Cashflow, Unit Economics, and Bootstrapping $550M ButcherBox with Mike Salguero | Ep 819

Want to scale your business? Click here. Check out ButcherBox here. Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth. Follow Alex Hormozi’s Socials: LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Hormozi?

  Hey guys, welcome back to the game. Today I have a special episode where I talk with Mike Salguero, who is the founder and CEO of ButcherBox, a subscription service that sends meat to people's doors. They do north of $550 million a year. And we broke this into probably like two halves. I'd say the first half, we talk kind of the story of getting there and some of the lessons he's learned along the way. And I'd say the second half of the podcast, we go really deep on tactical stuff that has, you know, materially improved the business. We get some of the unit economics. So for those of you who are a little bit more advanced, I think you'll probably dig it a lot, or hopefully you'll enjoy it as much as I enjoyed talking to Mike. And with that being said, let's dive in.

• 0:40Alex Hormozi?

  Everybody, welcome back to the game. I've got a special episode for you guys today. I am here with my soon to be friend, Mike, who owns ButcherBox, which is a company you may or may not have heard of, but you will have heard of it very soon as we go through a deep dive on the business. And so I would say unlike some interviews with business people, I think a lot of it is narrative. We'll have a little bit of that in terms of the story of the business, but I want to dive into the actual unit economics, like how it works, how it scales, what's your cash flow cycle. I want to get, I want to get into the nitty gritty. And then as Mike's going through it, I'll try and kind of encapsulate some of the pieces that I think could apply to any business, kind of like through lines that anyone can use from it.

• 1:23Alex Hormozi?

  So that's the plan and that may not at all happen, so we'll find out. But Mike, welcome.

• 1:29Speaker 01

  Yeah, thank you.

• 1:30Alex Hormozi?

  So before you had ButcherBox, you had another business. Do you want to do a quick like how we got here and some of the lessons you learned from that business, the failures? I love, I love hearing about failures because the, the lessons that we get from them, I feel like every entrepreneur is always like building, like all of the businesses prior are stepping stones to the business you have today. And then maybe someday this is the stepping stone to the next, the future version of ButcherBox or whatever.

• 1:56Speaker 01

  Yeah. So I mean, I could talk about a tremendous amount of failure in between college and my first business, if we want to go there. But my first business was a company called custommade.com. And my best friend Seth and I bought the company. We had approached a guy to sell us custom made.com for $140,000. We didn't have any money at the time, so we gave him a check for $2,500 for a deposit. And then it had 90 days of due diligence, which is where you're supposed to figure out what happens at the company. And we took all that time to go raise money. And so we raised 500 grand and the whole.

• 2:31Alex Hormozi?

  Okay.

• 2:32Speaker 01

  Yeah, the whole, the whole thing was we were both working in real estate. And we called it a shack in Manhattan. So this is 2008. Custom made.com got a ton of inbound traffic.

• 2:42Alex Hormozi?

  Yeah.

• 2:42Speaker 01

  From people typing in custom made. And it was filled with woodworkers who had their projects and stuff on there. And when you talk to these woodworkers, they're like, I get all my money from custom made.com and I pay $35 a year for my subscription. And they had to like email the owner to like upload their content. So we were like, this is like a shack in Manhattan. We're just gonna buy it. We're gonna like overhaul it.

• 3:07Alex Hormozi?

  Yeah.

• 3:07Speaker 01

  Turn it into they can log in and manage their own content and jack up the rents. So people, you know, thought that was a good idea and gave us.

• 3:16Alex Hormozi?

  It's a great narrative for raising money as a side note, just even the like, it's a shack in Manhattan. Like everyone's like, okay, I get what you're saying.

• 3:20Speaker 01

  Yeah, yeah. Of course, this was 2008 and in Boston in real estate and everyone had just lost their money because Bernie Madoff just ran off with everyone's money.

• 3:29Alex Hormozi?

  Did something happen in 2008?

• 3:30Speaker 01

  Uh, yeah.

• 3:32Alex Hormozi?

  Oh, no way. Okay, crazy.

• 3:34Speaker 01

  Yeah, so Bernie Madoff ran off with everyone's money. We heard a lot of no's, but we cobbled together around. And then we got going and things were working and we raised another $500,000.

• 3:45Alex Hormozi?

  When you say things were working, what did you mean? So like you were starting to make more, like you were able to grow the revenue business?

• 3:48Speaker 01

  Yeah, so we had pivoted the website. You could now log in. We made a ton of mistakes, but we built a sales team. We had people calling to get makers to sign up for like an annual subscription or a monthly subscription. We hit about $60,000 in revenue a month and.

• 4:04Alex Hormozi?

  What was it doing prior?

• 4:06Speaker 01

  Thirty five thousand dollars a year.

• 4:07Alex Hormozi?

  Oh geez, I mean, you did an amazing job.

• 4:10Speaker 01

  Yeah, yeah.

• 4:10Alex Hormozi?

  Yeah.

• 4:12Speaker 01

  But we were still losing a little bit of money and whatnot.

• 4:14Alex Hormozi?

  Also, a great frame for me who's listening to this is the idea that, like, I had a mentor say this. He's like, right before you go to take your business to market, he's like, switch sides of the table. And then try and say, like, you just bought your business today. What are all the things you'd fix about it? It's like, well, maybe just do those first. And so I think it's just a great perspective on any businesses. Like, if I bought everything today, how would I? It's like a different lens, at least. Anyways, for me, it's been helpful. But please continue.

• 4:40Speaker 01

  Yeah, so at the time, it was like 2010, 2011. Everybody in tech was raising money. And so we were looking at TechCrunch and looking at all this stuff. And at that time, there weren't like all these accelerator programs and all these things that now exist to help people. And so my co-founder and I looked at each other, we're like, we have a good business. Why don't we raise money? And so we ran around town, again, raising money, this time trying to raise from VCs.

• 5:05Alex Hormozi?

  Yeah.

• 5:05Speaker 01

  And we got first round capital, which is a very well-known VC in New York. And then we got Google Ventures to invest in our company. It was a, we raised 1.9 million at like a 7 million pre-money.

• 5:20Alex Hormozi?

  Sure.

• 5:21Speaker 01

  That's where things started like falling apart. So, most people told us, no. We went to raise money and people are like, woodworker, listing site? Like, hell no. And I was in, I was in a meeting and at this VC benchmark. And I said, I was like, we built this function where somebody could post a project and makers could see them coming in and then they could bid on them. And I was like, pull up the job board. And this thing was like live action. We wanted to make it exciting. And there are like these jobs rolling in, like custom coffee table, custom. I was like, all we have to do is stand in between these transactions and we'll be the largest marketplace for custom stuff.

• 6:02Alex Hormozi?

  Yeah.

• 6:03Speaker 01

  It was 2011. As soon as I said the word marketplace.

• 6:06Alex Hormozi?

  Yeah.

• 6:06Speaker 01

  Everyone wanted in our deal. We went from no, no, no, no, no to like marketplace. You could be the next Airbnb.

• 6:12Alex Hormozi?

  Yeah.

• 6:12Speaker 01

  And we're like, yeah.

• 6:13Alex Hormozi?

  You bet.

• 6:14Speaker 01

  Yeah, sure, we could be whatever you want. Just give us some money.

• 6:17Alex Hormozi?

  Yeah.

• 6:18Speaker 01

  And so we raised the money on the premise that we were going to create a marketplace and stand in between a custom transaction, which wasn't the best premise, but people loved it.

• 6:28Alex Hormozi?

  Yeah.

• 6:29Speaker 01

  We raised 1.9. Six months later, there was one VC that we left out of the first deal.

• 6:34Alex Hormozi?

  Okay.

• 6:35Speaker 01

  We're like, we don't want to raise more than 1.9, so you can't participate. Six months later, they're like, we'll give you four on 16. We're like, okay, we'll take more money. So we took four and then we did an 18.

• 6:47Alex Hormozi?

  So now you've diluted, because now you're at, because you had 1.9 on seven. So you're, that was 21 or 2%, something like that, right? I don't know the math, somewhere there.

• 6:55Speaker 01

  Yeah.

• 6:56Alex Hormozi?

  And then you did another quarter, so 25%.

• 6:58Speaker 01

  Yeah.

• 6:59Alex Hormozi?

  With the second round. So you're, you guys are sitting a little bit above 50.

• 7:04Speaker 01

  Yep.

• 7:04Alex Hormozi?

  At that point, just from the two rounds.

• 7:06Speaker 01

  Yeah.

• 7:06Alex Hormozi?

  Okay.

• 7:07Speaker 01

  And then we're giving out equity at all of our employees and all that stuff, too.

• 7:11Alex Hormozi?

  I'm highlighting this because I know, I think I have some perspective on where you go later.

• 7:14Speaker 01

  There's a different, there's a different path.

• 7:16Alex Hormozi?

  No, no, yeah.

• 7:16Speaker 01

  Yeah. So, and then a few years later, we did a $10 million round on $30 million. It was actually 18 million. It was 10 of equity, four of debt and four of secondary.

• 7:28Alex Hormozi?

  Okay, so you got some money off the table.

• 7:30Speaker 01

  So we got some money off the table.

• 7:31Alex Hormozi?

  You were like reading the tea leaves and you're like, you know, there's no way we're going to make anything with this.

• 7:35Speaker 01

  Yeah, we got all of our, all of our original investors got three X their money.

• 7:38Alex Hormozi?

  Okay.

• 7:39Speaker 01

  If they wanted it. Many cashed out. My mother did not. She's like, I believe in you.

• 7:44Alex Hormozi?

  Yeah.

• 7:45Speaker 01

  They used to cash out, mom, but okay.

• 7:47Alex Hormozi?

  She was like, I took secondary, it didn't work.

• 7:49Speaker 01

  Yeah, like I, I sold.

• 7:50Alex Hormozi?

  Yeah.

• 7:53Alex Hormozi?

  Nice.

• 7:53Speaker 01

  So.

• 7:55Speaker 01

  By the end of it, I mean, what really happened at the company, the big lesson I learned is, so Google, they have incredible services for entrepreneurs. So if you're an entrepreneur and they invest in you, they can help you with a whole bunch of stuff. You want to manage your AdWords account? It's like, go talk to the people that run AdWords. By the way, here are some gift cards and like, they do all sorts of stuff to help you.

• 8:19Alex Hormozi?

  Yeah.

• 8:20Speaker 01

  They're like, do you want us to come and look at your website and like, get under the hood of your technology? And we're like, yeah, of course, Google, come on in. And I mean, literally, the guy did this like, week-long deep dive, came out and was like, that's the worst website I've ever seen. He's like, I can't believe we invested in this. So our investors up in arms.

• 8:40Alex Hormozi?

  How does this even make money?

• 8:41Speaker 01

  How is this, like, and these guys, like, yeah. And so what ended up happening over the course, so immediately, we were like, we have the wrong tech team. Our investors were like, you have the wrong tech team, you have to get rid of them. So we got rid of our tech team. And then it was like, you have the wrong product people, and then you have to get rid of the product people. You have the wrong marketing people. And what ended up happening over the course of about a year is, I took all of the people who helped me build this company to help me like, hack through the jungle to get to like, the road, and we fired all of them.

• 9:12Alex Hormozi?

  As one does.

• 9:14Speaker 01

  And I was left with a company of.

• 9:17Alex Hormozi?

  New hires?

• 9:18Speaker 01

  New hires, people that didn't fit the culture.

• 9:20Alex Hormozi?

  Mercenaries, yeah.

• 9:21Speaker 01

  I hadn't written down the cultural values. And I just have this vivid memory of sitting in my car in the parking lot, being like, I can't go in. Like, I can't, I don't even want to go to work. And I had a good salary, but by that point, with all the dilution, I owned like, 8% of the thing. So I could go get a CEO job doing something, and it was just like, this, like, what have I done? And I let go of all my friends, it was, it was bad.

• 9:48Alex Hormozi?

  Yeah. How many years was this?

• 9:50Speaker 01

  Eight years of working on it. This was eight years? Two thousand fifteen, or sorry, two thousand eight through two thousand fifteen.

• 9:58Alex Hormozi?

  So we just, we covered eight years in a pretty short, short, short little window, just for anyone who's listening. I bring this up just because like, when you, when you hear the stories or you watch the, the, literally the sixty second short about someone's career. You know, you, you see the highlights and the lowlights, but a lot of it is just kind of like the mundane middle of just dealing with the stress of every day. There's always fires and there's a, a permeating level of baseline stress that doesn't really go away.

• 10:23Speaker 01

  Yeah, and so, I mean, one big lesson was like, don't listen to investors. When I, when I started ButcherBox, which we'll get into, I didn't want to take investment. There was also like, I lost myself. I lost my team and I lost myself. And when I looked at the shambles that happened, um, it was like, I don't want to.

• 10:42Alex Hormozi?

  Did you shut it down?

• 10:43Speaker 01

  Yeah, so we, um, we actually foreclosed on it because we had some venture debt. There was a little bit of debt. Our bank account got below what we owed and they were like, we're, we're taking it. So we actually did a, what's called a friendly foreclosure. They took it over. My co-founder stayed and is still running it.

• 11:02Alex Hormozi?

  Oh, it's still going?

• 11:03Speaker 01

  Yeah.

• 11:03Alex Hormozi?

  Is it doing okay?

• 11:05Speaker 01

  It, it's now a jewelry company and it's just, they just do everything. There's no maker, there's no like.

• 11:11Alex Hormozi?

  No marketplace.

• 11:11Speaker 01

  The big problem that we had was you can't like these custom, if you want a custom coffee table or a custom piece of jewelry. There's like sixty back and forths to like, talk about every detail.

• 11:21Alex Hormozi?

  Yeah, right.

• 11:22Speaker 01

  And we had to stand in between that in order to get our fee, which was like ten percent, which is a nightmare. It was a bad business.

• 11:27Alex Hormozi?

  Yeah.

• 11:28Speaker 01

  But we, because we sold everyone on Marketplace. When we were like, this isn't going to work. People are like, well, that's what I invested in, so you, you need to keep going.

• 11:36Alex Hormozi?

  So doing the other version of, so, because I, so I think about this sometimes as like the path not taken. So if you had, if you had not raised really any of the money, besides the amount that you needed to kind of acquire the business. So at that point, what did you raise the five, what did you raise the five hundred thousand dollars? When you did, you didn't go through the due diligence, that period where you raised the five hundred? What was the, what was the, or how much equity did you give away for that?

• 11:59Speaker 01

  It was a converter. So it converted into the

• 12:01Alex Hormozi?

  For the next round, like a safe.

• 12:02Speaker 01

  Round, yeah.

• 12:03Alex Hormozi?

  Oh, great. Okay, so that ended up being like five or six percent. I mean, well, a little more than that. So like seven percent of the business.

• 12:08Speaker 01

  Yeah.

• 12:09Alex Hormozi?

  Which should have been pretty, a pretty good, a pretty good move effectively.

• 12:13Speaker 01

  Yeah.

• 12:13Alex Hormozi?

  And if that business at the time said it was doing $60,000 a month, right? So 720 a year ish in terms of run rate. If you had stuck with the original model.

• 12:22Speaker 01

  Mm hmm.

• 12:22Alex Hormozi?

  And just been like, I'm not, I don't have to pursue this, not as an insult, but like cockamamie. Business model, basically billiard bust business model is what I mean to say. It probably could have just been a very profitable. I mean, going from 35,000 a year to $60,000 a month in like 12 months is, is, is great growth.

• 12:39Speaker 01

  Yeah, totally.

• 12:40Alex Hormozi?

  And was it, was it profitable at that point?

• 12:42Speaker 01

  It was almost profitable.

• 12:43Alex Hormozi?

  Okay, like you could have made it if you wanted to.

• 12:45Speaker 01

  We could have been profitable. And that's one of the reasons why like I want to be here today and I like talking to people like you who talk to entrepreneurs about a different path.

• 12:52Alex Hormozi?

  Yeah.

• 12:52Speaker 01

  Raising a bunch of money, diluting yourself, having people who tell you what to do.

• 12:56Alex Hormozi?

  Yeah.

• 12:57Speaker 01

  And losing your culture in the meantime and losing yourself.

• 12:59Alex Hormozi?

  Every business I've had has been butchered.

• 13:01Speaker 01

  Yeah.

• 13:01Alex Hormozi?

  That I've found it, so I get it.

• 13:02Speaker 01

  Yeah, so when I started ButcherBox, so I took the, we, we closed the business. We let go of 50 people. Shut the doors. I literally closed the gate and put the lock on.

• 13:13Alex Hormozi?

  But then your partner's like, I'm still here though, and we're still gonna keep, we're gonna make this happen.

• 13:16Speaker 01

  They like spun it out and.

• 13:17Alex Hormozi?

  Are you guys still friends?

• 13:18Speaker 01

  Yeah, we are.

• 13:18Alex Hormozi?

  Oh, good. That's cool.

• 13:19Speaker 01

  Yeah, it was a, it was a little rocky for a couple of years, but yeah, we're good friends. I took the weekend off. It was Memorial Day weekend, so it was a long weekend. And then I started ButcherBox.

• 13:30Alex Hormozi?

  Okay.

• 13:31Speaker 01

  On Tuesday. And I, I had known in the final year at Custom Made, it was very clear to me that we were gonna hit a wall. And there was like no stopping it. My co-founder had become CEO in that last year because there was, he, he just like loved the distressed. He wanted to be the.

• 13:47Alex Hormozi?

  What was revenue then?

• 13:49Speaker 01

  So we, we would only talk about GMV because, because it was platform. So our GMV, I think, got to like three or four million a month.

• 13:58Alex Hormozi?

  Okay.

• 13:59Speaker 01

  But, you know, then we took a 10%, but actually because of, I forget all the reasons, it was like 7%.

• 14:05Alex Hormozi?

  Yeah. So like 200, 200,000.

• 14:08Speaker 01

  200,000 a month. We at our height were burning 500,000 a month.

• 14:14Alex Hormozi?

  That is, yeah.

• 14:15Speaker 01

  Healthy burn.

• 14:16Alex Hormozi?

  Yeah.

• 14:19Speaker 01

  Just like never seen anything like it.

• 14:20Alex Hormozi?

  Yeah.

• 14:21Speaker 01

  Watching the bank down just a road.

• 14:23Alex Hormozi?

  Quote from Reid Hoffman, I think he was talking to Elon or Peter Thiel or something. And they were on the roof of the building that they were at for PayPal. And he said, if we were one at a time lighting hundred dollar bills and pulling them off the building, he said, it wouldn't be as fast as we're actually burning money in this company. And I just saw that was such a visual of like, I could burn one hundred dollar bills slower than we're actually burning the money in this business, which I thought was hilarious.

• 14:51Speaker 01

  Yeah, no, it's wild. I mean, you start adding a bunch of people and then you add managers to manage those people and then you do a bunch of marketing and all of a sudden you're just like losing, losing money. And when you raise, especially when you raise something like a 18 million dollar round, they want you to spend the money as fast as possible. And the thing, the thing that they don't talk about with venture is venture capitalists get paid when they put money out on the street. They take a management fee. And so they have, everyone around the table has the incentive to like, put as much money as humanly possible into these deals. And so you really, when you go, like, people are like, how do I figure out what my valuation is? It's like, no, no, no. Just tell them how much money you can spend over the next

• 15:32Speaker 01

  18 to 24 months and just argue for a bigger number. We're like, we can blow through 10 million. They're like, great, here's a check. So, yeah, it was.

• 15:42Alex Hormozi?

  Which is counter to how like business works, this side note. So it's interesting because you're actually, it's the collision of two different business models and the one who has the voting rights is the one who wins. But like their business model is deployment of capital and management fees. By and large, obviously there's carries and things like that, but there's that component. And then there's the business model of the actual business, but the person who actually calls the shots is the largest, the person who makes the most money from the business prevails in terms of who has leverage in the conversation.

• 16:12Speaker 01

  Yeah, and we had all the rights. So we negotiated really, really well. We had all the rights in our documents. My co-founder Seth was just like a phenom at that. So they couldn't overthrow us. They didn't have any management decisions, et cetera. But it doesn't matter. Like, at the end of the day, when they're like, you're gonna be blackballed if you don't.

• 16:29Alex Hormozi?

  Yeah, like the pressure.

• 16:30Speaker 01

  X, Y, Z, you know? So at the end, it was like, we're gonna sell the company, we're gonna bring in a different CEO, we're gonna do all these things, none of which worked.

• 16:38Alex Hormozi?

  Yeah.

• 16:39Speaker 01

  I knew the writing was on the wall. And so I'd been playing around with like, what am I gonna do next? And I had a few ideas. I had a billboard company I was really interested in starting. I had a bond company I was really interested in starting, and I had this like, shipping meat in the mail.

• 16:55Alex Hormozi?

  Interesting.

• 16:56Speaker 01

  And the quick backstory, my wife has an autoimmune disorder. We were following these elimination diets to like, clean up our diet. We were trying to find grass-fed beef, couldn't find it.

• 17:08Alex Hormozi?

  Huh, okay.

• 17:09Speaker 01

  And I just got obsessed with like, where do you find grass-fed beef?

• 17:12Alex Hormozi?

  Yeah. Why is this a hard thing to find?

• 17:13Speaker 01

  Yeah, why is this hard to find? And I ended up like, meeting a farmer in a parking lot and buying trash bags full of meat and being like, this is weird. And I started selling steaks to my buddies because it was like, too much meat.

• 17:25Alex Hormozi?

  Yeah.

• 17:26Speaker 01

  And one of my buddies was like, this would be so much easier if it was delivered to my house.

• 17:29Alex Hormozi?

  Yeah, I don't wanna like, meet you at your house to pick up the meat in a bag.

• 17:33Speaker 01

  Just ship it to my house. And so I was like, okay, how do you ship meat in the mail?

• 17:36Alex Hormozi?

  Yeah.

• 17:36Speaker 01

  I couldn't figure it out. This is all while I was like, still at Custom Made. And then I met.

• 17:41Alex Hormozi?

  This was while you were at Custom Made?

• 17:42Speaker 01

  Well, it was like, at the tail end.

• 17:44Alex Hormozi?

  Yeah, you were having an affair.

• 17:45Speaker 01

  Yeah, yeah. Things were closing down. And then I reached out to the former head of operations of Omaha Steaks, which at the time was like, the big meat in the mail company. And he's like, yeah, like, my non-compete's over.

• 17:58Alex Hormozi?

  Oh, great.

• 17:59Speaker 01

  I can help you.

• 18:00Alex Hormozi?

  That's amazing.

• 18:01Speaker 01

  And so he made all these introductions.

• 18:03Alex Hormozi?

  Yeah, pro tip right here, just for everyone listening, find the person who has built the business.

• 18:08Speaker 01

  Yes.

• 18:09Alex Hormozi?

  Already.

• 18:09Speaker 01

  For later.

• 18:11Alex Hormozi?

  It's, you know, from an entrepreneur's perspective, I think the beginning is always about how, like, you know, you're very tactic obsessed. And obviously, I talk a lot, a lot about tactic stuff on this channel, but.

• 18:21Alex Hormozi?

  I'd say beyond a certain point, it just becomes a lot about who because the leverage is in not having to live the 15 or 20 years or however long this guy had been in the steak business. You're like, you can either like relive his life and then be 20 years older. It's like, or you can just find that guy and then he doesn't have to live your life either. And then you combine and everybody wins. And so I think in the earlier stages of my career, I thought way more what and how than who.

• 18:46Speaker 01

  Yeah. Also, the way that I structured it, so I had a whiteboard. I had the three ideas and I had like the kill shot, like the thing that if I didn't figure out this week or this month, like you don't have a business. So for the bomb thing, it was like a legal thing. And for the, for ButcherBox, it was like, how do you ship this?

• 19:03Alex Hormozi?

  Yeah.

• 19:04Speaker 01

  And so I actually like, every time I went to the bathroom, I'd be like, all right, how do you ship me mail? Like reaching out to people, trying to get somebody to help. He finally said yes. And so fast forward to close the doors at ButcherBox, or sorry, at Custom Made. And it was pretty clear that like, hmm, why don't I just like spend the summer messing around with this idea? So my intention was to build a hobby business. Like I was, I was very enamored by like Tim Ferriss four hour work week. Like, you know, build something that runs in the background and then you can go live your life, you know, passive income.

• 19:40Speaker 01

  And that was like, I thought if we had a thousand subscribers and we made a $20 profit on each subscriber, it's $20,000. You, so if you, you customer service, if you outsource that and if you build tech easy, like you could have like $10,000 a month.

• 20:00Speaker 01

  And so I built, it was like WordPress on top of Stripe, which nowadays there's Shopify, which is incredible. But like WordPress on top of Stripe, which we basically ran with until last year when we moved to Shopify. And then we outsourced everything and it was like, okay, this is gonna be a hobby business.

• 20:17Alex Hormozi?

  Yeah. I want to pause us on something because I think it's such an important thing. So like, I have, I have had such a similar experience to I think the, what you just walked through from a narrative perspective, which is that. Every time I've tried to like build a business, it doesn't work for me. It hasn't. And I've failed a bunch of times on businesses that I was like, I'm building a business. When I was like, how do I make some money? That doesn't take a ton of my time. I end up building a really good business. And so it's just like an inch, again, it's these like these, these frames of questions. And I think this at any level, you could ask it from a product line perspective or new division perspective. But it's, it's like I have, I've had these like romantic ideas of like this big thing that I want to have happen. Rather than like,

• 21:00Alex Hormozi?

  you know, I just, I just want to make some money in a really easy way. And then when, what's interesting though, is that you're basically, I call it solving for zero, which is like, how do I solve for like no time and profit? But when you solve that problem, when you have no time and profit, it also scales a lot easier because you already started with the premise of how do I have it? Put no time, not be as risky and be profitable. So, sorry to pick back up.

• 21:24Speaker 01

  Yeah, no, that's right. If you build something to be a hobby, it can remain a hobby.

• 21:28Alex Hormozi?

  Yeah.

• 21:29Speaker 01

  And I could all talk about our backbone now, but it's, it's very similar. Everything is third party. We have really tight specs on everything, but we took the perspective that I started with, I want a hobby. And nowadays I took the perspective of like, we're not going to learn how to ship boxes better than a company that's been in the business for 75 years. Like, why bother trying to do that? So anyway, we started with an intern and we decided that we were going to do a Kickstarter campaign.

• 21:58Alex Hormozi?

  Okay.

• 21:58Speaker 01

  Or it was Kickstarter or Indiegogo at the time.

• 22:00Alex Hormozi?

  Yeah.

• 22:01Speaker 01

  This is 2015.

• 22:02Alex Hormozi?

  Also a different way of raising money, by the way, for anyone who's listening.

• 22:05Speaker 01

  Pre-sales.

• 22:05Alex Hormozi?

  Yeah.

• 22:06Speaker 01

  So it's not raising money, you're just selling your product and you're seeing if there's a market and you're getting money upfront.

• 22:12Alex Hormozi?

  So my first gym, I saved all my money to start. As soon as I, and I, and I wanted to start the gym as fast as human possible because I thought if I start the gym really quickly, then I could start making money. Every gym after that gym, I had multi-month pre-sales that would pay for the, that would finance the entirety of the gym off of people pre-buying memberships and pre-buying weight loss challenges and things. And so like, this is definitely like a 101 to 201 entrepreneur, like the first one, you know, you're, you're taking the outside capital. You're like, you know, I'll bet you I could just get my customers to just pay on different payment terms and just, and then it's also, also a great product market fit test. If no one wants to buy your pre-sale, then thank God you didn't like raise money for it or something like that. It's like, we actually know people want to buy it and they're willing to pay for it and we.

• 22:54Speaker 01

  Exactly. That's the great thing about Kickstarter is people are used to waiting a really long time to get their products. And, and, you know, we basically started, we, we hadn't launched yet, but we went out and showed our page to people. And the first thing that we learned was people were like, I don't eat that much beef. We only had grass-fed beef.

• 23:11Alex Hormozi?

  Right.

• 23:11Speaker 01

  We're trying to sell people eight, 10 pounds of grass-fed beef for $129. People are like, I don't eat that much beef. I would never buy this.

• 23:18Alex Hormozi?

  Yeah.

• 23:19Speaker 01

  And we're like, well, what if we put in chicken and pork as well?

• 23:21Alex Hormozi?

  Yeah.

• 23:21Speaker 01

  They're like, oh, totally. Can you make it at the same standard? Like, can you find chicken that's like raised better and pork that's raised better? And we're like, yeah. So we, we started with a box, beef, chicken, or pork, and launched our Kickstarter. And I think one of the, you know, one of the things that we've done well as a company is found arbitrage opportunities.

• 23:42Alex Hormozi?

  Yeah.

• 23:42Speaker 01

  And so the first arbitrage opportunity was with Kickstarter.

• 23:46Alex Hormozi?

  Okay.

• 23:46Speaker 01

  So back in 2015, Kickstarter had this verified badge, like if, if it would be like Kickstarter verified.

• 23:53Alex Hormozi?

  Mm-hmm.

• 23:54Speaker 01

  And so what we did is we watched these campaigns and to see like which campaigns got

• 23:59Alex Hormozi?

  Yeah.

• 24:00Speaker 01

  the verified badge and then tried to reverse engineer, like, how did they get the verified badge? And it was one part early momentum.

• 24:07Alex Hormozi?

  Yeah.

• 24:07Speaker 01

  You know, sales coming in. I tried to reach out to all the founders and be like, oh, we're doing this thing.

• 24:13Alex Hormozi?

  Yeah.

• 24:13Speaker 01

  Did whatever it took. And so we went out to raise 25,000 in pre, or in sales.

• 24:18Alex Hormozi?

  Pre-seed, right. Yeah, right.

• 24:20Speaker 01

  And we ended up selling 40,000 in boxes in the first day.

• 24:25Alex Hormozi?

  Oh, jeez.

• 24:26Speaker 01

  And then we got the Kickstarter verified badge.

• 24:27Alex Hormozi?

  Yeah.

• 24:28Speaker 01

  And then we ended up doing 210,000 in pre-sales.

• 24:32Alex Hormozi?

  Yeah.

• 24:32Speaker 01

  Which was 1,100 boxes.

• 24:34Alex Hormozi?

  Yeah.

• 24:34Speaker 01

  Of meat.

• 24:35Alex Hormozi?

  Yeah.

• 24:36Speaker 01

  Going, you know, the first, the beauty of Kickstarter is if you get that verified badge, it's no longer, you're no longer just asking your friends and your audience to shop. It like goes to everybody.

• 24:47Alex Hormozi?

  They'll push it out, yeah.

• 24:48Speaker 01

  And so it was a lot of random people we didn't know.

• 24:51Alex Hormozi?

  Just, I want to double click on the offer real quick. Offer's part of what we talk about. So what ancillary benefits or bonuses did you give to people beyond just the box of meat? Was there anything else that they got for being, you know, fully participant?

• 25:04Speaker 01

  Good one. So we offered, the way that you do with Kickstarter is you try to activate the people who have bought to like go be your ambassadors. So we said, if we hit a hundred thousand dollars in sales, we'll get, give everyone free bacon in their first box.

• 25:21Alex Hormozi?

  Yeah.

• 25:22Speaker 01

  And that, like, people went crazy. They're like, I want the bacon, you know, and started like promoting it, putting it on their Facebook pages, all of that. That was it, though. That was the offer. Our product-

• 25:32Alex Hormozi?

  So you had a referral bonus.

• 25:33Speaker 01

  Yeah.

• 25:33Alex Hormozi?

  Really interesting.

• 25:34Speaker 01

  Our product was really hard, is still, really hard to find.

• 25:38Alex Hormozi?

  Yeah.

• 25:39Speaker 01

  So we're dealing with people who like want to eat healthier, feel guilty about the meat that they're eating, and we give them an answer to that. And so there was, it was really clear that we had struck a nerve really quickly.

• 25:50Alex Hormozi?

  Yeah.

• 25:52Speaker 01

  And so then during the Kickstarter campaign, so we signed up like 1,100 people. During the Kickstarter campaign, the most interesting thing that happened was there was a, we were like writing on Twitter to anyone who did Kickstarter, like anyone who talked about Grass-fed Beef to get them to talk about us. And this one nutritionist-

• 26:10Alex Hormozi?

  So you're like, you're reaching out to them.

• 26:11Speaker 01

  Yeah, just like, hey, we're launching this thing.

• 26:13Alex Hormozi?

  This is warm outreach, or sorry, this is cold outreach-

• 26:16Speaker 01

  Yep.

• 26:16Alex Hormozi?

  -to affiliates fundamentally, that you'd either pay for, through sponsorships with money or free stuff or both. And then I don't know if you gave them affiliate links or it was just like, hey, just talk about our thing.

• 26:27Speaker 01

  At this point, it was just talk about our thing.

• 26:29Alex Hormozi?

  So like, I'll send you a free box of meat if you just talk about it, kind of thing. Yeah. A great way to get started early from a, from a capital perspective. So it's like both of the examples that Mike talked about first is like, okay, if there's platforms that'll give you free reach, figure out what you have, you know, reverse engineer what free reach looks like. And they're just getting you customers for free. And I think some people, especially, this is weird, but like a lot of small business owners will like obsessed about like, they charge 10%. It's like they charge a commission on customers they get you for free.

• 26:55Speaker 01

  Right, totally.

• 26:56Alex Hormozi?

  What are we talking about? You know, and then with the affiliates and influencers that, that you reach out to, another way to basically like, if you, if you factor in the cost, it's like literally just the hard cost of the box of meat is your advertising cost and everything above that is basically freebie. Right? And so both of these are super low capital ways early on to, to, to get those initial sales going.

• 27:18Speaker 01

  Yeah, so this nutritionist in California, this guy Chris Cresser tweeted like, this is an interesting, you know, I've told you to eat grass-fed beef. This is an interesting place to get it. That's all he did. And we saw a flurry of activity from that. And by flurry, I mean, there was like seven people who signed up. But at the time that was like, holy, like what, what just happened?

• 27:40Alex Hormozi?

  Yeah.

• 27:40Speaker 01

  And then we were like, you know, to what you were just talking about, we're like, we need to do more of that.

• 27:44Alex Hormozi?

  Yeah.

• 27:45Speaker 01

  Like we're, we need to go find every influencer who's ever talked about grass-fed beef and get them to promote, to promote us. So we finished the Kickstarter and then we immediately-

• 27:55Alex Hormozi?

  And that was the CTA. So when you're pushing out to them saying, hey, promote our Kickstarter, basically. And they could send their traffic to your Kickstarter to, to, you know, the seven buyers that came in from that.

• 28:04Speaker 01

  Yeah.

• 28:05Alex Hormozi?

  And the guy who did, is that how, that's how the money came in?

• 28:07Speaker 01

  Uh, yeah, well, so Kickstarter will tell you like where, like where did this come from? Okay. So it came from Twitter. So we're like, okay.

• 28:12Alex Hormozi?

  But that was, but you were still in pre-sale mode for this whole thing?

• 28:15Speaker 01

  Yeah, okay. Yep, great. Um, because we wanted to be capital efficient, uh, the whole idea was we're going to send you the butcher's selections.

• 28:24Alex Hormozi?

  Okay.

• 28:24Speaker 01

  So it, I didn't want to hold inventory because I don't know how many ribeyes we're going to sell. And this is really expensive inventory. So the idea was we'll sell a bunch of stuff and then we'll just decide what to put in the box.

• 28:36Alex Hormozi?

  Yeah.

• 28:36Speaker 01

  So we sold a bunch of stuff and then it was like, okay, we have 1100 boxes. We talked to the, the place that we were working with. They created, you know, these different.

• 28:44Alex Hormozi?

  Did they have all types of meat, the one place that you went to?

• 28:46Speaker 01

  They did, so.

• 28:47Alex Hormozi?

  Wow, that was fortunate.

• 28:47Speaker 01

  Yeah, we started working with this company in Wisconsin that did, they had a cutting facility and a pick, pack, ship facility. It was like, they did everything.

• 28:55Alex Hormozi?

  So they just had it and they had no marketing, basically?

• 28:57Speaker 01

  Yeah, yeah. And so we, we shipped out all these boxes and then called everybody. We shipped them out really quickly. It was like a week.

• 29:07Alex Hormozi?

  And they were thrilled, I'm for Kickstarter.

• 29:09Speaker 01

  Yeah, wow, I got my box already. And then we called them, hey, how are things going? Do you need any recipes? Would you like to become a subscriber?

• 29:15Alex Hormozi?

  Yeah.

• 29:16Speaker 01

  And signed up like 40% of the people.

• 29:18Alex Hormozi?

  Amazing.

• 29:19Speaker 01

  So right away, we had like.

• 29:20Alex Hormozi?

  Well, you didn't just send an email to 1100 people? Wouldn't that have been easier?

• 29:25Speaker 01

  Nope, we had a guy, Nicky Graham, who picked up the phone and just like pounded the phone. And he was like $10 an hour plus like a $5 spiff.

• 29:33Alex Hormozi?

  I just want to, I just want to hit on this just cause like, it was nice is that you're hitting all these really clear milestones that I feel like are just forgotten, which is like, just the elbow grease of what I'll consider like unscalable work or unscalable effort is like a lot of times early on, everyone's looking for like, I don't know if that scales.

• 29:50Alex Hormozi?

  It's like, well, I mean, you know, we, we hand wrote, you know, 1,100 cards and we manually reached out to every single person and we had conversation with them and we asked them if they knew anybody else who'd be interested, just like the basics. Everyone's like, oh, I'm sure that would work. It's like, right, but it would just be work. And you did it and obviously it worked.

• 30:07Speaker 01

  Yeah, well, and one thing that I think is important is I knew that I couldn't do that.

• 30:12Alex Hormozi?

  Yeah.

• 30:12Speaker 01

  Like if you put me in a room with a phone and said, call 1100 people, no way. Like the business wouldn't have gone anywhere. And so it's good to know what you're good at and what you're not good at, what you're willing to do, what you're not willing to do and invest in the areas that you're not willing to do. Cause if you believe in the business, there's a guy who for $10 an hour is just like, okay, we'll just, yeah, he's thrilled. And he was good at it and like, then I didn't have to do it. But I think too often entrepreneurs take the approach of like, they need to do everything. And like, I mean, the business would not exist if we hadn't made those phone calls. But if it was up to me, I would never make those phone calls.

• 30:49Alex Hormozi?

  Was there an offer that you gave them for the subscription? The 40% besides like, hey, wanna sign up?

• 30:54Speaker 01

  I don't remember.

• 30:55Alex Hormozi?

  Like get your next box, $10 off your next box? Or you get bacon for free in your next box if you subscribe?

• 31:02Speaker 01

  There must have been, but I don't, I don't actually remember. But what did happen was we launched butcherbox.com. So in the background, we signed up these people and we realized affiliates was a thing. So we, you know, started working on that. We launched butcherbox.com to the world and there were many people who were trying to get in on the Kickstarter and they let you put up a link. So they were coming to our website and they were buying. So right away, we signed up like five subscribers, 10 subscribers, like on the first day.

• 31:31Alex Hormozi?

  Yeah.

• 31:32Speaker 01

  And what happened was we had a little tech issue. So when those new subscribers signed up, they got free bacon in their first box. Because we built the tech to be like bacon's going in every first box. And two weeks in, I got a call from the tech guys. They're like, we have a really bad problem on our hands. I was like, what, what's going on? And they're like, we've been sending bacon to everybody. And I was like, oh my God, this is bad. And then my marketing guy was like, why don't we just tell people, sign up and get free bacon? And I was like, oh, well, we can't shut it off anyways. Let's do that.

• 32:06Alex Hormozi?

  The thing's broken.

• 32:06Speaker 01

  Yeah, it's broken. Like we can't fix it. So we're just gonna, that became, that became the offer.

• 32:11Alex Hormozi?

  I know that one and like, I knew that before even like heard or met you or heard the story from Harley and whatnot. So again, like grand slam offers, like, and, and you know, the free box of bacon, like I, I've heard of that.

• 32:23Speaker 01

  Yeah.

• 32:24Alex Hormozi?

  And so sometimes these happy mistakes were.

• 32:25Speaker 01

  Started with get bacon in your box. And then two years in, we created this bacon for life offer.

• 32:32Alex Hormozi?

  Yes.

• 32:32Speaker 01

  And that really took off.

• 32:33Alex Hormozi?

  That ripped.

• 32:34Speaker 01

  That was like, that was a ripper.

• 32:36Alex Hormozi?

  So you just one upped an already really good offer and said, not only do you get it in the first box, you'll get it in every box as long as you stay subscribed.

• 32:43Speaker 01

  As long as you stay a subscriber.

• 32:44Alex Hormozi?

  Right.

• 32:44Speaker 01

  And you know, ultimately the bacon costs $4 and the box, you know, you're making your profit off of. So it's like you're. It's not that big of a deal. Um, and

• 32:54Alex Hormozi?

  You definitely acquire customers for less than four, like the arbitrage on CAC or you know, CPA, depending on what industry you're in.

• 33:00Speaker 01

  Yeah.

• 33:00Alex Hormozi?

  Uh, cost your car customer significantly higher, but basically said differently. If you add bacon for life in your cost, your car customer drops by more than the cost of the bacon.

• 33:08Speaker 01

  Uh, more importantly, they stayed longer.

• 33:10Alex Hormozi?

  Really?

• 33:11Speaker 01

  Yeah. Oh, cause now you have your free bacon. You don't want to get rid of your free bacon.

• 33:15Alex Hormozi?

  And so they can't come back.

• 33:16Speaker 01

  Well, they, yeah. Now you can't. If you, if you, if you quit, uh, you lose your for life offers. But we have, that we've built a whole thing around these for life offers. Our, our, our top people have been with us from the beginning of like six or seven for life offers that they get every month. And they're like, why would I ever go anywhere else to buy my meat? Like I'm, I have all these for life.

• 33:36Alex Hormozi?

  Okay. Talk to me more about this, cause it's really interesting. So how can they stack multiple for life offer? Like if I'm one of the 40%, right? So I signed up on my subscription and I still have the tech malfunction. So I get free bacon every month. Okay. How am I getting these other ones?

• 33:49Speaker 01

  Well, so pretty soon after, I mean, this is several years in this was like, you know, we're fast forwarding like five or six years. We started offering like, okay, free bacon for life is kind of getting overused. Let's try ground beef for life.

• 34:03Alex Hormozi?

  Okay.

• 34:03Speaker 01

  And then people were signing up on ground beef for life. But then our customers, our current customers are like, what the hell? Like I want ground beef for life. So then we just started selling ground beef for life to our customers. So we're like, okay, for $50, we'll sell you.

• 34:19Alex Hormozi?

  One time?

• 34:19Speaker 01

  Ground, yeah, ground beef for life.

• 34:23Speaker 01

  So we just stacked all of these like offers on top of each other. Um, very few people.

• 34:28Alex Hormozi?

  So your gross margins went down on some of those people, but like they know they're just, they're just the base that just like never.

• 34:33Speaker 01

  We've gotten smarter at being like, it's for a year.

• 34:36Alex Hormozi?

  Yeah, for life.

• 34:37Speaker 01

  And it's like, we've gotten a lot smarter and you lose them if you leave and like, but um, yeah, bacon, bacon really built this. But we built this business on bacon. So, uh, the, the, there's one, one channel. Well, I'll just say, yeah. There's the influencer channel, which we'll, we can talk about. The other thing that, so it went Kickstarter arbitrage, influencer arbitrage, and then Facebook video arbitrage.

• 35:03Alex Hormozi?

  Okay, because I want to talk about, I'm guessing paid ads became the next like

• 35:06Speaker 01

  Yes, after influencer.

• 35:07Alex Hormozi?

  Yeah, so how long did you do influ, so, okay, I'm going to retrace the steps real quick. So we had Kickstarter, and then, then you officially opened the site. Kickstarter had a backlink to you so that people would go to the Kickstarter because they've got SEO and good rankings, whatever, and so then they'd find you. You started getting sales every day. You have your mess up on bacon, but you're like, you know what, screw it, let's give everybody bacon. And so the influencer strategy worked well for the Kickstarter, so you kind of doubled down on that and say, how do we get every influencer on the planet to talk about ButcherBox?

• 35:33Speaker 01

  Yes.

• 35:33Alex Hormozi?

  That was, so did you go like Instagram, Twitter, like you just went across the different channels for influencers?

• 35:38Speaker 01

  No, so what we did was we figured out that there's a company, Thrive Market. They're a big like online, Thrive had done this, had done this thing where they, they had all these influencers and they, they gave a lot of them equity in the company to like actively promote Thrive. They were like kind of the first ones to unlock influencer.

• 35:59Alex Hormozi?

  Okay.

• 36:00Speaker 01

  And so first we reached out to like everyone who mentioned Grass-fed Beef. And then we realized that there's like a lot more people in health and wellness. And so we, like Thrive Market's URL was like slash partner slash one.

• 36:15Alex Hormozi?

  Okay.

• 36:16Speaker 01

  And then slash two, slash three. And so we just like concatenated all the URLs and just like took every single person and then found their website and their contact information.

• 36:25Alex Hormozi?

  Oh, so you didn't go to Thrive, you just reverse engineered Thrive?

• 36:28Speaker 01

  We reverse engineered all their influencers, got a, got a lead list of 400 people. And then, I think you'll like this part, like, because it

• 36:36Alex Hormozi?

  I like that part.

• 36:36Speaker 01

  The offer, that's a good one. That's a good way to get your warm leads.

• 36:39Alex Hormozi?

  Well, how I got my first leads for gym launch was pay to VA to go to CrossFit's website, sorry, CrossFit, and literally look up every single affiliate, affiliate box that they had.

• 36:52Speaker 01

  Yep.

• 36:53Alex Hormozi?

  And so, because, and gym owners usually put their personal cell phone number, their personal email as their actual like thing on the, on the crossfit site, but they wanted to get listed because they're paying $3,000 a year to get the list. Of saying, I'm an official CrossFit. But for me, I got like, at the time, this is super early, you know, we had like 1,600 names on this list, but it was enough for Facebook to make a look-alike audience off of that. And that single look-alike audience is like what built GymLaunch. Like, I didn't, like, I tried to hit all these different audiences and nothing worked. And as soon as I hit the ads to that audience, it was like ding ding ding. I was like, oh, my God.

• 37:23Speaker 01

  Yeah.

• 37:23Alex Hormozi?

  This works.

• 37:24Speaker 01

  Amazing, amazing.

• 37:25Alex Hormozi?

  So you reverse engineered your list. Also, elbow grease for both of these, right? Like, you just look at the site, look at the directories and manually like paste the stuff over.

• 37:32Speaker 01

  Yeah, but again, you know, like you used a VA. I use a VA as well. I use somebody in the Philippines who for like 20 cents a record is just like, here you go. And you sleep and it's like there the next day.

• 37:43Alex Hormozi?

  Exactly.

• 37:44Speaker 01

  So the way that we reached out to these influencers, I thought was pretty genius. So we had this box, right? We're shipping a box of meat. And at the time, there was like Blue Apron and HelloFresh and all these companies. And they all.

• 37:55Alex Hormozi?

  Even, no, Blue Apron's gone, right? Or they're.

• 37:58Speaker 01

  2015, they were hot.

• 37:59Alex Hormozi?

  Yeah, I remember that, yeah.

• 38:01Speaker 01

  Blue Apron is now, was purchased by Mark Laurie, who did Jet.com. And they're trying to like make.

• 38:08Alex Hormozi?

  Fix it. And then HelloFresh was a darling a little later than that.

• 38:11Speaker 01

  Yes, and HelloFresh is still around.

• 38:13Alex Hormozi?

  They're okay. Yeah, I'm not right on that.

• 38:15Speaker 01

  So at the time, Blue Apron and HelloFresh would include a recipe in the box.

• 38:19Alex Hormozi?

  Okay.

• 38:20Speaker 01

  And our customers were like, this is really great, but I'd love a recipe.

• 38:23Alex Hormozi?

  Yeah.

• 38:24Speaker 01

  And so what we did is we reached out to these influencers and we're like, hey, we started this company on grass-fed beef because we believed in like eating grass-fed beef. And you've talked about grass-fed beef, but we didn't see a source of where to buy it. So we'd like to be that source. And by the way, we're shipping out all these boxes and we don't have any recipes. And what we'd like to do is include your recipe on, and the VA would like, you know, find Taco Bowl.

• 38:52Alex Hormozi?

  Yeah.

• 38:52Speaker 01

  Steak, whatever. And we'd love to include that in our box. And so these influencers who like trade on influencer like, of course, yeah, use my recipe, no problem. Are you gonna like link to my website and all that stuff? And we're like, yeah, yeah. They're like, by the way, what's ButcherBox? And we're like, perfect, let's talk. So that was like, that was like, we called it the Trojan horse. Because it was like, not only do you get the recipes for free, but you also get, you know, you get in contact with all these, you get them to reply to you. As soon as they replied to us, then it was like, let's talk about ButcherBox.

• 39:25Alex Hormozi?

  So I want to double click on that real quick. So if you're dealing with influencers, you have to think about the currency they care about most. And a lot of influencers care more about fame than they do about money. And so you were able to deal in the currency they preferred. So just as like for any, any businesses, like, is there a way that we can do this? That's, that's realist, that like actually provides real value to them in the way that they want to get value? Which I think is actually like a really brilliant like little nugget.

• 39:49Speaker 01

  This is 2016, so this is a long time ago. At the time, the influencers, especially in the health and wellness space, like didn't really know their value. And so we were able to go to those influencers and say, look, like, we don't have any money. We can't pay you upfront. I'm not paying you like $5,000 to send an email. What we can do is we'll pay you $10 or $15 per subscriber for every month that they remain a subscriber.

• 40:14Alex Hormozi?

  So for life?

• 40:15Speaker 01

  Yeah.

• 40:15Alex Hormozi?

  That's great. Bacon for life?

• 40:17Speaker 01

  Yeah.

• 40:17Alex Hormozi?

  Commissions for life?

• 40:18Speaker 01

  For missions, commissions for life. And people said, yes, they started, yeah, I'll do that, I'll do that. And so we figured out that, you know, tweets didn't work, Facebook posts didn't work. The thing that worked was a dedicated email blast where they would be like, here's ButcherBox, let me introduce this to you. And then ideally with a last chance, like a last chance thing. And there was always an offer, $20 off, free bacon, whatever it was. And because we're only paying these influencers $10 or $15 a month, we could do all of this and be box one profitable. Meaning we still made money because we started with a $20 profit. We still made money on that first box. Or at least it was like, we made a penny.

• 41:01Alex Hormozi?

  Is the, is the, so I want, let's talk about, now that we're here, let's talk about the box economics. So you're profitable on box one, which if we're juxtaposing this with custom made, right? I always fundamentally like, There are some business, it's basically, I think there are significantly fewer businesses that actually rely on outside capital to, to work than people, like if you want to build rockets, it's probably tough, right? Like you probably have to do that.

• 41:26Speaker 01

  Yep.

• 41:27Alex Hormozi?

  But so I see a lot of businesses that like even that, that hit me up and they're like, "Hey, you know, I'm raising capital for my insert normal business." And I'm like, "Have you considered just making money?" No, but like, right? It's just like the perspective, right? And so box when you're profitable. So walk me through like with the, the standard box, like that most people, you know, what the cost is and, and all the costs associated. I know you're really obsessed about the box.

• 41:51Speaker 01

  Yeah. So the Omaha Steaks guy who introduced us to the place in Wisconsin that we worked with.

• 41:57Alex Hormozi?

  It's massive, by the way.

• 41:58Speaker 01

  The one nugget, and yeah, he like opened the whole business. That's why I was like, I need to start now.

• 42:04Speaker 01

  The one nugget he left me with, he's like, "Listen, all we care about at Omaha Steaks is dollars per box." I was like, "What does that mean?"

• 42:11Alex Hormozi?

  Yeah.

• 42:12Speaker 01

  He means everyone at the company knows when a box comes off the line, how much money are we making off the box? And so that's how I built the business. I started the business, right? So we were charging $129. We were trying to make a $20 profit. We were only shipping from Wisconsin, which is a nightmare for California. But it was like, so we were losing money on California, but we're like, whatever. It averages out to 20.

• 42:36Alex Hormozi?

  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. Thank you.

• 42:54Speaker 01

  And it kept our focus. So like when I, and when I talk about $20 a box, I mean like all in, because we put all the costs associated with it in.

• 43:02Alex Hormozi?

  Yeah. So you like fully loaded the box in terms of costs. So it was $20 of net profit.

• 43:06Speaker 01

  Yeah.

• 43:07Alex Hormozi?

  Rather than gross profit per box. We're seeing gross profit.

• 43:10Speaker 01

  Gross profit.

• 43:11Alex Hormozi?

  Okay, got it.

• 43:12Speaker 01

  Because we, again, it was hobby business, so like it wasn't our labor, it wasn't our, so this is pick pack, so like putting all the stuff in from our distribution center into a box. The cost of the meat, the cost of the box, the cost to ship the box, the cost of the dry ice that goes in the box, the credit card processing fees, the tape that goes on the box, like all of those things. And because we just became doggedly focused on dollars per box. And what I love about this business, even to this day, is that we, we get to focus on like, you know, the minutia, like negotiating the price of tape. And the super creative, like, how are we going to get our next, you know, 500,000 customers? And we get to do both.

• 43:56Speaker 01

  But we just started with a DNA of like, we're going to negotiate every single line item in this box.

• 44:03Alex Hormozi?

  So what is the gross margin percentage per box?

• 44:06Speaker 01

  Currently or then?

• 44:07Alex Hormozi?

  Yeah, oh, both, sure.

• 44:09Speaker 01

  Like 30% is a healthy gross margin?

• 44:11Alex Hormozi?

  Okay.

• 44:12Speaker 01

  Yeah, we definitely want to be around or above 30%.

• 44:16Alex Hormozi?

  Got it.

• 44:16Speaker 01

  One of the challenges that we have as a business is that, at least currently, so we're looking at pricing model change. Currently, you pay $169 and you choose six items in the box. And so it's kind of an inflationary disaster because the prices of meat fluctuate all the time. So if you stack it with ribeyes, you're way less than a 30% gross margin. If you stack it with really cheap stuff, you're way more than a 30% gross margin. That's an area where I feel like we're in, like not in alignment with our customer. So I want to change that over time. But yeah, currently, we're looking at 30%. So.

• 44:54Alex Hormozi?

  What are net margins?

• 44:55Speaker 01

  They're like six.

• 44:56Alex Hormozi?

  Okay, got it, got it.

• 44:59Speaker 01

  We did like six and a half last year. Certainly not a content business.

• 45:03Alex Hormozi?

  Yeah, yeah, yeah. We use six and a half, what, million? Oh, yeah, percent. I was like, that is, okay. That was, that was, that's making sure. And you did.

• 45:11Speaker 01

  And the big, the big line item, so these businesses, like I've seen so many of them. Thirty percent gross margin.

• 45:18Alex Hormozi?

  Yeah.

• 45:20Speaker 01

  You got 10% to operate the place. That's salaries, technology.

• 45:24Alex Hormozi?

  So a third goes to ops of your gross margin.

• 45:26Speaker 01

  Yeah. And then you got 20% left over for marketing and EBITDA, or in profit, right? And so these businesses at scale, what they do, what you do is you market, market, market, market, market for years, build your name and then just try to collapse your marketing and take it all in.

• 45:46Alex Hormozi?

  And hopefully get enough word of mouth, you know, from, from those customers that it can at least stave off churn.

• 45:52Speaker 01

  Yeah, that's the, like, the CPG playbook.

• 45:54Alex Hormozi?

  Yeah.

• 45:55Speaker 01

  And that's what a lot of these subscription companies are doing.

• 45:57Alex Hormozi?

  It's a tough business.

• 45:58Speaker 01

  It is a tough business.

• 45:59Alex Hormozi?

  Like, it's, I mean, it's so, it's interesting because in so many ways, it's like software.

• 46:04Speaker 01

  Yep.

• 46:04Alex Hormozi?

  With the exception of like, rather than dealing with development, you're dealing with supply chain. That's your big, like, I said, like, I'm sure, I know there's more fires, but like, if I had to, if I had to simplify it into like the big buckets, most of the time, I feel like that's where, well, why don't you tell me? That's.

• 46:17Speaker 01

  Yeah, no, I, I agree. I mean, so, you know, that was the Blue Apron's whole thing. They raised a whole bunch of money and it was all like, we're, we should be valued at a software multiple.

• 46:26Alex Hormozi?

  Yeah.

• 46:27Speaker 01

  Nowadays, box subscription companies are not valued as software multiple because there's like actual physical product being sold.

• 46:34Alex Hormozi?

  And I don't think stick is as high as like a, I don't know. Well, a consumer, you know, consumer tech company like Shopify, for example, they have 60% annual retention for like new, new customers, right? I would imagine that if, if, that in the consumables business, that that would be unbelievably good.

• 46:54Speaker 01

  Yeah, yeah.

• 46:55Alex Hormozi?

  What's your retention on like a year one customer?

• 46:58Speaker 01

  Gosh, it's not how we look at it.

• 47:00Alex Hormozi?

  Okay, interesting.

• 47:01Speaker 01

  Yeah, probably around sixty percent, seventy percent.

• 47:04Alex Hormozi?

  Yeah, that's like, I mean, that's, those are like best in class numbers. I mean, there's a reason that you're doing.

• 47:08Speaker 01

  Yeah, yeah.

• 47:08Alex Hormozi?

  Is it six hundred now that you guys are doing?

• 47:10Speaker 01

  Yeah, well, it's like five fifty.

• 47:11Alex Hormozi?

  Okay.

• 47:13Speaker 01

  Yeah, the six hundred has been out there, but it's really five fifty. So, yeah, we're, you have five hundred fifty million profitable since day one.

• 47:21Alex Hormozi?

  And you own seventy percent?

• 47:22Speaker 01

  Yeah, so I, I gave equity to most employees like early on.

• 47:27Alex Hormozi?

  Like a software company?

• 47:28Speaker 01

  Yeah, like, like a venture backed one. I was like, oh, this is what you do. You give out equity, which.

• 47:34Alex Hormozi?

  Are you happy about that?

• 47:35Speaker 01

  In, in many ways, yes. Like, the people who helped me build this business, the people who helped me hack through the jungle.

• 47:41Alex Hormozi?

  Yeah.

• 47:42Speaker 01

  Are all millionaires. And, you know, that's cool. That's like really neat. But also, we have.

• 47:52Speaker 01

  It, if you don't want to raise money.

• 47:54Alex Hormozi?

  Yeah.

• 47:54Speaker 01

  Which I don't. And you don't want to go public.

• 47:57Alex Hormozi?

  Right.

• 47:57Speaker 01

  Which I don't. And you don't want to sell, which I don't. It's like, how do you cash people out?

• 48:01Alex Hormozi?

  Yeah, right.

• 48:03Speaker 01

  That has been, that is a, a concern of mine all the time. It's like, so every year, we've actually done a, we've taken profits and repurchased shares.

• 48:12Alex Hormozi?

  Got it.

• 48:13Speaker 01

  So that people have a escape valve. Yeah.

• 48:15Alex Hormozi?

  And so then you basically set the valuation every year.

• 48:17Speaker 01

  Actually, we do, yeah, we, there's a, there's a four or nine A value. Somebody comes in and does a valuation.

• 48:22Alex Hormozi?

  Yeah.

• 48:23Speaker 01

  We also have done this thing, which is, I don't know if your listeners are interested, but we, we've done this thing this year, which is a reverse Dutch auction.

• 48:30Alex Hormozi?

  Okay.

• 48:31Speaker 01

  So we are like, we're going to allocate this much money to buy shares.

• 48:34Alex Hormozi?

  Yeah.

• 48:34Speaker 01

  And then we, people can say what they're willing to sell at. And then we, we bought them that way, which is pretty interesting.

• 48:40Alex Hormozi?

  That's awesome.

• 48:41Speaker 01

  Yeah.

• 48:41Alex Hormozi?

  That's very interesting.

• 48:42Speaker 01

  Yeah, I was right. It's a really, it's, it's actually more common now. And it's a really great way to get like what the actual market value is. Because when you do a valuation, it's like not.

• 48:52Alex Hormozi?

  It's a dude who makes it up. Who knows?

• 48:53Speaker 01

  Right. So yeah, so I mean, you know, just on that point.

• 48:59Alex Hormozi?

  What did you, what was the reverse duck to auction valuation of the business?

• 49:03Speaker 01

  It was like 50% of the, what the.

• 49:07Alex Hormozi?

  498 was, what was the 498?

• 49:09Speaker 01

  They have one valuation and then they do this control premium that they take off, but the, the valuation is about a one, one for one with revenues.

• 49:17Alex Hormozi?

  Okay. So like one X. Okay. Got it.

• 49:19Speaker 01

  Uh, which is probably low, uh, who knows? I mean, it doesn't matter.

• 49:23Alex Hormozi?

  Yeah, because you're not trying to sell.

• 49:24Speaker 01

  Yeah. One for one with revenues is what people.

• 49:27Alex Hormozi?

  Yeah, I'll, I'll give $1 so that you have a trillion dollar valuation.

• 49:30Speaker 01

  Yeah, exactly.

• 49:30Alex Hormozi?

  0.000%.

• 49:32Speaker 01

  Thank you. Yeah. So, you know, the 30% that other people own is, uh, it's a hundred 50 million dollar problem.

• 49:38Alex Hormozi?

  That's, yeah.

• 49:39Speaker 01

  It's a big problem.

• 49:39Alex Hormozi?

  Yeah. Do you see this a problem?

• 49:41Speaker 01

  Uh, I, I don't. I mean, you have to get comfortable, uh, with, um, telling people to be patient.

• 49:48Alex Hormozi?

  Right.

• 49:49Speaker 01

  Right? It's like, look, uh, we're not going to spend a hundred 50 million dollars here.

• 49:53Alex Hormozi?

  No, this is super relevant for me.

• 49:54Speaker 01

  Yeah. And, uh, you know, so during COVID, COVID was, we grew the business tremendously and we almost shut off marketing. So, I mean, we just made so much profit. And then we bought all these shares and we just started buying and buying and buying. But then inflation took over. And so our inflationary disaster, like our margins just got super compressed. We went from like a 30% gross margin to a 25% gross margin. After doing two price increases.

• 50:20Alex Hormozi?

  After cheese.

• 50:21Speaker 01

  So it was like, there was no money.

• 50:22Alex Hormozi?

  Yeah.

• 50:23Speaker 01

  Um, and we never like ran out of money, but you know, we're all looking around being like, dude, we just like did a share buyback like for 20 or 30 million dollars over the past like three years. I'd really love that money right now.

• 50:35Alex Hormozi?

  Yeah, that'd be nice. So hey, can I, uh?

• 50:37Speaker 01

  Yeah.

• 50:37Alex Hormozi?

  And no Indian verse.

• 50:39Speaker 01

  Do you want some shares?

• 50:40Alex Hormozi?

  Yeah. All right. Well, did you, so with, so this is, this is a great follow up question. So do you take regular distributions from the company or have you just been like, kind of like, you took once or twice and that's like my, you know, my family set and now everything's still like.

• 50:53Speaker 01

  Me personally?

• 50:54Alex Hormozi?

  Yeah, yeah.

• 50:54Speaker 01

  Um, I take, uh, a salary.

• 50:57Alex Hormozi?

  Okay.

• 50:57Speaker 01

  Um, and a bonus. And then, um, very early on, because we started as an LLC. I owned all of the technology and employed everybody.

• 51:08Alex Hormozi?

  Okay.

• 51:08Speaker 01

  And the company bought that from me.

• 51:10Alex Hormozi?

  Got it.

• 51:10Speaker 01

  And so there's been distributions to cover that.

• 51:12Alex Hormozi?

  And you controlled both companies, so you got to pick what that was valued at?

• 51:16Speaker 01

  Uh, that had to be third party.

• 51:17Alex Hormozi?

  Oh, was it? Okay.

• 51:18Speaker 01

  Gotta be fair to the shareholders.

• 51:20Alex Hormozi?

  Oh, because it's not all you, right?

• 51:21Speaker 01

  Yeah, yeah, yeah.

• 51:22Alex Hormozi?

  Okay. So when you've been doing the buybacks, um, were you at like 50 50? And then over time, you've kind of like bought your way back to 70 30 or?

• 51:30Speaker 01

  Yeah, I think, I think, yeah, I think it was like 60 and now it's, well, originally.

• 51:36Alex Hormozi?

  Yeah.

• 51:36Speaker 01

  The, uh, the Omaha Steaks guy.

• 51:38Alex Hormozi?

  Mm hmm.

• 51:39Speaker 01

  And there was also a brand guy. They, this, my biggest mistake when I started the company was I valued the company at a stupidly low rate.

• 51:48Alex Hormozi?

  Okay.

• 51:48Speaker 01

  And so I had just raised $10 million on a $30 million valuation.

• 51:52Alex Hormozi?

  Right.

• 51:52Speaker 01

  I started this and I'm like, it's gonna be a hobby. This isn't gonna be anything. So the Omaha Steaks guy is like, I can make all these connections. I can do all this stuff and it's a $75,000 worth of work. And I'm like, well, I don't have that, so I'll give you equity. And he's like, okay, great. How much is the company worth? I was like 750 grand. So he took 10% of the company.

• 52:09Alex Hormozi?

  So he's, he's a 10% stakeholder?

• 52:11Speaker 01

  Not anymore. I bought him out. Uh, and then there was a brand guy, which was the same thing, 10% of the company. And as we got going, it was like, ah, that's like way too much.

• 52:21Alex Hormozi?

  Yeah.

• 52:22Speaker 01

  And they're not doing anything.

• 52:23Alex Hormozi?

  Right, yeah, yeah. They did one time work.

• 52:24Speaker 01

  It's like one time work, right? Uh, and so we bought them out. We bought them out when the valuation was 48 million.

• 52:31Alex Hormozi?

  Well, I'm sure they were thrilled.

• 52:32Speaker 01

  And it was, yeah, two, they got $200,000 a month for two years.

• 52:36Alex Hormozi?

  Okay.

• 52:36Speaker 01

  Um.

• 52:37Alex Hormozi?

  I'm sure you're still thrilled, you know?

• 52:38Speaker 01

  Right.

• 52:39Alex Hormozi?

  Probably more than you made at Omaha.

• 52:40Speaker 01

  Totally, yeah, way more.

• 52:41Alex Hormozi?

  One, one good phone call for him.

• 52:43Speaker 01

  Yep.

• 52:43Alex Hormozi?

  Right?

• 52:44Speaker 01

  A little bit of work.

• 52:45Alex Hormozi?

  Yeah.

• 52:47Speaker 01

  Except for life.

• 52:48Alex Hormozi?

  Man, there's so many directions I want to go, but, uh, to, to, to put a button on, on, on the story. And then I want to go back and kind of unpack some numbers and things like that. If you're not gonna IPO.

• 52:58Speaker 01

  Yep.

• 52:59Alex Hormozi?

  And you're not gonna sell the company. And the CPG playbook is that at some point you turn off the marketing. When is that?

• 53:05Speaker 01

  Yeah, um, not anytime soon.

• 53:08Alex Hormozi?

  Okay, so you just want, you want to keep going for a minute?

• 53:11Speaker 01

  Yeah, so, um.

• 53:12Alex Hormozi?

  Give a goal, like a billion a year in sales?

• 53:14Speaker 01

  I mean, a billion, I'm very goal oriented, so I do have a billion on my whiteboard, but I recognize that before that I had a million and before that I had a 10 million and then 100 million.

• 53:25Alex Hormozi?

  A billion will be enough, for sure.

• 53:27Speaker 01

  Yeah, totally. Then it'll be enough.

• 53:30Alex Hormozi?

  Yeah.

• 53:31Speaker 01

  Then I'll just lay down my arms and walk away happy.

• 53:33Alex Hormozi?

  And then you'll be happy, you know, I'm just messing around.

• 53:35Speaker 01

  Yep, exactly. I would like, I think running this to a billion in revenue would be a lot of fun. Uh, I don't know how fast that's going to be. Uh, we've definitely learned that it's, it's gotten a lot harder. Like, as you grow, you just lose more people and, you know, it's just harder.

• 53:51Alex Hormozi?

  Yeah, 1% on, how many customers do you have right now?

• 53:53Speaker 01

  Like 430,000?

• 53:55Alex Hormozi?

  Yeah, so 1% on 430,000, it's like, oh, all of a sudden that's just, you know, 4,300 customers that we just have. If we lose 1%, it's like, okay, that's a decent amount of customers. And you're like, well, if it's 10% churn annually, and you said, I think you were keeping, well, 60 of you are one or something.

• 54:10Speaker 01

  No, I mean, our churn is like 3% a month.

• 54:13Alex Hormozi?

  Right, so that's 30-ish percent or whatever.

• 54:15Speaker 01

  It means you have to sign up 12,000 people a month before you stop treading water.

• 54:20Alex Hormozi?

  Just to chill.

• 54:21Speaker 01

  Just, yeah, yeah, so it's like, it's, those numbers just get bigger.

• 54:25Alex Hormozi?

  It's 400 a day.

• 54:26Speaker 01

  Yeah, just like, they're leaving, they're leaving.

• 54:28Alex Hormozi?

  Yeah, they're leaving, yeah, they're falling out, right?

• 54:29Speaker 01

  Don't leave, people. We have a great product.

• 54:31Alex Hormozi?

  Dude, you have bacon for life. What are we talking about?

• 54:33Speaker 01

  Yeah, you're losing your for life offer.

• 54:35Alex Hormozi?

  Yeah, I really do love the, um, the lifetime, the lifetime offers.

• 54:41Speaker 01

  Yeah.

• 54:42Alex Hormozi?

  I have a book that's coming out that talks about this, this particular offer structure, so.

• 54:45Speaker 01

  Yeah.

• 54:46Alex Hormozi?

  A lot of fun.

• 54:46Speaker 01

  Yeah, lifetime offer, people getting a box of meat, um, seemed really magical. Like, I was like, wait, this is gonna show up, it's gonna be frozen, like, I don't trust it. So, uh, money back guarantee, like, no questions asked, we'll just, we'll just refund you.

• 55:00Alex Hormozi?

  Let me, let me talk to some of the fears of business owners around money back guarantees, because I talk about them a lot, too. Um, what percentage of customers do you get, uh, who ask for refunds on, like, a monthly basis?

• 55:09Speaker 01

  Oh, gosh, I don't even, like, so small, I don't even know the number.

• 55:13Alex Hormozi?

  Right, and the conversion increases certain. Worth having.

• 55:16Speaker 01

  For sure, for sure. Also, like, you know, one of our core values is being customer obsessed.

• 55:21Alex Hormozi?

  Yeah.

• 55:22Speaker 01

  Like, we actually want to deliver you an amazing product. Right? And so if we fail at that, you should get your money back.

• 55:28Alex Hormozi?

  Yeah.

• 55:29Speaker 01

  That's like, and it's like, well, I'm worried about that. Well, fix your product.

• 55:33Alex Hormozi?

  Right.

• 55:33Speaker 01

  Make your product better.

• 55:34Alex Hormozi?

  Yeah.

• 55:34Speaker 01

  Like, spend time obsessing over your product. And you'll do very well with money back.

• 55:41Alex Hormozi?

  It's like dollar per box and then also like happiness per box.

• 55:43Speaker 01

  Yeah.

• 55:44Alex Hormozi?

  On the customer side, like your delight per box.

• 55:46Speaker 01

  Totally. Yeah. I mean, it's all about your, well, the metric that is commonly used is the net promoter score. So it's all about your satisfaction with the, and we're constantly asking.

• 55:56Alex Hormozi?

  What's your NPS right now?

• 55:57Speaker 01

  It's like a sixty-three.

• 55:58Alex Hormozi?

  That's great.

• 55:59Speaker 01

  Yeah. Yeah, we're pretty happy with that. We want a perfect experience every time.

• 56:03Alex Hormozi?

  Yeah.

• 56:03Speaker 01

  And when you're shipping multiple species, you know, you had twelve to fifteen.

• 56:09Alex Hormozi?

  Do you eat fish now?

• 56:10Speaker 01

  Yeah, we do seafood.

• 56:11Alex Hormozi?

  How did that, how did you get, was that just a whole nother, had to find another supplier?

• 56:15Speaker 01

  Yeah, I mean, we don't use any of that. So basically, we got going, we'll go all the way back. We got going, we're shipping out boxes, we're making twenty dollars a box, the influencer thing is working. We get to about six thousand subscribers.

• 56:28Alex Hormozi?

  Oh, go ahead.

• 56:29Speaker 01

  And it was clear to me that we had no idea what we were doing. It was like, okay, we've been faking it. That's great, but like, we need somebody who knows how to buy.

• 56:38Alex Hormozi?

  An adult.

• 56:38Speaker 01

  We need an adult right there. And so again, I went to LinkedIn, usually while on the toilet. And I reached out to this guy who lived in Boston and ran meat and seafood at one of these big grocery chains. But he had retired. And so I was like, interesting background, let's talk.

• 57:00Alex Hormozi?

  Yeah.

• 57:00Speaker 01

  Pulled him out of retirement and he came and started purchasing.

• 57:04Alex Hormozi?

  Yeah.

• 57:05Speaker 01

  Meat and seafood for us. Meat and then seafood.

• 57:07Alex Hormozi?

  Yeah.

• 57:07Speaker 01

  And I mean, the saving, my whole thing was, okay, we're shipping 60,000 pounds of meat. I've got, all I have to believe is that somebody can save me like 25 cents a pound? And this is like worth it, right? So he came in and just, he's like, you guys are paying, this is like second day, he's like, you guys are paying enough in chicken breasts that you could send people three pounds instead of one pound? Do you want me to do that? And I'm like, yeah.

• 57:33Alex Hormozi?

  That'd be great.

• 57:34Speaker 01

  That'd be good.

• 57:34Alex Hormozi?

  Yeah, 25 cents was the target and he was like, I can give you a buck and a half.

• 57:37Speaker 01

  Yeah, I mean, multiples of his, of his salary back. And, you know, I think it's really important to, that you hire experts in certain areas at the right time, but in certain areas.

• 57:48Alex Hormozi?

  I want to, so I want to, I want to hit on, on the meta part of this, which is like, all right, like the big, the big turning points, because I like, I like, like, what are those, those inflection points in the business? So it's like, all right, you switch from raising money to pre-selling. That's probably, I feel like that's like setting yourself up on the right path. Okay, so that was number one. Number two is you realize this influencer thing has some legs to it. And then you go hardcore on getting influencers. You also reverse engineer somebody else's database, which I highly recommend if you're trying to reach out to people, to find the high, like, I call them HVTs, but high value targets. Like, how do we, how do we find the HVTs and then, and then grab them? Okay, so you do that. You have a happy accident with free bacon that ends up being a core component of the offer.

• 58:31Alex Hormozi?

  And then later, you turn on the lifetime version of that. And then you do that across, kind of horizontally across the box. You obsess about gross margin per box or whatever your unit economics are of the business. You got super dot on that and just want to make every single, every single penny count. Because, you know, you're on the same side of the table figuratively as the customer. You got experts in, at the right times, the branding person up front, the Omaha Steaks guy, later the meat purchasing guy, that all came in at key points to like unlock, you know, levels of profitability and growth. What's, what are some of the other ones that, that, that might have been skipped over in the?

• 59:06Speaker 01

  Jeez, man, that's good. Just like boil it down in a good way.

• 59:11Speaker 01

  I think working like so our backbone today, we still don't own our backbone. So distribution, we don't do, we don't own our own farms, we don't own our.

• 59:20Alex Hormozi?

  Do you want to?

• 59:21Speaker 01

  No.

• 59:21Alex Hormozi?

  Okay.

• 59:22Speaker 01

  Because we believe that it's better to work with partners. It's kind of like the Toyota approach, work with partners. Hold them, hold their feet to the fire, hold them to a tight spec. Have them do things they're not doing for anyone else, but trust that they know better than me. Like, I don't know anything about farming. I don't know anything about slaughterhouses. Like, that's a bad place for me to spend my time. The only piece of our entire backbone that we control is dry ice. We have two dry ice plants. And that's because if you don't have dry ice, you can't ship a box.

• 59:54Alex Hormozi?

  Yeah.

• 59:54Speaker 01

  And so we were like, we should, it's like a great insurance policy.

• 59:57Alex Hormozi?

  Yeah.

• 59:58Speaker 01

  Everything else.

• 59:58Alex Hormozi?

  Because if you lose that, revenue goes to zero.

• 1:00:00Speaker 01

  Yeah.

• 1:00:00Alex Hormozi?

  Right.

• 1:00:01Speaker 01

  Everything else is like not, I don't think it's worth us taking. And so, and I think that's like one common mistake in box subscription companies, in overfunded companies, and just with entrepreneurs in general.

• 1:00:13Alex Hormozi?

  Vertically integrate, bro.

• 1:00:14Speaker 01

  Yeah, you need to, you need to like own everything. You need to control all of it. And that has been a huge, it's actually been a huge part of our success.

• 1:00:23Alex Hormozi?

  Well, then let's, so, because I'm sure you've had partnerships that didn't go well.

• 1:00:27Speaker 01

  Yep.

• 1:00:28Alex Hormozi?

  And you've obviously been really good at building these relationships. So to the greatest degree possible, do you have any kind of test for how you judge a partner's ability to fulfill on their promises before you've started working with them? Because obviously, you know, you're bringing a huge amount of business. There's a significant risk that you take on by having a partner do something bad. There's obviously with food, there's huge liabilities of a whole, you know, a whole state has rotten meat. It's like, I mean, it's a, it's more of a PR nightmare. It took Chipotle years to, to live down the salmonella issue that they had as a micro example.

• 1:01:02Speaker 01

  Yeah, so I mean, on the on the meat side, we do robust safety audits and you like, we're not working with you unless we've done a whole bunch of audits. On the other partner side, we're generally trying to work with the best best people, like best in class.

• 1:01:18Alex Hormozi?

  So you just look at an industry and say, okay, we want to find, okay, so of all the different farms in the US that are grass fed, who's the biggest and the best? And you just try and do a deal with them?

• 1:01:27Speaker 01

  Yeah, I mean, you're you try to balance like helping small farmers, right? And working with big farmers because a small farmer might have 50 head and we might need like 100,000 head, right? So we can't work with 2,000 small farmers. We work with you, we generally work with collectives that would then work with the farmers. So we're working with that collective saying, this is what we want. This is our spec. This is how we want it raised. And then they go and find the farmers. And again, it's like, we don't want to be on the ground. You know, I love meeting with farmers and doing all that, but like, that can't be what we do.

• 1:02:05Alex Hormozi?

  Inspecting hoes is probably not here.

• 1:02:06Speaker 01

  So it's like really important to know what you're good at and what you're not good at. And anything that you're not good at, including picking up the phone 1,100 times, like just don't do it. Try to get someone else to do it because you can't, I don't think you can build a business unless you're feeling that flow and you're feeling like really engaged and that can only be done in the the work that you're really good at.

• 1:02:25Alex Hormozi?

  You've been really good at picking those people, though. So like, what's your, obviously, there's the reputation of the company, right? But like, also, you're really good at picking like the Omaha Steaks guy and the branding guy that you picked out and even Nick, who did those first, you know, 1,100 calls, like, it's it's an uncanny trait, like you've been really good at it. Just I'm just like, listening to the story, I have, you haven't mentioned, I'm sure there were some horror stories, but like, it seems like you've had a huge amount of success. And I feel like if I had had a different entrepreneur in the chair, I would have, I could, I could totally hear the total other side of the story. I went to a couple of partners early. What I learned is you got to control everything. If you want, you know, like, I've, you'd be like, I've heard that side. And so you're obviously better at picking partners than most people. So like, what do you think about in trying to isolate like?

• 1:03:11Alex Hormozi?

  This person will work.

• 1:03:12Speaker 01

  I mean, so early on, when you're talking about your first employees, I have this analogy, I think I stole it from someone, but like, building a company is like hacking through the jungle with machetes. And so you're just like, you're just dropped in the middle of the jungle, you have a machete, you're like, I don't know where we're going. At that point, you need people who are just gonna hack day and night with you, like, and it's grit. So I'm looking for athletes, I'm looking for people who have failed at something, I'm looking for people with a chip on their shoulder, you know, daddy issues, all of that, because I've got all that, so like, you know, I want to, you know.

• 1:03:47Alex Hormozi?

  All great men do.

• 1:03:50Speaker 01

  I, that's the type of person I want. And then as you grow, you realize that like, okay, we need some experience here, and how do we get experience? One thing, this doesn't totally answer your question, but one thing that we did that was like, I think, pretty, I thought was pretty smart, is, I call it the barbell strategy. We hired people like out of retirement. Because they were so far along in their career. And we found that the middle, like, so really young and really old, worked incredibly well.

• 1:04:19Alex Hormozi?

  I would say personally, I've had a lot of experience with that, too.

• 1:04:22Speaker 01

  Yeah, and the middle is like, they're super busy, they've got kids, they've got all these commitments, they want this to be like the one mark on their career.

• 1:04:28Alex Hormozi?

  Yeah, the one career, the careerists, rather than people who want to do the work, which is different.

• 1:04:33Speaker 01

  Hunger.

• 1:04:33Alex Hormozi?

  Yeah. It's interesting, because the people at the very beginning want to work all the time because they want to learn a lot. The people at the end want to work because they have nothing else to do, and they want to, in some ways, like, have their experience be used, like, they want to be useful.

• 1:04:46Speaker 01

  Legacy.

• 1:04:47Alex Hormozi?

  Right, and that, both of those are actually concentrated on the work itself, rather than the label ascribed to the work.

• 1:04:52Speaker 01

  Totally.

• 1:04:52Alex Hormozi?

  And everyone, a lot of times, people in the middle are, it's like, you're three years on my resume, and I want to, you know, just leverage this brand name.

• 1:04:59Speaker 01

  I need to go from director to VP, and then I need this, and I need this, and, and yeah, we just found that people on the ends were just like, so grateful, and, and so like, my meat guy.

• 1:05:09Alex Hormozi?

  Title obsession.

• 1:05:10Speaker 01

  Yeah.

• 1:05:11Alex Hormozi?

  Yeah, I hate it.

• 1:05:12Speaker 01

  My meat guy, I just remember this dinner I was at, and it's like, my meat guy and Blue Aprons meat guy was there. And Blue Aprons meat guy is like 32 years old, in like skinny jeans and a nice vest. And my meat guy is this like grizzled, like 65 year old, it's like, who do you think is buying chicken for cheaper?

• 1:05:29Alex Hormozi?

  Yeah. Like my guy looks like me.

• 1:05:32Speaker 01

  Yeah, yeah, yeah. Like, yeah, I mean, so I don't really like, I don't really know what's happened here. Like, I like to say like the the business wanted to be something way bigger than I expected.

• 1:05:43Alex Hormozi?

  Interesting.

• 1:05:43Speaker 01

  And I just honor that as like, some of these people just kind of fell into my lap.

• 1:05:48Alex Hormozi?

  Yeah.

• 1:05:48Speaker 01

  Um, but I definitely, my first company, I I knew people were off culture and I hired them anyway.

• 1:05:55Alex Hormozi?

  Yeah.

• 1:05:55Speaker 01

  And this time around, we wrote down our core values and we're like, okay, this is what we're, this is what we're hiring for. One of our core values is relentless improvement.

• 1:06:04Alex Hormozi?

  Uh huh.

• 1:06:05Speaker 01

  And to your question about partners, um, any partner you work with, there's gonna be problems.

• 1:06:11Alex Hormozi?

  Sure.

• 1:06:12Speaker 01

  And we're just not afraid to talk about them. We do quarterly business reviews. We're like, you know, auditing, we're doing a whole bunch of stuff and telling you what you're doing wrong so you can fix it. Cause most partners don't wanna like just.

• 1:06:24Alex Hormozi?

  They wanna fire the relationship or not not talk to you. It's like, no, let's just keep getting.

• 1:06:27Speaker 01

  Yeah, like, let's just get better. Like, we wanna lock arms with you and get you better. And so we're also, because we're trying to build a long term thing, like, we're just locking arms with partners and trying to just move forward with them.

• 1:06:38Alex Hormozi?

  Talk to me, so given the the growth rate that you had, so it was like, was it, it was like five million was the first, like, or second year, I think, of business, right?

• 1:06:46Speaker 01

  Yeah, so we started in September twenty fifteen and we did like two hundred in the Kickstarter. We did like five hundred grand.

• 1:06:53Alex Hormozi?

  Yeah.

• 1:06:53Speaker 01

  And then we did five million.

• 1:06:54Alex Hormozi?

  Yeah.

• 1:06:54Speaker 01

  And then thirty three million, and then a hundred five million, two twenty, then covid hit, we went to four fifty.

• 1:07:01Alex Hormozi?

  Yeah. And then you had what, like five hun- and then five hundred ish the next year?

• 1:07:04Speaker 01

  Four fifty, five fifty, five fifty, five seventy.

• 1:07:08Alex Hormozi?

  Yeah.

• 1:07:09Speaker 01

  And then last, uh, two years ago, so twenty twenty three, we went down for the first year.

• 1:07:13Alex Hormozi?

  Okay.

• 1:07:14Speaker 01

  Which was pretty heartbreaking for a team that, you know, prides themselves on growth.

• 1:07:18Alex Hormozi?

  So talk to me, so yeah.

• 1:07:19Speaker 01

  And then last year, we started growing again.

• 1:07:21Alex Hormozi?

  Okay.

• 1:07:21Speaker 01

  That's good.

• 1:07:22Alex Hormozi?

  So I have two follow ups. So first one is, talk to me about rush. Like, what's your, because like you grew really fast.

• 1:07:28Speaker 01

  Yep.

• 1:07:28Alex Hormozi?

  And then you were essentially flat for like basically four years.

• 1:07:32Speaker 01

  Yeah.

• 1:07:33Alex Hormozi?

  How does your perspective on where you wanna take the company affect how you run the company? With regards to growth's rate?

• 1:07:40Speaker 01

  Yeah.

• 1:07:41Alex Hormozi?

  And like rush around goals?

• 1:07:42Speaker 01

  Yeah.

• 1:07:43Alex Hormozi?

  I like talking about rush a lot because I think it's where all mistakes happen. And you grew really fast without the intention of growing really fast.

• 1:07:48Speaker 01

  Yeah.

• 1:07:49Alex Hormozi?

  Which I find. Has happened to me multiple times.

• 1:07:53Speaker 01

  Yeah, you know, I think that we so we grew, obviously, we grew incredibly quickly.

• 1:08:02Speaker 01

  The biggest mistake that we made, the biggest rush that we made was we

• 1:08:11Speaker 01

  the wheels kind of felt like they were falling off the bus at like 450. And we decided to bring in a whole bunch of people to help like fix the wheels. We need bodies, we need bodies and we need managers. We need people in the middle.

• 1:08:27Alex Hormozi?

  The middle, right, yeah. What was headcount, just so I have context, what was headcount at that at like?

• 1:08:33Speaker 01

  I mean, going into COVID, we were 85 people.

• 1:08:36Alex Hormozi?

  So doing 200 going into COVID with a headcount of 80.

• 1:08:40Speaker 01

  Yeah.

• 1:08:40Alex Hormozi?

  That's great.

• 1:08:41Speaker 01

  And then coming like end of 21, we were at like two, like one, maybe one, 160. And then we got to a height of 240.

• 1:08:53Alex Hormozi?

  Yeah.

• 1:08:54Speaker 01

  With designs on, you know, we're going to be like 300 people.

• 1:08:57Alex Hormozi?

  Yeah.

• 1:08:57Speaker 01

  And now I'm like, you know what, like 150 sounds really good.

• 1:09:02Speaker 01

  So, um, yeah, we currently have, we have 25 associates in our dry as facility and then like 170 people outside of that. And so the rush was we hired a lot of people and what, what happens to companies? And apparently I've learned now that this is a classic 500 million dollar shop. So you can add a book to your, your thing later. The 500 million dollar trap is something bad happens, you hire a bunch of people because you don't know enough. And everyone starts saying, no.

• 1:09:30Alex Hormozi?

  Yeah.

• 1:09:31Speaker 01

  And you go from capital E entrepreneurship, like a bunch of pirates, like very little process. We're just going and growing and like to like, oh, we need, we need process, like we need capital P process. And entrepreneurship needs to come way down here. And that's what happened.

• 1:09:47Alex Hormozi?

  You guys are a bunch of kids.

• 1:09:49Speaker 01

  You're a bunch of kids like you, Mike, are like, you know, have all these ideas and like, we need to corral you.

• 1:09:56Speaker 01

  And that's what happened. And at the meantime, I broke my arm, like my, like everything in my life kind of fell apart at the same time. And it was, it was a slog. And I'm, I'm really proud, like last year we grew like 6%. And I'm like, fuck yeah, like we'll take it.

• 1:10:11Alex Hormozi?

  Yeah.

• 1:10:13Speaker 01

  And, you know, so sometime along the journey, um, I went from like, this is a hobby to I'm gonna just flip this thing. Like, let me build this up and sell it for a hundred million dollars. And I went on a couple of meetings and I was like, it just doesn't feel right.

• 1:10:30Alex Hormozi?

  Interesting.

• 1:10:30Speaker 01

  And then I just, it just kind of, over time, came to me of, um, the meat industry is broken.

• 1:10:37Alex Hormozi?

  Yeah.

• 1:10:37Speaker 01

  Uh, animals are not being treated well in this country and that's like hurting the health of like people who are eating it. And it's like, I just wish there was a company that like, wasn't funded, had no one breathing down their neck, who could just take the, play the long ball.

• 1:10:52Alex Hormozi?

  Yeah.

• 1:10:53Speaker 01

  And just like, this might take 25 years, it might take a hundred years, but who cares? Like, we're in it for the long haul. And then after a while, it was like, after pointing on everyone else who should be doing that, it's like, oh, maybe that's me.

• 1:11:04Alex Hormozi?

  Yeah.

• 1:11:04Speaker 01

  Um, and so I have no idea if this is what's gonna happen, but the, the plan is to build a multi-generational, long-term hold. Um, if you look at food companies in the US, many of them are family-controlled, multi-generational, long-term holds. Um, and so that's kind of like, that's how I've built since the past few years.

• 1:11:26Alex Hormozi?

  Yeah.

• 1:11:26Speaker 01

  Uh, while reinserting myself and becoming a, becoming a pirate organization again.

• 1:11:32Alex Hormozi?

  Does it feel better?

• 1:11:33Speaker 01

  Yes. Yeah. I mean, we, um, we did a lot of work in the middle layer, like a lot of directors, a lot of, yeah.

• 1:11:42Speaker 01

  At our, at our height, we had 230 people and, um, 85 managers.

• 1:11:48Alex Hormozi?

  Yeah.

• 1:11:49Speaker 01

  So like, the average person had like, one person underneath them. I just equated to, um, like, the restaurant worker where the receipt comes out and they grab it and they're like, where's the chicken parm?

• 1:12:00Alex Hormozi?

  Yeah, yeah.

• 1:12:01Speaker 01

  On their phone, like, chicken parm, you know, it's like, dude, what do you do all day?

• 1:12:04Alex Hormozi?

  Yeah.

• 1:12:05Speaker 01

  Um, and so we've done a lot of work in, in like, re-tasking people and just making sure that people are in the right seats.

• 1:12:11Alex Hormozi?

  Doing things.

• 1:12:12Speaker 01

  Doing things. And, uh, it, it feels much better. We're moving much quicker, we're growing, we're, yeah.

• 1:12:18Alex Hormozi?

  So you're losing 12,000 customers a month?

• 1:12:21Speaker 01

  Yeah, something like that, yeah.

• 1:12:23Alex Hormozi?

  Do you have any idea what the split is of new customers per month in terms of where the sources of customers come from? And is there a, an acquisition channel that you have not mentioned so far that has, that majorly contributes to that?

• 1:12:38Speaker 01

  Yeah, so right now we're we're heavily on referral and heavily on meta. Those are like the two areas.

• 1:12:46Alex Hormozi?

  Ads and referrals.

• 1:12:47Speaker 01

  Ads and referrals.

• 1:12:49Alex Hormozi?

  What's the split?

• 1:12:50Speaker 01

  Uh, we're like thirty percent referral.

• 1:12:53Alex Hormozi?

  Okay.

• 1:12:54Speaker 01

  Uh, and then I don't know what meta is because it's, you know, there's also organic and Google and whatnot. Uh, let's say thirty percent meta and then twenty percent organic.

• 1:13:05Alex Hormozi?

  Yeah.

• 1:13:05Speaker 01

  Affiliate, all the other.

• 1:13:07Alex Hormozi?

  Yeah, influencers or ten or whatever it is.

• 1:13:08Speaker 01

  Yeah.

• 1:13:10Speaker 01

  Referral's been really interesting. Uh, we now, if you're a member, you can, uh, refer a friend for a trial box and it costs twenty dollars. Um, and we've just seen that work really well.

• 1:13:21Alex Hormozi?

  Does the refer, what does the referrer get?

• 1:13:23Speaker 01

  Uh, nothing.

• 1:13:24Alex Hormozi?

  Okay.

• 1:13:25Speaker 01

  Yeah, uh, we tried a whole bunch of different things that you get fifty dollars, you get this, you get that. What they, what they like the most is giving their friends a box that's almost free. They just pay for shipping and handling.

• 1:13:34Alex Hormozi?

  Oh, so like a free plus shipping, basically. So it's like boxes free, it's twenty dollars for shipping and handling kind of thing?

• 1:13:39Speaker 01

  Exactly.

• 1:13:39Alex Hormozi?

  Interesting. So that's another offer.

• 1:13:41Speaker 01

  Yep, and, uh, that's worked really well. Like the, you obviously get a lot of people who just take, get one box. They're like, sweet, free meat, and then they cancel. But, um, you know, executed well, you see a lot of people stay and then they just become great customers. And if, if you, yeah, if you like, a referred customer is a better customer. Um, and so we've really leaned into that as a program.

• 1:14:02Alex Hormozi?

  Cause it compounds at scale, which is why it's so great.

• 1:14:04Speaker 01

  Yeah, exactly. Yeah, we've shipped a box to one point seven million, one point seven five million households in this country. Um, and so at a certain point, you're like, how do we inspire those people to do the sales on our behalf? Rather than us trying to like, you know, retarget people on meta. Yeah.

• 1:14:23Alex Hormozi?

  So, um, there's, there's two, two things that I wanted to get into. So one is the. Ad strategy. And second is, if I'm not mistaken, you guys did a media play, correct? Recently?

• 1:14:35Speaker 01

  Yep.

• 1:14:35Alex Hormozi?

  Yeah, I want to talk about that.

• 1:14:36Speaker 01

  Okay.

• 1:14:36Alex Hormozi?

  I think that's really cool. So let's do media play first.

• 1:14:39Speaker 01

  Okay.

• 1:14:39Alex Hormozi?

  Yeah.

• 1:14:40Speaker 01

  Yeah, we bought a company called Truffle Shuffle. Uh, it's these two, two guys, uh, one's actually in Vegas. We're gonna see him tonight for dinner. Um, and they, they raised money on Shark Tank. And during COVID, they decided that they were gonna sell truffles direct to consumer. These little mushrooms that are hard to get. And then, once they started selling truffles, they realized that no one knows how to cook them. Um, and so they started doing these instructional videos.

• 1:15:02Alex Hormozi?

  Yeah, you have my DiGiorno and I'm just putting my truffle on top.

• 1:15:05Speaker 01

  Exactly. People are like, how do I, what do I do with this?

• 1:15:07Alex Hormozi?

  Yeah.

• 1:15:08Speaker 01

  Uh, and that took off. And this is like COVID, uh, where, um,

• 1:15:12Alex Hormozi?

  Everybody's at home trying to rest.

• 1:15:14Speaker 01

  Everyone's at home. All these corporations are trying to like, treat their staff well and give them stuff and whatnot. So, so they, they ran a pretty interesting business for a while. Great content, thousands of classes where they're teaching people how to cook and inspiring people. Live. Interesting. Uh, also recorded, but live.

• 1:15:31Alex Hormozi?

  Yeah.

• 1:15:31Speaker 01

  Um, and they just like, that they're experts at hosting a live class to cook.

• 1:15:39Alex Hormozi?

  Yeah. It's virtual.

• 1:15:41Speaker 01

  Virtual.

• 1:15:42Alex Hormozi?

  Yeah.

• 1:15:42Speaker 01

  Our biggest challenge as a company, if you look at our churn, the people who are leaving, our biggest challenge as a company is how do I inspire you to take the meat out of your freezer?

• 1:15:52Alex Hormozi?

  Yeah, they put it in there and then they're like, oh, I've got two months worth. Like, I don't need any.

• 1:15:55Speaker 01

  Right. And people think of their freezer as like a savings account rather than a like, so when you say what's for dinner, you open your fridge.

• 1:16:01Alex Hormozi?

  Yeah.

• 1:16:01Speaker 01

  And look inside, or you look on your phone and order something. So how are we gonna like, inspire you? Well, one way to do that is if we do cooking classes.

• 1:16:09Alex Hormozi?

  Hmm.

• 1:16:10Speaker 01

  So we, um, you know, really liked the founders, Jason and Tyler, and just, uh, decided that it was a good fit. We got it for, you know, like, a good price. And, uh, we ended up ingesting them. And so now we're doing cooking classes for our members. We're doing.

• 1:16:26Alex Hormozi?

  And that's included in the subscription?

• 1:16:27Speaker 01

  Yeah, including the subscription.

• 1:16:29Alex Hormozi?

  Do you do, so how much of it is public and like, available for people who are not buyers?

• 1:16:34Speaker 01

  We're trying to figure that out.

• 1:16:35Alex Hormozi?

  Okay.

• 1:16:36Speaker 01

  Um.

• 1:16:36Alex Hormozi?

  Cause I'm so like.

• 1:16:38Speaker 01

  Yeah.

• 1:16:39Alex Hormozi?

  Yeah, I don't know how big of a media company in terms of like, you know, impressions they do, but like, like, is my whole, my, my whole, my whole business model around content is just demonstration, right? It's just like show, don't sell. Yeah. And then the selling will occur. Yeah. And so like, whenever you have the opportunity, in my opinion, that's the, that's the most elegant, you know, way of, of selling. Yes. Um, and so like, these, you know, high-end chefs having these really engaged, the high-end, you know, I mean, obviously. They are. Relatable. Yeah, they're high-end. Yeah. Um, I, cause on one level, there's the retention piece, but I have this theory around the idea that this is, this, I don't have a double-blind placebo test here, but this is Alex's opinion. I think that you retain customers that pay for a subscription with free content.

• 1:17:24Alex Hormozi?

  That's available for everyone for a couple of reasons. Number one, a lot of people don't log into stuff. It's just like, you're not like, oh, I'm gonna go log in, what's my password? And then it's already, you're already like gone, it doesn't, it's not gonna happen. So the reason that I have like all my courses on my site are all free and also available with no login is for that purpose. And it's certainly been a significantly better thing than me trying to hide it behind even an opt-in wall, uh, just to collect people's emails. You can watch them and then at the halfway point or whatever, it just says, hey, you can opt in if you want. You can also not opt in and keep watching the video. Yeah. Um, and it's been exceptional for lead generation. And, um, so the thing one is that, uh, I don't think a lot of, I think the utilization is not as high as I would like it to be.

• 1:18:10Alex Hormozi?

  Even when you make these really high-end things. The second is that it certainly doesn't drive, I think that you will drive more, not you, but like one, anybody will, can drive more sales with making the media available to everyone. It also makes it more shareable. And I think that spins the referral machine, you get the media machine from platforms. And then that will drive top of funnel sales and awareness. And I think that maybe you, you put a handful of them behind a paywall if you want to, as a, as a membership benefit. I'd be curious to know if, cause if we're thinking about like, how do we solve the problem, sorry, this is me like, thinking of like, like, how do we solve the problem of? The customers I have bank too much meat and don't cook it because they're not inspired enough to cook.

• 1:18:52Alex Hormozi?

  So it's like, okay, so we want, we're trying to maximize on consumption in two ways. Consumption of meat, but consumption of meat cooking so that it leads to consumption of meat. Right. And so if you were to pre-educate, right, where people watch some show about some truffle meat dish and then purchase, they're purchasing with intention to make a specific dish. And I think it's almost like it, it like colors them a different type of customer because their consumption experience was pre-framed with recipes versus I'm going to buy meat because this is good quality meat and it's a good deal and I'm getting free bacon. Just, this is me just, I'm totally spitballing here, but like that was, that was, that was when Harley told me that you bought that media

• 1:19:36Alex Hormozi?

  business, that was immediately where I guessed or where, where I thought you were going, I was like, that's, that's brilliant.

• 1:19:42Speaker 01

  Yeah, good. Well.

• 1:19:44Alex Hormozi?

  Push as much of that as humanly possible out, incorporate the product into everything. Way more eyeballs come in, existing customers still attribute the benefit of their subscription to the show because they're still going to consume the meat.

• 1:19:58Speaker 01

  Right.

• 1:19:59Alex Hormozi?

  And so you still get the, the positive brand association, even if it's free for other people.

• 1:20:05Speaker 01

  Right.

• 1:20:05Alex Hormozi?

  And that was something that actually like I, I stumbled upon that. So, because I've, I've had media businesses, right? And there's always this big fear in anything media related, especially if you have memberships and things behind paywalls that what if I give away too much for free that I upset my paid customers? But I, in, in my experience, it hasn't been the case at all. One, because basically no one logs into anything. It's big, you know, big thing, you know, big point number one. But secondarily, that I think the human brain has a very hard time attributing whether the content they watched was behind a paywall or not behind a paywall.

• 1:20:45Alex Hormozi?

  I think we zoom out and say, has Butcher Box provided $129 of value to me this month? And you think about the one meal that you cooked, whether from a recipe that you found, whether it was your recipe that was behind a paywall and not behind a paywall, or just that they saw on a cooking show and used your meat. Right. That wasn't even associated with the, um, the truffle hustle. Is that what it was?

• 1:21:06Speaker 01

  Truffle shuffle.

• 1:21:07Alex Hormozi?

  Truffle shuffle. Yeah.

• 1:21:07Speaker 01

  Yeah.

• 1:21:09Alex Hormozi?

  And so anyways, that's that's my.

• 1:21:11Speaker 01

  That's genius.

• 1:21:12Alex Hormozi?

  Two cents.

• 1:21:13Speaker 01

  Yeah, that's more than two cents probably. That was probably worth more than two cents. I'll come back in a couple of years and we'll, you know, I'll have crossed off the billion. Still won't be enough, but yeah, I mean, that's, um, that that's the beauty of owning content is pushing it out more, doing more with it, serving our member. But I think that gives me a lot to think about in terms of like, how are we pushing it to non-members? Cause we've, we've definitely been careful. We've been like, well, this should be a benefit for our members.

• 1:21:41Alex Hormozi?

  Yeah. I would just, I'd be curious, cause I think that, cause there would be, because the math problem, right? Is is solvable of, does the increase in conversion and retention on members with this added benefit, which I'm sure you've measured, like now that we added in the box, has it measurably reduced churn? Or has it measurably increased conversion rate on the page, whatever? Versus the amount of new customers that come in with first, second, third touchpoint via content.

• 1:22:08Speaker 01

  Yeah.

• 1:22:08Alex Hormozi?

  And it, my bet would be that you would, this is my bet, obviously. I don't, I don't know. But my bet would be that it'd be more on the, on the top end. And then from the ads, ads perspective, cause I know you run a ton of advertising, I'm sure. It's like, I feel like that kind of content, taking them, cause if, if you have it public, then you can let the algorithm tell you which pieces are the, the fire, fire pieces of content, of the cooking, and then push that out as top of funnel awareness ads. You know, retarget people who are at, you know, do 50%, 75%, whatever it is. With now your conversion stuff, but they have positive brand sentiment because like, now they're like, they're in, they're in the market. You know what I mean? They just consumed this. They're literally, they were watched enough to be inspired. They were inspired enough to watch. And so now we just want to see if they're inspired enough to buy.

• 1:22:54Speaker 01

  Love it. Love it. Yeah, there's a, there's a book called How Brands Market. And what they've, what they found was they put up all these ads, like billboards and stuff, trying to get new customers, but they found that it actually drove more repeat orders.

• 1:23:09Speaker 01

  And so that's similar, like if we, if we put out content to the.

• 1:23:12Alex Hormozi?

  They'll be reminded to eat.

• 1:23:13Speaker 01

  Yeah.

• 1:23:13Alex Hormozi?

  They're meat.

• 1:23:14Speaker 01

  That's right.

• 1:23:15Alex Hormozi?

  Right. I think it's brilliant and I think that like, I'm really excited to see what you do with it. How long ago was the acquisition?

• 1:23:20Speaker 01

  Uh, we bought it in June of last year.

• 1:23:23Alex Hormozi?

  Okay, so it's really, it's still pretty recent, yeah.

• 1:23:25Speaker 01

  Uh, we just launched a spice line with them. We've done a bunch of, uh, social content. But yeah, I think, um, you know, making more of it public would probably be a good thing.

• 1:23:35Alex Hormozi?

  Um, and so, uh, the, the, the last piece was the ad strategy for Facebook. So what do you, what's been your thinking process for generating probably the amount of creative? I'm assuming, I mean, you've got a pro, I mean, yeah, you probably have to put out 50 pieces a day.

• 1:23:47Speaker 01

  Yeah.

• 1:23:47Alex Hormozi?

  To maintain that kind of, and you probably have gotten, uh, a crash course on running ads if you're the CEO of this business.

• 1:23:53Speaker 01

  Yeah. Um, so we've, we've gone all sorts of different ways. Uh, we have, um, had ad agencies work on our stuff. Um, so buyer ads and, you know, update and whatnot. We've done in, in-house. We've gone back and forth. Uh, we're currently outsourced on our ad buying.

• 1:24:09Alex Hormozi?

  Interesting. So outsourced media buyers, who does the creative?

• 1:24:12Speaker 01

  Uh, they do as well.

• 1:24:13Alex Hormozi?

  They do the creative too?

• 1:24:14Speaker 01

  We do, we do some, we give them guidelines, but there you do it. The reason why was we weren't moving fast enough. Um, so it has become, as you said, yeah, it's become a game of, it's like an arms race. You gotta like be changing your creative all the time. You got, and we, um, we noticed that there were multiple, multiple, multiple meetings to like, talk about and obsess about all these things. It's like we, this, this isn't going to work. We can't do this. So we, you know, we've made a hard pivot. Um, I imagine at some point we'll come, we'll be like, okay, we're paying way too much. We need to like do it in-house, but the speed.

• 1:24:48Alex Hormozi?

  Do they charge percentage of Aspen?

• 1:24:50Speaker 01

  Yeah, they do. Yeah. But so when you're spending a lot, that's a lot of money.

• 1:24:53Alex Hormozi?

  Yeah. And that's baked into CAC.

• 1:24:57Speaker 01

  That's baked into the CAC, yeah. Yeah.

• 1:25:00Alex Hormozi?

  Have you, you've, have you done multiple different agencies over time or has it?

• 1:25:03Speaker 01

  We have. I mean, there's certain agencies that work well at a smaller size and certain ones that work at a bigger size. Uh, we have, we haven't been able to grow with like one agency.

• 1:25:12Alex Hormozi?

  Okay. You've had multiple.

• 1:25:15Speaker 01

  Yeah, at different, like different times.

• 1:25:16Alex Hormozi?

  Okay.

• 1:25:17Speaker 01

  Where we've.

• 1:25:18Alex Hormozi?

  We have one right now. It's not like you have four running for you.

• 1:25:21Speaker 01

  Yeah.

• 1:25:21Alex Hormozi?

  Got it. Okay. Cause I had a buddy who had a really big company and he had four different agencies working at the same time. And he was like, yeah, the world's big. All, I need all of them just fully focused. And I was like, are you worried about like?

• 1:25:33Speaker 01

  Crossover.

• 1:25:34Alex Hormozi?

  Well, yeah, and that was the kind of the response was just like, well, there's 300 million Americans.

• 1:25:39Speaker 01

  Yeah, there's a lot of Americans out.

• 1:25:41Alex Hormozi?

  I'm not giving them, no one's getting any other access besides like pixel traffic. And so they can make their own look alikes off of whatever they think is gonna, gonna convert. And if there is some overlap, there's probably overlap with 10 other thousand companies that are also advertising. And so it's more, because I think the deficit, like the, the constraint is more the creative power. And mental, and a mental bandwidth and attention and skill than, um, than really anything else. And so like what, like one team, and you probably know this from the, from, from the companies, or at least you've experienced this, so I have. There's this law, I can't remember what it is, Tom Billy talked about it, but he, basically the square root of every company does 50% of the value creation. So it's like, if you have 100 employees, 10 people do 50% of the value creation.

• 1:26:24Alex Hormozi?

  And I, like, I thought about it, I was like, that sounds about right. Um, in terms of like, where's the, the contribution towards revenue and all that kind of stuff. And so when you think about that from, from the, from the, the agency owner perspective, it's like, I'm getting these four really good people from this agency on my stuff. But I also want the four really good people from this company and the four really good people from this company. So anyway, it was just like a, interesting, because you had, you've had one agency that runs all of it. They're doing, I can't believe they're doing, they're doing really everything. So how, like, they're going out to farms.

• 1:26:52Speaker 01

  We do some stuff internally as well.

• 1:26:53Alex Hormozi?

  But they're going to, like, so they're like going to farms and capturing stuff.

• 1:26:57Speaker 01

  No, we have all that B-roll.

• 1:26:58Alex Hormozi?

  Okay, so you have B-roll, okay.

• 1:26:59Speaker 01

  We have all that. Um, so they're not, they're not really taking any, they're not going all the way shooting. We have all that content. Um, and, uh, yeah, I mean, I think, um, yeah, Facebook has been a wild place for the past few years. It's like, either working really well or not working at all. We've also had more competitors come into our space. Uh, HelloFresh launched a company, um, that is like.

• 1:27:24Alex Hormozi?

  Hello Meat?

• 1:27:25Speaker 01

  Uh, Hello Meat, yeah.

• 1:27:26Alex Hormozi?

  Is it really?

• 1:27:26Speaker 01

  No.

• 1:27:26Alex Hormozi?

  I was, I was like, I was like, I don't know, I guess.

• 1:27:29Speaker 01

  I don't even want to mention their name.

• 1:27:30Alex Hormozi?

  Okay, no, no free press.

• 1:27:31Speaker 01

  Yeah, no free press for them. Um, but, you know, everyone's copying us.

• 1:27:36Alex Hormozi?

  Yeah.

• 1:27:36Speaker 01

  Everyone's advertising against us, which I think is a good thing, but it's like, here's why we're better than ButcherBox, you know? And it's, it's, uh, it's a different world. You know, I think there's been a lot of conversation about this on Twitter recently around like, Facebook is great for retargeting. Somebody comes to your website. Great. Top of the funnel, little bit harder. Top of the funnel, meaning like you're exposing your brand to new eyeballs. That's where I think, you know, in order to grow from, to just continue the growth, what do we have to do? We have to have 12,000 to 15,000 people a month, like at least. We just need a lot more top of the funnel awareness. And one of the challenges I've had is driving top of the funnel awareness has been really hard.

• 1:28:21Alex Hormozi?

  It makes sense for the media acquisition. That's why I heard that. I was like brilliant.

• 1:28:24Speaker 01

  Yeah, yeah. So we've, we've done other things, like we've, we've tried to do a lot of like brand top of the funnel stuff that has not worked. I'm hopeful on the media thing, but really we're trying to like get the word out about what we're doing. We're trying to change the industry. But the, yeah, Facebook has been, I mean, you could see it in our numbers. We were like grow, grow, grow, grow, grow. And then there was the iOS change in 2021. It's just like, and then inflation.

• 1:28:51Alex Hormozi?

  Yeah.

• 1:28:52Speaker 01

  Yeah.

• 1:28:53Alex Hormozi?

  Business is easy.

• 1:28:54Speaker 01

  Yeah, super easy, super easy.

• 1:28:56Alex Hormozi?

  Everyone should do it.

• 1:28:57Speaker 01

  Yeah. Yeah. I mean, I think that like focusing on the fundamentals is so important for people. Like you broke down the business into like these moments and fundamentals along the way. And, you know, yeah, business is hard. It can be really challenging. But if you just focus on the things that matter and know the things that matter, it can be a lot easier.

• 1:29:18Alex Hormozi?

  And I think, oh, a big, this is me just saying from outside perspective, I think a big part of the success has also been that like you haven't had a mental option for pulling the ripcord, you know? And so when problems come, it's like, well, I'm not going anywhere. So you just kind of take it one bite at a time, you know? And I think that when you, when it's almost like in a marriage, if you like, if divorce is an option in your mind, then maybe you don't feel like having the conversation. It's like you're like, you know what? Screw this, right? But if it's just never an option and you're just like, I'm in, right? Under that hypothetical guise or premise, then it's like, that's the, that's the premise that you approach all the problems within the business is like, well, I either

• 1:30:01Alex Hormozi?

  die or we keep going. So we keep going. I'm still alive. Therefore, we will solve these problems one at a time.

• 1:30:08Speaker 01

  Yeah.

• 1:30:09Alex Hormozi?

  Yeah, it is really interesting with the top of funnel component. I feel like, I feel like the content is the ultimate, is the ultimate top of funnel because it's the You can harness the algorithm finding all those people because it'll serve your meat stuff to the people who really want meat. And you don't have to figure out what the perfect look like audiences like they'll do that. And then, then you have this massive retargeting audience where you can spend the amount of money you're spending now, but it's all warm traffic because you're getting a billion impressions a month on, on all this, all this content being pumped out, which I think is so cool. I think it's, I think it was just a brilliant acquisition. Thank you. So yeah, I think I can say on behalf of all the entrepreneurs who listen to the

• 1:30:50Alex Hormozi?

  game, thank you so much for sharing the story of ButcherBox, ButcherBox to a Billy and beyond. But thanks so much, man. Yeah, thank you. Appreciate it. Thank you. Hello.