that when he makes a tweet, a gazillion people see it. And so we probably could add this up and see what his total impressions are per month. both directly on X and then also in terms of shared volume of the amount of pages that share his interviews and the Rogan stuff and YouTube.

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And so like, there's no marketing department because they have a one man marketing department that in and of itself is worth, I mean, billions of dollars. I see everybody as an individual contributor at the most basic level. Like everyone does things and they're just either directly tied to some sort of outcome that gets customers or makes them worth more or they're not, right?

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And so I would encourage you, this is me talking specifically to business owners right now. There's three questions that will frighten every person that you ask them to. Number one, what do you do? And they will use amorphous terms and you're like, no, no, no, not analyze, what do you do? What does that mean?

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And so they can define it in a way that like, okay, you look at numbers on an Excel sheet and then you see if some are above a certain threshold or below it. Okay, got it, so that's what you do. Now, do you know what I do or what we do as a business? Now a lot of times people can't even explain it back to you and they work for you.

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So if they certainly can't explain it to you, they're definitely not doing something necessarily that's going to help it. And then here's the third question. How does what you do help what we do? And it ties what they do to the outputs of the business. And so fundamentally, so whenever Layla and I get overwhelmed, right? Because it happens all the time.

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You basically clear your plate and then you add more stuff to your plate and then you're like, oh man, I'm overwhelmed. Then you clear your plate again. And that's, I honestly, I think a lot of that is just like entrepreneurship. And when we look at our plate, what we do is I look at every single activity that I'm doing on a weekly basis and I say, how does that tie to how we make money?

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And it's trying to understand what are the inputs that I'm pushing into our money making system? And are there things on here that are either too indirect or just not actually driving anything at all? And so, for example, I took over a department recently and I canceled all meetings that were recurring where people were just sharing data.

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And the main reason was that that that data was not being used to change behavior. And so either the data is not correct or useful or we need to learn how to do something about that data.

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and so this is also why quote good branding even if you don't have a history of reinforcement can still be important because if you walk talk and quack like somebody who is a scam artist you will have people treat you like one it's not just your experience, but their experience with people like you. Fundamentally, this is what racism is about.

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And so if we spend all this time going over data and do nothing about it, then that time is completely wasted, both in the collection, storing and analysis of data, but then also the reviewing it with a team of people. And so unless something changes what we do, we don't need to track it. And so this gets you much more targeted on the few things that matter.

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And so a friend of mine has, Sharan Srivatsa, he's a public CEO, he and I talked about this at length, but he basically posits that for every company, it's one tenth of the employees that are actually creating the majority of the economics in the business. Like there's a core team that really is the one that moves the whole machine.

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and a lot of the rest of the people are there more or less for the ride. The idea is, what is it that those 10 people do? What are their inputs that drive this machine? And I think that being able to identify what those activities are, not the general amorphous words, but what the actual activities are, like is it writing an email? Is it writing ad copy? Is it filming?

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Is it filming content or filming ads? Is it reaching out to a certain amount of people? Is it reaching out to customers? Is it hopping on a certain number of sales calls? All of these are activities that will drive revenue in the business. You basically look at a lot of other stuff that many people fill their counters with, and the majority of it doesn't make money.

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And if the point of a business is to generate a profit, through providing value to a marketplace outsize of the cost of delivering that value, then you want to put as much into the value creation as possible, as little into the cost basis as possible, and do it as many times as you can. And everything that's not those things ultimately detracts from the efficiency of the system.

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I'll give you three major money sucks that people do that are not this. So number one is they will work on projects that are not going to drive the main objectives. So it's like they want to reorganize Asana in some way, right? Or whatever your project management thing is. Okay, we have this massive reorganization, fine. Okay, great, now it's taken up a lot of time.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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Or you redo your entire website, which takes you a ton of time. But is it really the constraint of the business? Is it the thing that's going to generate money? Or should you just split test your headlines on your landing page? There are other things that will drive more customers. And so basically, I can give you a list of a thousand things that you could do to grow a business.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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The question is, which one of them will grow it the most? Most people spend time on activities that they enjoy, that drive very little business to the business, but they can mentally masturbate to the idea that they're being productive because it's business-ish, right? It's related to business. And so it's almost like they're doing arts and crafts and hobbies while they're doing business.

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But those aren't the main drivers. The second thing is that they spend too much time on meetings. And this is a really common one, which is that people are social. People like to talk to each other. And so if they get an excuse to do it, they will do it. And one of the most frightening things in the entire world, which I recommend you do, is actually look at how much everyone makes per hour.

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So look at their annual pay divided by 2,000. And then look at a meeting when you have 10 people on it. And then all of a sudden you're like, I paid $500 for this meeting. And if you went out to dinner and took everybody to dinner and then you paid $500 for dinner, people are like, oh my God, thank you so much. It's so generous of you. It's like every meeting is that.

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And so unless you can show how this is going to generate us $500 plus, now mind you, you need to get a return on that. So you probably need to get something like four or five times that amount of money from that meeting. Then you probably just shouldn't have it. And where this gets really, really nasty is once your business gets big enough, employees in general start meeting with each other.

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And so it's like you're not even involved and these losses are occurring on a regular basis. Sometimes people call it time theft. I don't think the intention's there, but I do think that the end result is still the same, which is that Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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But people prejudge people because that's how we go through life. If we had to start at zero for every single person we met, we would use up all of the cognitive load that we have, and consumers, like all humans, try to use shorthand. We want to learn based on the things, put a label on it, put it in a bucket, and not think about it as fast as possible.

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you. The business becomes less efficient and bears more cost to deliver the same product.

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The third big hole that I see a lot of times is people who spend an inordinate amount of time on data that doesn't change what they do. So I'll give you an example. I could track what the temperature is of every room that I walk into. I could track the amount of words that I say on a meeting. I could track, I mean, you could track anything, right?

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Some people, especially small business owners, and sometimes even on your team, will just love to show you all these Excel sheets of all this data that they've tracked. It takes a huge amount of time, and they get all these percentages and all these ratios, and then you just have to ask the question, why should I care about this? How does this change what we do?

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So I remember this point when I had launched this new product called ALN at the time, which is supposed to be automated lead nurture. We had a big distribution base of gyms that use our model.

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And I ask this question over and over and over again because so many people love to be like, oh no, we're data-driven. It's like, are you data-driven or are you data-distracted? Basically, and this is the limits test. This is the very easy limits test. If this number goes up, does it change what we do? If this number goes down, does it change what we do?

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If this number changing doesn't change what we do, we don't need to track it. When you ask that question over and over again, because people are like, well, we want to keep an eye on that. I'm like, why? Let's take it to the natural extreme. Why?

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The world is increasingly quantified and being able to, with automation and software and wearables, like there's so much technology out there that wants to quantify everything because they know that people have an obsession with data. But not all data is useful. And so most businesses, you can figure out the metrics on the back of a napkin and figure out if you like it or not.

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That back of napkin way of running a business, in my opinion, is an exercise in thought discipline of the entrepreneur. If you know the clear inputs that drive the business, which for you might just be I have to script, record, and edit content. It could be I have to script, record, and edit ads.

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It could be I have to do a certain amount of outreach attempts or manage a team to hold them accountable to doing these outreach attempts. There are a certain number of things that actually drive the business. If the data that you collect does not change what you do with your inputs, then you don't need to track it.

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And so you can reverse engineer this to figuring out first, what are the inputs that actually drive the output? And then secondarily, what data would change how I do these inputs? If you find out that the CTR dropped on your ads, then you would probably change your hooks, you'd change your targeting. That would change what you do, so it makes sense to track that.

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And so from a conversion rate perspective, a good brand means that, let's say, neutral, would be, let's say you close 20% of people who you get on the phone with at a specific price point. At negative, which actually, I'll just put a zero here, negative one, and then positive, right, maybe, and the thing here is that this could go as high as you want.

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Like number of tags on a social platform. You could track it. Let's say it goes up in general over a month. What are you gonna do? Now you might say, well, I'll make more of the content I made that month. But if you made a variety of different pieces of content, would you then have to track it daily and see if there was a spike? Okay, I got more tags in this. Okay, okay, wait, stay with me.

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How does getting more tags translate into us making more money? Because I can show you a number of people who get lots of tags and lots of likes and lots of views that don't make more money. And so again, it's not only like, maybe it tracks to what we would do, but does that track to us making more money? And I'll give you a three-stepper that I had recently.

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I was talking to a specific manager of one of our platforms. I said, what do you do every day? And so we listed out all the things he did. And then I said, okay, how do those things that you do every day grow this platform? And that was a very different and probably more difficult conversation. It was like, okay, now, let's say that all these things that you do does grow the platform.

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How does growing this platform grow the business? And so this is what you need to walk through with your own self, right, of what do I do, and what does that affect, and does that thing that it affects affect the business? Sometimes it's direct, sometimes it's indirect.

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And so you have to basically walk through as many of those steps as you need to, and the more steps you have to jump through, to be clear, the more indirect it will be, and the higher risk you have that the work is wasted.

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If you want to get so rich that you question the meaning of making money, then the first thing you can do is make sure that all of the work that you do makes you more money and stop spending time on things that make you nothing, although they are fun distractions.

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Which leads me to the third way of getting so rich that you realize that making money was never the point, which is get other people to advertise for you. I remember the first time I ever had someone else sell for me. So I had to go home for Christmas. This was the first year of owning my gym. And this is while I was still going home for the holidays.

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And while I remember I was driving home and I got a call and I had hired this sales gal and I had taught her my script and we were still running ads even though I wasn't the one selling. And I was the one who had done every single sale since the beginning of the business. And she sent me a text that was like, oh, I went two for four.

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And I remember I like I got so emotional in the car while I was driving that I felt like I almost had to like pull over because I like I got choked up because I was like, oh, my God, like this could actually work without me. And it was like the first time where I realized that like this could actually be a thing. Like it's not just like Alex working really hard and I have to make the money.

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If no one else makes the money, then like like it transitioned. It was the first like leading indicator of transitioning from a job to an asset. Once I had that loop, I got really addicted to it. I was like, man, I wonder if there are people who could train without me training. I wonder if there are people who like, and I just looked at all the things that I did.

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And that obsession has not really ended since then. You have to get other people to advertise for you in order to have more leverage, okay? So leverage is about getting more for what you put in. And fundamentally, like in my opinion, all of entrepreneurship is mastering leverage. It's why it's core to our logo for acquisition.com. This is a fulcrum.

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Because all of us have the same inputs at the base level, which is time. And so the people who get the most for their time are the ones who get the most money for their time by doing activities that generate most revenue per minute or second, right? Imagine I had to just get customers. Well, at some point, I would max out the amount of hours per day that I could spend doing it.

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Like, if you have an unbelievable reputation, like plus, plus, plus, maybe you close 80%. And what's interesting about this is if you look, and maybe here it's 0%, because everyone hates you, and you basically have to rely on people who don't know who you are.

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No matter how efficient I get, I'm going to have to trade time to get it if I'm doing it on inputs, outputs that are directly correlated, a one-to-one ratio. I can do the ratio faster, but I'm still going to have that connection. I can be more efficient in terms of getting better at that skill, but as long as the base metric is still there, I will be capped based on hours per day.

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And so I'll walk you through four levels of this. So I'll walk you through four levels of this, and I talk about this in my leads book, which is the second half, which is talking about lead getters. So basically at the very beginning, imagine that you are getting leads for your business. So this is just you.

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And so let's say you get 100 leads a day that you're calling or you're reaching out to or whatever. Now you can do this. Now your work's gonna be high and your throughput's gonna be fixed. There's nothing more you can do to it. Now, the next level here is that you do this thing, but then instead of getting leads, you get a lead getter, meaning you get other people to advertise on your behalf.

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And so functionally, instead of getting, like you reach out to 100 people, you then get someone else, here's someone who's not you, ta-da, let's make him smiley. There we go, he's smiling. He's very happy to make you money. Okay, so this person now, spends their time getting you leads.

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Okay, so we just had to do this once, and then this created this node, how I like to think about it, of lead generation, right? And so, boom, this one day created this node ongoing. So who's more efficient, the guy who just continues to work here, or the guy who works, gets one person, and then that person works on their behalf and doesn't even have to do this? He still gets the same output.

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Alright, you sticking with me? Like, look at our return here. Return was 100 versus 300 in terms of units of effort versus return, but here we're getting way more. And every single month this guy does more, we still keep getting a higher return on this initial base. Now, let's say that the next month you do this and you get another guy. And this guy gets you more leads.

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So now you're working the same amount you were before, but now we've tripled the amount of, well here we've doubled it because you're getting lead getters first, but the third day you would have tripled it, right? You keep getting more leads via these other people that you've been attracting. And so there are different types of lead getters that you can bring into a business.

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So basically you just have to keep finding more, you have to advertise wider and wider to find people who have yet to meet you, which is a terrible way to live. Brand gives you an increased percentage of people who will buy when presented with your offer, just like the guy who didn't even need to get presented with the offer, just knowing that I had an offer, he was willing to buy it.

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You can bring employees into a business, so imagine I recruit somebody, and then I pay them to help me make content. I recruit somebody, I pay them to help me make media, right? Of course, you can do that.

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The alternative is that you can go recruit an agency who does this work on your behalf, and the only real difference there is just the nature of the pay relationship, but it more or less works the same way. Now, I will say this. The businesses that grow the fastest will typically have two different types of lead getters.

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They will have the lead getters that come naturally from their existing advertising activities. And so you, let's say, are continuing to advertise to get customers. But these customers now become lead getters on your behalf. They then are the ones who are bringing more people into your world. And that is what will end up compounding because over time, you can't scale media indefinitely.

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At some point, you will get such diminishing returns that it won't make sense anymore. You have to eventually rely on word of mouth. Mind you, this is if you want to get super rich. If you want to just get medium rich, you can make $10 million just knowing how to market and sell and just find people who don't know who you are. You can absolutely do that.

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But I'm trying to talk about getting mega rich. And so you have to get leverage over basically lots of other people in a decentralized manner, all right? So if you get employees or you get agencies, those are centralized. Those are people you have direct relationships with. You have to scale those relationships, right? If you had affiliates,

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which are other businesses that basically operate independently that have your customers and then send you business, or customers that operate independently and then bring you more business, that decentralizes the activity so that they continue to advertise on your behalf far beyond your ability to manage them. If I had to, if no one shared the content that we have,

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it would be very difficult to grow a brand. I would have to go one-on-one. And you can do that, it's just tough. Right now, the people who don't understand social media, so sometimes you've seen these old school business guys who just haven't realized the world moved on. I see them all the time. And they will do one to many they'll do like a circuit of in-person events.

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Now, that's because they realize that they have to get more leverage, so they just try and attend as many conferences as they can, and it totally is effective, it's just a different way of doing things. Now, if the LTV is high enough, you can still make a tremendous amount of money in that setting. But if you are a business, a consumer business,

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you're typically going to need a decentralized manner of acquiring customers. So like for example, school needs a decentralized manner. Like we have to have affiliates, which last year, 55% of all of our customers came from affiliates or referrals, right? People will on the platform refer to other people, which is awesome.

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And so we're like, you know, like, Hey, what if we actually like tried to do this a little harder? And so that's what we're doing this year, right? The whole point is, You can either do it and you will get capped, or you can find a system that allows or enables other people to do it on your behalf.

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And the reason I use Apple as a great litmus test for this is that I think Steve Jobs is one of the best brand builders of all time. I mean, people lining up to buy whatever his next product was because of his past history of keeping his promises and over delivering on it. And so number one is conversion rate. And this is like, if you had nothing else, this would be worth it.

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So I'll say the two biggest mistakes that people make for trying to attract lead getters, so either referrals or affiliates specifically, is number one is that their product simply isn't good enough. Imagine you go to a restaurant and the sandwiches are mediocre or soggy or not that good, right? And then they say, hey, we'll give you 50% off your next sandwich if you tell your friends to come here.

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We were like, I mean, I just, I don't want to tell my friends to come here. It's just not that good, right? And imagine this, let's level up from a soggy sandwich to just like a mediocre sandwich. If they say you get 50% off a sandwich if you get somebody else, are you going to refer somebody for a mediocre sandwich? I don't know, probably not.

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And so the big thing is, is people try and jack more into the incentive when like the most efficient thing to do is just make the product better because you want to get it so that they this is just my this is my two cents on this. I want people who are like, I'm about to refer all my friends because your product's really good.

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Is there some sort of incentive that you have that I can get paid for it? It's like I want people who already want to be doing this anyways. and then maybe reach out and ask so I can just lubricate the incentive system more so than go from zero to one. I wanna go from like one to N. Like I was gonna refer people already, but with this incentive, I'll refer everyone, right?

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Like that's where this really gets magical rather than trying to use the incentive as the zero to one. And I think me too, like me personally, I also probably in my earlier days spent too much time on like, how do I give even crazier incentives rather than how do I just make the thing better?

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So that's thing number one is like, if people don't want to refer your product, it's typically because the product's not that good. And so like we can obsess, you can read every referral booking in the world you want, but it's always going to still come down to how good the sandwich is. The second is if you had to ignore the first point, right? Because like these are like,

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These points operate independently. I think that it's better to have a better product. But if you don't have a better product, how would you still try and get referrals? Well, you have to make a crazy good incentive. And I think that most people think their incentive is good and it's just not that good.

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Like you giving 20% to somebody or 50% off the next sandwich is just not that good of incentive. Now if I said, if you get a friend here to try my sandwich that's mediocre and I'll give you sandwiches for life, I'll probably get people to prefer more people to get sandwiches, right?

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But the thing is, is like, it can't be so big that people are like, hey, just eat the damn sandwich for me so that I can get this incentive. Because then you're circumventing the whole point of this. The point is that they buy the product, they try the product, they like it and they buy it again, right? That's the point. And so a lot of times we try and jerry-rig our way around

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solving the main thing, but the core economics of every business are always going to come down to how good the product is. And so like, this is something that has taken me way too long to realize. And I think the reason it took me so long to realize is I got really good at marketing and sales early. And so that was my, that was kind of my, my foray into, into the business world.

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Like, I mean, obviously I had my gym, but I, you know, the first offer I ever really ran was still the greatest offer that's run in the gym industry for the last like 12 years or 13 years. Like,

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I wrote a rocket as my first try and so in some ways like I got lucky on my first shot I did what most people would do which is like I had a very fast feedback loop of reward for doing that so I did more of that thing and I did it harder and I did it better you can only spin the marketing wheel so many times because at some point you will run out of customers and if your sandwiches aren't good you'll have just told the marketplace very quickly very aggressively that you're mediocre and that's what you want to avoid and so like

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If you could 4X the amount of people that bought your stuff at a specific price, that would give you a material advantage over everyone else. But branding doesn't stop there in terms of its business benefits. The second is CTR. Now it's like, okay, how does click-through rate, what does that really mean? So it's actually conversion rate again, but just earlier on in the funnel.

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I remember hearing people talk about this who were further ahead of me saying like marketing is just gasoline. It'll just like let, it'll do whatever you're doing faster. So like if you suck, it'll just let more people know that you suck faster. The problem is that it doesn't take into account numbers. Meaning like you can tell a lot of people that you suck really fast and still make a profit.

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And this is fundamentally why I think like the education space, the information space gets a very bad name. It's because once you know how to market and sell, you absolutely can make millions of dollars. And you can deliver a pretty bad product, which I try to do my very best to try to reverse that trend and deliver a very good product.

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big picture i i am a i'm a product of the alternative education space like i didn't learn all these things from college i learned these things from other business owners who taught me specific skills that i was able to cobble together and piece together into building businesses that made money but the thing that i didn't learn until much later and honestly the best people to to consume product stuff from um is in silicon valley like listen to software people talk about product they're obsessive about product and there's a reason that some of the biggest companies in the world

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are all product-driven tech companies. And it's because product gives you the most leverage, right? Because if you think about it, you can, like you could conceivably not do any promotion. You have to do enough to get the first users, of course, right?

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But once you have those first users, if those users then continue to advertise on your behalf, these, so like this is where you get the most leverage. What people don't realize about referrals is that they typically are not like a one-to-one ratio. So it's not that like every person refers a person. It's typically like one out of 10 people refers 10 people.

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And so we have these kind of micro-influencers within their network that they have enough trust that people will listen to them. Like if Alex goes and gets sandwiches, I'm a bit of a sandwich aficionado, if you will. I do love me a good sandwich. And so if I'm like, dude, this place is great, I don't give cheap compliments.

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And so if I say that, then a lot of people are like, well, one, he's had a lot of sandwiches. Two, he doesn't say that most sandwich shops are good. And he has the means to buy whatever sandwich he wants. And so he probably has high... his recommendation carries weight, right?

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And if I recommended a sandwich shop in the past and it was good, then they will even be more likely, this is where brand comes in, more likely to listen to my referral again. The problem for the business owners is that we don't know which guy is gonna be the 10. Like which of the 10 is gonna be the one guy?

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And so that means that you just have to over deliver for everyone, understanding that nine out of 10 aren't going to be the person who's the magic referrer. I got very lucky with my first store. I think in the first 10 customers, one of the customers that I signed up in that first two weeks, I think brought me like 20 more customers.

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And I'm telling you, for a small business owner, it was the difference between making rent and not making rent. And it was a nurse who knew all these other nurses, and she brought her hairstylist in, she brought her friends in, she brought other nurses from work in. She brought everybody in. She brought everybody in. And I was like, man, this is so cool.

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You just want to look at what happened with that person that happened on accident and do it on purpose for everyone so that when that next super referrer comes in, you're ready. The third big mistake is not reinvesting. And so I'll explain what I mean by this. So

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Let's say, again, you have eyeballs, you've got people who see your promotions in whatever way you advertise. So that could be making content, that could be outreach attempts, responding to emails, but it's basically the number of engaged leads. Having a higher click-through rate means people take the first action, they then convert on a landing page or a Shopify page or whatever.

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If you decide that you're gonna have a referral strategy or an affiliate strategy as the primary way of getting business, which I honestly think that you should figure that out with a business, like it is the way that you create a compounding business that is viral in terms of its acquisition, and as you scale any company, especially B2C, you need word of mouth, and at the very least, the nice thing is that word of mouth for product also translates into retention.

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So if somebody refers somebody to you, the likelihood that they stay and continue to pay you is pretty high. And even if someone doesn't refer to you, if you structured something that was so good that most people do refer, the likelihood that people who don't refer still continue to stay and pay is still also high.

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And one of the big pain points they had was that they wouldn't work their leads or it was very time consuming and costly to, you know, continue to follow up and call and set appointments and remind people to show up for their gym workouts and their sales appointments. And so we put together this like Zapier Frankenstein product basically that

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And so you end up solving for both acquisition and retention with the same core activities, which for me is like high leverage. Like if you fix the product, you get more customers and you get the customers who stay to buy more. But once you find an affiliate system or referral system that works, it's just letting it go on autopilot. And I think that is a mistake.

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And so like I mentioned earlier, like school, for example, we like we did a lot of things this year to promote it. And then we saw that 55% of our customers came from affiliates. And so now we're like doubling down. We're like, how can we make this even easier? How can you lubricate the process? How can we remove steps? How can we give them more training?

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How can we just make this even higher likelihood that people who already have a low threshold because they like the product, we just lower the activation they need even lower so that more people can hop over and bring business our way. I told you at the beginning that I would give you three ways to get so rich that you'd realize that making money was never the point.

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And so the first way is that you build a brand. And the translation of that into making money is that you get more people to click on whatever you do for your advertisements, you get more of them to buy, you get them to buy at higher prices, you get them to buy more times.

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all of those compound into lower cost per customer and more lifetime value per customer the two primary ways of growing a business the second way is that you track your inputs and outputs so that you do more of the things that actually generate more customers and get your team to do more of those things that actually generate more customers or get them to be worth more and basically remove everything else and avoid all the mistakes that that and pitfalls that people get time sucked into that don't actually move the needle

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The third is getting a higher leveraged way to get customers, which is getting lead getters so that they can get customers on your behalf. And basically every Mondo business you've ever seen has this. And if you're like, man, Alex, that's hard. Welcome to becoming super rich. There's a reason that not many people have it. And so you have to find ways to get leverage.

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And the strongest way is to build an exceptional product. The second strongest way is to have an amazing incentive. And then the third best way is that when you have a great product or a great incentive that you reinvest in the thing that's making it work.

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when you do all three you will make the amount of money because you have this amazing brand you know the inputs that generate those types of returns and you will continue to reinvest in higher and higher leverage ways of getting customers to get you more customers so that eventually it's decentralized that it grows on its own without you it becomes a monster that you have to feed rather than dog that you have to pull by the neck to grow

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They say this in Y Combinator and I just love it, which is in the beginning, a startup feels like pushing a boulder up a hill. And then as soon as you get product market fit, which is where the customers tell other customers about the product, you start getting referrals and that wheel starts spinning. It feels like you're chasing the boulder down the other side of the hill, running after it.

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they're either buying a product or they're scheduling a call, and then on the call they have a higher conversion rate as well. And so basically you can think about this as conversion rate throughout the entire process, from the beginning to the money, and then obviously if you continue to do a good job, on resales, repurchases, et cetera.

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And so I love that visual because that's where you want to get. And to be clear, it's painful on both sides. It's just most people would prefer the pain on the other side of the hill. I remember when I was in college, the Powerball lottery had gotten over a billion dollars. And so I went and I bought a ticket with my girlfriend at the time. And it was more just because it was like fun.

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It wasn't because I thought I was going to win. But when the drawing actually happened, I remember having this moment of sheer dread where I was like, what if I win? And the dread was that if I won, no one would ever, I would never have had a shot to prove that I was good enough. and that the only reason I was successful was because of luck.

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And even if I built success with the cash that I got from the lottery, it would basically be meaningless. And so, now, you could talk about all the self-work you want there of like, well, you should take a billion dollars if someone offers you a billion dollars. Yeah, I think you should. But I still wanted to have the shot of being able to prove that I could do it.

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And I really wanted to prove it to me, I think, more than anything else. And when I did lose, I remember feeling relieved. Of course, I didn't hit the billion dollar Powerball. But selling my company for a material amount of money so much that I didn't have to work anymore, it did help me realize that making money was never the point.

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It was just a way of measuring whether I was doing a good job in the thing that I was building. And so it was over basically an entire year of me being relatively sad because I didn't know what to do. And so sadness is, as I define it, a lack of perceived options, which is you don't know what to do. It's why I feel so hopeless.

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You don't know what actions to take, which is why you just want to stay in bed and do nothing. Anxiety, by the way, is the exact opposite of that, which is you have many options and no priorities. That's why it's like you have many things you could do, but you don't know which one to start with. And so for me, it was definitely sadness at that time. Hard work for me was the goal.

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And so I want to take this quick second to make this point, which is that I get a decent amount of flack for talking about how I work. And I want to be clear, do whatever you want. I just know that when I didn't work, I was very sad. And when I work, I'm much happier. And so I work. And if you aren't that way, then that's amazing. Like, you won. You know what I mean?

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I talk about what worked for me. And I talk about that because it would have been helpful for me to hear somebody else who was like me say these things. Like, it will be hard regardless. I mean, I think a big part of the suffering that I've had has come from thinking that things should be different than they are. Like, I should be happier.

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So let's say that generically at negative one and then zero and then plus, right, here you might have a .5% click through rate. And then here maybe you have a 1% click through rate. And then maybe here you have something like a 3% click through rate. And this is super standard, like this happens all the time, especially if you're going after markets that already know who you are.

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I should be... Like, I think most of human discontent comes from thinking we should be happier than we are. Like we just have the expectation of the universe that life should always be happy. But it's like, it's so rare that that occurs. And I've gotten significantly more feel goods out of looking back at what I've done and being proud of myself.

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And I think that that's something that I can kind of chew on day after day after day, even if what my day to day is isn't always fun and games. You know what I mean? Like if I have to record another piece of content because I'm like, OK, we got to do that, then I do it. You know what I mean? But and I'm OK with that. But it's because I like the output of that.

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I like the amount of businesses that I see that have come to be like, dude, I had my job. I read your first book and I made $100,000. I read the second book. We got $2 million this year. Like, I love that stuff. And

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i'll die and no one will care and we'll all move on in weeks and that'll be it and so i live this way because when i looked back on the years when i was at this point i knew i didn't need to make any more money i looked at the happiest moments of my life when i looked back and the happiest moments was when i was going through it was like when i was working and i had this very there's this saying that i really like a lot which is like you're always going through the good old days

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When I was going through it, like, you know, I could tell Layla, like, man, remember when we were like broke as shit and trying to make this work? It's like, yeah, it's like you look back nostalgically on those moments, but like during the moment, it's tough. But when you look back, it's actually like some of the fondest memories you have.

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And so reframing the fact that like all of my fondest memories were during my hardest times, I then was like, well, shoot, maybe I should reframe how I see hard. Maybe I should pursue hard things. And so that's what became my kind of my life thesis, which was hard work is the goal. Like, I want to leave nothing in my tank. I want to leave on empty, right? I want to have nothing left.

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Like, those are the days that I enjoy the most is that I worked at the end. I'm like, I know I can look back on my day and be like, I moved all of these things forward. And to me, that's meaningful. And to other people, it might not be. And if you're like, well, I don't want to work, they're like, don't. It's like, by all means, don't. For the love of God, don't. Do whatever you want.

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If I had one big message, it's like, do whatever you want. The Queen of England died a year ago or whatever it is, and you haven't thought about her, but she was like one of the most significant female monarchs of all time. She was one of the wealthiest people to ever exist. And you haven't thought about her until me saying this right now. Think about your great-great-grandfather.

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You probably haven't thought about him until right now in this moment. And no one's going to think about you either. Like, it takes three generations for you to be completely forgotten. Where you see pictures of your relatives and you don't know anyone in the picture. They're just humans to you, right? And we're going to be humans to other people.

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And so I think in some way, it actually is a really nice, like, humanitarian angle, which is that, like, in four generations, like, one, everybody who's in your progeny is so far removed in terms of gene pool that they've been mixed with other people. They are so much greater not you than they are you that, like, it's just humans.

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Like in some ways, like we're all family, not to get all kumbaya on you, but like in a lot of ways we are. And so I'm good with making stuff that helps a bunch of people and using whatever unique genetic predisposition I have, which is like, I'm willing to work for a long period of time. I don't lose focus very easily. I can keep kind of working for extended periods of time without losing energy.

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When I launched my leads book, We had never run ads before, and so this was all novel. And there was a past history of the first book. So the first book has, I think, like 26,000 five stars at the point of making this video. There was a lot of anticipation for the second book. And so the CTRs were like 6% for our ads.

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And so like I do that. And there's some people who are painters and there's some people who are musicians and like they contribute in their way. But I think that I will always have respect for anyone who works their ass off. I was talking to a friend the other day and he brought this up. He's like, hey, man, I think I think your content is sounding like a little hardcore right now.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And when people meet you in person, he said, like, the number one thing they tell me is like, he's a lot nicer than I thought he was. And he's like, kind of funny and cracks jokes and stuff. And I heard that and he was like, I think when you started out, like the content Like people think that you just do this to make money now.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And I also say that to be clear so that I have brand coverage, which is if I just say I'm only here to make money, then no one can get ever upset that I make money. I think where people get in trouble is where they're like, I only do this because I want to love humanity. It's like, well, if you do that, then never make money. Fine, just give it all away for free.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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Like you basically set yourself up for a trap to be destroyed later. So that's why I say that. Now, is it possible to both make money and do things that help people? Yeah, I think that's the nature of capitalism. Like when I had this period of time right here where I was like, what am I gonna do with my life? I originally thought I was gonna start a charity.

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That was my whole, that was like gonna be my whole angle. And the more I thought about it, the more I thought that charities were not sustainable. They can't feed themselves, right? You have to keep always asking for more money. really begging people for money so that they can care about your cause. But basically, it's an inefficient allocation of capital.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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You take from one side, you give to another. But in order for something to be sustainable, it has to have a cycle, right? And so then I ended up reading this book by John Mackey called Conscious Capitalism. And to be really clear, I think I only read the first third and I was like, this is whatever. Anyways, I get the point of the book. So basically, it's just that

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In order to have something be sustainable, it needs to benefit all stakeholders. It has to benefit the investors, it has to benefit the employees, it has to benefit the environment, it has to benefit the customers, it has to benefit everyone. I essentially like re-derived capitalism from base units of like, how do I do good? How do I do good in a sustainable way?

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Oh, I need to have a business that does good, but because it does good, it generates a profit because there's value to all stakeholders. And so fundamentally, that's why I had this whole like, okay, well then I'll just give lots of value here, which then will create these businesses or attract businesses to then invest in, and then that will be the cycle.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And so I would encourage you to, if you can think about it, I get when you're broke, it's very hard to think about other people. But you will end up getting to that point. Now everyone's number is different. Some people are like, I just want $10 million. Some people just want $1 million. Some people want a billion dollars. Like everyone's different in terms of your requests of the universe.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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But I will say something that Bezos said, which is that small expectations are a self-fulfilling prophecy. And so like if you shoot small, you win small. And so if shooting is going to take the same cost either way, it's going to be hard and it's going to take time and years and effort. I think Peter Thiel said this. He said, if you want to compete,

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open a restaurant in chicago right like like there's there's if you want like you can just do that if you want if you also want the monetary goal um which i just like because it just shows me how how if i'm improving in the game and back to what my friend was saying at the very beginning he said i don't think a lot of people understand that you just actually just like love business i think that's like i i just so happen to have fallen in love with something that rewards financially

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And so people were signing up for the book launch for something like a dollar, which is crazy. And I'd never had anything like that before, especially at scale. And so I was like, man, these are some of the benefits of building trust with an audience. Now, the third big brand benefit is price point. And so this is one that I think is probably more commonly touted.

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My litmus test for this is that I actually don't have tremendous affinity for any one business. Like, I'm not like, oh, I love sneakers. I love insurance. I love whatever. I love software. Like, I just kind of like love business. I think trying to fit myself into a box caused me a lot of pain and suffering.

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When I think about the moments where time stands still, it's when I'm talking to a business owner about their business, about how it works, and I get to ask like a million questions. I'm like, oh, what are the margins on that? And when I ask questions, they're super invasive, because I'm just like, how much profit do you make? What are your return on ad spend? What's your conversion look like?

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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And I ask all these things, and some people think I'm trying to steal their stuff, and I'm like, oh, I have no desire. But I just want to understand it. I think that's why I write books about this stuff, I make videos about this stuff, I draw pictures about business, because it's what I love. And it just so happens to be something that makes money.

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If I were playing video games all day, no one would care. And it's just because there's a wider percentage of people that can play video games all day and people understand it. It's just that fewer percentage of people understand that I would work all day and talk about business all day. Because why would you ever wanna do that?

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Well, it's just like, I feel like I have this very odd, I have this business fetish that, and I remember, because I was very obsessed with fitness for over a decade. I competed, I was very into fitness, and I'm a pretty obsessive person. And so, enough that the people that I worked with were like, dude, please quit here and start something fitness related.

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And so I ended up doing that, because they were like, dude, I can't hear you talk about fitness anymore, it's so annoying. But the thing, here's the crazy part, is that two weeks into starting the fitness business I had, once I had my gym, I realized that I loved business more than I loved fitness. And I love fitness a lot, and I still work out to this day, but I loved business even more.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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and that was weird for me because i was like i'll never like anything more than fitness there's no chance and until i found it and so if you are fortunate enough to love a specific problem or love a specific avatar by all means like my hope is that you just lose yourself to that romantic love and just go all in on it i am hardcore i'm willing to be hardcore in my content even for the sound bites even though i know it makes me look

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more binary, more black and white than I really am. Because I think that for the younger version of me that was out there that was like, I felt very misunderstood, I felt very lonely, was like, I just want to work all the time. And I want to work on weekends and I want to work in the morning and I want to work while I'm awake, basically.

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And it's because it's the thing, like, it's the thing I'm into. I had a lot of suffering. when people would judge me on it and would tell me that I was doing something wrong and that I was unbalanced. And it's really tough when you don't have the proof to show that you're good at it yet. And that's what it was for the first... I mean, these are years, guys. This isn't like six weeks, six months.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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These are years. And I started here, right? Like, years. And so I bring this up because you might be on year three. Year three is before this graph even starts for me, to put this in context. Like, this is year four for me. Like 26, this was year four, I started at 22. And so I bring this up because like, you're not on the wrong path, you're just early.

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And Warren Buffett describes it like this. He says, if you have to say a prayer before you raise your prices by 10%, you have a bad business. And so the idea is that if customers love your product, they will be more willing to pay a premium to get it because they are paying down the risk of buying somebody else's product.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And so they buy your product with the existing promise and then the extra is basically their insurance that they pay you knowing that they're going to get exactly what they expect. I can't overemphasize how important it is to pay down people's risk. Like risk is one of the three primary levers in terms of value creation.

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And so this is why McDonald's, for example, even though their product in and of itself is not that good, it is consistent. And consistency in and of itself reduces risk. And people just like to have their expectations met.

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Now, what's interesting about this is that to meet everyone's expectations, it means that you'll have to go really high, because some people have high expectations, some people have medium, some people have low expectations.

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And so if you want to meet the expectations of a large percentage of the audience, you will have to try to over-deliver when the people who are the most demanding, you will simply have delivered. Now, other people you will have over-delivered for, but I think this idea of like, you're always going to over-deliver, I don't think is true.

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I think you just have to try as hard as you can, and a larger percentage of people will be satisfied. So let's say that they have the same base economics. So the cost of doing business is the same between these two businesses. But this business can simply charge 10% more. By doing that, they basically double the amount of profit that they're able to make as a result of their brand.

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There's one more point that makes brand make you even more money. And it just took me way too long to realize this because I... got really good at marketing and sales early, and I came at it from the perspective of like, I just need to go find more people.

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automated the texts based on responses and it was this massive decision tree that took like six months to build. And when I did the release of this product, some people weren't able to be live for the release because they had classes, they had sessions, they had whatever. And one of the most interesting things that had never happened to me before,

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When it's so much more profitable to find the existing people that you have, that you already have done business with, and they want to continue doing business with you. And so I solve now for, how do I get people to always want to do business with me again, rather than how do I find more people? The fourth piece is,

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repurchases and so just like apple like i was mentioning earlier they have such an amazing system of getting people into their ecosystem and then buying again and again and again and it would take a tremendous amount of effort to get someone to disconnect all of the products they own their phone their computer their their music whatever their app stores from their existing ecosystem of digital products of digital hardware

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The fourth benefit is that not only do you get more people to respond, more people to convert at higher prices so you can make more profit, that profit then gets multiplied. So if we have our neutral example, I'm gonna have to put the other one over here. Now we already have a higher price point. So we're already making more money than this guy.

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But not only that, the next year, some of these people might buy again. What do you know? Now our cost basis is gonna go up because obviously they're buying something else, right? But so is our absolute profit. In those four ways, building the brand makes you so much money that you will have the first step taken towards

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realizing it wasn't the point to begin with and so from the conversion rate perspective if you think about those guys who bought at the aln launch who weren't even presented the offer they just found out that i had something to sell those are people who otherwise in a neutral or negative business certainly wouldn't have purchased they would have either need to be convinced if they were neutral or they just would have not wanted to buy to begin with if they were at the negative side of the spectrum and so that's how you can just demonstrate visually what the experience of having a higher conversion rate looks like more people buy when they're presented with the offer

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And I'll give you another really tactical example. So my offers book on Amazon, the actual page itself converts at 30%. So basically a little bit less than one out of three people who visits the page buys the book. Now I think there's a variety of reasons for that.

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One of them is that many people who go there got referred via word of mouth, which we'll get to one of the big compounding things from that later. But the second thing is that even if you don't have word of mouth, when you have a 4.9 rating and you've got 26,000 people who rated at that, then you have high confidence that it's going to deliver at least a decent product.

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And so you convert at a higher percentage. And so the first and baseline way of understanding how brand makes you more money is the boost in conversion rate. And so let me give you four visual examples of how branding even came to be. And so back in the day, you'd have bulls and those bulls would originally be unmarked.

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And so people had no way of differentiating between their bulls and other people's bulls. They started branding, literally searing their own logo or whatever into the bull. And so let's say we've got our Nike bull here. Great, now let's say that now we recognize that as a logo and we like that person.

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is people started calling into our support team and saying, hey, here's my credit card. I know that Alex launched something, just like bill me for it, I'm in. It was the first time in my life where I had people just say like, I will buy whatever he has based on his reputation, not based on anything else. In a word, Steve Jobs describes brand as trust.

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If we have that experience, then we're going to treat the cow differently than if it were unbranded. Now, let's say that there's a brand that we don't recognize. We would then treat this bull like all other branded bulls in that it's a category that we just know that it belongs to someone else. The third scenario might be, let's say that it belongs to somebody that you hate.

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We have branding that you recognize and like. Well, then you'd be nice to the cow and take it home. Branding that you recognize and hate. You might capture the cow, kill the cow and eat it for yourself or steal it.

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branding of somebody you don't recognize but know that in general it belongs to someone which would then change your behavior and then finally a cow that was unbranded in general and you would treat it like you treat all cows that have no owner the reason this is important is that fundamentally the point of branding is to change behavior of the person who sees it and all of this is an indication of past experience it's saying hey treat me like you would

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Treat me like you'd want to be treated. Treat that cow like you would want to be treated, which is exactly the point. No, but the owner is communicating something to anybody else who sees the cow. That's the point.

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We want to brand our products so that they treat it ideally like something that people like and love, which might mean that they buy it quickly at higher prices and over and over again and tell their friends versus not buy it, tell people terrible things, dissuade their friends from buying it.

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Versus, I don't know, maybe I'll take a risk on this thing and then it's gonna be the quality of the creative that's gonna have to communicate. And this is again why, if you had a really fancy brand and it looked high end, then they're just going to extrapolate what they know about high end brands in general to the purchase.

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Okay, this looks like a premium brand, I understand why they're doing these things, but I don't have history. Now, if you make the purchase and they have history, then it would shift into one of these two categories. I want to talk about something that I think a lot of people misunderstand.

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How To Get So Rich You Realize Money Isn't The Point | Ep 822

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So there's a concept of the give to ask ratio, and I talk about it here in my Leads book in the content chapter. And the reason that this is such an important metric is basically this is a history of reinforcement, is how many times have you reinforced positively before you ask for something? But this is the part that people miss. is that, and it's because most people's products aren't that good.

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Their ask in their mind is perceived as a negative and the give is obviously perceived as a positive. And so you make this media, you give out this free stuff, that gives you more and more pluses. Some people like to think about it like a bank account. You add more deposits and then you can withdraw. But when listening to jobs talk about this,

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He actually purely talks about it from an asks perspective. And so he says, if people buy our product and they absolutely love it, then we have provided more value. We put a deposit into our relationship. He said, if people buy our product and they hate it or it's just mediocre, then we've withdrawn from that relationship.

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This whole idea of give ask, many people talk about this in terms of like content and then monetization. It actually extends all the way through the business and in the perfect world, you give in the content and when you ask for money, it becomes a give because as soon as they buy the product, they're like, Oh my God, this is amazing.

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And I define trust as predictive power based on past experiences. Just as much as you can trust someone to do a bad job, you can trust someone to do a good job. And so the idea here is obviously to build trust that we will deliver on our promises. And so fundamentally, you build that by making promises and keeping or over delivering on the promises you have. But brand is a big amorphous topic.

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Which is why, for example, I think that like I try to get people to start with the books because it's the thing that I've spent the most time on and cost relative to value is pretty insane. That allows me to give yet again and create a positive history of reinforcement with an audience.

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Brands compound over time, not because necessarily media compounds, but media is just a measurement tool for word of mouth. Because your audience will grow because people will share your stuff. Try and get it down to the people when analyzing these kind of amorphous ideas. What happens when a brand grows? It means you did a good thing, and then that person tells another person.

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And then that person experiences the benefit themselves, and then that person tells another person. And so the output of the brand is the trust with an audience that grows, rather than logos and color schemes and fonts. Like it's none of that. It's just how many people trust me. But the reality of building a brand is that it's kind of like a friendship.

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Like imagine meeting somebody and being like, we're best friends. If they said that the first time you met, you'd be like, that's a bit weird. And so building a brand is a lot the same thing, which is like it takes time to build trust. And trust is predictive power based on a past history of experience. And so you have to develop that past history of experience.

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If you do something nice once for you, you're not immediately going to be like, oh, I I trust this guy with my life. It's like, well, he did one thing, you know? But if he does thing after thing, after thing, after thing, after thing for an extended period and then makes an ask, you're like, well, I kind of owe him money. He's done a bunch of stuff for me. Right?

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And so that's the idea is that it just takes a long time. Now here, here's where it gets, where there is high arbitrage with brand is that

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with media and technology one person can give to a million people at once in a very small way and so the idea is okay how can i give to a million people at once over and over and even in a fractionalized manner such that in 10 gives or 20 gives or 50 gives i've now given effectively three full gives or four full gives to somebody so that they might

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be willing to quote return the favor based on their cultural rules. The second way to get so rich that you realize that making money was never the point is to know the inputs and outputs of your money making system. And you want to break those down to the absolute smallest action. That way you can scale it while sustaining your margins. And so think about it like this.

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You have a money making system. You have a box. Now in that box is your general activities of doing business. So you sell tables, you sell books, you provide services. Whatever your thing is, is you have a cost of delivering that thing and you have a price that should be above that cost. And then that discrepancy between those two things is how you make money.

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And then that should take a full day. And then after that, I've got this thing. And then after that, I was planning on working on it over the weekend so I could get it to you by Monday. That I'd be like, OK, that makes sense. Now, if I look at all those other things, I might find out a couple of things. Number one is maybe they don't have all these other things, in which case we'll do this now.

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So I'm curious whether it's not knowing what to do, that I want you to do it, how to do it, or that something's preventing you. Or if you're not motivated to do the above. And by framing it that way, it completely shifts the whole vibe of the conversation.

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And maybe they do have all these other things, but this thing is more important, in which case, do it now. And so the thing is, is that by consistently asking when they can do it, how long it will take, and then what else they have going on, allows you to have a way better idea of everyone else's workload in real time whenever you're asking people.

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And also, it just makes you a way better boss, in my opinion, because if people are like, oh, I've got these, you're like, oh, no, finish that. That's more important. Do that first. After this, we'll do my thing. And this is kind of, I would say, a pervasive mindset that I have. I'll write it down because I think it's cool. But basically, end of day is better than end of week.

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I want end of day to be my default. I want everyone's default in my life to be end of day. And think about how impactful this is. If you just assume whenever you ask for anything that it should be done by end of day, your organization will move at seven times the speed. Like some organizations, like their default is end of month, end of week.

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It's like an end of month organization will literally work at one 30th the pace of an end of day organization. And you might think, oh my God, that's crazy. But do you think that some companies grow 30 times faster than others? Hell yeah, there are. And this is why the rich get richer and the poor get poor. And there's the great divide between the doers and everyone else.

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It's because you really can outwork someone a thousand times. You really can. I can put out a thousand times more content than you. I really can. I can do that. We can work that, but we can work a thousand times faster than you. If it takes you 90 days to get something done and we get it done in two hours, we worked a thousand times faster than you. It's crazy.

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And so then it shouldn't be as big of a surprise that some people out-earn other people by a thousand times. And so I'm saying this because I'm trying to transfer this to you so that you can go get rich and do whatever you want because I'm going to die and no one's going to go fuck anyways long-term. And so like you might as well do something useful. Yeah.

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And what's interesting about the star system is that it actually creates stars. Because if you tell somebody and they are clear because you wrote it down, they know that they should do it. They understand the what that must be done accurately. They understand how to do the thing because you've done it with them before. They know how to do it your way and you've taught them, you've broken it down.

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And then they'll be able to do it faster because they have absolute clarity on this point. And this is what starts to really move an organization. And so the other pro tip is that Jeff Bezos has an amazing one-pager that I tweeted about not that long ago. And it was almost like the theme of the month for me.

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But he basically takes Richard, an excerpt from Richard Dawkins talking about biology that basically biology fights against this environment to stand out, right? On a long enough time horizon, once something dies, it basically merges with this environment. Like it becomes inseparable. On a long enough time horizon, like you just become dirt. Like literally you become the same thing.

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And the thing is, is that it takes energy, a tremendous amount of energy to stand out, to be different. And the thing is, is that the world will try to pull you down. It will pull you into mediocrity. And the same thing happens within companies. Like the trend line is regression towards the mean. That exists for a reason.

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And by adding the piece, and I think this is really key in terms of how it was framed, it's just like compared to what I believe you're capable of. So I'm basically weaving in a compliment saying, I think you're capable of more. I think your potential is significantly higher.

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You have to basically be willing to be so potent as a person that a drop of you into an ocean of clear water turns the entire clear water the same color as you. And fundamentally, that is what disseminating culture is from a leadership perspective. Like that is how great organizations are built. And so you have to hold the fucking line. And so that means that this always happens.

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That means that like every time I'm on a meeting, if we're driving something, the key word is that we're driving it. Like I was actually talking to one of my leaders in the company earlier today and last week about this. And I was like, I want you to replace the word leader. And I want you to switch it with driver in your mind. I was like, cause that's what I need. I need people who drive.

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And it's not like you're, you're not like you're a slave driver. The point is that you're, you're driving things to get done. It's like, Hey, where is that? What, like, how can we do it faster? What else can I pull off your plate? Right. Which I'm already, I'm already giving you a little bit of

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of pre-framing for the fifth and maybe the most important part of the star, which is if someone knows that they need to do it, they know what they're supposed to do, they know how to do it, they know what is Dubai, what's the last thing that could stop them? And I'm going to take motivation out of this and I'll tell you why. But the last thing that could stop them is circumstances.

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Now, what does that mean? It means something else. So if I asked you to do all that stuff, but you're like, but dude, you asked me to do 10 other things. So something else got in the way, an obstacle, something is blocking them, right? If I ask the best chef in the world, hey, can you make me an omelet? You know how to make an omelet? Or so you know what an omelet is, you know how to make it.

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And I want you to make it for me right now. That guy might not do it. And I'd be like, why didn't you make me an omelet? He might be like, I don't have any eggs. What do you want me to do? I don't want to be eggs, right? And to the same degree, in a real business setting, it might be like, I don't have the RAM on my laptop to be able to process this size file and edit this thing on time.

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I have to get this other thing or I have to move to this other place and that's going to take me time, right? Like there's some things that sometimes block people. Now, the reason this is so important, and this is the one I'll tell you right now, we go through the other four first, because as soon as you mentioned this fifth one, everyone blames this one. Why? Because it is not that, right?

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And so people's egos are protected when they say, oh, I've got this other thing. I got this other work. I got this, I don't have eggs. I don't have a wifi. I don't have a blah, blah, blah. Now, this is where the real leadership start comes in. Because this is where we say like, well, how hard would it have been for you to go get eggs? It's been three days. Like how hard was it to get eggs?

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Rather than saying, hey, you suck, I'm actually saying, hey, I think you're awesome, and I think your performance, which is separate from you as a human being, is below what I believe you're capable of. So what do we think the gap is? Is that you know that, how, what, when, or something's blocking you, or you're just not motivated. Help me help you.

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The Wi-Fi was slow. Was there any way to get faster Wi-Fi? And so this is where I start to make judgments on someone's ability, on someone's agency, their ability to solve problems on their own. Because the thing that we always want to tease out long-term is this. Why? Right? Because that's the big motivation question. Because you'd assume, why didn't someone do it? Because they weren't motivated.

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The thing is, is that I can't, me asking someone, hey, were you not motivated to do this? No one's going to say yes to that. I'm just being real. It's not going to happen. Right? And so we ask these other questions. The first four are what I would consider very standard business practices.

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But here's the thing that's really clever with this, is that by asking the first four, you basically give many opportunities for it to not be a tackle on the person. When you have the circumstances one, it also has realistic options where it might not be the person's fault. They might actually have too much stuff on their plate.

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But this is where the nuance comes in, where you get to judge, are those circumstances really the things that blocked you? Or are you actually not trying? Now with the, hey, I just need an omelet by next Monday on my desk. And the person gets to you next Monday and says, I didn't have any eggs. What are we talking about here? I mean, you're technically correct.

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If you have no eggs, you can't make an omelet. But do you lack the other skills of acquiring eggs? If you do... Then we ask the larger question is, I know I could train you on how to get eggs, but is it worth the hassle? Like I could train you on how to use a computer, but is it worth the time?

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And so this is why, this is my fundamental belief about training in general, which is that everything is trainable. It's just not everything's worth training. Some things you expect to have someone have batteries included. And that's why there are requisites for jobs. That's why when you go to school, you have to take English 101 before you take English 201, right?

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Notwithstanding the fact that it's all retarded, but let's just like pretend it's useful. Well, English is useful, but let's... You get my point, all right? So the reason this is such a powerful frame is that if someone comes back and says something like, well, I didn't think that was my job. Well, then they probably shouldn't do anything else in your company either, right?

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Because fundamentally, what creates motivation? So, motivation is the opposite of deprivation. But, Somebody who motivates other people is able to temporarily increase the value of an outcome. Fundamentally, that's what motivation is. And if you think about that, that's also what persuasion is. That's also what sales is. And so there's a lot of words that fundamentally mean the same thing.

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If I motivate you to buy, that's what a salesman does. If I motivate you to move, I motivate you to change your behavior. I, for a short period of time, change the relative value of an outcome, which then changes your behavior.

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And from this perspective, both of you are basically attacking the problem on the same side of the table, trying to figure out how to get the person to their potential, which both of you are aligned to have happened. And I'm telling you, it's just like, imagine if I had started that being like, Hey man, you're, uh, you're, you're at your, your subpar right now. You're, you're under expectations.

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So if I talk to you and talk about your weight and you haven't done anything about losing weight in a very long time, but in a short period of time, I changed the relative value to you about what it might be like to lose weight or said differently, the pain associated with losing weight. You might have always wanted to lose weight, but didn't realize it could be easier. Right.

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Or you might realize it's hard, but I realize I help explain even more value. Like, hey, I don't know if you knew this, but you'll live 10 years longer statistically if you lose 50 pounds. Then all of a sudden you said your daughter's about to get married. Don't you want to see your kids? Right.

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So my mother, side note, the only reason she lost weight was because the doctor told her that she wasn't going to see my grandkids. And that was the thing. Tried to lose weight her whole life. 30 fucking years. Tried to lose weight. Couldn't do it. That was the line, right? He was able to motivate her because that was the one thing for her.

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And so sometimes we have to think to ourselves, okay, what other things are we playing with that we can change the relative value of either decreasing the pain or increasing the carrot, right? Decreasing the stick or increasing the carrot associated with getting the stick. You know what I'm saying. I'll give you an example.

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So I'm going to share a five-step framework that I call the star system that you can use whether you're a business owner or you work within a business to influence other people. So let's dive into it.

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So sometimes a salesperson will get tired of selling because it's the same conversation over and over again. And they will say they'll get bored. But there's a huge amount of time between the first time you get bored in sales and when you're exceptional in sales.

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And so explaining that in and of itself to a salesperson is that your ability to maintain focus is itself a skill that needs to be developed in order for you to become world class, which is what you said you wanted.

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And so sometimes just reframing their current struggle as a skill deficiency on their way to getting what they ultimately want is one of the most motivating things that you can do to help someone do the thing that they ultimately probably want to do too. They just haven't been motivated to. And so we knock out all of the peripheral things. They didn't know that we wanted.

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They didn't know what it was. They didn't know how to do it. They didn't know when we want to do it. They had something to block them, but not really. And so the main one is that we can get to the motivation. But if some people, just fundamentally don't have enough motivation around this thing, sometimes they just don't need to work for you and that's okay.

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There's tons of other companies that will, that will employ mediocre people. It just doesn't have to be yours. And if I can, if I can give you a fun one, because some of you guys have employed people that you know shouldn't be working for you. It's your, it's your sister, it's your sister's husband, it's your cousin.

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And you think to yourself, man, if I, if I let them go, no one's going to hire them. It's like, Yeah, no one would hire them. And somehow you think it's a good idea that you continue to employ them. That feels max silly, silly, silly game. Silly tier, S tier, S tier silly. Now let me give you a little bonus reframe on this.

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If you have, if you're trying to look at your business as a business owner, right? From a strategic perspective, there's a lot of things that you could do, right? But we have to ask ourselves, why? What are the things that are the most important for us to do? By when would it be the most meaningful? Now, here's where it gets really interesting. You more often than not are going to have how issues.

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You're not going to know how to do it. And reframing the things that you know you need to do as questions that you don't know the answer to is so much more valuable than there's no one who can sell like me. I don't know how to get someone to sell like me. No one can market like I can. I don't know how to find someone who can market like I can. That's solvable.

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Like that sounds pretty bad. Right. And that everyone's going to be defensive. They're going to be thinking it's attack on their character when it couldn't be further from the truth. And so having little frameworks like this, I've just like made life so much easier for getting people back to where you want them to be. So let's paint the scene.

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No one can is a statement that you can do anything with. And so what I would really, really push back on is my kind of like leaving thought that might be the most powerful thing in this video. Be incredibly wary about the statements that you make that you believe are facts. because those statements exist as truth only in your mind.

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And so basically your reality will be influenced by the laws that you choose to create and live by. And so if you want to bend your own reality, you have to be able to change the laws that exist. And so in the matrix, It's like every system is built on rules, right? Some rules you can bend, others you can break.

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And the thing is, is that wouldn't you want to build a business in a world that had the fewest rules possible? And then what's interesting to me is that the amount of conversations that I have with business owners who tell me rules that limit their business, like, oh, we can't charge more than that. Because no one else does. That sounds like a terrible reason. We can't pay people that much. Why?

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Because it's not industry standard. Okay. Well, everybody in your industry makes no money. So why would we do what they're doing? Like the biggest gift that I can give you is that the vast majority of business owners are broke. The vast majority. The average business owner makes like $50,000 a year, right? I'm not saying that's broke. It would be clear.

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But for many people, the aspirations of being a business owner come with significantly higher goals than that reality. And if that's true, then the vast majority of business owners are wildly underperforming their aspirations. And a big part of that is because they model people like them. Most business owners look around, they see what everyone else is doing and say, oh, I'll do that.

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And I'll do it a little bit better for a little bit less. But then every other person does that too until eventually you can't do any more for any less. And so many of these businesses function as essentially nonprofit organizations where the person's barely above water selling a largely commoditized service at a commoditized price with no differentiation in the marketplace whatsoever.

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That's a game where if you choose to play like everyone else, you will lose. And so I would encourage you to, if everyone's doing something, it's a great reason not to do it. If anything, that like that alone would be, that would be a reason not to do it. At least it's different, right? At least you have an angle. You have something that's different.

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You say, hey, Kyle, I need you to make me that TPS report by Monday. Okay, fine. You said that. Monday comes, Kyle doesn't have the TPS report. What do you do? Now, normally it could be like, I could yell at Kyle. You'd be like, what the hell, Kyle? Whatever, right? But the thing is, is a lot of people don't confront people who work for them because they're afraid of losing influence.

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Well, if everyone else is paying this, maybe if I pay more, I'll be able to suck up the top 10%, right? One of the things that people will talk about Henry Ford is Henry Ford paid people better than his competitors so that he could scoop up the entirety of the talent at his plants. He's the one who invented the manufacturing line. Yeah, he did.

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He also paid people better than anyone else so that he could get the top talent. People thought of him as the guy who was just automating humans out. It's like, no, he actually ended up paying the best people to work for him. But he did something that other people weren't. He did something that other people didn't.

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And so I would walk through this star system so that you can also think about your own business in that same frame. Why aren't you doing what you know you need to be doing? Do you not know that it needs to be done? Do you not know what it is? Do you don't know how to do it? You don't know when it would be meaningful that it's being done by? Or do you have something that is blocking you?

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And do you have some things blocking you? Is it more important than that thing? And if the answer is no, then stop doing it and do the thing instead. And if you're struggling to be motivated, maybe you need to look at yourself in the mirror.

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And I don't know what you'd say yourself in the mirror, but like you could look at yourself and then eventually actually just do it because the look at yourself in the mirror is not going to change anything anyways. But you know, maybe you look good. Maybe that'll get you motivated. All right. Love you all. Rock and roll. And use the star system next time you have a hard conversation.

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Hey, real quick. Did you not know that I wanted you to do it? Did you not know what I wanted to do? Did you not know how to do it? Did you not know that I wanted you to do it by Tuesday? Or was there something blocking you? There was something blocking you. Is it reasonable that it blocked you for that long? No? Okay. What's the issue? Or you know what? You're right. That did block you.

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Do that first and then do this after.

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All right, so let's face it, getting other people to do what you want is arguably the most important skill because if you have that one skill, it unlocks every other skill that every other person potentially has. The problem is other people don't always do what you want them to do.

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Like, hey, if I bring it up, I don't want things to be weird. And so being able to have these kind of confrontational conversations and having a framework around it has made it so much easier for me to have really good conversations that don't in any way attack the other person. All right. And so thinking through this framework is how I do it.

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And so I'm going to make this really simple because it has to be simple or else you're never going to use it. All right. And so it's called a star because there's five points to the star. And there's really a five points that you work through when you're figuring out why they didn't do something. And so the first thing is, hey, Kyle, and I set this frame.

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So the people who work for me already know that I have this frame. So I don't think you need to keep this a secret. I mean, listen, there's only five reasons someone doesn't do anything. It's either number one, you didn't know that I wanted you to do it. So did you know that I wanted you to give me that TPS report? Um, and he might be like, oh, I thought we were just talking.

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Now you might hear that and think, wow, Kyle, how, what an insignificant or what a, what an arrogant ass, right? No, but like, let's be real for a second. Like you probably don't follow up on a lot of stuff that you tell people to do. And what do you think people learn?

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what's going on everyone welcome back to the game uh where we talk about making mo money so that we can eventually question the meaning of life to begin with and today i've got a fun little star system very tactical um fundamentally the thing that separates your business's growth from happening is people doing stuff that you want them to do.

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They learn that if you don't follow up, it's like, oh, it probably wasn't that important to him because like you probably maybe as an entrepreneur have a lot of ideas. And if someone actually acted on every single thing that you said, they would have a mountain of stuff. They wouldn't be able to do their normal job. Right.

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And so they kind of just like wait for you to maybe cool off on the idea for a second. And if you mention it two, three, four or five times, they're like, OK, this is something I actually have to do. Right. And so the solution for the that problem is you write it. All right, and so one of the things that we have at internalacquisition.com is if it isn't written, it never happened, right?

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So if you just have a verbal conversation that exists IRL, just in the air, It doesn't ever matter because no one has proof of it. You don't have proof of it. They don't remember it. You remember it differently than them. And so this is why crystallizing those experiences is so important because then you can point back to it. That way everyone's on the same page.

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Hey, I thought you said you wanted me to send you the KPIs by Monday. It's like, no, I said the TPS report. It's like, oh, well, here's the KPIs. It's like, that's not what I asked for. But how do we know? Maybe you did say KPI. How many times have you said something, thought you said something different? Happens all the time, right? And so number one, figure out,

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Set the frame that these are the five reasons and be like, hey, Kyle, you didn't do it. There's five reasons someone doesn't do anything. So did you not know that I wanted you to do it? If it says, I didn't know, then you're like, great. It's problem solved. I'm going to write it down next time. Here you go. I'm going to write down for you right now.

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And if you want, I'm going to memorialize this with an email and send it to you. That way we have a timestamp and everything. But what if he's like, oh, no, I knew that you wanted me to do it. It's like, oh. Well, then did you not know how to do it? So once we're like, okay, Kyle, did you not know that I wanted to do it? They might be like, okay, yeah, I did know that.

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But then did you not know what I wanted you to do? Because he did send me something. Okay, what's the that versus the what? Let me explain. So two things don't always mean the same things. And it's like, what does that even mean? Well, you want to define what you're asking someone to do in terms of behavior or outcomes. So if I wanted that TPS report right now, that's a really simple example.

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Um, I would probably be like, well, when I say like, give me that, I was like, does that mean it's going to be printed out? Does that mean I want to print it on my desk? Does that mean it's an email? Does that mean it's going to be like, like verbally given to me? Is it gonna mean it's a presentation in what format?

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And the thing is, is like, you might hear this and be like, oh, that sounds like such a pain, but it's like, it probably takes like two or three extra minutes for you to be like very clear. And then someone's going to take that two or three extra minutes and then save themselves like two or three extra hours. And so it's high leverage, like clarity is high leverage work. Right.

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And so, like, I would say that if this is something that makes you uncomfortable, you need to break that habit for real. And let me explain why. How do you think AI works? Why do you think prompt engineering is such a high leverage skill right now? Because the problem is no one even knows how to communicate. Like you have this ultimate being or whatever you want to call it, right?

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You've got this thing of ultimate intelligence that can do things incredibly quickly, has access to the world's information. And yet you can't get AI to do stuff for you. It's not because AI is dumb. It's because you don't want to talk to AI. And if you can't talk to AI, you can't talk to a human. Right.

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AI honestly has more context and more like tries to ways to figure out what you're trying to say because we communicate like monkeys. Right. The thing is, is we're communicating with other monkeys. We got to be as crystal clear as humanly possible. Now, what's interesting is that the bigger the organization gets, the more this banana phone issue becomes a problem.

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And so this little five system, the star system, I run through it in my head all the time, right? Did they not know that I wanted them to do it? Did they not know what I wanted them to do, which I defined in terms of behaviors or outcomes, and I need this thing on my desk by Monday printed out with that nice paper. Or it's, I need you to, when someone says this, say this instead next time, right?

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Not... be less of a dick or, you know, you know, stop harassing Courtney. It's like, well, what does harassing Courtney look like? He obviously isn't trying to harass Courtney. She might describe his behavior as harassing. He might describe his behavior as being cordial. So now what happens until you actually break down the behavior that they are both labeling differently.

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And I have a little five-star system that has worked very well for me to have very direct conversations that in no way feel direct and have really, really helped a ton. And I would show this framework to every one of the people who works for you so that they know what you're going to be going through.

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He's saying, Hey, I said good morning to her. She's saying, Hey, he's hitting on me. And you're like, well, what the hell? Like what's going on? But until you figure out, wait, Courtney, when you say he's hitting on you, what exactly did he do? It was just like, we always like smiles at me in waves when he comes in. It's like, I don't think he's hitting on you, Courtney. I think he's being polite.

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Right. And you might on the flip side, it's like, what do you think hit, you know, hitting on you is it's like, he always squeezes my ass when he walks by. It's like, well, that's a fucking problem. Right. And so like, let's be clear here, Mike, You shouldn't squeeze anybody's ass, let alone a girl's, all right? On the flip side, like, you get what I'm saying here?

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But like, if we say he's hitting on me or be less creepy, no one knows what it means because one person thinks they're trying to do something. Like, no one wakes up and says, I want to be creepy today. No one does that. Creepy people act in ways that they don't think is creepy. And so by telling them to stop being creepy, they don't know what the fuck that means. That's the problem.

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And this is why we have to describe this. This might be one of the best explanations I've given of this. This is the problem. And this is why so many people behave in ways that they don't want to. Not because they don't want to do a good job, but because they don't know what doing a good job looks like because it hasn't been taught to them. And so you just got to tell them. Right.

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And so number one, they didn't know that they want to do it. If they did know that you're like, Hey, you know, be nice to Courtney. He did. He grabbed Courtney's ass rather than saying hello. Right. He didn't know what to do. Right. So if he did know those two things, well, what's the third thing that could be the issue? Okay. Well they do that.

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They wanted the TPS report and they knew how to deliver it. Okay. They knew that, uh, I wanted the TPS report and they knew exactly what it was. Well then why didn't, why didn't it happen? Well, Did they know how to do it? So I told you to do that, but I was like, honestly, you asked me to, but I don't know how to put a TPS report together.

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And I'm like, wait, I didn't, like you didn't get that in onboarding? It's like, honestly, no. It's like, oh, okay. Well, the solution to this is training. And all you do, by the way, if you're like, man, and this drives me absolutely insane, is that I will hear people say, you know, these things aren't trainable. Everything is trainable. How do you think a baby learns how to do anything?

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How do you think humans learn things to begin with? It's just that some things are more trainable, take longer to train than others. And it's not even that a specific thing takes longer to train. It's just that that term has more skills underneath of it that ladder up to the larger thing. Meaning if I say be kind, be kind has like 500 behaviors underneath of it.

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And so, yeah, it's harder to train aptitude than attitude because attitude is 500 behaviors, aptitude might be 20. And so, yes, it is easier to train this than that, but it's not that something isn't trainable. And this is why specificity is so important. And so what we have to do is like, okay, if you don't know how to do it, what part do you not know how to do?

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And then it just becomes almost like a, it's just, it's just a, it's almost like an unspoken language of performance management. And so when you walk through all five of these, you can remember them very easily. And you can run through it in five seconds with a teammate who's not performing the way you want to. So with that being said, enjoy.

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Do you not know how to turn on a computer? Do you not know how to turn on the internet? Do you not know how to send an email? Do you know how to use Excel? No, I know how to use all this stuff. Okay, boom, underneath that, do you not know where the data is that you need to extract this from? No, I know where the data is. Okay, got it. Then once you have the data, do you not know how to format it?

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Yeah, I don't know how to format it. Got it. So now instead of being like, oh, this guy's an idiot, it's just like he knew how to do eight of the nine steps. He just couldn't do the last step. So now I could say, cool, let me show you how to format it. Done. And from here on out, when I ask you for a TPS report, this is what I'm looking for. Make sense? Yes.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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The 5 Reasons Your Team Isn’t Following Through | Ep 882

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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The 5 Reasons Your Team Isn’t Following Through | Ep 882

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Now, let me give you a little pro tip. The higher the general skill and competence of the individual, the greater the expertise of the person in the domain, the more vague you can be with your directions. All right, so let me explain. So if someone comes to me and says, hey, I've got this product, this new marker, and it writes upside down and it's invisible ink, it's amazing.

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Alex, can you build a business around this? I could just say yes, because I have all the other skills it takes to build a business. Now, if you go to somebody who might be lesser skilled, you might have to say like, hey, can you make a marketing campaign around this?

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Now that person probably might not be able to like set up the energy structure in a tax efficient manner or be able to source the materials or be able to, you know, set up, you know, HR practices and all this other stuff. But like they could do the marketing campaign and you might be able to go to a good marketer and say, hey, can you run a good marketing campaign? They say, sure.

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Now, if you go to a junior marketer, you'd be like, hey, can you run a marketing campaign? They'd be like, it's like, okay, can you write some emails about this? We just keep chunking it down. And so the more skilled the person, the vaguer the instructions can be, the less skilled the person, the more specific it has to be.

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So I want to read you a real exchange I had with an employee that wasn't performing the way I wanted him to. I said, hey, what are you doing today? And then he gave me his little rundown. And I said, I asked because I haven't felt like I've seen a lot of production from you compared to what I think you're capable of.

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And for anything around trading, I talk about this at length, but basically document, demonstrate, duplicate, which means that I do it in front of you. I write it down. I do it in front of you. You do it in front of me and then sign on. That's how it works, right? So we create the list is me doing it. I observe myself or someone observes me doing it, puts the list down.

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I then do that list in front of the person. They do that list in front of me. And then we have a great day, right? And so with the TPS report, I say, hey, here are the steps for formatting. I'm going to write them down and then I'm going to do those steps in front of them. And then I'm say, hey, let's do a second TPS report for next week. We can do it together.

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They do it in front of me following the exact same steps I wrote down. They did it. Skill is transferred. And now next time I asked for the TPS report, it'll be on time. You guys are amazing. I can't believe you guys keep sharing this. It's like, it's going nuts right now. Um, we've had record once back to back. Um, and it's, it's all because of you.

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And so I just want to thank you guys so much again for sharing the podcast. Um, it's why I keep doing this and, uh, Yeah, so if you can text it to a friend or an enemy, slack it to maybe a work rival or slack it to a work friend, that works as well. Or share this on the gram to the many strangers who follow you so that they too can grow enlightened by business principles.

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Or just share it because you feel like it. Anyways, love you all and enjoy the rest of the pod. All right. So slight recap. First, we figure out if they knew even that we wanted them to do it. Second, we made sure that they knew what we wanted them to do. And the third, it's like, okay, if they know those two, then do they even know how to do it?

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Now, if they do, then did they know, and this is a big one, which happens all the time, is did they know when I wanted it done by? And this sounds so silly, but the reality is that the solution for this is deadlines, right? And so let me, but it's not just deadlines. I'm going to give you a little 201 version of this. If I say, hey, Kyle, when can you get me the TPS reports by?

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He might say Monday. Now, a boss or leader or whatever who doesn't pay as much attention might just say, sure, that sounds good. I like to push on this and I say, cool, how long do you think it will take you in order to get the TPS report done? The actual work itself, not from now until you can deliver it, but how long will the work take?

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And usually someone will say something like, I don't know, probably like two hours of like, OK, well, it's Wednesday and it's two o'clock. What are you doing between now and four o'clock? Now, if they have something that's more important, then they can be like, well, I have to finish this thing by tomorrow. And then I've got this other thing that I'm going to do.

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Okay.

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Sure.

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Okay. So switch to a subscription. Switch to a subscription, yeah. Okay.

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Right, and it's free to sign up, and you only get paid if they get paid. Yeah, so you're in a prosumer audience. So if you look at like Shopify, for example, it's super, if you look at the amount of people who've tried to build marketplaces, almost all of them fail.

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And it's my opinion that the best marketplaces do run as SaaS, and then once they get to scale, they can kind of push more marketplace. So like Shopify, for example, like it's 29 bucks a month or whatever it is, because they know that the vast majority, They make more money charging $29 a month than getting 4% on Xero for the vast majority of stores.

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But people continue to pay for the hope that someday they will make money. And so I think the idea of switching to SaaS is not a bad one. I am concerned about the four businesses that you have. So, because in order to win at SaaS, you have to be like all in on software.

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And so the alternative to that would be instead of letting creators come on for free, you would charge them to come on, which you could do. It has like a one-time setup fee and then maybe increase the likelihood that they win. Either path would work, but if the ultimate goal is that you want to build a network of creators, then you want to have the lowest barrier possible on the creator side.

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Yeah, you'll have to play with the feature set because that's always a... a bitch.

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Yeah, so I think adding the subscription for the base and then still maintaining the revenue that you get from the sponsors makes sense. I would maybe push back slightly on the hypothesis that they can't convert anything because it dramatically decreases the value of the network from the sponsor side.

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Because some people will pay for impressions.

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And so... Those guys can for sure deliver those. And so maybe there's like two tiers that you can sell. You have another product on the ad side or the media side. It's just something to consider.

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No, I think it makes sense, yeah.

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Basically you have to position as higher ticket and do premium wake level onboarding and then select only for the really good creators and that would be like you charge five or $10,000 and you really get them set up or you basically flip the other way, go freemium, and then it's all based on basically media arbitrage where you're just running tons and tons of ads to get people onto the platform and you just know what your average revenue per platform user is.

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Perfect, thank you. Hi, Alex. My name is Alex. You can call me Alex Rodriguez. From Puerto Rico. From Puerto Rico. So I'm a music attorney. Abogado. Abogado, correcto. En la música y el entretenimiento.

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Yeah.

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So what we do is, our constraint is focus.

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Okay.

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I have. At least you said it.

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Yeah.

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So we have a law firm. So basically it's three businesses. But today, thanks to Ed and Sami, we got much more clear on what we should do. But I would like to know, how would you think about this? Because the law firm side, it's growing 20% year over year without me actually doing anything. redirecting people that comes to me through my law firm. And right now it's about 100K.

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And then we have the educational side and that is making 200K and it's been stuck like that in the last two years. And we're building- And you get customers from organic?

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yeah both are organic okay so if you don't have money to pay us as a lawyer you go to the educational platform and we are developing a contract uh automation software for big companies like major labels or publishing companies uh so right now the the product our software our goal with the software is to sell we are seeing that other that big music companies are buying tech

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Yeah.

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So specific for them. Sure. So they're doing everything manually. We want to sell that, but we have a cash flow problem because we're selling to people without a lot of money and the service size does make money. So our problem is where should we focus?

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Yeah. But what's monthly churn right now? On the software.

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We got 100 people and we only have 40 active right now.

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And how long have you been doing it in the first year? So you've retained 40%. Are they actually active though? So they're paying.

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The people that are active are paying $3,000 per year. And there are only like four.

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Four?

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Four that are paying $3,000.

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And then what are the other 36 paying? Are paying $600 per year. Okay, got it. Okay, so I think we chatted about this last night. So... You have a, there is no right answer, but there is a path that you have to pick.

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And so either you're going to be an enterprise company, and you're going to build only for that, and I would say you probably will just transact on the education side in order to fund this.

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I, in general, don't like this plan, but you could do this, because you'll be split attention, and this is fundamentally why people raise money in software, so they can just focus on one customer the whole time, build the product, and then actually get it to work. Okay, that's that.

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Because you said that you're retaining 40% in basically a prosumer-ish market, which is where you're at, I would be inclined to say that you probably are pretty close to a decent product. So you probably have nailed something there. Because keeping 40% of people one year later on

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you know, whatever it is for musicians that you guys have for contracts and whatnot, you could absolutely go all in on that and get that to like 50 or 60%. And then you just need to have a different acquisition system. So you probably just need to go spend money acquiring customers. And that already cash flows because of the education side.

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And are the people who are still paying you on the software also education customers or no?

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They usually come from the education or from my legal services as well. So I have some clients that be 80% of the job automated.

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Here's the million dollar question. The million dollar question is, if they stop the education, do they keep paying for the software?

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Yes, because it's a one-time thing. Well, then that's... What, you mean the software's a one-time thing? No, the education. Oh, well then... So, sometimes they just pay and they're going to use the software.

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So, the only thing that we're solving for is revenue retention on the software. And so, like, enterprise in and of itself is not more valuable than lower market. It's just it tends to be stickier, which is what makes it more valuable. But if you can get a... larger marketplace, easier to acquire customer, to stick as well as a large enterprise customer, you've got a gold mine, if that's true.

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And so if you want to go spend money, acquire customers with the education or media as your liquidation, and then get 100%, but the goal that you guys should have is like, we don't care at all about the education.

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All of your focus, all the profit goes into just fixing one number, which is that you need to look at M12, so month 12 retention, and just say like, okay, we're at 40, how do we get to 60? And then how do we get to 70? And that's all you're solving for. Because if you solve that, then the thing will just keep growing.

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And that's fundamentally the beauty of software, once you get it right, is that it just keeps growing.

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Thank you.

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In home or? In home. Okay, got it.

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Okay, is it like guy drives out or is it you sending machines?

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Yeah. So what stops you from just doing way more of the doctor stuff?

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So you're making 50% margins, right? So what's the cost to acquire a physician?

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That's good. Well, I think that one is you could probably just take the existing brand that you have and just be more deliberate about the call to actions that you make. And basically, cause like if you talk about high level insurance stuff, that's going to attract both people who want to learn more about insurance, but many of those people will be agents. Yes.

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Who refers your business. Cost of acquiring a affiliate.

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Okay, so it costs you $500, and then what does the average physician refer to you in a year?

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So I mean, you're getting 12 to one there, and you already know how that works. So what stops you from doing 10 times more of that? You're saying they don't pay well, but that's the part I'm not sure I understand.

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You mean you've only really talked to 200 in terms of reach outs? Or 200 who signed up as affiliates kind of thing?

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Yeah, do you have an active affiliate manager who's like regularly reminding them? Yeah, so the way that I think about affiliates is it's basically a second tier of customer. And so you need to have somebody who's regularly stoking the affiliate fire to keep them activated and continue to get them to continue to refer business. So I'll give you an example.

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So there was a roofing company, it was a restoration company. They had one star, star salesman and all he did was he'd go around to other tradesmen and get them to refer them business. And so they would get a thousand bucks to refer the restoration business business, but the sales guy got 500 for every time they referred.

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And so that guy, all day long, was knocking on doors, walking to the front door with donuts, asking them how they're doing, bringing coffee to the guys, and then reminding them that they existed, and that's all he did. And so I think you're doing the hardest part, which is getting them to refer, you just didn't have the consistent referrals.

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Because if you had 200 active affiliates who were consistently referring your business, and most of these physicians, especially like GPs, things like that, I mean, they see thousands of patients. And many of them could probably benefit from the services you have.

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And so the activation is both getting them to refer consistently, but also percentage of customers that they see that they refer to you. So it's kind of both sides of it. And so I think that the missing link with what you were already doing was just that you didn't have basically the continuous affiliate marketing strategy to get them to keep sending you business.

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So that's probably like, right now, today, I would fix that first. Because you already have the acquisition system, you already have the network, and so for me, reactivating that affiliate base would be the first thing that I did.

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The second thing, maybe, because you might just reactivate the base and all of a sudden you're like, I got 200 guys who are referring me to business, holy shit, we're at 10 million. But the second thing I would consider probably, I would still probably focus most of my time on the B2B because you already have it. But for this business, I think that it lends itself, what's the price point?

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And so I think if you basically alternate the CTAs, you'll be able to basically, I don't want to say chase you both, but in some ways you kind of can double dip here because as long as the content strategy fundamentally doesn't really change, you're just changing really the calls to action, then you can kind of get a little bit of the best of both.

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Per treatment, okay. Wait, so the average doctor will send you one $6,000 patient per year? When you said it cost you 500, they'll send you one patient? Interesting. So do you have a process for once the patient gets the thing calling the physician up? So like, I'm Dr. Smith, I send you Sandy, Sandy goes and gets the, well, you come to Sandy and Sandy gets the treatment.

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Is there a cycle where you call back me, Dr. Smith, and say, hey, we just dealt with Sandy, here's some of her stuff,

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For sure, yeah.

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Okay.

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Yeah, I would systematize the hell out of that. Because it's like, hey, you just sent me this person, let me close that loop for you. She's awesome, we did this thing, she loved it, by the way, and then we have the opening to the other. What patients did you see this week who you think would be a good fit? And rather than saying, do you have any, it's which ones would be, is the question.

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Small training stuff, but it matters. So I feel like there's so much on the B2B side that honestly, that's probably where I'd be ripping apart.

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It's not that I wouldn't, it's that when I think about, so this is the difference between theoretical and actual. I would, given the fact that you're already running good margins on this thing, basically doing it, and take this the way I mean it, completely unoptimized right now. Again, this is not a slight. Then I'm like, there's so much juice left in this thing.

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I don't want to now start something new. It's like, I barely got this one going. I want to crush this. And when I'm like, no, we follow up with every single person. I've got a full-time affiliate manager who steps by our affiliates. I'm calling them affiliates, but drops by the docs once a week just to remind us, say nice things. Hey, by the way, that is happening all the time.

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And we've already covered literally every single physician in the Twin Cities. Then I'm like, okay, let's go B to C. But if we haven't completely squeezed the hell out of this thing and it's already working at the level it is right now with like, you're only getting one patient per doc. Yeah, so you getting B to B customers is the same as getting one B to C customer.

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I understand why you'd be frustrated because you'd be like, well, fuck it, I'll just, I could sell one customer on my own without having to deal with the doc. But the whole point is that I want them to be sending 20, 50 a month. And they can, because they have the volume.

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But I do think that the big thing that you need to crack is teaching them to generate their own rates. Like that is a hundred, like, That's the limiter of your business. So you need to bring them on and you need to have the training system to reliably get them to self-generate. That's it. That's what you have to do. If you do that, the sky's the limit.

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And I think that first one has to be a beautifully choreographed experience, because that first patient's the test run for them, for you. They'll refer you one, and we'll see what happens. And so one, it's like Sandy's got to be blown away. She's got to come back and be like, oh my god, that place was amazing. And then you also have to go back to the doc and be like, we blew Sandy away, by the way.

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And so I think you have to tackle it from both sides. That's what I would do. Getting into the ad side, you absolutely could do it, and I could walk through a whole strategy there, but if we swap places, that's where I would be focusing.

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Infinite banking, insurance, you have 29 agents, and you're needing to decide whether you need to be the face and get customers to feed your agents, or you should go all in on getting more agents and teaching them how to do lead gen. Yes. Cool. Yeah, so do the second one.

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If I crush my B2B play, then I just run my B2B playbook in the new market. Like once I find something that works, I just want to just, yeah, pillage. Right on. Thank you. Yeah, no, you bet. Thank you. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Okay.

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That's fine.

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you want to teach them the highest efficiency strategy for getting customers. So whatever that is. So you can just like, whatever your method is that you think the highest percentage of people will succeed with, that's what you teach. So whether it's shake hands, kiss babies, or it's cold calling, whatever. Or a combo of both. Yeah, or a combo of both. Either way is fine.

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But like fundamentally, like look at the biggest insurance companies in the entire world. they are that big for a reason, and almost all of them, they are recruiting machines. That's where fundamentally, because they're not a supply-constrained business. You can sell as much insurance as you want. You're not supply-constrained.

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You're just demand-constrained, and so you just gotta get guys and then put the system in place so that they learn how to sell, and then that's the business.

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Yeah, it's significantly higher leverage. So think about this as, what problem do you want to solve? So either you say, I want to become a,

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No, you're good. You're in education. And education graduates people. That's how education works. So if you look at the education system overall, the way to create continuity in education is just always have something else to learn or to teach. Like first year, now you're an undergrad. Now you're a graduate student. Now you have a master's. Then there's a PhD and you get a second PhD.

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You just keep, people just become endless students. And so do you want to sell the business eventually or do you just want to make money?

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No, it's fine. No, I prefer the truth. Yeah, I mean, the easiest thing to do is just double the amount of events you're doing. You can either go one a quarter or you can do two at 1200.

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Is that where you run them now?

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Like, you want to keep growing your brand top of funnel so that you just have more and more people who are interested in infant banking, and then you have all these agents that you pass it off to so that they can, you know, basically transact and own the relationship. So that's like option one. That is, I would say, the lower risk path because you're already doing that today.

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I mean, you have a really simple solution. Like just run the same playbook more times. If you were like, I want to build a more valuable business, then I would say take the year to figure out revenue retention, which is how do I get these people who paid me $12,000 to pay me another $12,000 or pay me $30,000 next year? Or even downsell them to something that's $5,000 a year but they stay.

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Yeah, but I think considering for the model that you have, downselling the upsell, I actually like a lot. So if they paid you 12, maybe they'll stay for three a year, three to five, just to have access to the network and some of your vendors and the stuff that you provide. And I think that's something that people would be far more likely to stick with.

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And so then you can basically think about your business as, from a zooming all the way out perspective is that the $12,000 is actually like an offset CAC, which is like you could break even on the $12,000 if you know that someone gets into a $3,000 a year membership that's pretty much all margin, that doesn't leave.

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So it's like that allows you to spend way more than your competition, because they need to make money on the 12, you can break even on the 12, and then you just have this stack of $3,000 bills that just keep stacking up. That's like low effort to maintain.

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Make sense? Yeah, it's good. The nice thing is that you're honest about just wanting to make more money. It makes this a lot easier. Yeah. Don't say, I want to make an impact.

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So where did you source the single whale this year?

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Okay, so SEO or PPC?

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Okay.

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So if you want to go whale hunting, then I think your initial thought strategy of finding the architectural firms and engineering firms and whatnot is a good one. I would probably try the outreach method as my primary way, because you can be hyper-targeted in terms of who you're reaching out to. And the key to making it work, though, is what's in it for them to refer you business?

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And so how many, is it on Instagram that you do your stuff?

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Are you shipping? Are you doing installs or no?

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You just actually... We just ship product. Interesting. Got it. then who are the decision makers? Well, right now it's been primarily residential is what it sounds like.

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Well, this is a fundamental change in business strategy. So you're aware of that. So with that comes risk. Because like if, obviously the lowest, or the highest risk adjusted return move, or lowest risk I guess, is to, probably add in, like if I were like tomorrow, what would I do? I'd probably just add PPC in right now because you already have something that's working on SEO.

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I would probably see how can I get way more articles written so that my SEO traffic can go up? Can I tackle more keywords? That's like the for sure will work and make you more money play. The going after whales, for sure can make more money because why not add zeros to things? It'll just be a completely different sale and you'll have two levels of sales.

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So sale number one is going to be for the affiliates and then figuring out what's going to make it worth it for them. And then the second level is what's the, you know, what's the actual sale to the, to the whale customer. So who's the decision maker with the whales?

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So you just want bigger homeowners?

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Okay, yeah, so you're gonna have to go B2B outreach, basically when you look at core four, that's gonna be what you're going to do, and then they're going to be your affiliates, and so the million dollar question is, what's in it for them? So my proposition would be, So there's three ways you can do affiliates, at least in the world of Alex.

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Yeah, and what percentage of the leads come from that stuff versus whatever you do in person?

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So you have they sell you shit for you, and they get a commission. That's option one. That's typically my least favorite option, but it is an option. Option two is that you give them some morsel of something that you sell that they can sell for 100% markup. They could keep all the money, but you get the introduction. This is my favorite way of doing it. The third way is that you basically,

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allow them to just bundle in your free thing with their services. Now with architecture firms, it's not like they're gonna bundle in a railing for their service, but just for everybody else. Those are the three things. So it's like, they bundle basically your lead magnet in for free with their thing they sell, so it enhances the value of their overall package.

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You give them the things so they can upsell your lead magnet for an amount of money that they can keep 100% of. Or they just sell your stuff and they get a kickback. Is there a version for this where they can just upcharge? Like you can do a small portion of this that they get 100% of?

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We wanted them to be stupid to say no. Yeah, because the generic leg, you get 20% kickback, it's just like everyone does it. Who here does 20% kickbacks for anybody who refers you business? You can raise your hand, I'm not gonna be upset. Okay, and so the point is that, and you probably, no one here has referred anyone else business, because no one cares. That's kind of the point.

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And so it has to be an irresistible offer. And so if we give away the lead magnet or something, think about it as like my CAC for a $50,000 customer is the cost of the lead magnet. And if I close one out of three introductions, then it's three X the cost of lead magnet is my cost to acquire a customer, which is usually pretty darn good.

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But it sounds like an irresistible offer to the architecture firm, because they're like, we can just sell this and keep 100%. You're like, yep, just make the introduction and I'll deliver that. And then when you talk to the customer, you're like, yeah, I'll deliver that. Here's one rail, but you need 10 more. And then you make the sale. Does that make sense?

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But that's probably the way you're going to have to do it. So either you can do the discount. I mean, I would say, guys, I have 20% that I can play with here. So you can take all 20 and give them no discount. You can take a 10% discount and then you get 10% kickback. Like this is what I got. I'll make it work whatever way you want, but this is my bare bottom price. Okay.

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And I think that's the outbound strategy.

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Yeah, I'd love that.

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Thank you. Love that for you.

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Of what?

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Yeah, I thought it was like 60, 70% of the business was coming from...

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Okay. And you say tools like software?

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Now the issue here is... What's the split between the three in terms of revenue?

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And the brand side is you basically being an agent to do partner deals.

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I will wait in line until you get 19 more customers just like me. And then all at once, we will start working with this new account that you're bringing in so that your payroll and your revenue can match. Wouldn't that be nice? It'd also be nice if this table was made of gold or diamonds. Be sweeter if it were diamond or adamantium, even cooler, but very unlikely.

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Hey guys, this podcast continues to grow, which is insane and it's amazing. And it's only because of one person and that's you. You who's listening to this, you might think you're just, you know, like a dot on a map or on some data sheet or something. But the fact that you guys every day share it and post it and text it to friends, put it in your Slack groups for work.

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That's how this podcast grows. And so it means the world to me. And if you think that this podcast would provide value to somebody else, if you'd share it, it would mean a lot to me. So thank you so much. And so if you want to be in the wishing game, then maybe entrepreneurship isn't the right path for you.

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But if you want to live in the real world, you have to accept that there will be problems and there will be things and they typically revolve around one core issue, which is the delta between your expectations around time. So let me explain what I mean by this. The problem isn't your expectations of the business. Your problem is the timeline of those expectations.

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If you want to change the world, you absolutely can. I believe that wholeheartedly. I think any one person, any one man, any one woman can change the world. I believe that. But not tomorrow. It will probably take time. It will take infrastructure. It will take help. It will take a movement. It will take many other people helping you along the way. And that does not happen overnight.

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Like there's the saying, Rome wasn't built in a day. And it's true. It wasn't. And so now I'll give you a realistic timeline, I think, that I work on, which is I work in decades. And the reason I choose that number is that you can go from new idea to massive global company in about 10 years. You look at zero to a Microsoft, which they IPO'd at about seven years, right?

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to scale quickly because maintaining quality of service when you have other humans doing things and you're bringing them in and they don't know anything and you have to train them becomes more challenging.

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You look at like, obviously open AIs, we saw their very rapid growth, but they're also, they worked since like 2017. And now they're what, like eight years in? So again, seven years, six years, I round a little higher because I don't think I'm Elon Musk. And maybe you don't think you are either. And if you're politically charged about it, pick a different entrepreneur, whatever. The point is,

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The rush you have is imaginary. It's not real. It's in your head. You've made it up. To get to where, by when, why? Maybe the fact that you think you have to double this year is the reason you'll never double over the next five years because you keep trying to cut corners. You can't build it right. And because you don't build it right, you don't get the right people in on the front end.

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You don't get the right people in on the back end. You get the wrong talent. You get the wrong customers. You keep churning this up because of arbitrary, arbitrary, completely made up lines that you draw on the sand and say, this must occur. You can have the business you want, just not by the time that you want it. And so I don't think you need to change your dreams.

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I think you need to change your timelines. And so the idea that your business isn't scalable is actually, yet again, in relation to speed. Of course it's scalable. It's just not as scalable. It doesn't scale as fast as you'd like it to. And what part of this can we change? The as you'd like it to. That part you can change. Now, of course, you could advertise more.

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If we had kind of like the middle of the path there, you've got like an e-commerce business, which you can start relatively quickly, but as you scale up, you can scale up quickly, but some of the issues become supply chain and logistical problems, right? So I'd say that's kind of like in the middle, right? It's a little bit slower to start. It costs a little bit more money to start.

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You could try and hire a bigger recruiting team within the constraints of your business, given the resources you have. Sure, of course, you can allocate more resources. But you're not going to solve it. These are features. And so I think a lot of people are wishing for a business that has no difficulty. And if you find it, let me know.

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But I have yet to see it and I've looked at a lot of businesses. And so I say this because many of you probably, one, don't need to change your business. You probably need to keep doing the business you're on. Number two, the business you're on is probably... scalable. All businesses are scalable. It's just how hard is it to scale?

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And when we translate hard into what problems must I solve in order to scale it? And what are the alternative problems to this path that I would have to encounter if I didn't follow this path, which you'll find are often also equally difficult. And probably you're less equipped to solve them because you've never solved them before.

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And so the idea is I want no problem, but really you're only trading problems. And so when you're thinking about, I want this to not be this way, think about what problems you'd rather have. There's a big, big pile of problems in the middle of the table. All the business owners are tossing them in, in the middle.

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And it's like, you got to throw your cards in, your problems in, you got to pick somebody else's. When you look at everybody else's like, ah, I don't know. I don't know if I would pick them up. And the thing is, the longer you deal with your problems, the better you get at dealing with them. Kind of like the longer you've dated somebody, you're like, I kind of know how to deal with this person.

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I know how to deal with their crazy, right? And over time, they kind of know how to deal with your crazy. So your business probably isn't broken.

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It's probably just not growing as fast as you want because you are demanding that it grow faster, but you're in so doing trying to break things about your business that were making it work in order to get it to not work so that you no longer have that problem and you create another problem. And now you have two problems to solve. Your timelines are the biggest issue in the business.

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And the fact that it is hard is a feature, not a bug. And the vast majority of your business career will be spent waiting in painful tolerance of the solutions that you are implementing to kick in. And you have to deal with the lashings of life while that's happening and look at everyone in the team in the eyes and say, we are working on it.

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And they're going to be like, well, why don't we change this? And you have to look at them and say, no. And they're going to say, but there's this fire. And you're like, yeah, but if we do your thing, then we're going to have another fire.

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And we're also going to incur the cost of change between both scenarios, which I'd rather just have pain one rather than pain two and cost of change pain, pain three. And so what it is, it's erratic. It's frenetic energy. It's the feeling like you must do something.

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And if you do have that energy and you're like, man, I got to do something about it, go to what you're actually trying to do with the solution and try and promote yourself. Go take some of the interviews yourself. Try and speed up the cycles there. By all means, try and speed it up. You're just not going to eliminate it. These will be features. These will be things that you live with.

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It does scale faster than traditional service does, but you're still going to run into some problems. Now, all the way on the kind of extreme side, you've got the software digital type businesses. Now, these businesses are typically, when I say digital, I mean SaaS software, not digital products like e-books and courses, things like that.

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And I'll leave you with one thought. There's an old saying, an old bull and a young bull, and they see a bunch of pretty cows at the bottom of a hill. And so the young bull is looking at the old bull and he's like, hey, let's chase. Let's go run down there and see if we can catch one to procreate with. And the old bull is like, no, that's a terrible idea. And he's like, why?

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He's like, well, because if we charge down there, he's like, they're all going to scatter. And the young bull's like, yeah, but I'm going to I'm going to take this. You know, we'll each get one. He's like, yeah, but if we if we walk down the hill slowly, he's like, we can procreate with them all. And I've tried to make that PG. How does this relate to business?

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Does this mean that if I take my time, I can pursue every single entrepreneurial endeavor? I actually think that within the context of entrepreneurship, it's backwards. You're never going to sleep with all the women. You can't. There are so many businesses that exist. And the reason for that, and you have more ideas than you have time.

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Enjoy.

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There's a fixed cost that we must accept that it will likely take. If you really want to go big, look at the biggest businesses. They're 20, 30, 40 years old. And you're like, well, I'm 30 now. It's like, right, that means until you're 70, one thing. You just keep growing it. And so what does that mean downstream?

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It means that there are opportunities, not just some opportunities, but all other opportunities besides the one that you're currently working on, you will have to say no to. Think about that reality, like let it settle with you because you have to come to peace with it. And the fact that you haven't come to peace with it is why you keep wanting to pursue all of these things.

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But by pursuing all of them, you will get none of them. You're not going to start every business. You're not even going to start every great idea you have. You're not even going to start 20% of the great ideas you have. 10%, 5%, 1 out of 20, 1 out of 100. You're going to have one idea and then you're going to have to keep sticking with it because that's where all the gains come in.

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It comes in the compounding. It comes in the sticking with it. The hard part about the plan isn't thinking about the plan or doing the plan. It's sticking with the plan. That's the hard part of the plan. And believe me, in the frustration that I'm having, the reason I'm like almost shouting like this is because I'm shouting at me. I'm not shouting at you. I'm shouting at me. Because it's so hard.

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Like this is what's hard. It's the hard because it's a muscle you're not used to. It's a skill that you have to learn. It's a trait. You have to flex over and over and over again. And I will say this. The more you say no, the better you get at it. It never goes away how hard it is. But it just gets a little bit easier. It just gets a little bit easier. with time.

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And eventually, I think you'll know that you will have appropriately flexed that muscle when you can have no FOMO. If you can hear that someone else is doing great and be like, that's amazing for them. I know my game. I've been doing this for six years. I've been doing this for eight years. I'm going to keep doing my game. And I think a lot of it is that we have this desire for permanence.

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These businesses cost the most amount of time to start, the most amount of money to start. But once you achieve scale, they become significantly easier relative to the others. And so I get this question of like, I don't think my business is that scalable all the time, when in reality, it's just harder to scale.

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We have this desire for legacy. We have this desire to live forever. And When outside of Brian Johnson, no one else is really talking about that. And up until this point, the death rate on humans is 100%. The likelihood of forgetting of a human's life is also close to 100%. And of the people who are remembered, they're not remembered by the people they know.

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They're remembered by people they don't know. And by the way, they're dead. And so we have this desire. And I think it just comes into direct conflict with the idea that we just live finite lives. Time moves faster than you think. And the younger you are, the less you realize it. The older you are, the more you start to be like, man, that was pretty quick.

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You only have a couple, a couple big bullets in you. You got a couple decades, you know, or couples too. So a few, you have three, four, maybe seasons. And if you really want to go big and something starts working, then you're going to do that thing for 30 or 40 years. And so like the idea of like, oh, I'm going to own all these companies. Like,

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You can have divisions within a business if it makes sense. But most of the time it doesn't. Most of the time you could start this other thing or you could just do more of the things already working. Why isn't it happening faster? Because you're demanding that it happen faster. But there's nothing wrong with your inherent business. You're saying the problem is a problem that you created.

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Basically, you just take reality, you move the line of expectations and you say there's a problem. And I see more businesses ruined because of that than just about anything else. You could make it work if you just stuck with it and you stopped thinking that there's something wrong with your business and maybe look at the fact there might be something wrong with your expectations.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And so the thing is, is that switching from one service business to another service business in terms of overall category is not likely to dramatically change your growth trajectory at all. You're still likely going to be constrained by humans, which most businesses are. I'm going to say this again. 78% of businesses in the United States are service-based businesses. This is reality.

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What's going on everyone? Welcome back to our, I think six months ago, might've been the last time I did one of these, but it is a thirsty Thursday, a thirst trap Thursday, if you will. If the thirst trap is obviously my dashing good looks, but more importantly, A business concept that I feel needs talking to.

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And the reason that this is so annoying to me is that people will come and want to break their businesses. They won't want to abandon their businesses because they think that the woman in the red dress, they think this other new thing somehow doesn't have the same characteristics of a people-based business. Now, within that category, let's say we have a service business.

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You can have demand-constrained service businesses and supply-constrained service businesses. Each business has problems. And the crazy part is that the problems are actually kind of similar. So let me explain. So if you have a demand-constrained service business, so you have a brick-and-mortar fitness business, you're going to be demand-constrained.

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As in, it's going to be harder to find people who want to work out than it is to find people who want to teach people to work out. Finding trainers and fitness enthusiasts, not that hard. Finding people who actually want to come in the gym and get excited and sign up for a service package or something like that, much more difficult.

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On the flip side, if you have an accounting firm, getting people to do their accounting, everyone kind of has to do their accounting, but getting competent and high quality accountants becomes the issue. Now, how do you solve each of those problems? You promote. fundamentally, you promote. You promote to get new customers. You promote to get new accountants. It's the same problem.

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You just have it on the back end of the business or the front end of the business. And some businesses alternate between whether supply or demand constrained if you kind of grow at the same rate. So you alternate back and forth. But fundamentally, and this is why I think this is so important, you're going to struggle in one way or the other.

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And the way that you will solve it in either of the situations is going to be through promotion of some sort. And so the reason that I bring this up is that said differently, my business isn't scalable means it's hard. And I want it to be easy. And can you just tell me that it's going to be easy? And it's not. And so difficulty is a feature, not a bug, of scaling a business.

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It is something that comes with scaling a business. And the reason I think this is so important is that there are periods of time, and sometimes those periods are not weeks, but they are quarters, many quarters in a row, where you have to sit with a problem. As in, you see the fire, and it's in your living room, and you have to just let it burn. So let me explain what I mean by this.

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There will be problems that occur in the business. Let's say that you're, you're supply constraint and you need to bring new people in. Okay. So once you decide, okay, I can't handle more customers because I have to hire more accounts. I have to hire more HVAC people. I have to hire more technicians at my auto shop, whatever it is.

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As soon as you make that decision, you see that clearly you start the promotional cycle. So you start kicking off ads, you start doing some outreach, you start hitting up your network, and then you start some interviews, start some screening. And then maybe you find one or two people and then you interview them and then maybe you give them a job offer.

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And then once you give them a job offer, you have to get them trained up and be proficient. And you might lose some of them because they're not as good as you thought they were. And other ones are good, but it still takes three or six months for them to scale up. And so all of a sudden, remember this, what the feeling is going to be like.

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And I think that I can make this relevant for just about every business owner watching this. So we have these, you know, in our advisory practice, we just started last year. We invite some business owners out every so often to come out, kind of talk about their business and then help them, you know, solve problems and get, you know, grow, hopefully.

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You decided and you realized that you were supply constrained. You went out and you did something about it. Good for you. But once you start going out and doing something about it, what happens? Nothing. The business is still constrained. And so you just suffer day in and day out while you try and solve this problem. And here's the nasty part.

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Let's say that six months from now, but remember, six months is 180 days of every day you wake up and you're like, I have this problem. I should do something about it. And then you have to remind yourself, I am doing something about it. But the thing is, is that your team is still going to be struggling. They're still going to be complaining. You might still be complaining.

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And the thing is, is your brain, your monkey brain is going to be like, we should do something about this. But you are doing something about it. It's just that the thing you're doing about it isn't going to solve it today. And the likelihood is that... And this is where it gets nasty. This is where the real problems happen. This is why this is such an important video.

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During that waiting period is when the vast majority of entrepreneurs fuck with shit. So they change their model. They change their price. They try and change... They're like, you know, what... Well, what if we change our deliverable to... you know, it's, it's 20 people per account instead of 10 or five.

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And that way we get, you know, we can keep selling, but then all of a sudden your service delivery drops and your churn goes up. And now you have a structural issue within the business. Whereas when you had to business that you had before this without changing it, you had good margins and good revenue retention, meaning like you kept making money and people kept paying good.

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And so you take something that's really good. And because you have a constraint on the system, you break the business and While you're waiting for your solution that you already started on to kick in. This is the tangible of pain tolerance. So a lot of people like to think about like the rocky cutscene and things like that. Like, oh, I'm in business. It's the grind.

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The grind is oftentimes realizing there's a problem, beginning to try and solve it, and then having to live with that problem for not weeks or months, but quarters and sometimes years. And so the reason I'm bringing this up is that then the next thing that you start thinking is, well, you know what? Maybe I'll outsource this problem to somebody else. I'm going to delegate this away.

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Sam Altman had this really good bit that I saw on Instagram the other day. He's the founder of OpenAI if you don't know who he is. And he said, You can't delegate the execution because the idea and even the product or service oftentimes, though exciting, is not the hard part. That's like the 10% of the business. I mean, it's fun. You have lots of iterations, lots of changing.

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But then once you have it and people are buying it and they like it and you make money at the end of the month, the 90% of everything else is the actual execution. It's the doing this. And then doing this is the part where you have unrelenting problems that either you are actively solving and have not seen the fruits of your labor, or you're just solving the micro problems that happen every day.

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And all the while, you have to resist the urge to break the thing that actually works that you spent all of this other time getting all these iterations, getting punched in the face to find the thing that actually worked.

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And the likelihood that when you change the thing that actually works to something that's not that thing and that that other thing is going to work better than the first thing is low. And that's the crazy part. Think about this from a hypothetical perspective. If I have a building, right, I've got bricks all along each of the walls to create the building, right?

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Now, I've had the same problem come up again and again and again that I felt the need to make this for you. Which is, if I hear... My business isn't scalable. Or shouldn't I switch my business to something that's more scalable? Again, I might gouge my own eyes out. But the reason that I'm so annoyed by it is that basically every business has limits to scalability.

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There are unlimited places that those bricks could be in the physical world. They could be in China. You know, like I'm saying, like if I had a thousand bricks, brick number 999 could be in its exact place where it needs to be for the building. Or it could be in unlimited other places. But only in one of those locations is it serving the purpose of keeping the building upright.

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And so oftentimes when we move bricks, what we're doing is the likelihood that the move that we have is going to take that brick from something that already works in the building to improving the strength of the building versus just being a Jenga block that we remove, we put on the side, we just put it across the street.

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And then we think that it's going to improve the building when in fact, the likelihood that when we change something that works, that it works better is usually significantly lower. I want to dovetail into kind of a third bigger idea here, which is features and bugs. And I referenced it a little bit earlier, but I want to hit on it really hard.

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And to use the words of my late great CFO, Suzanne, she said, all businesses have shit. All businesses have features.

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and bugs but i think one of the big mistakes is that founders believe that the feature is a bug when it really isn't and so if you have let's say a service business then you're going to be like man it's hard to find good people i should change my business model well people's the business That's a feature. That's something that comes standard with the business. You're never going to eliminate it.

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It's going to be part of it. If you were like, man, I am a software company, then guess what the problem that you're going to have is? Finding good software developers. They're really hard to find and they're really expensive. And so you're going to still have to manage those people. Now, of course, there are problems in business that you can solve.

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It's just that there's a lot of business problems that you manage rather than solve. You never get through them. It's just like basically this pain of business. It's just overhead. It's just something that you have to keep paying. Understanding this took me a very long time. And you must do the hard thing.

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And a lot of the hard thing is basically withstanding the pain of knowing that there are mistakes occurring in the business. There's churn that's going up. And if we had these people, we wouldn't have this churn. But I can't change the business because I'm actively getting those people. So you just have to sit there and watch it burn. You have to be okay with the flaws.

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And it will drive you insane because as a person, you need to be the type of person who's not okay with flaws. But you have to be willing to deal with the flaws as they exist because you are already actively solving them. And you have to look at your team in the face and be like, yep, heard. And they're like, there's all these fires. You're like, yep, understood. What are we going to do about it?

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Right now, we're already working on it. Well, why isn't it done yet? It's in progress. What, what? It's in progress. Well, shouldn't we do this in the meantime? No. We're just going to continue. We're going to endure. We're going to persist. We're going to deal. And I think that season is the part that is the hard part.

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And the thing is, is that season is literally never ending because once you find your mechanics, you find your accountants, you find the software developers who are going to help you with your business, whatever it is, right? As soon as you find those people, guess what happens? Something else will break. And you'll have some things that are fast fixes and you'll fix those fast.

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But some fixes are slow fixes. And the slow fixes are the one that are going to be the vast majority of your business career because the fast fixes are only there for a small period of time because you deal with the pain, you see the solution, and you solve it. Done. Over. But then as soon as you go fast, fast, fast, slow, then you just got to stick with that slow one until it's solved.

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This is what makes it hard. And it's not that your business isn't scalable. It's that you want scaling to be easier. And that's the issue. Your business isn't broken. You don't need to change the business. You need to deal with the fact that solutions take time. And that this might just be a feature of the business you're in.

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Now, part of you might think, well, if this is a feature of the business that I'm in, I don't want to have this business. I don't want to have this business. Okay. Well, let's walk through that. So hypothetically, if you were very good at solving that problem, would that be a problem that you'd be more okay with dealing with? Maybe.

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And if you're considering an alternative path, you should also consider the alternative problems, right? You're like, well, I want to do something else. Okay, tell me all the things that suck about that path, because I promise there are things that suck about that path. And then the follow-up question to that is, are you better equipped to solve those problems?

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Now, in the hypothetical world, you always think you're better equipped to solve those problems. But oftentimes, you've never even solved them before. And maybe the problems you think that are there are not actually the real problems. The real problems are much deeper and more nefarious than the ones you're currently dealing with.

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And there are different problems that occur at different times. Now, I want to talk about this within two different contexts. One is industry context. And the second is more on like the demand and supply side. But I'm going to break this down in a lot of different ways.

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And so I think that there's something so deep about the saying, the devil you know, right? It's like the business is the devil you know. And you may be even doing this for a year or two years or five years or 10 years, however long you've been in your industry, 20 years. The thing is, is the longer you've been in industry, the more you've mapped the system, right? You've mapped the terrain.

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You understand the good and you understand the bad and you understand what to do about the bad. And so fundamentally, problems will not end. And I think this is like, it's almost like a human problem that exists with entrepreneurs is that they want problems to stop and they will never stop. They will never stop. You're wishing for something that does not exist.

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And in so doing, you are consistently changing things about the business that is working. It's probably the same thing for people who hop from relationship to relationship. Is they want to think, I want to find a relationship that has no problems. It's not going to happen. You're not going to find it. But the biggest problem of all is that you think that there shouldn't be problems.

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Hey guys, real quick. This podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth. If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love.

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Thank you. You have a problem with your problems and that problem is solvable. You decide that there isn't a problem with having problems. You accept that having problems is a fact of life. It's a fact of business. It's a fact of wherever you're trying to go. Like, find me $100 million, $10 million, $1 million, $1 billion. entrepreneur who says, I got here and there were no problems.

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In fact, today I have actually solved all of my problems. It doesn't happen. And so we have this demand, we have this wish, and that wish is the actual biggest problem in your business because it's the thing that's causing you to break the thing that's working. And this is where you need to give time, time. You need to give solutions time to breathe and you need to give solutions time to work.

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As always, once the solution actually happens, play it out. Let's say that we finally fixed our accounting recruiting problems. We now have lots of accountants. We've created a whole school for accounting. We made 20 partnerships with different accounting schools. And now we have this. We have guys banging down the door being like, man, I would love to work for you. What's your problem now?

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So right off the bat, if you have a service business, for example, you hire humans to do things for other humans, then that is a business that's very easy to start, can be very profitable, and then over time can become a little bit more difficult. Not impossible, just more difficult.

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Well, you know what? Now that I've got all these accountants, I've got all these guys with empty calendars. I have so much more capacity. I'm overpaying in payroll because I got all these guys, but I need to get more customers. And so what do you do? You start marketing more, but now the customers are coming because you're trying to fill slots. You're lowering your bar.

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You're taking worse quality customers. Now your churn becomes an issue, right? And your margins start going down because you can't charge these people as much. And you've already taken on more fixed costs because you started hiring all these people. Huh? Is this sounding familiar?

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These are sounding like business problems because wouldn't it be convenient if that accountant would say, hey, I will wait here patiently until you have acquired 20 accounts of appropriate size. And then and only then will I choose to come on board. And at that moment, you can collect their revenue and all of these customers will say, you know what?

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Every year I make a podcast on the lessons and failures from the year before, and every year it is my most listened to podcast. And the wait is over. This is my lessons and failures from 2024. To give you context on the companies that I own, our average position at acquisition.com is just about 40%.

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And so the idea here is, I will try and speak in a way that I think has the highest likelihood of being language that will be comprehended by the widest slice of my target audience. If you have an even broader audience, then you would limit the amount of analogies to things that everyone understands. So probably be human things.

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So I might be talking about just eating in general, sleeping in general, brushing your teeth in general would be the analogies that I would use. And the great language of my speech would be as low as humanly possible. So I looked at this politics thing, this was before this election, but they had shown that the politician that spoke at the lowest grade level won every election.

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Now, I don't know if that's held true since then, but I thought it was relatively telling with all of these different marketing strategies, the one that mattered most was actually being understood. Which leads into one of the biggest next things that we did, which was we were focusing more on pre-production. Like this video right now, we prepared for hours. Like what are all the lessons I have?

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What are the examples I want to talk about? Like this isn't me just turning on the camera and saying like, what's up? I actually put a lot into this. And because it was a whole year, it was also helpful for me because I like to crystallize my own knowledge. But pre versus post. And then... Another one is clear packaging, right?

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Is just be very clear about what it is your content is about and what they're going to get from it. And so from that, we came up with the three P's, which is proof, promise, plan. And so every introduction of every video has to have these three things. Now it doesn't have to, but we found that when we included those things, those videos did better.

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Cool, then what do we do? Well, the easiest thing is incentivize all the people in your existing workforce to go do that recruiting for you. Like, too many business owners will give like a $1,000 referral bonus on something that makes $400,000 a year in gross profit. Well, that's dumb.

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And so you notice every video since this back to business theme, we have proof, promise, plan within the first, call it 30 seconds. And so it's What are you gonna get from the video? Why should you believe me? And this is how we're gonna do it. That's it. And so, in this video, I started with, we have these three companies. Three of our companies are over 100 million. We scaled a lot this year.

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We went from 50 million in EBITDA to just under 100. you will learn the lessons from this so you can apply it to your business, and the plan that we're gonna do it is I'm gonna walk through them step by step. All right, there we go, right? Very straightforward.

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And the last piece, which was a small one, which I actually got pushback from my team on, which is why I'm sharing it with you, is introduce yourself.

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right so a lot of people are like oh we don't want to introduce my like my audience knows who we are well good thing you're not just making it for them you're making it for people who don't know who you are yet right and so what we did is that we've actually now consolidated this to lower third and so at the beginning of this video you should see you know alex ramozy managing partner acquisition.com so we actually able to cut that out of me saying it because we want to keep the intros really tight

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I also have taken out the, hey, if you don't know who I am, just say, I'm Alex Ramosi, I'm the managing partner of acquisition.com, this is what we do. Or, put it lower third, and then just skip forward, right? You wanna keep it as tight as humanly possible, and when we look back at the videos that did exceptionally well, these were the things that, these were our common themes.

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We put more in pre, we introduced ourselves, we made it very clear packaging, we had a proof promise plan that was laid out, we had examples that were clear and relevant to our avatar, which is business owners, And so we made content about business, and lo and behold, it has been good. Yeah, and on a personal note, I prefer making business content to not business content.

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I like resented, I'll be really real with you, I was so, I was afraid of the results that were gonna come in, because I was like, if I'm gonna have to make meal videos, I'm gonna kill myself. They're like, we'll do our workouts next. I'm like, no, I'll just be dead. It won't matter. It doesn't matter, I'll just die. The thing is that I relatively have pain tolerance.

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So if it was the way to win, if you were like, hey, if you hit your hand with this hammer, your pistils keep growing, my hand would be a pancake. I would just keep going at it. But I would prefer not to do it that way, and I'm very grateful that you guys like business content better, because that's what I like making too.

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All right, so the next one is around platforms, and I think this was really interesting, so I looked really deeply at the platforms from this last year. I made a whole tier list video about this, so I'm not gonna go in super depth on this, but I would say that the MVP of the year was email, or maybe most improved, if you wanna call it that way.

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If I can give $25,000 away, or $50,000 away, and I can get it solved in a month, then every month, because that $400,000 doesn't happen at once. It happens over this period of time. And so if I can actually solve the problem two months earlier, then that means I get to collect $35,000 for two more months of gross profit. Okay, so there is a time component of this.

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I have not traditionally spent a long time on email, which seems ridiculous, because written word is my best format. And so I started writing emails, and they started doing well, duh. Like, maybe I should hate money less. I don't know. Anyways. So email was kind of the MVP of the year for me. Probably the most improved. Like, didn't expect it. The feedback I've gotten has been exceptional.

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And I made also a separate video on how I just write my emails. And so you can watch that. I'm sure you can find it. Beyond that though, Facebook was a, in terms of book sales per follower count and per view count was kind of like the highest leverage. We actually got a lot from that, so we're investing more in Facebook right now.

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But the obsession over the minutia of how you're going to get there is, I believe, an act of mental masturbation. You try and create these massive projections that are based on hundreds of variables that in reality, you just don't know what's going to happen.

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The perennial champs were IG and YouTube in terms of percentage of traffic that came to Acquisition.com. YouTube and Instagram were by far the biggest ones. The unbeknownst one was books.

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This is one that no one talks about, but Amazon is actually responsible for like 15% of my traffic, which is kind of cool, meaning basically the amount of people who buy books and then read the books and then go to the site

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Like a huge percentage of my traffic indirectly comes from Amazon because they, because my books do really well and have a lot of reviews and Amazon wants to have people buy products that they like on Amazon because then they associate the good thing from that product with Amazon. Right, it's like they have a strategy.

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And I also said in my tier list video that TikTok was something that I was de-prioritizing and I thought more about that since that video. So it's been like seven months I think since I made that video. I think that it's not that TikTok is not a good platform for business. I think that we had a skill gap around TikTok.

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And so I'm actively trying to remedy that right now and bringing in some really amazing people from the TikTok side. It's a platform I don't know very well. And so we are going to just bring in great people and align their incentives and see what happens. But fundamentally, I know there are business owners on TikTok.

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I just haven't been able to package my content in a way that did well on that platform. But if you're curious, since we made the incentive change, our TikTok is up 300% this week. So, you know. Incentives work. And speaking of those platforms, I would recommend checking out my email. I did say it earlier, Mozy Money Minute. I put a lot of time into them. I think they're really good.

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If you like my books, you'll love the emails. It's like super, super distilled down that. Really proud of them. It's just worked out really well. And so I think you will like them. It's acquisition.com forward slash newsletter. And by the way, if you haven't read the books, For the love of God, it's the best stuff I have. So if you like my videos, you will like the books more. Straight up.

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You'll like them more. They're better. And I feel like I can say that objectively. I work on both of them, and I think that, and it's just fundamentally, it's because I haven't spent 2,000 hours on a video. I have spent 2,000 hours on a book. So $100 million offers, $100 million leads. Check them out. Otherwise... Stay awesome.

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If this was valuable for you, it would mean the world to me if you shared it with another entrepreneur or people inside of your team. It's the only way that the podcast grows. And it's the only thing that encourages me to keep doing this as I shout into the dark abyss. But no, share it on your stories, text it to friends. It would mean a lot. I don't have sponsors for this thing.

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So maybe you can get the referral, and maybe it does take you six months instead of three, but you missed out on whatever that is, $105,000 in gross profit that you could have had had you just been willing to pay a little bit more, but still less overall, and you still get to keep that person for life. So you'll notice that I'm talking a lot about who in these examples, and you know,

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And so that is my only ask. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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It's one of those big, obvious, trite responses that everyone who is a senior entrepreneur or senior investor or Warren Buffett or Steve Jobs, they all say the same thing, which it's just about the people. Right? Bet on the jockey, not the horse. There's tons of isms in this world and everyone nods along.

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But the problem is that people don't have the context to understand the levels of talent that exist. And this is why these mistakes are so hard to bear because you have to have some sort of pattern recognition of having worked with one, terrible people to know how to avoid them. And then secondarily, what star talent looks like.

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And sometimes it takes luck in the beginning and then over time you start recognizing what that looks like so that you can do it on purpose rather than on accident. And if you think about people as one of the highest leverage things you can do, so think about this as hypothetical.

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If your business had people who could do everything that currently exists and you could simply own it, that would mean that you could work zero and make almost the same amount that you do now. You'd only have to find someone who could do what you do. Like literally, just think about what you currently make. Think about what you currently do.

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If you could pay someone less than what you currently make in distributions to do 100% of what you currently do, you could feasibly retire at your current income level just with that one hire. The idea of getting really good people is still undervalued in the marketplace, which is why there's always an opportunity for people who know how to attract and retain the best talent.

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There's a reason that the most expensive companies in the world in the stock market are at war for talent. I think, I want to say like 18 months ago, one of the headlines of, I think like the New York Times or something was the talent war. And the whole idea was just that

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There's just, it's an onslaught of signing bonuses and kumbaya and free lunch and all this stuff to try and attract the top talent. Because they know that the leverage of having somebody who's a 10x engineer or a 100x engineer 100x marketer for their business is always worth more than what they're going to pay the individual. And so they're just doing everything they can to get them.

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And so over time, I've consistently trimmed and trimmed and trimmed our planning processes such that at this point, I pretty much only care what we're going to do in the next 12 weeks. And beyond that, we might have one target or two targets by the end of the year, but we're not going to dedicate a lot of resources to this. And this is somebody who's a big fan of preparation.

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And this is me trying to translate that to you in terms of my emphasis over the last year or years that has yielded this outcome. If we're thinking about more or less in terms of my focus, this is one that I'm doing more of. I'm more focused on talent. I'm more focused on better people, fewer better people, and incentivizing them and incentivizing other people to bring them in.

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Yeah, and there's some semiconductor companies that are offering 3x salaries, their current salary, to poach people from one company to another because the cost of switching is obviously high. If they're making more money than you, you should look at what they're doing. So next point up for me is of the first 100 days this year, I took zero days off.

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And I bring this up because this is a very taboo topic, and I want to be clear, do whatever you want, all right? I'm just saying that when I see the entrepreneurs who are obsessed with their work, they do better than people who aren't. And it's basically that their discretionary time that would go to hobbies, that would go to other things, basically all flows into this one thing.

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And so I'm going to paint a different picture for you. If I played video games all day, And someone came up to me and said, hey, why don't you go outside? And I say, I don't want to go outside. I want to keep playing video games. The thing is, is that that person's making some moral judgment that I should do something that they have projected onto my life.

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Now, I'm a big believer in personal freedom, which is if you want to play video games every hour of every day until the day you die, that's your prerogative. It's not how I would want to live my life, but more power to you.

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If you have an outcome that you're optimizing towards, which would be financial wealth, which is kind of the point of my channel, the people who work the most tend to make the most money. And there's a number of reasons for that. So number one is you make more money when you work more because you have less time to spend it. That sounds obvious, but I think it's like kind of silly.

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If you work, you make more. If you stop working, you not only don't make, you also spend. So it's a negative to positive swing. It's actually disproportionate. The next thing is that a friend of mine messaged Elon about his vacation. He's like, hey, you should go on vacation or we should go here for vacation. And Elon's response was, I don't do vacations. And I was like, man, I love this guy.

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I bring this up yet again because I feel like the more you get in the game, the more addicted to the game you get. And I think that addiction is just a term that society uses for activities that people do that have negative consequences rather than simply things that you do on a regular basis. Well, I'm addicted to food because I do it every day. I'm addicted to sleep because I do it every day.

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I'm addicted to talking to Layla because I do it every day. And so it's just that addictions is when they decide that the outcome of that thing is somehow negative. But if the outcome of what I do helps more businesses grow and is something that I enjoy, why is this wrong? Big picture for me, we did end up doing one vacation in, we did two very bad vacations this year.

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one was in july 4th which i ended up basically just traveling and then working the whole time so i don't know if i would consider that a vacation and then the other one we went to truly do a vacation and so this one was going to be two days uh we got there and it was this beautiful luxury resort and there's only 22 villas it's like three or four people per villa like very you know ritzy whatever and i look out on the patio of the villa that we have over the mountains and i'm like man this is beautiful

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But I've just found that it ended up being a huge waste of time, mostly because whenever I looked at the plans that I made the year before, one year later, I was like, man, half this stuff isn't even relevant anymore because of new changes in conditions. I will probably continue to lean more in this direction.

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and i don't care and i think it was this realization that even vacations were something that had been passed on to me from someone earlier in my life that i was something that i should do that i must do this or else i will not gain their approval and i will get judgment from people that i care about

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But when I think about who do I care about, who would care about whether or not I go on vacation, there are very few and they certainly don't have the things that I want or have accomplished what I would like to accomplish. And so why would I listen to them? And so one of the other things that we did this year is that we traveled significantly less.

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And so this year in total, I think we took somewhere in the neighborhood of 12, you know, 10 to 12 days off in total. And I would define a day off as not working at all, that would be a day off. And so I would say a workday I would define as more than, call it four hours of work as a workday.

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So maybe on the days off, I would still consider I worked for a few hours, but I'll count that as a day off. So big picture, the increased focus and decrease in change in variables in my environment allowed me to work more because I had fewer changing variables that I had to accommodate on a regular basis. And so Layla and I were looking over our calendars yesterday. We did a joint...

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a joint podcast going over each month of the year, like what we focused on in that month. And what was interesting is that we kept swiping through it. It was just like work, work, work, just like an onslaught of things that we did over and over and over again. I can tell you this is that the periods where I've had tremendous financial growth,

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across different companies that I've founded, have almost always had these very long periods where I just have to do reps. And this is like, I'm in a rocky cut scene of my own right now, and I know that it's likely going to take

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three-ish years and I'm probably about a year in and I probably have two more years to get to the other side and it's just that I've been on this roller coaster before and I know how the song goes and so it's less like weird for me and also I don't have the anxiety of will this be forever I know it's not going to be forever and I know that it's a season and even if it is forever I have found that it's

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And I think this has become a little bit more popularized by some of the CEOs like Jensen Huang, who despite having Nvidia over 30 plus years, has recently talked about how he basically doesn't do a lot of long-term planning. Because fundamentally, you have things that you can do today, and those are the things that you begin to allocate.

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Far more productive for me to work seven days a week eight to ten hours a day Then it is for me to work five and take two people have different preferences But for me, it's kind of like the summer gap in in learning So when kids take three months off for the summer They have this whole summer catch-up that they have to do which takes like another quarter for them to just get back to where they were and so if you think about the three months plus the catch-up it's like

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kids are only like net positive for like six months of the year and the other six months they're not. So basically learning at half speed, not to mention you're learning at the slowest person in the class, which we won't even get into. But from an entrepreneur perspective, we're incentivized to get as much quality work done as possible.

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And so for me, I work very well on realistically a 10 to 12 hour a day schedule. Obviously there's probably two or three days a week that I'll work 16 to 18. But I would say my true average is probably seven days a week of 12. And I'd say weekends are shorter. And I probably have two or three days, like I said, during the week that are probably 18s.

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And so that gets me somewhere in the 90 hours a week range. But for me, that's actually fairly... Fairly doable because my wife's here with me.

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I have a gym downstairs I have all the people that I care about who and I they I care about them because they support me they take interest in my goals and They want to help me accomplish them and so they increase the likelihood that those goals occur And so how could I like what else could I ask from someone like for my life?

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Like what I'm I'm very happy with my life and I think that a lot of people take offense to me being happy about my life because they think that I cast judgment on them living differently you can do whatever you want and I make this channel because I've been trying to document this since I had nothing, all the way to a billion dollars plus, and just say what's worked for me.

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Now, when we think about heaven, a lot of people see heaven as this place where no one works, right? But that sounds like hell. And what's interesting to me is that, biblically, and I'm not a Christian, so don't get upset, but the Bible begins with giving Adam a job before God gives Adam a wife. And I see that as God seeing work as just as, if not more important, to our life.

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Like He's modeling what we're supposed to do. And to be clear, I have a lot of Christian values. I just don't necessarily believe in the narrative overall. Not the point of this video. But I see work as integrally human. So in case you're watching this before the end of the year and you've got someone in your life who's like, dude, just chill out. Hey, just relax.

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I wrote this thing in response to this because it was something that I got a lot. It was like, dude, relax. Everything's fine. You're doing great. And I got really violent about it. Almost no one in my life would describe me as a chill guy. And I don't think I ever will be. And it got me thinking about this. And it's that greatness isn't chill.

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Greatness is jealous, it's obsessive, it's demanding. It required me to sleep on the gym floor, to live on the road, and lose everything I had twice. Greatness required me to quit my job, leave home, enter a new industry where I knew nothing and no one. Greatness required me to use all of my savings to make new partnerships and then break old ones.

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Now, sometimes what you need to do today is work for something that's going to happen in the future, but you can only control what you do today. And so I have shifted more and more in terms of what will this change about our behavior, and the rest of it, I more or less toss out.

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It required me to get rejected by strangers, have people laugh at me, have money get stolen, get betrayed by friends. And today requires me to work longer hours than I did even in the beginning with fewer days off and do it with a smile. And I still work like my life depends on it because I believe that it does.

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So my point is every time you hear someone tell you to relax, telling you to ease off the gas, Just remember that it just means there's going to be more for the few, more for those who hunt, who fight and persevere. And it means more for you and more for me. And the thing is that it's so easy to beat people nowadays because people are so soft and they can't stick with anything. They're distracted.

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Instead of doing what they know they should, they waste their time counting their notifications rather than the tasks they should get done. And so they want the goals without the pain, without the focus, and without the sacrifice. They want the promise without the price. And people think they need work-life balance.

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But work-life balance is a great goal if you're okay with being balanced in the middle between the best and the rest. But if you want to be the best, chill is not going to be good enough. Greatness is just too fickle. She demands too much and she doesn't let you split your attention. She won't let you coast. She won't let you relax. She won't let you chill.

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And the moment you do, she'll leave you for someone who will give her more, who will put more on the altar. And so whatever you're not willing to sacrifice to keep her, someone else who wants greatness more will. And so the TLDR is, I want to achieve great things and great things have a great price. And that price never feels, looks, or pretends to be relaxed.

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And the reason it's just about is because we have options, we have performance kickers, things like that, but it's about 40%. Our EBITDA growth, meaning basically the profit of those companies in total, went from just over $50 million to this year we'll probably finish just under $100 million in EBITDA. So really good growth here for us.

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So my little message is, if you want what you say you want, Being relaxed, being chill, easing off the gas won't get you there. And being willing to sacrifice more for longer than anyone else probably will. And don't expect anyone else to understand it will be a lonely path because if they could understand, they'd be right there with you.

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The first thing is that we think that you're going to have this really neat line of how the growth is going to happen, right? But reality is very messy. And so what's likely going to happen is that you will flatline and then figure something out and then you'll flatline and then figure something out and then flatline to figure something out.

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So play by your own rules, win the game that you want to play. You know, my grandfather, when he died before I was old enough to remember him, every picture I've seen of him, he's standing up, bones straight, like proud. And he ended up getting taken to prison and tortured for many years in Iran during the revolution. And when he came out, he was a very changed man.

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He didn't remember anyone because just torture was tough. He didn't. Yeah, I'll just leave it there. And so what's interesting about that is like I see him as a great man, but many people describe my grandfather and I've talked to countless. And the thing is, is they've all said the same thing. They were like, Hussein was a serious man.

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And if I had to choose between how people would describe me, like he was a really relaxed guy or like he was a serious man, like if I had to describe those two people with just only those two descriptions, which one of those people do you think will impact the world greater?

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And for me, I would rather sacrifice cool points in the eyes of people that I don't care about to do what I feel like I came here to do. On the back end of that serious note, fun things did happen this year. And so I ended up buying acq.com, a three letter domain from Yahoo. And so they'd owned that since 1998 or 96, I can't remember, it was 96 through 98.

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They said they'd owned it for like 26 years, something like that. And I finally was able to wrestle it from there, from their grip. And so that was really cool. For those of you who are curious, it was $480,000 to buy the domain.

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you know what i don't buy a lot of crazy and um i'm allowed to spend my money however i want to spend it and i think acq.com is dope and so uh on on the back end of that part of the reason i did that was because we just uh stood up acq ventures so really proud of that um that was a project that we took on zach choi we we brought in house he's one of the he's basically managing the investments on that side uh long history of venture capital work it's primarily focused on uh sas and tech enabled services

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The reason that we're doing it is basically because our family office, which functions like a private equity, but it's a family office in that we don't have outside LPs or limited partners, people who give us money. So we don't have any people who give us money. It's all our money, which is why it's a family office. But in terms of the day to day, most family offices tend to be passive.

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We are very active in our investments and we take significantly larger positions. We stood this up because we have a tremendous amount of people who are entrepreneurs who we meet through the various things that we do that would like investment, they would like help, but they don't want to necessarily hand over control or have that level of engagement.

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And so we stood up ACQ Ventures because there's just honestly a ton of demand for a different capital structure for our investments. We just did our first three deals in ACQ Ventures, I think should finalize in the next week or two, so before the end of the year, kind of cool. And so that will be a much higher volume deal side for acquisition.com, and that branch will just be on the venture side.

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This is what it looks like if you were to zoom in on this little area here. If you were to zoom in here, it actually looks closer to what this is, which is you have the stagnation and then you have these improvements that occur and then increase revenue.

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Also, a free gift for you, one of the big things that I worked on this year, probably a month of my life, honestly, went into building out zero to $100 million scaling. and what that looks like from a head count, from zero to 500 people, and from $0 to 100 million plus.

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And I did it across all eight departments, so the departments were sales, marketing, customer service, product, IT, HR, recruiting, and finance. And so what problem exists at every level, and I broke it into 10 stages, and what you need to do to graduate from that level.

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So you can literally just look at your own business and see what things you're missing, what things you're lagging on, maybe sometimes what things you're ahead on, because it's very neat to put these things into 10 stages, but reality is messy. And so it's more that you'll be at stage five

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You'll have some things that you're at stage seven on and some things that you're at stage three on, but those stage three things will likely be things that you will need to fix sooner than the things that you're at stage seven on, right?

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And so it's very much the constraints concept where you have a weak link and this helps you see where you're the furthest behind so that you kind of up-level those things faster. And so I just dropped the training. It's at acquisition.com forward slash training. and just click the $100 million scaling roadmap and you can go there.

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We also have a little button there that you can get a personalized plan made for you so you can answer some questions and we'll tell you what stage you are at and we'll give you the one before and the one after so you know what you should be finished and what you have a line of sight to. It's absolutely free. You can just go there and enjoy. It's 14 hours. You don't need to watch the whole thing.

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Just watch the section that's specific to your business right now. So big thing right now is growth trends. And historically, when I would do my podcast recap of the year, it was always my most popular episode. And so now I'm just doing it on YouTube. But these are the things that I would say we learned or that we doubled down on in the portfolio that yielded really good results.

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Now, one of the things that's also shifted my perspective on how to plan is let's say that we've got thing A, thing B, thing C, thing D, thing E that we need to do. Well, before this, I would try and, you know, diverse, you know, delegate each of these things to person one, person two, person three, person four, person five and so on.

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So number one is we focused a lot on leadership talent recruiting. So you call this key player recruiting. And the big thing here is that I kind of switched my perspective on this, which is fundamentally if you listen to Steve Jobs, you listen to Bezos, you listen to Zuckerberg, Elon, a lot of them take a hugely active role in bringing in top talent.

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My understanding of talent has been probably the single largest shift that I've had this year in terms of my understanding of business and why I think that we're disproportionately growing across the portfolio. The companies that are doing the best are the ones that we've been able to place key players. Part of that is being willing as the CEO, as the founder,

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to actively show interest in these types of people. And they are the type of people that would not respond to a traditional recruiter because they are either so good at what they do and they want to know that their investment in the company is going to be valuable. These are not the type of people who feel like you're giving them an opportunity to work for you.

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These are the types of people that they're giving you the opportunity of helping build your business, bringing their entire Rolodex of people they already know, of teams that sometimes they can bring with them, and just a huge stack of skills that ideally should disproportionately benefit the business. And fundamentally, this is one of the highest leverage things that you can do.

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Because at the most basic level, What you need to do as a CEO is attract the absolute best people and align incentives ruthlessly for them to work and then get out of their way. Number two was focus. Now I talk about focus a lot, so I'm gonna try and say this in a different way than I normally do. It's really top-down focus and prioritization, which is just another word for strategy.

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But just how much more important strategy is for businesses, because what happens is when they pursue too many paths, they look up a year later and they haven't grown much at all. And if you're a small business, you absolutely can double, triple, quadruple, 5X every year for a few years before sometimes that'll slow down.

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Now, if you have a compounding mechanism, it could even keep going and getting faster. But at the very least, growing at 10% a year, again, there's nothing wrong with that. But if you're at a million bucks a year, five million bucks a year, even $10 million a year, you should be able to grow a lot faster than that. And typically, it's because you lack people and because you lack focus.

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And when I say people, it means you lack good enough people. The people you have, you might have a high head count, but a low talent count. And focus, you might have lots of priorities, but they're the wrong ones.

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And so fundamentally, if you can't focus on one thing, one objective that is most important, that makes the rest of your objectives less important, then you are not doing your job as the CEO to tell the team how they should be allocating their attention. And that, and here's the important part, is deleting everything that is not this.

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And so a lot of people are like, these are our objectives, also keep doing everything else. It's like you can't do that. You can't just add more because now you've even further diluted what's important. Now for sure, people need to continue to transact. Sales guys still need to sell, customer service still needs to service.

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But the discretionary effort that exists in the top talent, the leaders of the company who aren't as involved in the day to day, and are basically all times they have between aligning teams should be dedicated to a single priority that if accomplished would be an order of magnitude improvement in the business.

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And so this level of focus is what I continue to drill with the founders and the CEOs of the portfolio companies and it has yielded outsized returns. And there's a great razor for this which is when I want to fix a system or when I go into a department, the first thing I do is eliminate as much as humanly possible

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But I would say that that appears to me like I have not done my job because I need to do a better job prioritizing. One of these things is the most important. And if you can't decide what that is, then you are not doing your job and you certainly can't expect your team to make that decision for you.

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And here's the thing is people are afraid of eliminating meetings, eliminating communication lines, eliminating processes. But if you eliminate just about everything, you'll find out that the vast majority of that stuff was complete waste and complete distraction. And here's the cool thing. You can always add it back. So there's this fear of loss. People literally have

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Fear of loss around processes and meetings, which is ridiculous, but that's just how we're wired psychologically, which is why companies in general, as they grow, create bloat. There's too many people doing too many things that don't matter or not enough stuff to begin with. And all of them together don't know how what they do makes the company money.

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One of the easiest tasks that you can do is zoom all the way out and think, what is the output of this department? What is the output of finance? Have you ever thought about it? What is the output of finance? The output of finance is information to make decisions. That's it.

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And so if you're getting too much information, or you're getting the wrong information, or the information that you're getting doesn't change your decisions, then the function of finance is inadequate. You're not getting enough of what you need of output from that department. If the function of IT is to gather, store, display, and analyze information, then are you, is there,

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Are you getting the correct data? Are you able to analyze it? Are you able to display it and see in real time and be able to make decisions off it? Also, another information output department. Kind of interesting, right? So many of these departments really exist just to have information to make decisions. I bring this up because you have to delete until you have the fewest things that matter.

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It's like you want to cut to the bone. You don't want to cut to fat or cut muscle. You want to go all the way to the bone and then add the few things that matter most back in. And I think that I'm doing this better now because honestly, I think I'm just more ruthless and I think I care less about judgments of other people.

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I think honestly, I think it's just like I'm more confident what I'm doing now. And so it's like, I think I conceptually felt the same way. I just was like, this feels crazy, even though it makes sense to me. And so fundamentally, first principles thinking operates from this perspective of like, okay, physics are laws that we have to obey. What else do we have to obey? The law of the land.

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So we've got government laws that we have to obey. Besides that, tell me a physical law or government law that prevents us from doing this thing in one tenth of the time. Tell me the law. If not, then there is a way. And here's the thing, is that there will simply be resources that are required.

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And so one of the things that I'm trying to get my team to understand is if I ask to do something and they say we can't do it, that's saying it's impossible and it's ridiculous and of course they're wrong. So it's a terrible position to take. It's also very frustrating. Instead, tell me what it would take.

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Tell me the resources that would be required that we'd have to take from something else, and then we together can decide whether it's worth the trade. So for example, if my whole media team, I said, hey, I want to make a motion picture, for example. I'm not saying I want to do that. Let's say that we decided that was a big strategic priority.

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And so I've had to look at this and say, if I could only pick one of these things and we only accomplish that thing, which of these would get us closer to our vision for what the company should be? Which one would move us the furthest forward? Which of these is the biggest domino? And so what I've redone is I say, okay, A is actually the priority. I don't need to order B through C here.

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If we were to get one big motion picture that was as big as Avatar, then it would be, maybe it would do things for the business. then they might say, well, we can't do that. Now, implicit in that statement is we can't do that and keep making content at the level that we're at.

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So then we'd say, okay, well, if we allocated all the resources and stopped making content and we actually were able to get a feature-length film with the existing media team, would the benefit of that be worth the cost? And if it is, then great, we'll do it. But a lot of times we get a soft no immediately out the gate rather than a what it would take.

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And this has been one of the biggest shifts that I think has empowered me is asking better questions. And so one of the most frequently asked questions that I will probably, my question of the year is, what would it take? And by doing this, the reason I think it's such a powerful question, it also works for deals, it works for sales, it works for anything, is that it assumes the result occurs.

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It assumes success. And so because it assumes success, you work backwards from the reality that you want to create rather than forwards trying to figure it out as you go. I'll tell you something funny. So we had a company that we were looking at in the diligence process. I said, hey, you've got this down sell. Basically no one takes it.

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Have you considered just giving it away for free to get more leads? And they ended up doing it and they tripled their lead flow the next week. And so that downsell was worth maybe 5% of revenue, but what's the value of tripling lead flow? Tripling revenue, and probably disproportionately dropping to the bottom line.

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So tripling, really it would triple lead flow, so it would cut CAC by two thirds, but fundamentally it would triple the business. There are so many of these little things that exist inside of companies, and just being focused enough to say, no, this is our core product, this is where we make all of our money, anything that's not that distracts us from making this thing better.

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So theme number three was CRO. And so I'd say this year, the companies that made the biggest gains had a discipline around conversion rate optimization. That means that at any given point, they're running, call it, three to 10 different split tests on the key parts of the pipeline for revenue generation.

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Meaning, if you have a landing page where you get a lot of traffic, or you have a homepage that you get a lot of traffic, or you have a follow-up sequence that a huge percentage of your customers are in, actually testing things out there. So one of the companies we had had three CRO improvements, and this was the largest company we have in the portfolio.

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So we got a plus 20% CRO test improvement, which is a monster win, especially at the level of optimization that this company's in. So we're talking eight figures plus a month in revenue, like it's a big company. And so 20% lift is huge. But on top of that, we got a 50% lift, then we got a 28% lift. So we had three mega wins. Now the question is, how many split tests did we have to do for that?

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I mean, probably 100. But the thing is is that, That was basically one guy and a couple devs split basically running these sprints on a regular basis. But how valuable is that to the company? Tremendously valuable. Because things that are efficiency improvements typically are long lasting.

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And so what's cool about that is that when you have an efficiency improvement, it means your LTV to CAC ratio expands, which allows you to spend more money in advertising, more money in talent acquisition, all the way around the business. It literally just makes the business stronger.

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And so I'll give you a little hack that is worth looking at which is many businesses integrate third party tools into your processes. You've got 100 different softwares that you probably pay for. What none of those softwares typically advertise is what their conversion rate is.

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And so if anything is customer facing that a prospect might interact with, I would look at three or four other tools within the exact same use case and see which one has a higher conversion rate on the UX, so the user experience. I think you will get disproportionate returns on that.

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I don't need to worry about what order these are in. And then I will take 1 plus 2 plus 3 plus 4 plus 5 and get all of these resources concentrated on solving A. And then what I found is that once you solve A with all those resources because everyone's aligned, then all of a sudden B happens faster, C happens faster, D happens faster than trying to do them all at once.

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It's typically a heavier lift because splitting between multiple tools is a pain in the ass, but I've seen monster lifts there. So those are the three probably biggest themes, which was people, focus, and then optimization around the things that worked really well across the portfolio in 2025. Now, the next part is, okay, well what are the detractors?

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These are the things that grew those businesses, but what are some of the things that hurt those businesses? And so, I actually see this as the personal stuff. So we had a few entrepreneurs, I think, took their foot off the gas, they started making more money than they'd been accustomed to, and were like, this is good enough. And so this is where having, some people call it a big reason why,

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You can have whatever you want as long as you change your behavior. I don't really care whether it's a big reason why or you just change. But either way, you have to find something that's going to keep driving you. So for me, it's the love of the game. I just enjoy business. And so I spend all my time doing business. Some people don't enjoy business as much.

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It either has to be some mission that you have around the problem that you solve. Like it actually has to light you up. Otherwise, you will make enough money and you'll stop pushing then. Now, again, if you accomplish your goals, that's amazing, that's great.

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Again, I make my channel for people who just want to consistently grow, consistently grow in personal development and using money as just a stick for seeing how far you've stacked your skills, right?

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Also, not saying that money is a virtue or having money is a virtue, just saying that in general, you become more skilled and you can measure how skilled you are in the game of business by the amount of money you make. Here's one that's gonna be uncomfortable for a lot of people, is spouses and or partners.

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One of the big detractors, believe it or not, and I've seen this and this is a big focus that Layla and I have across the team is, how much support do the key players on your team and or the entrepreneurs have from their spouses. You basically have the worst type of spouse, which is a spouse who actively decreases the likelihood of your goals.

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So they are constantly reminding you of the negatives that exist. They're trying to constantly distract you, say, hey, stop working, stop talking about that. Let's do this instead. So not only do they try to get you to stop working, they try incentivize you by doing something else. And so it's reversing a negative and a positive. It's like a double whammy.

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And the thing is, is that I want to be clear. I don't think there's malicious intention here. But the result of what they do still massively damages the business. Like if you were to think of an enemy, what would an enemy do? They would try and get you to not think about the business and then do something else that you get addicted to instead.

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It's almost like going to your competitor and being like, try some heroin. I think you might like it. Like fundamentally, the actual what occurs is more or less the same. And again, I'm not talking about intention here. I'm just talking about what happens. And so when we look back, so we did like a retroactive analysis of this, of like, who were the stars who just crushed and kept growing?

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They were the ones who had absolute spousal support, who were like, if they need to work late, they need to work the weekends, I'll pack them with a lunch, I'm here at home. And this happened for husbands and wives, both sides. The ones who, where you had somebody who came in

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who presented like a star, but then eventually fizzled, was typically because, and this is where it's so nefarious, is that they would get into a relationship at some point, or they would upgrade the relationship, like they'd move in together, something like that, and that person would have a disproportionate effect on the entrepreneur.

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And so what's really interesting is that entrepreneurs are typically, we're so concerned with our surroundings, who we want in our space, who's good, who's helping us out, and then for some reason, The person who has a .71 correlation with your subjective well-being, the person who will probably have the largest influence on your behavior in your life, you don't hold to the same standard.

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And I find that crazy. But it happens all the time. And just because everyone else does it doesn't mean that it makes sense. It's also why most people are mediocre. One is that if you're looking to bring a high level person onto the team, I would consider talking to their spouse to just gauge their interest level, see if they're supportive.

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And the reason I say this is because I tried the other way first. And what ended up happening is I would have A, B, C, D, E, and then by the end of the year, A would be half done, B would be one third done, C we hadn't tried, D was no longer relevant, E was no longer relevant.

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Like in the middle, they're neutral, but I think neutral becomes negative over time. So you need someone who's active, who when the employee inevitably has a bad day, because everyone does, They say, hey, this is a great job. This is great for us as a family. You got this. I trust you. I believe in you. I support you. What can I do to help? Tell me how I can make this easier for you.

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That is the type of support you want. Whereas if you have somebody who says, let's put work, let's leave work outside. It's home now. And I don't want to hear about that. Let's do all this other stuff instead. That sounds innocent. The problem is that it decreases the likelihood they win. And again, I know this will be controversial. So, you know, take it or leave it. Again, my two cents.

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You can tell me to shove it. It's up to you. Let's talk about the next big one. So in creating that scaling roadmap that I was talking about earlier, I wanted to create like a micro cycle I felt had to exist within every process. Right. And so I'm going to break down two different processes that are different. One is scaling. The other is optimization. All right. So I'm going to walk through both.

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So whenever you have a system, you'll typically start as the first step. So whatever you're doing, you want to start out, you have to start. Number one, S. Then you have C, which is compound. All right. So you have to do more. OK, great. We're doing more. The next is augment. So how do we do better? Then we have leverage, which is how do we make it consistent? Right. How do we automate it?

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And so I'll just I'll make this a little infinite thing. And then finally, How do we expand again? And so this is actually a loop between each of these steps. So you start, and then you do more, and then once you do more, you try to get better.

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Once you get better and you know what works, you try and automate it and make it consistent and have low volatility, and then you expand to the next territory, you expand to the next channel, you expand to the next type of content, you expand to the next product. The same process, and it's nice because it has this little, what are these called? Acronyms, yeah.

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It's got this nice acronym, S-C-A-L-E. And so it actually fit in there, and I was super pumped about that. And so now when I think about what someone has to do next within a department, I often think, okay, where are they at? Okay, they just started this thing, so they just need to do more. Oh, they've done a lot. Okay, so maybe there's probably a lot of waste. So now we probably should do better.

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How can we augment? How can we streamline? How can we optimize? Once they're doing better, it's like, okay, they're doing really well, but there's more demand that's coming in. How can we make this consistent? How can we automate this or portions of this work? And then finally, once we have this thing airtight, we're like, cool, how can we do this again? And then we expand.

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If we're thinking about this within the context of content, it's like we start on a channel, Then we start posting on a channel. Then we say, okay, well, one post a day works. Can we do three posts a day? So we do more. Then we're like, hey, some of these posts do better than others. How can we make our posts better? And then we say, cool, what percentage of these processes can we use AI for?

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What things can we pre-prep? How that we can basically make better happen more easily.

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and more consistent how can we make it instead of having you know one do 10k views and one have a million views how can we get all of them over 100k how can we get all of them over 250k and then finally we're like okay i think we've maxed out this specific channel how do we now go to tick tock how do we take this process and go to snapchat or whatever so it works for anything

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And so what ends up happening is that when you do it this other way, after you've accomplished A, what you might find is that if you have B, C, D, and E as your remaining options, you might figure out that actually these are now irrelevant. There was no point in allocating that effort originally.

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Now, the second process, that's about scaling. This is about optimization. And so this is typically when you come in and fix something that already exists. And so I got to have a lot of experience with this this year because I took over media and conversion within Acquisition.com and I haven't operated day to day probably in like five years. And so it was actually a ton of fun for me because

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Honestly, it's just like I've developed a lot of skills since the last time I operated. It's been great. So anyways, so the first thing is you question the requirements. And I got this framework from Elon and it's freaking awesome. So question the requirements. Why are we doing everything that we're doing? Please explain to me, how does this thing relate to this output?

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And this is why defining what each department is supposed to create is so valuable, right? It's like, You're the content team. The goal here is to make as much good content as humanly possible. Anything that does not facilitate content creation in terms of volume and quality is waste.

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If you're an engineering team, it's like you have code that you must type which then creates software that people can use and we want the quality of that software to be really high. And so anything that does not relate to those things are things that are waste. So we question why we do everything. The second was you kind of get lay of the land after questioning is you delete.

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And you delete because the next few steps are going to be adding resources to the system. And so you delete everything that doesn't matter. So the first step that I did when I took over the media team was I deleted all meetings. Now, to be clear, it doesn't mean that we're never going to have meetings again.

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It just means that I will find out which meetings matter and then we will add those in proportionally. And so I said, you can have ad hoc discussions about clear things, but otherwise I'm canceling the recurring meetings and I replaced all team meetings, all one-on-ones with just a daily huddle. That way, basically the entire day, and these were also deep workers.

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So everyone who's creating content really just wants to get into flow, and anything that prevents flow massively impacts their performance. And so it's like the solution of just adding more people and adding more meetings just gets more people to not work. It's terrible. And most people also hate it. Most people want to work.

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And so once you delete, then you optimize, which is saying, okay, what of the things that we're doing right now get us the most results? What are these things that get us the least results? What are the resources required to do them, as in like time spent or money spent in order to get it? And then we optimize it.

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So we say, the things that give us the most for the least, we put as the first priority. The next thing that gets us the most for the most, we put as the second priority. The things that get us a very little amount, That costs a lot, we put at the end, and we're just basically gonna not do those things. And so you re-optimize the actual processes once you've deleted everything else.

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Then, you pull up timelines. You say, how can we make this happen faster? How can we do this in 1 tenth the time? And what's crazy is that you honestly can increase the speed of things by 5x, 10x. It's mind-blowing when you do it, because you're like, I can't believe how much waste we've had this whole time. But all you do is when you ask questions, you say, how many hours does that take?

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And so then someone's going to respond with how many hours it takes. So rather than, this is the classic, instead of doing end of week deadlines, you just make it end of day. And so if a team is used to delivering something to a team meeting every Monday, and you say, cool, how many hours does it take? Great, let's have it done by the end of the day. You 7x the speed of that team.

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So the two people in your original scenario who are working on these, four and five, were basically doing wasted work because it's no longer a priority. Because once you accomplished A, basically all the variables change. the context of the entire business will change if it's truly a good priority, right? It means that it's going to make a big dent.

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And so some people can't comprehend how one company can grow at so much faster rate than others. And it's because of this resource allocation. They pull up time. If you accomplish a goal in 100 years, who cares? Time is a huge function of business. And so if you don't have a process around pulling up timelines consistently, then here's why it's so important.

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Like let's say there's more utilization on the team. Like they have bandwidth. And you pull stuff up and they're like, hey, we don't need that for another week. Like why are you making me do it by the end of today? Because we don't know what's going to happen next week. And we might have a priority next week that we do need to get end of day.

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And then when that happens, we still won't have done this other thing. And now we have to do the other one. So this other thing's now two weeks delayed. And so basically you want to use up all available resources that are renewable on a consistent basis to get the highest return. So I want to make sure you understand the argument there because you're going to have to tell it to your team.

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The reason I'm going to drive this outcome, even though there's no apparent outside urgency, is because it assumes that the future is going to be exactly like today. And one of the things I can guarantee is that the future won't be.

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and that there will be things that you didn't expect and when that day comes you will want to have all of the things that you've accomplished behind you supporting you and have as many resources as humanly possible available to you to deploy in that moment. Because the most adaptable player in the system survives. That is what the survival of the fittest means within the context of business.

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It's the most adaptable player.

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most flexible and so the final step here is automate same as before and so this is what you look at when you're trying to fix something or turn something around or make it better all right this is when you're trying to scale something i could probably come up with something cute around optimize but has too many letters hopefully those two frameworks give you two different ways to look at departments where you come in you're like okay is this a scale thing so we need to do more we need to do better we need to make it reliable or automate a portion of it or do we need to expand

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For back of napkin math, if you assume a 10x multiple on the valuation, the company in total in aggregate is over $1 billion. Probably pretty easily because the bigger the company is, in general, the larger the multiple. Now, to be clear, I don't want to claim that until we have some sort of third party validation. But it was a very good year for Acquisition.com.

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Or is this a everything's screwed up, why are we doing what we're doing? Okay, delete all that stuff, optimize the things that get us the most outcome, pull up time requirements, then automate. Having these types of frameworks to solve problems makes life so much easier, which is why I share it with you. So the next one is about success and failure and knowing why.

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So Professor Bergman from Stanford has this statement where he says, it's better to fail and know why you failed than to succeed and not. Now, notwithstanding the outcome itself, but he's talking about you as an individual. It's better to know why you lost than not know why you won because you can't learn anything from it. Essentially, it means that the success is purely chance, right?

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Which means you can't repeat it. And so Edison, you know, had 10,000 ways not to know how to make a light bulb, right? It's the same kind of idea. And like, as long as you learn from your failures on a long enough time horizon and you don't give up, you will win. Period. And so an expert you can define as somebody who's made all the mistakes that you can possibly make in a very narrow field.

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And so fundamentally, that's what we want to be within our businesses. And so within that context, I have now spoken to a lot of business owners, because we started this workshop division so we could meet more businesses, so we could do ACQ ventures, and obviously within the main portfolio. You're noticing I'm lining up a lot of sheets here.

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And so if it does make a big dent, then it doesn't make sense to spend all of this time wasting on trying to plan out how D and E are going to work out because the whole scenario, all the players on the board and the rules will change. And so what happens is once you do hit A, and that changes the paradigm, we hit A, all of a sudden you might have F that becomes number one.

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So there are what I call the six horsemen of business stagnation. And so if you are stuck, this is for you. So there are six reasons that I've seen that have been continuous Rock and hard placing errors. And the reason that business owners get stuck here is because you have to choose between two apparently impossible choices. One is pain today, the other is pain forever. And both of them sting.

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And that's why people just wade water in pain because it hurts a little bit less to keep pain forever than have a lot of short-term pain now. Alright, so these are the big six. So, number one is being underpriced. This is how it presents. A business owner is at close to full capacity.

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Let's say they provide some services and they're like, I can't work any more than I already have, or my team can't work any more than it already is, and, and this is the key point, and we're not making money. So when that occurs, they want to look at all these different things, but the problem is you're just mispriced.

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Now there's the fear that if I raise my price, I will lose my customers and then it will get worse. But the thing is is that I have shepherded so many businesses through price raises that it makes me sick. And the process of raising price works like this. You get to the price and then you say a higher number. and you keep going up until people stop buying.

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That is how you do it in the back of napkin, redneck logic way that I prefer most times. All right, and so if you're in that situation, you get to pick. Do you want to have a few people say no and you make more money? Or do you want to be barely above water and not be able to expand forever? Because the reason you can't expand the business is because you don't have cash flow.

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You don't have cash flow because your prices are wrong. We need to fix the price. Once we fix the price, we'll free up cash. With the freed up cash, we can expand into new locations, we can hire that key person that you need to bring in. Number one, if you are full capacity and you aren't making money, you need to raise your price. An easy way to do it is every five plus 20. All right.

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So I actually got this from lifting weights, believe it or not, which is basically once you it's the reverse of this, which is once you increase volume by 20 percent, bump your intensity up by five, meaning add five pounds. Right. Or five percent. Right. So bump volume by 20, bump intensity by five, and then volume will drop again, but now you have higher intensity.

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And so it's this kind of balanced progression process. It's just a very simple one. But it actually works the same way for price. And so it's like you sell five customers, if they all say yes to that price, or around the same percentage, or you net more money overall, you bump the price by 20% and do it again.

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And you just keep doing the five and 20, keep doing five and 20, until eventually not enough people are saying yes, so you're netting less money. Now, the problem is if you have small sales numbers, it's harder to hear no more often because your brain isn't going to calculate the fact that you made 20% more. It's going to be binary in its thinking of like it was a yes or a no.

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And the thing is that if you sell three people at twice the price, it's better than selling five people at half the price. but you're going to hear no more often. And so it's going to hurt more, but it is better for the business for two reasons. One, you actually make more money. Secondly, and this is the big one people forget, you also have fewer people to service.

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So you have less cost and more revenue, which those two things together create a disproportionate increase in profit. So big thing number one, fix your price. So, the second big problem is overcompensation. Now, what I mean by this is actually paying people, not like you're overcompensating for stuff, okay?

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So this is now the priority and then you align yet again those resources to making F come true. And part of the reason that solving problems this way I think is more effective is that because all of the rules change and the paradigm changes, so too do your resources. And so your original plan for how you were going to do D&E is based on today's resources and today's solutions.

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This typically happens when you have a set of employees, especially in service businesses, where you accidentally, in the beginning, give some sort of revenue share or something like that, so it doesn't matter, you can't out-earn it. If you grow the business, they just grow their revenue. You overcompensate them or you miscompensate them.

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And maybe you did that in the beginning because the revenue was really low and you never thought you'd get to where you're at now. And then your big fear, each one of these has a rock and hard place scenario. The big fear is if I tell them that I have to change the compensation, they're going to leave. And the answer is maybe. But if you don't, you'll never grow. So what are you going to do?

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You have to go through the short-term pain to get the long-term gain. The process that I'd recommend doing, number one, is you shore up the infrastructure, which means that you bring someone else in that can do the same thing as that person and do it at the new price that you want to pay them for. Then you can have the conversation with them with more leverage and saying, hey, the market is this.

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I'm paying you this. I understand this is what I need to pay you in order for us to accomplish our goals, which is what I sold you on, is that we want to accomplish this big vision with the business. Now, I understand that isn't like I'm changing expectations. And so go home, talk to your wife, sleep on it and come back tomorrow.

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If you want to stay here for that compensation, I'll give you a delay. So this is the key part is you say, hey, I'll keep paying you this for the next two months or three months, whatever. And after that, then you'll go to this to this new kind of compensation philosophy. If they come back and say, no, I feel underappreciated, blah, blah, blah, then that's fine.

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And the good news is you already have somebody who's right there ready to go. That's the second big, big issue. The third big problem, and this is a big one, is this is really common when you're smaller. So I'd say sub three million, this is you guys. All right, serve too many, I'll just say infinite avatars. All right, meaning you serve too many customers. So you're serving too many people.

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And what happens is all these different people have different demands. And so they are telling you all these different things and you can't get your offer right, you can't get your advertising right because you're serving too many people. Now, again, what's the rock and hard place scenario? Well, if I get narrower on my avatar, I'm gonna sell fewer customers and I'm getting all these other people.

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Well, to me, number one is if you fix your messaging, you will attract more of the right people, but you haven't been willing to take that bet. The alternative is you can try and be everything to everyone, which you know isn't going to work because it's what you're already doing and you know it's not working. And so you have the evidence that your existing path is going to stagnate you.

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Again, the impossible choice is do you want to keep stagnating forever? And maybe you make some money now, but it's preventing you from growing. Or are you willing to? And business is about risk. Like you have to be comfortable with risk. All of these are risks. But the alternative is you never risk and you stay exactly where you are. And so for me, that is a much greater risk.

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It's like when you get into investing, anything you invest money into can go down. So you incur that risk. But if you never invest, you absolutely will never get wealthy. So what are you going to do? You have to take the small risk so that you avoid the much larger long-term risk. And each of these is small short-term risk to avoid large long-term risk.

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Here you have to niche down who you're serving, which you do by 80-20. So that means you look at all of your customers, and you say, what are the top 20%, who are these people, what do they do, where are they from, and you say, how do I make this my message, and how do I make an offer that's only for them, that they would go nuts for, and here's the part people miss, and price it accordingly.

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So if you have customers that you provide five times the value to, and I'm sure you do have those people, Well, all of a sudden, if you were to turn some of these bad ones away, then your price could reflect the value that you serve to only that much narrower avatar. And that's okay. And that's great. So you may, yet again, and by the way, this is the point, make more money.

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Again, all of these are counterintuitive, which is why people get stuck. So the next one, the next rock and hard play scenarios is overextension. So this one is Alex's favorite, this is Alex's greatest hits of mistakes, is me trying to take on too many things. I have a plate that's this big and I start putting food on the table because I can't fit it on the plate.

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But in the future, once you've accomplished A and the paradigm changes, then all of a sudden F becomes the priority, but you have all the resources of a business that has now accomplished A. And so this further changes why I think long-term planning, it's good to have long-term goals, but the obsession around every single little task and item and who's going to do what I think oftentimes is just a waste.

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and typically this is where you get ahead of your skis where you open that second location when the first location isn't really operating as much as well as you think it is and as soon as you go there the revenue from the first one drops and you're like oh but a lot of that was my profit and so you've got these fixed costs the revenue is down and then you've got this one but this one's new so it's not doing as well as the first one was and your star person's there but you're not there and so now you're splitting between two locations and you're like

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oh man, now I'm actually making the same amount as I was with one, but now I have twice the risk. And you're like, oh, you know what the solution should be? I'll open a third. And then between the three, now your profit goes down even more, and now you're not making any money, but you have three locations, and you have three times the risk, and you're stressed out of your mind. So what do you do?

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Honestly, you have two solutions. You either have to hire incredibly impressive people, which means that you're going to probably give up your income in order to bring this person on, or you have to cut your losses. You have to prune the tree, you have to re-concentrate, get it right, and then scale back out again the right way. And so overextension is typically a who problem.

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which is you don't have enough good people that you left behind who can actually run it without you. This happens a lot of times in like the one to three million dollar range. It happens at all ranges, but a lot there because When you get there, you typically suck yourself out of the day to day. You're not actually selling people, you're not doing customer service, and you're not doing delivery.

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But the issue is, you think that because you're not involved in the acquisition and delivery, that you're not required to run the business. But the thing is, is that you work every hour of the day right now. And so if you work every other day, but you're not selling and you're not delivering, then it means you're doing other stuff.

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And that other stuff you're doing is very much operating the business. And so a lot of owners will mistakenly think that CEO and owner mean the same thing. You happen to be both, but they are not the same. And so right now is you leave. So it's like the CEO leaves the business. And all of a sudden the business stops running as well because the CEO is gone.

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So you have to have somebody who's going to operate behind you. You have to basically backfill yourself. And in my opinion, I like a six month test at the very least do a one month test, which is go away for a month and you hand your phone, you show your phone to your operator and you say, Hey, here's the deal. You're going to get this override on the business.

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So a little profit share, whatever, some stock. And in doing that, I'm doing this in exchange for this not ringing. That's the deal. That's the trade. And if this rings, then that's not the deal. And so it's like, then you role play it out. So it's like, let's say a pipe burst. What do you do? If it's call you, wrong answer. Because what do you think I'm going to do? I'm going to call a plumber.

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So what are you going to do? Just call the plumber directly. You don't need to call me to call the plumber. Same idea. If it's an emergency, call 911. If it's not an emergency, don't call me. Either way, don't call me. And so this is the trade.

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So if you're overextended, you either got to dip into your own paycheck to bring someone in or you got to prune the tree, re-concentrate, and then build it back right. And the six-month test that I was alluding to is... The business has to either maintain or grow for six straight months without your direct involvement. Now, that last point is the big one without your direct involvement.

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Now, some of you are going to run that test, still continue to work in the day to day for six months and then say, Oh, I think I did it. But you just didn't change what you did at all. And the business continue to operate with you as CEO, which is not the case. You just delay six months and then you open the next location.

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Well, which is still make you a little bit better in terms of your cash position, but not my recommendation. So what's what's what's number five? So number five is More than one business. So this is also an Alex special. I have a lot of specials here. Four and five are my personal favorites that I've made the most often.

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Which is, you've got two businesses, or you've got three businesses, because you don't know how to pick. And you operate from the fallacy that Zuckerberg had a side hustle. Zuckerberg was also flipping Airbnbs and doing wholesaling on the side. Right, and that's how he built Facebook. Of course not. One of these businesses is the business you should be doing.

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And the thing is, is that the opportunity is the problems that you need to solve and aren't. It's not in the missed opportunities. It's the problems that need to be solved. Right? It's the hairy work that you're not sure what the answer is, but you know you need to fix it. That is where the opportunity is.

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Because fundamentally, if the product were exceptional and everybody loved it, you wouldn't have an issue. You'd be going all in on that business. And so if that's the case, then just do it. Now, you're gonna have this sunk cost fallacy of like, I already put all this money into this, and I already got it going, and I already have a partner there. Yes, short-term risk, you lose a relationship.

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So let's say that you ran an agency, right? So you do, you know, meta ads for small businesses, like a very typical business. So if that was your business, you might say, OK, we need to, you know, get more leads. So that means we're going to increase ads. OK, that's one of the things we're going to increase shop rate because our shop rate sucks. So we're going to we're going to try and fix that.

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You lose maybe short-term income from that business. Long-term risk, you never grow any of these things to any material size because you're too distracted. Pick. Again, do whatever you want, but I'm just saying, these are the most common ones. And then finally, we've got no data daddy. All right, no data, papa. I have no projections, papa.

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Okay, so with no data daddy, the issue is you don't even know what your problem is because you don't collect any data. And so it'd be like, hey, what do we need to grow? What's our lead cost? No idea. What's our close rate? No idea. What's our churn? No idea. Well, you can't really do much if you have no idea what's going on.

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And so this then becomes the constraint of the business, which is we need to start collecting data. Now, to be clear, the first five have what I consider an impossible scenario. There's some cost. The cost here is that you give up a business. The cost here is that you have to cut, you have to prune things, or you have to hire someone and hurt your own income.

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Here, the issue is that you have to say no to customers that you're currently making money from. Here, the issue is that you have to say no to employees that you're currently overcompensating. Here, you have to turn down customers at a lower price and hear no more often. Those are the short-term costs. But the one big risk of all of these is that your business isn't going to grow.

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And you've been stuck for long enough to know it's already not happening and there's not going to be a silver bullet. You've got to confront this. The no-day-to-daddy issue is just, hey, silly pants, get your data. then you'll actually be able to grow. Now there's no downside to this one.

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The only downside here is that you've got some shiny object that you think's really sexy and interesting and you don't get to do that because you need to do this. So do this first. And I'll give you a really useful razor for how to think about what data to collect. The easiest test for is this data valuable is when it changes, does it change behavior?

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So if we track our views on a social media channel, if the views go up, does it change what we do? If the views go down, does it change what we do? If the answer is no, then we don't need to track it. Because you can track unlimited variables in the world. Like you could track the temperature of the room when people are walking in. You could track it. but will it change your behavior?

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You can also reverse engineer into what are the behaviors we do, what data affects it, and those are the only pieces of data that need to track. So my biggest personal growth lesson of the year, so I give you all the portfolio growth things, but my number one was rush is imaginary. Now I just gave you that whole speech on urgency.

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But one of the things that is that I've had to learn is my biggest mistakes have been shiny object or woman in the red dress and overextension. And so I have these arbitrary goals that I set for myself that I never say out loud that I think about every day that mean nothing to no one. And then I try and force everything to happen on this arbitrary timeline that I made up.

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And then I'm upset when people who don't know my arbitrary timeline fall short of the speed that I wanted to happen, even though I made it up to begin with. Layla gave me this frame that I alluded to briefly earlier, but it's probably been, I'd say talent focus. And this is a subset of focus, but it's missed opportunities is less than problems.

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So what I mean by that is that the opportunities that you're looking for are in the problems that you need to solve. And me understanding this, I've repeated it because it's really been singed into my brain. For example, if you're starting to get low reviews, these are things that threaten the livelihood of the business. That is a problem.

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If you're not doing email follow-up, that is a missed opportunity. And unless your, call it, payback rate or your LTV or some sort of conversion mechanism is the risk of the business, then that would be a missed opportunity. If the number one risk in the business right now is that you can't make money because you aren't converting a higher percentage of leads, then that would shift into a problem.

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We've got to hire, you know, a sales manager. and whatever else, right? Like you've got your task. Now, if this was your objective, a good strategist says, given the resources I currently have, what one thing could I do that would make all of these problems disappear?

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And so it's not that any specific thing is one or the other. It's recognizing contextually within your business, is this something that would be nice to do? Or is this something that we must do in order for us to achieve our ultimate goal? We might be able to achieve our ultimate goal without doing email follow-up. If our product sucks, we will never achieve our ultimate goal.

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And so it's understanding the order of magnitude or the importance of the potential tasks that you have. The reason that this stressed me out for so long, and this is the big one, is that problems in your business are actually finite. You can list all the number of problems in your business, by and large. Missed opportunities are infinite.

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And so I basically took, I would look at the world of all the things that we could do. And here's the thing is the better you get at business, the more things you know you should be doing that you aren't. And you see this huge unlimited potential options of things and you look at these tiny little resources that you have and then it's like we need to do all of these things.

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And this is where you stress out your team and you stress out yourself for literally no reason.

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it's been difficult for me and it's been a discipline now to ask myself first when i want something to happen is this a missed opportunity or is this a problem and nine times out of ten it's a missed opportunity and so i've been doubling down on problems and solving those the thing is is that problems are typically not nearly as fun as missed opportunities because missed opportunities have all the new gloss on them they're they're still in the wrapping paper you're like oh my god this is gonna be amazing

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But as soon as you get into it, you're like, oh, there's problems here too. And then, and I've said this before, but what ends up happening is when you have this missed opportunity bug, you start building all of these half-built bridges, right? You never actually get all the way across. You've got a dollar here, but you're standing on this side of the land, right?

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And you need to get this dollar across. And you start building and then you find out that there's problems. And then you're like, oh no. So you know what I'm gonna do? I'm gonna build a second bridge. And then you find out that there's problems. And you're like, oh no, I hate problems. I'm going to go find another one that doesn't have problems. It immediately just makes me more money.

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But there's always problems. There's always problems. And so it's like I have to just use the problems and I've got to stitch this thing together so that I can get the dollar all the way across and then into my very large pocket.

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Here's the difficult part of this for an entrepreneur, is that when you quit your job, when you started this business, you were very reinforced for pursuing a missed opportunity. You weren't doing this thing, you start this business, and you get rewarded for doing it.

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And the problem is, is that you need to unlearn that behavior, because it's a behavior that you only want to do once when you start your business, Every time after that, you have to confront. You have to endure. You have to stick through the problem and see it to its natural end. You have to get it all the way there so the dollars can make it across the bridge.

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Or you'll just have spent all the resources, all the distraction to build and reinforce this thing that actually results in nothing. And so this has been probably my single biggest tier of lesson because this is a subset of focus for me specifically. I ask, is this a missed opportunity or is this a problem? And if it's a problem, then I need to solve it.

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Well, the good strategy would then say, well, if I had a brand and I invested in my brand, well, would that accomplish my leads thing? Yup, now I wouldn't have ads, but it would accomplish my problem of getting leads. Now, would show up rates be higher if I have a warm audience? Yes. Would my close rate be okay because everyone is being warmer? Probably.

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And I just need to confront a lot of the problems or things that you don't know how to solve yet. That's why they're still unsolved. And so you have to become comfortable in enduring the failure of... working with limited information or incomplete information.

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Because the reality of businesses is that you will almost always not have enough information to know perfectly whether this is the right call. And so you have to be comfortable in ambiguity. You have to be comfortable with incomplete data sets and still making the call. Because when you have a complete data set, there's really no stress. The answer is obvious, because you have the data.

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It's all the times where you're like, oh, well, I wish I had tracked that one thing that I didn't know was going to be important now and I can't go back six months to get it. That happens all the time. And you just got to be able to make the call. Because the thing is, is that we have this fear that we're leaving money on the table. Right?

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We feel like this missed opportunity right here, we're like, man, there's so much money on the table. But the real money on the table sits in the problems that you know you should be solving but aren't.

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And so once I realize that the problems are the things that I need to be solving, then I can deploy all of the resources that I normally would use to distract myself to reinforce this bridge and reinforce this bridge and reinforce this bridge before I've made a dollar go across and then point all of those resources to one this big dollar sign so I can go put it into my pocket and actually solve it.

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And so the compounding that occurs in business happens from focus. It's from doing one or two things exceptionally well, not doing many things mediocre. And missed opportunities are the gateway drug to mediocrity. And how I deal with this emotionally is I have a big list of Alex's big money ideas. And I've done this at very different times in my life.

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Like when I know what we need to do and we just have to keep doing more of it. And the thing is, is like, you probably know this, too. And yet you have this this this need for novelty. Right. I get it. Believe me. And so what I do is I add this idea to my big money list. And then, when we do have bandwidth, I say, what one big thing on this big money list are we gonna attack?

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What's crazy is, I'm like, I've got 100 ideas on this list. And then it's a fun problem for you to be like, okay, which of these things is the biggest thing that will get us the furthest? And what's crazy is, and if you actually do this,

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I have found so many times that I'm in love with an idea and then a month later, two months later, I look at that idea on the list and I'm like, I can't even believe I was so into that, right?

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And the thing is that if you don't have that discipline, you don't just write on it, you don't let it marinate for a little bit, sometimes you end up deploying all these resources into something that you, a month or two later, would be like, I don't even know why I did that. If this is resonating with you right now, then Do more of this.

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Put more of the ideas on a big idea list and then just let it cook and don't tell anybody. Because you have this need to share. You have this need to talk the idea out loud. I get it. I do it.

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Just write out as much as you need to there, and then it's like you get it out of your head so you didn't have to, you got all the details and all the craziness out, and you're like, I can shelve it, I'll deal with it later. It's kind of like Abraham Lincoln. He used to write these letters when he was really angry at people.

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He'd write these huge letters, just scathing letters to these people, and then he would seal them, and then he'd put them in his desk, and he said he'd sleep on it, and the next day if he wanted to send it, he could. And so his desk after years was just filled with all these letters that he never sent. but it allowed him to get through the moment.

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So I wanna hit on this rush piece, because I think this is important. Rush is imaginary. So something that I've been thinking about is like, where does this rush come from? So fundamentally, unless you have a network effect business, so you have a winner take all market, like you're trying to become the Uber of whatever, right?

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Now you might have to still hire the sales manager, but you can see how the entire dynamic would change if only this were true. And so then it follows, okay, what are the resources required to make this happen? And if I know what those resources are and I have those resources available, then it would follow that I should do this one thing and then in so doing accomplish all of these other things

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there's a network effect that there's one winner who will win and that's it. You're either gonna be Apple or you're gonna be Android. There's no one else in the market. You've got two spots in the market for phone creators and that's it, that's the monopoly. Unless you're in one of those settings, which 99% of businesses are not in that situation.

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i have realized that for me rush is actually linked to one thing which is my competition reference point which is fundamentally who i choose to compare myself to and so my rush is entirely arbitrary because i just pick who i'm comparing myself to now here's what's kind of crazy

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Do you compare yourself to a five-year-old who doesn't actually, like, do you look at a five-year-old and be like, what a loser? They don't have a business as big as me. No, of course not, right? But the thing is, is that, why wouldn't you compare yourself to a five-year-old? Well, because they haven't had any time. and because they are not developed yet.

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But the thing is, is that they're another human just like you and they will eventually, now like let's fast forward 20 years. Now they're 25 and let's say they're crushing it. Do you now compare yourself to them? Why do you compare themselves at 25 and not at five? No real reason, because we think it's acceptable to compete against that particular person.

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And so for me, the realization that Rush is entirely linked to who I choose to compare myself to meant that it's entirely made up in my mind. So I can just change who I compare myself to, or I could try to compare myself less, much more difficult. And so in thinking about this, it's more, how does this comparison change what I do every day?

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And if it changes my actions, that decreases the likelihood that I achieve my long term goals, then these comparisons hurt me. The question that follows from the comparisons is, how does this serve me? And if it doesn't, then why do it? Like, do you feel guilty in middle school that you aren't the richest person in the world? Well, then why do you feel guilty at 30?

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I'm not saying that's my goal in life, it's not. But like, fundamentally, you don't, like flipping roles, when you're in middle school, do you feel like a loser because you're not making money? Maybe a couple people, right? But y'all are weird, right? But most people in middle school, you're like, oh my God, I have, you know, I'm getting chest hair or whatever the hell, right?

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You're like, I'm navigating life right now. Like, I'm a child, look at my limbs, they're longer, right? And so the thing is, is that, We just choose to enter this comparison game, but we're all gonna die and all of our stuff's gonna go right back into the middle and other people are gonna play with our chips, so who cares?

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And if this rush is impacting your business, then you need to find a way to quell it. Now, a third door is to compare yourself to your heroes at that stage in their lives, right? Which is, where was Warren Buffett at age 35? Okay, am I on track with him?

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But again, you're not going to be Warren Buffett because Warren Buffett lived through the greatest growth in American history and was born at the perfect time, right? And he also bought his first stock when he was seven. Did you buy your first stock when you were seven? No, there goes my five-year-old analogy. So if you didn't buy your first stock with your seven, you're not Warren Buffett.

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Now you can model his behavior to have outcomes that will be probably proportionally smaller than his, but that's okay. It's only a problem if you think it's a problem. So the next big category of kind of growth trends or focuses for the year of 2025, my big lessons, was branding. So I talk about branding a lot, and that's because it's really important.

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But I had a one day where I spent with Ben Francis. So he came out to Vegas for the Olympia, and then we spent the day together. He came a day early, which is great. And we just hung out. And Noel Mack, who's his head of brand, was there with him. And we got to spend a wonderful time talking about brand in general. They told me this story that has really stuck with me.

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And I got to actually connect through them with the CMO of New Balance. And so this is the story. New Balance's CMO, their growth had plateaued after a number of years, and so they were kind of stagnant, and they needed to shake things up. So he became the CMO of everything, and he went to the CEO and said, hey, can I just swing really big? And the CEO said, sure.

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as a consequence.

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And this is why, to be clear, if you're like, wait, well, they're just going to say build a better product because if you have a good product, you're not going to lose people, you're going to get word of mouth, you're going to have higher LTV, or they're just going to say, you know, Alex is just going to say build a good brand because if you build a good brand, then all these other problems go away.

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And so then he said, I want to take our spend, which right now is 70% bottom of funnel and 30% top of funnel, And I want to flip these two things. I want to make 30% bottom and 70% top. And you're like, what does that mean? This is brand awareness, storytelling, associations that you make with different athletes. that is all top of funnel, like, wow, new balance is cool, right?

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The bottom of funnel stuff is buy shoes, right? And so after doing this, what was crazy is that for the first 18 months, they made less money. And so the company's return on their advertising budget went down for 18 months. But on month 19, it went like this, boop. It started going up. And then it went up even more. And then it went up even more. And so they've had this massive rebirth

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from this shift in strategy. And so when I heard that story, it was really compelling for a number of reasons for me, and it changed my behavior. So number one was this is a good ratio to think about in terms of investing in an audience versus kind of withdrawing from the audience.

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And the reason the 70-30 I found interesting is that in the $100 million leads book, I talk about this at length, but there's been a three to one ratio that's been studied by television, it's been studied by radio, which is content, right, to ads. So if you're on your Facebook newsfeed and you scroll, every three posts, the fourth post will be an ad, all right?

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If you're on YouTube, it might be number of minutes. Now they have AI and all this stuff, but for the typical one, it's a three to one ratio. Now this ratio is what is required to basically keep a brand, keep a channel, people keep coming back. Now if they change this to two to one, all of a sudden people stop watching that channel. They stop watching, they switch to something else, right?

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That ratio being reflected here I see as a human thing. And so I think to myself, okay, I need to make sure that I always keep my ratio at least three to one in terms of value-driven, and you can think about this in terms of views, like impressions per person, because that's what really matter. Or you can think about this in dollar spend if you want to think about it from a budgeting perspective.

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But for me, I think about this at the individual level. I want to make sure that someone's getting at least three or four positives before they have any kind of ask for me to do something. Now, the net-net world is that if your product is exceptional, the ask is not an ask because they're excited to buy something else from you.

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No shit. That's called leverage. And so you're like, no, no, no, I don't wanna do the one thing that would solve all my problems. I wanna try and solve each of my problems individually. Well, that's amazing for you, and you should probably get that looked at.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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And so this is why brand and product long-term are interwoven together. Your reputation with somebody will be reinforced or diminished by the quality of the product because you make a promise with your advertisement and you deliver on that promise or over to. Real quick, the rumors are true. $100 million scaling is live on my site at acquisition.com forward slash training.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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It is the full 14 hour saga of going from zero to 100 million across eight functional departments at 10 different stages in the business. There's so much time went into putting this together for you.

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and yes it's absolutely free so if you're a business owner and you're trying to get to whatever the next level of scale is for you whether you're trying to go from 50 to 100 employees or 100 to 250 or you're just going from you know five to ten uh there are clear things that you have to do at each stage having done it multiple times in a row now i feel really proud of this and it's all yours so if you want that you can go to acquisition.com training and enjoy

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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with the product. And if it's worse, now you got to put more in the bucket here to kind of like get them to be willing to take another shot with you again. Or, If you have a really good product, the amount that you have to put back in here is actually less. You could sell something else even faster. So if Apple came out with the next iPod, people would be really excited about it.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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And if the next day they said, hey, we also have this other amazing thing that doesn't necessarily compete with the iPod, as long as you had the money, which is a different question, as long as you had the money or financing available, you'd be excited to buy the next thing too, provided the first thing was awesome.

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And so this is the idea is that products can reinforce brand and should be the thing that reinforce brand over the long term. Which is why I want everybody to read my books first. Because the books have been the pieces of content that I put more single time in than anything else. I put 2,000 plus hours in each of those books. Like, no joke. 2,000 plus hours.

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And so they are the single best pieces of content that I will likely ever make. And they will outlive me. These videos will go away. Podcasts will disappear. But the books will remain. That is why I want everyone to read them, which is why I've made them free. You can listen to them on my podcast for free. And if you like hard versions, you can go on my site or you can go on Amazon.

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You can grab them. They have 26,000 five stars. There's a million copies that have been sold. And it's because they're good. and it's because I put so much time into them. This lesson, first off, was important for me because the ratio, and it corroborated what I kind of already think about in terms of content and giving to asking.

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The other piece that I thought was really interesting was the time delay, which is that he made this shift, and then he had to wait a year and a half, and that's given the size budget New Balance has, which means that if you want to build a brand, you've got to measure in years. You're not going to build a brand in months. It's just not going to happen.

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But the point is, is that a good strategist has to look at all available options, given the resources they have, and say, which one of these gets me the most? And fundamentally, that is leverage. Next up is the strongest force in all of business. And so I believe in this so thoroughly that there are only two concepts that are embedded within the acquisition.com logo.

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And people see my brand now, but my first YouTube videos also started at zero. My first Facebook page started at zero like everyone else. My first Instagram started at zero like everybody else. And so it just takes time. My first YouTube video, I think it was 2019. Don't expect to have a 10 year outcome in 12 months.

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One of the questions that I ask myself is like, okay, for branding for CPG companies, so for companies that sell to consumers, direct to consumer, The branding playbook is very well tested. You go find influencers in that world or brands that are similar. You do collaborations with them. You basically crossover on values. Their values become similar to yours. You kind of rub off on one another.

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You go find champions and athletes that are top of their field. You make the associations. People then want to buy your product because of that association and the history of positive reinforcement they had with that particular athlete. I was like, how do I do this in a B2B setting? And so I have split this up into basically two major categories.

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If I want to build a brand in a B2B setting, you typically want to educate your audience because you want to be positioned as an authority. So if you're an accountant, you're a lawyer, whatever it is, you want to be known as somebody who knows what they're doing. And so category one is you help them accomplish their goals for free. Very simple. So a lot of this is gonna be content, right?

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And so we'll likely cross $300 million in revenue up from $85 million in 2020. And so we have consistently grown year over year. And so this video is about what changed from $85 million in revenue to 300 plus. My first piece of advice is set fewer goals and do less long term planning. Hear me out.

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Like this is why we brand with content is that if you, like what's the most positive association someone can have? They have a goal, you help them achieve it. Okay, so they will link their goal achievement to your help. Great. The next thing is that you help someone like them. So it's an approximation.

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I am a lawyer and I help someone negotiate some deal, and that person, and I have to advertise it, I have to let people know about it. Me seeing that as a plumber, and this lawyer only helps plumbers negotiate these deals, I say, oh, someone just like me got exactly what I want. So this is a degree removed. The next one is that you do the aspirational outcome yourself.

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Now both of these can be aspirational, to be clear. And this was actually something that Ben and I talked about a lot, Ben Francis, which was oftentimes brands are built on the aspirational because it's almost like an extreme version that I translate into decreasing risk of purchase. So let me explain.

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so north face can help people get to everest and so if it's really cold at the top of everest if i buy that jacket it will likely keep me warm on the way to work from my car to the door right if a range rover makes an ultimate outdoor vehicle and that they're the off ultimate off-roader then it'll probably help me if i have to get over a curb

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It's these extreme versions that get regressed down to, well, if it can do that, then it'll probably help me with my thing. Sebum is the best fitness influencer right now in this generation, and so if he wears this stuff to compete at the Olympia and train for the Olympia, then for me to just try and be the strongest guy at my gym, it'll probably work for me.

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And so the question is, what is that aspirational outcome? Like Red Bull, if I could drink the Red Bull and jump out of space, then it'll probably get me a little bit motivated when I have five hours of sleep, right? Like you notice the theme here, like all of these brands have these big aspirational outcomes.

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There's a reason that my brand grew when I had a $46 million exit because it was an aspirational outcome. Now, what I'm trying to do now, and I've been public about that, is cross a billion dollars, like that's the goal. And when that occurs, my brand will be reinforced. It'll be strengthened because it'll be an aspirational goal.

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for more people now the good news is a 50 million dollar exit or 46 million dollar exit is a good enough occurrence for many people now a different aspirational thing might be our portfolio performance now we're worth significantly more than when we had that exit but it's less validated it's less third party signed off and when we have that sign off it'll become validated now i'll give you a fun story on this the amount of people that gave me kudos for

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for selling Gymlaunch was significantly more than the people who gave me kudos for owning Gymlaunch. But the owning of Gymlaunch, I was richer the day before I sold the company than the day after because the equity in the business compounded tax-free. And the moment I sold it,

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The first is this cross here, which is the supply and demand curve that exists in any market. The second part is why is this a triangle? The triangle is there to exist as a fulcrum for leverage. And so fundamentally, If you can have a supply-demand curve that is dramatically in your favor, that alone will dictate this.

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had to pay taxes on what i gained and so by definition i had less money after the transaction than before but everyone perceived it because there was a third party edification that occurred because the third party at arm's length made the transaction happen and so it was real but as long as you don't live in the minds of other people's perceptions which to be fair in branding you kind of do you don't want your self-worth to be tied in their perception but your brand ultimately will be

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The idea is, the question to answer if you're a B2B business, which is over half of businesses are B2B, fun stat, I didn't know. I was looking this up for school actually, is that these are basically your buckets. Is how do I help them do what they want? How do I help people like them? And how can I accomplish something aspirational in their mind?

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or help other people like them accomplish that aspirational thing. And this is where you can help them accomplish their goals or the aspirational goal, it's either of those things.

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But the aspirational one I find incredibly interesting because some people saw the book launch last year for the $100 billion leads, we had a gazillion people there live, it was awesome, and they were like, I would like to do something like that. And so that in and of itself was a brand reinforcing event. Big picture,

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This is what I see as the process for building a B2B brand, because it's not like you're going to, think about it like this, if you're an attorney, you're not gonna sign the top attorney, you know, OJ Simpson's attorney, I can't remember, it's the Kardashians X, I can't remember, Jenner? Anyways, no, that's Bruce Jenner. Forget about it, you get the idea.

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If you're a business person, then it's like Elon's not gonna endorse you, right? It's not gonna happen. And so it's like you have to do the other things that can approximate your proficiency with proof. The final TLDR of this is you have resources. This is what your brand must accomplish. This is the timeline that it has to go off of. This is the ratio you need to follow.

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And this is how you spend your money and time. to make these things happen for the audience. And that's how you do it. And so this has been my focus. One of the big kind of like crystallizations of knowledge maybe deepened my understanding of branding and how it translates back and forth between D to C and B to B. Next up, I had more legal issues this year than I think I've ever had.

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And I don't see it as a problem. I have positioned it as a cost of doing business, which is that the more you have stuff, the more people will want to take it from you. Or alternatively, people will believe that you don't deserve it because you don't need it anymore. And so both of those situations are obviously outside of an original agreement.

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And so I'll give you some of my takeaways that might be helpful for you. So number one is the point of an agreement is not for when things are good, it's for when things are bad. And I think this is a mistake I made earlier on in my career, which is like, oh, it'll be fine. It's like, this is always gonna work. The whole point is for when it's not working.

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And I probably would have been more vigilant

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in how I thought through some of the agreements that I made earlier on in assuming like assume that this does not work out like think about really think about all the ways things could go wrong and then assume it is 100% wrong or worse and then operate from that perspective now that doesn't mean that you want to have negotiations in an agreement that are

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contentious, but it's good to operate from that angle. So the second thing is I would look at legal stuff purely based on a return on time. And so at least in the US, the bar for suing, getting sued, whatever, is basically zero. And so it's a very litigious country that we have a lot more lawsuits, a lot more lawyers. In Europe, for example, like It's very difficult to get malpractice lawsuits.

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If you are the only person who sells this one thing and the entire world wants it, you are going to make a lot of money pretty much no matter what. Doesn't matter how good you are at marketing, doesn't matter how good you are at sales, doesn't matter how good you are at pricing, you're gonna make a ton of money.

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It's really hard so they don't have all the malpractice insurance industry. All of that doesn't exist there. And so it is very much dependent on the laws of the land. But for me, I look at everything from the business perspective of dollars and cents.

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And the idea is, OK, if we have to go through some sort of litigation or some arbitration or some sort of thing that we have to deal with, I upfront like to understand what does it look like to have to go all the way? Obviously, you want to settle, you want to like do things in mediations because it just saves time for everybody. Right.

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But if you have to go all the way, then this is my absolute highest cost, which is going to be time. If you are smaller in the business, then money would be an issue. Obviously, you know, the lawyer bills can go as high as you want, I guess. But for me, limitations, this hasn't really been financial. It's just been time.

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And so the process that I apply to this is like, okay, walk me through every single piece of time requirement I will have to do and contribute to this that an attorney cannot do on their own. Once I have an understanding of how much actual time it's going to take, and I look at it at total time. So if it's like, it might take two years for this to come to fruition,

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well, if it's two years, but there's literally six days that are gonna be taken over those two years, then I really just think about the six days. And then I think, okay, what is the potential cost in terms of downside risk? And then what is the potential gain in terms of upside of a six day cost? And so from there, I'm able to look at how much do I make per day now?

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What would it cost me to pursue this or defend this or whatever? And in those instances, I just use that as my cost.

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In the defensive situation, you obviously have to defend yourself, because it becomes, it's one of those things that's very hurry up and wait, and so it will take all of your attention for a very small period of time, and then it will disappear again for a few months, and then the next kind of move kind of moves forward, the legal process is incredibly long and difficult.

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And so I try to think, what are the fewest things that have to be true in order for me to win? And I would rather just get those things right and then everything else can fall away. And so think about this in sequence. Supply demand is the first and most important thing.

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And so the TLDR of all of this is, by all means, at all costs, try to avoid any kind of legal conflicts because it will typically take more attention and time than it is worth. But there are times where you must defend yourself where, when that occurs, I would just look at the dollars and cents, does this make sense, and then not try and make the decision again.

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Because as things go on, your emotions will move, but the dollars and cents will remain the same. Sharan Srivatsa, good friend of Leila Nain, currently the CEO of Real. Also has Cirillo Capital, which is his investment firm. he gave me this little quip that I really like. And he said, talent only gets better in the future.

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And that has been, I mean, you'll notice a common theme around people in this. And that's because when I look at the things that we did really well with this year is bring good people in, get bad people out. And the companies that did the best in the portfolio, like that strategy ring fruit.

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Like the highest performing company in the portfolio, we put in probably like six great leaders and it's just crushing. And that's not an accident, right? So that's thing number one in terms of talent. The second thing is Work with the people who move towards you.

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And so I have spent too much time in my life trying to sell people on why they should do things my way, or with my values, or with my kind of rules, which I define culture as rules of reinforcement in a business. So like, these are the rules of the game as I would like to play it. And I noticed that if I kind of had this kind of recurring conflict with a handful of people,

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I was like, I don't need to do this. Like, there's another person who is stoked to be here, will agree with the path, and it will be so much more efficient because they'll want to talk to me, I'll want to talk to them, we agree to the rules of the game the way we both want to play it, and so we'll just play that much better that much longer.

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And so this is more of like a warning shot because I think what happens is you habituate, especially if you're an entrepreneur, you have a high pain tolerance, like you're used to suffering. Suffering is just the current state. And so sometimes someone comes in, things are okay, sometimes they change, sometimes you change, whatever, But fundamentally, conflict emerges.

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As long as we have those things, then if you had that hypothetical example of the entire world wants something and you're the only one who does it, what's the next thing you would need? Which is leverage. you'd want to be able to get as much for the effort that you put in because you would get bottlenecked based on maybe your supply chain.

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And if you cannot resolve the conflict, then over time, your communication cycle lessens and lessens. You start talking less and less frequently. And if this person is close to you or close to your function, it becomes very difficult for them to do their job and for you to get what you need out of the role. And so my single line of advice is work with the people who move towards you.

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And so a corollary or second point of that, that's a different frame to think through, is if your team doesn't admire some aspects of you, you either have to change them or you have to change you. Like this is a tough one though, because you want, like this is my opinion,

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If your team doesn't admire certain things about you, then the likely that you have strong influence over their behavior outside of basically punishment is low. And it's much better, in my opinion, to have a team who admire different traits of yours.

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Now, they don't have to say everything you do is amazing, but there are skills you have, there are behaviors you do that they're like, man, it'd be really cool if I had that, or it's really cool that he has that or she has that. That creates this element of respect in the relationship that I think is really required for high performance. And you have two choices there.

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Like, either you change or they change. Or you get someone else, so you change the whole thing, right? I think making sure that you've established the rules of the game and just subtly noticing, like, is there someone who just, like, disrespects you on a regular basis? Or they tried, or they're the first one to disagree? I want to be clear here.

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I'm not saying that you shouldn't have healthy tension and disagreement at the top. It's actually very common. Everybody who has different perspectives to yield the best outcome, that's how you get truth. So that's good. But if you're consistently blocked on what you consider to be par for course behaviors, that can grate on you. And I think that I tolerated that for too long.

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And I have done that in different occasions. And I want to shorten the time that I tolerate those kind of dynamics. So next up is sawdust. My favorite businesses in the world are businesses that are started off of waste from someone else. So let me explain. So I love the Airbnb and I love Uber the way that people have excess capacity or sawdust.

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They have something that they're not using that would be valuable for someone else. And so an easy example in a brick and mortar scenario is like, I don't use my gym. My gym was closed after 830 and it was no one used it until 430 in the morning. And so I'm paying for this rent and I have this space and there's probably some people who would like to have that space but can't. Right.

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You'd have other dependencies that would prevent you from capitalizing on the opportunity that the supply and demand curve has put in front of you. And so in a perfect world, you have all of that and unlimited leverage. And that allows you to maximally capitalize on opportunities. And that is why I designed the acquisition.com logo to exhibit those things. Now,

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And I didn't have, you know, weekend hours ended afternoon. Right. And so there are many of us and Airbnb did this on the residential side, obviously, like you have a spare bedroom, you can let someone crash there and you can make money for it. But the thing is that within businesses, you also have excess capacity. You have sawdust.

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And so the sawdust analogy comes from lumber mills when they would strip the trees of bark, they would turn them into planks, and then they shipped the planks out. But a smart foreman of the factory looked on the ground one day and they had to just keep sweeping up all this dust from the saw. And then finally, one guy said, hey, could we just mix this with glue and make plywood?

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And then if all of a sudden a whole new kind of industry was born from that, where you could take the scraps and then turn it into something else. And in the fur business that I did when I was 16, 17, 18 in there, the owner would have to make these jackets and he would cut off these snippets.

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from the snippets he was able to make earmuffs and then he was able to sell his earmuffs or give the earmuffs away as bonuses. And so he was able to make something from nothing. And so there are sawdust things that exist in your business. And I'll tell you one of the big ones that came from acquisition.com. So our primary business is obviously the portfolio.

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And that's where the majority of our resources are allocated towards. We tried to figure out a way where we could meet more potential portfolio companies. So I tried a few different things. So one thing I tried was, okay, could we just like invite people out to come out? Well, the barrier was too low, we got mixy-matchy, and I was like, that's not good.

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So we tried that one, and we didn't meet good people, and I was like, all right, that's not good. So the next thing I did was like, okay, what if we raise the qualifications really high, and then we kind of have these dinners? So we did four or five dinners where people would fly out, we'd meet them, the whole idea for me was like, I have to eat either way, so I might as well eat with people.

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Like, again, like sawdust, like what do I have to, I also have to make content, so if I go to dinner, I make content, and I meet people, this is all good, this helps us generate deals.

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And the reason that I was trying to figure this out was because the best performing, portfolio companies we have are number one, number two, number four, best performing company, were companies that we had worked with for six to 12 months prior. So we had an existing relationship, We had helped them grow. And then we were like, okay, I think they're portfolio ready now.

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Then we made our investment and we grew them from there. And our best performers were like that. So I was like, how can I have this happen on purpose rather than by accident? So I was really struggling with this. Mind you, I was also like running the portfolio too. So it was like I wasn't putting full attention towards it. And then in January, I was like, okay, well, we have this building.

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There's an open floor space. There were a whole bunch of desks there. But I was like, we weren't using those desks. Everybody had offices. And because we do a lot of confidential calls and whatnot, we're more of an office closed-door setup. And so we...

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cleared the desks and we're like, okay, well, let's see if some businesses would want to fly out to our headquarters and have us spend like two days kind of going over how we create value because then that way it's like, it will provide value to them. And the people who are like, oh, this is really cool. I would love to potentially like follow up with them over the long haul.

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They become, they kind of enter a longer term nurture process and we can potentially do deals with those people, et cetera. That's also why we spun up ACQ Ventures, et cetera. And so that whole division of workshops came out of, we have extra space, and the portfolio team isn't fully allocated.

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They work on the portfolio, obviously, but they can step down for a day or two during the month to meet other companies, network with them, share how they are turning around different companies in our portfolio, specific divisions or departments, and that'll be very additive. We can add value to everyone, it adds value to us, it adds value to them, and I get content from it.

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And so that was a big W. And the reason I bring this up is, there are some things in your business that check more than one box. And so it's like, I don't want a single box check. I want like four boxes checked. And so this generates deal flow. This generates cash flow. This generates content. This generates talent flow.

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The first piece here is understanding whether your business is supply or demand constrained. And so a supply constrained business, for example, is one that's like cleaning. Like cleaners often don't have a hard time finding other businesses or other homes to do cleaning for. A lot of people just don't want to do it.

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And so all of these things, and it utilizes a resource that I already have paid for. I pay this building every month, right? This cost exists. I pay my team every month, no matter what, either way. And so it used an existing cost basis to create a new opportunity for content and deal flow.

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And so from that, it's like, if you can just look at the pieces you have on the board, and this is actually what I do, is I look at, I try and write down with as much detail, what are all the things we do on a regular basis? Like what are the calls we take? What are the conferences we attend? What are the, like every single thing we do, and I'm like, is there a way I can recombine these things

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into something that would be valuable at no cost to me. And that's where I've had these really disproportionate gains in profitable divisions or products in our company, obviously, and then within the portfolio. You probably have SOPs and checklists within your business, right, of how you do whatever you do.

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Well, if you can take that and then turn those into lead magnets, then not only are they valuable for you, they also generate demand. And so that's just a very micro example of like take something you're already doing and find another use for it that requires no extra work. The next one's really big. And so this is a little bit leaking, you know, like looking forward into 2025 and beyond.

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And so I believe this. So this is a bet. So I'll be clear. This is this is me making a bet and calling a shot. that IRL and AI exist on polar opposite sides of a continuum. And I think that doubling down on both of these is a good decision. And so within our portfolio, we are pushing heavily on both sides. And so post COVID, I still feel like there's unmet demand for people who want to connect.

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I mean, obviously this is why I invested in school. Like I believe community is really good and I think it's lacking right now. So I think there's huge demand for it. And we've never been more connected and also feel so apart. And so it's almost like we have a lot of false solutions. It's like we're eating fake food that keeps you full but doesn't satisfy you. It's kind of like porn to sex.

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Like it's not the real thing, right? And so the idea is this is the real thing, this is efficiency. And so it's like how can I get as much efficiency as possible so that I can do as many of the unscalable things that are the real thing?

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And this IRL push that I'm doing, I'm doing across all the portfolio companies because the interesting thing about IRL is customers who have in-person experiences have tremendously different brand affinity. They're more loyal, they refer more, they rate higher, they buy more often. And if you have a strong culture within your marketing or your branding, you will attract like-minded people.

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And so that allows you to provide them value at no extra cost. So think of it like this. If I assemble a party, I'm the host of the party, Everybody who meets at the party feels like the party was awesome if everyone else at the party was great.

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The issue they have is finding staff who can do the cleaning with them or for them. And so that means that your supply side of how you can deliver to the demand is usually the issue. And this happens a lot of times with what I would consider nuisance services. So services that people might know how to do but just don't want to do.

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I could not talk to any of the guests and have them think, Alex's party was awesome, and I will get a disproportionate amount of the reward from the associations and the time they had. But that network allows people who assemble to provide value to each other, which is almost like, you just organize it and you let them provide the value. IRL, And AI, I'm heavily pushing on this this year.

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Sam Altman said that this year is the year AGI will come out, 2025. So artificial general intelligence, which basically AI is better than everyone at everything, which is frightening. But we'll figure it out. In the meantime, though, it'd be great if it could take some sales calls and set some appointments pretty accurately. And maybe help with some content and things like that.

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But in the meantime, we're staying really abreast on this and we're actively kind of like, I'm not trying to, be the AI company. I want to be a company that uses AI well, just to be clear about my position on this. IRL though is something that I feel like AI will not disrupt. And I think that the demand for in-person experiences will continue to rise. And I think that it is a good bet to make.

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And so this is what I'm betting on next year. I will mention this because a lot of people don't like IRL because they say it's unscalable, right? But I care so much more about is it valuable? And if it's valuable enough, it's worth scaling. And so the thing is is that just because it's harder doesn't mean it's not worth doing.

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And the benefit of scaling something that is harder to scale but also valuable means that once you scale it a little bit more, you'll have more resources to continue scaling it. And so if we can build cities in the middle of the desert or the middle of the ocean, we can absolutely scale an in-person experience. So next fun one is school.

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So what's crazy about this is that this was this year, which feels like an eternity ago, but we negotiated the deal in 2023. And then in January, we came out publicly with it. So this was the first brand deal that I did this year, or sorry, the first brand deal I've ever done. And the main reason behind doing it was that I believed in the product and I believed in the team.

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And I thought it was the best one and I think it's going to win. And so that is why I was willing to make that bet. And to be very clear, opportunity always looks like risk today. This bet has proven out very well. The platform continues to grow like crazy. We have millions and millions of users, which is awesome. And that was kind of the goal.

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And the reason that I ended up betting on this versus like any other potential thing I could do was it felt very uniquely fit for me. So I'll explain what I mean. There's a make money component to school. There's a education component to school. There's a community component to school, which I just see as like plus for social, right?

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And then all of these together are in an opportunity vehicle that is high leverage. And so for those reasons, I was like, I feel like I am uniquely qualified for education. Media would be another one here. There's definitely a huge media component with the business. So it's like education, media, business, societal good, operational leverage.

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It was like if you could make a business that hit a lot of the things that I'm about. And for me, it also helped people who are going zero to one. And I have a huge percentage of the audience that want to start a business, don't have one, and didn't know where to go. And so I wanted to have something that I could say, if you aren't a business owner yet, this is a very easy business to get started.

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And so a different example of this in a professional setting would be like accounting firms. Accounting firms, a lot of people don't want to hire accountants. And for a big period of time in a lot of companies growth in the beginning, you don't have in-house accounting. And so having an out of house accountant, there's plenty of demand for them.

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It's very low risk. There's not many moving parts. You can do it without any employees. You don't have to have inventory. You literally just need to learn the basic skills. And so this is a great vehicle for doing it. And so I was super pumped when we found out that the average community made $1,360 per month as paid communities.

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And I think that's really cool because it's like, no, you're not gonna be a gazillionaire by doing this. But it can help get you started. And I see this as a great gateway for getting into entrepreneurship. As a side note, for existing businesses, I think every existing business should have it. Every gym owner should have a school community.

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Every realtor should have a community for their customers. Every HOA should have a community, a school community for the people in the neighborhood. Whatever business you have, if you have an e-commerce business, there's a ton of e-commerce businesses joining school right now that realize that

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The email deliverability, like if you can reach 100% of people who bought your product, the feedback that you can get on the product, the reviews, the likely they buy the next thing goes way up. And so it's like, sure, add them to the email list, but also add them to a live community. And so I see that as, again, the IRL versus AI, like how do we bring people together?

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And so we're also doubling down on that with school because we are not, we don't see ourselves as, I mean obviously it's a technology business, but like it's a community business. And so we're also doubling down on how can we facilitate in-person connections between people of similar interests.

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So I'll give you some specific lessons that I've learned from growing school tremendously over the last year. Number one is CRO usually decreases, hold on, usually your split test will fail. And so basically the more optimized something is, the more likely a change from optimal results in a decrease.

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And so our first launch of the page, of the school games page, did so well that we've done like 14, sorry, 16 major split tests, and only two of them have won. And so like anything from the control, so basically the control is really, really dialed. So, and it's typically like if you have monstrous amounts of traffic, when you incur the cost of change, like it is a real cost.

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The second kind of thing that I would say that like I've learned or rather been reinforced from school is kind of customers above everything, which is just always a great reminder. Paul Graham has this statement that I probably feel like I've said a whole bunch of times this year, which is, You can solve almost every problem in a business by talking to your customers more.

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Like if your marketing isn't working, talk to your customers. If your sales isn't working, talk to your customers. If your product isn't working, talk to your customers, right? You are never too big to not talk to your customers. And so that was a big emphasis. I would say the next one is the value of offers. It was just, the school games itself was a really cool offer that we came up with.

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The issue they have is recruiting really good accountants. Yet again, they are a supply constrained business. Now, this works again with legal, it works with high-end consulting, like if you're a very good consultant in a niche, it's very easy to get people to wanna buy from you, very hard to get other people to do what you can do because you're really good at this thing, right?

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And then we added in, you can win a Cybertruck if you win, which made it even crazier. And so the uplift that a business can get from having a superior offer, we got to see that. It's nice to see things proven out. So that was a really good one. The next big lesson, I'll put this one, this is really big, is the value of deletion and simplicity. So I'll explain what I mean here.

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So we have tried to make it as easy as humanly possible for people to win on the platform. And we get better and better every day. But a big part of it is the number one reason people cancel things is overwhelm. It's not, and so overwhelm translates into zero value because they stop. And so what happens is people hear overwhelm and then add more stuff.

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And so it's rare that addition improves things rather than simply making things better or taking something out and replacing it with something better or eliminating it altogether. Like you want it to be as simple as possible but no simpler, right? Like if you take away all the friction that occurs from using a phone, what's left is an iPhone, right?

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The only next version of that would be you just talk in the air and then you get connected with people. That would be the next version of that. But what Steve Jobs did was an order of magnitude improvement off of the existing phones. And he just looked at all the things that suck about a phone, removed all of them, and what was left was the iPhone.

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And so thinking about product and value this way, so the value equation, you've got the outcome, you've got the risk, right, you've got speed, and then you've got effort, right? So the idea is, how do we make it faster and easier? Faster and easier, faster and easier, over and over and over again on this value equation. And a lot of times, what makes things faster and easier is removing things.

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I have I have grown more and more affinity towards looking at what's there and saying, OK, we need to maximize value per second, not seconds of value. And so this comes from the media side in terms of making content.

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But on the product side, like as long as the like every customer will ask you for different things and they will and if you give them every single thing they ask for, they will cause their own demise and then leave.

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And so then you get these Frankenstein products that have a gazillion gizmos that no one knows how to use because to fit it all in, it's like there's a hundred specific use cases that don't apply to everyone. And so product discipline around keeping simplicity and speed and ease as the primary goal is an incredibly difficult thing to focus on and making those strategic bets.

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And so that has been a great focus and kind of relearning, I would say, of this year with school. And I would say finally, knowing what your loop is. So it's like, what's your flywheel? So Jim Collins has a short book on this called The Flywheel, I think, or Flywheel Effect. And it's basically like, can you draw a circle within your business?

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And so this is very typical in a lot of businesses, especially service. That would be supply-constrained businesses. And if that is the constraint, then what do we do to gain leverage over the constraint? And so this is where, okay, is there a way that we can build a community of accountants that we can then recruit from?

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Which is, first we do this, which then, if we do this, this is what must occur. When this happens, this next thing must occur. If this occurs, this next thing must occur. And so I'll show you what I'm talking about. So if we make a lot of media for businesses, so we make a lot of business media. If we do that, then we will get business owners who are interested in our stuff.

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And if we get business owners who are interested in our stuff, they will then do deals. If we do deals with them, we'll have stuff to make media about. And so this is a basic wheel of acquisition.com. We talk about business stuff, that gets businesses interested, we do deals with those businesses, those businesses get outcomes, which then we talk about in the media. And so around and around we go.

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We want a wheel that feeds itself. And so the only thing that's required is to get the wheel moving. And so within school we have multiple different loops that we have that generate the growth that compounds within the business. And these loops are so important because

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When you have a linear input output equation in terms of how business grows, then it means that you just have to keep adding more on the front end. What you want is something that you spark once the engine runs and then all of a sudden it spins and it spins and goes out of control and it just keeps growing, right? And so that is the ultimate goal is having multiple of these flywheels.

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So a simple example is like Amazon, right? They have, they bring, you know, they make products that are really cheap, So they create a marketplace that has the cheapest products that have the highest fidelity in terms of the risk that someone has to make when they purchase because they have the reviews. So if they do that, then they will get more customers.

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If they have more customers, then they will be able to get more suppliers. If they have more suppliers, they will be able to get more competition and selection for customers, which then brings in more customers, right? And so around and around we go. And so businesses often have multiple flywheels like this that exist that self-reinforce.

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And the quality of that flywheel, what you want to figure out is what are the friction points that prevent this wheel from spinning? And then smooth it out so it just runs. So this is probably, I would say, number five in terms of the things that I've gotten away from school this year. And school's probably, I'll also call, will be, it'll probably have been,

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One of the best investments I've ever made. So this year and somewhat last year, we got this great office, right? And part of the reason we did this is because I wanted to have a massive gym, I'm being really honest with you. Like I wanted to have a really big gym, which I have. And I wanted to have a place that I could record that wasn't like out of my house or out of a closet.

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As much as it is great to have my team in and out of my personal space, I prefer it in a studio. And so that was the reason for building this to begin with. Then we started having a lot of teammates just started like spending more time here and they're like, maybe I'll move here. And so then we started to become more and more in person as a business.

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And so I will remind anyone, I started in person exclusively with gyms. Then we went to Gym Launch, which was entirely a remote business.

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and we were entirely remote before it was cool like we were entirely remote when people were like you can't be a remote business it's not legit for real like we like we would struggle to get like some banking relationships sometimes because they're like we need to i remember there was some software that we needed they were like we need to see a picture of your filing cabinet and i was like

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Is there a way that we can create some sort of environment that attracts more cleaners? Can our compensation structure, can we have a referral system internally for our team or our employees because I know what a cleaner, I know what a legal person, I know what another consultant is worth to me, to my business in total gross profit per year.

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What year is it? But it's like it was antiquated until COVID and then became the norm. I want to talk about pros and cons of this because some of you guys are business owners and you're trying to make this decision. And so number one, I think, is understanding which roles are remote and which roles are in person.

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So for us, because we know how to manage, I think remote teaches you how to manage better than in person does because there's so many ancillary small communications that occur in person that don't get documented remotely that still have a material impact on the business. And so if you're only remote, you have to be very structured with the communication.

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If you're in person, you can get away with a lot less. Now, Four roles, like fundamentally we say like, why does this person need to be here? We would only want people to be here who should be here. If finance doesn't really need to be in the office, that allows us to recruit from a wider net.

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So we can recruit from all over the United States rather than requiring people to move or only picking from, call it Las Vegas, right? And so for us, the pros have been training is much better in person, culture is much stronger. I think you have an eye to efficiency, which to be fair is somewhat offset with the additional cost of the building.

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You're able to see people in deep work and correct meeting cadences and things like that. Like if you're walking around everyone's on meetings all day, you're like, who's working, right? And so this allows you to, you get faster feedback loops, which I think is important. The cons of in-person is that harder to attract talent because they have to move. That's a big one.

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It's probably the biggest one. But it's easier to attract other people though. So for us, what we did to accommodate this is we, for some roles, depending on the level of the role, we will also include signing bonuses and things like that. So if you're in that position, including more incentive for them to move or move their families to your place of business is a good way to do it.

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I also recommend having them come out for like 30 days and stay at a hotel, just so that they don't like, you know, Deplant their whole family if for some reason it doesn't work out kind of the first month you'll know and so that's that's like a little in-between that I think is worth doing that has worked well for us and To be clear for me.

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I think 30% of our portfolio is in person 70% of remote So I don't have I don't care at all about how someone chooses to structure their employee teams, I think you should just, whatever way it is, I just want there to be sound reasoning behind it. And so for us, obviously we have a lot of media, and so having the entire media team here makes sense, because I film here, I'm here.

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And so they should be here too. Whereas, like I said, finance, it doesn't really make sense. And so it's just making sure that you're not being a stickler in either direction for the sake of it, and instead just saying, what problem are we solving, and which path increases the likelihood that it gets solved. Here's a few productivity hacks that helped me work a lot more this year.

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And so, as I was saying earlier, I worked a lot more days this year, a lot more hours per day than I probably worked in recent history, and I needed to optimize more things. It's kind of like when a car's driving at 60 miles an hour, it's like it moves a little bit, but when you're at 200 miles an hour, a tiny movement makes a huge change. It's kind of the same thing in terms of me.

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And why would I not be willing to pay 20% of that to somebody? Now, you might do that math and be like, holy cow, I make $250,000 a year per new lawyer who joins my firm. It'd probably be a lot more than that, honestly. In that case, then why would I be unwilling to spend $50,000 to go and not only that, give that $50,000 to someone on my team for bringing another great lawyer in?

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um with the increase in hours the increase in days i was like i need to get everything else dialed one massive one which is going to sound so silly is the big three of sleep so number one is pitch black and when i say pitch black i mean pitch black so tape the little lights on all the electronics in the room get blackout curtains i'm telling you just do it i took way too long to do it just do it just do it please do it

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Number one. Number two is it's gotta be cold. It has to be super cold. And if you are in a different temperature than the person you sleep with, then get one of those mattress pads that has the temperature control thing. It will change your life and it will certainly change your sleep, which could very much change your life. Just do it.

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The first big shift that I would say that's happened over the last year has been I have emphasized less and less long term planning. And this may sound contradictory. does some of my content about being patient. And so I think the patience is about being able to figure out what you're going to do in the meantime as you pursue your long-term goals. And I think long-term goals are very important.

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I think they're like two grand and you spend more time in bed than anywhere else. It's the wellspring of youth. It's everything worth doing. um and the third one and this is the most recent one is that i actually added in earplugs so i now sleep with earplugs uh which you just the simple foam ones like nothing crazy and uh sleeping with earplugs had a four beats per minute drop

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to my resting heart rate at the bottom of my sleep. And so I bring this up because like it had a material difference in basically how deeply I rest. And my deep sleep is basically very chunky and front loaded rather than like intermittent throughout the evening. So it's like basically as soon as I get to bed, I have like deep sleep because I hear nothing.

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It's like I'm in this black float tank essentially, this cold dark tank where I can't see anything or hear anything. And so you'll know when it's dark enough if when you open your eyes and when you close your eyes, it's the same. That's where you want to be. And so those are some significant ones. The next big one for me was making sure that my work environment was basically just as tailored.

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And so I've usually been better about this, but I always black out my windows because I get distracted with good weather. I just want to go outside. And so I black all that stuff out.

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I had two desks that I set up one for standing one for sitting because I realized that having a desk that moved I ended up just not moving it cuz I didn't want to like mess the wires up and like all the other stuff I just set up two desks and so that was helpful the biggest pain relief thing that I did this year because I spent a lot of time on my desk is I Got a kneeling chair.

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All right, which sounds ridiculous and they look goofy but If you sit in one position all day, like I was getting really bad neck pain, like it was very tough for me. And so by switching the kneeling chair, originally I thought I was going to do half my day in one chair, half my day in the other chair.

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But then I realized that when I was in the kneeling chair, I actually have like six different sitting positions that I do in that chair. And so by constantly varying my sitting position, because as soon as I get a little bit uncomfortable, I just change it up. I was able to basically decrease the resting stress on like my muscles being in this one frozen position for an extended period.

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And that eliminated my shoulder pain. like gone, like really, really helped me out a lot. And so I don't know what you're doing, but like it was probably like 100 bucks and like such high ROI for me. So the last thing was fitness wise, because I was in this very heavy season, I decreased my workouts to two a week, which is pretty light for me. but I just made those the absolutes.

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So I basically did Saturday, Sundays, my two workout days. And I just go really hard on those days. And that's actually kind of a weird way. It's been more fun for me than trying to do shorter, more frequent workouts. And so it's actually kind of brought some like more life back into my training, even though I'm doing it less frequently, I'm like looking forward to it.

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And I realized that for me, I love training on one condition that I'm not in a rush. I hate having to do a workout in 45 minutes because I have a call. It takes all the fun out of it for me. And so I do it on Saturdays and Sundays because I can just wake up, I will work out as long as I feel like, and then I'll start working. And that's been really, really good for me.

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And so this scales all the way up and all the way down based on the revenue that each of these high-end or supply-constrained employees provides the business. Now those are supply-constrained businesses, and if you're in one of those, you need to recognize it because the real businesses you're in is attracting, hiring, training, managing, and incentivizing these people to perform.

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But part of this has also been my transition. At 35, I told myself, you know, when I was 15, like at 35, I will transition to longevity. And so I have made that transition now. And so I'm light, I'm probably the lightest I've been in a long time. I'm like 203-ish right now, which is very light for me. For context, I weigh heaviest, I was 250. So I was very buzzed and it was all steak.

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And so now I'm 203. And basically, Chihuahuas live longer than Great Danes, which is small dogs live longer. And so I want to put less stress on my heart. And so for those of you who are like, Alex looks smaller, that's true, because I have lost weight. I've lost about 10 or 15 pounds. And so I'll probably stay around here. Maybe I'll get in the high 190s.

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But I'll probably, I maintain here pretty easily. And so that's my update on that part. And I do think that it's okay to have seasons. I'm not saying I'm only gonna work out twice a week forever. I'm saying I'm gonna work out twice a week now. I worked out three times this week. And so it's not like I have these rules.

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It's just that I absolutely committed to Saturdays and Sundays and being a weekend warrior. And that has worked well for me to not work, basically give myself permission to do that so that I could keep working harder on the stuff that needed to get moved forward. So next one is culture. So I define culture as the rules that govern reinforcement in a business.

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And so that means like the rules of behavior. What is good? What is neutral? What is bad? And typically people have some sort of values that they create that are supposed to embody that culture. But those values typically are either phrases or they're one or two words, and you have three to 10 of them, right?

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And so for us, I've always believed in three because I don't think anyone remembers more than three. And if they can't remember them, there's no point in having them. But those three typically are very... bucketed terms that then need to have hundreds of behaviors underneath them that kind of roll into that culture. It's not like you only have three rules of behaving.

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You have three concepts that have many applications across different conditions. A big one that we've been focusing on, Layla and I together, has been kind, not nice. And so I think that

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in the wake of wokeism, if you will, there has been a lot of accommodation that has been accepted or tolerated within businesses, which is like, everybody needs to have these safety zones and everyone has to feel hugged and fluffy and like all this stuff. And I believe that this is a pendulum, right? And I think that

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The pendulum swung here, and I think a lot of brands, Walmart just came out recently rolling back some of its initiatives. I know Victoria's Secret did last year. A lot of them are starting to swing back. Now, I do think that we're gonna swing too far the other way, to be clear, because that's how we do things. That's how us humans do things, right?

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But I think it's going in the right direction right now, which is going back towards the middle. And so, within Acquisition.com, we have this big, belief that we're very good at training.

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Like we're very good at training skills, because it's something that Layla and I pride ourselves on, and we're in this in-person environment, we're good at fast feedback loops, we're very good at breaking skills down into smaller chunks to make them manageable for somebody who's new. The problem is that sometimes that goes into no man left behind. And we are not a government program.

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Instead it should be, if you can't keep up, you can't come. And so I think this is a departure from the traditional like all accepting, let's all arms open. Like if someone, you know, has like, they don't like working late. It's like, well, then this isn't for them. And they can find another job that will accommodate that. But I do not. Because we were trying to accomplish great things.

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That's the real business, because the demand kind of takes care of itself. Of course, you have to do the basics, but the real issue is going to be on the back end, not the front end. Now, let's flip the tables. There are some businesses that are demand constrained. Now, demand-constrained businesses will be typically like e-commerce businesses.

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And great things require great sacrifice. And it doesn't feel like a sacrifice to the person who also wants the great thing. It only feels like a sacrifice for someone who doesn't. And so that price diminishes for someone who's aligned. And so kind not nice also brings into light like being able to have these sincerely candorous conversations of saying like you are not where you need to be.

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And I'm gonna give you a really good nug on this is that right now you can pause this video and I need you to show it to your team because what they don't understand is the difference between an insult and you might not understand it either. And this like changed my life. Insult and criticism. So an insult is where basically you slander the other person.

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You assign a word that has a negative connotation. So I say something like, you are lazy. You are a piece of shit. You're a dick. You, whatever. Whatever, insert the insult you want. A criticism is the gap between desired and actual. This is a commentary which is factual. The expectation is that you show up every day by 9 a.m., You've shown up every day at 9.05.

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Therefore, there's a discrepancy here. In order for you to continue maintaining your employment, you need to be here before nine. So this is a criticism. It's simply observing reality. And if you can do this, This will allow you to help people without having the emotional charge.

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Now if I say, you're five minutes late, and that makes you lazy, or that makes you uncommitted, or that makes you insert whatever insult, it then turns this into an emotionally charged conversation. And so what happens is, and this is why I think it's important, is that you need to explain to your team, criticism is not negative. It's an observation of reality.

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And insult is where we attach judgment to that discrepancy. Like, Your content sucks. That's tough. And the secondary of that is you suck because your content sucks, which is even harsher. But instead it says, our channel average is 100,000. the content that you make is 75,000. In order for you to keep your employment here, you need to be above 100,000.

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And now let's break down what do we need to do behaviorally that will increase the likelihood that you meet desired or exceeded. And so then this is where you get to teach, this is where you get to train. If someone's always late to meetings, they might not be lazy, they just might not have the skill of showing up on time, which is a skill. And so you then say, okay, do you set alarms?

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How do you estimate your time of driving? Do you do it on the fastest time you've ever driven somewhere or the slowest time you've ever driven somewhere? Do you do it on the fastest time you've ever gotten dressed or the slowest time you've ever gotten dressed? And so typically when people estimate time, they usually just skew to one of these two things.

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There's the people who are always way too early. It's because they do worst case on everything. And then you've got the people who are, they do best case on everything and they're always late, right? So it's like, how do you estimate time? And how do you set reminders for yourself to get places by the time you need to?

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Oftentimes, software businesses, specifically B2B software businesses, can be demand-constrained. Typical consumer products. Weight loss, for example, is a very demand-constrained business. Now, this might sound wild to you, like, wait, I think so many people want to lose weight. Yeah, there's just even more people who supply it and so many different methods for doing it.

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And so literally breaking down that skill, which seems obvious, and yet there's many young people, and to be fair, sometimes old people, who don't know how to show up on time. Understanding this and saying, if we don't share this criticism, we are being nice, not kind. We are seeking contentment. We are seeking approval from everyone. We are seeking consensus. We're not seeking truth.

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And so we need to be truth seeking as a business. And so we must always state the facts and tell the truth. And if someone is not up to snuff, we need to communicate that as fast as possible and give them the steps in order to remedy the situation. And so this is the part, I think both of these things get missed. Bosses will say, he's a dick, he's lazy, he's whatever.

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And sometimes they'll say it to the person, sometimes they'll say it behind their back. Both of those are bad. Instead, I would encourage you to go criticism and then steps. So the way to do this is you say, tell them what to do instead. So Don't just say, don't do this. Say, do this instead of this. That way you give them directions because no one can operate on a negative. Give them what to do.

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And this has dramatically improved my skills as an operator within the business. And hopefully the kind not nice is something that you can give to your team and that you can say is like, we are here to be kind. I want to help you win, but I'm not here to be your friend.

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Like, and I think Reed Hastings has a really wonderful frame around this, which is like, we're a professional sports team trying to win the world championships. We are not a family. Because you're not going to fire your kid. You're not going to fire your spouse. You're not going to fire your mother. But if you're on a professional sports team, it's like we are all here to win.

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And if you don't want to win, this is not the team for you. There's AAA. There's other teams. There's other teams that are pros that don't want to win. And that's fine. But that's not what we have here. And so the kindest thing that I can do for someone is give them clear feedback and opportunity to improve.

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And if they don't improve, give them the opportunity to work at a place where they will better fit in. Now that it's been five years and I'm back into operating day to day on the media and conversion team that we have at acquisition.com, it's been fun to turn things around. Now I already went through the optimization framework and that's what I executed.

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But the output of that was, number one, I removed all meetings. Number two, I said, you can have ad hoc stand-ups between each other when you want to solve a specific problem. So I don't want to stop communication. I just want to stop regular wasted time blocks that don't increase your output.

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The next thing, and to be fair, when I did all my one-on-ones with every single person in the department to understand what they were struggling with, one of the biggest things that came back was, we're in meetings all day. We hate being in meetings. I just want to work. And I was like, great. Let me make it easier for you to work.

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The next thing was, and this was feedback that I got from some of the managers when they saw me running this, was they saw a framework that I like a lot, which is what, who, when. So think about when you have a meeting and you're like, hey, we gotta do this thing, right? That's the what. All right, then a lot of times that's it. That's the meeting. Everyone just goes about their separate way.

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The next level of that is, okay, this is what it is and this is who needs to do it. So who's going to own this? Who's going to own this one, right? Who's the chest to poke, the throat to choke? All right, who's the one who's responsible?

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now if you have what and who that's already a better stop but where it gets really nasty is when you put in when and so the question that i like to ask here is how many hours will this take i don't ask how many days i don't ask what day you're going to get it done by i say how many hours will this take and then that person will say it'll probably take because then you get to hear it so it's like if someone says like 20 hours i'm like 20 hours right but if you ask them what day they might be like oh today's tuesday i can get you by friday i'm like why is it going to take three days

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Now again, all of these things can shift, right? Supply and demand is a curve, like it can move, right? This is dynamic and this video exists in time and unfortunately the environments change. But anybody who's been in fitness would understand that getting customers is actually typically the hardest part. Finding trainers, not that hard.

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right so when you ask hours it's like this will probably take i don't know 90 minutes i'm like okay cool so you can get this done in the next 90. now they will then say well i have other things to do i'm like okay what are those things and then you get to dive in and this is fundamentally i think the job of the boss is to prioritize this is strategy and they're like oh well i have this other thing that's for this massive project and i have to get that done i'm like well how long does that take and they'll say okay this many hours

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And say, okay, do that first, and then this one you can start on tomorrow morning. You'll have it done by lunch. So hit me up at noon tomorrow when you have it done. Now, people get scared about this because they're like, why are you driving all these deadlines? The more deadlines you have, the more opportunities you have to say, nice job.

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I would rather tell someone, you did a great job seven times in a week than once a week. And so I also have found that the best performers want to work and they hate not working and they hate things that get in the way of work. They hate office politics, they hate meetings, they hate gossip, they just want to work. And so I want to create an environment for those people.

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And if there are a bunch of people who want to gossip and want to have lots of meetings and want to ideate all day, Amazing, just not here. With the who, what, when framework, this also gets stacked and recapped, all right? So think about how a meeting runs, right? So okay, first thing we gotta do is this. Okay, what is it? Who's got it? When are you gonna get done by?

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How long is that gonna take? Can I pull it up? Can I pull it up? Can I pull it up? Yep, that's fine. All right, great. Next one, what's the next thing? Great, who's gonna own it? How long is it gonna take? Great, you'll do it by this time. And then, so what we do is, is I will recap every one of them every time.

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And so by the time I've done my fourth one, they've heard one four times, two three times, The third one, two times. And so there's this repetition that gets built in, and then obviously the thing at the very end is also going to be the freshest.

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So it's like I can repeat the least, the thing that's the most fresh, and the thing that I started with, which is like way out of their mind at this point, has been repeated like seven times. And so it makes it more likely that they will actually do it. Now, if you want to go the 201 version, which I had to do for a little bit, was repeat it back to me. So I would say, okay, got it.

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That's what you're going to do? Say it back to me. And I kid you not, if you ask them to say it back, this is crazy, like one out of three times they'll just completely get it wrong. And it's because they weren't listening, they weren't paying attention, whatever.

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And so I'm like, oh my God, I can't believe that I was about to leave this meeting and they still, they didn't understand what they needed to do. And so you can stack the who, what, when, you recap it all the way through, and then if you have a team that's not doing as well, ask them, have them explain it back to you so they know what needs to happen.

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Now, once you have this loop in place, what do we do? We lubricate it, we add money, we add incentives. So how can we align what they do with the outcome of the business? And so back into ops, I looked at everything, eliminated all the meetings, and then I said, okay, in this department, everything is based on quality, and so we just need to make better stuff.

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I said, if you make better stuff, I will pay you more. I'd rather have one guy who makes three times the money than three mediocre guys. In a very real way, it's easier for me to manage one person, there's way less communication, there's way less overhead, way less waste, and we'll get better outcomes.

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There's lots of people that like training and they'll even do it for free. Same thing with musicians. Like if you teach music classes, right? One of the different... difficulties there is attracting people who want to buy music lessons, but there's tons of people who play music and do it for free, right? And so the idea is which side of this curve are you on?

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And so if you're like, okay, I understand that you did all this, but how did you communicate with them if they had no meetings? So I just switched to a daily standup, which is every day, same time, we all hop on and I run departments like sales teams, alright? And I think that you can do this with any business and the reason that I like modeling sales teams for two reasons.

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One, I have a lot of experience with them. Two, I believe that the way sales teams are structured and operated have already been optimized for performance because the feedback loops are so tight. If you're not managing your sales team well, you find out very quickly. And as soon as you fix how you operate it, you find out very quickly.

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And so I think that sales teams overall are run typically very well. Now, What are the things about sales teams? So for new people, when they come in, what do they do? They listen to a lot of game tape. This works for customer service, this works for media, this works for sales. They watch a lot of the right way to do things. Then what happens? There's a lot of role-playing in sales.

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So you could role-play customer service. You could role-play around what would you look at with this piece of content? What would be the moments that you would clip out? How would you structure it? And you ask them to explain the work that they would do. That's when someone new is coming in. And then we say, okay, we're gonna give you a half calendar if you're a sales guy.

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I'm gonna give you a half calendar if you're customer service. I'm gonna give you a half calendar for media to make sure you're not posting tons of crap. You're just gonna get one post a day. And then if you do a good job, you meet KPIs, then you get a full calendar. Then I can give you an uncapped calendar, right? So we have these progressions as long as they maintain their quality metrics.

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And so like sales, we have a similar onboarding process. The huddle process itself is let's look at the good stuff and let's tear apart the bad stuff. So we've reviewed a call that went well, great. And the far more valuable, let's look at a call that didn't go the way it should have. And then we let the person who did the call correct themselves.

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So it's really tough if you go jump in and jump down to everyone's throat and tell them why they sucked. It's much easier for them to say, these are the things that I messed up, and then the team gets to say, here's all the things you did well. That way they get some praise from everybody else, but they still get to have that feedback.

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And then you can prioritize, okay, this is the thing that's the most important. But that still works for customer service, it works for product, it works for media, which is, okay, why did this clip suck? And let's look at it. And if you notice a common theme for when clips suck, then you just repeating it and reinforcing it keeps it top of mind.

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We have switched to that process and it has been very good. I also got people off the bus who weren't aligned with it. And so if you have a change that you wanna do and you foresee that people will not be aligned with that change, then I think that you owe it to the high performers to create an environment that is only other high performers.

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And then whatever that side is, is asking yourself, how can I gain more leverage over this problem so that I can solve it at scale once and for all, rather than having to solve it continuously over and over and over again? So I'll give you an example. I had a company who came out that we were looking at and they were a little bit on the smaller side, but they were a home services company.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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You wanna get it to the point where it's so self-managed and self-policed that if someone comes in and isn't pulling their weight, they just get removed. Simple as that. And the whole team comes to you like, dude, I don't think this is the guy, right? It shouldn't come from you. It should come from the culture of the team.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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And that's why you can't have a culture of acceptance where it's no man left behind like, oh, they're not as good as we thought, but we're just going to keep training them. We're going to keep deploying these resources. It's not to say that you can't train someone. The question is, is it worth it?

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The next big theme along operations, I'll break this into another chunk, is technical versus management. All right. And so this is very common. in tech companies, right? You have an engineer who's exceptionally talented, and you want to give them a way to move up in the company. But they don't want to manage people.

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And in most companies, the only way to move up is to increase the headcount that's underneath of you. And so when I saw this within our company, I was like, this feels dumb. We should find a way for the best sales guys to keep making more and more money. We should find ways for the best media guys to make more and more money, the best customer service guys to make more and more money.

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especially in the roles that have high leverage. So basically the best content creator has more leverage than the best sales guy. The best sales guy is closer to the reward though, to be fair, and so the likelihood that what they do generates revenue is much closer, whereas marketing or content could be significantly further away, so there's a discount that's applied there.

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But big picture is, is there a track for both types of people? Because the people who are experts at something, you just want to let them cook. Right? And so when I realized that the orgs that I, basically the divisions that I took over, the only way that someone would win was by moving up. And when you have a, the only reward structure is people underneath of you, then what does that incentivize?

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It incentivizes you keeping against yourself, because if someone gets better than you, then they move ahead of you in the line, number one. Number two is it incentivizes the managers and the whole team to always ask to hire more people. Because if you hire more people, then it means they, by default, move up in the organization.

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The third thing is that whoever is in charge of the promotions and the titles becomes chief person who's asked we must kiss. And that means that it basically becomes entirely subjective as to who gets promoted. And so then the job, so then the next incentive that comes up that's perverse is you want to show how much you're working rather than do work, which are different.

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And so this is where people are like, if I said, what did you do yesterday? And I was like, you need to give me a thousand bullets. You could probably come up with a thousand bullets. You're like, I tied my shoes and then I stood up straight and then I put one pant along my right pant leg on and I put my left pant leg on.

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And so people make it seem like they're just doing all of this work, but they don't tie that work to the output of the division. And when that happens is when you have misaligned incentives. So every one of these incentives is perverse in that it doesn't fuel the business, but it does fuel costs. With this and with the aligned incentives, the team post-change has more than doubled output.

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More than. And so I think the lesson here, and I think that we'll probably get to triple or quadruple, like for real. Maybe I'll do an update later. But this has been a recent takeover for me.

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But the thing is, is that people typically have significantly more output potential if you can tap into what we call discretionary effort, which is what is that effort above and beyond the minimum required to keep their job? So everything above you not getting fired is discretionary effort.

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And so the issue they had is they were struggling to attract plumbers. One of the things that we put in place for the business was, well, what does a plumber bring in every year? And let's call it $400,000 in gross profit. Okay, so if you have a nut of $400,000 that you know you've got the demand for, they're turning away business because their phone's ringing too much and they can't even take it.

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And in most companies, there's a massive amount of effort above not getting fired that is unlockable if the incentives are aligned. Many people can, in a very real way, triple how much they're doing, quadruple how much they're doing, only if they're incentivized to.

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When you have a political hierarchy, it just means elbowing, no one teaching each other anything, saying we always need to hire more people, decreasing your output to the lowest potential possible as long as you don't get fired. And this, when coupled with a management style of never firing, is a great way to create waste.

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So in order to facilitate this, there typically has to be a change in compensation. So I've talked about incentives a couple of times through here. And so My goal is to try and have everything be pay for performance to the highest degree possible. Now, here's where your operations and your finance team will push back. They'll say, this is complicated.

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Why can't we just do it the way everybody else does it? Because just because it's hard doesn't mean it's worth it. So there's a price, but there's also a return. And so all they are talking about is the price of this thing, not what we're going to get from it. If I could then go back to that finance person and say, hey, and to be fair, this isn't me saying anything about my finance.

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I'm saying you might have to deal with this. Hey, if we were able to quadruple our output by creating a more complex incentive structure that might require someone full-time just to manage, is the cost of that one person full-time managing it worth the increased output of Forex across the entire company? Duh, of course it is, but it's more complicated and it's also worth it.

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And so I bring this up because you will probably get pushback if you try and incentivize people on performance. It takes more math, it takes more tracking, but I will say one key part, which is that if people are going to be paid on performance, my recommendation is two things. One, if you make the transition, allow them to keep their existing salaries and then add the performance on top.

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And then for new people, bring them in and then just have the performance. But this allows complete adoption of the new way, rapid reinforcement loops so that they're like, this is way better. And then ultimately, if you make the jumps in comp proportional to the output that you seek to get, then you will still make more than the cost.

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So it's like going to the store, buying 3x output at twice the price of your 1x. It's still a better deal, even though it costs more. Around this pay for performance, it will also very clearly demonstrate who is really good and who isn't. And I haven't really talked about like letting people go who are low performers.

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And I'll just only say this one word about it, which is bloat is like cancer in a business or it's like weeds in a garden is that bloat naturally occurs. People hire more people because the simplest solution is throw money and bodies at stuff. And it's often not the right one. And so you have to keep your garden healthy by pruning it, by de-weeding it.

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You keep a tree healthy by cutting off the stray branches that are growing in the wrong direction because it's detracting from the growth of the overall trunk. And so this is the part that is probably contrarian for most of you. Fire when things are good, not when they are bad. So when things are good is when you have the most bloat.

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And so it is far better to let people go at that point for low performance because it doesn't feel like the company's losing. It feels like we're being disciplined. If you let people go only when the company performance drops, it feels way worse. Having done both, I strongly recommend the other.

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It says, you got a $400,000 nut. What are you willing to pay one time to unlock $400,000 every year in gross profit? Well, if you were to think about that like an investment, right, which would be like, okay, I've got this stock that yields $400,000 in gross profit per year to me, what would I be willing to pay for it? And that's every year.

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So for example, we were very fortunate, but during COVID, prior to COVID, we had been very militant about making sure that we were making sure that everyone was efficient and that the headcount made sense based on the demand. And so when COVID hit, we had very minimal amounts that we had to change internally in the business.

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And so because of that, I think it was able to maintain morale relatively well during a time when my industry was getting destroyed.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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and there's a number of ways you can do pay for performance and you don't need to have as much performance as you might think in order to incentivize action and so if you're like i don't have budget for that that's okay just just make a couple tiers of performance and then you can have flat bonuses by hitting some tiers like you can i mean literally it doesn't have you don't have to think in percentages it can just be flat amounts based on based on tiers and i think it's a very good structure

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And a good way to test this out is once you figure out your your compensation thing that you want to do back test it So just look at what it would have been the month before and then see what it is And if that makes sense, then it's like cool well I'm gonna assume the performance is gonna go up if I pay for that added performance and am I okay with this increase and if so Which if you aligned it with the incentives of the business it should more than pay for itself this the the structures that I'm talking about with the sales team management is

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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functions best in my opinion when you have teams of similar function. So what that means is like an executive team is going to be very, is as many people with very different functions and expertise. a customer service team has many people with the same function and expertise.

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And so this style of management, of reviews, onboarding, huddles, what could we do better here, those are great when everyone does the same thing. If everyone does different things, you will have a different structure of, it's far more round table, where everyone's more or less updating and then coming with the discussion topics that affect everybody else.

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and problem solving together more than upskilling together.

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So it's really probably the main difference between those is one is like we're really solving problems together for the majority of time, not say you don't do it the other way, but the majority of time we're solving big problems with disparate teams or different teams, diverse teams, and then with similar teams, homogenous teams, it's typically upskilling together and aligning priorities.

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This is huge. So problems and solutions have delays. All right, so hear me out on this. Right now, you are living with problems that you created six months ago. And when you begin to implement your solution, the problem will not immediately go away.

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And so there will be this period of time where you're executing a solution on a problem that you caused six months ago, and you will still continue to live with the problem because the solution has not borne fruit yet. It hasn't latched in yet. It hasn't come to fruition.

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And so you have to give solutions the amount of time they deserve to work before appraising whether or not they worked to begin with, which I recommend doing prior to implementing the solution. So basically, when you're about to do something to fix some problem, say, how long do I think this should take before I can say if it worked or not?

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and then stick to that because in the moment you will only incur even more cost which is why it's so painful. It's like you have this problem and now you're incurring more cost to try and solving it and you're still suffering the problem and the cost of solving it without the benefit.

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Well, shoot, I'd be at least willing to pay $400,000 if it was a stock, right, that's 100% return, because next year I'm gonna make $400,000 too. Now, there is an element of risk that comes into the equation. What if the person leaves? What if they get fired? What if they're not good? All of those things, so those are for sure there.

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And so this is kind of the endurance part of entrepreneurship is that you have to keep working without seeing the result of your work. You don't need to change anything, you need to learn to endure because Just because it's not working doesn't mean you're not on the right path.

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And so the easiest way to think about this is like if you were to go to the gym and you start working out and you start eating better, you're 50 pounds overweight. That problem was created years in the past.

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you now incurring the solution is incurring the problem, you're still overweight, and the cost of the solution, which is now you go to the gym, now you're not eating the foods you like, whatever, but you're still overweight. And so after seven days, you might think, okay, well, I should stop doing this because it's obviously not working.

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You have to give time time for the solution proportional to the size problem it's solving. And if you don't approach it this way and you ignore your problems, when you scale, you scale your problems with you.

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Which means that this is why I'm such a believer in solving the problems in order to scale rather than scaling despite my problems because then it just makes my problems bigger, hairier, and nastier. If you're living in good times right now, you can't rest on the laurels because it's not from the work you're doing today. It's from the work that you did six or 12 months ago.

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And this has been a constant reminder for Layla and I when we go through things. When things are good, we're like, what did we do six months ago that is causing this? And if things are bad, we ask, what did we stop doing or what did we add in in the past that created this? Too often we look at today and think that our bad day is because of what we did yesterday. And it often isn't.

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My 2024 Lessons in Business That Will Make You Rich | Ep 819

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And so properly attributing where the cause of the solution or problem came from can give you the outsized return that you're probably looking for. And I'll give you this very tactical tip. If you see a decline in performance in a division or a function of the business, it'll typically look like this.

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So let's say that you've got this, let's say it's lead flow, whatever, and then it starts to flatten out, and then it starts going down, right? So you notice, right? So what happens is people wake up here and say, we don't have enough leads, right? And so they say, okay, well, show me the ads this week. Show me the ads last week.

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Which means that we would then apply some sort of discount to account for that risk. But I think that one of the big misconceptions that business owners have is they're not willing to pay enough for talent that is the constraint of their business.

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And so you have to look at where the delta first occurred, and then what happened in this, what happened leading up to here, what did we change? Oftentimes, it's a who. Who did, and here's a fun one. A lot of people think, oh, we must have lost someone key. Most of the times, you added someone. You added someone terrible. I'm dead serious.

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We had an issue where our ascension rates all of a sudden, I was like, why our ascension? And we started looking at all these different, we looked at all the functions, we looked at messaging, all this stuff, and finally, I was like, and Layla brought it up, she was like, let's just look at the month when they stopped going up. We looked at that month, and we looked at what had happened.

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The only change that had happened was that we had hired a new head. We added someone to do the job. And by adding this bad person, they destroyed the function. Sometimes it's a how, sometimes you change your process, and sometimes that's the culprit. But a lot of times, you added someone who actively is destroying your business. So another big lesson of this year was around content.

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And so I made this video called Back to Business. I don't think it was called that, but that was my theme, was basically we did this experiment for 16 weeks where we made very, very wide content. So like, you know, meals and workouts and vlogs and things like that, where we wanted to see, okay, well, if we get more views, then maybe a percentage of those people will be business owners.

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And so our relative amount will go down that are business owners, but our absolute amount will go up. And so that's all I care about is the absolute amount. And so it turns out that that hypothesis was wrong, at least for us. And so when we made wider content, we had fewer absolute amount of business owners who were opting in, who were buying the books.

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And so for me, book sales is actually a very leading indicator for the people who we want coming towards acquisition.com. And so, and email opt-ins on the site, that's a big one. By the way, if you're not subscribed to Mozi Money Minute, it's one of the best things that I put out there.

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Like right now, if you could get 10 more, like if you are in a supply constrained business, if you could get 10 more of, not star, just appropriately competent employees who could service the demand that you have, would that double or triple your business? If so, yes. What would you pay in order to double or triple your business? Probably a lot more than it costs you to attract those people.

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It takes a minute and I deliver two every week that are extremely tactical things that you can immediately use to make more money. Like very tactical. One of the best things I put out there. So I think you go to acquisition.com forward slash newsletter and it's there. So you can opt in, grab that. I think you will like it. It's very good. I put a lot of time into it. Okay, back to business. So...

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In finding that out, we shifted our content, indeed, back to business, and lo and behold, we got more business owners. Crazy. But I think this is important because a lot of us fall into this wide views vanity trap. And so being clear about why you're making content to begin with is important.

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If you're a business owner and you're making content because you want to make more money, then you need to stay on point. Stay, serve the avatar you serve. And that has served us very well, especially in the longest forms content. I think the shorter stuff you can get away with what I would consider adjacent, right?

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So like if you're a salon lady and you sell haircuts, then if you talk about beauty in general, you will probably attract the type of avatar who spends money on these types of things. And so I see that as okay. But if you're gonna do a long video, probably don't do it on makeup tutorials if you sell haircuts.

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So another big part of this is that the structure of the content for entertainment is not the same as education. And so with education, a lot of the effort is in the pre-production. With entertainment, a lot of the effort goes into post-production. There's obviously pre as well, but the post-production, there's just got, like think about making the Transformers movie.

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How much post-production is there in that movie? A ton, right? Whereas some of the top education, videos on the internet are just a dude with a whiteboard, which just goes down to the quality and the simplicity of the content itself. And so you can make something significantly more compelling by making the language more readily accessible to your avatar. Now, two components to this.

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One is the examples that you use, you want it to be as relevant to the avatar as possible. If I'm talking to a bunch of mechanics, then I'll probably make a car analogy. If I want to talk to a bunch of ladies, I might use a cooking analogy. And that's with traditional gender roles and stereotypes, deal with it.

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OK, well, number one is that Harvard has standards. So they have many people apply and only a few get in. If you accept everybody who has a credit card, that's not a very high standard. And so if you want to create a brand around education, you can't let everybody in. Thing number one. Thing number two, Harvard makes no promises.

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And what many people will do, strivers especially, will just suffer for extended periods of time, and then sometimes they don't even get the second marshmallow and the first marshmallow is stale. So I don't see an issue with the fact that the business that you have might just generate more cash flow and not really be that sellable. That's okay. It's a trade you make.

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And I think it's a reasonable trade. But if you want to have your cake and eat it too, then there is one specific type of education that does have continuity. And so that's what I'll dive into. So obviously all the components that I talked about that are consumable, those will drive continuity. But there is one specific type of education that drives continuity, which is continued education.

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So there are professions where you have to stay up to date with technology. You have to stay up to date with new practices.

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Where if you can build a business where you recertify people on new skills or new technologies that come out on a consistent basis, then that membership, which is really what the business is, that membership business can over time continue to compound and you can demonstrate that people will stay with you for an entire career.

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If you can demonstrate that, then you have a business that is very valuable and is in education and can sell at almost a tech multiple. Fundamentally, inherently, technology businesses don't get these multiples because it's not like, oh, I have a software, therefore I get a software exit. No one gets this.

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The thing is that people will preach this because they want to sell you on that idea, but that's not how an investor sees it. The things that make a software valuable are the things that make a business valuable. which is that there is revenue retention, there's high gross margin, there's high incremental margin, there's less operational drag at scale.

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This is where service businesses start to sprout off of education because they're not coming for the education, they're coming for the service. They come for the service, they'll keep paying for the service if it's good. Back streets, back, all right. Or is it let's go? I don't know. I actually don't know the words to the song.

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These are all the things that make software companies at scale more valuable. It's not that the fact that they use code that makes them valuable. If you sell people into a software and they churn out every six months, that's not valuable. It's basically the same as a service. And you're going to be valued based on the fact that you have customers that come in and out all the time.

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And the thing that you'd have to establish as a brand that would then prove out the fact that you're going to continue to have demand like Harvard for years to come. And so if you're not doing this... then you're basically just building something that generates cashflow, which to be fair, I'm not saying there's nothing wrong with that.

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But the big misconception is the idea that number one, there's something wrong with it. Number two, that I have to add software or something to make my company valuable, which it won't make it valuable. It'll likely make it a distraction and decrease the size of the business. Number three, We're cranking. You're charging too much for the consumption and too little for the education.

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You probably need to do this. Charge more for the upfront thing because it is life-transforming value, and then charge less for the thing that's ongoing because it probably is less valuable than the other one. And if you're like, I'm not sure if mine is less valuable, well, just look at your churn. People are telling you if it's less valuable.

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They don't say, hey, you're going to make this much money and you're making this many days. So they've completely gone away from that. Instead, it's just it costs this much money to get in and you might not get a result. Now, here's the here's the craziest part. Number three, not everyone passes. So not only does not everyone get in and everyone pays with no promise, not everyone passes.

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And if you don't have something that is consumption-based, think about what components of whatever it is that you sell, someone must consume on a monthly basis. They use and reuse so that you can get them to buy again and again. So these are my qualms. With education done right, this is how I think about it. And hopefully that should put to rest. One, how do I sell my education business?

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Well, it's not about an education business. It's about keeping a business that keeps customers for a long time and having high gross margins. I gave you one model that does work. The other model is having a stack of consumables. Continued education is also a method that works there. But again, that's the new thing. That's the PhD. That's the master's.

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It's certification level one, two, three, four, five, six, right? It's the extra thing that you're doing. And you have to understand that there's gonna be a trade-off or drop-off at each level. Now, if you sell only continued education on the front end, then you have people already have a prerequisite.

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So then the issue there, it's going to be finding the people already have the prerequisite that matches your continued education demands. All businesses have problems. Now, if I wanted to go use my marketing skills on something, because you probably, if you sell education, you have to get good at marketing and sales. It's one of the parts of the business.

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If you have to, if you want to build something like that, then let me give you the easiest hack in the world to build something that's really valuable. Find stuff people already don't stop buying. Then use your marketing and sales skills on that, which is fundamentally what we did with private equity. So what do I put in my feature set to make it stickier?

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So number one is I would add as few things as possible and you likely can delete things. This is big. This is very big. How many education businesses do you know that include calls, accountability, some sort of resource library, library of all past Q&A calls or one-on-one calls? Probably a lot of them. Have any of them solved churn? No. No.

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If you want to have a feature set, the way that I think about feature sets is that I want each feature to be on its own valuable enough to more than justify three or four times the price. If someone can't just say it's worth it for this alone, then I don't want it in the stack. And that may mean you only have three or four things or two things or one thing and you just do it really well.

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That's fine. So that's in terms of how I'm thinking through it. In terms of what things should I add and when... We have to answer, what problem are we solving? If people are churning and you have an education business, well, unless you're doing continued education, that is the nature of the business. And you probably mispriced on the back and probably mispriced on the front.

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In terms of when to add it, it would be when I know that this particular service is something that people consume again and again and again. So if you get repeated questions month after month after month of a problem that needs to get solved, this is where service businesses start to sprout off of education.

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Now, what you'll realize is if you do the service well, the service business itself will be more valuable than the education business because they're not coming for the education, they're coming for the service. They come for the service, they'll keep paying for the service if it's good.

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Part of the reason that sometimes service businesses, even if the service should be sticky, they aren't sticky is because the nature of the customers. So let me explain that. So if you have customers that are inherently volatile, then their volatility will reflect on the volatility of your product or service.

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And so if you're dealing with VSMBs, so very small business owners, or prosumers, people who just, you know, they have a job and they kind of upgrade things, Those people are notoriously volatile. They're going in and out all the time. They, you know, get passionate, get unpassionate, they get whatever, right?

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And so it doesn't matter how good the thing is, you're going to have churn that's going to be there. And so you have to make sure that you're comparing what churn, what you're expected churn or you want to get to. Like Facebook has super high churn, right? If you think about churn as people who stop using the product,

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Now, I'm going to say super high relative to Salesforce, but way better than every other social media platform. And so you look at Shopify. Shopify, I think, is considered best in class. I think they have 55% or 60% renewal on an annual basis, meaning they lose 40% of customers every year. But the people who stick after that year stick for the long haul. And so...

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And so if you just look at those three criteria, there's more. But if you just look at those three criteria, you'd be like, oh, that's why they're different from 99% of other education businesses in general. They also do education. Now, what else is different about their thing?

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They're going to have involuntary churn the lower on the axis you go. What you want to make sure is that after people reach a milestone, they never leave. So that's what you're really going for. So if you have some period of time, let's call it 12 months, where people churn in and out, and then after 12 months, no one ever leaves because they reach certain benchmarks or certain activation points,

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If you get there, then you have a valuable business because those people, you just have this year up front that doesn't matter. It doesn't really factor into the value of the business, but the valuable part of the business is you do this functionally as a sales motion in order to generate this reliable recurring revenue stack, and you're just filtering through to find the diamonds.

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So the question was, what kind of churn benchmarks exist so I know if I'm doing good or bad? So I can tell you in school, because we have a lot of metrics there, 18% monthly churn is the average school community churn. So if you're doing 10%, you're doing basically about half that. So it's decent good. If you're above that, you probably have some things that you can improve on.

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If you're at 5%, so that means that you have 20-month LTVs. If you're like, how did you do that math? All you do is you just take one divided by your monthly churn. So one divided by 10% monthly churn means 10 months of average stay. If it's five months, then one divided by five. You know, if you have 1% churn, then you have 100, right? 100 months. And so what's good, what's bad?

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Well, the lower, the better. But the piece that I would really care about is M12. So the 12-month retention. How many people get to month 12? And of those people, what's my churn on them? If my churn on them is zero, then I'm very excited. If they're also just slowly churning out as well, then I just have this very long tail and I have to always keep selling people.

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Which, of course, every business has to keep selling people. The percentage is going to matter based on the industry and who you serve by a wide margin. If you're serving high-end enterprise, then you should be 80% annual renewal or higher. If you're serving beginners, then it's going to be high. And that's also a feature, not a bug. It's just part of selling to that customer.

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Well, it's in person versus remote, which is probably, again, another big differentiation for the vast majority of these businesses. On top of that, the network of the quality of the people is probably the most valuable thing that they give on top of the brand. And so they just curate an experience for very smart people and they slap their brand on top of them.

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For me, what I care about fundamentally... is the cost and the return of a permanent customer. So let me break this down. This is probably the most important concept. All we care about in any business is how many permanent customers do we have.

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Let's say that you have, for every 10 people who buy your education, three of them transfer over to your service, and of the three that transfer to your service, one of them never leaves. Then we just have to know, okay, it cost me 10 times my current cost to acquire a customer to get one Person who never leaves. So what's that LTV to crack ratio? What's that LTV to crack ratio, right?

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If you're having just your LTV to crack ratio for front-end business, that's different than LTV to permanent, right? What's my permanent crack to a permanent LTV? They just never leave. And if you're like, well, I don't really have that yet. Well, yeah. And that's because that's the hard part of business.

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Once you figure out the product market fit of what's my feature stack, what type of customers that feature stack better, you know, better serve for so that 12 months from now, these people never want to leave. Once you solve that part, that is the hard part of business. That is the hardest question to solve.

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Once you solve that, then everything else is basically just math of how do I find more of those people? And if I have to go through five to get to one, then my cost, but this is one permanent customer. And then it should be able to cashflow question. which is why people raise money and then they get really aggressive.

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But then you want to see like, okay, is there a way that I can either select better on the front end or is there a way that I can increase activation so it becomes one out of four instead of one out of five? But we have to get to that one point you have a permanent customer and then build backwards from there. Okay, so when do you upsell other feature stacks?

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Well, it's going to be based on their need. So if someone comes in and has all of these needs, then you'd sell it naturally at that point. If someone has one problem solved, but then just creates another problem, a simple example would be like, Hey, I teach people how to do, you know, DM setting or whatever. So you teach people how to, you know, reach out to people and create appointments. Okay.

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Uh, Well, once they learn how to do it themselves, what's the next thing they're going to want? They're going to want other people to do it for them. And so if you want to sell a service of placement for those people or sell some sort of like a fractionalized service where you have a pool of people that works for many people, or you say, Hey, I'll employ them myself.

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So you don't have to deal with the liability or risk, but I charge 20% above and I pre-trained them. And that's the ongoing rate. Fine. Like these are all different business models you could have there, but you can't sell the GM center. I don't think, well, you could upfront, but likely they would have to have the business model and understanding first, and then you would upsell them and back in.

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So we always set like offer timing matters just as much, if not more than the offer itself. Like sometimes you have the absolute right offer and you're just offering at the wrong time. So people say, hey, I really want to start a business that has enterprise value. They'll say, I want a real business. Fundamentally, if you exchange goods and services for money, then you have a real business.

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So you've got to deal with your own head trash on that. But if you define real business as a business that becomes an asset that's sellable to somebody else, fine, I understand that. Don't let anyone make you believe that there's something inherently wrong about the business you have.

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If you follow the law and you exchange goods and services for money and you make a profit, then in the eyes of Alex... There's nothing wrong with what you do. You use the skills you got to provide for your family. I don't think there's any shame in that. I would die on that hill.

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And fundamentally, that's actually what they sell. Now, what's the next issue that comes up for most people of like, why is my business not a Harvard brand? They will then get into, well, my customers leave. So do Harvard's. They leave after four years. Now, they also have an extended time horizon in terms of the promise of when someone might get to the end of this thing, right?

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Now, beyond that, if you're like, I would just prefer to have a different business or I'd rather have a business that doesn't rely on me. I'd rather have a business that could sell someday because I have whatever goals that I have. Fine. I have yet to see the I'm going to use my cash flow for my education thing to feed my software or service business and then let that take off.

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Usually what ends up happening is that both businesses end up taking your attention and the service business doesn't put as much cash flow out, neither does the software company. And your lifestyle has already accustomed to the higher income level that you've generated from your high cash flow business.

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And so you never really want to give it up because you don't want to take a lifestyle cut, which most people can't. And so they end up not being able to pursue it. If you do make the jump, you can win. So I want to be clear. Sam Ovens from school had consulting.com, sold and shut down consulting.com, went all in on school.

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Alex Becker with Hyros had Market Hero, which is an education business, sold and shut that down, started Hyros, went all in on Hyros, made it work. And both have succeeded exceptionally well. If you want to do it, do it. but no half measures. Well, hopefully that puts the nail in that coffin for those of you who are unsure about that.

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I get that question probably twice a month, and hopefully that just resolves that. Keep being awesome. Love you all. Bye.

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Yours is six weeks. Theirs might be six years. Now, what is continuity in the form of education? Well, every quarter... or every trimester, semester, or whatever they work on, right? You have new courses and you have a curriculum. And so a lot of people who are in the education space are like, I want to teach this one thing and I want people to pay me for it forever.

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We have to answer, what problem are we solving? If people are churning and you have an education business, well, unless you're doing continued education, that is the nature of the business and you probably miss price on the back and probably miss price on the front end.

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And the reason for that is because people in the education space mistake a payment plan for continuity. So if you sell something that costs $12,000 and you give them access to it for a year and people pay $1,000 a month, you don't have churn. People have graduated. You have a payment plan, not continuity. If you're trying to solve for continuity or solve for sellability, let's go into those.

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Why not? We're partying, right? A business that has enterprise value has reliability of future cash flow, meaning there's a high likelihood that this business will continue to make money in the future. And so typically like a Harvard has a brand. And so because of that brand, they're not worried about demand, right?

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They can demonstrate the fact that they have a certain number of people who are applying every year and a certain number of slots available. And so because of that supply demand discrepancy, because of the brand that they built, they were able to likely, if it were a private enterprise, what is private, but it's not a nonprofit or sorry, it is a, it's not a for-profit institution.

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It's a nonprofit technically. Let's not get into that. But point is, is that For your business to have value, you're going to have to build a brand around it that guarantees demand in the future. Because, and this is the big one, because education does not lead to continuity except under one circumstance. So let me explain.

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Don't know the words to any song, believe it or not, except for one that I did for poetry class in seventh grade because I actually had to like write it down. So I'm a very visual learner. Literally can't remember any of the song lyrics. Anyways, that's not why you're here. I am on a little bit of a roll this morning because I've had a lot of things that have been percolating.

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So if you teach someone to do a thing, they usually learn the thing if you're good, and then they graduate from the thing. And they should do that. But a lot of people are like, man, I want to have recurring revenue. But the thing is that you have to break up the deliverable that you have into two different columns. So this is a good exercise for you to think through.

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Column A is what's the stuff that someone uses one time, gets the value, and then after they get the value, it's no longer valuable, right? So if I teach you how to sell and then you know how to sell, I don't need to teach you again. You already have the value.

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If I teach you how to generate leads for yourself, as soon as you learn the skill, the skill now continues to provide value, but I no longer provide value to you in teaching it, right? Right. So there are education components which are typically one-time value. People aren't on a, like for a Harvard, for example, they teach you, you know, communication 101.

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Okay, after that semester, you don't take communication 101 again. And it would be weird if they tried to charge you again for communication 101 because you're like, well, I already know it, right? But we do this. And as a we, as entrepreneurs who do education stuff, like try and do this stuff all the time.

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Now you're like, wait a second, then how did gym launch sell for a lot of money if there was enterprise value? Ah, because most people mistakenly think gym launch was an education business. And that's because the people who profit from education businesses try to sell you on that.

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As the owner of gym launch, I can tell you the vast majority of the enterprise value in that business was not from education. Because there's other things. So I said column A is one-time value. Column B is consumables. Things that continue to provide value again and again and again. Now, if you look at your service, which I like to think about it from that perspective.

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What are the other things that you have in the business that someone must use again and again and again? Examples. Forgemont, one of the primary things that we do there is that we go and test ads in representative markets. We spend our own money. to get ads that we know work. And then once we have that ad, we then sell it at a margin, basically, to everyone else.

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And it's 100% gross margins for us after we've incurred the initial cost of, one, filming the ads, editing the ads, and then displaying the ads, actually running them, putting the money behind it to see which ones are the winners.

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But once we scoop up the four or five winners, we can just hand them to 1,000 or 10,000 locations, and they are valuable to each of those locations because within those local markets, they are new ads. But what do you need next month? More new ads. And so it is a consumable that has 100% gross margins that can be sold again and again and again.

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I haven't done one of these in a minute. I've just had a lot of backlog of like consistent questions that I get around the same themes. And I wanted to make stuff to like... just put a nail, you know, drive a nail into the coffin, like not have to, basically it's like, I want you to not like this, like this is solved. Like you don't have to think about this one again.

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What else do you think someone could have that is consumable? There's a great school community, for example, where they do 3D printing. So the guy teaches 3D printing. How do you do it? How do you set it up? Whatever. One time value. And then after that, every month, he scours the internet for new products that are hot and trending right now so that you could set up with your 3D printing business.

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And so people stay every month because they can get this list, the hot list, and then they grab the things off that list and they stay in there. And for him, he just had to do the one-time work of creating the list and then he can sell it over and over and over again. But people stay because they don't want to lose it. I'll give you a different business. There's a real estate business.

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that has a school community. And they have super low churn. And one of the reasons they have low churn is because every month he has bird dogs, so basically people who go out and scout for properties, and he puts a list out of properties that meet his criteria for his way of doing wholesaling. And so then people pay to be in his community in order to have access to this list of fresh properties.

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So he does the one-time work, and then he basically licenses that or fractionalizes the sale of that to many people. These are the consumable consumables. What other ones are common? Let's think through them, all right? So one of them is you've got community. Community in and of itself is actually a consumable thing. You use it this month, you use it next month, right?

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These are things that you can do. These are fundamentally why network effects exist. If you can build a valuable enough network, people don't want to leave that network. And fundamentally, that's what communities are. It's on a micro level, right? And so community is something that you use. Now, what are other things that you might use? You use traditional services.

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So if you have a marketing agency, you might pay monthly. If you do SEO, you might pay monthly. If you do accountability, which is a service for some people, that is something that people use month after month after month. If you solve a new problem on a monthly basis because a new problem emerges, then that would be something that is consumable.

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And so we have to look at our deliverables and think, what are the things that are one-time and what are the things that are consumable? And then, here's the key part, we have to price them appropriately. And so the reality is that education, extremely valuable. There's a reason that Harvard can spend, you know, charge $60,000 a year or 70 or whatever it is now, is because that is very valuable.

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To educate someone gives them, they basically pay today to increase their skill set so they can increase their future earnings. That's what education is about, is literally increasing someone's future earnings. That's why people learn shit.

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Or if they want to learn how to paint, then they could obviously monetize that too, but some people just want to learn how to paint, or they want to learn how to do music, they want to learn how to sing, whatever the skill is. But they pay today because they know that they're basically paying a discount over the long haul as long as they learn the skill.

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In this context, how do we get customers to stick? One is, with the pricing, we want to price the one-time value as high as we possibly can relative to what people are willing to pay. On the consumable part, we price it where people are also willing to pay if the other piece didn't exist. So think about this. This is the big mistake, right?

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Like this is, this is the, this is, I won't say the answer, but I'll do my very best. So here's the issue. Many people have education businesses. And so that means books, courses, you know, media, speaking, coaching, all of that stuff. Right. And they want to make sellable businesses and And they also want their customers to never leave.

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This is the big mistake, is that people will price their consumable at a payment plan price of their one-time upfront value. And so, for example, if something's worth $30,000, then they say, cool, you can pay $2,500 a month for 12 months, and you're going to get this one-time value and this consumable value.

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But then once people have kind of drained that one-time value, and sometimes it takes less time than a year, then people exit because the consumable value is not worth the $2,500. This is why I'm a big advocate of the big head, long tail model, which is maybe the upfront thing is worth really $10,000. And your consumable thing might be worth $100. It might be worth $200. It might be worth $500.

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I don't know what that is. But if you only sold that, so this is a good mental frame, is if you only sold this thing, What do you think would be a price that people would not want to leave? That's the price you have for your continuity because that is the price that people are willing to stay at.

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And typically, it's significantly lower than a spread out version of the upfront value of whatever the educational skill is. And so you have to differentiate those things. Now, beyond that, you might be like, well, shoot, my consumables aren't worth that much. Fine. Then structure your pricing so that you always have a value discrepancy in what you charge and what you deliver.

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Now, the other piece of this is, okay, well, I want to have enterprise value in the business, which means that I should have a reliability of future revenue. So, sure, we have a little bit of our consumables. That will stack up over time. Great.

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We have our upfront, which typically serves to liquidate the acquisition cost, at least how I like to structure things, for the high margin continuity that goes on the back end. But what else can we do? Well, what does Harvard do? They sell you more courses. They sell you more degrees. You want to have a bachelor's? Guess what you have now? You want to get a master's? Get a master's.

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After a master's, what do you get? You get a PhD. Well, after a PhD, what do you get? You get a double PhD. You get a super duper PhD, right? They'll keep selling you, but the thing is that's the continuity. That's the ladder is just with the higher level version, but they also know that it's a fraction of that, right? If 100 kids go to get a bachelor's, it might only be

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10% or 20%, I don't know what the numbers are, 20% that they get a master's. Of the masters, maybe it's only 10% of them that get a PhD. And so also the pricing also reflects that. Interesting, right? Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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It's breaking scaling into 10 stages and and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap. R-O-A-D map. Roadmap. Now, back to the stickiness of the business. A piece of advice. Don't start an education business and then say, I'm going to make it a SaaS company. Famous last words. Now, if you're white labeling somebody's tool, whatever. It's not really yours and fine.

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That's really just you being an affiliate of someone else's thing. Whatever. But if you're like, I'm going to start something from scratch, the likelihood that you succeed is basically zero. And when I say succeed, it's like actually have a true software exit. I have yet to see, literally yet to see. And I look at a lot of businesses and I kind of sit in this space. Like I understand pretty well.

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I have yet to see a business that has successfully done this. And the likelihood that you were the special snowflake is probably not a bet that I'd be willing to make. Now, you might feel like a special snowflake. Your mama might have told you you're a special snowflake. Your father, well, hopefully he didn't tell you you're a special snowflake. He should hopefully have you prove it.

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And so they have these problems, which is that customers are leaving and their business isn't sellable. And they think there's something wrong with their business. And the answer is maybe. So let's dive into this. Number one, what makes Harvard Harvard? Like, why is Harvard different from whatever one, two, three, you know, coaching education business?

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But the point is, is that it's unlikely. And I prefer to make bets that where if I wait, I win. And if I look around and look at the marketplace and no one's won using this path, it's probably because it's a flawed path. And it is because when you attract them with education, then you try to keep them with software.

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It typically doesn't work unless it's a core function of the business and you're fully focused on it, which you probably aren't. If you want something that is super sellable, then you want something that's sticky. If you want something that's sticky, then make the business about the sticky thing. A lot of stickiness here, right?

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Now, the trade that most people in education and even media companies make is that instead of having something that is inherently valuable as an asset, they tend to just make more money than they otherwise would with a similar scale business in just about any other space. And I see that as the trade of future value or future money for today's dollars. And so I'll give you a story.

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So a buddy of mine had a business. He worked on it for between 8 and 12 years. I can't remember. A while. And he took a salary of $70,000 a year. And at the end of that period of time, he sold the business, a software company, for $250 million. So $70,000 a year for eight years, 10 years, 12 years. He lived on Dave Ramsey style, paid his house off, like lived on that. And then boom, $250 million.

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He could have done an education business and maybe made $10 million a year for that whole time. He's skilled enough entrepreneur. And so the question is, how do you want to make money? And I want to be clear, I don't think there's anything wrong with saying, I have a business that makes me $10 million a year that I'll never be able to sell. Well, you get to enjoy the $10 million every single year.

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So, I mean, life's only going in one direction. It's getting shorter. So, I mean, I don't think there's anything inherently wrong with that. There's this kind of mantra of what I call the three marshmallow problem. So there's the typical story of the child who gets put into a room, he gets one marshmallow now, and if he doesn't eat the marshmallow, he gets two marshmallows.

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The problem with that for those of you who learn how to delay gratification is that once you learn that skill, you then want to delay gratification forever. And then you hope for this third marshmallow that might never come. And so think about different versions of this experiment. If we were to say, hey, you get one marshmallow now, and if you wait a year, you can get a second marshmallow.

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Is it worth waiting a year for a second marshmallow? Like, is the payoff of a second marshmallow worth it? Maybe, maybe not. Is it worth it at 10 years? Is it worth it at the end of your life? You get the second marshmallow. Maybe, maybe not. And so I think a lot of people mistake delaying gratification with maximizing gratification. And so, yes, it's true.

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Delaying gratification in general tends to, especially at the beginning, increase your reward. But at some point there is a diminishing return, in my opinion, beyond which you should just get your reward, right? And also there's this misconception, I think, that by taking the reward,

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unlike the experiment, that it prevents you or precludes you from getting another marshmallow again later, which oftentimes it doesn't. And so I think there's a sweet spot, and that's like most things, is that the magic is in the middle, is being able to balance both extremes.

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Let's do... Q&As. Raising Qs. In whatever order. Yes. So you sell people to people. You do human trafficking. You're not... You have no... You have no revenue. And you want to get $2 million a month. So what's the issue?

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larger marketplace easier to acquire customer to stick as well as a large enterprise customer you've got a gold mine if that's true and so if you want to go spend money acquire customers with the education or media as your liquidation and then get you know 100 like but the goal that you guys should have is like we don't care at all about the education all of your focus all the profit goes into just fixing one number which is that you need to look at m12 so month 12 retention

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um and just say like okay we're at 40 how do we get to 60 and then how do we get to 70 and that's all you're solving for because if you solve that then the thing will just keep growing and that's the beauty i mean that's fundamentally the beauty of software once you get it right is that it just keeps growing thank you yeah hello my name is zion hold on sorry we do 1.1 to 1.2 million in revenue a year which one is it 1.1

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But like old people, young people, women, men?

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So like cooking skills, balancing a budget.

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Brick and mortar?

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Okay, so the government is your customer?

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Okay, got it. Okay, so the issue is Focus and Avatar. Why is that a problem?

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So you're mostly insurance or you're mostly cash? Mostly insurance.

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oh mostly insurance out of network got out yeah yeah no i'm investing in a rehab facility so i'm familiar okay cool yeah um yeah 4.2 want to get to 20 okay got it we have three offices and don't know exactly how to transition out of the dying business model obviously our industry is growing yeah so what what business model are you thinking about switching to cash hmm i have a bunch of friends who are in network and murdering it in network yeah do why don't you get in network

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Got it. Okay, that helps a lot more context-wise. I thought you'd sneak that by me. No, so you can fill up all your properties using the professionals?

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Okay, so is it just that your heart's not in it with the professionals? Yeah, my heart's not in it. Okay, cool. Well, first off, kudos. How difficult is it? How quickly can you fill it up with kids?

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Yeah, I'm guessing you have a cash flow issue in the meantime.

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Yeah, I think you've got to bridge the gap to where you want to go.

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So, like, basically... Sometimes you got to do what you don't want to do to get to what you do want to do. You know, like as much as I could be like, you should only serve the one person. Like, I think that you have the properties you already have leases on. You have the commitments that you have to stick with, fill up the properties with the working professionals so that you can create cashflow.

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I would consider just rebranding the old one, given your partner, and then just kind of relaunching if you can bandwidth wise in parallel, but just knowing that this is going to be basically an asset that you're going to sunset. Yeah. Is there a huge amount of like operational resources after it gets filled up that you have to deploy to like manage it or no?

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Professional, professional.

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Okay. Yeah. I will say this as a side note. Notice how easy it is to like make money in this other thing versus the hard thing. In general, if you weren't like, I really want to help the kids, I'd be like, dude, just do the really easy one. No, you're like, it takes nothing. I can fill it up in a day, cash flows, whatever. Like, like do more of that. Um, if the goal was money. Yeah.

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If the goal, like, okay.

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All right. So you can flick in priorities.

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That's the issue. So it's like, it's a sequence thing, right? Like you have a thing that you're good at making money on, and then you have a thing that you want to give back on. I would imagine the professionals one makes you more money than the kids one does.

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It doesn't.

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Okay. So I stand by my original thing. Hmm. Bridge this for the cash flow and then switch to the kids. Professionals, fill up your existing ones so that you're not going into debt and you're not going negative. And then basically the rest of your priorities going forward, you sunset that. It's like that was our legacy model. Now we do kids.

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Don't keep growing that side of the business.

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Right. Fill up the ones you have because you have all these vacancies because you had to get the kids out. Fill that up really quickly. Get the cash flow back up. And then if you can make more money with the kids thing, and that's what you want to do it and you make more money, do that. But you got to get to there.

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That's my two cents.

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Thank you.

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Yeah. I mean, I really think prioritization is the most important skill.

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Everyone here is limited. Yeah. So it's what you do with the limits.

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Thank you.

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Can you just say a higher number when you get to the asking for money part?

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No, I understand. I understand. I'm saying like what stops you from just changing nothing and just saying a higher price?

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Okay. So a couple of things. So one is that it feels like you need to be sold more than anything, which like, great. But are you good at it?

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Oh, Christmas tree. Lights. Oh, yeah. Okay, good. They're the best. So, great. So then you can charge whatever you want. In terms of, has the business all come from referrals?

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Okay. Got it. So you want to get to 2 million, uh, you raising your prices, what percentage do you want to raise them?

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Got it. So the thing is, is like, if you want to raise them 50%, I'll bet you got so much more room than that because you seem not as convicted. So I'll bet you there's like a ton of room. Okay. Um, so you're charging. Okay. Let's just, let's start with 50 and then bump it again. Another 50. If basically you have no change in close rates.

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And I would like you to keep bumping it by 50% until you see that you're making less money. Got it.

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Okay. That sounds great. I love this. Was that as good for you as it was for me? I'm kidding. That's what your partner said. There you go. Okay, so I'll give you a little script for the people who are old that are going to come back because I know some of them are going to recur.

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I mean, basically you have three different ways to run it. So let me ask the question, why do you feel like the way that you have right now is dying from out of network?

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Is that I would give them a heads up ahead of time and say, hey, just so you know, we're raising prices on all these new crazy people who are trying to give us money. But since you're an old OG, if you want to reward you for being a previous customer, I'll honor your old price as long as you buy now for Christmas. Okay. Otherwise, you'll get the new price.

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So it's like I'm giving you the love now because I'm like, hey, I'm letting you in. But then you can pull cash flow forward. Does that make sense? Perfect. And then everybody else just raise the price and you'll feel okay about it because you'll have a full bank account.

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Right. Okay. Thank you. Hey, Alex. My name is Alex. What's up? We sell residential window replacements to homeowners. Okay. We did $84 million in revenue last year.

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residential windows to homeowners to homeowners okay got it 84 okay yeah um today we have had a google sheets empire and a what empire a google sheet empire and we're starting to build out a hub spot um we spent the last few months building out the frameworks of our hub spot are you involved in it very involved okay good that's just like yeah biggest mistakes

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So that's what I wanted to ask you about because I know you just moved all your portfolio companies to HubSpot.

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Who said that?

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You. When? On one of your podcasts. Jesus.

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It's like I say it on one podcast like four years ago. It's like everyone, there's like the best HubSpot endorsement ever. Anyways, keep going.

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Yeah, yeah. The question I have, so we're going to roll this out across 16 offices, hopefully a hard launch March 1st. Cool. I don't want to pay the ignorance tax if I don't have to. So what advice would you have?

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Basically, you're CEO of IT for basically this whole quarter. It's the easiest way to say it. And so I would have really rapid feedback loops with each of the department heads. If you have functional heads at the holding company, and then you'd want to have basically separate lines of communication for all the location heads. So I think about, do you use Slack or something like that?

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Just Boxer, yeah.

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really yeah geez okay yeah so i i'd want to have basically different threads by by function so one is the actual function so people who are handling sales people handling marketing and i'd have the leaders there and then i still want like you basically want the different slices basically lines of communication to the different slices of the org so that you can get as much transparency top down um into how it's working for them and making their life easier and

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And then that way you can triage basically which, because you have limited resources in terms of which of these bugs are we going to fix, which process flow sucks. And then you can basically stack order which of these things has the highest driver for revenue. But you can't really do it appropriately unless you basically can drink in all that information. And as, are you CEO? Yeah.

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No, I'm okay.

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Yeah. But, but you're in charge of it. So you're CEO of this. So, um, that, that's, that's basically, basically it's just like, you need to eat, breathe, breathe and sleep this stuff.

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Yeah. No, that's helpful. Thank you.

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Yeah. Just like, it's okay that it is unscalable. Got it. But you have to do that in order to make it scalable.

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Yeah, thank you.

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Yeah, you bet.

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So first of all, thank you. You and your team for the things that you are doing.

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Yeah, my name is Paulos. This is what I'm doing that you said already. And for the, I guess, three, four years, it seems like I just kind of lost everything. Something like why or stuff like this, because two and a half, maybe already three years ago, we planned to go from what I have right now, because it's a one-man company, just a few team members. Now it's 416 revenue the last year.

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And the goal was 2.3 mil. Uh-huh. Maybe this is the why. I lost this on the way. Uh-huh. So I just wanted to know what's your why, why you are doing what you are doing.

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I like working. I spent a year thinking about that question when I had enough money to do whatever I wanted and could just live on treasury bills for the rest of my life. When I looked back on the days that I enjoyed most, they had three things in common. I worked out, I ate with people that I liked, and I worked hard and had something to show for it. and had nothing left in the tank.

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And so once I realized that those were the days that I enjoyed the most, that I made it my goal to live as many of those days in a row as I could. And the way that I live my life bothers a lot of people. And that's okay. And so I think, I mean, I got that advice when I was 22 years old from, I'll just, whatever, from a person in my past. And I'd had a good weekend and I started work.

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And she said, you're in a good mood. And I was like, yeah, I just had a good weekend. She was like, I'm pretty sure the secret to happiness is living as many days in a row like that as you can. And that was like the closest to operationalizing kind of joy that I'd ever heard. And so I have just stuck with that. And I think that the things that bring you joy will change over time.

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But I think that structure of just trying to find what that perfect day is and living in as many days in a row as you can is kind of the way to do it. That's how I do it. You can do whatever you want. Yeah. Thank you. As a side note, for those of you who feel like you have lost your passion for your prospect, and I'll give you a simple example.

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So you basically see it as like, I could either go in network and then make your entire business model around operational efficiency, which is, I mean, I've got somebody to murder it doing that. So I don't think there's anything wrong with that. Or alternatively, you just go premium, be the best and be private, right? Be cashback. So the question is, how do you transition it?

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Like I used to sell weight loss to women between the age of 25 and 55. And at a certain point, I just really stopped caring. They were like, Oh my god, my life changed forever. And I was like, I know you had a calorie deficit and you moved like, yes, that's how that works. And I would have to kind of like fake myself into feeling excited about it.

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I it really bothered me because I was like, I quit my job to do something that I loved. And I don't really care about this. I ended up loving business more than I loved weight loss. And then I fell into that. Um, but I had a friend who was a personal trainer who quit being a personal trainer and started a cookie business, brick and mortar, big cookie store, like did it right.

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Um, and I remember being like, are you passionate about cookies? And he was like, not really. And I was like, but he crushed it. He did a really good job. Everything was like really tight. And, um, what I realized was that he was passionate about doing things well. rather than the cookie business.

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And once I realized that, I was like, oh, I don't have to be passionate about weight loss, but I can be passionate about being good. And just saying like, when I do things, I will do them well. And I think that has been something that has helped me stay motivated in times when I feel less so. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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We should do the little thingy-jingy. Right.

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

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and across all eight functions of the business so you've got marketing you've got sales you've got product you've got customer success you've got it you've got recruiting hr you've got finance and we show the problems that emerge at every level of scale and how to graduate to the next level it's all free and you can get it personalized to you so it's about 30-ish pages for each of the stages once you enter the questions it will tell you exactly where you're at and what you need to do to grow

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Hello.

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Let me say channel, explain, dial into the channel sales that you're talking about.

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So like affiliates.

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Got it. Okay. So you're an affiliate expert for big IT companies and you have a network of people that can do basically sell their services for them with a markup.

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So the question is, well, I mean, it sounds like you did okay with your announcement. Why do you feel like you can't outcompete the other people?

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And this is the channel part. So the crowded part doesn't bother me at all.

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Because that just means that there's lots of demand.

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And who you deal with. Yeah. Yeah. A pain. Literally for you. Or really, I guess for them. So I think, so fundamentally, I think you just have to think about this as basically starting a business over, but with resources already. So it's like, you don't have to think about, you don't really have to think about the service. You probably have to think about the packaging itself.

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I mean, you could do either path, but... I mean, it's a good question. I think it's more the statements that would initially jar me of, like, it's saturated, I think it's going away, things like that. Because, you know, my big questions are always logic, evidence, utility. So... what does that mean? Like define that for me. How do you know that? And so what? Logic evidence utility.

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So when I asked, you know, channel partners, like please define that for me. It's like, okay, that's affiliates. How do you know that they are going down? Like, how do you know that?

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Who's on the market for a while?

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Brutally Honest Business Advice | Ep 878

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Okay. And those people were looking for jobs?

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Brutally Honest Business Advice | Ep 878

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And when you say a lot of people reached out to you, how many is that?

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Brutally Honest Business Advice | Ep 878

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Okay. The big conflicting data point I have is that you like made a post and made 360 grand. Yeah.

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Yeah. No, I mean, it's real, though. But I think I'll tell you what I like. If I'm in your shoes, I get excited by this stuff. Maybe because I'm broken on the inside. Who knows?

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Yeah. And like I see everyone bleeding and I'm like, let's let's finish them off. You know what I mean? Like they didn't deserve to be in business to begin with. And I will make sure that everyone knows.

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And so if you have this in and you're better and you're seen as a market leader, if things are consolidating, for example, then it means that like as long as if the industry isn't going away, but it's consolidating, then it means a winner take all. So it just means the stakes got higher.

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Which if you're better, that's a good thing.

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No, you bet.

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Self-crack, yeah.

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It's like, what's the, what's the grants I'm offer for this?

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So you are a chiropractor?

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And you no longer have your practice?

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And then you also have an academy where you train other chiropractors?

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Yes. And you also want to start a physical products business?

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You don't want to leave money on the table. What's revenue right now?

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And you'll you'll have a number of like you're just going to become a normal business, which is just like you will run advertisements and you will make offers to people and they will come in and then they will take their credit card out and they will buy stuff from you. And so it's probably more that it conceptually feels complex more than it actually is.

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So you just started it a year ago? Yeah. Why are you starting another business?

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You know what I mean? Like, sell orange juice. People are thirsty.

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You already have two businesses. Yeah. And you have a third business. And it's a physical product. It's a totally different business.

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What's your goal?

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Yeah, but what do you want to have happen from that?

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You're saying it takes time to build a big business.

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Yeah, I believe you.

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Let me help for a second. Sorry. You're good, man. Uh, you're also like probably, you know, everyone's laughing, but like you're probably one out of four, one out of three of you here is in this exact same boat. So hope so. Uh, here's the thing. The opportunity will only get bigger, not smaller. So the rush that you have is a rush to do a smaller version of what you want.

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Right.

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Oh, no. I have no... I had nothing to sell anyone for years. Okay. So, point being, thing is, I don't actually think I'm going to convince you. I think you're going to do it. No, I'm serious. So, I don't even know if there's a point. You want to sell your thing. You want to sell your widget. Yeah. So, what am I going to do?

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And so it's probably a ripping the bandaid off thing. Which is that I would just out like so one is what channel of acquisition you're going to use. I'm guessing right now. Is it mostly word of mouth?

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You want me to tell you how to focus?

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What?

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You want to be CEO of multiple. There's a difference between ownership. I also own stocks in zillions of companies.

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So no, you have, no, this is important. This is good. So for everybody, there's an interesting owning something and being CEO and operator. You can only really operate one thing. That's it. If I buy a stock in Apple, I'm an owner. I don't do anything, but I'm an owner. Does that make you get the difference here? Yeah. You're like, well, I'm going to be more.

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So like the, where you would get me if you wanted to was school on the face of, but when I did that deal, I said, I will change nothing about what I do. So my regular day must remain the same in order for me to do this deal. I'm going to continue to make content. I'm going to continue to record stuff. And then all I'm going to do is point in a different direction. That's it.

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So the pointing is a copy paste on a link. Everything else remained the same. So I boil this down to what does this change about what I do? And so the reason that this is very difficult is that you're going to start another business and it's going to change what you do.

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Yeah. So one is you can start sell upselling existing customers. So like, obviously, they have what's covered in from insurance, but then, you know, upselling other packages that'll get your team a little bit used to be like, it's okay to pay us. That's from like a really tactical level.

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All right. I don't know what your question is anymore. I would take your 500 medical people and be like, how do I go from 500,000 in my first year to 5 million? That's what I would do. You already have something that works. You already have a following of people who have this thing. If you want, you can sell through them as an affiliate base and you have one business.

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How do you split test organic content?

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You don't. You just make 10 pieces of content. And if you think something was really good and it bombed, you can re-edit it with a new hook. But it would be weird if imagine if you had a page and you saw 10 hooks for the same piece of content, it would be kind of odd. And so obviously, Instagram has the trial reels and whatnot, which is an interesting new function.

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But every person up to this point in human history of social media has not had that function. And so it's usually just a gross and disgusting amount of volume for an unending period of time. I'm being super real. I assume that is the answer. Yeah, that is the answer. And that disgusting amount of volume, the learning process is this.

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We make, call it 100 pieces of content, and then we look back at which ones did well, and we try and point out what was different about those compared to the ones that didn't do well. then the next hundred, we say, let's add two points to our checklist and do these extra two points for the next hundred videos. And fundamentally that is how we've continued to make content.

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But from an acquisition perspective, you've got content, you've got outreach, and then you've got paid ads, right? And alternatively, you could have affiliates. So we have to pick. So of those four things, which ones do you feel like you are better suited?

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So like our long form YouTube videos have massive checklists of just like, okay, we have to do this. Like whenever Alex is about to enter a story, this is what we have to do visually. Uh, you know, big, this like, obviously the intro is super, super important for long form, but

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I just like we're saying better and more that accordion I would see say is a consistent theme across all content creators that I've met, which is like in the beginning, you just do a ton. And then you're like, okay, this, if I just like this video got a hundred thousand and the other 10 videos got like 500 views. Yeah. You're like,

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okay, if I just spent a little bit more time, instead of making 10, made three, I'll bet you I could get like 10,000 views per. And then you start doing that and you get good at that. And you're like, I could probably go from three to 10 of these. And then you do 10 of those. And then as you do 10, you're like, you know what, man, these ones popped off.

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I'll bet you if I spent a little bit more time, right? And so you just keep going back and forth between better and more. And it's a very normal cadence. I will give you one final thing because I know that you're not the only content creator here. There's a lot of mythology around content and volume.

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which is like Instagram can only take two posts a day or TikTok maxes out at four or at two o'clock and six, like don't worry about it. Don't worry about it. One of the biggest Instagram accounts right now is a Bollywood account. They post a hundred times a day. They get 9 billion views a month, a hundred posts a day. You're just not doing enough.

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And so now I used to like be sore, like, okay, let's make sure they're, you know, 12 hours spaced out. Like I'll post one and 30 minutes later, I'll have something else and I'll post it again. It doesn't matter. Thing is just 1% of your audience is seeing it anyways. So they'll just push it to somebody else. The content is incentivized to distribute your content.

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So from affiliates, it's like go to shoot injury attorneys or like you want to find the person that they're going to see prior to hitting you up.

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So the platform is incentivized to distribute the content to people who find it valuable. So just give them more stuff to distribute. Just go crazy on the input.

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To a million or past a million?

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Okay.

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tried a bunch of that and the issue there is that they want to send in network or if you're injury attorneys to workers cop cases which they'll pay very well so you don't want to go from that perspective so you don't want to do affiliates content probably in my opinion probably isn't the the best way um so then you have outreach and you've got paid ads i'm going to bet paid ads is going to be your better bet since it's local it's pretty straightforward um operationally it's not complex like running paid ads in a local area is like pretty easy

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Okay. So are you franchised?

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It's not that I don't like franchise. It's just that when you do the math on the amount of franchise support that is required. Now, I do think that I'm more okay with it in food businesses, typically less with low skilled labor businesses, like a gym, for example.

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Because it's easier to actually standardize a product in food more than... That's why if you think about how many successful franchises there are in food, there's tons of them. How many successful franchises are there in service-based gyms? None. There's none. F45's out of business. Orange Theory's out of business. CrossFit's whatever. And the thing is that they actually don't have a model.

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They're a licensing business. And so that's why they've been able to stay around. So anyways, back to your point about franchising. The business. I'm not going to tear into that right now. Okay. So let's just, you just, you have a CAC issue. Okay.

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Well, what's the, so once a store gets going, do you have to have any advertising in the market or just, it just kind of like slowly grows its way off a word of mouth?

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You need a great opening strategy. Yeah. Every brick and mortar expansion, this is for everybody, you have to have a killer grand opening. I can't tell you. I don't know of a single successful chain

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brick and mortar that doesn't have like a super dialed this is exactly how we get to profitable within 30 days 60 days 90 days these are the promotions we run this is the the 90 days we do you know leading up prior like by the day um it's just the level of detail that has to occur like think about how chick-fil-a opens up right like that first day they have a line you know down down the block right it's just it's like it's like this you know i was gonna say jesus coming to town that would be tongue-in-cheek but but it's it's a big deal right um

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And so one is you need some amazing giveaway that you can bring people in the door on. Two is I like to limit it to like the first 500 customers get something that's basically ancillary. So like Wendy's does a great one of these, which is like the first hundred people or first 500 people get a little golden key chain. that they get free Frosties, right? For life, I think.

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And so very incentivizing for people to like tell their friends and line up. But where the second order effects that come from that are that the only people really gonna stand in line there are people who live close by. Like, why would you care about getting that thing for that one local area when... you live far away, right?

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But on top of that, what are you going to do now that you have this one free dessert, for example, that you can take whenever you're going to bring friends with you, and you're not always just going to get dessert, you're going to get a burger, you're going to get fries, you're gonna get everything else. And so that becomes kind of like the ambassador base of the business.

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And so having one killer giveaway promotion on the front end, and like lifetime deals on some sort of mini or some sort of I'm sure you have some sort of little upsells or desserts or whatever that are healthy that you can give away that are high margin. That would be thing one.

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And it's probably like you need to start marketing 60 days at least prior to kind of like pepper the market, let everyone know that it's coming. I would just like build the list up of people who are getting excited for this giveaway. And then you basically run a launch play, whisk, repeat, shout into the launch itself.

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In terms of the offers for decreasing CAC, it's going to be some version of either BOGOs. So, you know, buy one, get one. or, you know, kids' cups are half off, and you just have to have one or two-line transaction upsell that you have to teach the staff so that when people come in with this coupon, they ask one question back. That's it.

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And then that question then leads them to the upsell that can help you recoup CAC. And the thing that's going to be most important about this entire thing is what percentage of customers come back.

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No, I'm just telling you. That is the most important metric that you need. I mean, if you have it, what percentage come back after first visit?

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It's super doable. Super doable for brick and mortar.

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I mean, 30 days.

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I mean, I would imagine if somebody's going to be getting a smoothie, if they don't come back for a month and like they weren't thrilled. Yeah, that's fair. Right. Okay.

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also punch cards running start you probably know some of those things already um when i say running start it's like instead of having if you have 10 on the card you want to punch three two or three up front when you give it to them uh psychologically they're like three times more likely to finish it one fact

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You drop a pin.

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Got it. How much creator were you putting out per week?

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So like 500,000 a day is usually 50 pieces a day.

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For context.

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Spend 100 a day, 100,000 a day. It's closer to, it's less than that. Yeah. We spend 250 a month. Yeah. Yeah. I think that you should at least right now be at 25 a week minimum.

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You're probably going to end up finding that you have one to three offers that actually convert. And then the remainder of your business will be upselling and cross-selling when they walk in the door. So instead of thinking about your business as having like, you know, we have 15 services, we advertise all 15. You're going to have one to three that convert really profitably on the front end.

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I would rather you just get it going. You can kind of like think about removing yourself. Are you like still the face of the business?

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Yeah, I don't think that's the issue right now. If you want to get to 10, it's like you got tons of time before that's going to happen. So like... Cool. Yeah, it's a ton more volume than you're currently doing. And it's actually the same answer that we're talking earlier from the concept perspective, just on the ads.

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The nice thing with ads, though, is that because the nature of testing that can occur with ads is that if you record, call it 25. Here, I'll just walk you through this. This will apply to everybody. So you make 50 hooks. So it's just like, hey, quick question. Hey, have you ever wondered about data engineering? Hey, look at this crazy AI thing. You know who makes this? Data engineers.

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Like, what's that? Like, you just go through 50 hooks, right? Then you have your three to five meets, which is like, this is actually the fastest growing industry in America right now. And believe it or not, You know, Goldman Sachs said that there's 23% in Kager. And if you're like, what's Kager? It just means every year by 23%. That means it's going to double in four years.

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So think about how many people you know who are data engineers, right? None. Well, there's going to be even more. And this is the starting salary. This is just according to this, you know, reputable source. And here's the craziest part. You only need 16 weeks in order to get certified to get these types of jobs.

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And so if you've ever been kind of tech oriented or you're good at math, like this is something that's worth considering. I just have a free class that'll walk you through step-by-step, blah, blah, blah, right? So that's the meat. And then you have call to actions. I don't do a ton of tests on this.

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So usually, typically with call to actions, once you know what the call to action that works best is, I tend to just run that as what I say at the end of the ad, which is if it's like, are you running to a VSL or something? Video sales letter.

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Yeah. So it's like, you might try web class. You might try masterclass. You might try, um, you could even just try video sales letter. Uh, like I've got a video training. I've got a training, like basically it sounds small, but when you're running tons of traffic, those little, little incremental bits matter. But once you nail what the CTA is on the backside, just use that.

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But fundamentally 50, even times three is going to get you 150 ads. And so one, one recording session, uh, If you do that, it's like you only have to think of three to five actual like meaty angles. And the rest is just hooks that you'll take from the best performing ads.

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And I would strongly encourage you if you're running one, look at obviously people in the marketplace that are kind of around you or adjacent. But the cool thing with hooks is that they work across everything. And so I've used one of the same hooks in four different businesses that are completely different. B2B, B2C, tech, and service. And it still works. Right. And so like you can reuse hooks.

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And so this is, by the way, why I don't pay for any subscriptions for ad free service is I'm always just paying attention to the hooks, like what hooks are coming in my in my ads. And if I see an ad that's been running a lot, I'm like, it's probably a good hook. Yeah, that's I just write it down.

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And then the remainder of your business is cross-selling and upselling. So it's like you're going to have the most efficient door into your business. And then you'll end up just cross selling, you know, selling people and retaining people from there.

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Yeah, I don't know for sure. Just just watch ads. Cool.

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Appreciate it.

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Yes. Okay.

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What's LTV to CAC? So what do you make on a loan?

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So you make $2,500 and it's costing you, it was costing you 600, now it's costing you 900 for the same deal. Is that correct? Yeah. Okay. Something like this. Okay. Okay. I actually just wrote an email about this today, which will go out in like six weeks.

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So fundamentally, if ad costs are going up, and so you feel like there's some sort of ceiling, like you want to spend more, but you can't spend more because the cost goes up, there's basically one of three potential progress resolutions. So, problem number one is that the LTV needs to get fixed. And this is just a fact of life.

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As you go to colder and colder audiences, you get out of your kind of honeymoon phase of the easiest targeting with the absolute highest interest, you know, most, you know what I'm saying, that. Very small amount of people who are perfect fits and then it just continues to go wider and broader. And so the way to fix that is we have to increase LTV so that you can spend more.

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And so like in terms of next steps, it's you need to record an actual ad for an offer and then put it on meta and then drop a pin on the map and do a 10 mile radius. Um, hopefully all three are close together. Um, and you'll run the ad that'll then go to, uh, either a CRM or if you're low tech, you can just go to a Google sheets and then you can have your front desk, call them within 60 seconds.

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The second reason that this would be limited is based on the quality of the creative. And so I think a month ago we had, you guys seen the Old Spice ad? The guy, that whole famous ad. So the guy who made the ad actually came here. Kind of cool. So we get to chat about that. But what's interesting about that ad is that that ad was so good that they could show it to everyone.

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And they went from like 20% of the market to 70%. with one ad campaign. And so to me, that is like the perfect example of what like complete S tier creative, like the maxed out creative of just amazing advertising is. And so a lot of businesses will get stuck at a thousand dollars a day, for example, and say like, I think we've capped our market. When in reality, it's you've capped your creative.

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And so in order to break through that, the quality of the creative needs to go up and the volume also needs to go up by consequence. And so in the companies that we spend like $100,000 a day in, in terms of our ad spend, we create, you know, 50, 100 pieces a week that are going out in terms of ads. And then...

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We do that at first and then we follow kind of Google's 70-20-10 kind of rule, which is 70% of the creative that goes on from that point going forward is the highest performing hooks from historic. 20% is kind of adjacent to that. Uh, so just kind of like remixes, remakes, slightly different versions of the originals. And then 10% is the wild ideas that you've been saving.

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But since it's only 10%, you're going to only pick the ones that you're like, I think this one's going to work because you have 20 crazy ideas because you're an entrepreneur and you think that'll be awesome, but you just got to pick the one or two. Um, and so that's problem two that could, um, be the reason that, that, that you are capped. So, um, either you are not. The creative sucks.

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Your LTV is too low. And there was a third one, which I forgot. But there were three in the email. And so the question that I would have for you is, which one of those do you think is the issue?

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The back end becomes the arms race of every business that spends money to acquire customers, which is many businesses. And so if you look between industries, the benchmarks for plumbing businesses in North Dakota, the cost to acquire a customer is going to be more or less the same between businesses.

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So as much as we like to think that we have some very special sauce about our sales team somehow magically sells different, even though we recruit from the exact same pool and compensate the exact same way, Like we think it's somehow different. But in reality, like we run similar ads, we're in similar promotions, we have similar sales teams, similarly compensated, pulled from the same talent pool.

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And so CAC is typically very similar between businesses. But where you get the outsized returns are that some businesses can have 10 times the LTV. And that's how they ultimately win. So I think you're right. So when I buy a business, I typically fix it back to front. And then I look at the creative and think, okay, how do we just do a ton more volume here?

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Typically, because we just don't even have enough data to figure out what the best ones are. So like, let's do way more, then look at the top 10%, then do more of that. And that process just never ends. Does that help?

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And then if they don't pick up, call them again and get them booked because your time is valuable. You'll probably want to consider running some sort of highly discounted assessment on the front end. So that'd be like a $200 stuff.

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What do you think I'll say? What do I think you'll say? Yeah. I mean, not as a slight. I mean, genuinely.

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Okay. Yeah. Okay. No, that's fair. I mean, fundamentally, is the construction thing just like a separate business?

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You bought the construction business?

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From an entrepreneur who was retiring? Yes. Got it. Okay. What's the EBITDA contribution of each?

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Yeah. Is there one of those two businesses that you like better? Yes, service. Yeah, I would be willing to let it go. It's sunk cost. It's like it's already in your hand. Even if you bought it and paid for it, that decision's done. And the only decision you have now is like, well, if I were to start this today, would I do it this way? Probably not.

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And so if you're looking at also from an acquisition perspective, like if you want to get acquired in the future, which is I'm guessing because you bought it here, it's cleaner. It's like, what's the, cause they're going to probably want to carve out cause they're like, well, we only want this piece and this is different than that.

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And especially if it's splitting your attention, you'll be amazed at how much faster the other one will grow by getting rid of the headache. It's just really painful in the short term because you have all these, like I made this mistake. I should have, and I will refer back to the nine failed businesses I have been losing all of my money twice.

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And so like, I think the game's long and it's, um, I think your gut was right. I think you kind of know. Okay. Thank you.

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for you yeah x-ray or something like that that they can get for 19 or 20 you don't care about that you just want a credit card on file so that when they walk in the door you have two things one is that when they walk in the door uh well one you you want them to walk in the door because they paid two you can charge a no-show fee if you want to um but typically if you're getting even a low ticket amount you'll be in the 70 to 80 percent show rate so you won't waste uh so have to pay up front

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Yeah. My guess is that you're serving customers that are too small. So this is probably gonna be really good for like a third of you in here, or like rather, it'll be really relevant for like a third of you. So there are some business models that small business owners look at from large businesses and say, I'll do that same thing for the bottom end of the market.

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The problem is that that strategy typically only works with a fully fledged business. And so If you look at a small business, these agencies that you're selling,

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they're volatile like they have good months they have bad ones they have good months they have bad months and their volatility now reflects onto your volatility and so let's say you make them some money here then they make more money here and then all of a sudden they make less and then they make then they cancel right and so these things are called structural churn which is that um kind of things that are inherent to the industry and so i'll tell you a story that might make this relevant

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So I was talking to a friend of mine who owns a CRM in the gym space. And I was asking him, I was like, what's your churn? I would imagine it's like zero. He said, it's about 3% a month. And I was like, 3% a month for a CRM? He's like, yeah. He's like, about a third of the gyms got a business every year. And so there's nothing they could do to improve the product anymore.

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Just a third of the businesses go out of business every year, and there's nothing you can do to the product. And so it's kind of similar here, which is like if you look at, and this is a great exercise, if you look at the ultimate version of your business, because there is a much bigger version of your business, which is you look at Ogilvy, you look at NP Digital, you look at Vayner, right?

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They're big agencies that exist. Who do they serve? Fortune 100. And so... The reason that those work that way is because those businesses can pay on time. They have salespeople that know what they're doing. They have a process in place. They have margins. Their check's clear. And when they sign contracts, they keep them, right? And that's because they're good businesses.

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And so it's very likely that you're not in the wrong business. You might just be serving the wrong customer. And so if you were to look at your spread of customers right now, I would bet that there are some that have been with you for a little bit, right? And then all the new ones just turn out. It's just like, they're the ones, right?

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And so those ones that have been with you for a little bit probably look a little bit different than some of the ones who are coming in.

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Sure. And so if there are intangibles that someone has to have, you can test for that or you can just go upmarket. So think about it this way. If somebody does a $5 million a year agency, they have to sell. There's no way they'd get to 5 million without being able to know how to sell, right?

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And so you can just put, like, you can try to test for it or you can just make a requirement that would make it impossible that the person didn't know how to do that. Does that make sense? And so I try, like, if I can get something that's really small and testy that, like, allows me to go a little bit lower market, that's okay. Otherwise, I'll just put a bar and say, it's got to be this.

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But likely, and so many of you, I think, are in the same boat, though, is that you serve, you have a business model that is better served to a bigger customer, right? And you charge too little and then they churn. And then you keep trying to like, think about what new thing do I need to add my offering? Like what new guarantee, what new onboarding process?

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Like you're keep adding things and it doesn't matter because they are volatile and that volatility will not change. Does that make sense?

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And just for the discount offer, now when they come in the door, you'll do the assessment. And then after the assessment, you don't treat them. You'll do the sale appointment then. You sell at point of greatest need, not point of greatest satisfaction. So at that point is when you'll make the offer. And then you'll be like, hey, awesome.

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Oh, by the way, the equal opposite of that is that if you were in that in that position, if you do want to serve that market, then you have to make the entire business model around being the low cost leader. And so you can serve that market.

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If you have like a very tech enabled service or software where you could charge those people $300 a month, which is always going to be below their volatility level of cash flow. but it has to cost you nothing.

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And so the idea of like, I will, you know, $1,500 a month for lead generation or whatever it is, like, which is kind of like the standard, like that model doesn't work because it just won't scale.

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Okay.

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But you can always make one to 3 million bucks a year with it and just always be like looking on the hunt for the next lead. Yes. Yes, sir.

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Thank you. So did you go through the four horsemen, five horsemen retention?

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So those are the things that we have done consistently to cut churn. Are you doing all of them?

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Well, I would do them consistently and I'm not saying that as a, like the interesting thing about the, um, the horseman retention is that they, when, when you realize how much work it is, you're like, Holy shit, this is a lot of work. Um, But that's also why people stay.

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And so the point of the five force of retention is to approximate what having a small tribe feels like in a disorganized manner, doing it on purpose. And so some of you guys are familiar with Dunbar's number. which is basically like people can maintain whatever 125 to 150, uh, basically acquaintances in their mind.

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And that's, I think the reason that the vast majority of gyms tend to cap around a hundred to 150, because that's about as many as the owner can manage in their mind without it becoming too big. And then beyond that new people come in, they never really get assimilated and they turn back out.

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And so it's like, what are we doing with the original 150 people that we're not doing with these other ones? And so that's where the touch bases, uh, on a regular cadence are super helpful. So Mike Ferreira has his retention system where he updated the five-forceman. Sorry, I'm getting really tactical about gyms. But basically alternating between an internal referral play

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Does that help? Yeah, definitely. But that's what you have to do. You have to learn how to acquire customers that are cash-based. And so that means that you have to run ads and you have to sell shit.

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Uh, they've got fast cash Fridays, which is how they get, you know, how they generate the referrals. Uh, they have a weekly theme that that's gives you the thing to talk to them about. Cause it's like, how do I approximate a relationship? It's like, I check in on people and I let them know the thing that's new. That's cool.

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And so, um, the tweak from the system that I have here is that I used to check in about people's results and we realized that people didn't care, uh, and just wanted to work out and have fun. And so us reminding them about the fact that they were still overweight, uh, didn't actually help real talk.

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And so we were like, okay, so that's probably the big major shift between what is in here and what is kind of now the most up to date. And the every other month is when you run the internal play. So internal plays are like when you hit your list up and say, hey, we're doing it's the last chapter of the offers book. it's whatever our internal seasonal promotion is.

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So it's, you know, Valentine's day, you know, get fit to fudge with your, you know, with your loved one, whatever, you know, um, accountability buddy, you know, uh, lean by Halloween, you know, whatever. Uh, and so, um, The churn, though, is still going to be the quality of the sessions. I mean, the fundamentals are still going to be there. The sessions have to be good. The music has to be good.

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The trainers have to be solid. You want to reach out on a once every other week basis. You want to check in around the promotion that you're running or the bring a friend component that you're doing. And obviously, the sales stuff and getting the prepays and stuff, Ed's already given you. So that's the big stuff. But the main thing that drives down churn is consumption.

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And so all of the objective has to be around how do we get them to use the membership? No one cancels a membership they use. And so people will cancel $10 in memberships if they don't use them. Like nothing is worth it if you don't use it. And so that's the TLDR. Any questions on that? Because I want to make sure that you feel okay.

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You're going to keep that business. So all of your discretionary resources are going to go towards this if you want to build a bridge to tomorrow.

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Yeah. So think about it like I say. So every month you spend X amount of money in general. So forget about the fact that like some of this is nurture for customers who've been here before. You pay this amount of money every single month that goes into advertising and sales to a car customers. So all of that blended together. Yeah.

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And if you have more lumpy revenue, which I'm guessing you do, you just expand the time horizon. So you look at trailing six or trailing 12 and say, okay, we spent just simple math. We spent a million dollars on marketing and sales this year, whatever, between commissions and advertising. Okay. Over that year, we acquired, call it 50 customers. Okay. So our CAC is $20,000.

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So the longer the time horizon is also, by the way, the more accurate it tends to be. So if you just zoom it out, because like if I just says, what's your CAC today? It's, you know, it's kind of like that, this volatility thing. It's like our CAC today is terrible. And then tomorrow it's amazing. Right. And so the further out you blend it, the more accurate it will be.

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But in terms of less than gross profit or LTV, that one sucks. There's a lot of different ways to calculate it. I tend to calculate it in the ways that are underestimated so that I like, I want to overestimate CAC and I want to underestimate LTV. If I do that and I still have my good metrics, then I'm kind of like in safety zone on both.

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So like I'll do fully loaded CAC, which is like including commissions and the software and the media spend and the nurture and all that. fully loaded. And then LTV, I'll say, okay, if I want to have the lowest LTV, I would just look at same thing, all customers, what do they spend historically?

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So even if you look at all the way from, it's been five years, whatever, even in business, what was revenue? How many customers do I have? And you just do total revenue for five years divided by total number of customers acquired. And then you're like, wait, but some of these customers are only six months old. It's going to underestimate it, but then you still have a, that will be the most

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It will be the ugliest version of that number. But if that's baseline, then you can only go up from there. Does that make sense? It does. Okay. Was that helpful? Absolutely.

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Are you going to do insurance and storm chase?

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So I would probably keep doing that. So what stops you from doing that?

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Do you feel like you've nailed the model? No. No. So right now, what I wouldn't want to do is try and make a decision with incomplete information when it could be knowable. And so I think once you nail the model, then the path will become really clear.

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And so if you nail the model and then the returns on capital are really interesting and you can be more patient, then owning them all privately becomes more interesting. If it costs a ton of capital to open up and let's say it requires a lot of like oversight, then sometimes a franchise model can be good. But fundamentally, I kind of see franchises as like being impatient. Just being honest.

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Yeah, I understand. Well, you can't control. So unfortunately, because you can't control how you're reimbursed.

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Because like all it basically it's the most expensive form of capital. is you say, hey, we're going to partner, and you're going to put all the money in, and I'm going to become a, you know, maybe you get 8% of top line, so maybe figuratively it's like 25% partner, or 30% partner location, which is okay. Like, nothing wrong with that.

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But I have seen such a graveyard of, you know, 20 location franchises that make no money. And the amount of work that it takes to maintain 20 is about the same amount of work as it takes to maintain 20 where you own them all. It just happens faster. But you make way less money. So I have a habit of flipping franchises back into let's own them all. Like the teeth widening chain that we bought.

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When we bought it, we had 14 corporate stores. We had 18 open franchisees. And so then over the last 12 months, we bought out all 18 franchisees. And so now we own all 32. But then like all of the administrative headache has just basically disappeared because we just run the way we want to run them. And we make more money. But yeah, I think you need to nail it.

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And then the scaling of half will become clearer. I know it's not the sexiest answer, but that's probably the truth. No, thank you.

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I think that would probably be the first thing that I would do. Because you want to free up cash flow. So yeah, you use this resources in terms of time and money to build a bridge.

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Make sense?

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Gross. What's that?

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Okay. Got it. Do you want to sell it or do you just want to keep it forever?

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So are you the platform? Yes. Okay. So you're the platform. How many tuck-ins have they done? Eight. Got it. How long has it been since they started?

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Yeah, got it. Okay, so sorry. Go back to the original question. You sound like I have better context on this. Okay.

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Well, the question is, is that the constraint? Is that the thing that's limiting the growth of the business?

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And is everyone insurance-based?

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So you're the only guy selling just new roofs. Everyone else is doing storm chasing and damage repair and shit like that?

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Centralized sales virtually. Correct. So you want an irresistible roof offer. I'm going to blow the roof off. I feel like if I were in your position, the first thing that I would do would be centralize everything first without trying to change. Basically, I would take the model that I already know works. What was your revenue before you were acquired? Okay, you're doing 20.

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So I would like, in terms of introducing levels of change, so this is actually pretty good for everybody, like... I will typically not try and change like five things at once. And so you centralizing all sales is going to get cost efficiency improvements and you're going to be able to have a higher sales utilization. So you probably cut off the bottom third of the Salesforce that's low performing.

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664.564

That alone might give you a 25% lift in general because you're The best sales guys will take more of the sales and you'll have centralized all the costs. Like we have centralized all the costs. Right. And so you'll have an increase in revenue and a decrease in cost that's paired. That would probably be my first step.

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So, but like, I wouldn't, I mean, I know the question was about roofing, but like, that's what I would do first. And that will probably take you six months or more realistically. Yeah. Um, in terms of, in terms of the offer to roofs, um, an offer that's worked really well in home services is instead of being a money back guarantee, um, I positioned as a profit guarantee.

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Seriously.

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So fly out, spend two weeks with me. I'm not going to cater to you. I'm going to live my life. If the way that I live my life, the way this works, this is how it's going to be. If you like that, let's rock and roll. If you don't, I don't want to change.

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So it's like, listen, um, you want your thing to be on time and on budget probably. And so I guarantee that I will deliver it on time and on budget, or I'll give you my profit, which is 20%. whatever. And that way it's like, you're not underwater and you still have 40% gross margin. So you're not really losing on the deal. Um, but then people are like, okay, so he's got skin in the game.

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And so that's a way of closing significantly more deals. Cause the two biggest, um,

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obstacles that well you would know this but in most home services it's on time on budget and probably for roofs it's like and how much am i going to be displaced how much it's going to interrupt my life and so i would put my guarantee around those items and then just have a marginal amount that's back but it's really just because all they don't so the big thing which is right with guarantees is that people don't want their money back they want the roof

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And so they just want to know that you care enough to make sure the roof gets delivered. And so that's really the solve for the guarantee is it just pays down risk of them not getting what they want. And so as long as that gets accomplished, you don't have to do with money back. You can just do it with some money back that gets them to say yes.

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Brutally Honest Business Advice | Ep 878

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Does that help?

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Brutally Honest Business Advice | Ep 878

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Perfect.

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Brutally Honest Business Advice | Ep 878

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Hi, Alex. Hello. Alex, you can call me Alex Rodriguez. From Puerto Rico. Sí, from Puerto Rico. So I'm a music attorney. Abogado. Abogado, correcto. En la música y el entretenimiento.

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So what we do is we have more constraint is focus. Okay. I have, yeah.

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So basically it's three businesses. But today, thanks to Ed and Sammy, we got much more clear on what we should do. But I would like to know, how would you think about this? Because the law firm side, it's growing 20% year over year without me actually doing anything, just growing. redirecting people that come to me through my law firm. And right now it's about $100,000.

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Brutally Honest Business Advice | Ep 878

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And then we have the educational side and that is making $200,000 and it's been stuck like that in the last two years.

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Can you get customers from Organic?

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Yeah, both are organic. Okay. So if you don't have money to pay as a lawyer, you go to the educational platform. And we are developing a contract automation software for big companies like major labels or publishing companies. So right now, the product, our software, our goal with the software is to sell. We are seeing that big music companies are buying tech. Yeah, so specific for them.

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So they're doing everything manually. We want to sell that, but we have a cash flow problem because we're selling to people without a lot of money and the service size does make money. So our problem is where should we focus?

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Brutally Honest Business Advice | Ep 878

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Yeah, but what's monthly churn right now?

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On the software. We got 100 people and we only have 40 active right now.

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And all you've been doing it in the first year. So you've retained 40%. Are they actually active though? So they're paying.

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The people that are active are paying $3,000 per year and are only like four.

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Four?

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Four that are paying $3,000.

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And then what are the other 36 paying?

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Are paying $600 per year.

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Okay. Got it. Okay. So I think we, we, we chatted about this last night. So you have a, there is no right answer, but there is a path that you have to pick. And so either you're going to be an enterprise company and you're going to build only for that. And I would say like you probably will just transact on the education side in order to fund this.

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I, in general, don't like this plan, but you could do this because you'll be split attention. And this is fundamentally why people raise money in software so they can just focus on one customer the whole time, build the product, and then actually get this work. Okay, that's that. Because you said that you're retaining 40% in basically a prosumer-ish market, which is where you're at,

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I would be inclined to say that you probably are pretty close to a decent product. So you probably have nailed something there because keeping 40% of people one year later on, you know, whatever it is for musicians that you guys have for contracts and whatnot, you could absolutely go all in on that and get that to like 50 or 60%. And then you just need to have a different acquisition system.

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So you probably just need to go spend money acquiring customers. And that already cash flows because of the education side. And are the people who are still paying you on the software also education customers or no?

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They usually come from the education or from my legal services as well. So I have some clients that be 80% of the job.

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The million dollar question. The million dollar question is if they stop the education, do they keep paying for the software? Yes, because it's a one-time business. Well, then that's... What, you mean the software is one-time business? No, the education.

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Oh, so then... Sometimes they just pay and they're going to use the software.

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So the only thing that we're solving for is revenue retention on the software. And so enterprise in and of itself is not more valuable than lower market. It's just it tends to be stickier, which is what makes it more valuable. But if you can get a...

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0.939

What's going on, everyone? Welcome back to a new episode, joint style between the game and build with Layla. So this is a collab, you know, because we're influencers. We're collabing.

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Yeah. So this has been I would say this has just been like what's been kind of the theme for us right now. It's been what's top of mind. It's like staying true to us despite increased pressure to kind of bend the knee to conform. And we do a very potent culture.

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was funny because i had um i had two different founders over the last week who visited the headquarters um and it was during the weekend and you know one of them was like i think you know we were hanging out talking about whatever and then um i was like i'm gonna do this hop into this uh compliance training i was like you want to

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join and he was like yeah sure it was like three o'clock on a saturday and the whole sales team was there and and i was just like walking them through like you know things to say things you can't say things like that and then just you know drilling it with them and after you know we left you know got it got out of the training he was like how like how did you get your culture so that people work weekends and

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I thought about it and I had the same thing. I had the same question asked for me from a different founder the next week as well. And I was like, I think we work weekends and the team sees us work weekends. And so they work weekends.

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And the number of problems that go wrong is just astounding. As an entrepreneur, how can we even function with the amount of things that are going wrong at any given point? But for some reason, we keep doing it. And so here we are. But anyways, that's what Layla was referencing. So it's definitely been an eating glass period.

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So hear me out. So I'll say something a bit controversial in the spirit of being sincerely candorous. If we hear I need work-life balance on a job interview, we're probably not going to hire the person. And it's not because we think there's anything inherently wrong with that. If you want work-life balance, I completely respect that.

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It's because we're looking for people who in their spare time, like doing the thing that they work on. And so for them, they're not looking for a vacation or a break away from it because they're currently love doing that thing. And whatever role they're in, doesn't give them the opportunity to fully flex all the skills they have. So I'll give you an example.

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So there's a guy on our marketing team who like we're actually right now, literally right now, he's at a summit internationally that he paid for with his own money. and bought his own tickets and all of that stuff to go see some new kind of cutting edge thing or whatever, right? And you don't,

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like so for him if i reach out on a saturday it's he doesn't it's not doesn't feel like work he's like this is what he wants to do anyways and um whenever i'm like hey have you seen so and so's thing he's like oh yeah here's all the cool stuff that they're doing whatever it is and it's it's it's that is what we're looking for where someone's inherent interest happens to be the work that they do because then

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That team, and just think about it purely from a competitive standpoint. If you have two companies, one company built of people who desire work-life balance, right? And in their quote off time are not thinking about work at all, fine. And then you have another team that's thinking about quote, work all the time because it's what they're interested in. The other team's going to win.

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And so I saw Dharmesh, who's the founder of HubSpot, post this really cool little visual. And it's just a Venn diagram. So two circles with a tiny, tiny little bit of slice overlap. And one side said work life balance. And the other side said breakthrough startup. And he said, both of these are fine. And then he pointed the arrow to the middle of the overlap. He said, this is not.

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He said, because you're just not going to do it. He said, it just, no matter how much talent you have, greatness requires toil.

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I've I recently read Elon's biography by Isaac Walterson, and there's a lot of really good little anecdotes in there that you kind of see the level of determination that it takes to build something really great. You know, among them, you know, Elon showing up at Sunday at two o'clock in the morning and being like, Why aren't there more people working? as like one level of extreme.

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But the other part was talking about like many Tesla engineers, you know, would leave Tesla and be like, you know, burned out and they'd go to some other company and then they would come back to Tesla like nine months later under the conclusion that they would rather be burned out than bored.

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And I think it's just like we are trying to build a company for doers, for people who want to take ownership, take action, make an impact, actually see their work get put out. And it it just it's not it's you know, I love this quote, but it's like it's a dangerous place to work. You know, that's what we're trying to create that for.

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It's it's dangerous place to work, but you're also going to be among like other fucking predators, people who are good at what they do.

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More service area of glass to break.

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What Leila Hormozi And I Accomplished In Q1 And HOW We Did It | Ep 860

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Yeah, we get that feedback a ton.

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Well, I've got a cool story about this. So I had an interview the other day with an executive assistant candidate. The one interview. Yeah, my one interview. My one interview of the month. So anyways, I got on and I was like, tell me a controversial belief that you have. And obviously she struggled to give me a controversial belief because she was afraid of whatever her answer would be.

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But the reality is, I said, well, don't worry about it. I'll go first. And then I just said a bunch of controversial beliefs that I have.

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I was like, well, I'll give you 10.

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I was like, oh. I'll explain the thing about it, where I was like, especially an executive assistant, somebody who's working super close all the time, I was like, she's going to find out what my beliefs about the world are. And if she doesn't like them, she might as well know now, and we can both avoid the pain.

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and so it's kind of weird because you have to go against like social niceties and politeness and political practice to be like this is what i think and if you think that's a problem then you probably shouldn't be here or just like go work somewhere where that's that you do have that because the flip side is if someone else is like yeah that's exactly what i believe and i just have never been around people who've been able have been you know willing to say it then i think they're going to be more bought in and i think we're moving towards a world hopefully where people can

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honestly just be more authentic. And so I define authenticity as how you would behave when you have zero risk of punishment. Now in almost every condition, every environment, there's, there's some risk of punishment. So it's authenticity is not a, are you authentic or not authentic, but how authentic are you? So to what degree do you behave as though you could not be punished?

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And so also to a certain degree, the, The more resources you have available to you to protect yourself, the more authentic you are able to be because your risk of punishment drops.

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I get it. I mean, one of my big goals in life is to die with no secrets. I would like my controversial beliefs to be known. I'm not there yet.

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I mean, yeah. Well, I think the thing that really started pushing me in that direction was that we'd have these for school. We like once a month, we ran these that we did the school game. So people compete to build the biggest community in 30 days. It's just, it's just a fun way to get people involved and using the platform.

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And so the winners would come out and like to a man, one of the most consistent piece of feedback I got after the day was over is people would just be like, you're a lot nicer than I thought. And you like are funnier and like make more jokes.

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And I thought about that and I was like, there's some misrepresentation that's occurring because it means I'm not fully show like what is being displayed versus what is real. Um, there's some disconnect. Now, part of that is the algorithm, right? Like anything that's a little bit more of an extreme take is going to get, you know, boosted further.

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So even if you have equal representation in terms of creation, you will have dis or unequal, uh, reach, uh, from those pieces because anything that is more polar will, will go more viral.

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That's what we're making this podcast right now. This is an empty room. No, basically no one's here. Oh my God. So much better.

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But maybe that's not who we are. What do you mean? Well, maybe that's only who we are one out of 10 times. And then the mediocre one, that's the more common occurrence is who we really are.

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Maybe we're not as good as we think we are.

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Yeah, only judge me by my best days.

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Circus.

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So, yeah, I would say, interestingly for me, I had the same. Basically, when I heard that, I really was like, I want to change some things about how we're making content. So 2025, so this year, we've already been kicking off the new strategy. Some of you guys have seen it and you've heard it on the podcast. My theme for the year for me personally has been interactivity and demonstration.

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I feel like you were like, you didn't even know, did you?

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So less theory, more demonstration. And the reason for that is I enjoy doing it more than I enjoy talking about doing it. Buy a country mile, buy a lot. Like there are not a ton of things in this world that I enjoy. I enjoy working out and eating with people I like.

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2026.5

And I enjoy solving business problems with business owners, whether that be, you know, founders of the portfolio companies or just business owners that, you know, shut the headquarters or companies that we're looking to invest in. Like I, I just love solving business problems like really big strategic business problems like those things just like really light me up. I can do it actually all day.

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And the only other thing I like doing is writing. And that's it. That's the only thing in this world that I enjoy. Everything else is overhead. And Layla, of course, and spending time with her, obviously above all else. Anyways, but I bring this up to say that you guys have probably seen that in the nature of the content.

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And part of the reason that I had interactivity as the second of the themes was, I am, in my opinion, the better version of me when I'm with someone else. And probably you detect a different vibe on this podcast with Layla, cause like we're together, we're hanging out.

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Versus like a lot of podcasts that you hear from us is like Layla on the treadmill, like walking and slacking to like figure out what she's gonna like do, slacking like using the tool, not. slacking off.

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And for me, I'm just like pacing around in a room with a microphone, trying to like get the few kind of interesting ideas I had from last week off my head so that we can make something out of them. But the interactivity is what I think is real. And so that's kind of the big push is just how do we make it even more real?

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Well, then let's use real business owners and real scenarios and just show, not tell. And so it's way more work for the team, but I'm happy with it. And so I'm doubling down on that. I think I'm committed to it for the year. Unless something crazy changes, I'm in.

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i commit to doubling the size of the team to support my to support the company yeah so just so you guys know the so for us to do these kind of like interactive things it actually takes four times the resources like actually uh maybe even more than that uh to pull these off and so uh me demanding that immediately january 1 was a bit of a shit show.

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You're better at solving problems than you are at making content.

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Yeah. And we're hiring 35 other people this quarter.

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Yeah. So it's, and that's just at Holdco. Um, So yeah.

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Well, I think actually now that I think about it, your documentation is demonstration. It's just that the demonstration for you has far more of like you do a lot more like meetings and interviews and feedback because Layla works a lot more team focused than I do. I tend to be more, I would say, like, you know, front of face driven, customer focus being business owners in general.

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Layla's focus is internal, more like team in general. So that is you demonstrating what you do, which I think is actually, I mean, if you think about like teaching, right? Like teaching people, the most effective way of teaching is modeling. Like that's how you learn how to walk. It's how you learn how to talk. It's how humans learn everything.

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And so modeling plus feedback is the, obviously we can't give feedback at scale, but at least having the model of like, this is how we do it and it's worked well for us. By no means is it a sermon, it's a documentary. This is just how we've done it. If you do it differently, I love you, that's amazing. That's just how we do it.

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This was a big realization I had. This actually might be really valuable for somebody, but I love training, like working out. I do, I still, I mean, I've been doing it for 20 years. Like I really like training.

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There was this period for a while that I like wasn't looking forward to training and I was like, huh, maybe it's because like my joints hurt and because I'm getting older, which is definitely a thing. But I thought more about it and I was like, okay, well, there's definitely been some workouts this year that I enjoyed and then others that I didn't.

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And the common factors originally that I thought was that I had someone with me. Now that's definitely a factor, like having a social factor there and having somebody else to alternate with and encourage and spot and all that stuff I think is huge. Like I really push myself harder when I have someone with me.

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But the second part was one that I had to think more about, but it was actually not being in a rush. Like my favorite workouts are, I have a Saturday morning, I have nothing on the calendar and I've got a friend in town and we train for two and a half hours. And afterwards I take 30 minutes to unwind and have a shake or whatever. And then I can like start my day and, and, and, you know, get to it.

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But I get to it when I, when I, when I am ready to get to it rather than like, I've got 45 minutes, I got to get it in and out. To me, it's just not enjoyable. And, um, It's the only reason I train is because I enjoy it.

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I wasn't sure if it was scale. Oh my God, no. I know it's Bill, I said the right word. No, you don't. I said the right word. This is so fucked. So we thought we'd give you guys a 2025, one sixth of the way through the year update, which is kind of insane when you think about it. Like we're almost done the first quarter. How fast that moved. I mean, yeah. Layla, would you like to kick us off?

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Well, I'll tell you what I've been thinking about. Pulling up your Twitter? Yeah. That's where I draw my thoughts. All right. So this was a letter from Bezos to everyone. Those were the shareholder letter. And this is just an excerpt. And I keep coming back to this since I've read it because it was so good. So I'll just read it and then I'll kind of give you my two cents on it.

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Cause you're always rushed with everything, with everything. It was literally always rushed. And I think that that's probably why we get along or good for each other is that I am almost never in a rush. I know. I do not do rush. I'm like, or what? Because the inherent position of a rush is that there's a threat. Whereas that if I am rushed, then you must finish by this time or else.

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I'm like, or else what?

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Or else I don't get to everything else I've got to do that day. And then I've got to do tomorrow and tomorrow I have even more shit.

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Yeah, well, some shit's just not going to get done. I mean, you can add things to do list in about two seconds. I can what? You can add things to a to-do list in two seconds. And we're going to die with work undone. Oh, come on. I'm just being real. It's like the few things that I enjoy.

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You can't tell me this.

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Well, you should definitely take care of it.

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Definitely take care of it.

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I'm like, right. There's five more you don't know about.

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You should definitely take care of that. Someone should take care of that. I agree. Ridiculous.

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For me, the media infrastructure is the goal for the year is that we're fully firing based on the vision that I set at the beginning of this year for what I want it to be 12 months or not 12, but now eight, 10 months from now.

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Your standards raise or the conditions change.

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With change management and all that.

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I wanted to, clean up our brand image on YouTube. So that's changing headlines and thumbnails for kind of all the image. Just kind of like the look and feel. I think in the early days we were like kind of figuring out how YouTube worked and it looked a little kiddish. Cause we were like, oh, we'll do what Mr. Beast does. And we found out that that doesn't really work for education and what we do.

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So he says, differentiation is survival, and the universe wants you to be typical. This is my last annual shareholder as the CEO of Amazon, and I have one last thing of utmost importance I feel compelled to teach. I hope all Amazonians take it to heart. Here is a passage from Richard Dawkins' extraordinary book, The Blind Watchmaker. It's about basic fact of biology.

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And so we had to figure that out, but I have to go back. I want to kind of clean up the surface area of the brand.

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um so i think we're actually going to be on pace for it for doing that um we had a deal that i had to um divest us from and i dealt with that so that's a pain in the ass but i did handle that whole thing and then so you got that done no i know i just went through the emotional piece still yeah sure um And I had to do compliance review, which I have done.

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So I have, um, all the stuff except for one, which we pushed to next quarter, but that was strategic decision. So yes, I have done all my MITs.

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Winners win. And what about your MITs, mon cher?

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Let me double click on something real quick. So I think this would be valuable because I find it valuable. One of the things that I've observed with Layla, so this is me as a non-operator commenting on Layla as a pure operator. A lot of what Layla spends her day on is QA, so quality assurance.

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And so if you're like, man, all I feel like I do is like go and like fix this shit that's fucked up that people did. It's like, that's a lot of what the job is. is how should I have this conversation with this employee and give this feedback?

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How should I, you know, message this email that's going to go out to the whole company that's going to change the way compensation or benefits are being provided? How do I like Layla is very frequently giving like you make you probably make like 100 small decisions a day. Yeah, I feel most confident in my ability to make decisions. Yeah. Layla's, I mean, that is very good at making decisions.

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Um, and she just makes them quickly. And I think that I'm speaking for you now, but would you say that that's because if you make the wrong call, you're willing to just be like, well, I get 90% of them, right. And if I have 10%, I'll just book and undo it. And we'll do the other way. If I find out later.

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I just think it's a great frame. I was listening to, I was saying the Elon book and there's this period of time where he had to like ramp up Tesla production to like 5,000 cars a week. And they were at 1800 and they, and like his, everyone like was shorting him because they were like, there's no way he can do this. Yeah.

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And he obviously slept on the factory floor and whatnot, but he just walked around the factory floor trying to remove steps from the process and made like 100 decisions a day. And he had to do it off of gut intuition. And he just told the team, he's like, I'm going to get 80% of these right, 20% I'm not. And we're like, but we just he's like, but we need to make these decisions now. Yeah.

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And so I think one of the big things that this is just me witnessing from you is that like your speed of decision making is very fast. Like Layla makes a lot of decisions and she makes them quickly. And I think that one of the, I mean, there's the saying from Lee Iacocca, which is the speed of the boss, the speed of the team.

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Starving, staving off death is a thing that you have to work at. Left to itself, and that is what it is when it dies. the body tends to revert to a state of equilibrium with its environment.

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And it's just like how, like you are often the bottleneck in the business because you like decisions are sitting with you that need to get made. And you're like, I need to collect more information. But the question is like, is there a world where you can not have the information and just pull the trigger? And is it, is it something that will be an existential threat to the business?

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Or is it just like, if I'm wrong, like I'll muck something up. But I also feel like there's so many decisions where like it's happy, glad, and someone just needs to make a call.

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If you measure some quantity, such as the temperature, the acidity, the water content, or the electrical potential in a living body, you will typically find that it is markedly different from the corresponding measure in the surroundings. Our bodies, for instance, are usually hotter than our surroundings, and in cold climates, they have to work hard to maintain that differential.

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Yeah, we built the entire team in like 60 days.

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And then my last MIT was... By the way, when we say MIT, it's most important task. It's just like our way of setting our targets.

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Being married to me.

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Recruiting someone? I think it was recruiting. Oh, you want me to look at yours?

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Yeah.

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No, I could. There's two. I could see them. There's two. Really? Yeah. You had Restructure Media and Co-Lead Compliance Project.

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And that's what we did this quarter. And next quarter we'll do more things. So anyways, for those of you guys who are feeling like, uh, Pulled from a thousand directions and that culture, society, comments on Instagram, whatever, are trying to get you to not be who you are. New hires are trying to get you to bend to whatever new corporate jargon exists. Just know that you are not alone.

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Don't dilute yourself.

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When we die, the work stops, the temperature differential starts to disappear, and we end up the same temperature as our surroundings. Not all animals work so hard to avoid coming into equilibrium with their surrounding temperatures, but all animals do some comparable work. For instance, in a dry county, animals and plants...

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work to maintain the fluid content of their cells, work against the natural tendency for water to flow from them into the dry outside world. If they fail, they die. More generally, if living things didn't work actively to prevent it, they would eventually merge into their surroundings and cease to exist as autonomous beings. That is what happens when they die. Now it's Bezos.

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While the passage is not intended as a metaphor, it is nevertheless a fantastic one and very relevant to Amazon. I would argue that it's relevant to all companies and all institutions and to each of our individual lives too. In what ways does the world pull at you and attempt to make you normal?

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How much work does it take to maintain your distinctiveness, to keep alive the thing or things that make you special? I know a happily married couple who have a running joke in their relationship. Not infrequently, the husband looks at the wife with faux distress and says to her, can't you just be normal? They both smile and laugh.

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And of course, the deep truth is that her distinctiveness is something he loves about her. But at the same time, it's also true that things would often be easier, aka take less energy, if we were a little more normal. This phenomenon happens at all scale levels. Democracies are not normal. Tyranny is the historical norm.

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If we stop doing all the continuous hard work that it is to maintain our distinctiveness in that regard, we will quickly come into equilibrium with tyranny. We all know that distinctiveness, aka originality, is valuable. We are all taught to, quote, be yourself. What I'm really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness.

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The world wants you to be typical. In a thousand ways, it pulls at you. Don't let it happen. You have to pay a price for your distinctiveness and it's worth it. The fairytale version of be yourself is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don't expect it to be easy or free.

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You'll have to put energy into it continuously. The world will always try to make Amazon more typical to bring us into equilibrium with our environment. It will take continuous effort, but we can and we must be better than that.

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just like love that i just thought it was so good and leila and i had this little exchange i don't know a while back not that long ago but i've been um i mean i guess i get the same amount of hate anybody does but i don't know maybe i read it that day or whatever it was and i was just like why do i even bother you know what i mean like why do i even we've already cursed on this podcast so whatever so i was like why do i even give a like i don't need to do this

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And I was like, maybe I'll just do what some of these other people do and just like, just be vanilla, you know, just like not state things that are controversial. And there's a difference between like what I would consider faux controversy and like true controversy, right? Like to me, faux controversy is like, you know,

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You're you're complaining about results you didn't get from the work you didn't do. Right. Like that's that's like faux controversial. Like no one really disagrees with that. Right. It's like it sounds a bit spicy, but like it's fundamentally no one's really going to be like, yeah, you should get things for doing nothing. Right.

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But there's other things that I believe that are actually controversial, that there's a huge amount of people that disagree with it and get up in arms when I talk about it. And so I was telling this to Layla and she just kind of like paused and she was like, never dilute yourself. And it was kind of exactly what I think I needed to hear in the moment.

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And then, you know, reading this, this letter from Bezos was very reaffirming along the same lines. And so I wrote this as my, uh, quick response, which Layla is like, of course, he's going to say something else. Cause Alex loves talking. Uh, So I wrote this. You are either a thermometer or a thermostat. Most people are thermometers. What?

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This is a quote that was from Jim Collins' book that I talked, I said all the time.

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I've never even heard you say it. I literally had it pulled up. I don't listen.

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ridiculous you say i don't listen so this is obviously me not listening well let me just read the part that i wrote fine i said most people are thermometers they change based on temperature outside of the room they use almost no energy to operate they're completely passive thermostats on the other hand lead to systems that expend huge energy to change the temperature of the room they're entirely active but not only does it require huge effort and energy to reach the ideal temperature it takes even more energy to maintain that temperature

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Every hour of every day, it must persist, hold the line, literally, to create a different environment from the outside world. And when I feel beat down, I ask myself, am I a thermometer or a thermostat? Will I hold the line or simply melt into the background? Then I try to do what the thermostat would do. I do what I was afraid to do. I say what I think when I know it might hurt.

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I play when I know I might lose. Make the bet when I know it might not pay off. Trust when I know I might get stabbed in the back. So much energy, so much effort, but the only alternative is to melt into nothing. So we hold the line.

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So you know his original thought, there you go.

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Yeah. eating glass. I don't think we have the staring into the abyss part. For those of you who don't know, that's an Elon Musk quote that Layla and I both like. He said, entrepreneurship is a lot like staring into the abyss and eating glass. Staring into the abyss because you don't know if your company is going to make it and you're always facing existential threats.

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Stamps.

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I was not there to hear that, but I was there in spirit. So I will respond in the same way, which is that I agree. And I think it's funny that Layla and I both independently wrote those things. Um, because I mean, I'll, I'll, I'll just, you know, speak candidly.

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Um, I think one of the, one of the, you know, Layla and I have plenty of our own flaws, but like, I think we've usually been pretty in sync with each other in terms of like what we're thinking, what we're feeling, what's going on in the business. And I think that's the season that we kind of feel like we're in right now. So we feel like a lot of people are trying to, lower the bar, right?

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Lower the standard, um, within the company, lower the standard. Uh, obviously they're not trying to lower the standard, right. But like for me with media, like people like just comments that, that I get on a continuous basis for like, just believing what I believe. Um, and so we both been like feeling that, that pressure.

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And then eating glass because the way entrepreneurship works is that you were a funnel for all the problems that people either could not solve on their own or did not want to solve on their own. And usually it's both of those things, the ones that they don't know how and don't want to solve. And so basically your every single day is just only solving the worst things on an unending basis.

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We're the opposite of suicidal empathy. What's that? It's where you have so much empathy that you love the person that's hurting you. Oh, understood. And you don't try to stop them because you don't want to disrupt them. We are not that way.

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just do what you do and do it well and do it for a long time and it always takes longer costs more and is harder than you expect it to be but it's the expectation that was the problem not your plan Welcome back to the game. Two out of three businesses fail. Sad face. And since 2016, every business that I have founded continues to make money to this day.

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And so many of them were still stable businesses even though they had lots of churn, which the fact that they couldn't necessarily have the skillset to grow their business wasn't necessarily a problem for me. So to the same degree with the CRM, there are some CRMs that are very successful, even that serve small business owners.

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But they have to match the pricing to the spending power of that small business. Shopify, for example, probably makes more than almost any e-commerce company on the platform. We'd have to fact check it, but it's probably pretty close. And so the platform itself actually makes more than the opportunity seekers it enables.

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So this is definitely one of those situations of selling the shovels rather than panning for gold. Once I realized that gym owners were not the customer and agencies were the customer, I was able to start asking agencies for the correct feedback. And that is when we were able to continue to iterate the product in a way that actually served the right customer.

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In the agency world, where you do some sort of advertising for any type of business, if you look at some of the biggest ad agencies in the world, you'll notice a common theme. They all serve the biggest customers in the world. Whereas if it were true that agencies would be best served serving small customers, then some of the biggest agencies would serve some of the smallest customers.

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So fundamentally, when it comes to product or service based businesses, there's, I would say, two schools of thought around product iteration. One is kind of the rank

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and build model, which is basically, you ask your customers to just vote, upvote and downvote the potential things that all of them have asked for, and then the one that gets to the top that month, you then say, this is the one that we're gonna build, and then you do the build cycle, and then you ask it again. And this is not a bad way to do it.

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It's a different way to do it and what ends up happening when you have a business like this is that you keep building more and more things. And so this can result in kind of these Frankenstein type businesses. But some customers are okay and want to have all the features. And so this is kind of like a PC versus Mac kind of product strategy difference.

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So the PCs is like, you have all the customization, all the different add-ons, all the features that has all these different ways you can use it, but can sometimes be more arduous in terms of UX, or user experience, user design, than a Mac. Now if you're like, how does this apply for a service business? It's literally the same.

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It's just that the features that you're building are going to be around the services that you provide rather than the actual physical product or software that you're building. But it works the same way. The Mac style of this is trying to take every single thing that people want, right, up and down, up and down, and then trying to go from the ultimate

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experience at the end and then reverse engineer it into a elegant solution that purposely removes some things because it interferes with the other experiences. And so when you do the kind of rank and build model, there's lots of kind of conflicting contingencies.

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Like different customers want different things and some of the things that you built for one customer might actually impact negatively another customer. And so when you do that, all of a sudden you can lose.

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Now here, the downside is you're not going to be able to serve all the needs of every customer because some of those specific, if you're really specific about stuff, then you might want to have one of these solutions. And so basically the customer base that buys Mac stuff is unsurprisingly different than the customer base that buys PC stuff.

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And so, for example, at school, our product strategy is much more based on this, which is how do we create the most elegant, simplest solution so that we can help people who are starting out build a business online? And so if we have all of this customization and things like that, you might serve somebody who's like, I want a white label, I want a whatever, right?

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Now to be clear, these businesses can obviously still get wildly big and successful. Apple is a $3.8 trillion company. Amazon, which also kind of follows this model, is a, you know, also trillion dollar plus business. They are different strategies that you need to decide which one you want to pursue, but both of them work. You just can't do both.

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So there's two questions that I fundamentally like to ask when I'm trying to go through this product iteration cycle. So set of questions number one is if there was only one thing that was left after I deleted every other component of my service or product, what one thing would you want me to keep? The second version of that question is the equal opposite.

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If I kept everything except for one thing, what thing would you not care at all about? And then you delete that thing. And you see who complains. And to be clear, you don't announce that you delete it. You just delete it and then see what happens. And then if you get complaints, you ask yourself the question, are these the types of customers that I want to keep?

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Because sometimes the people who complain are the ones that you don't want, in which case, win-win. For more info on this, I cover this at length in the referral section of $100 million leads. In the referral section, I talk about how do you get more people better results? So this is fundamentally product iteration. The idea here is how do we increase the perceived likelihood of achievement?

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But that's not reality. And so in looking at this, it means that just like the CRM business, and that's arguably one of the stickiest businesses you could possibly imagine, the agencies could not keep churn down with small business owners because small business owners in and of themselves are volatile.

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So I have our action steps, right? So you survey customers to find the ones who get the best results, step one. Step two is you interview them to find out what they did differently. All right, so this is a behavior thing. So on one level, you want to look at demographics. Do they look different? The second is, do they have a different user path? Do they come in a different way?

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Do they have a different promise? Number three, and this is the one that we're referencing here, is did they take actions that not everyone necessarily took? Then we look at those actions that only those people had in common, and then what we do is we take those actions and we force new customers to repeat those actions on purpose that the best customers did by accident.

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And then we measure the improvement of the average customer based on those new behaviors that we're incentivizing them towards, or at least pushing them towards. And then what we do, if you want to get really fancy with it, is you can match the conditions of your guarantee to the actions that get the best results to get more people to do them. Said differently,

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If you realize that the best customers, for example, import all of their contacts into your CRM when you're starting the CRM, then you would then try and create the onboarding experience and a guarantee says, hey, we will guarantee that you'll have some improvement using our software service product as long as you export and import all of your contacts into our CRM within the first 30 days.

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And so now we have shown our hand to say this is very valuable to us and it will be valuable to you. And the nice part about this process is that, I'll say like this ask process, can fix any department. That's customer facing, obviously, can't fix IT. But it can fix marketing.

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So if all of a sudden your ads aren't doing well, show your ads to customers and ask them what's missing or what's not working. Why would they not respond to this? What ads did you find that resonated the most with you? Because I want more people like you. you're saying, okay, what's wrong with this picture? Show me what's difficult.

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Watch users actually interface with your product or services so that you can understand the friction points before, during, and after. And so I like to use the three term contingency of before, during, after to think through any kind of change that I have for a customer. What's gonna happen immediately before they buy my product? What's gonna happen immediately before they use my product?

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What's gonna happen during the time that they use the product? What are the interactions they have? And then what happens immediately after? And those are the places that we have the closest and strongest leverage over the ultimate customer results and the value that we provide. And same thing with sales.

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Like if people are getting on the sales calls and they're not buying, then you ask customers, what about my offer, what about the way that we're presenting it, is not compelling to you. And just as valuable, sometimes more if you can get them, is interviewing the people who said no and say why not. One of the best things you can do is just pay them.

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Like I'll pay you $100 to hop on a phone call with me and just tell me what we could have done better. And you know what's crazy is that a lot of times You just even doing that does give you a second shot at the sale, which is by no means the objective. You just want to get the information because that information is so much more valuable than the $100 and maybe the hour that you'd give.

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So number one, once we've picked the right customers who aren't going to have structural churn based on the business model that we have, Two, we have the thing that that type of customer wants. Well, we need to keep improving that product so we don't get out-competed in the marketplace by new entrants or new businesses who are trying to take our slice of the pie.

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And so what happens is that there's many businesses like small agencies that do lead generation for small customers and continue to wonder, what do I need to do in order to make my business sticky? And they kill themselves trying to figure it out when the problem is inherent to who they serve, is that they are volatile. And as a result, your business will be volatile too. It reflects onto you.

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The third thing that we have to do is not pretend to be something we're not. And you're like, what does that even mean? So, success, this is by Shane Parrish. Success comes down to doing the obvious thing for an extraordinary period of time without convincing yourself that you're smarter than you actually are. And I love this quote for a number of reasons. First off, because it's so true.

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But secondly, let me tell you a story to illustrate the point. So there was a solar company that I was talking to that had 400 sales guys. So a big solar company that did very well. And the founders were young enterprising guys, super ambitious. They came to me and said, hey, we want to have a monstrous valuation for our company.

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And I said, I think you already do have a monstrous valuation for a company. And they said, well, we know that software companies get valued significantly higher than kind of the transactional sales nature of solar. And I said, you're right. And so what?

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And so they were like, well, we have this software that we have that we use to recruit salespeople and make them more productive, and that's why we have such a big and productive sales team. And so what we're thinking about was taking that software and then licensing it to other solar companies. And I told them that I thought that was a terrible idea. Now, why would I say something like that?

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Well, in theory, if you had a software company that had the same revenue metrics as your solar sales company, then you would have a significantly more valuable company. But number one is for you to get those same economics, you're not selling $30,000 things. The likelihood that you'd be able to get even close to the amount of revenue per customer would be significantly lower.

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Number two is the amount of people that can buy solar roofs versus the amount of solar companies is way smaller. Third, neither of these founders were software people. And so what they wanted to do was kind of like pretend to be software and just say like, oh, we'll just sell some people into this thing and then we're gonna get a software multiple on the entirety of our revenue.

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That's not how it works. You have to remember that the person who's writing a 100, 200, 500 billion dollar check is smart enough to have a 100, 200, or a billion dollars to spend. They know the difference between a solar company and a software company. And so if you put a little bit, you sprinkle a little bit of software into your service business, it's still a service business, right?

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And so if like 90% of your revenue comes from service, and here's the tricky part, if 90% of the value comes from the service, they will still determine that it's a service-based business. And arguably, the likelihood that you will get the economics that a software company has with the service business is low. So let me say this differently.

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Software companies and companies that get extraordinarily high multiples don't get high multiples because of the name or the label that's associated with them. They get those extraordinarily high multiples because of the nature of the revenue and the quality of the revenue that they have and the potential for gross profit in the future.

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And so if you have a service-based business that has the exact same economics as a software company, you will get software-like multiples and enterprise value. You want to solve for the things that matter, which is you want to solve for revenue retention. You want to solve for incremental margin.

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You want to solve for logo retention, meaning number of businesses that are staying on your platform or inside of your business. You want to solve for being able to onboard low-value people to be able to provide high-value services.

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So this is where a tech-enabled service can be more valuable than a traditional service, because a tech-enabled service might be able to take one person and have them serve 50 customers rather than one person and have them serve five. But it's not because it's tech-enabled, it's because you have now 10x'ed the value

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that any individual employee can provide and lowered the skill barrier for somebody to provide that value. And so that translates into higher gross margins, lower cost of acquiring talent, and higher percentage of customers that stay every year, which means that the business will compound year over year over year. And so you can wash away

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Now, to give you an absolute hypothetical extreme here, to give you an example, Shopify is what most would consider world class or best in class for customer retention. But they serve, by and large, prosumers, meaning consumers who want to start a business. And let me give you a stat that might blow you away. 60% of their customers stay every year, but 40% leave. And that's the best in the world.

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all of the labels that people ascribe to business and simply boil it down to the metrics and the unit economics of the business to then ascertain, fancy word, figure out what the enterprise value multiple of the business is because it's only going to be a discount off of how big and how likely that bigness is to occur in the future for an investor.

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So a lot of small business owners, entrepreneurs want to get the maximum amount of money for their business in the future. And that makes sense. You should do that. But the way you do that is not by trying to pretend to be a different type of business. It's not by taking your lawn care business and trying to say, actually, we're a software business.

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And one of the mistakes that I honestly see all the time is where people will take their service, say, I'll give you the service for free if you use the software, but here's the problem. The revenue will look just like service revenue.

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so just because you bill through a software system if you still have the same churn as a service business and the same margins as a service business then they will still value you like a service business you'll get valued based on a multiple of bottom line which is fine it's just not going to be a top line multiple or some big number on top of that because that's not the nature of the business you're in and that's okay so i think just

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leaning into who you are and what your business really is, rather than wasting a tremendous amount of time trying to be something you're not, would serve a huge percentage of business owners. They think because the grass is greener on the software side, man, they're getting 10x value multiples.

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Well, do you know how hard it is to get 80% of people to stick on a software and do it in a way where you're making that kind of money, but it's at $50 a month instead of $5,000 a month? Well, in some ways, it's like, They kind of deserve it. All of a sudden, it's really hard to get 5,000 customers to pay $1,000 a month for B2B software. Really tough.

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Is it nearly as hard to do some sort of service at that level? Probably not. And so when we think about it from that perspective, the differences between valuations actually equalize. I'll tell you one more story around this. So I recently invested in a treatment center. and we were talking about the business model.

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And so basically there's two, there's more permutations, but this is said simply, there's two kind of models in the treatment world.

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So model one is you stick with primarily insurance and you get people to, you know, the insurance companies send you people who need to, you know, come off addictions, detox, et cetera, and you get paid a fixed kind of rate per day based on the insurance that the person comes in with.

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The second type of company is more private insurance and cash pay, where people are just paying out of pocket or they're paying with, I would say premium insurances, where they could pay somewhere in the neighborhood of like $3,000 a day. So way more money per day than maybe the insurance-based detox business, for example. Now, which business do you think gets higher multiples?

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the insurance-based one, because the likelihood that the insurance pays is high, and the likelihood that you're gonna keep getting customers from those insurance or Medicare companies, things like that, is high, and so it becomes a reliable business, but the margins are lower, and you have to deal with more volume.

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Now, on the alternative side, on the cash pay side, you might have, call it half the enterprise multiple value. So instead of getting a 10x, maybe get a five or six x on the value of the business in terms of bottom line. But if you can charge two or three times more, return on effort might actually be the same or even better in the cash pay.

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You don't want to try and build for some label that you think someone's going to ascribe to you. You just want to build for the ultimate enterprise value, which may just be doing better with the thing you have, which is more times than not the right move.

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Success comes down to doing the obvious thing, continuing to build your business for an extraordinary period of time, much longer than you think, without convincing yourself that you're smarter than you are, without actually changing the label of your business, trying to pretend to be a software company, trying to pretend to be a platform, trying to pretend to be tech-enabled.

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Just do what you do, and do it well, and do it for a long time. And it always takes longer, costs more, and is harder than you expect it to be. But it's the expectation that was the problem, not your plan.

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And if this was valuable or a wake-up call on maybe some of the things that you are doing or should be doing or should stop doing, it would mean the world to me if you sent this to anybody else who would benefit from it. That's how this show grows and it would mean the world to me. So thank you. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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And so in thinking about this, You'll typically need to have a business that has almost a zero cost of servicing the smallest business owners if that's the game you want to play.

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

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And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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If you want to be Walmart, then you have to orient your entire strategy on basically a zero cost basis for providing value, which works in software companies or like Walmart where the entire model is structured such that it creates the smallest cost to them so their alternative is really not having it at all.

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Now, there was one agency that did really well with this, a mutual acquaintance of mine, and what he did was that he basically provided marketing services, but for about $299 per month. Now, what he realized was this volatile, and this was a guy who used to charge a lot more than that. What he realized is that with this volatility, he had to price to their worst month.

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And so there's a process of building an unfuckable business that you might not expect. And the first of those three steps is stop selling small customers. Let me explain. So many businesses stay small because they only serve small customers. Let me tell you a story to explain this. So there was a small gym CRM back in the day that approached me about investing.

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And so it's like, okay, what's the lowest part of this volatile range, this wave of revenue that these small businesses are going to encounter? Okay, well then I'll just put my price here. And that way, I'm so cheap that they'll never cancel.

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And the cost of them doing the services that he rendered, which was actually far less than the guys who were charging, call it, $1,500 a month, which is probably like the industry standard for a small business or local business lead gen, all of a sudden, he's won fifth the price.

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but he just provided still more value than the $300, and so it still felt like a good deal here, because all you would do is you would optimize their Google stuff, get them a few leads, a few phone calls a month, and for them, they're like, okay, if I get a couple customers, it's worth it.

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This, it's so expensive relative to what they made that if you weren't saving the day every single month, the question they'll always ask is, what have you done for me lately? This is one of the big misconceptions that business owners have, and I've made this myself, which is you see this, right? You see this delta that you created. You're like, look, you went from $1 sign to $2 signs.

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All of this extra money was because of me. But the thing is is that if you make someone $10,000, right, in the first month you work with them, and let's say you charge them $1,000, in your mind you say, oh, Well, this $9,000 is because of me, which means I just bought another nine months of service with you, right? Because I made you $9,000. I charge $1,000 a month.

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So I could basically just break even for the next nine months. But try actually having that conversation in reality. It doesn't work that way. What happens in reality is this. They pay $1,000. They make $10,000. They make the extra $9,000. And they say, oh, that $1,000 was worth it this month. And guess what happens next month? you start at zero.

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Actually, you start at negative 1,000 because they've already paid you 1,000 and they haven't made any money yet. And so, again, it's always gonna be relative to when they pay and what they get relative to that. This is where this volatility ends up becoming a trap for most business owners. And when you're starting a business, or even when you're a few years into business,

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you'll often sell the people that you relate to. And so you'll sell out of your own wallet to solve your own problems. But the problem there is that those people will never become reliable. It's like building your business on a foundation of sand. It doesn't matter how beautiful of a castle you can imagine in your mind, one bad storm on a foundation of sand and it's going to topple over.

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And so you end up just getting in this endless cycle of trying to iterate your products, create different offers and all this stuff. But the fundamental issue is you're serving somebody who's never going to stay in pay. because of them, not you. Said differently, your business may fail, not because you are a failure, but maybe because the customers you serve are failures.

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So for example, if you have a supplement business, it's unlikely that you're gonna get very high stick if you're super expensive and your product suite is only geared towards beginners, and beginners churn out, as in they go to the gym, they stop going to the gym, they go to the gym, they stop going to the gym.

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Now, if you had a business that was geared around the regular user or somebody who already, let's say, takes protein every day, and you truly have a superior product, and then that entire base of people who takes protein shakes every day is willing to take yours instead of someone else's, then you have a customer that is already a qualified customer who's gonna continue to take the product over and over again.

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But when you target beginners, whether it's B2C or B2B, Obviously the price differences are significant between businesses and consumers, but they are still beginners within that continuum. And so you will have the churn in relation to how much of a beginner they are.

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And so my preferred way to think about this is if you think about this pyramid as representation of the marketplace based on their spending power. At the base, you're always going to have the most people that have the least amount of money to spend. And so whether it's B2B or B2C. Like B2C, it's going to be base beginners for whatever it is that you sell.

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If it's B2B, it's going to be the smallest business owners. So it could be consumers becoming prosumers or prosumers becoming VSMBs, which is a very small business. And then VSMBs becoming SMBs, which is small business owners. And then you have low mid-market, mid-market, and then you go all the way up to Fortune 100 companies.

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And I asked them what their churn was. So what percentage of customers were leaving between last month and this month? And their answer surprised me. It was a much higher percentage than I expected because I thought CRM, they're processing their payments through here. They have all their memberships in there like this should be a very sticky product. And I said, so where is the churn coming from?

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Now, my preferred way to structure a business model is to actually start at the top. And the reason for this is that because there's little operational drag, because you have fewer customers you need to take care of, they're able to spend significantly more, they are going to be around a while, and they know their numbers, and they can stick with their commitment.

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So if you have a contract, for example, and they say they'll pay you $1 million a year, the likelihood they pay you is significantly higher than a beginner saying he's going to pay you $10,000 over 10 months. Very unlikely. I would make that bet. So much so that corporate debt is an entire investable asset class based on the promises that businesses make to repay things.

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The cool part about this from a branding perspective is that you learn how to service these much higher end customers. And with that reputation, then there are customers who are gonna be underneath who are then going to say, you know what, I would love to be able to work with somebody who works with the Fortune 100, but I can't afford that.

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You say, you know what, I can make it a little bit more affordable for you, but you're gonna get a little bit less service for that. And you can work your way down. Now here's where it gets really clever. is that as you work your way down, you're consistently making more money.

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And at this point, when you go further and further down this rabbit hole, you're going to be able to spend the money it takes to create the automated solution or the software-based or technological-based solution that's going to have a near-zero cost basis for you as a business owner so that you can profitably serve this itty-bitty, these itty-bitty dollar signs here.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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without the headache associated with beginners. Fundamentally, if you sell to beginners, you're going to have to either sell a really big ticket one time that's based on an emotional purchase, and you're doing what I would consider a smash and grab business. Like solar, for example, is kind of what I would consider a smash and grab business.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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People go in, they sell solar, and then it's on the roof, and then that's kind of it. And so it's really just massively just trying to sell every single person that exists, and that's all there is to it.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Or you have to create something that's the price to value discrepancy is so absurd because what's crazy about this is that the price to value for poor people actually has to be higher than it is for the people at the top. Because here's the part that people miss. Think about this. There are people who cancel the $12 per month Netflix charge. Like what else could Netflix offer?

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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They give you like every movie you could imagine, every new shows, they do everything and still some people are like, you know, I'm not really sure if it's worth it for me, right? And so if you take that as hypothetical extreme, you could take the same thing for Spotify.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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How about I give you every song that is possible in the universe and you have access to it whenever you want on your phone, in your pocket. Eight bucks is a lot. Eight bucks is a lot for that, right? I don't know, Mr. Spotify. I know many of you have these businesses and are wondering, looking at yourself and be like, what more can I offer? It's not about you.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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And they said, oh, well, about a third of the gyms go out of business every year. And I was like, wow, wait a second. So this has nothing to do with how good your product or service was. These businesses in and of themselves just stopped being in business. And so the formal language for that is called structural churn. It means it's baked into the structure of the market that you serve.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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You have the wrong model serving the wrong customer. And so you have to have a cost basis as low as possible with a crazy high price to value discrepancy. So values up here. prices down here, this huge delta, so that even on their bad months, they're like, you know what? Even though I lost my job, structural churn, I'm still willing to pay the 12 bucks for Netflix.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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I talk about this at length in the $100 million offers book. This is how crazy it is. The thing you sell doesn't even need to materially change in order to make it ready and available for the highest end customers, all right? So let's say that you sell time management, all right? And you sell to all these people. Well, you're gonna have to have a, probably a $19 price point, see?

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Very mass market, 19 bucks, maybe. Now, the next level is like, okay, well, I want to do time management for sales professionals. Well, for salespeople, maybe you'd be able to charge $99, okay? More, because salespeople are like, all right, well, you know, one sale might pay for this. Now, what if you then go up to time management for outbound B2B sales?

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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So this isn't just people selling memberships or car washes or cleaning services. This is now people selling, let's say, enterprise software, where they're making $2,000 a sale in commissions or whatever. So for them to pay $500, basically, it's a quarter of one sale.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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now let's go all the way up now we've got time management for outbound b2b power tools and gardening sales reps so super specific and high ticket you get super niche down and you could sell for $2,000 but fundamentally time management is time management and so the likelihood that the product that you're selling is really materially different between these these these different avatars is is unlikely but we're choosing to purposefully narrow down who we sell to so that we can

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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make more money, and have less operational drag, and have less structural churn, as in people canceling for reasons outside of what we've delivered, and as a result, have a much more stable business that can compound year over year. A lot of business owners struggle in the business, and they look at everything except for the most important thing, which is they messed up the pick.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Chick-fil-A's head of people gives a great example of this when they talk about actually talent selection, but I think the parallel holds. Which is, most people lose in the NBA, in the championships, and wonder what they did wrong in the game, when in reality they lost in the draft. As in they didn't have the right people on the team.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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And so if you think about your business as an ecosystem, the right people on the team has to be all the stakeholders, including the customers. By the way, I do have an entire extra chapter on this that I wrote between my offers book and my leads book, called Your First Avatar. And it was kind of like a single that I produced between the books.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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I think you can get it for free at acquisition.com forward slash avatar. I think that's what it is. And if not, you can probably Google it and you'll probably find it. But it's free, just pop in your email and we'll send it over to you. Step one of making your business unfuckwithable is that you want to have customers that can't be fucked with.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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You want customers that keep making money month after month after month so that they can be able to keep paying you month after month after month. And so, the next question that comes up is, okay, well maybe I'll have a product with them, but how do I ensure that I continue to keep the product as good as possible?

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Because if I just have it in the beginning, over enough time, my business will be fucked with a bull because I haven't changed. So, step two, ask. Now, what do I mean by ask? So, I'll tell you a quick story. So, Paul Graham said this and I remember hearing it and it just like got singed into my brain. He said, you can solve every business problem by simply talking to your customers.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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And I thought that was such an elegant answer and also true. It's easy to make a pithy response. It's hard to make it useful and valuable all the time. And this is one of those rare instances where it's both. And so I'll tell you a story. So when I had Allen, which was our software company, which is the third company that I started after 2016, I originally made, in my mind, to serve gym owners.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Now the question is, Is that your choice to pursue that market? And the answer is yes. And so if you're thinking about your own business, there are many business models that simply aren't fit for smaller customers. And so I'll give you a different example.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Once we spent a million plus dollars on developing this thing and actually rolled it out to gym owners, we had this big obvious problem that came up, which is they said, oh, this is so great. This will work on my leads. By the way, can you help me get more leads? And I was like, oh, no. we completely missed the mark.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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And so what ended up happening is that in my mind, I could see that they had this problem that they weren't working their leads. But what I didn't realize is that there was only a very specific amount of customers that had that problem, and so then I had to think, oh gosh, okay, so I have two possible scenarios.

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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I can either only go after gym owners who already know how to generate leads consistently, which we're talking like a tiny, tiny, tiny marketplace, and, and here's the caveat, that marketplace still can't pay that much. So bad market to go after. Small and has not a lot of money. And shrinking. Yee. Right? Not a good market. So I thought to myself, okay, well, what businesses always have lead gen?

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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Well, the solution came to me when an agency owner actually reached out to me. and said, hey, could I use this for my business to work the leads that I'm generating for my small business owner customers? And I was like, oh, wait a second. Well, small business owners will churn in and out of the agency services, but the agency

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These 3 Things Will Make Your Business Unstoppable | Ep 816

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will stay because they will bring new customers in, use our software, and even if they churn out with them, the agency will stay with me. And so the agencies had much more reliable revenue than their base customers did because they could reliably sell 10 new customers a month to offset the 10 customers they lose or whatever.

The Game with Alex Hormozi

Throwback: When It Gets Easy, Go Hard | Ep 875

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There's no way to strike out. You just have to wait and wait and wait until you get the perfect pitch, that fat pitch that's in your sweet spot. And then you step up and you knock it out of the park. And if you look at the people who are the wealthiest in the world, invariably, the vast majority made their money with one vehicle.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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I was like, are you sure you want me to come? And he was like, yeah, dude. He's like, you're going to blow past eight figures. I was like, really? And so anyways, we get to this event. Super nervous to speak, because all these guys are like titans. They're all doing $10 million, $20 million, $30 million.

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And I think Russell at the time, I think they were doing $35 to show you how long ago it was, because now I think they're doing $150.

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and i got up there it was finally my turn and i you know i wrote on the board and i told how our whole process worked and how how much money our gyms were making on average actually i'll start with what alex charvin said so alex charvin was in the room he's like you have a hundred million dollar business right now and you don't even know it and i remember feeling like the air was sucked out of the room because i felt all of a sudden i was like really proud of what i had accomplished but

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Throwback: When It Gets Easy, Go Hard | Ep 875

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all these guys made so much more money than me that they were like, dude, you need to like, you need to step on the gas. And I was like, what? And they were like, you've got a huge thing in front of you. If you, if you like, like you need to take advantage of this. And at the time I was saying how I was like, okay, we're making three 50 a month and I'm going to start a supplement company.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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And they were like, why would you want to start a supplement company? Just double your ad spend. Cause you're not spending anything on ads right now. And I was like, okay, I guess I'll do that. Cause I listened to these guys. Cause it made more money than me. And I was like, all right. And so, That was my end all.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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So rather than starting another business, I just kept doing the thing that I was doing, which ended up being an amazing piece of advice for them to give me. And I probably would have sabotaged myself if I had not paid for that.

The Game with Alex Hormozi

Throwback: When It Gets Easy, Go Hard | Ep 875

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I want to tell you a story that was really impactful for me earlier on in my life and my business career. And it was when Layla and I went to the Pirates Who Have Mastermind. Now, if you've ever, you know, listened to my podcast or you've been on this channel, I've talked about this before, but it was one of the most impactful experiences of my life.

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So it's like, if you ever have the opportunity to spend more than you're probably comfortable with to be surrounded by people who make a lot more money than you, you will almost always disproportionately. And every time in my life, I have always disproportionately moved up faster when I can surround myself and figure out, I want them to speak into me and tell me what I cannot see.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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I'm like, tell me what I'm missing. What am I not seeing that you can see? Because for whatever your business is or whatever your skill set is, I'm sure that if someone who's doing something that you are very good at, you can immediately see what's going on. It takes you two seconds. You're like, oh, this is what's wrong, this is wrong, this is wrong.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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When I look at a business now, I can be like, oh, this is the issue. It's immediate. But when you don't have the context, you just run your head into the wall wondering what's going on. So anyways, after my little presentation was over, Jason Fladley came up to me and he had done $100 million on webinars. And I was like, man, this guy's super smart. And he was really aggressive and bright.

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And I was like, man, we got to figure something out. Or I don't want to say anything stupid. And so anyways, he comes up to me and he said, you need to 10x overnight. And I was like, what? He said, if what you're saying is true and you're making gyms this much money, he's like, someone bigger than you who already has all your customer base is going to take everything you have and distribute it.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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I was like, what? He's like, they're going to take everything you have and just destroy you before you even have a chance. And I just felt even worse after this rifle, this pit in my stomach. And then he leaned into me and he said, when it when it gets easy is when you go hard. And I remember how much I was shaken by that. And Layla was right next to me.

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And I was like, when it gets easy is when I go hard. When it gets easy is when you go hard. I was like, huh. And the biggest gift I got from those guys there was that this was my fat pitch, right? There are only a handful of opportunities that present themselves in the course of entrepreneur's career where you have the opportunity, you have the skill, And basically the stars align, right?

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Now, that being said, you have to develop the skills so that when the opportunity presents itself, you can knock it out of the park and step up to the plate. When I listen to Warren Buffett, and he talks about investments, they choose very sparingly what things they're going to invest in, but when they do, they load the truck up. They go all in.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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You find your sphere of confidence, and you just get pitches all day long, just like a baseball analogy. You get pitched over and over, but you have no strikeouts. There's no way to strike out. You just have to wait and wait and wait until you get the perfect pitch, that fat pitch that's in your sweet spot, and then you step up and you knock it out of the park.

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And if you look at the people who are the wealthiest in the world, Invariably, the vast majority made their money with one vehicle. They made all of their wealth, or the vast majority of their wealth with one vehicle, and then after they made their wealth, then they diversified, right?

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And so this is one of the big issues that I feel like I see in the internet culture, in the Instagram culture, is they're like, billionaires have seven revenue streams. Yes, but they didn't have that to get there, right? Now I have lots of revenue streams, but I didn't have that building this, right? And so the idea is it looks much more like an umbrella.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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You've got one straight path all the way up on one vehicle where you're all in invested, which is your business most of the time or your career, and then it balloons out. Then it umbrellas out, and then you sprinkle those investments in other things because you're overly leveraged in one business. But...

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Every single one of them, most of the guys that you see, all of them came from one thing that made their money. And then they sprinkled it out on top of the other vehicles. And so if you listen to Gary Vee, even, he talked about one of his biggest regrets was how when Google ads were really cheap that he should have spent more for Wine Library.

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And all of these things kind of collided at the same time in my life where I had, you know, like I knew nothing. We're doing 300,000 a month. And I was like, holy crap. Like, what is going on? Is this legal? I don't want to mess it up. Like, it's just like holy. And so but because of their encouragement, rather than a distract myself and start another business, right? All we did

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is I followed what they said. I 5X my ads, man. And then it just took off like a fricking rocket. You know what I mean? We went from 350 to 1.5 million in the next five months, as in per month. And so it was just bonkers. And I just listened to what they had said. And so my takeaway from this and me sharing this story is that I don't know what pitches you have in front of you.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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There are only a certain amount of times where we're going to get that fat pitch. And I think the point of this is that if it is easy for you right now, this is the time to step up. I was talking to some entrepreneurs that were younger, not that long ago, and they went from... you know, next to nothing. I think not next to nothing. I think they were doing that.

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And that sounds horrible what I'm about to say. So they were doing like one or $2 million a year. I didn't mean it like that, but their last month they, they made like 20 or $30,000 in their last month of the year. And then the next month they, they hit this offer out of the fricking park and they, uh, they did 3 million and they did 5 million the next month in revenue. I mean, that's insanity.

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I mean, I've, I've never heard of anything growing that fast without like a JV, you know, like some sort of joint venture thing. Like never in my life I've heard something grow that fast. And they were like, yeah, you know, we're trying to like enjoy the fruits of our labor and not spend a ton of time on the business.

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And I got to have the opportunity to be the older person in the situation because I could see in them what I imagine people saw in me, which was like, You've got a hot one right now. Like you need to ride it hard. Like when strike when the iron is hot, right? When the fat pitch comes, you step up and you put everything you've got into it.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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And it was because I had multiple mentors who made more than me speak belief into me and also made sure that I capitalized on the fat pitch. All right, and so I'll tell you how this went. So I was, Layla and I had just gotten married. This was 2017, May.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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And so like this is not the time to try and figure out work life balance because you're going to have this finite window. We're going to make disproportionate amounts of money. We're going to make your generational wealth in this short gap. And we just have to hope that when that opportunity presents itself, we take full advantage, right? If you're going to California,

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and during the gold rush in 1849 and you start panning for gold and you start getting gold that's not the time to say you know what i've made it i'm going to stay at home i'm only going to pan for gold an hour to a day of course not right because you'd be like i got a pen i got to try and take as much gold out of this river as humanly possible it seems obvious to us from the outside but when you're in it you have all these other things that are going on in your mind

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Throwback: When It Gets Easy, Go Hard | Ep 875

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Right. And the thing is, is that opportunity, like many are finite. Right. There's a defined period of time where you're going to be able to ride that wave and be early on it and crush it. And so most people were very wealthy, had one big pitch that they swung hard on. And and then after they've made it, then they sprinkle their other investments.

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Just don't try and reverse engineer the wrong sequence.

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We had just gone from, you know, me almost losing everything to this business that we had just shifted from a done for you, flying out, doing gym turnarounds, to a consulting service teaching other people how to do our model. And we were like in our second month and doing $350,000 a month. It was insane. And it was just Layla, me, and an assistant selling over the kitchen table.

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Throwback: When It Gets Easy, Go Hard | Ep 875

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It was absolutely bananas. I didn't even know. We made more money than I knew what to even do with. It was crazy. You know what I mean? We're living on $1,200 a month and taking home 340 of $350,000 a month. It was crazy. And so anyways, I got invited to an eight-figure mastermind. And clearly, if you're doing the math there, I'm not making eight figures. And I felt really out of place.

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Why Constant Changes Kill Growth | Ep 893

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There are probably a hundred things that you have on those notes and each of them you're like, this could give me 5% more, this give me 10% more, this give me whatever. If I know them and have a 20% guaranteed cost, that whether it works or not, I'm going to have this happen, it changes what things I'm willing to take a bet on. So how was this morning? Good? Yes? Tactical? Okay, good.

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Why Constant Changes Kill Growth | Ep 893

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Simple threads, four locations. Oh, small threads. Sorry. Small threads, four locations, three are new. One is the old one you had for 16 years.

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Why Constant Changes Kill Growth | Ep 893

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Yes. And one of the big issues is we don't have enough data and we have to have a better CRM so we can track.

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So that's worth doing.

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Yeah.

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Why Constant Changes Kill Growth | Ep 893

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Instead of thinking about what type of content, think about what will be valuable for the person that I'm trying to attract.

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Why Constant Changes Kill Growth | Ep 893

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So think about all the problems that moms have, specifically the moms that you were talking to. So maybe single child or single sex child, whatever moms. And the nice thing is that they have lots of problems. And so you just make your content around that. And then you just try and tie in the product.

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Why Constant Changes Kill Growth | Ep 893

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You post as many of those as you can. The ones that take off, you take those, make them into ads. Yeah. And if you don't want to even put a CTA in the organic, you can just make the organic content. When you have the winner, you take that one and then stitch on five seconds of a CTA at the end and then run that as the ad.

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Why Constant Changes Kill Growth | Ep 893

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Yeah. Super easy. It's a really good strategy for anybody. Like if you, if you're like trying to get it, like if you're right now are predominantly paid and you want to start doing a little bit more content. I do think it's a good idea in general, just cause you'll get more conversions on a lead nurture perspective. Cause people get on the phone, they're like, what is this person?

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Why Constant Changes Kill Growth | Ep 893

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Meaning there are probably 100 things that you have on those notes and each of them you're like, this could give me 5% more, this give me 10% more, this give me whatever. If I know them and have a 20% guaranteed cost, that whether it works or not, I'm going to have this happen. It changes what things I'm willing to take a bet on.

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Why Constant Changes Kill Growth | Ep 893

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Or who's this person? Then they'll look at your account. They're like, oh, okay. They're alive. And so, but basically it's just free. I just see it as free testing. So you just get, you post as many times you want. You can just see relative to the other, other, other pieces that you have. These ones outperformed. Great. Now I'll make these into ads. So just provide value.

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Why Constant Changes Kill Growth | Ep 893

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Here's other, like, here's three ways that you can, you know, save on repairs for, you know, kids, torn clothes, or here's how to get stains out of these things. Or if you're, if you're the type of person who like sees this and is like, I'm never going to do that. Awesome. Come to Simple Threads. Like, I keep saying simple, sorry, Small Threads. We've got you covered.

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Why Constant Changes Kill Growth | Ep 893

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That help?

The Game with Alex Hormozi

Why Constant Changes Kill Growth | Ep 893

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Okay.

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Why Constant Changes Kill Growth | Ep 893

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So when someone slips and falls, then they need to get repaired. As a repairman.

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Why Constant Changes Kill Growth | Ep 893

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Being a doctor. Except I don't repairmen. Yeah, but I lost a bill of repairmen. Got it.

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Why Constant Changes Kill Growth | Ep 893

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Is this a, is this a problem to solve or is this just like overhead? This is a problem to solve. Okay. So what I'm trying to figure. Is it limiting your ability to grow? Yes.

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Why Constant Changes Kill Growth | Ep 893

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What if driverless cars come and then it's like no accidents happen. Now what are we going to do? Right? Okay. Okay.

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Why Constant Changes Kill Growth | Ep 893

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Okay. So let me just, let me pause you real quick. So I think, so part of this is probably how it's being framed with the positions, right? So one is you could just reframe it based on revenue, like basically revenue volume. So it'd be like, cool, we're going to usually send you around $20,000 worth of revenue volume. Sometimes it's going to be from two or three cases.

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And so for me, my kind of minimum litmus test for this is I need to see at least a 20% bump or believe I can see a 20% bump from any implementation that I'm going to run, or I'm not going to take the guaranteed 20% loss.

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Sometimes it's going to be from, you know, five or six. It'll depend. Obviously we can't make sure that everyone's going to be paralyzed. I'm sorry. Ha ha ha ha. Of course. Right. But I think if you just reframe instead of lead count to revenue volume, which is ultimately what you care about anyways, like leads translate to revenue.

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And if you're saying that there is some variability there, I think that the lead number will no longer matter nearly as much based on how you're just framing it. And in terms of the whole branding and all the other stuff, I think that's a different business.

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And so either you would start that as an additional service that you charge separately for based on its own value proposition, or my preferred method, don't do that and just continue to do the main thing that's working.

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And so part of this comes into something called ICE, which is kind of an investor terminology, but basically of impact, confidence, how likely, like how big of a difference is it going to make? How likely is that to happen? And then you've got ease, which is basically the value equation without speed.

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Yeah. There's a lot of different models from the position that you're in right now, which is probably why you feel the heartburn. The first thought that I had was just like, and instead of, or like, maybe I want them to pay $20,000 to make sure that they're legit. And I'm going to get a percentage of all the business that I send them.

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Okay.

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Well, to help the kid who has nothing, you can just make all the content free, right? Which you do now. Yeah. So that kid already has been helped from you. If he wants more help from you, he can pay and he can save up his shekels. So instead of 20, if you want to make it five, you want to make it 10 and you can offer, you know, nice financing terms, you could do that.

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I will just tell you that there's, I get where your heart's coming from. It's, it's, it's very tough to go free and deliver a lot to people expecting that they're going to do something. they typically will need to have some skin in the game. If you're gonna put skin in the game, you're gonna want them to put skin in the game.

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Yeah, I think you can play with the price. Okay, great. Mrs. Myclaw, yes. Yeah. It's otherwise you're just gonna have a bunch of freebie seekers who are going to come. And then you're also like the enforceability of the backend contract and then we're paying you is probably going to be a little bit of a nightmare.

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I would prop, like if it were me, I would control the sales and then hand them the deals so that I could collect the payment and then distribute payment to them rather than expecting them to pay me. For the leads. Yeah. Got it. So I was like, I'd rather just basically build a centralized phone team that could close the, close the deals or whatever. And then, you know, send the deal to the person.

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Got it. And if they're coming from your content and they already have trust, so you probably like, it makes sense that they would buy from you. They'd be like, cool. One of our licensed contractors will go out there. Licensed contractors go through two year training. You know, they're vetted by us. And also just like, think about like Harvard, you pay to go. You don't get guaranteed a graduation.

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So it's like, I would just let them know. It's like, we will not graduate you if you're not good.

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So yeah. Or we kick you out just like a school. Like real schools have standards and you pay and you might not graduate. Like normal school. So just do the same thing.

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And so if we're looking at any of the implementation that you're thinking about putting in the business, I'd be like, okay, how big of an impact do I think this could have? How likely do I think this is to occur? And then how fast and how easy do I think I can make it happen? And so typically we'll organize it in that way.

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We have our enterprise clients and we have our other ones that are 36 to 80K and they have a 300 to 600K packages. And we need to figure out which one has the highest LTV to CAC ratio and which one you can convert most easily. So what is the issue? That's correct. Essentially, well, first of all, I have no idea what I'm doing. I started about six months ago. First step. Thank you.

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Second thing, I think we just have a fulfillment issue. And so my question is, at what point do we consider productizing the service? From what I understand, it's kind of what you've done with Gym Launch. Yeah. At what point would it be worth doing that, if at all? You said you wanted to sell this eventually, right?

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Yeah, I wouldn't do that. Okay. Yeah. So you have the same issue that justice has, which is like, I have this hard thing in front of me. Can you tell me there's an easy way? The easy way will create a business that's significantly harder to sell. And so then you'll be at that point and be like, how can I sell this business? I'll be like, you can go back in time and not do this. Right.

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So like basically you're in a high position. You're in a high skill service business. It's a professional services business. Most professional services businesses are supply constrained. It is easy to sell high end professional services if you are good at what you do. It is hard to find other people who are good. This is the trade.

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But if you build a firm like that, you build a very valuable company. And, and another, just on a side note, again, I don't know what I'm doing. I got, I got a 500K in, in investment coming in soon. Why? It's been my, my boss just. No, but why are you taking investment? I don't. So we haven't finalized this yet, but I'm considering whether to do it or not. Yeah. But that. No.

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You don't see any point in. Why do you need money? You, you don't run a capital expensive business. Like what are you going to use the money for? I guess to hire great people. But the business model should be able to hire great people. It's very rare that you need to bring on outside capital, far rarer than most people expect.

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If you want to build a platform, you want to build school, yeah, you got to do that because you need to get zillions and zillions of users and you have to build this exceptional product before you monetize. So yeah, someone's going to front the money on the bet that it's going to be worth a lot more later. Your business makes money today on work it does today.

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And if anything, you can sell the work before you even have the person. And so like you, you, you have a negative cashflow cycle. You have no, you don't have to like front inventory for months ahead of time. You don't have to do any of that. So you have a service business. So we just need to make the business make money. You're already profitable. I'm assuming. Right.

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And you'll probably figure out pretty quickly, if I were to implement two things at once, what do you think would happen, right? And so you'd have two negative 20% decreases. And so the end result of like basically taking this ideology to its natural extreme means that you basically can't change that many things in the business and expect it to grow.

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So you don't need the 500 grand. You have deals that are worth 500 grand, right? Yep. From what you told me. Yeah. So why would you like, why would I give a chunk of the way of the company to have somebody who's permanently going to be involved in my business for the cost of one deal? It's like, just sell another deal.

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Work a little extra on your own time and then not, don't take that guy's money and just have the money. Okay. You know what I mean? And, and you, you absolutely think then it shouldn't be, you know, cause I feel like I'm creating extra problem that I otherwise wouldn't have to have being the whole high skill talent thing. If I just went down the productized route, you think it's really.

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When you say productized, you're talking about the 36 to 80 K price point. Yes. That's fine. I'm okay with that. But again, it's going to go back to what I originally said, which is we just have to look at the LTV to CAC between those with the different avatars.

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If the LTV to CAC is literally the example I was just saying, if you have a $100,000 thing that costs me 30, then I make 70, or something that costs $10,000 that costs 100, I'd rather just sell six more of the 10K things provided I have the ability to sell that. So it's like I want to find something that has really good revenue retention, really good gross margins.

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If I have that, then I can just sell the shit out of it. And then I'd rather just sell five times more of that than try to come up with the... you know, high touch one that's going to like is a more immediate ticket today, but it's going to quickly, I'm going to quickly get constrained. So I'm basically pushing out my constraint. based on what problem I'd rather solve today.

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So the question back to you is, do you think you can, so what are the gross margins on, let's say the average on the 36 to 80K is 50,000. That sound fine?

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Okay. So let's say 50K is the average price. What's the gross margin on that?

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Okay. And then with the 200K thing that you do, what's the gross margin on that? 50%. That's gross margin? So you're running thin net margins because that means you're starting at 50 and then you got to pay everything else.

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You're basically white label selling his stuff. We do what we can on the inside, but we accepted quite a few projects. Okay. Then the follow-up question is, can you more easily sell four times as many of the low touch as the high touch? Yes. Then do that one. If your gross margin is the same and you can sell more than four times as many on that one, then do that one.

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Basically, we're just looking at number of units sold times gross margin, the one that makes the most money. Got you. So I think it always just comes back to the point of the LTV.

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Were you in one of the schools I talked at? No. Okay, cool. No, I just figured I was.

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And so that end result for me has been, and I'm going to be crude on purpose, is that some shit stays fucked. And so there's a lot of things that I would love to do to improve this experience for everyone here. I've got a list many pages long. But every time I do implement a change, it negatively impacts the next group because it was a change.

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Yeah, I'm old. Nevermind. Nevermind. Yeah, but it's digital business cards though. It's an NFT.

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To make money? Yes. Yeah, yeah. No, heard. Dude, I think if you sold something else, you'd make way more money. I agree.

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Like, what you have is a hard pitch. Because I'd be like, your digital business card is, here's my Instagram. That's my digital business card. If you want to find out more about me, watch some content. You know. What else are you into selling, man? Like, I just, I don't know if this is, fundamentally, you can sell, like, you obviously have the skill of sales.

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And so, I'd rather just, like, use that on a better opportunity vehicle. Got it. Okay. It's like, this world is just crumbling. Yeah. You want to hire me? Well, if you confess. Yeah, so else. Ari, is Ari over there? Oh, there's Stephanie. Stephanie's right there. Stephanie works in our recruiting. You can talk to her.

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Oh, that was the real? That's not a real offer. All right. Neither was mine. Two can play that game.

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So you're selling, so who had this idea for this digital business? Well, there's your senior, whatever thing, right? Your senior project. Yeah. One of the big issues I take with, and when I do my entrepreneur talks at like colleges and stuff, the big thing that I, that I hate about those classes is that they try and make seniors invent something. It's like, it's very like invention heavy.

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Like everyone thinks it's shark tank. Like I have to invent something that doesn't exist. When you can pretty much just like go look at any business that exists and just do that and probably make way more money. Like you start a lawn care business tomorrow, like knocking door to door and probably get to two or $3 million a year just with your existing skillset.

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Now, the next one after that, it starts to recover and come back up because the team learns whatever that process was. They get better at it. And then maybe the one after that, it goes even higher. And that's great. And so what happens is I've gotten addicted to not changing things.

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Like you're able to, you know, shake hands and kiss babies and clothes. And so like, like you could sell solar and make, you know, 800 grand a year on your own. income. So I was like, I'm just saying like, there's, there's like, I think I would be looking at. So when I was, when I was doing the presentation yesterday, I talked about how like, now I look for products that people don't cancel.

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I would look for products that people don't cancel. Probably the people that are similar to who you already sell to. I would look for that product. And then I would use all my sales skills on that rather than trying to explain to them why they need a digital business card. Got it.

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Basically for your current pitch to work, you have to, you have to create a problem and then solve a problem all within one presentation. Right. And also explain some stuff that they don't understand how it works. Right. So it's kind of like three things. I'd rather just like talk to somebody who immediately already knows the problem that they have. And I'd be like, I can solve that.

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And I know from the history of that industry that they don't cancel and that they're just going to buy from me because they like me better.

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No, I mean, fundamentally, every entrepreneur is a salesman at heart. We're the promoters. And so you can obviously sell for somebody else or you can sell for yourself. A good way to learn a new industry is to sell within that industry, kind of learn the ropes, and then try to basically just figure out lead gen. for it. Once you have that, then you'll have lead gen in sales.

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And so the only thing that you'd really need would be delivery. If you're good at sales and good at training sales, which is a different skill, then it comes down to like, can I like, this is where like insurance sales are incredibly profitable. Like there's really no delivery. You just sell the product, right? And then there's these massive behemoths that deliver the risk. Essentially.

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There's so many businesses that are basically demand constrained where people stick. You just want to find one of those that you like that caters to the existing avatar you currently sell to, because you already know that avatar well, if we're talking speed to money, and then sell that.

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Because people tend to, because the flip side is if you change nothing, so let's say you have no change that occurs, you'll have something usually that's in like a 2% to 3% increase that happens pretty much no matter what. Because people just get better at their jobs. Sales guys just get a little bit more comfortable. Customer service guys get into a rhythm. Like it just works.

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That is the objective. And hopefully it puts a little more context on what I was talking about yesterday, which is, all right, there's probably a hundred questions you could have potentially asked, but ideally, or hopefully you ask the questions that you think could get you the highest return. And that's fundamentally why we laid out that way.

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And it just works a little bit better because most people like to make their jobs easier. And so they tend to just do it a little bit better. That's what specialization of labor is all about. And so I would encourage you that when you have this list, that you're going to have for your one, two, and three that you're going to go home with.

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Think about ice when you're putting that together and make sure that you're going to make your biggest swing worth it. If you have a change that can get 2x the business, then yeah, take the 20% dip, no question. But there are some changes that just aren't good enough to be even worth the guaranteed cost. Does that make sense?

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This took me a really long time to understand and is almost like I would say like a stepbrother to the focus on the macro scale of business model focus. Let's not start a second business, which probably a third of you have. But even within the business, it's staying focused on keeping the main thing, the main thing. And the hard part is, is it's hard.

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Because the thing that's often limiting you in the business are hard problems. New things are easy problems because you can always just whip something up and promote it and make money. But the hard problem is like, okay, I can't scale past this current level because I need to recruit like three really niche employees. Well, you're going to have to do it either way.

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And so you might as well just confront the hard that's in front of you. And so being able to spell that out to myself and be like, this is the hard, the hard is the not knowing how to do this thing. And I have to figure it out and not knowing where to find these people, but I'm going to have to figure it out. And so it's like taking all that energy where you're like, I don't know how to do this.

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So I'm just going to do the thing I know how to do, which is,

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i say this and i see like all the smiles like and like nods in the audience right now but you have to keep fighting that muscle because in a lot of ways it's almost like an addiction for entrepreneurship it's like we like to do new things and also like addiction you just have to fight it every day this is just because a lot of you guys are going to be implementing some of the things that you walk away from here i just want to make sure number one that the few things that you choose to do that they're absolutely worth it and that many of the things on that list i'd rather you just forget about because after you do the first three things

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all the pieces on the board are going to change. You're gonna have new resources, new problems. And number, you know, five, four, five, six, seven, eight might not be, like once you do one through three, number four might not be number one. You'll have another thing that'll be number one that you didn't even think about, which is why I'm not super obsessed with very long-term planning.

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To frame this Q&A, I want to go over a couple small things and then we'll kind of dive into it. So one of the big ones is everyone here probably has a lot of notes from this morning and yesterday. And when you get back in your car or you go on the plane, you're going to open up your laptop, you open up your notes, and you'll probably open up some sort of fresh document and be like, okay.

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So I thought this might be a good timer before we get into this as a good way of thinking through this. And this is like, I wish I could transfer this to you because this is probably from a skill perspective, one of the things that has made me the most money. is basically just saying, I'm not going to do new things.

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And if I'm going to do it, it better be worth it because I'm going to pay a price immediately with my team being confused, feeling whiplash, saying, what is this thing? I didn't feel like it was communicated well. It doesn't matter how well you communicate. It's not communicated well enough because they don't just immediately know it. Okay, cool. Let's do Q&As. All right. So you had 107,000.

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150. Excuse me. You want to get to a million. Yeah. And your biggest issue is hiring.

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What do you sell?

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Okay. So personal branding for them. Correct.

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So what stops you from doing a lot more of that?

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And now you're just going to be a middle young white guy. So my business partner. I assume you know what you're dealing with because like when I came up, I started making a lot of money at like 26, 27 and they're like, Alex is so young. And now I'm just like 36 and no one really gives a fuck. Yeah. Sorry. Keep going.

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Yeah. Yeah. Boomers. Boomers. So, but what are you, what are you saying though? Like it's, it's more of a trust issue with clientele. It's like totally in your head, man. Really? Yeah. A hundred percent. You care. No one else cares. You even think they're old. Hey, I don't think that I don't think they're old. Like you a little bit. Cause you're bringing it up. Right. So like, like no one cares.

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Did you guys care that Jacob Hopkins is 22 at the same time? We have people who are in their late thirties and forties. People just care about how good you are. So like people care about your age for the two seconds before you open your mouth.

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And then as soon as you open your mouth, all of it's like, that's like the, the, the, the absolute thinnest surface level of judgment that someone will make in general, younger people know less than older people in general.

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But there are also Mark Zuckerberg, who's a billionaire at 21. So there's obviously people who know more at a younger age. So you just have to demonstrate expertise.

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What am I actually going to do? Right? Because you have all these ideas. And kind of the objective for me, when I think about how to prioritize within a business, aka strategy, it's making sure that we get those one to three things that we're going to change correct. And I want to introduce a little bit of a concept that's taken me too long to understand.

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For a franchise to be something that you'd really want, it's simply you're gonna have some sort of like franchising is just a model for raising money. And you dilute selling the most expensive version of it, which is that you're going to give all of the upside away except for a small royalty. And you're going to do a huge amount of the work.

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And so in your business, you don't require really any capital to expand. Right. So we wouldn't franchise. So that doesn't make sense. If you wanted to have revenue retention for these people who are in different markets, I can see two different ways that you could do it. Well, really three.

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So one is they fly to you and then you just book, you do like one day of recording and you get 90 days or six months worth of content for them. And I think that would be a very strong value profit. And you can probably charge 25 grand for that. That's number one. The other way is that you could fly out. You can fly somebody out to do that. That's the second version.

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Also still charging a lot of money. The third way is you can, I guess, find people, basically run ads locally to find videographers to go capture the footage and then do what? Edit centrally?

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So you edit centrally, they capture locally, right? So I think I would just consider...

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hiring those people on behalf of the client and then just charging an upcharge on the rate that you're like if you you know pay them four thousand dollars a month you charge five and but they're paying you five you pay the person four and then that way you'll have built-in revenue retention because it's much harder to fire an employee than it is to fire a vendor

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And it's really, really hard, which is this, there's a lot of things that you can do to grow the business. You have a lot of ideas that you're coming off on. And so let's imagine that this line represents your current revenue level. Whenever you make a change in the business, my estimation is that we see about a 20% decrease in revenue as a result of a change, especially if it's a manual change.

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that you would just basically fractionally own a lot of these relationships.

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Yeah. And as soon as someone says they're going to cancel, it's like, oh, that's great. I had such a waiting list in your area. I'm just going to have that guy shoot your competitor. This is so helpful. That works out great.

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Cause I think this is really viable for everybody. I hear that sentence all the time. I have this business. It's working. I don't think it's scalable. I should do a different business. If we reframe this as I'm doing her business, it's working and now it's hard. And so I'd like to do something easy. Can you tell me something easy? That's, that's what I hear.

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Why Constant Changes Kill Growth | Ep 893

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And so I'm bringing this up because it kind of hits to kind of what I was talking about earlier. Like you have to confront the problem, but like the other side of that problem. So the way that I, the way that I talk about this to our founders within the portfolio is like, let's say that I'll just give a simple example. Let's say that we have to, I'll, I'll look back to a question.

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Why Constant Changes Kill Growth | Ep 893

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Let's say that we have, you know, a key hire that when this key hire comes in, we could add, you know, 5 million. Ooh, nice green. There we go. $5 million in profit to the business. All right. So it'd be a really, I said five, five million titles, top line, $2 million in profit to the business. But this is somebody we're gonna have to pay, you know, 500K a year to unlock this. Okay.

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Why Constant Changes Kill Growth | Ep 893

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So this is gonna be a pretty specialized role that we're looking for. Now, a founder might say, hey, can we just like figure out a way to not have this role? No, I think it's a worthwhile question to pursue, but sometimes you just need the role, right?

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Why Constant Changes Kill Growth | Ep 893

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And so this $2 million, let's say at a 7X enterprise valuation is gonna be an increase in $14 million in enterprise value, which if you own the business goes straight to your net worth tax-free. And so if I say back to the founder, hey, do you think you could find this one person for $14 million? All of a sudden it feels better. You're like, you know, 14 million, I could find it. Right.

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Why Constant Changes Kill Growth | Ep 893

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And so I tried to think about like, what is this going to unlock in the business? What does it create to enterprise value? And then I try and put a ticket to kind of the hard that I'm trying to go through. Like we had a different portfolio company where we had to put in this, I talked about them yesterday. We had to put in this tech tech component to it.

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Why Constant Changes Kill Growth | Ep 893

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And I was like, well, currently the company's probably valued at like 80. If we can get this fully integrated, we can be valued in the two hundreds. It's like, man, but building a whole developer team, we'd have to recruit a head engineer. We'd have to bring all these other people in. I was like, Yeah, I mean, we'll also get paid $150 million to do it. So, you know, worth it.

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Why Constant Changes Kill Growth | Ep 893

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So it's like, it's hard and worth it. So anyways, please continue. So it's not scalable. Okay. I appreciate that.

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Why Constant Changes Kill Growth | Ep 893

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So there's so many products.

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Why Constant Changes Kill Growth | Ep 893

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No, I understand why you review so many products, but there's so many more products to review. Specifically, why is this not scalable? Why can't you review 500 products a month?

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Why Constant Changes Kill Growth | Ep 893

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We're changing a sales process. We're changing a customer service process, something that involves humans. We're changing something that they're doing. We'll typically see a 20% decrease guaranteed simply because of the cost of change. But once I kind of like realized this, it changed what things I decided to choose to change to begin with.

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Why Constant Changes Kill Growth | Ep 893

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But you get paid on the short form that they probably repurpose as ads.

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Why Constant Changes Kill Growth | Ep 893

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You do a lot of faceless though.

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Why Constant Changes Kill Growth | Ep 893

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I mean, yeah, it's just like I do 50 and I do majority faceless. Why can't we do 500? I mean, do you run good margins?

The Game with Alex Hormozi

6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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The wealth or money ladder. There's six levels to this and I'm going to break it down. This fundamentally changed how I saw, how I priced my payment terms and fundamentally how I saw money flowing through a business. Welcome back to the game. I have an old concept that has reemerged. This is something that I thought a lot about in the year that Layla and I were selling Gym Launch.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And so what's the word for somebody who falls into this category of rules? Well, the answer is an employee, right? They will front, you know, two weeks of work, sometimes a month of work. They'll work up front and then they'll get paid later. Right. And that's a pretty standard agreement that's existed for a very long time.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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As I walk up this ladder, think about both of those variables, the payment and the work, and you'll see how they shift. And obviously the goal or the ideal is to go as high up the ladder as you can. And so the level above that would be an independent contractor. So this is somebody who functions like an employee. They do work and they get paid.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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But sometimes the nature of the payment and the timing of that payment can be altered. And so, you know, a common setup might be half now, half later. Right. And so you can see how how this works. So they get paid half now. They work and then they complete work and they get paid the other half. And so it's a little bit more smoothed out. compared to the employee situation.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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Now, that would be the second lowest on our rung of wealth. Ah, the plot thickens. And so what are these remaining tiles above this? So above that, I would consider the in-demand professional. And so what happens in this situation? So this would be a specialist of some sort, or you go to a heart surgeon, or you just go to a doctor in general, whatever. You pay first. And then they do services.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And sometimes, depending on the leverage, you pay now and get services later. You know, if you have a surgery, just to use that to keep that example going, you might pay today and your surgery might be for three months, you know, from now. And so from a cash perspective, that business's advantage compared to one where they have to, you know, work first and get paid after.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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So we're plotting along here. Now, hopefully the goal isn't to really think, oh, I need to jump to this next rung. It's more like, how can I alter how I ask for money within the business that I exist or the services that I sell so that I can... make my money flow more advantageous and ideally have more of that money stick to me within the economy. So now we go what I call above the line.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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So those are kind of like the three levels as I see it for an individual. Right. But as you go up the ladder, you have the leverage of organizations. Right. And so I would say the the level above that is banks. So let me let's play it out. So a bank gets paid immediately, and they always get paid first. Meaning, there's something called a capital stack.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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But essentially, if you buy a house, you don't really buy a house. The bank buys it for you, and they get the house. And if you're a good banker, typically the rule of banks, if you didn't know this, is that you should be able to recoup your money in at least three ways. And so that creates collateral for the bank to do lending. And that's typically how they do it. They'll be like, you have a

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And it's basically just how the flow of money is prioritized. And so I think if there were like a wealth principle or like a woo-woo idea that I have ever subscribed to, this would be it. I don't really know what would make it woo-woo, but wealth principle certainly has that ring. But it's actually that there's some mechanics behind how money flows within the economy.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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guarantee. We also have the house, which is payment. And if they can, they'll get a third way. There, it's like they kind of cover their downside and they will get paid no matter what. And they take on some risk at a later date. And so you can see how work shifts. It's like, how much work is there? Well, less than in some of the first three scenarios I gave.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And you continue to pay for that thing every single month and they get more than the money they put in. Now, what level is above banks? Ah, I think there's two. And so I will break them down. The next highest up or second highest, if you will, on our money ladder or continuum is insurance.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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So the reason I think this is interesting is because banks, insurance, and the final example that I'll give you are establishments that are hundreds of years old. And when I see something that's lasted for a very long time, I think that they must have some superior setup or agreement implied or or explicit for how money should flow to them.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And like this is just stuff that I think about on Sunday afternoons. But insurance, if you think about what it is, it's like, let's say I buy insurance, right? So I, you know, I buy insurance, I pay today and I may or may not receive something back in the future based on the agreed upon terms.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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To use the simplest example for insurance is like if I buy life insurance today, I'm literally just going to give money. for a 100% margin box of air that may or may not be redeemed at some point in the future. If I do this for 20 years and then I stop, they literally just got all the money for nothing. Like, wild.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And in the unfortunate circumstance where something does occur, and some of the terms of the agreement for some reason were broken, they still get all that money for nothing. And all the compounding and growth that occurred as a result of that. And not to mention, insurance, the float that they generate is tax-free.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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which means that all the money that they have to keep, which insurance companies basically act like investing accounts, except they don't pay taxes because they predate the tax code. This is why I look at very, very old businesses because they have survived wars. They have survived different leadership within the world.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And when I see that, I'm like, they must have a robust system for getting paid, right? Otherwise, these things wouldn't exist. And so you're like, okay, well, what's even better than getting paid now and getting paid for a long time and maybe or maybe not even have to pay anything back? Well, I think the final is, I would say, three categories, government, God, and franchisors.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And what do these companies get? What do these establishments get? They get, which is a term that is more commonly used, royalties. And the reason I think they're called royalties, I'm going to make a bet here, is that they were given to royalty. They were given to the kings of the kingdom, right?

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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The nature of a royalty is kind of interesting because you get paid always, and you get paid off the top, and your work is questionable. So what does the government do for us, right? Now, this is not intended to be some sort of political point, but I just like to see how money works, right? What do we get for what we give? to the same degree. Religious establishments, right?

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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You tithe off the top, right? God gets paid first. Again, not a statement for or against religion, just noticing how the money flows. And then you have setups like franchisors, where they set up some sort of royalty agreement and they get paid off the top.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And so when we're looking through this lens of this money ladder, this wealth ladder, whatever you want to call it, at the very lowest levels, you work now and get paid later. A level above that is you work now and you get half now, and then you work later and get the other half later. You've got the in-demand professionals who get paid now and then they work later.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And the privileges that certain types of businesses or agreements set in motion cause a disproportionate amount of money to stick to those entities that follow this structure. And so I see this more as a continuum than I do a specific rule. And I'll break it down. But it's basically the relationship between payment and work.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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You've got banks who get paid now and then maybe they take some risk later. You've got insurance that gets paid now and maybe pays money later or doesn't. And then finally, you've got government and royalties that get paid always off the top and first and maybe never work at all.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And so when we think about how we set up our agreements for services, for products, for how we do business, the goal is obviously to keep these two things in mind. And the work really functions as the vehicle for risk, right? So when you have time, you risk time in the process. in the vehicle of work in order to get paid later.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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But it's fundamentally just money versus risk and how that gets shifted over time to the ultimate expression, which is you take no risk and you get paid up front versus you take lots of risk and get paid later. And everything in between is just little Meyer markers that I like to use as examples. But for us as entrepreneurs, I would love to see how can we model

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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the companies and establishments that have been here for millennia, for hundreds of years or thousands of years. And how can we apply that to our businesses? Because they've clearly been able to stay around for a significantly longer time than the vast majority of businesses do. Like as crazy as this is, if you look at the S&P 500, I think there's two companies that have been around 100 years.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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I think it's GE and Ford, right? That's it. That's it. Everything else booms and then busts. It disappears. And what's fascinating about the U.S. is that we look at fastest growth. We look at biggest as metrics. But if you look at different countries like Japan, for example, their determination of what a valuable company is, is all about endurance. It's about outlasting.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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They brag about companies that have been around for 50 years, for 100 years, etc. And they do have many companies that have been around for very, very, very long time. Third, fourth, sixth, eighth generation type businesses. And it's because they think about business differently. And I think that

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And typically, they have a significantly different view on growth and risk, which is if there's the possibility of going to zero, they will not do it, right? Whereas in an American company, we tend to value kind of rapid growth significantly at a higher premium than other places.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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Now, notwithstanding, our economy grows faster than theirs does, and they also have population dropping issues, so I won't even get into that. But the takeaway for me is that

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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I want to, at all times, position myself like the royalty of old, like the insurance companies, like the government, whenever I can, so that I can take as little risk as possible, get paid up front, off the top, and do that as fast as I can. And ideally, do it as many times as possible. And if there's a way to guarantee those things, all the better, aka collateral.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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The collateral for government is that they throw you in jail because they have a monopoly on violence. The collateral for banks is they take your stuff. The collateral for insurance, really interesting on this one, is actually the money you already gave them and the risk that they're able to calculate. So kind of fascinating there.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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But anyways, this was just a Sunday thinking chain that I thought, to me, was worthy of sharing with y'all because I think every business could improve by simply saying, how can I shift from where I'm at to the other side a little bit more? Even just a nudge could have a dramatic shift on how durable the business is.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And at the end of the day, I think the point of the business is to stay alive and fight another day. And so the more we can do that, the more we win. Appreciate you all. I'll see you guys in the next one. Bye. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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There are kind of six varying degrees along this continuum that I've kind of identified. I have noticed that as I have become wealthier, I've moved up kind of the continuum here towards the ultimate extreme. Let me take this out of the theoretical and put it into the actual or real life.

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6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

6 Levels Of The Money Ladder And How They Effect Your Business | Ep 856

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So at the lowest end of this continuum, you would have somebody who works now, takes on tremendous personal risk and gets paid later. All right. Now, normally you'd think, oh, wait, isn't that, you know, the results of like, isn't that, you know, delayed gratification? Well, not when it comes to the flow of money within an economy. And so I'll kind of explain.

The Game with Alex Hormozi

Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Hey guys, welcome back to the game. Today's episode is a throwback city of one of our top episodes of all time. And so if you are new to the channel, then you will probably like it. It's titled how to get ahead of 99% of entrepreneurs.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Then I became self-employed. I gained a little bit of leverage just over my own time. So I went from having someone else control my time to me controlling my time, which was leverage. I got more for what I put in. And I went to five figures a month. Then I went to employing other people. Which is then I would say the first level is me now having the first level of leverage.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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So I went to six figures a month. And this is right as I would say first when I started my gyms and I had multiple gyms. And then when I transitioned that to turnarounds, I still stayed at six figures a month. But fundamentally, it's because I actually didn't change leverage. I changed how I was structuring it. But fundamentally, it was people doing the same work.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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So this was both me being a gym owner with six locations and me doing the turnaround business with other people. You're like, how do you go from six figures a month to seven figures a month? Then you start licensing. Now, what is that? I made content fundamentally, and then I made it once, and then many people could have access to it. And so when I did that, I went to seven figures a month.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And so if you have those two things together, then you create a $10 million plus business. And If you've consumed any of my other content, I used to talk about how entrepreneurs have three main things. You've got skills, you've got character traits, you've got beliefs. I've thought about this more and I've actually simplified it to one degree, which is I think you just have skills and beliefs.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Now, the question is, how do I get from seven figures a month to eight figures a month? Because that's what we have at acquisition.com. What did I add into it? Capital. So now we buy into companies that have other people working for them. I use content to attract those businesses. Now, I don't have any code right now. I have one software investment, maybe two, I think, that are major investments.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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But the rest of my stuff, really, if we're talking about it, is that I made content, I had capital from the things that I'd done before, and we have the ability to get other people to help us get to our goals. And so this is acquisition.com and that's eight figures a month. Now, what do I need to do to get to nine figures a month? I may just need to add time to the existing thing that I'm doing.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Key point is that leverage is about getting more for what you put in. People who move faster in life don't actually move faster. They get more for their inputs. They get more for every step, right? I'm not like frenetically moving to move faster. You just get more out of every move. And so that means that if you're getting more out of every move, it's a function of time.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And so if I had, for example, maybe some code that was implemented within everything that I do at acquisition.com, I might be able to get to nine figures a month faster than I currently am. But I feel confident with these three that we'll get to nine figures a month eventually. And so you might say, Alex, that might be a limiting belief. It might be.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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But that's kind of how I'm choosing to play it. And so let me reverse the clock here. If I had just kept my gyms from the time I started my gyms until now, I might have 100 locations. And I might also already be doing... nine figures, not nine figures, I'd probably be doing eight figures a month from the gyms. And so you're like, well, wait a second. So was it the best move?

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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I can't go back and replay time. I don't know. But that's where, to me, this is why the game gets interesting is that every time you switch vehicles, you start at zero again. So the pace that the leverage affords you for each step you take has to be disproportionate because year four of a business, you'll typically grow more than year one of a new business.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And so that's where doing the same thing for a longer and longer period of time, you still get more leverage. The guy who owns Panda Express opened 600 new locations this year. Because he has done this, because now he has enough capital, he has enough collaboration, that he's maxed, no, he doesn't do any content. And he doesn't have any code, right?

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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But he has these two at such a high degree that when he adds 600 locations, and each location does $3 million a year, right? Or it might even be a month. I don't know. It's a lot. And just to give you context, Panda Express in 2021 did $3.7 billion in top line sales. And he owns 100% of it. No outside investors with his wife, Peggy. And they took home 27% net margins on brick and mortar food.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Character traits... If you think about this, you're like, I want to become patient. Patient is just a general term for lots of little skills. And so if you want to become more patient, you want to do things that patient people do. And that means that if I can train someone to become more patient, then patience is a skill.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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All right, so let's do the math. That's $935 million in income. Like that was his distributions from owning this thing. Now, if you're like, wait, but did he pay taxes on it? Sure didn't. Why? Because he owns all the land in the dirt for most of the locations that he had that are freestanding. So he depreciated all of that against his income. So he took all of that tax free.

The Game with Alex Hormozi

Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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So point being, he did this and you're like, well, how did he do it? He's been making chicken and orange chicken and Kung Pao chicken for 45 years. So even though he might not have been in the highest leverage vehicle, he was able to stick with that vehicle for 45 years. And being able to stick with something for 45 years makes it really hard to suck.

The Game with Alex Hormozi

Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And when you do that, you start unlocking multipliers on the leverage you have rather than thinking, I need more leverage in terms of more types of leverage. Maybe you just need more of the one that you've been using since you started with. Remember I gave the little phone call example of like two people doing the same thing. One person has more leverage.

The Game with Alex Hormozi

Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Well, each of these things are big buckets with many smaller skills underneath of it. So collaboration is I have to know how to recruit talent. I have to know how to recognize talent. I have to know how to onboard. I have to know how to train. I have to know how to manage. I have to know how to grow talent.

The Game with Alex Hormozi

Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And I have to know how to run meetings and I have to know how to have one-on-ones and I have to like, you know what I'm saying here? Like all of those micro skills chunk up to collaboration for capital. It's like, you have to be good at math. Being bad at math is probably not like it'd be tough to raise capital if you really can't do math. Right.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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It's like, okay, well that's a skill you need to know. Well, what else do you need to know? It's like, well, you need to be able to reach out to people and get rejected. Why? Because when you try and raise capital, you get rejected a lot more times than you get checks. Right.

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From there, it's like you also probably have to have an understanding of legal because you have to learn how to set up a fund structure. You also have to know how to negotiate because every single person who writes you a check is going to want different terms. You then have to structure it in a way and negotiate so that you can get mutually beneficial terms for both parties.

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So these are all other skills that go into raising capital. Right. Making content. It's like you have to understand the different platforms. You have to understand how to tell stories. You have to understand how to have. I mean, and even understanding here is just like you might even have to just do the work to have credibility to make the content about whatever you're making it on.

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And you know what? I'm going to side quest this real quick. A lot of people make content right now and they're trying to hit it big. But what they do is like, in my opinion, you've got entertainers and you've got educators, right? The thing is, is that a lot of people who haven't done shit are trying to educate on things they haven't done. And so they have no credibility.

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And so the thing is, is that like the reason Mr. Beast was able to get so big is that when he was 15 years old, he wasn't teaching people about business. He was being funny and being cool. People are like, oh, I want to be like him. And so then they say, oh, I'm going to educate people on house flipping. but they're 22 years old and they haven't flipped that many houses.

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And so as a total side quest on this, what's interesting about this is that you've probably heard people say soft skills and like hard skills. In my opinion, hard skills are just skills that are easy to measure. Soft skills are just hard to measure, but they're both 100% skills that you can train and improve.

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And so they have no credibility in their content. And so in my opinion, when you're doing this content thing, if you're gonna do it, then make sure that you have the backing of experience and proof, because then I promise you, like when you get shit on from the public, cause you will,

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because they don't know who you are, and most people are lying, you'll be able to know that what you're saying is true because you lived it. And so then you won't second guess yourself. The people who like tank and self implode because they're like, they can't handle the hate is because on some level they believe it.

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So if you want to be an educator, then I think that the middle ground, the pre-education stage is the documentation stage where you just say, this is what I'm doing now. Check it out. Like right now, I can't educate really on nine figures. Not really. Excuse me. I can't educate on nine figures a month. Haven't been there. I know what eight figures a month is.

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Don't know how to get to nine figures a month. I have my theory, which is that I just have to add time to this equation. The math spells that out. But I just got to wait. Once I get there, then I can talk about how to build a billion dollar portfolio. And you can imagine how my content might change, right?

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And so if you're making six figures a year and trying to talk about how to make seven and you've never made seven, then you're full of shit. And you rightfully should get the hate that you do. Right? And so these are skills that you have to learn how to acquire to make content. And to make code, you have to learn how to go code. And this is how little I know about coding. This is it.

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So I would even give you examples of micro skills, but like you have to learn HTML and JavaScript and Ruby and Python. That's about it. That's all I know. And data architecture. And yep, that's it. That's all I got. And so you have to learn these smaller skills to then say, I'm very excellent at code so that I can then have more leverage on the things that I do.

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But it's really a podcast about leverage, which is about the skills, beliefs and traits required to get more for what you put in so that you can move faster towards your goals. And I think it's one of the better things I put out. So enjoy. One in every 250 businesses does over $10 million a year in sales. And that means that 99% of entrepreneurs never hit it.

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And then you can walk yourself up this income ladder with more leverage, right? And again, leverage is about speed. Any of these vehicles that I had done, if I had done it for 45 years like Mr. Panda, you could get there. because my N on input is so high.

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If I spend 45 years doing something, I might not have the strongest arm, but I've done it 45 times more, so I still get more out than the guy that's over here that does it two times.

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this is where strategy comes into play is making sure that you're picking the right vehicle chris for example made less money in the first nine months scaling enchanted fairies than he did before but at month 10 he matched it at month 24 it was it was like so small in comparison that didn't even matter but i can tell you this

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really easy to say this really hard to do that for nine months, eat shit and feel like you're losing and always knowing that you could always go back. And that's the hard part. Go back to what you were doing before that was comfortable and made you X versus staying the path. And I can tell you, it was, I mean, it's hard for me.

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And so if we say, man, I wish that guy had better people skills, what we mean is 100 micro skills that are like, I wish he would smile when someone walked in the room. Can I train someone to do that? Absolutely. If I said, hey, I wish you would greet someone by their first name immediately every time they walk in the door, right? Boom, that's trainable. I wish someone wouldn't interrupt.

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Right?

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And so like, these are things that you have to like take in, but I do believe genuinely your 10 of acquisition.com, I think is bigger than your 15 of gym launch to make the apples to apples comparison. Because the thing is, is that you actually never get an apples to apples comparison because you can't go back in time.

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And so you have to look at what your 10 of one business is compared to your three of another. And so if you're at your sixth year, Maybe you should just keep riding it out because whatever you started with is the thing that you have the longest lever on number of times that you got reps in. And people want to change industries. And I'll give you a little tidbit from Y Combinator.

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One is they don't take solo founders as a side note. Now, mind you, they're only interested in billion-dollar companies. So if that's not you, then you could totally be a single founder. But it's just harder to be successful with one person's skills versus three. The second interesting thing that they have, they have many things they select for, but one of them is industry experience.

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And so if someone says, hey, I want to get into this industry, if you don't have any experience in that industry, and then second to that is personal experience, like you've suffered from whatever problem you're trying to solve, then they're not interested. And so you might have six years of experience in the mortgage business. I wouldn't recommend getting into weight loss.

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I would say maybe you take a half pivot so you're in the same industry because it's so hard to make up those six years. This hopefully gives you a more nuanced view to making the right picks to making the most money. By the way, if you guys like the whiteboard of me drawing with markers, this is a throwback to what I used to do. I finally got another board because I love these things.

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But if you like this style, let me know. I love this style, but I just try and do the things that the data suggests that you like the most. I'll do what you guys want so that I can hopefully transfer the skills that I have to you faster. I said earlier that the unknown unknowns are the most expensive thing in business, right? Because you don't know what you don't know.

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And so I want to give you a quantifiable example. I remember the first time I heard this, it changed my life. And so it was actually a whiteboard just like this. So you get to like, I'm getting goosebumps. You'll have the same experience I did. So a guy was on stage and gave this whole presentation about learning skills and about how you have to invest in yourself to get better, right?

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And he called somebody in the audience and he said, ma'am, And as he's saying this, he's doing what I'm doing. He says, ma'am, how much money do you make right now per year? She stood up and she said $50,000 a year. He was like, okay. So what would be the main reason that you wouldn't want to invest today? So he was closing. This was actually a close.

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But as a side note, I think the reason I like sales so much is because many of the obstacle overcomes that you learn to overcome are actually self-bullshit. And so in a way, learning how to sell other people, for me, was learning how to sell myself.

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Because I had so much head trash of like why I couldn't do things or why I shouldn't start now or why I had to think about or why I needed permission from someone else or why the universe was stacked against me to be successful. Like these are all things that I had to learn the arguments against to convince myself to do stuff.

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And so he asked the lady, he says, okay, so what would make you not want to invest in this? And she says, well, I don't have the money. And he said, okay. Well, you probably don't have the money because you've been paying a really expensive bill every single year. And she's like, what do you mean?

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It's like, OK, well, we can just give someone a cookie every time they don't interrupt someone and let someone finish their statement. And then we train them. And so all of these soft skills are just soft because they're hard to measure. Doesn't mean that they're not skills or they're not important.

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He's like, well, right now you've been paying $950,000 a year, not knowing how to make a million dollars. He said, this is the cost of your ignorance. Hey guys, love that you're listening to the podcast. If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, you know, drawn out stuff.

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Sometimes it can help hit the brain centers in different ways. You can check on my YouTube channel. It's absolutely free. Go check that out if that's what you are into. And if not, keep enjoying the show. This is the debt that you carry for the rest of your life until you learn how to make a million dollars.

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And so the reason I'm so heavy on learning skills and becoming educated is that right now I'm paying down ignorance debt. I'm paying down $950 million a year not knowing how to make a billion. It's the debt I'm paying. We all pay ignorance debt. And so the idea is how quickly can I pay this down so that I can have more cash flow to continue to pay this down faster?

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Now, strategy, like I said earlier, is about how you allocate limited resources against unlimited options. That's the fancy word of just saying prioritizing, all right? And so right now, you have limited resources. You have time and you have money. Now, you might have more time than money, but either way, you have some limit on what you have.

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And so for you to move faster, you have to identify, prioritize priorities. the thing that you're going to allocate your time and money towards, right? And you want the thing that gets you the most for it. Remember the input output that we had earlier, the leverage? So you want the thing that gives you the most leverage.

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Now, one of the tough parts about reality is that the things that you have access to when you have fewer resources are less than the things that you have access to when you have more resources. Like Mr. Panda can go buy a building for a billion dollars and flip it for $2 billion in a year or two and make a billion dollars because he has more resources than you do. And you can't do that, right?

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And oftentimes, most of us know that like within an organization, like the way that you gain influence is the soft skills that are hard to measure, but incredibly important. So if we're talking about how do we make the highest leverage entrepreneur, we want somebody who has lots and lots of skills. And really, it's about beliefs that don't limit them.

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Not right now. But you do have things that could get you there, which is why Charlie Munger talks about how do whatever you can do, beg, borrow, steal, eat ramen, walk with your lunch pail both directions, do whatever you have to do to make your first 100,000. It's because he understands, and mind you, him saying 100,000 is probably like a million dollars today.

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Because he knows that once you get that, you can actually get a little bit more leverage in terms you get way more for what you put in because you can't only put your time in because it's so limited in terms of how much you can do. All right? So... This is why I talk about investing in the S&P 500 more than the S&P 500.

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So if you don't know this, it's standard and poor 500 companies on the stock exchange. It's probably like the gold standard index that we track how the US economy is doing. It's really just the stock market in general is doing. All right. And so if you dollar cost average in the S&P 500, you get 9% to 10% a year for life, or at least that's what it's done historically. All right.

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So the question is, rather than investing in this, we just have to say, can we do anything that gets us more than 10% back? Great. Now we can quantify this. And so if I have, let's say, $1,000, right? And here's the magic of this, is that when you invest $1,000 into the S&P, you have nothing else that you add to that thousand. Like you can't juice the thousand.

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You're buying at the same valuation that every other investor buys in it. And so I'll tell you one of the magic, so I'm gonna open up the curtain here for a second. One of the magic of what we do at acquisitions.com is that we pair capital with know-how. And so we can buy a company

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At a decent valuation and have a big margin of safety because of our skill set So we know that we can triple or 10x the business when we invest in it So we don't have to pick amazingly like warren buffett's a better picker always will be than I am right at picking businesses But warren buffett doesn't work in the business, right? So that's the advantage.

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That's my advantage over warren buffett right now mind you he has way more advantages over me right made 90 billion on his apple trade, but But this is the game that I'm supposed to play right now because here's the leverage that I have on him. I have 60 more years of life than he does. Right? He's 93. I'm 33. So I have a lot more of these left on my move set. Okay? Now, we have our $1,000.

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We get 10%, meaning at the end of the year, we're at $1,100. Dollars, roughly. Okay. Or let's say you buy a sales training course. They teach you how to sell and you get implementation from that where they review some of your calls so that you can improve. And all of a sudden you take your income from $40,000 a year to $220,000 a year. Okay. Well, what does that mean?

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That means that that thousand, think about this return. All right. In scenario one, you have $1,100. In scenario two, and here's the crazy part, you have an extra 180,000, all right? So compare this to that. But here's the crazy part. This is every year. Because once you have the skill, you only get better from there.

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If someone had no limits in terms of what they believe they could achieve, then the only thing that would limit them was their skills. But most of the times, The beliefs that we have are things that just decrease our potential. And it's not really our fault because most of the people that were around us when we grew up, just by statistics, were poorer than you might want to be.

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And so one of the things my dad used to tell me that when I was growing up was that he was always really big on education. Cause he came here a thousand dollars, didn't speak the language and he learned English. Like that was a skill he didn't have. Like we'd take so many skills for granted. Like the man didn't, he couldn't even speak the language of the country, right? In a thousand bucks.

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And he was able to take his medical school education and apply it here in the US because he fled during the revolution in Iran. And he said, the one thing that no government can take from you and no wife can steal from you in a divorce and you can't get sued out of is your education.

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can't take it from you and he had uh relatives who were actually really well off who actually owned the lottery in iran so it was a private company so they made a lot of money but they were like second third generation and they hadn't learned the skills and so when they fled during the revolution they could only take what they could carry because all of their assets got seized by the government and they never were able to go back to what they had because they didn't have the skills

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Because the government could take their assets, but they didn't have the education, right? And the guys who were businessmen from Iran straight to LA became businessmen in LA and crushed it there too because they understood the game, right? And so this is why, like, if you think about it from actually an investment perspective, like, education can't go down. It can't be taxed.

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It can't be taken from you. It only gets better over time, right? And it compounds unto itself. Because when you learn the next skill, so let's say this is the lift we got from sales, then you learn lead gen. And then all of a sudden this, because then you 5x the demand on your sales skills, and you just paid down your ignorance debt with two investments.

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And so is that worth it more than putting the money in the S&P? In my opinion, every fucking time. Is going from 40 to 220 realistic? If you're a killer and you're part of Mosey Nation, abso-fucking-lutely. If you do it the way we tell you to do it, which is you look at the top guy on whatever company, whatever team, and you do twice what they do. Because you know why?

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Because they're going to be better than you. And so you've got to make it up in inputs. It's like, but Alex, does that mean I'm going to have to work harder and longer hours? You bet. Welcome to the world. Because think about it. If you work the same hours as that guy, that guy always has the advantage because he's already better than you.

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And so if he puts a month in and you put a month in, he's going to get further ahead than you because he already has skills through which to judge his own performance and improve. And so you have to put way more inputs in to get the same output than that guy.

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And so that's why Kobe spent five summers doing two-a-days when everyone else was doing one-a-day because he knew he had to make up for the guys who were way better than him naturally.

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And so I would like to think of everybody in Moza Nation as mini Black Mambas from that perspective, is that we're willing to put in twice the work, three times the work, four times the work, despite the natural talent deficiencies, to make up for it. Because on a five-year or a 10-year or a 25-year timeline, you become unbeatable. Do I think you can get to 220? Hell yeah.

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But if you were to just look at average, which I don't want you to be, but if you were to look at average, you might make $100 a year or $120 a year. It would still triple what you were making before. And if you don't adjust your living from what you were making at $40, Mr. Smart Cookie, then now you have even at $120, this was $120.

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And so they told you how they see the world. If there's ever something that's going to be on my tombstone, it's this quote, which is... We question all of our beliefs, except for those that we truly believe and those we never think to question. And so like the things that you actually believe, they're so invisible to you because that's just your lens through which you see the world.

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you have 80K a year extra that you can then invest in more skills to pay down your ignorance debt. A key point here is I said that there was an advantage that I have with Warren Buffett, which is I got money and time slash effort, right? If you go spend the money, but you don't put this in, then you lose your advantage.

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And so it's not just about spending the money because here's an interesting factoid for you. When you sell someone, you understand that the moment someone buys, they actually feel like they've solved the problem emotionally. And so you can sell that because you learn how to sell.

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But the reality is that that just gives them the license to begin solving the problem of whatever it is, especially if it's a skill or it's education-based. Here's my ask for you guys. One of the beliefs that I think has served me well is that whenever I joined a group or I joined a community, free or paid or otherwise, I always wanted to become number one.

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And the way that I thought about that was, and I always wanted to join groups of people who are all ahead of me. Like when I joined that internet group that I was talking about earlier, everybody there was making more money than me. How do I get status in this group? And the way that I did that was like, be good. You know what I mean? Make more money.

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And so what I did was I talked to every single person in the group and I had only my small skill set and I gave it to them for free. And I want to fucking hit on this because I get DMs every day about this. Guy this morning even said it. He said, Alex, I want to make you 100 videos for free if you're willing to employ me.

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The amount of times that I get this request, whether it's I want to make you this website in exchange for a job. The point of Mosey Nation, the point of everything that I do at acquisition.com that I hope to live by example is that you give first without asking. you're doing it wrong, right?

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You think, because like, and I was like, hey, in the spirit of Moses, it's like, you're not doing it in the spirit of Moses, you're doing the spirit of John, all right? You're doing the spirit of you. The way that you do it is that you give, and then you give, and then you give, and then you give, and you keep on giving until that person is like, dude, what can I do for you?

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And then you make your ask. Like, whenever I get frustrated, and I think, like, why do I even bother doing this? Like, I think about giving up. I just think, this is where most people stop, and this is why they don't win. it transitions into one of my most used sayings to myself. I don't say it a lot out loud, but to myself, it's like, I won't do my best. I'll do what's required.

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And so right now, what is required for you to win or get a job or get the skill might be better than your best. And so it just means that your best just needs to get better. All right. So you might be riled up and be like, I'm going to go do this and take over the world and make all the money. So, but you're like, fuck, I got to pay bills. So how do we take this and then put it into reality?

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Number one is like, and this is how you transfer any skills in general, by the way, a little sneak peek from the book that's coming up. All right. Coming soon. Is that you have The person who's teaching you documents the skill. That's step one. Step two is that they do it in front of you. So they demonstrate it. And the third piece is duplicate. You do it in front of them.

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Whereas when you're like, oh, I want to debate this point. It's like you don't really believe that. You just have an opinion on it or you have some assumptions that you're willing to back. Right. But the true beliefs of like, well, no one would be willing to pay for something like that. Or like, that doesn't exist. I didn't know that was possible.

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So document, demonstrate, duplicate. Now, I can do this and I can do this. But you have to do this. I can't duplicate it for you. You have to take the stuff and actually execute on it. And so if you're like, okay, Alex... what does that actually look like in my life? I'm actually a big, big proponent of having jobs.

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And I think that's probably taboo nowadays, but yeah, why not get paid to learn shit? And if you're like, well, the place that I work at doesn't teach me anything, then you should absolutely go apply for other jobs, like change your conditions. All right. So I'm all about get paid to to learn.

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And as an aside, the reason that keeping your living expenses low is so important is because if let's say you make a hundred thousand dollars a year now, and you're like, Alex, I've got a pretty good white collar job right now, but I really want to get into this. Then it might mean that you have to go from a hundred thousand dollars a year to $30,000 a year to learn the skill.

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Because right now you go from earning to learning. All right. And like, I want to tell you, like I walked this walk. So I was a management consultant at a boutique strategy firm In DC, I had a top secret clearance. I was 20. I did shit that people could brag about. And then I went and became a personal trainer at a gym for $14 an hour. Think about that.

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I went from a high-rise condo that I owned to renting someone's bedroom for $400 a month in their house. And I went from having Hugo Boss suits to wearing Beast Mode Engage t-shirts and showing up at 4 a.m. ready to teach Nancy how to lose the last five. You know what I mean? And so I had to swallow my pride on this because I wanted to I wanted to get learned. All right?

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And so you have to be willing to relinquish getting paid for getting learned. All right? Once you get yourself in an environment where you actually have a business that is investing in you, and it doesn't mean that they actually have to write checks, to be clear. Now, if you have a company that's willing to do that, awesome. Level one is,

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You communicate to them, this is the skill that I would like to learn upon working for you. And so you're like, these are the skills that I bring to the table. This is what I would like to learn. Is this a place that I can do that? Any business owner loves clear communication. And it's like, if you want to learn that, and if they're a good business owner, they'll be like, let me help you support.

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You don't even question those things because they weren't even in your mind to begin with. It's the unknown unknowns that are the things that limit us. The question is, how do we up-level someone's beliefs? So let me give you a quick example here. So there was an entrepreneur that I know who had a fitness app. He was a super high-level CrossFit Games competitor.

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Now, if they're like, my job isn't to teach you, wrong place. And I'm going to be real. A lot of business owners are like that. And so if you're like, well, man, it's not fair. It's like, well, I mean, getting paid to learn is a pretty good deal. It's just that that's not always what happens. And so I would say switch your conditions.

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But let's say you finally get into a business that teaches you stuff and you feel like you're getting better, you're moving faster. I would say once you feel like, and this is a big caveat, this is like fucking caveat, Once you have nothing left to learn from the current position, you communicate to them that you feel like your learning has slowed down.

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And then they may give you another opportunity to learn more. And if they feel like they can't actually teach you internally, they might say, I'll pay $10,000 a year for you to go through these programs or workshops or seminars or whatever, or certifications, so you can continue to level up your skill. A good employer will do that.

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And if you look at big corporate America, as much as people shit on them, they usually have pretty strong corporate reinvestment programs. Why? Because they want their human capital to appreciate. And so if you can pay $10,000, because they do the same SME 500, except the SNU 500, right? They invest in you $10,000 and they get a three times more valuable person.

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Like one of the biggest arbitrage opportunities, side note, this is me talking to business owners, that's out there in the marketplace is that you could pay 25% more for an A player versus a B player and you get five times the output. So like you think about value arbitrage, like instead of paying 100 a year if that's the market, pay 125 and get five times the output.

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Why would you never make that trade? Once you've done this, here are the three steps that you can transition from getting learned back to getting paid. All right, number one is that you live below your means. The less risk you take in your personal life, the more risk you take in your business life. Let's say that I own a business that does $10 million a year in profit.

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If my living expenses are $800,000 a month, then I'm not leaving much for the business to weather a storm. And let's say that it's all fixed. It's like mortgages and cars and jets and all the other stuff that I do. Well, if there's a hiccup, the business might go under. But if I live on $400,000 a year, then I have $9.6 million every year that I can go on the offensive and I can take huge swings.

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I can be like, I want to buy this company even though it's risky, but it might 10X, right? And that offense is what you have to do as an entrepreneur because you have to take calculated risk, but you don't want to introduce multiple risk if you can control it. And this is controllable risk, okay? So you live below your means so you can stack cash, okay? Level two is that you take this cash and

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And I want to be clear, I'm actually kind of against side hustles as a long-term thing. I'm pro them as a way to transition. Again, this is how I play the game. I'm a maximizer. I want to win big. And so I think if you follow my stuff that you probably want to win big too.

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And so if you're doing a side hustle, it's because you want it to eventually become your main hustle, not because you're just looking for side income. I'm just not that guy. There's other guys who will talk about that. It's just not me. All right. And so you stack the cash, you can start your side hustle. And you keep doing this until... you have matched your income.

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So you start your side hustle and you keep doing it until you match your current income. And if you're like, wait a second, for me to match my current income, I'm going to have to work 40 hours a week in my job and then work another 40 hours a week at this thing. Yep. And the thing is, and this is just one man's caveat. There's going to be different takes on this.

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And he started this app, and he didn't want to tell anybody about it because he never placed top three. He placed fourth place in multiple competitions, which is insane. But he had a belief that if he wasn't the winner, he didn't deserve to have an app. Like, think about how crazy it is. But he didn't question that. That was just what he believed reality to be. He was like, well, of course.

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If you're not making more money on 40 hours a week of the new thing, you're still not doing it right. Remember, I went from employed to self-employed. You have a level of leverage. So those 40 hours, you have more leverage than the 40 hours that you're working for someone else. And if you're not making more there...

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then you're like, you still need to keep doing it until you've matched at least, at least matched your income. And then once you've matched the income, I would say sustain it for six months. Two reasons. One is because now you're going to be making double time. You're going to be making money on your job. You're going to be making money.

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So you're going to be doubling your actual income, which means you might be like three or four X in your savings. And the second is so that you don't just quit on the one good month you had because you sent out three clients. Okay? We want to make sure that it's not seasonal. We want to make sure that we get... Like, it's not just normal volatility because really small businesses, super volatile.

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Right? If you're selling two customers a month, if all of a sudden you sell zero, your income goes to zero. Right? Unless you retain the people, et cetera, et cetera. And then... Cut bait. Cut the cord. And go out on your own. Spread those wings. Like a beautiful butterfly. And a lot of people look at this thing, the side hustle, and they're like, but this isn't Facebook. Like, this isn't... Sure.

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It's not. But I think a lot of people put undue pressure on themselves by expecting their next thing to be a trillion dollar company. And... The likelihood that it happens, super, super, super, super, super, super small. But again, it's like, what are your goals?

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If your goals are just like get out of poverty, get above the middle class, get above, get into the upper class, like a lot of businesses can get you there. If you want to be a trillionaire, there's only a few. And also what we don't see is the zillions of not Zuckerbergs who put everything into their social media thing and it didn't work.

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I'm a big fan of service businesses because it costs you nothing to start. It's just your time. You have no overhead in the beginning. Those ones are harder to scale, but you'll usually learn a lot of other skills during that process. Like I learned more from running a gym that allowed me to do gym launch. Like if I hadn't run the gyms, I don't think I would have been able to do gym launch.

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And so think of whatever this is as the stepping stone. And again, we're still trying to get learned. Like that doesn't change. We're just going to also get paid as we do it. And that's one of the beautiful things about entrepreneurship is that like, once you get past a certain level, you get to get paid to learn more.

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And I think that's like, for me, why I love the game so much is that you just keep getting better and get paid to get better. Don't judge yourself on the side hustle. And especially don't listen to other people's judgment on your side hustle.

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You know, many people like I was like Vanderbilt, Magna Cum Laude, you know, white collar consultant job, like had a above Harvard, you know, GMAT score say like, and you want to become a trainer. Like the amount of people that like I used to compete against frenemies, whatever you want to call it. They were like, oh, great. He's he's out of the race. You know what I mean?

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Like he's he's doing stuff to make himself happy. Right. You know, I was younger and I probably had more fucked up shit in my head then than I do now. But like I used to just think about them all the time when I'd be sleeping on the floor. I'd be selling where I was like, they're not willing to do this. They're not willing to do this. They're not willing to do this. And then you come from behind.

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Right. And you do Kobe and you work twice a day. And while they're working their job and they have their three series BMW and they're, you know, going out to dinner and they have the football on the weekends and their fantasy league and you have none of that. Just know that you're doing your two days during the summer or your three days during the summer.

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Of course I wouldn't want it. And so he built this app for himself and just the members of his gym. But the app was so good that people started sharing it. And... Finally, a client of his was a marketer and said, you need to start marketing this. You need to start posting about it. And he wouldn't post. And finally, she convinced him to just make one post. And he doubled his revenue.

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But because your rate of input is so much higher than theirs is, you will catch up and you will surpass them. And that's if you want to compare. And the main reason I don't think you should judge yourself on whatever you do is because in my opinion, like I'm married to the game, right? More than anything. Like I'm going to keep playing the game because I love the game.

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And so if you want to play the game a long time, then it's the game itself that you want to stick with rather than the vehicle you're in, right? Most entrepreneurs start more than one business over their career. You

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are above the business the problem is that people identify so closely like their identity is their business but you have to just think about it and this is me just trying to give you like a you know big brother what do you want to call it piece of advice but like the further you can separate your identity and your self-worth from the worth of the business the better off you'll be as an entrepreneur because you also start to see as an asset that can be sold can create value in the asset you can make hard decisions whereas if it's you you're like what will people think it's like I made a decision about a business that I own

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That's okay. Simon Sinek has a great piece on this, but when I learned the difference between infinite and finite games, it really changed my perspective. The infinite frame will always beat the finite frame. And there are finite games within every infinite game. And so you have quarters, you have years, you have goals. These are all finite games that we play in an infinite game.

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And so when the US invaded Vietnam, we lost. Why did we lose? We lost a war of attrition, which was that they were willing to play the game longer than we were. All right, and so the difference between a finite, infinite game is that a finite game has known players, agreed upon rules, and an outcome, and an end. That's why it's finite.

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An infinite game has known and unknown players, has no agreed upon rules, and the point of the game is to keep the game going. And so the problem that most entrepreneurs have is they approach an infinite game with a finite frame. They are the United States trying to invade Vietnam, and you will lose every time. because there will be players who are playing with an infinite frame.

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And so let me give you two more examples of this. If you want to get healthy, right? You don't win at health. There's no end goal to being healthy. You're not like, okay, I'm done working out. I did it. I've achieved it, right? Of course not, right? Same thing with marriage, right? Like you're not, the point isn't to get married. The point is to stay married.

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The point is to stay in the game, to keep the game going. Most of the games worth playing are infinite games, not finite games, which means the point is to just play. And so business, you don't win. The point isn't to finish. Because even if you were trying to say finish first, it's like, by what metric? On what time period? Has there anyone who's been the richest man in the world for all time?

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No, of course not. which means that anybody who would try to do that is coming from a finite frame. And so, but there have been people who've won the game of business in my perspective because they played their whole lives. If you want to be a stronger player and be somebody who can succeed as an entrepreneur, then the day you start playing is the day you win.

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And the day you stop playing is the day you lose. And so the goal is to find games that you don't want to quit. That's where learning what you are into from executing is the mega win here. So for me, I found out that I actually liked business more than I liked fitness, which is crazy because I loved fitness, getting into fitness.

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He'd gone from $20,000 a month to $100,000 a month with his app simply because he changed his beliefs. And so fundamentally, he had all the skills. He was already a really good CrossFit Games competitor. He already had the product that was really good. And he already had the skills to be able to market it. He was just choosing not to.

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But like the day I started my gym was the day my love for business outpaced my love for fitness. I was like, this is amazing. This is so cool. And so you have to find whatever that thing is. And I'm going to be clear, business sucks all the time. But it's just that if you're willing to play, and there's plenty of times marriage sucks. There's plenty of times you don't want to work out.

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But it doesn't mean that I'm going to stop working out. It doesn't mean I'm going to stop being married. It doesn't mean I'm going to stop being in business. And so I think if you can unlock that frame that you want to play until the day you die, even if the vehicle changes, even the players that you're playing with on the court change, then you'll be the guy who stays on the court the longest.

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You might think, oh, I don't like video editing or, oh, I don't like, you know, dry cleaning or I don't like mowing lawns. I don't like washing cars or whatever it is. Right. But the higher up you get in business, the more all businesses are the same. Right. You're going to have marketing. You're going to have sales. You're going to have product.

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You're going to have customer success or customer support. You're going to have IT. You're going to finance. You're going to have legal. Like all these departments are going to these functions will more or less exist in every business. And so my advice is, a lot of people quit industries when they really actually just quit a function of a job. And so they're like, oh, entertainment wasn't for me.

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It's like, do you know how many jobs there are in entertainment? You might love sales in entertainment. And you were in... And the actual like product side, right, or the production side or the support side. And so, again, remember I said earlier that like if you stay in the same game longer, you'll be likely to get more reps in and you'll do better.

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Well, then maybe stay in the same industry, but switch roles. Now, in a micro business like your side hustle, you'll get to taste all the roles and you'll find out the things that you like more. and that's where you can shift some of your attention there, and then you backfill people who are, because you have a little bit of context, good enough to do what you do better.

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You document, you demonstrate, you duplicate. They duplicate, and then they run with it, right? And so... Today, for example, what I do looks very different than what I did 10 years ago. What I did 10 years ago was the highest value scale I had then, which was just closing. That's all I did. I had consults all day because I got trainers to train for me.

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I knew how to run the ads and that didn't take me that long. It took me two, three hours a week to run the ads, make them and manage them. The rest of my time, was sitting in appointments and closing. And I had somebody else make the phone calls and texts for me. So I would just sit there and close because that was the highest value thing I could do at the time.

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But the thing is, is that your baseline skill will continue to level up. If I lost everything then, like if I lost everything, I knew that I would sell cars during the day and I would strip at night. Right. Once I had that skill before I had the skill of sales, I would drive Uber during the day and strip at night because I had the skill been in shape. Right.

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And so your baseline continues to grow, like being the best car salesman, you make 400, 500, maybe even a million a year at some of the best dealerships. Like if you're an absolute savage and I would consider myself an absolute savage if I was going to do that. Right. If I lost it all, I'd be there 12 hours a day for sure.

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Unchaining an entrepreneur is figuring out the reasons they give for why they can't do something. Those are known limits, right? Well, I can't do it because of X. That's the things that you know because you can even explain it. I can't do it because I'm not number one. I can't do it because I'm not in good enough shape. I can't do it because the app doesn't load well enough.

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And then once I learned how to market, marketing and sales together, my new minimum was a million bucks a year because I knew that I could sit in front of any brick and mortar business and I could get them leads and I could close them. Once you have that, you can make a million, two million, three million. I can't go below that because I have skills that are above that, right?

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You keep learning these skills as you keep doing your business and you might, you'll start ping-ponging in different directions until you hone in on the things that you're best at. And so I think if you can find that game, make it the meta skill of continuing to learn then you won't stop. And then at that point, it means you win by default. So we had talked about a lot of stuff, right?

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But the question is like, what's the next thing you're going to do? And so I'm just going to give you advice that I followed, which is like, what was the first thing I did to get myself out of this million dollar or below million dollar category to the above million dollar category, and then to eventually the 0.4%, $10 million category. And it was actually just learning how to sell.

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Because if you can't sell anything, you can't make money. It's the first part of the equation. Number of sales times. If you have no sales, it doesn't matter how good the lifetime value is, if no one buys it, zero.

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Every business that I've started since I was 25 has crossed 10 million. B2B services with Gym Launch, B2C consumer products with Prestige Labs, our supplement company, Allen, our B2B software, and Acquisition.com, which is an investment firm for all of the money that we made during those businesses to invest in other ones.

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I can't do it because it's only on one platform. I can't do it because insert whatever, right? Now, the dangerous ones are the unknown unknowns, all right? When I started my chain of gyms was that I wanted to be America's next gym. So I bought the trademark United Fitness. I was really proud of it. I had six locations. I joined this group of internet entrepreneurs.

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Now, mind you, the reason I think this is funny is because I was sold by the sales guy that there was other gym owners in the room and they were all like doing well and doing stuff on the internet too. Got in the room. Not only were there no gym owners, there weren't even any brick and mortar business owners in the room. And so I was like, wow, this is a shock.

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And so everybody's going up there explaining their ads and their funnels and their upsell process and all this stuff. And I get up there and I'm like, I own six gyms. And I was like, but these are the ads I run to get members into my gyms.

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The thing is, I gave this whole breakdown of everything I did and how I opened every location at full capacity on the first day without taking cash out of the pocket, all this stuff. And I remember the guy who was running the whole group said, And I really looked up to this guy at that time because he was the first person who was way more successful than me that I actually had access to.

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And so I think at that point, he was doing a million dollars a month. And I remember thinking like, whoa. And so I go through this whole presentation. I'm talking as fast as I can, explaining all the stuff that I do. And he stops and he's like, Alex, I don't think you should be in the gym business.

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And I remember hearing that it was like time slowed down because I felt like he like punched me in the gut because this was like my whole plan, my whole dream. This is what I was going towards. But I like paused and just like heard him out. He said, you have a level 10 skill set and a level two opportunity. I don't think you should be running gyms.

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I think you should be teaching people how to do what you just walked through. and i had a belief and i still do that if someone's further along in the game of business you always have things that you can learn from them and if i paid to be in this room if i don't take the advice it's the closest thing to me burning all the money that i paid to be here and so

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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When he told me that, to me, that was an unknown unknown. I didn't know that there was another opportunity vehicle outside of me just owning gyms. Like, I didn't know it was possible. So I hadn't thought, like, I didn't know how franchises worked. I didn't know how licensing worked. I didn't know how any of, I didn't know how to B2B national, any of that stuff worked.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Now, there were some skills that I would have to learn in order to enable it, but I couldn't even start on that skill path or see the deficiency of skills that I had because I didn't even think I could pursue it. And so these are the ones that, in my opinion, are the most powerful to overcome. It's the things that you didn't know were possible. I'll give you a different example.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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In Chain of Fairies, which is one of our portfolio companies, amazing business, super successful single location. And the founder had an agency when he approached me saying like, hey, I want to do what you did with Gym Launch, but with photography studios. And so we talked and we talked and we talked and his model was so good. I was like, I don't know, man.

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I think like one of the things that I didn't have with Gym Launch is that like I couldn't control delivery. With photography, you can control delivery. And so that means that we could actually centralize a lot of stuff. I was like, what if we just owned all of them with like a hybrid model?

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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We actually took the agency from what it was doing, which for most people watching this would be a very good business for you, to zero. to start this next thing. We had such good rapport that he's like, if you really think so, and we walked through the math, and he's like, I mean, this makes sense, but I'm going to kill something that makes a lot of money.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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I was like, yeah, but I think it's going to be for something that's going to make way more. And then for the next six months, we worked and tweaked the original model to get this new model off the ground. And 30 months later, that business is two and a half million a month with 30 plus locations because I said, let's just own it all. He didn't think that that was a model that was really available.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And then as soon as we made that switch, everything took off. Even in my own personal story, when I switched from having my gyms to doing a done for you fly around the country model, that took the same skills that I had as an entrepreneur and put them in a better vehicle.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And then even from doing the gym turnaround business for two years, I accidentally fell into the licensing model because I didn't want to fly out. Somebody asked me if I could just show them all the stuff that I did so they could do it for themselves. And then at that point, he bought it. And it was all margin. And I was like, holy cow, this is insane.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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That's when everything took off like a rocket. And so I had my brick and mortar gyms. And then I scaled to a done for you turnaround business. And then I scaled to licensing. And each of those were higher leverage opportunities. And it was because I didn't know it was possible. And so once I learned that it was possible, that unlocked all of the potential value that my skills could have.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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Because fundamentally, in every one of those examples, I knew how to do the same stuff. I knew how to market and sell for a local gym. I knew how to build them more profitably, create the workouts, the meal plans, all that kind of stuff that got people results. That's what I knew how to do. But at each level, when I went from gyms to turnarounds, the leverage increased from each of these things.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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And so the same skillset put into a new bucket or a new vehicle unlocked huge value. And that's why a lot of entrepreneurs don't get past a million or even get to 10 million is that they're in the wrong vehicle. So I talk about leverage a lot, and it's actually one of the core concepts in our logo.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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90%.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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So we have a supply-demand curve, and then we have a fulcrum, which is the acquisition.com logo, and it's because it's core to everything we do. If you think about leverage, you've ever heard Archimedes, he said, give me a long enough lever and I can move the world. This is our lever, and we'll put our little hand here. That's my arm.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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It doesn't look that way on Instagram, but this is the vast majority of businesses, right? Now, 9% of businesses cross this million dollar threshold, right? And then only 0.4%, which is one in 250, right? do 10 million plus. It's so rare. And so the nice thing is that success does leave clues. I want to kind of separate this into two major categories.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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If we grab the lever here, we have the most leverage on something that is here. If we grab the lever here, we still have the most leverage on something here, but we have less leverage overall compared to how much we have on this side. And the main difference here is how much force goes up the other side. And so leverage is the difference between what you put in and what you get out. That's it.

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Throwback: How To Get Ahead of 99% of Entrepreneurs | Ep 841

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So let me give you an example in the real world. If you are really skilled at cold calling, skill itself is leverage. Because if somebody who doesn't have the skill makes 100 phone calls, that's their input. And somebody who does have the skill puts 100 calls down. And the guy who doesn't have the skill gets zero appointments set. And the guy who's amazing at it gets 10 appointments set.

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He has, well, let's just say the first guy had one for sake of math. He has 10 times the leverage on that skill compared to the newbie. Getting and acquiring skills gives you more leverage because it gets you more for what you put in. And so if you're more skilled entrepreneur, being a skilled entrepreneur is a big bucket for hundreds of smaller skills underneath of it.

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Because it means that you know how to prioritize what to do next. And so one of my favorite quotes about leverage comes from Warren Buffett, Uncle Warren. He and one of his closest friends graduated Columbia Business School at the same time, same year. And he said that guy was smarter and harder working than him. Now, they then went their separate ways.

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Warren ended up getting into investing with Ben Graham and his friend goes into the steel business. Because that was back in the day when like American steel was like a thing, which it really no longer is. What he learned from that experience is that you fast forward 30, 30, 40, 50 years. And he said his friend did okay.

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And he said, mind you, this is a guy who was smarter and harder working than him. He said he did okay, he did pretty well, but not close to what Warren did. And he said his biggest lesson from that was it's not about how hard you row, it's about what boat you're in. And I love that because it really encompasses the concept of leverage, which is Warren got more out

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for what he put in than his buddy in the steel business because the steel business had a lot of headwinds. A lot of things going against them. They had globalizations that started happening. You had other imported steel that was cheaper from China, blah, blah, blah. And so those forces, he had to roll harder against the wind than Warren did while riding one of the best

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growth curves of the US economy overall. And so he got higher returns. And so over my career, I make more now than I did before because I've moved further back along this lever. So I have more leverage now on what I put in than what I did before. When I was selling one-on-one in person and I was doing 20 consults a day, I was working more hours probably than I do now.

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But I get so much more for what I put in. So I'm going to show you two triangles that show increasing amounts of leverage. All right. Now, one of these I've stolen ruthlessly from Naval Ravikant. All right. And so he talks about the four types of leverage. I've renamed them so they're C's and it's mostly just so I remember them more easily.

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But you've got collaboration, which just means other people working for you. All right. Then you've got

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Capital which means other people worked for you and gave you the fruit of their work so that you can invest it on their behalf So for example if I get people to give me a billion dollars Which I could do just raise the money and then I invest that money and I say I get 20% of the gain I didn't have to work all the time to make a billion dollars, but I still get 20% of it, right?

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That's the idea of using leverage of other people's money. So capital so you've got collaboration and Capital, you've got code and content. If I'm a genius coder and I could build one piece of software, I can build it once and people, a million people can use that same piece of software. With content, Joe Rogan can make one podcast episode and millions of people can listen to it.

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And so he gets more for what he puts in, right? So if you think about each of these things, it's like you have the influence on someone else. I trade me selling for 40 hours a week to me managing a salesman for two hours who then sells for 40 hours a week. Or higher leverage. I spend a week or two weeks recruiting the best sales recruiter. And then I do that one time in my life for two weeks.

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One is the entrepreneur and the other is the opportunity vehicle they're pursuing. You'll notice I said leverage rather than opportunity vehicle, but fundamentally leverage is the difference between what you put in and what you get out. And so you want to have the best entrepreneur getting the most out of what they put in.

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And then that sales recruiter works 40 hours a week to get new salespeople in every single week on my behalf. And then those salespeople on my behalf then sell every single day. And so I did two weeks of work for 100 salespeople over the lifetime of that one hire. More leverage. I get more for what I put in. Compare that to me taking 20 consults a day.

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Higher leverage skill, but same concept done at scale. Capital, we went over. Code, content. Those are the four types of leverage. Now, this is where this gets interesting because once I learned this, I was able to put words to what I kind of knew intrinsically, and I can now explain it. So if you look at my career trajectory, and one of the key points here is that

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you can actually just max out one of these things. So you don't need to have all four. Now, if you have all four, cool. But if you think about what leverage is in general, it's just you get more for what you put in. And so if you get 1,000x on any of these, it's still 1,000x. So somebody can just be an amazing private equity guy or amazing at raising money and become a billionaire.

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They don't need to do any of these other things. Somebody could be amazing at galvanizing people and creating movements, and they wouldn't need any of these other things. If someone's amazing at writing software, they don't need anyone else's capital, and the software does the collaboration on their behalf.

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And so all of these things, even though they're structured like this, you don't have to have all of them. If you do have all of them, well, you look at Facebook that is code about content. He raised other people's money, and he has people working for him. But let me show you how this changed for me. So in the beginning, I was an employee, right? And I made four figures a month.

The Game with Alex Hormozi

How the Top 1% ACTUALLY Make Their Money | Ep 811

Welcome back to the game. So how do the top 0.1% of the world actually make more money than everyone else? Well, there's three layers and I'm going to start at the top, which is global. So let's dive in. How do the top 0.1% in the world actually make more money than everyone else? There's three layers. Let's start with layer one, global.

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When he originally IPO'd Apple, he had 15%. If he had not sold those shares, that 15% today would be worth $465 billion, making him by far the richest man in the world had he lived to this point and kept his shares. And so the reason that he was never the richest man in the world is because when he sold his shares, he gave up a lot of his risk. He gave up a lot of his upside.

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Bill Gates, to the same degree, when he IPO'd, had about 49% of Microsoft. Now, if Bill Gates had continued to double down on that risk, rather than selling and diversifying, which is what he did, today Bill Gates would be worth $1.5 trillion. He would be more than a trillionaire.

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But because he chose to diversify, he decreased his risk, and so he got less on the asset that he owned, which was built through building, selling, and leading. And so we started with education and technology. Now we zoomed in at the second layer of the individuals, what the actual 0.1% wealthiest people did. They zoom in on their skills of building products that people love.

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being able to communicate the value of that product and sell them on buying it and using it, and then leading the team of people that could help do that at scale over and over and over again. And if you're like, well, which one of these should I start with? Well, everyone starts on a different BSL path. Now, I personally started with selling because it's a chicken and egg issue.

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You have to have something to sell, but you have to have people to sell it to as well. At the very beginning, you must have something to sell. As soon as you have a basic amount of something to sell, then you must sell it. Once you do this well, then you will have to recruit people to help you out, so then you will learn leadership.

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And so this tricep will continue to expand as you get better and better and better at all three of the tripod skills. So if you're starting from scratch, you first have to figure out what to sell. Once you figure out what to sell, you need to learn how to sell it. No economic activity can occur without both of these things. You can't sell nothing, and you can't build and not sell.

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A dollar must exchange for goods and services. So they have to know about it and you have to have something to exchange. And so obsessing over your logo and your branding and your website is neither of these things unless you're selling the websites, right?

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And so you want to just start on how do I get people's attention so that they can give me their contact information so that I can communicate with them and explain the value of the thing I have and then what is required for me to deliver that thing I have. The first business I ever started,

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I just gave people my email and my phone number, and then I emailed them personalized nutrition plans and workout plans. So I had no CRM. I had no website. I just did those two things.

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At the employee level, if you want to make more money, then if you kept your skills the same, you could simply try and take on more risk within the organization, saying, hey, I will forego some guaranteed income to have the potential for upside. That would be taking on risk.

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So if I had a conveyor belt of switchboards and I had to plug two things in, another one comes in, I plug two things in, it's typically something that you can train someone to do in about five minutes. And then you're just basically having them trade their time and doing this very simple task repetitively.

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If you are a business owner, at some point your business will get limited by either the quality of your product or the product offerings you have, your ability to sell them, meaning you don't have enough people coming in the door, or you have both of these okay, but you can't seem to scale it because you need more people.

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And so being able to properly identify which of these things is the constraint will tell you where you need to reinvest your time to get more out of yourself. And then when you do that, you expand the lever, and then more money shoots out.

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If this video is helping make things click for you, which is, okay, I want to make the most money humanly possible, I want to model the 0.1%, and I understand that I have to build, I have to sell, I have to lead, and I multiply all of that by the amount of risk that I'm willing to take on.

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If you know somebody else in your organization or you want to share this with your employees, it would mean the world to me because I'm trying to make the world a better place through economic activity. And I believe that fundamentally, every economy in the world could be super developed if everyone had enough education and skills.

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So the first layer was global, and we figured out education technology. Underneath of education technology, it's like where are we investing that education technology? Technology around building, education around building, technology around selling, education around selling, technology around leadership, education around leadership.

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And so in each of those settings, if we invest in them, the lever expands and more money shoots out the other side. And so the final layer is environmental. And so BSL creates the money. And then that money is the output. That's the other side here. And so it's either wasted, stored, or what the top 0.1% do, multiplied. So how does build-sell-lead relate to... Education, technology.

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Well, the educational component is fairly straightforward. You develop the skills around each of these three. But what about technology? Well, if you can use technology in order to build more things faster, then you will make more money. If the thing that you build is technological and allows more people to use it, then you will make more money.

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If somebody builds a table, they will make less money than a developer who knows how to make an app that a million people can use because they're able to provide value at scale just with their own skill set. but it's the skill of using technology, so these things are very much interwoven. With sales, sure, you can sell one-on-one, but the leveraged way of doing it is using technology.

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Now, that is typically not valued nearly as highly as other skills, which is why countries will invest in technology and education. The education so that they have more skills, the technology to do three things. Technology does, number one, it allows you to do more of what you currently do.

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If you can develop a personal brand and have trust with a larger audience, then you can sell one-to-many. If you run advertisements one-to-many, you're using the technology of the platform and media so that you can get more people's attention and then ultimately convert it.

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From a leadership perspective, if you can track what your employees are doing, if you run project management systems, you can increase the output per employee by using technologies around leadership. And so in each of these sessions, in each of these core pillars of value creation, you're going to have the education,

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to use the technology to maximize your output per unit of time, and ultimately the money that you make, which is what the 0.1% do. And so with the advent of things like Copilot for coders, coders can actually write code 10 times faster than they could before. With that as our working model, Anybody who is not using technology is always gonna be at a disadvantage.

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And so if you wanna be in the top 0.1%, it means you're competing with everyone. And so you wanna use as many advantages as you can. And on a personal note, I would say that I have been someone who's been more hesitant to use technology. And I think that it has been a limiter to my success.

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It's something that I'm spending more and more time on of, okay, how can I incorporate more technology into the products and services that we build? How can I incorporate more technology into how we advertise and sell? How can I incorporate more technology into how we lead, recruit, manage people?

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Even on the recruiting side, it's like if we can have predictive analytics to figure out which candidates have higher likelihood of matching with the organization and being good long-term productive employees, then that decreased so much waste for us. And again, it increases our output per unit of time.

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And the coolest thing about education specifically, not necessarily technology, is that when you have these skills, they cannot be taken away. They can't be confiscated. They can't be stolen. And this is near and dear to my heart because my family was, or that we are Iranian, but during the revolution, we left the country and all of our assets were seized.

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In the United States, it seems like a very crazy thing that you could lose everything overnight. But in other countries, this happens all the time. The government just says, oh, all that money is ours now. All that land is ours now. Your house is actually our house now.

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But the thing is that the family members that I had who had skills and then were able to scatter all over the world, which my family is, they were able to start all over again and rebuild what they had lost. The ones who didn't have skills and only had the few assets they had struggled a lot and still do to this day.

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So that switchboard person, if there wasn't a conveyor belt in front of them, wouldn't be able to do nearly as many of those things as someone who did. The second thing is that technology allows you to do what you can already do even better. And so think of both of those in terms of units of time, because remember, this is one of the key inputs that everybody has that's even.

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So BSL creates the money, and then that money is either wasted, so it goes off the map, it's stored, meaning it basically stays the same, or what the top 0.1% do is it's multiplied. And the way that they multiply it is they either buy stuff or they lend. So you can only do two things with money.

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You can give it to people and then they give you a little bit more of it back in the form of debt, or you buy stuff with it that either goes up in value, sometimes it can go down, but the hope is that it goes up in value and it produces an output. So an example of the storage would be I buy a brick of gold. A brick of gold does nothing and it's speculative in that

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We hope that somebody else in the future will pay us more for that brick of gold. And no matter what currency I have, I can trade gold for euros, I can trade gold for Bitcoin, I can trade gold for US dollars. It doesn't matter, it's a store of value. And as far as we've had in human history, people still value gold. Now, you could take

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all of the gold in the world and this is a warren buffett example you take all the gold in the world and put it in the middle of a baseball field and it would be about as tall as the stadium and be a big round globe it doesn't matter what you do to that big ball of gold a hundred years from now it'll still be a big ball of gold but if you took that same amount of economic value and you invested it through buying you could buy all the farmland in the united states and about 13 exxon mobiles

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And so the amount of money that those farms and ExxonMobil would spit out every single year over that 100 years would be at least greater than zero. And so in that way, this is how this loop of wealth gets spun. And so when you are buying or lending, you're either lending to people who are doing BSL and the risk that you incur is that they don't actually succeed and you never get your money back.

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you're compensated for the risk based on the interest that you charge for them. So you basically sell them money for more money later. with buying the assets, what you're doing is you're buying a percentage or the entirety of their build, sell, lead. Now if you recall earlier, I said this is all multiplied by risk.

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And so as a result, you get to have an outsized percentage of what other people are doing to build, sell, and lead. And then this gives you even more money over time. In understanding this, this is why I built acquisition.com the way I did, which is we have these companies,

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that generate money and then that money either goes back into the company to make it a bigger company or it goes into buying another company that generates money. But then this process repeats itself over and over and over again and it compounds unto itself. So no matter how big you get, you can keep reinvesting all of that money, and then it's a percentage-based growth.

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Whether you're in the richest country in the world or the poorest country in the world, every single person has the same 24 hours. And yet some countries massively outcompete other ones, just like some individuals in every individual economy massively outcompete people within them, which we'll peel back in layer two. And so imagine you have two different sets of people.

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So whether it's a million dollars growing by 10%, or a billion dollars growing by 10%, you're still growing 10%. But the absolute amount of what that 10% is is $100,000 versus $100 million. And so if you're the individual,

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You can take this money and you can invest it in people who are going to do build, sell, lead in your company where you take on more risk, which means that you get outsized returns on the investment in the people that's within an organization. You can buy a slice of an organization of all of those people and not have to necessarily do anything.

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That's what the public markets are more or less all about, or investment funds do. Or, at the most micro level, you could just take that money and invest it in yourself by buying skills. And what does buying skills even mean? It means you pay someone to give you feedback on an activity such that you can replicate the outcome that they can already do. Fundamentally, that's what buying skills is.

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And so you find someone who has the skill that you want and then you offer them money so that you can continue to do the activity in front of them until eventually you replicate the outcome that they have because they have taught you the variables that they use to recreate that skill. And once you can do it without them and get the same outcome, then you have learned.

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And so if we're thinking about this in terms of levels, You can have a piece of a company, you can have people that you hire in a company, or you can put that money into yourself. But all three of these are going to relate to BSL. Build, sell, bleed. And to what degree is the risk that you take on? So, buying a piece of a company would be probably higher risk.

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A little bit less risk would be bringing somebody in and paying them. The lowest risk is going to be investing in yourself. But here's where it gets kind of interesting, is that when you invest in yourself, this can also give you all of the skills that you need to do all of these things better.

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Which is why, and I will continue to hit this until the day I die, you will always be the best investment. And so you want to max out this bucket to the greatest degree possible. And the limitation that you will have when you do reinvest in yourself is the time it takes to learn the skills and how many skills you can learn.

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But at any given time, you should always be spending as much money as you can to buy the most valuable skill that is constraining your growth.

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And so if you look at build, you look at sell, you look at lead, you figure out the one that's limiting you the most, and you put as much cash into that thing as you can, you pay every expert you possibly know or don't know or need to know in order to get what you need to move forward.

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If I could isolate one decision that has changed my life forever was the willingness to invest my money in the potential to learn a skill from someone who is further ahead than me. And I will probably do that till the day I die because I have gotten better returns on that money than anything else in the world. So building and selling, that feels relatively straightforward.

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You've got 100 people on one side and 100 people on the other. And the 100 people on one side have electricity, Wi-Fi, internet, computers, like just that, versus the others don't. Well, which one's going to produce more economic value? Obviously, the one on the left. Not because... These people are inherently better than the others. They just have technology on their side, right?

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You learn how to code, you learn how to make a service, or you learn how to advertise, you learn how to sell. But how do you learn how to lead? Well, I think an important part of this is learning how to orient behavior in a specific direction that yields the highest returns. And when I say orient behavior, I mean the behavior of the people who work for you or work alongside you.

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Strongest way that I have been able to get better as a leader is by eliminating wasted communication. And so what that means is both internally amongst themselves, but also from me to them. And so that means that I think the vast majority of people are very ineffective communicators, is that they say many words and most of the times they don't even know what they're saying.

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And I'll give you an example. So I had a director a couple of days ago who came up to me. They wanted to reconcile, this director was over at a department, and they said, hey, one of the people on my team has basically complained that somebody who's a direct report of mine is doing this issue. And so I said, and I'll tell you the words that they said.

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They said, I'm here because I wanna bridge the gap between this department and this department, and I wanna support the growth and the overall initiatives of the business. And all of those sound like wonderful corporate words, But I looked at the person and I said, what do you want to have happen? And they kind of looked at me differently.

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I said, what behavior are we currently doing that you would like us to stop doing or something that we're currently not doing that you would like us to start doing? And so what's interesting is that when that question was posed to the individual, they actually didn't have the answer.

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And so this is very common, is that someone will know that there is a problem, but they will not come with an intended change in behavior. And so you have to take that extra next step and say, okay, there's a problem. What potential changes in behavior on my team or someone else's would need to occur in order for us to decrease the likelihood that this problem happens again in the future?

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And so when you frame things from what would I like to occur, what would I like to have happen as a consequence of this conversation, you'll find that many conversations don't need to be had to begin with because most people don't even define that. And so they basically just make face noise at each other for 30 minutes and call it a meeting. But no one actually changes what they do.

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And so if you don't change what you do as a result of communication, it was wasted. It literally took effort from both people, time from both people, and then no change occurred. And believe it or not, this is the vast majority of people in the vast majority of companies, which is why the biggest threat to big organizations is waste. And so if you want to lead,

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You need to learn how to communicate clearly what you want someone to do, what you want them to stop doing, or you want them to do instead. And by defining it in those terms, it cuts away a lot of the ambiguity. I had a meeting not that long ago with a different person in the company. And I said, I don't understand what you do.

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And so we have to think about ourselves from the country all the way down using the same tools. So at the first layer, the wealthiest people in the world, the 0.1%, invest in gaining skills, buying technology, or learning skills to use that technology. Now, if you're hearing this, you might think, like I would, well, cool, that's great for them, but what about me? So that enters into layer two.

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Now, most people you could imagine would be terrified by this question. But I said, I'm not intending to intimidate you. The point is that I actually don't understand and I'm seeking clarity. one of the first things the individual brought up is, I do a lot of this research so that I can better understand X, Y, and Z. And I said, what does that change about what we do?

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And the honest answer was, it hadn't changed anything about what we do. And I said, so then if all of this time that you spend researching doesn't change our behavior, you don't need to do it. It is a waste of time.

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And so just like I could measure the temperature in the rooms when I record them, and I could measure the temperature of every room that I walk in throughout the day, just because I can measure it doesn't mean it's going to change anything. And so many people spend a lot of time trying to, quote, understand, but the only way you will get a return on that understanding is by changing what you do.

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And so finally, after several kind of peeling back the layers, I was able to say, you do this, this is what you do. You click these buttons, you do this stuff. Okay, and then all of a sudden the scope of what this person's role was went from this to this. And I was like, these are the only things that drive economic activity.

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So how do we get you to do more of these things, do them faster, do them better? That is the question that we need to answer together. And by doing this, it just melts away a lot of the pretense, a lot of the corporate jargon. And so if you get into a conversation with someone and you don't know what they're saying, don't assume that you're dumb. Assume that no one knows what's going on.

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And I think that if you seek clarity and you seek truth, then you will ultimately find the best outcomes rather than seeking agreement. And if you enjoyed this video on what the 0.1% wealthiest people invest their time and money into, then you're going to love the video that I made on leverage. It's the number one video on my channel. It's basically how to go through a wealth warp of time.

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So if you zoom all the way out, the top 1% of countries in the world do things differently than the rest of them. And we can measure the productivity of a country by something called GDP, which is gross domestic product per capita. Now, the per capita part just means how much total production the economy does. So just think revenue, think sales, and then per capita is per person.

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It was one of the first presentations I made before I became public. Basically a consolidation of many of the thoughts that I had that created the generational wealth that my wife and I have been able to experience. I hope you enjoy it. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

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and across all eight functions of the business so you've got marketing you've got sales you've got product you've got customer success you've got it you've got recruiting hr you've got finance we show the problems that emerge at every level of scale and how to graduate to the next level it's all free and you can get it personalized to you so it's about 30-ish pages for each of the stages once you enter the questions it will tell you exactly where you're at and what you need to do to grow

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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So let's zoom in on that. What are the skills that actually create the production at the individual level? So instead of global, now let's talk about that per capita, that person, just like you, just like me. Now, how do the 0.1% actually create that gross domestic product, that gross production, that revenue that then gets categorized for the entire country?

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Well, there are three skills that I'll call BSL, and then they're multiplied by something that I'll use as R. And you're like, what do these all stand for? Well, the first thing, category of skills, is around building. You make stuff. You either build bridges, you build software, sometimes building is putting together things so that you can do services, but you build stuff.

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The second is you sell stuff. The third is you lead people. And these also chunk up, if you want the fancier terms here, to mechanical, verbal, and social skills. So these are the three overarching categories that skill development, as it relates to GDP, can get bubbled up to. Now, to be clear, each of these skills are not binary.

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It's not, oh, you know how to build, oh, you know how to sell, oh, you know how to lead, but it's how well can you build, how well can you sell, and how well can you lead? And so with each of these, they create leverage, they get you more for what you put in, specifically time, because if I build something, then I can have many people use it over and over again.

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If I learn how to sell, I can sell many people at once. If I learn how to lead, I can get many people inside my company to do many things on my behalf.

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And in each of these situations, that one person starts to accumulate the aggregate production of everyone else that touches either the thing they built, how they got people to exchange money for it, or the people that they were able to lead to deliver. And the outcome of all of these things is the big thing that everyone cares about, which is money.

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The longer that this lever gets, meaning if I get better and better at building, then more money happens on this side. If I get better and better at selling, more money happens on this side. If I get better and better at leading, I can pull this lever with more leverage and get more money. Now, what do the richest people in the world have in common?

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Well, not only do they have one of these skills developed out a lot, many of them have all of these skills super maxed out. So let's zoom in on some of the biggest financial success stories of our time. So if you look at Zuckerberg, for example, who's the founder of Facebook, when he started, he probably mostly just had build skills.

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But those build skills were enough that eventually he learned a little bit more about promotion. He built some promotion into the product, which allowed him to get more and more people on. Then, over time, he developed leadership skills so that he could lead the company. And it's very common that building and selling happen in the beginning, and then leading develops over time.

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Because in the beginning, who are you going to be leading besides yourself, right? Not many people. And this skill naturally will develop in time, but it gives you more leverage on the other two. So let's get tactical on build. So in this book, 100 Million Dollar Offers, I talk about the concept of trimming and stacking.

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And so this allows us to normalize different countries that are big countries versus small countries and see how much the individual is making. Now, the reason this is so important and why we start at layer one global is because if you even out everything, you will be able to see the strongest levers on wealth creation because they're just done in aggregate.

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So it starts with looking at all the different problems that a customer presents with, and then thinking, okay, how many different ways can I solve them? And so I use something called the delivery cube to say, okay, if we have this one problem, how can I solve this by thinking about what level of personal attention I want to provide? What level of effort would be expected from them?

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If doing something like, what kind of environment or medium do I want to solve this problem in? How do I want these people to consume my solution? How quickly do I want them to get a response or get their problem solved using my services or product? And then if I were to create a product that was 10 times as expensive, what would that look like?

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And if I had to create a product that was 1 tenth as expensive but still had to produce the same outcome, how would I build that instead? And so this is a wonderful framework that I like to think through and also wondering, is there a way that we can psychologically solve a problem rather than simply logically solve a problem?

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And Rory Sutherland talks about this when he explains that some people used to complain about having slow elevators. You could either replace the entire elevator system, put a bigger motor in and try and get people there faster, or You can just put mirrors in the elevators and then people stare at themselves and don't notice the time pass.

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And so that would be a psychological rather than logical solution because customers are by and large illogical. And so we want to make sure that the solution that we have solves the problem. And sometimes it's not even in the way that you'd logically expect.

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Now the way that this problem-solution cycle actually works, which I talk about in the Leeds book, is that you're going to have one problem they present with and then you're going to solve it. And then what happens is that creates yet another problem. Because let's say that you solve someone's hunger problem with a salty pretzel.

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Well, what solution comes up naturally or what problem comes up naturally? Well, now they're thirsty. So then you solve that with a glass of water or a soda. And so this cycle continues and continues and continues. Now, once you've solved those two problems, what's the next problem? Well, now their dessert stomach is empty. So we have to present them with a cookie, right?

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And so there's always, if you properly solve a problem for a customer, there's almost always another problem that gets presented as a result of the solution. And the main reason for that is because people are never satisfied. And so over the span of many years, a good builder will develop an ecosystem of products that solves many customer issues at once.

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So if you look at Apple, one of the most valuable companies in the world, if not the most valuable, it's not just that they have one product. They've built an end-to-end ecosystem that's closed so that someone can use just their products and solve most of their digital needs. They've got a browser. They've got computers. They've got a phone. They have music where you can buy the stuff.

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Everything is interconnected. But if you're like, oh, I'm going to build that, well, that also took them 50 years or however long it's been. So, this stuff happens over time. So that covers build, but what about sell?

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Well, selling is about the perception of the prospect, which is that fundamentally, you might have the best product in the world, but if they don't perceive it to be the best product, or even know that it exists, then there's no way that they're ever going to use it. And so we want to make sure that we can communicate that value to prospects ideally at scale.

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And to be clear, within each country, of course, there are some people that get way more of that slice of the pie than others. But even at the global level, there are some countries that get more of the slice of the pie than other countries. And so, for example, the United States has the largest GDP in the world and Tuvalu has the smallest. Now, per capita, it shifts around.

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So the simplest lowest leverage, so think about this thing shortening, the lowest leverage version of selling is selling one-on-one. You sell somebody in person, you sell them via chat, you're just selling and you're closing one customer at a time. Over time, you increase the leverage of sales by either you selling more people at once

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or getting through leadership, which I'm getting ahead of myself, getting other people to sell on your behalf. But in either situation, you gain more leverage on the amount of people that find out about your stuff and ideally shift their perception of it so that they want to buy it again and again and again.

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And when I talk about sell, I actually talk about everything that takes someone from completely unaware to giving you money. All right, so that's all of acquisition. So that's advertising, marketing, sales, branding, promotion, and conversion, as in getting the person to buy.

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And so the easiest way, or the most important part of this, is what I would call the call-out, which is people noticing your ad. And when I say ad, I mean if you reach out to somebody that's in advertisement, you let people know about your stuff, is the most important part. I love this quote by David Ogilvie. He says,

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after you've written your headline, you've spent 80 cents of your advertising dollar, which just goes to show that that first impression is the part that, one, I test the most and the one that will shift their perception the most, which is also part of something called framing.

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And so how you position, again, how people perceive, the reason the intro of a video is so important, the reason the intro of an ad is so important, the reason the moment you introduce yourself, how you introduce yourself is so important is because it frames everything else that happens afterwards. And so let's imagine that you're at a cocktail party in a big ballroom.

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Lots of people talking in groups, loud music playing in the background. In all that noise, a single sound pierces through it all, and you turn around. You want to know the sound? Your name. You hear it and instantly look for the source. And so a call-out is whatever you do to get the attention of your audience.

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Call-outs go from hyper-specific, to get one person's attention, to not at all specific, to get everyone's attention. Let me explain. So if someone drops a tray of dishes in that ballroom, everyone looks. If a child yells mom, then all the moms look. If someone says your name, then only you look. But again, they all get attention.

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And so we want to make our callouts specific enough to get the right people and broad enough to get as many of them as we can. And so with each of these skills, you will typically start narrow and go broader. Facebook, when it started as a product, was very narrow, and then it just started with college students, and then it expanded to high school students, and then it started going to adults.

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When you sell in the beginning, you're just going to advertise to a very small niche, as tiny as you can, mostly because you can't compete in the ocean. You're not a big enough fish yet, but you can win in the tiny pond, or maybe even a puddle. But then over time, as you get better and bigger, you can expand the breadth of the people that you choose to target.

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And so you will always convert a higher percentage, not absolute, but percentage of an audience by being more specific. And so the easiest way to figure out what your customers want to hear when you're advertising and selling to them is to simply ask them. And if you want to be a super advanced student, go look at user reviews of all your competitors and figure out the things they complain about.

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And then talk about those pain points and the things that you want to attract them with. Now, the 0.1% know how to build things, then how to let people know about it and get them to give them money for it, the second core skill here, which then leads us to the third skill. Because once you're building and selling and building and selling, you're probably gonna need help.

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Luxembourg is actually the country in the world that has the highest GDP per person, so 151,000. Now, I'll give you an example of number two, which is Singapore. They have the second highest GDP per capita and is also the home of Michael, who's our media director. And the reason they were able to do that is because they invest these countries in two major categories.

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And that enters into leading. So these are the social dynamics. The reason I think leading is arguably the most important skill, besides learning, is that it is a meta skill. It gains you access to everyone else's skills.

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At its most basic form, if you were the best leader in the entire world, you would be able to get the best builder and the best seller to come work with you and align with your overall objective. I consider building, selling, and leading to be the tripod of business. You must have all three. They are the tripod of business. You must have all three.

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Now, you can be imbalanced and have a stool that looks a little bit weird. But if you don't have one of these legs, this thing's gonna fall over. And so you must have all three. Now the extent to which you have all three will dictate how much money you're able to make.

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So if you can only sell and you can't build and you can lead, then you'd have a bunch of people who are really good at selling something terrible. So this would be like the Wolf of Wall Street's business. So what he went to jail for. And so that is basically lying at scale, not good.

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If you just build and no one finds out about it and you're good at leading, for example, then you'll just have this thing that's sitting in your garage that you promise is amazing but no one knows about it. And so if no one knows about it, no one can buy it. And on the third extreme, and this is why this one's a little bit more interesting, is that if you could lead

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And somehow you found a bunch of people that no one in the organization knew how to sell or build. This is why this is a meta skill. Then, well, really nothing would happen because you'd have nothing to build and no one would find out about it. And you just have a lot of people that were somehow organized around doing nothing. And so these are the core things that actually generated the activity.

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The leadership aligns those activities in one direction. So fundamentally, every single time you're considering bringing someone into an organization, and this is what we're thinking about, like either you are the person getting brought into the organization or you're the person that owns the organization, but we're talking about the 0.1 wealthiest percent of people.

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And this is how they think, which is that every new person needs to support either selling more people or making them worth more through making the product better. The sad truth of it is that every new hire is a guaranteed cost, but is not a guaranteed return. And so unless they are building or selling, they must support the activity of building or selling, or they are waste.

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And to give you a classic example that's been touted a lot is Steve Jobs, the late great Steve Jobs, was a very good leader. Now, a lot of people say that he was tough, but they say that they did the best work of their lives when they worked with him. And so it's commonly stated that Steve Jobs didn't build the iPhone. He built the team that built the iPhone.

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And this is why it's such a high leverage skill. And this is why it's a skill that the 0.1%, if you look at the top of the Forbes list, all have this. So that's fundamentally why it's the third bucket of the biggest skills that generate the most money. But if you're like, huh, is there any other variable that dictates how much the 0.1% make?

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Well, I'm going to give you the advanced one, which is all of this is multiplied by risk. which is the risk that you're willing to take on.

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Number one is education, and number two is technology. And so if we think about this at a global level, which I think is important, is what are the inputs that every country has that's even? The inputs are time and bodies. And so at the very basic level, Anybody at all these countries at level zero can do menial labor, which is basically things that have required no skill to do.

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And so whether you're an employee of a company or you're an owner of a company, there is a risk that you take on for the building, selling, and leading activities that you do that generate the economic activity that gives you the percentage of the production out there. If you're willing to take on more risk, this is a multiplier on all of these skills.

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So if Steve Jobs, and I'll give you, Steve Jobs is a perfect example. When Steve Jobs had the company when it originally went public, he owned 15% of the business. He ended up leaving for a period of time, starting Pixar, and then he came back like 10 years later. When he came back, he was gifted a much smaller percentage of the company. Now, here's where it's crazy.

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Five business lessons that I just learned, crossing 250 million in 2024. So the first one was the cost of change. It was the first time that I've actually quantified how much does changing something in the business actually cost? So if you would imagine a straight line, right? It's saying, okay, this is normal business activity, right? Straight line is going across.

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And so what's ended up happening is that there's all these little 5%, 5% little improvements that I think could happen, but there's only like one or two, 20, 30, 50% plus improvements I think we can do in the business. And so what happens is some of these things I just choose to never do. And I'll try not to stay explicit here, but some stays...

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And then number two, if you want to scale, make sure that your LTV to CAC ratio is appropriate for the level of leverage that you have within your existing business across all three functions. So you might be wondering, why doesn't the ratio still cover it for a super manual business versus a business that's entirely automated? The main reason is lumpiness.

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You have to bring people in for outbound that are not gonna be proficient. So you're gonna have to incur the cost of new SDRs that either aren't gonna work out at all or aren't gonna work out in the beginning and then eventually gonna work out. So you have to incur that cost. But imagine incurring that cost and then also incurring the cost of new salespeople.

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who are actually gonna be trying to convert those prospects and they're gonna suck and they're gonna lose opportunities. And so you're gonna be paying them while they literally close fewer sales for you. So you lose twice. And then also sometimes you spend all this money and time to get them hopefully to be proficient and then they aren't. So they just lost you money three different ways.

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The third component of this is the delivery piece, which is like, okay, I'm going to have to onboard and hire all of these other people. And if you have anything that's like higher expertise, then forget about it. It's going to take even longer for you to both find these people and then also to train these people up. But again, recruiting itself can be a super expensive task.

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Like there's recruiting firms. And if you want to recruit a high level person, it usually costs you 25, sometimes 30% of their first year pay. And if you're paying someone $300,000 a year, it's like, You're going to pay 80 grand just to get somebody, let alone hope that they're proficient and you still have all this onboarding.

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So you have this lumpiness of people that aren't going to be effective. And if you're at three to one, boom, you're done. Like that three to one disappears real fast. It's like you have this lumpiness of like, okay, boom, we got these new SDRs in. Okay, now this is coming back up, but then this starts growing down. So now we start at 20 to 1 or 30 to 1, but it's more like a wave.

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It undulates with the efficiency of the business and how stable it is as you're scaling. And the faster you're scaling, the more inefficient it's going to be. So that's why you need to have as much as you can in terms of LWD CAC. It's padding. The third piece here is that we just went over it, LTV to CAC. One, we wanna make sure that we're doing this off of gross profit, not revenue.

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And secondarily, we wanna make sure that if we are highly leveraged, then we can be at three to one. But if we're low leverage, we wanna be at 20 plus, 21 or higher. And again, this sounds crazy and unrealistic for a lot of people. I get it. Fine, at the very least, be at 15 to one. Please, for the love of God, I promise you it's possible. You just have to work on it longer than you expect.

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Which brings us to number four, let's dive into it. Number four, I've said a lot about this, which is that the one to three million area is a huge swamp, right? We call it the swamp, at least at acquisitions.com. And why is one to three million so hard? Now, we've noticed that it's hard, but we're like, why is that range hard?

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Now, for those of you who are like, this is not real for me, I'm just trying to make my first $10,000 a month, just keep listening. Because believe it or not, some of these things will apply to you. So if you're at one to three million dollars, why is this one of the hardest periods? Because usually from zero to a million, you can usually do it with like you and two, three people.

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It's not that hard for you to keep track of the team. You can usually run very high margins, especially if you're a sole proprietor. You're basically just selling your time, which is fine, right? You don't need to obsess about your passive income before you max out your active income. Good idea. By the way, a lot of billionaires, very high active income, FYI.

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Anyways, as you're scaling up, that first 500, 800, sometimes million dollars a year is actually in some ways somewhere more profitable than the next two, three, four million, because you have to install this level of infrastructure, because you're like, I just can't do it anymore. Now, you can always just keep jacking prices, and that's fine, and I'm a big advocate of that.

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You just have to accept that the business will not be perfect, but your chase of perfection will actually make your current business worse because you're constantly changing things. But let me spell this out one more level. So let's say you have your 20% loss, right? Now, let's say you do something that is good, right? You start going up, right? 20% loss, it starts going back up.

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But if you're like, no, I think this is the price that I wanna service at, and I wanna do more volume, then you're gonna have to put in more infrastructure. But this is the math that I just realized is why it's so hard. So let's say you've got a $2 million business. You're right in the middle of the swamp, okay?

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And you probably noticed, anecdotally, for those of you who are kind of like in this business world, there's a lot of people in the $1 to $3 million range. Like a ton, a ton of businesses. To be fair, does that mean they're making $1 to $3 million in profit? Which means they're doing $1 to $3 million in revenue. Big difference. All right, but let's say we've got a $2 million business, okay?

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And let's say that they're doing... 20% margins, all right? So they're doing $400,000 per year in EBITDA, or profit, okay? So we have $400,000 here. Now, here's the shtick. At this point, for the business to evolve, for the business to level up, the entrepreneur typically has what I would consider an impossible choice.

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You have to choose one of two things, and sometimes the option is both, which is path one, instead of getting more help, I'm just gonna work even more. I'm gonna go from 12 hours a day to working 16 hours a day. I'm gonna stop taking weekends off, and I'm gonna basically get through this hump so I can push my way to $10 million a year, which you can do. It is hard.

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or I'm gonna bring in somebody who's gonna help me get there and I'm gonna maintain a relatively long schedule, but still, you know, not the same as working 16 hours, seven days a week. Those are the kind of the two impossible choices, which is like other person. Here's the tough part.

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If you have $400,000 in profit that's left over, if you wanna bring in a stud who's gonna really help you there, you're probably gonna be looking at $250,000 per year in all-in comp, kind of at a minimum, to bring somebody who's a real star into the business. Let's look at that in comparison to what the profit is for this business.

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You're looking at risking more than half of your income on one person with the hopes that it's going to work out. But what happens when this person comes in and then they aren't that good? They don't expand your capacity. It's like, well, shoot, I just lost half my profit for a year and then I'm still not further along. This is why this is the swamp.

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And I've just spent a lot of time thinking about that because I was like, why is one to three million dollars so hard? You need the help, but you don't have the money to afford the help. And so you either just got to go overdrive and go nutso mode, right? Or you make a huge bet proportional to what you have in terms of net profit to bring this person in. And that's why it's so hard.

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And so if you're in the swamp right now, my encouragement to you is this. I have almost always been the, like, I'm going to go into overdrive. And... I'm going to hire the person.

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Because the idea is, what if I just do things that are more unscalable but still generate higher profits for the business so that I can afford to take two or three shots with somebody else who's coming into the business knowing that I'm not going to get it out of the park on the first shot. I mean, if I do, I'm stoked. But I want to win either way.

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But what happens if you at the same time say, oh, well, now I'm going to start changing something else, right? And so basically you incur this permanent 20% decrease because you're always changing something. So you're always 20% below where you should be in the business. 20% is a lot. Oftentimes in the business, my business has done exceptionally well when I just let them breathe.

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And so either I'm going to win with more profit faster or less profit slower, but I want to make sure that I'm guaranteed to win. I kind of do this as a plus strategy.

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scenario so if you happen to be in that one to three million dollar range it's something that we know obviously a lot about with acquisition.com and we put together a scaling roadmap so when we looked at our whole portfolio and the companies that we've worked with over the years we're like what are the things where do we get stuck and how we get unstuck right and when we put it all together on a map what we realize that it actually isn't by revenue

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It's by head count. You might be doing one to three million dollars a year and be here, or you might be doing one to three million dollars a year and be at level five product size, right? So it really depends on the nature of the business that you're in.

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You want to know what level of the scaling roadmap you're at, and more importantly, what things we've done in the past for businesses of this size or at this stage to get to the next level, then you go to acquisition.com forward slash roadmap. You put in your business information and it'll spit out and it'll help you figure out what stage you're at so that you can get to the next level.

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On the thank you page, if you would like our team to help figure out which stage you're at and those specific steps and personalize that, we'd love to invite you out to Vegas. You can book a call on the next page. And if it's a fit, love to see you. And then the fourth thing we just covered is why one to three million is the hardest. And the main thing is cash flow and time.

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You don't have the time and you don't have the cash flow to do more work, but you have to in order to grow. So either you work overtime or you bring someone else in to work overtime or you do both, which is what I recommend. And that means it's going to be hard, which is why most people stay stuck. So that's number four. Number five. So 2024 was probably the first year that I didn't have FOMO.

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So fear of missing out. It is the hardest part of business is staying focused. It's the hardest part. The reason you hear Bezos talk about it, you hear Zuck talk about it, you hear Jobs talk about it, you hear Elon talk about it. You have to be incredibly focused on what the points of greatest leverage are in the business.

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The reason that this was a big lesson for me, not the focus part, I obviously talked about that, but I was like, why was this year different? Why was this the first year where I didn't have FOMO? It's actually because the idea of rush is where the fear of missing out comes from.

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It's the arbitrary timeline that I set for myself that I just grab from thin air and then I measure myself against this thing that I made up to make myself miserable at all times from whatever success I'm achieving. In thinking about that, I've coined the term for myself which is that rush is imaginary. It's made up. It's completely made up.

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There's only one caveat that I'll make to this, which is, and if this is you, you probably already know, if you have a business that has a tremendous network effect, and there's a very small amount of people, or even a big amount of people in that network that you're trying to gather towards, then yes, it's likely that you have a winner-take-all business model, and in which case, you've probably already raised a ton of money, and you're probably trying to aggressively grow to capture that network so that eventually you can turn something into a profitable business.

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Fine, for everybody else who's not running a tech platform that's trying to build a network effect of some sort, you don't need to rush. There was Ani, actually I don't think her episode's come out yet, but anyways, I'm gonna give you a sneak peek. So I was talking to Ani Truong, and she has nail salons, okay?

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And so she has one core nail salon that worked really well, and then she decided to partner with other people doing like three or four other nail salons. And the biggest issue she has for growing right now is that her partnerships are kind of a mess. I'll just put it like that. Why did you do these partnerships? She said, because if I had more locations, I'd make more money.

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Because here's the other part that no one tells you. If you change nothing, you get about a 5% guaranteed improvement. Think how crazy that is. If you change nothing, you just 5%, you can book it. Think about GDP. Partially, some people are like, oh, that must be, you know, that could be in relation to education, which in the U.S. it certainly isn't.

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And I said, why didn't you just make more money with your existing location, save up the cash, and then open a second location all for yourself? The thing that I kept trying to tease out of her is I was like, she was just in a rush. Like that was the reason. She was just in a rush. There's no actual reason for have three or four other different random partnerships with each of these locations.

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And the thing is, is that some of you guys are, you do this. There was a guy who was here at our headquarters yesterday. He has a TikTok shop management thing, right? Where he just like helps people start their TikTok shops for e-commerce businesses. And he was like, but I also have this brand that I started on my own using TikTok shop and it's doing really, really well.

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But I also want to start investing in, and I'm like, dude, what's the rush? And so the counteraction, like how do you counter the rush? How do you counter the rush? And I think the way that I have countered the rush is to look at the people who have the ultimate version of my business. Who are the people who are 20 years ahead of me? What do their businesses look like?

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And what's interesting about this is that the vast majority of them have one massive business. And in seeing that, I was like, huh, almost none of them have multiple massive businesses they started. Elon is, of course, the one exception that everybody wants to bring up. And if you're Elon, you already know how to speak alien, so don't worry about this video.

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But for everyone who doesn't know how to speak alien, for people who haven't just generated $100 billion in a year, if you haven't done that yet, then maybe consider every other person on the Forbes list that just did one thing for the entirety of their career. And it's like, Bezos has Blue Origin.

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Yeah, after 35 years of Amazon, you've got Mr. Panda, still doing, he's like, but wait, he owns the Cosmo. Yeah, but he also did that after 45 years of Panda Express, and Panda Express is still his cash cow. Okay, I've got this restaurant, it's working well, so I'm thinking about starting this agency, right, to help restaurants. It's like, dude, What does the ultimate version of this look like?

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The ultimate version of this looks like either you go all in and you build an enterprise agency that only works with very large restaurant chains and those tend to be sticky and those tend to be valuable businesses. But if you're like, well, I'm only dealing with small SMB restaurant owners for my agency, show me one.

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One, agency that service SMBs in that $1,000, $1,500, maybe $2,000 a month mark, who has a $100 million plus business, even just like revenue. Just show me one. Why doesn't it happen? Because it's a bad model. Every single agency goes upmarket and they serve enterprise and it's become really big. Look at Ogilvy, look at Vayner, look at NP Digital.

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All of these are massive, massive companies that only serve as really the Fortune 500. Why? Because they're sticky. Because if you have volatile customers, you have a volatile business. If you have a volatile business, you're not gonna be able to weather the storms. If you can't weather the storms, you're not gonna last long. If you don't last long, you're not gonna get big.

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How do you counteract the idea of rushing? You have to look at the end state of the business. What is the ultimate version of my restaurant look like? It might be 2000 locations nationwide. What is the ultimate version of my agency look like? It might be Ogilvy and Mathers, right? It might be we're doing $5 billion a year. And let's look at the number one person in space.

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It could be in relation to technology in terms of GDP improvement, or it could be an increase because of population, which in the U.S. there's no population increase, or not really. For me, I just kind of see that across all businesses that if you just let people do stuff, they just get better at it, right? People get more efficient at it.

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What is the ultimate version of my lawn care business look like? Maybe it's a franchise. Maybe it's you privately hold it. But no matter what it is, it's probably not three different businesses that you're trying to start all at the same time because you're in a rush. Because the thing is, is that rush is what guarantees you're never going to get big.

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And I'm saying this because this is something that has plagued me my whole career. And so it's just this last year was the first year that I didn't have FOMO. And I was like, why is that? And I just think that I've just failed and messed it up enough times to be like, I just have to stick with one thing. And here's the part about this. You have to accept that you can't sleep with every girl.

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We can't date every guy, whatever your preference is. The point is, our life is so limited. We just don't have that much time. If you want to do big stuff, you just don't have that much time. Because of that, it's like you just have to accept the fact you just got to pick. And you could have had four other timelines where you could have done each of these other things all the way to their extreme.

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But the likelihood that you're going to do all four of those to the extreme when you start all four of them at the same time is zero. It's not going to happen. The first, business is built on hard choices. Business is built on the amount of no's that you're able to make. If you can't say no at the beginning of like, I'm not going to just pick one of these paths, right?

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One of my favorite little definitions of deciding comes from the Latin, decadere, which means to cut off. Like if you want to decide, you have to cut off, you have to eliminate things. If you have three different paths or four different things that you're considering, pick for the love of God.

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And the reason and the thing is, is that you have made up some number because some person you know makes a certain amount of money or some person you know, you're thinks that this amount of revenue is cool. And so you're like, well, I want to be cool, so I want to hit that amount of revenue.

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And because you don't know how to grow the business you're in, you only know how to get to $100,000 a year, you only know how to get to $1 million a year, you only know how to get to $3 million a year, then your way of growing is doing more $3 million businesses when the reality is that you have to confront, why is my $3 million business not a $10 million business?

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And you have to figure out that problem. That is the hard work. I talked to a lady yesterday. She was stuck at a million dollars a year for 10 years. I said, why haven't you gone to $3 million a year? Like, what stopped you? Because she had a very clear motto. I was like, why don't you just double how much you're doing? And she was like, well, it's a pain. And I was like, oh, because it's hard.

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I'll leave you one tactical framework that you can kind of use to think through this, which is, this is actually from the investing world that I've borrowed as an entrepreneur, which is called ICE, all right? And so it's an acronym, I stands for impact, which is like how big, that's that 20%, that's that 50%. How big of an impact do I think this is gonna make on the business, right?

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Because it's hard. She's like, no, no, it's not because it's hard. And I was like, well, then why haven't you done it? She's like, well, it's just like, it's just like, it's inconvenient. And there's like, it's more, it's more time allotment and all this stuff. And I was like, yeah, that sounds like hard. Sounds like hard.

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It's hard for us to hear that we're not willing to do hard things because the hard changes. So the hard is constant, but the nature of it changes. Just like suffering as a human being is constant. It's not gonna go away. There's nothing wrong with you because you're suffering while you're in business. It's just that the nature of the suffering changes. In the beginning, no one knows you exist.

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And that's tough because you feel ignored and irrelevant. And then you start to let people know about your stuff. And then as soon as that happens, you have a different kind of heart, which is that no one wants to give you money. And then all of a sudden, people start giving you money. And then what happens? Then people start complaining because your thing's not that good.

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But all of these things are hard. And so we have this idea that it's this rocky cutscene that we're going to be fighting. It's like we've got to just keep gritting through it. But it's like, no, we are so equipped to save our egos. that we will come up with a hundred ways that our hard is not hard. It's different because we're special, right? But the reality is hard morphs.

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That's what makes people get stuck is because they learn how to conquer one hard, but not the next kind of hard. I think that a lot of the hardness is sometimes learning to say no. It's learning to focus. That's the hard part. It's not getting punched in the face. It's being willing to let one of your children die. to let the other one live. We get the Sophie's Choice.

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Now, let's imagine we want to change something, right? So that's like our normal revenue, but then we decide, you know what? I'm going to change something in the business. So what ends up happening is this little line kind of dips down. And I've estimated just for my kind of like this, again, there's no science behind this, just my estimate.

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We actually do have to do that in business all the time. And so you have to accept that there is a life in the future that you will not be able to live. And it's actually, it's honestly, it's acceptance. And this has just been a really good lesson for me. Which is like, there are opportunities that I think I could crush. And I think they're amazing. And you know what?

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I'm never going to be able to do them. Because I still have the one that I'm working on right now. And I have to continue to say yes to this. And by saying yes to this, I have to say no to everything else. These have been the five big business lessons that I've kind of learned more recently. And I thought you might enjoy them. Have an amazing day.

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And I'm sure I have other videos that you can find somewhere along here that if you like this, you'll like this.

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If I had to make, like if this works, it's gonna do this. The second is, well, how confident am I that it's going to work? That's the C, which is what's my confidence level? So I got this big thing with low confidence or this medium thing with high confidence. I'll probably take medium with high confidence, right?

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And then the third is ease, which is going to come into a combination of how many resources are we going to have to deploy to do this? And also what's the timeline that we're going to have to do this on? Impact, confidence, ease. And so we actually do this. Like I have this massive sheet that it's called growth and I have it in all caps. And this is how I like it.

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how i get my add out is i put it all on this list which would probably be the second big tactic is that i have every big idea that i want to try and i have to like get it out and spell it out and say all the things that i want to do and i just put it somewhere because the team can't handle the amount of ideas that i have and probably your team can't either you have to just like scratch that itch in some way i do it by documenting so i don't forget it and then whenever the team has more bandwidth i go back to that list and i'm like all right

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Let's order this. Which one has the highest impact? Which one do we think's gonna work? Which one's gonna be the easiest? We tabulate those together and we're like, okay, this is the one that we're gonna try. This one we know has a 30% shot or a 50% chance increase.

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That's basically thing number one and it has, I've tried to teach this down in our portfolio and also what we do at acquisition.com is that you just need to be willing to leave some things not perfect so that the business can incur as few guaranteed costs of change. And when you are gonna make a change, make sure it's worth it. So, so far, number one, we covered the cost of change, right?

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So this is making sure that you are only taking bets that have 20% or higher upside to be worth the guaranteed cost that you're going to incur. And the framework that I use is ICE Impact Confidence Ease. All right, so that's number one. So the second thing is I used to have this idea about the virality of products.

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So I've talked a lot about referrals, talked a lot about word of mouth, and I still obviously believe in that. But I would say that I've had this big pendulum swing in the very beginning of my career, you know, and especially if you're, you know, sub a million, you just gotta promote, right? You just gotta let people know about your stuff. No one knows you exist. You gotta advertise, right?

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You gotta learn how to sell. Cool. That's zero to a million. No questions asked. That's what it is. Now, to expand beyond that, I was like, okay, we kind of pendulum swing back to like, we gotta make it super viral, right? Word of mouth is the best way to grow a business. But I've thought more and more about this, and I think that it's an it depends answer. Now, there are some products

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that I get about a 20% decrease in effectiveness across any function that I'm going to change, especially if it's manual.

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that you want for sure to have people who buy and then buy again. You want them to reoccur with you, as in like if I buy a Coca-Cola product, I might buy a can today, and I might buy a can at a restaurant later this week. And so it's like, am I on a subscription? No, but I buy again and again and again. Or you have your internet, which you just never cancel out of.

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Either of those are things that are recurring, they have high revenue retention. But that is different than virality, right? That's very different. So on one level you have, does it stick? On the other level you have, do people share it with other people? This is the nuance of understanding that's kind of shifted for me this year, which is that some companies, like especially B2B,

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There's sometimes disincentives for a customer to bring in a competitor of theirs, right, if you service two types of similar businesses. They have literally a disincentive to tell people about it, like they don't want anyone to know how you're helping them in whatever way, right? So that's kind of like thing number one. you have like a negative pressure on word of mouth.

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The second issue is that not, even if you didn't have negative pressure on word of mouth, there has to be some sort of density in terms of the frequency of communication that your customers have with other potential customers.

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Now, if you split test a headline, that's different, but if you're like, hey, we're changing our onboarding process, or we're changing our sales process, or we're changing our outbound process, or we're changing our something that people are involved with, we tend to get a decrease immediately of 20% in a performance, which is pretty significant.

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So if I've got a guy who runs a metal shop that specializes in aerotech, for that guy to have very frequent communication with other aerotech companies that might use my software, my internal tech, or whatever it is that I help them with, Why is he going to be talking to competitors? And if he is talking to competitors, why would he want to share all my stuff?

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You can understand why sometimes it's not about word of mouth. And this is just a nuance of understanding that I would think is kind of my belief set is broken. Because I was very hardcore on everything can grow on word of mouth, period. But that's just not always the case. The gold standard should absolutely be revenue retention. Bar none, full stop.

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And I can say that with absolute confidence no matter what business you're in. If you're B2B, you're B2C, you want to be able to get recurring or reoccurring revenue. But the virality typically is gonna be more on the consumer side. So if you have a really good soda, you as a customer is not like, oh, I don't wanna tell my friend that this soda's really good.

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You know, I've got this shirt, it finally fits me, cool. Well, do I know other guys who are Biltmore like me? Yes. Do I have high frequency of communication with them, at least digitally? Yes, okay, cool. So I'm gonna have, there's some viral kind of coefficient there that goes in. And that applies to also consumer brands that are not tech. I wanna be really clear about that.

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Like for those of you who have, you know, the dropshipping, e-commerce, retail products, it's like you still absolutely need to have word of mouth that grows the business. There are just some businesses that are just never going to have that. And for everybody, you want to retain. So that was lesson number two.

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From a tactical perspective for that lesson, the big thing I would just wanna measure is what percentage of customers that I have at the beginning of this year that 12 months later are still buying from me. That's the metric that we look at. We have 100 customers at the beginning of the year, and at the end of the year, 50 of those people are still buying. So this is day zero, or Jan one, whatever.

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Jan one, and then December 31. How many of them are still buying? If I have 50 versus the 100, then I have 50% revenue retention. Now, you can have logo retention, which is a second nuance of this. Logo retention is, of the 100 customers, do I have 50 customers, or did I go from 100 customers to 25 customers, but those 25 customers really like me, and they now spend twice as much?

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So that's the difference between revenue retention and logo retention. For me, we look at revenue retention because that's what we care about. It's like, okay, if we just know that these 50, now that they're in, are just gonna keep paying and potentially even growing between 50 to 100 next year, this is a monster business.

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This is what we look at and we obsess over in any business that we invest in.

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Now, no matter what, you might not have a viral product for word of mouth, but if you want seven different ways that you can generate word of mouth, inside of the $100 million leads book, I've got a whole chapter on referrals, and I took out the things that were the actual best ways that I have seen from a tactical perspective.

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And so as soon as I realized that we had almost this guaranteed cost of change, which is about 20%, I was able to quantify what things were worth doing. Because if you're anything like me, I have this big list of stuff where I'm like, man, we need to improve this, we need to improve this, we need to improve this, and I have all these ideas of things that I think that'll improve it.

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So I'd say I have six kind of thematic things, or like these are things that you can do to your product to improve stick, to improve activation, to improve the number of customers who actually want to stay and continue to pay with you. And then on the other side, I have basically the tactics that I have seen work best for me and our businesses.

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And so these are things that actually drew in referrals. So I have this whole section

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on one side of referrals, two side of referrals, how to ask for them at the right time, so timing's a huge component of it, how to run referral events, how to have ongoing referral programs, unlockable referral bonuses, seven different tactics that I've used to work, inside of the $100 million leads book, you can grab them somewhere on my site or on Amazon.

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Number two is making sure that the highest priority for the business is going to be revenue retention, not necessarily virality because not all products are meant to be viral. But if you are in a business that is consumer focused or something that doesn't have one, a disincentive to share,

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and a high frequency of interactions between your customers with one another, people who have basically high overlap, so they talk to lots of people who could potentially buy your product. If these two things are, you have a high disincentive and you have low frequency, then you're just not gonna have virality in the product and you don't have to worry about it.

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But if you do, then obviously you wanna have both. Number three, I've been very obsessed with the concept of LTV to CAC. I've talked about it a lot, which is basically how much does it cost you to customer versus how much money you get from that customer over the lifespan, specifically in gross profit, not lifetime revenue.

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Now the reason I like to always delineate this, and I say LTGP, which is a mouthful, is because most of the literature that exists on LTV, so lifetime value for a customer, how much they pay you in gross profit over time, is typically written in the software world. And software tends to be virtually 100% gross margins in most businesses.

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Many businesses look at that literature and then say, oh, well, let me just say someone stays with me for 10 months, they pay $100 a month, therefore my lifetime value is $1,000. Well, that's only true if you sell information, media, or software, something that has zero incremental cost. But a lot of businesses don't have that.

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If you sell chocolate chip cookies, and the cookies cost you $20 for each of those $100 shipments, I mean, these are expensive cookies, but let's just go with it. So this costs you 20 bucks for every $100 shipment. Your lifetime value is not $1,000, so we have our 100 bucks, right, times 10 months, That's the revenue.

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What we're looking at is $80, because we have to take out the 20 in cost, times the 10 months, which actually equals $800, which is our real lifetime gross profit, which in the business world sometimes where people refer to as CLV or LTV, they all more or less mean the same thing, which is how much money you're gonna get from the customer.

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Now, I put this as a frame for the big lesson that I had, which is in the software world, the big rule of thumb is three to one. That's the big rule of thumb. I actually, now having worked with a lot of different businesses and invested in different businesses, I think there's nuance to it. So let me explain. This is actually pretty cool.

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But when I actually am honest with myself and I think, huh, how much is number one gonna actually improve the business? If I say, well, I think I'd maybe get us a 5% improvement, Well, if I have a guaranteed 20% decrease or decrement in performance, and I have a 5% incremental increase in performance, do I want to take a 20% guaranteed loss to have a potential for a 5% gain? Probably not.

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So there's three components to a business that I think influence that number. So you have the attraction component, which is the advertising. How are we advertising? How are we getting people in? How are we letting them know? How are we generating leads? Then we have the conversion, whatever your sales motion is, right? Sales. And then finally, you've got delivery, right, or fulfillment.

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How are we going to get people whatever they chose to pay for, right? So, if we have these kind of three functions, the extent to which you need to have high LTV to CAC is predicated on how manual each of these processes is. So let me explain. If you have paid ads, which I would consider very high leverage and very, like one person could write a gazillion dollars of paid ads, high leverage, cool.

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That's number one. If we had a conversion process that's through a checkout page, so it's automated, then that's gonna be something else that's gonna give us leverage, okay? And then third is let's say that we have software as our backend that has unlimited, like we have no supply limitations, there's no logistics limitations, and pretty much it just works.

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If you're in one of those businesses, then you absolutely can be at three to one LTV to CAC over the long haul. Fine, you can even be at 1.5 to one. I mean, it wouldn't be ideal, but depending on the size and scale, you could still make money doing it. Put $100 in, get 150 back, do it over and over again. If that's only true for them, what is it for a construction business? What is it for a...

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a plumbing company? What is it for an e-commerce business? The other extreme ends, I'm gonna just paint the extremes and you can kind of understand the middle. If I had, instead of paid ads, I had manual outbound, so outreach or whatever you want to call it, outreach, reaching out to people one-on-one with a team. And then from a conversion process, I've got one-on-one sales.

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And then from a delivery process, I've got, call it concierge, one-on-one, or even many-to-one services. then I'm gonna want an LTV to CAC ratio that's gonna reflect that. For me, if I had a business like this, and this is gonna shock some of you, but just bear with me, I'm gonna want this thing to be like 20 to one or more. Now some of you guys are like, there's no way, it's impossible.

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I would say I've made the material, the vast majority of the material wealth in my life at 30 to one, or a higher, and I've done it multiple times. And during those periods of time is when a lot of the, basically the wealth that I've accumulated has come in. But in the times in between, instead of trying to scale something that's at five to one or eight to one, I'm just gonna continue to tinker.

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I'm gonna stick with my one location. I'm gonna keep working on the model and just keep tinkering with it until eventually we get the economics that we need in order to scale. What if I'm doing paid ads, but we do one-on-one sales and we sell media or information or something like that? Then it's like, then you're gonna be somewhere in between.

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But I have this as my rule of thumb is that the three to one only matters at the companies that have 100% scale, 100% leverage across all three components here. If you have manual across all three, you're going to be at, I would at least want to be at 20 to one. I shoot for 30 plus. A lot of people can't even believe that. Fine. So, fit it to whatever your goals are.

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I really do believe that you can just keep tinkering with the business, keep tinkering with the offer, and find a way to get it so that you can have a huge discrepancy between these two numbers, because that's what allows you to scale.

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If you want to scale a business that's more manual, which some of you guys who are listening, 78% of businesses in America are service-based businesses, so this applies to you. As you go into colder and colder markets, you will convert a smaller percentage of customers.

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These are customers who are less likely to purchase from you, but you have a bigger pool of people, so that's kind of the trade-off. But when you go to those colder and colder markets, smaller percentage convert, meaning it costs you more to get those customers. Basically, you sell more people, you're going to have more infrastructure that has to get built into the business.

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So you have layers of management that will start costing you and not necessarily always be alpha. There can be value additive. With these two things that are working against you, you have to have this very large discrepancy between what it costs you to get a customer and what you're going to make from that customer in order to weather that storm and allow you to kind of grow into that.

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You can almost grow into your LWD CAC, which is kind of how I think about it. So if you're thinking about this for you, number one, know what your true LTV to CAC is and make sure you're doing it off gross profit, not off of revenue.

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I'm telling you this right now. It has everything to do with what's going on in your head. You have to go through the shit and you have to figure out the stuff that they aren't figuring out. Every problem that you encounter, instead of running away from it, which is exactly what niche hopping is, exactly what new opportunity hopping is, you have to confront it.

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I had the gym launch that started happening, was working, and then all of a sudden we had chargebacks from one of the gyms that I shut down, which then wiped that account clean again. All right, the dentist that I sold did not get results because I did not have a system for them put together.

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I just generated leads on a sheet and just told them on calls what they needed to do and they didn't do it, obviously. And so I had two dentists that had paid me $10,000 each. I had chiropractors that had paid me $10,000. And all that was left is that all of the money that I used that I'd gotten from that was literally just to pay my bills and eat and do whatever. All right.

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And the issue was that I had no focus. As soon as I see an entrepreneur that comes into my world and they say, I have a couple of companies, I immediately know that they are a nuke. that they are a new and some of you may be hearing this right now and be like, well, I have a couple of companies. Cool. You're probably a new. All right.

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It's very unlikely that you have the ability at this point to have multiple entities. All right. Like I'm telling you this right now. And so. The issue is there are five stages that you go through when you are a new. All right. And I'm saying this. And if this affects you, I'm purposely doing it this way because I am not going to help you unless unless we break some beliefs. All right.

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I want to tell you a story that will hopefully break some of your beliefs and I think will be one of the reasons that you, like, if you can internalize this story, this may be the way that you get to eight figures or seven figures, if that is your goal. When I started in the information marketing agency world, Layla and I were dating. At that time, I had six gyms that I owned.

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And that's what has to happen. And for some reason, I'll just make another sheet. All right. Here's the five stages. You got one. You got a little up. You got it down. And then you go up higher at the end. All right. One in the beginning is called uninformed optimism. That means you're optimistic about something that's going to happen.

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You're excited about the opportunity that's in front of you because you see with your skill set, you imagine how much money you could make. And you start doing this math in your head and you put it on an Excel sheet and you get Excel rich and you sell yourself and you talk to your partner and you talk to your parents, you talk to your friends and all you do is get excited. Right.

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Your dopamine starts sprouting. Oh, my God, this is going to be amazing. Make so much money. Right. Then what happens? You get into it and then you go to here, right? And right here is called informed pessimism. You now know that it's not as good as you thought because now you have more information. You find out that just like every other niche, there's going to be issues.

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There's going to be constraints. There's going to be problems, right? Because guess what? They all have problems. And then you go to here. This is called the valley of despair. This is where you're in the thick of it. You can't figure it out or like you're figuring out there's tons of hair all over it. And so what do you do?

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You jump to the next niche and you start all over again and you do the dance. You say uninformed optimism, informed pessimism, valley of despair, and you never make it past step three. Step three is where you have to go through the shit. And the only way to get through the shit is to focus. When you keep going into new niches, you never put your roots deep enough to learn the game.

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There's a reason it's not Cairo launch, dental launch, and PT launch, and whatever launch. There's a reason that we chose not to do that. Because you can have a $100 million dental agency. You can have a $100 million Cairo agency. You can have a $100 million PT agency. What you probably can't have is three of them.

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And so you have to ask yourself, what is the reason that I think I need to do more niches? What's the reason? Is it because I think that's going to make me more money? No. Why? Why would it make you more money? Because wouldn't it be easier to just get more of the customers you already have and can demonstrate results for? Right.

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And so the next two steps of this are now informed optimism is step four. What that means is At this point, you've gone through the shit and you've figured out the solution, right? And it's starting to work and you're starting to get into a rhythm. And then all the way up here, number five is achievement, all right? And that is where you realize the potential of this new opportunity.

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Most people never make it past here, ever. And depending on the entrepreneur, they can continue to repeat this cycle for years. years and they cannot figure it out. It's like the guy that you know who continues to date the same girl identical, different chick every time, but it's the same chick, right? And they keep going and they keep doing the same mistake over again.

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They fall in love, they get really excited, and then they actually realize they have to have a relationship and they bail, right? And they do the same thing over and over again. They never get to the part where they can achieve the potential of the relationship. It's the same thing in business. And until you learn the skill, you will never get to eight figures. I'm telling you this right now.

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It has everything to do what's going on in your head. You have to go through the shit and you have to figure out the stuff that they aren't figuring out. Every problem that you encounter, instead of running away from it, which is exactly what niche hopping is, exactly what new opportunity hopping is, you have to confront it. You have to face it head on and you have to figure it out, right?

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I had Gym Launch, which was a done-for-you sales and marketing system where we'd fly out and launch other people's gyms. And I had a dentist agency where I would generate leads for dentists. And I had a chiropractic agency where I generated leads for chiropractors. And guess what? I made no money. The reason I made no money is because I could not focus on anything.

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If they can't sell over the phone, you have to figure it out. You have to make a better script. You have to make a better training. You have to do daily calls with them. You have to have your team train their team. You have to think, how many ways can I solve this problem, right?

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If they're not making enough money, it's because you did not create a mousetrap that was valuable enough for them to extract value from. And whose fault is that? It's yours, right? Hey, Mosley Nation, quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you.

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All right, so send me a connection request and note letting me know that you listen to the show and I will accept it. If there's anyone you think that we should be connected with, tag them in one of my or Layla's posts and I will give you all the love in the world. All right, so let's get back to the show.

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And so just like I'm putting this out there because the number one thing I'm seeing right now, and if any of you guys were on my presentation yesterday, the third framework that I introduced was the niche duplication framework, which is how you can repeat this in as many niches as possible. And I put that in there because I know who I'm talking to. Right?

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In their minds, an experienced mind, they think, oh my God, if I made $10,000 in one niche, I could do $10,000 in another niche because they don't even have the belief yet that you can make a million dollars a month in a niche. You can make $10 million a month in a niche, right? You just have to have that belief. All right.

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And so getting to another niche, tell me what problem it solves to double your operational issues, double the types and number of problems that you have to solve in real time. Tell me how that's going to make your life easier. Explain it to me. Make an argument to me. Right. Because if the question is, I don't know, my my niche is super saturated. Welcome to the fucking world. Right?

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It's all saturated. 100% of it's saturated. Right? And the only way to win is to be better. And the way to be better is to stick through the shit. It's to go through the third step where everyone fails. Right? And on the other side of that is where all of the green grass is. The green grass is not on the other niche. It's not on the other side of the fence. It's not in the new opportunity.

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It's going through the manure and digging down and then letting it grow. Right? You got to work the field. That's how it works.

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all right i'm telling you this because i lived it all right i had six gyms one done for you agency and then i had three niches i was serving it was impossible same guy all right six months later i cut everything out just said i'm going all in on gyms and why did i do that because my wife was like if you don't pick something she's like i'm not gonna be with you and i was like all right and so maybe some of you need someone

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Maybe you don't have a, maybe she has no idea, whatever, right? And so hopefully this can just be a voice to you from your past, all right? Because I feel like as I'm talking to some of you guys, I just feel like I'm talking to myself, right? And so I don't want you to make this mistake.

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And some of you will keep going around this merry-go-round over and over and over and over again, and you will not beat the level until you learn how to unlock the boss, right? And to put him on his ass. And the way to put him on his ass is not to do more different things, is to do more of the same thing. It's to get better. And every entrepreneur wants something that's new.

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The marketplace wants new, but the business world wants better. And that's how you win, right? There's no shortcut. And so you have to put in the work. You have to run beta tests, right? You got to say, okay, we're going to try this new script. We're going to take four of our facilities and have them test this new script out.

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You're going to make a little training for them, present it, get them to give you stats every day and focus on it. And then what happens? If it improves, great, roll it out to everyone. If it doesn't improve, learn from it, try something else. Right. And like the reason Jim Watts grew the way it was is because every single step of the process we tested and tested and tested. Right.

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Even in this online model that we've been pushing right now. Right. We have we've already changed and tweaked and improved each part of that process. Like it wasn't like, all right, let's do chiropractors. You know what?

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gyms gyms aren't working right gyms don't work let's do chiropractic no right we just stick through the shit and so i say this with like a lot of love and i'm trying to say this because some of you guys i feel like i could be a big brother too like i want to give you like a noogie sometime but i'm saying this with love because i need you to get through this i need you to get through this like creepy besant phase of new entrepreneurship of i want to do everything you gotta pick one you can win at any of them but you can't win at all of them

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And that's the reason, right? Some of you have so much skill, right? You guys are so good at promoting. You're so good at selling, right? Some of you guys are great marketers. You just have to use that and channel it into one channel. Otherwise you're spread too thin. And that's why you feel like you're working all day. You're putting out fires all day and you can't move forward. Right.

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And so what happened there was I developed an initial set of skills, sales and marketing, and then immediately saw this whole new world of opportunity that was in front of me. But what I had not developed yet was the character trait to associate with the skill, which was discipline and focus.

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Imagine right now, if all you had to do was get one person to be successful and then all you do is duplicate that one person and just clone them and do it again and do it again and do it again. And I'll tell you, like right now, we're learning on the agency side how to make you guys successful.

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One of the mistakes that I made early on, like with Alan right now, is that in the beginning, a lot of the messaging that I have when I talk to you guys was that Alan is a platform that you can run your agency on and make more money. In reality, Allen is a platform that supports the business model that I'm telling you, right? It's more switch to my model and you will make more.

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We just so happen to use Allen to extract the value. It is a piece, but the model is the thing that's going to make you the money, right? That's the game. And so some of you are not following instructions. You're half in, you're half out. You're like, I want to do half of things one way and half things another way. It's not going to work. Right. It's like the girl who's trying to lose weight.

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She's like, well, I'm going to do keto on Monday, Wednesday, Friday. I'm going to do a high carb, you know, Tuesday, Thursday, Saturday. You can't mix shit. It doesn't work that way. Right. Got to follow the sequence. The guys who are doing the best are just following the play. Right. Or following the plate. Some of you guys got solid fucking egos. Right. You're not hot shit. Myself included.

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Right. But I'm saying like, like, I don't know how, like, and I'm, I'm just so you guys know, well, I'll, I'll leave there. I'm going to reach out to a couple of you guys, but you have to just, you So I want you guys to win. And I don't want you to make the same mistakes I did. And I want you to level up. And the way to level up is not by doing more things. It's by doing the same thing better.

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And it's not sexy. And that's the character trait you have to develop to get to the next level. So anyways, I hope that made sense for some of you guys. And if maybe it made sense for one of you, hopefully it made sense for one of you guys. And hopefully that's a turning point that you can say, you know what? I'm not going to do six niches.

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I'm going to pick one and I'm going to get really good at it. And that's what I'm doing. When it gets hard, I'm going to stick with it because I know that every other person who's gone and tried this niche gets to this point and bails. And that's why they can't move forward. They all do a mediocre job and then try and spread themselves too thin. But I'm not going to do that.

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I'm going to be better than them because I'm going to win and I'm going to get through this piece. Because what it took to get you to here, which is learning how to self promote, is not the thing that's going to get you to there, which is learning to be disciplined with your focus, with your attention.

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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And because of that, my lack of character, I was not able to reap the rewards or the fruits of the skill set that I had acquired. And so what ended up happening was probably one of the hardest year and a half of my life. All right, I ended up having, I sold five of the six gyms. I just shut one of them down. A partner stole all the money from the sale of those gyms.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Welcome back to the game. This is a guest spot on Eric Way's podcast. He's the founder of Carrot, which is a very large company that helps creators get credit cards. Kind of interesting business model. But this is a super, super business podcast. So I would say this is probably on the more advanced side.

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Is this where you wanted to be? I don't consider myself a traditional creator. I had businesses and had businesses outside of this that aren't my face in anything. But I saw just the monster amount of impressions that social media was getting and giving away for free. And I was like, this is the most insane thing I've ever seen.

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Yeah, he exposed it. Here's the thing. Liver King still makes content. And I would imagine that he probably still makes good money. And so I would see what happened to Liver King as close to a, quote, brand suicide moment as you can get. And yet he keeps going. And so here's the real, real. I don't think you can get canceled.

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And so a lot of people have this fear of making a mistake that's going to end their career. And no mistake ends your career unless you choose to end it. And so you can always get back up and keep going. The only way that you can actually get canceled is if you get prevented from distribution. So if all platforms de-platform you, if every platform did that, then yeah, you are canceled. Right.

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Like R. Kelly is in jail and can't make content. He cannot make content. So like he has been he has been effectively canceled. Right. On the flip side, how many times has Chappelle been canceled? I'll put that in quotes here. Right. He's not canceled. He just keeps going. Right.

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And so in the same light, to further hopefully put a stake through this thing, your assumption that you have killed your career assumes that everyone in the world knows who you are and the vast majority of the world doesn't even know you exist.

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nor did they really care um subtext and so like let's say you have a million person audience okay you mess up just go get another million you're not dead and if anything you start having learned a lesson and you just keep going it's interesting because like i think the poster childs for this in some ways are like jake and logan paul dude the suicide forest thing yeah like

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Here he is on WWE or whatever, whatever they're doing now. I don't follow as, as tightly as I probably should to be, uh, you know, in this world, but, um, he's still around and he's bigger than ever. Yeah.

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Yeah. Well, there you go. There are so many examples of quote career ending moves that didn't actually end the career where you have to be able to deal with. And this is the real hard part is that you have to be, you have to be able to handle hate for a week. Because the news cycle is about a week. And so you have to be able to just be hated.

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And it's very against our human wiring to receive that much hatred and continue onwards.

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It's impossible to fathom a million people telling you that you suck. Have you gone through that yourself? I mean, I've had my moments of people hating on stuff that I put out. Usually it's just stuff that I put out that just triggers people in general. Right. And I would say that part of it is intended to do that.

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Like, because I have relatively extreme views on life and death and things like that. And I make those because those are the views that helped me free myself and made life a lot more palatable for me. I've always been like, and if it helps you, use it. And if it doesn't, don't worry about it. Use whatever you're doing.

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And to this day, I still think it's crazy that we can get 100 million, a billion impressions, a quarter for free. I think about creators in two buckets. I think there are the words guys. And then there are the video guys and then the crossovers audio. Then I'm a little bit of both. I started making YouTube videos and I wrote a book basically about the same time.

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That's the advantage of if you understand the business game, you can do nasty things. Because I remember, so there's, I can't wait for this to get the callback. But one of my very first podcasts I ever did was on Ice Coffee Hour with Graham Stephan. And on the show, I said, if I had your size audience, I would already be a billionaire.

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I'm excited for when we cross that because I think it'll be pretty close.

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Yeah. I mean, we've grown a ton. I'll just leave it at that. I'll say this for anybody who's listening to this. So the problem with me claiming something, I would like to have a third party substantiate. And so like I could say, well, if you know what our revenue is, right, and you put any kind of EBITDA on that, that would be reasonable, especially in a business that has low CAC.

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you would probably imagine that it would be decent. And you put any kind of multiple on that, it would be a pretty large number. And so we have things that are going for us. And we've had conversations with companies that said we would value in this range. But those are things that I...

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wouldn't if i claim it i want to be rock solid absolutely right and so that's why i have it but that being said um obviously we've grown a lot um in that period of time and uh i i'm excited for whenever that callback comes because he still has more youtube people so i'm using that as mine as my you're saying we haven't quite reached your audience yeah on youtube yeah i'm still i'm still i'm still uh behind his audience on youtube it's actually another good point though you said multiple right the multiple that you would get on what you've built is gonna be higher than say a pure youtuber yeah

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So I think I'd probably take Chamath's angle, which is like, you're just, you're basically betting on Jimmy. And I think, yeah, I would take that bet. Right. Because I think Jimmy will just die or he'll win. Yep. And that's kind of. He's obsessed. And you just want to find people like that. when your distribution base is the world, uh, it's hard to lose. Yeah.

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I'll just, I'll, I'll leave it at that. But what you brought up though, like prime, for example.

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So prime is actually the identical to a school deal because he didn't build the product.

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Yeah. And so they promoted it.

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Right. But they put, I don't know if they put cash in. I don't know what they did, but I'm assuming they put some money in because they have the capital. Why not? To get more leverage on the ultimate dealer or joint venture. Was Logan going to learn the drink business and get brick and mortar distribution? Like maybe, but it's also the question is how much is your time worth? And I don't mean like

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dollars per hour, anything like that, you absolutely can do it. And when I say time is like, how much is the next five years worth to you? Because if you can pull five years of knowledge forward and then grow for five years rather than learn for five years, then begin growing. Because if you have an audience of their size, your constraint is going to be delivery. It's not distribution. Like,

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yeah, it's not, it's not media distribution. It's going to be product distribution. Yeah. It's going to be product distribution. And so to, to build out the kind of infrastructure and knowledge base, uh, to satisfy the demand internationally, not just nationally, internet, cause they're in the UK too. Um, You need deep expertise and large existing infrastructure. And so Kong already had that.

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And then the book kind of took on its own, you know, growth path. And then the videos also did too. The nature of how I've done things is that I'm all about business process and system. The reason people followed me was because the systems were good. And so because the systems were good, they didn't need me for the systems to work. Whereas many businesses... don't have that.

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And so it made sense. And so I would probably lean more towards that type of model. I'm curious, like there's me, there's Sirhan. Jimmy, I think with Feastables is the only person who's building things truly from scratch.

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Yeah. And I don't know if you were to ask Jimmy again today if he could go back in time, if he would have.

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Just if he would have done it the same way.

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Yeah. And we can already say he launched Lunchly, right? And well, what did he do with Lunchly that he didn't do with Feastables? He didn't build it from scratch. Right. And so I think part of that is there is a desire that I totally understand as a creator slash entrepreneur to control everything.

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And if you look at the people who are the wealthiest in the world, almost none of them own 100% of the companies that they have made their wealth on. So you look at Jensen Huang from NVIDIA owns 4%. You look at Elon, he owns whatever it is, whatever small percentage of Tesla that he owns. With SpaceX, he's not the majority owner. Now, he might have voting rights, whatever.

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That's a different question. SpaceX owns 9% of Amazon. Like, I'd go down the list. Warren Buffett, I think, doesn't own more than 40% of Berkshire Hathaway. And we could keep going. And so the idea is to build something really, really big, in my opinion, need multiple lifetimes.

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And you can either live all of those lifetimes in sequence, chronologically yourself, and then take a lifetime to finally learn how to do everything. Or you can get three people's lifetimes. You all start together, you divvy up the pie, and then you can build something way bigger, way faster. The longer I've been doing business, the more I value time and speed.

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Because also we have the assumption that these things will not change in 10 years. So maybe it does take you 10 years to learn everything. Is the moment still there?

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So I approach all new things with the same perspective, which you can, you probably share with me, which is kind of the consultant's perspective. And so I started as a management consultant, which we share as background. And the way that I was taught is if you want to rapidly learn something in a space and to give context on this, imagine this back in time, I'm 22 years old.

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I go through my security clearance. No beard, by the way. Yeah. No beard. I have a, so I have to get a top secret security clearance. So I get, I passed that. Thank God, you know, I'm sweating bullets. Like, Oh, what did I do in my frat days? You know, like I'm thinking this is like a huge deal to national security. So I passed that.

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And then I can't say which, which armed forces, but we go and do work for the defense department. And I was focused on space cyber and intelligence. And, you know, some of the projects that I can say this that we worked on was like basically mix of assets to kill the most bad guys the most efficiently. Right.

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And the thing is, is that there's overlap between different armed forces for similar style of, let's just say, killing people or gathering intel on, you know, bad guys. How do you, at 22 years old, go and say something that's impressive and worth $4 million for a project that you're on in four months?

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So it's like you start now, four months from now, you have to give a presentation to two two-stars and a four-star general who have been doing this for their entire careers and then somehow manage to say something intelligent. So the way that they approach that problem is, so the person who puts the requisite out for the project, we say, who are the smartest people you know around this problem?

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And they give you five people. So you go to those five people and you interview all of them. And then you say, who do you know, five people, who are the smartest people around this? And you do that over and over and over again until eventually the same names keep popping up. And then you're like, all right, I already talked to John, I already talked to Steve.

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And basically you have you kind of like map the neural network of expertise and then you consolidate those notes into those buckets. So you like recode them and then you distill them down and then you make a pretty slide show. That's like the very TLDR. That is what consulting is. Yeah. And if you were the 22 year old, you were the one doing all of the notes and all of the consulting.

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And so I learned a very valuable skill set there. And so I've approached every new endeavor using the same thing. To answer the question, what are the things that I would say I will learn more about this or I won't? I think it depends on my first question. my first pass. So if I get into, because there's some industries where I look at it and I'm like, this isn't that hard.

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And a lot of people follow the creator for other reasons that are not that, that are less duplicable.

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Like some businesses, I'm like, this isn't as bad as I thought it was going to be. Other ones, I'm like, this is way worse than I thought it was going to be. And it's also like, what problems come up and how equipped am I to solve them? So like, I'll use an, like insurance, for example. Right.

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I think insurance is really interesting, largely because one of the biggest problems with insurance is cost of acquisition. It's like, it's a demand constrained business. Insurance is not hard to get capital for. Like there's tons of insurance companies that will, all that to say, It's there. But I was like, oh, that's more interesting.

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And so when I have that like of the not now or later, like I would put insurance in one of those buckets as something that like is also regulated, but I would say lesser than banks. And there's pretty amazing tax advantages that exist within insurance.

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But we talk about, obviously, a little bit on the creator side of how they can build big businesses, what I look at when I invest in companies, and my philosophy around content as our competitive advantage in the private equity space. Enjoy.

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Where the magic will happen is.

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i'll find some nugget in there and this will just take time that i'm like we can win on this yeah three ways to build a business you can just look at what's already working and just do that for yourself and i think that's totally fine i think it's a wildly underestimated path uh like you know what business do i start i'm like look around pick one like you can just start and then you'll learn and then you'll you know learn from there the second is you have uh a strong advantage in one of either that you can acquire customers cheaper

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or you can deliver in a better way, right? You've got some advantage in one of those two. And if you have an advantage in one of those two, you don't really need much of an advantage in the other. The third is that you need such a strong advantage that you can overcome a deficit in the other.

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So like if you have what I would consider a true product-driven business, you could not be really ever good at acquiring customers. And by solving products so well, it becomes viral. And then you do solve your acquisition problem vis-a-vis a better product. Now, on the flip side, it's like, can you do the same thing by just having unbelievable distribution?

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Really interesting question.

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um i think it's a it's a double-edged sword so what makes them great also makes them risky so they will typically have very low cost to acquire customers because it's organic and so it's just channels some yeah it's some star or whatever i'll call it a star right um is is good on camera or good in whatever format they they advertise in um so they acquire customers cheaply uh the other pro is that typically if someone starts with an organic audience

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They really care about product because being a creator, like your media is a product in a way. And so they have the right perspective on like, this has to be really good or I'm going to lose my reputation because the whole, an organic brand is built on reputation. And so I think they're more obsessive about product, which I think that's a huge plus.

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The downsides for the business, obviously, is that they have massive key man risk. So now I think where you get really smart about it is If you can gain enough influence where you can develop an affiliate network of businesses, like somebody who's done this really well is Derek from Derek More Plates, More Dates, the fitness guy.

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bring in your face to increase it so yeah and i think what you said at the very beginning which is that like entrepreneurs are realizing just the amount of attention that's here and this is just a way to advertise your business i mean that was the that was the entire thesis bond acquisition.com was i'm a big fan of something old and something new so like something old private equity with something new social media and like how do we how do we bridge that how do we how do we merge that now because there's been old school i mean or buffett's an influencer

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He has, I think, an affiliate base of four or five thousand affiliates that promote his fitness products. And so he's become such an authority that people are willing to say, well, I don't want to remake what he's made. I'll just promote his stuff. And I think he has a good, you know, a good program there.

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And so he is he's paying down his key man risk by getting larger and larger percentage of the business. And so I think that the way to really scale an organic creator business is you launch it with the personal brand. And then over time, you backfill with other faces that you have to approve. And that's the key part.

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You have to approve that are on brand with your values and your message and are authentic to the product that you have and are attracting the audiences that you want to go after. And then they, over time, become bigger than you. And you kind of like Homer Simpson into the into the bushes. Oh yeah, you recede. Yeah, yeah, exactly. Yeah, exactly.

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And you recede into the bushes until eventually people associate you with the brand, but the brand outgrows you.

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So, two answers. First, we're not planning on selling acquisition on any time price, and that's useful. And so I see Elon as key man to SpaceX and Tesla, and so what? If you have the desire to exit a business, then key man risk becomes a problem. If you want to go public or you want to hold, It's really who cares. And so it's kind of a who cares issue.

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That being said, the second answer is yes, because I do like having fewer single points of failure in general. So despite the fact that I don't think we necessarily would need it, I still like to build businesses that way in general. And we have plans for what we're going to do over the next probably 24 months and beyond to build out ACQ's brand.

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Dave Ramsey.

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He's got Rachel, who's his daughter, but like, he's got Rachel, he's got John, he's got Drew. George Cameron. he's got nine, I think channels, for example, just on YouTube that are associated with the primary. And what's interesting is that they basically run the same playbook. Um, it's daily calling show and clips and full episodes basically are, are the channel.

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And so they clip each episode into like four or five, 10 minute clips. Um, And they put each of those out. So that's like... That gives them tons of good mid-length clips. They get the one full episodes. And then short clips get taken and become shorts. I study Ramsey a lot. One, because I like Dave. But secondly, because... The amount of creators that get, quote, creator burnout is really high.

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Yeah. Or we're talking like Shelby Church, right? She just kind of shifted to, I would say, a sustainable content model. Right. But it's it doesn't really acquire new viewership anymore. Like you only care about a vlog if you care about the person. Yeah.

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Right. And it's because it's a quote easier format, but it doesn't really grow the audience. It just kind of like maintains the audience that you have. And again, to be clear, nothing wrong with that. Totally. But I look at somebody like Dave and I think he's been making content for 40 years. Like there's something to be learned from that.

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And I think the nature of why his content has been so interesting is because you have, he has two types of variety or three really, and that I think have to be present. So what are, what are the types of shows that have, uh, and I already say shows that have existed for a long time. You look at the daily show, right?

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For sure. He's just legacy media. Ray Dalio is an influencer. Now he's starting, you know, he's making his TikToks and things like that. Naval is an influencer. Of course, these guys get deal flow because they're out there. You know, they're talking about business. And so they get it. I just took what they were doing and just like did a lot more. Right. What type of companies we look for.

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You look at the, the night, the nightly host shows like those can go for 20 years, right? What makes that unique? In my opinion, um, you have, you have three variables. you have the people who are on the show, you have the subject matter, and you have, actually, it's just that. Two. Yeah, I was thinking because you also have the interviewer. Right, format as well.

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Yeah, so I'll still say the third, which is the interviewer, comma, errs. So, like, there are some shows where they will rotate 10 people through three seats who are doing the interviewing of other people about dynamic topics.

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And so you need some level of novelty, I think, to consistently, one, engage your existing audience, but also to bring in new people. And I think that a lot of creator content on a long enough time horizon becomes the news.

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Like they say all the things they wanted to say about personal finance or how to build a house or like, and then at some point they're like, I don't know what else to talk about. And then they're like, The news. And I don't necessarily think that's a bad thing. It just like, I just, it's just a pattern that I've seen over and over again.

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Because if you have single person, they only have topic as their variety. And so once you've exhausted many of the, I would call it standard direct to camera topics, then the novelty comes from news, which is literally novelty, right? What is new? And so that's where they allow the environment to create their content or other topics. Going back to Ramsey, he has guests on.

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He has the call-ins, which create endless variety. And so those are kind of like the two formats. And he doesn't have to prepare really ahead of time. And so he is, if he does three hours of content a day, he's generating three hours of content. Whereas I would say many creators will spend 20 hours on generating one hour of content.

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And so he has pretty decent leverage on his time in terms of output per unit of time spent on content itself. And if you want to grow a business around it, you can't just do content because then you have, like, when do you grow the business?

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He said that like three years ago.

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So two really interesting things about this. Well, Graham specifically, and then also in general. So I think we need to be very careful about what audience we want to gather. And so Graham's audience has been predominantly people who don't want to spend money. Yes, frugal. And so he gathered everybody together who don't want to spend money. Yes. And then was like, hey, spend some money.

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And so I think in some ways it's almost harder for him to sell something than almost anybody else. Right. Because of the nature of his brand specifically. That's why I think like for him, it's like doing media stuff in some ways is probably an easier. He can sell to advertisers and they can have the good luck, you know.

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The process overall, those things have changed a lot from when we probably spoke three years ago. Because three years ago, I was looking at basically running the gym launch playbook that we did taking a company that has basically digital media driven, that is vertically integrated education around a specific sector. Yeah.

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But I think for him, like something that would have been on brand would have been like honey, right? Before the, the, the Lord, yeah, before the scandal, right? But pre-scandal honey, I think would have been very on brand for him to offer.

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Yeah. And he could have made a lot of money on that. And so I think all discount related things or discount related financial services probably would have been good angles for him. So that's thing one. Thing two is, so I guess that, sorry, I was getting into thing two, which is picking the right product.

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So you have right audience, right product. And so I think that having the saving money audience, you can make money from it, but getting them to buy something that would be considered frivolous, which is just like coffee. Now you can try and position it as like, OK, it's not Starbucks. Fine.

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But now you're literally dealing with a commodity like it's like coffee beans are traded as a commodity, like very hard to be. to have alpha from a brand perspective when the whole brand has been built on don't buy. Like this stuff comes off the same factory floor as this stuff and they just put a markup on it, right?

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And so from a product perspective, I actually think creators are horrendously bad at picking products. Like the amount of conversations I've had with creators who are like, hey, I'm thinking about launching an X. And I'm like, what?

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So on one hand, like these are real conversations I've had where they're like, yeah, you know, I read Peter Thiel's Zero to One and I think I have to create like a totally new category

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Yeah, and I'm like, dude, you already, your monopoly is the attention. You can sell a commodity. And as long as it's on brand, you know, like with you, you'll probably be able to do really well. The follow-up question is, will you do as well as you could have otherwise done if you picked a better product?

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Which then goes into kind of like circling all the way back to acquisition.com in terms of what we do is we, I only really solve for revenue retention. It's like really the only thing I care about. Because on a long enough time horizon, anything that retains customers becomes huge.

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If you know how to advertise at all, which if you're a creator, you do. And if you can keep the customers, then on a long enough time horizon, you build a massive company. Right. It surprised me you said retention instead of growth, actually. Well, like level one, like keep customers. Level two, grow those customers too and get them to bring more. But yes.

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And so from a product perspective, though, I don't think enough of them are thinking about reoccurring and recurring revenue. And my two cents for anybody who's a creator who's listening to this, do not try and solve churn. try and find products that people already don't churn out of and then make it your own.

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I spent a huge amount of my career banging my head against the wall, trying to figure out how to make something that people inherently leave, like a gym membership, something that's sticky. And I've learned a ton. And so there's lots of what I would consider like blocking and tackling tactics that I have learned that will improve churn.

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But to conquer churn, like how many of you have churned out of your internet lately? How many of you have turned out of your cell phone bill? How many of you have turned out of your insurance account for that matter? Yeah, exactly. I mean, you're still with, of course. And so you think about these products.

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And so I would rather find products that people already don't leave and have no affinity for, and then try and just shift them over. And now you're like, wait, how can, well, aren't they technically turning out of them? Yeah. But I'm being laser targeted in how like, Yes, that's the point.

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That's the advantage that you have as a creator is that you can bring those people over from what is otherwise a commoditized product that they don't care much about, but still pay for. Rather than trying getting people to care about your product in order to buy it.

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And then wrap in business services and then be able to package that because you have revenue retention and then sell it, right? And transition it from a face-driven business to a kind of consulting business that's in one niche, right? It's a difficult operational challenge for... for face-driven businesses to remove the face. And I think that makes sense.

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I have really strong views on this.

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Yeah.

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So I think it's because the people who are allocating money didn't understand media at this level. Like I would wager that you and I probably understand the creator world and media better than most. And I think that fortunately, unfortunately, I think short form content does not build tremendous influence.

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I think it brings awareness. But if we think about influence in terms of like, what percentage of likelihood can we get the audience of this person to purchase something? You just need... Okay, so four elements for influence. So you've got likeness. So does this person look the way that I look? So because of that, I will trust them more and be more likely to follow their directions.

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The second is credibility, which is say-do correspondence, which is basically does this person have evidence or proof that what they say is true? Third is you have power. And power comes from someone doing some directive that you have stated and then yielding a positive consequence from it. And so I'll give an example of this.

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So Huberman made a short about if you have hiccups, how to stop having hiccups.

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And I remember watching it and being like, well, I don't have hiccups right now, but I'll try to remember this when I have hiccups. And about a month later, I had the hiccups. You followed it. There's power in what you said. And then I did the thing and the hiccups stopped. And so in that moment, Huberman gained influence over me. I'm more likely to follow a directive in the future.

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And so status is the fourth thing that gives you influence, which is relative control over reinforcers. Meaning if I am a bartender and I control a scarce resource, which is alcohol, I have status in this setting. Because I control the things that reinforce.

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In this setting, I control what's scarce, right? And so if you were a billionaire, you control money. And so you gain status just from that. Presidents and politicians also have status because they control resources of the government, right? But they still control resources. And so women have status because they control a scarce resource for men. Just being real.

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And so they can influence behavior. And so all of those things increase the likelihood that you get adherence or compliance from a request. And so if you have all four, then you are incredibly influential. And big picture, our goal as creators is to gain actual influence so that we can influence the behavior of a large group of people. And the way to do that

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most powerfully is to give them something, some sort of directive that they follow and their life gets better. And then they're more likely to adhere to a following request. That makes sense. So if that's the case, it's very difficult for you to do that well with very short content. And so to put this in context, let's say that somebody has consumed 20 YouTube videos of mine.

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And let's say that those videos on average were 30 minutes. All right. So that's 10 hours of content that they've consumed for me. Okay. Right. Let's do the math here. If the average short that I put out is, let's say, 20 seconds. Okay. So if we have 20 seconds for a short, that means it's three shorts per minute. Okay. So 10 hours times 60, we have 600 minutes is what my longs were.

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And we'd have to triple that. So they would have to consume 1800 shorts of mine. God. Right. And so I think that what's happened is that people have wildly over leveraged followership and views for influence. Hmm.

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What's interesting is that like small businesses, I remember Michael showed me this actually, he saw this little cue card, he took a picture of it from like a car detailing business or something. And they said, for 400,000 views on TikTok, Or 10,000 views on YouTube, $500.

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Taylor Swift isn't looking for somebody to step in and sing for her.

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So any creator who wants to make something about their card detailing organically, they'll pay them $500 if they get 10,000 views on YouTube or 400,000 views on TikTok. So they had already basically appropriated that as 40X is the equivalent amount of influence. And if it were me, I still would probably rather have the 10,000 views on YouTube. Wow. If we're looking at this, what's her name?

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The dancing girl, Charli D'Amelio, right? So I think she's had a couple of things that didn't work as well that like, and again, it's, if I make a brand built around slapping strangers in public, right, just as a complete extreme, and then I launch a credit card, does that really carry? There's no say-do correspondence. I have no proof, right?

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Right, and I think she had a popcorn. And to be clear, there's no shade here. That's not my point here. My point is to help creators monetize. And so I see the point of short form as one thing, which is to drive them to long form. Or if you can, obviously deliver some sort of value like I got from Huberman in that short clip.

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But the thing is, is that the likelihood that that occurs is really, really low. I have a pretty decent memory and I remembered a short from a month earlier and then actually did it and got a result. Super unlikely. Now, if you listen to Huberman on a daily basis, for example, he probably gives 80 directives over his every podcast.

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And all you have to do if you're a long-form listener is listen to one of them over a month and your life gets better and he gains influence. And so when he then makes a product recommendation, I'll bet you that the Huberman collabs have probably crushed Huberman.

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And he's got broke. He's got the sunglasses thing. I think he's promoting David bars, which is actually high protein. Yeah. So like, and those collabs, I think have probably gone pretty well. Right. And Rogan also to the same degree, like when he makes when he makes recommendations, like a huge amount of people, like including presidential recommendations, a huge amount of people follow.

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And this is where it gets really fucking interesting. So again, it's all of those elements. So if you have a, let's say somebody who's a long form host, doesn't talk about politics at all, shows no knowledge of the stuff, has a big audience, brings somebody on, their endorsement Probably matters little.

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If their audience pays attention to a political candidate, then that's basically just functions as an ad and the political candidate is doing the influencing on their behalf. But for their endorsement to matter, not just the distribution, they have to have demonstrated some credibility around the topic so that people say this guy is informed.

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And get value from it. Exactly.

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Right. Right. Joe has done a ton of political stuff and like it, don't like it, whatever. He's demonstrated that he's at least spent a lot of time trying to research the topics with the intention of just trying to find truth from an independent perspective. I'm not getting into like the weeds on either side here, but just that that has been the intention.

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And so he is tremendous influence because most people think, at least I think most consumers think this way. I don't want to do all that work. I'll just trust him.

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Yeah.

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Yeah.

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Yes.

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Yes, totally.

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Think of it as like awareness ads. Yep.

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And so what happens is the objective, in my opinion, so like the ones you like school, for example, if you're a short form person, it's like, how can I just get them to take the tiniest amount of action, which is to go into a community where I can get way more interactions with them on a much faster feedback loop so that I can gain the other three or four more like harder. Right.

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But what's interesting is like the people who I think are doing really well monetization right now for TikTok are doing TikTok shop plus lives. Yes. And what's alive? Well, Thank you. I think there were some creators that were still wildly undervalued and many that were wildly overvalued.

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And this is the, you know, the classic story of like, I had two people that I paid a hundred thousand, you know, I had a hundred thousand followers on Instagram and I had both of them do a shout out for my thing. And one guy drove 10,000 customers and one guy drove zero.

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How is now assuming it's not bots, but like there's definitely legitimate creator accounts that have a hundred thousand followers that have zero influence.

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I have... super strong reservations with the word should in general um i would say really just depends on what the constraint of the business is and so like let's say you have an outbound channel that you have cold callers and cold emailers that you know generate b2b customers for you do you need to start making content Probably not.

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And given the resources required, is there something else in the business that would generate more enterprise value?

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If so, then you should do that, right? Big picture, more attention in general tends to grow businesses provided they are not supply constrained.

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But that's a big asterisk. Many businesses are supply constrained. There's a lot of plumbers who the phone's ringing on the hook and they're like, I just need more plumbers, dude. Yeah, of course. I don't have a problem getting people. If you have a cleaning business, the problem is not getting people to want cleaning. The problem is finding cleaners.

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So it depends on what the problem of the business is. Now, if that were the issue, do you make content around what it's like to be a cleaner? So that you attract cleaners, people who want to clean. It's like, hey, you already clean your house all the time. Want to do it for money? And we have better working conditions, blah, blah, blah.

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Fundamentally, I guess reframing the question as, should the other 60% of businesses add another advertising channel? No, unless it's the contrarian of the business.

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Right. And I still use those three kind of legs of the stool. So I got money. We've got time or work. And then we've got brand, reputation, distribution, et cetera. I prefer to do as many as I can of the first two. Because in a lot of ways, brand is so much more limited. Not limited in its power, but limited in how many. And maybe this could be a limiting belief for me, but I don't think it is.

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I think it's very – so brand is built on associations and pairings. Mm-hmm. And if you pair yourself with too many things, the brand starts to lose its potency because you have associated with too many disparate things. Now, if you made many associations with things in the similar buckets, I think you could get more bullets, more shots on goal, if you will.

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But no, I, I, I try to basically do the more scalable things, which money is actually, you know, pretty scalable. We've developed a pretty, pretty exceptional team at the holding company for acquisition.com. Um, because I, I basically take, I marry a lot of old school and new school.

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So we have a lot of young called five and 10 year McKinsey, you know, um, Bain consultants that will pull who are like, I hate feeling like a cog in a machine and just doing billable hours. but are otherwise incredibly hardworking, incredibly bright, and also see the problem with a lot of antiquated businesses and want to work with more new, more cutting edge stuff.

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And also really like, and a lot of them came from, you know, my content, my world, and want to marry, I would say, big business strategy with small business tactics, right? And then kind of like bridge those two gaps together. And that's a lot of what we do at ACQ anyways. And so I think they really enjoy it because they learn a ton from the frameworks that we have for growing companies.

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It adds nuance and texture to their existing knowledge set from what they learned at the kind of like big consulting firms. And just to put context to this, like... If you're looking at like supply chain for Walmart Brazil, right, or something, you know, Walmart Latam, because you need to do some analysis for that, super heady, really complex, lots of moving parts,

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And not useful to a small business. Like really valuable to a big business, which is why they pay the money for it. Not useful at all to a small business. But the thinking process, and the reason I like taking people from that world, one is because I came from it, but also because I think at the end of the day, consultants are a lot like engineers in that you just have to solve problems.

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And being able to have a really good problem thinking mind is I think what makes a good consultant in general. And so that feeds really well into the advisory practice.

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I would if I, like, okay. Let me clarify, qualify the answer. So are you saying invest in them, like, if I could buy a stock in a person? Or, like, if, hey, I want to start this umbrella company? I was thinking initially the second. I probably wouldn't for a de novo idea.

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In some ways, like the reputation of the creator was branded, if you will, like in a figurative sense, like branded by... the early creators, which is not reflective of how you advertise a business today.

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For a couple reasons one is like I don't I don't really like Seed stuff like idea stuff right also because creators are typically like big idea people That's not the constraint the constraint for them is execution And business acumen and for a deal structure like that to like in a traditional structure I probably wouldn't have majority controller ownership. And so that would be really high risk.

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I think and And so I probably wouldn't like that deal. If it was a deal that was kind of like the opposite, where like maybe they owned like 20% and we owned 80 and we fronted the capital and we like put all the stuff together.

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Yeah, maybe. Yeah. But even then it's like, I also have to look at supply demand of like my own deal flow. Right. And to do that, it would have to prove that that

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deal structure provides more alpha than the existing thing which i would have a hard time believing what about a later stage creator company like the primes of the world yeah so like a logan paul or like whatever jake paul or something who's not him but somebody else right it would be tough And the main reason is investing in someone like that isn't really investing. It's a joint venture.

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And then it's really like, so I'm starting another business. And that's really what it would be. And so it would have to be a business that I felt The existing resources and assets that we had, we already had a huge percentage of the core competencies required, not just in knowledge, but like in manpower.

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To do it.

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They don't have any. Right. And so we'd have to build a company. And so that's where I see that as like translating the ultimate question to like, would you build a company for a creator? If that's what I translated into, then the answer is probably not. Right. Just given how much it would take.

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And we briefly- ACQ Ventures is all capital.

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Honestly, just we had so much deal flow for it. So a lot of people were coming in and saying, hey, I would say it is largely tech. So-

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Yeah, they're just the economic, like the economics lend themselves to tech. But we had a lot of people were coming towards us in, I would say like a couple buckets. So bucket one is somebody who's already raised some round, consumes all my stuff, it helped them grow. And they're like, I would just rather have you on our cap table than somebody else. And that's like perfect scenario, right?

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Like they already, they, they liked the stuff they're using. They kind of like subscribed our ideology. We can provide capital, help them grow because we believe in the thesis. So like, that's great. And those, and the thing is, is that the existing model that we had prior to that required us to have a significantly larger equity position to justify the return, right?

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But because some of these tech companies can have significantly larger exits and because they don't require more work, we can take smaller slugs and just do money only, essentially. So that was kind of bucket one. Bucket two is people who don't have a cap table at all, they're maybe bootstrapped, but they still want to take on some clear opportunity that we can help fund.

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And those also, you know, as long as the deal structure makes sense, like those can make a lot of sense. The nice thing with that is that they require almost no work and expertise. And so it's really just like these entrepreneurs are like, I'm not trying to exit. I'm not trying to have a growth partner. I need capital and I prefer your capital to somebody else's.

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And we basically had so much of that. They were like, we should probably just spin this up. And the check sizes are not that big. And so I don't even really need to raise a fund to do like I like I can just do it on my own. Yeah, exactly. So that's worked out really well. We've already done like I want to say like six or eight deals. Oh, wow. Yeah. Yeah. I know. Just in the last like two months.

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So like it's it's heating up really pretty quickly. Which is great. Or I'll just lose my ass and we'll find out. But like, I've deployed a lot of money. Like, congratulations, you know, because it's funny because in the investing worlds, for those that don't know this, in a fund structure, you basically are incentivized to deploy capital.

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The reason people followed me was because the systems were good. And so because the systems were good, they didn't need me for the systems to work. When I look at creators in the space who've successfully executed on this, it's actually very minimal. I actually think creators are horrendously bad at picking products. Your constraint is not that you're a 97 out of 100 on content.

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Really interesting question. I think it depends on your goal. So if your goal is to make money, then learn the money game. If your goal is to make content, then get, you know, just keep making content. I had a conversation with other Uber creators not that long ago, and we operate at acquisition.com off the theory of constraints.

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Yeah. So it's kind of interesting because like the traditional like clapping of hands that happens when it's all your money. Yeah. It's actually like, well, I took a lot of swings. We'll see.

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um yeah i mean fundamentally we operate 100 like a private equity group and obviously the fund the the acq uh ventures operates like uh a vc right like we have a uh basically a general partner who just basically runs that uh came from the y combinator world like has really good deal flow on his own yeah he sources a bunch of deals on his own outside of our network too which i you'll probably notice this is a common theme is like i want stuff that already works and that i can put gasoline on yeah rather than

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It can only work because of me. School is an exceptional product and was compounding month over month with zero advertising on its own. Then we added gas. If it only, if it requires me in order to work, then it requires me to work until I die. That's not fun.

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And so just as like a side note for the creators, like everything that I, again, this keeps coming back to this point, but like I solve for revenue retention because if, if you go on vacation and the company dies, you just bought yourself a higher leverage income, but you did not buy yourself a business. Right. And it's not an asset.

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It's literally only valuable to you and not valuable to everyone else. And the valuable to everyone else part is where you get significant outsized returns in terms of wealth creation.

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I would say, one, there was multiple motivations.

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And I was actually pretty reluctant to do this. And I don't even know if I will do it forever. I think some people were like, I'm going to do this. Like, I don't know if I will do it forever. I came in with a very clear purpose of why I was going to do this. So I'll tell you the stories that got me to decide to do it. And then Why?

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So in very short order, The Rock had Taramana for multiple billions. Huda Beauty did a minority deal, you know, valuing the company over 600 million. Conor McGregor, same thing, 600, ironically, 600 million for proper 12, his whiskey company. So those are like some celebrity examples. Then I had, I remember hearing this podcast of this guy named, he did Nomad Capitalist.

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He's like a YouTuber and he talks about expatriating and like how to have tax savings and things like that. I had seen his channel and I listened to a podcast and he said, I get 3000 applications a month. And I went to go look at the application and it was like, it was an application. It was like 30 something questions and they weren't like multiple choice. They were like,

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very in-depth questions for financials and like you had to upload documents and like there was a lot of stuff involved. And I thought to myself, if I had 3000 applications a month for any business that was high end B2B, my God, I would just print money. And so I thought about that and I was like, okay, so these, these were like, I'm getting warmer and warmer to this idea.

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And so the positive of the theory of constraints is that any system will grow until it's constrained and then will grow no further. And so, you know, these gentlemen had like subscribed to that and they said, hey, Alex, I think we understand what our constraint is. You know, we have our media and our content creation machine.

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And then Kylie Jenner gets on the cover of Forbes as a billionaire at age 20, which they ended up disproving later, but like, it doesn't matter. I think she is a billionaire now. But she was 20. I was 27. I thought I was hot shit. She's seven years younger and she's a chick and she's richer. And I was like, I suck.

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I'm a big believer in like, if somebody is making more money than you, there's something you can learn from them in the game of business.

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And, and it might just be like, you need to be luckier. But like sometimes it's like you need to be the right place at the right time. So it's like, okay, well, what do I do about that? It's like, okay, well, I try to increase my surface area of luck. Then I decided I was going to do it.

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And so when acquisition.com for sure was what I was going to do, the brand part wasn't something I was for sure going to do. But when I thought, okay, how can I decrease the likelihood of failure as much as possible?

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Like one of the tenets would be like, well, if you had an investment firm and you had unlimited deal flow of people who only wanted to do business with you, it would make it very hard to fail. Yeah. And so I wouldn't have to be the best negotiator. I wouldn't have to be the best picker of companies. I could just have unlimited shots on goal.

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And so it's like, okay, so if I were to solve for that, what would I do? And I said, well, if I could build the biggest business brand, then that would basically shrink into irrelevance or make, sorry, shrink all of my problems or make them irrelevant by consequence. That was fundamentally why I decided to do it.

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There are pros and there are cons. And right now there are more pros than cons. And if there's a day where I feel like there are more cons than pros, I will stop. I think there are some people who really love attention and love fame and things like that. I don't think I am that person.

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And I feel like I have evidence to support that because I didn't do it for a long time when I think I had the opportunity to. Right now, my content feeds thousands of families. first from obviously what we do at acquisition.com, the holding company, but then also all of the, you know, school, like there's, you know, from a distributed perspective.

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If I were to quit in the future, I would try to make sure that I had backfilled my responsibility to those families to make sure that that vacuum, you know, didn't, that it was filled. The pros of this are you have recruiting talent becomes

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infinitely easier the best people in the world at whatever they do which is such a such an underrated lever like i just can't i can't overstate this who is is lever number one number number two is you have the obvious thing is that you have lots of deal flow or customer flow depending on whatever you know whatever you whatever you sell Those are really the big pros.

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The constraint of it is like we need better editors for whatever so we can get even more leverage on our time. And I said, well, what's the goal? And they said, we want to make money. And I remember kind of like smiling about this. And I was like, your constraint is not that you're a 97 out of 100 on content. It's that you're a zero out of 100 on monetization.

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You have some ancillary pros, like, you know, if I go to a gym and drop in, like, they usually know who I am and they'll give me some nicer treatment. And if I go to a restaurant, they probably know who I am and they'll, you know, be nice about it. Those aren't super, some people like that. The downsides are that what you sell is privacy. And so that's the price that you give them.

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Privacy is the price. And so, and one of the really tough parts and why I spent so much time thinking about this was that it's kind of a, it's a one-way door. You can't undo it.

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If you don't care really about making money and your passion is making videos about whatever it is that you make videos about, then like, you won. Congratulations. You're making videos about stuff. It's what you want to do. It's your dream. This was, yeah, you were like, if I could just quit my job and make videos about Dungeons and Dragons, then like I would do it.

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And it's like, awesome, you won. Like, so now where to from here? But there are creators that I've talked to who I'm like, hey, so what do you want? They're like, dude, I just want to make money. And if that's the case, then you got to learn the game.

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This is going to be really interesting. So because I've given a huge amount of thought to this. So I'll see if I can get the number right. But the creator paths exist on a spectrum of basically five paths of monetization for a creator. So and they exist on an axis of control. And so at the lowest amount of control, you have sponsorships, right?

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Like people just pay you money, you give basically you're an advertiser. And so you promote their stuff, you read an ad, whatever. That's that one degree next to that you have being an affiliate, which is just like, you know, getting sponsors, except you're paying performance.

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Because what we do, when you do an affiliate deal or a performance-based deal, you're saying, I would like a larger percentage of the upside if I can prove that I can generate it. And so what you're essentially doing is shifting the risk from them to you. And the more risk you're willing to take on, the greater percentage of the upside. And so winners always work on performance.

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No one should be able to as accurately estimate how much you can drive as you.

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Right. You're the seller. So like in M&A terms, Uh, the seller of a business, the person who owns the business, you're selling to somebody else always has an information advantage because they always know more about the business than the person buying. Right. And so you are the seller of attention. So you should always know the value of your attention better than someone else.

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Now, if you know that your attention shit, um, and doesn't actually convert at all, then maybe you should just do the sponsorship.

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It's that you're a 0 out of 100 on monetization. That's a powerful concept right there. I think that when people promote anything, they get backlash because anything that you give me that is not free, you die. You're saying that people have followers, but they don't have influence.

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Yeah. Yeah. Yeah. We're just, it's, it's overall the impression.

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Yeah, right. Yeah, it's going to change everything. So yeah, so you've got sponsorships here. You've got kind of affiliates and performance deals here. Then you've got kind of the next path, which is what I did with school, which is you promote And so I put capital in the deal too. So it wasn't just. You also invested in financial. Oh, I wrote checks too. It wasn't just your time. Yeah. Yeah.

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It was a big deal. Yeah. And so we invested capital in the company and we invested resources and we invested brand. So it's, we did all. So I think about them in terms of like, what are the buckets that create investment? So there's work. And for me, there's brands. Some people don't have that, but like there's work, there's brand, and then there's capital. And so we put all three.

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into the business. I think there's a really nice sweet spot there because what you can do is rather than try and go through all the iterations, I say, hey, let's do a deal. I think there's a really nice sweet spot there because what you can do is rather than try and go through all the iterations, I say, hey, let's do a deal.

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It has to be significant enough for me to like make it worth using what I would consider a brand bullet on. And let's let's get carried into every business in the US, not just creators. And then if like if that's compelling, then then you get to just do what you're good at as a creator. This is me talking to creators and let the business. do what they've already proven.

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And this is the key point that they've already proven they're good at. And so this is where a little bit of business acumen comes, it comes into play.

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This is where like understanding what revenue retention is, looking at churn, looking at user acquisition, looking at engagement rates, look at activation points, whatever, that you want to look at a business to understand, okay, is this actually, is the product good?

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Because what you want as a creator, like the perfect nirvana situation is unbelievable product compounding on its own from word of mouth for 12 to 24 months. in a market that's like very similar to your audience and that you know that you can 10X in a year. That's where the magic happens for both parties. They have an amazing product that could grow without you.

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But with you, it just grows that much faster. And so fundamentally, all you're doing is pulling the future forward by like four years. You're cutting the compounding curve and just basically step-wise increasing in a straight line up and then saying, okay, we're just gonna pull year four forward.

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And now we're gonna compound starting next month at year four to five, rather than year two to three, right? And that's fundamentally what I was doing with school. And I mean, think about the amount of deals that we look at. School was the only deal that I've done since that time period. It was because it hit all of those things. Now next on, so that's like third stop on our creator world here.

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The next is that you can white label. So you can drop ship stuff, which is pretty common that I see as the simplest way of this is like, you don't manufacture t-shirts. You find a t-shirt manufacturer, you slap your logo on it and you ship it. Pretty straightforward.

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And then the final version, final boss of this is that you create a product from scratch or service from scratch and you market and sell it. And those are degrees of control that exist on that spectrum. There is a right path for everyone. And you just have to have some level of awareness to know which path is yours. Now, which of these can create the most enterprise value?

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the further on the right you are, the more enterprise value you have. If you are doing sponsorships or affiliate deals, which is the first two categories that I talked about, those two can create enterprise value in and of themselves if you consider yourself a media business, which is so funny. I was talking to a Mondo creator, so like 20 million plus subscribers. And it's so funny.

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He was like, dude, what we're doing, like no one's ever done this before. Like, have a business around like making videos. And I was like, so, you know, media has existed for a long time. Right. And I was like, and when I, when I told him, I was like, dude, me, like you should just look at existing media businesses. And it was like this big light bulb.

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It's like, all we're doing is taking an old business model and just doing it in a new media. Like that's all it is. Right. The difference though, is if you look at like a great media business of the new age, it's like Barstool sports. Right. Right. And, Dave Portnoy is sort of now a creator. I would say he is a creator now, but it wasn't started that way.

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He just saw the arbitrage that existed for all these cheap impressions. Yeah, exactly. And he built a network and so that he could sell impressions across a specific demo to advertisers. And if that's the business, I just have yet to see. I think YMH, your mom's house for comedy, I think they have a handful of productions. So they're kind of becoming a media.

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Zach Justice is trying to do this too, right? Yep. Yeah, I've talked to Zach. It's tough though, especially if you were the primary like breadwinner kind of for the media business. I would say it's almost simpler to be like, hey, I know a ton of advertisers. Let me sell your ad space.

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And I think you could far more easily acquire a big network from that perspective, which is basically what Portnoy did.

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Also, can we hit on this real quick before we switch? So I want to say this mostly to the creators or people who have started from organic and like built an audience and whatnot. There are two types of angry. So there's angry because you have done something that you said you wouldn't do or that is against your brand or purported values. Right.

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Then there is people who think that everything in the world should be free. And I find that YouTube or really across all platforms, these people exist. And you can, by and large, ignore them. And so I think that when people promote anything, they get backlash because anything that you give me that is not free, fuck you die. Yep.

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I think on some level, you just got to be like, okay, anything worth doing is going to get lash back. And there's like, show me one ultra famous person, because this is all we're talking about creators and influencing audiences who doesn't have haters. Right. And so if you're going to get hate, regardless, you might as well also accomplish your objectives. Hmm.

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So that's just my two cents on now betraying the brand that you have. No, I think that's dumb. So like if you have, for example, a naturopathic brand of weight loss, don't push a Zempik. That's probably a bad idea.

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At the same time, if you said, hey, I've got these supplements that help you do that or I have this, you know, nutrition program that I'm, you know, you do a retreat with me three times a year. Seems very natural.

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It would have been interesting, for sure.

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It would have been interesting. Oh, yeah. I eat goat nuts, but I also inject Tren. People are like, so is it the goat nuts or is it Tren? Well, it's actually both.

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I don't understand. That's where the magic happens, right? Yeah. Yeah, so that's, yeah. But actually, I think he's, it's a worthwhile example to pull that up because, so obviously there was a moment in time where he went super viral and then it peaked and then Derek, as a callback to earlier, ended up being the one who outed him.

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Transitioning From Dying Business Models | Ep 853

A number of businesses just lined up over two days to ask me questions. They range from $200,000 a year to $140 million a year. And the crazy thing is, is the questions between businesses are so similar that they apply to all of them. And we pulled out the best moments that we think will give you the highest ROI. Enjoy.

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Are you doing installs or no? No, we haven't done an install.

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Interesting. Got it. then who are the decision makers? Well, right now it's been primarily residential is what it sounds like.

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Well, this is a fundamental change in business strategy. So you're aware of that. So with that comes risk. Because the highest risk adjusted return move, or lowest risk, I guess, is probably adding, like if I were like tomorrow, what would I do? I'd probably just add PPC in right now.

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because you already have something that's working on SEO, I would probably see how can I get way more articles written so that my SEO traffic can go up, can I tackle more keywords. That's like the for sure will work and make you more money play. The going after whales, for sure can make more money because why not add zeros to things.

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It'll just be a completely different sale and you'll have two levels of sales. So sale number one is going to be for the affiliates and then figuring out what's going to make it worth it for them. And then the second level is what's the actual sale to the whale customer. So what James has is he's using affiliates to get customers, which is this is inside of the leads book. All right.

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And so affiliates are businesses that have your customers that market and sell your stuff to them. All right. And so fundamentally, I walk James through the three different ways that I have found that work best for affiliates. So who's the decision maker with the whales?

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But so you just want bigger homeowners.

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So both of them were architects that sent you these.

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And so he felt like he needed to change his model quickly. And so basically he had two options. You could go in-network, which is you have guaranteed customers, but you're getting, in a lot of ways, lower quality customers that the government and things like that are paying for, mass market insurance is paying for. Or you can go cash, cash pay. People can just pay privately for whatever you want.

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Okay, yeah. So you're going to have to go B2B outreach. Basically, when you look at core four, that's going to be what you're going to do, and then they're going to be your affiliates. And so the million-dollar question is, what's in it for them? So my proposition would be, So there's three ways you can do affiliates, at least in the world of Alex.

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So you have they sell you shit for you, and they get a commission. That's option one. That's typically my least favorite option, but it is an option. Option two is that you give them some morsel of something that you sell that they can sell for 100% markup. They could keep all the money, but you get the introduction. This is my favorite way of doing it.

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The third way is that you allow them to just bundle in your free thing with their services. Now, with architecture firms, it's not like they're going to bundle in a railing for their service, but just for everybody else. Those are the three things. So it's like they bundle basically your lead magnet in for free with their thing they sell, so it enhances the value of their overall package.

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You give them the things so they can upsell your lead magnet for an amount of money that they can keep 100% of, or they just sell your stuff and they get a kickback. Is there a version for this where they can just upcharge? Like you can do a small portion of this that they get 100% of?

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We wanted them to be stupid to say no. Yeah, because the generic leg, you get 20% kickback. It's just like everyone does it. Who here does 20% kickbacks for anybody who refers you business? You can raise your hand. I'm not going to be upset. Okay. And so the point is that, and you probably know in here has referred anyone else business, because no one cares. That's kind of the point.

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And so it has to be an irresistible offer. And so if we give away the lead magnet or something, think about it as like my CAC, for a $50,000 customer is the cost of the lead magnet. And if I close one out of three introductions, then it's 3x the cost of lead magnet is my cost to acquire a customer, which is usually pretty darn good.

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So what I outline with James is right here on page 237 is that there's three ways you can integrate your product into their offer, basically getting an affiliate to sell your stuff. And so I order these from easiest to hardest. So first, you can give away your lead magnet with every purchase. So they just give away your stuff for free in order to get leads, right?

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So they'll sell their product with your lead magnet or they'll just give your lead magnet away. But either way, you're not making anything from it, they're just gonna give it away. Second is that you can get them to sell your lead magnet separately to their audience, which is my preference.

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You give away something that has hard cost or real cost, and you let them sell it for whatever, and then the cost to you is just the cost of delivering the thing. And so if I had a marker business, I might say, I will let you sell one of my markers, and let's say my marker cost me 50 cents. for whatever you want to charge for it. And they're like, I can sell this marker for $5. I'd be like, cool.

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You sell it for $5, but I now have a contact of somebody who bought these markers, and I might call them up and say, hey, you've got blue. Do you want red, and do you want green, and do you want black? And all of these are $5. Now my hard cost is just the 50 cents it cost me to deliver the marker. And so the question is, what percentage of customers who buy a blue marker buy the other three?

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And so if I found out one out of two customers who buy a marker at 50 cents end up buying these, then my cost to acquire a customer through affiliates is 50 cents times two. So the cost of delivering my lead magnet is the actual cost. And here's the crazy part. If they go make zillions of dollars selling your thing, Great, it means that you're gonna make even more money upselling your stuff.

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And so he felt more aligned with the cash payment. And so either way though, I think understanding what strategy is required to win within each of those paths was kind of the real decision, which is like, what problem do you want to solve? Do you want to solve the problem of learning how to market and sell customers? Because that's what it's like when you are in kind of the cash business.

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And so a lot of people get very greedy about what other people are making off of their stuff. Just focus on the money you're making, whether the deal makes sense for you. That's one of the piece of advice that Layla actually taught me. She said, never count the other guy's money. And it's a really good piece of advice, and I'll pass it on to you.

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But it sounds like an irresistible offer to the architecture firm, because they're like, we can just sell this and keep 100%. You're like, yep, just make the introduction, and I'll deliver that. And then when you talk to the customer, you're like, yeah, I'll deliver that. Here's one rail. but you need 10 more and then you make the sale. Does that make sense?

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But that's probably the way you're gonna have to do it. So either you can do the discount. I mean, I would say, guys, I have 20% that I can play with here. So you can take all 20 and give them no discount. You can take a 10% discount, and then you get 10% kickback. Like, this is what I got. I'll make it work whatever way you want, but this is my bare-bottom price. Okay.

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And I think that's the outbound strategy.

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Yeah, I'd love that.

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Thank you. Love that for you. The reason I like that second offer is because I think it's very compelling. Now, obviously, the third way you can do it is just get them to sell your offer and then have some sort of kickback. Obviously, many companies do this.

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It has to be very compelling because almost every business I know is like, yeah, I give 20%, at least in services, every business I know gives 20% kickbacks for anybody who refers business their way. It's like, yeah, but... No one does anything with that. And so it has to be enough that would really change someone's behavior.

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So think about it like this, is that the offer has to be good enough that it changes what they do with their business. If it doesn't change what they do, the offer wasn't compelling enough. Or you made it too hard, right? So it's either make the thing better or make it easier for them.

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Gross. What's that?

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Okay. Got it. Do you want to sell it or do you just want to keep it forever?

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So are you the platform? Yes. Okay. So you're the platform. How many tuck-ins have they done?

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Got it. How long has it been since they started?

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Yeah, got it. Okay, so sorry. Go back to the original question. We kind of have a better context on this.

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And if they've never done that before, then that's a real beast to get over. On the other hand, if you want to be in network, then it's going to be a business all about operational efficiency. It's about returns on capital and basically how efficiently you can staff up and how low you can keep costs across the business because you have no pricing power. So it has to all be off of efficiency.

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So you want an irresistible roof offer. The greater the change, the greater the risk that the change doesn't yield the outcome that you want in the business. And so fundamentally, you're always making a bet that you're going to get a higher return off of incurring the cost of change than it costs you to do the change, right?

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And so in this instance, he is now 30 days in or 60 days post acquisition of his roofing company getting bought with seven other roofing companies and for them to try and combine them. And he's the one who's supposed to lead the effort of combining all this stuff. And so the idea of like, let's change the offer.

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The offer is one of the highest leveraged things you can change, but it also affects every department. It changes how you bill, it changes how you sell, it changes how you advertise, it changes everything, right? Which is why it can change a business overnight, but it can also destroy a business overnight.

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And so when I see a business that, in aggregate between those eight, has $140 million in revenue and $30-ish million in EBITDA, you're talking about a business that's got probably $300 to $400 million in enterprise value, I would be very hesitant to immediately change something that's obviously working.

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And so there's lesser degrees of change that have higher likelihoods of working that could still materially impact the business in terms of increasing the likelihood that it exits, right? And fundamentally, I'm guessing that's what he wants to get his slice from. Centralizing the sales would allow them to decrease costs because they could not have guys on the road. It's just cheaper to do it.

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It's also easier to hire salespeople who are remote. All of these kind of downstream cost savings. The other benefit is that when you hire remotely, you have access to a bigger pool so you can get better salespeople at lower prices who close more deals And they could cut down all the real big costs for this business if salespeople were unproductive.

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All right, so people who are, they're losing leads on people who can't close. And so by reducing costs, increasing talent, and increasing sales utilization, all three of those things, reduce costs and increase revenue, which could disproportionately drive EBITDA. which is what that company is being valued on.

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And so when I look at that, I'm like, this is a change that you have to do in order to sell the company and will result in revenue and EBITDA growth. And so let's do this massive change first before risking the biscuit, right? Because we might just found out that just from doing that, we get a 25% increase in EBITDA and that might be enough.

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And so those are basically the two paths that he had. And so I wanted to walk him through the kind of the questions to figure out which of those he felt more aligned with. And it sounded like he definitely wanted to go more the premium cash pay version. And so that was kind of the direction that I let him in.

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OK, you're doing 20. So in terms of introducing levels of change, so this is actually pretty good for everybody. I would typically not try and change like five things at once. And so you centralizing all sales is going to get cost efficiency improvements, and you're going to be able to have higher sales utilization. So you probably cut off the bottom third of the sales force that's low performing.

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That alone might give you a 25% lift in general because the best sales guys will take more of the sales, and you'll have centralized all the costs, like, well, you'll have centralized all the costs, right? And so you'll have an increase in revenue and a decrease in cost that's paired. That would probably be my first step.

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Yeah, so, but, like, I wouldn't, I mean... I know the question is about roofing, but that's what I would do first, and that will probably take you six months or more, realistically. In terms of the offer to roofs, an offer that's worked really well in home services is instead of being a money-back guarantee, I position it as a profit guarantee.

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Yeah, you bet.

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So it's like, listen, you want your thing to be on time and on budget, probably. And so I guarantee that I will deliver it on time and on budget, or I'll give you my profit, which is 20%. And that way it's like you're not underwater and you still have 40% gross margin, so you're not really losing on the deal. But then people are like, okay, so he's got skin in the game.

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And so that's a way of closing significantly more deals because the two biggest obstacles that, well, you would know this, but in most home services it's on time, on budget, and probably for roofs it's like in how much am I going to be displaced, how much is it going to interrupt my life. And so I would put my guarantee around those items and then just have a marginal amount that's back.

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But it's really just because all they don't. So the big thing, which is where I agree with guarantees, is that people don't want their money back. They want the roof. And so they just want to know that you care enough to make sure the roof gets delivered. And so that's really the solve for the guarantee is it just pays down risk of them not getting what they want.

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Perfect. So he wanted a better offer despite all of those improvements. And I was like, okay, I think I can think of something for you. So if you look inside the offers book, page 125, I talk about guarantees. And so this is the guarantee formula. And so whenever you're thinking about adding a guarantee, this is what I think through. So if you don't X,

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In Y time, we will Z. Like that is fundamentally what a guarantee is. And most people, I would see a lot of times people just say, I guarantee it. But that doesn't mean anything. You have to say what the terms of the guarantee are on a timeline. What do I get if you don't perform, right?

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So you basically see it as like, I could either go in network and then make your entire business model around operational efficiency. Which is, I mean, I've got some buddies who murder it doing that, so I don't think there's anything wrong with that. Or alternatively, you just go premium, be the best, and be private, right, be cashback. So the question is, how do you transition it?

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And so with this business, and some people use like, well, I can't give a money back guarantee because I would just lose too much money. Understandable. Now, if you have hard costs like he does, then what we can do is we can just give something else. We can either a lesser portion of money, we can give something else for free. And so the guarantee is a consideration.

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It's what are we going to do to show you that we're just as invested as you in the outcome being positive. And so we basically shift some of the risk from the customer onto us. And this is all you're doing as a business when you do a guarantee is they take some risk of buying, and you're saying, no, I'm gonna take some of that risk.

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And so, sure, you can take 100%, but in this situation, you'd be taking like 200% of the risk. Basically, you'd be losing money, right? And so the idea is, again, you can add stuff. So hey, if you don't get what you want, I can add things, which is like, hey, if you don't hit your goal, I'll add more time, which does work as a sales tool.

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Sometimes, though, in the real world, if someone's not getting a result, they're like, I don't want any more from you. I hate you, right? And so it does still work as a sale, but it's one of those like, mid, right? Now, alternatively, you can go the reverse direction, which is take away negative, which is a discount, right?

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So, hey, I can't give you all your money back, but I can give you back my gross profit, or I can give it back 20%, or I can give you back 10%, right? These are all things that you can choose to give back. And the thing is, is it just shows that you have skin in the game. And all we have to think about, and this is the point of a guarantee, so I want to make sure I'm very clear here.

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The point of a guarantee is not to have the craziest guarantee. The point of a guarantee is to maximize net conversions. All right, so we just need to increase sales more than we increase refunds. So proportionally we net more sales. And if you can just do 10% back, then that's enough to change behavior. That's the point.

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Like if there's no difference between giving 25% back and giving 100% back in terms of the actual performance of the sale, then give 25. And so you can move what you're guaranteeing in order to find the sweet spot and figure out what's actually compelling to your customer. And most times, the things that you want to guarantee around are their biggest fears.

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Transitioning From Dying Business Models | Ep 853

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In home services stuff, it's usually going to be around time and around budget, right? Are they getting it done on time? Are they getting it on budget? If it's other services, it might be different than that. And so you'll know your services better, but you want to list out what their biggest fears are and then crush those with the guarantee. Hello.

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Transitioning From Dying Business Models | Ep 853

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You say tools like software?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2113.864

Okay.

The Game with Alex Hormozi

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2116.606

Sure.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Okay, so switch to a subscription.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2124.819

Okay.

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And who you deal with.

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Right, and it's free to sign up, and you only get paid if they get paid. Yeah, so you're in a prosumer audience. So if you look at like Shopify, for example, it's super, if you look at the amount of people who've tried to build marketplaces, almost all of them fail.

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And it's my opinion that the best marketplaces do run as SaaS, and then once they get to scale, they can kind of push more marketplaces. Like Shopify, for example, like it's 29 bucks a month or whatever it is, because they know that the vast majority, like, They make more money charging $29 a month than getting 4% on Xero for the vast majority of stores.

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Yeah, a pain. Literally for you. Or really, I guess for them. So fundamentally, I think you just have to think about this as basically starting a business over but with resources already. You don't really have to think about the service. You probably have to think about the packaging itself. It's like, what's the grandson offer for this?

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Transitioning From Dying Business Models | Ep 853

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But people continue to pay for the hope that someday they will make money. And so I think the idea of switching to SaaS is not a bad one. I am concerned about the four businesses that you have. So because in order to win at SaaS, you have to be all in on software.

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Transitioning From Dying Business Models | Ep 853

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And so the alternative to that would be instead of letting creators come on for free, you would charge them to come on, which you could do. It has a one-time setup fee, and then maybe increase the likelihood that they win. Either path would work, but if the ultimate goal is that you want to build a network of creators, then you want to have the lowest barrier possible on the creator side.

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Transitioning From Dying Business Models | Ep 853

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Yeah, you'll have to play with the feature set because that's always a bitch. Yeah.

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Yeah, so I think adding the subscription for the base and then still maintaining the revenue that you get from the sponsors makes sense. I would maybe push back slightly on the hypothesis that they can't convert anything because it dramatically decreases the value of the network from the sponsor side.

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Transitioning From Dying Business Models | Ep 853

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Because some people will pay for impressions. Yeah. And so... Those guys can for sure deliver those. And so maybe there's like two tiers that you can sell. You have another product on the ad side or the media side. It's just something to consider.

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Transitioning From Dying Business Models | Ep 853

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Oh, good. I just wanted to make sure I'm thinking the right way. No, I think it makes sense. Basically, you have to position as higher ticket and do premium wake level onboarding and then select only for the really good creators. And that would be like you charge $5,000 or $10,000 and you really get them set up.

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Transitioning From Dying Business Models | Ep 853

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Or you basically flip the other way, go freemium, and then it's all based on basically media arbitrage where you're just running tons and tons of ads to get people onto the platform and you just know what your average revenue per platform user is.

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Transitioning From Dying Business Models | Ep 853

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So this guy obviously has multiple businesses, and he's sinning. He's doing the cardinal sin of chasing multiple rabbits, or more particularly, many women in the red dress. That being said, I still wanted to help. And so he wants to build a software company. If that's really what he wants to build, then he's got to go all in.

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Because if SaaS is one of the most, if not the most competitive space that's out there, I guess now there's AI, but SaaS is still competitive. Everybody you're competing against is typically very well-funded and also very smart. And so they're going to have significant advantage. And so if you think that you can split your attention and still beat them, it's a tall order, right?

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And so for him, my whole goal was that at least he had clarity on what he needs to do so that hopefully he could get that business up and running as fast as possible so that he could basically shut off the other things and go all in.

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And you'll have a number of, like you're just gonna become a normal business, which is just like you will run advertisements and you will make offers to people and they will come in and then they will take their credit card out and they will buy stuff from you. And so it's probably more that it conceptually feels complex more than it actually is.

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Transitioning From Dying Business Models | Ep 853

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Hi, Alex. My name is Alex. You can call me Alex Rodriguez.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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From Puerto Rico.

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From Puerto Rico. So I'm a music attorney.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Abogado.

The Game with Alex Hormozi

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2344.066

Abogado, correcto. En la música y el entretenimiento.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2347.207

Yeah.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2347.568

So what we do is we have our constraint is focus. Yeah, you think?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2352.438

Okay. At least you said it.

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Transitioning From Dying Business Models | Ep 853

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So we have a law firm. So basically it's three businesses. But today, thanks to Ed and Sammy, we got much more clear on what we should do. But I would like to know how would you think about this? Because the law firm side, it's growing 20% year over year without me actually doing anything. Just... redirecting people that comes to me through my law firm. And right now it's about 100K.

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Transitioning From Dying Business Models | Ep 853

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And then we have the educational side and that is making 200K and it's been stuck like that in the last two years.

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And we're building... And you get customers from Organic?

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Transitioning From Dying Business Models | Ep 853

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Yeah, both are organic. So if you don't have money to pay us as a lawyer, you go to the educational platform. And we are developing a contract automation software for big companies like major labels or publishing companies. So right now, the product, our software, our goal with the software is to sell. We are seeing that other, that big music companies are buying tech. So specific for them.

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Transitioning From Dying Business Models | Ep 853

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So they're doing everything manually. We want to sell that, but we have a cash flow problem because we're selling to people without a lot of money and the service size does make money. So our problem is where should we focus?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2440.752

Yeah, but what's monthly churn right now?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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On the software. We got 100 people, and we only have 40 active right now.

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Transitioning From Dying Business Models | Ep 853

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And how long have you been doing it in the first year? So you've retained 40%. Are they actually active, though? So they're paying.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2455.55

The people that are active are paying $3,000 per year, and there are only like four.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Four?

The Game with Alex Hormozi

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Four that are paying $3,000.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2463.811

And then what are the other 36 paying?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Are paying $600 per year.

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OK, got it. He has a very classic problem, which is that you're good at doing something and you have two very different avatars. And if you continue down either direction, you ostracize the other. So he's actually at the product tie stage. So he's 10 to 20 employees between the three companies. the three companies that he has. And so the issue that he has to have is he's got a niche down.

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Transitioning From Dying Business Models | Ep 853

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Qualified leads are too expensive and they cap his ability to advertise. That's fundamentally his big issue, right? And so he's got too many different customers. So we have to niche down his advertising and basically message the new offer, which for him was going to be the education and the software.

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And so the million dollar question for him, which is what forced me to say I think that it made sense, and this is rare for me, was for him to go down market, which means to go for the smaller customer that's more numerous.

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Most of the time you want to go out market, and that's because those customers can afford to pay you, like sell to the rich, rich people pay better, solve their problems, that type of stuff. I'm always in that direction.

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But because he said that 40% of his customers, basically right off the onset, were still paying him a year later, to me that's fairly compelling that he's found some sort of product market fit.

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And so it's probably a ripping the bandaid off thing. which is that I would just, so one is what channel of acquisition are you going to use? I'm guessing right now, is it mostly word of mouth?

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And so in hearing that, I thought, okay, well, best in class is like 60 plus percent in your retention for a consumer prosumer type product, which is where he was at, which is musicians who like wanna make it in business, but aren't that big yet. So to me, that'd be a prosumer, somebody who's a little bit of above a consumer, kind of business-y oriented, side gig-ish, right?

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And so the good news is there's lots of them. The other good news is that there's new ones that get minted every day. And it's a growing market. So all those things are in his favor, which is, again, these are some of the reasons I like that.

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The other piece is that some of the old businesses he was going after, I think, though they are big, I think they're going to have trouble over the next years with the AI stuff. I think they'll have a hard time pivoting. And so I would second guess going all in there. Not to say you can't. I would just really consider it.

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Now, the other piece of why I like this is that if he can move his revenue retention up at the 12-month mark, then he has something that will just keep growing year over year over year because getting those customers is not hard. Keeping them is hard.

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Transitioning From Dying Business Models | Ep 853

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But if he can keep them, then he can probably blow the doors off this thing, especially if the education can offset his CAC or cost to acquire a customer. Okay, so I think we chatted about this last night. So you have a, there is no right answer, but there is a path that you have to pick.

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And so either you're going to be an enterprise company and you're going to build only for that, and I would say like you, probably will just transact on the education side in order to fund this. I, in general, don't like this plan, but you could do this, because you'll be split attention.

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And this is fundamentally why people raise money in software, so they can just focus on one customer the whole time, build the product, and then actually get it to work. OK, that's that. Because you said that you're retaining 40% in basically a prosumer-ish market, which is where you're at, I would be inclined to say that you probably are pretty close to a decent product.

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We've been in business for a long time. Yeah, so one is you can start upselling existing customers. So obviously they have what's covered in insurance, but then upselling other packages, that'll get your team a little bit used to being like, it's okay to pay us. That's from a really tactical level.

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Transitioning From Dying Business Models | Ep 853

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So you probably have nailed something there. Because keeping 40% of people one year later on you know, whatever it is for musicians that you guys have for contracts and whatnot. You could absolutely go all in on that and get that to like 50 or 60%. And then you just need to have a different acquisition system. So you probably just need to go spend money acquiring customers.

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Transitioning From Dying Business Models | Ep 853

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And that already cash flows because of the education side. And are the people who are still paying you on the software also education customers or no?

The Game with Alex Hormozi

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They usually come from the education or from my legal services as well. So I have some clients that be 80 percent of the job.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Here's the million dollar question. The million dollar question is, if they stop the education, do they keep paying for the software?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2682.316

Yes, because it's a one-time fee.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2683.598

Well, then that's, what, you mean the software's a one-time fee?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2685.8

No, the education.

The Game with Alex Hormozi

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Oh, well then, okay.

The Game with Alex Hormozi

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So sometimes they just pay and they're going to use the software.

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As long as they, so the only thing that we're solving for is revenue retention on the software. And so, like, enterprise in and of itself is not more valuable than lower market. It's just it tends to be stickier, which is what makes it more valuable. But if you can get a...

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Like old people, young people, women, men?

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larger marketplace, easier to acquire customer, to stick as well as a large enterprise customer, you've got a gold mine, if that's true. And so if you want to go spend money, acquire customers with the education or media as your liquidation, and then get 100%. But the goal that you guys should have is like, we don't care at all about the education.

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All of your focus, all the profit goes into just fixing one number, which is that you need to look at M12, so month 12 retention, and just say like, OK, we're at 40. How do we get to 60? And then how do we get to 70? And that's all you're solving for. Because if you solve that, then the thing will just keep growing.

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And that's fundamentally the beauty of software, once you get it right, is that it just keeps growing. Thank you. Yeah. And so for me, that was, I thought, the higher likelihood path, and also because you already knew how to get those customers. Whereas getting Sony and some of these large brands could be significantly more difficult.

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And so for me, I saw that and was like, I think that's the direction that has a higher likelihood of succeeding, given their goals. Infinite banking, insurance, you have 29 agents, and you're needing to decide whether you need to be the face and get customers to feed your agents, or you should go all in on getting more agents and teaching them how to do lead gen.

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But from an acquisition perspective, you've got content, you've got outreach, and then you've got paid ads. And alternatively, you could have affiliates. So we have to pick. So of those four things, which ones do you feel like you are better suited? So from affiliates, it's like, go to shoot injury attorneys. Or you want to find the person that they're going to see prior to hitting you up.

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Transitioning From Dying Business Models | Ep 853

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Cool. Yeah. So... Do the second one.

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Transitioning From Dying Business Models | Ep 853

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Yeah. Yeah, it's significantly higher leverage. Cool. So basically, so think about this as what problem do you want to solve? So either you say, I want to become a...

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Transitioning From Dying Business Models | Ep 853

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Like, you want to keep growing your brand top of funnel so that you just have more and more people who are interested in infant banking, and then you have all these agents that you pass it off to so that they can, you know, basically transact and own the relationship. So that's, like, option one. That is, I would say, the lower risk path because you're already doing that today.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2814.624

And so how many, is it on Instagram that you do your stuff?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2821.065

What's your followership from that?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

2831.69

Yeah, and what percentage of the leads come from that stuff versus whatever you do in person?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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I don't even know what we're talking about. For sure get agents.

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Transitioning From Dying Business Models | Ep 853

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Yeah, I thought it was like 60, 70% of the business was coming from...

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Transitioning From Dying Business Models | Ep 853

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That's good. Well, I think that one is you could probably just take the existing brand that you have and just be more deliberate about the call to actions that you make. Because if you talk about high-level insurance stuff, that's going to attract both people who want to learn more about insurance, but many of those people will be agents.

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Transitioning From Dying Business Models | Ep 853

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And so I think if you basically alternate the CTAs, you'll be able to basically, I don't want to say chase you both, but in some ways you kind of can double dip here. Because as long as the content strategy fundamentally doesn't really change, you're just changing really the calls to action, then you can kind of get a little bit of the best of both.

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Transitioning From Dying Business Models | Ep 853

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But I do think that the big thing that you need to crack is teaching them to generate their own rates. That's the limiter of your business. So you need to bring them on and you need to have the training system to reliably get them to self-generate. That's it. That's what you have to do. If you do that, the sky's the limit.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Well, they already are cold calling, right? Huh? They already are cold calling.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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That's fine.

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You want to teach them the highest efficiency strategy for getting customers. So whatever that is. So just like whatever your method is that you think the highest percentage of people will succeed with, that's what you teach. Cool. So whether it's shake hands, kiss babies, or it's cold calling, whatever.

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Transitioning From Dying Business Models | Ep 853

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Yeah, or a combo of both. And that's what I did. Either way is fine. But fundamentally, look at the biggest insurance companies in the entire world. they are that big for a reason, and almost all of them, they are recruiting machines. That's where fundamentally, because they're not a supply-constrained business. You can sell as much insurance as you want. You're not supply-constrained.

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You're just demand-constrained. You just got to get guys and then put the system in place so that they learn how to sell, and then that's the business. Heard. Thank you. Appreciate you. Yeah. This is why there's higher leverage of him getting lead getters than him getting leads. So this is the leads book 175. So right now he's in scenario one, which is that he is getting leads, right?

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Transitioning From Dying Business Models | Ep 853

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He's getting customers and he's sending those leads to his agents to close, right? Look at a much higher leverage move. Let's go to scenario three, where he spends the same amount of time advertising, but every time he's getting lead getters. And so every month he's getting more agents into the business, and each of those agents are now getting money. Now it's the same level of effort for him.

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So you don't want to go from that perspective. So you don't want to do affiliates. Content probably, in my opinion, probably isn't the best way. So then you have outreach and you've got paid ads. I'm going to bet paid ads is going to be your better bet since it's local. It's pretty straightforward. Operationally, it's not complex. Like running paid ads in a local area is like... Pretty easy.

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Transitioning From Dying Business Models | Ep 853

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Look, his line is still the same. He's still working the same amount every day, same amount every day, But here, he's got these new nodes that are generating business for him. And so if you add up all of this, these are all the extra customers that he's gotten just from this level of effort.

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Transitioning From Dying Business Models | Ep 853

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And so this has far higher leverage than this does, which is why I recommended that he start making CTAs in his content to both continue to generate, because I don't want to kill the business,

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Transitioning From Dying Business Models | Ep 853

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continue to generate his normal leads, but also make it clear for agents if they want to join him and gain access to some of the leads that he has, that he can come in, he can train them, and he can show them how to get the leads on their own, which he can benefit from.

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Transitioning From Dying Business Models | Ep 853

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In-home? In-home. Okay, got it.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

3130.095

Okay, is it like guy drives out, or is it you sending machines?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Yeah. So what stops you from just doing way more of the doctor stuff?

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Okay, brick and mortar?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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So you're making 50% margins, right? So what's the cost to acquire a physician?

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Who refers your business. Cost of acquiring an affiliate.

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Transitioning From Dying Business Models | Ep 853

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So you're getting 12 to 1 there, and you already know how that works. So what stops you from doing 10 times more of that? You're saying they don't pay well, but that's the part I'm not sure I understand. Because you're getting 50% margin.

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Transitioning From Dying Business Models | Ep 853

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You drop a pin, you do a radius.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Like you mean you've only really talked to 200 in terms of like reach outs and 200 who signed up as affiliates kind of thing.

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Transitioning From Dying Business Models | Ep 853

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In the twin cities.

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Yeah. Do you have an active affiliate manager who's regularly reminding them? No. Yeah. So the way that I think about affiliates is it's basically a second tier of customer. And so you need to have somebody who's regularly stoking the affiliate fire to keep them activated and continue to get them to continue to refer business. So I'll give you an example. So there was a roofing company.

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It was a restoration company. They had one star, star salesman. And all he did was he'd go around to other tradesmen and get them to refer them business. And so they would get $1,000 to refer the restoration business business, but the sales guy got 500 for every time they referred.

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You're probably going to end up finding that you have one to three offers that actually convert, and then the remainder of your business will be upselling and cross-selling when they walk in the door. So instead of thinking about your business as having like,

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And so that guy, all day long, was knocking on doors, walking to the front door with donuts, asking them how they're doing, bringing coffee to the guys, and then reminding them that they existed. And that's all he did. And so I think you're doing the hardest part, which is getting them to refer. You just didn't have the consistent referrals.

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Because if you had 200 active affiliates who were consistently referring your business, and most of these physicians, especially like GPs, things like that, they see thousands of patients. And many of them could probably benefit from the services you have. And so the activation is both getting them to refer consistently, but also percentage of customers that they see that they refer to you.

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So it's kind of both sides of it. And so I think that the missing link with what you were already doing was just that you didn't have basically the continuous affiliate marketing strategy to get them to keep sending you business. So that's probably like, right now, today, I would fix that first.

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Because you already have the acquisition system, you already have the network, and so for me, reactivating that affiliate base would be the first thing that I did. So this gentleman is using B2B outreach to get physicians and therapists to refer him business. Now, part of what he was missing is if you go to 240 in the leads book, which is the affiliates chapter,

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I talk about the launch and integrate model. And so basically, right now he actually was missing both of those. So launch is like you want to do some sort of big promotion with them so that you get to all their customers. Now, they were giving him like a trial customer and he was basically not getting any customers beyond that.

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And so if he's acquired 200 affiliates and each one of them is sending one customer, it's because he's basically not following up with the test that they're making. Like imagine if you... You know, if you have a business and you have customers and someone says, hey, can you refer me to a business, you might be like, I'll send you one and I'll see what they say, right? But it's a trial.

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And so basically we have to think about getting these affiliates on board is like a trial, but to convert the affiliate into an activated affiliate, right? And so a launch is step one, which is that, okay, maybe you succeed with the trial and then you propose, hey, let's do some big campaign to send a lot of your customers over and then you can make money, we can make money, everybody's happy.

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we have 15 services, we advertise all 15, you're gonna have one to three that convert really profitably on the front end, and then the remainder of your business is cross-selling and up-selling. So it's like you're gonna have the most efficient door into your business, and then you'll end up just cross-selling and up-selling people and retaining people from there.

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But the long-term goal is full integration, right? which is at what point in your process can we integrate our business so that what you sell is merged with what we sell so that we don't have to do any extra work or remind you, you just do it on your own.

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The second thing, maybe, because you might just reactivate the base and all of a sudden you're like, I got 200 guys who are referring me to business, holy shit, we're at 10 million. But the second thing I would consider probably, I would still probably focus most of my time on the B2B because you already have it. But for this business, I think that it lends itself, what's the price point?

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Transitioning From Dying Business Models | Ep 853

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Per treatment. Okay, so the average doctor will send you one six thousand dollar patient per year? When you said it cost you five hundred, they'll send you one patient? Interesting. So do you have a process for once the patient gets the thing calling the physician up?

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Transitioning From Dying Business Models | Ep 853

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So like, I'm Dr. Smith, I send you Sandy, Sandy goes and gets the, well, you come to Sandy, and Sandy gets the treatment. Is there a cycle where you call back me, Dr. Smith, and say, hey, we just dealt with Sandy, here's some of her stuff,

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Okay.

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Yeah.

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Transitioning From Dying Business Models | Ep 853

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Yeah, I would systematize the hell out of that. Yeah. Because it's like, hey, you just sent me this person. Like, let me close that loop for you. She's awesome. We did this thing. She loved it. By the way, and then we have the... you know, the opening to the other, like, what customers, or customers, sorry, what patients did you see this week who you think would be a good fit, right?

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Transitioning From Dying Business Models | Ep 853

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And rather than saying, do you have any, it's which ones would be, is the question. Small training stuff, but it matters. So I feel like there's so much on the B2B side that honestly, that's probably where I'd be ripping apart.

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It's not that I wouldn't, it's that when I think about So this is the difference in theoretical and actual. I would, given the fact that you're already running good margins on this thing, basically doing it, and take this the way I mean it, completely unoptimized right now. Again, this is not a slight. Then I'm like, there's so much juice left in this thing.

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Transitioning From Dying Business Models | Ep 853

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I don't want to now start something new. It's like, I barely got this one going. I want to crush this. And when I'm like, no, we follow up with every single person. I've got a full-time affiliate manager who steps by our affiliates. I'm calling them affiliates. But drops by the docs once a week just to remind us, say nice things. Hey, by the way, that is happening all the time.

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And so in terms of next steps, it's, You need to record an actual ad for an offer and then put it on meta and then drop a pin on the map and do a 10 mile radius. Hopefully all three are close together and you'll run the ad.

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Transitioning From Dying Business Models | Ep 853

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And we've already covered literally every single physician in the Twin Cities. And I'm like, okay, let's go B2C. But if we haven't completely squeezed the hell out of this thing and it's already working at the level it is right now with, like, you're only getting one patient per doc. Yeah, so you getting B2B customers is the same as getting one B2C customer.

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Transitioning From Dying Business Models | Ep 853

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I understand why you'd be frustrated because you'd be like, well, fuck it, I'll just fucking go. I could sell one customer on my own without having to deal with the doc. But the whole point is that, like, I want them to be sending 20, 50 a month. And they can, because they have the volume.

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And I think that first one has to be a beautifully choreographed experience, because that first patient's the test run for them, for you. They'll refer you one, and we'll see what happens. And so one, it's like, Sandy's got to be blown away. She's got to come back and be like, oh my god, that place was amazing.

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Transitioning From Dying Business Models | Ep 853

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And then you also have to go back to the doc and be like, we blew Sandy away, by the way. And so I think you have to tackle it from both sides. That's what I would do. Getting into the ad side, you absolutely could do it and we could walk through a whole strategy there, but if we swap places, that's where I would be focusing.

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If I crush my B2B play, then I just run my B2B playbook in the new market. Once I find something that works, I just want to just... Do more. Yeah, pillage.

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Transitioning From Dying Business Models | Ep 853

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No, you bet. Now, if there's no way to do that integration, which there always is, but if for some reason you have limited beliefs about the world... what you can do is basically you have to pay affiliate managers to consistently, they're kind of like account reps. And so they manage the relationship with the affiliate to remind them that you exist and remind them to promote your stuff.

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And so if you have a handful of good affiliates that can be worth their weight in gold, because each of these business owners is advertising on your behalf. And so if he has 200 businesses, which is what he said, imagine harnessing the horsepower of 200 businesses of advertising and forcing it through one. Well, if you have that, he's easily gonna hit his $25 million in sales.

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Transitioning From Dying Business Models | Ep 853

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He just needs to activate and better use the resources that he has at his disposal right now. And on top of that, he's already really profitable. We still know the model works, we just have to do more of it.

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That'll then go to either a CRM or if you're low tech, you can just go to a Google sheets and then you can have your front desk call them within 60 seconds and then if they don't pick up, call them again and get them booked because your time is valuable. You'll probably. want to consider running some sort of highly discounted assessment on the front end.

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When it comes to your spouse or not spouse, your partner is my partner.

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Transitioning From Dying Business Models | Ep 853

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Okay.

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Transitioning From Dying Business Models | Ep 853

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Seriously.

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So fly out, spend two weeks with me. I'm not going to cater to you. I'm going to live my life. If the way that I live my life, the way this works, this is how it's going to be. If you like that, let's rock and roll. If you don't, I don't want to change.

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Transitioning From Dying Business Models | Ep 853

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Thank you. Crushed it. I see the most important relationship that you have as you with your goals, because your goals are really just a reflection of yourself. And so I don't want to, especially if I were single, I wouldn't want to sacrifice my relationship with myself essentially for someone else. The recommendation that I gave was what I would give myself, which is be you.

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Transitioning From Dying Business Models | Ep 853

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And if the way that you want to live to maximize the likelihood that you do what you want to do with your life is this way, then rather than try and compromise where both people don't get what they want, try and see if there's somebody who actually just really loves the way you live. That felt like the easiest first step is just have her come out and just don't accommodate.

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Transitioning From Dying Business Models | Ep 853

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Live the way you'd want to live. And if she's thrilled about living that way, then you have a very high chance of this thing working out because you have little effort. You're not pretending to be someone you're not. You're not putting on a show. You're just being you. And if being you is enough that she's stoked, then you probably have a good life ahead of you.

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Transitioning From Dying Business Models | Ep 853

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Now, if she comes out and that's not the case, then at least you didn't have to wait two years to find out after you both stopped acting that this is how you really are. And so I see the goal as how do I get as far forward in the relationship as possible of what would it look like if neither of us acted, and then let's just behave that way. And if it still works, that feels pretty good.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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Transitioning From Dying Business Models | Ep 853

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Transitioning From Dying Business Models | Ep 853

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So that'd be like a $200 X-ray or something like that that they can get for 19 or 20. You don't care about that. You just want a credit card on file so that when they walk in the door, you have two things. One is that When they walk in the door, well, one, you want them to walk in the door because they paid. Two, you can charge a no-show fee if you want to.

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Transitioning From Dying Business Models | Ep 853

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Transitioning From Dying Business Models | Ep 853

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So you're mostly insurance or you're mostly cash?

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Transitioning From Dying Business Models | Ep 853

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But typically, if you're getting even a low ticket amount, you'll be in the 70% to 80% show rate. So you won't waste practitioner time.

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Transitioning From Dying Business Models | Ep 853

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And just for the discount offer, now when they come in the door, you'll do the assessment. And then after the assessment, you don't treat them. You'll do the sale appointment then. You sell at point of greatest need, not point of greatest satisfaction. So at that point is when you'll make the offer. And then you'll be like, hey, awesome, do you want to use the card we have on file?

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Transitioning From Dying Business Models | Ep 853

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Oh, mostly insurance out of network. Got it.

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Transitioning From Dying Business Models | Ep 853

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Because you already have it on file because you got it earlier. It makes a much smoother sale. So the issue he's dealing with is that he's at optimized stage. He's 20 to 49 in terms of his headcount. And the issue, number one, that he has is that he can't hire higher level talent because they expect full compensation and he basically has very little cash to bring in the talent that he needs.

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So that's number one issue that he's dealing with. He's spending money to grow, but he's not growing, money's missing, and so that's an issue that he's dealing with in finance.

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Transitioning From Dying Business Models | Ep 853

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Because he has so many kind of products and services, the improvement between those things has gone down, and ads aren't converted, basically he doesn't have any real ads or real way of getting customers in, and so costs are going up, right? And so these are the issues he's dealing with, which is really common at this stage. Now let's look at what he has to probably do in order to improve it.

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Transitioning From Dying Business Models | Ep 853

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And so he has to create customer segmentation by cohort and activation process and then install sales training for his team so that he can start segmenting people and upselling them down a customer journey path.

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Transitioning From Dying Business Models | Ep 853

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Instead of marketing all of these different products, he basically needs to make one or two or three entrance points in the business, then a cross sell and upsell all of these additional services that might not convert as well on the front end, but work very well for continuity or for upsells and downsells or even high ticket upsells on the back end.

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And so he basically has to shift his perspective from somebody who bills insurance that's just like whatever they take off the menu, you know, because insurance encourages people to be like, here's all the different services, and this is what we pay for them, and so people just try and offer lots of stuff. Once you have a cash business, it's all about efficiency of acquisition.

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Transitioning From Dying Business Models | Ep 853

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You're trying to acquire customers as profitably as possible, and then ascend them to the highest LTV. And so this is basically what he has to build is the sales system, the ad assembly process to increase the volume of people coming in, segment the customers, and then learn to headhunt higher-level roles once he increases the cash flow.

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Transitioning From Dying Business Models | Ep 853

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Does that help?

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Transitioning From Dying Business Models | Ep 853

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But that's what you have to do. You have to learn how to acquire customers that are cash-based. And so that means that you have to run ads and you have to sell shit.

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Transitioning From Dying Business Models | Ep 853

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Yeah. So what business model are you thinking about switching to? Cash.

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Transitioning From Dying Business Models | Ep 853

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You're going to keep that business, but all of your discretionary resources are going to go towards this if you want to build a bridge to tomorrow.

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Transitioning From Dying Business Models | Ep 853

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What's profit?

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Transitioning From Dying Business Models | Ep 853

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Yeah, I understand, because you can't control how you're reimbursed.

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Transitioning From Dying Business Models | Ep 853

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I think that would probably be the first thing that I would do, because you want to free up cash flow. So yeah, you use this resources in terms of time and money to build the bridge. Make sense? Yeah, thanks a lot, Alex. Yeah, you bet. All of these things are on the graduate list at this stage. And that's because businesses behave in patterns.

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Transitioning From Dying Business Models | Ep 853

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I have a bunch of friends who are in-network and murdering it.

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Transitioning From Dying Business Models | Ep 853

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By the way, as a free gift for you, if you like the Scaling Roadmap and would like to know where you're at, you can go to acquisition.com forward slash roadmap and plug in information and it'll spit it out for you exactly where you're at. Don't worry, it's absolutely free. So go enjoy it.

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Transitioning From Dying Business Models | Ep 853

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If you want my team's actual help on the thank you page, you can schedule a call and we'll see if we can help you out.

The Game with Alex Hormozi

Transitioning From Dying Business Models | Ep 853

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Why don't you get in-network?

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Transitioning From Dying Business Models | Ep 853

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No, you're good. You're in education. And education graduates people. That's how education works. So if you look at the education system overall, the way to create continuity in education is just always have something else to learn or to teach. Like first year, now you're an undergrad. Now you're a graduate student. Now you have a master's. Then there's a PhD, and you get a second PhD.

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You just keep young people just become endless students. And so do you want to sell the business eventually, or do you just want to make money?

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Transitioning From Dying Business Models | Ep 853

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Why do you feel like the way that you have right now is dying from out-of-network?

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Transitioning From Dying Business Models | Ep 853

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No, it's fine. No, I prefer the truth. Yeah, I mean, the easiest thing to do is just double the amount of events you're doing. You can either go one a quarter, or you can do two at $1,200.

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Transitioning From Dying Business Models | Ep 853

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Is that where you run them now?

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Transitioning From Dying Business Models | Ep 853

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Yeah, I would do East Coast, West Coast.

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Transitioning From Dying Business Models | Ep 853

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So Henry is at the product tie stage and the issue that he's dealing with is that customers have nothing else to buy and churn. Literally right there, first line, and he says it himself. And so in order to graduate, he has to connect his customer success to product and then make something new to sell them, which is the back end. So I recommend that he follow exactly that advice.

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Transitioning From Dying Business Models | Ep 853

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and create either a higher level thing, or if he wants to build out a continuity that actually sticks, maybe consider downselling something that's maybe a cheaper annual fee for continued access to some of his services and events. But the big picture though was what does he want to do?

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Transitioning From Dying Business Models | Ep 853

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Now if he just said, I want to sell this company, then we have to create some sort of revenue retention so that it becomes valuable. But for him, he was like, I just want to make more money. And so then the obvious answer is like, cool, then just do way more. And so instead of just having the two events on one side of the US, put two events on the other side.

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Transitioning From Dying Business Models | Ep 853

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And just like that, you can double the business with really no operational risk whatsoever. I mean, you have a really simple solution. Like just run the same playbook more times.

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Transitioning From Dying Business Models | Ep 853

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If you were like, I want to build a more valuable business, then I would say take the year to figure out revenue retention, which is how do I get these people who pay me $12,000 to pay me another $12,000 or pay me $30,000 next year? or even downsell them to something that's $5,000 a year, but they stay.

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Transitioning From Dying Business Models | Ep 853

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Yeah, but I think considering for the model that you have, downselling the upsell, I actually like a lot. So if they paid you $12,000, maybe they'll stay for three a year, three to five, just to have access to the network and some of your vendors and the stuff that you kind of provide. And I think that's something that people would be far more likely to stick with.

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Transitioning From Dying Business Models | Ep 853

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And so then you can basically think about your business as... from a zooming all the way out perspective, is that the $12,000 is actually like an offset CAC, which is like you could break even on the $12,000 if you know that someone gets into a $3,000 a year membership that's pretty much all margin, that doesn't leave.

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Transitioning From Dying Business Models | Ep 853

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So it's like that allows you to spend way more than your competition, because they need to make money on the 12, you can break even on the 12, and then you just have this stack of $3,000 bills that just keep stacking up. That's like low effort to maintain.

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Transitioning From Dying Business Models | Ep 853

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Make sense?

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Transitioning From Dying Business Models | Ep 853

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Yeah. The nice thing is that you're honest about just wanting to make more money. It makes this a lot easier.

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Transitioning From Dying Business Models | Ep 853

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Yeah. Yeah. Don't say I want to make an impact. So big picture, he's an education business and education businesses graduate customers because they teach you. I mean, if you do a good job, you graduate. That's kind of how school works. Right. And so the real continuity in education is just more education. Right. Look at college. Then you have a master's. Then you have a Ph.D.

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Transitioning From Dying Business Models | Ep 853

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and you have a double Ph.D. And then you're just crazy, who knows? All right, and so the point here though is that he could try and build a recurring revenue stream from this business, but in all likelihood, his goal was just to make more money. And so why add complexity if that's not his goal?

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Transitioning From Dying Business Models | Ep 853

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So I was like, cool, just run more events and do them in different areas so you attract different customers.

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Transitioning From Dying Business Models | Ep 853

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So where did you source the single whale this year?

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Transitioning From Dying Business Models | Ep 853

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Okay, so SEO or PPC?

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Transitioning From Dying Business Models | Ep 853

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So if you want to go whale hunting, then I think your initial thought strategy of finding the architectural firms and engineering firms and whatnot is a good one. I would probably try the outreach method as my primary way, because you can be hyper-targeted in terms of who you're reaching out to. And the key to making it work, though, is what's in it for them to refer you to business?

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So this is a therapy provider who bills insurance. He's dealing with an issue that a lot of out-of-network are dealing with, which is that reimbursements, aka what insurance companies pay providers, is going down, but inflation and costs are going up, and so that's squeezing their margins. And for this individual, he was making zero profit.

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Okay.

The Game with Alex Hormozi

Helping A Failing Business Owner Fix His Business | Ep 870

You're about to watch a conversation between me and Alexi Omar, who is a legal attorney for musicians. The problem is that he's losing money and lots of it. And he has about six months of cash left before his dream is going to go under. My name is Alex Ramozy on Acquisition.com. It's a portfolio of companies that last year did over $250 million in aggregate revenue.

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Helping A Failing Business Owner Fix His Business | Ep 870

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Got it. And so this is 40K. I'm just going to put this as for the software. And then the money that you lost here was how much in total? I guess 110,000. Okay. Put a little negative smiley face there. Maybe a little tears. There we go. Very sad.

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Helping A Failing Business Owner Fix His Business | Ep 870

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But we are currently doing it that way. Yeah, you're right.

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Helping A Failing Business Owner Fix His Business | Ep 870

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So what we're going to do is income, but we're going to do through budget authority need timing. That's the big four, right? So do you have the money? Is there somebody else who needs to be on the phone? Your grandmother, your dog, your, your agent, whatever need. So how important is this to you?

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Helping A Failing Business Owner Fix His Business | Ep 870

1022.006

Uh, and then timing, if we were to get you set up, how quickly would you want us to, to make this, get this trademark or get this thing filed, right? You want to take the people who have the money and want to do it now and are able to make this decision. That's the qualification. Now, the big the big question is, what are we going to charge?

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I'm going to give you a hint. It's more than 250. So hopefully the price is right with what you're going to charge.

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Okay. And a lot of that is from people just getting hourly charged.

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So this is what I want you to do. I would love you to charge 5,000. I feel like that's going to be a stretch for you emotionally. So how about we start at three? Yeah. Can you do five? We can do five. Can you emotionally do five?

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1101.77

Okay. All right. This is what we're going to sell. That's your retainer, right? So either we can sell. So, okay, this is a question for you. I would prefer to sell the outcome if it's just a clear outcome that they're going for. Or you can sell a retainer, right? And just say like, it's 5,800, I'll draw from that, whatever.

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1119.985

I prefer outcome personally, because I don't want you to be tied to hourly if you can afford not to. You good with that?

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When I say outcome, I mean like the contracts or that kind of thing. Like when it's the commission-based stuff, I want the $5,800 plus the percentage.

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We just need to raise the prices. And we also need to organize the business so that we're optimizing for this outcome, not three different outcomes and confusing everybody.

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Okay. Now, if on the sales call, someone is unqualified. So this depends on your deal flow, but I'm assuming that you've got time to take calls.

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We don't. All right. This will work. When you have these people that are coming to call, what I want to add is before we have to sell the outcome. So this is kind of like on the call right here beforehand. We're going to add a VSL. Okay. So you're familiar with the VSL sales letter. Do you have one right now?

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All right. So how are you getting customers right now? Before we talk about how we're going to fix this. How are you getting customers?

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um for the course yes okay so instead i just need you to make one seven minutes you know five to seven minutes doesn't need to be long just explaining how you do things in your process okay and the other people that you've worked with some of the successful outcomes reviews things like that and then also set expectations which is like on this call we're gonna have one or two outcomes um either you want more personalized attention and we'll you know give you the outcome that you want or if you're like just starting out

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1204.111

We do have an education thing that if you can't afford our actual services, you can do it on your own. Yeah. Now the thing is, is that, you know what? I don't even know if I like that. I'm deleting, I'm deleting that. So the VSL is going to sell the services. That's it. When you get on the call,

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If the person lied about their income or lied about their qualifications, which does happen, then you can immediately triage them and say, so triage isn't like you split, and say, you know what, you can tell this isn't going to be a services sale for $6,000 plus a percentage. Instead, it's going to be a one-time education product sale, and then you can sell that.

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Now, right now, you have this 500 and then 500. I'm going to wager that you don't need, like if you're getting people to buy this on a checkout page, Typically, you can triple the price with a phone call of the same thing. So you could probably sell for $3,000.

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1256.867

So if we're charging six here, I would say probably somewhere in the neighborhood of like $2,000 to $3,000 is the right price point for the education downsell. But the only purpose of that is just so that you can maximize your time on the call so that you can still kind of have something. And if you need to do a payment plan or whatever, you know what I mean?

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Is that where most, like, everybody's coming from?

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1273.993

At that point, you're just trying to liquidate your time. But fundamentally, if we were to do this, let's walk through what it actually looks like now. You have your YouTube videos. Now all of the calls to action, the way I see my YouTube is I have, you know, 2000 video, whatever, how many videos I have. And each of them are basically like little mini ads that are always running.

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Okay. So we got YouTube. All right. What else we got?

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And underneath of the video or the quality ad, I have my actual call to action and I can, I have this surface area across the whole internet that I can change and redirect all of that traffic from all of my videos to wherever I want.

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1306.313

Then you can go back and on your biggest videos, go get pinned comments that, you know, um, that have the same call to action because some people just read the comments, change your profile. And then going forward in your videos, you'll put the, the, the CTA towards to DMing on Instagram. We're going to completely ignore the site since that's where all of your sales are happening on DM.

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So let's just push everyone to DM. Now, how many followers per month are you getting?

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Guess what? We're going to... Okay, so this is thing one. Thing two is that for every new follower you get, I want you to DM them and say, are you here for free content or entertainment, whatever? Entertainment or... You want help. And then every person who says they want help is a lead. So right now, if you think about that, you got 800 new leads a month that you can work.

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1356.196

Realistically, you close 5% of those. I mean, it's 40 more sales a month at 6K. There's 240. That's just from not including your existing volume, which we're now going to redirect everything to the most efficient monetization model. What stops you from doing this?

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From YouTube?

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Well, I think this will make you a lot. And I think this will save your business. And I think this will also make you very rich.

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Yeah, because you can't help people if you're broke. The thing is, is that the education, I think long term, long, long term, you might end up just giving it away for free because people are coming from that group as well, I'm assuming. And then they buy your services. And that's why I'm not trying to attack this because this is long term lead nurture for you. So where is this hosted?

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Good job, A. Well, there's your first mistake.

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No, but if you were to do it on school, there's a couple benefits. The biggest one is that we have more active users than any other group platform and community platform. So you'll probably just get people coming into your community anyways.

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1425.16

but you can also every single person who gets into the group you can offer a free onboarding call as a part as a benefit of being in the community and then you can use those as setting calls to either triage them to services or just refer them to free stuff right like instead of coming from youtube they would come from the school and then Think about it like this.

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This is actually a really good visual. So your old way, let's do this in red because Michael loves colors.

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So old way was this. You had one source of eyeballs, right? And you were splitting it between three different places. The new way is you now have three different sources of eyeballs and you're forcing all of them through the most efficient monetization vehicle. So you've got your YouTube, you've got your Instagram, And then you've got your group.

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And all three of those are pushing to the one thing that we know makes you the most money that also people want. And we're pricing it in a way that actually makes you money.

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It's not an, it's not a consultation.

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Yeah, before the call.

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No, not like you getting signed with a record label. No, no. We're going to do the work to prepare you for that. You're still gonna have to do that on your own. And then when that deal comes, we ask for 5%. And the reason we do that is because it makes it affordable for you at 5800.

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Yeah, I want to just do this as the easiest thing that I can do to immediately fix this business and make it profitable. If we wanted to add something else, we could, but I just don't want to right now. We're going from spraying the traffic all over the place into places that lose money. to pointing three different places to the one place that makes money and doing more of what already works.

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And we're going to take all of those findings and help him save his business. Enjoy. Let's do a quick, quick overview. So walk me through the businesses that currently stands right now. What's revenue?

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And we're just going to add a little bit of qualification, add a little VSL, fix the pricing, and then we're also going to route all the new followers that come there too. So you will likely have a lot of opportunities. So you'll likely be taking eight, 10, 12 sales calls a day.

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Like, yeah, of course. Yeah.

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So there's a couple of, so there's, I'd say like right off the top of my head, there's two places that we could, like, if you wanted to use it now, I would say that you could give it to people who are unqualified. If you don't think you could, like, if you look at somebody's profile and you don't think they're, they look like, I mean, you can probably tell somebody is not qualified.

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You could say, Hey, it doesn't look like you're ready for our level of services, but because I want to invest in the relationship longterm, here's a copy of my book. I think that would be a very elegant way to not overly complexify what already will work. Long term, we could start using it as a way that we would drive traffic in the future.

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And then you could have a call team call the people who bought the book and then see if they want more help. And then you could basically bring it. All we would do is we add another circle. But right now you have three more than sufficient traffic sources that you were just wildly under monetizing. And we just need to fix that.

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And you don't tell people to go there? They just find it?

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Okay. All right. We'll put a little star next to that. If all the money is coming in from Instagram, how many DMs do you get?

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I'll believe that when I see it.

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In a world that doesn't exist. Yes.

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So at the very beginning, you know, I said like, what do you want? And so we had to fix making this make money because you're going to run out of money. Yes. And so we have to solve that. The thing that makes me hesitate with the software is the amount of work and the amount of expertise it takes to make software really work is really high.

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And so I would be more inclined to say like, if you have some of these big companies, you might just give them the software or have them just say like, you're like, Hey, instead of 25,000 a year, if you just pay me a hundred grand or pay me 200 grand, I'll just give you the whole thing. And that's basically you getting it at cost and saving two years. And then you can focus on this. Got it.

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That's of course, if you want to make money.

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Yeah. I mean, the alternative scenario is that you burn the education, you burn the services to the ground, you go all in on the software and you need to be able to fund that loss for a while and then actually build it right. No, that doesn't seem like it's a, that's too more fantasy than reality. Then you learned a ton of lessons, which is fine.

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Everybody just gets better from learning and you build a really good business, which I think you have all the makings. You literally have everything in place. They were just organized wrong. That's the good news. We don't have to build anything. We just have to take what we already had, redirect it through a better monetization vehicle, and that's it. And so this is the first step.

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We add traffic here as the second step, and then we'll add the book as the third step later. But for now, you just need to do step one and step two. We have enough leads to probably fill up your calendar plus one other person, maybe two. And if you have three people selling full time and you have a $6,000 thing, you could be at $18,000 a day, $30,000 a day, $50,000 a day.

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And the next problem that's gonna hit you is that you're not gonna have the team to actually deliver on this stuff, which we'll cross later. But that's what this is gonna do. This is gonna break the business. but you'll be making money. And then we'll take that money that we're making and then we'll solve the thing that's broken, which is that we're going to hire more abogados.

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And you were mispriced. So I have my little moniker for the six big mistakes that small business owners make. So let's make those in red. And I think you're making almost all of them, which is great.

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Yeah. So you were selling to too many different avatars. So that's number one focus, which is that you had more than one business. So you were you were hitting that one. You're hitting this one. You're you weren't so over expansion, which I will not say that you were wrong. So we put it under focus. I'll give you a neutral on that one.

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And then that goes into 150. Okay. Got it. So you're converting 2% okay. Into opt-ins.

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Uh-huh. Then we have compensation. So it's, are you overpaying your people? Which right now I don't get that impression. Underpriced, which you were or mispriced. So you had that one. And then this one is single product. So that's when somebody has a front end and a back end, which I'll say that you had kind of like a half issue. We had the

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the $250 per hour service fee, but we didn't have that kind of percentage win rate yet, and it wasn't part of a standard offer. So I'll say that you had like a little X, a little mini X there. But the good news is that these are the mistakes that most small business owners make, and it's normal, and it's okay, and that's why we're fixing them.

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Is that your, I don't know if you'll get to a million a month from this. You will certainly make a lot more than you are now. And the next thing that's going to break is you're going to run out of orders. So the next is you're going to run into a supply constraint. I actually think you have probably more demand.

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You will not be able to sell through the demand that you already have without expanding supply. But if we completely utilize your existing supply of work that you could do at the appropriate price, you could absolutely make this into a multimillion dollar per year business.

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2000.004

Yeah, and a specialized law firm, which is good. So you have that niche down. You have a very specific niche. And the nice thing is that there's a lot of people who want this service. And the price point that we're charging is an appropriate price for somebody who's wanting to make a bet on themselves and their career. You have to make an investment.

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2014.854

Just like you do, they have to make an investment too.

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2023.9

So I mean, you'll know this better than I do, but I just want to make sure that, you know, the average ticket.

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I want to I want to make sure that I'm running at at least 80% gross margins for service minimum. So your actual cost, so your actual cost on this should be, let's see, you should be less than, call it like $1,200 or I'll say $1,100. So if you're less than $1,100 in terms of total cost for this. To deliver that. To deliver that, then you charge $5,800.

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2053.56

And so I'm guessing your man hours are going to cost you less. I mean, I don't know what you pay your lawyers, but let's say it's $100 an hour. If it's less than 11 hours to do it, then you're good to go. And if they do it in five, amazing.

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Okay. And that may sound crazy to anybody who's listening to this, who doesn't have a business, but let me, Let me show you a visual. So good. So good. This is great. People say that, but let's imagine we have $100 of revenue. All right, to keep it simple. If you have a 20% gross, sorry, 20% cost, but 80% gross margin business, then it's like, cool. So we already have $20 gone.

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Got it. Okay. And then from there?

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So we have $80 left. But we're still going to have marketing that we got to spend. We're going to still have admin costs, you know, people who are scheduling and all that stuff. We have sales that we're going to have to pay on top of that. And that's going to be the majority for this business because the labor is going to be here. Right. In terms of your cost of goods.

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And so maybe all of these things cost, you know, 60 percent. Right. So then we still have a 20 percent margin in the business. But that sounds greedy when you're like, oh my God, there's 80. It's like, yeah, but we got to do all the other costs, all the 80. And then whatever's left is our profit. Now, hopefully you can run this thing at 30, right?

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And then you have a 50% margin here, which would be wonderful. And then we smile.

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So all in all, we went from sad face to smiley face. Did it? Great.

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You already 4x the business just by focusing on that one thing. And that's with still having the distraction. Like you absolutely can be at multiple millions a year. Like no question. Given the fact that you have a 90,000 YouTube following, you have a 23,000 person Instagram following, you have a community of people who love you and are raving fans. You have all of the foundation.

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How do you try and sell them? Do you like reach out to them? Do you, what do you do?

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So the good news is that all the work that you spent doing over the last however many years was not wasted. You just didn't monetize it well. And the good news is you can do it now. So no big deal.

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2203.083

It's a good question. It's a tough call. And the reason for that is that it's for sure a long-term investment to speak on stages and things like that. The thing is that you're currently not demand constrained. So you speaking on stages will just generate more demand that you can't handle. Let's play it out the other way.

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If you speak on stages and you take your eye off the ball in the business, you lose. If you focus on the business and you continue to grow the firm, the stages will still be there because you'll just be bigger.

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If you know that you generate three sales a day at $6,000 when you're there and it takes you two days, then your speaking fee is $36,000 plus travel.

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Yeah, and also to be fair, the opportunity cost isn't just what money you would have made, but also the focus and the distraction that takes away as well. So there's hard costs and soft costs. The hard cost is you really just won't make these six sales. The soft cost is what else would you have done in between and then not had to deal with any of this hassle? Perfect. Will you do this?

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And then from the emails is how they buy? And what are they buying from the emails?

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Nine out of the 150?

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253.064

Is that on a funnel or something?

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264.371

Per month?

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Nice. Okay. Oh gosh. Okay. So there's so many, I mean, where do, there's so many things. Before we, you know, tear this apart, the good news is I actually think that you'll be able to make significantly more money pretty quickly. So this is your education side? Yeah. All right. What's the services side?

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So you go DM to calendar. Okay. And then you charge before you have the call.

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okay 250. dude the good news is there's lots of room for improvement okay that's great so you have your calendar and then you charge 250 per hour and they pay on the calendar to to have access yes man all right and so that means that you sold somewhere in the neighborhood of uh 600 or 630 something like whatever the math is 131 times four that's 400 520. So 524.

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Okay. How much?

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So 524 hours is what you were able to sell in services last year?

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347.644

Okay.

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36.379

Okay. Minus a hundred thousand. Yes. You're like, I could have done nothing and I would have just had zero at the end of the year instead of working all year and then being worse off. Heard. All right. What are the business units?

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Okay. And what other business do you have? Let's talk about that.

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Cause you were like, you know, I'm not losing money. So I should, uh, I am losing money. Excuse me. So I'm going to, I'm going to spread my attention even more. Yeah. Okay. So there's a story behind that.

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So if you want a horror story, we'll get, we'll get, we'll get into it. I'm sure. All right. So there's the software company. Okay. So let's walk through that.

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Instagram, where's it coming from?

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Okay.

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So via Instagram, you just send those people a not a calendar link and you don't send them the site. You send them to.

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So which is a different website. And then they just check out on that page.

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And what's the membership price?

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And that's what it goes straight to a thousand per year is what you were billing.

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They were like, I can't afford $250. And you were like, yeah, so pay a thousand dollars a year.

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We have a couple of decisions that we have to make. Is there any reason that you just don't sell services and make money?

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Okay.

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So actually, you know what? I'm going to show you it on my logo. Two most important concepts in business, supply and demand and leverage. So if supply is low and demand is high, what happens to price?

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Okay. And who do you sell to?

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Is that what happened?

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But then you created this other thing that was much cheaper rather than just saying, I don't have enough supply. Pay me more.

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All right.

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Yeah. But the thing is, is that a long enough time horizon, you'll have no one if we don't make this business profitable. Right? Yes. So, okay. Tell me why we can't shut down the education and software so that we can just do services and then we can fix the service business to make it make money.

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They were bought like lifetime, everything.

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Musicians who are Latin American who speak Spanish. Yeah. Okay. And you sell service, you sell education. What was the last one? Software? What's the revenue breakdown between, did any of these make money?

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Okay, so when we did this breakdown, you said the education loses money. So how much money does the education make if you don't have the software?

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Okay.

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Yeah. But you said this is $110,000 of losses. So that means the software costs you 150,000 a year and makes you 40. Yes. Okay. You could say that. So why can't we be done with the software?

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But that is something that... How much does it cost you to develop the software?

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How likely is it, do you think, that you're going to sell the software?

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Well, it's obvious that the service is the thing that everyone needs. And then we just have this other stuff that we did to be cute. Where do you want to grow from here? What do you want to have happen?

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Okay. That we can solve very easily. That's the good news.

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But it will just be painful.

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But it's good pain.

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Yeah. Call them growing pains. If you lose a negative, it's a positive. So, okay. So in a world, hypothetically, where you just ended the software tomorrow, and then you have the education and services, what is required for you to maintain the education work-wise per week?

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So this made money, was profitable.

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Okay, great. Can we just shut down the software?

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Okay. What was the top line and bottom line here?

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Oh, that was easy. Okay, great. I love this for us. Okay. So we're going to X this out. Let's use a red. Let's keep this, you know, keep this, keep this on brand here. So this is a red. I'm going to say that this isn't really a business. I'm going to say this is a charity. You might even want to operate it like a nonprofit because it doesn't make any profit anyways.

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And you're, you're very, you know, kind of impact driven and whatnot. So then what's the cost on the 131,000 in services?

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Do you guys act as an agent for that?

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So the services strike again in making.

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Wonderful. So what I want to do is reimagine the business in the simplest format possible that's organized to make you money both short and long term. Is that OK?

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All right. So I'm going to draw it across the top here and we're going to draw it in green because this is the money path. All right. It's the money path. You keep your YouTube where it is. Now, what I want you to do is I want you to have four different places that you're going to embed calls to action. All right. So number one is at the 30 percent mark of every video.

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Because you just didn't lose money on this one, basically. Okay. And then education?

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I want you to make a quick 30 seconds like, hey, by the way, you know, if you want us to help you out with your music business right now, just DM me on Instagram and I'd love to help you out. This is my handle. OK. Number two is the description. And you want to make sure that it's above the fold. So below this video right now, you'll probably see two links.

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One is for people who are trying to start a business, which they go to school. And if you already have a business and you're trying to scale and you're like a million bucks a year or more, or 500,000 a year or more, or $10 million a year or more, you can go to acquisition.com and schedule a call with our team and see if we can help you out. So we have a description.

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Now on top of that pinned comment. So you can own that real estate. We also have your profile on YouTube, which gets traffic as well. And so those are four places that we can actually just put in all of the CTAs here are DM me on Instagram. Why are we doing that? Because it already works. So I'm not trying to break it. All right. So now everything's going Instagram.

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So instead of having the site, we don't even care about the site. Who cares? It doesn't matter. So we're going to DM me on Instagram. And then from there, what I want you to do is I don't want you to have them book a call. without paying. And then what we're going to do is we're going to sell them.

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And what we're going to do is we're going to sell them a package and we're going to sell it to the outcome. And you're going to say, hey, a lot of lawyers like to charge by the hour. The reason that we don't do that model is because it disincentivizes us. Basically, our incentives are adverse to you. When we do it by the hour, we're incentivized to take as long as possible.

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All right. Profit.

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So it means it costs you more and it takes longer. That sucks. So what we're going to do is we're just going to charge you for the outcome, period. That's it. How's that sound?

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But they all eat. They all have cars. They all have cell phones. They all pay mortgages and rent. We're not. We don't. You sell to a lot of up and comers and newcomers. They're going to use just like you have been spending your education money that you make money on this dream that you have and losing money. We're going to have them do the same thing.

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They're going to take their job money and spend it on their dream. And hopefully they make it. But our goal isn't to try and figure out who's going to make it. Our job is to enable the opportunity. So the pre-qualification that I would have here is just income. Not like, and if you want, you can add their Spotify if you think that matters, you know, in the qualification. But fundamentally, yeah.

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Okay. That's what I figured.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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Welcome back to the game. Business owners making less than $10 million per year cannot afford to make this mistake. And it's a problem that limited me and my ability to sell my company. And there's four parts to this mistake, and it starts with something that I like to call key man risk.

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I want to not have to do any of these things at all. I want someone else to do them. And then that transforms this particular job that you have, because as an entrepreneur, you'll have more than one job. It takes this job, takes the hat off your head, and puts it on someone else's. And then that shifts you towards owning an asset rather than owning a job.

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And to be clear, I'm all for maximizing the amount of money that you're making. And some businesses lend themselves more to kind of the people and process stuff than others do. Taylor Swift, for example, is going to have a hard time being like, hey, this is my blonde double and she's going to sing for you guys today because look, I've delegated the responsibility.

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Now, it's very unlikely that that would happen. And so there are situations where you just have unicorns in a business, and so that's where you just have to align incentives like crazy and try and take it all the way, right? Which is either you're just getting paid a ton of money, which Taylor Swift does, or you create liquidity, meaning you get paid for the equity shares that you have,

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via a different vehicle than selling. So when you go public, you sell a little bit of the company, but the vast majority of the wealth that most of those founders have is that they have shares that they can take loans against.

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So this could happen on the marketing side. If only one guy knows how to generate leads or if that person left, you would get half the leads or a third of the leads, that would be key man risk. If only one guy knows how to sell like you and that guy closes 80% and no one else can close 20, that would be material. That would be key man risk.

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And the bigger a business gets, if you don't have any desire to sell, you can take debt or other instruments where people will lend you and you can collateralize or back it up with the stock that you have in the business. And so if you don't pay them back, they get to own shares in the company. And so you can see with Keyman, it's all about risk.

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And so when we successfully bridge this gap, what we avoid is the risk pitfalls here at the bottom where we could just die a fiery death in our business. And so we just keep building our little bridge, the next brick in our bridge to our big money pile over here. is single channel risk. Now that's just a fancy word, so let me tell you what it means. Very simple.

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If more than half of your customers or leads come from one place, you have single channel risk. And the concept behind this is that if that were to stop, it would materially affect your business on a long time horizon. So quick illustration.

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One of our portfolio companies, which is the Teeth Whiting Chain, got a lot of business from outbound, meaning they had a team in the Philippines that would reach out to prospects geographic so that we could give them an offer to get them to come in and get their teeth whitened. Very simple business. Almost all customers were coming from that specific source.

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All of a sudden, the rules on that platform changed based on the way that we could message. Almost overnight, we had 50 to 70% fewer sales coming in from that primary channel. Now, that is single channel risk. Can you imagine as a business owner, overnight, you're like, oh my God, this will change.

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Now this has happened for, if you're ads dependent, let's say all of your ads, the way that you get customers is on meta ads, and then you lose your account, boom, all of a sudden your business almost goes to zero.

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Or if you have an organic content following and you're only on one platform, for example, and that platform bans you or restricts you or shadow bans, whatever, and then boom, all of your lead flow disappears. or you have, let's say, a domain or a server that you send your emails from.

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When you do outbound and all of a sudden that gets whacked with some sort of, you go into the promotions tab on email, all of a sudden all your response rates from your domain go to almost nothing. In each of those scenarios, you have single channel risk. Now, thankfully for this particular business, I had spent the last six months or more building out a recurring revenue stream.

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And I detailed that in a different video where we went from like 5% of revenue being recurring revenue to over 60% of revenue being recurring revenue. And so even though we decreased the amount of new sales coming in by over half, it didn't actually change our overall revenue because we had so much compounding that had started to become unlocked.

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If only one person can do the delivery, that would be key man risk. And so I'll give you an example of the delivery. And so when I had Jim launch, I was kind of the innovator of the product and the service. I came up with the solutions for the Jims. And so for an acquirer or a private equity firm who wants to buy this business, or whoever else you might want to sell a business to,

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which is why there are multiple ways to stabilize a business. But for the purpose of this video, if you have only one way to get customers, then you have one way to lose them. So first off, who needs to worry about this? Well, the bigger your business gets, the more important this is. And let me explain tactically how this works.

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Because let's say even volatility from a single channel is something that could rock the boat, figuratively. Well, if you have a small business and let's say the channel goes down by 20%, then let's say you've got one sales guy and his calendar goes from 100% filled to 80% filled. Not a huge deal.

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Now, if you have 100 sales guys and their calendars go from 100% to all of a sudden 20 of the guys have completely empty calendars, that level of volatility that can occur when you only have one channel makes it much more difficult to do business on a regular basis. And so there's a variety of solutions that I will walk you through.

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So number one is that if you're a tiny business, you don't need to worry about this yet. But my biggest advocate for being a small business is that you're going to have one primary method for getting cold people, which is usually going to be outbound, number one, which is you're reaching out to prospects who don't know who you are. Two is going to be affiliates.

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So again, you've got third parties that are sending you traffic. Three, you've got ads that are ways that people are coming into the business. And you've got organic. So this is going to be likely how you're going to be getting customers.

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This may seem like a little bit of a departure from some of the things I've talked before with one channel, one avatar, one product up to a million dollars a year. And that's true. It's just that I've seen like... so many people be able to manage this. And I think it's such high return for such low effort that the organic that you put here is not really to acquire customers.

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It actually functions more to amplify what you're doing with these other channels. If you are doing outbound and then people Google you and then they can find a little bit of content, then it's like, oh, this guy has a pulse or this is a real business.

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As an affiliate or affiliates are sending you customers or you're trying to sell affiliates, then just knowing that you have some sort of presence increases the likelihood they do business with you. And same thing with ads. And so if you're a small business, this is going to be one of the big ones that you're probably going to use.

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But the organic is just something that you can do even one post a week. It doesn't have to be a ton just to look like you have a pulse. So if you're a bigger business, the way that we solve this is a standardized process that I've now had to jump through with a lot of companies. So the first thing we do is we shore up long-term nurture.

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And you're like, how does this have to do, what does this have to do with getting a second channel? weight. So the reason we shore up the long term nurture is because we want to get more out of what we're already doing. And if we get more, that's going to increase our cash flow without adding cost basis to the business.

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So basically think about it as like decreasing risk and increasing our ability to make bets. So long term nurture means a combination of making more content and Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you. email specifically follow up because a lot of people, a lot of businesses don't do a good job following up with the leads.

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And so they have this list of 10,000 or 20,000 or 1000 people that have done business with them over a long period of time, or at least given them their information. And so if we create a cadence or some sort of schedule, around reaching out to those people, providing value, and then occasionally presenting offers, we're going to have another stream of customers that's coming in.

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Having one person, especially if it's the person who's going to leave when the business is sold, is a huge, massive red flag for them because they're like, wait, we're buying this production, but it's with this key cog in the machine and you want to have us buy this thing and remove the cog.

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So think of this as, in a way, another customer stream, but it's an incredibly low-risk customer stream that is the most profitable of all streams. And so email marketing, for example, has, depending on the source, a 42 to 1 to 36 to 1 return on dollars. And so it's like, oh my God, why would we not do that?

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So we do this to decrease our risk, increase our cash flow in the short term to get that engine going. The next engine that I like to make sure is very strong is my referral engine. And so if I haven't put a strong referral system in place to get customers to send me more customers and

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made sure that I'm asking multiple times in different and creative ways throughout the customer journey, then I implement that next. Again, we're getting more for what we put in. And so after we've got the long-term nurture firing and we've got the referral system going, this should give us a little bit of padding to then invest in the second channel.

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Now, when I say invest, the way that it typically works is that you will see no outcome for an extended period and then all of a sudden it will start working. And you may get frustrated in the short term that you're not seeing immediate results, but welcome to business. You have to think long term about the value of what a second acquisition channel or third acquisition channel means to you.

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So number one is that when you do the second acquisition channel, you can't immediately double sales or more. And if you double revenue, you typically far more than double profit. So that's number one. Number two is that the business itself becomes less risky. So not only are we adding revenue and profit to the business, the revenue and profits itself,

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is more likely to continue and so the business itself becomes more valuable and you can sleep much better at night knowing that if one of these things goes down, my team is still fed. And so when we make this investment, here's one of the big no-no's, is you don't do two news. Like what's two news? So you don't wanna have two news. So what does that mean?

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Well, if you're gonna start a new channel, that's one new. What you don't want to do is put a new person on a new channel because then you don't know which new is the problem. Because even if you take you and maybe you're really good or your best person and you put them on the new channel, well, there's already the newness of the new channel and you won't know.

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But if it's somebody you know who's really good, then at least we're working through the channel itself. Otherwise, you could be stuck paying lots of money for a long period of time not knowing if you're solving the right problem.

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If a single person is vital to how your business operates and if they were gone, the business would cease to be able to exist or be able to be as profitable as it is with that person. And so this key man risk can exist at the founder level. So it might be you, like if your business, if you leave for two months, which by the way is a great test of this,

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which is why I'm such an advocate for founders to have deep understanding of the core processes of the business, which for me are understand how you get customers, which is going to be marketing and sales, and understand how you deliver value.

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Now, if you wanted to outsource IT, if you wanted to outsource accounting, if you wanted to outsource HR or payroll processing, those are things that I don't see as core to the business. You can of course bring them in-house when the cost makes sense.

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But in terms of the core economic engine of the business, those are the things that you, the founder, the entrepreneur, want to understand intimately. If I am going to start a new channel, I do these two things first in order to give myself some breathing room.

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Now, in a situation where you raise money, for example, it's not as much of an issue because those people, those pieces, those cogs are still in the machine.

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I get a little more cash flow, I get a little bit more from what I'm already doing, and then I have one new, which is the new channel, and then old person. Now it doesn't actually have to be old, but it's somebody that I know. This can be tough because you're like, wait, wait, I don't want my original channel to go down, which is the most common thing that happens in this situation.

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My recommendation is transfer the skill on the first channel first, to someone else, make sure that they can handle that without decreasing performance, ideally it goes up, then and only then you can then make the investment into the second channel where you're the old guy and the channel's the new thing. to bring somebody in to help you with this, I think that's a great idea.

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Like if you're a larger business and you're like, I can't actually just like figure out cold outbound, that's fine. But you basically have a thought partner and you guys are working through it together because you'll have more context on the business overall. And maybe they have more context on the methodology that you're going to use for the second channel.

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But that merger, those things coming together where you learn a lot about the method, they learn a lot about the context of the business, both people get better. And this is how I've seen, this is how I've been able to successfully use all of these different methods of getting customers in different companies.

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If you wanted to sell a company and you own the company and you leave and all the people who are still key men remain within the business, then what they're going to do is try and incentivize those people to stay, but it still makes the company sellable. So this just counts double if it's the owner or somebody who's going to leave as a result of a transaction.

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If any customer or associated customers left tomorrow, would your revenue drop by 20% or more? Now, the reason 20% is kind of the number I choose is that most businesses run at 10, 20, 30, 40% margins. And so if you had even a 40% margin, which would be a great margin, you lose half your profit. This would be material to the business itself and its value. So I'll give you a real business story.

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So I had a business owner come out to acquisition.com who was an agency owner. And he had 10 customers. And nine of his customers were small like tech, SEO, like agency customers. And then one customer was Google itself. and it was a massive percentage of his revenue. So for him, for this example, this was actually 70% of his revenue.

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So if you actually look at the meat of this fish, and you added all these little pieces of meat in between together, this is definitely the fish that has all the money. If I'm this owner, I'm like, oh my God, if I lose this whale, it's going to kill my business. I have to let go of half my staff, I would certainly lose all my profit. And so this is a huge risk to the business.

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Now, there are four ways that you can solve this problem. So there are four proven ways to solve this problem. So when this business owner came out, I said, we're gonna go through all four and you're gonna pick the one that you think you have the highest likelihood of achieving. And so this is you, this is how you solve it.

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So the first way you can do it, all of a sudden you get a bunch more minnows, and then all of a sudden, by percentage, man, these are ugly fish, by percentage, you know what? This whale isn't 70% of my business anymore. So you just keep adding minnows to your boat and then all of a sudden you're like, you know what, my minnows way outweigh my whale and so I don't have key customer risk anymore.

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The second way is that you lock this whale in to a long-term contract. So just think about this whale as signing his life away. But you get Google or whatever this customer is to sign

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a three-year, a five-year, a seven-year commitment, and you can add some bonuses in there and say you're going to have some dedicated reps or you're going to have some sort of discount that might be associated with that kind of commitment. But when they do that, then it makes it more stable because it's unlikely that they're going to leave.

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And if you want to be smart about this, just a little pro tip, add a little breakup fee. Because some people are still going to back out on their agreement, and you don't want to get into a legal battle. So you want to just give them some way in the future. But just knowing that there's this nut that they're going to have to pay will prolong how long they'll stay with you.

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And so I would probably charge somewhere in the neighborhood of 10% to 20% of the contract. Now, all of this stuff's negotiable as a breakup fee. So if someone has a five-year deal, then I might say you ought to pay a year if you're going to break up beforehand.

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Another way of thinking about it is saying whatever discount I gave you, you're going to have to pay to make up that discount for the entirety of the contract in order to leave the contract. Another one is that they have to give you six or 12 months of heads up.

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So there's a lot of ways that you can write terms around this with the whale to decrease the likelihood that they leave and disrupt the business. Now that's path number two. The third path is, and this is my preferred path, is you just get more damn whales. And then all of a sudden you realize, you know what? Dude, I'm in the whale business, right? Why was I hunting minnows?

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Look at the meat on these guys, right? And so all of a sudden, you don't try to outnumber with minnows. You make all of a sudden, you just go get five, six more whales, and this isn't 10% or 20% of your business. So path four is a nasty one. And for many of you, if this is your situation, it may actually be the right path. And I'll tell you a story to illustrate it.

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is the key man risking any of the functions of the business? So I was key man in the delivery. And so I did a couple things to solve the problem. So number one is that I created a department called the R&D department. And so the way it worked was simple. I thought about the process that I would go through when I wanted to innovate the product.

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So there was a recruiting firm that I was talking to and they had grown a decent amount and they had this Mondo contract that was on the horizon. And so they staffed for very specific types of engineering roles that were difficult to find. So they definitely had a niche that they had found.

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And they had some big whale come to them and say, hey, we want you to staff us with 20 new employees a month, which was a big contract for this firm. So this firm was probably doing $600,000, $700,000 a month. And so this would be like an additional contract. $200,000 a month that they were gonna be able to contract through this new whale.

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And when they were asking, how should we negotiate this deal? What pricing should we put in there? I thought about it for a long time and I was like, you know what guys, I think the actual best move is to not do this deal. because they were going to have to basically change the fundamentals of their business, their pricing, their delivery.

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The whale demanded so many custom things that were only going to be a use case for them and were not going to service the rest of their customers, and they had no way of reliably acquiring the whale. So I'll explain the difference. the whale comes in through a tried and true channel, then this might make a ton of sense.

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But if you just get a random referral, or you just meet somebody, or you work from your network, building your entire business around an unsustainable or unpredictable way of getting this type of customer is probably not smart. Now if that, Recruiting firm had said, hey, we just got our first whale, but we have a new way of getting whales. Then I say, oh, this is the first whale of many.

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This makes sense. But if this is just a random lottery ticket that falls into your lap, you have to make the decision of what business do I really want to be in and what customer do I really want to serve?

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And so I think that this entrepreneur just saw dollar signs in his eyes but didn't calculate the cost of what it would mean to his business and the disruption of the main economic engine that he had spent years putting together. And so path four is you just realize that this whale might be someone else's customer, and you let it swim on by.

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And the fourth one, and this one is a crazy one that I've got a story for you, is single vendor risk. All right, so the first example of this that I had, like, unfortunately, I've had this happen a lot. All right, so with Prestige Labs, I had one manufacturer who made our products. And it turned out, we found out that he ended up stealing about $400,000 in cash that I had sent.

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And he kept asking for early and earlier payment on stuff to lock in greater discounts. And in general, if I have cash and I can guarantee a 10% or 20% return on that money, then it's almost like I could put it in the stock market, but I know for sure I'm going to get 20% less cash.

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discount, or sorry, I'm gonna get a 20% discount for sure, then it's like getting a 20% return on the money guaranteed. So I'll take those deals when they come. But kept asking for it earlier and earlier and earlier. And when we just said, hey, you know what? It had been enough times that we were like, why don't you just send us what you owe us in terms of product? All of a sudden, he couldn't.

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Because what he had used is he was using our cash to run his business rather than use it as an account for the products and raw materials that he needed to purchase for our account. And so obviously that was a big no-no and we were able to thankfully bridge to another provider and not really create a disruption.

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So I'd say, okay, what can we do for our gym owners that will help them generate more leads, make more sales, whatever the issue was. And so the first thing that I did was that I would say, okay, I have a way of identifying problems. I would ask the customers, and the nice thing is if you listen to your customers, they will shout at you, and they will tell you exactly what their problems are.

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But for probably a period of six months, we were running out of product on a regular basis and had like three month lead times where we had to basically make this transition and we lost a serious amount of revenue. And that was a big hit both to the revenue, but also just reputation because Prestige Labs sold through affiliates. It still does sell through affiliates.

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And during that period, affiliates were like, dude, we can't sell half the products we normally do because you don't have them in stock. And so that was very tough. And I learned that lesson. Prestige Labs, which was a supplement company that I owned at about 20 million bucks a year. And I ended up selling that in that $46 million sale to American Pacific Group in 2020

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Alan was a third company that I started and sold in 2021, which was a company that helped brick and mortar businesses work their leads through automated messaging. And I didn't understand how software worked at the time. And so I just said, cool, I know this problem. I'm going to go hire an outsourced dev team to go build me this software stack. And they did.

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And lo and behold, here's the crazy thing, no one on my team was any bit technological or a developer, and so 100% of the development was happening in this outside shop. Now, what do you think the outside shop owner did when all of a sudden this thing that he built's doing 500,000, 800,000, a million, 1.2, 1.5, 1.7 million dollars in sales? All of a sudden, magically,

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What was once $100,000 a month in development became $200,000, $300,000, $500,000 a month in development because he could see how much money we were making. Which is why I'm such an advocate of if you are going to start a software company, you want that person to be in-house. At least it'd be key man risk that you can control, right?

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But instead, I had a key vendor who literally designed and built the entire product that I was selling. And so this guy had me by the balls. There was nothing I could do. And so I had to start building an in-house team.

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In parallel, without trying to let him know that I'm doing this, because obviously he could see the writing on the wall, and then he was difficult to work with in transferring the knowledge over, and it was a nightmare. And so that was my second big experience with this. The third, you're like, you should learn this lesson. You know what? Sometimes it takes me a while.

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So in my first book, 100 Million Dollar Offers, I talk about how I lost my payment processor and it was this terrible experience for me because it was the only problem I'd ever encountered in my life that I couldn't save with sales because no one would process the money. I was running a national business out of a brick and mortar store that I had in Southern California.

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So I'm processing payments out of Canada. I'm processing payments out of Mexico. I'm processing payments out of the United States, all over the country. And they're like, wait, how is this happening out of a little brick and mortar store in California? I didn't know how this worked. I was 25 years old. And so I broke the rules and was unaware of it. And so they held my processing.

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After that happened, and you only need it to happen once, for every single business that I've had afterwards, I always have redundancies in processing, meaning I have multiple processors that are approved, spun up, and can handle the entirety of my monthly volume at a moment's notice. Because I only had one payment processor, I had no ability to negotiate anything in terms of my fees as well.

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And so I'd say, okay, number one is that I had these problems. Now I have to solve those problems. And so I'd have them rank the problems. They say, okay, this month, lead generation is the biggest issue. They want more leads. And I'd say, all right. Now the next thing that I would do is I would deploy resources. So this would be time.

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And so having multiple there that are approved gave me leverage with the relationship, I got better service, and if for whatever reason something goes down, I can switch it over in a heartbeat and not even miss anything. Now, I had a second occurrence with this later on in my career where we did have redundancies. And here was the issue.

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I had a recurring revenue business and the payment processor acted a little bit shady, which is why I decided to shift away from that specific processor. And they said, oh, if you want to transfer away from us, that's going to cost $150,000. And I was like, what? And they're like, yeah, it's just a lot of work to transfer all those things over.

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I was like, I'm pretty sure it's a button that you click export. But the thing is, is what was I going to do? I had multiple millions a month in recurring revenue across thousands of customers. There was nothing I could do. It was basically extortion. And so I paid the bill and then I got all my customer information and I transferred it to a more ethical provider.

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And so I bring these stories up because I hope that You don't have to live through each of these. And so let's get to the tactics for how to actually solve against key vendor risk. And I think this one can be so nasty because it's one of the only times where the person on the other side of the table has leverage. And if you don't have a good person on the other side,

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They may use it and they may try to put you out of business or put you just as close to getting out of business as they, I mean, they basically can just blackmail you for your own business. And the amount they can blackmail you for is proportional to how much money you got or at least how much money they think you got. All right.

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So number one rule, always have backups for just about everything that's important. So you want to think about this in terms of acquisition, conversion, product, and then the layer on top of this obviously is processing, banking, anything that you do that facilitates transactions with customers. And so the big solution, and we're going to put this in big green letters.

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So solution number one is redundancy, right? Now, I want to be clear about redundancy. Sometimes redundancy looks like waste, but is actually insurance the day you need it. And so think about it this way. If I pay for fire insurance and my house never catches on fire, if I knew for a fact that my house would never catch on fire, then 100% of that money is completely wasted.

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and money that ideally my customers couldn't deploy, but I could fractionalize that cost between all of my customers to create a much bigger individual investment than any one of them could afford. Let's say they pay $3,000 or $4,000 a month, I would spend $50,000 a month on this test. And so I'd say, okay, go hire a bunch of models, go out to a really good gym,

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I literally just flushed the money down the toilet because I didn't get anything for it. If my house does catch on fire, the day it catches on fire, every one of those payments was 100% worth it. And so I see redundancy the same way, which is that it is insurance against existential threats to the business.

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And these are the things that I'm telling you, now that I have these things in place, it's like 100%. I have leverage in negotiations, which is probably the more reasonable thing that you get in terms of short-term benefits of having redundancy. The second is that you sleep great at night knowing that your business can't get taken down, at least from the things that you know about.

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Like listen, you can't control the unknown unknowns, but at least control the knowns. And if the chickens do come home to roost, and you do have that bad day, and the bill is due, then you will be grateful that you had this redundancy in place. The second way of doing this is having mutually insured destruction. So what does that even mean? So it basically means that the bigger you get, the bigger

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you are as a percentage of their business, the more they need to keep your business and not let you go. Because basically you shift from them being key vendor risk to you becoming key customer risk for them. And so it's the shift in power, basically the bigger you get, the more important you are to them.

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And so there's this saying in the finance world where it's like, if you owe a bank a million dollars, they own you. If you owe a bank a billion dollars, you own them, right? Now, obviously, it depends on the size of the bank and things like that, but the saying kind of carries, right?

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And so you want to understand what percentage of the business their business you are, and that way, if they fuck you, they get fucked too. So this is where the size of the person that you're working with can be kind of a double-edged sword. The small guys are probably the guys that are most likely to do the shady stuff.

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On the other hand, if you become a huge percentage of their business, you have some leverage back towards them. And so redundancy, number one, mutually insured destruction, number two. And here's a big one, covenants and terms, which are just fancy ways of saying, what do we agree to? Now, kind of like key customers, because key customer, key vendor are kind of opposite sides of the same coin.

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So all the terms that we asked from our customers before in the last section for mistakes, we also can ask now as the customer of the vendor. If you want to stop doing business with us, you have to give us a six or 12 month lead time to letting us know that that's going to occur so that we can find another vendor. So that's number one is lead time.

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Number two is you can have a breakup fee associated. Now you can imagine on the other side as a vendor, you're like, this guy wants to put a breakup fee on me. My God, this guy's going to be sticky.

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But at this point, when you have key components of the business that are outsourced, which I fundamentally don't do this anymore because I have been screwed so many times, which is why I think that marketing, sales, delivery should be in-house to a business because it's just too important.

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Payment processing, it's unlikely you're gonna start a payment processing just to be able to process your own payments, right? There are some things that are gonna be outsourced and you have to have trust. Now, one is give the heads up. Two is the breakup fee. Third is that you have fees or fines associated with service level agreements, meaning you're going to respond to us on this timeline.

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You're going to ship to us products or raw materials on this schedule. You're going to get us leads or run this amount of ads on this cadence. And when we think about it that way, that allows us to say, if you don't do those things, then you hedge the amount of money that you would have lost as a result of them not doing the work with the fine associates. It's basically a hedge. Now,

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If you have a vendor, they're going to try and decrease what that amount of money is. But them also having transparency into understanding how important their role is, is again, a double-edged sword. One is to understand leverage. On the other hand, if you get the term inside the deal in terms of the cash required from them to make sure that they're doing their job, you cover your downside.

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And finally, and this is a bit of like a advanced move, but if you become significantly bigger than they are or you're a huge percentage of their business and they're still important to you, that's where things like aqua hires and acquisitions can be very strategic. So you say, hey, under what circumstances would you like to do what you do inside of our company? Right.

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film some great ads, then test those ads. So number three, I would test the ads in representative markets. So I'd have 20 markets or so that would represent different demographics. So black, white, Asian, Hispanic, poor markets, rich markets, large markets, small markets with good operators, with poor operators, with mediocre operators.

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Is there a way that we could work together more permanently? And then you permanently align the incentives if they're doing a good job. Now, if they're doing a terrible job, then you absolutely want to do that. But this is how I think through reducing risk with key vendors who are core to how we make money. And if they were to disappear, so too would our business.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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That way I had a true sampling rather than just saying, I'm just going to send this to my favorite customers because that's not going to work. And so we test it, and then what I would do is hand off winners. And so what that meant was I would say, okay, these ads of the 30 that we ran, and we spent $50,000 on this whole thing, these two or three were the ones that generated the highest returns.

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And then I would give all of those to the gyms in our distribution base so that they could run those ads. They just wanted the inputs to feed the system, And those inputs were required on a regular basis. In order for me to hand this off to someone, I said, this is fundamentally the way I do it. I look at the problems that they have. In this instance, it was lead generation.

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I would dedicate time and money to solving this problem in a way that they couldn't do it so that I could create a better solution that they could do it on their own. I would test to validate that the solution that I had was superior. And then we roll it out. And I followed this process for my R&D so that I could replicate the person with a system.

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Why this matters is that if you have key man risk, you don't have an asset, you have a high-paying job. And I don't say that to insult you. I say that so that you can be aware of it, so that you can actually fix it. And to be clear, if you are fine just working and not necessarily owning an asset, that's great. There's nothing wrong with trading time for money. Big fan.

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It's just like, ideally, just trade it for lots of money, right? But if you do want to solve it, you will get more leverage on your time because then you don't have to do this thing. This thing occurs without you. And then you can take the remainder of your time and shuttle it to the things that make even more money. And so typically, key man risk will occur in three primary areas.

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If the business cannot sustain its level of productivity, like if all of a sudden the sales go to zero, or they cut in half because you're the only good closer, or all of a sudden you're not even getting leads because you're the only good marketer, or because the product can't be delivered because you're the only person who knows how to do it, right?

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So number one is, is that it can occur in marketing. So how do we get leads in the door? The second big place that it can occur is sales or conversion. How do we get prospects to hand us money for our goods and services? And then third is the actual goods and services themselves, which you can consider product, et cetera. And so this happens at any level.

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So if you're a service and you just happen to be the best plumber, the best electrician, or you're the best coder, or you're the best advertiser. Now, with marketing, for example, if you own a marketing agency, you probably are key man on marketing for yourself and marketing for your customers, right? Like it can happen in multiple places, even if it's one person.

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And the more places one person is key man, the riskier the business is overall. Now, I want to be clear. Key man risk is a double-edged sword because the more valuable you become, the more of a key man you are. And so the idea is that as soon as you learn a very valuable skill, the most valuable thing that you can do next is learn how to transfer that skill to another person.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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And I think this is a skill that I've spent a tremendous amount of time trying to hone so that I can build companies, and I think about it like this, assemble companies, assemble people, and then transfer the skills around whatever area has some sort of bottleneck where there's too few people who know how to do the thing.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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And this is so important because whether you want to sell a business or not, making a business that is sellable makes it better for anyone. Here's the best analogy I have, which is say that you've bought a house. Now, if you've never bought a house before, then this may be news.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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But when you buy a house, what happens is that after a certain amount of time, and the average American's like three to five years, they change where they live. All right, so you buy a house. Now, over time, you got some wear and tear on the house and the house kind of degrades in your mind, right? Like you get a little crack on the front porch. This door kind of squeaks a little bit.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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And when you go to sell, what do you do? You fix the little path in front of the house. You put some oil on the little hinges here. You know, you're like, you know what? Maybe I'll put a little patio out back. I feel like that would increase our home value, right?

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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And then all of a sudden, and this is the crazy thing, right when you're about to sell the house and you fixed all the things that are wrong with it, you're like, you know, This house ain't so bad, right? And so the same exact thing happens with the business.

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In each of these situations, there's key man risk. And that can be, of course, you, the owner. In the beginning, it's more common that it's you. And then over time, that key man risk can be an employee who works for for you.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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If all of a sudden you remove yourself as key man in marketing and sales and product, all of a sudden you're like, huh, this business almost runs without me. This ain't so bad, right? Now, the last area that you can have key man risk that can occur, and this is kind of like the glue between all of these, is operations.

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So if you have a key leader, for example, who has tremendous influence over the entire team, then the operations connects the people to their functions. And so think of that as kind of the glue that runs the organization. If Layla were to leave, she would leave a huge vacuum at Acquisition.com. Now, she is not specifically over marketing, sales, or

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she just has all of these leaders that are rolling into her, and so if the leadership was gone, that in and of itself would also be somebody who's key man. So if you're thinking to yourself, okay, this is me, I'm definitely key man, or there's somebody in my business who's key man on marketing, sales, operations, product, then there are two major ways that you can solve this.

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Critical Advice for Businesses Making Less Than $10M | Ep 824

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So the first is through process and people. Just like I walked through earlier where I said, okay, what are the actual steps that I do in order to solve this marketing problem? What are the actual steps that I use to think through creating new products? What are the actual steps that I use to think through creating sales process, driving sales results, et cetera?

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So it's process and the people who will then do those processes within the business. The second way, and this really only applies if it's not you who is the person who's key man, is incentives. And so, if it's you, you only have option one. If it's somebody else, other people, you have option one and option two to solve the problem.

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And so, for example, if I said, hey, I will incentivize you to stay in this business by giving you some vesting of shares over a three or five year period, then that would make it less likely that the person's going to leave and disrupt the business. I think through it in both of these. Now, which of these is the most valuable to the business to do? Well, the most valuable to do is this one.

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It's just as dangerous for a public company that has an employee who has zero stock in the business, who happens to own all the passwords, for example, to every single dedicated system. Like if that person leaves, it could do material damage to the business. you've got these functions that occur in the business on a regular basis. And there may be multiple people that can do these functions.

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But the higher up the skill set is, the more unique the individual. Like think about Elon Musk. He's key man in almost all of his businesses. But the reason that it's okay is that he has no desire to sell them. And so people bet on Elon and the companies because they are inseparable entities. Like they go one together and no one's leaving, right?

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They go public and all of their shares are still theirs and they're still incentivized to continue to grow it. Now, if you're watching this and wondering, well, OK, process and people, what does that actually mean? So inside of $100 million leads, I break this down.

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In the employee section, which is a chapter in the book in terms of how to get people to get you more customers, you have the functions that an employee would do. And so there's two aspects. One is like, how do I get these people? You can use warm outreach to ask your network. You can do cold outreach, which is basically recruiting.

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You can post content, which is basically posting job openings that you have available. Doing paid ads, so promoting job postings on like a Craigslist or an Indeed or a Monster or a Ladder. Getting employee referrals, right? So rather than customer referrals, you're getting employee referrals.

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Affiliates would be like associations, guilds, listservs that already have a huge amount of people who want this specific type of role or job. Agencies, so think like staffing firms. And then obviously employees themselves could be the solution. How do you get them to actually do this?

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And so the step one is that you document, which is basically saying, hey, here's our checklist of things that must occur in order for this process to be deemed complete or sufficient. The second D here is demonstrate, which is that you do it in front of them, right? So you do it on your own and create the checklist. Then you do that checklist in front of them.

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And you only stick with that checklist because if you do anything off the checklist, then you have to add to it. And then finally, you document. They do it in front of you, so they duplicate it. So you document, checklist, you demonstrate it in front of them, then they demonstrate it in front of you, which is basically duplication.

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And so that three-step process is fundamentally how you can teach anyone to do anything. And in order to make a process more teachable, you simply have to break it down to more and more steps based on the skill of the person you're teaching it to. If I wanted to teach an advanced marketer how to do email marketing, for example, I wouldn't say, hey, turn on your computer.

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Step two, pull up Internet Explorer. Step three, sign up for a Gmail account. I wouldn't have to go through all those steps because there's an assumed level of proficiency. This is why when you go to college or whatever education system you went through, there are prerequisites for moving on to the next level so that they don't have to teach you arithmetic and then teach you calculus later.

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They just assume you know it. And so your checklist that you create is going to depend on the level of the person that you're teaching the skill to. And the lower the level, the more checks you're going to be on the list, the more you need to regress it. And so let's say you brought on somebody for sales, right, who's going to be a director of sales. This might be a higher level role.

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You would still follow the same thing as, hey, these are the activities that I spend my time on. This is what I actually do. Then they're going to watch you do it. You probably are running teams. You're probably doing one-on-ones. You're probably looking at data to look for key out points so that you can...

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address them and solve them within the team, and then they are going to take over those responsibilities, do them in front of you, and then when they have done them to the satisfactory level, you can then delegate it. And so the easy litmus test for good delegation is that after you've given the responsibility away and someone else is actually doing the actions,

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then the performance of the department or function either remains neutral or goes up. That is when you have successfully delegated. It's not that you give something to someone that makes it delegation.

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And so the opposite of key man risk is redundancy, meaning if one of these people disappear, we still have a flow for, let's say, dollars to go across this bridge. It can still kind of make its way through. All right, so let me tell you a story. So... One of the key man risks that existed in gym lunch, and we had multiple. So the thing is, is that this can happen at any function.

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You can give something to someone and completely abdicate or basically get rid of responsibility but with no feedback loop to determine whether or not you did a good job or that they're doing a good job. And so it has to be the performance of the function after you've hit it off that determines whether or not you have successfully delegated.

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And sometimes you have to repeat the cycle multiple times with the same person, and that's okay, because you need to learn too on how to teach better. And quick pro tip, if you're a smaller business, and let's say that you do some sort of service, and it's just you, or just you and a couple people,

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There are three options that you can do when you have too much demand and very fixed amount of supply. You're completely maxed out. You can't take on any more customers. You barely can. So option one is that you can simply raise your prices. And if you do that, you'll absolutely make more money. So you'll get paid more for the same thing, which is my favorite way of getting paid.

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Now, the second thing that you can do is you can increase the service ratio. And so that means instead of doing one-on-one, for example, I would do one-on-five or one-on-ten. Now, alternatively, you can think of it with a team the same way, which is let's say I have four people who work in my agency and they do different functions to serve one type of customer.

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Then if I can change it from those four people together can handle 20 clients, I could have those four people together handling 40 clients. And so the ratio still shifts towards us. So you get more efficient, which is either process or some sort of technology or training that allows you to get more from your existing talent.

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The third, and this is the most valuable one, process and people, is that you actually get somebody else to do the work for you, which typically means you have to organize this stuff, make sure they did it successfully, and you can hand it off. And if I had to do this in sequence, meaning in what order would I do this?

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First is I would raise prices because that requires the least amount of work and can immediately make me money if I'm supply constrained. Second, I would say, okay, well, people are saying yes to these higher prices. Well, I don't want to raise prices again, which you obviously still can.

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I can shift my service ratio at this current price to fundamentally dilute down the service that I have because it's so good, and as long as my value still exceeds my price without raising the price with this second implementation, I would still have people who want to give me money. Now, if I've done as much of these two things as I can, I can then say, you know what?

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

Hey guys, welcome back to the game. This is a guest spot on Impact Theory with Tom Bilyeu. I had a blast doing this particular episode. We're breaking this into two parts. We go deep on a ton of topics. It's me, so it's going to be business related. I don't get to go this deep on stuff often, and so it was enjoyable.

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And I try to get to the procedural part of it as fast as I possibly can, because I know that I'll learn significantly more by failing and doing it than, you know, reading 100 books on sales versus doing 100 phone calls. Like you'll learn a lot more in the first 100 calls.

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Yeah, I mean, I think I'm so aligned with what you said. You know, what are the causal factors? And I mean, the whole common factors analysis concept is basically trying to do that. Like, how can we identify it? Like, we're going to do everything with these variables in addition to the last time. And if those variables don't meaningfully change, then they're not the correct variables.

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But it's so funny you said that because I thought you were going to go in a different direction. So I've been putting together this $100 million scaling roadmap. It's probably the biggest project that I've done in a long time. It actually releases on Black Friday. It's free. It's free for everybody.

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The first thing I spent a long time on was like, is there a micro framework that fits into this larger framework? Which is like, how does anything scale? And then I try to make an acronym out of it. And I think I have a decent one. So S is start. You got to start. You have to do something. C is compound. You have to do more. So first you start, then you do more.

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A is augments, and then you do better. So it's like, OK, I've done a lot. That's the common factors part. So I'm going to try and do something better. L is leverage. So how can I get it to be consistent? How can I automate it? Both sides of that. And then E is expand. You do it again. So that's the loop.

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So that scaling loop exists on content at all levels, organizational structure, because that one, first we start, then we do more, then we do better, then we try and make it consistent and automate it, and then we expand to the next thing. That works for markets. It works all the way across. So that fundamental unit became how I thought through

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Scaling all eight departments, which is what I divide everything into. So it's customer service, product, sales, marketing, IT, HR, recruiting and finance. I don't put legal in there because I think it was most people outsource legal anyways for a while. And so those are the eight functions that I had of the business, going from zero to 500 people headcount.

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I did zero to 100 million because no one would know what zero to 500 people would be. But most businesses at 500 headcount are usually over 100 million. And it was easier to draw parallels on organizational structure rather than by revenue, because a software company like Skool can do $100 million with 25 people, whereas a restaurant might do $1 million with 25 people.

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And so doing it by revenue felt too, it wouldn't be valid. or useful. And so instead, I went by headcount, which had far more similarities. And so in thinking about that scaling, I broke it into first there was functions like what must occur in order for us to move to the next level. And then you have the people who do those functions.

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And then the third element is the operations that connects the people to the functions. And so that would be like training, meeting cadence, communication structures. That's all the operation side. And then the people is what is the hierarchical? How does the hierarchy look? Who do you need to hire? What point typically?

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And so that's basically the three sides of the of the pyramid in terms of thinking about scale. The scaling roadmap that I have that I came out is just the functions part because it was already a monster.

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um basically an hour plus long video going through each of the functions of each of the departments at each level and then i vetted it with uh a few of my friends who have multi-billion dollar companies and they're like dude this is so accurate it's freaky and so i was like i felt really good about that and they helped me with a couple of them like i would raise it like this and maybe this is you know move this instead of here um but that micro framework of you have to start

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Then we have to do more. We have to do better. Then we have to automate it or create some sort of leverage around it. And then we expand to the next thing was the micro concept that I then applied across all departments to tease out the functions that happen at each level.

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So I would think, so if I were to have to solve this problem out loud in front of everyone, I would think, okay, what we're doing is not working. What is it that increases the likelihood that I pick up my phone when a phone number calls? Okay. If I know the person and like them, that would be the highest likelihood person that I'd pick up. Okay. So Layla, that's the highest likelihood pickup.

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The second highest likely would be somebody that I know. So their, their number is saved. Okay. Got it. Now, what numbers that I don't know, would I be more likely to pick up the numbers, other numbers that I don't know? Well, a local number that would either be local from my hometown or local to my regional area. Those would be the two categories that I would probably pick.

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Now, the call wrapping feature that we were able to do could only do one of those because it didn't know where they were, but it did know what area code they had, so we could call from that. But if there was another software, for example, that could do both, then that would have been even cooler. But that's how I would reason through it.

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And then obviously the lowest probability would be like a four-digit number that's calling from Zimbabwe or a private call or something like that I probably wouldn't pick up. I just walk through it from that perspective. Then I probably also ask other people, what are the calls that you'd be most likely to pick up? What are the calls, you know, and walk through it.

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And then I would try and tease it out that way if I had to solve a problem.

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First off, I think it's a practice. I think it's a skill. I think you practice doing it over and over and over again and you get better at doing it. But I would say the thing that I try to practice by modeling that other people can model is thinking about things only in the observable universe.

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And so eliminating a lot of the fanfare of motivation, energy, frequency, manifestation, all of these things. I see all of those as noises that we make with our faces that may or may not increase the likelihood that we take certain actions. And those actions have either high or low correlate or are high or low correlates for the outcome that we want.

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You have to have a mechanism for letting people know about your stuff. And so that can happen on a variety of channels that typically happens either one on one or one to many. And so one on one would be you knock on doors, you reach out to people via DM, you send emails, you send direct mail, you you make phone calls, you send text messages. Any of those are one on one.

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And so in trying to break apart a system or a department that's not working, I think about a lot in terms of approximations. What increases or decreases the likelihood that what we want to have happen happens? And that creates a really easy razor, black and white. Does this increase the likelihood?

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Okay, so if our team is incentivized on performance, we have a higher likelihood that they do the stuff that performs. If they're incentivized on hierarchy, that increases the likelihood that they will perform in terms of hierarchy in politics. So it's like, OK, well, then I can bet then I should do that. Then we have to get into the execution of it.

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But just from from an ideological perspective, getting those what would make it more likely to occur has been a really has been like my first razor for this.

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And then in terms of the creative problem solving, which I love that you just went through with the bar thing, is there was like an implied question that you ask, which is probably my the two most frequently asked questions are the one I just said, which is what does this increase or decrease likelihood? And the second is, what would it take?

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And I love that question because it presumes or it assumes success or it assumes reality that we can make a bar that would do that. Okay, then what would it take for that to happen? Well, I guess we'd have to have our own facilities. Okay, well, we'd have to have our own machine. We'd have to have a different supplier. That's okay, great.

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Now that we know what that is, do we have the resources today or do we need to use resourcefulness? It's one of the two. It's either we have the resources or we have to go get them. And is the trade-off for the outcome worth assembling those resources? And what I found, and this is really fun stuff.

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This is like probably the most fun thing that I do in my life, which is asking the question of like, okay, what would it take? What else would have to be true for impact theory to get 10 times the views in 12 months? It's not physically impossible. There's no reason for it to be like somebody else's. There's another YouTuber right now who's going to do it this year.

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So what would it take for us to get that? Now, that might mean we'd have to we'd have to get the smartest people. OK, well, what does it take to get the smartest people? Well, probably more money or maybe some chunk of the upside. And maybe I have like and I might not get that guy, but there's probably 10 of those guys or 20 of those guys.

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And if I go to all of them, is it reasonable to believe that all 20 will turn me down? Probably not. OK, what offer would I need to give them to make it worth it for them? And then is what I give them worth? less than what I get on the larger umbrella? And if the answer is no, then we make the trade.

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But I think a lot of people think in terms of I'm here, how do I do more of what I'm doing rather than what would have to be true for this to be 10 times bigger? And are the resources required to have that happen within my control. And oftentimes they are, but it's a move that's off the board. It's not in the immediate do more. And I'm all about do more, do better, to be clear.

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Outreach is one way of letting people know you could do one to many. to people who already know who you are, which is basically today's equivalent of a billboard, which is social media. You make posts, you make content. The third way would be that you run paid advertisements. So on those same platforms, you just pay to get the exposure rather than doing it by earning it through quality content.

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But every once in a while, the order of magnitude changes to the business happen when you do something different. And to me, that is strategy, is that you've limited resources against unlimited potential moves. There's a million things you can do, but you only have this much time, this much money, this many people. And so the best strategists, in my opinion,

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have the most visibility into the most potential moves and allocate the asset or the resources to the thing that gets the highest return and i think the thought process of thinking what would it take for this reality to be true and then working backwards has been one of the most fruitful and productive thought processes that i go through from a strategic perspective

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Yeah, I love that. And the for the for the beginner who's at zero. So we went we went sky. Now we're going to go back down to dirt. the way that you'd frame that is what would I have to do that would make it unreasonable that I didn't get a sale? Like how much action would you be like, there's no way, there's no possible way that if I ask a thousand people to buy something, one doesn't buy it.

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It's just, there's no way. And so then you take that and he's like, okay, well just in case I multiply by 10, if I ask 10,000 people, And the thing is, is that 10,000 is not that hard to do. Like you hear that, you're like 10,000. But like right now, if you think about that, you're like, well, I mean, yeah, obviously, if I ask 10,000 people, okay, 100 people a day, 100 days. It's a quarter.

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And if right now you've been stuck in years of not making that first dollar, years of wanting to start a business, then a quarter is nothing. And so again, we have this, well, it'd be unreasonable that if you make, you know, 10,000 asks of different people, and the thing is, is that you'll also have a feedback loop, which is that you'll look at the first hundred.

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Well, which one's got closer to saying yes? Because you didn't get a yes yet, maybe. Maybe you do get a yes on the first one. It happens a lot. People are like, they commit mentally to doing 10,000. And then by day four, they're like, oh my God, I got a sale. But the idea, and maybe this is, maybe I should teach this differently.

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Cause maybe I should just say do a hundred today, but I want people to stick with it. But when, when, when people do that, the feedback loop of which ones went well, which ones didn't go well. What did I do in the beginning? This one's I made a joke at the beginning. Okay. I'm going to make a joke on all of them next time. Great. Now I made a joke. Okay. I got further in the sale with these guys.

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And then kind of like the door four would be using those three methods to then get someone who already has the type of person that you want to advertise to and doing structuring some sort of deal with them. But you'd still need to reach out to them one-on-one. You'd have to make content to attract them or you'd have to run an ad to get to that person.

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This guy even asked me about price. Okay. What happened in that one? Okay. This one, I asked him about what he was struggling with earlier on. Okay. I'm gonna start asking that question too. So I'm gonna make my joke and I'm asking him what he's struggling with. And I'm gonna do that a hundred times.

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And so that's the, that's the process of iteration that, that can get you to that first, that first W. And then you just do it as many times as you can.

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I think you have a 100% chance of bothering somebody on earth by existing. And so if every action you take has somebody who will hate it, then it kind of cancels everything out and you might as well just do whatever you're going to do anyways.

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I sell many things. I mean, how many guys have $6 billion companies and run all of them and have time to go all in on political campaigns in the meantime, not withstanding what side or any of that, but just the shit. The big question that I feel like is the unspoken one right now, at least in the zeitgeist of the entrepreneur world, is how does he do it?

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And I love the impossible nature of the feats that he takes on, literally pushing the realm of physics, obviously, with SpaceX. But he reinvented the car industry. He's creating brain chips. He's aggressively attacking AI. I'm sure you saw the Jensen Huang interview where he's like, he did in 19 days what everyone else takes three years to do. That's incredible.

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So these are the core things that someone must do to promote whatever they have. Because if we think about it from what must occur in order for a transaction to happen, well, people have to know that you exist or that your product exists. No one can buy something without knowing it exists. And so we have to start with promotion.

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And so we're talking multiple orders of magnitude in terms of improvement compared to the basics, because he starts at physics and works his way up. But he truly does it because he's also like a physicist. He really knows it. Like I get to pretend to sound that, you know, intellectually, you know, whatever he really does. And so I that that's his his material achievements.

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But I think the thing that I admire the most is the balls. The man is not a coward. And I think that in thinking about him, I think about what are the things that he does? What are the things that I do? He is more successful than me. How can I do more of those actions that he does in order to approximate his success? And so I think modeling is one of the most effective ways for people to learn.

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It's how children learn, it's how monkeys learn, it's cross species. And I think that he functions as a model for many people. Now, again, he only became political in the last three years. So if you all of a sudden now hate him, like maybe question that if you didn't hate him three years ago. But you cannot question that he is the best.

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Like right now, people say he's the best entrepreneur of our generation. I think he's the best entrepreneur of all time. It seems like it to me. It's it's not even to me. It's not even like he is. Yeah. I mean, I could I could get on an Elon parade, but he has forced me to think significantly bigger about the problems that I want to take on and who I want to become.

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and what to do with the small platform that I have that best serves humanity. And so that's what, and I think at least from my point of view, that he really genuinely wants to do the best thing for humanity. Some people disagree with that. I don't, I don't agree with them.

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I think if there was ever somebody who would have, you know, with great power comes great responsibility, he's probably the guy you'd want. Agreed. Why balls? Why is that the thing that catches your eye? He had the most to lose, like literally financially, he had the most to lose. So I'm quite like he had the most to lose and went the most polar on the bets that he took.

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And I think that, again, there's a really great like masterclass in winning here that he did with this whole election thing. Because if you think about how Elon tried to solve the election, he absolutely treated it like any business problem. And so he looked at the whole map and then it was whoever wins Pennsylvania wins the election.

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The second component is that they have some sort of voluntary exchange. And so that means you have goods and services that are exchanged for money. And so I think the idea of like money being created really only happens with the government, but for everybody else we exchange for it. And so there are people all around us. Like one of my really fun exercises is looking at whatever room you're in.

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And then zooming into Pennsylvania, it's there are 28 counties or whatever the amount of counties that we have to win. And so then he flies to Pennsylvania himself and then since three weeks campaigning gives a million dollars away a day just to get people to register to vote. holds town halls every day.

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So it's like he finds the greatest point of leverage and then just bombs the hell out of it with unbelievable amounts of action at that one crucial spot. And I see that as that's how he violently solves problems. It's like, how do you build a super supercomputer for AI in 19 days?

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Like he looked at the whole supply chain and he found the point of greatest leverage and was like, we're going to dump as much into this as we possibly can.

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I think courage is the quintessential trait that leads to everything else. Like you have to first have courage. You have to have courage to quit your job. You have to have courage to get rejected. You have to have the courage to ask the girl out, to shoot the shot, to run the ad. And if you don't first have courage, nothing else follows.

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And so I see it as again, it's not are you courageous or not? It's how courageous are you? It's not a binary. And so I just like I think that based on my history, I have courage because I have done things that have required it. But I think Elon has more courage than I do.

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And so I see that as how can I how can I move more in that direction if this is a trait that leads me into the better version of myself?

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Yeah. So this actually comes down to and I wasn't sure if you're going to press me on this, but like courage, for example. I try to, the single most effective decision that I've made about how to run my life across all functions has been only thinking about behavior and erasing everything else. Because it's the only thing you can observe. And I'll tell you a little micro story about this.

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So there was a guy on my team who, we were getting complaints that he was acting like a dick. And so he had talked to three of the leaders in my company who had had one-on-ones with him and said, hey man, stop being a dick. He continued to be a dick. And so they said, Alex, can you talk to him? And I said, sure.

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And knowing that everything that was there, there's a business behind it. So like the walls you have, there's the person who manufactured the raw materials. There's a person who sourced the materials, the labor that went to installing it. There was an architect who designed it.

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And so when I sat down with him, I said, hey, to be clear, I don't really care what you do. I care about the fact that you have now taken my time. And so this is now the most costly thing that you could have done for me personally. And getting complaints from other people detracts on their ability to get things done within the company, which now also costs me.

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And so my goal here is to decrease the likelihood that people complain about you. And so they keep saying that you're acting like a dick. And so he's like, yeah, I know I'm working. And I was like, no, it's fine. I don't care about whether I was like, internally, you can be a dick as much as you want. I don't care. I don't care about intention.

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What are the actions that you take that increase the likelihood they call you a dick? And so number one is that you interrupt them on meetings. Number two is that you say that you know their department better than them. And whatever, I have my list of things. And I was like, so don't do those four things and do this instead. So when this circumstance occurs, do this action instead of this action.

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And in the next week, everyone's like, oh, my God, it was like night and day. And the thing is, is that we give each other feedback all the time. And this happens in marriages and whatever. It's like, hey, don't be a dick. That doesn't help people. You have to tell them granularly what to do instead and focusing on the observable. And so this is my weaved in answer to how does someone model Elon?

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Well, it's not like I need to get Elon's mindset. It's like, no, look at what he does just with your eyes. What does he do? Because it's the only thing that you can measure. It was funny because when you said earlier about what I want to have happen, what am I going to do that I think is going to have to happen? And so your planning process is identical to ours because it's the scientific method.

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And then you look at this mic and you're like, okay, well, there's this foam thing, which he probably got from a third party. Then there's the mechanisms inside, which is another business. There's the distributor that you bought this from. Like there's all these pieces when people are like, man, I just, I don't know what opportunities there are.

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Like mankind has figured this one out. Like we know how to make a guess of like, this is what we want to have happen. This is our hypothesis. We're going to test the hypothesis. We say, did we do the thing or not? And then, and did what we think was going to happen, happen. Four steps, scientific method. And so don't try and reinvent that one. Like that one works.

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The same can be true, but it has to be observable for the scientific method to occur. It has to be something that you can see. Saying like, I need to be more motivated. Well, if you want to be anything, and this one trips, I think, a lot of people out. But have you ever heard like be, do, have? Yes. Okay. I think it's complete crock of shit. Mainly because...

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If we want to have something, we must do it. I think if people are okay, you have to do stuff to get stuff. Okay, we're good with that. But if we just have to do stuff and the having occurs, then we don't need to talk about have. So now we just have be do, all right? Then how do we describe how someone is? We describe them by what they do.

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I mean, even in the olden days, people used to be Carpenter, John Carpenter, John Butler, John Taylor, right? We literally described people's beingness, who they were by what they did. And so if you want to be a certain way, then you need to act in accordance with the behaviors that people describe as that trait.

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And so then I this is how I make sense of the world, because the world doesn't make a lot of sense to me in a lot of ways. And so this is the only way that I've been able to navigate. And this has given me so much peace because I actually think everyone's wrong. And it drove me nuts for a long time because I didn't know how to do what I wanted to do.

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I was like, I want I want to be I want people to think I'm smart. I want people to to think I'm hardworking. That doesn't mean anything. Be charismatic. It means nothing. You can't look at someone and say, don't be a dick, be charismatic. How do I do that? So they give you beings rather than doings.

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And so if you break it into the corresponding chunks, which may be 20 or 30 skill sets, which are under this condition, you act in this way. Then all of a sudden, when you do all 20 or 30 of those things, then people describe you as charismatic. And I find this interesting because we talk about culture or values in a business and

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I'm like, you can literally open your eyes and everything that you see has a business behind it. And so from the value component for people who are, I'll just tie this into people who are starting out. I recommend most people start with services because it requires no capital and you require time. And when you start out, you use what you have.

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These values that we choose are bundled terms that are meant to approximate many behaviors because there's no like when you get into a business or a company, you have to like figure out the culture. But the culture is just the rules that govern reinforcement in a business, which is what are the things that are rewarded?

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What are the things that are extinguished and what are the things that are punished? That's it. And so the culture is just what are those rules? And so people have to basically either watch other people get punished, rewarded, or extinguished for the actions they take, or they have it themselves. But either way, it's just a series of if this, then that, if this, then that. And it's a monster list.

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And so to speed up the process, we create a couple of phrases that are meant to approximate the largest percentage of those list of rules as we can. And so in thinking about if you were to microcosm into a person, what are the traits we want, then we just have to get really granular.

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And I think that this is how we solve problems in a business, which is it's convenient for communication to use these amorphous terms, confidence, loyalty, like these things, but no one can be more loyal. We have many activities that under conditions people describe in retrospect, That this person has loyalty. Loyalty has occurred.

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And so that single framework of thinking through the world has been the most valuable thing that has finally made the world make sense to me. And so that's fundamentally how I model people or if I want to be more like this person, be more like this person. I try and do more of what they do.

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I, well, one is he makes big concentrated bets. And so that's a behavior. He does that. I can observe that. I've seen him make big bets. He's willing to give up equity in companies for lots of capital in order to make things happen faster. That's something that he does. He ties every company he has to saving humanity. That's something that he does.

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This is me just parroting what he has said, but his approach to solving systems is one that I have adopted, which is question all requirements of the system, delete everything that doesn't matter, optimize the rest, pull up feedback loops and timelines, and then automate. And that process I've applied to sales, I've applied to marketing. content, whatever. And those are things that he does.

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And so there's, I mean, a lot of things that Eli does, but those are just some of the ones off the top of my head that I think are the greatest impact, at least the ones that I'm specifically trying to model.

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And so if you have no money and you only have time, then you trade the time for money. And so either you're going to do something that other people don't want to do that they know how to do. So like taking someone's trash out, doing lawn care, washing things like cleaning. Those are all things that people know how to do, but don't want.

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Then the second level of that is doing things that people don't want to do or know how to do. And obviously that's knowledge work, which you get the amount that you can get paid is predicated on the value that whatever that skill deficiency is to the other person. And so I think about it like that. The person has to know you exist.

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I, first off, so hardly agree with the jumping into the dirt of like, how do I get as close to the problem as humanly possible? The biggest mistakes I've made in my entrepreneurial career is I heard this from a mentor. I like this ism, but you have to know where the bodies are buried. And it's been a great limits test for me to understand when I'm getting too far away from a department.

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When if I don't know what's going wrong in a department, because there's always things going wrong. If you don't know what's going wrong, you're too far away. And so that's been a really good, just an easy black or white test for me. Oh, I need to get a little closer to this. Because they say, oh, marketing's great. I'm like, there's no way. There's always things.

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There's got to be things that are wrong or missed opportunities. That's actually a totally separate entrepreneur thing that I think you might dig a lot. Layla taught me this this year, and it's been a huge entrepreneurial unlock for me. And it was a huge source of anxiety for me for my life, which was... I did not differentiate the difference between missed opportunities and problems.

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And so basically, if we were not capitalizing on an opportunity, I treated it as though it was a problem with the same level of urgency and moving things out of the way. But I would say that where I'm at right now, and maybe I'll be different in the future, but right now, the thing that has been rewarding me again and again, which has been counter to my nature, is...

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They don't do the things that makes people rich. And I think they probably convince themselves that they're smarter than they are. And so if you were smart, then you would be rich. And so then it follows that there's probably a series of traits of behavior that you don't do either because you think you're above them or you don't know about them.

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looking at the problems in front of me as the opportunities, which is like fundamentally, like if we made these things exceptional, then maybe the opportunity set that I'd have as a result of that would be fundamentally bigger, different than the one that I'm having today.

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And whenever I, in the past, allocated resources away from solving problems towards missed opportunities, I ended up just scaling my problems. And so allowing the bigger by better

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and really leaning into that and doing fewer things at a higher level has been, I think, the reason that in the last two years, Acquisition.com has done exceptionally well from a returns perspective on all of our portfolio and then obviously what we do on the content side and things like that.

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Yeah, where it gets really wild is I heard someone say this offhand remark and it hit me. He was like, Zuckerberg didn't have a side hustle. And it's like, it's so true. And you think about your face, right? There's one of the three divisions that you have underneath the impact theory that has a higher return on your face than the other two.

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So you have to do one of those advertising activities I referenced. And then the thing that you give them is you're going to give them some amount of time back, either the time to learn the skill or the time to do the skill. Um, and then once that exchange is made, uh, then both people say thank you because they didn't want to do the work and you wanted the money. And so everyone wins.

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Now, it might be on different timelines or towards whatever mission you have, but one of them has a higher return. And the thing that makes me sick is thinking like, do I need to kill my other children? Because if I believe what I say I believe, then I should act in accordance with that belief.

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No, and that kills me. And I think it's, I had a mentor tell me, he was like, so I was like, this is what we're going to do this year. And I was like, these are the, you know, the priorities. And this is the biggest, the missed opportunities versus problems has been a massive improvement for me as an entrepreneur. The other one was a deeper understanding of focus.

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And a lot, part of that was from Elon. And people were like, well, how does he run six companies? I'm like, he's an alien, but for everyone else, like we need to run one, honestly. But basically, If you don't know what the number one priority is, then how can you expect everyone on your team to know it? And for years, I came in with five annual objectives. And I think then it went down to three.

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And now I'm just trying to say if we just did one of these things and it made the biggest difference. Interesting. Yeah, I mean, I've done away with a lot of the long-term planning components because of the dynamic nature of the environment. And the other one is, if we're not sure that this one thing is the one thing, then there's another one thing that exists that will be clear.

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And if I can't do it, then I'm not doing my job. Because if I'm chief strategist, which I define as prioritization, right? You prioritize limited against unlimited, limited resources and limited options. If I can't clearly articulate that, then I am not doing my job. I'm not allocating the resources in the best way possible. And I say that everyone in the company is a strategist.

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Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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It's just that the resources that you have dominion over is smaller or narrower in scope. And so it's like I have the entire portfolio of all the companies of the different places that I could allocate whatever resources I have. And then if you're the CEO of one of those companies, then you have everything in that company.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3230.116

If you're the head of marketing, then you have the 10 people that are in marketing. But every person has to ask the question, These are the resources I have. This is the objective I have. What is the best mix of this to get that thing? And is there one thing that I can do that would give me an outsized return compared to all of the other things?

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3248.163

And I mean, I think one of the better decisions that I made in 2020, I think, was when we started getting into this investing thing, I was like, I don't think I'm going to beat Warren Buffett at picking. And I don't know if I'd beat him at negotiating.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3263.126

was like so how do you win in a world where everyone's better than you at most of that stuff and i was like well i'm pretty good at marketing and i was like but how do you tie that to like private equity and so then it was like well if i had more companies walking towards me than anyone else then i could be pretty terrible at picking and still do like i i could i could hit the broad side of a barn you know like i could i could i could get the really easy ones right and

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

328.688

And then around and around we go.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3288.516

And if I'm negotiating, but I'm negotiating only with people who want to do a deal with me, then I don't have to be the best negotiator. And if the companies are good and I'm okay at negotiating, but they're good companies, then it's not going to matter whether I got 29% or 54%. Because if the thing becomes 100 times bigger, who cares?

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3306.567

And so that one big thing was you need to build a big business brand. And so if I just do that one thing, none of these other things matter. And so originally you think, okay, I have to get a broker network. You know what I mean? I might have to raise capital. Like these, the normal activities that most people would do. But that was one of those kind of like high order of magnitude changes.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3326.714

Like what would have to be true for me to be able to outcompete people who are significantly smarter and better capitalized?

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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Well, I think Zuckerberg said that he's a, well, he said he's a truth teller, but I think before you can be a truth teller, you have to be a truth seeker. And Bezos also talks about this, which is that their goal is truth. So when we're making decisions, he said, the goal shouldn't be to compromise.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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I think a lot of people spend a lot of time on everything that isn't revenue generating. And so everything that's not what we just outlined, like if you're not reaching out to people one-on-one, you're not posting content or you're not running ads or getting in touch with someone who already has an audience of the people you want to reach.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3477.097

Like if you say it's 10 feet tall for the ceiling and I say it's 11 feet tall, we shouldn't meet in the middle. We should find a way to know who's right. We should get a tape measure out and we should measure it. And so from that truth seeking perspective, I probably like you, I just want to win. And winning doesn't care whether it was your idea or not, or whether it was your original idea.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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It just cares whether you did it. And like we recently, because we talked about this before the show started, but like a quarter or two ago, we had a hypothesis, which was, hey, we're going to make wider content. Because if, you know, Mr. Beast, because my theory was, okay, taking the natural extreme, Mr. Beast, everybody knows who Mr. Beast is. or many people do.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3520.997

And so he has by default all business owners in his audience or many business owners. And so then I will go the how do I go wider and general fame? And we then ran that pretty hard for about 16 weeks. And when I saw the data that came back, which was all of the vanity metrics, the views, the subscribers, things like that were all way up.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3543.752

But the metrics that I cared about, which was how many people were going to acquisition.com, how many people were applying to be portfolio companies, how many people were buying books, all of those metrics were down. And I thought that was so, it was counter to my hypothesis. But at that point, I had to look at the team and be like, yeah, so that experiment was wrong, and that's on me.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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But we're gonna go what we call back to business. And so everything is going to be business related, which means that we all need to accept now that all of our views are going to be lower. Our subscribers are going to be lower, but we're going to attract business owners. And I had one anecdotal experience that really like cemented this.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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I had a guy who came out who's a business owner, does probably 10 million bucks a year. And he was like, yeah, I listened to your podcast for years. And I, you know, I just, I guess I'm not really in your audience. I'm not your core audience anymore. And so I stopped listening to it probably the last six months. And I was like, okay,

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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you are 100 my core audience and that was like this kick to my stomach but i mean like you probably being right has zero value like why i just want i want to win and so that's i mean my my uh my little ism for my team is just win and that's that's that's all i care about like just win and if if it's your idea it's my idea it's the the janitor's idea test it, see if it works.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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And so that's been, that's been really, really big for me.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3639.934

Yeah. I don't tolerate that much. We let the data talk. We let the data decide. Data's king. And so, I mean, sure, we can try your way. Do your way. We'll do it my way. And we'll see which one works. And if yours works... I'm all in. And so I think that's like, there's no arbiter of truth that's arbitrary. Well, that just says you are now right. We can know this.

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Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

364.828

If you're not doing that right now, then nothing else you do matters. It doesn't matter. You have to have something to sell, which like I said, you can start with your time, very easy. And my recommendation is to go and get money from a stranger. It doesn't matter what you sell, just get a dollar from a stranger to actually walk through the process. That's the procedural knowledge.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3671.67

Now, I think where it gets difficult is on the ones that you don't know, or let's say you have limited shots on goal. Which shot do we take? That's where it gets harder. And then we try and assemble as much data to support an argument. But I think fundamentally at the base level of entrepreneurship is you make approximated bets. Like you...

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3688.464

By the time you have complete information to make a decision, the opportunity is gone. And so we have to, and this also goes for beginners because I think it's actually especially for beginners is there's this fallacy that you're going to know everything before you can begin and you simply cannot.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3702.531

And so you have to get over the discomfort of the unknown and you have to get comfortable making bets of saying, okay, is this reversible? Yes. And to what degree is it reversible? Okay. If you lose all your money, is money replenishable? Yes. Okay. Now, how long will that take given my skill set? And that'll give you a degree of how big of a bet this is.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3725.335

Now, is there a way that I can make an approximated bet? Can I get a directional bet on this that would give me a much better clue as to whether this bigger bet that I'm going to make afterwards is correct? And so I'll try and make smaller bets that give me a little bit more information that are a little bit more reversible before making a big one.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3741.919

uh but like that was a big bet that we made with all the resources that i had and all my time for 16 weeks making all that now you could make the argument okay we gained audience that's not really core and then that might hurt my later videos and i've got you know 50 more years so okay we lost a quarter yeah big deal yeah now the willingness to try things i think is incredibly important

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

3769.69

Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

385.703

Like it's one thing, okay, oh shoot. How do I take a credit card? Oh, that's a whole nother thing. Oh, I have to get a payment process. Oh, to get a payment process, I need a bank account. Oh, to get a bank account, I need LLC. Right. So like you walked in like, oh, here we go. Now, now I can get my first dollar across. Once you get the first dollar across, the second one comes very fast.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

401.512

And so why don't people why don't people do the stuff that it takes to make money? Because they're doing everything else that doesn't make money.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

514.218

So the process that I follow is common factors analysis for basically a retroactive look back window. Now that sounds like a whole bunch of fancy words, but basically I look back at stuff I did and see what worked better than other stuff. And then I say, okay, well the top 10%, what things did they have in common?

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

52.711

So either it's a declarative knowledge deficit, meaning you don't know about the thing, which has nothing to do with the intelligence. Like if somebody eats an apple, sorry, banana, and they're from a different country and they just eat it through the skin, it doesn't mean that they're stupid. It means they're ignorant, which is very different. That's a declarative deficit.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

533.751

And then the bottom 10% or the bottom half, what things did those lack compared to the top 10%? Then I try and do a next batch of activities, whether it's phone calls, whether it's content, whether it's product iterations that then do more of the thing that worked. And so that process has been, I think, the fastest feedback loop that I've had.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

554.88

So rather than trying to find like a specific course around something super niche, which gets really difficult, the more niche it is, I rely on the universe for feedback, which is like. we have to try 100 repetitions of whatever the thing is, look at the top 10 or 20%, look at the common factors, and then do a whole next batch of 100 with those common factors.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

576.709

If performance goes up, then the variables that we isolated were the correct ones. And then within that next batch, there will be another top 10 or 20% that by variation of repetition which will always happen. There will be other mutations like in DNA that occurred in in that subset that I can then replicate again. And that process is how I got good at sales. It's how I started making content.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

599.499

I just I but I think the first piece that people stop that they prevent themselves from doing is doing the hundred repetitions because they think that they're It's the fallacy of the perfect pick. They're going to get it all right so that they don't have to fail the first time. But one of my favorite scenes in The Matrix is when Neo tries to jump across both buildings and then he falls in Cypher.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

621.709

Everyone's like, what does it mean? And he's like, everybody falls the first time. So even the one falls the first time. Obviously, it wasn't the one then. Whatever. We can get into that. But I just like that as a... failure as an assumption, rather than something to avoid. Like Elon was able to get the rockets up because he failed five times faster than people were able to do one.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

641.539

So he got five failed rockets out before he got a sixth. And everybody was looking at the five failures, but he's like, well, look at how much further we got with each one. And I think that most So one of the difficulties with skill is that masters have more milestones along the way. And so they're able to mark progress with more nuance.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

661.713

A beginner only sees kind of a binary outcome between it worked or it didn't work. But for me, if I'm going to go into a new advertising channel, for example, if I want to say I want to start doing cold outbound. Well, I actually have a great story about this. When we started doing cold outbound for gym launch, my executive team.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

67.243

Then there's procedural deficits, which is knowing how to. And I think one of the big difficulties with smart people is they have tremendous amounts of declarative knowledge and very little procedural knowledge. And so it's like saying you read a book on how to do a private equity deal and you know everything that has to happen, but you've never done a private equity deal.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

679.028

So, you know, not like experienced people about three or four months in basically did like an intervention with me. And they said, you're putting all of your time and attention to this. We think this is a shiny object using my words against me. Right. This is a woman in the red dress.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

693.498

And we think you should stop and let's double down on what works, which for us at the time was paid ads and some content. And the thing is, is that they were too far away to know the progress we were making. And so they just saw that we basically hadn't made any sales. We made one sale in like three months. But I knew that the first problem we had is we didn't know where to get the data from.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

710.936

Where do we get these lists from? So then we finally got the list and they're like, OK, but no one's picking up. We have to enrich the data. OK, then we enrich the data. Then no one is still picking up. So then we're like, oh, well, we have to find out how to get people to pick up. So we have to do local call wrapping on our phone so that increases the pickup frequency.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

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So then people start picking up, but then no one wanted to book a call because our script was off. So we fixed the hook and then people would listen to us, but they didn't like the offers and we fixed the offer. Then people came to the second call, but then they weren't showing up to the second call. And then we were like, OK, we have to create a follow up sequence.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

735.73

Now, at this point, they're like, hey, you need to get you need to stop. But it was just we have 100 steps that we have to take and we're 33 percent of the way there. But if you're a beginner, you don't know you're 33 percent of the way there. And so I think one of the difficult things as a beginner is that there is a leap of faith.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

752.421

Like when you do your first week at the gym, you're not going to get results. But it doesn't mean that working out is wrong. It just means you're measuring on the wrong time horizon. And I think one of the things that has thrown a ton of beginners off is the understanding of volatility and volume.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

766.074

So basically, when you have a new business or a new endeavor, what appears inconsistent or volatile is typically a function of doing too little.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

774.241

volume and so it's like if i it's like yeah you know one sale comes in every you know a couple weeks it's i'm still you know but if we look at the activities that generate that sale it's like you might have done a hundred reach outs over 30 days and then one of them becomes a sale so it appears volatile but really it's just you got one percent and you're doing far too little

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

795.157

And so if we did 100 a day, then all of a sudden we might make one sale a day. And all of a sudden it seemed very consistent. And so the volatility is only a function of insufficient volume. And so I think that that misconception is why many people who start out fail quickly or choose not to start because they are measuring their feedback loop on too short of a time horizon.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

83.899

It's probably unlikely that you know how to do a private equity deal. And so delineating those things has been helpful for me. And since the procedural knowledge has significantly more utility on a daily basis from a moneymaking perspective. I have reduced, or at least this is me, you know, transitioning to me, but like I've reduced the amount of time that I spent on declarative knowledge.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

836.254

Well, I think to cross a million, you need a consistent acquisition process. I think that's about it. Customer acquisition. Yeah. Sorry. Yeah. Customer acquisition process. Like in the beginning, you have to do something, period. Zero to one. You have to do something. And then you have to make your first dollar. And then your advertising is inconsistent because you're inconsistent.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

853.667

Once you become consistent, then your sales become inconsistent because you don't have a process. So then you have to dial in.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

859.111

the sales process so basically advertising and sales have to become a consistent process with predictive metrics we know that if we do 100 primary actions whether that's 100 posts 100 an ad spend um 100 reach outs that that will generate this many leads which generates this many calls which generates this many sales and it could be on e-commerce or it could be you know in a service or environment like i'm describing with calls um but fundamentally you just have to get to that equation

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

884.827

And once you get there, then it's just inputs and outputs. And then you're just pouring as much in and then figuring out what the constraints are from you putting more in. At least that's how I think about it.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

897.173

Not as much as I used to, to be really honest with you. This is actually a huge change for me in terms of how we grow our portfolio now. I'm actually really curious what you think on this. But I heard Jensen Huang say it. And so I feel like a little bit better, but basically they did away with all long-term planning.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

914.586

And I always felt like long-term planning, because when I got a year later, I was like half these things that we were talking about a year ago, the variables of the environment, talent, many of the major movers have changed what the priorities are in the business. And so I focus almost exclusively now on what are we going to do in the next 12 weeks?

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

934.722

Now, we obviously have long-term objectives, but I don't want to plan out forecasts and basically obsess and get everything down to the decimal when I can't even estimate the big forces that are going to be at play. Now, if I say, I think if we build the brand this year, that is a good thing and that's our number one priority, then great, then I can reverse that.

The Game with Alex Hormozi

Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849

951.013

But I'm reversing it only into the present for the next 12 weeks because things will change.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

1963.081

Yeah, yeah.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2037.341

Yeah, yeah, absolutely.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2048.011

Yeah.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2097.885

Yep.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2197.123

Yeah.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2348.777

Yeah.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2470.956

Yep, yep.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

2615.558

Yeah, that makes sense.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

767.697

Yeah, yeah, yeah, definitely.

The Game with Alex Hormozi

Helping An Artist Scale His Business | Ep 835

779.994

Yeah.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

1.946

It becomes very dissatisfying because your team gets burnt out because they're like, I feel like all we're doing is onboarding new customers all the time. And they're just walking out the back door between three and four months later. And if you're listening to this and being like, oh my God, this is my life.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

107.382

And on bad months, they will take a real hard look at their expenses, sometimes including your business, and decide to cut. Right. And the same thing happens on the business consumer business. But the issue is that most of these businesses who sell to these customers would be significantly better served. Basically, there's a fork in the road.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

126.081

So either you sell more templatized, higher volume, more scalable products and services. or you go up market in pricing and avatar to sell more customized solutions. The problem is most people kind of end up somewhere in the middle.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

13.57

It's probably because the model you have, the services you deliver and the prices that you charge do not match the avatar that you are selling to. Does your model match your avatar? That's what I want to talk about on today's episode of the game. I have been doing these deep dives into kind of like growth sins.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

146.081

And this is the very painful no man's land where these customers, because you offered customization, but you don't have scalability built into it, end up getting upset with you that they're paying $20 and don't have it entirely custom, whatever it is that you deliver. And so it's like they have unrealistic expectations.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

165.613

And since you didn't start with, I'll call it a tech first approach, it just makes it a very painful business to run. And every year, the difficulty is that it's very easy to acquire these customers because these customers, there's a lot, you know, boatloads of them. The problem is that they're very hard to keep.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

182.392

And so you end up getting into this kind of hamster wheel of getting lots and lots of customers, but then falling out the other side. And you bang your head against the wall because you're like, I need to look at these turn tactics. I need to look at these revenue retention metrics and activation points. And the thing is, is all that stuff is the correct thing to do.

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

201.329

But you might just be missing the big obvious one, which is that these people aren't going to stay. And as tough as that is to hear, it's just the reality of it. And so I'm going to give you two very different examples I've done the right way, and then I'll give you some examples I've done the wrong way. One of the best prosumer businesses or VSMB businesses out there is Shopify, right?

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

219.743

They're considered gold standard for providing a great product for small business owners. But they keep, on average, like 50% at month 12. I have to double check, but it's between 50% and 60%, which is considered best in class. So that means that they lose half of their new customers every year. Now, after that point, they get people to stick, and then it becomes really valuable, right?

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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But the first year, they lose like half the customers who sign up who are brand new. But they're able to build an entire business around this because it doesn't really cost them that much to add another customer. And this is kind of the problem. So let me, let me give you a services example of this. I'll say an acquaintance of mine had a very large agency, right?

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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So this is, you know, your standard high touch or I'll put high touch in quotes here, high touch service. a services business, which would be agency work for small businesses, which sounds like a complete nightmare. But here's the thing that he did that was really clever. He figured out that he had to be really low priced. We're talking like $200, $300 a month for services.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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Now, most of you might hear that and be like, well, that's impossible to deliver any kind of service there. Aha. And this is where it gets interesting. So what he did was he just looked at what most business owners think they need to do, which is, you know, think Main Street. So they have to optimize their, you know, their Google reviews.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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They have to, you know, do a little bit of management, responding to DMs, things like that. It's what I consider a nuisance business, right? It's stuff that a business owner knows they should do, but aren't doing. And you can absolutely sell them on $1,500 a month for that same thing. The problem is they turn out.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And so the question is, how can you deliver or how did he end up delivering those same services for less? Well, he built his entire business around cost so that he could charge a very small amount of money to these businesses. And because of that, they're like, yeah, I mean, if I get one customer a year, two customers a year, this thing pays for itself, right?

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And so you want to have such an easy ROI argument that it would be stupid for them to cancel. And so his average stick was like 38 months. That means that call it $300 times 38 months. I don't know what that math is, but 9,000 plus, plus 2,400. So 11, four, right? So $11,400. Now, If you could sell something for $200 a month, you could sell a lot of people at $200 a month.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And obviously I talk to a lot of business owners on a regular basis, and there are very common themes that come up for why there might be, let's call it structural difficulties to growing the business.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And if you know that you're making 11,000 plus on each one of these customers, that's a pretty interesting business. Think about it like this. If I wanted to guesstimate how high that business could grow, the question is just how many $200 a month business owners could I sell? Probably a lot.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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right like hundreds and hundreds thousands per month and so if you sold a thousand of those small business owners per month and you had a eleven thousand dollar ltv you'd be looking at eleven million a month hundred million dollar plus business right from just from just from doing this but but that that'd be easy to do that's not hard

The Game with Alex Hormozi

What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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Now, the vast majority of business owners, though, that sell to SMBs are typically in that $1,000 to $3,500 a month range. And it's because you can sell them there. You just can't keep them there. That's the issue. And so when I said at the beginning, you have basically a fork in the road, right? So either you say, you know what? We're going to do services. We're going to do real work.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And if you do that, then you've got to go upmarket to an avatar that their volatility does not preclude them from affording your services. You have to price to their worst month, and that can be really hard for you from a margins perspective.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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which means if you want them to stay you either got to go down market and then make your price so cheap which then means your services need to be absolutely templatized and built for volume and scale with high amounts of tech and huge amounts of operating leverage meaning one rep can manage 300 accounts 500 accounts a thousand accounts

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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Or you say, you know what, we're going to have one rep can manage five accounts. And in that instance, we need to go to businesses that if they have a bad month, they're not immediately looking at their bill and saying, hey, we're going to cancel. And so either you go custom and you go upmarket or you go templatized and you go smaller, low market.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And there are a lot of different forms of this, but today I want to talk about this one because I think it affects a lot of small businesses, which is that the business has trouble scaling because you sell the wrong type of service to the wrong type of avatar. And this often comes up when you want to do everything for everyone.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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But you still have, and here's the key point, is you still have high gross margins on that low ticket. And so that's okay. That's fine. Let's say it costs you 10 bucks a month and you charge 300. Good business model. It's just that these small businesses typically cannot sustain high prices on a continuous basis.

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So you end up just creating this churn factory that becomes very dissatisfying because your team gets burnt out because they're like, I feel like all we're doing is onboarding you. customers all the time. And they're just walking out the back door between three and four months later. And if you're listening to this and being like, Oh my god, this is my life.

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It's probably because the model you have the services you deliver, and the prices that you charge do not match the avatar that you are selling to.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And it's just one of the most common mistakes that I see, especially in services businesses, because you have less operating leverage, because you have you have people that you have to train up in order to, you know, deliver whatever you whatever you sell. I might make a series out of these kind of like little growth sins, but this is one of the big ones. And the thing is, is you can fix it.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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You just have to decide, am I going to change my services and price, or am I going to change my avatar, and maybe also your price, and go up, right? Do I go up market, charge more, and do it custom? Or do I go down market, which you might already be selling to, which means you're keeping the same customers,

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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charge less, but maintain higher gross margins as in percentage of dollars kept of dollars made by scaling back my deliverables. And you're able to do that with a smaller price tag. So a lot of people will see a business that charges $100 a month and let's say has 80% gross margins, meaning it costs you $20 to deliver the thing that you charge $100 for. Okay.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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Which, by the way, Alex's rule of thumb for services is it must be at least 80% gross margins for me to be interested in it personally. At least. I prefer to be at $90 or $95. Now, when you hear 80 versus 90, you might think, well, that's just a 10% difference. That's twice the operating leverage. So think of it differently, is that my cost basis is 20% versus 10%.

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So it's half, which means double the leverage. And so again, also, the difference between 90 and 95% is another double. So if you're like, okay, well, I'm looking at a business and it's got 95% gross margins versus 80, the 95% gross margin business has four times the operating leverage.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And so this might seem like a small, irrelevant thing, but it can very well make the difference between you having an unbelievably scalable business that can print money, Versus one that just you always get stuck in this hamster wheel of, you know, the revolving door of customers in, customers out, you know, team getting frustrated.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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You feeling like you're always having to think about your next marketing campaign rather than just knowing that you have this bolus, this stacking of customers that are either coming back on a monthly basis or on some sort of membership subscription that just keeps building.

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right and so this is just one of the big sins that i see in growth which is just that you grow quickly in the beginning because you can sell customers easily in this space but churn catches up real fast because they walk out the other side and then you just think okay well i could just keep increasing advertising which is what a lot of people do

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And this isn't a, you know, you need to be narrow on your avatar, which I cover at length in other podcasts. But this is more a difficulty with how you deliver times how you price times how many people you have to do it for. All right. So let me let me explain.

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but then the the difficulty is that your cost of acquisition starts going up your gross margins start shrinking because because cax is increasing right and you start hiring this team and all to to sustain the new customers that are coming in but they're costing more they're more of a pain in the butt they know you less because you're going to colder and colder markets right

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And because of that, you have more volatility in your acquisition. So you have, you know, when you're selling 10 customers a month, if you have a down month of call it 20 percent and you sell eight, it's probably not going to make a big difference in the business.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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But when you're selling, I don't know, 100 customers a month and there's 20 fewer, all of a sudden you've got like four reps or three reps that would have had customers that they need to be serviced or onboarding. They're just sitting there twiddling their thumbs. Right. And God forbid you a 40 percent decrease. And now all of a sudden, instead of 100, you sell 60. Right.

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But if you go from 10 to six, not a big deal when you go from 100 to 60, a very massive deal, especially if that's basically how you make your money and you're living paycheck to paycheck because you need to sell every single month to keep the lights on and pay this massive team that you scaled up because you didn't you scale too fast the wrong way to the wrong customer.

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Anyways, this is just one of the major growth issues. It is fixable though. So I don't want you to lose faith if this is you or you're like nodding your head up and down and be like, oh my God, this guy's explaining my life story. I get it. And it's solvable.

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We have to make a few strategic decisions about which direction you go to depending on the market that you're in and how to recombine the services offering so that it is even more compelling at a different price to the right customer. And so anyways, this was top of mind for me because I talked to a couple businesses last week that was suffering from the exact same issue.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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And so I figured I'd make a quick pod for you guys. And yeah, you guys rock. Appreciate you. If you feel like having us take a look under the hood, you can always come out to one of our events here at our headquarters where we kind of look under the hood. My whole team does. I check the businesses out as well. And we help you scale, hopefully. That's kind of the jam.

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So anyways, I think it's acq.com forward slash go. I think you can go there and then you can grab a time if that's interesting. Otherwise, keep enjoying your day and I'll see you next one. Bye. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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So if you have a low-end customer, so let's call it prosumers or small business owners as a customer, for example, that's going to be a VSMB, so very small business owner. And the problem with VSMBs is that they have inherent volatility. Meaning because they are small, they will go up and down on a regular basis. They have good months and bad months.

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What To Do When Your Pricing Model Doesn't Match Your Avatar | Ep 865

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap. R-O-A-D map. Roadmap.

The Game with Alex Hormozi

The 4 Paths To Making Mega Money | Ep 820

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Welcome back to the show. Today, I'm going to talk about the four paths to mega money. And so in the year that I took off after the sale, I studied this intently because I wanted to figure out the best opportunity vehicle for me. And it turns out there are four and all four can make you mega rich and they all have pros and cons. And let's start with the first one.

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The 4 Paths To Making Mega Money | Ep 820

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Meanwhile, Chick-fil-A, 75 years later, has 2,600 locations and they're all privately held and they have no debt. Now, you might think, well, I don't want to wait 75 years. It really depends on what kind of vision you have as an entrepreneur because for me, my belief is if I could build something that outlasts me, I think that would be amazing.

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The 4 Paths To Making Mega Money | Ep 820

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And sometimes the way to build something for the long term is to not build it for the short term, which is not fast and growing at all cost. Because sometimes you grow bigger by giving yourself the time to grow longer. Yeah, and I share this story because this is how I've started every company that I've founded. So I haven't founded a company and taken on capital.

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The 4 Paths To Making Mega Money | Ep 820

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I have invested and co-founded, but if I'm the sole founder of the business, I have typically bootstrapped it, meaning I funded the original business. So when I had my online fitness business was my very first business, that was just me, and I spent the $5,000 to start that up. My... Gym cost me, I think, $37,000 in total to start my first gym and sign the lease and get it kind of outfitted.

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The 4 Paths To Making Mega Money | Ep 820

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the question is what type of debt you're going to incur and so for example if you bootstrap a business as in you take no outside capital when you start it you just fund it yourself and you own it you grow it organically then the debt that you take on is going to be that you're not going to have enough money to get the best talent in the door and so you're going to have talent debt you're probably not going to have enough money to get the right technological infrastructure in place to to run the entire business so you'll take on technological debt

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The 4 Paths To Making Mega Money | Ep 820

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That was all me that fronted that capital. And when I opened up each additional location, it was the same thing. There's a key point there that I'm going to talk about return on invested capital in a second. Stay tuned. The next thing I had was Gym Launch, which was started by me, Prestige Labs started by me, Allen started by me, Acquisition.com started by me, and funded.

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The 4 Paths To Making Mega Money | Ep 820

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And so when you do that, you don't have any dilution, but you also have complete control. And so if you can think long, you can grow big.

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The 4 Paths To Making Mega Money | Ep 820

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now back to the return on invested capital every business you want to have a compounding vehicle within it so what i want to do is walk you through a little company example that will illustrate this so let's say we have company a and we have company b and let's say this is year one year two and year three all right so let's say year one company a sells 100 customers company b sells 100 customers

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The 4 Paths To Making Mega Money | Ep 820

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Next year, for company A, they lose 100, but then they sell 200 customers. So they're plus 200, and then minus 100. So they lost 100% of those customers, they still did 200 sales, okay? This company gets plus 100, and then minus zero. So they're now at 200 in total. 100 from the first year, 100 new customers from the second year.

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The 4 Paths To Making Mega Money | Ep 820

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And let's say year three, company A sells 300 new customers and now also loses the 200 customers from the year before. And year three, company B sells another 100 customers but has the 100 from year one and the 100 from year two. Both of these companies are gonna have 300 customers in that year. Which business would you rather have?

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The 4 Paths To Making Mega Money | Ep 820

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Hopefully, if you watch anything that I talk about, you would want company B. Why? Because this is a company that is stable, that will continue to grow year over year over year, and they don't need to necessarily grow, they don't need to grow faster. If they just do a good job and keep the customers they have, they will just consistently grow year over year.

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The 4 Paths To Making Mega Money | Ep 820

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And I'll tell you this, knowing that no matter what happens, you will always get bigger is a very nice value proposition for an investor or for you as an entrepreneur. The key is that you want to have some sort of compounding vehicle within the business. And so to accomplish that, there are pretty much only two ways to do this.

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The 4 Paths To Making Mega Money | Ep 820

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So one is you, so the first is that you sell stuff that people never stop buying. And so that can either be a recurring or reoccurring membership. So a reoccurring business might be something like Coca-Cola. where you start drinking Coca-Cola and you go to Costco and you buy it, when you go to restaurants you buy it. And so you buy from a number of different places.

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The 4 Paths To Making Mega Money | Ep 820

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Now you're not on a subscription for Coca-Cola, but you might just buy it on a regular basis. And so because of that, once they acquire you as a customer, you keep paying them. Starbucks is the same way. Once someone goes to Starbucks, the average customer spends $14,000 at Starbucks, so they just keep buying products from them. You're not on a subscription, but you do keep going back.

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The 4 Paths To Making Mega Money | Ep 820

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The other version of this is something like Netflix, where you have subscription, you have a membership of some sort, and people stay on and keep paying. And so in either of those situations, as you acquire customers, the business just keeps growing. And so every new customer you bring in just grows this big bolus of people that over time makes you more and more money.

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The 4 Paths To Making Mega Money | Ep 820

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The second scenario is where, and this happens all the time in home services, solar, roofing, a lot of real estate adjacent type stuff. where you have a business, I mean, even physical products can be this way, where you have a product that doesn't have a lot of return business.

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The 4 Paths To Making Mega Money | Ep 820

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So if you buy a house and sell a house, it's like maybe somebody comes back to you three, four years later, there's nothing wrong with that, but you probably wouldn't describe that as a recurring or reoccurring business. And so instead, if you owned a business like that, what you'd want is a growing network of people who never stop selling for you.

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The 4 Paths To Making Mega Money | Ep 820

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So here you have customers who never stop buying, and here you have a distribution base of people who never stop selling. And so, for example, Prestige Labs, the supplement company we had, people who go to the gym and try to lose weight, that's a very cyclical thing. People try and lose weight for a little bit, and then they fall off, and that's common.

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The 4 Paths To Making Mega Money | Ep 820

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Now, that being said, what can make the company more stable is if I have a thousand locations that are consistently selling product every month. Now, the who they sell it to might change, but the fact that they are continuously selling becomes the node of kind of recurring revenue or reoccurring revenue, but just one level chunked up.

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The 4 Paths To Making Mega Money | Ep 820

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And so this is a distribution-based model, this is a customer-based model, but both of these compound. And so when I look to invest in a business or start a business, I try and solve for this. Once you solve for this, growth becomes inevitable, right? And because of this, when I was 26 or seven years old, it was the first year that I made like a lot of, lot of money.

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The 4 Paths To Making Mega Money | Ep 820

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And I took home, I think just under $17 million in profit personally, in income. And so this stuff absolutely does work. So this isn't just like armchair theory that I'm just like talking about something I haven't done, which I can understand any skepticism around that because of a YouTube video on the internet.

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The 4 Paths To Making Mega Money | Ep 820

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And you can go down the line and start thinking about all the other ancillary non-financial versions of debt. Now, businesses that choose to take on financial debt choose to take on that debt instead of the other types of debt because of the nature of the competitive dynamics of the market they're in.

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The 4 Paths To Making Mega Money | Ep 820

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That being said, the key to growth in this path, so when you're in this box, it's your business and your money, your key or your path to growth is something called return on invested capital, so it's ROIC. Now, return on invested capital basically is how much money does it cost me to make more money? And so, for example, there are multiple levels of this within a business.

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The 4 Paths To Making Mega Money | Ep 820

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And so if I have a brick and mortar business, you're going to have the lowest level of this, which would be LTV, lifetime value, to CAC, which is how much does it cost me to get a customer versus how much do I make from that customer over time. That's the base unit of economic arbitrage in a business. This is how you make money fundamentally.

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The 4 Paths To Making Mega Money | Ep 820

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Now, leveled up from this, you have ROIC, which still talks about the same concept, return on invested capital. How much does it cost me? The return, this is basically LTV. Capital is the cost, right? It's just one frame. So I'm trying to give you the real terms rather than just use some of the third grade terminology so that you can actually learn it.

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The 4 Paths To Making Mega Money | Ep 820

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Alright, so return on invested capital typically will describe the larger unit. So if my massage business, for example, cost me $10 to get a customer worth $1,000, then that would be an amazing LTV to CAC. But the question is, how much does it cost me to open a massage studio?

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The 4 Paths To Making Mega Money | Ep 820

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Well, I mean, this doesn't take into account the lobby, the build-out, the licenses, the recruiting costs, administrative costs, tech costs, you know, construction, whatever. At this point, it's like, okay, maybe I have an amazing LTV to CAC, but my return on capital might be not as good, or it might be amazing.

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The 4 Paths To Making Mega Money | Ep 820

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Here is basically the bigger money multiplier within the business over the longer term. Let's say that we have a business that does $1 million top line, and we own the whole thing, okay? $1 million top line, and let's say it makes $250,000 in profit. If we're entrepreneurs, then we have two options. We can reinvest that in our business or we can put it into another business or another asset.

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The 4 Paths To Making Mega Money | Ep 820

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But if we know that our returns on invested capital are very good, then it would behoove us to put it into our own business. And so let's say that my return on invested capital in my brick and mortar chain, for example, let's say that it costs me to open this million dollar business. It costs me $50,000 to open a store. And within 12 months, it makes $250,000 back.

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The 4 Paths To Making Mega Money | Ep 820

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And if you hear that, you're like, whoa, that's amazing. This happens all the time. This is not that uncommon. I mean, I told you about my gym, cost me 37,000, and I was making 20,000 a month within six months. You absolutely can have these kind of, these metrics, okay? So at this point, what would make sense for me?

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The 4 Paths To Making Mega Money | Ep 820

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And so those types of businesses typically are in businesses that take a tremendous amount of capital to start up and scale, or they are in winner take all markets where speed is the primary objective of the business so that they can capture the opportunity and then fundamentally become monopolies of a new type. So Facebook, for example, became a monopoly of attention to a large degree.

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The 4 Paths To Making Mega Money | Ep 820

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Well, I should probably take my 250 and basically have this times five, and then this gives me this times five, and all of a sudden the next year I make 1.250, Million. And what'd I do the next year? This is how compounding occurs. So then I split this up and what would this allow me to do? I would open up 25 locations and then that would make me 5.25 million in net income, right?

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The 4 Paths To Making Mega Money | Ep 820

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Now, of course, when you're at this point, the constraint will quickly be operational constraint. You'll actually have a people issue of trying to staff all these things, get all the locations signed, and this is why some people turn to franchising and things like that so that they can expand a little faster.

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The 4 Paths To Making Mega Money | Ep 820

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And that being said, it is the most expensive form of equity because you're giving away basically the entirety of your business for a percentage of the top line, but then you have to still service all of the locations almost as if you own them. And so I'm not the biggest fan of franchising. There are times where it does make the most sense, but most times it's because founders are in a rush.

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The 4 Paths To Making Mega Money | Ep 820

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If this is your first time business. Hey guys, real quick. This podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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The 4 Paths To Making Mega Money | Ep 820

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you.

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I would strongly recommend doing your business with your money because there's so many things that you don't know and you have to pay down your ignorance debt. You have to pay down the cost of not knowing what you're doing and I'd rather you do that on your money than someone else's.

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If you do start to have this business that starts doing well and you start having this excess cash, our $250,000 in the example I just gave. So the third path is that you can have your money with other people's businesses. So remember here we had our $250,000 in profit from this business that we created.

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Well, of course we could put it into our own, but if we put it into someone else's, then we want to understand what our return profile is going to be. And so this is what I would consider the path of the investor.

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And so if the first category is the path of kind of like the venture-backed entrepreneur, the second path is the bootstrapped entrepreneur, the third path is the path of the retail or just traditional investor. You have some extra cash and you want to put it into something else.

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So for example, you guys have probably seen the show Shark Tank where there's five sharks that are all wealthy people and entrepreneurs come to them and they invest in their companies. What they give is money and help and what they get back is some percentage of the upside depending on how the deal is structured. Those sharks tend to have less time and so what they're compensated for is risk.

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And so when you become an investor, the chief thing that you give is that you de-risk the founder, and you incur some of that risk, you shoulder some of that risk, not in exchange for work or time, but in exchange for capital, which fundamentally means I took time somewhere else, I did work somewhere else, and I'm going to throw that into your business, so that I can offset your personal risk.

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Now, the benefit of an investor is that you can diversify to a wide degree, meaning you can take 100 bets, you can take 1,000 bets. So every single share that you own in a publicly traded company is a small bet that you're making as an investor. And every share that you own of a privately traded company works the same way.

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It's obviously not privately traded, but just off market, it works the same way. Now, investors in general tend not to be the wealthiest people in the world. And so this is why, in my opinion, real estate has created more millionaires than any other vehicle, But private equity has created more billionaires than any other vehicle.

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And so it's because of the nature of the concentration of risk and reward. When you are the business that goes all the way, to the investor, you might represent 1% of their portfolio. So they might have a huge win with this business, but it's only going to be 1%. But if it's your business in either of these scenarios, then you're probably going to have a big slice of that pie, which means that

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Now, because there are other social media platforms, they get away with that, but they have created a big moat around all of the attention that exists in media. And so for them, there's only one real big social network that was going to exist. And so they then captured it. Of course, LinkedIn was like, well, is there a version of that we can do for business professionals?

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Their 1% win might be a 20% win, an 80% win for you. But what we don't see is the other 99 entrepreneurs who just go to zero. And so this is where I think that from a personal level, you have to know what you are shooting for.

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Because if you're like, I just want to get rich, then investing in sound assets that can give you a good return over a long period of time, there's probably no sure way to become wealthy. to become the richest person in the world or the top 100 richest people in the world, you will almost invariably have to do one of the other two paths that I just described.

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The fourth path that I'll show you last is one that also gets you on the top 100 list too. And I'll share how that works in a second. The beauty of being a traditional investor where you take your cash and you invest in businesses is that it's unlimited in its scalability.

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It's for the most part passive with the exception of the active work that you have to do in finding sources and negotiating the deals, which is work, but typically less than running a business. Since I am an active investor, why don't I share with you some of the things that I look for in businesses that I invest in. Now to be clear, this will be my investment thesis. There are many.

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So for me, I create content like this so that I can get exposure to entrepreneurs so that they can come towards Acquisition.com and say, hey, I'd like to do a deal with you, or I'd like your help to help us scale. And we happily do that. And this is how we get to know businesses at early stages so that we can be with them throughout their careers.

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I mean, the smallest company that we started working with had done $2 million the year before, and this year we'll probably finish around $110 million in revenue. And that's, mind you, over years, not like a couple months. Number one is that I try to invest in high cash flow businesses that are profitable.

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So I like getting distributions every month because it offsets my principle and it tells me that the business is doing well on a much faster feedback loop. So number one is I invest in high cash flow businesses. And mind you, this is in my active arm at Equizition.com, which is kind of our private equity portfolio.

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We have a venture arm, which is ACQ Ventures, where we write smaller checks for smaller slices of businesses where we are not involved and our primary value add is risk and a light amount of help compared to what we do when we're heavily investing in a company where we're taking 30, 40, 50 plus percent of the business.

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In those instances, we're gonna be working, we're gonna be recruiting, we're gonna be leading the strategy of that business, versus just saying, I believe in this entrepreneur and this team, I believe in this concept, and I'm willing to write a check and take on some risks so I can get exposed to some upside. So this is my private equity thesis. The second is that I want something that can grow.

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And then they captured that. Can you imagine now another professional social media platform being like, oh, we're now starting up. It's like, there's no room for you. It's already done, that market is captured.

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And so fundamentally, for growth, there's only two ways that a business can grow, right? We can increase the number of customers, or we can increase lifetime gross profit, or LTV, per customer. So we can get more people or increase how much they're worth.

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And if we see a path that's very clear that we can say, oh, we know how we're gonna get this company more customers, or we know how we're gonna be able to double, triple, quadruple how much customers are worth, which one will immediately make us more money, but then also allow us to spend more money to get more customers. So school, for example, is one of our largest investments.

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And that one breaks rule number one. And that's because at this point, I wanted to take a very big swing on something that I think could change an industry. And it's an industry that I understand very well, which is education and media. And I feel like very, I have edge there. I understand it. Could something happen, it could go wrong?

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Maybe, but in the last year, we, you know, 6X'd the business, so it did, we had a good year. With school, it was like, okay, do I clearly know how we could help it get more customers? Yes, and so that was fundamentally what we drove. Now, the lifetime gross profit is very much product-driven, which is not the role that we decided to take on for this particular investment.

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But I did know that I have a huge part of my audience that wants to start a business. And so I said, okay, well, I don't have something for people who want to start a business. All my stuff is really for business owners. But people who want to start businesses still want to learn about business before they start businesses. And so I wanted somewhere I could say, well, if you're not sure,

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Go there, and if you're not even sure about that, just read some of these books so you can get a little bit more context on what you could potentially sell. The third thing that I look for is focus, and I talk about this a lot, which is is the founder someone who can say no, who's focused on a specific avatar, a specific customer, has lived the life or the problem of that customer.

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There were other companies that were competing for the same market, and the people who were able to raise the most money, spend the most money the fastest, attract the best talent, were able to capture it the fastest, then sealing their competitive moat to keeping that as a long-term cash cow over the long haul.

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I don't want to have to niche slap a founder. All right, so a niche slap is where they're like, aye, sir, I do everything for everyone, which really means nothing for no one.

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And so the benefit of being very focused on one specific customer avatar, or ICP, ideal customer profile, depending on what market you listen to, if you have that, you can solve people's problems far better because you can be more nuanced in the solutions you provide. You can also charge more because the actual value is higher.

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And you can tend to acquire customers cheaper because your messaging will be more targeted and the target of your advertising itself can also be more targeted. So both the words, the offer, the deliverable, the pricing, all of this is a strategic question, which is why I want to make sure the strategy of the business makes sense.

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And then fourth, and this is probably the biggest one of all of them if we're being very real, is jockey over everything. I'll put one caveat out, which is I'm not going to try and enter a market that I think is going to die. So if someone's like, hey, I have a new gas-powered car, that probably wouldn't be the bet that I would make.

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So in the first path, you have other people's money being invested into your business. Now let's look at some of the business titans that followed this path. So here you can see three pie charts with 17%, 10%, and 4%. If I were to show you this and say, do you think the people who own these pies are very rich? You might think, well, no, they own so little of the pie.

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If someone says, hey, I have this brand new print newspaper that I want to start, probably wouldn't be the bet that I would make. But if they're in a market that I don't foresee is going to disappear tomorrow, then all of my emphasis is going to be on the jockey, which is how good is the person, the founding team,

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for the business, because the thing is that the founding team is going to encounter innumerable problems as they try and scale this thing, and you have to trust their ability to solve problems, because it doesn't matter how good the idea is, your ability to consistently solve problems in a cash efficient manner is how you can grow a business over the long term.

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And so you want someone, and I'll use Uncle Warren's three big values, is you want someone who's incredibly industrious and hardworking. You want someone who has very strong ethics and someone who's competent and intelligent. You have competence, you have work ethic, and you have integrity.

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And so he famously says, well, you know, if you have just competence and work ethic, but you don't have integrity, you've got a crook who's working really hard against you. He's like, very bad. He said, so if you are going to have that, you'd rather have somebody who's really competent but lazy. And... because at least that way he's not going to do you as much damage.

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So you want to have all three. Now what's difficult about this is that even one of those three things is hard to find. Somebody who truly has character even when the chips are stacked against them because it's the only time that it matters. Or someone who has tremendous work ethic, especially when it matters most in the business.

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When things are tough or you're going through a growth period that's just like, it's just requiring you to work 20 hours a day because there's not enough people, but the business requires it right now.

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which means that those businesses lose a tremendous amount of money for a short period of time, and then they're able to kind of get over the hump and then become cash machines. And so, for example, Amazon was unprofitable for nine years, famously. And there's an interview of Jeff Bezos getting grilled on the Tonight Show, I think, with Jay Leno. Is it Jay Leno? Yeah, with Jay Leno.

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Or you just have someone who's exceptional product or prospect knowledge that they, that integrally gives them, that gives them tremendous edge over their competition because they understand everything down to, I love this analogy that a VC who invested in Regal, which is now, you know, in a pretty tough situation, but for years was a cash cow business, Regal Cinemas.

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He said, when he talked to the founder, he said, that guy understood the cost of everything down to the kernel of popcorn. He said he just knew everything about the business. He said, he's like, there was really no reason that I should get into cinemas.

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He's like, but when I saw this guy talk about it, he was like, he was so energetic and so passionate about it, and clearly had good character, and he just understood the business so well, he was like, there's no way this guy's not gonna make money in it. And he did. And that is a great example of a business that required a ton of capital to start. Opening up movie theaters cost a ton of capital.

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And so it makes sense that that business owner, even though he knew everything about it, probably been there for a long time, he still asked for investors rather than saying, you know what, I'm going to take another 10 years to save all the money on my own just to start one.

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When he's like, you know what, I could leverage other people's lifetimes of work so that I could basically be at year 10 at year one and have a smaller slice of a much bigger pie. And so fundamentally, betting on the jockey is the highest leverage bet you can make because you're betting on someone's ability to solve problems in a dynamic environment. And businesses, if anything, it is dynamic.

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So the environment may change, the market may shift, some of the variables or assumptions that you thought were gonna be there aren't. And some of the most famous founders were companies that started not even with that intention. Like Slack was a video game company that eventually just had this engineering messaging tool that ended up being good and then they shifted to that, right?

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Because they just had exceptional founders who were able to pivot and be adaptable. In some ways, betting on the right jockey is almost like insurance for an investor. It's like, I just think this guy's brilliant and hardworking, and I think when something happens, he will figure it out.

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And so, when we're looking at all four of these things, it's a high cash flow business, it has high growth potential, there's a focused founder, and they exhibit high character, high work ethic, and high competence, then it's like, okay, well, if there's companies that meet all of these criteria, which is still rare, what makes you pick one versus another?

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And so for us, we operate under, at acquisition.com, one thesis, which is the theory of constraints, which is that a system will grow until it is constrained, and then it will grow no further.

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And so once we find what the constraint of the business is, then we attack that constraint with all the resources and all the brain power and all the money we have to try and solve that constraint to then unlock the next level of growth until the next constraint.

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And so to give a simple example, if we were to simply 10x advertising for a lawn care business, if they don't have 10 times the sales people to take those leads, The next, like us just blowing the doors off the front end is just gonna lead to the next constraint. Then we have to hire more sales guys.

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But even if we did the marketing and then we did the sales, then we'd have to hire more guys to do the, to mow the lawns, right? And so the constraint will continue to move down the pipeline until the entire business is de-constrained and then you will realize the throughput increase of having this huge influx.

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And he's like, you guys don't make any money. And Jeff Bezos just gives a, he does this like weird laugh. And he's like, yeah, we don't, but we could.

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And so for us, if we understand the business well, so it has all of these things, it happens to be in a space that we feel like we understand better than other people, then that's where we will be more likely to take our bet. And the better we understand it, the bigger the bet we'll make.

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And so to give you context on this, the company founders within our portfolio, not including school, because this metric would be stupid if I put school in there, the average founder in our private equity portfolio has had a 13x return on equity. Think about it like this, if your company was worth

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$10 million when it started, your slice, I'd have to, the circle would be much bigger than this page, your slice of equity, let's just not draw into size, right? Your slice of equity later would be worth $130 million. Independent of how much they quote sold to us, they are significantly wealthier than they were before.

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And I think we may be the only private equity fund that even tracks what the return on founder equity is. And that's because long-term, I believe that me getting great deal flow from founders who want to do business with me is the long-term strategy that is going to make acquisition.com into a powerhouse with a new model of private equity.

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As an investor, you can think through these things and invest in companies that meet these requirements and ideally are in companies that you have some sort of edge in, that you understand better than other people. The final way of getting ultra wealthy is other people's money and other people's businesses. You're like, wait a second.

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We just choose not to because we get better returns on our capital by continuing to expand our infrastructure so that we can eventually support literally delivering things the next day to every single customer in America, notwithstanding the fact that they have the single most successful subscription in history. in Amazon Prime.

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Okay, so you've got other people's money in your business, that's raising funding. You've got your money in your business, that's bootstrapping it. You've got your money in other people's business, you're an investor. And then you've got other people's money in other people's businesses, which makes you a fund manager. So let me explain.

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So for example, when I sold Gymlaunch and Prestige Labs, I sold those to American Pacific Group in 2021. They are a $500 million fund, which now has a second fund that's another $700 million, so they have $1.2 billion under management. Now, they bought Gymlaunch and Prestige Labs together as a package for $46.2 million.

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Now, that check they did to me represented a small amount of the overall funds that they had. And so let me show you exactly why people who run funds make a huge amount of money. So APG bought my company, other people's businesses, using other people's money,

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like the teachers' endowments, the police fund, the fireman fund, the Yale, Princeton, Harvard, the endowments that they have, they have these massive war chests of money that they give to these fund managers as a small allocation of their overall investment for their university or for their limited, for their investees, if you will, to get a return.

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The key point that I think is very interesting here is that the fund manager of a fund like this will often make more money than any of the founders of the businesses that they buy. When I saw that, I was like, oh, this is a very high leverage vehicle. And so this is what kind of kicked off my journey to thinking through what are all the ways to make mega money.

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And that was the point of this video. So a typical fund manager, typically, not always, but it is common for, if you wanted to raise, call it $100 million, okay? Let's say that that's the amount of funding that you wanted to raise. A fund manager, which would then be typically the general partner, the GP, would put something like 5% in.

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So they would contribute $5 million of their own capital, and sometimes that's between multiple partners, to fund the $100 million. Because most investors want to make sure that you have some skin in the game that you care. That means that they're going to get $95 million from other people's money. Okay, stay on track with me. Now, the question is, what does $100 million buy me?

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Well, in private equity, $100 million, so you can leverage this and get $200 million in debt to buy $300 million worth of businesses. So think about the leverage here. You put $5 million in, and you're able to buy $300 million for the businesses. So then the question is, okay, but then what do these guys get for taking this risk? Great question.

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So the typical fund structure has a two in 20 structure. This is kind of industry average. There's obviously some that are different than that, but this is the most common structure. And so 2%, the first number, that people say, it's like, what's the structure? If you hear someone say two in 20, one in 25, whatever, what they're referencing is the management fee,

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And so when Bezos was making the investment of capital into the business, he asked the question not what do I think is going to change in the next 10 years, he said what things won't change in the next 10 years. And so he realized that there are some fundamentals that will never not be true. People will always want things to be faster. People always will want things to be easier.

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which is charged off of funds raised every year. And then the 20% is off of the profit that's generated at the ultimate conclusion of the fund. All right, so let's say 10 years from now, we've exited all of the positions that we had, and we turn this $300 million of companies into $900 million. So over 10 years, let's say we triple the money in general, we triple the value of the companies, okay?

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Now, well what do we have to do? Well, over, let's say this is 10 years, over the 10 years, that 2% equals, so this is management fee, equals $20 million. So you get $20 million in management fees just for that 10-year period of time.

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Now, mind you, you have employees, you have costs, and so fundamentally the management fees are supposed to help you run the actual fund without having to put more stress on the companies that you're buying. The 20%, so this is called the carry, the cool thing with carried interest, which is kind of the profit part for the fund manager, is that it gets taxed like capital gains.

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And so basically they can make their income in a tax-efficient manner. So let's say that we sell our, all the companies, and so we have to take out the debt that we owe, right, so we have $200 of debt that we owe, and then we have to return the, I'm just gonna say round numbers, we have to put the $100 million back into the investors' pockets, all right, so we have $600 million back.

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Now, there's gonna be some interest costs here, so maybe it's, if it was over a 10-year period, we'll say $100 million in interest payments that we had to pay to also carry this debt, okay? Let's just say hypothetically. All right, so we've got $500 million left over. Now, we have our 20% carry, which means that we're going to get $100 million for doing this.

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So we took our five, we got paid 20 and 100 in that 10-year period. And this 100, also post-tax, is $80 million. And so all in all, you're making $100 million plus with a $5 million slug. Mind you, this is when you start with $5 million. What happens when you capitalize a fund and you put $100 million in and you raise a $2 billion fund? Well, just multiply these numbers by 20.

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It gets really big really fast. And so fund managers employ one of the key principles of wealth, and I'll have a follow-up video on the principles of wealth, but one of the key principles is leverage. And so they have multiple forms of leverage that they're able to multiply. It's why Acquisition.com is, in my opinion, the two strongest forces in business are leverage and supply and demand.

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And so supply and demand is these two little curves here. And then leverage here is this fulcrum. They first leverage their $5 million to get $95 million from investors. Then they leverage the entirety of that $100 million to buy companies, which then they use the companies, they leverage the companies to get the debt.

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off of these initial cash checks that they can write, and then all of a sudden, that five becomes 60 times bigger in terms of the assets that you can control. Obviously, APG ran this exact model, and they had a $500 million fund.

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If Acquisition.com, one day in the future, wanted to have a fund saying, hey, I'll put money in, and if you guys want access to deals that I have access to, and want my team to work for you, basically, then we would have some fund structure in place that would allow everyone else to participate. A fund typically should get structured because you have one of two key things, in my opinion.

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This is now just me talking Alex's opinion. You should have access to deal flow that other people don't have, so proprietary deal flow. The reason proprietary deal flow is super valuable is two things. Number one is that you will get better negotiated terms on the deals, meaning that you could buy assets for maybe less than intrinsic value or less than a competitive process might yield.

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People always will want things to be risk free. And if you can create an outcome that is desirable, fast, easy, and risk-free, then you have an incredibly valuable business. And so this corresponds with the value equation in the $100 million offers book.

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If you're in an auction, you will pay more than if you're just making a one-on-one deal, which is why when you sell a house, you're like, I hope a lot of people bid. That's really good if you're a seller, really bad if you're a buyer. And so you want to have deals that you can just be the only person bidding on it. So that's thing one.

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So for example, what that looks like is for acquisition.com, it'd be businesses that are applying on the site at acquisition.com saying, yes, I'd be interested in selling a business where I'd like you guys to help me, help invest in the business, help it scale. That's what that would be. Now, the reason that it's proprietary is they're not typically going to other people.

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They're not saying, I want investment. I'm going to pick acquisition.com of 10 people. They're saying, I want to work with Alex and his team because of their proven track record. The second thing that you want, in my opinion, as an investment thesis is some sort of edge.

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You want some sort of insider knowledge, not insider trading, to be clear, insider knowledge on the industry or prospect that a company serves. And so you will find that there are some private equity firms, for example, that just specialize in manufacturing. They're just really good in heavy manufacturing businesses.

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Some private equity firms are really good at CPG, so consumer packaged goods, direct to consumer, physical products, e-commerce. There's whole fields of great private equity firms around that. And they typically have founders or ex-founders who funded that with their own exits and then basically redo the playbook with more leverage. There are some funds that just specialize in software.

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There are some funds that just specialize in professional services. There are some funds that just specialize in media. You want both proprietary deal flow so that you have deals that no one else has access to, these are off market deals, that they only want to do business with you so you can get better, more attractive prices and terms. And then you want to have a way to accelerate value.

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So if you want to think about investing is a business, right? We have LTV to CAC too. These things completely apply to investing business. So the CAC is if I have proprietary deal flow, then I'm going to be able to acquire customers or acquire deals for lower prices and on better terms.

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And if I have a way to grow those businesses, then I will have higher lifetime deal value than somebody who doesn't. And so when you combine those two things, you get better returns. So you have more value on the buy and more exit value on the sale, and that discrepancy is what creates the outsized alpha, which beats the market.

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And so fundamentally, this is what, this has been my thesis for Acquisition.com. Now I haven't talked about this as much publicly, mostly because it applies to fewer people than the vast majority of my content, but our team decided, you know what, let's, Let's talk about what we do. So within the private investing world, the fund world, there's typically kind of two big buckets.

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You've got private equity, which means that they are buying equities that are private or off market, which is about a 60 or 70 year old industry. And then you've got VC or venture capital. And within venture capital, you have growth funds, you have seed stage funds, you have series A, series B, and these will typically be defined by their check size.

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And so time delay is speed, ease is gonna be effort and sacrifice, perceived length of achievement is your risk, and then the dream outcome is making sure that you're not just making things fast, easy, and risk-free that no one wants, right? And so that's the dream outcome component. And so getting things to your door, a lot of people want that. If you can do it faster, they like that more.

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An interesting tidbit for you is I was talking to David Weisberg, who runs 10X Capital, unaffiliated with Cardone. He just actually owns 10X Capital, kind of funny. He exclusively talks to LPs. So big endowments that have many, many, many, many billions of dollars. And that's like his entire network. Good podcast if you want to check it out, if you really like high, high level investing.

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And so they did a meta study and they found out that VC or venture capital assets, so think software companies in general, have the highest return of any asset class. So they average about 14% per year, which is, I think the second highest one is REITs, so real estate investment trusts, I think average like about 12% a year.

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And then you've got, you know, the public securities, so normal stocks is something like nine and change. They kind of go down the gamut of different asset classes. Now, mind you, this is just the class of assets, not just a specific stock.

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Obviously, in every one of those categories, there's some, you know, real estate buildings that have, you know, 100x, and there's probably not 100x, but have gone up a lot. There's software companies that have definitely 100x, and even individual stocks that are not software that have also 100x. And most of these still follow that kind of two and 20 structure.

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There are some, like there's a famous one that's zero and 35. So like it's really about how you want to shift risk with your limited partners. Private equity tends to manage, tends to manage bigger amounts of money. So if you look at Blackstone has about a trillion dollars of assets under management. Apollo has about $600 billion. under management. KKR has $500 billion under management.

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So monstrous sums of money. And there's a reason why private equity has created some of the wealthiest people in the world. The fund managers of these groups are all deca billionaires and above. Stephen Schwarzman, I think, is a $40-ish billion, just an absurd amount of money. And they do that because of all the leverage that I explained earlier.

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Now, venture capital tends to, not always, but tends to. So if you have like A16Z, which is Andreessen Horowitz, has about $50 billion under management. Sequoia, one of the most well-known funds in the world, has about $56 billion. So they're about the same in terms of size. So you can notice there's an order of magnitude difference in terms of the size, but they're

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usually making bets on what the next Facebook is going to be, whereas these guys tend to buy more traditional businesses that are already monstrous, and they do a little bit more of the financial arbitrage, meaning it's more about how they can buy it at one price, sell it at another price, or combine assets in a way that makes it accretive, so the fancy word for just value additive, to the overall enterprise value.

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If you can make it easy for them, they like that even better. And if you can make it so that the purchase they had is very likely to be good, aka the entire review system that Amazon pioneered. Reviews were not a thing. Think about how crazy this is.

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Whereas these guys tend to do zero mergers and acquisitions and bet on the organic or viral growth of the companies that they take shares in. And so these guys typically focus on inorganic growth, and these guys focus on organic growth, meaning the company itself grows, and these tend to grow by globbing in multiple things together to make the overall entity bigger.

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And so that's where like, for example, if I were to buy an auto repair shop, I might be able to buy the auto repair shop at a five times multiple,

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and then get debt for half of that, so I put two and a half times their income into the deal, and then buy five other ones with that, and then altogether sell them for 10, and I can triple my money in that period of time without actually having grown any of the companies. That's where it gets wild. In this game, all they want to do is see this company just keep hockey sticking.

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Now if you're like, okay, well where does acquisition.com sit within this world? So we kind of sit in the middle. So obviously we have ACQ Ventures, which is just traditional VC, but our actual private equity side, we do little M&A.

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we do if it makes sense and typically it's because it's like an adjacent purchase of a business that we're referring a lot of business over to and it makes sense for us to just kind of bring them in more than we're like actively seeking out 10 follow on investments to glob together.

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So we do less financial arbitrage and more value add in terms of our ability to help businesses scale and for us that's less capital intensive and I would rather, this is me personally, I would rather allocate my team's effort to growing something organic because it is the most efficient form of growth in terms of return on capital. Not the easiest necessarily, but it's the most efficient.

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So if you can do it, you do that. But most people can't do it, and so they just do financial arbitrage. But there's nothing wrong with it. It's just a different way to play the game. And so private equity, for example, will have traditionally somewhere in the neighborhood between five and 10 investments for a fund. So if you have a $500 million fund, you're gonna have five to 10 investments.

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They were not a thing and a lot of people were afraid and pushed against Bezos when he wanted to roll out reviews because they were afraid that sellers would hate it. But he bet on the fact that customers long-term would want the transparency. So in Jeff Bezos' very first capital round that he raised, he sold 20% of the business for $1 million to around 50 investors.

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And so the fund size will typically dictate the size of the investment or check that they're going to be writing. Venture capital, and many times they have multiple funds within one kind of fund, you know, company that will be dark ones for seed companies, ones for series A's, ones for growth equity. So it just depends on what stage of growth they're investing in.

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But these companies can sometimes have 50 to 100 investments per fund. Because of that, they are significantly more hands off and more betting on the few that go big, knowing that they're going to have 99 losers and one Facebook that's going to make up for the whole fund. Here, you really can't afford to lose very much.

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So here they're looking for the very consistent triples and quadruples and five X's. Here they're looking for one hundred or thousand X and then a bunch of losers that aren't obviously looking for losers. They're hoping for more winners. But fundamentally, that is the difference in terms of the investment thesis.

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If you are accepting a venture check, you have to understand that those are the odds that they are playing with and that they're betting with on you. Like the thing is, is for them, you are one percent bet. For you, you're 100 percent bet. And so for the investors, they can distribute their outcome and diversify, which decreases their risk but also decreases their upside.

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And if you happen to be Mark Zuckerberg, then you will make more than everyone else who invested. But you got to be Mark Zuckerberg.

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And so imagine the return on that today for that $1 million for 20% of Amazon. It's more than he still controls to this day for context. And he took that to buy the initial inventory, get the website established, hire the first developers to get this going. You take on debt. If you're going to take on financial debt, use other people's money into your business.

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If you have a market that must be captured quickly in order to get a network effect of some sort, or you have huge amounts of capital that are required to make the business start to begin with.

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So if I wanted to start, call it a pharmaceutical business, then I would probably have to have capital for an extended period of time to start a new drug, to do the research, and then maybe five years after we get the licensing, then have the ability to print money. But that capital would have to come from somewhere. And so unless you start as a

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billionaire to begin with, which you actually could do that, hypothetically, but the vast majority of these businesses are not started by billionaires. They're started by everyday people who have a good idea. And then they go to people who have capital and say, hey, I will give you a piece of this upside. This is the live fast, die hard style of making money.

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The reason it is that way is because it will typically be very investor favorable, especially the earlier it is, because they are taking on more risk. And so the big thing about these mega wealthy paths is that the underlying thing that occurs in all of this is one, return on invested capital, and two, the risk that you're taking in order to validate or justify that return.

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But if I then said, this is Tesla, this is Amazon, and this is Nvidia, would you all of a sudden then think, oh wait, this is Jensen Huang, Elon, and Bezos, some of the richest people in the world, who are all centibillionaires, and now at this point, multi-centibillionaires. And so these incredibly successful people understood the first path of getting ultra-wealthy, which is,

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Some guy in 1995 says he's going to start a bookstore on the internet, whatever that is, and you give him a million dollars. It's like, I need 20% of this thing at least because no one's ever done this before. You've never started a business before. What's the internet? And are people even going to buy stuff on it? Right?

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So there are so many unknowns here that it makes sense that they had a tremendous amount of compensation for the veritable guarantee that they would lose the money they were going to give. And that's probably part of the reason that Jeff Bezos didn't just raise it from his friends and family, despite the fact he was a Wall Street insider.

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So he could have easily gotten the million dollars from probably a handful of people. But he also probably knew that there was a very low chance of success, which I think he says in his early interviews. He figured that there was a low chance of actually making this work.

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And so when you follow this path, the other people's money into your business path, there's really only two big kind of potential outcomes. One is as a founder, you're going to de-risk along the way, which means that sometimes you will get something called secondary.

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So when an investor puts money into a business, they're going to appraise the business based on how quickly it's growing, how likely it is to continue to occur. Well, for them, the ease of investment is high because they just have to make the investment. But still, the fundamental value equation exists for them as an investor, where your business is the product itself.

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Let's say that we have a business before the money that is worth, we'll call it $10 million. and then they say, I want to put $2 million into your business. So if they put $2 million into your business, this business is now a $12 million business, where they now own 20%, and then everyone else now owns 80. And so the founders, the original shareholders, are going to get diluted.

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It means that they now own a smaller percentage, but now the business has more capital that can help it grow. Now, a different path to this, if instead of putting $2 million into the business, they could have put, let's say, $1 million into the business, and say, we're gonna pay the founder over here into his personal bank account $1 million. And so that's called secondary.

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And then most people don't even say primary, but it's kind of almost assumed that money is going into the business when you're raising a round of funding.

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And so some founders will de-risk along the way because at some point, you know, when you have a billion dollar asset and you have $100,000 in your bank account, some investors will understand that the founder themselves will become a little bit volatile. And so they want to give them a little bit of money so that they're not constantly freaking out and actually can make better quality decisions.

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So it's not uncommon for founders founders to take a little bit of chips off the table as they continue to scale and raise funding. Now, this is along the way they're making this money, but they still have this monster asset that's worth billions of dollars or hundreds of millions of dollars. And so there's basically two paths from there for them to actually get paid.

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Path one is that a big private equity firm, which is now kind of a new thing, is that there are some firms that can buy billion dollar businesses and not have them be public. This is a new thing of probably the last call it seven to 10 years, where there's enough private funds, enough private money, sovereign wealth sometimes overseas, that can take down companies of this size.

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When I say take down, I mean put the capital in and buy it. So a simple example of this would be like a company like Kajabi, which is a learning platform where Tiger Capital came in and bought majority of the business and the founders basically now a minority and they kind of had a full exit and almost all of that cash went to the founders and very little into the business.

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In that setting, it's like they had a lot of capital, they bought this company, and so now they're, you know, what's their exit? And so most of these paths, especially when you're raising funding, most of the time is going to be some IPO.

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So an initial public offering that then allows those shares to be made public, which allows the person who owns the whole pie and all the shareholders to have liquidity, meaning they have access that they can either sell those shares or they can lend against those shares.

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the combination of other people's money into your business. Now, the way that it works is that you raise funds by selling a percentage of your company. So what this does is that it actually dilutes you as a founder, meaning you no longer own 100% of your company, but now you might own 80% of a company that now has an extra $20 million, for example, that you can then use to grow.

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either way they have a way of making money from the business not counting distributions which many businesses that are like this don't ever give distributions because they continue to reinvest the capital in the business because the returns from reinvesting the capital are superior to just getting a dividend one of the difficulties with raising money is the nature of the money that you take on all of these are completely unique deals depending on the risk profile of the company the risk appetite of the venture capital firm or whoever is making the investment

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and what their investment thesis or philosophy is. And if you look at 100 different VCs, you'll have 100 different investment philosophies in terms of what they're thinking about. Now, all of them just want a big company, of course, but how they're going to get there is different.

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So there are some firms that only take on one company in a specific space, and they say, we're going all in on this company, and we're going to provide all the help we possibly can to help them grow. There are some companies that say, we want exposure to this entire market, and we're going to take a bet on 10 different companies in this market with the hopes that one of them will win.

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So they don't even care that they're competitive. They're just like, we want to make sure that we're with the winner, whoever the winner is. If you're in the latter example, each of those VC checks may say, well, we have to 10x this business in the next two years, or it's going to massively lose valuation.

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And so they will force the founders to take aggressive growth measures that may sometimes be not in the long-term benefit of A, the founder, but B, the business.

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which might mean that they're overspending on advertising, they're over hiring on talent, they let the culture get diluted or suffer because they can't have enough filters in place because of the rate or the pace of growth that they are requiring.

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And a lot of this growth is almost artificial because they're just injecting so much cash into advertising oftentimes to get the business to grow that they actually didn't solve the core fundamentals of the business. So one of the dark sides of this that doesn't get told is that as you do more and more rounds, each VC or venture capitalist oftentimes gets a board seat or two board seats.

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And all of a sudden you might find out that you have a minority of your business and you no longer have voting power and you can get ousted from your own business, from the investors that invested money in. And so a classic example of this was Steve Jobs. There was a period of time where he ended up getting kicked out of Apple for years before being able to come back.

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Now, mind you, at that point, it was still a public company and it had a board of directors, but it works the same way with a private company. I have a good friend of mine who exited, had enough of an exit. It was a billion dollar valuation. He didn't get a billion dollars, but he had enough of an exit that he could retire.

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And he continued to work, but then they just said, we don't want you to work here anymore. And so he got fired. And then three years later, they asked him to come back. And so it's very common to think, oh, this founder doesn't really know what he's doing. But the thing is, the founder always knows the heart

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and the pulse of the business, because you're the one who knows each of the problems and why everything exists the way it does. In terms of wealth creation, when you take, let's say, 100 of these bets, you can get supremely wealthy. So believe it or not, venture capital is the highest returning asset class of all asset classes.

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The problem is the amount of capital that you can allocate into that asset class typically is very closed, very small, because most of these funds and good companies are oversubscribed. There's many investors who want to put money in when these deals are really good or the likelihood that the business succeeds feels really high. What happens is

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You may take 100 bets and the winner you have may offset the losses, but you're still never going to get richer than the guy who has a fully concentrated bet on the one business. And so there's 99 entrepreneurs who failed and didn't make money, but one of them who still gets even richer than the venture capital investors who put money in.

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They use that one winner to offset their losses, whereas if you were the only guy who went all in on that, you don't have losses to offset. You just went all in. And the reason you would take path one is because you have a business model that requires you to grow quickly or have tremendous amount of capital for an extended period of time before it could become profitable.

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If you've ever heard of like XYZ company raises money at a $500 million valuation, they're not saying they sold the company for $500 million. They're saying that the founders deluded themselves and the other investors by some percentage, and it could be as little as 1% or 2%. at that valuation.

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Now, there are some businesses that this is the only strategy to successfully, realistically accomplish the goal, and then there are some businesses that this would be a terrible idea to pursue. One thing that I think took me way too long to understand as an entrepreneur is that every single business incurs debt the moment you start it.

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So for example, if you had a $500 million company and you sold 2% of that business, then you would have $10 million in cash that you could then put inside of the business to then help it grow. But you'd only sell 2% for that at that valuation. Hopefully this puts some relative numbers to some things that you've heard before. So let's say that you don't want all that risk.

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You have your money and your business. And so this is probably the most common path that entrepreneurs take. And I will say that a lot of the entrepreneurs that I aspire to and like to model tend to fall in this bucket.

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Within this model, I want to make a very big point clear, which is that many people who are bootstrapped or could otherwise be bootstrapped businesses, as in the founder themselves funds everything and doesn't take outside money, as though they are venture backed and that they must grow at all cost. And they chase growth for the sake of growth.

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My first big thing that I will share with you is that rush is imaginary. 99% of businesses don't need to have some aggressive growth timeline. Because whether you're starting a chicken shack or you're starting a lawn care business, there's no network effect that you're going to build up.

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You just have to keep out competing and doing a good job in the local area or in the service vertical that you're concentrated in in order to achieve good returns for the business. And so if you look at Chick-fil-A with Estreau Cathy, they had a competitor earlier on in their career called Boston Market. Some of the older people in my audience might have remembered this.

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I used to go there after baseball games. And Boston Market was kind of like chicken and homestyle cooking, and they were a direct competitor with Chick-fil-A. Now, they raised a gazillion dollars and went super, super fast, and everyone told Chick-fil-A that they should do the same thing.

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But Escher or Cathy, being a lot more prudent of a man who didn't want to take that kind of debt on, who didn't want to just chase some imaginary title for ego, he said, we just need to get better. And if we get better, our customers will demand that we get bigger. Fast forward 10 years after Boston Market was kicking the tail off them and was a Wall Street darling, they eventually went bankrupt.

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I think you can beat 99% of people not by beating them in every possible facet, but just picking one thing to beat them on. And that's how you can win in competition. Now, if you can do more than one, you dominate. What's going on, guys? This will be either the absolute best video you'll ever see, the worst video you'll ever see, or somewhere in between.

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With an exception, if you can make the services cheap enough. I have seen it work well, but I mean way cheaper than you think. I'm talking $100 to $300 a month for services that most people charge $2,000 a month for. When you can do that, now you have something that a lot of people are interested in so that even on their worst day of business, they're like, well, I'm not going to cancel that.

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It's only $100, only $200, and it certainly makes way more than that even on my worst month. Right. And to the same degree, we basically, OK, if I want to do this or if you're you like, OK, how do I actually build for cheapness? All right. So there's three ways that I think about this. Thank you. Thank you. Thank you. You guys are awesome.

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And so they actually outlawed it because guys would just keep driving to the point of like insanity and wouldn't sleep for days. And it was unsafe. All right. That's how powerful speed is because that is what trains behavior. And so functionally, the questions that we have to ask ourselves is, okay, if speed is going to be my competitive advantage, it doesn't matter what we do, right?

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We had our highest month ever in terms of downloads for the podcast. And the only person that I can thank is you guys, because you're the only ones who share this. And so I keep making these because you keep sharing them. So thank you. But if you know somebody, you have an employee, can you share it with your team on Slack? If you have a friend, can you text it or DM them?

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Or if it's just something that you think you would want to share with your audience because it's something that resonated with you, please put it on your on your gram on the I.G. or maybe on your LinkedIn or whatever it is that you like to share with your audience or maybe send it as an email. Why not? Let's get crazy. It would mean the world to me and maybe it might mean the world to them.

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So number one is you can have AI, right? Day one. Now, a lot of you guys should already be investing in this stuff. Like for sure, AI is giving the best employees 10x the leverage they had before. And so if there's ever been a time to have to pay people better, it's been today because AI is now taking your best person and making it 10 times as effective. So it's like, why would you not?

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Like, you're always like, man, if I could have 10 Johns or 10 Daniels or 10 Michaels, man, that would be amazing. It's like, well, AI is giving you 10 Michaels. And so be willing to pay the Michaels of your business more because you actually do get more from them now more than ever. So number one is AI.

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The second is, I'll just say automation, because I think automation for some reason has been forgotten about. There's still lots of stuff that can get automated that doesn't necessarily need to have AI, but you build day one with those automations in place. Now, the third... is offshore rate, right? Or near shore rate. Basically paying significantly less for the same labor.

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But you're actually making this your entire business strategy from day one. We're going to win by being the cheapest. And if that's you, then you state that First and foremost, in your marketing, in your sales, and what's really cool about it is typically when you're on the cheapest, the sales are pretty easy. Marketing is not that hard. The difficulty is being profitable.

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But I've seen some tremendously profitable businesses that structure themselves from day one on being the cheapest. And a little tidbit, a little pro tip that I think a lot of business owners are going to miss out on. I think people are not getting this. If you do all this stuff, let's say you do the offshoring, you do the automation, you do the AI, you don't need to tell your customers.

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You can just have AI automation and offshoring into your business and you just sell a normal service. You need to tell them you have a bunch of VAs in the Philippines. You need to tell them that a lot of your stuff is from AI. Don't say, hey, we're an AI design firm. Just be a design firm and then charge the same rates or a good deal for design because you just have an automated backend. Great.

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Amazing. So that'll allow you to get more cash for the business and ultimately provide more value. All right. So three vectors so far. Speed. How do I do it faster than anybody else in the market? Risk. How do I do it more reliably and build a reputation better than anyone else in the market? Cost. How do we do it cheaper, consistently, and still be profitable than anyone else in the market?

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And finally, you have ease. Now, before I dive into ease, I want to make this point. If you just went on one of these, you could have an incredibly successful business. If you could do multiple vectors, then you'll crush everyone. Right? A quote that I like is, the best... For the most people, for the least. And so best probably takes into account speed and ease and risk.

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And for the most, it's going to be like total number of people that it helps. And then for the least, right? It's like, and I've had different ones. It's like unique, expensive, sticky air. How do I do something that no one else can do? How do I have it that they keep buying it? How do I have it that I have high gross margins? And how do I have it so it's over and over and over again, right?

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If you're in lawn care, there's components to speed, right? So on one angle, like you have to think about each of these larger vectors and smaller sub-vectors. So for speed, it could be the distance between when someone purchases and when they get something, right? That's one vector of speed.

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And so we think about these little monikers. I think about this when I'm trying to build a business because ultimately these are the ways that you win. These are the strategic modes. So people talk about strategy, but fundamentally it's going to have to ladder up to one of these things, right? Right. So so if you're like, oh, by the way, what's acquisition dot coms?

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It's going to be this one probably primarily. And then I would say secondary vectors are these were obviously not cheapest. Right. And so that's where I've built my business around. Now, if I had a different now, not all the business, our portfolio are built that way. Right. We have a teeth whiting chain that's more around speed, ease and cheapness.

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And so you have to make sure that the strategy is best tailored to the customer avatar you're trying to serve. All right, let's talk about ease. So I want to make a big point about ease. If you want to make your product more convenient for customers, you don't make something convenient because we want to like, I want to do something to my product.

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It's actually the opposite, which is why I think most products suck. You make something easier by removing everything that is no longer required. You make something easy by saying, what is hard about this? And then removing everything that's hard. And so what's cool about this process is all like, like easy is not the outcome. It's removing all hard and then easy happens as a consequence. Right.

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So like easy is not noticeable. It's like good design. It should vanish. Right. Like if you look at an iPhone, an iPhone is the result of what happens when you remove everything that sucks about a phone and what remains is an iPhone.

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the the the ux vanishes into the screen there's no menus you just hit what you need it immediately opens up right this is how we have to think about ease and so this happens for services it happens for products and just like i was saying earlier with if many variables exist many variables must be studied you and the nice thing is that customers will tell you what's what's hard thing number one what's hard thing number two what's hard leader number three what's hard thing number four

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And you have that list. And then the way that you make something easy is one at a time, crossing things out one at a time until eventually people are like, man, this thing just works. And that takes work, right? And so take a thing, figure out what makes it hard, remove all those pieces. And then what you're left with is something that's easy. This is the work.

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And I wish I could say this in a hundred different ways, but like, honestly, that's the game. And so when we're thinking about this, it's like, as a customer, like you want to think again, click to close to delivered. So when a customer is coming into your ecosystem, into your world, right? Or like, how much information do they need to get?

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The other vector is that if you're doing something on a recurring basis, how much time is it going to take each time? So, for example, if I had a 10-minute workout, it's going to be more valuable than an hour-long workout if I could get the same results, right?

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Do they have to give information, the same information on multiple calls? Are we passing calls to two reps? Like I'll give you a really simple example. So right now you probably have, like if you have a business that sells via appointments, right? You have phone calls, you have people who made the calls.

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If you have multiple calls that occur in order for someone to buy, let me tell you what happens all the time. Call one, tell me about your business. All right, tell me about the size of the business. Tell me about some qualifications, blah, blah, blah. Okay, cool. So then let me set you up with Charlie. Charlie will get you set up. Okay, cool. Now we get on the phone with Charlie three days later.

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Charlie's like, hey, how's it going? What's the revenue of the business? What's the size of the business? You're like, dude, I just told the, why am I telling, I hate you already, right? And so instead of doing that, let me show you. The thing is that this is a very binary outcome. This is a very binary one. A lot of them are more continuous, but this is binary.

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And the only thing easier than doing what I'm about to share with you is not doing it, which is why most people don't. Your salespeople, your setters, or your salespeople in general should take notes on the customers. And here's what's cool. If you start the second call and say, hey, had a conversation with Charlie.

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Charlie told me that your revenue is this, your industry is this, and the biggest issue you're dealing with is this. Does that sound about right? They're going to be like, wow, they actually did some homework. This is a pretty buttoned up operation. You know what that just made it? Easier. And so we have to think about every single little step. That's just the sale.

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And if you don't think that how you sell affects their perception of the quality of service that you have, you're kidding yourself. Many people will make a judgment based on how good your product is, based on how good your sales motion is, how clean it is, how dialed it is. If you call someone in 30 seconds, they're like, man, these guys are on it.

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They would imagine that if you make a promise about speed later, Guess what the past experience they have that they're going to use as judgment is on? The sales process. And so this, again, I'm just talking about sales because everybody likes talking about sales. Well, I like talking about sales. Fine. Caught me. On the flip side is the back end is the same thing.

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If I say I'm going to help someone get leads and I can help them get those leads in an hour versus waiting a week to turn on the ads, that's more valuable. And so at all times, it's always like, how can we take what we're currently doing and do it faster?

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What's the onboarding call look like? What are the activation points? What are the touch points with the customer? What kind of reporting are we going to provide to them so they know that we're delivering them value? what things do we give? We're giving massage. We're giving a map.

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We show them where the pain is and we show them, Hey, when they come back in, this is where you said last time you were in pain. How's that auto scuff from one to 10 a day? wow, that was really good. Like, I mean, can you imagine you walk into a massage place that you've been to before and they're like, oh, last time you struggled with your shoulder.

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And the reason that so many people like just going with the same person is because the business have so few processes. And so it's like, well, I might as well just go with the same masseuse because she knows me.

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But if every masseuse or massager, I don't know the male version, whatever, massager, already knew the pain that you were dealing with beforehand, could you imagine what a superior experience that would be as a company? And then also, how much more would you be able to keep customers? Whereas when the masseuse leaves, they take all the customers that went with them. Not very sticky.

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But if every massage person knew all the pain points of the business, that would make it easier. Easy is when everything that's hard vanishes. And that's all that's left is the value. Now, If you're looking at these four, how can I do it faster? How can I make it more reliable? How can I do it cheaper? How can I make it easier for the customer?

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The end state, the kill shot, is that you have all four. Now, to have all four, it almost always has to be tech. Now, you can typically have three of the four if you have labor. So if you have a service-based business, you're basically going to need to pick three. But specifically, you need to make sure you have one. Now, why am I so hard on this one thing? Well...

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customers do not understand multiple benefits. Now they can, like from a messaging perspective, now when they buy something and they experience it, that's different. But from a marketing angle, if you say, hey, we're the fastest, we're the least risky, and we're the easiest, it's too much. Just focus on the core vector. And if you're like, which one do I pick?

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Pick the one that values the most to your customer. Pick the one that they care about the most. And so if you know that your people care the most about speed, then speed's the angle. If there's a huge cost when something doesn't go well with the business, then risk is the angle, right? Or the customer, whatever, right?

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And I can promise you, if you just did that one thing compared to everyone else in your marketplace, you just delivered faster, you will have a sustainable competitive advantage over them and be able to charge premium prices for it. And what's really interesting about speed is that speed rarely actually costs more. It typically is...

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And if it's just in general a huge pain to do this thing, then how can I make it easy? So I'll tell you, there's a lady that I know in Albuquerque, New Mexico that I used to go to church with when I went to church. And she had a massive business in, in New Mexico and her entire business was built on one thing, speed and ease.

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And so she had a DMV business where she just privatized getting people their IDs. That was it. That's all it was. And I remember her talking to me and she was like, yeah, they just passed a new law that everybody in New Mexico has to get a new ID because we just changed the license. And she was like, well, that's a, you know, 12 million people times 50 bucks. And I just remember her saying that.

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I was like, how elegant, right? And the thing is, is that her $50 is like, she was able to get people in and out in 15 minutes from the time they walked in the door to the time they left. Could you imagine how lovely of an experience that would be? Everybody, when they think about getting their ID right now, it's like just pain. All you think is just like waste of a day.

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Just frustration, dealing with inept people who have no urgency, no regard for other people, and just generally deal with you as a nuisance, like you're somehow inconveniencing them in their day of not working, that you have disrupted their day of not working by existing and breathing on them. Right. Of course you hate them. And so she just had a business not hard to beat. Right.

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When that's the standard. Again, there are industries that are like this, that are privatized, that still no one tries to compete in. And so if you're wondering, which of these do I pick? Obviously, you start with the customer reverse backwards. But let's do the DMV example I just said. Is she going to win on being cheaper than the government?

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No, I'm pretty sure it's free or it's a nominal price in order to get the new the new IDs. And so she's not going to win on cheap. But what else could she win on? Speed, ease. In other ways, the ease can also be like positive customer experience. Like those are things that improve the overall experience for the customer. Could she double her prices?

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I'll bet you plenty of people would be willing to pay $100 to not have to waste a day, right? So she doesn't have to win on this, right? So she has to pick the one that, now risk, I mean, as long as you get the ID, I mean, you have to be good enough at this, right? But she's going to work on her reputation by having a reputation of being faster and easier,

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And so if you're trying to pick one, you pick the one that's going to matter most to the customer. And if you are competing in a space that has a lot of cheap or sometimes even free competitors, just remember this, fast beats free. So back in the day, there was Napster, which some of you guys may have remembered. It's probably before actually, probably half of y'all's time.

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There's something called LimeWire that happened later. There was Kazaa. There's all these different basically shareware things where you could share files with one another and ultimately just like steal music for free. I'll just be honest. That's what it was, right? So when that was happening, how did a company like Spotify come in, not really free, and beat them?

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They won on speed, and they won on risk. Because when you download a LimeWire, you knew that you were downloading all sorts of viruses to your computer, number one. And then number two, on Spotify, it was like, you just pick the song, you can immediately start listening to it. And so they beat an industry that was literally free by being faster.

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It typically comes from idea alpha, meaning idea over performance. You've thought through the process of the steps better than the competition has, and as a result, you actually can get better outcomes. Now, part of this also comes down to what types of customers you're picking.

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And I remember when I when I went to get Chipotle once, this was at University of Maryland. I was visiting the campus and it has I think it's like the number one highest grossing Chipotle like the nation. This thing is packed. It's in the middle of like the commons or whatever. Right. And it was happened to be Halloween the weekend that I went to visit. You can imagine.

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And so at Halloween for Chipotle, they do this thing where if you wear any kind of foil, you dress up like a burrito. They like give you free burritos or whatever. And I didn't know, I didn't think that that was the day that I wanted to go have Chipotle. So I walk up and I'm like, oh my, and it was, it was, imagine a grocery store parking lot. So massive parking lot. There's a Chipotle there.

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The line stretched through the entire parking lot. It was insane. And I just remember thinking to myself when I got there and I was like, I would pay $20 to just have the burrito that I want and not have to wait in this line, even if it's free. And that was the moment where I sensed that, that, that, that concept fast beats free.

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So if you're not sure, start with the customer, reverse backwards, look at the competitive landscape. You're probably one of these four vectors or maybe more. And so if you want to get into a new space or you already have a business and you're like, how do I actually win? I feel like I'm the same as everybody else. Pick one and dominate. With that being said, rock and roll.

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Hope you enjoy this and I'll see you guys next time.

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If you have 100 different types of customers, it's very difficult to do things quickly because you're doing lots of different things for lots of different people. This is why niching down also helps you provide more value because you're being more selective about the customers you're picking.

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And then as a result, you can be more templatized in the types of services and products that you ultimately offer. And so there's kind of three different vectors that I think about in terms of like, what can I actually do to improve speed? Because you're like, okay, I get that, but how do I actually do it? So number one is I want templates.

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So, listen, you can beat 99% of other businesses if you only pick one thing to beat them on. Now, if you can beat them in two vectors, you become a possible. But there's four that you can compete on. All right, and so that's what we're going to talk about. Now, the first of the four vectors is speed. How do I do what I'm going to do faster than everybody else?

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How can I take what we're currently doing and make these into templates? Can I have ad templates? Can I have email templates? Can I have landing page templates? Can I have presentation templates? Can I have at least templated steps that someone's going to follow? All of these are just templates that we can pass on to somebody else, create a repeatable process.

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If it's repeatable, they don't have to decide. Decision-making is typically the slowest part in the organization. So how to remove all decisions to speed up the time of completion. The second one is pre-made. physical products or even food. I mean, fundamentally, McDonald's changed the game in fast food because they started pre-making food. They already had burgers on the line.

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So when someone ordered a burger that he's handed it to him, and if you haven't seen the movie Founder, great movie, he experiences this and he's like, no, no, no, I just ordered. They're like, yeah, that's your burger. And he's like, no, but I just ordered. And they're like, yeah, that's your burger. And he's like, And it's this big aha moment like, oh, this changes everything.

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And so sometimes if you know, there was a great Persian place I used to go to. It crushes in California. It's called Panini Cafe. Go check it out. But they make amazing Persian food. But one of the things I realized is right as the lunch hour started, because I lived pretty close by back then, they just started grilling chicken. Because they knew that they were about to get the lunch rush.

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And they knew that they were going to have people who wanted jujube kebab. Shout out for those of you who know. All right. And so they just thought ahead of time. And it became really bad. Because I would show up and be like, jujube kebab, extra rice, my whole thing. And they would just, boom, they would deliver for me. Because they didn't even have to make two order.

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Because they just knew certain amount of things are always going to have to be in. And even if for some reason, someday, they're not going to hit that. The benefit they get of the vast majority of their customers immediately getting served and how many tables they return faster, more than paid for the small extra chicken that maybe they had to throw out at the end of the day.

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The third element here, and this happens a lot with services, is availability. Now, what does this mean? I'll give you a couple examples. So if you have a spa or a salon or something, if you have more availability for people to book, it means they want something and they can immediately get it faster.

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They can get the appointment with you to get their nails done, get their hair done, get their back cracked, get their paint away, whatever it is. Basically, the sooner you can have that availability, the more you will be able to convert and the more people will be willing to pay.

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And so if someone says, hey, I have an appointment in four days or I have an appointment in one day, they're probably far more likely to come to you and be willing to pay more for that one appointment. But how do you increase availability? Sometimes it means you have to pay people more or extend their hours or hire more people. But the reality is that

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This is one of those things that is one of the largest vectors in terms of increasing throughput on a business that is underappreciated by the vast majority of business owners. And so when I invest in a company or I look at a company, a lot of times I'm like, ooh, like it's one of those huge hidden diamonds.

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I probably shouldn't even share this, but it's one of those hidden diamonds that I could almost always drive 20, 30, 40% more through business by simply better staffing the hours. And so like even, even at acquisition.com, we currently sell 12 hours a day, seven days a week. And we're now investing so we can get to 20 hours a day because we have such a larger international market, right?

The Game with Alex Hormozi

The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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So it's like, we always want to increase our availability because I know the math behind this and it's a huge impact on the bottom line. All right. So the first vector macro vector that you can win on, and you only need one, but if you have more than one, you just dominate everyone. All right. Is that we went over speed. Now, the second is risk. All right. So how can we make our thing not risky?

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Now, think about McDonald's, the example I gave earlier. Well, they're both fast and they're not risky. So what does that actually mean? Now, part of you are like, oh, no, they're risky because of cancer and all this stuff. Well, let's ignore that. Because why? Why do people not care about this stuff? Actually, it's funny. Speed.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Now, what's interesting about this is that I have been doing business for a minute now, and I would say that of the four vectors, I'm starting with speed because I actually think it's the most important of the four. And I think the reason for that is that humans learn behaviors with decreased latency, meaning...

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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it's not latency if you ate a burger and immediately had something growing on on you no one would eat the burgers but because it happens 40 years from now no one cares speed changes behavior and lack of speed doesn't so what about risk so a way you can translate risk is reliability and consistency it's a different way of saying it which is when people but this is especially important for services that are recurring where people get month after month after month after month they keep coming back again and again and again

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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And so the question is, how can we consistently match conditions between the perfect and ideal state and every state that happens afterwards? And most people dramatically underestimate the amount of variables that exist in any given encounter. And so as a result, they have far less consistency than they otherwise should. All right. So that's just the output.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Now, what are the other components of this? So I'll say one is consistency, right? In terms of in terms of decreasing risk. We can also consider that reliability. If you say you're going to cut someone's grass, but sometimes you're late or you show up a different day or you don't show up one week, that's a major hit. People just don't want to deal with that stuff. They're not willing to.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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On the flip side, if you're the type of guy where someone's like, you know what? I could undercut your lawn care guy. You know what? I could clean instead of your cleaning person. A lot of people are like, you know what? I've been with Rose for 10 years and and she's never missed a day, you're like, I just, I'm not willing to take the risk because she's already paid down so much.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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So, but I could do it for 20% less. It's like, it's just not worth it, right? That's real value that actually defends the business. Now, what other types of risk mitigation can we offer? All right. One of them is reputation. So this is where brand comes in. So the consistency of reliability typically happens after someone makes a purchase.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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But how do we shift the perception of the customer that they're going to have a high likelihood outcome that they're going to get what they want? Well, one of the easiest ways is that you've gotten somebody else exactly what they wanted and that person found out about it. Now, if they don't know someone directly, but then they just heard lots of whispers, that's a reputation.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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You've done it enough time for enough people that you just have a reputation for keeping your word, right? And a lot of people, especially in the small business space, especially, especially in their response space, all of a sudden, sometimes their costume car customer goes up rapidly and they're like, what's going on? What's happening?

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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But the thing is, is that the CPMs in your industry haven't gone up by double or triple in that same period of time. So what is it? It's that your word of mouth, people believe in positive word of mouth, you think negative word of mouth doesn't exist? Negative word of mouth is like 10 times as viral as positive. And somehow you think that doesn't affect your sales. Of course it affects your sales.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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People who would have otherwise purchased choose not to because of something they heard or read online. Right? And so... One is, okay, so we've got reputation and we've got consistency. So how do we do this? How do we actually operationalize this? Now, I've talked a lot about guarantees. I talked about it in the offers book, all right?

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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If like Facebook and Instagram or whatever you're watching this on has trained us to come back, not because they pay us to come back, because they have compressed latency for some positive outcome. And the positive outcome they give us is a thumbs up. They literally give us a little red light. And other people give actual money, but at a delay, and they struggle to get people to do things.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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And a lot of people took that immediately like, oh, guarantees are the only way that we reverse risk. It's just one of the components. And I give that to people because I assume that a lot of people don't have a good reputation or don't have a reputation at all, or they don't have enough customers to really develop a process to become consistent.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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But these two things are how you deliver long-term risk mitigation and In the short term, you do guarantees. Now, again, and what's really interesting about this is that everyone assumes that I was like the guarantee guy, but like a lot of my stuff that I sell has no guarantees, right? But the thing is, is that there's four different types that I cover in the book, all right?

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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The first is unconditional guarantees. When you're starting out, that's a great way to do it. Conditional guarantees. If you do this and it doesn't happen, then I'll do why. What's my consideration? What am I going to put on the table if you're going to put this money on the table? And a lot of times people mess this up. Guarantees only work if you have stakes.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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So if you don't have reputation, you've got to basically... It's literally like giving a payday loan. It's like you've got to take your watch off and be like... If you give me the money, I'll put the watch down, right? You can take my car if I don't pay this loan back. It's the same idea just in business. You're starting out. You're like, here's my shirt.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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If I don't deliver these leads or I don't deliver a great back massage or I don't deliver a good fitness experience, you can take my shirt, right? But...

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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over time there's the first two there's two other types of guarantees there's implied and then there's anti all right so implied guarantees is one of my favorite types to use which is just performance based if you're good at what you do winners always want to compete on performance think about your best sales people they always want the most upside because they're good and so if you're actually good be willing to put it's another way of putting skin in the game for you

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Right. And so just put skin in the game and people are far more willing to take risk if you take some risk for them. So it's like we've got this big pile of risk. How much are we going to eat down versus the customer eating down? Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

The Game with Alex Hormozi

The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

The Game with Alex Hormozi

The 4 Ways to Beat 99% Of Other Businesses | Ep 879

742.823

And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

The Game with Alex Hormozi

The 4 Ways to Beat 99% Of Other Businesses | Ep 879

758.407

It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap. Right.

The Game with Alex Hormozi

The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Now, here's the cool part is that you can shrink that pile of risk over time with reputation, which brings up the fourth guarantee, which is an anti guarantee, which once you do have reputation and you are consistent, you don't see McDonald's saying we guarantee that the burger is going to be good. You just know it's going to be good. right? Because you've had enough people.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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Now people are like, oh my God, McDonald's is not good. Calm down. You get the point from a business perspective. All right. So that's vector one is speed is how can we do whatever we're doing faster? Number two is risk. How can we do it more consistently? How can we do it more reliably?

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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How can we, and in so doing build our reputation over time and that consistency and reliability, how do I do that tactically? It's actually looking at as many variables that affect the condition or can affect the outcome for the customer as humanly possible. and then actually trying to control for all of them.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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So BF Skinner, famous behavioral psychologist said, if many variables exist, many variables must be studied. And so you might find out. So like for us to make videos, we have like a hundred different little golden BBs, little things that when put together, make a good video. And if we just do 98, it's just a little bit less good of a video. If we do 97, it's a little bit less good of a video.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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So think about it like this. You pay someone who works for you every two weeks. It's much harder to motivate them than if you actually paid them in real time. And paying someone in real time is actually so effective, it's illegal. And so truckers, for example, used to be able to get paid per mile and like almost essentially in real time.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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And so we just try it. Every time we learn a little bit more, we add to that list. Another condition that we didn't realize existed that mattered, we were just talking about one right before I did this video. So we did this big filming session where I did a walk and talk and it was hot outside. So I took my shirt off and I was doing it. It was in Florida. It was super humid.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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And that whole series of kind of like walk and talk things that I did murdered. It was like some of my, it was probably the single best recording session I've ever had in terms of performance of the clips in the session. So we were like, oh, walk and talks work great. So then I did another series of walk and talks where I'm just like in normal clothes because it wasn't, it was actually cold out.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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I think I put a jacket on. And so I put a jacket on in the second one. And literally, I think it might've been the actual worst recording session that I ever had. And so what we got to see there is that it wasn't the walk and talk that was the thing that made the shorts valuable.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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It might've been me being shirtless, which I have other considerations for, which was like, maybe I'll start only Alex someday. But for now, those are the first two, speed and risk or risque, if you will. Now, the third one is price. It's cheap, right? So you can be faster, you can be less risky, or you can be cheaper. Now, we have a fourth one too, but let's talk about this for a second.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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I'm always the, I tend to be the sell for more expensive guy. But you can win with any of these three vectors. If people absolutely know that your stuff's amazing, they'll be willing to pay more for it, and they'll come to you instead of somebody else. If you're the fastest, they absolutely will come to you over other people because you can deliver all these vectors of speed.

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If you're the cheapest, people will absolutely come to you. Like to pretend that price doesn't matter is silly. Of course price matters. But so does value. Because value is a, sorry, the deal rather is the comparison between price, what you pay, and what you get, right? And so something is appropriately cheap if you get tremendous value for a low price.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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But the answer is not hearing this and saying, oh, I will now lower my price. That is certainly a terrible decision. But instead, it's Day one, deciding our competitive advantage, the mode that we're going to build around is being cheaper than everyone else. And you have to start that way day one.

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The 4 Ways to Beat 99% Of Other Businesses | Ep 879

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That means every component of the business from click to close to delivered is organized such that you can pass on as much of that cost saving to the customer. And so, for example, if you were like, hey, I want to start a marketing agency for small business owners. Well, in general, typically a pretty bad business. Why? Because it churns out really high. They're volatility reflects onto you.

The Game with Alex Hormozi

My Approach To Scalable Content - The Content Accordion | Ep 845

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What's going on, everyone? Welcome back to the game. We talk about getting more customers, making more profits, and making more impact. I guess. I don't know. I think that's what we talk about. And so today is a special audio first edition, so I hope you guys enjoy it. I want to talk about a concept that I've been thinking a lot about. It's related to content.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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I, over this last nine months, have had people who I really like a lot who are in my life who said, you know what's interesting? I actually came to your stuff because I saw some short of you wearing a chef hat and making some meal, right? And I got that from both YouTube and on Shorts. And I thought that was so interesting.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And other people were saying, hey, you know, I actually found you from this really broad podcast that you did with Lewis Howes or with Ed Milet. And, you know, I talk about business, but I talk about a lot of philosophical stuff because that's something that I'm interested in. And so people are like, you know, it actually really resonated with me.

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But they're business owners, but they're like your philosophy is what rang true to me. Like it wasn't sugarcoated. It wasn't fluffy. And, you know, you didn't seem like a complete asshole. Notice I didn't say, you know, nice guy. I said complete, not 100%, right? Or at least I try not to be. Anyways, point is, by me hearing this though, it has shifted my perspective yet again.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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I'm going to explain my current thesis for the quote, perfect thing to be managed. So I already give you the perfect algorithm for quantity and quality, which is maximum quantity, maximum quality is the goal, right? Now, what is the goal with content for topics? You want max wide and max narrow, so that's the obvious one.

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But here's the little special ticker, here's the special, the sauce, the flakes that we sprinkle on top, is that I believe that the content should reflect who you are. Hold on. It should reflect your thumbprint. Basically, it should be an accurate representation of the proportionality of your time or interests. And so for me, business is the vast majority of my life.

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Philosophy is a portion of my life. Fitness is a portion of my life. My relationship with my wife and partner, business partner from that perspective, wife otherwise, is a portion of my life. Now, if you don't want to be public about something, that's different.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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But if you want to be public and you want the perception to match reality, then you'd want those proportions to be as close as possible to one another. And so I think that if you just go narrow and wide on your topic, I think you'll build a super, super, super loyal following from that thing.

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But I think having the little sprinkles, the little elements, the occasional pure philosophy video, the occasional pure meals video does more benefit than it does harm. Now, if you get obsessed with that game and then get into the views game, then you lose, right? But it's that little bit.

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It's like in a brand when you have like, you know, primary color, secondary color, tertiary color, and then there's like accent color. It's the accent color.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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It's that little bit that just shows a little bit more depth, a little bit more texture to you, your brand, your personal brand, that also allows, in my opinion, because we live in a world of algorithms, allows the algorithm to go fishing outside of the normal pool and then drag people in who otherwise wouldn't be.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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Again, some of the people that I love the most in my life actually came from stuff that wasn't really business-centric. I would say that my adaptation here is probably to follow the Google algorithm for how they do strategic business planning. So they have the 70-20-10 rule, which I've talked about before, but basically 70% of activities go to the core business.

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You know, it's funny because like, I get so much, I get so much, pushback and sometimes hate publicly for like sharing the stuff that I do. And people were like, you're faking your numbers or like this guy's, you know, some guru. And I'm like, I just, I, I just share the stuff because this is what helped me out. And if it doesn't help you, then don't use it. You know?

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My Approach To Scalable Content - The Content Accordion | Ep 845

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So for me, so for them, it's obviously Google Ads. For me, it's business content that is both narrow and wide. To me, that right there is the core, that's the meat, that's the meat and potatoes of what I'm going to put out. 20% is probably going to be business as it applies to X thing. So it's still going to be business flavored, but it's adjacent. That's going to be the 20%.

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And then the 10% is moonshots. So one out of 10 videos should be something that's just like something I'm just really passionate about or something I'm really interested in. And so for me, it's like I'm probably going to do a video of my office gym sometime in the next month or so.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And so you guys will be able to see the actual gym that I work out and that I've built that I could talk about at length. I just don't. And you'll probably get to see a different side of me because a lot of you forget that I come from the gym world. I actually am probably the ideal equipment collector because I am both bodybuilder and incredibly wealthy. I'm kidding.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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Well, not about the wealth, but kidding about stating it. And so I can buy the best stuff and have the knowledge of how to not just be some generic dude who has dollars and says, hey, just build me a sick gym. I can tell you why I have every single piece in there, what make and model it was, the other ones I was considering, why I like this one, and it'll be a really fun video.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And so you'll basically be able to see depth of expertise in a different domain, and I think that'll be interesting for some people. For other people, you won't care, and that's fine. But the thing is there'll be people who are outside of my normal world who will see that and then be like, oh, I thought this guy was just some money guru and he's not so bad.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And so I think that that 70-20-10 kind of split is the quote answer to the accordion of wide versus narrow in content.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And so those are the two accordions that I consider on a regular basis, which is we're always going to make more quantity, and then we're going to trim it down and make it better, and then when we do better, we're going to say, can we do better and more, and then we're going to do more, and then we're going to say, hey man, if we could just do this better, we'd do even better, and we just accordion back and forth.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And here, we're going to have wide and narrow, and sometimes we're going to have some broad content, but it's going to be less so, and then we're going to focus for the most part on the narrow stuff that is core. to our audience. And so for those of you who make content, I hope this provided some insight for you in terms of like answering the eternal questions of like, am I making enough content?

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Is my content good enough? What topic should I be making it on? And I think the answer is there is no one answer. And it is also dynamic over time. You may find yourself leaning more towards some of this type of, you know, X type of content for a while.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And I think the key to making this sustainable and I speak this firsthand here because I'm definitely somebody who it has to be something that I want to do. I won't do it. If you can't make content for 10 years, you shouldn't make content. And so solving for a decade is probably how I would reverse engineer my day.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

The Game with Alex Hormozi

My Approach To Scalable Content - The Content Accordion | Ep 845

1389.784

So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

The Game with Alex Hormozi

My Approach To Scalable Content - The Content Accordion | Ep 845

1406.549

Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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And so I'm definitely not somebody who enjoys the spotlight. And for the vast majority of my career, notwithstanding the last five years, my entire attention was to be rich and unknown. And so it's only in the last five years that that has changed anyways.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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the accordion of content so i think what might be helpful is kind of walk you through the different seasons of content creation that i've gone through and then kind of explain kind of the concept of the accordion of content so uh in the very beginning i started making content by making facebook lives when those were like a thing um into a group that was for gym owners that was basically the first thing that i did and that was what started the gym secrets podcast

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My Approach To Scalable Content - The Content Accordion | Ep 845

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I would do these lives and then we'd rip off the audio and then put them on this podcast. Right. And that was July of 17. So kind of cool because that was 90 days after I lost everything, which still to this day, I think is like the coolest thing is that like basically from zero all the way to here is documented. Not not always, you know, the prettiest documentation, but it's it's out there.

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So that was kind of that was honestly, I did that for like, two and a half, three years before I did anything else. Then I want to say in 2020, 20 is either very late 2019 or 2020. Nope, it's 2020. It's 2020. I'm almost positive 2020. I decided that I thought YouTube was a good idea. And so I went to a vendor and he said, just do your normal podcasts, but I'll just post them on YouTube.

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My Approach To Scalable Content - The Content Accordion | Ep 845

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So I'm going to call this the accordion of content, all right? And so I get, I'd say, one of the most frequently asked questions I get, and I would say about a third of the people who listen to this podcast, this is me estimating, but about a third of the people who listen to this podcast generate their leads from inbound content.

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And so he would just trim them, which I found out what the difference between trimming and editing was much later. But I thought he was editing. He was actually just trimming them, which just means taking out the oohs and aahs and whatever craziness that I say.

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Um, and so the reason that the first videos are like me in my closet or whatever is because I was doing, you know, like the aesthetics didn't really matter for a podcast or, you know, Facebook lives. They didn't, it didn't really matter. So I would just talk to my webcam and just record probably pretty terrible quality audio, but that's what I did.

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And so I committed to three times a week and that's, and it worked. And I think I went from zero to like 400,000 subscribers, I think in that period of time, just trimming and posting. Um, So then after that, and so at this point, just to give you like a recap here, I was just doing... Basically only long forms. I was just doing YouTubes and podcasts, and that was basically it.

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So then I had a guy who reached out to me and said, hey, I can do these new things called Reels for you. And it was right as Reels and TikTok and stuff was coming out. And I really didn't want to get into that. I was like, you can't say anything in 60 seconds. All these kids with their short time attention spans, whatever. But he said he would do it for no extra work for me.

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He said, you already have enough stuff out there. I'll just clip stuff that already exists. And I was like, all right, that's pretty compelling. I don't have to do anything. You can just like basically advertise me for free. And he said, I'll even post it. And I was like, great. And so he just started doing that and they started really doing well. And I was like, wow, that's pretty cool.

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After a quarter or two, he said, you know what would work even better is if we just like flew out and just did like one dedicated day. to get clips. And so that was kind of the next iteration is we would do 100 clips in one day, every 90 days. So that's what I would do. I'd sit down, I'd do 100 shorts in one sitting once every quarter.

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And then that basically created my clips for the whole time period. So I'd have one new one and then one repurpose. I'd have like two a day. So we did that for a while. Then I had a really good editor reach out and say, hey, you know, you don't edit your videos. Like if you edited them, they do better than if you just trim out the oohs and ahhs.

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And so he started editing the videos and then by editing them and like actually ordering them and, you know, maybe having some sort of sequence in mind, the videos did significantly better. In this time period, and you're like, okay, where's he going with this? What happened is I would have these moments where I would say, okay, I need to make more content. So this was quantity.

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I'd be like, okay, I'm going to make more. I made three a week. Let's see what five a week does. And when I would do it a five a week, all of a sudden I make, you know, I would have 60% more views. And I was like, wow, what do you know? Volume works. It works everywhere. You know, I'd go from making two, you know, two shorts a day to five shorts a day or eight shorts a day.

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So they're either doing SEO, they're making content on social media, they're making YouTube videos, they're making shorts. Basically, they use organic stuff to attract customers, right? And one of the most common questions that I get about that is quantity versus quality and narrow versus broad.

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By doing that, we got more views and we got more people who kind of came into our world. And so that was beneficial. But what happens is at some point you're like, man, when I look at the distribution of where views go from these eight shorts a day, it's like, well, every like 50 shorts, I've got one that does like a hundred times the views.

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And so then you ask yourself like, man, if we just tried a little harder on these and made a, you know, a little bit fewer, would we get, you know, maybe even more views. And so then you accordion in from quantity to quality. And so you start making, you know, fewer, fewer, better things. And then maybe you get close to matching the views that you were making before.

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And then you start to get used to that. Let's say it's two times a week instead of five times a week. And then you're like, huh? And you do that for a few months and you're like, you know, I feel like we could go from two to four now. I feel like we've really got this down. And so you go from two to four and then you coordinate out your quantity.

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And then you do the four a week for a while and you're like, man, but these formats do really, really well. If we just focused on doing these even more, then we could probably cut our volume in half and hit the same total views, but it'd be higher quality. And so then you go back to quality. And so quantity and quality is this accordion.

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And so a lot of times I get the question of like, what's the optimal amount to post? The true theoretical answer is that you would want to post as much as humanly possible. That's the highest quality stuff. Now this sounds obvious, duh. But the thing is, is that people think that there's some specific cadence or like, oh, Instagram, there's a lot of mysticism, a lot of like mythology around this.

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Like, oh, you know, Instagram can only do two a day and TikTok can only handle three a day and tweeting can only do 10 a day or whatever. I genuinely believe, and the people who write the algorithms have come out and said this, Mosseri on Instagram, Elon on Twitter, their platform is incentivized to distribute good content.

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So the more good content you have, the more they will distribute it, period. Mosseri even on Instagram said, when you have a good post, you should post again faster so you can ride the benefit of the one before, which kind of goes contrary to how a lot of people do. Like, oh no, I don't want to mess with it. It's like, dude, that one's already on its own rocket ship.

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It's like, but you're getting views to your page, so put more stuff out. To give you an example on this, I think one of the top Instagram pages posts 100 times a day. It's an Indian account in Bollywood. 100 posts a day, they get 9 billion views a month. Billion with a B. It's like one for every person on earth. That's right. That's math.

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Anyways, the answer to how much content you should make is as much amazing stuff as possible. But here's the kicker. Everyone has limited resources. You have limited time. You have limited bandwidth. You have limited money for both recording, editing, and manpower, etc. So... What do you do? I think you basically think about this as the two factors.

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You've got, call it Q1 is quantity and Q2 is quality, is if you want Q1 times Q2 to be the highest absolute number. That's it. And so if you think that you can dramatically ramp up quality if you cut quantity in half, so basically if you can more than double quality by cutting volume in half, then you should do it. If you can keep quality more or less the same and double quantity,

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And I do think that I have some pretty developed thoughts on this as I've gone through a lot of iterations for how we create content. And this is especially, I don't know, I feel like I have a lot of context on this because I come as somebody who didn't This isn't the only way that I get customers.

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You should do it. Now, I will say this on a personal note is that, in general, when you increase quantity, you almost always grow. And that's usually because when you know how to do something at a certain level, just doing it more is typically easier than doing it better. Because usually, like, I don't know, but I'll just do more now.

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But here's the crazy part is that the more you do it, the better you get at it. And so it is a virtuous cycle between more and better. And so there is no answer. It is, it is not a problem to be solved is a dichotomy to be managed. So that's the accordion on quality and quantity. Now the next one that I get really a lot of questions about is the topics themselves. What do I talk about?

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What blog posts do I make? What emails do I send? What shorts do I make? What longs do I make? And as someone who's experimented with this a lot, I feel like I have a decent amount to say on the subject. So obviously, I am first and foremost for business owners, right? That's that you guys are my people. That's why I do this from a financial perspective.

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But I am not immune to the fact that if I make a meals video, or if I make just kind of a generic life advice video, it will almost always do significantly better asterisk, if we measure it by views. Now, does that necessarily translate to more sales? In the data that I've collected, the answer is no. Asterix again, but there is some nuance, which I want to explain.

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And so I said, this is the accordion of content, but the second accordion is the narrow versus broad, which is. I have gone super broad for periods of time being like, okay, I want to get as basically the theory is if I just talk about everything, that's really big and affects everyone. If I talk about health, I talk about relationships. Maybe I talk about just personal finance.

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Those are very broad topics. I talk about careers, jobs, things like that. Those are broad topics that affect almost everybody. And so when I do that, the theory would state that if I got the whole world in my audience using that stuff, then I'll have a smaller percentage of people as a relative percentage of my audience that are business owners, but I will have a higher absolute amount.

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Now, when we did this in practice, it didn't actually work out that way. And that's because branding doesn't work that way. And I'll give you a simple example on this. So I don't know if you know, Kim Kardashian started a fund for private equity. And she recently had to close down the fund. And I actually don't think it got a lot of press. I don't know why. Maybe it didn't.

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Maybe it had a five-day news cycle. Anyways, I noticed that they had to shut it down or it wasn't performing the way they had expected. And so you'd think, well, wait, everybody knows who Kim Kardashian is. And so she should be able to raise, one, monster money, and two, be able to crush things. But the thing is, is that her influence... is not of a business person. Think about that for a second.

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Do you trust Kim for beauty? Sure. Do you trust her for fashion? Sure. Why? Because she's demonstrated that. She's got, you know, 20 plus years or 30 plus years. Man, it's been a while. Anyways, a while that she's been kind of like a fashion icon. I think she's wanted that. Now, I think she's tried to shift towards business tycoon or businesswoman, but it takes a long time to, quote, undo that.

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And my experience before acquisition.com and starting the YouTube worlds that I did was not this at all. It was almost the majority direct response, just kind of like paid ads. And so adding in content and kind of branding has been something that I've had to take very like scientifically. And what I mean by that is like it didn't come natural to me. I wasn't like, oh, I just want to make content.

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you know, 20, 30 years of branding, right? And so she doesn't have the same influence in business as, say, somebody who's maybe a much smaller creator, but has provided significant value. So I want to explain the difference here, all right? There are elements of persuasion. One of them is power. So I'm going to explain what that is. So power in different contexts could mean different things.

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But for the purpose of what we're talking about, we want say-do correspondence. which means if I say, hey, raise your price in this way, and then you end up raising your price in that way, and it works, you will like me more. And that likingness will be specific to the domain under which the context of the deliverable occurred.

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All right, that hopefully sounded like a little bit wordy, but follow along with me. If I then go and say, hey, here's fashion advice, that probably wouldn't be on brand for me, right? I'm not known as a fashion icon, probably laughably so, right? And so it would be very weird for me to start a fashion line. And so to the same degree, Kim doesn't talk about business, not much.

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And even if she does, she doesn't talk about stuff that provide value to business owners. Now she might talk about wealth in general, but not something that she says do this and this other valuable thing occurs. Now I'll give you a different example. So Martha Stewart, I think, became one of the most influential people because she literally gave out instructions.

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She gave out recipes, and people would follow the recipes, and they'd get a good outcome, which is the cookies were great, the cake was great, I did this quiche, and it was amazing, whatever. They followed the steps, got the good outcome, and then as a result, liked Martha more. And here's the cool part about this.

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People don't need to follow all of your instructions for them to have the positive liking towards you. And so if you're worried about like one, repeating content or two, well, what if people don't follow most of my stuff? That's one, normal, two, fine. Because it only takes one good experience for someone to have positive affinity towards you and your brand.

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And so you might be like, wait a second, how's this relating back to the, you know, the accordion content thing? All right, so let me bring it back in. When I was making all the broad stuff, what I found was my book sales actually went down. The number of companies that were planning to become portfolio companies went down.

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All my views metrics went up, but all the metrics that mattered to me actually went down. And so then I was like, oh gosh, complete pivot. And so I went from super, super broad to back to business. And so I've actually been in the back to business kind of vein, I would say for a while now. It's probably been at least nine months at this point, maybe longer. No, I think about nine months.

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In this time period, all of the metrics that matter to me have gone back up, which I care a lot about. Now, within the context of business, the objective is still to be, or within the context of whatever your narrow thing is, the objective is still to be get as many views as you can within that pond, right?

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And so if I can make business content accessible to more people so that it's both narrow and wide, so let me explain what I mean by that before you freak out. Hold on. So I would define wide content as content that is only valuable to a beginner. I define narrow content as content that is only valuable to someone who's advanced.

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So for example, if I said how to get your first five customers, that will be only valuable to someone who's a beginner. Somebody who's advanced already knows how to get their first five customers. They're not that interested in that. On the flip side, if I say how to sell a company, that is not going to be valuable to a beginner and will only be valuable to somebody who's advanced.

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Now, here's the cross section. If I talk about strategy, or I talk about leverage, or I talk about pricing, these are things that are valuable for both beginners and advanced people. And so that's to me, as I think, as I've kind of evolved in my content, it's like, how do I make stuff that's valuable for everyone, but still gets me the people that I want, which is business owners, right?

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Like, first off, I'm not somebody who I don't wake up every day thinking like, man, I want to make content. That's not that's not me. Some people are like that. I'm also not somebody who's like, man, I love attention. I would say that once a month, I'm like, I don't even know if I want to keep doing this. And so, but the many notes that I get from you guys honestly do keep me going.

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You're like, again, how does this go to the accordion? I'm going to get there. As my content has gone from, you know, super niche to what I want to talk about, to super broad, to now what I try to aspire to do is both narrow and broad. wide together content within a business theme.

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Fear and anger are what drove me to take action. Like I didn't have a lot of faith. I had a lot of anger and that's what I had. And so that's what I used. And it took me years, like years, not like a year, like six to like, I would say even switch to not always being driven by anger and trying to prove people wrong and make the point that I was right. You know what I mean? Um,

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Like that was it. That was the whole vision. And so I think what happens is like you have to get your head above water so that you can even breathe and like look around. But like if it's kind of like the air mass scenario, which is overused.

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Yeah. I... The question always comes down to what am I going to do, right? And so if the input like, I consume all this media, right? I get quote educated, which, Getting, not even getting into like where you get sources of information which conflict and it's a tough, it's tough for anybody right now. Like to even know what an informed decision is, right?

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Because no one actually can touch the situation anymore. Everything's, it's banana foam times 100, right? Right now across all media. So it's really hard to have an informed decision. And so for me, and I really thought about this. And I was like, the reason I actually haven't, I voted one time in my life.

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The reason that it's so tough is that if I'm going to vote, I would like to be an informed voter. In order for me to be informed voter, people like it only takes 10 minutes. I'm like, if you're an idiot, it only takes 10 minutes to literally click the buttons. It takes weeks to be informed about what buttons you're pressing. And so for me, that's where the time tradeoff has not been good.

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And this isn't me saying I'm an advocate for not voting. I'm an advocate for being informed. But the cost of being informed relative to the amount of change I can make with my vote is relatively small. And so for me, I look at the opportunity cost of that time. And could I, with that same time, more positively impact my life than what my one vote will impact my life through?

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And for me, the answer is yes. And so then I choose not to. And so I am uninformed, which is why I try not to give a political opinion because that's exactly what they would be, opinions. I have no idea. So it's the same as me making up answers because I don't know. So I try to talk about only the few things that I feel relatively confident that I know about.

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I had a DM the other day who was like, I watched one of your videos and you said you don't know how to get to nine figures a month. And so I wanted to tell you. Mind you, the only person who's going to say this is not someone doing nine figures a month, but we'll leave it aside. The point is, is that I will only talk about getting to eight figures a month because I have been there.

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But like if you're looking at how you're going to pay rent and how you're going to make payroll and all that stuff, like it's very hard to make strategic decisions. Like in some ways it's like, I do like having the idea of some entrepreneurs who have saved up enough from a job or career that like, they're not worried about shelter. They're not worried about food.

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And so I know what it takes to get there. And I said, once I get to nine figures a month, I will tell you that. Not that I don't have a map or a roadmap of how I plan to get there, but I won't talk about it until I've walked it. And so like right now, I don't feel like I could walk any political discussion because I would get trounced by anybody who's more educated than me.

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And I'd be like, you're probably right. I don't know. And then I would be like, why am I here? I'd be like, oh, this is a game that I don't know the rules to. I'm going into a game that I don't have an advantage. I don't want to play. And so I play games that I know that I can win.

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I don't, not on any time horizon that I associate with the current identity that I have.

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I like my life a lot. And so like, I don't like, I'm, I'm good. Like, I like the path I'm on. I like what I'm doing. I like, I like the impact that, that, that we're making. I love, I love seeing the businesses that come in every day. I get stopped in the street from, you know, every day from most people being like, dude, I read your book. I quit my job and I'm doing a million dollars a year.

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And I'm like, that, that might not have happened if I hadn't taken the extra 20 hours on that one page. It's true. And my editor said this to me, and it's been like, it's haunted me to a degree.

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When things would get hard, right, in the editing process, like there are times where we, you know, I mean, we're the closest to friends, but we would really argue viciously over a point because we wanted to get to the truth. We wanted to get to the bottom of it. And he was like, Alex, he's like, there's a 16-year-old kid who's going to sleep with this book under his pillow.

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He's like, you owe it to him, man. And I was like, fuck, he's right. He's right. So let's keep let's let's keep working through it. Let's make it simpler. Let's not cut the corner. Like, let's explain it. Let's define the term. Let's make a visual, you know, even though it's going to take me another five fucking hours.

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Like I didn't, you know, like it's it's that's the hard part, you know, and it was during the writing process that I tweeted this tweet that went pretty whatever. It got a lot of lift. It was whenever I whenever I like it gets really hard and I just think to myself, like, why am I even bothering? Why should it why should I even keep doing this?

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I just remind myself that this is where most people stop and this is why they don't win. And so that's a quote that has helped me get through some of those really tough times. It's like, well, do I want to win more than I want to fail? Yes. It's like, well, then this is a Trevor quote. He's my editor and my closest friend.

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He said, well, whenever someone says they can't stand it anymore, he said, well, if you're alive, you have proof that you can stand it. And if you die, you won't have to stand it anymore. So you can always stand it. And I think that's a really powerful message. It's really simple. But like if you are going through it, then you are going through it. You may be uncomfortable. It may be painful.

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So they can actually think on a 10 year time horizon. Like it's easy for me to stand here and be like, guys, be more long-term thinking, except you're like, well rent's fucking due tomorrow. So what do I do now, right? And like the reality is you decrease your liabilities. You decrease all of the things that stress you out.

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You may hate it, but you're still here. And I think like to me, it reminds me of this, the Morpheus quote. I think it was in one of the Matrixes. And he says, I stand here truthfully and afraid, not because of the path that lies before me, but because of the path that lies behind me. And so I think that that's like the gift that we all have. It's like we all have stood life to this point.

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And I think that's like all the proof you need that you can keep standing. Hey guys, real quick. This podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you.

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Sure. Yeah.

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This is the perfect question. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can have more entrepreneurs, make more money, feed their families, make better products and have better experiences for their employees and customers.

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And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world for someone else. Well done.

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So this is something that I learned about later that stems from a psychological concept called the Solomon Paradox. And so the Solomon paradox, if you don't know who anyone's listening is, there was King Solomon who was known for being wise and he was one of the richest men of all time, et cetera. And so people, kings, rulers would come to him and ask for his advice.

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And so if the things that stress you out are the things that you spend money on a regular basis, then it's like decrease those to the absolute greatest degree possible so that you're not in fight or flight every month. So that you can breathe and then you can actually make the better decisions.

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The reason that it's a paradox is that he gave exceptional advice to everyone else, but his actual life was in ruins. His son was a terrible son and he had many wives and he cheated and he had this lust for money and all these things, but his advice to other people was amazing.

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And so the Solomon Paradox, and it's been studied in multiple facets, that people give better advice than they follow themselves. And so they've studied this with relationships. They'll have somebody in a weird romantic relationship, tough setup, and they'll whitewash the names and say, hey, there's a lady and she's getting beat by her husband once a month. And It's happened for four years.

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And this time she says that her husband says that it's not going to happen again. What do you think that that woman should do? And then the person would give advice. And it completely conflicts with how that woman actually lives her life, even though she's giving advice to somebody who's not her. Right. And they have postulated why this is. Now, you could say you've removed the emotions from it.

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You've removed the tensions, whatever you want to say. But what we do know is that people give better advice than they follow. And so if you pair that concept with the idea that no one has more context on your life than you do, then you have a very powerful combo. And so one of the issues that I've had with like therapists and performance coaches and things like that is that I've done a hand.

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I would say maybe I've spent like five, maybe 10 hours in total in a setting like that. I'm not very good at it. And it's because I usually feel like I'm spending the majority of my time trying to give them enough context in order to give me advice. Right. But they don't know every one of my skill sets. They don't know every one of my backgrounds.

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They don't know how that business deal like he kind of looked a little dodgy, but I didn't have time to give more context to it so that they could give me the advice. Right. And so I have failed at most of those things. And so when I tried this experiment, it was because I was actually really stressed about a decision.

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Because like if you're in that state, it's so hard to win because other people who are competing against you aren't there.

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And so I said, OK, and this has been a mental practice of mine was just talking to my 85 year old self. But I was like, let me formalize this a little bit. I'm actually going to write it out in a document. And so I started talking to my future self. And it was kind of interesting is I could hear myself laughing at myself. So I'm like, this thing isn't happening fast enough.

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I don't know what's going on. And then I'd be like, what did you expect? You're trying to build a billion dollar thing in what, a year? And then I'm like, well, I mean, no. And I'm like, well, what's the objective? And I'm asking the same questions I would ask a portfolio company or CEO, right? Or whatever. And I'm now getting coached by me.

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And some people might take that as like wildly egotistical, which hopefully they don't. But the other side of it is that like this person has two things that no therapist has. They have complete context on my situation and they have completely aligned incentives, right? And there's no one else in the entire world who has that. And I would argue that most people know what they should do.

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They just don't do it. So I'll relate this back to weight loss sales way back in the day. I'd sit across the table from Sandy and she'd be like, I don't know what to do. And I used to just like play into that, be like, oh yeah, well, I'll help you to educate and all that stuff. And as I got more and more experience with sales, I'd be like, sure you do.

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And they would look at me because they didn't expect that. And I'd be like, what do you mean? And it's also, it breaks the frame. And all of a sudden you actually get their attention. But I would say that and they'd look at me cross-eyed and I'd be like, if you had to lose weight, what would you do? And they were like, well, I'd probably like, I'd work out more. I'm like, okay.

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I was like, what else would you do? They're like, I'd probably eat a little better. I'm like, okay. I was like, pretty much got it. I was like, but that's not the issue, is it? They're like, well, no. I was like, it's that you're not doing it. She was like, yeah. And I was like, I can help you with that.

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And so the issue is that a lot of times we think that we like, that we have a knowledge gap, right? But a lot of times it's not that we have a knowledge gap. We just need someone else to hold us accountable. And so the ultimate gift that I think you can give yourself in life is holding yourself accountable. Like if you can do that, if you can really hold yourself accountable, you can do anything.

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And so sometimes it's really hard to hold yourself accountable. And so I'm just asking my 85 year old self to hold me accountable to what I say I want, right? Because even the flip side, and I said, there's two things, there's the knowledge and then there's the incentive, right? Somebody might be able to help you out. but their incentives aren't aligned.

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So as terrible as I'm about to say may sound, there are therapists that I think are very good and really help people. But there are also therapists that are human and have bills to pay and have families and they look at their business like a business and have a recurring revenue stream and say, like, if I solve your problem, you won't leave.

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And so you come here and you vent to me and I say, let's do the same time next week. They're not trying to solve your problem. They're trying to make you feel better in the moment, but not solve it long term. And so I want someone who has complete context and completely aligned incentives. And there's only one person who has that. And that's me.

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And so the question is like, how can I give me advice? It's like, well, me giving me advice isn't working. So I need old me to give advice who has 85 years of context. And the nice thing is, is that most of the time he just laughs at me and makes fun of me and tells me that none of this is going to matter. And so it's been a very nice razor for focusing on the few things that do.

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And so when I am stressed or I have a big business decision, I also know that I don't have to educate a therapist or a coach on at least my level of business acumen to get good advice. Right? And so that has been what I've called the Solomon Project. And so I have a recurring calendar meetup with myself for an hour on Mondays. It's the first thing I do.

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And I have a back and forth dialogue with 85-year-old me. And I, I mean, it's a dialogue. It's just like a chat. And so I chat to me and then I click enter and then I chat back and I do the whole thing. Like I, like it's, and I'm like, well, dot, dot, dot. And I'm like, what? Dot, dot, dot. It was like, well, you kind of know. And I'm like, what do you mean? You know, like I have the whole thing.

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So that was not external. So that was more... Okay, so I'll unpack this. So for everyone who's listening, so I quit my job, drove across the country, mentored with a guy for three months, then opened my own gym. And I didn't have enough money for two rents. My rent was $5,000 a month, which... I was 20, like it was all, I couldn't even, I mean, it was insane. Like it was 5,000.

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Um, but I can't tell you, it's been one of the most rewarding experiences that I've been through because like, uh, old me has absolute grace for young me and old me has appreciates the sacrifice that young me right now is putting in for old him. It's like, I wouldn't be living the life I have if you weren't doing what you're doing right now. So thank you. And it like, it hits.

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Because like, there aren't many people who thank you for doing what you do. But like there's no one that it benefits more than you. Right. But actually to be thanked. It's very weird. It's very meta. But like it's been a really powerful experience for me.

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And I think from a mental health or anxiety or long term planning perspective, it's allowed me to pump the brakes on reactivity in my life, whether it's with relationships or business decisions and be able to just be wiser if we call it that. But really just, you know, most of wisdom is just thinking over a longer time horizon.

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And so it's like might as well talk to the guy at the end and see what I should do today.

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Just a Google Doc. Let's just click enter. It's simple. I mean, I can tell who's talking. I know whose turn it is. Yeah, I love it.

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Well, I was notorious for not documenting anything for most of my life. And I think I have a different tweet that says the biggest regret I have is not documenting the failures. It's like not documenting the low points. Because everyone wants to document the success story. But the only way you have a success story is if you show where you came from. And where you came from is the shitty part.

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And so like I did 30-something launches of gyms. I only made one recording. It's like two minutes. Yeah. And that one recording made me like $10 million because I ran it as an ad. Wow. Imagine if I had 30 other ones. But it was me in some random gym being like, look at this random gym I'm in in the middle of nowhere. And I'm like, isn't this weird?

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I was like, I just sold 200 people into this thing. Look at the stack of contracts. And I was actually not making it as an ad. I was sending it to a group that I had just joined to try and show that I was cool. They're like, they were all these internet people. And I was like, I do cool stuff too. You know, I was like, I do stuff. Look, look at those contracts. It was me flexing to a group.

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It wasn't even an ad. And then I ran it as an ad and then it murdered. Like people in the gym world are like, I remember that ad, right? Because it was so crazy because it was real. And so I think that the biggest mistake that I made from a marketing perspective, maybe a life perspective, biggest is strong. One of the mistakes I made is that I didn't document the low points.

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I was like, that, that was more than, that was like my salary. You know what I mean? I was like, what am I going to live on for everything else? Right. And so I moved out of the place that I was at, which was just a spare bedroom.

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And so I have a screenshot in my first book that's when I had $1,000 in my bank account. And for the audience who's listening, the $1,000 in my bank account for me, I had had six locations before that. So going from six gyms to $1,000 in a matter of 90 days was very hard for me. But it was hard enough that I do remember screenshotting it and being like, fucking remember this.

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Don't make this mistake again. And it was a little bit of like at the time, like self-punishment of being like, you will not forget this. But as I've gained a little bit more grace to my younger self, I have those screenshots. And I've used that one screenshot of $1,000 in my bank account probably more than any screenshot I've had from my past.

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And I've used the I took one picture of me sleeping on the floor at the gym one. And I just sent it to my dad being like first night here, you know. And I'm so grateful that I took the picture because if I hadn't, I would. And I have so many other crazy things that happened, but I have no documentation of it. And so it's easy to say, hey, document.

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But the thing is, is that documenting is a local cost for a global benefit. It costs you now, but it benefits you long-term, which is why most people don't do it. And so what I've tried to do with how we've oriented our life is that I give myself local benefit and global benefit. So I get fast feedback loops for documenting what we do now.

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And so we document everything, but I also get really fast feedback because I post it. Now, the problem is if you're not posting things, then you have no feedback cycle for remembering them, especially if they're tough. And so I think that one of the genius concepts of capture, don't create, et cetera, is that it actually gives you a feedback loop on something that otherwise has no benefit.

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Um, and I slept at the gym and I remember like, you know, I would read the Instagram motivation manifesto when it was just like stock images of girls that were like, chase your dreams, you know, like whatever. And I'd be like, like, you know, uh, And the thing is, is that like, I had a very different idea of what that suffering would feel like, right?

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Because in the moment, you remember it. It just happened. In some ways, you're trying to forget it, right? But when you think about the human experience, when I think about my 85-year-old self, what makes the human experience in its entirety the human experience is the highs and the lows, right?

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And so like there was a we were talking about frames of mind for like getting through hard things earlier. But I'll give you another one, which is. There was a guy, friend of a friend, successful entrepreneur, and he got really bad cancer, like super bad, really, really fast. Right. And I think he lost his like trachea and some other stuff. And like they thought he was going to die.

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He ended up making it. And and he was telling my friend, he was like, man. so grateful. And it was like about, you'd think it was like the whole, I see life a different way now. It wasn't that. It was while he was going through it. And his reasoning was, how cool is it that I get to live this part of the human experience? He's like, so many people don't get to live this.

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Like I get to know what it's like to have cancer. Like so many people live their whole lives and then die not knowing what cancer was like. I get to know that. And I just thought about that. It's like a very interesting frame. It's like, whether it's bankruptcy, going to jail,

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Like even the depths of human suffering and some people who are still going through that trauma, I'm not saying that like, I'm not justifying it. It's just a frame on like being human is the rainy and the sunny days. Like you can't skip weather. And so I think like embracing the totality of the experience can give you gratitude for what feels locally like a low point.

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But most of the defining moments in our life, broken leg, then he doesn't have to go to war, right? When you expand the time horizon, those are the things that create us. And so again, I mean, I talked to my 85 year old self a lot, which sounds really weird. But whenever I'm like complaining about something, one of the common things he'll ask me back is like, well, who do you want to be?

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And I'll be like, well, I want to be like this. And he's like, do you think that person would not go through hard times? I'm like, yeah. He's like, well, it sounds like you're wishing for the outcome, but not willing to pay the price. He's like, are you willing to pay the price? And I'm like, well, yeah. He's like, well, this is what paying the price feels like. Embrace it.

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Because these will be the stories you tell. And so I think that's given me the ability to weather rainy days, sunny days. Because like there are a lot of those days in the entrepreneurial journey because that rocky cut scene is five years, not 30 seconds. And so I think you need as many of those tools as you can possibly put together in your tool belt to just keep going.

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I'll give you something you probably didn't expect from me on this one. It's actually, I think it's a smiley face. So if you post it, when you're going through it, people will respond saying, keep chasing your dreams, keep at it, et cetera. And then when you start succeeding, all of a sudden they won't do that. And then later they'll be like, it's cool that you came from that.

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But like when you're on the come up and I remember I wrote this I wrote this essay and I've actually tried to find it. And it was because I liked creative writing. I had a creative writing scholarship back in it. Like I didn't actually take that scholarship. But it was point is I've liked writing for a long time. And I wrote this essay to myself because I'm a weirdo.

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Like it was very praised and lauded, L-A-U-D-E-D, by Instagram and the world and Motivation Manifesto. But like when I was alone, in a city I didn't know, in a dark warehouse that was underneath of a parking garage. And people would drive over the metal cracks in the concrete on the ceiling six, seven times a night. And it was like this gunshot.

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I said, everyone believes in the American dream until it comes true. And so that was like the heading. And it was this weird observation that I had because like everyone was rooting for me when I was sleeping on the floor. So like in my head, I had back home everybody that I was running away from. But everyone in the local, like the people at my gym and stuff, they were like rooting for me.

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You know what I mean? They're like, good for you, chasing your dreams. Like, you know, you're sleeping at the gym. Like, you're going to get it. You're going to make it, man. Right. But like nine months later, when I had like a team and I had a manager and like I wasn't at the gym every hour of every day, I was working from home sometimes because I got more done because it wouldn't disrupt me.

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And I would show up to the gym or show up to a second location and they'd be like, oh, big man, I can't be too bothered by us. Like, don't forget us little people. Right. You know, that stuff. And I remember being like, when did I I was like, when did I go from the underdog to the man? Hmm. as in like working for the man, which is a saying that Gen Z probably doesn't know.

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But, um, I think that there's a quote that I think, uh, Chris Williamson said that I really, and he, I think he was quoting somebody. I don't remember what it was, but anyways, he, he said, people root for you on your way up because you remind them of their dreams and they try to tear you down once you're there because you remind them that they gave up on them or something. And, um,

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I have lived that. And it's weird because I think there's these cycles as you kind of gain an influence. It's kind of like the crab story, like in the beginning, like all the crabs try and pull the other crabs back into the bucket. So I think like you start succeeding and people are like, good for you. That gives them hope. And then you start passing them.

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And it's like everyone wants you to do well, just not better than them. Yeah. And so then you start passing them by the objective measure, whatever you want to call it. And then they start cutting at you. Well, he cut corners. He's not ethical. They start making things up, whatever. But then what happens is people who are not from your hometown start recognizing for who you are now.

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And they didn't see the path. They didn't see you suck in the beginning. They just see who you are now. And they're like, wow, this guy's great. He provides so much value, whatever it is. And I think there's a saying that Jesus wasn't the Messiah in his hometown. Right. Like that it's counterintuitive, but you think that the place that someone was from is the place that they would root for.

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But it's the last place that accepted him as Lord in the story. Right. And I think there's a lot of truth to that. And so it's also I'm a big advocate of leaving. Like if you want to become a different person, then change your environment, because the environment you have is reinforcing the person you used to be.

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Define the input output equation that gets you closer to where you want to go. And then 10x the input.

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So whatever your thing is, like if you're like, I want to be an editor, I want to be an agency owner, I want to be a whatever, whatever the thing is, the first thing you have to do is figure out the input output equation, which is what do I have to do that will get me closer to where I want to go?

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Step one, if you can't define your output equation, then you need to define your input output equation because otherwise you're working for no goal. Once you define that, then do 10 times more. This is the flyer story. Like you probably you might be doing the right stuff. You might be working out, but you're working out five minutes a week and being like, I don't know why I'm not losing weight.

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It's like you're not even close. You're like, no, I think I need to double it to 10 minutes a week. It's like, no, you're not even close. The thing is, is in fitness, we have some context. Right. But in business, you have no idea. And that's the big disconnect is that people might be doing the wrong, the right stuff, but doing the wrong amount. They're doing way too little of it.

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And there'd be kids my age partying on the roof illegally. And I'm trying to wake up at four o'clock in the morning to do the first sessions. It wasn't fun. There was no... The Rocky cutscene lasts 30 seconds in the movie and lasts five years in your life.

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And they think you, they think in doubles, not in orders of magnitude as in 10 X, a hundred X, but like the, like you want to make a hundred times more money than you are. You need a hundred times more input. Like, hold on. I'm going to hit this home real quick. Cause this is, this is, this is important. I have right now 10,000 times the input that I used to have when I was running my gyms.

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I just have leverage on my input. And so, for example, so I could do 200 cold calls a day and get a certain amount of sales. The next level is I could go get somebody to do those 200 phone calls for me, and then I make the same amount of sales, but that don't do anything, more leverage. Another leverage above that is I go call, do 200 phone calls a day until I get a recruiter.

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And then that recruiter brings me a new person every week. And then every week I get another added 200 phone calls per day that keeps stacking and the number of customers that comes from that. But what did I do there? I made calls for a week to get one recruiter. And then from that point going forward, every single month I get more and more sales. And so that's three levels of leverage.

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There are more than that. And so what you unlock in the game of entrepreneurship is leverage. And the way that you unlock leverage is through relinquishing control. And so the tough part about the entrepreneurial journey is that the thing that got you to quit your job is the very thing that you have to stop doing. And so what happened is you felt out of control.

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And so you quit your job so you could take complete control of your life. And when you're self-employed, you take complete control. You hunt, you kill, you produce, you do everything, right? And then the thing that you got the big, massive reward for, because you quit your job, you started making money, living life your own terms, you now have to unlearn that.

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And you have to say, now I'm going to give up control again. And then the rest of the journey is unlearning the control that you so hardcore were rewarded for in that first action. Because in the beginning you have to give up doing production or doing delivery, right, on the backend. And then you have to give up doing admin work. And then you have to give up doing sales.

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And then you have to give up doing marketing. Then you have to give up doing management. Then you have to give up doing leadership. Then you have to give up doing financing. Then you have to do, like, you have to give up all these things until eventually you're like, but I'm not needed. And then you have to give up the desire to be needed by your business.

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Because many people make their business to fulfill personal desires. but the business doesn't need to do that. It doesn't exist for you. It exists for the customer. You're not required. You think you are because it makes you feel more important. And so that's the unlearning experience and that's where leverage comes from.

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And so right now to answer the question, the challenge for the people is figure out what the input output equation is and do 10 times more. And if you can figure out how to do 10 times more, figure out how to do a hundred times more. And the secret is that if you're trying to do a hundred times more, it's probably not just you.

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Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And so you have to find ways to win in the meantime. And that's where the patience comes in. It's like... I didn't... I've said this before, but... I didn't know if I was going to win, but I did know I wasn't going to stop. And that was the only thing that I felt okay committing to.

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And I wouldn't say that I'm purely faith-driven now. I would say that I have elements of it. And so I just don't know if it's a binary for me. I would just say that over time, I have less of that and I have more of some other stuff. Like I enjoy what I do now a lot. And so I do a lot of it. And so, you know, trying to find what the fuel is now, I don't think about it much.

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Because when we talk about fuel, it was like, when it got back down to it, the wall that my back was against was going home, a failure. And to me, I would have rather died. And so that was it. So like, I love this quote, which is, it's amazing what you can accomplish when you have no choice.

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And so, like, and this is a really visceral example, but I'm going to use it for the sake of being visceral. Slavery has happened for thousands of years. We think about it in America with our American slavery, but slavery has existed everywhere, right? Thousands of years. Slaves work all day, every day.

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And the idea of being a slave right now for many people who are free is incomprehensible, right? And so I remember, as twisted as this is, maybe I started thinking this when I was younger, is that I would be in this gym alone, not having slept for a long time, doing all the jobs and being like, this is horrible. And then I would think, well, being a slave and being whipped every single day

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and not being compensated, and having sunburned everything with everything chapped and peeling constantly. And the only respite that I would have would be a meal at the end of the day, and then eventually maybe a day off once a month, and then eventually have the good grace of dying. And yet those slaves continued to work. And I was like, how are they able to do that?

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They would do it because they had no choice. The choice was death or work. So they worked. And so when I thought about it like that within the context of the gym, I was like, for me, I wasn't in an extreme scenario like that. But it felt that way. Because to me, the idea of going home a failure might as well have been death.

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Of course. Yeah. And all the people that, you know, and all the people real and fake in my mind that were speaking against me. And I still probably have this issue is that like I will fabricate other people talking shit about me who aren't even thinking about me. Right. And so in that time though, I had gone from what would be considered a high status setup.

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You know, I'd been doing everything right. No, like my dad could brag about me at the cocktail parties and I could see guys at the reunion and be like, oh yeah, I've got a good consulting job. Like I've got a 401k, whatever. Right. And going from that to this, that I was already swallowed the pill of looking foolish. Like, why would I leave my white collar job to be a personal trainer?

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And I don't say that it's an insult to personal training. I just say that in the general rung of status, white collar management consultant is perceived as higher than personal trainer. And so I had swallowed that pill once and I was like, I'm not swallowing it again. Like, I will not go down a rung and then fail. And so it was just like, there wasn't an option.

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Like I, if I, if the, if the gym had gone, if I somehow wouldn't have figured it out, I wouldn't have told anyone. I would have just kept working and found a way. And I've already told my plan B before, but like my plan B in my head, which allowed me to do this is that I was going to drive Uber and I would strip.

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That's what I would have done because I knew that if I lived on, you know, a thousand dollars a month and I made another 150 the next year, if I did driving Uber and I stripped at night, then I could start over again. And I would have done that cycle as many times as it took until I won. And so like the thing that I could commit to is that I, my actions are under my control.

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I just do the things that I enjoy and that I've been rewarded for doing in the past. And so like, I work hard on things because the harder I work on things, the better things tend to work out for me. And so the projects that I work on now, I have a way longer time horizon than I did.

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And that was the only, like, I didn't know if I was going to win. And honestly, there's many times where it didn't look like I was, but the only thing I could, I could commit to was like, okay, well, slaves continue to work.

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Oh, I mean, they're, they're like what I would call fake enemies. You know what I mean? Like they're not, they're not real. I know they're not real, but sometimes it's just, it just, it just gets the juices going.

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Um, and I'll tell you this, a lot of times it's, uh, like some of my content, like my more spirited content comes from me seeing someone post something and then I'm like, this is such horseshit. And then I just go off on basically that person, but I'm doing it to a camera and anonymizing it. Um, but

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I think I resent the passion thing, not long term, but in the short term for people who are starting. And I think that's because it sets too high of a bar. I understand the intention behind it. And I think the intention is pure. And I think the intention is right. But I think the execution of that is where people fall short, is that they wait for something that they're going to fall in love with.

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And you don't fall in love with things unless you're good. And you only get good at things if you suck first. And so I think it's really about like lots of action, even if it's disjointed until you're like, oh, I have seen some progress on this. I will do more of it. And then all of a sudden you get good at whatever the thing is and then you like it and then you find your passion.

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But you didn't find your passion. You created it. And you created it through excellence and through finding ways to consistently win over time. And so I think if we lowered the bar for a lot of people who are starting out, like it's kind of the same thing with like romantic partners right now for a lot of younger people.

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It's like you have the paradox of choice is that there's so many fish in the sea. There's so many swipe rights. There's so many opportunities to meet girls or meet guys that you're looking for this perfect key or this perfect lock that's going to like unlock all the amazing romantic thing that it is just not like that. And I think that you could probably look at careers the same way.

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Like gym launch was just like, I mean, I told Layla when we started making like, I'll say crazy money in quotes here, but we were taking home like a million a month dish and we're in our twenties. Like, like, I didn't think it was going to last. So I was like, we need to live so cheap and take every dollar we possibly can. I told her as soon as it started working, I was like, we have 18 months.

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And so people haven't connected. Like there's some element of people are like, OK, marriage isn't perfect and there is no perfect partner. Well, there's also no perfect career. And so it's like everything has overhead and that's a basis quote. Like everything has elements that you don't want.

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And I think the expectation that everything is going to work out makes it so that nothing does for most people.

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I think brain meds are like, we have no idea what's going on in the brain. And so like we take, you know, it's kind of like electroshock therapy of like 50 years ago. We're like, I can't believe we did that. Or like lobotomies. You know what I mean? Like I can't believe we used to do that. And I think a lot of the psych drugs that people put kids on really early is tough.

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I think the problem with this stuff, there's part of me that even hates that I got into it. But like wherever there's a need, there's always a 10 times bigger need. amount of abuse of a solution, right? And so it's kind of like workers' comp.

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Charlie Munger talks about this, but it's like, it is absolutely wrong that someone should work and get injured on the job and not be compensated by the company that they were doing work rightfully so for, right? The problem is how do you manage that when there's no way to hold people accountable? And so what happens is you actually sacrifice the system For a select few. And so I. Tend to be.

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A global optimizer. But a local minimizer. What that means is like. I'm willing to sacrifice the small. I'm willing to sacrifice the pawn for the game. And society is not willing to sacrifice the pawn for the game. Because the pawn is a headline. And that's the problem with how media. I'm not even getting into that. But like that's. That's what makes it hard.

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And that's why it's very, it's hard for sometimes cultures to move forward. But I think most people on a common sense level would rather have the whole benefit, but they cannot make the decision in the short term. And so like total side note on this, if you want an amazing razor for predicting people's behavior, just look at what will reward them the fastest.

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And you can, with favorable certainty, guess what people and groups of people will do.

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Should we print more money or should we reel things back? Well, short term, this one's better. That's what we'll do. It's near impossible. It's hard for one person to do it for themselves. It's almost impossible for a group. And so groups will always optimize for the short term until eventually they run out and another group wins.

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I told her, I sat her down. I was like, we have 18 months before this is going to not work. So like, we need to just make this work. And here, Jim watches six years later, still crushing it. You know what I mean? But like, I didn't know that. Right. And so there was no faith. Zero faith. Like people were like, what was the vision of gym launch? I was like, the vision was don't be broke.

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I don't like getting into this because it gets off the beaten path of... It's just a bummer. And I would get more into it, but I don't like getting into the politics around things. I've never been in it ever. I've just never gotten involved. Because I try to play games... That I have variables that I have control over. And so I got this from my dad, actually.

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But he said, I only play games if I know I'm going to win. And people might take that and take a lot of different things from it. But I'll tell you what he meant by that was that. he wanted to do all the preparation and have all the unfair advantages he possibly could before taking the first step into a game.

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And I would say that that's probably the biggest difference between people who are big time winners and everyone else is that like, once you learn the rules of the game, then you learn how to stack the deck and you can do it ethically and you can do it legally, right? Like easy way to stack the deck, wait longer than your competition.

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You can come in with unfair advantages simply by measuring success on different time horizons or measuring a different metric for success. Right now, what am I optimizing for? I'm optimizing for brand. I'm not optimizing for money. So I'm measuring something different than somebody else might be.

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And so someone who maybe started making content at the same time as me might be making more money than me today. But are they winning? I don't know. We're playing different games. And so... I think that that lens can be used by most people. And most people don't do that because they don't even know the rules of the game that they're trying to play. And so they are pawns in someone else's game.

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And so I think that's where the heaviness of this whole thing comes from for me is that like I hate not feeling like I have an element of control over the outcomes in my life. And a lot of the stuff that's happening in the world, I don't feel like I have control over. And that annoys me. And so I focus on the few things that are controllable for me and I direct all of my attention there.

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You're not growing as fast as you want because you're not making decisions as fast as you need to. I heard this really great bit by Elon and it moved me enough to try and look at my own decision making process and audit it. And there's this great quote by Lee Iacocca, which is the speed of the boss is the speed of the team.

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And likely a lot of variables have changed since you decided to make those goals. But what's interesting about it is that like, We probably, and you, if you're like me, probably belabored a long time over those goals and that planning.

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But what's been really interesting is that, like, the variables of the game change so rapidly that a lot of times, like, super long-term planning, I've become less and less a fan of. And what's resulted is just more of an emphasis on decisions that I need to make today.

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And I said at the very beginning that Elon had this really interesting frame, which is what I want to talk about, is when he was under the gun and it looked like Tesla could go bankrupt. And this was probably like 2022. And he had to get production to like 5,000 cars a week. And, you know, every single one of the engineers in his company said, there's no way we can get above 1,800.

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And they were at like less than that at the time when he made the prediction. And it was supposed to be like a quarter or two. And it was an incredibly taxing time period in his life. And I think we can all kind of resonate with those kind of like gun against your head, like you have to figure it out.

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There's a story that Isaac Wolterson tells in the biography where Elon is on the floor and he says, listen, there are so many decisions that have to get made that I'm going to be making them on the spot and I'm going to get it right 80% of the time and I'm going to get it wrong 20% of the time. And then 20% of the time that I get it wrong, we can always fix it.

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And I think, and Bezos talks about this too. And the reason I'm bringing them up is I consider them like, you know, the all time goats of entrepreneurship, independent of whatever your political beliefs are, they're fucking amazing entrepreneurs. In the interview that Bezos gave with Lex Friedman, he talks about decision-making a lot.

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And I bring this up because like, it's one of these topics, like I said, that no one really wants to talk about, but like the people who are at the very top talk almost exclusively about decision-making because obviously there's something important there is that they've made better decisions than other people have. And they've gotten disproportionate returns as a result.

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And so Bezos talks a lot about the importance of making fast decisions. And so he basically determines, is this a one-way door or is this a revolving door? As in like, is this a decision that can be unmade or is a decision that once we make it, we can't pass through it, pass back through, right? And what I've found is that the vast, vast, vast majority of decisions can be unmade.

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And I think a lot of that comes down to your ability to make decisions quickly.

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There's a cost associated with it. But we don't take into account the much larger cost, which is across an organization, the cost of indecision, the cost of inaction, the cost of waiting too long and delaying things. And so when you think about the speed of the boss, the speed of the team is like, how quickly can the boss make decisions? Imagine if, imagine just like as a hypothetical extreme that

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every single person in the organization could pass every single decision by you, right? And you could make them in an instant, right? Well, that would be like you, like the company would move at an absolutely breakneck speed because all decisions would get passed through you. Now, mind you, you probably like, you know, blow your brains out, but like fundamentally that's the idea.

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and so right now i mean fundamentally a lot of what we do in entrepreneurship and even leadership within businesses is we're tasked with making decisions and it's one of these very amorphous topics that most people kind of like yawn at but like fundamentally at its core what business is this decision making right you have to make lots of little decisions throughout the day with varying levels of impact and i think

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And so then I thought to myself, okay, what can I do to increase decision-making? And I thought, well, what slows down decision-making? And so for me, the things that slow down decision-making is it honestly comes down to one thing, which is fear of making a mistake, right?

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Is that I'm afraid of, you know, looking dumb to the team and making a decision that, you know, people either obviously think is wrong or that turns out to be wrong. And then I look bad and I lose respect from the team and then maybe lose authority or gravitas or whatever, right? I thought about this and I was like, how do I, how do I decrease that fear?

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How do I make me making decisions faster happen by decreasing the friction associated with it? And so, you know, by racking my, my, my brain here, the thing that I came up with is pretty straightforward is first off explaining the nature of the biggest cost of the businesses, me being indecisive, right? And also every leader in the business being indecisive. And as a result,

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us slowing down everything. If you think about the gazillions of decisions, if every one of those decisions takes 20% or 50% longer, like every, because a lot of decisions happen in, they're contingency-based decisions.

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Like we have to make this decision, then we have to make that decision, then there's other decisions that are contingent on that decision, and then there's decisions that are contingent on that decision.

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And so this big chain of dominoes, we end up, you know, belaboring decisions for so long that like, we almost wait for life to make the decision for us so that we don't have to have the fear of being wrong. And so what I'm pushing myself to do is prefacing in meetings and in conversations and Slack messages and emails, hey, I might be wrong here, but we need to make this decision.

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And so this is my best bad idea. This is my best bad decision. Let's go forward with that. And if it's wrong, we can fix it later.

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and by doing it that way and also zuckerberg talked about you know um i think it's like builds break stuff and do i don't know shoot it's like move fast and break stuff was a core competency or core value of facebook for a very long period of time and they you know only edited in the in the years of the 20 20 20 years we'll just put it that way but the thing is i like to look at like what got a company to where it's at

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And move fast and break stuff was one of their competencies. And so you think about the three of the richest people in the world, from an entrepreneur's perspective, all talk about the speed of making decisions. I guess my mental challenge to you today and to myself is, one, how can I normalize fast decision-making within the company?

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Number two, how can I decrease the pain associated with making a bad decision for myself and the team, both by prefacing it and also, and this is the tougher one, not aggressively punishing the people who make poor decisions. Now, if someone consistently makes bad decisions, then they just might be an idiot, in which case, you know, okay, maybe they shouldn't be on the team.

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We have to take into consideration kind of like someone's decision batting average, right? Right now, you know, in the baseball world, it's like if you hit 300, you're a great baseball player. I would say in the business world, if you're hitting 80%, you're probably a good decision maker. The other, you know, wrinkle to this, I said, that's one and two.

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The third wrinkle here is sometimes there's just a lot of right decisions. There's also, there's even more wrong decisions than there are right decisions, but there's often multiple right decisions. You know, in the government contracting world, which is the first place, that was my first workplace, believe it or not. was a defense contractor. We did space cyber and intelligence for the military.

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This was my first job out of college at a boutique consulting firm. There was this ism that they had in the company, which I've probably kept, which is they called them happy to glads. And so happy to glads is like if you're writing a proposal and you're editing it, sometimes you get to the point where you're editing it to death, where you're just changing the word happy to be the word glad.

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which is like, OK, well, they're both probably fine and neither of them will will increase or decrease the likelihood that we actually get this job. So we're just kind of like changing things for the sake of changing them. But either of them will work.

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And so I just find that a lot of times the decisions that I'm choosing between both of them will work and maybe one could work slightly better than the other. But the delay that I have to make between either of those choices makes either choice significantly worse than the incremental benefit of picking the slightly better option.

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One of the big mistakes that I have made in my career that I try to remedy is making decisions too slowly or requiring too much data in order to make decisions. And the reality of it is that we often have to make decisions with incomplete data in kind of a world of changing variables and try and make our best shot.

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And so by framing my decisions that way, which is basically speed of decision-making being nirvana, let's say that I've got decision A and decision B. And decision B, for the sake of our conversation, is 10% better than decision A. Now, I don't know that at the time, but let's say it ends up being 10% better.

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me being able to decide a instantly versus b in a week makes a or b 50 or 100 or 200 better of a decision because speed is still going to out compete the incremental margin and speed across hundreds of decisions is for sure going to be beat out a five or ten percent incremental margin

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That thought process is what I'm trying to make as my North Star because fundamentally a lot of my job is, at this point, I don't do a huge amount of doing, I do a lot of deciding. Making speed my priority has been really helpful. And so basically, if you're thinking about this as the decision-making matrix, Up front is, is this irreversible or not?

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The likelihood that it's irreversible is low, which means it probably is reversible. If it is reversible, what are the options I have in front of me? Cool. Of the options that I have in front of me, will both of them probably get me there? Yes. If so, pick one.

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As simple as that sounds, that's been kind of the thinking process that I'm trying to employ more and more within the organization and also teach across the organization within leaders because they're also, you know, we're making a decentralized decision-making process. At the end of the day, you cannot make every single decision.

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And so hopefully the decisions that are coming to you are at least worth your time, but the team has to be able to make decisions on your behalf and be relatively okay about it. I'm teaching this as a thought exercise to our team of like, I would rather you just make the decision and teaching decisiveness as a core competency within the org.

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And so I know this is probably one of the shorter pods that I've had. I don't think it makes it any less important. I guess speed is the underlying point for this today. But as you approach your day today, maybe consider like, if both of these will get us there and one of them might be better than the other, me choosing fast is gonna be better than both.

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And maybe that gives you a little bit of permission to get the 80% right and forgiveness for yourself of getting the 20% wrong and letting your team know, I'm for sure going to get 20% wrong. And I'm going to just try and get them wrong on the ones that we can flip back fast. And so I want to hear no griping if we have to flip something back fast.

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And to the same degree, if you were making these decisions and you make a little whoopsie, I'm not going to get on your case about it because I want you to just be making more decisions quickly so that we can move faster as an org. And so anyways, hope you're having an amazing day. Keep slaying and I'll catch you guys in the next one.

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Hey guys, real quick, just want to say thank you for sharing the podcast. It continues to grow only because of y'all sharing it and tagging it and sending it to your employees, sending it to your friends, putting your Slack messages. It's the only way podcasts really grow. And so I just want to say thank you guys.

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And if you do think of somebody who this would be helpful for, maybe your team, please send it to them. It would mean the world to me.

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What I want to recommend or at least kind of talk through today is a different way of seeing it that has like really shifted my process. Before I dive in, think back to, you know, maybe your goals four quarters ago, right?

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So maybe you had some annual goals, maybe you had some, you know, quarterly goals that you wanted to hit, some monthly revenue numbers, some sales numbers, marketing numbers, lead numbers, etc. Now, if you can think back to what you were thinking about then, you probably are like, oh my God, if I looked at those quarterly objectives, they seem so out of date now as they should, right?

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The thing is, it's just that his warm audience is like everyone, whereas your warm audience might be like a million people. And so what he's running actually is an ad that's targeted at most aware. And so when you're targeting most aware consumers, you actually just make an offer. That's it. And so that's fundamentally what this ad does.

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He just draws a contrast and says, by the way, we're cheap and you can buy three months free and get three months free. That's it. That's the whole ad. So in my next book that is coming out, I talk about this particular offer structure, which is a buy X, get Y. Right. And so he's got a parallel structure buy three, get three. I would say that I found that buy one, get two or buy three, get six.

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If you can contrast that you get more free than you pay for, it will typically convert better than a mirror structure. So I would test buy one, get two versus three and three, because you would probably end up getting you would save money as a business and you might end up still converting more because the discrepancy between what people pay and what they get is higher.

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I mean, if I wrote this ad, I'd probably have the CTA. This is yet another joke that he weaves in. You could say that this is on brand for him. So one of the nice things I think Ryan Reynolds does for his own personal brand is that he does weave in direct response advertising, which is what this is, with what some people might consider branding.

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And before I break down the actual structure, I think what's important to note is that Ryan Reynolds, despite having a very large personal brand, still used paid ads as the primary acquisition strategy. And so think about it like this. If all he did was just post every day, just be like, Mint Mobile, Mint Mobile, people would just not really care. Right?

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And so he does very much kind of brand himself in these ads because the ads are funny. Um, and he kind of like, if you literally look at this ad, it pretty much alternates humor, moves the ad forward, humor, moves the ad forward, humor, moves the ad forward. And it's a pretty simple structure in terms of how he's making this.

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And so what we're doing here as we're looking through this in terms of tools is that one, obviously he's a, he's a celebrity. So we just looked at his YouTube video and ranked the videos that had the highest views, but I can guarantee you virtually that the ads that are doing the best are the ones that are being pushed out every single day on meta, on YouTube, et cetera, from ads, not organic.

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Like, sure, he might get some signups from the six and a half million views, but believe it or not, six and a half million views for an ad, not that much. So right now we're pulling up the Facebook ads campaign. So if you don't know how to do this, by the way, just Google Facebook ads library, and then you sort, and then you type in the account that you're looking at.

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And it's because Facebook is trying to be transparent. They show you every ad that is running for an account, and sometimes also ads that are running in the past. Now, the rule of thumb here in terms of looking for ads, because you're like, well, how do I know which one's working? Well, the easy way to do it is just say which one of these ads has been running for a long time.

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And so the longer the ad's been running, the more likely that that ad has worked well. And so let's say you put out 100 pieces of creative. Anything that's new will always do better than something that's old. But if something is old for a while, then it means even though it's old, it's still performing really, really well. So here's some of the oldest ads that they're running. So let's pull it up.

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Despite the fact that... I think this ad fundamentally from a creative perspective kind of sucks. It's been running for five years or six years. So it's probably doing okay. Now I will bet that this is a retargeting campaign. And so this is probably converting very well for people who have already seen some of the top of funnel ads.

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And so if you think about this levels of awareness that I was just talking about, retargeting ads are always gonna be targeting people who are bottom of the funnel here, which is why it makes sense to retarget simply with the offer.

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So it's like, hey, you saw one or two ads or three ads, because we don't know what the audience selection for this ad is, but I would make a guess that retargeting ads, because the audience that enters into the retargeting bucket, basically the new people that see the new ads and watch past a certain point or click to the site,

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are a much smaller subset and change frequently, you actually keep the creative the same because the bucket of eyeballs changes. Whereas when you're hitting a mass market on a regular basis, everyone's seeing the ads, so you actually have to have far more creative top of funnel than you do bottom of funnel. So if we just look at this, this is an offer recap, essentially.

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So it starts with the price, tells you what the dream outcome is. If we're looking at our original framework, we're reversing risk, right? So we're just hitting through the buckets of value. It's cheap. it's fast and it's guaranteed and this is a humor thing at the end there and then again they'll restate the price Hey guys, this podcast only grows because you guys are amazing.

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And so you guys have been bros and shared the show and you guys have been pals and told your gals. And so I want to say thank you for doing that because it's the only way that more business owners create wealth and ultimately provide value in the economy, which is, in my opinion, the point. Because ain't no government saving us no matter who's in charge. All right.

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So instead it's like he provides value via movies and things like that. That's where he gets his mass distribution. That's where he builds his brand and his goodwill. And then he monetizes through the paid ads as basically almost like a retargeting, but his warm audience is everyone. So the hook is basically a contrarian hook.

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So please share this with your friends and let's get back to the show. What's that? You guys want to see where all of this traffic is pushing? Fine, we'll also look at the landing page. Let's do it. Okay. So this is mintmobile.com, which is their CTA in every ad. All right.

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And I do think big picture, if you have all your traffic pushing to one page, then you want to make sure that it's all congruent. And actually it's a huge mistake. I think a lot of marketers make is that you have all these different creative hooks and stuff, but then like you don't actually go for congruence.

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And one of the easiest ways to drop conversion is have someone click somewhere and then not get what they think they're getting. And so a lot of the elements here are, look, okay, let's just look at this page here. All right. So right on the top, time is literally ticking. So they're showing true urgency right at the top, big banner saying, like, you need to act now.

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Now, on top of that, they have a banner across the top. That is probably also something that moves forward in the funnel. And if you look at acquisition.com, for example, we have a banner across the top because it's actually one of the most clicked buttons. And so you can have the same CTA with multiple buttons on the page. And in general, rule of thumb, not bad. forever.

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But if you only have one CTA on a site, if you add another, you will increase conversions. If you add a third, you'll also probably increase conversion. At a certain point, you have too many referees on the field and no one can see the actual offer. But in the beginning, two, three, sometimes CTAs in terms of button for someone to take action will usually increase the conversion of the page.

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All right, now we're hitting, they're basically just slamming over the head with urgency. Now they don't have scarcity because it's unlimited customers. So that's not where they're hitting, they're just going on time here. So big picture for those who don't know, scarcity is limiting quantity, urgency is limiting time.

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And so people talk about scarcity and urgency interchangeably, and that's not how it actually works. All right, they're separate things that can be combined, but they exist separately. All right. Now they do have a caveat. It's new customers. All right. So it's not all customers, but new customers get three months of unlimited premium wireless for $15 a month. All right.

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So let's, I mean, it's pretty clear what they want us to do here. Okay. So two plans for the price of one. So if you switch from one of their primary competitors, they have a separate offer for you there. All right. Now let's look at the secret sauce. I'll bet you this is optimized for mobile too. All right. So 5G for free. We're online. Flexible payment plans. Okay. Bring your own everything.

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Fine. So what's really interesting about that BYOE, another budget provider, which you may have heard of, which is Spirit Airlines, has the same thing. They call it your ass and gas. So they say like, we give you nothing. And they kind of lean into how cheap they are. And they are the cheapest provider, but they do nickel and dime people.

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So there's a little bit of curiosity here because you're like, okay, well, one, you recognize Ryan Reynolds right off the bat, and he's got brand placement behind him. So he's making the association between him, the thing you like, and the thing you might not know, which is Mint Mobile.

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So let's scroll back up and let's actually, let's go like we're going to convert. So because this is actually like dev work that they'd have to put in. So there's probably a reason they added this bar in. I would imagine the number one concern, which they also talk about in their ads, is what's the service quality, right?

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And so if someone's like, I'll switch to it if there's really good coverage in my area. And so they're probably resolving one of the biggest concerns. So let's just do acquisition.com zip. So there we go. Man, they make this a problem. All right, so there we go. So they tell us that our device is compatible and they have excellent coverage. Now, I'm going to be real with you.

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My question would be is like, what's excellent? Now they do have a map so they can visualize it. Okay. So they've got some towers that looks like it's right there at the corner. But all right. If I'm trying to make a decision, I might say, well, they said it's excellent. So I guess I'm going to consider it. So now we go view plans. So let's do that. Okay.

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So this was actually leads us to the same place as the original button. So if someone takes a detour and then goes there pretty, basically you handle the objection and then they go back to the sale. All right. So choose your plan. Okay. All right. So let's see what we got here. We got three months, six months, 12 months.

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They obviously want, you know, they're drawing attention to the three month offer. But I would be super curious to see what their conversion rates by offer are here. And so what's interesting is that they have the same starting fee, but just different ongoing fees after the fact. Now, to me, the six-month offer is a dummy offer. I'll bet you they have their split between the three and the 12th.

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And so look at why they would do this. So it's like, okay, well, I can only commit to three months and then it's $30 a month, or I can pay $35 a month with 210 upfront. I'm like, I don't know. Like for me, if I look at this, I'm either three or 12. And I'll bet you that that's how most people are looking at this. And so when you have three tiers, by the way,

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And so that's a 101 strategy, and there's a reason that I wear this hat and why underneath of my shirt, which normally is unbuttoned for those of you who are you wild fellows, because of my 90% male audience. The reason I rep my brand is to make that same association.

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you almost never want the three tiers to be evenly split. So we're going a little bit into pricing, but YOLO, we can do what we want. It's our video. So where you move the middle... on a three-tier offer determines where you want to nudge the customer, okay? So if I want more people to take my 12-month offer, I will make my six-month offer really close to the 12-month offer.

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And so I'm like, oh, well, shoot, this is so close. I'll just do that one, right? So this is the typical small, medium, large soda play that movie theaters has done for ages, right? So if you have a... I'll explain it to you real quick. So let's say that you've got... equal ounce differences between Between sodas. Okay, so let's say that this is 10 ounces.

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This is 15 ounces and this is 20 ounces Okay, so that's what that's what these sodas are obviously at a movie theater It'd be like a gazillion ounces and they just give you a gallon of whatever soda you want All right here you're asking someone to make a logical decision and it's proportional to how much they buy and they're not really saving anything by buying more so functionally this would incentivize people to go here and

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because there's no savings for buying more. And if you wanted to just get some more later, you take on less risk by buying a smaller purchase, and you can always just double up again later if you so desired. Now, what does this next pricing tier tell you? So let's say we keep our $5, and then we have $6 here, and then we've got $10 here. What does this tell you?

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That tells you here that this is the best value option. The first is here. Now let's look at a different pricing scheme. So if we have $5 on the low option, but let's say that now we've got $9 on this option and $10, what is the pricing tier that we're pushing towards? We're like, well, dude, for an extra dollar, I'm getting another five ounces. This is not a bad gig.

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Now, because of this basically dichotomy between the 10 and the 20, We would probably realistically what this would probably be priced at. Like if we were in the movie theaters, this would probably be eight bucks. This would probably be seven. And so this would then push more people to here. Right.

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And so how you price your three options, you can tell what offer a smart business owner is trying to incentivize you to take. We're getting into a little bit of advanced pricing, but you're an advanced person. So let's talk about it. All right. So if I have this $6 option, what does it really communicate? We think like for a dollar more, I'm going to get 50% more soda.

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If there's stuff that you use for my content and it makes you money, then hopefully you associate that value with me and acquisition.com. All right. So here, this is a contrarian hook and the curiosity is, okay, well, what's opposite about this thing versus what my current carrier. So this is a clear setup for an us versus them strategy. All right.

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That's a pretty good deal for here for a dollar more. I get another five ounces of soda. And so these prices are always taken in an aggregate, right? Now, If I have a lot of people coming in the door and everyone's buying smalls and I want them to upgrade, then I'm going to put my price here.

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If everyone's coming in and they're getting mediums and I want to push them the largest, then I'm going to move my price of mediums up to make the large more appealing. So what you're ultimately trying to do is maximize revenue per soda buyer, right? And so it'll depend where your average customer is actually entering the business to determine which of these you would actually push.

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So this is a sales page, all right? And so sales pages are different than landing pages. So the first page was relatively short, just wanted to get people to take the next step. And they have probably tested pushing people straight to the sales page and it probably doesn't convert as high. So they have the intermediary step to get more qualified people to the page. Why does that work? No idea.

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I can just tell you that it often does work when you have too much traffic going and not enough conversion, you add a step, you add friction, and then it sorts the right traffic. All right. So let's look at the actual page structure here. Boom, big thing. We have our urgency yet again, and then we have our offer right there in bold so that everyone doesn't miss the thing.

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Last chance yet again, 50% off. Cool. Okay. They're restating the offer multiple times, and then they restate the benefits underneath high speed. So if we're looking at this, you've got Headline, subhead, and then three bullets, which is a really common structure. It's interesting because above the fold, which is when someone loads on their phone, you'll see a very common structure.

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So in the paid ad section 147, I talk about three different landing page structures that work really well. And so what they have here is they're using layout three above the top, all right? So they've got headline, subhead, right?

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So unlimited premium is headline, subhead is last chance, and then the three bullets right here, now I have mine below the button, they have theirs above, minor difference, but fundamentally they're using this structure. Now notice I have attention avatar at the top. What do you think that is? That's time is literally ticking. And it says new customer offer. So avatar is right there.

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Attention, new customers. All right. Like these are timeless advertising principles because they work. This is how you convert traffic. All right. So we've got the button. One tiny tweak I would consider on this page is I think the button is not visible enough. And so I would consider making that more, I would make it jump out more because I think you could easily miss that.

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It says, choose your plan. So now it's telling you what to do. Okay, great. This is just all plans include this. Are you new? Great. And then just restates the offer yet again. And then we see our three, six and 12 month plan. Now they made it a user-friendly for mobile so that you can toggle between them, which I think really interestingly. So imagine the user experience here.

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So if I'm looking at this, I'm gonna see $15 a month and I go to six, six months. It goes up and then I go to 12 months. $15 a month. Huh. What is that telling me to do? Well, I came for the three, but man, this one for 12 isn't bad. And so what's interesting about this is that the intro offer is 15 a month and then it bumps up, right?

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And so this strategy is best employed when you are not the market leader. All right. So obviously, Mint Mobile is kind of the underdog. They're going the small guy. They're trying to face Goliath. Obviously, they're not even close to as big as Verizon or I was about to say singular. I was about to date myself. Well, Verizon and AT&T. Right. So this strategy makes sense.

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But the 12 month offer is 15 a month and then it stays 15 a month. And so if someone has a sensitivity to that price point, then they basically make it available to them. It's like, hey, if you want to stay at 15 a month, you can, you just got to make the commitment. So this is a, if you can't decide right now, don't worry. You can change it later, which is a great risk reversal. All right.

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So facts. So now they're getting into features here and they're probably going to show speed because what's the biggest concern everyone has coverage and speed. All right. So they're going through these things. And for us, we already checked our zip code beforehand, which they helped observe. Now, I don't think anyone's going to know anything about this.

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Like, like I honestly, and maybe this is a compliance thing that they have to show, which is very possible. So that one, I don't know. It might be a legal thing. All right, let's scroll down because obviously this is not going to cover anyone. Okay. Bring your family. So this is an upsell potential. So it's like, okay, while I've got you, because what's another concern someone has?

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Well, I don't want to switch on my own. I want to bring my whole family over because I don't want to make a separate plan than them. Cool. So they give a family plan. All right. Now, yet again, we scroll down to the bottom if you missed it, because let's say you think about click journey, right? So someone clicks over and they didn't, they just went straight to the offer.

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And so I am going to talk very little about big picture stuff that they did, distribution, brand deals, any of that. I'm just going to be talking about like what ads are converting, what pages are they pushing to, what's the offer they're running, how are they packaging it, and how are they following up via email to maximize conversion.

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Now that they're actually in consideration, so they're thinking, am I going to take this offer? Am I going to take my credit card out? They might now, the coverage device checker is what I consider a buying question.

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And so sometimes on a sales call, this is obviously doing this in a virtual setting, there are questions that are kind of more open-ended, like discovery questions that a customer would ask. And if someone says like, talk to me about payment plans. Right? That's a buying question. They're strongly in consideration. And so this is something to help overcome any obstacles around purchasing.

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So they were like, okay, the price makes sense if you have it in my area. I'll attend your gym. How far away are you from me? Right? That's going to be a real consideration. And if you're close enough, they have some line in their mind that if it's over it, it's acceptable and they'll make the purchase. All right. So scroll down.

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And this last section is super common on a sales page, which is FAQs. All right. So almost always having an FAQ on a sales page will increase conversion.

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Because just think about every one of these questions as a couple percentage points of customers that haven't gotten all their questions resolved yet and either want a deeper explanation for some of the sentences or headlines from above, or they have some unresolved concerns that didn't really make sense to weave into the page because it would overall lose some people.

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And so you basically stack those at the bottom. And you've probably seen this on a lot of pages. Even if you look at like an Amazon purchase page, they're going to have their FAQs at the bottom where the seller will answer some of the questions that people are asking. And so, by the way, if you want a really great way to study how to make sales pages, study Amazon.

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What's going on, everyone? Welcome back to the game. Today, I'm going to do a very in-depth breakdown of Ryan Reynolds Mint Mobile. Now, this will be different than the Rihanna collab by Fenty. I don't know, a bunch of people corrected me in the comments. I don't know how to say it. I'm obviously not a buyer of the lingerie, but I am a consumer of business models.

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Think about how they structure their pages and how many elements of persuasion are woven in that are real and actual. Now, they obviously are a trillion-dollar company, and so they have a lot of resources at their disposal. But you can still use the elements of persuasion that they have. And fundamentally, that's what they're harnessing here.

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If you're number one, you don't want to do us versus them. If anything, if you want to use an us versus them structure, you would use us versus the alternative. So rather than another brand or other companies, you'd be like us versus your couch. If you were the top fitness brand or something like that. Obviously, he's weaving in humor because that's part of his personal brand.

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And at the very bottom, I see this as a – if you haven't decided to buy yet – Why don't you enter our long-term nurture sequence where we'll send you emails to hopefully get you to buy later, right? And so that's basically what we're doing here. What's that? You want to see the emails that they send to ConvertWarp customers? Fine. We'll look into them. Okay. Big picture.

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This is their actual email sequence. So we looked it up. You'll notice that these are very visual. So these are very picture-driven. So I want to make a clear point here. I would say it's very split in the types of products that are being sold, what types of emails convert. And so I've seen, this is just me, Alex's point of view, pictures do really well with physical products and low ticket items.

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So people just like click and buy, right? If you sell services or complex services or complex products or high ticket products, oftentimes basically almost the exact opposite perspective of this, which is lots of text that's plain text, maybe one hyperlink, that's all not formatted to basically make it look like a real email that someone might send to you.

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That tends to be the best deliverability, which will ultimately convert more people for those more complex things. So if you sell services that are complex, I would lean towards that. Here, if you're e-commerce, which fundamentally this is e-commerce, it's just a phone service that you're getting, it makes sense. Now, one last point here is that notice that they don't offer phones.

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Remember the BYOE? So they're able to sell at a much lower price point because most of the other carriers include the phone in some sort of payment plan with your service. And so a big portion of what you're paying for is the $1,000 smartphone that they're subsidizing for you over X period of months with a decent markup. All right. So let's look at the offers they have.

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So email one is they just say, they just restate the offer. Cool. Let's go to the next one. All right, now they say it's easy. So let's think about the elements of value here, right? So first they restate the offer. Then they say, by the way, it's easy. Now the makings of Mint Mobile. So now they're saying, okay, someone didn't take the first two.

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So now let's just give them a little bit more information, right? Let's talk more about the value that they're getting. That's the next email. Yeah. And so here they're also telling a little bit of the story of the founder or at least the spokesperson. And so this would be more common if someone hasn't made the purchase for you, purchase with you yet, you're explaining more about yourself.

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Basically, they're trying to build some trust, build rapport with the prospect. All right. So now they're hitting the family people and they're like, maybe you didn't buy because of this reason, you might've missed it on the site.

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And so what they're really doing is they're chunking down a lot and just focusing on one obstacle at a time, which is what I would encourage you to do in email follow-up is There's going to be, let's say, 13 reasons people aren't going to buy.

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And instead of saying, here's 13 reasons, let's handle them all, you just hit one email at a time that hits each reason in order of prevalence, meaning the more common the concern is, the earlier on in the email sequence it should be. Now, here's the 411 on SIM. So this is like, this is going to be a concern question. This is a detailed question where someone's like, well, what about SIM cards?

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And so he's basically weaving in his brand sub-bullets as he's going through. Now, every ad has three parts to it. You're going to have the hook, which we covered right at the beginning. There's the meat of the ad, which is typically going to be the value. And then at the end of the ad, there's usually going to be either some sort of call to action or a payoff.

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What about my use case? I'm a special snowflake. So they're covering the special snowflake scenarios in this. And I would imagine that it continued on this process. Now, if I had to rate this email follow-up, I would probably rate it like, I'm being real. probably a five out of 10. Main reason here is, you know, they're just hitting, they're just restating the offer over and over again.

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I think that what could make this better is if they made it feel a little bit more tailored, right? And so if they could expand in personalization, now I don't know what segmentation they have in the background, but personalization of their marketing and thinking about onboarding a customer before they're a customer, right? is a great way to get people to do those first steps.

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That coverage question that they have, it's like, can I get someone to take a micro step towards me? And so I'd be thinking, what other things are kind of micro steps that get someone who's going to get further along the road of consideration before they make a purchase? Another one would be like, okay, can we give, can we deliver them some sort of lead magnet?

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So once we have their zip, it's like, here's other people in your area who have said that this is really good. That would probably be really compelling. Another type of testimony might read someone who's like you. Another one might be someone who considered buying at the same time as you and is now already enjoying the benefits. Right? And so people thinking cohort.

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So it's like, if I considered buying this last week and it shows someone else who did buy last week and is enjoying the benefits, it becomes more compelling because you double down on likeness. That person's just like me. Additionally, you can reference my Rihanna video on some of the things they did for their offer.

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But in this offer, having birthday and anniversary offers is just, it's one of a reason why to extend personalized offers to people that will increase their specific urgency. But the thing is, is that you know that every month you've got one twelfth of people who are turning a certain age.

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And so you've got basically one sixth because you've hit anniversaries and birthdays every single month that are getting a special offer. And so if you do that on a regular basis, it's like every month you get this kind of lift to one sixth of your audience that's getting a special offer specific to them.

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All right, let me hit some of the big takeaways that anybody can use on their site that we can take from how they're converting a lot of traffic, obviously. So number one is website optimization. So if you haven't tested your page load speed, just do it.

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And then most tools will tell you some of the things, images that need to be compressed so that you can decrease file size and ultimately load faster. Now, this may not sound interesting, but for every one second saved, you get, I think Neil Patel had this, he's already studied this one, but I think it's something in the neighborhood of like a

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When you're thinking about value creation in an ad, there's, at the most basic level, more good stuff. Less bad stuff. All right. And so when you're writing your ads or you're writing your copy, you're scripting them out. I think first from those two buckets. And so if we pull out our handy dandy textbook for advertising and you go to 134. So this is the leads book. All right.

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two and a half or something like that percent increase in conversion per second. And so sometimes I've seen some of your pages, you have nine seconds, 13 seconds of load time. And it's like, if you can get that down to like three seconds, you've got two plus percent times 10 in terms of improvement on a conversion, right?

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If you click and it's like changing a channel on a television, you're going to convert more people. The next one is using side-by-side comparisons. I'm surprised that they aren't really hitting on this heavily. So they talk about it really heavily in their advertising, but they're not showing what other people are doing comparatively.

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And so this is one where like Progressive kind of pioneered this in the insurance industry, where they were showing what other plans... cover and prices associated. And I think if you are the underdog, then it's okay to do that. If you're the top dog, you don't show anybody else's.

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But if you're making a budget as your primary sales point, then using side by side makes sense because they can see the delta. One of the other things here that I think is probably worth mentioning is hidden fees. I think one of the big concerns with budget providers like budget airlines is that they will charge you for each piece of luggage. They'll charge you for drinks.

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They'll charge you for everything. And it's like, are they going to charge me for anything else? And I think being explicit about that somewhere would probably increase conversion. So if I'm them, I would be looking at the same... plus good stuff away from bad stuff. And if you don't work with us, so selling the don't, you're gonna keep having bad stuff and keep not having good stuff.

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And that's where having the juxtaposition of the other providers could prove for very good fodder for ongoing emails. And so like one email would just be more good stuff. Next email would be less bad stuff. Next email would be, if you don't do this, you'll keep having bad stuff. If you don't do this, you'll keep not having good stuff.

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And then each of the good stuff and bad stuff, you have three vectors that you can look at across all four of those, which is risk, speed, and ease. And so showing the visual of the step-by-step process of what it takes to sign up, it could de-risk someone's concern about how easy it is.

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from a speed perspective i would probably hit on more points of like well how quickly can i get activated right like could i be using my phone within a few minutes if i could i would want to know that so i would talk about speed from a risk perspective they do have commitments associated and so i'd want to know what are my cancellation policies and what does canceling look like so believe it or not if you actually show someone how to cancel before they buy sometimes they're just more likely to buy because they're like oh i understand how i can get out of this it reverses the risk of the purchase

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Now, the big obvious one is that price is another thing that they do, but I wouldn't say that's an area of opportunity. I think they already hit their price pretty hard. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into ten stages

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and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you.

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So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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So there's the steps for running paid ads. So first you have to know where to advertise. He's advertising everywhere because everyone already knows who he is and everyone already has a cell phone. And so his market is everyone. Right now, that part's straightforward. The second part is like, OK, how to get the right people to see it. That's via targeting.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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So I'm sure there's different audiences that look that do better. And it might be for discount providers rather than people who are maybe at premium. They might have found, for example, that, you know, switching someone from Verizon might be more difficult than switching for someone from like maybe pay on the pay as you go type phone, especially given the price points.

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Now, the third part, which is right here, step three, what should my ad say? And so this mirrors that three-step process. You get your call out, which is the hook. You got the value, which is the meet. And then you got the call to action, which is the end. All right. So besides the kind of general points that I start that are more common hooks, obviously, there's not exhaustive.

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You can have unlimited types of hooks that could fit in the book. But in terms of concepts, he's using contrast here. Contrast in two ways. One is that there's contrast visually. Like this is a bright color. This is something that's going to pop out. But then also he's using contrast us versus them. That's kind of the theme here. All right.

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Now, from a value perspective, we get into the interest step. All right. And so the interest step is the best ads make benefits look as big as possible and the costs look as small as possible. And so from the benefits and cost perspective, what we're basically doing is a reverse value equation. And so the good stuff is what's the outcome they want, which would be phone coverage.

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People would want it fast, they would want easy, and they would want it to be likely. Now, the negative side is going to be what is a nightmare scenario, the worst case scenario, slow, hard, and risky. And so as he's describing the benefit here, which is less bad stuff, the nightmare scenario is that you pay a lot. Right. And you get basically the same thing.

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And I think there's a ton of stuff in here, super tactful, that any business owner can use. I certainly am. And at the end, I'll give you some things that I think if I were the CMO of the company, I would consider at least testing that might show some performance improvements over what they're currently doing. Ryan Reynolds acquired over 2 million customers from Mint Mobile with paid ads.

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And so before this, he said, and we do this due to not hating you. Right. And so, again, he's he's talking about the nightmare scenario. They charge you more and they don't like you. And so he's saying we charge you less and we do like you by implication. And then he adds in more humor. And to be clear, he doesn't actually show an angry customer. He shows a sheep. Right.

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And so it wasn't actually like showing a negative review, which other companies like Liquid Death, which is a water company, which took the market by storm with cans of water that looked like beer. They actually had ads that were one-star reviews of their product because they kind of went, again, contrast, that contrarian angle. Now, here, we finish with what? The CTA, right?

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So they make the offer, and they tell people, midmobile.com, and what do I get? Unlimited. Now. Speed. Just. relative to the cost, low, done. Fundamentally sound ad, and obviously brought lots and lots and lots of customers in. So if we're thinking about this ad in three slices, right? We've got our hook, We've got our meat or value and we've got our CTAs. All right. And so we cover the hook.

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We cover the CTA. Let's talk about the meat. And so here we've got more good stuff or less bad stuff. Now on the good stuff, what we're thinking through here is how can we make it faster? So we would describe speed if we can. How can we make it easier? And how can we make it risk-free? Now, if we wanted to improve this offer, it would be month to month, not just monthly, right?

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Now, there's some disclosures at the bottom. What does it say there? Limited time only offer, new activation, and upfront payment for three months. There we go. Promotional rate for the first three months only. Again, so now we get to understand, oh, it's only $15 a month. for three months, and then it will go to, who knows, maybe it goes to 30, we'll find out.

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Taxes and fees are extra, so there is more on top of that. And what are these fees that they haven't disclosed? And unlimited customers using 35 gigabytes per month will experience lower speeds. Okay, so they do slow you down. and video streams at 480p, see full terms at midmobile.com. All right. And so that is the fine print on this.

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Now that's because he's being a compliant advertiser and that's wonderful, but big picture though, if we wanted to make this more compelling, we would actually flip those things. We would say, okay, well, your dream outcome is to have unlimited,

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fast, right, internet, and you're not gonna worry about getting overcharged or getting your rates turned down in terms of the speed that you're getting downloaded. That would make this offer significantly more compelling, right? Now, the thing that a lot of people don't do in their advertising is they don't cover what I call the don't, right? Which is like, what's the negative side, all right?

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So here, less negative is the, what are all the things that suck? So paying money sucks, which would be, and the opposite, this is slow, hard, and risky, right? Now in this ad, obviously they don't really have that offer because a lot of the things they have are, they will slow you down. They probably made signing up easy. They might not make canceling easy.

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And then the risk is that obviously you don't get what you want. Now on top of this, this is the real don't. This is the 201 version of ads. is that we say, okay, well, plus minus, so more bad stuff and less good stuff, right? That happens in your life. These are still the same categories. But when we sell against the don't, we say, well, you could also not do this.

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And I'm going to break down the best paid ads these run and how you can model the structure for whatever it is that you sell in your marketing. I'm Alex Ramosi. I'm the founder of Acquisition.com. We spend millions of dollars every month on ads. We make tons of money and no one cares. Let's start with the first ad.

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And instead you say, you will have more delays by not buying Mint Mobile. It'll be harder for you to use your phone stuff and it will be riskier for you to do it. That's more bad stuff. And also, you'll experience less good stuff. So you can think about these as mirror images of both sides.

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If you do it with us, then you're going to have less slowness, less hardness, less risk, which means that it's risk-free, it's easy, and it's fast. These just give you different ways of more or less saying the same thing. And on the alternative side, when we're marketing against someone or something or some idea or some competitor, then we're saying basically the converse of that.

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All right, so next ad up is actually an ad that ran as a Super Bowl ad, but the results weren't what you expect. All right, play it.

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So what's interesting about this is they began not really with a hook, but they began with the offer. And so me right off the bat, I'm not like, oh, now I'm paying attention. I would be like, all right, there's an offer here. So the good part that they have here is I do think that they have a reaction, which I think is overall like a good thing.

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I wonder if I were to split test this, I would probably lop off the offer and start at the reaction and then finish. flip the order so that then you see the offer just so that there's something interesting there. Now, here they have a mascot which shows up in the next frame. I think what the intention here was to take Ryan Reynolds' face away from stuff and transition it more to a mascot.

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But my guess here is that his goodwill and his positive brand is probably what drives a great deal of the advertising return above par because many people might not know Mint Mobile if it weren't for Ryan Reynolds. They might not even know that this is the same company as his. Right here, What they're actually doing is a pretty clever advertising tactic.

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Whether or not it was effective is predetermined by the fact that they didn't have as many sales as they wanted. So I'm giving you a little bit of a foreshadowing here. But what they did is they actually just drew an analogy between other people's service and chunky milk. So this is another contrast style ad. They're saying, we are a Ferrari. They are a clunker, right?

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They're a Vespa or whatever, some small scooter, something that's a huge contrast that basically paints an analogy in someone's head to say, we are good, they are bad, and we keep going. And the way that branding works is that you don't actually brand in the negative. I can't say, hey, don't think about pink elephants and me. Well, of course, you're going to think about pink elephants.

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And now I forever am associated for those of you.

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who see this with a pink elephant and i will just cry myself to sleep every night because of it but the point here is is that they said we don't want smoothing we want chunky milk and we started the the the video starts with the actual uh brand itself and then subsequently follows with chunky milk and almost the entire ad is talking about chunky milk and that it's disgusting right and so people now just simply associate mint mobile disgusting thing so now they complete the loop and say that's not right kind of like your wireless bill

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which is a simile, if you want to use kind of, like, sort of, it's basically drawing an equivalent between two things, which by the way, is one of the key ways of educating and advertising. So they hit the three here, right? It's easy, it's online, which to me would be, it's fast. Like it's not something that you have to talk to anybody. So that's taking away some of the pain associated.

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Now, they don't really hit risk-free, but I guess they kind of lower the risk again with the small price here. And you have clear call to action, which is the end of the ad. And then obviously the call to action is just simply go to the website. All right. So I think that the mistakes in the ad are that branding works, whether you like it or not. Associations occur.

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And so they branded themselves with Chunky Milk, and they took out their biggest star, which was Ryan Reynolds. And so unsurprisingly, the ad didn't perform as well. All right. Let's go to a good one.

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Easy. All right, so because what we have to think about when you're advertising here, because I don't actually think this is an effective hook from a hook perspective, but because this is fundamentally not going to strangers, this is going to people who already know who Ryan Reynolds is. And so the equivalent to that would be if I'm in a local area and I run an ad and I say, hey,

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Towson locals, which is a suburb in Baltimore, which is where I'm from, then people are gonna be like, oh, this is for me. I recognize something. One of the four elements of getting influence with someone is likeness or relatability. You're like, oh, I know this guy. Yet again, he continues to hit on this us versus them concept. And obviously it's working.

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So when you do have something that works, keep doing it. And so he's drawing this parallel between us and them yet again. He delivers one core brand message here, which is that we're not into wasting money. Now they're a budget option. And so it makes sense for this, that this ad did significantly better. One, they have their main person. Two, he's the focal point. Three, the scripting itself.

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It's like, oh, you know who I am. And I'm not like these guys. My value is cheapness. And so we made this ad cheaply because we value money. That's kind of like, I would say the implication of the ad. He obviously weaves in humor to then transition to the offer. And so these ads are super short ads.

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But when you have an ad that's this short and it's going to audiences who know who you are, you pretty much just make an offer. And so from an advertising perspective, Eugene Schwartz has something called the levels of awareness. And so the levels of awareness kind of are like this reverse pyramid. All right. And so you have unaware at the top. And this is about the problem.

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So unaware, you have problem aware. So they know that they have a problem. You have solution aware. You have product aware. And then you have most aware. Now. When you make your hooks for ads, you actually make your hooks depending on what part of this funnel you're actually finding people. And so the colder the traffic, the more different the ad will be.

The Game with Alex Hormozi

Breaking Down Ryan Reynold's Billion Dollar Marketing Strategy for Mint Mobile | Ep 844

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Now, when you have an unaware ad, if you've ever seen something that's like Texas homeowners are getting reimbursement checks for up to XYZ in this area or something, that's going to drive curiosity. And so curiosity is usually that very top of funnel for people who have no idea what this thing could be about. And so it has nothing to do with what the, with the solution.

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Breaking Down Ryan Reynold's Billion Dollar Marketing Strategy for Mint Mobile | Ep 844

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If you've seen like five weird foods that, that help you lose stomach fat, it doesn't say whether they're going to sell you a detox tea, they're going to sell you a Zympic, they're going to sell you a gym membership. It starts all the way at the top with curiosity.

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Breaking Down Ryan Reynold's Billion Dollar Marketing Strategy for Mint Mobile | Ep 844

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So let's break this down frame by frame. Now notice, though, that this is a 30-second ad. And so 30-second ads, as a side note, there are some placements you would get all over the internet that are helpful.

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Breaking Down Ryan Reynold's Billion Dollar Marketing Strategy for Mint Mobile | Ep 844

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Now, here's the massive advantage that branded ads, people who are already recognized, this is what The Rock, this is what Ryan Reynolds has, et cetera. Now, every business can do this. Every influencer business you see who has 50,000 followers and then begins to run ads, for example, you still use the same exact strategy that Ryan Reynolds is doing.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

in 2020 my life changed forever it was the year that i started acquisition.com and since then four of my companies in our portfolio have crossed the 100 million dollar enterprise value barrier but none of that would have been possible without the changes i made that year and so no matter what your goals are whether it's to make more money you know find the relationship or whatever here's my brutally honest advice to make this year the best year of your life so there's four steps the

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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I would say opinions of other people are affecting your behavior and your decisions. I think that your environment affects your efficiency of behavior. So think about how much more you get per hour of output. And so if you can't sit still, ignore notifications, and focus on one task for eight hours straight, never expect to build anything great.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And as uncomfortable as that is, it's also the truth. I don't know a single incredibly successful entrepreneur that can't sit down and have hyper-focused periods of time, sometimes weekends, weeks at a time, where they don't talk to anyone and they just hammer away.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And it's whether they're coding for software or they're making some insane marketing campaign and all the email follow-ups and all the text follow-ups and the affiliate promotions and incentives, or someone who's creating a product that they're designing and they're in the shop and they keep tweaking at it,

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Or there's somebody who's hyperscaling a company and saying, I'm going to sit in 20 interviews a day for seven days straight so I can hire 20 people this week because I need to get going. If you can't sit still and ignore notifications and focus for a day, Nothing great will get accomplished because it's not about what you want, it's about what's required.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And whether that's your best or not is irrelevant. It's just there's a price tag and you got to be willing to pay for it or you don't get the thing. And so it's not about doing what you want, it's about doing what's required. And a lot of times it's not what you want.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I spend a lot of time trying to dispel the concept of like follow your passion because I think it leads more people astray than it helps. Because it's very easy for someone who's successful, who's already delegated tons of things to only then focus on their area of genius and then say, here for my seat, do what I do.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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But there's a very big difference between doing what someone does and doing what they did to get there. And I think this is what's lost in a lot of the content that I see in the entrepreneurial space. And to be clear, whenever I'm trying to get to the next level, I often have to take on things that I don't know how to do.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I have to learn how to do that, which means I have to suck for a period of time. And sucking sucks. But the thing is, is you have to be able to embrace that period of time and say, like, this is the cost of greatness. And so I'll give you something very tactical.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So I have timers in a lot of my offices, and my team has adopted this too, which is I like to time block, which is essentially saying how long do I think this is going to take? And you can do this on a week scale, you can do it on a daily level, it depends on the level of project you're tackling. But for me, even on the most micro level, I say, okay, how long should this take?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And in that year, we did $31 million in sales to customers who could not legally transact. And so I bring this up as a testament that after that point happened for me, I decided that I would never give outside circumstances any weight on their outcome in my life. Now, did they affect the business? Yes, our sales reduced from the year before. But how much of that could I control? Zero.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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I'll then crank this thing, boop, I think this should take 20 minutes, and then I hit start, and I let the timer go. And if for whatever reason something distracts me, I pause it so that I know that I didn't actually work that period of time.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so what happens is it will give you a very real look at how long you're actually working versus how long you think you're working and you tell other people working and you Instagram how long you're working.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And as I've become more efficient at work, meaning my output per unit of time has gone up, I've realized that there's just been a significant decrease in the distractions that I allow to interrupt me. Again, if you wanna stay focused, staying focused is not like zeroing in and saying, I'm gonna do it just like, I'm gonna just zoom in on this thing.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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It's more that focus occurs when you remove everything else. What's left is focus. And so Jerry Seinfeld has this famous process that he talks about with writing. And I think writers are also wonderful people for talking to for deep work because it's the nature of the work they do.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so one of the things that he did, and he has done for years for his standup so he can script it out, is that he locks himself in a room that has no windows and has nothing but a yellow notepad and a pen. And he tells himself that he has to go in that room and he doesn't have to write, but he can't do anything else. And so what ends up happening is that writing occurs as a default.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so focus kind of works the same way. You eliminate everything else to create focus. You don't try and push harder while also having these disruptions. So I'll give you three easy things you can do with your phone. Number one is that I have a zero disturb mode. where no one can contact me. So one, set that up on your phone. Most phones can do it. Number two, set Grayscale on your phone.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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It takes a couple seconds and it decreases your overall desire to go to a phone by 30%. That's research-backed. The third thing that I like to do is literally just remove it from my physical location. And so if you can put it outside of the room that you're in, that's going to help a huge amount. Because you're going to notice you have these ghost desires.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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It's like you have these little impulses to just check your phone on stuff. You'll have these ghost vibrations where you think your phone vibrated, but it's not even on you. And you'll actually get a very good idea of how incredibly addicted to your phone and social media you are. The other piece is eliminating all notifications across all different platforms.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so none of my apps notify me because I want to pull things, I don't want it pushed to me. Because if it's pushed to me, then it means that it's sent to me when it's convenient for the application, rather than when I go grab it, then I make consumption convenient on my timeline. Because let's be real, is there anything urgent on social media? Of course not.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Are any text messages actually urgent? Of course not. If they are, call 911. If they're not, then you can check them later. And so you have to just realize that it's like the fallacy of urgency around inane tasks is that people will disturb you on their timeline based on their priorities, not yours.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And if you consistently live on other people's time horizons and priorities, then you will get what is important to them, not important to you. And my team wanted to remind me that I don't email. And so I don't email. I heard in, I think it was like 2016, that Bill Clinton didn't use email. And I was like, if he's the president and he doesn't use email, I cannot use email.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so my team doesn't contact me via email. And so if you can eliminate entire channels, that's also an easier way to concentrate fewer flows of communication. And here's the thing, it's always harder, takes longer, and costs more than you think it will. And that is a reflection of poor expectations, not that reality is bad.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so it makes sense that it would be harder, take longer, and cost more, because if it didn't, then everyone would have it, and if everyone had it, then it wouldn't be worthwhile. And so literally the difficulty of the task that you embark on is proportional to the reward that you ultimately get because you are the asset that you build more than the achievement.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so if it's hard, that's amazing because it will make you that much harder once you conquer it. And it will also make it harder for anybody else who wants to follow in your footsteps. And so the higher up the mountain you climb, the thinner the air gets and the rarer the climber or explorer must be in order to get there.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so all I could do was look at the things that I could control. And so within that context, thinking, oh, interest rates are up by 2%. Well, 100% of your customers are allowed to do business. So that's at least better than that. Oh, inflation is getting out of control. Are you allowed to do business? There's this great quote by Phil Knight.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so I don't know about you, but I would so much rather climb a mountain that so few people have been able to climb so that I can see a view that other people haven't seen. And so speaking of expectations, let me talk about the worst expectation of all, which is entitlement, which is the expectation of life or other people to give you something without earning it.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so there's the famous quote, hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times. It makes sense that right now we have a lot of weak men. because it's been pretty good times. The good news about that is that it's so easy to beat them.

The Game with Alex Hormozi

The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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You just have to show up, be on time, prepare the night before, remember people's names, actually follow up when you say you were going to, and try like you mean it rather than trying like you want to get credit for trying.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I see this is this thing that's pervasive right now is that people will comment or they'll DM me and they're like, hey, I'm trying really hard as though I'm supposed to give them credit for trying. The world doesn't work that way. It gives you credit for achieving. And the reason that you want credit for trying is because you want it to cost less, take shorter time period, and be easier.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so if you restate your complaint about the difficulty as, oh, I have false expectations about the ease or the price tag of this goal, then all of a sudden you realize that the only real problem was that you expected it to cost less. It's like going to the store and being like, oh, I've got these Jordans that I really want to buy. I got $50. I'm so excited to buy them.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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You go to the store and see that they're $300. At that point, you can just say Jordans aren't for me, or you can say, oh, I will have to keep working and keep saving so that I can afford this. And so it's a lot about affording the goals that you want to achieve.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And a lot of things that we have to spend in order to get them is the time and the rejection of not achieving what we want on the timeline we originally thought. Like what makes success hard is that the expectation that society puts because we only see the highlight reel, you actually only see people after they finish the race. And so you don't see much of the actual race itself.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And if even you look at a marathon, where do people actually stand to watch? They stand at the starting line. and they stand at the finish line. And so the perception of how long the race takes is just that little couple seconds in the beginning and that little couple seconds in the end. And the four hours of the marathon in between is what no one's looking at.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so their expectation of how hard it is to run a marathon, they base on what they've seen with their eyes, which is only the beginning and the end. But the mundane middle is the part that you have to master. Like that's the part that you have to conquer. And that's the part that's always harder, takes longer, and costs more than you think it will. It's so easy to beat people nowadays.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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who talks about in Shoe Dog, he said, you're not out of business until they have put padlocks on your door and no one lets you into the building. And so what happens is there's so many steps before that where people think they failed when it's really like they get rejected or they get rejected 100 times in a row or there's some issue.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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You have to start running and you have to keep running, but you just don't know whether you're running for a mile or 300. And so this is where the pacing is important. So a lot of people run really hard. They'll think because they only saw the beginning of the marathon on TV and the finish of the marathon on TV that they can just sprint because both of those clips only lasted a couple of seconds.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So they start their marathon of success of whatever it is they're going after by sprinting as hard as they can. And then they realize that there's no one around and there's just a bunch of open road ahead of them. And they're like, how long is this going to take? And that's when reality sets in. And so I make these videos to say that a lot of times it's going to take longer.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So one of the big nasty things that you have to eliminate on this path is the identity that you have about yourself, the isms that you claim. And so, for example, like, oh, I'm a neat freak. I'm not good at math. I'm not techie. And so you make these statements and they don't serve you. Fundamentally, you should have one razor that rules all decisions.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And this is pretty cruel, but it's also the reality of the world, which is, does this thing, person, belief, make it more or less likely that I hit my goals. And so if you run every single thing you do, the actions you take, the people you hang out with, you having your phone in the room, you saying, I'm not techie, does this increase or decrease the likelihood that you hit your goals?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I'm not saying this to preach because I had one that I dealt with for a long time. So I always considered myself to be bad at math. I remember I was decent at math. And then in ninth grade, I had a really bad teacher and it basically put me back a year. I basically after algebra, I didn't really learn anything because the year after that, I didn't have the foundations from the year before.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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I basically just cheated through high school math. The difficulty was I kept saying after that point, I'm just not good at math. But when I was in my 20s, I made the decision that that didn't serve me anymore. And so I was like, OK, well, what would I have to do to feel like I was good at math? And I was like, well, people who like can do math in their head. I think that's a pretty cool thing.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so I didn't use a calculator for anything for years. And then I learned I mean, I made a lot of mistakes in the beginning, but then I got better and better at doing math in my head. And I would check it, obviously, after I was done. But I always let my head try and do it first. And so nowadays, if you were to ask people, man, is Alex good at math?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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They're like, dude, he just rattles off numbers like crazy. But the thing is, is that until I was in my 20s, I thought I was bad at math. And so it's like we are so much more pliable than we think we are. And we had something that set us on a trajectory a little bit earlier in life that just gave us maybe a little bit of disadvantage. Fine. Because you just have to get over it.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Everyone's childhood was difficult. And if you want to win the award for the hardest childhood, and if you want to win the award for hardest childhood, congrats, you win. You feel better? Right. No one cares about what happened to you then. Only what you can make happen now. We only describe people about who they are by what they do. Doing is being.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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He's like, basically, until you physically are prevented from doing work, You're still in the game. When I was young, my father gave me this advice. Rich people buy time. Poor people buy stuff. Ambitious people buy skills. Lazy people buy distraction. I can give you the first and easiest 2025 prediction. Look at what you spend money on,

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so if you want to be somehow different, you have to do different things, and then only afterwards will people describe you based on the actions you take. Think about back in the day, the actual names people had was, he's John the carpenter, he's John the stonesmith, he's John the mason. Right? People literally had their names based on what they did. That hasn't changed.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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The first thing you do when you meet somebody is you find out, what do you do? And that gives you indications. And if you want to describe who someone is, what do you say? You describe what they do. And so this means that our identity is 100% under our control because we control what we do. And then only after the fact will other people describe you in that way.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So we covered environmental things like with the phone and having a timer. We covered interpersonal things in terms of our identity and voting with our dollars and time about the things that we care about. We eliminated the bad people and their opinions about us that affect our behavior. And so we've eliminated all these things. So now we've made room to get started.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And the good news is you only need three things to win. The balls to start, the brains to learn, and the heart to never give up. And the best thing is you already have all three. And for the girls, you have gonads. So it's fine. It still counts. And so my ask of you is to make the commitment. Now this is, again, the elimination of alternatives. to make the commitment to never stop.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so it doesn't mean that I'm asking you to commit to be successful. I'm asking you to commit to keep running, to keep walking the marathon. Even if you have to pant and you have to slow down, you just can't stop. And so the best way to hit next year's goals is to not wait until next year to work on them. It's to start now.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Because I'll tell you this, if you feel like you need a special occasion to begin making your life better, then it assumes that a special occasion must always be there for you to want to improve yourself. It shows that you don't think today is worth improving. And so that means that you typically will always cast forward when you think things are worth improving.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so the easiest way to vote with your action is to make today the only day that is good because it's the only day you have control over. And I'm purposely posting this before the year ends Because I think it's stupid to wait. Why would you wait on getting better? If you had a lottery ticket, why would you wait to cash it in? You would cash it in as fast as humanly possible.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And that lottery ticket is the life that you want on the other side of this. Why would you wait? And so here's a harsh truth. You're young. You've got time. False. All this does, that lie, is extend how long people... All that lie does is extend how long it takes people to realize tomorrow isn't guaranteed, nothing is going to be easy, get over it.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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It takes time to get good, and the sooner you start, the sooner you act. And the sooner you act, the sooner you get. And don't stop until you do. And as harsh as that sounds, I do have good news. It only takes 20 hours of focused effort to get decent at anything. The problem is, people wait years before they start their first hour.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So many of you could probably start achieving next year goals before the end of this year. 20 hours is not that long. If you're like, man, I really wanna learn ads. I really wanna learn how to make content. I really wanna learn how to edit videos. I really wanna learn how to sell. You can do that now. And you can have that skill. We can onboard a new sales guy in a few days.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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It's just there's this massive delay that people think because of the unknown. They don't know what is going to happen. And so they therefore assume that it's bad. And so the reality is that most people don't like surprises, even if they're good ones. Have you ever heard people like, oh, I don't like surprise parties? It's a fucking party. Why would you hate a surprise party that's in your favor?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Look at your calendar and wherever you invest is what you will get more of. And so, so many people are surprised when they look at their bank account next year and it's lower than they want it to be. They look at their accomplishments from that year and it's not the things they set out to do.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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You hate it because you don't like the unknown. And so it's a really good thing to test for yourself, which is, why would I hate a good surprise? You hate it because there's a possibility that the surprise is negative. But on a long time horizon, you know, 85 year old you isn't even going to remember it to begin with. I tend to have a bad habit of really not looking back very much.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so I occasionally will go through my photos and I am reminded about all of the mistakes and the detours that I took along the way to where I wanted to go. And I'll tell you the story that my father told me when I was very impatient. He said, listen, you think that this is taking too long for you to be successful. He said, do you know how long it took me to become a doctor? And I was like, no.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So my father's Iranian, and he left the country to get educated. And there was a program for anybody who was Iranian that the government would pay for your schooling as long as you came back with the education. Now, the revolution occurred during the time he was away. So he actually never got to go back. And so he went to France, Paris, to try and enter medical school.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Only problem, he didn't speak French. And so he's trying to do pre-med in another language as somebody who doesn't even share the same alphabet. And so he failed that year. He then took the second year, he tried again, because you're allowed in France, it's a different system, you can just basically try as many times as you want. So he started again. And the second year, he failed again.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And then he talked to his brother and he's like, I don't know if being a doctor is for me. Like, I just feel like, imagine this, like failing two full years in a row. And his brother said, hey, why don't you go to Belgium? You know, change the environment, you know, different school, different people, go there. So he went to Belgium and then his third try, he made it past his first year.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Now, mind you, at this point he had two years of learning French and so he was able to finally actually understand what the professor was saying. So was it that he wasn't smart enough to understand how to become a doctor or was it that he just had other skills that he lacked along the way?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so a lot of people right now are judging the fact that they didn't succeed because they somehow think it's some innate trait. I'm not smart enough, I'm not good enough. But sometimes you just lack some prerequisite skills, right? Like if you're like trying to learn calculus and you've never done arithmetic before, it's going to be really hard, right? Dare I say, impossible.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so if you jump straight into calculus, you're not going to win. So sometimes you have to take two steps back in order to build the foundation to get forward. So he then graduates in, you know, seven years because how long it takes, the actual medical school system is different in Germany. in Europe, they actually do college and the next degree, all is one thing.

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But when you look at their calendar and their credit card expenses, it's very obvious why those things didn't happen. Because we vote with our dollars about the things that we care about. We vote about the type of person that we want to become. And so I'll give you this story. So I remember when I was a few years back, I was walking with Layla and we went to Sephora, which is like a makeup store.

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So seven years later, he graduates. Okay. Then he's this Iranian dude, can't go back to his own country, meets a girl in Belgium. She says, I'm from the US. And so he comes back to the US with the lady who would eventually become my mother. And when he's in the US, he then, his doctor, his MD doesn't apply here. So he then has to basically do it again in the United States.

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And in order to do this, you have to get a residency. Now getting a residency as someone who's a foreigner back then was pretty tough. And so it took him two years where he had to basically work minimum wage jobs. He was like, he had to like run slides, like radiology slides back and forth as like a runner, a courier, when he was a full surgeon. but he couldn't do it here in the U.S.

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And so imagine how emasculinating it is, right? Where your wife comes back, she was a U.S. citizen and had all this other stuff, right? And she got her internship immediately because she was U.S. and she was a girl, whatever. And my father didn't. And so he then had to do two more years where he didn't have progress.

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So he told me this whole story and then eventually, obviously, he got the residency and then he was able to get in the path. But if you look at that, he basically had four or five years of his life where there was basically no net gain in progress towards his goals. And so he's telling me this story when he's 50. And he's like... Look at my life now. He's like, no one knows.

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He's like, no one asks me how long it took. They just know what I have now and what I can do now. And so you have this idea that it's that it should take a certain period of time. It should only last this long. It should be this level of difficulty.

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But the thing is, is that that level of perseverance, when he decided to go out on his own and start his own practice rather than and left the practice that he was working in, He then didn't know anyone, and he still had a heavy accent, was a new guy in a new area, and it took him time to build up. And what did he do? My dad learned how to be a general contractor.

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He built his own surgical center because he couldn't afford having these outsourced third parties that charge $250,000 to build a surgery center. He built his for a fraction of that. And so it was my dad going to Home Depot, measuring and figuring these things out as a full plastic surgeon. It's not about the resources you have, it's about how resourceful you're willing to be.

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Right now, getting started is 100% under your control. And I love taking this frame, which is that every self-made billionaire is self-made. Now, if you're like, wait, there are billionaires who aren't self-made. Right, that's why I didn't say all billionaires. Every self-made billionaire is self-made. And every self-made millionaire is self-made. And here's the one people hate.

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Every self-made person in poverty is self-made. Now, that may make you feel uncomfortable. And you know what? You may be right. You probably did have more disadvantages. You probably did have things that worked against you. And now what? You're right. So that's it then for you. The rest of your life will never go the way you want it to go.

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The harsh truth here is if you want to feel better, blame others. If you want to get better, blame yourself. My father told me that story multiple times in my life, as I'm sure your fathers have told you stories multiple times in your life, or you had a parent or an uncle or a brother, and they told you those big, meaningful stories. And so I'll tell you another time he told me it.

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And so we walked inside and I remember, you know, I'm sitting, you know, standing there awkwardly because I'm like, I don't know what I'm supposed to do here. And there's this lady with the smock who like helps out. And she had these two girls who were young. They must've been maybe, well, about this old. And so I'm guessing between nine and 40, who knows? Anyways, I think they were young.

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So after I lost everything for the second time, think about, like, I tell the story, but it's very easy to gloss over. But think about this.

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The first thing we have to do is we have to create space. We have to eliminate the things that are preventing you from taking the action you want. The second step is actually to begin taking that action. The third is that once those actions begin to improve the efficiency of those actions.

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I had left my job, went to a new area, didn't know anyone, started a gym, didn't have enough money to have an apartment, slept at my gym, just grassroots got it going, made the gym successful by working there every hour of the day, was finally successful enough to be able to open a second location, a third, a fourth, a fifth, a sixth, finally feel like I tasted success, like I'm actually doing something, I'm actually pretty good here, like that bet that I made actually paid off.

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And then I lose it all. And so I sell all those locations, I put the money in a new thing and then it's gone. And so I could look back and say, wow, I just spent all those years and I actually have nothing to show for it. The only thing I would have had to show was the money that I made.

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But my father retold me that story and he said it was never about the amount of failures he had, it was about the education that he had. And so one of the other repeated fatherisms that he gave me was that education is the only thing that no one can take from you. The skills you have, the skills you acquire along the way are the only thing that are truly yours.

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There's nothing else in this world that actually belongs to you. your clothes can get stolen, the belongings you have. And he said this from a place of reality, which is my family came from a country that took all of our assets. They seized everything. They seized land, they seized homes, they seized wealth. They just said, oh yeah, all that. That's ours now.

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Because of that, this may not be as real for people in the United States, but having people who everyone in my family had everything taken from them, that is very evident in how they talk to me and how I've always seen the world as these things are ephemeral. These material goods, the studio, the setup, the lights, the whatever, the platforms. Like gone.

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But the thing is, is that my father came here with $1,000 because of the revolution and had nothing and built the life he has. And you can lose it all and gain it back. And so we've seen so many entrepreneurs who've actually lived through this cycle. It's actually a common thing in entrepreneurship. And it's because you have to understand and respect risk.

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The beauty of it is that after you fail, the likelihood that you're successful goes up, not down. This is the part that people miss. They fail and think it somehow decreases the likelihood of success, but it actually increases it. And so it's like you want to just get the failures out of the way. Why would you not want something that increases the likelihood to reach your goal?

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And the reason that it increases that likelihood is that failure is a requisite probability for taking action. And so anyone who has failed has taken more action than someone who's done nothing, which means it increases the likelihood that they are successful. When you fail, you get feedback. And when you get feedback, you get better. And when you get better, it increases the likelihood you win.

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Losers become losers by never being willing to lose. I'm going to say this again. Losers stay losers by never being willing to lose. Everyone loses before they win. And so there's this great moment in the Matrix, which is the famous jump, where Neo is trying to jump across the buildings. And everyone's gathered around because they think he's the one. He obviously takes the jump and he falls.

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And so she's leaning over and she has these two paint brushes in her hands and she says, okay girls, now that you guys are women, you need to start budgeting for this stuff because you're going to be spending money on this every single month to do your makeup. And so the girls grabbed them, they were super excited and they went to go check out.

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And they're like, what does it mean? What does it mean? And Cypher, who ended up eventually being the Judas of this, says, everybody falls the first time. And so even the one or the person who was going to become the one was somebody who had to fail first. And I love that because everyone falls the first time. Your first business is very unlikely to be your last business.

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The first product you have will be a product that you will be embarrassed of years from now. But what's important is having the product, getting the product, building the product, launching the product, shooting the shot. And so if you're never willing to lose, you're never going to win.

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So in 2025, if you start a podcast, you start making content, you start doing cold outbound, or you take a new job, whatever it is, Just remember that your second try after you fail, which you inevitably will, takes twice the emotional effort, but half the actual effort. So you'll fail and you'll emotionally feel bad, but guess what you did?

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You actually gripped your hands on the unknown and you go from, unknown optimism to known pessimism. So it's like, okay, now I know what it takes. I now have realistic expectations of what is required in order to be successful. And although it may be bigger than I originally thought, I now can quantify what is required to win. The best entrepreneurs in the world have the biggest failure resumes.

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And so I don't even want you to win. I want you to build your failure resume. And so if you're like, oh, must be easy for you to say, I lost money on my first two real estate deals I ever did. Almost lost all the money I put in. I've lost money on crypto when I put it in years ago. I lost money on bad hires. I've lost millions in bad hires, actual hard costs, not soft costs.

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I've lost money on, I've had six failed businesses. I've had nine failed partnerships. And so I bring these things up because like, you're not gonna hit it out of the park on the first shot. But the crazy thing about how success works is that you only need to win once. I'll read you this quote from Jeff Bezos, which is what I started my first book, 100 Million Dollar Offers, with.

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We all know that if you swing for the fences, you're going to strike out a lot, but you're also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can hit is four.

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In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long tail distribution of returns is why it's important to be bold. Big winners pay for so many experiments. And when he says big winners pay, they pay in failures.

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And I saw that exchange as actually a really beautiful lesson when it comes to identity, which is,

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They pay in the scars that they have to incur and endure along to hitting it out of the park and hitting it out so big that they never have to swing again. And so I want to make this as real as I possibly can. I just found an old note from myself to myself that's 12 years old. And so I talked about my $10,000 per month income goal. And reading it got me actually pretty choked up.

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And this is all to say that no matter where you're at in your journey, you've just got to believe with all your fucking heart that you're going to make it. because no one else is gonna believe for you. Because you can never expect someone to invest in you more than you invest in yourself. So we've eliminated the distractions, all of the things associated with not doing this stuff.

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And now, hopefully, I've removed some of the mental BS around getting started. And so now, once you start, you gotta get better. And so connections, money, looks, intelligence, those are all great. But you can beat someone with all of those things if they have only one trait. and insatiable desire to improve.

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No matter where they start, it's hard to beat someone who improves every second of every day without giving up. And this is why earlier I said ambitious people buy skills and they pay for those skills with time and money. And in order to have the time and money to invest in those skills, they have to take them from somewhere else. Because the thing is is that your resources are zero sum.

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our priorities we dictate by what we spend not by what we say and so these girls because they wanted to step into this new identity had to match it with new priorities so they had money or they had saved up their shekels or whatever they do for chores or babysitting or whatever and by doing that they had to start prioritizing some of that money towards their new identity from girls to women

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and this is something that a lot of people aren't comfortable with, whatever you choose to spend your time on, you take from something else. Whatever you choose to spend your money on, you take from something else. And so most people don't have a resources issue, they have a priorities problem, is that you are choosing to say that other things are more important. And hey, I want to be real.

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If that stuff is more important to you, then amazing. You won at life. Congratulations. But if you don't have what you want and you're spending money to proliferate a life that is not the one you want to lead, then you need to shift the list to invest the time and money and pull from those things that you don't want to put more in the ones you do.

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One of the easiest ways to have more money is to work more hours. You're like, how is that possible? Well, when you work more hours, it actually kills two birds. One is that you actually make more money when you work more hours. But on top of that, you don't spend money because you have less time to spend it. And so every hour of work is a net positive in two directions.

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So it saves you money you're not spending and makes you money. And so you want to find those little twists that you can make in your investments of time and money that are outsized. It's not just that you gain, you also stop the loss. I've always been willing to bet big on me. And so a lot of you guys are trying to like bet big on Dogecoin or some meme thing, or like some get rich quick.

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And I promise you the guys who have all the money know how to do it better than you. And if you have your last thousand or 5,000 or $10,000 that you're like, what do I do with it? bet on you because you'll never sell you. You're a long term hold, right? And so if you get better, you guarantee the win.

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And every investment you make compounds, you guarantee compounding because every skill stacks on top of other skills. Steve Jobs talked about how when he went to college and learned calligraphy was the reason that fonts showed up in the Mac later. And so he talks about you can only connect the dots looking back.

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and so you want to double down on investing more into you getting skills and i'll tell you something that you probably don't know so i spent ten thousand dollars and i only had fifty saved up after years of being a consultant so i had fifty thousand dollars saved up i was 23 years old this is my life savings i spent ten thousand dollars to get a gym coach i joined a mastermind for gym owners

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Fun fact though, I didn't have a gym, but I figured if I go to a mastermind of gym owners, I'm going to learn so many of the things that they made mistakes on when they started their gym. They're going to have opinions on how I should lay out the square footage, what locations I should pick, what model I should use.

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And so rather than say, oh, I'm just going to find out all these failures on my own and take five times as long, I was like, I'd rather pay $10,000 to pull five years forward into the present. And so I was able to get that first location up and profitable and outsourced by month nine. Now, some of the guys in the mastermind were at year five and still hadn't done that.

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I pay down my ignorance tax as much as I possibly can because the cost of you not being able to achieve your dreams, the price is ignorance and the debt that you pay is the difference between where you are and how much you'd be making if you knew how to do it.

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And so I've told this story before, but I think it's something that's so ingrained in how I think in terms of how I price what I'm willing to pay in time or money. And before I tell that story, I move geographically whenever I see an opportunity to get around someone who's better than me.

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And so when I wanted to learn fitness stuff, I moved to an area where I knew there was other fitness entrepreneurs that I was like, well, maybe I'll be able to hang out with them a little bit and I'll learn a little bit there. And I went to a city I didn't know anything about. I knew no one.

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And so with that, they decided to say, oh, I'm gonna spend this amount of money every month for the rest of my life because I am now a woman. But the thing is is that many people who wanna start next year think, okay, well, I'm just gonna see if this happens. But it doesn't work that way.

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And when I wanted to get in the gym space, I said, well, California is like the capital of fitness, SoCal, so I'm gonna move out to Southern California because the best guys will be there. And if I can win there, I'll be able to win anywhere. And so I moved out to California without knowing anyone. Whenever I've had these big transitions in my life, it's not only being willing to

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bet with my money and bet with my time but also bet with my geographic location i'm willing to risk losing the relationships that i had to gain relationships that i need and so 2025 for you might mean that you have to leave where you're at and that could mean across town but it could also mean across the country or even across into a different country

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it may mean that you're gonna take all this money that you used to spend here and spend it in an entirely different way. You probably are gonna have less stuff and that's okay because that stuff only deteriorates, it only gets worse, but you will only get better.

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And so the reality is anyone can get rich fast as long as you're willing to make no money for a long period of time while you work to get good enough to get rich fast. And so I told you, I'll tell you that story. And so the salesman used one of my favorite closes of all time. And so he wrote a million dollars on a whiteboard in front of an audience.

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And so then he called out to a lady in the front row and he said, how much do you make, ma'am? And she said, $50,000. And he said, okay, well, right now, You pay reality $950,000 every single year for not knowing how to make a million dollars.

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And when I saw that, I realized that the value of the skill of making a million dollars is the difference between what I'm making and what I could be making. And so people wildly undervalue, and people wildly undervalue how much more they could be making once they have a skill.

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And so if you're the type of person who can actually follow instructions, show up on time, smile, be able to fail and keep going, virtually all education will net you a positive yield. Because let me ask you a question, would you pay $950,000 to make a million dollars and be able to make a million dollars every year? Well, that would be an insane deal.

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You pay it once and you get the skill forever. So every year after that, you make a million dollars a year? Well, of course you should. Now, once you make the million dollars a year, are you willing to give 100% of what you make to make $10 million a year? Of course you should. And that's why education is by far the highest return.

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You have to basically make the decision that this is the type of person that I want to become, and then these are the actions that that type of person would take, and then we align our calendars and our budgets in accordance with that so that the investments we make yield the results that we want.

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You can learn how to make a million dollars a year for probably close to $200,000 a year. And you're like, well, where do I spend that? You'll spend that on conferences. You'll spend it on seminars. And it'll likely be in $2,000 to $5,000, sometimes $30,000 chunks.

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But for some reason, you're willing to spend this on some academic who hasn't been in reality for 20 years because they're on tenure and thinks that the world is just going to hand you stuff because that's their reality because they're government funded. Or, You can pay money to people who live in real private businesses who do this stuff for a living. And here's the thing.

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I have never paid for education and not gotten more than what I paid for. Now, I don't want to conflate that with the fact that I've paid for things that I didn't think was worth that money to other people. But I always ask myself, okay, number one, how can I become the best student who's ever gone through this? How do I become this person's number one success story?

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And I've told every program, every partner, every vendor that I've ever worked with, that I will be your biggest success story. And so the reality is, once I am their biggest success story, is that because of them or because of me? And I think that's a choice that you get to make. Am I going to be the number one success story or do I want to be right and prove that they're not good?

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Well, congratulations. Maybe they're not that good. Well, what does that leave you with? No skills and less money. If you choose to succeed anyways, and say, what can I learn from this person? Because I've learned just as much from bad people as I have from good. Because a lot of times, getting good is actually the removal of bad.

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And so if you find out other ways that people do a terrible job, it's also a wonderful way of figuring out how to not do a terrible job. And so if I want to create a product that's exceptional, and I say, let's say I want to put a phone, a camera, the internet, email, all in one place. If you remove all of the stuff that sucks from all of those things, what you're left with is an iPhone.

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And so most times, you can always get more than what you pay for when you invest in you. So let's get really tactical. If you really want to double down on you, which will by far, I mean, think about this. 10% improvement is the S&P 500. So you're saying that you could take, okay, let's be real. Let's do real math. Let's say that you've got $10,000 saved up, okay?

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Let's say that's what your savings is, which, by the way, makes you like a top 40% American, FYI. So let's say you've got $10,000 saved up. You could... put it in the S&P 500, and have that $10,000 be 10,900 one year later. Or you can spend that on something that can triple your earning capacity, and next year, instead of making, let's say, $50,000 a year, you make $100,000 a year.

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Because I can tell you this, if you put all of your time into getting better at one thing, and you put all of your money into getting better at that one thing, and you remove all expenses that are not that thing, and you remove all time expenses that are not that thing, I can veritably guarantee you that at the end of next year, you will have accomplished the thing that you wanted to do relative to that investment, and you will have learned the skills that you wanted ultimately to get.

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Well, which of these increases, the $50,000 plus increase, is more than the net of the 900? Because you lost the 10, you spent the whole thing. Here you invested it, here you spent it. But did you spend it, or did you invest it in an asset you could control? And so, I don't know about you, but I'd rather have the extra 50 and put the 10 in, and then what do I do next year?

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I'm gonna take this 50, and I'm gonna ask myself, is there anything I could put this $50,000 into? So I could put in the S&P 500, and I could go and add myself an extra $55,000, whatever. Let's say I get 10% that year. Okay, so I get 55,000 this year, or I could put that 50K into five 10K things, or two 25K things, and all of a sudden take my earning power from 100K to 250K.

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Wow, what a deal, but I'm gonna lose the whole 50 again. And so the thing is, is that on my way up, I basically took my savings and I spent it almost every year on education. Because why on earth would I want the future to take longer to get to me? When you buy skills, it's the closest approximation to buying time. And so there's this big thing like you can't buy time, false.

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You can buy the future at a discount. And you buy the future at a discount by buying the skills required in order to get there faster.

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And so if it could take you five years if you did it on your own, or it could take you one year if you paid four different people to help you out with each step of the process, why would you not want to pay all of the money you have to get to there and then have four years of gain with that new baseline? you now are living four years, five years into the future.

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It's like you skipping from being 20 to 25 and you're getting the earning power at 25 plus, but now you're just 21. At that point, you pool the next five years for it. And when you're 22, it's like living like you're 30. Now at that point though, you might spend all your savings yet again. And this process has been one that I have consistently done for the entirety of my career.

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And it just gets to a point where you can't even spend the money. And so my very controversial advice is spend all your money on education for as long as you possibly can until you can't even spend the money because you're making too much of it. And so how do you become an expert?

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You do more repetitions than anyone else in a narrow field, which also means you fail more times than anyone else in a narrow field. And so if you want to beat someone, just try 10 times harder than them. And you only really need to try two or three times harder, but you probably don't realize how much harder they're trying than you are. So try 10 times harder just to make sure you win.

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And people reject this idea that someone can work 10 times or 100 times harder, but I define work as output. And so for you to say that someone can't produce 10 times more than you is just factually false. There's tons of people who produce 10 times more. There's tons of people who produce 100 times more than you. And so I'll give you the easiest example in the world.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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A lot of departments run on weekly cadences. They say, do this thing by end of week.

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oftentimes you can ask that person how many hours will this really take you and then that person will say something like i don't know three or four hours you say okay well why don't you just get it done by noon and then at noon you say okay what's the next thing gonna take and they'd say uh probably another three or four hours you say cool get it done by the end of the day now from those two cycles that would have normally taken two weeks or 14 days but instead it got done in one and so just right there you got something done

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But the thing is that people want to say, hey, wouldn't it be great if I owned Apple, but they never buy the stock? And if so, if you want to be that version of you, you need to start buying stock in that today, both by paying in time and paying in money to vote with your dollars about what you truly care about.

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You got 14 times more done than the competitor who's doing things on a weekly basis. And so this is how you drag the future to the present, is that you're not focusing on how hard you're working, you're focusing on how much you're getting done. You'd be amazed at how much better you get after you've done it 100 times. If you want to win, Do it again. I wanna be clear.

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You don't just post 100 videos in a row and see what happens. You post one, see what worked, and then try and do more of that thing. And so the idea isn't just raw effort. It's raw effort with an improvement loop. I remember one of my favorite words that I have to teach sales guys, because it's a very repetitive task to teach someone how to sell, is great, do it again. Great, again.

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Great job, again. And so it's that repetition that breeds the nuance of skill. And you want it to be so drilled into you that you no longer have to consciously think about how to do the thing because you can then do it as a natural skill so that you can move on to putting your attention to the next skill. So it's not just about learning how to do it once. It's about how to...

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It's about learning how to do it so many times that you don't have to think about doing it at all. Especially if you're starting out, your goal should not be passive income, mainly because you don't have enough money for the passive income to mean anything. Instead, you should learn how to make money while you're awake before trying to learn how to make it while you sleep.

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You crawl, then you walk, then you run. Once you have more money than you can possibly reinvest in education and acquiring more skills, then you can take the leftover and put that into your passive income pool. And so very, very tactically, this is what I'll walk you through. you should have an education investment budget.

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And then finally, fourth, to make sure that you unlock compounding by not stopping the actions that are continuously improving. So number one, elimination of the things that are distracting you. So right now, election distraction is over. back to work because no president is going to make you rich. You got to do that for yourself, no matter what side of the aisle that you actually backed.

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And so just like you spend X dollars per month, so let's say we pull all of your expenses down and you're making an extra $1,000 a month. Okay, now if you're not eating out, you're not buying new clothes, you're not going out with the boys, you're not spending money in stupid ways, then you're gonna have $1,000 left.

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If you have that, then you can take that money and every month you can put it towards a bank account that you can either choose to immediately spend or save up for something that is more expensive.

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And I can tell you that a lot of what I learned when I bought programs and seminars and conferences and things like that wasn't even from the content itself, but it was connections that I was able to make at those types of events

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that I was then able to leverage the one skill I had, which I was good at sales, and then start giving that away to every person I met so that I could collect those IOUs and then learn skills for free. And so it's like I really just needed the ticket to get in the room and then I could trade with everybody else with the skills I had to then get to learn theirs.

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And the reason that I'm hitting this so hard is that it's never been easier than it is today to be successful. it's also never been easier to be distracted. So along the theme of investing in the things that matter most, the first thing we do is we eliminate all the stuff that sucks. And so I define commitment as the elimination of alternatives.

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And so as wild as this sounds, at the end of 2025, you could be dead broke, but rich in skills. And so let's say at the end of next year, you actually have no more money, but you would now have the ability to make more money. And so just like my father had to start over from nothing after losing everything, he didn't lose everything.

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he still had the most valuable thing he had, which is that he was a surgeon. And so he knew a skill, and he could make it work here like he'd make it work there. And that is something that no divorce can take from you, no government can confiscate, and it's something that's with you till the day you die. We've eliminated everything that's bad. We've started something that's good.

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We've gotten even better at being gooder. And now finally, we've got to stick to it when it gets tough, because it will. Here's something that's taken me way too long to learn. Staying focused is like beating addiction. It's not a one-time victory. You have to fight it all day, every day, then wake up and do it again tomorrow.

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Because the thing that's going to distract you is going to change every day. The thing that's going to trigger your addiction to distraction is going to keep morphing and changing its form so that it can steal or rob you of your future. And so you have to be adaptable in knowing that you have to fight it every day. And so it's not good enough to just say, I was focused for this week.

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You've got to wake up on the eighth day and the ninth day and do it again. And so you remember that guy who got rich dropshipping and day trading and buying crypto and wholesaling all at the same time? Yeah, me neither. Focus.

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And so to win in business, you need to be able to say no without remorse and hear no without a loss of enthusiasm, which means that you have to keep feeling rejection, keep failing, and keep going while being willing to reject basically everyone else.

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And that seems so counter because you're right there and you're like, man, I don't want to reject this person because I know what it feels like to be rejected. But you have to be able to maintain this discrepancy so that you can create the space to do the work that you need. You need to be able to maintain this discrepancy so that you can create the space to do the work that needs doing.

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So there have been a couple of lessons that I have learned over and over again in my career. I've had to relearn. So it's a lot like a like a fine wine. It's like it gets better with age and there's more nuance to the flavor. So I think focus is not a are you focused or not? It's how focused are you?

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And you can measure someone's focus by, again, the quality and quantity of things that they say no to, which means that as you get better,

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more opportunities will emerge which is interesting because people who start out can't see opportunity anywhere and it's because they have so few skills and so there's very few opportunities for them when you have a lot of skills there are so many opportunities that are in front of you that you feel like you're missing out but

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The real opportunity is actually in solving the problems in front of you. And so I was able to, in my opinion, become another order of magnitude greater in terms of entrepreneurship, which I would just measure by wealth. once I was able to learn to say no and accept that I would not be able to pursue the many things that I know I could crush.

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If you get married, you eliminate all people of whatever sex you're married to that are not that person. Actually, you eliminate everyone who's not that person independent of sex, right? That is a commitment. Right. If you enter into a partnership and you say, I'm not going to do any business besides this business as part of the terms, then you've eliminated all alternatives.

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Because once you realize how much actual work it takes to make something good, you realize how few things you're actually going to be able to do in your entire life. And so this is why picking becomes so important. Right now, the things that you're gonna have to say no to are really the distractions and kind of, in some ways, easy.

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Say no to fantasy football, say no to drinking beers with the boys, going out with the club, whatever. But in a year from now, once you have more skills, there will be more opportunities. You're gonna have multiple $10,000 a month income opportunities that you're gonna have to say no to to stick with the one that you have.

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And then once that thing becomes a $100,000 a month thing that you're doing, you're gonna have to start saying no to multiple $100,000 a month opportunities. And here's the thing with opportunities that come up. They only show you the upside and not the downside. You have to know where the skeletons are buried. You have to know where the bodies are.

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And so if you don't know, and I've gone through this visual because I think about it every single time I have to walk through not doing something. You are here. You see this new opportunity here. Then you understand the downsides here. Then you live the downsides. Then you experience the upside. Then you achieve your goal. And so this is the starting point. This is called uninformed optimism.

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This is now informed pessimism. This is the valley of despair. And this is where most people quit. But what they do is they don't even quit because they don't want to say they quit. What they do is they start another one of these things. And they say, oh, this is now my uninformed optimism. And then, oh, now I understand this more.

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But the thing is that they never actually get through to this upside. And so they just keep jumping from thing to thing to thing over and over again. And so the reason it takes so long is because you're in a rush, because you have to start from zero over and over again. And if you actually stick with it, it's actually the shortest way to get to where you want to go.

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It just takes longer than you think. Big things don't happen on small timelines. Must be easy for you to say is probably something that you might think by watching this or listening to this. I like to tell the story because in July of 2017 is when I started my podcast. And it was 90 days after I lost everything. The last time.

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And from that point until now, it's taken that period of time to get to over a million downloads a month. And for the first three years, and I was making multiple podcasts, we're talking three, 400 episodes. For the first few years, I never really cracked 3,000 downloads a month. And so I could say, man, why is this taking so long? But the real, real is that it took me that long to get good.

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It also, being extra real, took me that long to have proof on the outside that what I was saying was true on the inside. Right. And right now, no one who listens to my podcast cares that it took me seven years to get here. They just care that it's good today. And so people quit here when things get hard because the thought of something being hard forever is unbearable.

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And so if you want someone to commit, ask them to eliminate everything else that's not the main thing. These are all the things, a laundry list of things that are probably not your main thing that very likely are getting in the way.

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They think that this line is just going to keep going this way forever. But it's not. Because once you fully understand all the bodies, where the skeletons are hidden, then you can actually start solving them one by one. The thing is that that distraction only is distracting because you don't know what sucks about it.

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You might think you know what sucks about it, but you don't know what sucks about it. And so the big difference is you have something called declarative versus procedural knowledge. And so there's two types of learning. And this is actually formal. This is from academia. So you have declarative knowledge, which is knowing about something.

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So if you go memorize a fact or you learn how private equity works, right? This is knowing about. The other type of knowledge is procedural, which is knowing how to. And so a lot of people mistake declarative knowledge for procedural. And so they mistakenly think that if they watch 10 videos on doing a private equity deal, that it means they understand how to do a private equity deal.

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or they watch 10 videos on cold outbound and they think it means they understand how to do cold outbound, or 10 videos on sales, and so forth. But you're never really gonna learn how to do it until you do it. And so you're gonna learn more from your first 100 cold calls, your 100 cold knock-on doors, than you will from 100 books or videos that you watch. But I have good news.

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Because nothing hard lasts forever. There's only three things that can happen. You either quit, it gets easier, or you get better. So no matter what, it always ends. You only lose when you quit before you see it all the way through. And I think that's incredibly encouraging.

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So no matter how hard whatever it is that you're doing is, which by the way just means that your expectation doesn't match reality, but no matter how hard it is, you either quit, It gets easier because something changes externally or you get harder, something changes internally. But no matter what, it will end. And so think about it like you're mining for gold, right?

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And these are the most common things that I see in my DMs, that I see in my comments from people who are not getting where they want to go as fast as they'd like to get there. And so first big category is bad friends. So if you want better friends, get used to seeing them less. Better friends are busy friends.

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You're chiseling away underground and you've got this pile of gold. You don't know how far away it is, but it's underground and you're digging towards it. So you can, this difficulty of swinging the pickaxe can end when one, you walk out of the mine and say, you know what, marketing doesn't work. Sure.

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The second is that all of a sudden you hit a soft patch and then you're like, oh my God, I'm digging so much faster now, this is great, and then you get to the gold. Or you just start swinging the ax harder because you get more muscled, you get more efficient with your movements, and you just keep chiseling away, even if it goes from dirt to rock.

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You just keep chiseling away at a slower pace, but you eventually break through and get there. But in all three of those scenarios, Hard doesn't last forever. And so you have to accept that you have a fundamental different understanding of how life works. And I believe that is a more accurate view of reality.

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The reason that the rich can get richer is because they see the world differently than the poor. And so it makes sense that if your poor friends don't see what you see, that they see through the lens of poverty. And all my goal in life is to be able to see reality more accurately.

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And so in the beginning, you have to develop this armor, this thick skin around people saying those little snide comments of like, you work too hard. You're too obsessed. You have a toxic work capacity. And why are you working weekends? Why are you working late nights? You're not like, this is not worth it. They're not paying you enough for the work that you do. All of these different things.

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Because eventually that armor on the outside actually just becomes one with you and you don't even hear it anymore. Because I can promise you that those people who were in my life decades ago, They're just not even, I don't hear those claims anymore for two reasons. One, because my reality changed so drastically that they couldn't say anything.

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And secondarily, they're just not in my world anymore. I was only able to get here because what they deemed acceptable, I deemed intolerable. How far you go in life, I truly believe this, is based and predicated only on one thing, which is your actual standard. The person who runs any company or runs any division should be the person who has the highest standards.

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And if there's ever a day that someone has a higher standard for Acquisition.com than me, they should run this instead of me because they would be the one who's best serving the company. And so the person who should have the highest standard for you is you. And so it makes sense that they have a lower bar, but why would I listen to their bar on my life?

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I think that that standard is the one thing that rich kids get from rich parents more than anything else. It's because they have an expectation of life. They don't accept opportunities that are below that standard. And so they actually get their huge leg up on the pick, on the vehicles that they choose to pursue.

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So I remember when I started working more and some of the friends that I had were a little bit more ambitious and I started realizing that the people that I liked the most, I actually didn't spend as much time with and the people that were always available were the ones that I didn't want to become more like.

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And so one of the tougher parts, if you're not from an area where people make a lot of money, or you don't know anybody who's a super successful entrepreneur, is that you basically have to borrow someone else's measuring stick. And you have to say, is this the standard that Elon would pursue? Is this the standard Bezos would pursue? Is this the standard Jobs would pursue?

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If it isn't, then why are you doing it? If you want to be like them, then act like them. If you want to be like your friends, then you can act like your friends, but don't be surprised that you have what they have. And so I'll give you a little rule of thumb that I've seen on how do I do more of what's working, right? How do I keep going? When it's easy, do more. When it's hard, do different.

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And so I told this story years ago, and I'll tell you guys again. So when Gymlaunch just barely started to work, so I'm like three months into Gymlaunch working, guess what brilliant Alex thought he should do? So I went to this meetup of 10 entrepreneurs. All the entrepreneurs were eight-figure entrepreneurs, so 10 million plus per year. I was not making that.

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We were pasting probably $300,000 or $400,000 a month at the time. And it was just me, Layla, and I think we had an assistant over at Kitchen Sink, right? So I was making the most money I'd ever made in my life and probably to this day because it was the most material change in my life by percentage.

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When you go from no money to hundreds of thousands a month within 90 days, me looking at bankruptcy attorneys six months earlier to that, I can't explain how crazy reality shifted. But I had this guy who came up to me after I gave my little presentation of like, hey, this is what's working. And so, of course, what I want to do now is start a supplement company.

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And so he came up to me and he said, if what you're saying is true, if the economics of the business that you've outlined really do work as well as you say they do, when it gets easy is when you go hard. It's when you double down on what's working. And he said that to me.

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And I remember he said, because what's going to happen is that if it really works this well, someone bigger and badder is going to take all your stuff and immediately try and do it with their distribution, their audience, and their leverage. And so if there's ever been a time to focus on the thing that's in front of you, it's right now.

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And I remember Layla and I felt this huge weight of pressure that started us at that point. Because literally, I think I was really content for like six weeks. And I was really thrilled. We had just gotten married. We're six weeks into being married. We're making really good money. She's 23 or 24. I'm 26 or 27. So I was like, holy cow, this is amazing. Our rent for context was $1,200 a month.

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I was taking home $400. And so I've always lived far below my means. And At this point though, we went back home with the devil inside of us in terms of the fear of us losing everything that we had. And so we basically worked around the clock like someone was trying to put us out of business.

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So these are five questions that came from a super viral Reddit thread about relationships, but I actually think it applies just as strongly with friendships. And so question number one is, if someone told you that you're a lot like your friend, would you take that as a compliment? Second, are you truly fulfilled by the friendship or is it just someone to keep you from being lonely? Third,

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And the thing is that people did eventually, but by the time they did, we had gone so far ahead that they were way behind us because we were working against a hypothetical enemy who was trying to destroy us, not the ones that were actually mediocre and distracted. And so when it's easy, do more. Once it starts working, put the blinders on and hit the gas.

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And I would challenge you with this tactical setup. Right now, if you've never worked for 30 days straight, I would encourage you to try it. And so in China, there's something called the 669. Sorry, there's something called... the 996, which is basically the standard for Chinese tech work hours, which is you work 9 a.m. to 9 p.m. six days a week. That's the bar.

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And so I like to state that because we think we work so hard. That's just the average. And so I would encourage you, remember hard times, hard men, right? Good times. Well, we need to act as though it's hard times because if you don't, you're surely going to become soft. My challenge for you is work 30 days straight. Work 10, work 12 hours a day, 30 days straight.

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What you will realize at the end of this is one, how much work you can actually do. Two, that you're not gonna die, you're not made of glass. And third, you'll know that you have that gear if the time calls for it. Now, I will be very real with you. I work more now than I have ever worked in my life. save maybe when I opened my very first gym.

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So I work in absolute hours more than I ever have, and I produce significantly more than I did then. And this year, I think I've taken something like 10 or 11 days off in 2024. And I would measure a day off as any day where I worked probably fewer than four hours.

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And so I put this as context and I had a security guard who was here at acquisition.com earlier this year and he was talking to some of the younger guys on the team. And he said, You should never let Alex work more hours than you because he's already ahead of you. And so if you want to catch up with him, certainly don't let him outwork you.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so some of the who do mental health, whatever people are going to disagree with me. Also, don't give a shit. And so the thing is, is you can just go and make those mental health people happy. or you can get what the fuck you came here to get. You can do what you came to do.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I have found that in my life I've gotten significantly more purpose and more drive from a long day's hard work, from earning my shower at the end of the day, than anything that I've ever had from a pleasure-seeking perspective.

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Like, as much as it's great to go to the pool for a day and hang out with some people, or maybe just watch movies, as great as that may be, there's nothing that I get more film out of than knowing that at the end of a day that I work 16 straight hours, that I have some product that I pulled out of my brain and into the world, that this thing got life now.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And looking back on the best days of my life, it was those types of days. And so when I realized that, I stopped trying to satisfy what everyone else told me my life was supposed to be like. They're like, you should take vacations. I took my first vacation this year, and it was supposed to be a two-day vacation, and Layla and I left after one.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Because what happened was, I got there at this beautiful resort, $5,000 or $10,000 a night, very expensive. And I say that just to say that it was ritzy, right? It was luxurious. I get there, I sit out on the back of this beautiful patio for this really expensive room and I look out on this mountain view and I think to myself, this is beautiful and I don't care. I wish I felt something.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And all I wanted was to get back in the game. And so I realized that even that little mini vacation was something that I had done because I thought it was an expectation. It was unspoken or spoken from someone else in my life. And so I have this quote that I live by which is, if you don't know why you believe what you believe, it's not your belief, it's someone else's.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Are you able to be unapologetically yourself or do you feel the need to act differently to please that friend or to be around that friend? Fourth, do you like who this friend is right now today or do you like the idea of the friend and who they could be someday? And then finally, five, would you want your future or imagined child to be friends with someone like this person?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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That double applies with this political season. And so at that time, it's like I had this belief that I should take a vacation. But why? Now, if I can't explain it, which I really can't, then I shouldn't do it. And now I want to be very clear. This doesn't mean that there's no time for rest. But I like to think about the hypothetical extremes.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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I like to think about the 996 that is just the standard in China. And I like to think about people in the Middle Ages and the Dark Ages. They worked above their shop and they didn't have like the seven day or five day work week is something that was invented in the last hundred years. This is not pointing to your human capacity. This is pointing to a societal constraint.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so I think that a truly liberated individual operates purely from first principles of what do I want? What does it take to get it? And then what are the things that hold me back? And those things that hold you back are gonna be physical constraints. You can't operate without sleep, not for an extended period of time. So I'm not saying don't sleep. Sleep as much as you can.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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I'm not saying that you can work physical labor all hours of the day without rest. You need rest. And sometimes you need mental rest, which is different than physical rest. And that's okay. So if you need, and I'm gonna put need in quotes here, if your way of unplugging is watching Netflix, cool. If your way of unplugging is gardening, cool. If your way of unplugging is working out, cool.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Do what works for you. But fundamentally, the goal is to increase total net output over the longest period of time. And so it's not about Okay, I'm going to work 24 hours straight. Well, you're actually going to take from tomorrow, so your net output over two days is going to be much worse. And so it's really balancing that.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I learned that much later in life, I was able to get significantly more out of myself working seven days a week and working 10 hours, 12 hours on those days, rather than working, call it 18 every day. That was for me a little bit too much. Now I have had seasons where I call it three shifts.

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So basically I work six to noon, noon to six, and then I work six to basically sleep time when I get back home. I only usually have to go into that gear probably once a year for maybe six weeks to eight weeks is when I have to go into the third shift. But most of the times I can pretty much sustain 12 hours of work a day kind of indefinitely.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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I bring this up to kind of set the bar for at least where I'm at. So maybe you have some sort of benchmark. But if you're wanting to get ahead, I can promise you working less is probably not the way to do it, especially when you don't have as many skills.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Because the fewer skills that you have, the more labor or volume you have to compensate with in order to make up for the ineffectiveness per unit of time you work. And so in the beginning is when you actually have to work the most. But in the end is when you want to work the most because of how much more you're getting for it.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So my team wanted me to make this point because they've obviously seen me work and they're like, I don't think this is coming through in this video, which is that I have an obsession with speed. And so this seems kind of weird in juxtaposition with patience, but this is the very classic micro speed, macro patience, you know, whatever, whatever, whatever ism you prefer.

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The idea is, though, that you want to pull reality forward. And so I always like to break things down, whether it's me or my team, into how many hours and minutes something's going to take. And then I like to stack those things back and forth. And rather than using arbitrary deadlines of, OK, let's get this done by next week, you use actual deadlines based on how long it should take.

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And then when you find out how long something takes, you then ask the next question, which is, how can I make this take less time? How can I automate this thing? How can I automate portions of this work? How can I give away chunks of this? How can I deem some of this unnecessary?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so that continuous cutting and pulling forward of tasks is how you can move so much faster through life and towards your goals. And so in 2025, by the end of the year, you absolutely could go from zero to making a million dollars a year. The way that you would do that would be doing five years of work in one.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so I have this weird mental belief that there's like this big path in front of me that I have all these skills that I have to achieve to hit these milestones. And the thing is is that that is laid out on this time span. And so I reject the timeline, but I accept the skills.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so the idea is like, okay, it's like I'm a Pac-Man of like eating those little dots and each of those dots is a skill. It's like I want to pull it towards me as fast as I can so I can ingest the skills and basically power up myself faster. Because I know that these skills are requisites. I can't move on to calculus without knowing arithmetic.

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I can't move on to calculus without knowing algebra. There's no way around it. But I can choose to learn algebra faster. And so then it's like, okay, what is required to learn algebra? Oh, and if I do more problems faster than the standard person, then I'll get there faster.

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And so if the class says, okay, I need you to do these 10 problem sets and they're due next week, well then how long does it take for me to do those problems? Maybe 30 minutes. Then why can't I do my second lesson 30 minutes later and then do another 10 problems and do my third lesson 30 minutes after that and do another 10 problems?

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And I think it's a really wonderful litmus test because it forces you to take a look outside of yourself in order to have perspective from a third party angle on the true quality of that person. But the reality is that rare people are by definition rare. And so it's normal to have fewer of them.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Well, if that's the case, then I can do an entire year's worth of work in a week. And this is how, in my opinion, pulling forward is one of those things that I've seen so many of the most successful entrepreneurs do is they simply question timelines aggressively and ruthlessly eliminate any waste or gap between the actions required to win and everything else.

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Honestly, I think the things that I'm working on right now for my skills are I'm learning how to reinforce cultural norms across a company that continues to scale, which I define as the rules that govern reinforcement in an organization. That is the culture, and those are both spoken and unspoken rules. And when I say rules, I mean when someone does this, they get a pat on the butt.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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When someone does this, they get chastised or they get a ding, right? And the thing is is that people like to say they have a good culture here, But the culture is 100, 1,000 unspoken rules, and that's why it takes people time to learn and figure out what the culture is when they go somewhere new. You can give someone a list of 100 rules, and if you were very granular, you could figure it out.

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The problem is that the culture changes based on the people who change the reinforcers. The culture in a team could be different than the culture in the company because the person who's closest to them manages it differently. And so that changes the behavior.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so that's why a sales team can have a different culture than a marketing team, a different culture than a finance team, a different culture than an HR team. And so I'd say right now a big focus of mine is trying to standardize the rules that govern reinforcement across an organization that scales and making sure that everyone is aligned with that style of work.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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The second thing that I'm working on right now is basically the highest level of recruiting. And recruiting and talent is actually kind of like focus, where it's one of those skills that I don't think you ever master. You just keep learning the depths of how many more levels there are to it.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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It's like right when you finish it, you realize that you're at a sub-peak and there's actually another peak beyond it. The mist lifts and then you see the next steps. Like Focus, I thought, oh, I was focused at $100,000 a month, because I could turn these opportunities down. And then you've got some even sexier opportunities. You've got to learn how to say no to those.

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So the same thing happens with talent, is that you're willing to tolerate a certain amount of mediocrity at one level that is no longer tolerable at a level above that.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And the types of people that you bring in, you have a higher standard, a higher bar for those people and attracting them in the process associated with getting them to buy into your culture, your vision, and getting them to take their skills and apply them to your opportunity is a skill set that I am working on now because fundamentally I have a belief which is the best talent is always yet to come.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And that's predicated on the idea that if I get better, my opportunity will get better and that will attract more people and better people. And I bring this up because I basically want to translate one thing, which is that the reinvestment in learning skills never ends. And so Charlie Munger said this, You just have to be a lifelong student. You have to be willing and want to learn.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So I actually had an example of this. So recently there was somebody on Teams. I did a bunch of one-on-ones over the last week because I was looking at one of the departments. And one of the guys said, hey, I have this particular skill. I was hoping that we could eventually have a role that only does this thing.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so if you only have a few friends or one good friend, then that's normal if you want rare and exceptional friends. If you have many friends, it's far more likely that the bar for your friendship is too low. And to give you a filter that I actually used for the most important friend in my life, Layla, I like to think, does this person have the same scale of goals that I have?

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And I said, you know, it's interesting that you ask or you make that request because if I were you, I would not think that way at all. I would think, how could I learn 10 more skills? Rather than how can the organization meet my demands, it should be, how can I let my skills meet the demands of the existing business?

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It's asking reality to meet you where you're at rather than meeting reality where it is. And I think that too many people do this. Why can't the world, insert, be more convenient for me? Well, the world is uncaring and doesn't care about you at all. And underpinning that statement is the entitlement, is the expectation that it somehow should. And I think that is a poverty lens.

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And so the wealthy accept the world for what it is and then choose to maximize and adapt. Everyone else tries to stomp their feet and throw tantrums and say how it's not fair. And they're right. And so what? So I want to read you this quote by Sun Tzu, which I think applies to what I'm kind of working on right now personally.

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which is, the skillful leader does not rely on the quantity of troops or resources, but instead on the quality of his strategies. Just as one skilled worker is worth 10 unskilled men, a good plan, well executed, will outperform a larger disorganized effort. When troops are well trained, disciplined, and their energy is channeled efficiently, their effectiveness increases exponentially.

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The strength of one can equal the strength of 10, not by numbers, but by mastery and discipline. And so that is fundamentally what I'm trying to transfer into the organization and the organizations within the portfolio. I want to transfer that energy efficiency. And I would define all of that as another and higher form of leverage, which is getting more for what you put in.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so I believe that leverage and supply and demand are the two most powerful forces in business. And so this is what we try to consistently reinvest with and think through as our lenses for making decisions in business. There's a Haitian proverb, which is, behind mountains are more mountains. Goals aren't finish lines, they're mile markers.

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And I think that's a great mental frame, which is that you think that your goal is to get to $10,000 a month, or $100,000 a month, or a million a month, or 10 million a month, whatever your goal is. And I can promise you, having hit those, you just move it again. The mist lifts when you get there and you realize there's another mountaintop.

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But where people lose their way is when they start listening to people at the bottom of the mountain who see them at the subhead and say, you weren't happy last time when you got to the last peak. Why are you going to be happy the next time? But that's under their assumption in their poverty lens that you did it to get to the mountaintop. You did it for the climb.

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they'll never understand that and don't expect them to I remember I was trying to understand this person who had made this really irrational decision and I kept thinking like how does this decision make sense and I was I was talking to my father actually and he said you're trying to apply logic to someone who's illogical and that itself is illogical And I remember thinking about that.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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There are these people in our lives that say these things that you're like, I don't understand why they'd say that. And then you try and make sense of it. But the effort of trying to make sense of somebody who doesn't make sense is nonsensical. And so if it doesn't make sense to you, ignore it. Because they're going to disappear anyways.

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One of the things that has been true in my life is that the lazy don't know how to start. The losers don't know how to finish. And the legends don't know how to stop. And if I look at that, the lazy losers and legends, I know which one I would rather be. And I also say that as somebody who doesn't believe in legacy or anything after we die.

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So it doesn't mean that they have to have the same goals as you, but it has to be the same level of goals as you, because at least you're going in the same direction. So that's number one. Number two is do they have the same level of dedication and commitment to those goals? Because I don't know about you, but I had plenty of friends who were like, I want to be an NFL player.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Here are a few final consolidating thoughts for how to make 2025 the best year you've had so far. So this is tactical. Find what works, do more of what works, find the thing that's preventing you from doing more of what works, solve that thing, and get back to doing more of what works. Then repeat.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so the reality is that in health, marriage, business, or any game worth playing, you don't win by winning. You win by staying alive long enough that you outlast everyone else. So I will give you the advice that I gave a subgroup in school that we picked 100 people who had applied out of 500 plus to basically do a 90-day sprint to help them start a school community.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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So we wanted to do a more in-depth kind of training, things like that for this special group so that we could see if this new implementation yielded better results. And so the guy who we had running the group asked me, he said, can you give any kind of like words of wisdom to these guys before we kick it off? And so this is what I told him. Number one, follow instructions.

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Number two, when you read something that you don't understand how to do, Google first. Number three, when you figure it out, post it. Others also may have struggled.

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Four, actually follow the rule of 100 daily, which is that you reach out to 100 people, you make a post that you spent 100 minutes on, you spend $100 plus on ads, and you spend at least 100 minutes a day making and improving ads and researching ads. As long as you do those things consistently and you get better, you will see results.

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And the amount of you that I see who tag me in like day four, day 20, day 30, the guys who are at day 60 of rule of 100 are like, I have more business than I can possibly handle. The problem is no one sticks with anything. And this is why I want you to stick with it. Rule number five, you will be excited for a week. Then excitement will end. And that is where the work begins.

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8.

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The pain of repetition is what forces you to seek improvement. When you figure out ways to get more for what you do, you've gained skill. And so people want to avoid the pain. But one of my favorite bodybuilding coaches, Milos Sarcev, talks about this in the context of how to grow a muscle. He says, find the pain. And then he'll just shout and be like, suffer, suffer.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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He's like, stay there, find the pain. Because the thing is, is that that pain is what forces you to change. And so if you encounter the pain and then say, oh, it's not working, that's the pain that you need to lean into because when it's not working is what will force you to do an improvement. And that's how you get good at making better content, get good at making better ads, get good

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I want to be a really rich tech entrepreneur. I want to be a touring musician. And they had these goals, but I'm like, dude, I see you just playing Fortnite four hours a day, and you practice guitar once a week. Do you really want that, or do you just like saying it because it makes you feel good? And so I wanted people who walked the walk, and I wanted people who would keep up with my pace.

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having more effective reach outs on different channels whatever it's that pain that forces you to improve nine if you complain you are dead to me and I said this because I believe it like there is nothing weaker and more helpless and that has lower agency than someone who simply complains about what has occurred it's something that happened in the past or is in front of them in the present and regardless

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10.

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Literally thousands of people have already succeeded. You are not special. Repeat the same activities and you will be able to repeat the same outcomes. And so before you make a conclusion that something doesn't work, I want you to state the objective truth of what you're claiming. You're like, Facebook ads don't work.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Sure, so the $400 billion a year in advertising that gets spent on Facebook just somehow doesn't work. People aren't doing it because it's not working. Cold outbound doesn't work. Yeah, so the gazillion companies that do 10,000 emails, 10,000 calls a day, they just, it just, it doesn't work. What you have to reframe it as is, I don't know how to make it work.

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I am not good enough to know how to make it work. 11, write down every reason that you're going to stick with it. Put it in front of you and revisit it when you need a reminder of why to stick with it. 12, business is shockingly simple but surprisingly hard. The hard comes in the form of consistency.

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The moment you don't want to do it or just skip today is the day you realize what hard actually feels like. Learn to endure, overcome. 13, just win. Because at the end of the day, all of this hardship will be forgotten. It will fade into your memory.

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And so know that as you're going through it, you're actually just going to disproportionately in your memory, remember the good stuff and not the bad stuff. I only have a few glimpses. in my memory of the time when I was sleeping on the floor and I had my gym and I was getting started and I remember being so tired that like a good night's sleep couldn't fix it.

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I remember that, but it's almost like I remember the words that I told myself more than I even remember the experiences because it was so long ago. And so things will get better and you will remember the betterness more than you remember the suffering. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

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And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And if you are someone who's ambitious, and this is me just talking specifically to you because there's only a few people who are watching this who really are, and you'll know that if it's you. You have to get used to being alone because there are seasons where you'll basically transition from one group of friends into another. And it's not even a group of friends.

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And so now we're back to the realization that this doesn't really matter, right? You need to eliminate everything. That isn't the one thing that matters. And so if we define focus as the number and quality of things that you say no to, then to be focused, it means that in a hypothetical extreme, you would only do one thing.

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You'll usually transition from a group of friends into no friends. And then you'll find one or two people who are at a new level. And then sometimes those people introduce you to some of their friends. And if you keep walking and you keep outpacing, then that group will then start retiring past you. And then maybe one person stays with you. Maybe no one does. And you'll have another lonely period.

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I'm saying this because I used to think that there was something wrong with me when in reality I just didn't understand what the nature of being exceptional meant. And so I'm saying this purely from a definitional perspective. To be exceptional means that you are the exception. It means that you are not normal.

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And so it's normal for normal people to find you abnormal if you do things that are not normal. Don't let people who have mediocre goals deter you from taking actions that make you great because it makes you different. realizing that I thought most people actually made no sense. They say they had these goals, but they took no action.

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And they called me work obsessed and they would tell me I should take time off. And they're like, hey, you're not as cool anymore. You're not hanging out with the boys. Like, why aren't you participating in the fantasy league? Why aren't you watching football on Sunday with us? And for me, I actually used to love watching football with my friends.

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It was actually one of my biggest things that I look forward to. But the thing is, is that like I needed that Sunday because I had to prep workouts. I had to prep the music list for the next day. I had to run billing. I had to do all this other work. And the thing is, is that like I looked at that football game and I was like, my goals are more important to me than this.

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And so I think that a lot of people don't actually look at themselves in the mirror and say, like one year from today, will I will I remember this football game or will I remember the fact that I'm not where I said I wanted to be? And to me, that was significantly more painful. Now, this is an uncomfortable fact for a lot of people.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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Your ability to delay gratification is actually a function of intelligence. And so your ability to learn at a longer and longer delay is something that comes, I mean, we're talking from primates all the way up. And so basically, if you want to teach a monkey how to do something, you have to say, hey, do this thing and immediately give them a reward.

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And the longer that period goes on, the less trainable they are. The sign of intelligence is that you can actually expand the reinforcement window and they can still abstract it back to the original action.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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If you want to practice intelligence, then being able to actively delay your need for a result or reward from the work you do will make you a more intelligent person because your rate of learning will actually increase despite the fact that your reward rate will decrease in the short term.

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The Ultimate Guide To Making 2025 Your Best Year Ever | Ep 815

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And so to give you full transparency on what 2025 might look like if you accomplish your goals at the end, you might have a different friend group or no friends at all for a season because you don't become like the people you admire. You become like the people you want to impress.

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And so Harvard made this wonderful study years ago about the best predictor of someone's long term material success was what they called their reference group. Now, this has been misquoted in places by the five people you spend the most time with, but it's actually the five people you compare yourself to. And that's a very big difference.

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Now, I want to take it a step further because I think to myself, what are the things that affect our behavior? And so it's really about the people that you want to impress, not necessarily even who you compare yourself to, because it's the people whose voices you hear when you're about to make a big life decision.

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So if someone was extremely focused at video games, then they would do nothing but play video games. They wouldn't eat, they wouldn't sleep, they wouldn't talk to people, they would only play video games. And so if you think about that as your hypothetical ideal of what focus looks like,

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And so when you make a big life decision, you don't listen to the people closest to you. You should listen to the people closest to your goals. And some of them may not be in your neighborhood or your city or your state or your high school or your college. They might just be people you follow on the internet. And you have to abstract, what would that person think about this decision?

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Not my mom, not my homie, not my uncle, or that person at church. And so I think this is a great transition of thinking through, instead of necessarily even having mentors, having heroes. and transposing what you think their decision-making calculus would be onto your life.

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And so what's interesting is that I will have conversations with entrepreneurs and they'll say, hey, here's my current condition. This is my desired state. This is what I perceive my obstacle to be. And I say, okay, well, what do you think? And they're like, well, I think you're gonna say I should do X, Y, and Z. And I'm like, you're right. Why aren't you? They're like,

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Well, and the thing is, is that basically what they answer with after that well is, in essence, other people's opinion who aren't at the place they want to be. Here's the uncomfortable truth, which is that winners focus on winning. Losers focus on winners and you never receive hate from above, always below, because winners have their eyes on the goal, not on other people.

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And so you have to decide whether you want to be a loser or a winner. And I'm just being real with you, because if you have your eyes on the goal, you won't have time for anyone else. What this looks like in reality and maybe for you in 2025 will be like this. First, you look like an idiot to everyone else while you try to figure it out.

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then everyone else looks like an idiot for ever doubting you. And so everyone takes a different amount of years to stop giving a fuck about what everyone else thinks. And if you're going to get there eventually, you might as well start today and enjoy the benefits longer. So if I'm 85 years old, I think about what that man cares about. And that man cares about very, very little.

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Everything else is simply a detraction from that, which is why the first step is about eliminating everything else. And so by default, what remains is your focus. And something that I don't talk about often, but during COVID, 100% of the businesses that I served, gyms, were not legally allowed to do business.

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all you have to do is talk to an elderly person or a grandparent and be like, what do you think about this? A lot of them are like, ah, who cares? Like, it doesn't matter. Life is literally too short. They literally don't have time for it.

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And so I think to myself, if that's the ultimate version of me, if I'm going to get there eventually, and that's what the wisest people think after having the most life experience, then why would I not try to cheat code that into today? and then not have to go looking back from 85 and think, man, I wish I knew then what I know now.

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Look forward to 85 year old self and say, I am gonna choose to learn the lesson I know I'm going to learn and act as if I knew it today. If we're thinking about elimination, we're eliminating bad friends and tangentially their opinions about you that are affecting your behavior. So the next thing are what things are playing interference on your time and your attention.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

We want to decrease the friction here for qualified people.

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And that's okay, though, because you're still getting more of them to opt in. But right now, is the assessment the thing that they're booking on the Google Ads page today?

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It's not being positioned as that. The 1.0 version is style assessment is what you can basically promise them on the landing page. But I was thinking more something like, really tactical, like the perfect outfit for you, like one perfect outfit or something to match their skin tone, like your idea of colors, like that would be a cool one.

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Okay, got it. So what do you do? How do you help them?

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Because like that doesn't, you don't have to like put a whole thing together. It's just like, oh, this skin tone, you know, there's like 10 tones and you just pick the one that's appropriate for them.

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Okay.

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So we want them, so for a lead magnet to be really valuable, we want it to be risk-free, easy, and fast. And so those things require effort. And so we don't want the avatar to work to get the value, we want them to just click and get the value. And so I think what we think about is like, I think this is actually really interesting.

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This is just me personally, so maybe I'm a CEO man, but it's like there are some skin tones that combination, basically it's like, You have a combination of hair and skin tone and eye color that is unique to you. And between all these different permutations, there's a hundred different variations people can have, and they have a different color palette that would be unique to them.

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Now, you'll know behind the scenes that there's probably like eight different color styles or whatever. I think either doing color, because that feels like the easiest, one degree more nuanced than that would be a specific style. Being like, you know, street wear, hip hop, like whatever.

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You know that better than me.

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Yeah, exactly. And so I think that... This is like, you could do this tomorrow. You don't have to change anything just by repositioning a lead magnet. But I think this one would be really attractive, especially if you, like when you push them there, I would experiment with the different headlines there. And then we need to measure the conversion rate of the page.

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I know that you've turned them down. The interesting thing here is like 1800 clicks. I think we could be able to get somewhere in the neighborhood of like, if we're doing this right, like 500 leads from that amount of spend. And just if literally we just need to nail this because on a Google ad intent, like high intent, search like this. you should be able to get like 30% of people to opt in.

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So from a benchmark perspective. To this? To something that is right for this audience. So if someone's looking for personal stylists near me or personal stylists LA, then it's like, what is the first piece? And like, I always think about like our offer is you've got all these steps that someone has to take. Can I peel off the first one?

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Even though it's something that I normally charge for, what's my actual cost? It's going to be time. Can I template some of these things out so that I can still provide a lot of value but not have it take, too much of my personal time. And the cool thing with these like kind of like more costly or unscalable lead magnets is that you only have to give it to people who are qualified.

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So low style, you look terrible. Like look at the mirror, you look horrible.

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So you are not obligated to, like you can choose to do this only if someone meets these qualifications and you just say that in the landing page. So it's like, hey, if you're a mom with kids and a socialite or you're a CEO guy and you're not getting what you want, then

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schedule one of our style assessments where we'll go through personally your skin tone, your hair color, your eye color, and find the things that will immediately make you look better just within your existing closet. Because that's like, again, they don't have to do anything and they'll immediately look better. That's like immediate value, not a lot of work.

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So I'd be like, okay, that's what we're going to offer. So now I can get more people to apply. Now they're going to fill out their stuff. And again, if they're not qualified, then it's like, well, you didn't read the headlines, so don't worry about it.

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So you don't feel like you're... And then for them, I would probably just send them some free things so they feel, you know, they still gave them something. Okay. But that would be like the thing that I would do to improve the funnel right off the bat without really even seeing the funnel is a clear headline around what they're going to get.

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Sub-headline is either an image of like almost like a before and after of style or some sort of image that shows, you know, white skin, brown hair, don't do this. And then they're like, oh shoot, I do that. And so just like a simple thing that they're like, shoot, I do that. And then they're like, oh my God, I need help.

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And so all we're doing is increasing deprivation so that they take the next action. Okay, so that would be the lead magnet component that I would do for these paid ads. Now, I think that you have the scheduler, so they apply, then they schedule, then what's the follow-up sequence?

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Helping a Personal Stylist Scale Past $3M | Ep 829

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Do you reach out to them? But they self-schedule on the page, right?

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Got it. So I know you're gonna put the video together. There's the video before the call that gets them to book. And then I would probably consider sending them a second video between booking and showing. And then that does a little bit of the pre-sale for you. And I think about this in terms of like, what are those things that you repeat on a regular basis on the call?

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So there's usually like, in every call, there's kind of like a little bit of a sales pitch that occurs where you're like, okay, so let me tell you what we do.

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I just try to put as much of that before the call, so that I can spend the majority of the call on the person, the decision making process, rather than basically have this like pre-recorded script that I have to keep reading over and over, because it tires out you, tires out your sales team eventually. That's how I would try to do it.

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I think that if we can do a lead magnet, we can capture way more leads. I think if we add the video to the landing page, so,

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No, no, I don't think so. I think that if we ask for qualifications and we describe the services, that'll give us 80%. And then basically you just want to find, cause the thing is, is like, you don't want to just squat. Cause there's some people who will be in, who have a smaller income, but really want this.

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Helping a Personal Stylist Scale Past $3M | Ep 829

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And so it's finding kind of that sweet spot, which is like, if someone then says like, I want to start immediately, I'm super open and their budget's like medium, then you probably take the call.

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right if they're like my budget's zero then like okay well it doesn't matter how mad you want it it's not going to work right i think that on your qualification question which you'll have on your scheduler we just ask for the fewest amount of questions that are required for us to make the decision whether or not they should stay or not what would you so the way i would think through this is that i'm going to have like 10 templates that i know that are color palettes that work for these 10 you know characteristic people and if i have asked their skin hair whatever up front then i know what i'm going into the call

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which template I'm gonna be using when I talk to them. So it's like, hey, oh, you're blah, blah, blah, blah. Actually, you know what, I would describe you more as olive than white, and I think this might actually be a better thing for you. Cool, okay, and then you go into your normal sales process, which obviously works. I don't even wanna talk about sales career closing 50%.

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Does that make sense though? I wanna make sure you get it.

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Helping a Personal Stylist Scale Past $3M | Ep 829

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Well, this is sales.

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You're only taking the calls with people who have the income.

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So you're going to take more calls. You're also going to hear more no's, but you're going to make more money. Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you.

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Like fundamentally, I could just say like, I could run an ad that just said, hey, I have this really expensive thing, book here if you want it, and this is the price. And the people who hop on those calls will be incredibly qualified. But if I just said, I have this really free, amazing thing that'll help you with the first problem, let me help you with that.

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And then people are like, oh, but do you do any of, ah, you know what, I do do that stuff, it's so funny you ask, and I get 10 times the calls. And so if I close 30% of a 10X number, I still close three times the deals. Does that make sense? And so there's a little bit, now part of it is because you're selling out of your own wallet in terms of time.

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Okay, cool.

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And so it's because you're like, I have my time and I understand that. But all we have to do is just tweak these things. If you have somebody who you have the information about them, you have the income.

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As many things as possible you can do. We want to decrease the friction here for qualified people. So there's good friction, bad friction. So good friction is something that increases the overall quality of the lead and gets out people who suck. Bad friction gets everyone out. A slow page load time, for example, everyone leaves, good people and bad people.

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We want to get the type of friction that only bad people leave and good people stay.

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and so if we have budget authority need timing we have the specific things relative the lead magnet then your follow-up if you want like hey if you can send me a picture be great if not I can just go off of your Facebook profile something like that then they show up to the call you have your one of templates that you already figured out ahead of time that then sets up the sale which is for you it's like oh you don't have this this this and this all we're doing is expanding the gap of like you're here you want to be here oh you're missing all this stuff oh you know what it's so funny I think you'd be perfect fit for we have can I tell you about it and then you're in

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Helping a Personal Stylist Scale Past $3M | Ep 829

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Fashion emergency, if you will.

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All right. So when you say you show them what the future looks like, is that just like, here's like looks of like other models or something like that or like?

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Does that make sense? Yeah. Okay. So this is what I would do to change the paid ads funnel. And I think this will probably apply for both Thumbtack and can you spend more on this?

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Well, I'm like, dude, if I had a machine in front of me where you, and this is without you doing any of this. That's the crazy thing. That's without you doing any of this. So if I said, okay, instead of paying $3,400 a year, what if we paid like $3,400 a month? Well, that would 12 extra business. That'd be chill.

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Helping a Personal Stylist Scale Past $3M | Ep 829

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right yeah i mean it beats the s p 500 where you put a dollar in and get 23 back within the next week it's not bad right so the next thing um that i want to go over is the affiliates because i think that's really important you would not touch facebook ads well you already have an acquisition channel that's working and super profitable so i'm less likely to want to do that now okay so um because you can spend more if you wanted to um all right let's talk about affiliates so matchmakers yes okay so you have six matchmakers right now

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Okay, so I'll go... I mean, whatever.

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Helping a Personal Stylist Scale Past $3M | Ep 829

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Yeah, you're good. Okay, so you got six affiliates. How much time did it take you to get each of these affiliates?

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Helping a Personal Stylist Scale Past $3M | Ep 829

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Okay, and each of these sends you people on a consistent basis?

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What was the process that you did to integrate with them?

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So you did outreach to get them?

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Okay. Is it like phone calls, text, email, DMs?

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Oh, cool.

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Love this. Almost like it's directly out of the affiliate section in the book.

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And what percentage do you close the people that you talk to?

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Okay. Do you know how many outreach attempts you did to get to the six?

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Okay. And I want to, I want to paint something for you cause I think it's gonna be interesting. Okay. So you sent 40 emails and you were able to close six, right?

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Okay. Now how much money do those six? So it's a third of your revenue, right? So it's a hundred thousand dollars a year roughly. Okay. So think about this. So every one of these emails need you $2,500, right? that feels like a pretty good turn for sending emails, probably copy and paste. Hmm. Hmm. I have a wild idea. What if we sent 400 emails?

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I don't even want to mess with the affiliate process that you have right now. You're reaching out manually is obviously effective. You sent out 40 emails. So I'd be like, okay, how do I send like, and that, like if you did that for four hours every day,

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I mean, you'd probably be able to send, even if you did them completely personalized, completely manual, the way that you probably did, you don't have to buy any software, like you can just send the emails. You'd be able to do that in like a week. Or two weeks, do you want to spread it out? It's like not a lot. So 14 days, what's 400 divided by 14? You know, we'll give you the weekends off.

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So it's 40 emails a day.

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I'll give it to you in a month, how about that? So we'll do 20 emails a day. 20 emails a day. That feels reasonable.

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Okay, cool. Let's do that.

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Good question.

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1763.674

Mm-hmm.

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Yeah, for sure. I would think about, I think you have these in segments, right? And so you've got high-end trainers, high-end PTs, you've got exec coach, you've got the dating people, you've got, I'll give you one, divorce attorneys. So that's four lists. Now the thing is, is that you can actually find all of these, These ones you can find probably from Google.

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This you can find also from search and Instagram. And there's also like list brokers. So you just like Google list broker, whatever city, and then you can, usually they'll have this massive national list and then you can let it down to a localized area. Can you do any remote services?

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1817.286

That's fine. That's cool. Okay. So this obviously makes money and doesn't require any financial risk. Yeah. And is also a compounding way of acquiring customers because you did this work. Think about this. You sent 40 emails one time and then you got six people to send you business for good. Not bad. Now, what do you do to continue to reactivate them?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1840.165

Okay, so you do events, okay. So for the affiliates?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1843.869

Okay, cool.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1854.682

so i love that yeah really good so i think uh do you do that like regularly like it's on a calendar or it's just like okay good because that's obviously that's why part of why it's working so normally one of the things that that falls off with affiliates is that they don't stay activated they don't keep referring you yeah and so you have to like work them like customers like it's another set of relationships um but if you can put them all together an event on a regular cadence where like all of the dating coaches bring all of their people and they all look good and they all get to meet each other like that's value for everybody

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1883.31

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1885.832

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1888.914

Just one of them? Okay. Well, so that works.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1890.635

Yeah. I think if you do like one or two of those a year or three of those a year, I think that's like more than enough to keep the . Right. I would try and figure out a way to put them in the same room, Just because I think it'd be like, I would be pitching on collaboration rather than competition, which is just like, hey, you have single people, so do they. Maybe they can meet.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1908.169

Yeah, they're all single.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1909.891

They're all single and obviously looking to mingle and trying to live their best life. It would also be desperation city. But anyways, so that's the affiliate piece. Okay. And so in terms of lists, I would go list brokers and then I would sort social media and Google first. That'd be like my first thing. And then I would look at list brokers once I ran out of those.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1926.642

But between like these four sources, you need to send 400 emails. It's not that bad. And then what's crazy is like if you send it and then they don't respond, you can send it again. Next one's continuity. So let's talk about that. Okay, so this is about increasing LTV. So you already have pretty good LTV, but I have this feeling like there's something that we can do better.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

193.492

Yeah.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1944.149

Okay, so right now LTV is $10,000, right? So walk me through. So if someone comes in, so I come in, I'm CEO, $8,500.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1978.789

Okay, so closet tear down.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

1995.158

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2018.067

Yeah, in terms of the continuity. Well, do you have churn on the continuity? Do a lot of people, so people stay and they keep paying?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2028.771

And what was the one-time thing?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2032.244

And you just did this, but then didn't have anything else?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2038.248

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2040.25

It's way better to do in person. It's a different relationship. Yeah. No, I like that. I'm a fan. Okay. So, and then the ongoing price point is what on the back end?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2052.922

So $8,500 and then $2,000 per month. So we should be at... Now, I'm guessing that you have a lot of grandfathered people of those 40 customers that are paying less than that.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2062.373

Okay, what are they paying?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2067.878

per week or per month?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2069.218

Okay, so I was like, wow, okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2073.82

Okay, got it, got it. I'm guessing the majority of them are 1,500 quarterly.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2077.721

Okay, got it, because then it's 500 bucks a month.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2084.644

Okay, so most people are at $1,500. So if you have, call it 38 customers who are at, I'm just going to say in general, right, $500 per month because it's 1,500 per quarter. I'm just looking at revenue.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2097.348

Okay, because this now makes sense with the revenue that you're doing. Okay, cool. So the vast majority of the money is actually in a recurring revenue base. That's not bad, that's good. That's really good. And the churn's low, all that stuff's good. I actually don't really want to mess with this that much because you have low churn. What's the percentage of people who go from here to here?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

21.425

And so if we have budget authority need timing, we have the specific things relative to the lead magnet, then your follow up, if you want, like, hey, if you can send me a picture, be great. If not, I can just go off of your Facebook profile or something like that. Then they show up to the call. You have your one of templates that you already figured out ahead of time that then sets up the sale.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2133.3

No, I think you can have it. What happens is it serves as a price anchor.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2137.452

So even if only 10% of people take it, it increases the people who take that one.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2141.153

So I don't think it's actually a mistake that it's there.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2143.394

Because if you're like, because they have the reaction I did. I'm like $6,000 a quarter. I'm like, Jesus. Or just do $1,500. Like, oh, no, that works. I'll do the $1,500.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2154.797

With this one?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2156.838

Okay. So you're saying at the new price point.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2160.319

It's at this. Okay. But this is brand new. And here you have all the retention that you have. Yeah. Okay. But you haven't had any issue with sending people into that, into the $4,500 a quarter either.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2174.108

It's the same take rate.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2175.729

Okay. Yeah. So I'm fine with quarterly billing. So if you have monthly and quarterly, that's fine. I'm good with that. Yeah. So if it's now $2,500 slash $4,500 per quarter,

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2189.451

Totally fine. Totally fine. That's great. No big deal. I feel comfortable with that, but I always let the market tell me. So like, I just keep edging up the price until people stop saying yes. And then I'm like, okay, that's about right. And you kind of back down a little bit and you're like, that's my price. Now I know that for these types of people, that's the number that they're willing to pay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2205.9

Unless we change the avatar or the marketing or the messaging. That's going to attract these people and they're willing to say yes at that price. Okay. So from continuity perspective, I don't think we changed that because then we just changed it. So that stays the way it is. I think the $8,500, I know LTV is $10,000, but $8,500 for the teardown and then you have the quarterly.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2221.884

And so this LTV that you have here is probably going to go up. It'll just keep going up over time. Right. Okay, great. So, I mean, honestly, the actual business is strong. Okay. So you have good-ish margins, 42%. Continuity has almost no churn. That's great. LTVCAC's strong, and so the real leverage with this business is that we just need to do more. Now, you stopped spending money on ads, why?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

224.301

And you realize you make more money on the luxury tier, so you do more of that. Yeah. Love it. So how do you get the customers? Where do you find them?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2250.303

Okay, cool. So this is what we're going to do. Video sales letter plus lead magnet plus the band qualification. So budget authority, you need timing. So that's number one. So once we fix that, that's a conversion mechanism. So then what I want you to do is increase your ad spend. And so currently you're spending 600, was it $300 a month? Yeah. So why don't we just go to 600?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2268.492

How much, actually, let me ask the question. How many can you handle? Like how many more leads could you handle than you currently are?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2274.855

Like how many more?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2278.282

Yeah, well, like how many calls, basically it's a call thing.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2282.106

So you're currently taking 12, right? Something like that?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2286.492

Okay, so let's go with 600 to 900 per month, because sometimes the lead cost might go up a little bit and that's okay. Just like, so basically you might get a little bit less efficient, but that's fine. Cause you're still, you have really strong LTV tech, so it's not a big deal. All right. Number three is we need to send the 20 emails per day to affiliates. So this is a big three.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2306.242

And then I don't want to mess with the continuity. So we had eight sales this year. So it's like one, like a little bit less than one a month. Right? So I just wish I knew how many leads were coming from Google. I just really wish I knew that number. And those eight sales, were those just like phone calls and closes, so 16 calls created eight sales kind of thing?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2326.127

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2330.308

Got it. But then they clicked on your ad, right? So you'll fix the funnel.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2336.21

You'll get the attribution tracking in place. I think the funnel lift could very well, like this is going to sound wild, this could somewhere in the neighborhood of like two to five X the lead flow you have just doing this, especially with a good lead magnet.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2350.017

Now, the next piece is that each of your affiliates were a third of your revenue. And if we were to 10X that, then we would 10X one third, which would be a triple. And so the result of a, call it a 2X, a 2X, and a 3X would be a 12X, which would take us from 300K per year to 3.6 million. Jo?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2368.887

Okay. Questions?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2374.45

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2377.272

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2400.289

Well, like your Instagram and, like, all that stuff?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2401.93

Okay. Well, I see your Instagram, because yours is such a visual craft in terms of what you do, that it makes sense to post. The thing is, these things just will all immediately make you money. I think that that's absolutely a long-term plan. Think of it, this is like your paycheck. This stuff, you do this, you'll immediately make more money. That is more like a 401k, like an investment plan.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2422.48

So it's like, I'm going to put this money into this, and it's going to take time to snowball. But over time, it'll eventually become so big that it'll be bigger than all this stuff. But you'll have to measure that in a couple years, more than a couple months. So I'm all for it, though, to be clear.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2435.368

Because what a lot of people don't know is that when you spend this money, when you do these emails, the first thing they're going to look at is your social media stuff. And so I see that as more lead nurturer. And so it's like the invisible hand that all of a sudden more people respond to your emails more.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2449.597

One of the things I didn't realize, because we do outbound for our own stuff too, for looking at deals and whatnot, me having a personal brand just increased the response rate. People are like, oh, I've seen your stuff. Or they take a look and like, oh, I've never heard of you, but this stuff looks really interesting. Yeah, I'll hop on a call, whatever. And so that's kind of like,

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2466.76

it's a rising tide that lifts everything in terms of how brand works. But yeah, I think it's totally fine to do that. I just want you to get obsessed with it.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

247.419

Do you know what percentage of customers come from each of those, roughly?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2473.482

I want you to just make sure that you spend, just basically block, I'd call it a half a day a week, that you're like, I'm just gonna do content this morning, plan out my week, get the pieces that I want out, and then the rest of the week you gotta run the business.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2485.745

Yep.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2502.208

I mean, that's not a big deal. That's like a one-line overcome. So like if you go to Wells Fargo, you're not expecting Wells Fargo or J.P. Morgan. You're not expecting J.P. Morgan. You go to Bain, McKinsey, BCG's Boston Consulting. But like many professional firms, look at every law firm, Kurtz, Kurtz, and Wild or whatever.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2518.518

It's not uncommon for a business to be named after its founder and have many people underneath of it. So I wouldn't like Dyson. There's just like so many brands are built off of the name of the founder and it doesn't necessarily mean that you have to work with them. If anything, all it does is just allows you to have a premium on yours.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2536.548

If you want to. So it's more like you can price here and then if someone's like, well, I want to work with you, it's like, oh, I'm premium. I only have a few private clients that I take on. And the people who have super money will just pay whatever. And then you can just add a zero to your price tag and make that yours.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2554.118

But yeah, I think if you go AC versus, actually caps, I'm not. You don't feel- I'm okay either way. I'm okay either way. I mean, AC people already probably know if it's actually caps, that's probably what it stands for. You probably have the same issue now with AC. I don't think the name change is gonna change anything. Okay. Yeah, but I do think branding personally is a good idea.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2583.032

Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2600.638

So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

261.216

So kind of like evenly split between referrals. Would you consider affiliates referrals or no?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

2617.402

Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

268.162

Okay, so referrals is one, affiliates is another, then paid ads between Thumbtack and Google.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

272.246

Okay, cool. Okay, so how many people do you sell a month?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

289.79

Okay, so these 40 clients still pay you monthly? These are active? Yeah. Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

3.892

So there's good friction, bad friction. So good friction is something that increases the overall quality of the lead and gets out people who suck. Bad friction gets everyone out. A slow page load time, for example, everyone leaves, good people and bad people. We want to get the type of friction that only bad people leave and good people stay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

303.755

Okay, so we're going to probably talk about that in a second, the 40 clients thing, because I think you probably have a big revenue opportunity there. Okay. So what's the goal? What do you want to do?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

323.78

Just like a totally different business.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

325.6

Yeah.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

329.301

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

335.849

Like super long term. Like super, super long term.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

339.93

Like next lifetime. Oh, okay. I'm just messing with you. But fundamentally for this business, the goal is five million doing what you currently do or a scaled up version of what you do.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

350.313

Is that correct? Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

352.774

Yeah, yeah. No, that's cool. That makes sense. What's the problem? What's getting in your way?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

357.935

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

372.281

Okay. All right, so show me the numbers.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

38.716

This is Ashley. She has a personal styling business. She does about $300,000 a year, and we're going to help her scale.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

392.36

There you go. Okay, so Google, we're looking at 3,400 for the year for 2024.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

403.643

Do you know what words you're bidding for?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

410.49

Do you have prices on the site? When they click, where they click, does it show your prices or is it just like an opt-in page?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

417.838

Okay, is it just like an opt-in page?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

420.641

Do you know how many leads you get from this source? I know you get eight sales, right?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

426.751

Yeah, and I'll tell you why I'm asking. I'm asking because when I see 1,800 clicks, I'm like, that's a lot of clicks, so your cost per click's great.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

433.275

And so I'd be like, okay, and especially with intent-based search rather than interruption-based marketing, like social media ads, it's like interruption-based, you're not looking for a stylist, you see an ad, then you click, versus like, I am looking for a stylist, so the intent-based click is usually much higher quality.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

444.782

I would be surprised if you were getting, I mean, unless there was a massive mismatch in terms of what you're asking people to opt in for. Between 1,800 clicks, I would guess you're getting somewhere in the neighborhood of at least, you know, 250 to 500 opt-ins that would come. Does that sound? So 250, just for context, so divided by 12, so you'd be looking at, what is that, 20 a month-ish?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

470.915

Does that sound realistic or does it sound like less than that?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

477.041

And I think that that's... So straight to book a call is the opt-in. Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

484.127

Okay. Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

489.773

And you don't give them anything, right? Right. There's no reason for them to opt in. All right, we're gonna make you so much money. Yeah, nice thing is like, yeah, it'll be fun. Okay, so despite like basically no incentive for someone to actually book a call, you're still making eight sales.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

507.065

And so I think that what's happening right now is like the show up rate and the close rates you have are like you're just basically skimming the absolute people who are like are in such dire pain. And you don't know them because they're coming from ads, right?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

519.975

Right, like if you're in that situation, then like this may sound exciting for you, but like you could probably 5 to 10x the sales of the business just by fixing this. Like we could do nothing else, we could just do that. So we'll get into that in a second, but okay. The good news is that even with the massive amount of inefficiency that's there, your LTVD CAC's still really strong.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

537.539

So it's really good, and I think we're just losing, we're just leaking a lot in this process. Okay, show me the Thumbtack one.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

558.859

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

574.13

Through your Thumbtack page that you then pay extra to promote.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

577.031

On Thumbtack. Okay, cool. Got it. I mean, $38 at least is not bad, given the price point that you have. Right. But the issue is that they are unqualified. And so the nice thing here is that it might just be changing the headline of whatever the page that you're promoting is. And again, adding some qualifications to the lead form so that you can immediately see,

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

599.202

So like underneath of this, as you get like, I'd say more advanced, there's total leads and then you'll have something called MQLs and SQLs. So MQLs will be marketing qualified leads and then sales qualified leads. And so an MQL is like, okay, in order for somebody to be an MQL, they must meet these requirements.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

614.287

So it's like, I got 158 opt-ins of the 158 opt-ins, 50 of them have an income above $100,000 a year or are a man with a corporate job. Like we have to just figure out what the fewest- Benchmarks. Yeah, and we'll cover that. So do you actually have a minimum income requirement?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

638.072

A year in income?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

639.513

Okay. So, yeah. So, this is definitely a top 1%.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

660.541

Yeah, and then is there a specific life event or something that happens that triggers people into getting into this buying cycle?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

675.9

That's for women.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

692.408

Okay, I feel triggered. No, you're good. Okay, so that's the thumbdack data. Is that the last slide? Oh, there's a bonus. Is it for later? Any other numbers, questions? Well, I have already a handful of ideas around... around what we can do.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

712.509

Tell me more about the affiliate side, the match, because you've got, I get both of these, I understand the referral side, I understand both of your paid acquisition parts. I think the continuity is lacking, we can work on that. I think where there's inefficiency in the ad funnel, we'll talk about that.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

72.456

1,000 clients? Yeah. How'd you get 1,000 in four years?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

726.415

But I think affiliates is kind of the last piece before we dive into figuring out what we're gonna do.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

747.697

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

748.878

And so you have these, how many matchmakers do you have who refer you customers on a regular basis?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

758.821

Okay, how did you find them?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

762.822

But you reached out and did it that way?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

765.184

And what percentage did they send you?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

768.067

What percentage of your business do those six kind of affiliates send you?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

776.276

Ooh. Hmm. Yeah. Interesting. Okay, cool.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

784.878

They're literally already buying the types of services related to what you want. That's great.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

789.782

Okay. Yeah, I feel like I'm pretty clear on what you said.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

797.889

No, this is great. So you wanna make 5 million, right? And we're at 300. So that's a 17X from where you're currently at, right? If we were to just triple and get to a million this year, would you be okay with that?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

80.052

So the business has been for, you've done 1,000 yourself. Awesome, super cool. So who do you help specifically?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

811.021

Because then going from a triple to a 5x from there is like a little bit, I think, because the thing is, is the business will usually change. There's something called the Chinese rule of three and ten, which fundamentally just means that systems break when they triple. And so I like to think in triples in terms of, unless there's some massive order of magnitude change that we can do.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

827.68

But the things that we have right now a handful of these are triples independently. First thing I want to talk about is going to be the avatar is getting clarity on who you are going to serve, because right now you serve a lot of people.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

838.051

Not to say that this is a bad thing, but I think over time we are going to get narrower so that we can make our value proposition a little bit more compelling for them.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

845.959

The next is going to be paid ads funnel, which we're going to look at the pages and we're going to look at the offers so that we can see, okay, can we tweak something? We add a lead magnet here that would get the right people and ward off the bad ones. And is there kind of some process things that we can do that just will stop the leakage? The third piece is still acquisitions.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

862.166

It'll be affiliates that I want to cover. And then the fourth, what I want to hit on is continuity. And so those are the big four that I want to hit on. We can talk about the corporate thing that you mentioned in between.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

873.314

My initial gut reaction is not yet, but because the thing is, is like, if we can get to a million, probably, we can probably, given the things that I think that we're going to uncover here, you could probably get to like two-ish, two to three, just from some of the things I'm going to show you in a second. Cool?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

886.447

Then maybe you get to there, you're at three, you might be like, wow, what if I just kept doing this rather than the other thing? Okay, so avatar clarity. Do you have any idea if there are some customers that are like way better than others or that you enjoy working with more? Like what's your dream customer? Who are the people who spend the most money with you that you help the most?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

908.952

Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

914.068

Mom, who has kids with many social events.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

916.31

Okay, mom.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

921.995

So usually mom, so it's mom, right? So there's kids, obviously, because it's a mom.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

924.797

Okay, got it.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

926.859

Plus money, got it.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

933.885

Okay, got it.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

937.148

Yeah, yeah, I understand. Okay, so mom socialites, is that the number one, your favorite avatar?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

945.46

Okay. By percentage of revenue, is it 50-50? Yeah. It is. Interesting. Okay. CEO men. Huh. Do you ever get cross-sells? Yes. CEO men gets wife. Wife starts or husband starts?

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

960.189

Interesting. Okay.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

964.822

Okay. Okay. This is good. This is good for me to know for now. Okay. Now, paid ads funnel. First thing that we can do on this one is, and obviously this isn't, I mean, you could, okay, there's a lot of things here, but wherever you're driving your traffic to, so whether it's the homepage or it's this page, you should probably have some big lead magnet that people are going to want.

The Game with Alex Hormozi

Helping a Personal Stylist Scale Past $3M | Ep 829

984.266

I would imagine that what's something that somebody like that would want a lot?

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

0.309

Welcome back to the game. Today, I have a throwback for you. This episode discusses strategies for building a business without feeling bad about making asks. And so main points are how to give first and how giving first builds goodwill and brand value. And I'll translate that into more tactical stuff. How often to make asks back with actual data. So I think this kind of puts the debate at rest.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

103.373

The key point I'm gonna talk about today is mastering the give to ask ratio. Now, you obviously have to have an audience, which I talk about at length in $100 leads and other content that I make, so I'm not gonna get into that part. I'm just gonna talk about mastering how much to give versus how much to ask.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

119.659

Gary Vee popularized the whole concept jab jab jab right hook right which is the idea of giving giving giving and then asking right not take but ask the good news is that this ratio has been incredibly well studied why because the biggest media companies in the world want to be able to ask on their platforms as much as humanly possible without losing viewership listenership audience on television for every 47 minutes

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Throwback: Give More, Ask Less | Ep 892

146.816

content there's 13 minutes of advertising all right so you think about that as it's almost like a three to one ratio between how many ads three and a half to one between how many ads there are and how much content there is if you look on Facebook Facebook it's every four posts there's one ad right so four and then one four and then one what I want to do is give you my slight tweak on the give give give ask concept

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

170.819

Instead of give, give, give, ask, I'd like to just change it to give until they ask you. You can just consistently give and give and give. And then only when someone reaches out to you to say, hey, how can I find out more? How can I work more closely with you? How can you do this? Can you help me out, et cetera? Only then do you sell.

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Throwback: Give More, Ask Less | Ep 892

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And my personal preference here is actually to give in public and sell in private. Whenever you give, you deposit goodwill into the audience, right? And it basically precedes reciprocity because From a persuasion perspective, if you give someone something first, they're far more likely to comply with your request later, right?

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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And so the idea is that you force people to get favors from you at scale by providing good stuff that builds goodwill that later when you do make an ask, many people feel obligated just through social construct to comply. When someone helps us, we feel indebted to them and we want to help them back, right? That's how society works. But with media, we can do that at scale.

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Throwback: Give More, Ask Less | Ep 892

22.316

And then finally, how to ask when you know that that's what you need to do. So you wanna make money online, but you don't wanna feel icky or sleazy to the people who know and love you when you ask them to give you money. So there's a good way to do it, and there's a bad way to do it.

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Throwback: Give More, Ask Less | Ep 892

227.482

You can gain goodwill and provide value to millions of people at once, but then it all funnels back to one person. And that's why it's so powerful. and it's free. When you do it that way, your brand consistently is reinforced publicly and you continue to grow and expand. It will force you to keep that content amazing so that you continue to reinforce your reputation.

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Throwback: Give More, Ask Less | Ep 892

247.61

Hey, real quick guys, are you a business owner or you want to start a business? Well, the first thing that any business owner needs is someone to sell their stuff to. And I spent the last decade getting proficient at advertising to the point that right now I have a 36 to one return on advertising, meaning for every dollar I put in, I get $36 back.

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Throwback: Give More, Ask Less | Ep 892

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And I've spent two years and 2,000 hours writing 19 drafts of my next book, 100 Million Dollar Leads, where I share everything that I've learned for you, for free. And if that sounds at all interesting, go to acquisition.com forward slash leads to register for the event. It's absolutely free. Everyone's invited. It's virtual. I'll see you there.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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If you consistently give and give and give, then what happens is your audience compounds. And this is something that I didn't understand for a long time was that the audience is the asset, not the content you make. So when I make a video and then it disappears in three days on my newsfeed, what that one piece of content is, is it got me 300 more people to start seeing my stuff.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

299.837

And then they permanently enter the audience provided I don't ask too much too frequently. In the beginning, it'll be really small and if you can hold off and you keep giving, you keep giving, you keep giving, you eventually never even have to ask publicly because instead of asking, you just start getting. Transparently, this is something that I've now personally experienced.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

317.969

And I was like, I don't know, but you know what? I'll give it a shot. Let's just see if I can make a bunch of business content and see if that will attract $1 million, $5 million, $10 million profit per year businesses, not revenue, profit, so that I can invest in them and help them grow. And it turns out it did. there's two ways that asks work in content.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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And so I want you to think of your asks as commercials. You're interrupting your own content with a commercial about your stuff. An integrated approach would be like during the content, I'm like, hey, if you wanna learn more about this stuff, go to $100 million leads and you can go check it out.

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Throwback: Give More, Ask Less | Ep 892

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It's as cheap as I can put it on Amazon with them still considering it a book, which I think is 199 because it's so much thicker than my first book. They wouldn't let me put it at 99 cents. There's too many images inside of it. So that would be an example of an integration. It's natural. It comes up as you're talking and then you can point to it and you get back to what you're saying.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

35.033

The good news is I can show you step by step how I got my first 20 clients posting on social media for my personal training business a decade ago, and how I've continued to use that in each company going forward. How you can build brand and goodwill at the same time.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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Integrations work better for long form content. PDFs, books, videos, podcasts, blog posts. Those are all things that lend themselves to integrating in very small percentages of the total amount of time it takes someone to consume something. For example,

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

375.908

If I made an integration and I started with a minute about something valuable and then I spent five minutes in the middle talking about my thing and then I spent two minutes on the end, you still need to keep the ratio of minimum three to one. Because remember, television's 13 minutes to 47, right, for a 60 minute slot in terms of commercials. So that's the max.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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And so for me, I would rather be at like, 98% give, 2% ask. The other way is intermittent, which means in between things. Intermittent is typically better for short form platforms. If you have 10 Instagram posts or 10 TikTok reels, on the 11th one, you make one that's a little bit more about your credit repair services that you offer.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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or your national lawn care franchise that you have franchise opportunities for people to buy into, right? Whatever it is. And then you go right back to the pre-programmed show. It's even harder because if you're doing multiple posts a day, I wouldn't do more than

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

429.594

three percent so once or twice a month one post that feels reasonable and you're not going to lose audience and so fundamentally the actual cost of the commercial is not money but goodwill how much of my audience am i losing by making this ask i though to be clear i always want to under ask my audience personally so if you're new to making content Now, hopefully you've been using social media.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

450.879

If you haven't been using social media, then what I'm about to say doesn't apply. But if you've been using it like a person, so like you post on Instagram, like when you go out with the boys or whatever, like you use it like a user might use it, right? Believe it or not, you've actually been providing value to certain people for an extended period of time.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

466.044

And so you actually do have a decent amount of goodwill. And I wouldn't normally say this, but I think there's some element that I can appreciate of if you took an action and you get immediately reinforced for taking it, then you'll believe that this could actually work for you. If you make your first post what I would just call like a declaration of business, which is,

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

48.801

And this is a sneak preview for my upcoming book, 100 Million Dollar Leads, which you can check out at acquisition.com forward slash leads. So there was a friend of mine a while back who had a podcast that blew up, like early days podcasts, like it skyrocketed. And very quickly he had millions of downloads and his business started to grow a lot.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

482.702

Just saying like, hey, you know, you guys have maybe been following me for a while. You might know me, you might not from personal, from college, from work, from out of the bars. This is what I'm doing with my life now. And I would love to give you guys something for free that would benefit you. And if that sounds cool, awesome. If not, keep following me. We'll be posting more about this stuff.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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Very quick, very simple. And I was actually able to find my first public declaration of business. This is April 9th. I'm actually coming up on 10 years. I spent my decade in business. How about that shit? For those of you who know me, you know two things. One, I am terrible with all things technological. Still true. For example, I just heard about Spotify a few weeks ago. Seriously.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

514.948

Two, I love training slash nutrition and fitness more than well a whole lot. So today is sort of special because it marks the day when my love of training vanquished, see me trying to use fancy words, vanquished my fear of technology. What do I mean?

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

526.667

For the better part of a year, I've been taking part in a free personal training project that I would give away free personal training to anyone who's willing to give $500 to $1,000 to a cause of their choice. Give value for an extended period of time for a small group of people to prove that you know what you're doing so you can get testimonials, by the way.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

540.872

This way, they wouldn't have to be motivated by the same thing as me, but be motivated to give to their cause and benefit themselves. When I first introduced the idea, I was happily surprised at the amount of positive support I received. So almost a year from my first client, I now have a website.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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to formally show some of the transformations that have gone underway using my programming and as a formal means of contacting me about signing up. I currently have a few slots open on my roster, so drop me a quick note if you're interested. Thanks so much. Take a second to check out some of these ridiculous transformations in record time. Would I make this post again today? Probably not.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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But I'm proud of the kid who did it because I had given value for free to people, free because they didn't pay me. I had them pay someone else because I wanted them to value it. But making that first declaration of business post was actually how I got my first 20 paying customers.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

584.486

I got 20 people who messaged me because I, to be fair, I had always been in shape and people had known me my whole life as a guy who was always obsessed with fitness. So it made sense that I would make that my next natural thing. And so you provided value to people for a long period of time.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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You can make your first post a light ask, which is just declaration and asking for support, and then you can start the business. Now, if you have no content up to that point, show them what you've been up to, and then you can make your ask.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

609.618

I would encourage you to make that first post because I think it'll show you it's possible, and I think if I can get you that first win, you'll be far more likely to continue. And if you're wondering, well, at what point do I fully right hook my audience and just drain it of goodwill? Real talk, part of the game is, quote, leaving money on the table. So let me give you an example.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

625.725

Friend of a friend had a tequila business that was pretty big, big enough that The Rock approached him, Dwayne Johnson. And The Rock said, I would like two thirds of your business. And mind you, when he did that, that might have been a big ask. I don't know. They said no. Now, fast forward years later. The Rock started his own tequila brand, which is now worth $6 billion.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

647.245

So they probably would have made out really well with that. But here's the thing. If The Rock had done that deal at that time, he might have actually lost out on what he ultimately made with Taramata. And so that means if someone says, hey, Alex, can you endorse my thing?

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

661.307

If I say yes today, it's probably going to be a bad deal for me because in two years, my audience will be significantly larger and so will yours. When you're thinking about these right hooks, there's a huge time component. And the thing is, is that compounding gets crazy near the end. Every time you decide to make the right hook, if you hold it, it could be 10 or 100 times bigger,

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

681.199

12 months, 24 months later. Could you imagine if two years ago when I started making content and I just started getting early engagement, my YouTube videos and Instagram, and people started DMing me. They're like, hey, can you mentor me? Which I don't do. If I had said, sure, I'm gonna do it, I would have stopped my growth curve and I would have just been just another dude.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

69.177

And it was almost 100% from people who were listening to his podcast. And so he realized he made an ass during one of his podcasts, he made a lot of money. And what happened was he learned the wrong lesson. he thought, when I make an ask, I make more money. And so what I'll do is I'll just make more asks.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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But by holding back, and this takes a lot of self-discipline,

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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self-control and patience which by the way if you want the definition for me operationalizing patience is just figuring out what you do in the meantime you don't actually wait you just figure out what you do in the meantime because i am in the game of making money my goal is to always have significantly less supply than i have demand and i always want to keep that demand because that is the holy grail of what you want which is far more people who

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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want to do business with you, then you have capacity to do so. The strongest driver of pricing power and profits is supply and demand. When we make content, what we're actually doing is artificially shifting the demand curve in our favor. And the other side of this is that if you are the business owner, you control supply.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

739.905

And so you can inflate your demand in terms of the amount of people who wanna work with you or buy from you, and at the same time, cut your supply. And when you have that happen, price goes through the roof, and so do your profits. And so for me, I'm all about growing as fast as I possibly can, which means you gotta give as much as you possibly can.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

755.619

Just keep giving and people will start coming to you. You'll start not even having to ask, you'll just start getting. And if you're going to ask, because you need to put food on the table, which I understand, then

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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Make sure, for me, I would be way more than a three-to-one ratio, more like 10 times that, which would be like a 30-to-one ratio of giving to asking so I could keep maximizing my growth and keep my brand compounding while still making a little bit of money for me because I know that long-term, the more I hold back my ask, the bigger it will be.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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If you just liked that episode, then you are going to love the free virtual event that I have for my next book, 100 Million Dollar Leads. And before you click away, listen to what I'm about to say. Fast forward three months from now, your friend is using something that you didn't have access to and their business is growing.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

797.581

Another person posts about how grateful they are that they went to the event because they're using these skills that they learned from the free thing that I'm going to give to only people who are there alive. And to give you some context,

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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We have the tech now that we are going to scrape every single person who is at the event, and they will be the only ones who gain access to a project that I've been working on for four years, which means that every person who is not on the link live is not going to get it. And I'm doing that because I know I'm going to piss off 99% of people who are not there.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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And it's because the next time I say, I'm going to give away something, it's going to be awesome, you're going to want to be there, I want people to believe me. And if you haven't taken action on it yet, go to acquisition.com forward slash leads. I'll see you there.

The Game with Alex Hormozi

Throwback: Give More, Ask Less | Ep 892

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And so he did make more asks and he then made a little bit more money and then he would continue to make less and less and less until eventually his listenership dropped and dropped and dropped. And so then it got to the point where he didn't even feel like making them anymore, right? Because it wasn't worth it. Because he had lost the goodwill of his audience. And so,

The Game with Alex Hormozi

15 Brutally Honest Truths You Have To Understand To Succeed | Ep 855

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pain this is long pain this is short gain this is long gain you want to trade short pain for long gain that's the goal it's the best trade all right Number nine, endure. There's a reason that when I gave instructions to some of the new business owners who were going to start putting a community on school, one of the sole instructions I gave them was learn to endure.

The Game with Alex Hormozi

15 Brutally Honest Truths You Have To Understand To Succeed | Ep 855

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And so the fastest way to become the person you want to be is to put yourself in a situation where you have no choice but to become them. You'd be amazed at what you can endure when you have no choice. And so for me, when I signed my lease for my gym, I had $5,000 in my bank account. The rent was $5,000. I had never really made money before. And so I was like, oh, wow, how does this work?

The Game with Alex Hormozi

15 Brutally Honest Truths You Have To Understand To Succeed | Ep 855

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And so if I made 100% of the money that I had made in my job, I would have been able to pay rent and have no food or anything else. But one of my favorite flavor texts on Magic Cards is necessity is the mother of invention. It's the constraints that create the innovation that is required to get you out of the constraint, to get you out of the hard time.

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So let me explain this. So you're allowed to be happy before you hit your goal, just not satisfied. And so there's a very big difference between being content with your life, content with your work and complacent, meaning you're not going to take any more action. There's this great Haitian proverb, which is, behind mountains are more mountains.

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And so when I think back on human history, sometimes we think that things that we're going through are hard, but they're certainly much easier than things that other humans have endured. And how did they endure them? Well, when the only choice they had was die or endure, you tend to endure.

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If you know someone who's going through a hard time and needs to hear this, please share this with them, no matter whether they're a business owner, their employee, they're your friend, they're your kid, they're your spouse. I make this for you because a lot of the business game is about what's happening between your ears.

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And if you can't survive your head game, you're never going to win in the real game. All right, number 10, results, excuses. This is not going to be a big surprise here. The thing with excuses that's interesting is that they may be valid. And I think that's the part that people struggle with is that they're like, yeah, obviously results matter more excuses, but insert special snowflake.

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The thing is, is that you might be right. And I just like this quote from Layla. She says, it's not your fault, but it is still your problem. And so you still have to do something about it. Or you can just wait and say, you know what? I'm going to continue to not live the life that I want until I die. And everyone will be like, oh, yeah. He had an excuse. Is that what you really want?

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Is that people were like, yeah. It's a weird thing to want a permission slip for mediocrity, which is fundamentally what excuses are. You just want permission from everyone else to still get respect, without the outcome because of your extenuating circumstances. And the thing is, is there's a ton of allure, but the only person who actually believes that is you. And so people might nod along.

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The people who love you might say, yeah, you know what? You are special. You are a special snowflake. Your mama might still love you. You're not going to earn anyone's respect. And I think you certainly won't earn the respect of the person that matters most, which is you, because you'll always know that you could have done more, that you could have done better.

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And I think that's the one that keeps me up. And so I have a saying that I tell myself a lot when I'm doing something that I don't want to do. And it's, I will do what is required. And so it's not about doing your best. It's about doing what's required because what's required might be better than your best is right now. The good news is that your best can get better.

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So number 11, and this one's real, all right? The hard way is the easy way. You're like, how does that work? The hard way is the easy way because the easy way never gets you there. So think about it. People always are looking for the shortcut, but you have to accept a very simple truth, which is that the shortcut never actually takes you to the place that you're trying to go.

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And it's because it's rarely one big thing. And I would postulate, fancy word, that there are a lot of shortcuts that exist in life and everyone already uses those. And so whenever an actual shortcut gets found, all humans immediately do it and it no longer becomes a shortcut. It's just a thing that everyone does and it's not really a thing anymore. Like we learned how to tie knots.

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It's kind of like after every peak, you can just see more peaks ahead of you, right? And so the work works on you more than you work on it. And so for me, I remember I had a year that I basically went into retirement trying to figure out what I wanted to do. And the thesis that I came out with was that hard work is the goal.

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That was a big breakthrough. And then everyone ties their shoes and they're like, oh my God, let me show you the shortcut to this. It's like, oh my God, everyone does it. And it's like not a thing anymore. And so all the things that you want to have that most people don't have, don't have shortcuts. But the thing is, is so many people waste so much time.

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They literally waste longer than it would have taken the hard way or the only way to get there in search of the easy way that doesn't exist. And so the reality of this is that it's usually 100 small things that make days, weeks, and months hard. It's the never-ending onslaught of shit. And then you remember, after going through that onslaught of shit, that you signed up for this.

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But then again, you figured that it would be hard. And then you're reminded that this is what hard feels like. And so you keep going because it's the only choice you have. And so I want to remind you that a lot of times what we imagine hard to be is different than how we experience hard because the nature of hard changes too. And it's more of a limitation in how we describe hardship.

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And I actually think there's a big problem with this. So just kind of like Eskimos have like seven different words for snow. I feel like I should have like 25 different words for hard. Right? Like the amount of things that you go through. There's like lifestyle hard. Like, okay, so there's sacrifice hard of like you're giving up things that you enjoy.

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There's also like effort hard of like starting to do things that you hate doing that you're not good at. There's risk hard of the fact that you could lose something that you currently have, that you have the chance of losing what you currently have. You have the uncertainty hard of the fact that you might be doing all of the sacrifice for nothing.

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There's lots of different flavors of heart and each one of them presents at different times. And for some reason, when it gets a new kind of heart, it's a new seventh type of snowflake heart, then you're like, oh, this is different. But it's not. It's just that the thing that you grow comfortable with, then you conquer and then you're exposed to a new level.

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And so I love this quote from Paul Graham. He said, if you want to make a million dollars, you have to endure a million dollars worth of pain. Fundamentally, in my opinion, the people who end up building, building, not inheriting, building tremendous wealth, just have massive concentrations of pain. So don't go looking for the easy way because it will never get you there.

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Number 12, don't, this is a big one, They're all so big, right? Don't give away your power. Now, this sounds very like, you know, girl power or a little like rah-rah, but I will break this down in a little bit less rah-rah way. So what offends you? controls you. Whatever you point your finger of blame towards is what also you point your power towards.

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Meaning, if we had, we talked about excuses earlier. I can't do it because insert X. Insert X is the thing that has power over your life. And I remember when I realized this was that I had this belief that I would never be able to be in a long-term committed relationship because my mother had hurt me as a child. I didn't get enough hugs. Who gives a shit? Whatever. But I realized that

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That by using that excuse and by saying it's her fault, I'm broken. It's her fault. I can't trust people. It's her fault. I can't love anybody. By saying that over and over again, all I did was I said, my mother controls how my love life will go.

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And so the fact that there's something that happens as a result of hard work is really just a secondary effect. It's a consequence. But the goal is the work itself. And so I had a friend this morning who messaged me and they're like, why do you still work? And I was like, because it's the thing that I enjoy doing most.

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And so then I was like, well, I don't want her to have control over how I choose to love or not love or how content I get in a relationship or anything like that. And so I actively had to say, maybe all these things happened. Maybe they didn't. Also, who cares? Me, I care. I'm the one who's getting, I'm the one who's affected by this.

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Me, like, and what's crazy about this, it's kind of a weird thing with like parents is that you think by hurting yourself, you get back at them for hurting you. And you do hurt them when you hurt yourself, but you hurt you more. And so at some point, and this is like, this is like super real. Let's say that you were parented tough, whatever that means for you, right?

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You had lots of bad things happen. Okay. And it was probably because you were a child trying to deal with the world without the skills of dealing with the world as an adult. But you had these things happen, right? And on some level, you might believe that you becoming successful, you making it work, validates the way that you were parented.

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And so you have this conflict where you're like, well, I don't want them to think that they did a good job by me being successful. And so then you want to keep not being successful to prove to them and to hurt them for hurting you. And you stay there as long as you want them to control you.

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And so the day that you choose to control yourself is the day that you choose to divorce your results from the very viable reasons that you have to not win. You are right, and so what? Number 13, rejection versus regret. At some point, everyone needs to choose whether they'd rather risk rejection now or guarantee regret later, right? And so losers fear rejection, winners fear regret.

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And most attempts fail of anything. Failure is literally a prerequisite for success. And one of my favorite quotes of mine is, greatness rejects all first-time applicants. So let me say that again. Greatness rejects all first-time applicants. And so it's kind of like that person that's just like, oh, I can't get a job. And you're like, well, what have you done?

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They're like, well, I applied somewhere. And you're like, what do you mean? They're like, I applied somewhere and I didn't get the job. They didn't even call me. And you're like, You went to one place, and they're like, yeah. So actually, this is going to be a really good analogy for somebody who's listening to this, only for people who don't have a business yet.

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And when I looked back on my life, when I didn't work, I was bored and felt depressed. And when I do work, I am stressed, but I do have moments that I really enjoy as well. And so basically, I took this as a kind of a foundational truth for me, not for everyone. that there is misery on both sides, so I might as well be productive and useful.

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A lot of starting a business is the number of reach outs that you had to do in order to get the path, the job, the career that you want right now. So think about the amount of interviews, think about the amount of outreach, think about the amount of job ads, think about the amount of resumes that you sent out. Think about all of that, and all of that work got you what I would consider one sale.

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You got one person to say yes to you, and they would give you money for work, all right? Now obviously within the context of an employee relationship, but fundamentally it actually works the same way. And so all you do in a business is the same thing. And so if you can handle that level of rejection, then you can handle the same level of rejection in a business. It's not actually that different.

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The question is whether you can handle that level of regret years later for not doing it. One of the things that I've noticed between champions and everyone else is that people, everyone else, is so excited when they win. They're so excited by the idea of them getting first place. But there's a reason that they never get first place. It's because they're excited about it.

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The people who always and very consistently hit first place and win the championships are relieved. because they tend to hate losing more than they love winning. And they expected to win because of the level of preparation they had compared to everyone else. Which brings me very magically to number 14, consistency beats, I'll just look at it then, shorter effort. Like how does that, oh shit.

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Consistency beats talent. I didn't read my own notes. Okay, so you can beat most people at anything if you just stick with it for a year. So you can learn, you can become competent at just about any skill in 20 hours. It's just that people wait 10 years to get the first 20 hours logged, right? Like if you want to learn how to play the first few notes of a guitar, you can learn about 20 hours.

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Now, are you going to be Jimi Hendrix? Which Gen Z, he was a guitarist, Purple Haze, you can look it up. Anyways, the point is, is that people have this huge delay before they begin. And what makes things hard isn't complexity. It's consistency. And so as boring as it is, you just have to keep doing it before you get anything back.

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So one of my favorite quotes from myself is, the world belongs to those who can keep doing without seeing the result of their doing. I've been told that I'm decent at presenting and talking on stage in front of people. And what a lot of people don't see is that for years, I spoke at the microphone in front of a group of people And I did it like multiple times a day.

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And I did that in the form of a fitness session. And so I had to literally stand on a box and shout around and tell people what they had to do. And I had to do that for years. And I remember when I had to get on stage for the first time and I had in high school been very nervous to public speak. And as I was about to get up on stage, I was like, why am I not nervous about this?

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Like, this is weird. Like I should, I was like, I should be nervous. Like, why am I not nervous? And I was like, oh, I've, I've done this so many times, like so many times. And I'm not talking about, you know, civil war history and Abraham Lincoln. I'm talking about stuff I know. And so you outwork your self-doubt through repetition, not affirmations. You don't do it through belief.

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And the only way to be productive and useful is to be happy about the process, but not satisfied, so you can continue to provide value to the world. Now, number three, ignore critics. Now, this is probably easy to say, hard to do. So let me break this down a little bit more. So...

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You do it through stimuli habituation. All right, which is just fancy words for saying you expose yourself to the bad things so many times they get used to it. It's no longer a bad thing anymore. It's just life. And so like, if you want to get over a fear, the way they do it is habituation.

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So if I wanted to get over, you know, being afraid of spiders, I'm not afraid of spiders, but some people are afraid of spiders, right? If you want to get over that fear, you literally lock yourself in a room with a bunch of spiders.

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And all you do is you just have panic attack after panic attack, and you pass out and you wake up again, the spiders are there, you pass out, you keep doing eventually, eventually your nervous system adjusts. And five hours later, eight hours later, you walk out of the room, unafraid. because you have habituated.

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And so the point of practice for all of these things is to habituate as fast as you can. And so we're trying to microwave that period of time. And the thing is, let's say it takes this many reps. You can have this many reps take you a year, or you can have it take you a month, depending on how dedicated you are to it. All right, number 15, have no shame.

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All right, now I have told this before, but my plan B was that I would drive Uber and strip. Now, I think part of that was because I wanted to, you know, Thumb my, whatever the Shakespearean saying, I bite my thumb at you. To bite my thumb at my very respectable parents and say like, I would take off my clothes for money. Now, of course, they would be horrified by that.

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But I think part of the reason I was okay with it was I was like, I'm going to do it my way, right? And so I want to be crystal clear here. If you have no money and you want to make money, you should have no shame, right? Knock, call, email, text, DM, ask. Life-changing doors do not open themselves.

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And sometimes I feel like shame was invented by people who have to prevent people who have not from taking action. Because all of this is just an illusion. What are you ashamed of? Trying? Like, let's play it out. Remember I said fear only happens in the abstract, not in the specific.

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So if you reach out to a stranger, no matter what happens, you always come out better than before because you either have a sale or you have an experience. Oath make you better. And so the crazy thing about trying is that it has an asymmetric risk reward return. So worst case is you get a no and you learn from it. You get better. Life gives you unlimited shots while you're alive.

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And so if you have nothing, like you're just basically cashing in lottery tickets and saying, oh my God, I lost, but what you're paying with is time. Fine, pay more time, get more tickets, keep scratching. So do you know the difference between shame and guilt? Guilt is when you break your own rules. Shame is when you break other people's rules.

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So if you are gay and you're in a religious community, you would probably feel shame. If you also share that religious community's rule set, you would also feel guilt. If, let's say, you were in a very liberal, progressive environment, you might feel neither shame nor guilt. And so the question is, whose rules are you following?

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Friendly reminder that most people are fat, poor, pansies, and don't listen to them when they try to deter you from doing whatever it takes to succeed. So the average person will always try to keep you average. It makes sense that if you want to be extraordinary, you will do things that an ordinary person would see as extra.

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And so if you have this feeling, this fear of being ashamed, then the question is who's the one who wrote the rules that you are choosing to follow? And I can promise you it's not the people who are successful because they're the ones shouting on the rooftops telling you that it's totally different once you get in the pool. It's very different.

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It's kind of like you have the lights of the world turn on, and you're living in this mirage when you're not succeeding, where there's all this uncertainty, there's all this ambiguity, there's this fog of the unknown in front of you. But as soon as you start taking action, things become very crystal clear.

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I think there's, I'm sure, some stoic analogy that said this, but basically, if you've ever walked through very dense fog, you can only see a couple spots in front of you, a couple steps in front of you. And so the only thing that you can do in fog is just start walking. And as you walk, more steps become available to you.

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And so there's this misconception that you're going to be able to see the entire path ahead of you. But it has two fundamental fallacies in front of it. Number one is that you have the right vision to be able to see that far with your current skill set and resources, which you don't. Because imagine today all of your conditions change.

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Hey guys, a lot of the business game comes down to what is between your ears. Because if you cannot stay in the game, you cannot win the game. Because in an infant game, the only way you win is by continuing to play. And so over the last few weeks, I've done a handful of podcasts and I've had a couple of hard conversations with friends that made this top of mind.

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And so these are 15 rules of engagement that make the hard life a little bit less hard and at least get me through the difficulties I am going through that may be valuable for you. Enjoy. These are brutally honest truths you should know before it's too late.

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You had more skills, which is hard to imagine because you can't imagine what it's like to have the skill. But maybe let's say you have resources that you didn't have before. Well, that would probably change the way you play the game. So trying to play out and try and play 17 steps in advance when the game itself is going to change and you as a player are going to change.

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And so the only thing that you can boil all of this down to is to take the steps that you can see in front of you one at a time and think, and I would write this down of like, what are the things that are stopping me? And more specifically, whose voice do I hear? Whose voice or judgment am I afraid of? Because usually it's people, it's society is what we say, but it's usually like,

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two people and i remember when i had this big decision that i had to make so when i was trying to when i was considering selling gym lunch i thought that 46 million dollars was not a lot of money uh for for for the business now some of you may hear this and be like oh my god that's amazing but believe it or not at before we before covet happened uh gym lunch was valued at 150 million and so for me going from 150 to 50 or you know 46 it felt small right it felt like a really small number and

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And I remember there was a particular person, we'll call it a frenemy, if you will, that I thought would think that they were better than me if I sold for this small number. When I was able to narrow it down to just that one person's voice, I thought to myself, am I going to give that person power over my entire life, which is literally what it was.

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I was choosing not to make a decision because of someone else. That person has complete power over me. And I was like, well, that's a terrible reason not to do this. The crazier part is that even if you're right and that person does say that you suck, so what? Most people don't want you to win.

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And even if you do win, they will try and do a reverse excuse, which is called a justification for why you should be excused of the respect that you should earn for having won. He just has good genetics. He has great parents. He inherited his wealth. He had good connections. He was born in America. He speaks English. He's a man. He's white. He's whatever you want.

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And so a lot of people, and this is the really hard part that I had to come to terms with, is that a lot of people want to see you fail because it justifies the risk that they chose not to take. And so we always have to think about listening to the people who are closest to our goals, not closest to us. And if you want a more violent version of this, your critics are going to eventually die.

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But giving the person justifications in no way helps you. You might be right, and so what?

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and not living your life because you might have some justifications that help you like it's so funny it's like let's say you have some advantage whatever it is right whatever whatever advantage you're born with right you might have one it's kind of the same thing as the parent thing it's like well i don't want to be successful because i don't want to prove that i had this advantage it's like would you prefer to prove everyone wrong by saying i had this advantage and i also wasted it

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I remember, I'll tell you a story, and I think it'll probably, that'll round this off well. So when I was younger, I didn't want to be a doctor, but that was pretty much the path that was laid out in front of me. And so my father's a successful doctor. And I was like, it's cheating, you know, to just assume your practice and just like immediately have a practice that makes a lot of money.

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And he said, do you think Shaq, when he was seven feet tall, was like, it wouldn't be fair for me to play basketball. Other people aren't as tall as me. And I always remembered that. He's like, you play the cards you're dealt. These are the cards you have, play them.

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And I remember thinking that as now, obviously I didn't decide to be a doctor, but the reason that I didn't want to do it was because I thought other people would say that I would, they would disqualify away my success as not earned by me. When the reality is that they're all going to disqualify your sex, no matter what, because it makes them feel bad. And so fuck them. Right.

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But if you have some cards for the love of God, play them. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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And their opinion isn't going to matter then, which means it probably also doesn't matter now. So might as well do what you wanted to do originally. Number four, selective productivity. Productivity comes from all the things that you choose not to do. So I'm going to define two more terms for you because I think it's important. I see commitment as the elimination of alternatives.

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So if I get married, then I eliminate all alternatives to the person that I'm married to, right? That is commitment, right? Which is very similar to focus. And so focus, if you think about the hypothetical extreme of focus, is that somebody does literally nothing but one thing.

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So they don't eat, they don't sleep, they would eventually die, but they would be 100% focused during the time that they were alive. And so obviously we have to put a couple of things in, you have to eat food, you have to sleep. But the most focused person does the fewest things outside of the thing they're focused on. And so focus is about the number of things that you say no to.

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And having this framework is, in my opinion, more powerful for productivity than just about anything else. People are always trying to figure out productivity hacks, but they want to add things to their lives to become more productive, which is completely counter to what focus even means. It's getting rid of everything that's not the thing is how you focus.

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Now, part of that also means environmentally, right? So if you like have a window that you look outside of and you've got people who walk past your office and people can knock on the door and you've got Slack notifications, of course you're not focused because all of those things are not the work. So I'm gonna give you an analogy here.

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So imagine there's a wall that you have to get over, all right? You have to get a critical mass to get above this wall, right? And so you start putting up these ladders against the wall to try and climb over the wall, all right? This should make some sense.

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But as you try to build up the little rungs of the ladder, you only have enough time to put, let's say, five rungs on the ladder, or rather four rungs, because I only have four ladders on this thing, all right? So you put four rungs up. Well, you're not going to get the critical mass required to get over the hump to actually get the success you want.

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But the idea, the fallacy is that, oh, I'll just do all three or four of these things and I'll see which one works. When the reality is that any of them work, but none of them will work unless you work on one. And so we have to take these four rungs that we're able to build and say, you know what? We're not going to do that.

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We're going to put that rung here because I'm going to take that time that I'm putting for my second opportunity to put it here. I'm going to take this rung and put it right here. And then I'm going to take this rung. And what do you know?

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I can get over this hump on top and I can get to the other side of the wall, which of course is where all the money and all the happiness and all the, you know, the girls with, you know, beautiful, beautiful hair. Look at this beautiful hair, right? This beautiful hair. Now she looks like a bug. Anyways. There you go. And so you have to hit critical mass.

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I'm Alex Ramosi, I own acquisition.com, a portfolio of companies that makes all the dollars, so many dollars, in fact, that I have these very fancy screens behind me that do nothing but show my logo. Right. Anyways, let's start with number one. Pain is the price of progress. Man, I wrote that real fast. The fastest growth periods are often the most miserable.

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And so right now, if you are, and this, what's crazy is that this literally happens at all levels of business. Like people who are starting out, trying to start five things, people who are like their second or fifth year. I talked to a guy last night who has a really good business, really good margin, 50% margins, has great revenue retention. He was in cyber security.

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And so people stay with him, people pay. He has no problem getting customers. He has no problem delivering on them. I was like, what's the problem? He's like, me. He said, I just, I get bored. He's like, I just want to start more things. And I'm like, yeah, you got to stop that. It's like, the thing is, is think about how much more successful you'd be. So zoom all the way out.

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Think of somebody who gets better every single year and works on the same project for 20 years. You'd be like, my God, that guy's probably really fucking good. And what's interesting about this is that it doesn't matter what project the person works on. You do 20 years of reps and you do nothing else, you're gonna be good.

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And so if you know that that's a fact, that's a certainty that you're going to be good with 20 years of practice, then the objective is to just get 20 years of practice in one thing and stick with it. So like your plans aren't working because the plans are wrong. The plans aren't working because you're not working on the plan.

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The hard part about the plan is not creating the plan or even following the plan. It's sticking with the plan. That's the hard part. All right. Number five, fear versus regret. Let me get some wild, let me get some stuff. All right. So change is scary, but so is regret. And so the life you live depends on the one you fear most.

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And so the thing is, is that the people who, who the more successful version of yourself also has fear is that, that your fear of regret is greater than your fear of rejection. Think about that for a second. I'm must supersede, must be bigger, must be greater than your fear of rejection. And so I remember when I quit my management consulting job, which took me six months.

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So I'm not saying this from a pedestal. It took me six months. I decided I wanted to quit. It took me six months before I actually quit. By the way, you can measure how powerful someone is by the distance between when they make a decision and what happens in reality.

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So if you want to feel impotent, then take as long as you possibly can between when you make a decision and when you act on that decision. Now, for me, it was six months. And all I did was I called my friends up every night. I was like, I'm going to quit my job. I'm going to start a business. And we'd talk every night, literally every night.

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And I would be pacing in my condo like, I'm going to do it. I'm going to do it. And I wouldn't do it. I was too afraid. I was too much of a scaredy cat. But the thing that got me over the hump was this. Number one, I knew that when I looked back on my life, if I never took the jump, I would have been ashamed of myself. and I would have felt like I was a pansy. And I was like, I can't die a pansy.

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I have to be able to make a jump. Number two, I played out plan B, which is, okay, let's say I actually completely fail. What happens? I was like, well, I'm not really going to be homeless. I know enough people that I can get food, right? And I was like, okay. So I would probably just couch surf. I'd have a little bit of shame. But at the end of the day, what would I really do?

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Well, I could always apply to get the job that I had back. Or I could just go to another place with an experience or a story that would set me up for something cooler later, right? And so all of a sudden I was like, wait, so my plan B is that I just have a cool experience that I could talk about at a job interview or to go to business school? Okay, that doesn't actually sound that bad.

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And so there's just this huge amorphous fear. But I've just noticed in my life that fear only exists in the vague. It doesn't exist in the specific. And so if you're afraid of something, try and break it into pieces and spell it out. Play out the next two or three steps. Because all of a sudden, if you're in the developed Western world, the downside risk is not really real.

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Like the only real downside risk is the opinions of other people who will say that you failed, who you don't care about anyways. You think you're going to die, but you're not. You're just going to learn some stuff. And you'll be like, oh, maybe next time I'm not going to make that mistake. And that's it. And I say this, and it's easy for me to say, but it took me six months to figure this out.

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But I do remember that my final straw was the realization that I had at the time, no girlfriend, no kids, and I had no real financial responsibilities besides eating and having a place to live. And I said, if I can't make the decision now because it feels too risky, I will never be able to make the decision.

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If you want to progress, get used to pain. And so if you think about what actually occurs when you grow, you stretch past your point of comfort. So even if you're growing a muscle, like you stretch it, you break it down, it's painful. If you have growing pains, like as a kid, it's like you grew too fast and your joints are in a lot of pain.

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Because if other people rely on me, now some of you are in a position where people do rely on you. And you're like, well, Alex, you know, I've got people who rely on me. Yeah, I would say that it makes it harder. And what now? Harder and so what? But for me, that was the thing that got me over the hump. It was like, if I don't do it now, I'm never going to do it.

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I'm never going to have fewer responsibilities. And to play this out a little bit more, if you have people who depend on you, they're probably going to keep depending on you for a while. Or their dependencies on you might increase. And so if you can't do it now, you still might as well do it, right? Because it's only going to go one way. Number six, persistence creates timing.

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So you can time everything perfectly if your intention is to never stop. I'm going to say this one more time. You can time everything perfectly if your intention is to never stop. So think about this visually. So let's imagine that this line right here is your lifeline. It's life as time passes.

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Let's say that you have some special thing that's going to happen here, and some special opportunity that happens here, and some special opportunity that happens here. What most people try and do is they don't want to work at all, and then they're like, oh, I'm just going to work here, and then I'm going to work here, and then I'm going to work here.

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But the likelihood that you're there in these three moments is very low if you're trying to time it. But if you work the whole time, then the timing will always be perfect because you will be ready. And so perfect timing is a complete myth, but perfect preparation isn't. And that on a long enough time horizon, your opportunity will come.

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And so people think that they need perfect conditions to start when in reality, starting is the perfect condition. It creates the perfect condition for opportunity to be capitalized on. And I can tell you this from firsthand experience with me, like the more you do, the more you see you can do. And so opportunities multiply with skill.

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And so the better you get at doing stuff, the more things you know you would be able to do and win at. And so the goal is to gain as many skills as possible so that you have access to the maximum number of potential opportunities. So a lot of people are thinking that, oh, I'm going to wait for the right moment. But when you have unlimited skills, like Elon can go do whatever he wants.

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He can go build a floating spaceship if you like. I mean, he literally does that. So like I was going to be my extreme example, but he literally does that. So he could build a city in the middle of the ocean. There you go. All right. And so he could do that. He has the skills because the world of opportunity is open to him.

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And so the idea and he also spent all of his younger years just developing all these different skills and becoming a polymath across these different things. Independence, put a little stuff, put it away. The point is the guy is good. All right. And so the goal is to get good. And then you will never have a shortage of opportunities. Number seven, envy versus effort.

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If you're a company and you expand, this is technically supposed to be good stuff, but it doesn't make it any less painful. And so elite athletes don't get stronger during easy workouts. And so if we want progress, we must accept the price of pain that's attached to it. You cannot both want progress and live an easy life. These two things conflict. Number two, happy but not satisfied.

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All right, let me write this down. If people worked for their goals as hard as they envy others for achieving them, they would already have achieved them themselves. So think about the amount of mental effort that goes into the hate that people spew out, the envy, the jealousy, right? That people, to be fair, jealousy is different, but the envy that people have for wanting other people's stuff.

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I'll give you a couple hard truths about this. Number one, no one is doing as well as you think they are. So by comparison, you're actually better off than you think. Number two, you don't win by beating people. You win by growing into your potential and then allowing them to shrink into irrelevance by consequence. Three, and guess what? Your biggest threat is not your competition.

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It's a mediocre version of you that never realized what you could become. And as pithy as that may sound, it's also true, right? A lot of people think it's like, oh, you know, that guy's doing really well. It's like his doing well changes nothing about your reality.

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And something really ironic that I noticed is that the people who get copied the most by their competition are the people who ignore the competition who are copying them. And so fundamentally, you start by focusing on the customer. And if you always put the customer first, everyone will copy you because you're actually doing the thing that will work, which is focusing on the customer.

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And there's a lot of weird things in life like that where like, It's the opposite is what you'd think. Like, oh, I'm going to look at what everyone else is doing. It's like, no, just do what matters most. And then people who don't know how to think will just copy you. But the biggest real threat is that no one copies you at all because you're doing nothing.

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And so if you take all this effort that you look, that you put into comparing yourself to other people, that you look to kind of like tearing them down sometimes, even in your mind, let's be real. Maybe you don't say it to other people, but in your mind, you're like, meh. that, whatever that is, whatever that feeling is, that, just do that towards you not being good enough.

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And what happens is that when you do that, all of that effort, all that energy goes into improving yourself rather than tearing down somebody else. And only one of those things will help you. Number eight, hard conversations create opportunities. Hard truth. Everything you want is on the other side of a few hard conversations that you have been putting off.

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So people either grow into their potential or they keep living the same six months of their life over and over again. And the difference is how many hard conversations you're willing to have and how fast you have them once you realize you need to. And so if you shirk away from this, and I get it, I'm somebody who for a very long time had a hard time having hard conversations.

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I literally traveled across the country before I told my dad that I left. All right, I get it. So if you think having uncomfortable conversations is hard, just wait until you see the result of not having them. It will be harder. And so you're going to basically, the struggle is that you have short-term pain versus long-term pain. And long-term pain, I call regret. Comfort is short gain.

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Regret is long pain. Fear is short pain. Fulfillment is long gain. You wanna trade short pains for long gains, not short gains for long pains. It's not the safe bet. It's a guaranteed loss just later. All right, so I'm gonna spell this out. This is short pain.

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Hey guys, welcome back to the game. I have been getting your feedback and y'all have been saying you like the more interactive content, you like the more real business content, which hallelujah, so do I. I prefer actually talking about business rather than not. And so I'm stoked about it and I'm gonna keep doing more of this because I love it.

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I would consider just rebranding the old one, given your partner. Um, and then just kind of relaunching if you can bandwidth wise in parallel, but just knowing that this is going to be basically an asset that you're going to sunset. Is there a huge amount of like, uh, operational resources after it gets filled up that you have to deploy to like manage it or no?

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Professional, professional.

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Okay. Yeah. I will say this as a side note, notice how easy it is to like make money in this other thing versus the hard thing in general. If you weren't like, I really want to help the kids. I'd be like, dude, just do the really easy one. No, you're like, it takes nothing. I can fill it up in a day, cash flows, whatever. Like, like do more of that. Um, if the goal was money. Yeah.

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If the goal, like, okay.

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That's the issue. And so it's like, I think... So it's like, it's a sequence thing, right? Like you have a thing that you're good at making money on. And then you have a thing that you want to give back on. I would imagine the professionals one makes you more money than the kids one does. It doesn't. No. Man, this thing.

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And so I have a very simple framework that I walk through for when we are figuring out what matters most. And if we think about strategy as prioritizing limited resources, time, money, you, to unlimited potential actions, then The better we do that, the higher the return we get on what we have and what we put in. And so fundamentally that is leverage, getting more for what you put in.

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Okay. So I stand by my original thing. Bridge this for the cashflow and then switch to the kids. professionals fill up your existing ones so that you don't, you're not going into debt and you're not going negative. And then basically the rest of your priorities going forward, you sunset that. It's like, that was our legacy model. Now we do kids.

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Don't keep, don't keep growing that side of the business.

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Right. Fill up the ones you have because you have all these vacancies because you had to get the kids out. Fill that up really quickly. Get the cash flow back up. And then if you can make more money with the kids thing, and that's what you want to do it and you make more money, do that. But you got to get to there.

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That's my two cents.

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Yeah. I mean, I really think prioritization is the most important skill.

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Everyone here is limited. So it's what you do with the limit.

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You bet. Thank you, man. Kudos to the kids. The next set of kids, not the old ones. So as I was picking through avatars and he was saying he has the kids thing and then he's got the professionals thing. I'm thinking like, how easy is it for him to get customers? What's the gross margin per customer? And are there lots of them, right?

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So it's like, if you have a lot of people that you can get really easy, really quickly and make a lot of money, that's a good path, right? And so when he immediately said that he could do, you know, professionals really fast,

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um and easily i was like and that's obviously a lot of them i was like okay this sounds like the right path and so then i just asked that one last question was like i'm assuming you make more money on the professional he's like oh no not at all so that's what then basically redirected my attention to like okay well maybe this other path is okay and is the better long-term play but we have to get there and if we don't get to the future then it's never gonna happen and so then it just became a short-term cash flow bridge that he needed to create which you either get you know you get

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somebody to lend him money or things like that, which I don't prefer to do. But given the fact that it was real estate and he could just fill up apartment buildings and just kind of like move on and then just restart with new leases for the government program that he was placing children into, that felt like the best kind of two step play.

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It's common that entrepreneurs will try and use one business to fund another business. It's often not a good idea. And it's usually just a massive distraction. And then the problem is that they can never turn off the thing that's funding it. And I'll say from my experience, the vast majority of the time, the thing that's funding it is the real business.

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And the other thing is some hobby that they think in their mind some way someday might work. But the thing that just pays their bills, if they just focused on that one thing, it'd be 10 times bigger. I mean, fundamentally, prioritization tells you what you're going to do with what you have. And so I can't think of something that's more important than that.

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What's the issue with doing more of that?

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You just have to make more. I don't think there's anything wrong with your existing. So this is a good meta one. So we, you know, fortunately, unfortunately, we look at a lot of different businesses and like we know the numbers for a lot of different industries. And you'd be surprised at how similar CAC is between industries.

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And so as much as people will generally obsess about like, I just need to get more leads, I just need to get cheaper leads. It's almost never really the solution. Once you have some working way to acquire customers, which you obviously do, it's usually about extending LTV. And that's where you see the huge disparity between businesses.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I think I made a short about this, but Starbucks LTV is $14,000 per customer. And so the coffee guy down the street is like, I just need cheap relates. It's like, dude, Starbucks is making $14,000. They can spend it wherever they want. And so the companies that make just tons and tons of money just find ways to get customers to never leave.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So every task that you have, because right now you probably have this big list of to-dos, right? You have this list of a hundred different notes that you're thinking about for the cleaning business. And you're like, okay, which one am I going to start with first? And when you get on the plane tomorrow, you'll have your empty page and you'll have like, okay, what am I actually going to do? Okay.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And then they just basically keep printing money as soon as they acquire them. And so what the game really then becomes is a cash flow management game. so that you can spend as aggressively as you want to get customers that will never leave. And so that's why like you hear in the software world, like, you know, six month, three month payback periods, things like that.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And it probably doesn't resonate as much because you're like, well, I make $4,500 and I spend $1,400. It's because people keep leaving out the back. And so from a Solve perspective, there's a couple kind of couple ways to look at it. Are you charging $4,500 upfront?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah, and so front end's four and then they get ascended?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah, so I don't think, so this is a great example. It's like, as much as this was like, should I do more organic or should I do more paid? I don't think that's the issue. I think basically figuring out the ascension links between each of the phases, but the real, I mean, that would be like first thing to do. But the second thing that I would do, which is like the long-term fix for the business is,

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Strategic Business Advice That Applies To Every Business | Ep 840

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is we have to get the price, basically we have to get churn below 3% per month. And you can do it. You 100% can. So if you're below 3% per month, this business will just continue to grow. And so I would basically put all of my effort into doing that because you will never outsell bad churn. You'll always feel this crippling anxiety of what happens if my ad account gets shut down?

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Strategic Business Advice That Applies To Every Business | Ep 840

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What if this happens? Because you never feel like you're really building a permanent asset because you're like six months away from no customers. And so it's worth taking the time to solve that problem in the beginning, especially to be fair, the smaller you are, the easier it is to solve. the bigger you are, the harder it is. So it's like, solve it now, get it right.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And then just, it'll just keep stacking. Cool. From a churn perspective, it's usually going to be around pricing. And, um, so what I found in that space is that the price points, um, that like have the lowest churn are between like 600 and 1200 a month, um, for, for fitness trainers, et cetera. Um,

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Strategic Business Advice That Applies To Every Business | Ep 840

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And there's usually some component of, you know, two times a year, three times a year, they get to meet up. And beyond that, I don't think you need a huge amount more delivery besides whatever kind of one to many thing that you're doing. If they have at $600 a month, it's not that hard to justify, but that's what continues to stack.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I'll go big headlong tail. So like 3K down, 600 bucks a month after that.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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I prefer pay and then pay immediately. Okay. So it's like rather than, you know, like 5K, I'd rather get, as crazy as it sounds, I'd rather get 3,500 and then have them pay 500 three times in a row Whatever the math works out. Yeah, that works out to 5K. I would rather that because I don't want to have a second sale for Ascension because then I'll lose whatever conversion percentage.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So this is how I think through it. And I would teach this to your teams because they will come to you with ideas all the time. And being able to say no and here's why, I think helps a lot.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So I'd rather just get like 3,500 you're invested. Now we start at $500 a month. Does that make sense?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Great. Does that one churn less than the other ones?

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Strategic Business Advice That Applies To Every Business | Ep 840

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When you pay $3,500, the $600 doesn't seem that bad. That's what I would do. I think you're doing fine on the advertising side. $1,400 is fine. If anything, it's good. So I don't think you should obsess on that.

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Strategic Business Advice That Applies To Every Business | Ep 840

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You've got to cut it by three quarters. That's where you attack. Part of it is going to be a pricing thing. Part of it is going to be expectation setting on the onboarding call. Um, and sometimes a little bit of is the marketing and what they're, how they're getting sold.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah. And also probably just customer avatar, like making sure that you're not taking people who want to start, uh, you know, fitness training businesses, but people who already have training businesses.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And if you tweak the marketing so that the messaging is clearer, you will attract more of those people. Just being like, this is only for people who... And then you keep going into the ad, you'll get more of those.

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Strategic Business Advice That Applies To Every Business | Ep 840

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If not, watch my free show.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah, you bet. Rock and roll. You know, this is a business that is very sales and marketing driven, but if you want to get really big in that world, or really any world, you have to keep customers.

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So number one is every single goal that you have in the business or any action that you're going to take has to increase the number of customers that you're going to get, increase the lifetime gross profit per customer, or decrease the risk associated with making action one or action two. And so...

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And so that business, you can either sell more customers year over year over year, knowing that they're going to fall out the back, or just take the extra year or two and fix the churn in the core thing. Now, my caveat is that will you ever eliminate churning that business? No, but you can dramatically reduce it. It's not going to be the same as a CRM business, right?

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Strategic Business Advice That Applies To Every Business | Ep 840

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It'll just be worse than that, but better than what he's got, right? And so that, by fixing it for a year, would then allow him year over year over year to have consistent growth rather than always having to be worried about where his next ad campaign is going to be doing.

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Strategic Business Advice That Applies To Every Business | Ep 840

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It gives more stability in the business, increases cash flow, increases margins, and fundamentally just makes it a more enjoyable business.

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Strategic Business Advice That Applies To Every Business | Ep 840

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You did 150 sales in December and had a record month using the Black Friday play doing a giveaway. Yes. Now you've got the bigger group that's happier revenue doing $180,000 a month, 6,000 members at 30, right?

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Strategic Business Advice That Applies To Every Business | Ep 840

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And then you have your hire ticket.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Big picture, you'll never feel like the business is solid until you find out how to get people to not leave. Everything else is window dressing. In terms of acquisition, I would rather you go from paid meta ads to adding in paid YouTube ads than trying to go a whole new method for affiliates or a whole new method for content as like your primary kind of like new investment.

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Strategic Business Advice That Applies To Every Business | Ep 840

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When someone comes with some sort of proposal of like, hey, I would like to use some of our limited resources to do something, you say, great. Which one of these things is it going to do? Is this thing that you want to do going to increase the number of customers we're going to get? Is it going to increase how much they're worth?

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so I would probably just go YouTube ads as my kind of like next thing. And you're knocking on the door of a million a month. So it's about that time. Does that make sense?

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Strategic Business Advice That Applies To Every Business | Ep 840

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That's what I would do.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So this gentleman trying to go from six million to over a million dollars a month, so he's right here, right? And his current constraint is that lead flow is volatile because he only has one way to get customers. And so to graduate, he has to fund his second acquisition general for what I like doing, and he actually just ran the play.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so when I started this, I was like, you just ran this referral process play, which he had just done, to generate more cash flow. and then segment long-term lead nurture by lead scoring, and then pick the most similar platform, which in this instance was go from paid ads on Meta to go to paid ads on YouTube. And so that was the most similar thing that he could do to get more customers.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so fundamentally, that's all I did was basically walk him through what his current constraint was, how to graduate for it at this level. And if you want a personalized version of this to know exactly where you're at and know what constraints you have and how to graduate, this scaling ramp is absolutely free. Just go to acquisition.com forward slash roadmap.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And on the thank you page, if you'd like to have my team tell you where you're at and kind of apply this to the business rather than having just kind of like the automated thing, then book a call. We'd love to meet you. Otherwise, enjoy.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So project-based isn't bad, right? You just need to demonstrate. So this is the concept of recurring versus reoccurring, right? And so if you go project to project, there's nothing wrong with that as long as you can demonstrate that you have a high renewal rate between those things.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so I'm in general, I do like having kind of project based stuff because typically you can price two to three types higher than you can for a subscription.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Or is it going to decrease our risk as a business, aka increase the likelihood that these two continue to occur? And if they can't clearly draw a line to how what they want to do changes these things, you should probably not do it. So I'll walk you through an example. So let's say Sharon comes up to us and says, hey, I think we should redesign the site. And you're like, okay, why?

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so you have usually way better cash flow because people are willing to commit to a certain amount for this period of time versus, you know, this forever, which is what a subscription feels like, even though realistically we know that it's not that, that, that case. So, um, You want to get to $100 million subscription business. You have a $1.3 million non-subscription business.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I would say I don't think the limit to your business is that. So we'd have to dive a level deeper and say, like, what's stopping you from getting to $10 million with your current model?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Is subscription already or that's the goal?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay, got it. And you said you have whales.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And you have small companies.

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Strategic Business Advice That Applies To Every Business | Ep 840

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What percentage of companies are in either bucket, revenue-wise?

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so this is full of business owners who ask me questions in person about their particular businesses. What's really nice about this is that there were so many common through lines that applied to every business in the room. Okay, I've got this other opportunity. Should I pursue that or should I keep the one I'm on? I've got multiple customers that I'm serving. Which one should I switch?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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I'm serious. So how do you get whales?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah. Okay. Got it. So if you had twice the outbound team you have now with equal skill, would your business double? Yes. Great. So what stops you from doing that? You don't have a recruiter?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay. So you have a bad recruiter?

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Strategic Business Advice That Applies To Every Business | Ep 840

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So hopefully this line of reasoning was fun for everyone. But that's what we have to work on. The rest of the stuff that we talked about is basically irrelevant. You need to go get another recruiter who's good and can get you outbound guys. Basically, my advice is to continue increasing the outbound team until you can't handle the sales anymore. That's it.

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Strategic Business Advice That Applies To Every Business | Ep 840

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In Wales, fundamentally, it's not uncommon for them to work on projects. Just extend the terms. If you sign, they're currently doing six-month engagements, try to go for 12 or 18-month engagements.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Does that make sense?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah. And that's just as valuable. Like if you have like a five-year contract with a Fortune 500, it's recurring. As far as like an investor would be concerned, it's the same thing. Make sense? Yes. All right. Rock and roll. Hopefully it's simpler. Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

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Strategic Business Advice That Applies To Every Business | Ep 840

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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Well, I mean, I think it just looks a little outdated, right? And you say, okay, understood. Well, how much... Do you think that's going to cost money wise? And she might say something like, well, I think, you know, we get a firm in maybe like 25 grand or something like that to like do a full rehaul. And you're like, all right, got it. How long? About eight weeks. Okay.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Can you just say a higher number when you get to the asking for money part?

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Strategic Business Advice That Applies To Every Business | Ep 840

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I understand. I'm saying, like, what stops you from just changing nothing and just saying a higher price?

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Strategic Business Advice That Applies To Every Business | Ep 840

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So, a couple things. So, one is that it feels like you need to be sold more than anything, which, like... Great. But are you good at it?

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Strategic Business Advice That Applies To Every Business | Ep 840

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No, Christmas tree lights. Oh, yeah. Okay, good. The best. So great. So then you can you can charge whatever you want. In terms of it has the business all come from referrals?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay, got it. So you want to get to 2 million. You raising your prices, what percentage do you want to raise them?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Got it. So the thing is, is like, if you want to raise some 50%, I'll bet you got so much more room than that because you seem not as convicted. So I'll bet you there's like a ton of room. Okay. So you're charging. Okay. Let's just, let's start with 50 and then bump it again. Another 50.

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Strategic Business Advice That Applies To Every Business | Ep 840

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If basically you have no change in close rates and I would like you to keep bumping it by 50% until you see that you're making less money. Got it. That sound okay?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay. That sounds great. I love this. Is that as good for you as it was for me? I'm kidding. That's what your partner said. There you go. Thank you. That's also what she said.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay, so I'll give you a little script for the people who are old that are going to come back, because I know some of them are going to recur, is that I would give them a heads up ahead of time and say, hey, just so you know, we're raising prices on all these new crazy people who are trying to give us money.

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Strategic Business Advice That Applies To Every Business | Ep 840

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But since you're an old OG, if you want to reward you for being a previous customer, I'll honor your old price as long as you buy now for Christmas. Otherwise you'll get the new price. So it's like, I'm giving you the love now because I'm like, Hey, I'm letting you in, but then you can front forward. You can pull cashflow forward. Does that make sense? Perfect.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And then everybody else just raised the price and you'll feel okay about it because you'll have a full bank account. Right. Okay. Thank you. So pricing is one of those weird dogmatic things that founders have these like deep-seated beliefs about it. And I think there's because there's a lot of fear, right? No one wants rejection. Everyone fears their business is going to go away.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And it's usually because you think that like, oh, if I, you know, change the price to one customer, everything's going to change. It's like, well, if you weren't selling, then you can just change the price back next week. But the risk of not testing your pricing is so much greater than the risk of keeping it the same. Like think about it at its absolute extreme.

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Strategic Business Advice That Applies To Every Business | Ep 840

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What internal resources do you need? Probably need to take Tom and Bill and put them on it full time. Okay, great. And what do you expect is going to increase revenue? throughput for the business? I don't know. I guess opt-in rate could go up by 10%. She probably wouldn't say that, but let's just say she did say that. I think we could get a site-wide opt-in increase by 10%. Okay, great.

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Strategic Business Advice That Applies To Every Business | Ep 840

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If you kept your business prices the same forever, you would eventually got a business. Think about how crazy it is because over time prices inflate, right? Costs go up. And so you have to be able to adjust prices. If you haven't adjusted your price in the last four years, you're making 30%, 40% less profit for sure bar none in terms on a per unit basis. So like, why wouldn't you do that?

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Strategic Business Advice That Applies To Every Business | Ep 840

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and so with this particular guy he wanted some like strategy to get his head around you know i i want to charge more so how do i increase the value but he's closing a ton of people and he's obviously doing a good job and so the easiest way to price higher is to just raise the price and i just gave him a little tactic which is you want to reward existing customers

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Strategic Business Advice That Applies To Every Business | Ep 840

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but the thing is you can reward them whatever you want so you can reward them by giving them early ability uh to pay you you can give them a discount for three months if it's a recurring membership so it's like hey i'm changing the prices you know today effective now but i'm grandfathering you in for three months right rather than forever right so as long as you give them some consideration it kind of like smooths things out and it's easier for a discount to go away than a price to go up

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so increase the price, give them the discount. Say you grant for the discount for three months or six months, and then the price goes up. So what Don was struggling with is an issue that I cover in the $100 million offers book. So he was dealing with a virtuous versus vicious cycle of price.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so there's always this fear of like, okay, well, if I decrease my price, maybe I'll make more money. But when you decrease your price, you decrease your client's emotional investments. You decrease their perceived value. You decrease the results they get. You increase their demandingness towards you. They're more of a pain.

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Strategic Business Advice That Applies To Every Business | Ep 840

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You decrease your revenue per customer so that you have less money to actually like do the thing that you delivered. You have less profit, less value for yourself, less perception of impact, lower service levels, and your whole sales team, which sometimes when you start it's just you, your personal conviction drops.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So wouldn't it be so much better to increase their emotional investment, increase results, increase demandingness, increase the revenue for fulfillment so you can get better talent, and have more profit, increase your own perception of self, increase the service levels you have, increase the impact, and increase your own conviction?

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so the thing is, is that changing your prices is the single easiest thing that you can do operationally that can make you more money. And you should always exhaust that as fast as you can before thinking about other things. Because literally the only thing you need to do when you raise your prices is just when you get to the end of the sale, say a different number.

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Strategic Business Advice That Applies To Every Business | Ep 840

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It's like every, it's like I say it on one podcast, like four years ago. It's like everyone, it was like the best HubSpot endorsement ever.

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Is there anything else that we can do for $25,000 and eight weeks and two of our people full time that can get us more than 10%? And if the answer is yes, then we shouldn't do that idea, that Sharon's idea. We should do the other one instead. And so fundamentally, the thing is, is that there's lots of very logical reasons of things that can increase the business.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Um, stake, basically you just need like your CEO of it for basically this whole quarter. It's the easiest way to say it. And so I would have really rapid feedback loops with each of the department heads. Um, if you have functional heads at the holding company, um, and then you'd want to have basically separate lines of communication for all the location heads.

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Strategic Business Advice That Applies To Every Business | Ep 840

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So I think about, do you use Slack or something like that?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Okay. Yeah. So I'd want to have basically different threads by function. So one is the actual function. So people who are handling sales, people handling marketing, and I'd have the leaders there.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And then I still want like, you basically want the different slices, basically lines of communication to the different slices of the org so that you can get as much transparency top down into how it's working for them and making their life easier. And then that way you can triage the

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Strategic Business Advice That Applies To Every Business | Ep 840

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Basically, because you have limited resources in terms of which of these bugs are we going to fix, which process flow sucks. And then you can basically stack order which of these things has the highest driver for revenue. But you can't really do it appropriately unless you basically can drink in all that information. And as, are you CEO? Yeah.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah. But, but you're in charge of it. So you're CEO of this. So, um, that, that's, that's basically, basically it's just like, you need to eat, breathe, breathe and sleep this stuff.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah. Just like, it's okay that it is unscalable.

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Strategic Business Advice That Applies To Every Business | Ep 840

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But you have to do that in order to make it scalable.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Yeah. You bet.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I just wouldn't.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I wouldn't do it.

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Strategic Business Advice That Applies To Every Business | Ep 840

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You're going to go from six to 15 this year. Do that.

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Strategic Business Advice That Applies To Every Business | Ep 840

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Like I'm not, I'm not trying to be like a short to like, like these are, these are the mistakes that we make. There will literally always be money on the table. Like you, you can't sell everything as much as you want to. Like you just, you just can't.

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And the thing is, is like, if said differently, if this company can go from six to 15 and the next year goes from 15 to 30 and the next year goes from 30 to 60, if you hit the same numbers and have two different product lines versus one, which would you rather have one? Right.

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And I'll also tell you that if you just do with one, you'll increase the likelihood, not decrease the likelihood that that occurs. And so like, that's all the, that's the focus and discipline stuff that you hear all the Steve jobs and all that. Like, it's just, it's, uh, he called it the, uh, the quantity of unbelievable ideas that, you know, you could crush that you say no to.

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The question isn't whether it's going to work. It's but to what degree will it work? How much is it going to work? And fundamentally, the best entrepreneurs get the highest returns for the things they put in. That's the game. And so I think about this all the time because the highest leverage moves are oftentimes moves that are off the board. They're moves that you don't see.

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That's what focuses.

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Um, when we have bandwidth, which if you're continually, like if you're basically doubling every year, your bandwidth is getting eating up by doubling. So just double. Basically, it's like, why, why would we do it?

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Yeah. But if it's like, I want to grow, why would I like, why? Like, then let's just grow with the thing that already is working and is really profitable. And we know everything about it rather than this, you know, crazy girl in the red dress that like walking by and like has a crazy boyfriend, has crabs. You're like, what's going on? You know? So like, why bother? It's like, we have this girl.

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She loves us. She knows me. I know her. Let's go. I define focus as the quality and quantity of things that I say no to. And so if you think about commitment, the ultimate commitment is the elimination of alternatives. You have nothing that you can do besides that one thing. That is the ultimate, like the perfectly focused person who plays video games would do nothing but play video games.

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Everything that is not that decreases his focus. And so focus isn't like, are you focused or not? But how focused are you, right? And so the idea is the more things we eliminate, the more focused we are. And so that is always my constant reminder, especially the Steve Jobs quote, because he's like, it has to be something that you want to do in your core.

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You know you could crush and you still have to say no. Yes, sir.

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The Coaching Federation, internationally, you have the certification. 18 people is the cap. How do we get around it? Let's go.

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I like working. I spent a year thinking about that question when I had enough money to do whatever I wanted and could just live on treasury bills for the rest of my life. When I looked back on the days that I enjoyed most, they had three things in common. I worked out. I ate with people that I liked and I worked hard and had something to show for it and had nothing left in the tank.

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And that's where sometimes you meet somebody who's in your industry and all of a sudden they change your paradigm and they show you a different move that you get 10 times more for what you put in rather than continue to play the kind of incremental game that you're on. Now, that being said... you know what, I'm going to explain this because I think it's really worth it.

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And so once I realized that those were the days that I enjoyed the most, then I made it my goal to live as many of those days in a row as I could. And the way that I live my life bothers a lot of people and that's okay. And so I think, I mean, I got that advice when I was 22 years old from, I'll just, whatever, from a person in my past. And I'd had a good weekend and I started work.

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And she said, you're in a good mood. And I was like, yeah, I just had a good weekend. She was like, I'm pretty sure the secret to happiness is living as many days in a row like that as you can. And that was like the closest to operationalizing kind of joy that I'd ever heard. And so I have just stuck with that. And I think that the things that bring you joy will change over time.

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But I think that structure of just trying to find what that perfect day is and living in as many days in a row as you can is kind of the way to do it. That's how I do it. You can do whatever you want.

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As a side note, for those of you who feel like you have lost your passion for your prospect, And I'll, I'll, I'll give you a simple example. Like I used to sell weight loss to women between the age of 25 and 55. And at a certain point I just really stopped caring. Um, they were like, Oh my God, my life changed forever.

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And I was like, I know you had a calorie deficit and you moved like, yes, that's how that works. And I would have to kind of like fake myself into feeling excited about it. And, um, It really bothered me because I was like, I quit my job to do something that I loved and I don't really care about this. I ended up loving business more than I loved weight loss. And then I fell into that.

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But I had a friend who was a personal trainer who quit being a personal trainer and started a cookie business. Brick and mortar, big cookie store, like did it right. And I remember being like, are you passionate about cookies? And he was like, not really. And I was like, but he crushed it. He did a really good job. Everything was like really tight.

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And what I realized was that he was passionate about doing things well, rather than the cookie business. And once I realized that, I was like, oh, I don't have to be passionate about weight loss, but I can be passionate about being good. And just saying like, when I do things, I will do them well. And I think that has been something that has helped me stay motivated in times when I feel less so.

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So one of the biggest breakthroughs that I had as an entrepreneur was my understanding of change and cost of change. So I'm going to show a little visual here. Let's say this is normal business function. All right, your business is moving. Everything's fine. Okay. Now, Let's say that you change something in your sales process because you think it's going to get better.

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Paul had kind of fallen out of love a little bit with his business, which is, I just want to say, if you're an entrepreneur, I get it, and you're not alone. It's very common. You've been getting beat up for two years, three years, five years. You're trying to support your family. And at some point, you just feel like it's just the amount of crap that you have to deal with on a regular basis.

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It's no longer romantic anymore. But the thing that really changed my perspective on this was leveling up the ideal that I wanted to be loyal to, right? So originally it was like, I wanna be loyal to my interest in weight loss or my passion in weight loss and fitness. But over time, I just found new interests. And for me, from a forever perspective, I always want to be excellent.

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And so that becomes a hypothetical ideal that I can always chase and never achieve. So like I want to be great at what I do and do excellent work. And so every day I can improve towards that ideal independent of whether I'm baking cookies or selling weight loss or doing IT services or cybersecurity or coding for software or sweeping floors.

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Like it's a very trite statement of how you do one thing is how you do everything because I don't necessarily agree with that. But how you do the things you care about is how you do the things you care about.

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Hello.

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When you say channel, dial into the channel sales that you're talking about.

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So like affiliates.

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Got it. Okay. So you're an affiliate expert for big IT companies and you have a network of people that can do, basically sell their services for them with a markup.

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So the question is, well, I mean, it sounds like you did okay with your announcement. Why do you feel like you can't out-compete the other people?

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And this is the channel part. So the crowded part doesn't bother me at all.

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Cause that just means that there's lots of demand.

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So the 14,000 people, you have a lot of high up people in those companies who follow you.

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I mean, you could do either path, but I mean, it's a good question. Um, I think it's more the statements that would initially jar me of like, it's saturated, I think it's going away, things like that. Because my big questions are always logic, evidence, utility. So what does that mean? Define that for me. How do you know that? And so what? Logic, evidence, utility.

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So when I asked channel partners, please define that for me, it's like, okay, that's affiliates. How do you know that they are going down? How do you know that?

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Who's on the market for 11 months?

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Okay. And those people are looking for jobs?

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Well, this is what's going to immediately happen. which is that you're going to go down by about 20%. This is just from pattern recognition from doing this for a decent amount of time. You change stuff, basically your team has to relearn a new process, customer success, marketing, onboarding, content, whatever. You're going to go down by 20% because they just don't know what they're doing.

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And when you say a lot of people reached out to you, like how many is that?

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Okay. The big conflicting data point I have is that you like made a post and made 360 grand. Yeah. So just shut up and focus. Yeah. No, I mean, it's real, though. But I think I'll tell you what I like. If I'm in your shoes, I get excited by this stuff. Maybe because I'm broken on the inside. Who knows?

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Yeah. And like, I see everyone bleeding and I'm like, let's, let's finish them off. You know what I mean? Like they didn't deserve to be in business to begin with. And I will make sure that everyone knows.

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And so if you have this in and you're better and you're seen as a market leader, if things are consolidating, for example, then it means that like, as long as if the industry isn't going away, but it's consolidating, then it means a winner take all. So it just means the stakes got higher, which if you're better, that's a good thing.

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No, you bet. What Heather presented with is super important because a lot of businesses deal with this same issue, which is the perception that the market's getting harder and the perception that saturation has gone up and those both may be true and so what. Right. And so the thing is, is that like business pretty much always gets harder.

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And in the opportunities where you have in the sectors where there's opportunity, more fish are going to come. Right. More sharks are going to enter. But like that's not always a reason to not pursue it. It just means that you have more competition. You have to be better. And so in some ways I can see lots of demand as a big market to go after. And if you're good, there's just more for you.

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Now, I want to be clear. There's a difference between consolidation and degradation. So a degrading industry would be like newspapers, right? They're getting smaller and smaller every year. But a consolidating industry is when the same amount of demands there is just aggregating into fewer, fewer customers.

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And so given the fact that Heather is better at high level deals with these bigger companies, it felt like a

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good a good risk adjusted move for her to go after that kind of big pie because she already had a company she'd already sold it she had good connections there she immediately made a post and made you know three four hundred thousand dollars to me it's like she's got a good reputation obviously like it seems as though she's doing a good job and so i have a hard time telling someone to start brand new in totally different industries totally different spaces where they don't know the devil that's going to come whereas here it's the devil she knows

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because she gets to harness the compounding benefit of being in the industry for a long time is that you know how it works and you know how the game is played. And so if you look at some of the richest people in the world, it's people who've just been in the same industry for their whole careers. And so it's really hard for me to give someone advice to be like, yeah, just change it.

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Okay, so if they're down by 20% and you thought you were going to get a 5% improvement from this thing, if it worked, is it really worth the bet? No. Now, this is where it gets really hairy, because some people are like, well, you know what? It'll improve by 5% a month, and by month six, I'll be plus 5%. But let's be real.

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Self-crack, if you will.

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But you have a practice.

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And then you also have an academy where you train other chiropractors.

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Yes. And you also want to start a physical products business.

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You don't want to leave money on the table. So, okay. What's revenue right now?

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You want focus? You want to do that by doing more things?

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Sorry? You have the Academy though.

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Month two, you're going to think of something else, and you're going to be here again. And so what this has translated into, for me, is two things. One, and I'm going to be crude on purpose here, some shit stays fucked. And so what I mean by that is, is that there are things that are in your business that are wrong and that you're like, this drives me nuts. And that's okay.

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So you're saying it takes time to build a big business?

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Yeah, I believe you.

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Let me help for a second. Sorry. You're good, man. You're also like probably, you know, everyone's laughing, but like you're probably one out of four, one out of three of you here is in this exact same boat. So hope so. Here's the thing. The opportunity will only get bigger, not smaller. So the rush that you have is a rush to do a smaller version of what you want.

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One's easy to get, one's harder to get. The other one that's harder to get is more profitable. The market's getting hard right now. How do I continue to scale despite that? And a few more questions that affect just about every business owner. Enjoy. Okay, Q&A stuff. So, typically I have a longer preamble that I'll do going into this. But before I do, did you guys enjoy this morning? Yes?

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Because if you get bigger on social media, you will have more customers who want to buy your thing. right?

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Strategic Business Advice That Applies To Every Business | Ep 840

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Oh, no.

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I had nothing to sell anyone for years. So, point being, the thing is, I don't actually think I'm going to convince you. I think you're going to do it. No, I'm serious. So, I don't even know if there's a point. You want to sell your thing. You want to sell your widget.

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So, what am I going to do?

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You want to be CEO of multiple. There's a difference between ownership. I also own stocks in zillions of companies online.

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So no, you have not. This is important.

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So for everybody, there's a difference between owning something and being CEO and operator. You can only really operate one thing. That's it. If I buy a stock in Apple, I'm an owner. I don't do anything, but I'm an owner. Does that make, do you get the difference here? Yeah. You're like, well, I'm going to be more. So like the, where you would get me if you wanted to was school I'm the face of.

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But when I did that deal, I said, I will change nothing about what I do. So my regular day must remain the same in order for me to do this deal. I'm going to continue to make content. I'm going to continue to record stuff. And then all I'm going to do is point in a different direction. That's it. So the pointing is a copy paste on a link. Everything else remained the same.

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So I boil this down to what does this change about what I do? And so the reason that this is very difficult is that you're going to start another business and it's going to change what you do.

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All right. I don't know what your question is anymore.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I would take your 500 medical people and be like, how do I go from 500,000 in my first year to 5 million? That's what I would do. You already have something that works. You already have a following of people who have this thing. If you want, you can sell through them as an affiliate base. Then you have one business.

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Yeah, I had no idea where this was going to go, but it seemed like this guy had a lot of stuff going on. This was a classic entrepreneur ADD rush issue. And so fundamentally, I think the reason that entrepreneurs end up opening up multiple things is because we're all in a rush. We all think that somehow an opportunity is going to disappear. So there's two things.

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Number one is that opportunities do disappear, but then other opportunities come. So there will not be a shortage of opportunities. The better you understand the game of business, the more opportunities will come your way that you'll have to learn how to say no to. There will always be opportunities. That is a promise. I don't promise often. You can take that to the bank.

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And there's tons of things. Literally, I have a list. It's Alex's big list of ideas. It's six pages long of things that I think we should do better at acquisition.com. And whenever I get up and I see people breathe for a moment, I'm like, I'm going to pull another one off the list. I'm going to mess their days up. It's going to be great.

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There will always be opportunities. The next issue is the timing around this, which is... some opportunities actually just get better with time. And so I'll give you a perfect example. So if I say no to people introducing me to people today, and the reason they're introducing me is because I have a big business.

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If I continue to grow my business, the people who wanted to introduce me to these other people today will want to still introduce me to those people tomorrow. But I'll also unlock the people that, now that my business is bigger, will want to also introduce me to even more people. So the opportunity grows by me not taking up the opportunity.

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And so the thing is, is that he's got this brand, he's grown it a little bit, and so he wants to basically monetize it because he's like, some people wanna buy something from me. Well, welcome to advertising, right? But the point is, is that those people aren't gonna go anywhere. And maybe even if those specific people go somewhere, If the brand doubles, he'll have more people that'll come up.

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That's the new opportunities will present themselves. But the thing is, is that you have limited resources and bandwidth. And so we have to allocate that to the highest return opportunity. And if he in the first year of a new business does $500,000, probably very profitably, I would have a hard time being like, yeah, now a year later, let's start another business.

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And I only say that because I've only done it every other time in my career and made a terrible mistake. And it's just like, I'm so vehement about this particular mistake because I have done it so many times. Can you hire a CEO for a business? Yes, but unlikely for a couple of reasons. So number one, he had a very small business. So the likelihood, think of it from a numbers standpoint, right?

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So let's say that he's got a business that does $500,000 a year and let's say he's profiting $200,000 from it, okay. So it's $200,000 in profit. what is he gonna pay a CEO to go like run this business? It's not even gonna be a CEO. It's gonna be like a manager, kind of. And so it's like, okay, maybe you can pay $100,000 a year for someone to do that.

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But then there's $100,000 a year that's left over in profit. But that assumes that that person's gonna run it as well as he does as the founder. And that's unlikely. And so it's likely to have like a decrement in performance. So like, would it be fair to say a 20% decrease in performance? Yeah, that's fair. And guess what? Now it's breakeven, you make some money.

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So like it's so small that unless you have a manager model that like is really built for that, like brick and mortar stores can sometimes work for things like that. It's unlikely to be able to find somebody who can take over like his influencer business. But can bigger businesses hire CEOs? Sure. But if you also look at the biggest businesses in the world, almost all of them are still founder-led.

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And I think that there's a little bit of a pendulum right now that's kind of swinging from like professional managers to the people who are like the heart and soul of the business. Because the one advantage that you have as a founder is that you wrote the rules so you know why they exist and you know how to break them and when to break them.

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But the thing is that I appraise those things that can get better by can it at least improve this process or the overall business by over 20%. And so that's my rule of thumb. If it's not going to, if I don't have strong confidence that this will have a more than 20% lift, I'm not willing to take a guaranteed 20% cut.

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And so when somebody else takes over, they're like, well, these are the rules, but they never derived them from zero. And so if you know how the infrastructure was built, you know how to navigate it without messing up the business overall while still accomplishing the objective. So fundamentally, you make the system more adaptive because of your knowledge of it.

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Self-cracking.

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You're 3565 referral versus meta. You did 48 customers per month. Yeah. The issue that you have 750 when it gets to 2.3.

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because we're losing- You lose half your customers, but you keep a little bit more revenue. So you're talking revenue retention versus- Yeah, so I'm like, which one do I focus on?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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And if you made more money, you'd definitely be happier. Not necessarily. That was a joke. Okay. So you have a location, you're doing 750. What does it cost to open a location?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4451.38

Well, outside of real estate, what's the cost to outfit the location?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4462.287

Okay, got it. What's profit?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

448.088

Because what you'll find is that if you actually do none of these things, this is what happens in reality. People just get better at doing their jobs. People just get more efficient. Humans don't want to work as hard. They find better ways. And so not changing things in and of itself oftentimes does result in improvement.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4483.081

Well, what's SDE? So seller discretionary earnings. So what do you make plus the profit of the business?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4490.306

Each? No. Total?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4492.288

And you have 13% on 75. So another 100. So 200K on 750. Yeah. Okay. Got it. So whatever. That's 20, 30, 30% ish margins. Okay. So you want to get to 2.3. Why 2.3?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4512.293

Okay, so that location can do 2.3 million. Okay, so the issue is we have to solve retaining customers. Now, if you keep 50% of customers Like if, if let's say you lose half your customers, you're one, but then after that they stay forever. That's fine. We just have, we just like in next year, you'll double.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4531.355

If that isn't the case then, and you lose half of those customers the next year and then half of those the next year kind of thing. Um, I would see what we could do to improve that. Um, that being said, you're in a business that traditionally is marketing heavy. Um, it's kind of like weight loss. Cause like people get fixed and then they're like, yeah, deuces.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4552.555

So, um, the, the strategy that I've seen that has worked really well in the chiro space is basically going significantly higher ticket number one and number two, niching down in terms of the different problems you solve. So this is like neuropathy, um,

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4568.4

You know, diabetes stuff, those types of like kind of segments and having more targeted advertising for those avatars and selling significantly higher price packages. And that's typically how those businesses will get to like a few hundred thousand dollars a month just with one like very small store.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4588.325

And so typically that model is a, you run ads for some sort of free workshop, free dinners, free whatever.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4598.132

So then what's the ticket price that you're charging?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4602.095

Well, you're selling 50 customers a month and you're doing 60K.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4614.162

No, I know. But if I just did simple math, I'd say $60,000 a month, 50 new customers, average customer is 1200 bucks. Yeah. Okay. So it's not the same model. Cause I'm talking $10,000. Right.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4626.432

Yeah. So I think you have to get niched down in terms of, so like if you're doing all those things, I think you probably need to add a zero to your price tag.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4638.262

Like, well, then it won't change. You'll still be the most premium.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4653.547

Like, would that be, well, if you keep half your customers, you're pretty close to three. So again, you're pretty close to three. If you keep half your customers, right.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4664.851

I mean, are there things that you could do to improve it? Sure. I think you have more of a model issue. Like you obviously can acquire customers and you're doing a decent enough job keeping them. If we need to improve how much money this thing makes, it's either a pricing thing. Basically it's an offer and pricing thing is that you need to charge more so that you can make more money.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

468.724

And so if I know I have a guaranteed cost of 20% and basically a fixed improvement of 5% to 10% that I'm going to get from doing nothing, I now have a 30% spread for change. You've got to be really sure that it's worth the bet. So this took me way too long to really understand. And so I would encourage you, if you have this big list of things coming from here,

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4688.064

And then once you have the cashflow, then the expansion becomes pretty straightforward. That goes for basically everyone. Like a lot of times it's like, you know, we're doing 20% and you have what I would consider is like a normal business.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4699.665

makes money we work hard but there's no like you never feel like you really can like get ahead yeah it's usually because there's some significant hole in the business and you're decent at both sides and i think that the issue is that you just you need to be making way more money okay which is i think you need to add more do you sell physical products and consumables Not really.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4725.31

Do you sell like braces and orthotics?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4734.157

So the key is there's two models that have worked really well. One is where you basically upsell them some sort of machine that they can take home and do other work. And there's a big markup on that. And the other is supplements.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4748.393

Because you can sell a year's worth of supplements or six months worth of supplements upfront, make a really good bit there and it doesn't increase your operational drag at all. Because you just make the sale, give them the product. Does that make sense?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4763.106

But that's what I would add in to justify the higher price so that you could make more money per customer, which will then make you more money overall, which then fixes the model, which then allows you to scale.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4774.275

Rock and roll. All right. Thank you. So he's kind of at the five getting to 10 employees. So he's at stage four. And so if you look at his product, he said yes to anyone who would pay. And because he's getting feedback from so many different customers, he has created so many different products and services. There's basically too many different things.

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Strategic Business Advice That Applies To Every Business | Ep 840

4793.178

And so what I wanted him to do was get really clear on a higher level avatar. So specialized product and price to serve niche down customer. So I talk about the neuropathy and diabetes and kind of like thyroid. These are all like kind of sub segments that allow a chiropractor to charge much higher rates.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4812.374

And so we had to reconfigure the offer and the avatar to charge more and then ultimately make significantly more profit for the business. Now he had a decent marketing and sales machine and I would say he had a decent delivery machine and as a result had decent margins.

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Strategic Business Advice That Applies To Every Business | Ep 840

4828.085

And so all we need to do is just change the offer and we could probably double or triple the business from that one move alone, which then opens up cash flow to then hire the people he needs to then be able to expand. Because at his current profitability, 13% margins after you have a manager essentially, you know, it's not a compelling model and that's with him running it.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4849.038

So, you know, if you spend $100,000 and you make something that makes $90,000 with you running it in profit, not including the manager pay, which he was taking personally, it's not a super compelling model. And so we had like, what you'd want is like you pay 100 and then it makes like 400 or 500. You're like, this is a model and that kind of cashflow allows you to scale.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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So that's what I wanted to get to. And I think honestly, if you just does that one thing, you could easily add 250, $500,000 to the business with maybe half that drop into the bottom line. Now you have a much more interesting business. Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

4890.924

Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

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Strategic Business Advice That Applies To Every Business | Ep 840

492.008

Pick the three that you think are absolutely, there's no question in your mind, are going to increase the business and cost you the least amount of operational risk in order to implement. Okay. So going back to this, and now I'll go to Tuesdays. Let's say that we say, all right, we want to increase, you know, a number of customers. Great. So let's say to do that, we want to double our sales team.

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Strategic Business Advice That Applies To Every Business | Ep 840

4923.663

It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

515.18

Okay. So when we do that, we have three options for any strategy. And if you follow my stuff, hopefully this should look familiar. But either we're going to do more of what we're already doing, we're going to do what we're doing better, or we're going to do something brand new. So if you're sub 1 million, you almost always have to do more. period.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

538.728

You're just pretty much like there's, there's a math explanation behind it, but basically if you're, you know, you're closing at 25%, you know, your sales guys are, and you're like, okay, uh, I could spend my time trying to get the sales guy better. And maybe I'd go from 25% to 35%. Okay. That would be material. Um, or I could just hire another salesperson, salesperson and double the business.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

560.38

Well, you should probably just hire the second salesperson and double the business. When you get bigger, when you have 20 salespeople, um, If you wanted to have, let's say, you're closing the same percentage, 25% close, right? If you wanted to go from 25 to say 35, in order for you to make that same increase, you'd have to get like eight more sales guys.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

579.279

So at that point, it's like, well, maybe it makes more sense for us to kind of retrain the team. And that would be a better rather than a more. And so math-wise, you can just math out which one of these actually makes more sense based on the risk and the cost associated with basically doing whatever path you're choosing to take. Does that make sense? Okay. So...

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Strategic Business Advice That Applies To Every Business | Ep 840

596.963

we wanted to get more customers we said okay could we improve our close rate or should we get more sales guys we said we're gonna get more sales guys and then if i see quarter over quarter that i have the same objective and it hasn't happened I usually have a who issue.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

611.644

And so one of the things that I made a lot of mistakes with this early on, and I would say even midway on, maybe even three quarters of the way on too, was that I would come up with a plan. I would check this out. I think it's a good return. I think it's low risk. And then two quarters in a row, it hasn't happened yet. And so then my immediate assumption was I must have done something wrong.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

632.616

This is a bad plan. More times than not, the plan is not that bad. You just have a bad person doing it or somebody who's incompetent. And I used to have a lot more like, you know what? Last two quarters, I know Sharon's going to turn it around. I think this is going to be your quarter. And I just don't have enough time for that anymore. I want things to improve.

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Strategic Business Advice That Applies To Every Business | Ep 840

655.661

We're on a mission to do what we want to do. And I just really need competence. And so at the end of the day, I think we do Sharon a disservice because there's a company that has mediocre standards that she will be welcomed to in open arms and feel at home and find her brethren be able to move up in that company because everyone there sucks and she's mediocre.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

67.334

Okay, awesome. It was cool to meet other people from the portfolio. Okay. Yeah. So those are the people actually do the stuff that we do kind of every day. Um, and hopefully I kind of fulfilled on the promise that I made yesterday that yesterday was all kind of like theoretical. This is kind of the framework that we think about creating value today. It was all about kind of tactics, right.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And so by, you know, imagine the fulfillment that Sharon could get in that company compared to yours. And I feel like I owe it to her to release her to that. And so I want to, you know, release her to free agency. Okay. So jokes aside, let's get into Q&A.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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I just like this as a backdrop for when you're making, okay, which thing am I going to be focused on so that's going to move my company forward the most in the shortest period of time? So guys, what you're listening to is one very miniscule sliver of the scaling workshop that we run here at acquisition.com in Vegas at our headquarters.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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If you want to be in the room and figure out exactly what you need to do to scale, then come check it out. Obviously, you got to be a legit business owner, got to have employees, got to have revenue, all that kind of good stuff. I think the room that this was, I think the average is over 3 million in terms of business size. So pretty legit businesses.

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Strategic Business Advice That Applies To Every Business | Ep 840

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And if you want the easiest link in the world, acq.com forward slash go.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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I make 1 to 100 million a year. In there. You're good.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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Cooking skills, balancing a budget, things like that.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

810.087

How do you make money?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

87.301

And actually making sure that you're asking the right questions and move your company forward the fastest. So, um, The big thing, hopefully, that I would like for you to get out of this is making sure that you're prioritizing the right things. And so I have had the fortune or misfortune, depending on how you see it, of sitting on a lot of quarterly meetings and annual planning.

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Strategic Business Advice That Applies To Every Business | Ep 840

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I don't know if that makes sense. Okay, say the two people that you're running it out to is the difference.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

887.584

The kids? Yeah. What's the revenue split now?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

893.877

So the whole kids thing doesn't exist right now?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

901.759

I was like, this guy's doing the Lord's work. He's like, well, someday. He's like, for now, I'm just a landlord.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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Well, technically, he fucked her.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

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This is the highest Q&A I've had today. For sure.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

945.956

Got it. Okay, that helps a lot more, context-wise. Just thought you'd sneak that by me. I'm kidding. That's what your partner did. Anyways. Okay. So how quickly are you able to fill it up with the professionals thing?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

963.32

Wait. No, so you can fill up all your properties using the professionals? Yes.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

968.628

Okay, so is it just that your heart's not in it with the professionals? Yeah, my heart's not in it. Okay, cool. Well, first off, kudos. How quickly can you fill it up with kids?

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

981.359

Yeah, I'm guessing you have a cash flow issue in the meantime.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

986.204

Yeah, I think you've got to bridge the gap to where you want to go.

The Game with Alex Hormozi

Strategic Business Advice That Applies To Every Business | Ep 840

989.086

So basically... Sometimes you got to do what you don't want to do to get to what you do want to do. As much as I could be like, you should only serve the one person. I think that you have the properties you already have leases on. You have the commitments that you have to stick with. Fill up the properties with the working professionals so that you can create cash flow.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

I've been teaching sales for 13, 14 years now. I've taught a lot of salesmen and I realized that I was missing this one piece. I call it the AAA framework. Okay. So basically there's this gap between when someone presents an obstacle, which is anything that's not a yes after you've presented price. Okay. So if you present a price and you said you want to buy and they say anything that's not sure.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

111.176

And when you say back to them what they said, they're like, oh, this guy cares. Right? right? The second thing is that when you acknowledge what someone says, you can take seconds to do that. And by taking those seconds, you buy yourself time to think about what you're going to say next. All right. So rather than having, and this is where I think you lose rapport.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

126.931

Otherwise it's just, someone says, I need to think about it. And then you go right into an obstacle overcome. It sounds like a sales response, but if you say, Totally interesting. You think about super reasonable. All right. So first day is acknowledge. Second day is associate. So you associate their response with buying behavior. All right.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

146.07

So what they thought was a step away from you, you actually say, you know, it's funny you say that. That actually makes you just like John, who I talked to earlier today, who was just like you. And he ended up buying blah, blah, blah, blah. And so there's three types of associations you can make.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

159.563

one is you just make a generically positive association so you just say that's a smart question that's a great question super reasonable all right things like that you just say it makes sense that you'd ask that question okay that's just a generic positive that's what i would consider the the lightest version of this the second version is you talk you create a foil which is basically you create a fictitious straw man or somebody who's just right next to them that's just like them that asked that exact same question but then bought

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

185.825

right i like to do two of these so one is either somebody who just bought earlier today or you remind me of janet who i was talking to six weeks ago she had the exact same thing and today she just lost 30 pounds that makes you just like our biggest success stories all right so you can either associate with buying or you can associate with the people who get the best results so this works for any type of overcome so if someone says like hey this is a lot of money i say

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

21.173

All right. That is an obstacle or technically it's an objection. They said, no, what I realized is the best salespeople. And I had this as a pro tip at the beginning as just like two bullets. And I was like, oh my God, this is the whole training. And I just, I've been doing it for so long. And the best salespeople do it so subconsciously.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

211.798

that's amazing and people are going to be in shock they're like what do you mean it's amazing i know it's amazing it's good that's a lot of money because it reminds me of janet so janet was uh what if i share a story with you yeah okay cool so janet was somebody who's just like you same age same thing has two kids

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

225.51

she said it was a lot of money do you mind if i share with you what i told her right now so here's the thing is that when you create a foil you're not saying the hard truth to the prospect you're saying the hard truth to the person next to the prospect you're saying the hard truth the person just like them but not them so then you can be brutal

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

243.354

to this fictitious person that doesn't exist who's right next to them and say like i said the same thing to janet but you know what if i tell you what i told her and then she ended up losing all this weight yes cool sure it's actually amazing that it's a lot of money for you because it means that you're going to be more committed the thing is is that you've always known what it takes to lose weight the problem is when you haven't done it right and so the thing is the fact that this is a lot of money like you've bought things before right they've tried to lose weight it hasn't worked you told me that this isn't this right hasn't worked but i don't think you bought something that was enough that it would hurt for not to work

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Closing Made Easy: The Triple A Framework Explained | Ep 810

272.045

And so that tells me that you're actually going to be committed to it. And so if you're actually committed to it, do you have any doubts that if you actually do this, you're going to hit the goal? No. All right. Well, then you should be more convicted than anyone. Again, I'm not telling her. I'm telling her about Janet, who's just like her in every way.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

289.009

The last way is that you can appeal to authority. If you have status, you can then say, hey, I had a similar situation. I used to believe the same thing. Do you mind if I share something with you that a mentor told me? You can say that, but they have to care a little bit that you have status.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

306.15

Now, if you're an 18-year-old trying to sell 40-year-old business owners, not going to work because they're like, I don't give a fuck about your beliefs. So what you can then say is you appeal to somebody else's authority. So you say, it's funny you say that. Alex just told me this thing this morning. Can I share it with you? Right.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

318.676

So if you have a sales team and you have authority, you can train them by saying you can appeal to me. I can be dad. Right. Hey, it's funny you just say this. Alex, let me this thing this morning. Mind if I share it with you? Right. So I'm just being the messenger. I'm not. And he said it not about you. He said it in general. Right. So in all of these situations, we're not insulting the prospect.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

339.124

We're attacking the idea that someone else said who's just like them. The point and the importance of AAA, and then the third A is then you ask, right? So then you ask. So you acknowledge what they said. Totally makes sense. I understand you say that. I think it's really smart. Make the association. It's just like X, Y, Z person. And then you say, do you mind if I share this story, right?

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

360.399

And then you go make your explanation and you make this and then you ask for the next sale again, right? You move on to the next. That will allow many of you, I retrained my team on this AAA concept and across the board, all close rates went up.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

37.025

Like we question all of our beliefs, except for those that we truly believe in those we never question. And so it was like, this is such an unconscious competence for me and the best salespeople that I've never heard anyone teach it. But basically the AAA framework looks like this. If you look at a study of the salesman who closed the most sales, Do you want to know what they all have in common?

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

372.668

So I see that as effective teaching is like, if you just get up front and you talk a lot and then nothing happens, then I'm like, well, they didn't learn anything. Their behavior didn't change. But by simply doing this, it also allows you to avoid these pitfalls and these traps. And so there are trap questions that come up that you never want to answer.

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

390.403

So I'm going into a side quest on sales, but let's just roll with it. A lot of people will ask questions that there is no right answer to. So let me explain how you know that there's no right answer. If you don't know what the right answer is, then it's the wrong answer. So for example, if someone says, well, how many times a week do I get to be on a call with you?

The Game with Alex Hormozi

Closing Made Easy: The Triple A Framework Explained | Ep 810

411.95

in your community and you're on the phone, what do you say? Now, an inexperienced salesperson will just answer the question, but that allows the prospect to determine whether or not your answer is up to their standard. And then they choose to buy or not. No, no, no, no. Like a lawyer never asks questions that they don't know the answers to.

The Game with Alex Hormozi

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The person who's asking the questions is in control of the sale. And so if they ask you a question, that means they have now taken control of the sale, which means that they're now selling you. No good. So instead, when someone says, hey, how many calls a week do you have? You say, how many were you looking for? Hot potato right back to them. Because you want to be like smoke.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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You never want to answer questions unless you know what the answer is correct. Now, if they're like, well, I would hope that I'd be able to hop on once a week. You're like, perfect. We already got that. Got that taken care of. Now we can move on to the next thing. Ready to buy? Ready to rock and roll? Ready to start on Monday? You have an idea on you, right? We move forward for the sale.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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And so with each of these, you always pivot that way. So it doesn't matter what the question is. You can always answer a question with a question. And sometimes it's as simple as why. It's almost always a why. So I'll give you one that used to stump my trainers. They'd be like, hey, how many certifications do your trainers have? I'd be like, well, which ones are you looking for?

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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And they'd be like, ugh, right? I'd be like, well... What I can tell you is that we have this one, this one, this one. And so we have three different certifications that will cover you for this thing. What you then do is you ask for the intention behind the question. So let's say somebody wants a feature you don't have. So let's say they're like, how do I get one on one time with you?

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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Do I get one on one time? This is very common. And by the way, anything that someone tries to object to that has to do with features is actually a preference objection. All right. So this is what this means. So I used to call them fit objections. I've now switched to preference because I like it better and it works with how I'm explaining this.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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So a preference objection basically states that I want your outcome my way. And so every objection where someone says, I don't want to buy your thing because I don't get one on one calls with you. I don't want to buy your thing because I don't get email support. I don't want to buy your thing because it doesn't have this PDF that I was hoping for. Right.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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And so basically it's them saying, I have this preconceived notion. Your thing doesn't match my preconceived notion. And because of that, I will not buy. But it really means I got on the phone because I wanted this outcome, but I want it my way. And my way includes a PDF. My way includes calls with you.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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It's the people who ask for the sale the most times. You might think, wait, if somebody asks for a sale a lot, that sounds like really douchey. Yes, which means there has to have something else that allows them to ask more times. And so the objective of closing should be you asking for the sale as many times as you possibly can while maintaining rapport.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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But if you ask for the intention behind the question, you don't have to overcome or have that specific feature. You can answer the intention. And so if someone says, hey, I want to have calls with Alex, then my team, instead of saying, of course, if they asked how many calls with Alex I get, they wouldn't say none because then the sale's over.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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We say, so what specifically you were looking to ask Alex?

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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or why did you want to ask or like basically what specifically or why both of those are kind of the smoke answers for how you go to the intention all right so if someone says i want to get on i want to get i want to have calls with alex let's say what specifically would ask alex or why do you want to get on calls with alex okay so if they said what specifically then we would say something like okay

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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that they say, I want to be able to have somebody who can help me with X, Y, and Z. And it's like, okay, pause. If we could have someone who helped you with X, Y, and Z, or if you had X, Y, and Z that we already knew worked because it was already pre-tested, would that solve that issue for you? Again, I didn't answer the question.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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I just asked if my answer that I'm about to say is the right answer.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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now they say yeah that would answer they're like yes then we've got that you're ready to get started and so for every time you ask you want to ask already knowing if what i'm about to say is the right answer before i tell you now if we did the y frame on the other side and the person says i say why do you want to talk to alex the person says I want to have accountability.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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Basically, whatever they say, you can then solve the problem with the features you already have rather than solving it their way. Because fundamentally, they have not done this thing as many times as you have. And if you have a complete product, which you probably do or hopefully have, you've thought through all the things that people struggle with.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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And you've probably thought about why you structured things the way you do. And so that's also where you can do a little bit of education. It's like, it's funny that you say that. It was just like Maria earlier asked that question. And do you mind if I share with her what I share with, what I can share with you? They say, yes. And you say, cool. So if, right. So now I've already got permission.

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I reframed, I blocked and tackle it. I got rapport. Now I've got all the space. You see how much space I have right now? I'm free ball, right? I'm in charge. I'm in the driver's seat. I'm driving this.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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accountability it totally makes sense that be a concern of yours can i tell you about three different ways we do accountability and that's why it actually works much better than what we what you asked for because that's actually what we started with so we started doing it the way that you wanted but we didn't get the outcome you want and so we were like well we want the outcome you want and so how do we get that the best way possible so now there's three different ways we can provide accountability we do number one number two number three and that's the highest likely way of getting this outcome

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Does that sound good? Great, right? And so now we're answering questions that we already know the answers to. We've already gotten pre-vetted. And this prevents anyone from disagreeing with you in the sale. You never want to disagree with a prospect. You want them to agree with themselves, right? Because they believe nothing you say and they believe everything they say.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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And so the idea is you want them to come to the conclusion. And so the only way we can get them to say it is that we keep asking questions until they say the right answer. not for you to say their names. Keep being amazing, actually compete in the games, go fight wins, save the world. See ya. Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

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Closing Made Easy: The Triple A Framework Explained | Ep 810

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Because if you lose rapport, you can't ask anymore. right and so then the question is how do we solve for maintaining rapport so that we can ask as many times as we want and say it is you know forcefully as we can right how can we cut through the and so that is where the aaa framework comes in okay so the the three a's are Ready for it? Acknowledge.

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We show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Whatever someone says, hey, I need to think about it. Totally understand you need to think about it, right? So you're acknowledging what they say. Doesn't necessarily mean you need to agree, but you acknowledge it. Now, there's a couple of reasons we acknowledge first. First is when you acknowledge what someone says, you build rapport. People love that somebody else is listening.

The Game with Alex Hormozi

The Top 1% Do These Things Different Than You | Ep 872

The top 1% of business owners aren't smarter than you. They do things differently. And that's what I'm explaining in this video. I'm Alex Ramosi, I own Acquisition.com. It's a portfolio of companies that generate hundreds of millions of dollars per year in revenue. And so I've seen a lot of different patterns across businesses that we both invested and scaled in, or some that we turned down.

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Motherfucker, they are building cities in the middle of the ocean. We are sending rockets to space and building internet from satellites globally. We have electric cars, we have AI robots, and you think that you can't scale service? Of course it's scalable, you're just not good enough. But when you phrase it that way, now it becomes a problem that you can solve.

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This is a second hack of hacks for figuring this out. Insert the problem that you claim to have that is unsolvable and frame it in the form of an I don't know. So for example, no one can sell like me. I hear this all the time. No one can sell like me. What if you said, I don't know how to get anyone to sell like me. Salespeople suck. I don't know how to find good salespeople.

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There's no good plumbers. I don't know how to recruit, hire, and train good plumbers. All the leads are crap. I don't know how to advertise to get good leads. One is a complaint, the other is a question, and the question has an answer.

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And so as soon as you can actually ask the right question, you start walking down the path to getting the thing that your business actually needs rather than you just complaining and giving yourself an excuse for why your business isn't growing anymore.

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And then you cast all the power out to some external thing and that way you feel good and you can rock yourself to sleep every night saying, you know what, I gave it the good fight. But there are some people who actually want to fucking win. And so for those people, this is what I'm making this video for.

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The thing that you're doing right now, if you keep doing it and it's not working, is the wrong thing. So let me give you one that you might not know as much about. So in the investing world, so I got into this, right? So Layla and I took out many tens of millions of dollars in distributions and we also sold the company for lots of tens of millions of dollars.

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and so we had enough money that we could start our own family office and actually start buying companies and investing i thought investing was about doing lots of deals at good prices and what's interesting about this is that in some businesses it does work that way so like if you're selling cars a lot of times the price of a honda 2000 whatever is this basically your proprietary way of getting a commodity for less you're not going to get it by by jipping people on the sale

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I didn't know what email marketing was. I didn't know any of this stuff. And the thing is, is I signed a lease and 30 days later, I had to come up with $5,000. And I'm like, how am I going to do that? When I was begging people to buy my gym memberships, that was a form of sales, not good sales, but it was a form of sales nonetheless.

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Sure, you want to close at retail or as close to it as possible, but you're not going to buy a Honda and then all of a sudden sell it for $100,000. So you're going to make more of the money on where you buy, and then you make up the difference on the sale at market rate.

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Whereas in the investing world, and this is what, like, I thought it functioned that way, but it assumed businesses were commodities. Think about this for a second. It assumed that, okay, I'm just going to try and buy as many businesses as I can and buy them for as low as possible. But the problem I was missing is that A really good business can outperform all of your bad ones with one good deal.

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For me, what I thought I was in was the high volume discount deals. The business that I was really in was learning how to say no at a much higher velocity to a much higher number of deals because you only need one Facebook. So let's confront the real problem. At each stage, I've had these learning curves where I thought I knew what the business was about.

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And then I realized what it was really about. The big hairy problem that I had to solve. Here's how I think through this. It can be painful because oftentimes we spend so much time trying to solve every other problem that we think we know how to solve rather than solving the one that we know we need to solve but don't know how to.

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That's a lot of times what makes that big hairy problem so hard is that you just don't know what to do. And this is why so many entrepreneurs start a second business because they're like, I don't know how to solve to grow this and pass this one.

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And then they make up a reason and then they start another business because they think somehow the second business is going to be different than the first. When in reality, you're just going to reach a plateau that you don't know and then you're going to stop again. So you have to confront the issue. You have to confront the problem.

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And so this is how I mentally trick myself into being okay with solving hard problems that I have no idea how to solve. I imagine to myself, let's just, this is purely hypothetical. All right. So let's say that I've got a business that's doing $10 million a year. You can use whatever zeros you want. Okay. And let's say that it's got, you know, $3 million in profit. Okay. So this is top line.

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This is bottom line, aka profit, leftover, cashola, cheese, cheddar, lettuce, money in the bank account, whatever you want to say. So that's our top line, bottom line. Let's say that we've got this big hairy problem. So we've got this big hairy problem.

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Now, we think that if we solve this big hairy problem, we're going to be able to continue to grow the business to $20 million a year in top line revenue. And that three, because we've covered a lot of our base, our fixed costs in the $10 million, is actually going to jump all the way to like $7 or $8 million in profit.

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So a big, a disproportionate profit increase with the increase in top line, which is not uncommon. So here's what's crazy. This business might be worth somewhere in the neighborhood of $15 million. I'm just going to make an estimate. That's a 5X on this $3 million. Okay. Now this $8 million business might be closer to worth maybe like $72 million. That's with a 9X.

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All of a sudden through repetition, I was like, oh, okay, so I have to have these consistent conversations that get people to buy. And if I do that more effectively, then all of a sudden I make more money. Okay, cool. So this is really important in this business because believe it or not, people don't wake up someday and say, you know what? I'm going to sign up for a gym membership.

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And so the difference between these two amounts is $57 million. Okay. That is a big allot of dollars. Here's how I mentally trick myself. I say, man, this big hairy problem is big and hairy. But if someone paid me $57 million to solve it, would I be willing to solve it? I'm like, hell yeah, I'd probably solve it for a million dollars.

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And so I've got this nice $56 million surplus of what I'm willing to do it for versus what it's actually worth. I tell our founders in the portfolio, I say, once we figure out what this big carry problem is, I always try and remember to do this. And I say, hey, if we do this, this is going to lock $50 million in enterprise value.

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This is going to lock $100 million in enterprise value if we solve this one problem. There's a common saying in the venture capital world, which is, is this a feature or is this a bug? There are some businesses that I will see founders bang their heads against the wall, being like, I have to solve the churn issue in my gym. I have to get it so no one leaves.

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I can tell you right now, you're never going to solve churn in fitness. you're not gonna do it because it's a human problem. It's not a bug, it's a feature. We have to look at what are the features of our business versus what are the bugs of our business. The bugs of the business are the things that you can and should work on that can help you get to the next level.

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The features of the business is like, this is the core way this business works. If you know for a fact that people are going to cancel fitness, because let's face it, people do, then what then becomes the issue? I need to build a marketing machine so that I never run out of people.

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Now, the good news, a couple pieces of good news, if you're in one of those businesses, is that one, some people come back into the business, right? So if people lose weight or they don't lose weight, in two or three years, they might still want to lose weight and try again. Whereas there's other companies, let's say your internet bill, probably haven't switched providers in a while.

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Who does your banking for you? You probably have been with the same bank since you got a Looney Tunes account when you were six. And so you've probably had this around the same banks for a while because it's a pain to change and you probably don't care that much about it. And so for those businesses, they're all about aggregating market share and just having a really sticky customer base.

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Doesn't usually happen that way. Usually they got to get interrupted. So they have to get interrupted with some sort of ad. And that then reminds them that they're not in the shape that they want to be. Or they put on their clothes in the morning. They're like, oh my God, I can't close this thing. But still they don't just say, oh, I'm going to call the gym up. Not usually how it happens.

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The Top 1% Do These Things Different Than You | Ep 872

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But guess what? They have problems too. My former CFO gave me this piece of advice that I just absolutely loved. And I was griping to her one day about basically features of this business. Like these are things that are absolutely true about this business and I was basically just complaining because there's nothing I can do about it. And she said, Alex, you know,

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I've been in business and I've seen a lot of different businesses over my career. She said, the grass is always greener on the other side because no one sees that's fertilized with shit. And she's like, it's all shit. They're all shit. Every business has shit. But the idea is that every business has overhead. Every business has stuff that has features and there's bugs.

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Things that are wrong with your service that should get fixed and things that are inherent to the very nature of this business. There's... Core features inherent to every business, and we just have to be able to confront the issue that is at hand. And oftentimes, it's big, it's hairy, and it sucks.

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We got to make sure that we're not trying to spend all of our effort trying to fix a term problem that will literally never get fixed because you're trying to gas humans to stop being human. If you think about entrepreneurship as a video game, which I often do, all right, so let's imagine that we've got these levels here. All right, so we've got level zero.

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We've got one, two, three, four, five, six, whatever. I should probably end on seven, because seven feels like a better level to end on. But let's go with six. Maybe in the very beginning, you have to figure out what you're gonna sell. All right, you've got a what. And the big issue at this point is that you just can't make decisions. You're completely indecisive. You can't commit to anything.

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The Top 1% Do These Things Different Than You | Ep 872

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You have this fallacy of the perfect pick. You think that whatever you pick has to be the one thing that you're gonna stick with for the rest of your life. But the reality is that you're probably not, because you don't even know what you're doing. You don't have the perspective from which to make a judgment.

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The Top 1% Do These Things Different Than You | Ep 872

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And the only way you can gain perspective in which to make a judgment is to actually pick something and then start and then gain more data. You have to do that first. Now, let's say that you graduate from that level and you actually made a selection. Congratulations. Now you have something to sell.

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The Top 1% Do These Things Different Than You | Ep 872

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So then you have to learn advertising 101 because no one's going to buy your thing unless they know about it, right? So you have to learn that skill. At every one of these levels, you will have entrepreneurs that just get to level one and then they don't learn level two. Let's say level two is they learn how to profit. All right.

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They learn a business model around it that they wrap a business around it. OK, let's say that's that's level two. Well, they get to level one and then they say, you know what? I just saw this thing over here that looks easier to scale up. So I'm going to I'm going to race through level one and level two here. And they do. And here's the crazy part.

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The Top 1% Do These Things Different Than You | Ep 872

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This next business, they do this in one third of the time. And they're like, oh, yeah, this was a great idea. I just boom. Look how fast I'm going. Sure. They crash in the same level again. They're still stuck at level two because they never learned it. The big hairy problem is typically the problem that you need to solve to get to the next level.

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The Top 1% Do These Things Different Than You | Ep 872

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And it typically requires an entirely different skill set. Most people can't confront that level of uncertainty or that level of dissatisfaction with themselves. And so they just start something else. This is, and I will probably keep repeating this because it needs repeating, is that the woman in the red dress, right? She is the distraction.

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instead again it's other people stopping them in the parking lot being like hey do you want a free workout our thing or showing up to their office of work and saying hey we made these protein muffins hey while you're eating these muffins of ours can i tell you about what semi-private training might do for you you have to get in front of people in order to ultimately bring him to the gym the other problem with gyms that i didn't know i was in is that basically no one sticks with gyms now there's a very small select group of people

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The Top 1% Do These Things Different Than You | Ep 872

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And if you don't know what I'm talking about, in the Matrix, there's a moment where Morpheus is training Neo. They're walking through a busy city. Then all of a sudden, a woman in red dress walks by. Morpheus is talking. Neo looks back and then Morpheus says, were you listening to me or were you looking at the woman in the red dress? And he looks back at him and he says, look again.

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He looks again, there's a gun pointed at him. And he says, freeze. And he said, this whole point, this training is to teach you one thing, which is that if you're not one of us, you're one of them. The one of us is if it's not the core business,

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It is a distraction from the core business because every one of these other things, every one of these other people in the street, every one of these other opportunities can look attractive because you don't know the shit on the other side. It's the grass is greener because it's on the other side of the fence.

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And if you got close to it, you'd see the manure that you had to sit in in order to get it to grow. The craziest part about all this is that you can beat just about everyone if you can stick with something for a few years.

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The Top 1% Do These Things Different Than You | Ep 872

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And real quick, if you're not sure what level of business you're at right now, I spent 200 hours this year just making this one project for you, which is the $100 million scaling roadmap. And I broke up the stages of business into 10 stages. And you can identify where you're at by simply just putting in your business information.

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You go to acquisition.com forward slash roadmap, and it'll spit out this custom report that tells you what the constraints are at that current level and what you need to do. to graduate and get to the next level. This is our gift to you, absolutely free.

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If you feel stuck, it's because what got you from zero to $100,000 or $100,000 to a million or a million to 10 million or 10 million to 30 million isn't going to be the thing that gets you to the next level. And you're probably working on something that was once very important but is no longer.

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And if you're like, I'm not sure what the big hairy problem is, or I'm not sure what business I'm really in, on the thank you page, you can book a call with our team and we'd love to help you figure that out and ideally get past it. Let me conquer a big belief that is common among entrepreneurs.

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One of the biggest reasons that people will switch from their current business to the next business, there's two big ones. One is a fancy way of saying it's hard. This is the like, I don't think my business is that scalable. And I'm like, remember, cities, middle of the ocean, rocket ships in space, cars that drive themselves, robots that are smarter than humans. Really?

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You think it's not scalable or you don't know how to scale it? Remember, let's flip it into a question. I don't know how. I don't know how to scale it. How do I scale a business like mine? So one is the difficulties thing. The other one that they do is that they will say, I don't think this business can get to the size that I want for myself.

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Now, I will put a big disclaimer here, which is that if you want to be the richest person in the world, yes, you're going to probably have to do some sort of technology that has mass global appeal. And it can't look like any of the technology businesses that already exist, because those already exist. So it has to be a true de novo idea. And I'll tell you something else.

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If your goal is to become a trillionaire, you probably won't. And the reason for that is because the people who are the absolute richest in the world are missionaries, not mercenaries. They do it because they genuinely believe that this solution deserves to exist in the world. And they're willing to eat glass for a very long time.

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Now, in your mind, and I say this as also an entrepreneur who has money goals, in your mind, a trillion dollars is just like, you just see that as winning because that means that you're the richest person in the world. But like, can you name the richest person in the world 30 years ago? You can't. That guy was number one. Can't name him. It wasn't Bill Gates. Do you know who Paul Getty was?

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Richest man in the world. 100 years ago. 30 years he was richest man in the world. You can't name them. So this idea that you think of becoming the richest man in the world is going to somehow make you immune to impermanence, that your life is going to now be meaningful because of that. It won't be. And I can also tell you that a billion dollars is a lot of money.

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A hundred million dollars is a lot of money. If you're not at that level, I think having that goal is a bit silly because... Things will change as resources change. The map, the pieces on the board change as you develop as an entrepreneur. Under the assumption that you have what I would consider to be modest goals of, let's say, $100 million. Let's make that our modest goal, all right?

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who are hardcore lifters, who do absolutely get obsessed with gyms. But here's the crazy part that everyone in the industry doesn't tell you. They are such a small percentage that they're the ones who actually take up all the space in the gym. And if the amount of people that actually were subscribed to the gym, all of them came, no gym model would work at $10, $20, $30 a month.

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So bear with me here. Every business, in my opinion, can get to $100 million enterprise value. I want to be clear here. I'm not saying every entrepreneur can get to $100 million. I'm not saying every business as it currently stands can get to $100 million. I'm saying that there is a version of every business that's maybe adjacent or one or two steps away that can absolutely become it.

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So let me give you an example. I have a restaurant. I don't think it's scalable, and I don't think that I can be a $100 millionaire. Well, all we'd have to do to disprove this is say, is there anyone who's worth over $100 million in restaurants? Turns out, there is. There's actually a ton of them. In fact, my neighbor above me is worth a deca-billion, 10, 10 billion, and he owns restaurants.

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The guy who started Subway, who's the primary owner of Subway. One is a franchise model, the other is privately held. Okay, so you, wait, so I definitely have to do, you can do either of them, but you have to pick which one you're going to do, and you have to go all in for a long period of time. And you might be like, well, yeah, sure, Subway. Well, let's play a fun game.

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How old do you think Subway is? 59 years old, as of right now, me making this video. How long do you think Andrew Chern and Peggy Chern of Panda Express have been doing Panda Express? 42 years. And so you're right. The five years you've been making your restaurant is probably not that close to the 59 years that Subway has. And you're like, oh, well, maybe I'll be like Chick-fil-A. 78 years.

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Can a restaurant business become a billion dollar business as fast as a software company or technology company? No. But what did we say your goal was? You said $100 million. That means you have to get about $10 million in profit in the business between now and the time you die. Doable. That's not a promise. That's not a guarantee. I'm just saying it's doable.

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Even if you're like, okay, well, I have a dry cleaning business. Okay, well, we can make that into a franchise model and then scale that way. We can privately own them and just keep compounding the business. And what business are we really in when we're in dry cleaning? Honest truth, I don't know. I've never been in it.

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What I would do is I'd talk to a bunch of dry cleaning people and be like, what sucks the most about the business? Maybe talent's not that hard in dry cleaning because maybe the skills of managing a dry cleaning business are not that tough. Maybe the issue is the machines break a lot. And you're actually like, actually, I'm in the logistics and machining business.

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I need a lot of tech inside of that business. Okay, well, that's the business you're in. Ask people who are in the business what the hardest part of it is. Oftentimes, they'll give you the big hairy problem, and then you just get to say, is that the type of problem that I'd prefer to solve? And this is a frame that Lely uses a lot that I love when we're helping an entrepreneur make a big decision.

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They'll say, hey, there's these two paths I have in front of me, and I'm not sure, should I do the franchise? Should I do the private health model, right? Now, the big overarching thing that no one seems to mention is, we might ask, what's the goal? But the subtext underneath of that is, in what timeline? Because almost all goals are accomplishable on a long enough timeline.

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Now, back to the two paths. Let's say that you're making that decision. I want to start a franchise or I want to keep privately held. Okay. If this is the path, what you want to do is you want to adequately be able to know what the big hairy problem is in each of those paths because there's one and they're different.

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Like if you actually had people pay who only used it, your gym membership would have to be something like $200 to $300 a month. which just so happens to coincide with the vast majority of service-based gyms. What cross-training facilities and boot camps and semi-private training facilities, all of those have clients who all show up, and that's why those prices are where they're at.

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And then you ask the follow-up question, which is, which of these problems would I rather have? Follow up to that is, which problem do I feel more equipped to solve today? And so that gives you a lot of insight because a lot of times people want to think about the upside, but the downside mitigation is what gets you to the upside.

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Elon has this really great quote that he has from somebody else, but he says, entrepreneurship is a lot like staring into the abyss and eating glass. The staring at the best part is because you're constantly facing the uncertainty of the business and existential risk to the business every single day, feeling like it might not work.

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On the eating glass side, it's that entrepreneurship is the most efficient funnel for having nothing but bad news. So think about it like this. There are problems that are very hard to solve and there are problems that people don't want to solve. You get to have the best of both. As in, you get problems that no one wants to solve and they're really hard, right?

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Problems that are hard that people want to solve, they'll still work on them for you. problems that are easy that people don't want to do, you can usually pay someone enough, but it's solvable. But it's the ones that really suck and no one wants that you get to have. And what happens is this becomes your lens of the world.

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Because you just think all day, every day is problems that absolutely blow and no one wants to do that. But you have to do it because who else is going to do it? It's your business. Every single day, it's just trudging through this muck. And you think that somehow another business is going to have different mechanics. But This is a feature of entrepreneurship, not a bug.

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Entrepreneurship is the mechanics of entrepreneurship and ownership, specifically being CEO, being the person who's calling the shots. That's your life. And that's what you get compensated for. And so there's a lot of romanticism about entrepreneurship, the freedom that entrepreneurship gives you. Well, it depends how big you want to go.

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Because basically, the day that you stop eating glass, the day that you stop dealing with that, is the day that, in my opinion, you sacrifice some of your potential for comfort. And I think that's okay. I think it's totally okay. But that's a trade you get to choose to make. But at the end of the day, I said that there was two big reasons that people say, I think I should switch my business.

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One is that the business I have is currently not scalable. Hopefully I've popped that balloon for you. And the other is that I don't think that this thing could become super big. Well, we have to ask the question, how big? And why do you want it to be that big?

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Is if it's just for you to go, you're probably never going to make it because it's too hard and you already have satisfied your material needs. So the reason that those massive companies exist is because the people who started them genuinely thought that it's almost like their purpose in life was to do this service for the world. And as a result, the company continued to

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and they were willing to deal with all the glass for that entire period of time. We talk about Jeff Bezos with Amazon. You know, it's only just been like a chill 30 years for Amazon, 35. Like we talk about these fast growth tech, like Facebook's like 20 something years old. At the end of the day, you're gonna have this choice.

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I want you to know that there is absolutely a version of your business that can become $100 million. I really genuinely, like I have a very hard time having someone convince me that there's not a version of just about any business. Because of this. No matter how small the niche is, there's 8 billion people in the world. And so with online, we can now access them.

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This might not have been true 30 years ago. But today, it kind of is. Anything brick and mortar, you can scale nationally. Now, if you're like, well, I'm in a country that only has seven people. Okay, well, then guess what? You become international. But are you saying it's impossible or difficult? Want to make sure we're clear here. I don't know how to go international.

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Even a business like Crunch or Planet Fitness, they have $10 a month membership, but they still have like 5% or 6% per month of their customers who turn out. So that's like half the customers per year are leaving out the door. If you've got thousands of customers and you lose half of them every year, guess what else you need?

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Do you think no one else has gone international before? Oh, people have done it. Therefore, it is possible. Therefore, I can learn it. I think about these big hairy problems because this is what hopefully the entire point of this video is figuring out the business you're really in and being able to confront the problem ahead of you so that you don't

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switch paths, and you actually solve the thing that gets you to the next level. While you're going through this, I think that there's this personal experience that you have to learn the difference between, which is what's good hard and what's bad hard? And this actually ladders up to a very classic entrepreneur question of do I push or do I pivot?

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And you're like, wait a second, I thought you said that I shouldn't switch new things. It's different. The good kind of hard is when you have underlying assumptions that you believe to be true from first principles and just have to push through via iteration. That sounded like a bunch of words. So let me just give you an example.

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So if I want to start running TikTok ads for one of our companies, because we decide like, you know what? One of the things, the big hairy problem here is that we don't know how to advertise on paid. And that's what it's going to take for us to unlock. Okay, well, if I sell to accountants, right, I would say, okay, are there accountants on TikTok? And the answer would be yes.

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And so it's like, okay, well, is there a way that we can run ads profitably to get our messaging in front of those people? If the answer is yes, then I fundamentally believe that there's a profitable way to turn those eyeballs into customers, period. Now, you might have run a TikTok ad to get accountants and not gotten them, but it doesn't mean that getting accountants on TikTok is impossible.

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It's just you don't know how to do it. Again, solvable. And you might be like, ah, but that's gonna be hard. Remember, there's gonna be a big dollar sign, a big price tag associated with solving that problem. Let's say if we start running ads and we don't immediately see ROI. That's the good kind of hard, because we can iterate. Remember I said good kind is you iterate, right?

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Do we get enough clicks? Do we get enough opt-ins? Are they the people who opted in? Are they the right type of people? If not, maybe we need to change the messaging, change the targeting, right? All these are just iterative. But it's not that it's impossible, it's just it takes work. This is iterative hard. That's good hard. To be clear, I don't see losing money on ads as losing money.

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I see it as investing in something that's going to increase the enterprise value by creating another acquisition channel and simultaneously diversifying how we get customers. And so having multiple acquisition channels meaningfully increases enterprise value without even having additional profit because it decreases the risk for an acquirer, as in the person who's going to buy the company.

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If I have two ways of getting customers, I feel way better. If I had six ways of getting customers, I feel even better than that. But not only that, each of the six ways also brings more customers. So it also grows the business and decreases the risk. It's one of the most valuable things you can do in a business.

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And so it would make sense that the reason it's such a valuable thing to do in the business is because it's hard. It's hard. It's why most people don't do it, which is why it is valuable and it is rare. I can't say that I want this really rare outcome. And then at the same breath say, I'm not willing to do very rare levels of work. So let's do a hypothetical.

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So if a business is worth $10 million, okay, and I can add a second acquisition channel that doubles the revenue and diversifies the risk, that might add $15 million in enterprise value. So if I lose $100,000 figuring out TikTok ads over six months, but I get a $10 million return on it, would I do it? Absolutely.

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a machine for generating another few thousand customers to fill up the bucket. These very large companies know how to train sales staff, recruit sales staff, market across different channels to get customers in the door. And once I figured that out, my gyms started growing. But until I did, I was like, lost. You might be like, okay, so every business has to be a marketing and sales business.

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But the thing is, is I say this and people nod their heads or they're listening and they're like, yeah, I believe that. But you have to see these as investments in the business. Like I'm going to invest this time and this money and I am willing to not see success for this period of time before deciding to truly call it.

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And honestly, the when you decide to truly call it is just your ability to deal with pain. So there's something about human behavior around this which comes down to frustration tolerance. So the basic behavior is how many times you try something again before you quit. And this typically has to do with your history of being reinforced after multiple attempts.

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So I'll give you a very simple example. If you say, hey, I'm not gonna buy something from you, and the salesman says, well, have you thought about it like this, or have you thought about it like that?

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The amount of times that that salesman is willing to both follow up and ask again on the call is directly proportional to the amount of times in his past or her past that after asking a second, third, fourth, fifth time, they were rewarded for doing so. And so if someone gets rewarded, again, intermittent reinforcement doesn't mean they have to get reinforced every time they ask five times.

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If they get reinforced enough times that they ask five times, they will ask five times every time. So if you have a dog and they come to the table and you give them food because they beg, right? Then what do you do? You reinforce begging. So they come back and they beg. Now,

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If they come back and then you don't give it to them because you execute your willpower, and they sit there and they're like, and you still don't give them food, fine. What do they do tomorrow? They come back again. And what do you do tomorrow? You don't give it to them. What do they do the next day? They come back again. Okay? They come back again. And here's the crazy part.

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Let's say that they come back five, six times. If on the sixth time you give it to them again, you've just taught them that they have to wait for extended periods of time. You've rewarded them trying again and again and again and again. Entrepreneurs, we are like this too. And if you're newer to the game, then I would encourage you to increase your frustration tolerance.

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I can't manufacture the win that you're going to have, but this is why I try to make these videos, is that the amount of times that it has taken me a hundred iterations to get an ad campaign to work is a lot. And so now I just have a fundamental belief. I'm like, if we keep working on this, we will make this work. Because down to fundamentals, there are eyeballs here and we can pay to reach them.

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And there's no reason physically why we can't get them to take a click and then ultimately buy our thing. We just aren't good enough. And so we just have to look, are there people who could buy my stuff on this platform? Is there a way to reach them? And can I do this profitably? Yes? Great. Then we will make money on a long enough time horizon.

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And so the only thing we have to do is just not run out of money while we try. That's it. But here's the thing. Let's say that, and I said that this is what this looks like in reality. You make this decision to make this investment because you see the big price tag on the other side, right?

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And you say, it would be reasonable for me to spend $100,000, $1 million, whatever the number is for you, in six months to get this thing that's going to double our acquisition, right? Of course you would make that investment. But the first month you spend $100,000 and then you don't make money back, people throw their hands up and they're like, ah, it doesn't work for me.

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Of course it didn't work the first time. This is why you get paid to solve big problems. The types of problems that occur in entrepreneurship is they're all one of a kind. And you're like, wait a second, I thought business behaving patterns. Absolutely. So I think there's this great, you know, like history doesn't repeat itself, but it rhymes. It's the same thing in business.

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Ah, kind of. And so then I got into the supplements business. So this business for sure is about what's inside of the bottle. So I got Dr. Cash, he's the smartest human being that I know, who's a PhD biochemist, got his PhD when he was 21 years old. He also did the stacks for Olympic teams And he has a national log press record.

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If I knew every single thing that I was going to do with every business that I started, then it would be instant, right? You'd be instantly bigger. But no, there's similarities. There's patterns that you recognize where you're like, okay, we're going to have to turn on paid ads, but we've never done this for B2B on TikTok. So we're going to have to learn that little nuance in this setting.

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And even if you've done B2B on TikTok, maybe you haven't done B2B on TikTok for accounting, but you did it for marketing agencies.

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right so like okay fine we did that all right well like there's always going to be more nuance because I can always say cool you did that a year ago but what about today so the idea that you're going to know the solution is is a false belief that will make entrepreneurship significantly harder for you or at least more painful for you I said earlier in this little diatribe that I just went on there's good kind of hard and there's bad kind of hard so what's bad kind of hard

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Back kind of hard is when your underlying assumptions are proven incorrect. So this is the classic push or pivot, right? So if we've pivoted several times, but I've pushed a lot more.

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So you pivot when your underlying assumptions are proven incorrect, meaning, so let's say, for example, if a report came out saying TikTok had banned accounts from the platform, then I would say we don't push on TikTok. The underlying assumption was there are people here, we can reach them profitably. Well, the underlying assumption's wrong. That's not true.

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So at that point we have to pivot to a different platform or a different advertising method. And so I just use this as a clear test of when I'm being stubborn versus when I'm being intelligent. And so before making a big investment, I like to identify what I call the need to believes.

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Or the assumptions that I believe to be true or I must believe to be true in order for the remainder to follow as desired. So as long as those assumptions are true, we keep pushing. And if one of those assumptions is proven wrong with supporting data, then you change.

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And so fundamentally, that's the ignorance tax we all pay is that sometimes you have these assumptions because you can't know everything. You're not God. Can't know everything. Sometimes you got to find out on your own and you find out that assumption that I had is not true. And that was kind of like the whole thing this was predicated on. And so then you pivot.

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You find something else out that is true that you didn't know was true before, and then you make your change. I tell the story in my $100 million offers book of a good friend of mine who had a technology business. So you think, oh, technology, this is something that, you know, obviously it's gonna be cutting edge. But what he chose to do was try and turn around a dying industry.

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So he tried to turn around newspapers. So he said, hey, I'm going to take you into the digital age and we're going to have an ad product for you that'll take all your print ads and turn them into online ads on your site. And it's just, you know, you can use our software to do it. It's one click, whatever. It's very easy. With that, you think, OK, that business makes sense.

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You're going to transition these guys over. It gives them a whole other thing that they can sell. Cool. Groovy. Now, what was the problem with the business? What are the need to believes in that business? The need to believes are that newspapers with their inherent business model are going to continue to exist in order for that business to be viable.

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So I was like, this guy is going to come up with the most efficacious product, the best ingredients. And I just said, listen, you make the best thing you could possibly make. I'll figure out how to sell it. That was the business that I thought I was in. The actual business that I was in with supplements is actually in the brand and distribution business.

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Now, at the onset, you might get into that business thinking, well, yeah, I'm gonna help them convert, that makes sense. But if those businesses cease to exist, there is no one left to convert because all the people have just switched their consumption to other platforms. And so in that instance, that's what I consider bad hard.

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That's like the underlying assumption of this business is no longer true. It's proven incorrect. We thought that they would continue to exist. We could flip them over. They'd generate the same revenue as they were before. And so then we'd have this massive market to go after. But in reality, many of them just went out of business. And so there's really no one to go after.

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The few that you could go after continue to shrink over time. Not a good market to go after. That is a bad heart. It's the kind of heart that you can't fix. In that setting, you have to pivot. You would then have to ask the question, okay, what other businesses could I add digital ads to?

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And then at that point, you'd have to say, okay, maybe I could take blogs and make ads, make a network of blogs. And that's kind of more new age traffic and help them either cross sell across each other's and basically create this network of traffic. Like that would be an interesting business. Again, there'd be need to believes around that as well.

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At that point, you'd have to have a real existential question of like, who do we want to be when we grow up? Because who we thought we wanted to be ain't going to work out. Little subtext here. It's very rare in what I would consider traditional businesses to have a need to believe that's actually not true.

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If you're an accountant, you're in lawn care, you're in your plumbing business, you sell website design, notwithstanding AI for the time being and robots taking over, notwithstanding those two things, for the last however many years, 50, 60, 80 years, those businesses, more or less, you not being able to scale them was a you problem. It's fundamentally you didn't know how. That was it.

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So to make this real, I'm going to give you three examples of my own business experience of what I thought the business I was in versus the one I was actually in. So in the very beginning, I was into fitness. I got into it thinking that my life was gonna be about what workouts we were gonna be and how I was gonna structure the weights and the intensity.

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There wasn't anything wrong with the market. There's nothing wrong with HVAC. There's nothing wrong with plumbing. Nothing wrong with lawn care. All those things are going to continue to exist. And so if you were limited in any kind of business that I would consider a normal business, just know that there's nothing to do with the scalability of your business.

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It's your ability to scale that is the problem. yours. And so at the end of the day, a lot of entrepreneurs get into this for some sort of freedom or some sort of monetary goal or because they want to solve a problem or a combination of all three. But we fundamentally get paid to solve big, hairy problems. And the bigger and hairier the problem in general, the bigger and hairier the payoff.

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Paul Graham said this quote on Twitter the other day and I really liked it. He said, If you want to make a million dollars, you must endure a million dollars of pain. I like to consider how much enterprise value I'll get on the other side of this concrete wall that I'm going to bash my head into.

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If the number is big enough and I've got a strong enough helmet, I will keep bashing into it so I can get to the other side. And that's what keeps motivating me. So as long as I'm solving the right kinds of problems, the ones where I can reason to first principles that there is a solution, and that solution will make money, then I keep going.

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The ugly secret of the supplement business, at least in the United States, is that if something actually works, it's most of the time illegal. Because if something works a little bit, then typically if you put a lot of it in, it works a lot of it.

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And if I get to the bottom of it and I find out that my underlying assumption's wrong, I have to change, and that's just as hard. For the entrepreneurs who are stuck, who are listening to this, who are watching this, identify the business that you're really in. Confront the big hairy problem in front of you.

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Don't jump ship thinking that some reason the grass is greener or that the woman in the red dress is somehow different and not crazy from the woman that you're married to right now. She just has a different kind of crazy and you'll discover that in time. So you might as well be happy with the one you got because you know what you need to do to make this person happy and you keep forging.

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And then you decide whether or not you want to push or you want to pivot based on the underlying assumptions. And if you push, focus on making progress and breaking through that wall because the payoff is on the other side and that's what makes entrepreneurship worthwhile. Now, this was all very theoretical because obviously it applies to a lot of different businesses.

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If you want to see me apply these same concepts of how to actually push through the walls for a business to get it to break through to the next level, I have a video here that you're absolutely going to love of me breaking down a real business and helping them scale.

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Now, I think supplements are good for filling up holes, nutritional holes in people's diets so that they can get some of these other minerals or whatever. But the thing is, is that if you're a customer, when you have two different proteins that have the exact same calories and macros, what gets you to buy? the brand.

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And so because every single supplement supplier has access to the same ingredients more or less as everyone else, and the research studies that are out there, anyone who says that they know the research, the customers certainly don't know what the research is, nor do they really care. What they really care about is how good does it taste, and do I feel cool when I drink it or eat it?

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And I was like, oh my God, this is not at all what I spent my entire time building this business to be. Then I had to learn all this stuff about brand. Now, I didn't know anything about brand at that time. And so that business kind of got to what I would consider like a direct sales model. But what I really missed was the cool factor. I didn't understand how to make my products cool.

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And if somebody's gonna buy a creatine for me versus a creatine that's 14 bucks and mine's 60, why are they gonna buy it? I didn't have a good answer to that question. And not only that, I didn't have distribution that was convenient. In the beginning, for a business like this, you can sell online to consumers, they cover the shipping and stuff.

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But a lot of times people still like buying supplements in person because it's very easy. You don't have to pay the extra shipping. The business that I thought I was in was a combination of sales and making a great product. But the business I was really in was a brand and distribution business.

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And you may be like, okay, so that business was maybe different, but the third time he'll definitely get it right. You would hope that, but I didn't. The next business that I had that I wasn't good at was my first software company. At this point when I got into it, I was like, okay, listen, I can market and sell this thing. That's all that's going to matter.

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Because I had, you know, again, I learned, I hit everything with the marketing and sales hammer because that was what I was good at. But when I got in the software business, I realized that You could sell software really, really easily because most software solves a problem that's pretty easy to describe and the technology is supposed to remove a lot of pain.

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The problem is that as soon as someone logs in and it doesn't solve that problem or it solves that problem by introducing even more pain into their lives, which is very common, they then immediately hate it and you by default. I thought I was in the marketing and sales business, yet again, when in reality, I was in the product business and I didn't know anything about product.

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And then as soon as I actually got into the business, I realized that the biggest issue is most people don't even show up to the gym. All of my attention was like, oh my God, I have to get people first in the door and how do I get them to stay? And how do I run this profitably when I've got rent, I've got trainers, I've got equipment that breaks.

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From like a software, I didn't know how to write code. I didn't know what UX or design is. Like I'm still not that good at design. The whole thing was just kind of like screwed from the onset. I didn't have any of the talent and my strategy was not around product. So the fundamental issue with that business was that the product wasn't good enough to deliver on the promise.

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And the problem was I needed to make a better product and I didn't know how. I, at the time, hired an outsource development team. And so I just had them build the product. I was like, yeah, do all the code stuff and ship it back to me. But the issue that I ran into was a couple things. Number one is that I literally aligned myself with someone who had a disincentive to do a good job.

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So think about this. They bill hourly and so their incentive is to charge as much as humanly possible and do as little as possible in that period of time and just keep me on long enough that I don't cancel.

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Now, the longer you work with an outsourced development shop, the harder it is to leave them because they have all these developers who are dedicated to your account and they're all read up on the code. You're like, well, I can't switch now because they already have five or 10 or 20 developers that are allocated to me. And here's the even worse part.

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Let's say that you're still really good at marketing and sales. Guess what happens next? They see how much money you're making. They own the damn software, right? So they can see that you're making money. And you know what's crazy? Is that I noticed as we kept making more money, my fees just kept going up. Wild, almost so much that I was like, wait, where's my profit?

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The Top 1% Do These Things Different Than You | Ep 872

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At the end of the day, the dev shop was more or less taking advantage of us. And because I had no technical proficiency, nor did I have a co-founder who was really technical, because you can't absolutely have a business like this. Somebody's got to know how to code, right? Somebody's got to understand technology. And I didn't know it, and I didn't have anybody else.

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And specifically, I didn't have anybody else who was incentivized to help. Because in the software business, you can make the promise of good, fast, cheap, and people are going to buy. But you have to fulfill that promise. And that's fundamentally what makes that business so hard, but also so lucrative when you get it right. And so I learned that lesson too late.

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I ended up selling that company to somebody who did have a full in-house dev team. And I had built, because of my sales and marketing ability, still a pretty decent sized distribution base that he could then leverage with his software and continue to expand the business. So that worked out okay. So I'll give you another example of what business you really have.

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The Top 1% Do These Things Different Than You | Ep 872

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And all of a sudden I was like, oh my God, I thought I was gonna be in the scientific business fitness business when in reality, I was in the sales and marketing business. One of the easiest ways to identify what business you're really in is to zoom all the way out to the people who are already 100 steps ahead of you. Not just one or two steps, but like 100 steps.

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So I talked to a guy recently who is in the M&A world, so mergers and acquisitions, and he was buying up plumbing businesses. And so he bought up a plumbing business, and I was like, okay, well, what's limiting the business? And he said, I can't find good plumbers. So I was like, well, what's your system for getting plumbers? And honestly, he didn't have one.

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And so I was like, okay, dude, if we think about what the product of this business is, when you're in a service business, the product is the service, meaning the people who deliver the service are the thing you sell. And the margin of the business is the difference between what you have to pay them and what you have to charge for their work.

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Our acquisition process to scale the business doesn't have to be customer facing because you've got phones ringing off the hook. There's already tons of demand. There's insufficient supply. And so the question is, what are you doing to out market your competition for talent?

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I introduced to him a concept that I love to talk about, which is the cost of acquiring talent relative to the lifetime gross profit Per employee, all right? It's a lot of letters. Basically, this is how much it costs you to get people. This is how much you make from them. And so I said, well, how much do you make from a plumber per year in gross profit?

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So revenue minus what you pay them, what do you make? He said, probably about $300,000 a year. And I was like, okay. I was like, so what are you willing to spend to get another plumber? He's like, well, I think we have like a $500 referral thing if any of the guys refer somebody else. And I was like, okay. So think about how wild this is. You're willing to pay $500 for $300,000 per year.

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This is per year from your plumbers. I was like, does this feel a little bit low? Of course it did. It's insanely low. Because the thing is, is that if you're a smart competitor, what am I going to do? I'll be like, well, shoot, I'll pay $30,000. So all of a sudden, if I offer $30,000 to everyone in my staff, if they can go get somebody, what do you think's gonna happen?

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They're probably gonna find more plumbers for me. But guess what else I can do with $30,000? I could also say, you know what? I'm willing to spend that in paid ads or in recruiting or headhunting. of people who just go and post people from firm to firm. How do I know if it's gonna work out? Well, if you're doing a referral bonus, you can say that it's after they're productive at month six.

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Now you've got somebody who did the referral who's super invested in making sure that it works out. Most recruiting firms have 90-day clauses to make sure that if the person doesn't work out in the first 90 days, they'll swap them out for free. That's a pretty typical offer. If you're running ads, you don't have to worry about either of those because it's just the cost of the ads.

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The question is, if the one thing that's limiting this business is that he doesn't have enough plumbers, literally everything that he does with his time that is not about creating an acquisition system for talent is the thing that's limiting the business. I'll give you a different example.

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And the reason I'm keeping these examples is because it happens in every business and this is typically what keeps business owners stuck.

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You started doing something, maybe it worked and then it stops working, but you think, oh, I need to keep doing this thing or do more of this thing when sometimes that's the truth, but a lot of times it's just that the game changed or the real constraint of the business is not the thing you think it is. So I was talking to a media company, super large YouTuber, big creator, right?

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And the reason for that is because if I said, if you just look at someone who's one or two steps ahead of you, you should do what they do. The thing is that they're one or two steps ahead of you and they're probably gonna get lost too. But if you look at the people who are all the way at the top, typically it's because they figured out something that you haven't figured out.

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And I said, well, what's the goal? And they said, we wanna build, make more money. I said, okay, great. So what do you think it is right now? And they're like, well, you know, right now, just to give you context, they're a way bigger channel than me. Very big, many millions, tens of millions. I said, what are you doing right now?

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They're like, well, we think that we've really mechanized our process of creating content. And, you know, we think that we can get this, these new levels of efficiency in the content creation. And I was like, Okay, so out of 100, compared to the marketplace, what would you guys rate your content at right now?

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So what's funny is that they were like, I think we're like maybe a 90, but I'm like, if you just do percentiles here, like your points, zeros, zeros, but everybody, when it's your own game, you know so much about it, you've forgotten more than people who have been in this for two years know about it. You guys are probably like a 99 out of 100. on marketing.

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The issue with your business, despite the hundreds of millions of impressions per week that you're generating, is that you're just not making that much money. So would you really think that doing more media is the solution? And so they looked at me for a second. I was like, what do you sell to make your money? And they were like, well, I mean, we do sponsorships every once in a while.

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We basically this and that. I was like, OK, do you think it's possible that not having a clear monetization mechanism is the issue, what would you rate your monetization strategy at? And they're like, oh, well probably like a five out of 100.

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I was like, okay, so you've been deploying all your resources to go from 99 to 99.5%, rather than taking those same resources, and the thing is is that when you're this low, going from five to like 25, probably takes less effort than going from 99 to 99.5. And so what we need to do is fix the monetization of this business.

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When they had this larger goal, the business that they thought they were in, which is media, but to get to where they want to go, they were going to have to enter into having a business model. They're going to enter into monetization as the issue in the business. The problem that most businesses have is they don't know the business they're actually in.

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And they keep trying to solve the problem that they enjoy solving rather than the one that the business requires to be solved.

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If you look at the biggest fitness businesses that are gyms, most of them are basically in the sales and marketing business. They have absolutely mechanized the ability of getting people in the door. Their general managers for each location are just people who have membership quotas who are driving sales day in and day out. And so for me, I'd never even sold a pour. I didn't know what a lead was.

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every business has a big hairy problem and this has been my experience maybe just because it took me too long to learn or i you know i i only learn about it once i get into it as a recommendation so this is a hack of hacks if you're entering a new marketplace talk to the people already in that marketplace and ask them what the hardest part of their business is and a lot of people follow me because they're in education or consulting information products so think to yourself well if you're in that world what business do you think you're really in

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Well, if you learn the basics of marketing and sales, just like any business, but if you want to make it big, look at the big consulting firms. Look at McKinsey, look at Bain, look at Ernst & Young or KPMG.

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These are all recruiting machines because on a long enough time horizon, you have to learn how to do other stuff because you can only keep selling infinite people for a period of time until eventually you've sold everyone within a marketplace and there's no one left. You've already pillaged the land. Instead, we have to find a way to get people to keep buying.

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If it's in the service business, it means having exceptional people. If it's in a physical products thing, it's how do we get customers to come back again and again? If you're in the software business, it's the same thing, except you're doing it via code rather than kind of a recurring, how do we basically engineer consumption?

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A lot of entrepreneurs who are in the education space, and I bring this up because I'm literally educating right now, is that they have one talented person, they have some guru, and then they hire people who really aren't as good, and then they dilute the service quality over time, and then they're surprised that somehow their business stops growing.

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When they were small, they grew really fast because you had a good product, which was you. You were exceptional. And then you hired all these other people, and they're not exceptional. But then you're like, oh, I love this one. I decided to stop doing it because it's not scalable. One of my favorite lines to hear. I'm gonna try not to curse. It's gonna be hard not to. I'm like really struggling.

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If you want to make $50 million, the likelihood that you get it there from a large group studio is very low. So if that's the goal, then you probably want to have a different vehicle. And so you can, I would say that if I was in your position, you have one of two paths.

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There's like a really close adjacent path, which would be like, I do believe that the best fitness model right now is the small group. I think it's the best model that's on the market right now. And so you could change your existing model to that, and that one gets exceptional returns on capital and is a very operationally easy model to run. And so that would be like,

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The reason I kind of like that for you is because it already borrows from a huge amount of your existing skill set and knowledge base. And that is a good vehicle. So that's option one. Option two is you just try something brand new, which I have very little insight into. What of unlimited opportunities could you pursue, all of them, or one of them?

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Transforming what you have into, I mean fundamentally I think that's why you're here, or at least I would be if I were you, is like how do I make this, how do I turn the thing that I have into the thing that I want? And I think that you can do it with a lot fewer steps than you expect.

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You'll probably have six months where there's a little bit of turbulence of people being upset because you changed the rules of the game on them. But unless the facility that you have right now precludes you in some way from delivering that other model, I would say that that's probably a very, the lowest risk, highest likelihood path.

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Another... Let me give you something. This is the first year in my entire life where I haven't had FOMO. I haven't had it and it's really weird. And I noticed that I didn't have it only at the end of the year and I was like, oh wow, that's weird. And I think it's because I finally realized how fucking hard it is to do anything.

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And so I would, so what's the big incentive for someone to get on the phone with you?

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And when I see someone who's like crushing it, like a friend of mine made 50 million in crypto this year and it's not his main business, it's a side hustle. And I was just like, okay, noted. And so then I thought to myself, I was just like, good for him. I was like, I'm not gonna get into it. That's not my game, you know what I mean? But he's like, dude, the school deal's fucking monster.

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And I was like, I know, it's awesome, but that's the game I know, you know what I mean? And so, it's not even the comparison's the thief of joy thing. I think it's just that

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Learning to play a game really well takes a really long time, and accepting, like one of the saddest things about life for me has been that I'm only gonna have maybe three or four more entrepreneurial seasons in me, and that's really sad, because it means I only have three or four more big swings, and it's like, shoot, I have all of these things that I wanna do in my life, but I only get to pick three or four more.

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Maybe, maybe, right? And so I think that just getting comfortable with the idea that there will always be people who make more, And even if you are Paul Getty and become the richest man in the world, everyone will forget anyways. And so like just context, right?

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That there's nothing wrong with taking, having six months where you, you know, re reconfigure what you're doing to then say, this is what I'm gonna do for the next five or 10. And then you set for life and then you can do whatever you want.

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You bet.

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I want to be like you, so we're all good.

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1,600, so we've got a lot.

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Business Scaling Workshop Live Q&A | Ep 827

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All stationary. All stationary. So I'm sure I bought something from you.

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Okay, yeah, keep going.

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Retire with a million dollars.

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Business Scaling Workshop Live Q&A | Ep 827

133.824

As much as you may hate what I'm about to say, there's a reason that all the big dogs do the same exact playbook, which is they run to either virtual or they run to in-person workshops. Because in one or two days or even a half day, you can gain a lot more trust than a very long time online. And I would probably use that as my lead magnet.

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Business Scaling Workshop Live Q&A | Ep 827

1333.63

That's the silent sixth, right? So we're going to continue to make the sausage. We're going to continue to do the proven winning strategy. And that's the core. That's the base. We're not going to threaten the base to try and pursue the new thing.

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Business Scaling Workshop Live Q&A | Ep 827

1343.562

But if you do see one of those writing on the walls type situations where you're like, my margins are going to compress, et cetera, et cetera, then it makes sense to make your one big bet of the year. Let's say it's TikTok. And I mean, to be fair, it's not that much more work to just take the same ads and then run them on Shopify.

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Business Scaling Workshop Live Q&A | Ep 827

1360.726

And then that becomes the objective of the year, which I would probably just put into owned customer list is probably how I would just categorize that for the team. I feel like that's it. So what was the actual question?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1388.38

It can be you and a small team.

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Business Scaling Workshop Live Q&A | Ep 827

1414.63

I'll make you a promise, and I don't make promises often. I promise that if you replace what you were doing, you will find something else to do.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1434.792

Yeah.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1442.855

That wouldn't be my priority. I think get the win. Say it differently, take it to the natural logical extreme. So you do lots of stage stuff and then the main business suffers and then you don't get the W. Then you're just a airbag, right? If you, on the flip side, you don't do any speaking and you get the win, all those doors open tenfold. And so what matters more, the win? So get the win.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1472.079

I do think that with your audience that you have, you'd be able to very easily headhunt a really savage director of marketing who's already done e-commerce for TikTok shop or Shopify. And I would probably do it on your podcast. I'd be like, hey, I'm looking for a savage. Like read Ernest Shackleton's ad about looking for men, low chance of survival. Just like this is a dangerous place to work.

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Business Scaling Workshop Live Q&A | Ep 827

1494.798

And I think you will attract the right people. Awesome. Yeah. And don't be afraid to pay them a lot.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1500.902

Yes, ma'am.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1514.575

Love it. Got to know your avatar.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1551.822

Is it high margin? So it's high margin?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1555.084

And it's fast?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1560.147

Yeah. So with a lot of... It's interesting because in app development or software shops, it's just digital construction versus physical world construction, but they have the same issues. I don't want to get into it, but yeah, they have the same issues. Yeah.

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Business Scaling Workshop Live Q&A | Ep 827

157.13

because that sometimes like for a lot of you guys like one of the biggest levers you can have like when we unlock like a easy 5x it's usually something at the very front where it's just like we just swap the lead magnet from like hey book a call to hey get this thing and then a call just happens to be part of it or a workshop happens to be the vehicle for delivering that outcome and we do that like that's when all of a sudden your lead flow goes from making two sales a month to eight or ten and i think that for me that would be the biggest issue now you managing

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1574.736

And so in almost all of those situations, I end up saying like, okay, what aspect of app development or what types of apps or what type of development do you do or what types of construction do you specialize in or that you have, like that you absolutely nail?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1586.584

And usually it's like, it's something like this, like, you know, we crush cabinets or like we're really good at countertops or really good at bathrooms or really good at whatever, right? And then zeroing on that, you'd be amazed at how much more responsive your advertising, your advertisements will be. prospects to your advertisements. Because then you can show before and afters on bathrooms.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1604.757

It gets much more niched down. And then people who are coming in and calling are like, that's what I want. And you're like, cool, let me just take your money and I'll give it to you.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1624.291

Well, what do you make on a bathroom?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1635.639

Okay, how many of those can you, I mean, how many can you fulfill right now at max? Five a month?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1645.846

Okay, and that's today.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1660.481

I don't want you to turn off how you get customers, because you need to make money. And just for everybody, when you're really small and you're starting out, it's normal to basically accept money from anyone. You're like, do you have a pulse and a credit card? You're for me.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1676.745

So it's normal, but what I would like you to do though, you can take those jobs, but in terms of what you're being deliberate about, your advertising, if you start running ads on Facebook and show some of those images to generate leads and sell, I would focus on that. And if you think that that, because you should be able to pencil out in five minutes, can we make more money from this?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1697.469

Your sister feels very, very convicted about this. She's very convicted. Okay. Yeah, so if you can make a lot more money, if you can sell a lot, yeah, a lot more money selling bathrooms and you can sell way more of them and the, because then the transaction, the deal cycle is shorter, it's, you know, you walk there, you quote, you close, like it's very straightforward.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1715.405

I like those types of businesses. Yeah, no worries. Keep the money coming, but focus there, and then over time, the coloring of your money will shift, and you'll be at like 80% will be bathrooms, and then you'll just be like, okay, now we're gonna, there'll be a time where you'll be able to say, we don't need this anymore, just to get the focus. So I just want you to shift it over time.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1732.984

Does that make sense? Okay. Yes, sir.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1742.831

In lawsuits, actively. Yeah. Well, there you go.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1745.894

Yeah.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1764.093

Both. Super common.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1769.574

Okay. So those are two separate problems. Yeah. Which one's the bigger problem?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1779.778

Just PPC?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1786.803

Well, I mean, if you're bidding for those terms, the only way to win, because it's an auction, is going to be you increasing LTV. But I'm guessing you're selling relatively expensive packages. We are. Yeah. So I don't know how much room you have there. So I would probably, if I wanted to solve the acquisition problem, I would probably be looking at another paid ad you know, way of running ads.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1808.298

So PPC for everyone here, typically pretty good returns, very consistent. It's really nice because once you set it, you can kind of forget it, kind of. Well, definitely compared to social ads that are interruption based, you have to refresh all the time.

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Business Scaling Workshop Live Q&A | Ep 827

1821.647

But I think that may be actually the next thing though, is that I think you might have to look at interruption based paid ads rather than inbound intent based. Because honestly, the only other thing that you could really do is just start going top of funnel more. Because what percentage is people who are in lawsuits versus people who are not in lawsuits?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

183.763

Customers it's like I think I think you just need more cash flow Which more customers will help you with and then you can get an account manager who can kind of like run those relationships But most relationship guys can handle many many many customers because people don't I mean also the higher up you go They tend to in my experience actually need less Is that required

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1840.705

Okay. Yeah, so then I would imagine that where your growth will come is from the people who are not in lawsuits, because there's way more people there than in lawsuits. True. PPC's gonna be intent, red hot pain, they're gonna come in, they'll buy quickly. Whereas the people who are preventative obviously take a little bit more education.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1855.719

That's where it's actually very similar to the finance thing I was saying earlier, where pushing to either virtual or in-person events, giving away lots of information for selling more complex products tends to do really, really well in your space. And so I would probably go social ads to workshop, virtual or in-person. and then sell from there into your stuff.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1880.29

That would probably be my strategy if you wanted to get to 25, because you probably can't increase your spend on PPC that much more anyways.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1891.776

Yeah, so you can do them virtually, or you can do them in person if you want. Cool. Because if you do it in person, where are you out of? Florida. Florida? Yeah, I mean, you could probably run a 50-mile radius in Florida and do an in-person one, and people would still show. Yeah.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1904.281

So like that would be like a, because it's much easier to get people to, it's a very easy funnel for in person if you're local. Like it's literally just lead gen, call, schedule, remind the hell out of them, expect 20, 25% to show up of your leads, 20, call it. And then from there you'll close a third of the room. That's, I mean, that's a very simple model. So I'd probably start there.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1929.721

And then as you kind of like get more familiar with it, get the pitch down, et cetera, then you can go online and then do The Nation. That help? Yeah, you bet. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1960.689

and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1977.099

So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

1991.728

And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

214.006

Save more money, save on taxes, tax projections and manage their, I think you're, I think you're under, under charging and over, not over delivering, but doing too much.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

232.048

So it's like, there's the Dave Ramsey of like, hey, stop spending money, silly pants. And then there's the like, once I have money, what do I do with it? And I feel like you're kind of blending those, but you're not, but you're doing both services and pricing like one, but like lower. So I think, basically you're not making enough money per customer to do the work you're doing.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

252.582

Like 12 meetings a year is a lot. Most of the wealth management firms that like come through here, one.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

260.207

Right. And so you're doing 12 times the work and billing less. So unless you had a tech enabled way of making that the model, I would change the pricing. Because fundamentally, you're either the volume player, and you have tech built in since day one, and the entire model is around cost efficiency, or you're premium. There's really not a lot of room in between.

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Business Scaling Workshop Live Q&A | Ep 827

289.219

It's a hard time for people to perceive that value. So I just think you're doing way too much.

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Business Scaling Workshop Live Q&A | Ep 827

314.571

I don't think it's dumb. I think you have two elements. You have a personal finance thing, and you have an investing thing. And you're getting the people who are younger with the personal finance thing, and they don't have enough assets to make their AUM really worth it.

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Business Scaling Workshop Live Q&A | Ep 827

331.557

I would probably have a more traditional private wealth management model, and if you just find out that you can acquire customers really easily on personal finance much more easily than you can here, but then the ascension is much higher, then that's a great model. I think that's a really interesting play.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

347.389

But I think trying to combine both of them in terms of both the delivery and the pricing, I think that's where it feels off to me. So I just blew your shit up, so I apologize. We have a whole year, so you're good. Go for it.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

404.123

So can you restate the question?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

421.305

What stops you from doing 10 times more of that? Probably just people. Because I do a lot of it myself. Okay, got it. So what's the return? Do you know what your LTV to CAC is on? It's right at 10. It's 10, and that's with your time being free? Yeah. Okay. So if you paid someone full time to do that, do you know how much that would impact your ROAS?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

455.614

Okay, so wait, you're knocking on doors and getting the business?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

459.32

Got it. And then the truck follows you and then does the work or whatever? Yep. Got it. So I think in the beginning, you'll have to keep stacking the subscriptions so that you can generate the cash flow, because then you'll have basically the for sure business.

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Business Scaling Workshop Live Q&A | Ep 827

474.132

And then once that starts stacking, then you'll have the cash flow to hire the other sales guy who's going to be able to take over your role. Thing is, most door-to-door guys need to make decent money, because it's terrible. And so, you'll probably need to be, they'll probably need to make, I mean, a decent, how many sales a day can you make?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

496.875

Okay, okay, yeah. So I think, I mean, one of those guys could easily, if you can pay them, shoot, 50, 100 bucks a sale, they can make 1,000 bucks a day. I think you'd be able to get somebody to be able to do that for you.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

513.251

I just don't want to add complexity, because right now you have limited resources, and so I'd rather just do more of that thing rather than be like, oh, on top of that, now I have to start calling leads and have to create a whole... The online world and then working those leads is a whole different monster versus you're right here, you say yes, I call truck, we clean shit, I get money. Yeah.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

52.403

How many sales a month did you do?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

533.28

It's good business, right? Just keep it easy. Yeah, I would rather you keep it easy.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

537.143

Long term, if you were like, hey, I've got 15 trucks for the city or whatever, and I've got 15 teams that are out doing it, then I'd be like, yeah, I think having a canvassed top of funnel kind of awareness, stuff that generates leads in a centralized phone team that can then also proactively send trucks out to people that you already sold over the phone, I think that makes sense.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

55.024

Two sales a month, and is the model like 1% assets under management?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

555.216

But given the fact you already know the script, you already know the process, I'd rather you just stack some of the recurring so you have the cash flow bring the new guy in. That being said, If you get a little bit more generous on the commissions, you could probably get someone to pay work commission only. So then you wouldn't have to take the risk on. So I revised my original answer. Do that.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

572.813

Thank you. Yes, sir.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

615.276

That's a really good question. I've gone back and forth on this, so maybe there isn't a right answer. But I would say that in the season that I'm currently in, I believe that there is one constraint, and if we solve that constraint, the business will grow. And so I want everybody to know that this is what we're working on.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

635.161

And what ends up happening is that you see the other fires that are burning, and then that actually creates more urgency to fix the first one. when you try and fix them in parallel, it ends up taking longer to do both than to do one and then the other, because the whole team knows. It's like, but there's this other fire burning, and you're like, right, then fix the fucking first one.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

651.616

And so then it just orients the whole team. And then also that means that if something has to happen, the whole team is greasing the tracks to make sure that this objective gets pushed forward. Because there's so many supporting and ancillary things to get some big thing done that if they're like, well, we have our priority, I think that's what gets in the way.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

674.873

So we call it the silent sixth, which is basically like every business has their priorities for the year or whatever. The silent sixth one is that we have to keep selling, we have to keep doing business, right? So those things always have to continue, but what is the one thing that matters most?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

688.64

I think it's Jack Slootman, he has a good book on this, but I'll give you the TLDR of the book is that he was a big believer or is a big believer in not having three objectives or five objectives, but just one. And he said, basically, if you can't get clear that one thing is more important than everything, then that's your fault as an entrepreneur.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

707.93

And so I see if we're the chief allocators of resources, then it means we have to be able to prioritize, and if we can't do it, how can we expect our teams to? which means we have to be able to say, this is more important than that. And yes, they are both important, but this one is more important.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

720.757

And I think that that kind of betting perspective has served me really well, being very violent with like, this is the most important. And I've just noticed that things get done way faster because then it's like, hey, when we do this, then we can do this next thing. And then everybody wants to do the next thing too. And then when we do the next thing, we part the seas to get that done.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

739.775

Yeah, it also, in service of what I was talking about earlier, when you have that perspective, it also minimizes all the other changes that you're making across the company too. Because you're like, that's not a priority. Could we improve this thing? Probably. Do we need to right now? No. It's not the constraint. Yes, ma'am.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

760.834

Wise Whisperer.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

807.46

Are they TED or TEDx?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

809.261

Okay, got it.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

813.866

Yeah, this is a math problem.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

815.871

So I'll tell you a story that applied to a home services business not that long ago. So he was really scared to raise prices, but he wasn't making any money, and he was closing 80%. So I was like, hey, man, please raise prices. And so he decided to raise prices. But to get him to raise prices, I said, so here's the deal. How many times, I said, what are the biggest concerns of a customer?

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

837.952

He said, well, it's on time and on budget. I was like, all right, how many times are you on time and on budget? He said, eight out of 10. I said, what happens the other two times? He said, one time, they'll change what their requirements are. They'll say they actually want their kitchen to be twice as big or whatever. I said, okay. He said, the other time, I won't get materials in time.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

851.505

And I can't control that. I said, all right. So what if we write the guarantee, so it's, you're gonna raise your price by 20%, which is what we did, and said, and if you don't deliver on time, you're going to give the client the entirety of your profit, right, which right now is you make no money anyways, so like, we can say that.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

869.397

So it's like, if I don't deliver on time and on budget, I will give you all my profit, which is 20% of this deal off. So that's why, so that's the guarantee. And... By switching to that, he closed way more people and made way more money. And so the fear around guarantee, I think, is justified.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

87.346

Interesting. Okay, got it. Okay, so typically with your type of business, they're usually demand constrained, not supply constrained. Like managing lots of people and lots of money usually doesn't actually take too many resources relative to how much they make you. And so I think that the big issue is probably just acquisition. So getting two sales a month is probably the big bottleneck.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

886.3

But if you just look at the math and you're like, oh, I can close twice as many people and I have to give one out of 10 back, you made way more money. So I think just do the math on it.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

900.707

Well, you already went through a pandemic, so you already know what you do.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

916.976

Personal training or semis or group? Large group.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

931.067

You need 49 more gyms.

The Game with Alex Hormozi

Business Scaling Workshop Live Q&A | Ep 827

991.294

This ain't it?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1013.969

Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and and across all eight functions of the business.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1031.576

So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1048.323

Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

106.458

So it was PVC?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1107.6

Okay.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1111.941

So, all right. We have this, you said department, it's $20,000 a month. So department's one person?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

112.981

Okay. How did that work?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1126.676

But it was the owner and now you have three people there.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1137.663

Well. So I, I, okay. We have to take these one thing at a time. So first things first, we're going to ignore this. Cool. We're ignoring that. Yeah. Second thing is you're going to get the sales cycle for doing this offer on the front end because that seems to be working for you. So I would get you better at closing these deals and doing it consistently. And that's a 20 year history as well.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1156.726

Great. So that's good. In terms of the cross sell, which is basically what that is, I would say table it for now. Not, I mean, I do think the reasoning of we're too busy, but we're also not making as much as we want is tough. But the steps of what we're going to do here is this is going to be number one. And then the second thing that you're going to tack on is the cross sell.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1179.289

actually it'll be 1.5, is Fix Compliance Department. so that they can actually handle the customers. And then, so it's restaurants is number one, fix the compliance department, and then you'll start cross-selling the compliance services. But this will probably take six to nine months to get to here, just to be clear.

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120.792

Okay.

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1201.948

It'll probably take six months to learn this, maybe three months to turn the department and figure out like, you hired three people to replace one, I'll bet you two of them aren't doing anything. especially if they're like, we're too busy. It's one person who's doing this. There's three of you. Now you're saying you're too busy. Something doesn't add up here.

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1216.021

And so you, like right now your business need has four fires. You just have to take one fire at a time. And this is the most important fire, which is getting new business. So let's solve that one first. Okay. Thanks so much, Al. Appreciate that. Yeah, 100%.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

123.673

So what was the issue?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1244.397

You must be.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1245.938

Or else.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1297.686

What percentage of the revenue is coming from the education?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1302.371

It's not something that... Well, then, yeah, they could free for sure. No question. Yeah. And I would make it free in a couple ways. So one is I'd put it out as content, put it on YouTube channel, let it be stream free. You can still have people opt in for it if you're running ads, and just give them all the links to the YouTube.

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1317.239

And so that would both get you leads from the platforms and also from you running ads to them. And it basically functions as like a great and like just put an easy call to action upfront and then also follow up with the leads like you have a sales team. So

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follow up with the leads who opt in and just put a thank you page scheduler that's like, hey, by the way, if you want us to implement this stuff because you don't want to do it, we're happy to show you how we execute this stuff. And just put a sorting question on the opt-in form so you can see what revenue level there's at.

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1344.088

And so if they're, let's say minnows or not big enough to do what you want to do, then don't have it thank you page over to the scheduler and then only have the pixel on the thank you page that has qualified leads. And then that way you'll, the algorithm will target more qualified leads on a continuous basis. Does that make sense?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1362.714

Great. This was good.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

138.417

Yeah. So what stops you from doing that again and now working the leads this time?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1391.405

Awesome.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1492.286

Did you find the business? Yes. Congratulations.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1496.229

How long has it been?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1499.111

That might be my quote of the day. Okay. So I think that, so I mean, margins have to be razor thin if a $500,000 deal is going to make or break the quarter. So what part of my misunderstanding there?

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152.038

No, you're good. I mean, that's, I mean, that's the, that's the hope.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1530.328

Do you trade on EBITDA?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1543.158

Yeah, because you'd have to dramatically increase EBITDA.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1552.805

All right, so I'll tell you what, I might start by what I wouldn't do, which is I probably wouldn't allocate existing resources or people and try and take people from one to the other because it's such a different sales motion, kind of going after minnows. And so I think you'll probably need somebody who's kind of entrepreneurial.

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1569.49

It might be a real, because given the size that you have, it might make sense to acquire somebody who already had, that's probably, if I'm in your shoes, because you need to have such a significant amount of scale in order to make a dent in this. It's I'd be looking at somebody who has inferior product to yours, but has a really good marketing and sales function for minnows.

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1589.62

And just say, listen, your backend's trash. We'll plug it into ours. But we just want like this. There was a deal that I was looking at for gym lunch, obviously smaller, but where there was a marketing agency that was selling like 50 gyms a month and they would keep them for three months and they turn out. And I was like, man, I could just buy this company and just say, keep everything the same.

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1605.713

Just sell our thing. We ended up doing a deal for a different reason, but I think that would probably be like the fastest way of getting into the minnow market. Start building that from scratch, given the fact that no one in the business sells to minnows now.

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So in all likelihood, you running ads in a local market to get more patients feels pretty sound to me. The offer that you were running, what was, what, what offer were you running to get people in the door?

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1620.279

Given the timeline, I don't think I would, I don't think I'd try an organic growth strategy for minnows to get from, you know, 340 or right around where you said to 500 in 18 months. I don't think, I don't think, I just, I think it'd be really, really tough.

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1648.212

I mean, I think either way, it's going to be a distraction. I wonder if, I know you said that the lumpiness is an existential threat to the business. What is sales velocity?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1664.11

But how many deals a year do you do?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1678.996

You have 1,000 customers, 340 million roughly. So annual revenue is like 340-ish per customer. And then top 40 are disproportionately higher. That's right.

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1696.826

Yeah, yeah. So if we were looking at the more better new, I know as Root Adventure it is, I still think that way. If I had to make a bet, I would probably bet on the better button for the existing sales function. You have 204 or 40, 204? 204 people. Yeah, 204 salespeople. I would probably be thinking like, okay, I'm dissatisfied with this.

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1722.816

I'm probably not going to introduce a new variable into the business when I know that if we just, I guess, thinking like 12 months in the future, if we just nailed one thing, what would have the highest likelihood impact on us getting to 500? We'll probably take in the existing infrastructure, existing deal model, and just say like, how can we tune this thing up?

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1739.746

Would probably be, and that's just going to be a lot of rolling sleeves up. But I think realistically that that's probably, and there's probably a lot of bloat right now, And I'll bet you that from a cultural perspective, I know you want to maintain the culture, but I'll bet you the culture of that team is probably not as good as you want it to be.

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1752.954

It's probably a lot, I mean, especially in like tech sales, it's like literally the butt end of jokes for lack of work ethic, right? That's right. So probably putting in almost like a Welchian, Jack Welch perspective of every quarter bottom 10% gets cut. Right.

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1766.943

I think would probably dramatically signal to them that like we need to produce and usually laying off the top bottom 10% in a business of that size. Yeah. It won't, it'll, you will make more money. And so actually I know, I know we, we had to drive that. We have a bigger business. That's probably what my next move would be.

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177.477

You ran your ads. Yeah. It's a monthly membership. No, no, no. But like the ad wouldn't be like want to buy a direct monthly membership. Right. No. Right. So what was the offer that people saw that caused them to take action?

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And then I would be looking at, so if we're, it's kind of funny because it's really what we're doing. One more. So this was like a perfect case study here, which is we need to get more customers, right? Are we doing more? Are we doing better? Or are we doing new? So new would have been, we're going to go after minnows or we're going to do an acquisition. That's new. So we talked through that.

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1803.268

It was like, I don't know, especially on the timeline. Is he going to create 150 million in sales? Probably not. It'd be really tough unless you just did, you acquired one that was already doing that. That's right. So then it's okay. Do we hire more sales guys or better? Well, we have a lot of bloat on the team right now. I'll bet you we could do it better. Cool. Okay.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1820.32

So who's in charge of that team right now and why are they not winning?

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1845.347

At the same time- Is it broke though?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

1863.772

Yeah. Heard. So I'll say this, and you may not need to hear this from me, but I think that founders have a special privilege, which is that you know how the company was founded, you know how it was made, you know how to break it, you know how to bend the rules. And so if you started this, the first few sentences you said was, this is an existential threat to the business.

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1885.363

And so if the private equity firm is not recognizing it as an existential threat, it's because they don't have the same information that you do because they couldn't, they haven't been around the business for 18 years, but you do. And so whatever pulse you have, I would probably trust your gut and say, no, this is a threat. So like when you say it ain't broke, don't fix it.

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1901.537

I say it is broken and we do need to fix it because we will not hit the $500 million goal if we continue with status quo. And if we, if we don't hit that goal, then all of a sudden, you know, one of the private equity guys that I know, he says, Oh, all businesses increase in value over time, unless they don't, in which case they are worth nothing.

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1917.828

And so you are, you, from that perspective, that's kind of where you're at right now. And so I think it would make sense for either you to parachute in and you might need somebody who's a little bit more entrepreneurial, a little bit more renegade-y to go in and kind of rattle some cages and say, we need to, we need to do better. And I think that's probably going to be what will be required.

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And it'll, and I focus, obviously we think I talk a lot about behavior, but what are the behaviors that we're going to change and how can we I mean, we solve sales problems in every organization by more role-playing, like role-playing is your eyes blade. That's how we do it. And that's fundamentally how we fix sales functions because we can just give rapid feedback.

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And so it's, I think you need people who, it's not like getting all the sales team to attend a rah-rah event and having some sales speakers speak for eight hours. It's not going to do anything, right? I think it's, you need to have probably almost like a SWAT team of people going in and then retraining and quickly red, red, yellow, greening. the team as is and be like, this guy sucks. He's out.

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1977.679

This guy has potential, but still needs to learn. This guy's great. Let him do his thing. And I mean, that might take 12 months, but at least at the end of that 12 months, like your sales velocity will increase. The deal cycle will probably shorten the deal average deal value will go up. And those are the things that I think would have the highest likelihood of, of getting to the 500.

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1994.952

It's from my vantage.

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1998.955

Thank you. No, a hundred percent. Thank you.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

2.31

Everything that you spend your time on that is not interviewing to get this setter and get them trained up are things that are not going to double the business. Let's do A's and Q's. Hello.

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205.608

I'm a real old path myself.

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2063.126

You need to do way more.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

2070.669

Yeah. I mean, for sure.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

2074.411

You're, you're so, again, this is not a slight, but like $60,000 a month, like you're, you're tiny. Yeah. So we have to, you gotta do so much more. So you said you get some from organic. What was the other source?

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2089.474

So all traffic is from organic? Well, basically, yeah. Okay. Do you run ads? No. Yeah. So I think it's unlikely that you're going to quadruple this year off organic, unless you just get really good at it really fast, which you could. And so I would say...

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2105.205

It would probably like, if you really, if you have to hit four or more, it would be either an ad funnel, or if you look at what Duolingo did, they did a lot of influencer campaign. Yeah. Of all these guys who teach languages or speak different languages and say, Hey, you know, go sign up for Duolingo.

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2120.249

Yeah.

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2120.729

And that might be a really good strategy because there's so many artists on YouTube and Instagram, and they typically are horrendous at monetizing.

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2136.03

Yeah. There's also a bunch that just don't. And so, but big picture, I just don't think you're going, like, I don't think you're going to quadruple your following or like your organic views. I mean, maybe you could, but what's the funnel that you have right now in terms of how you get customers?

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2156.247

What's the price point? Sorry? What's the price?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

2168.914

Okay. That's good. Yeah. So good on annual. And then what's LTV for the customers?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

2179.336

Well, you mean $12 is if you take your organic cost, basically your cost of production. Okay. How many pieces of content are you putting out?

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2191.285

Per? Per week. Okay, cool. So, yeah. Let's go more. For sure. Let's do more. Yeah. I revert back to my original statement. To put this in context, we put out 450 a week. So, like, you definitely have room Yeah. So, yeah, I mean, you want to, you want to, you want to build this thing. So, I mean, you know, 10, 10 a week is like one and a half a day. Yeah. So, yeah.

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Well, I'd have to look at all the content and I'd have to look at the funnel because I'm sure there's things we can find on the funnel to increase in conversion. So if you're at like 1.5 and it's, I think we get this to three, it's like, there's a double. Great, so now we only have to double our impressions.

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2238.555

Well, if we double our number of posts, we have a double there on the front end, we have a double on conversion. So those are 4X. But if we, you know, I like to say like, how do we leave no doubt with this goal? So it's okay, well, if we 10X the amount of volume of content we're putting out and we double our conversion and we increase our follow-up on the backend,

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2257.168

And we look at our pricing strategy and see if there's maybe some holes that we can find there. Right. Then it's, well, there's a 40 X. And so if we just suck by one 10th of that, we'll still hit the four. Right. Does that make sense? Yeah. That's how I tend to look at those types of holes. I don't want to hit a quadruple. I'll shoot for 40. And if we miss it, we'll hit 20. Right. Yeah.

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So what we need to do is basically have an offer that we can run on the front end. It would typically be some sort of, I'd say $19 to $99 offer. And I want to be clear, I'm not trying to undervalue your services. It's going to be a front end thing. So you get them to opt in, thank you page, they can buy it. Some of them will, some of them won't, doesn't really matter.

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2276.942

It makes sense. Rather than solve for four.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

2304.856

I don't even want to answer the question because it's so far from where you're at right now. Right. Doesn't matter. Right. It just doesn't matter.

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Because my answer will also be irrelevant because by the time you do have that problem, you have different resources, different teammates, more cash, and you'll have a different solution that will then make sense than what me trying to predict what that's going to look like 12 months from now is going to be.

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2329.326

But really the, the, the, the scaling that it will look like in the short term is how do we get more out of you? And it's going to be basically you getting as much assist as you can so that you can reduce more. And so you're like, well, what am I going to be on camera 24 hours a day? I'm not on camera 24 hours a day. We put out 450.

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2345.716

So like we're, you know, we're doing, I don't know what the math is there, but more, uh, right. I guess we're doing about 40, 40 times more content than you are. And I'm, I'm not on camera 24 hours a day. Thanks. Cool. Awesome. All right. Yeah.

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2361.066

Easy. Wow.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

245.822

So the ones that do buy and self-schedule, those will be easy because you won't have to work them. They'll probably just show up because they paid. For all the rest of the leads, you call them up, you collect the card over the phone, and then you obviously bill them the $19 or $99 thing for whatever the, call it a functional movement screening or like some sort of pain assessment or if that's,

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264.597

Basically, you want to figure out what the most common pain that your ideal avatar is suffering from and then make the offer related to that. And it would probably be some sort of screen slash assessment slash x-ray or whatever that then reveals the problem. And then you do a prescriptive close on the solution. And so this is a very tried and true method.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

285.307

And it sounds like the biggest issue that physicians offices typically deal with is that secretaries don't know how to work leads. Right. Right. And so you really need a sales role. And so it feels uncomfortable sales medicine, but it's also reality. And so that's pretty much it, which is that's the offer. And then you would hook it up to a scheduler and then you would call the leads. That's it.

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I mean, that's, that's really it. And so it means you just need one person to call the leads and you can do this thing.

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312.96

Okay.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

313.62

So then everything that prevents you. So I'm going to say it super directly. Everything that you spend your time on that is not interviewing to get this setter and get them trained up are things that are not going to double the business. Thank you. Yeah, 100%. Thank you. That help? It did. Okay, good.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

394.637

Well, the watches are the ones that are carrying the price, but your specific price.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

409.884

So I think, is there a way that we can chop it into pieces? Yeah. Meaning you have your proprietary lead flow, right? Right. You can not share where the leads are coming from and then share the leads with someone and have someone else work the leads.

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432.456

So you want to double your lead flow. Right. Right. And I'm guessing this has to do some sort of outbound method that you're doing. Correct. Okay. So I would probably look at like VAs in like offshore that don't know anything about the space.

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446.586

So I think if you look at the keys to the kingdom, it's like what you don't want to have is somebody who understands how to get the deals, gets the cash to buy it and then find sellers, right? You have all three of those, which is why you have a money flow, right?

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456.875

And so if we got, let's say somebody who is a VA who could work some of the outbound stuff and do more of that work for you, they don't know any of the buyers and they probably don't have the cash to buy something like that.

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467.083

And so I think you could pretty easily get someone to duplicate the effort that you're doing on the outbound lead generation side, doing that and just keep it controlled there. Does that make sense?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

504.39

So I'll say something that Layla taught me this one early on in our relationship.

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509.394

She said, never count the other guy's money. If the deal works for you, the deal works for you. Okay. If the deal doesn't work for you, it doesn't work for you. If the other guy makes more money, he'll do more deals with you.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

52.984

You want to double because I overheard you earlier. What sales velocity right now? How many customers are you selling per week, per month?

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529.128

Which one do you like better? Which one scales faster given your skillset? Partnership? Then do partners. I don't think there's any issue with that.

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536.058

I mean, if you think about it from the value of a business perspective, I personally do like the partnership thing. If you have a reliable way of getting them kind of in. I would say the only problem with that particular angle is that if they make enough money doing the deals with you, they eventually just stop doing it.

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552.877

right so keep them poor yeah shoot sell them a watch so or tell them to move to the u.s good text anyways boy bing i think long term the va thing is nice because of the issue that we were just talking about uh because if you only get eight deals done with somebody before they make enough money to buy their own you know i was trying to think of a auto ap there you go that's i can show you my luxury watch collection then i just don't think the va thing's gonna be that hard for you to do

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583.157

So you document, demonstrate, duplicate. So what do you do? What's your process? You find somebody, like a VA is going to have a very hard time making the amount of money to do one deal. Right. You're going to pay them $5 to $10 an hour. Okay. It's not going to be a lot. Right. And so it's going to take a lot of hours for them to buy an $80,000 or $240,000 watch.

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608.97

At the end of the day, my time was- Realistically, you just have a rubric. Like, you know all the brains of all the watches. I know that you probably in your head have an idea of what's hot right now and what prices you're willing to buy at. So you just have a decision tree that's in your head that you run every time.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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You just need to document it so that you can say, hey, if you find anything that's like this or they have any of these products, let me know.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Per year. Okay. So, so 40 a week, roughly. Okay. So 40 new patients a week are coming in. What's the way that you're getting customers right now?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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I mean, you're in the commodities business. Price is the game. So you having real-time metrics on pricing is what allows you to scale and go from being a one-man shop to somebody who can get more to building a business. Fundamentally, you build a business around buying and selling, so price is the exchange.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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And so that's probably just going to every morning you update the pricing sheet and then they can go out and hunt.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Does that make sense?

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Thank you. Thank you. Yeah. There we go. There we go. Yeah.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Yeah, but probably managers, you have three in their whales. Yeah, I got you.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Yeah.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Sorry? I said complex.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Just kidding.

The Game with Alex Hormozi

The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Yeah. Thanks. So, so, so you have a pretty classic issue and so this will affect more than one person, more than just you. So I'll fill in some of what he was explaining. So he's got restaurants as an avatar, right? Which, and he also has property managers, right? And they've got like a hundred units at a time, right? So think of this as these are your whales and you've got your minnows over here.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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And the issue is that he only has three of these and these came super, you know, sporadically. There's no process around it. The restaurants also come sporadically, but there's more of them. Right. And the main hook that he has now is that he also didn't tell you that he bought a cleaning business.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Right. So he bought a cleaning business and then he uses the cleaning as a way to get into the restaurant. Right. That's right. Okay. So do you remember what I told you last night?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Seven to eight a month. Okay. Got it. So you have really good patient stick, obviously, if you're at a thousand and you can. That's great. Okay. So the seven to eight a month that are coming in, is that just word of mouth?

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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I'm going to be out of the business in three months.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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So the key here is that, so I'll put a nuance into what I said so that you can, because I said it's a lot to take in when we were talking. So there's, I did say that, but the other part that what we're solving for is it's not that that's the solution. It's that I want to solve for the greatest discrepancy between LTV to CAC on customers that are using these to acquire. Right.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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And so what I want to figure out is, is it easier and more profitable to get restaurants? Because even if these guys are minnows, there's tons of businesses that can make a killing with minnows. There's nothing wrong with minnows. We just have to look at LTV to CAC.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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And so like, maybe it costs you, you know, a hundred dollars to get a restaurant and a restaurant's worth, you know, $2,000 over the next five years, 20 to one good business, right? Now these guys might be worth, you know, that's supposed to be a dollar sign backwards. There we go. Let's say these guys are worth, you know, $20,000 a year. I know they're not, but whatever.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Let's just say they're worth $20,000 a year and it costs you $4,000 to acquire them. Now in your mind, you're like, man, this is so much more money, but the LCV to CAC ratio is actually much smaller, right? And so what I want to just figure out is what the LTV to CAC is between these two things. And I do think that you owning it is an intelligent decision.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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If you have an inkling as to which one of these is more profitable in terms of what it costs versus how much you make, then I would start there. But I would focus only on one of them. Because you just have to get your hands dirty and learn the actual sales process.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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Now, I'll bet because you have this cleaning thing, if that gets the door open for these restaurants as a pretty easy like foot in the door, quite literally. It does. Okay. Well, then it's great. Well, then this one's like property manager is going to be harder to get. Right. And so if you're like cash looking trained, which I'm guessing you are given the stress I can feel. Right.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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I would probably go leaning because you can get your foot in the door and get your reps much faster. And I think you'll learn the sales motion that might also apply to the property managers later. So it's not like you're excluding that. But for right now, and this is what I hope to have happen, is that you figure out the sales motion for restaurants with this offer.

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The Fastest Way to Grow Is Simpler Than You Think | Ep 887

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And you might just be like, we're making a lot of money. Let's just keep doing this. And then you can just transfer that. Because I'll also bet, kind of like the flipping watches, selling property managers is going to be harder. than selling restaurants. And so if you do eventually want to get out of the business, it'll be easier to get out of the business if you make that the customer.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Hey guys, welcome back to the game. Today's a throwback episode where I go over a handful of things specifically around pricing and the downstream effects it has on the business in terms of the customers that you bring in and what kind of team you can attract as a result, which can spin the long-term wheel for a sustainable competitive advantage.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so if you think about the white collar echelon, you've got investment bankers, you've got management consultants, all right, at the highest level, in my opinion, of this kind of white collar world who deal with rich clients.

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The banking world fundamentally goes to rich people and says, I'm going to allow you to give me a billion dollars and I'm going to take that billion dollars and I'm going to give you back $5 billion in 10 years or five years or whatever. And they're like, okay, well, what do I have to do? And they're like, nothing, you just write me the check.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Like, okay, so I write you the check and then there's nothing else I have to do. Correct. Well, what's my perceived likelihood of achievement? How do I know this is going to happen? Well, here are the other three funds I've done and I've averaged X over five years in each of these ones. Okay, so you've done this three times over 15 years and you've had that each time.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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It's pretty high perceived likelihood of achievement. The dream outcome is I want to make way more money and I'm going to do it without any time or effort on my part. Here you go. That is how billions of dollars are made because they find what problem does a rich person have? What can they do with their money, right?

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Which is why investment vehicles and investment opportunities appeal to the wealthy. And the more passive you can make it, the less time involvement they have, the more turnkey it is, the higher the likelihood that you have a tracker that they're going to get what you have promised, they'll write you an unlimited check.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And if you solve rich people problems, they will make you one of them. And when you solve rich people problems, you get to charge rich people prices. And so it's this interesting concept that a lot of people miss out on. And part of the reason that a $50 person is saying, well, what exactly am I be getting?

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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If you can get 20% returns like Clockwork with virtually no risk, you can tap into literally unlimited money. Anyone. Massive amounts. And a key point here was risk. If you find a way that there basically is no risk and you can get 20% returns twice the stock market, you can have as much money as you want. Now, here's where the little wrinkle comes in for those types of solutions.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Many times you can find those things, but the opportunity can't take unlimited money. So a buddy of mine had figured out a short-term revolving credit line thing for specific businesses that can't get credit lines, but they had assets in excess of the credit line. Meaning, if they defaulted for whatever reason, they could claim assets that were worth more. So it's asset-backed loans.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so he was able to get 50% annual returns, but he maxed out that entire market with like $20 million of liquidity, that little niche that he had found in business. But $20 million may be more than what you currently are working with. And he structured his fund so that he would get 20% of the upside.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so if he takes $20 million and he does 50% growth every year, he's able to grow to whatever it is, I don't know, $100 million at the end of this. And he gets 20%. So he makes $20 million. And so for many of you watching this, you'll be like, I'd be happy with $20 million. And so all you have to do is find ways to solve rich people problems. And that's a big investment bubble.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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But let's go down to day-to-day types of businesses. Rich people will want often the same services as poor people because they are humans. But the way they want it delivered is going to be focusing on the bottom two variables of value, effort and sacrifice and time. Rich people will always pay for speed.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so if you don't have a fast option, or if you look at a marketplace and there's lots of slow stuff, the easiest way to appeal to the rich is just do the same thing in half the time. Whatever the service is, if it's dry cleaning and they can do it in a day, return it by end of day. right? And the effort and sacrifice.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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If you were in any kind of home services type business, a lot of the issues there is English speaking people, right? A lot of people don't speak very good English. They would pay the premium to just know that one, their stuff's not going to get stolen. Two, the stuff's going to be done consistently every time.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And three, they're going to be speaking to somebody who understands them immediately and they don't have to repeat themselves and then say an entire sentence in English and say, comprende or see, right? They don't want that. And this, mind you, this is in America. So whatever your native tongue of your country is, apply that thinking to whatever the service is.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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You just want to make sure that whatever the rich person's native tongue is, is you're making it as easy and effortless as possible for them to communicate with you in whatever way they want. And so if you only have a phone number, well, be the person that can accept anything.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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If somebody's got $100 in their bank account, you're asking for 50% of their net worth, right? For them, it's a very important decision, but it's also completely ridiculous. Unfortunately, this still might be half the population. It doesn't mean necessarily you should sell to them. To the same degree, that $50,000 might have been less than 1% of that other person's net worth.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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So that if they email you, if they shoot you a text, if they WhatsApp you, if they phone call, you can accept anything because you've made it more easy and convenient and effortless for them to communicate with you. And so I want you to think through these value equation variables because that is fundamentally how you deal with rich people, is that they just want it to be effortless.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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They don't want to think about it. And they will pay you through the nose to do it because for them, it's not through the nose because you need to make sure you're selling out of their wallet, not yours. Hey guys, real quick, if you're new to the podcast, I have a book on Amazon. It's called 100 Million Dollar Offers that over 8,000 five-star reviews. It has almost a perfect score.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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You can get it for 99 cents on Kindle. The reason I bring it up is that I put over a thousand hours into writing that book and it's my biggest gift to our community. So it's my very shameless way of trying to get you to like me more and ultimately make more dollars so that later on in your business career, I can potentially partner with you. So that's my give. Go check it out.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Amazon and back to the show. One of the main things I want to hit here is how you sell to rich people, okay? The big thing that poor people do when they're trying to sell in general is, again, they sell out of their own wallet. When I say that, it's like, if you're poor, you think this means a lot. And so you feel like you have to justify your price all the time.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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If I hear that, I might automatically know that this person is A, probably poor, B, doesn't deal with many rich people. And so they will weed you out knowing that you don't know how to deal with people like them. Real talk. When you sell to rich people, the benefits for them are always around it being the best, not it being the best value. It's not, I want to get the most bang for my buck.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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It's, I just want the most bang. Period. And I want it to be as easy and effortless as humanly possible. So I went to a fur coat store when I was in Park City. And I actually met one of the best salespeople I've ever met. I got a really good overcome from him that I'll tell you right now because I think it's awesome.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Layla was trying on these fur coats because I think they're ridiculous and I love that stuff. And we at the time lived in Austin, Texas. So it's hot all the time. There's literally never a point where you could wear a fur coat in Austin. And she said, you know, it's not about the money. She's like, I just don't think I'm ever going to wear this thing.

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And he said, well, if they were free, would you take one? And she was like, well, good point. He's like, well, then it's not not about the money. And he just redirected it back to the price. Now, what's interesting is that not once during the entire conversation that we had there, did he ever mention that the fur coat was going to be waterproof?

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Not ever did he mention that it was going to be the warmest jacket, right? Because it's not going to beat the Gore-Tex, you know, Arc'teryx, Spyder, you know, whatever, you know, double, triple, platinum, whatever, right? Fake down that can't be destroyed in flames, right? It's never that, right?

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All he was talking about was how we were going to look and feel with this jacket or how Layla was going to look and feel at events and basically getting her to imagine what the experience would look like after experiencing the product, right?

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And so if you're dealing with rich people on a regular basis, you have to think about the things that they're going to do and how they're going to experience the product. not the way you think you would experience it. And so this is where, you know, there's the golden rule, which is treat other people the way you want to be treated. But that's not actually the best rule for selling.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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You want to treat people the way they want to be treated, right? Which is the platinum rule, which if you've ever heard of that stuff. And so it's really coming from a place of empathy.

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So they just didn't even care. It would have been the equivalent of trying to sell a dollar to that person who's $100 in their bank account, right? And the thing is, is that you can only go to zero, right? Like you'd only be so poor, right? But you can be infinitely rich. And so your upside is uncapped, but your downside is zero.

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And if right now you don't have a lot of money and you have like a little bit of distaste for rich people, I like from the bottom of my heart, you have to get rid of that because you cannot become something you hate. And so if you want to make more money, you have to empathize first with how did this person get there? What is their worldview? And how do they see things?

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Because it's the first step to being able to walk around in their shoes and make products and services that are actually going to serve them. Because they ultimately, if you think about the biggest companies in the world, although many people who are poor use Facebook, where does Facebook make its money? advertisers, big businesses. And those people act like rich people.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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They want it to be as seamless as possible, and they will write an unlimited check. They'll say, hey, you know what? Facebook, we need to drop $300 million in Q4 because we have to get it off our balance sheet. Buddy of mine deals with Fortune 100 companies, and here's what's crazy. His advertising agency actually has to front the ad spend.

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And so he, if they say, hey, I need you to, for this month in December, I need you to drop 300 million on Facebook ads. He has to front the 300 million for the ads, all right? But the thing is, is that he has to do it that way because he needs it to be as easy as humanly possible. But remember, they're good for it, right?

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so he actually has to have a revolving credit line in the billions with a bank. And so what's crazy is that he charges 6% of all advertising dollars as his fee on top of whatever his normal fee is. And so when they drop 300 million, he gets 6%. It's not bad. He gets 18 million bucks just for fronting the cash.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so all he has to do is constantly look at credit lines that are less than six so you can arbitrage on the money. And so my point here is that rich people have different problems. The best thing to do is study luxury brands. If you aren't in an area or you're born in an area that doesn't have a lot of nice stuff,

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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I would highly encourage you to a, at least make a day trip out to like the really nice part of town, the nice mall and walk around the stores there. And, and this is unfortunate, but you will get treated differently how you dress in those places. Like I walk in like this and they always treat me like shit, but I kind of like, like it. So I'm like twisted in my own way.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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Like I like, you know, the surprise, of course, I'm the main shopper that they have there. Um, but Going there, dress like you're not a weirdo. And look around. Look at the service. When you shop at a high-end store, they'll bring you bottled water that's fizzy. Then they'll have different selections of waters. They'll offer you champagne while you shop. They'll offer you scotch while you shop.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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It's a different experience. You're like, well, why don't they do that at, why don't they do that at Tilly's? You know, why don't they do that at fucking Aeropostale? Right? I don't know. Is that a kid's story? It was probably not. Whatever. Hollister. That's probably a kid's story. Fine. I don't even know what are cheap stores, American Eagle? All right, American Eagle.

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And so when you deal with rich people, you have unlimited upside, which is why they are better customers. Now, like I said, there's five things I want to talk about from the customer's perspective. And my whole goal of this is to actually sell you on one, increasing your prices, but two, increasing the quality of your customers.

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Yeah, H&M, yeah, Forever 21, there you go. Do they offer that there? Of course not, right? And so if you're thinking about this, like who's gonna get a better experience? Like the clothing at the nice stores is way better quality, right? There's no one gonna argue that. The experience at the way better stores is significantly nicer. Guess what you don't try and do?

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You're going to have somebody who's assigned to you. And the moment you walk in the door, what can I get for you? And they become basically your concierge for the entire experience you have there. And they can have and deliver that better experience because of the premium and luxury prices they charge. And so if I had the choice of two businesses where I've got a super messy rack

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that's sitting there and people just have to clamor and fight over it versus the white glove champagne, how can I help you experience? I tend to want to serve those types of customers, charge those types of prices, make those types of profits and make those types of promises and deliver on them and work with

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My employees and team, really smart people who also want to deal with those types of people. And so in a real way, like it isn't in crowd and an out crowd. People who are in that world recognize other people who understand that world. And if I can get you to think like they think, then you will be able to sell to them. Rich people have all the money.

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And so if you want to go get the money, go to where the money's at. There's only one way to win in a low-priced business. You have to build your entire business from the ground up, day one, based on having a significant operational advantage. You have to build your core strategic advantage as we will be the lowest-priced person. Do not compete on best value.

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You either got to go premium or you got to go luxury. Luxury is your price is so high, it confers status to the buyer because your brand is strong. Premium, which is where most people is where I recommend you go, is actually just deliver significantly better in a real way service, all right?

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Now, here the point is that your price, like if you're an amazing marketing agency, you're not conferring status to the business by being expensive. You're not luxury, right? Luxury often is in consumer goods. So if you're in a business services type business, you're not really going to be there. It's much more about, I want the best. I want the most bang, not for the dollar.

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Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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I just want the most bang. The most bang for the dollar is best value. And this is where the graveyard of most businesses sit. They try and offer a little bit more for a little bit less. And they look at the next guy comes in, he tries to offer a little bit more for a little bit less. And then eventually you can't offer any more for any less.

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And you just stay in what I consider a capitalist nonprofit. You just don't make any money and you do it for years. And it crushes your soul because you kept trying to do a little bit more for a little bit less because you're selling the wrong person.

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Because if you increase the quality of your customers, you increase the quality of your business. And in a very real way, the smarter the people you sell to, the actually better the client results are. All right, so let's dive into the five. So number one, when you charge more money for your products or services, it's you get an increased emotional investment, right?

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And so if you're going to get into the price game, you got to go for the absolute bottom and build your business from the ground up only off of remote workers. Automate as much as humanly possible. You come into it like the first answer is always how can I automate it? Not who do I hire or how do I outsource it? It's always how do I automate it, right?

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And then the second is if I absolutely can't automate it, I'll have to bring someone offshore. That's a different business model than you probably have. It might not even be a business you're interested in. And the problem is there can only be one low price leader. the cheapest person. There's no advantage. And this is from Dan Kennedy.

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There's no advantage to being the second cheapest person in the marketplace, but there is an advantage to being the most expensive. And so when you sell to rich people, you get to charge rich people prices, they pay better. And if you solve their problems, they will make you one of them.

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So when you deal with better customers because you've raised your prices, you're going to attract better people because the rich people are attracted to higher prices. They seek them out like bloodhounds. I actually want to know what the most expensive thing is because I know that the business owner who set it up that way understands how I want to be treated.

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Might not have thought about it like that. I literally look for the most expensive thing because I just assume it's going to be the best. And most times I'm right. Because that's how most businesses that cater to wealthy people operate. They know what the rich person is looking for. They want speed, convenience, and they want it to just deliver exactly how it is and not think about it again.

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They don't want to haggle. They just want, here, get the extra 20%. I don't care. I just want to be in and out, and I'm done. And so what happens is when you deal with richer people, you have way less demanding clients. The nice thing is that when they spend money, they're actually emotionally invested. So when you raise the price, people get more emotionally invested.

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On top of that, they perceive the value as higher just from the price alone. There's a big experiment they ran where they had three bottles of wine. Cheap, middle-priced, expensive. They had people try them out, and they had them rank them. And people ranked them as best was the most expensive, middle was middle, and the cheapest one was the worst. Here's what's crazy. The researchers...

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pulled off the covers of the wines and showed them that all three wines were the same. And so in a very real way, the price actually increased the value of the wine itself. And so when you raise the price, you actually increase the quality of your product.

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On top of that, if you ever have a product or service where you have to get the person to do something, which is most products or services, then the higher quality customer you attract, in a real way, the better, the likely that they will achieve the result because more able people can afford more.

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And so you will increase the percentage of people who are happy and can follow through because they are more able. And so you have higher success rates because you attracted better quality customers. And so if we want to stack the chips in our favor to make big promises, deliver on big promises, have clients that aren't a pain in the ass, deliver results as we said we were going to,

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and make more profit along the way, the pathway is up, not down. Now, from a business perspective, when you have more profit in the core thing that you have, you can reinvest in staying innovative. You can do research and development. You can have beta runs and beta products and prototypes. You can do that because you have excess profit.

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Because on the flip side, if you decrease your price, people care less about your products and services. So if you ever have anything that you have, you require something on behalf of the other person, which almost all products and services do. Even physical products and services, people have to open up a box, they have to set it up, et cetera.

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On top of that, you can invest in having a superior experience because you have the excess cash to give them white glove service. On top of that, your conviction in what you sell that when you say, I'm going to deliver this thing and you can, is strengthened. Because conviction is where all sales comes from. You have to believe what you say. Most people don't actually believe.

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And so the thing is, is poor people think if when you close a sale, you think, gotcha, you're fucked up. Because you actually think that you are ripping off your customers. And so So you need to change that. If you feel that way, you need to change it. Because there's two emotions that you should feel. One is, oh fuck, now the work starts.

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And the second is, I'm really glad I can help this person. Like I get it because I've sold when I was poor. Like I understand when you're like, I fucking need to pay bills. I get it. But the thing is, is like you have to pull yourself out of that to get out of that. Because again, wealthy people can smell that. Like I love this term commission breath, right?

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Is that they can smell that the only reason you're trying to sell them is for you, not for them. And so when you have the most profit, you can reinvest in the experience. You can reinvest in the product. And most importantly, you can reinvest in attracting the best talent. Because how do you scale a business? It's not going to be you. You're going to have to have a team.

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And would you rather have a team of people who don't value themselves and don't want to make a lot of money? Or do you want to have a team of people who are ambitious, who have big dreams for themselves, who want to learn, and they want to learn from somebody who's making money? And they will ask for more than people who don't value themselves. But here's what's crazy.

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The biggest cost-cutting tactic Henry Ford said he did was that he doubled his minimum wage compared to everybody else who he competed against. What happened? He was able to take all the top talent from everyone else to work for him.

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And here's one of the secrets that you probably don't know, and I'm going to tell you right now, is that A-level talent costs twice as much as B-level talent, but produces five times the output. 10 times, 100 times the output, so much more. And A-level talent comes with batteries included. They come with a map installed, like a Tesla.

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They know where they're going, they know the route, and they already have the motivation to get there. And you just need to get out of their way. You need to empower them to do what they need to do. But you can't attract those people if you don't have the profits. And so keep trying to lower your price. Keep trying to do best value. Do a little bit more for a little bit less.

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And so if you have a very low cost item, people won't even give it the time of day. They won't even try enough that even if your product or service is good, they never even gave it a shot. And so when you raise the price, you raise their emotional investment. And in a real way, you actually increase the likelihood that they get results. So the second way is that it increases their perceived value.

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You ward off the best customers. You ward off the best talent because they all know each other. Because oftentimes the best talent are people who value premium products and services. And they want to work for a company that they would buy from. And the last one is a lot of people's prices are a reflection of their value of themselves.

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And I think there's a big thing that we have to separate here is that you can value yourself and understand that you are not as good yet. I'm a big believer in what I consider the Chick-fil-A model of pricing, which is it's either free or it's full price. There are no discounts. And that's why when people are starting out, I encourage them to do as many free services as they can.

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There's a lot of value to that. One is you get a lot of experience. Two, there's lower stakes. Three, you can ask for things in return that are tangential value. You can get reviews. You can get testimonials. You can get feedback. All of these things help make you better. And everyone's so, they're so short-sighted.

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Because what happens is if you're in the beginning and you suck, if your first five people you basically rip off because you're sucking at it and you're trying to learn with them, Like your first five customers all don't like you. Like that's a tough way to start. And your perception of business will be shifted by that.

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And so if you have a very different dynamic where you're just giving and you're giving away stuff for free, you're giving away services for free, right? You will have a very different dynamic and you will learn how to provide value in a different way.

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And then what happens is once you get to a point where people are like, I want more of this and you can't even satisfy the demand, then you go full price. Because now you've gotten the reps in, you know how to over-deliver, you know what an actually good relationship with a customer feels like, because it should feel like a partnership.

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It should feel like we're working together on this, and it shouldn't feel like master-slave, right? It shouldn't feel like you're pulling the cash out of their, ripping the cash out of their wallet. It shouldn't feel that way. It should feel like, hey, we're both aligned here, we're really partners in this work together. And when you have that vibe and you have the track record,

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you will be able to say no to bad customers and ultimately save your mindset and all of your employees from dealing with them too. Because one of the easiest ways to lose good talent is sell bad customers. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap.

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It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.

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It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes.

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And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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So I tell this story a lot, but I'll tell it to you right now. So there was a research study where they had three bottles of wine. They had a cheap wine, they had a mid-priced wine, and they had an expensive wine. And they had people try them out, and they had them rank them based on what they thought.

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And I think that there's a little bit of nuance that I dive into in more detail here around the different viewpoints between rich and poor people and how that can have huge cascading effects in the business. Enjoy. When people are poor, they tend to sell out of their own wallet. They sell using their perception of what money is.

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And so people said, I think the most expensive wine is the best, the middle price is the middle, and the cheapest wine was the worst. And that's not that surprising, except when the researchers explained that all three wines were the same. And so in a very real way, when you raise your prices, you do actually make something that's more valuable.

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Because if that's what we're trying to get at, which is value, price confers value to your product. A more expensive thing is perceived in real terms as more valuable, even if the actual core product is the same. Why would you not want to make your thing more valuable? The third is results for your customers.

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If you increase their emotional investment, you increase their perceived value, what ends up happening? They actually do get better results. They do have a better wine experience. They do, when they sign up for the gym for personal training versus a $10 a month thing, they get better results.

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And so if you want to get people the results that you promise or you claim that you're going to get them, then you should stack every single chip in your favor that's going to get them the result that you're promising. And the price is one of those things. And so some people want to lower the price because, like, I want to help everybody. But you're actually not.

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You're not helping everybody because most of those people aren't going to be emotionally invested. They're not going to perceive it as valuable. They're not going to get the results that you so promised, which means that you have to draw a line in the sand and say, I can only help the people who are swimming towards me.

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So the fourth thing is that when you raise your prices, you actually attract less demanding customers. And so anybody who's ever been in client services can attest to this. But the higher the price tag, the more expensive the contract, the more upfront someone pays their bills, the fewer payment plans you have to set up. the easier the customer is to deal with.

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And if you've ever had this, like the paid in full upfront, hey, can I save a little bit if I pay in all cash today? That customer, that one is the easiest one to deal with. The one that you have to arm wrestle for an hour to get $50 on a payment plan over 24 months, This investment is so important that they're going to milk the life out of you to get every every penny's worth out of you.

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And it's like sometimes it's not worth it because just like what you price is, what you pay values, what you get on the flip side, just because someone pays you money, you may be underwater in what you have to deliver. So just because someone's willing to pay you doesn't mean that you should take it.

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And so they think something's expensive and therefore they don't want to be offensive to whoever they're selling to. But what that is, is fundamentally a selfish viewpoint because you're never putting yourself in the other person's shoes and the other person might have all the money in the world and just want to solve a specific problem.

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The fifth benefit that your customers will get as a result of raising your prices is that you actually have more money that you can deliver on your promises for. So imagine you've got a hard cost thing that costs five bucks, all right? And you can add and subtract zeros here. I'm just using simple numbers. So if you have five bucks to do the thing, right? And you charge eight bucks,

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Well, you only have $3 left to run the rest of your business, provide service, et cetera, right? Like you don't have a lot of room there. Now imagine you charge $50 for that same $5 thing. You have $45 of additional gross profit that, or additional would be $42, of additional gross profit that you can now use to blow the other competitor's experience out of the water.

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Like you can, in a very real way, deliver two, three, four times the value. And in many times, if you do deliver two, three, four times the value, the customer gets a better experience. And so if our whole business here is actually trying to provide value, then we want to increase the emotional investment of the customer. We want to increase the perceived value.

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We want to have the least demanding person possible, have the most possible revenue we can have to deliver the results that the person actually wants. And so if we make these promises, we should stack as many of the chips as we can in our favor. And one of the biggest ones is the price.

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Now, let's talk about the business side, because there's five significant things that will change when you start raising your prices in the business. Number one is that, like the example I gave, if you had an $8 thing that cost you five bucks, you have $3 in gross profit, and you've got to run everything else off of those $3. So if you were just the most efficient person in the world, right?

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Let's maybe just run on half of that, which is $15, or sorry, $1.50 left, right? We're already paper thin here, right? On the flip side, when you have a significantly higher price, you have way more room to make mistakes. And I say that because no one's perfect. We all make mistakes in business. And what you don't want is mistakes that you can't recover from.

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And having a premium priced product or a luxury product that has a lot of margin there allows you to make mistakes. And as businesses are seasonal and you have macroeconomic environments, the people who don't have that padding are the ones that go under. And so having that padding in a real way can increase the likelihood that you can play the game in the long run.

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And so what I want to walk through today is why charging more has five significant benefits to your customers that actually make you a better service provider by charging more money. And it'll give you five specific benefits around your actual business itself that'll make your business more successful. And if you don't know who I am, my name is Alex Mosey. I own acquisition.com.

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The second thing is that as a business, it actually increases your perceived value of self. What do you think about when you think about a Walmart versus a Saks Fifth Avenue or a Neiman Marcus, right? They occupy different spaces in your mind.

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And if you're the business owner of that business, then having a higher perceived value of self, which a lot of times when people are starting out, they don't think they're worth very much. And sometimes they're right. But the thing is, is that you still need to charge a certain amount so that you can have the excess resources to get better.

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If you never have any money left over, you can never reinvest in yourself. You can't reinvest in your employees. I'm getting a little bit ahead of myself in terms of things that you can do, but well, screw it. This leads naturally to the next one, which is when you have extra cash left over, you can reinvest in your product, right? You can actually research and you can test out new things.

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You can make prototypes. You can test out new divisions of service. You can attract high higher level talent to your business. If you have no margin, the best people aren't going to work for you. Why? Because they're going to go to the real business owner who understands how margin needs to work so they can attract the best talent.

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And then now you're not only being out-competed by that person in terms of profits, But they also can scale way better than you because they have decentralized decision making because they have lots of smart people all working together because they priced the product right and they're dealing with the right types of customers.

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Whereas you're sitting here dealing with fires all day because of people haggling over $50 with employees who can't string sentences together because you can't pay anybody who's worth a shit to actually work for you. It's a terrible life. I know because I lived it. So just don't make that mistake.

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Start off high and allow the extra profits to increase your perceived value of self, help you attract the better customers, have the profits to reinvest in the business itself, attract better quality employees. Increase the conviction of your sales team if you do sell ever. Because think about it.

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If they're selling the shit product and they see the other guy on the market who's more expensive, the only thing they're going to have is, well, we're a lot cheaper. They know you're not better. But if you're the salesperson who can approach and say, well, yeah, I mean, if you want, you can try that one first and then come back to us because that's what everyone else does. right?

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Or you can not make the mistake and actually save yourself a little bit of money. And instead of buying twice, just buy nice once and solve the problem for good. And so the salespeople can enter these phone calls or these conversations with the conviction that they're actually going to help this person. And that is the best way to sell is having the full conviction that your product is the best.

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And you can't say your product's the best if you're trying to do it on margin and you don't have the money to reinvest in good people, reinvest in keeping it innovative at the front of the market. you can't do it, right? And so I'm a big believer in just making big promises and then delivering on big promises. Like that is the types of businesses that I like to build.

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And when you have all of these higher paying, lower demanding, happier customers, your perception of the real impact you're actually making goes up. And so your conviction over the entire business and your mission of like, I actually came here to help people, starts to become reinforced. And it becomes this snowball that starts rolling.

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And you have these testimonials and these reviews that start rolling in. And the momentum builds. On the flip side, if you don't have that, you have less margin. It becomes this vicious cycle in the other direction where you're not getting these testimonials.

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We run a portfolio of companies that does over $200 million a year. And I make these because I want you to make lots and lots of money and then hopefully someday partner with us. Beyond that, it's just to make you more money. All right, so... Have you ever seen this meme that's like, the customer says, well, what exactly am I gonna be getting for $50?

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All you're getting is chargebacks and refunds from these demanding customers that had unrealistic expectations because it was such a high percentage of their net worth. There was nothing that was going to save them from themselves. And so you have two stories that you can play out. And solving rich people problems allow you to charge rich people prices. They pay better.

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They're easier to work with. And ultimately, they allow you to build a business that can withstand different seasons and be in a position to succeed long run. This is very fortuitous timing-wise, but the time of this being made, the richest man in the world, everyone's like, what about big tech? What about AI? And believe me, I think it's scary shit.

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So the richest man in the world right now is not big tech, it's not big pharma, all the things that the news wants to talk about. It's a man selling $10,000 purses. All right, if you don't know who he is, his name is Bernard Arnault. He owns most of the major luxury brands that you've heard of.

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So if you've ever been to a luxury mall, and if you haven't, I really strollingly recommend that you go to one. Because it might not be in your neighborhood, it might not even be close to your city, but you should go. Because what will happen is it will stretch your mind in terms of what you believe is possible.

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If you don't make a lot of money and you see a purse for $10,000, and you see a jacket for $50,000, it changes something about how you see reality. And I would urge you to not say, those people are ridiculous. I can't believe someone would spend money on that. What I want you to do is actually empathize with the buyer. what kind of person would spend $50,000 on a jacket?

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Well, what conditions would have to be true in order for that to make sense? Because think about this. A lot of people are like rich people are crazy, but rich people are the ones with all the money. So they must have done something differently than poor people. So try and think about why would it make sense to this person?

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Well, if I can pick from all jackets and I have so much money that the difference between a $100 jacket and a $50,000 jacket in relative terms is a $10 difference to me and my wealth, then I just want the best jacket. And so I'm willing to just pay whatever it is because if you had a significantly better jacket for $10 more in your own net worth, you probably would be willing to pay for it.

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And so do they. It's just that they have more zeros. And so Bernard Arnault capitalized on this. And so there's four distinct positions you can have in any marketplace. You can have bargain, which is the absolute cheapest one, which typically is poor quality in general, poor experience, but barely, barely gets the job done. But it gets the job done, but barely. The next...

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is best value, all right? So this is the difference between like a Walmart and a Target, right? Target is better value. It's got brighter lights. It's cleaner in theory, right? And it's just a little bit better, right? It's the best value for the buck. The third position in the marketplace is premium. So it's the best versus, that's the high-end Lexus, right? That's the BMW.

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And then it has the rich customer who's like, wire a cent, let me know what next steps are, right? It's this wildly different viewpoint that poor people have versus rich people. And at the same time, I made three tweets in a row that each one of them massively outperformed. And it was so weird to me that this was like a novel concept. And I said, solve rich people problems, they pay better.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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These are premium products. They're above average. Based on price, it's not the best value, but it is better than the best value. And then the fourth position in the marketplace is luxury, where the price has no cap and part of the value of the product itself is the cost that people know you paid to get it. So Bernard Arnault lives in this luxury bubble.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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It's where people associate their status with the purchase they made. And what an amazing position to be in. He's like, so I just raise my prices even more and people want to buy more. And so there's called Veblen goods in economics. They actually defy the supply demand curve rules because typically when you raise prices, you decrease volume.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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But in luxury goods, when you raise prices, you increase how many you sell. And that creates this unbelievable amount of profit, which is what has now propelled him to be the single richest man in the world. Something to learn from this guy.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And so the number one question that I got from all the tweet responses I had from those three or four tweets in a row I made about solving rich people problems is, well, what are rich people problems? It's a great question. So rich people have the same problems that poor people do. They just want them solved differently.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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And if we go back to our trusted value equation, the big thing we want is we want to deliver a big dream outcome, right? We want to deliver an outcome that they want, number one. Number two, we want them to believe with very high confidence that if they work with us, they're going to get what we promised. On the bottom side, they want it to be incredibly fast.

The Game with Alex Hormozi

Throwback: Billionaire Recession Advice: Sell to the Rich | Ep 852

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So as soon as they pay, they want to get. And then they want to have as little effort and sacrifice as humanly possible. And with the rich, Speed and convenience are paramount because the money is never an issue. It's how much are you going to ask of my time and how painful are you going to make this for me?

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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This is Raymond. He owns six chiropractic clinics and he does about $5 million a year and we're gonna help him scale.

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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It's probably because like you absolutely can run a 10 to 1, 15 to 1, you know, row. Well, you're doing on Google, but you can do that on Facebook as well if the offer is right. And so right now the offer is like there really isn't one. It's just like try this thing. It doesn't even say free. And so I think. Yeah. So let's do that.

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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I want you to come over here and then we'll walk through game plan. All right. So got a lot of like. There's inconsistent lead flow. There's the sales process that I would look at. I think the discovery process needs something, need a better front end offer, increase ad spend. So those are the really tactical things that I'll walk through, but I still want to talk about ops.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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So if we have these six locations, what would you say like are the team structures the same between all six is the business model the same between all six yeah identical okay identical model got it so the people coming in are different that's part of why the the ltv is different um and so in terms of the individual location operators um if you had to power rank them like one to six who's the best

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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Okay, is the doc kind of like the manager of the location? Is that kind of how it works?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Okay, why don't you just show me, why don't you walk me through what the actual, like, what the model looks like, and we'll do the boxes, and then we'll talk about the acquisition stuff.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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I like that. So you've got a schedule. So basically we nurture. Are they remote or are they in person?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Got it. So that's it. Like that's the, that's the model. Okay. I'm going to shoot. What do you have to pay the docs?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Okay, and did they get some sort of like profit share or something like that?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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I mean, that's usually what I like to have, especially for like a high skill thing. Profit, that makes sense.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Well, if you think about equity, right, you've got you've got cash flow. So like distributions, you've got sale. Like if you sell it, there's value from that. There's risk and then there's control. So that's what equity gets you. Now, they're not gonna get control because you're the one who owns it and you're gonna be making decisions. It doesn't really matter. They probably don't want the risk.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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So then it just comes down to them getting paid on a sale and them getting distributions in the meantime. You already have this one. If you want, you could include something called a profits interest. because you probably have LLCs for each of them. And so this would be something that basically functions equity-like, so that if they sold, they would get whatever percentage of the profits interest.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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So it'd be like, okay, we're going to say that the business today is worth 500K, And you're going to get, call it 15%, above that goes to you. And then it's also key for them too, because you're like, hey, for us to get above a $500,000 EV for this thing, then we need to have profit for the location at 200 or whatever.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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And it's like, hey, but if you get profit per year to 500K, then we're probably looking at something like 4 million. So you're going to get 15% of 4 million, so you have another 600K check. Right. on the database. That way, and I would just draw the same quadrant, which is like, there's four elements, and so I want to make you an owner, and this is how we're going to do it.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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The benefit to them is that when you do this, there's no tax implication. Because it's like, if you were to issue them shares, they've got to pay taxes on it.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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The other benefit is, and this is just being real, is that let's say in five years you don't want to sell, you change your mind, or they've decided they want to move with their family, your equity doesn't walk with them, it comes back to the pool and you can give it to the next person. So basically this is fundamentally like phantom equity. And I think that's totally fine if you want to do that.

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The question is whether or not that actually changes their behavior. And so that's kind of like... I tend to agree for this particular role. But I do think the profit share is a much faster feedback loop, and I think that works.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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No, I understand.

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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No, it's, I mean... The thing is that when you sell, there's ad backs. And so the person who's buying it is going to do their own math on what they think. So they're literally going to throw out your financials and they're going to do their own financials and then decide. Then that means that the other four locations probably have really low revenue.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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How geographically concentrated are these?

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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Got it, got it, got it. Okay, so starting with the lead magnet, I think that offering... 19, $29, somewhere in there, first consult or free x-ray or something to that extent would probably go way better. And I do like, especially for your type of business, to do a low ticket and say something like this. It'd be like, $29 x-ray plus assessments, blah, blah, blah.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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And the reason I like this is because you get the credit card on the phone. And even though it's an insurance thing, it's like, yeah, no worries. We just put a card down just for shop rate. Obviously, we have a doctor who's going to be there to make sure that you're going to shop. And the thing is that if we bill them the $29, then the likelihood they shop is super high.

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And this is literally just to take shop rates to basically 100%. Hey guys, real quick, this podcast only grows from word of mouth, quite literally. There's no other way to grow a podcast than word of mouth.

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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If there's some element of this that you think somebody else should hear or would be relevant to them, it would mean the world to me if you shared this via text, via Instagram, via DM, via whatever way you like to share stuff with the people you love. Thank you. So then, and this is over the phone. So we do this.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Now, when they walk in the door, okay, so this is going to be a little bit of a departure.

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So they walk in the door. And when you, and I think the reason that you probably sold better, obviously you're better at sales than probably your docs are. But if you think about how sales works, so sales, you want to sell at the point of greatest pain, not the point of greatest satisfaction. And so the easiest analogy to have is like, okay, someone's starving. They come to my restaurant.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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I give them a steak and they're like, oh my God, that steak was amazing. And I'm like, hey, do you want another steak? And they're like, no, no, I'm good. But that steak was amazing though. I'm like, yeah, but do you want another steak? And they're like, no. And so it's kind of the same thing here where people are literally coming in pain.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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And ideally what I would want to do is we take the assessment. Instead of doing the treatment then, I want to sell the package. Got it. Then if you want, if they have time, they can do it or they can come back tomorrow and get their first treatment. Got it. So it's the same timescale. We just move the order around. That makes sense. Because like... I mean, I've been this patient.

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So I go to the chiropractor, they do some thing, I'm in pain, they adjust my back, and then they're like, hey, come back for this. And I was like, oh no, I'm good, you fixed it, I'm great. And then they're like, but it's not a long-term solution. And I'm like, good enough for me, and I'm out. And so that might be an immediate 10 to 15% boost in sales, so that's number one.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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But the thing is that I think that your close rates are gonna go up.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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so one is like you're losing some on the drop off right but i think close rates will go up and like when you're in pain your desire for a more per like all the desire is there in that moment and we're emotions we're missing it right and so um i always had this rule at least like with fitness it's like when someone walks in the door first thing i want them to do is expand the gap of where they are where they want to be so i have everybody hop on the scale and the amount of people's like oh i don't want to hop on this like i know i'm like get on the scale we gotta know it's just a number we gotta know where we're at

The Game with Alex Hormozi

Helping A Chiro Scale Past 6 Locations | Ep 837

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That makes sense. And so it's the same idea with this. Got it. Lead magnet in terms of off-ride, do you think this would be good? This will increase show-up rates overall. Getting somebody to get a $29 credit card purchased over the phone is like not hard. Right. They do that. That secures their spot. Then when they come in, we do same day sale.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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What has been the issue with the docs making this sale? You said they struggled with it. So there's two elements. You said there's some insurance stuff. So what's the issue here?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Like we know that someone has Blue Cross Blue Shield, so whatever.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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So question. So someone calls. So basically there's two spots that we can put this process. So either we can do it on the phone with the disco.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Okay, so that's the goal. So what's staying in the way? What's the problem?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Or we can do it the moment they walk in the door. So it would work like this. So someone walks in and say, hey, do you have your ID on you? I just want to confirm your appointment. Yes, I'm Sarah. Cool. Great. Do you have your insurance card on you? Yeah. And so you ask that. That way we can get the templates already ready to go. Right.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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So that then the doc goes and then he leaves them in there and he says, cool, let me get the x-rays. And then he comes in with the x-rays and with a template for their specific insurance.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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And then you can just match them and just do the sale.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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yeah so the issue is like some of those some of those so i centralized where they verify those benefits right uh some of them could take like 30 minutes to an hour okay so if they're like that's that's the okay so then we have to do the phone yeah i agree okay yeah so um so if the 29 thing gets in the way yeah then we can still just do the it's like you can either do a free offer like free x-ray for assessment whatever just if that's an issue um

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Helping A Chiro Scale Past 6 Locations | Ep 837

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I mean, personal preference, get the credit card and the insurance card over the phone. If it seems like a training issue, then I would prioritize the insurance card. But then that way, it's like you already have everything. They're preloaded. And so then they come out after the x-rays, get it printed out from the scheduler at the front desk.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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And, I mean, shoot, the morning of, I probably would just add the SOP, print all the packets out for everyone, and then the doc gets them in the clipboard when they walk in the door.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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I'll give you a different one. This is just how we always do it.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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It works only every time. It's just like, oh, this is how we compute our patient profiles. Okay, perfect. Like it's better to appeal to policy. Totally. So they'll get this. If this, for whatever reason, issue, you'll prioritize the insurance. They'll come in. They're going to have the printed out stack of all the insurance. The doc gets this on a clipboard.

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in order of the patients that he sees that day. He's like, okay, Mr. Johnson, I've got your x-rays here. I've got your insurance here. Okay, this is what we're going to do for you. And then there's prescriptive close. Makes sense. Okay. So right now, are there some locations that are having way higher close rates than others?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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What's the difference though?

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similar, it's just how much is being covered is going to be the difference.

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I'll give you something that will help you a lot with brick and mortar. So I've done a lot of brick and mortar sales processes in my life. And as much as possible, I like them to be like clicks and check boxes. So it's like,

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when we sell supplements, for example, it's like you literally just turn a laptop around and then you just like punch through it and you literally just say the words and then at the point that you ask for the thing, you ask for the thing. Like you really can machine it that way. And that will eliminate so much of the variability between people.

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And so I would look at what the top 80% guy is doing consistently. Make that into basically the deck so that they have a visual aid to go through it. And then it just feels like, oh, this is the next step. I do this. This is what you need. This is what we cover. He circles the thing on their thing, turns it to them, and then they...

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They rock and roll and then they just book out their next appointment.

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They can show it to them. Okay. So there's two ways to do it. Yeah. One is you have the laptop and you turn it towards the customer and then you basically read the words on the slides. That is like the perfect sales pitch, but with visual aids and whatnot. Got it. The second way of doing it is you have that clipboard, but they don't know what's on the clipboard. Right.

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And so the clipboard just has the script. Got it. And so it's like, cool, just ask a couple questions. And so you basically go through the sales process and you just look like you're checking off the boxes as you're going through a script. But then they always say the script and then the doc can visibly show this which they then staple to the patient contract.

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That way you know they followed the process. And then it just keeps it consistent every time. So either of those work, I've done them both. Okay. Okay. So from, so that was, so number one we had.

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I do know how doctors are. Okay. So you're saying this person or this person? This person. Oh, this person doing it.

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Honestly, I mean, I like it better here. Okay. For some of the reasons that you already outlined. Right. Because you already have this person. And the thing is, you'll start hiring differently if that's their role because they'll really just become sales managers.

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Which I'm not against, to be clear. It may impact the compensation of the docs, though.

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Yeah. Yeah, for sure. Like, if they're hitting it out of the park, they're doing $600,000 in profit for the location, they can make an extra $50,000 or $40,000 with commissions.

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I mean, which I kind of like, because then you could swap docs out if you need to. Totally. For being weird or whatever. Right? Yep. Okay. So I do like this. So I would probably not roll that out immediately to all of them. I would just like go to Auburn and be like, okay, this is the person that I want. We'll try it out.

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And if the close rate is higher and then also you can get your efficiency up because totally, yeah, you're, you, the doc only does half the work. The other person does the other half. Right. Okay. So the next one is I think ad spend needs to go up. So what,

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Helping A Chiro Scale Past 6 Locations | Ep 837

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The other thing that might be worth looking into would be local SEO. Okay. Because SEO is especially for intent based. So it's like obviously there's search, but it's not hard to win at SEO locally. Okay. Like nationally, you want to win back pain. Good luck. But like. Yeah.

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you want to win Everett Chiropractor, Everett Spine, Everett Pelvic Health, Everett Low Back, Everett Lumbar, Everett like you mean there's so many sciatica like all those I think you could probably win on long tail keywords.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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So then I'll spend everybody. Yeah, totally. So if you want to have to talk in, um, in marketer speak for them, and just give them our target CPA, like cost to acquire, or CPL, and just say like, listen, I can pay up to this. So like, make it rain, dude. As long as it's under this, I'm good.

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No, I get it. I get it. It probably wouldn't be my priority right now. Because if I look at this, I'm like, okay, we've got 12 to 1, 24 to 1, 91. So I'm like, we're doing pretty well on this. Right. And do you have Google on the other three as well? Yeah. Okay, it's just not there. I picked a high, middle, low. Oh, so that's low. 9 to 1 is a low one?

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Oh, that's great. Yeah. Jeez. Okay, cool. I would say basically I'd stop it at five to one. And say like, so basically double or triple whatever the CPA there currently is. And sometimes what you'll find though is that if you can double or even triple how much you can spend to get a customer, you might be able to like 10x lead flow. It's not proportional.

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Because you just all of a sudden you have to spend this many more people. Um, okay.

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So this is specific to Facebook, which I think could be the, like, honestly, this could be the differentiating factor in terms of how much, like this could be something that just like in terms of leverage could be a double or triple on your Facebook, which then would get you closer to that nine to one or 10 to one, which I think it should be.

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Um, the ad copy thing we already talked about, um, discovery process is this new guy where we're going to get, insurance and the card on the phone. Then they're going to print it out the next morning. Or whatever, print same day stack. Doc is going to just do the x-ray and the assessment. And then he gives the handoff with the clipboard that has for the patient.

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Sales manager then does the sale right then. And I think that we just book the treatment that next day. Just book them the next day. So I think if we do these things, then that's probably about six months of work.

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So I would do these one at a time.

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You can. It's just tougher. It just basically becomes more operational. You look at some of the like the big like gym chains and whatnot like they run their trainers the same way they go They do lead boxes. They go to Whole Foods. They stand outside names like they just that's just the culture And in a different way the cool thing about the grill and working is that it always works. Yeah, right

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It's just it it always works no matter how technology changes no matter where and I think that's why those guys do that I remember you still I used to laugh at them because I like could run Facebook ads and I was like man These guys are idiots and then I realized that they had a two billion dollar company and I was like, yeah, maybe maybe But it also helps with communication sales because I mean I will read all my sales skills to that because I got shut down So we got kicked in the nuts sometimes that you have to keep getting back up and do it over again Right.

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Because you're buying it from another person who's leaving, correct?

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I like the lean. I like the lean model. Yeah. Okay. For sure. Well, dude.

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You're going to crush it. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into ten stages and across all eight functions of the business.

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So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

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Helping A Chiro Scale Past 6 Locations | Ep 837

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Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

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Okay, and then people operations?

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Do you have anything broken out between channels? Between Facebook and Google?

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339.16

Yeah, because if you look at, because CAC is, I mean, half of Capitol Hill, right? Yeah. But the amount of money that you're making is, like you're getting more LTV and lower CAC at Kent. Right. So is it that the people that are coming, because it's insurance, so is it that they're billing better? How could they get LTV to be so much higher?

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Interesting. Do you have any other markets that are in that kind of blue collar damage? Everett's right there as well.

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Well then based on that, would we have more like ROAS? Cause the CAC's, you know, close and ROAS is a quarter. So why are there so many more cases in Kent than Everett?

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But Everett's a good market?

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Got it. Okay. Do you have any other data that you've collected together?

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429.398

Well, these obviously do significantly better than your Facebook ads. Yeah, for sure. Interesting. All right. Are you maxed out on spend here?

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Really good. Well, I mean, shoot, this is the most promising part. Okay. All right, let me think about some other kind of, walk me through the sales process.

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And actually, start me from click to close. So the person clicks on, is Google, is basically the sales process for Google Ads different than the sales process for Meta? Or how's it flow for you?

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So you're kind of like income level or anything like that?

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So it's click to call is the ad.

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OK, so click to call or they self-book. Got it. So then they talk to a rep that's centralized. That rep does some sort of discovery call, like triages them and either says, I mean, do they look at their insurance at that point on the call?

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Keep going through it. So they do some sort of discovery. They're currently not doing insurance on the call. Yep. All right. So then they do what?

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What's the sharp rate for the calls? Because the sharp rate that you have here, what you showed me earlier, was really good. But that's because they also just got it. They had a conversation prior to doing that, too. Right. OK. So what's the sharp rate for that other step? So for the call, right?

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Because some has clicked a call, but the ones that book onto your calendar, you then call them at the designated time.

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To show up to the facility?

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Oh, okay. Yeah.

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No, I dig it. Okay, that makes more sense to me. Okay, got it. So some people call and then they book them and the people who self-schedule just book directly. Got it.

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And then what's the kind of like reminder sequence there to make sure that, because you have really good shop rates.

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OK, so three reminders and call if they have not confirmed their appointment, and follow-up call as well if they didn't pick up the first call or the other ones. Correct. And then if someone doesn't hit any of those five, do you pull them off the calendar?

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Okay, so then they come in. So they show up to the appointment.

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Like movement, like move here, does that hurt? That kind of thing? Like circle where you have pain?

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649.075

I got some stuff there. Okay. So I'm going to say it back to you. Yep. So a disco call that gets them booked, reminder sequence, three texts, two calls, only if they don't confirm via text. They show assessment, clarify whether they're labeled a problem, overview past experience. Then you take them through some x-rays and whatever test that you're gonna run.

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then you do some light delivery and say, hey, come back tomorrow and then we will sell you the package. And then whatever. And the people who you do that service for up front, do they pay anything? Like the 10 to 15% that don't actually come to the sales appointment.

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okay so what's what are the margins for the top two like net margins for the facility net margins for top two are probably over about 40 okay so that's what it should be okay got it and what's revenue at those two uh those are annual yeah about 1.5 million got it that's what you want right that's so those two you're happy with because if you're running you're running 600k ish in profit right on those times two so one point oh well that that that's most your profit yeah right yeah yeah and then the other four kind of just like

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Okay. Can you walk me through the ad funnel with the Facebook ads? So go back one or just? No, just right here. Yeah, so just like we walked through the sales process, can you walk me through the funnel from the Facebook ads?

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So we have a video ad out there. Do you have ads live right now?

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Can you pull up Facebook ads live? We're gonna pull them up and we're gonna see it. We're gonna see for ourselves. All right, so we have different creative. It looks like it's the same copy. All right, so I think there's probably just some work that could just happen on the actual ads themselves. Like, I think you can have a clearer call out.

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Is that like stretching people out kind of thing?

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And the first line, I would probably separate the call outs. So it's like, attention to everyone surrounding areas. So instead of saying areas, I would go to like residents or something like, or people, basically combine the two, where it says chronic back pain doesn't have to be a life sentence, attention to everyone surrounding areas. So it'd be like, attention to everyone, like,

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Residence with back pain, that combines both lines, punchier, put two asterisks on either side. It's like, okay, that's what it is. And you're putting proof first, and I probably wouldn't here, I'd probably lead with a question, which would be like, are you, so either I would lead with a question that'd be some sort of like more specific pain, or I would lead with the offer.

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And then have the proof of why they should believe that I can help them after they've seen the offer. Because like it took us all the way down to actually see what the offer was. And the headline, avoid surgery, try spinal decompression. I would probably just put like the offer there. So it's just like a restatement like,

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free spinal treatment, decompress, you know, free spinal decompression, boom, $99 value, whatever, something like, like that's probably what I would, what I would put there. Cause I think it's just like, there's a lot of words. And I think you could probably get, just like I combined the first, the headline and the next sentence into just like attention Everett residents with back pain.

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It's like, boom, we got that. And then it's like, and you'd be amazed at how much like just changing, tweaking the headline, probably compressing the copy into a handful of bullets. It's like, do you struggle with boom, boom, boom, boom. And you've probably tried, boom, boom, boom, boom. But there's a better way. This is how we do it. We've helped this many people for a limited time.

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We're doing X, Y, and Z. And I think that would probably work well. I cannot guarantee availability as we accommodate 10 vouchers up to our patient schedule. I do like that could probably be compressed. We can only see 10 new patients per week. And scheduling availability is first come, first serve for this treatment. Done.

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There's tons of chiropractors who advertise on Facebook. Yeah. Tons.

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So I don't think there's any issue with advertising on Facebook. Okay. For sure.

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So there's really not even a landing page. It's just like they're going to lead form straight to basically redirect to scheduler.

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Yeah, yeah, yeah.

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Yeah. Okay. So when it gets 5 million EBITDA, you're doing 1.2. Basically, you have to get the other four to be profitable. There's a couple of things that I think we can go over in terms of sales process, lead magnets, things like that. Honestly, I think a big part of it that's not up here is the ops. Because in this type of business, it's so operational heavy in terms of operational excellence.

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And I kind of like hated that. And I thought about where the sources of money that I tend to draw from in order to make a purchase. Now, the reason that I bring up this building being a significant purchase is it was less that the price was a significant purchase and more so that I didn't need this building at the time.

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I just wanted to have a place to have a home gym that would be more than like a commercial gym. And I wanted to have a place for meetups and things like that. And I could come up with a rational explanation that between all the portfolio companies, we were spending about $4 million a year in event spaces.

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And I was like, well, if I had a big enough space for all of them to do their internal meetings, their quarterlies, fly out their staff and their team and have a venue, then I could probably save that and it would pay for the building. But I remember Layla was like, hey, maybe we should just get like a 5,000 square foot building. So this building is about 36,000 square feet, much bigger.

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I'm not gonna go into debt unless I know that I'm gonna pay it off within a year and I have no prepayment penalty and I have a clear plan of how I'm gonna do it. They have a clear plan of how they're gonna make the money on a very defined time period, and it's from doing above and beyond. What's going on? Welcome back. I've been stockpiling some ideas and I had a free morning and I slept well.

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I remember hearing this and I was like, that's appropriately sized for where we're at now. But it's not the size building that I would want it to be for where I want to go. And so I remember telling her, I said, I promise if we buy this building, I will make sure that it makes us more money than it has cost us. And so this goes to the sources of cash. And so there are basically four.

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And you can pretty much determine how wealthy someone is by where they're spending from. And so let me walk you through it. You've got what I would consider past money. So that would be savings. So that's earnings that you had in the past, and that's money that you put away. The next money is you have income money. So this is the money that you make every single month.

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The richest people I know, that is the behavior that they typically use. They're like, I want this thing, and so I'm gonna go make the money to buy the thing. I'm not gonna use my existing income. I'm not gonna use my existing resources. I'm not gonna use my savings.

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You can spend this money rather than touching your savings. This makes sense. Then you've got debt money. which is basically future earnings. Like this is money, I'm gonna take debt and I'm gonna pay with future money, right? And I'm gonna have to pay this debt off. And then finally is the category that I like to have, which is, I'll call it new money. Now you're like, what does that even mean?

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That's what I'll explain. So I've noticed amongst the friends that I have that are the best with money, that they're wealthiest with money, they're okay buying things that are big, grandiose, right? Now, some of them buy big houses, some of them buy big cars and buy big yachts, big buildings, whatever it is, right?

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I had a business owner came here and he was like, hey, I'm choosing between two offices. I've got basically a sensible office and I've got a much bigger office that I'm really excited about. He said, which one do you think I should take? And I said, which one do you want? And he said, the big one. And this guy was a very good salesman. And I said, okay, here's the deal. You can buy the big one.

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It was two and a half times the size, or at least two and a half times the price. And it was a little bit nicer, whatever. I said, but the deal is you got to pay it off in a year. He was like, I can do that. And I was like, right, then don't worry about it.

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And so the thing is, is that I would say these are kind of almost like different personality types in terms of where people are taking the money from. And I would say that a behavior that has served me extraordinarily well is looking at new money. Meaning, if I buy this building, can I find something that will pay off the building? Now, of course, I had the expenses on the portfolio side.

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We could have just saved the $4 million a year that we spend in venues and all that stuff, sure. But I was like, I'll bet you there's something that we can do with our existing resources, and this is the key part, is that it's sawdust money. It's money using your existing resources that you're currently under utilizing to generate new money for a specific project.

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And so my favorite way of doing this is like, hey, if Daniel wants to buy a boat or wants to buy a car, I love the idea of him being like, so I'm just going to work one extra day per week over the next year, and then I'm going to buy it. Hey guys, as always, this podcast only exists because of one person and that's you. You who is listening to this, you who's watching this.

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And first off, thank you. Second, the behavior that continues to grow this is you sharing it. And so that's you posting on Instagram, DMing this to a friend or slacking this to your team. This has been the only source of growth for the podcast and it continues to grow month after month. So I just want to say thank you. And if you think this is valuable to somebody else, please share it.

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And the richest people I know, that is the behavior that they typically use is they're like, I want this thing. And so I'm going to go make the money to buy the thing. I'm not going to use my existing income. I'm not going to use my existing resources. I'm not going to use my savings to buy it.

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I'm not going to go into debt unless I know that I'm going to pay it off within a year and I have no prepayment penalty and I have a clear plan of how I'm going to do it. they have a clear plan of how they're going to make the money on a very defined time period. And it's from doing above and beyond. It's looking at all the stuff you got.

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So I figured I would just unload them. And for those of you who are, who got some time between sales calls, between customer calls, maybe you're in your lunch break, whatever it is, maybe I'll give you a little something. A lot of people talk about money beliefs. I tend to not like it. I prefer thinking of things in behaviors. So what do I change about what I do?

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And the reason that I like this is I was talking to a good friend of mine, Sharon Cervantes. He's a president of Real. I actually just became a board member. Excuse me. And he said, oh, you just want to write yourself a swimming pool. And I was like, what does that mean? He said, so Paul McCartney, the Beatles, used to say he wanted a swimming pool.

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Everyone's like, well, how are you going to pay for it? Now, obviously, he has the money for a swimming pool. But he didn't want to use his savings. He didn't want to use his income and his royalties. He didn't want to go into debt for it. And so what'd he do? He was like, I'm just gonna go write a song.

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And so he writes a song and he writes himself a swimming pool from the money that he collects from selling the song, right? And so I think about this a lot because I think it's a different way of thinking about money. It's like, I want this thing. And so I don't wanna limit that thing. If anything, I wanna use that thing to motivate me to find other resources.

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So what I'm being is resourceful rather than draining resources I have, I'm finding new resources. by utilizing existing assets that are currently under my control. And so this is fundamentally like people are like, well, you know, you could Airbnb one of the rooms out. And it's like, okay, that's one of the things I'm going to do. But I also have some time. So it's like, maybe I'll drive Uber.

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There was one of my favorite customers ever at my gym. She was a mom of four, single mom. And she didn't have the money for the gym membership. She was like, well, I could drive Uber one day a week and I would be able to afford it. And I was like, great, then do that. And so that's what she did. And she was one of my longest standing members, lost 100 pounds.

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And it's like, there's a shift that happens when you decide to do it that way. And I think there's something to be said about creating a vacuum, about creating space. I've heard the saying like, make yourself poor, right? Of the idea of like, how do I create this deprivation? How do I create this threshold that all of a sudden increases my demand for money?

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Because everybody has a demand for money. Like you have a certain lifestyle that you have grown accustomed to. And so that's your minimum threshold. That's your minimum requirement for living. Now everyone's is different. The real wealth comes from being able to continue to jack this up while keeping this low, of course.

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But in those instances, when you do want to buy the sweet ride, because I'm not, like, people think of me as an aesthetic. And I am to a large degree. But if I want to buy a sick-ass home gym, which I do have, I would rather that money come from new stuff. And so either you can do extra stuff to get the thing, or I think the 201 version of this is, how do I use the thing to make even more money?

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And so part of the reason we spun up the advisory services was actually like me fulfilling a promise to Layla of like, okay, we'll find a way to use the building to generate income to cover the building. Because I do want to have this sick home gym, which will be complete and other waste of space. Besides the fact that I think it's dope and why have money if you can't spend it.

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and you can't take it with you anyways. And so this may seem like a wild departure from some of the content that I make, but this is obviously targeted at somebody who probably has a little bit more, is a little bit further along. All right, if you are broke, don't do that. If you're broke, just focus on the new money stuff, right?

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But if you have some, I think that you stay ahead of your spending by not increasing your lifestyle relative to your income, but by increasing the new money relative to the new purchase, which typically are defined. And so it doesn't have to be forever. So if you're like, well, I don't want to work overtime all the time, fine.

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I think that if you think in terms of behaviors, then there are behaviors that people who have money do that people who do not have money don't do. And there's also the reverse. Behaviors that poor people do that rich people don't do. And so I want to talk about one very specific one that served me exceptionally well. And I can try and break this down as well as I can imagine.

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then you can just work overtime for a year, work overtime for six months, work overtime for a month so that you can afford the thing. When you think about it like that is I have to take, I have to add this on top. I don't touch my flows, right? I don't touch my income flow and I don't want to create a liability with the debt and savings is like, that's my nut, right?

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I don't want to use up my nest egg. So I got to go make it. And if this has just been this behavior that I've observed from the people that I know that are the wealthiest and the people who enjoy their money the most.

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And I think that's the thing is like, it's one thing to be money, to have money, because I know there's plenty of people who obviously have money, but some of them, I don't think they enjoy their money. And it's because they're always, they're like afraid. And there's some of this whole idea of like, you have to be abundant and all that stuff.

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I know tons of people who are super scarce in their minds that have a lot of money because they just don't like spending it. And so like, there's something to be said for that. But that's if you make money the goal. And if you make money the goal, then by all means, don't spend it because then money is the goal. So fine. But if money isn't your goal,

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Then the people that I've seen that are the happiest that I think spend money well, they use money like a tool, is they use an expense or use something that they know they're going to consume. They know it's not a good investment. And they say, fine, I know it's not a good investment, so I'm not going to use my income to buy it. I'm going to use...

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something that I already have that I'm under utilizing, which might be just your time. You might take on a new client project. You might take on some one-on-one services that you wouldn't normally take on. Those types of things can be defined period because you're like, well, it's not going to increase the enterprise value of the business.

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It's not going to be some sellable asset, but I do want this thing and I don't want to touch how my existing infrastructure functions. And so it's just one behavior. And I think many of you, if you're like me, like I don't like spending money and I've tried to learn my way out of it, which is I don't like spending money that's like my main money. It's like my core money.

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It's the money comes in from businesses, distributions. That's my main thing. But if I want to buy something crazy, then I've just got to be willing to do something crazy for it. And the weirdest thing happens is that I get almost more excited about making that money than the money that I make every single day because I know that that money is going towards this specific thing.

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So I'm like, I'm building a home gym right now. I'm buying equipment right now. As I'm doing this, I'm almost more joyful about doing the work because I know exactly what it's going towards. And so just a little behavior that I picked up over the years, something that I've observed in other people that I've used myself that has been wildly valuable.

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And if you have that, you know, if you've got two machines that you could buy for your business and one's a little bit sweeter than the other, and you can't really justify the expense, then just take the Delta and be like, I'm gonna go make that myself because I think it's sicker. And I have never been disappointed by doing that. Not once have I done that and been like, this was a mistake.

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And the thing is, is that I bought plenty of things that I thought were expensive. I can minimize my regret by saying, I'm not using money that I otherwise want to use somewhere else. And so that's my little money behavior that has served me very well. And I hope it serves you well. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast.

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73.519

I'll give you a few tactical examples as we go through. So right now, I'm in a studio that probably cost me some of the neighbors of like $500,000, which is egregious. But it cost me about $500,000 to build this thing. And it's sitting inside of a building that cost me, I think, $9.1 million, something like that. I think I put like $2 or $3 million in this building.

The Game with Alex Hormozi

The 4 Sources of Cash (and why I bought a $10M building) | Ep 869

735.634

Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance.

The Game with Alex Hormozi

The 4 Sources of Cash (and why I bought a $10M building) | Ep 869

753.05

And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow.

The Game with Alex Hormozi

The 4 Sources of Cash (and why I bought a $10M building) | Ep 869

768.376

It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

The 4 Sources of Cash (and why I bought a $10M building) | Ep 869

91.848

So call it a $10 million building conservatively. I paid for it in cash. And the reason I bring this up is because I think that I've noticed different spending habits between rich and poor. That seems obvious, but I want to dive a little bit deeper. So not that long ago, I overheard somebody say, go buy that motorcycle because you could always make money in the future.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1005.294

But that's my rule of thumb for brick-and-mortar service businesses is I want it to be over $80. Ideally over $90, but I will not do a business if it has lower than 80% gross margins. Some people do. I just don't like to. because you don't have enough cash to do anything.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1023.028

And so then the question is, okay, how do we create the sales process and the positioning so that, now you already are working with a special class of customers. And so I would imagine that you would be able to probably even more easily than a traditional music academy sell at a premium price. Because if I'm a parent who had a neurodivergent kid, I would be willing to pay for a specialist.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1046.566

And so specialist prices are a premium. So I think that would work. And in terms of the model, you can, I mean, it's just head count divided by teachers, basically. But you have to get the core gross profit right in the business, and then everything else kind of flows from there.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

107.537

That's why I'm here. Yeah, no, your ascension rate is too low. You will probably have to bring the sales team in-house if you want to really fix it. It's very hard to influence the team. You'll want the ascension to be integrated into the onboarding. And so you sell the $2,000 thing. You have your onboarding call.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1076.113

So we have to get more margin.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1079.797

Cash flow allows everybody to breathe better.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1092.103

Sell one on four and just sell around the fact that it's a better experience for them. because you don't want them to be married to a teacher. You want them to be married to, like, this is how I would sell it.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

11.577

Ah.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1104.767

I would say, listen, Mrs. Whatever, like, if your child becomes really attached to a single teacher, then if that teacher leaves, then all of a sudden this skill that they spent all this time on, they'll associate with the teacher, and then all of a sudden they stop playing violin after five years. You don't want that, I don't want that.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1120.766

What we want is to create a positive relationship with the skill so they just continue for life, right? Right. And so we facilitate that by having other people in the sessions and so that the teachers sometimes do change so that no one really goes too attached to anybody, but they really grow attached to the craft.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1137.705

So if you are capacity constrained, so some of you guys are in that position, like you can barely handle the customers that you have right now, you have three solutions. The easiest solution is you just raise prices. Because if you have supply constrained, then that means that you have more demand than you have supply, prices go up, right? And most people just don't do that and just suffer.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1156.896

So just raise the prices, make more money, that's solution number one. The second solution is change client delivery ratio, which we just covered. So instead of going one to one, you go one to four. So you get more out of what you already have. This gives you leverage and it gives you cash flow. improves your gross margins.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1171.354

The third way is to bring other people in who can do what you do, which is then delegating the responsibility to somebody else. So that's the ultimate leverage, so you don't have to do any of it. Does that make sense? So those are kind of like the three steps that I think about when I have somebody who's supply constrained and they don't have any time.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1188.237

They can't grow the business and they can't sell more customers, but they need to sell more customers to grow the business and it's the rock and hard place. And the nice thing is we start with price because it's the fastest and easiest one to do. You have to do anything. You have to change anything. You just say a different word and then you'd make more money.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

12.498

You're like, screw the guys. They don't need to save money.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1220.875

So what would the... You can still have one-on-one. You can still have one-on-one. I would predominantly sell semi-private. And if someone's like, well, I want the special snowflake treatment, then you're like, awesome, I'll give you the special snowflake price. Right.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

124.79

The onboarding call, the finish of the onboarding call is they set their goal-setting call, with what would become a setter, and then that setter sets for a closer. So they actually get three calls. So they have webinar, buy, they have an actual onboarding call, because you want to make sure you deliver.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1244.248

But it would be something, whatever the fast outcome that you can deliver to a kid who's neurodivergent, who picks up a violin, or whatever the instruments that you teach are. It's like, they'll be able to play a song in this period of time. Now, it might not be good, but you'll recognize it, kind of. But I would want some sort of discrete outcome, and that would be an outcome.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1267.424

You could also do some sort of subjective thing, which is that they rate X, or you could have a survey at the beginning, a survey at the end. That would be kind of more of an internal thing. But yeah, typically you'll sell some sort of package upfront. I'm gonna guess that the price point for what you're looking at is between 600 and 2,000 is what the upfront package would be.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1289.526

And then you'd upsell or at least let people go into continuity on the backend. And it'd probably be somewhere in the neighborhood of like six weeks to six months. You would know that range better in terms of how long to sell for. Okay.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1311.306

You just need time, man. I think what's interesting is that the more stressed you are, the lower, this is not me, this is not a slight, just to be clear, I'm saying in general. The more stressed anyone is, the lower your IQ is. And so I'm saying this to say that, again, this isn't a you thing.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1327.161

I'm saying that the problems that you struggle with when you are stressed, when you have a good night's sleep and a little bit of time, you solve in like five minutes. And so if you want to increase your capacity, it's like, let's solve for capacity. And then a lot of these things that are keeping you up at night, you're like, oh, we'll just run a six week thing or run a 12 week thing.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1345.816

We'll sell it for this. I can see how the margins work out. And like, we already have more demand than we can handle. So it's okay if people say no at our higher prices, because we'll make it up and profit anyways on the people who do say yes. Does that make sense? That wasn't a slight, to be clear. I was saying for anybody.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1372.572

For women.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1373.933

For women.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1375.535

Ah.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1376.356

You're like, screw the guys. They don't need to save money.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1379.88

I'm messing with you.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

143.039

One-on-one. Well, you can start with group, and then you will make more money if you go to one-on-one. It is more ops, but we actually did this. And I have a video that breaks down everything that you need to know. Okay, yeah, and so one-on-one is better, but if you're gonna start, start with the group.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1471.496

That's why I'm here. Yeah, no, your ascension rate is too low. You will probably have to bring the sales team in-house if you want to really fix it. It's very hard to influence the team. You'll want the ascension to be integrated into the onboarding. And so you sell the $2,000 thing. You have your onboarding call.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1488.769

The onboarding call, the finish of the onboarding call is they set their goal-setting call, with what would become a setter, and then that setter sets for a closer. So they actually get three calls. So they have webinar, buy, they have an actual onboarding call, because you want them, like, you want to make sure you deliver.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

15.9

I'm messing with you.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1506.996

One-on-one. You can do, well, you can start with, you can start with group, and then you will make more money if you go to one-on-one. It is more ops, but, like, we actually did this, and I have a video that breaks down everything that you need to know. Yeah. Okay, yeah, and so one-on-one is better, but if you're gonna start, start with the group.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1527.354

And their way of getting off the call, like saying like, okay, you're dismissed, is that you show me that you have confirmed your booking with your next call, so that way you have 100% through line to the next. Now they're customers, so they're gonna show up. The goal setting call basically sifts for what's your goal, cool.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1545.735

Basically just do another sales call again and then you push people into the ones who can afford it, that makes sense, into a closed call with basically an invitation to join something that has more help or work associated.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1560.95

You'll probably need to get third party financing in place.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1563.893

Yeah, on front end.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1566.752

Yeah, and front end. Like you should definitely have some BNPL options, so buy now, pay later. You should probably have a few.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1574.774

Yeah. Also with the webinar, I would recommend split testing the first five minutes. So retest two or three different intros and look at LTV. That will make you money. But the biggest issue is that you're upselling 7%. You want to be at at least 25, and you should shoot for 50.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1618.308

really good sales director, and then you hire six recruiting firms that do sales and say, I need 10 guys from each of you, and you can get a 60-person team in like two weeks. We just added 40 guys in two weeks to one of our companies. We just paid a bunch of recruiters. If we're doing that kind of volume, we're just going to go to somebody who has a big network of people.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

163.375

And their way of getting off the call, like saying like, okay, you're dismissed, is that you show me that you have confirmed your booking with your next call, so that way you have 100% through line to the next. Now they're customers, so they're gonna show up. The goal-setting call basically sifts for who, like what's your goal, cool.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1637.883

That's their full-time business, recruiting sales guys. So it's like, great, these are requirements. Go get them. And I'm willing to pay for the speed. So if it's, and you can also negotiate if you're doing multiple, like the same of multiple. So it's like, hey, normally it's 10 grand per head, but I'm going to buy 20 from you. So I'll do it for five.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1655.557

So you pay 100 grand, all of a sudden you have an apartment.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1671.958

Realistically, if you spend less, you will typically ROAS will increase typically. YouTube's not that way though. Kind of random. The more you spend, the more profitable it gets. It's wild. if you have a cash flow issue right now, or like, you know, it's like, it's self-inflicted. Like you can just spend less and improve the returns, but your CAC is appropriate.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1696.729

$1,500 to acquire a customer in that space.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1700.291

It's like, you're not going to like, you're not going to get below a thousand. And so this is a backend issue. Like you just have to increase the ascension rate and that's it.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1711.898

You bet. Awesome. Real quick guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1741.61

So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

1758.357

Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

181.776

Basically just do another sales call again and then you push people into the ones who can afford it, that makes sense, into a closed call with basically an invitation to join something that has more help or work associated.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

196.989

You'll probably need to get third party financing in place. Yeah, on front end.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

202.773

Yeah, and front end. Like you should definitely have some BNPL options. So buy now, pay later. You should probably have a few.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

210.821

Yeah. Also with the webinar, I would recommend split testing the first five minutes. So retest two or three different intros and look at LTV. That will make you money. But the biggest issue is that you're upselling 7%. You want to be at least 25, and you should shoot for 50.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

254.332

really good sales director, and then you hire six recruiting firms that do sales and say, I need 10 guys from each of you, and you can get a 60-person team in like two weeks. We just added 40 guys in two weeks to one of our companies. We just paid a bunch of recruiters. If we're doing that kind of volume, we're just going to go to somebody who has a big network of people.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

273.922

That's their full-time business recruiting sales guys. So it's like, great. These are requirements. go get them. And I'm willing to pay for the speed. So if it's, and you can also negotiate if you're doing multiple, like the same of multiple. So it's like, hey, normally it's 10 grand per head, but I'm going to buy 20 from you. So I'll do it for five.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

291.601

So you pay a hundred grand, all of a sudden you have a department.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

308.092

Realistically, if you spend less, you will typically ROAS will increase, typically. YouTube's not that way, though. Kind of random. The more you spend, the more profitable it gets. It's wild. Yeah, it's the shit. Anyways, if you have a cash flow issue right now, it's self-inflicted. You can just spend less and improve the returns. But your CAC is appropriate.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

332.905

$1,500 to acquire a customer in that space. I'm not going to get that much lower, is what you're saying. Yeah. You're not going to get below $1,000. And so this is a backend issue. Like you just have to increase the ascension rate and that's it.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

349.552

You bet. Awesome.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

352.775

I know we talked a little bit. Dentist, yes. 3 million, 5% profit margins. You have five different ones. Three are part-time.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

362.323

Yeah. You're in Dallas. It's a 30-year-old business inherited from your father. Yes. Yep.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

368.247

Just kidding. I can pull it up.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

412.128

Yes, I don't think it's the constraint of your business. So number one is you're going to want to make sure that that time is the right time for them. And we ask questions like, is there anything that will possibly get in the way of you showing up for your meeting? And so we call this an integrity tie down.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

431.981

And so after you get a time slot, you want to ask that right afterwards because it shakes them out of their mind. For whatever reason, it works. Number two is, I think I mentioned this yesterday, but I think it might be worth considering pulling up appointments. Like to basically, can we bring them up sooner so that we have increased shop rates? The next one is, let's see here.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

462.659

You want to make sure that you have automated reminders, which you probably do, but then you want to have manual reminders on top of that. So if you have, I would have an office iPhone, and you want to send manual texts at three times. So you want to send the manual text at 24 hours. So basically think night before. Second text is going to be morning of.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

482.369

And then the third text is going to be 60 to 90 minutes prior. Basically when they have to like get your shit together, get in the car. Now, ideally, we like to have some sort of selection that they pick that we've like some cost we have incurred. So this works exceptionally well for brick and mortar, which is why I'm sharing it with you.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

498.813

In the gym space, obviously, like we would say, hey, Sharon, I've got... this shirt, tell me what size you're at and I'll pull it aside for you. And so when you come here, I'll give it to you. Or it's like, do you want red or do you want blue? Like just do some sort of AB ask for them. And so it could be as simple as like, you're going to pull, I mean, because it's a dentist office, right?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

526.384

And so you're like, okay, what can I give them? Well, I always get free shit when I go to the dentist's office. And so just like have them pick the free stuff that you put in their goodie bag and then I would send them a picture with their name on it so that they're like, oh man, they incurred this cost just for me. I have to show up now, right?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

53.366

Okay. How do you acquire customers right now?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

544.094

Because you're having the issue because someone books and like six months later is they're cleaning or whatever, right? That's the problem here.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

564.318

I think you're reminding too far out.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

568.099

Like, if I schedule an appointment on Saturday, Monday morning is a different universe for me.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

57.849

So it's all paid ads.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

574.628

No, I'm just being like super real. And so I think a lot of people are that way. And so all of the manual reminders are, like if you want to, like I would use the automated ones for the far out. Like, hey, you're seven days away. Hey, you're three days away. Okay. But I would have the ones that you're putting the real effort in 24 morning and right before.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

59.149

Okay. So all paid ads and you're running to what?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

593.802

And then have the incentive, have the personalization. And I will bet you dollars to donuts that that on its own would work.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

63.472

Okay. Are you, are you have a low ticket offer for the webinar? Are you charging like something as like a self liquidating offer on the front end?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

643.116

So it's all new roofs and repair?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

685.931

No. So right now, what I wouldn't want to do is try and make a decision with incomplete information when it could be knowable. And so I think once you nail the model, then the path will become really clear. And so if you nail the model and then the returns on capital are really interesting and you can be more patient, then owning them all privately becomes more interesting.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

705.767

If it costs a ton of capital to open up, and let's say it requires a lot of oversight, then sometimes a franchise model can be good. But fundamentally, I kind of see franchises as being impatient.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

71.377

Okay. So free webinar on the front end, you have a $2,000 offer. Okay.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

720.683

just being honest, because basically it's the most expensive form of capital, is you say, hey, we're gonna partner and you're gonna put all the money in and I'm gonna become a, maybe you get 8% of top line, so maybe figuratively it's like 25% partner or 30% partner location, which is okay, nothing wrong with that, but I have seen such a graveyard of, 20 location franchises that make no money.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

747.104

And the amount of work that it takes to maintain 20 is about the same amount of work as it takes to maintain 20 where you own them all. It just happens faster. but you make way less money. So I have a habit of flipping franchises back into let's own them all. Like the teeth whitening chain that we bought. When we bought it, we had 14 corporate stores. We had 18 open franchisees.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

769.595

And so then over the last 12 months, we bought out all 18 franchisees. And so now we own all 32, but then like all of the administrative headache has just basically disappeared because we just run them the way we want to run them and we make more money. But yeah, I think you need to nail it. And then the scaling of half will become clearer.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

786.479

I know that's not the sexiest answer, but that's probably the truth. No, thank you. Awesome.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

853.783

Yeah. Basically the core, so there's two, a chunked down version and a chunked up version of the core economic engine that makes a business successful. So LTV to CAC is the smallest version of that engine. You put some money in, you get more money out. That's the gross profit you run the entire business off of. At a higher level, it's return on invested capital.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

875.552

right so it's like okay that's what the core machine is but then there's also equipment there's leases there's build outs there's all that stuff that goes into it that's not typically included in lcbd cac and then how much does it cost us to build this machine again and again so that's kind of how i think about it like micro level it's ldb cac return on invested capital is what it is at the macro level when you're like opening more and more locations and saying it costs me 500 000 open a location location makes me 500 000 from the first six months okay cool i've got a two to one you know return on on capital uh within a year which is awesome right

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

9.976

For women.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

904.511

So, let's tackle for you. So, the nice thing about the music business is that it's actually identical to the gym business, so I know a lot about it. And so, the models that I have seen works unbelievably well, have been semi-private models, number one, or, The 30-minute, multiple times a week, much higher ticket. People stay three, four, five years with music lessons with their person.

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

932.97

I prefer semi-private because I think you get more loyalty to the brand and it's less about the music teacher who can then leave and then take all of those students to go private. I like semi-private in general. Also, I'm sure you could sell around the idea that they get a little bit more socialized and it's probably good for them and all that jazz.

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How To Raise Your LTV | Ep 823

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And in terms of pricing, I want my gross margins to be at least 80%, ideally 90. Now, you can do that when you're one-on-six, harder one-on-one. And so, let's say you have six kids, right, in the class, or four. I mean, you can level into it, but let's say it's one on four, keep it math simple. And you charge $200, sorry, $50 per session times four kids is 200, you make $200 per session, right?

The Game with Alex Hormozi

How To Raise Your LTV | Ep 823

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Well, for you to pay for an hour of music teacher's time, what does that cost? Right now, that would be $40 to $50. Okay. So that's 80% right there. So $240. So 80% gross margins right there. Now, if you charge $60 a session, you'd be at $240. So then you'd be at like $84, whatever, in terms of gross margins. So you're above that.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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No one will remember you. And that's a statement that bothers a lot of people. And if that does bug you, then you probably should look away from the rest of this. And my team was going back and forth on even posting this because they're like, dude, there's so many people that are going to disagree with this. And I'm okay with that.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so for us, let's just see if we can do better problems that we can solve. But wishing to eliminate problems is in and of itself something that will create a permanent problem in your life. So number eight, I think, is an exercise called a failure resume. And I'm going to make a separate about my failure resume I'll share with you guys.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So the big picture for me was a lot of people take a lot of work and stress a lot about what other people think about them. And I'm not going to say that I'm here like I don't care what anyone else thinks. That's not true at all. I think I use these frameworks to try and remind myself that other people's opinions don't matter as much as I think they do.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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But a lot of people like to make their resumes about their accomplishments. But what I think that does is it gives us an inflated mental image of ourselves. And so if you make yourself a failure resume, I think it creates the equal opposite situation, which is you're like, man, I have really messed up a lot of times over and over again. And there's a lot of valuable things you can take from that.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Number one is that, and probably the most important, I am still here. And I think if there's one big takeaway from that, it's like you have survived. And this actually leads to a frame in and of itself, which is If it kills you, whatever this problem is, it won't matter because you'll be dead. And if it doesn't kill you, it means you can handle it. And so either way, you win.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So when someone's like, I can't stand this, the statement in and of itself is self-conflicting. You can't stand it because you are standing it. You may be uncomfortable, but you are literally a living example of the fact that the statement was false. And if you truly can't stand it, you will die, in which case you won't need to stand it.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So pretty much your default situation is standing, which I think is kind of cool. And so back to the failure resume is that you're like, I am still here. Number two, none of those events, which felt like the end of the world actually did end my world because I am still here. Number three,

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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If you have any measure of success in your life, which everyone does, you just have to change what you're measuring on. You were able to have all of that failure and still have a level of success, which in some ways I think is like a little bit of a sense of humor. Like you can be like, wow, I'm such a dunce. Like, I can't believe I did all these things. I can't believe I'm still here.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And I think what it does is rather than talk about all your accomplishments and set yourself up for a big ego failure, basically sit from the exact opposite, which is like, I can't even believe I'm here. What a win. And the rest of this is all gravy.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And again, I am not saying that every one of the frames that I just gave you are things that I always have operating at every single hour of every day, but they are tools that I deploy when I am feeling not as good. And if you want my two cents, so here's my number nine, I believe that the only real legacy is leaving the human race better than you found it.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Not because they will remember you, because they won't, And even if they did, why do we care about the approval of people who aren't even alive yet? Fun fact. You can't say that you don't care about the opinion of others and yet care a lot about what people who aren't even alive yet will think about you while you are dead. So...

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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I see education as the ultimate legacy, as the ultimate thing that we can pass on. And so that is the reason that I've dedicated my life to doing that and passing on whatever learnings that I have, because I feel like if all of us accumulate knowledge, which we all do in some settings, If we don't package that and pass it on to the next generation, that, in my opinion, is a waste of a life.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And for me, reminding myself that I'm insignificant and in the long and eventual universal scale am irrelevant allows me to look at my failures and laugh a little bit. And so rather than say, oh my God, this is the end of the world, it's really on a 500 million year time horizon, I am a being that exists for a blip of time and then will disappear from existence.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Because everything that we have right now, the cameras that this is being recorded on, the phone or the screen that you're watching this on, or whatever you're listening to this, like there are many past humans who lived their entire lives to make one advancement that other humans picked that baton up and moved the ball forward.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Many people who are faceless and nameless to us today, but have made our lives better. And to me, that is a purpose that for me inspires me to continue to want to work, even though I know they will not remember my name. And in many ways, because they don't remember my name or won't remember my name, it actually adds a lot of levity to my life because nothing is that big of a deal until I die.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And when I die, it won't matter because I won't have to deal with it anyways. So the TLDR is that no one will remember you.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And one of the things I was telling a friend of mine, as he was telling me all the things that were stressing him out, said, you know, if you zoom out far enough, you can't even see the earth. And he started laughing and we both started laughing together because it's like, we like to exaggerate these things in our mind because that's what our brain's trained to do.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And this is not me in any way saying that my beliefs should be your beliefs or that your beliefs are wrong. I am simply explaining my beliefs. And the reason I'm doing that is because I think one of the hardest parts of entrepreneurship is managing emotions and managing anxiety and managing stress so that you can make higher quality decisions.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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It's what keeps us alive is making things seem into problems. They've actually tested this is that like, you will still always find the same number of problems. Whether they're rich people problems or they're poor people problems, they are still problems nonetheless. And so at least realizing that allows me to not judge the fact that I have problems as it being bad.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Because if I don't believe things have inherent meaning, then it means that I can control the meaning I ascribe to things. And so for example, let's say that I get into a car accident, right? That would be for most people a bad experience. Now, how you look at that can depend. It could be like, okay, well, there's a law of large numbers. I've been alive for this many days.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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It's probable that I'm going to get in one of these accidents. On the flip side, you could also think, hey, you know, How amazing, I got to experience this part of the human experience. I got to check that off the list of things that I got to survive, right? Like crazy to think about something like that, but like, what else are you gonna do?

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Would you rather just like sit there and sulk and just say like, this has ruined my life? Like, I don't think that's gonna be an advantageous response. And so the core of all of these things that I have sits from the fact that I can create and destroy meaning as I see fit, number one. And the big wrapper for this whole thing is that entrepreneurship is a stressful road.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so if you're somebody who like gets stressed out or feels anxiety or feels overwhelmed, then these are the tools that I've used in my toolbox to combat those things when they come up. So this is going to be a list of mental frameworks that I apply to diffuse stressful situations in my life. And so let's start from the top. Number one is that I don't believe that things have inherent meaning.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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I see them much more like the weather, meaning some people say sunny days are good and rainy days are bad when they are really just weather. Because if you are in a drought, a rainy day is good. And if you are on a drought, a sunny day is bad. And the flip side would be reversed if it was your wedding. Right. And so.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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The only thing that has happened is just a circumstance or a condition, and then we ascribe meaning to that thing. And so if we can control what that meaning is, then it means we can influence our own emotional response to it. And if the whole idea of being a good decision maker is controlling our emotional response, then having tools like this can be really helpful.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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The next one is that a lot of people like to say, if it's not going to matter in five years, it shouldn't matter for five seconds or whatever it is. I like to take that a bit further and say, if it's not going to matter in 500 million years, it shouldn't matter for five seconds. Now, some people take that and think, wow, then you don't think anything has meaning.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And the answer is yes, that is the point. And so for you, it might be a bad day, but it's like, we're all going to eventually be forgotten. And as much as that bothers people, it's like, do you know who your great, great grandparent is? You probably don't even know their name. Like really, you probably don't even know their name. Let alone anything about them.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And high quality decisions are one of those things that compound over a long period of time because we make hundreds and hundreds of decisions every single day, every single week for our business. And it's many small micros that can go all the way up 1% better every day compounded for 365 days is 37x what you started. And 10% or 0.1% worse goes down to zero at the end of the year.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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You probably don't even know their name. And we have this, because we're so self-centered, think that everyone around us is gonna sing our praises and hang our pictures on the wall and just sing Kumbaya to us every single night after we're gone. And the real real is why do we give a shit if we claim to not care about what other people think?

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Why would we care what they do and talk about us after we're dead, right? Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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and across all eight functions of the business so you've got marketing you've got sales you've got product you've got customer success you've got it you've got recruiting hr you've got finance and we show the problems that emerge at every level of scale and how to graduate to the next level it's all free and you can get it personalized to you so it's about 30-ish pages for each of the stages once you enter the questions it will tell you exactly where you're at and what you need to do to grow

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap. And so I'm going to talk to you about a lovely lady named Betty White.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So Betty White was somebody who was really early on race integration. She was a golden gal, a huge, huge personality. She lived to 99, didn't make it to 100, which is sad. You probably haven't thought about her until I brought this up. And she died about a year ago.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And the thing is, is that she lived an amazing life, an incredibly public life, very financially successful, the top of her skill, beloved by all. And A, you either forgot about her or B, you didn't even know her name to begin with. And so how arrogant are we to think that now everyone on earth is going to remember us?

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Like you probably don't even know any Indian celebrities at all who are alive today. You probably don't even know any Chinese celebrities who are alive today. Probably don't know any Russian celebrities who are alive right now. Right? And so we're so arrogant that not only do you think that we're going to matter after we die, we probably don't even matter right now. And those are the celebrities.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Forget the normal people. Right? It's just ego. And this is why I think so many people get bothered by a lot of the stuff that I say here is because they want to reject it because it makes them feel bad. The idea that they don't matter. Now, obviously, there's going to be a lot of counter people that wear shirts that say you matter. And I don't agree.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And I think by thinking that way, you set yourself up to be upset at the world. Because it means that you feel anything as a slight. Because the underpinning of feeling like you matter is that you deserve things. And I hate the word deserve because it sets an expectation that we are bound to not see fulfilled.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so if you see suffering as unmet expectations, you can either change the conditions or you can change the expectations. And one of them happens in your mind and the other one forces the entire world to change. And the crazy thing is people will demand that a universe who doesn't know they exist or care change to their will, which it won't.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so they self-inflict their own suffering or anxiety or overwhelm when they're in business. It's not fair that this competitor down the street opened up. It's not fair that they're copying my ads. It's not fair that they're undercutting my prices. You're ascribing a meaning to it. All that we know is that it happened. That's it.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so managing my mental state has been a continuous learning experience for me. And the set of beliefs that sits at the core of that is what I would consider Optimistic nihilism. And to be clear here, there's a lot of people who feel like nihilism is a really negative thing.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so we could say how cool it is that I get to have this experience of competing with somebody so I can tell the story later. Because at the end of the day, we're all going to just collect our experiences and then we're just going to cash them in and then die. And so again, this is not meant to trigger anyone. This is just how I view the world and has been helpful for me.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Because on another level, like as our current understanding exists of the universe, the sun is going to continue expanding until it eventually engulfs the earth and we all die in a heat death. Unless we become a multi-planetary species,

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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all of the stuff that we're going to do, everything that you've ever done, the books that I write, the videos that I make, will eventually all get melted into nothingness. And so when we have this worry that one of our videos or our post didn't get a lot of likes, it just really doesn't matter. And I'm not saying that I don't feel the feelings.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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I'm saying I remind myself of these things so that I don't feel them as much or as long. So let's imagine something bad has happened today in this moment. Now, I'm going to take you through a timeline. So if we go three months into the future, it probably won't matter that much. And here's how I'll prove it to you. Can you think of something that happened three months ago that bothered you?

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Does it bother you now? Probably not. So we can use that evidence to project in the future that the current moment won't matter then. And if it's not going to matter then, why should it matter now? Belief number three is that your legacy doesn't matter. So number one, let's assume that you define legacy as material assets that you accumulate, okay?

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So the nth degree of this, and this is something that I am fortunate to be able to share with you, is that my great-great-great-grandfather was a ruler of the Qajar dynasty in Iran. And so he had 400 kids, so I'm not that related to him, all right? just like your progeny won't be that related to you either. But anyways, great, great grandfather. I actually keep forgetting his name.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Guy was a king, right? I don't even remember his name. And yeah, like, and he conquered the fucking world or born into it. It doesn't really matter, right? He sat on the top of material wealth and power. And me, four or five generations later, don't even know his name. I know the dynasty he was a part of, right? And so I think it was Hormoz Khan, I think was his name.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Anyways, point being, I don't think about him every day. I think about him literally only to make these about how it doesn't matter. And so your progeny probably won't think about you. And so when you... Die and then you pass your stuff on part of people were like, okay. Well, I have my material assets.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Well, okay Well, those are gonna get divided up a zillion times over and get fought over with a bunch of people who don't know how to make money or manage money Until then she gets squandered. So we know that's gonna happen on a long enough time horizon. Okay, great Check that box off. Now. Let's talk about your values and your beliefs, right?

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And that's what you see as your new legacy, which I think is a more noble legacy if we had to compare the two. But even then, let's do the second version of legacy, which is just having children in general. Is that you're like, I want to proliferate my genes, which is super Darwinian of you, which is awesome. If you want to call it awesome, or it can be bad, or it can be whatever you want.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so let's say you have lots of kids, and let's say those kids have lots of kids, and let's say those kids have lots of kids, and lots of kids, and lots of kids. Well, guess what happens? Is that five generations from now, you're one half to the fifth related to those people. They're one 64th you. And that's like five generations. It's not that much, right?

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And that's because they ascribe some sort of meaning to the word, but it really is just that you don't think that things have inherent meaning. It doesn't mean that there isn't any meaning in the world. It doesn't mean that there is a global meaning that we all have to agree to. As a result of that, there are downstream implications that affect my behavior.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Like you're just great, great grandfather. That's all that is. Like talk about like great, great, great, great, great, great, great. They're one 1000th you. Are they really related to you? Are they just humans? If they're just humans, which means that the eventuality of this equation, if you just keep adding the numbers, is that your progeny will just be humans.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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Then if you care so much about them, you might as well just care about everybody today. Ah, kind of nice when you think about that way. And so that's the genetic argument. Okay, number four, leaving things to your kids doesn't benefit them for a variety of reasons. Number one is that timing of when you give it to them probably won't matter. Here's some stats for you.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So the average person gets inheritance in their late 60s because their parents die in their late 80s or whatever. And when that happens, they already are old and don't need the money.

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so if you are going to give your stuff to your kids you should give it to them when people deem it the most impactful in their lives which is between 24 and 35 because that is where you can materially change someone's living conditions the education that they can provide to their kids whether they can have child care those are huge changes in someone's life when they're in their 60s their die is more or less cast right and so one if you're gonna leave it to them leave it to them at a time it's impactful

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Two, leaving it to someone in general or giving it to someone in general when someone hasn't earned it tends to alter their behavior in a negative way. So how many people have seen like the trust fund kids that just completely lose their minds and spend all their money and get into drugs because they have no challenge? They have no hardships. Everything has been removed from their lives.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And then basically the real hardship becomes themselves. And so I think we benefit from struggle on a character development perspective. And I see money as potential energy to be exchanged. And so if you give someone who's not prepared for a gob of potential energy that they did not earn or learn how to wield, it will ultimately burn them up and consume them.

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Number five is a law of large numbers, which is, let's say you have a bad day. A lot of people want to say, I need to change everything about my life because I had a bad day. But if I were to say, hey, you have 365 days in a year and a top, you know, a bottom 10% day, do you expect that to be a good feeling day? Well, no. Okay. Well, 365 days, bottom 10% days would be 36 days a year.

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Well, there's 12 months in a year. That would mean that you'd have three of those per month, almost one a week. Wow. I get a bottom 10% day once a week? Well, that sucks. Yeah, on the flip side, you have top 10% days once a week too.

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and I think have positioned me to be less stressed about things that come up and as a result, make better business decisions. And so this is why I show this. And if only some of these things make sense for you, awesome. None of it makes sense for you, awesome. If it all makes sense for you, Awesome.

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And so I say these things because a lot of times we want to change our behavior and attribute some outside force that something happened when it might just be randomness. Like if you have 365 days, you're going to have top 10% days and bottom 10% days with the exact same conditions. So does it mean anything? Not really.

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And so for me, that helps me deal with the fact that sometimes I'm like, oh, this is a bottom 10% day. That's all it is. Don't need to change anything. Bottom 10% day.

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I'll give you another one that I borrowed called the frame of the veteran, which is from my good friend, Dr. Kashi, which I think this is number six, which is if something bad happens, imagine that has already happened a thousand times before. And I will tell you the first time I ever used this because how ridiculous this is. So I got this new flannel. I know.

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And my housekeeper cleaned it incorrectly. And so it's like a nice material in the trunk, which obviously looked even better. I'm kidding. Anyways, part of it was that it shrunk, and then it also, it wasn't soft anymore. It got all those little hairy beads all over. It's like when you wash wool. And in the moment, it was an expensive flannel, and I was kind of annoyed.

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And then I remembered the frame of the veteran, and I was like, okay, what if every time I washed a flannel, it always became like this, and every flannel I had was this way, and this is just how flannels were? What would I think? And I was like, I wouldn't think this was a big deal. And just like that, it was gone. Something that would have been an annoyance just wasn't anymore.

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If like you're stuck in traffic and you're not normally stuck in traffic, but every time in this hypothetical world, the frame of the veteran, every single time you got into a car, you get stuck in traffic. Would you be bothered by it? Probably not. Why? Because you're accustomed to it. You expected it.

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And so what it means is we can basically retroactively alter our expectations and project a fictitious past onto our present so that we can alter how we respond to it. And so for me, the frame of the veteran has been very valuable.

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If you've been broken up with and it feels heartbreaking, but if you figured every single time you meet somebody, you're going to have a heartbreak on the thousandth time, how would you feel? Probably not that big of a deal, which means it can be not that big of a deal right now if you choose for it not to be.

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Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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So a lot of us wish that we don't have problems, but problems are constant and sometimes they're a sign of progress. Because if you solve a problem, then you create another problem. So if you solve your marketing problem, what do you create? A sales problem. If you solve your sales problem, what do you create? A customer success problem.

The Game with Alex Hormozi

Throwback: Legacy Is A Lie You Tell Yourself | Ep 883

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And so it's called the never ending cycle of problems and solutions. And so the idea is that we're wishing for something that will literally never happen. We want to live a problem-free life. But instead, in my opinion, we should try to choose which problems would you prefer, because there absolutely are better and worse problems.

The Game with Alex Hormozi

Throwback: 13 Things I Wish I Learned Earlier | Ep 848