Breaking Growth Bottlenecks in Real Businesses | Ep 894

In this live Q&A episode, Alex (@AlexHormozi) unpacks the “seven deadly growth sins” he sees holding back entrepreneurs. From serving too many avatars to staying underpriced, from chasing new businesses to over-expanding too early, Alex shows how avoiding decisions keeps founders stuck in limbo. 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. Wanna scale your business? Click here. 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.

• 0:01Alex Hormozi?

  If you can make the decision, fail, and then go back and do the other path in less time than it would take you to gather the data for the right path, then you make a failure in judgment by not deciding. And I think that's a very key point.

• 0:19Speaker 01

  Please welcome to the stage the author of the $100 million series and host of the game, Mr. Alex Formozzi.

• 0:32Alex Hormozi?

  How was this morning? Good? Okay, awesome. Yeah, we split this up into theoretical frameworks, day one, and then we do very tactical day two. And the reason for that was, well, we thought about it. But the big reason was mostly like, if you're going to have the opportunity to talk to the team, team's not bad, right? Yeah, they're pretty good. I think in some ways, one of the biggest belief breakers that I get a lot of feedback on is, you know, in a traditional service-based business, it's usually the founder and then everyone else is just like multiple orders of magnitude worse than them. And then we're like, yeah, my team will take care of you. Everyone's like, great, like, super exciting. And then you just cancel immediately. That's why most service businesses don't scale.

• 1:13Alex Hormozi?

  And hopefully, in meeting the team, you got to have a better understanding of like, why acquisition.com does the revenue it does, has the size companies we have. It's because we have very competent people and they're not cheap, to be really candid with you. And so I bring this up because I remember when I had my first private equity deal or was in that process, there was this moment where I was sitting at this long table. There's a managing partner at the end of the other side, half a billion dollar fund. They had their team and then there was my team on this side. And so this really stark contrast visually. And, you know, I was doing the math on what he was going to make on the fund, which is somewhere in the neighborhood of like 200 million, 300 million personally, over five years at a super efficient tax rate, all liquid. And then I was looking at my team and it became incredibly apparent to me

• 1:58Alex Hormozi?

  why he was going to make so much more money than I was. And so it was a very drawing example for me. And I thought, man, whatever I do next, I want to make sure that I have people like this around me. And so that's partially why you got to meet the team. That you did. But also, if you have the context in terms of how we excel your value in a business from day one, then when you do have the opportunity to ask the questions you're going to ask, ideally, or hopefully, you should ask the ones that will generate the most impact in the business. And so I'll give you an example of this. I had a gentleman a few months back who came in and he said, hey, can you go over the closer framework? And so he was one of the questions. And I said, okay, well, what's your close rate right now? He said, 40%. And I was like, okay. So you got excited about this, booked this in your calendar,

• 2:41Alex Hormozi?

  waited for the day, took time off from the business, flew out here, stayed at the hotel, did the full day one. And then you have your opportunity to get a question asked. And the one thing that you choose to ask about is something that is in no way going to change your business. 40% is not your constraint, man. He was like, I just love sales. And I was like, yeah, obviously. He already knew the closer framework. And so I, I bring it up because oftentimes the things that we love are rarely the things the business needs. And so a lot of times the business is almost like the inverse of the need. Like your constraint will typically be not the thing that you are good at. And what's interesting is that we typically think it's the thing we're good at because the business excels in the beginning because of that thing that we are good at. And so if you're really good at product, really good at team,

• 3:24Alex Hormozi?

  then you'll be like, I need to do more of this stuff. It's like, dude, your marketing blows. But on the other side, you've got the really heavy promoters who are like, man, what's the next ad traffic hack? Or new content viral trend, whatever. But the route is the product sucks. And so the business is never going to compound. They never get sufficient LTV. And so they cannot spend anyone. They think it's going to be another trick to lower, lower CAC or lower, lower lead costs. The route is just the product sucks, right? And usually we have to chase the hard thing. And so I'll explain what I mean by that. If there's no hard part about the business you're in, that sucks. And so what happens is that we will often waste our time trying to solve easier problems rather than the one problem that if you just solve that, the rest of your problems would go away.

• 4:10Alex Hormozi?

  I mean, and fundamentally, this is what the theory of constraints is really about is that, you know, there's a lot of tiny hacks that you can do to improve conversion rate, improve ads, et cetera. But there's usually A big problem that you need to put most of your resources towards solving. And if you do that, then you get to crush everybody. The way that I like to frame this, though, is I remember there was a business I was working with that had had a lot of revenue, but they had no enterprise value. So it's just like a cash flow machine, but not it was all one time transactions, et cetera. And wanted to switch towards a SaaS model. And so a SaaS model for that business, if they were able to keep the same revenue levels with like good SaaS metrics in terms of retention, would have added somewhere in there, a bit of like 200 or 400 million in enterprise value to the business. So a lot of money.

• 4:55Alex Hormozi?

  And so I was talking to the founder and he's like, dude, this is just so hard. And I remember saying, well, that's why they pay you $400 million for solving it. Right. And so I bring this up because like sometimes some of the problems that you have, I have to frame them. And like, there's just a big pot of gold that's gigantic on the other side of this problem, which tends to just motivate me a little bit more, or at least, you know, it works for me. So with that being said, I've had the distinct pleasure of being able to talk to a lot of businesses over the last couple of years since we started doing this January of last year. And what's really interesting is you start to, you know, patterns start to emerge. And there are basically seven, kind of call it deadly sins that I have noticed as common themes for entrepreneurs. And what's very difficult about them is that they are typically

• 5:38Alex Hormozi?

  a choice between two apparently hard things, one that's hard today, one that's hard forever. And most times the entrepreneurs will stay stuck until they make this decision. Because decisions will slow you down more than anything else, because you can stop doing it. You can basically wait to make them forever. And a lot of you guys have unmade decisions right now. I'll explain these seven kind of growth sins are kind of decision impasses. And my hope is that you guys probably have some notes from today and yesterday. Yes. Okay. Pages and pages of notes. If you go home and try to do all of those things, then I will have failed you. Because that is not how you will get ahead. You're going to get on, you know, get in your car, get in your Uber, get in your hotel room, get on the plane, whatever, and you're going to have an open piece of paper next to you at some point,

• 6:22Alex Hormozi?

  hopefully, and you say, okay, I've got eight pages of notes. What am I actually going to do? Right? And hopefully on that next piece of paper, you only have one to three things. And those one to three things are the things that will get you the highest return for the effort and money and time that you allocate towards it. And so fundamentally, strategy is making sure you pick the right things. And the reason that we've been able to disproportionately grow our companies and what we've done is because we've been pretty good at picking those things. And so like, if you're like, what is strategy? I think it's a big amorphous word, but basically it just means really good decisions around where we put our shit. So we get more back. With that said, let me walk through the issues that most people struggle with. Number one is avatar. I've got two different types of customers. I got residential, I got commercial, I've got poor people, I got rich people, I've got whatever, right?

• 7:06Alex Hormozi?

  You have your two, two or three different avatars that you might serve. And you're like, well, avatar one is 40% of my business. I prefer avatar two, but if I get rid of avatar one, I won't be able to pay my bills. But if I keep serving avatar one, I'm never be able to get the operating leverage in order to actually expand this thing. And I'll stay stuck forever. Most of the time, you just have to make the call and it's going to suck. And it means that your ego is going to go down for a little bit because your revenue is not going to be what it was. And so whatever scoreboard or whoever you report to that somehow has like hold over your ego about whether you're making progress or not, I would encourage you to delete it. Because you will just stay stuck for a very long time. So if you have a clear avatar that you think you are better at serving, then serve that avatar. The next is data. This was the most recent that I've added to this list, which really just comes down to,

• 7:48Alex Hormozi?

  I have this very important decision and I would be able to make this decision if I just had the information to make the decision, but I don't have the information, which then means, okay, what resources are required to make, to gather that information? Why? I don't have the resources because I'm scow scatterbrained, which means that fundamentally, you need to stop doing everything else and just focus on putting the resources in place or processes in place or technology in place or all three in order to capture the data so that you can make an informed decision. There's also the opposite way of doing this, which is you just make the fucking call. Without the data, because you can't have perfect data at all times. Because sometimes the opportunity disappears by the time you do have all the information required to make the decision. If you can make the decision, fail, and then go back and do the other path in less time than

• 8:32Alex Hormozi?

  it would take you to gather the data for the right path, then you make a failure in judgment by not deciding. And I think that's a very key point. The next one is focus, which is just, hey, I've got a yoga studio. I also have a chocolate factory. I'm really trying to have a platform, all in one, one stop shop for, you know, whatever. I'm sure that you have a great reason for why you have that second business or that third business. It's just not good enough. Like, if you were that good, you would just make the one business bigger. It's better to have one $2 million business than two $1 million businesses for a variety of reasons. But the most basic is your competitors who are beating you are only focused on one, and that's why they're beating you. The next is over expansion.

• 9:14Alex Hormozi?

  And this is an interesting one, because there's no like line in the sand that says, oh, you have over expanded. But the reality is that you're under talented. You have insufficient talent on the team, and as a result, you got ahead of your skis. You have one location, it was working well, and then you say, cool, we'll open up our second location. I'll take my best guy from here, put him there so they can stand this one up. They'll backfill themselves, and all of a sudden, revenue from this location drops. This location doesn't go up as high as the first one. Now you have the same revenue you did before, but now you have twice the overhead, and you're like, oh, I think the solution here, since this is now baseline, is to open a third location. People do that a lot. Some of you are nodding your heads. And so what do you do in one of these situations, right? Well, I can't, if I shut down the location, I've got a lease, I put build out in, but I can't afford to bring someone else on, because I just dropped my profit in order

• 9:58Alex Hormozi?

  to do this, and I used up my savings. What's the call? Right? And it's almost always going to be, I stay here forever, or I do something very hard. And I would encourage you to lean into that very hard decision, because it's the thing that's going to get you out of it faster. It'll just be more painful. So it's like, you take your 10 years of waffling pain, and you compress it into six to 12 months. And it's very easy to say, it's the pain for six to 12 months before you've jumped into it. But then you're six months in, and you're like, this fucking sucks. And then you're still six months to go. Right? So I just got out of a season like that. So ironically, the launch is like not like painful for me. It's work, but it's not painful. I went through a very hard season at the beginning of this year, just because we had to headbutt our way through. But otherwise, it's like, what else are you gonna do?

• 10:39Alex Hormozi?

  Just sit in it. So over expansion. The next one is compensation. So rock and hard place here. If you, you know, I'm, I'm paying my people too much. Sometimes it's too little. A too little situation is, hey, I've got a plumbing company and phone's ringing off the hook, but I can't even service all the business because there's so few technicians that are good. I say, what are your margins? Person says my margins are, you know, decent. I say, great. What do you pay your technicians? They say market rate. And I'm like, what are we talking about here? Pay them better, get more guys, increase revenue. Like, like what's the, what's the decision? On the other side, I've got a, you know, physical therapy clinic and I were at full, you know, full capacity. All the beds are full all day long. Everyone's happy, except I don't make any money. Okay. Why? Well, I give my therapist 50% of revenue.

• 11:24Alex Hormozi?

  All right. Are they like doing their own marketing costs on sales, like, you know, fronting the, the cost of the bed and the materials? Oh no, I do all of that. I just give them 50% of the revenue. It's like, well, yeah, I mean, that would make sense. Well, you make no money. That makes sense. And so, but what do I do? Do I change their comp and then lose my team? Or do I just not make money forever and run a nonprofit? It's funny because the majority of businesses in the U.S. do not make money, over half. Either lose money or break even every year. So this is not a small problem. This is a big problem. Profit is unnatural. It's not a normally occurring thing. You have to force it and you have to keep the line because people will spend your money. Happily. And so having that kind of discipline is difficult. It's a discipline. Profit is a discipline. I'm proud to say, actually, I have not had an unprofitable year since I've been in business. Kind of neat. Thank you.

• 12:09Alex Hormozi?

  So compensation. So what do you do? Right? Next one is underpriced, which I would estimate just from my conversations with y'all here, probably about half of you are underpriced. About half. Same situation as the therapist, but let's imagine that they're compensating appropriately. You're still, everything's passive. Everyone's happy, blah, blah, blah. Well, now if I raise my prices, I'll lose all my customers. You won't. You won't. You'll lose some and then you replace them with better ones and you'll make more money. And then finally, you've got a single product, which this happens more in like e-commerce and sometimes the digital, which is, you know, you see a creator or somebody who's got a big following, who has one product that they sell. They're able to do so profitably, but they're not making that much money. And their margins are compressing every year as they add staff or they try to do advertising. And it feels like this vicious cycle, so they're not sure what to do.

• 12:54Alex Hormozi?

  The reality is that they're selling hundreds of units a month of whatever the thing is, but we're not just like calling those people up. We're reaching out to them in another way to just sell them something else. And so if instead of thinking of those as customers, you think about them as highly qualified leads, then all of a sudden, kind of the business model changes in your head. You're like, oh, this is just offset CAC so that I can then sell my main thing. And it's just the business is missing the main thing. You really just have a lead generation machine that doesn't, that just makes a little bit of money rather than honestly, the makings and the foundation of a monster, which is a great problem to have, but some people don't recognize that they have a monster by the tail. So with that being said, I will try and point to what problem I think it is as we go, as we go through these and let's rock and roll. Oh, also, I try not to answer their questions. Try not to talk to you. I try to talk through you to everybody else in terms of how I'm thinking about it.

• 13:38Alex Hormozi?

  So when I'm answering the question, I'll half answer your question and half kind of address everybody else. Cool. It's rock and roll. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Leila and I spent probably an entire quarter putting together our scaling roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30 ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at

• 14:22Alex Hormozi?

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

• 14:40Speaker 02

  Hey Alex, big fan from the gym launch days. My name is Amir. I don't know if you heard, owner of medical practice. We're kind of closing in on 3 million revenue.

• 14:49Alex Hormozi?

  Correct.

• 14:49Speaker 02

  We'd like to grow. Throw down my question. What's the most overlooked operational system that adds the most leverage in scaling a service-based medical business like HRT? And if you could only hire one person to help implement that system, who would it be and what would their role look like?

• 15:06Alex Hormozi?

  It's a very targeted question. I think it'll depend on the business. Right now, are you local or are you? Yeah, are you local or are you national?

• 15:13Speaker 02

  Just local.

• 15:14Alex Hormozi?

  You're local. Okay, so people come in person?

• 15:15Speaker 02

  Yes.

• 15:16Alex Hormozi?

  Okay, got it. What's your primary lead source?

• 15:18Speaker 02

  Meta.

• 15:19Alex Hormozi?

  Meta, so ads?

• 15:20Speaker 02

  Yeah, ads and revenue, uh, sorry, referrals.

• 15:22Alex Hormozi?

  Sure, what's the split?

• 15:24Speaker 02

  Probably 30, 60, referrals 30, 60, meta.

• 15:28Alex Hormozi?

  Okay, heard. What's CAC, what's LTV?

• 15:30Speaker 02

  LTV would be probably 4K, I would say.

• 15:35Alex Hormozi?

  That's LTV?

• 15:36Speaker 02

  Yeah.

• 15:36Alex Hormozi?

  What's CAC? What do you spend for a, on, per month on ads? How many new customers do you have?

• 15:40Speaker 02

  We spend about 25K.

• 15:44Alex Hormozi?

  Per month?

• 15:44Speaker 02

  Yeah.

• 15:45Alex Hormozi?

  Okay. And? AdWords?

• 15:47Speaker 02

  Excuse me?

• 15:47Alex Hormozi?

  AdWords or Meta?

• 15:48Speaker 02

  Both.

• 15:49Alex Hormozi?

  Both, okay.

• 15:50Speaker 02

  Yeah. And we get, probably out of that, we get roughly around 150 new patients.

• 15:58Alex Hormozi?

  Okay, so like 225-ish per, per patient-ish. Okay, so you're making like 20-ish to one. That's not bad. Okay, so 20-ish to one and I'm guessing margins are good?

• 16:09Speaker 02

  Yeah.

• 16:10Alex Hormozi?

  Great. From a capacity standpoint, do you have more square footage that you can service more customers with?

• 16:14Speaker 02

  Yes, we have more square.

• 16:15Alex Hormozi?

  How many, how many more customers can you take right now per month? Sales velocity wise?

• 16:19Speaker 02

  100, 200.

• 16:20Alex Hormozi?

  Okay, so you can double?

• 16:21Speaker 02

  Yeah.

• 16:21Alex Hormozi?

  Right now? Okay. So then what breaks when you double?

• 16:26Speaker 02

  Nothing breaks.

• 16:27Alex Hormozi?

  Well, then why don't you double? No, to answer your question, so like the thing that breaks first is going to be the operating constraint. And so then what stops you from doubling? Can you spend twice as much money?

• 16:37Speaker 02

  Yeah.

• 16:38Alex Hormozi?

  So why don't we spend twice as much money? We should do that. That sounds good. So if you had twice as many people, would they all be able to be serviced?

• 16:45Speaker 02

  Yeah.

• 16:45Alex Hormozi?

  I love this for us. I don't really know what the issue is. Are you doing this right now month over month?

• 16:51Speaker 02

  No, we're kind of stagnant.

• 16:52Alex Hormozi?

  So then why, why?

• 16:53Speaker 02

  Yeah, that's what, that's why I'm here.

• 16:55Alex Hormozi?

  So why don't we spend more money? Just because it's like you got to a mental barrier of a thousand bucks a day and you're like, I don't want to spend more than a thousand a day.

• 17:00Speaker 02

  I mean, I think my personal observation or thinking was that we should be more efficient with the money we're spending. Like I was thinking like, okay, our conversion rate is.

• 17:10Alex Hormozi?

  Twenty to one should be like forty to one.

• 17:13Speaker 02

  Maybe.

• 17:13Alex Hormozi?

  I mean, you can always get more efficient. I wouldn't say it's the limit of the business. Like if we're just zooming, zooming out, the only thing that's really gonna matter long term is that you keep people forever. That's the only thing that matters. What are your long-term goals?

• 17:25Speaker 02

  Long-term goals?

• 17:26Alex Hormozi?

  Yeah.

• 17:27Speaker 02

  Ideally, I mean, we would like to grow, expand, you know, nationwide if possible.

• 17:33Alex Hormozi?

  Would you expand to multiple locations locally first?

• 17:35Speaker 02

  Yeah.

• 17:36Alex Hormozi?

  Okay.

• 17:37Speaker 02

  We have two right now.

• 17:38Alex Hormozi?

  Okay. So if you could have four or five in your local market, you'd be fine with that?

• 17:43Speaker 02

  Yeah.

• 17:44Alex Hormozi?

  Okay. Yeah. The way, I mean, the way to do this is that you, you basically want to reverse engineer forever stick. Now, HRT is a product that tends to keep people pretty long time because it's hard to get off. Right? They might switch you, switch providers, but once you're on, you kind of stay on. So as long as you're, what's your churn? Do you know?

• 18:01Speaker 02

  Right now, probably forty.

• 18:03Alex Hormozi?

  Forty percent annually?

• 18:06Speaker 02

  Yeah.

• 18:07Alex Hormozi?

  Forty percent annually? So you keep sixty percent of your customers every year?

• 18:11Speaker 02

  Maybe less. Maybe we keep like fifty percent.

• 18:15Alex Hormozi?

  Okay. So fifty percent leave, fifty percent stay. All right. So that would be something that I would be looking at. So yeah, if I were to solve this in order, I hear where you're coming from, from like, because you're local, you need to make sure that you don't just burn through your reputation, which you might be at fifty percent of your customers leaving every year, especially on a product that's typically as sticky as that. I mean, that's if you come from the gym world. Did you go through gym launch?

• 18:35Speaker 02

  Yeah.

• 18:36Alex Hormozi?

  Yeah. So you learned how to market and sell. You just didn't learn how to product. Yeah. So I think you, I think your instincts are right. I think we have to fix churn and we have to fix the sales motion. Part of it is going to be how the expectations are being set on both the marketing and the sales call and the offers that are, that are top of funnel and kind of the handshake between kind of step one, two and three. And what are the, what are the kind of the key activation points and the conversations that have to be? So if you did have a lot of profit, I would probably grab someone from from the software world and customer success to build out the customer success like pathway for you so that you can fix the churn issue. So to your point, I hear where you're saying we're like, yeah, we could spend more, but you'd be churning out of people. So I think your your instinct's right there. Fix the hole in the back. And then number one, if you just do that, the business will probably double.

• 19:19Alex Hormozi?

  Like if you can cut your churn from call it 50% per year to 20% per year or less, then the business will just double on its own in two and a half years. You just did nothing. You just kept everything the same. But the thing is disproportionately that'll drop the bottom line. So your profit would significantly more than double by doing that. I'll give you guys a fun example. So We Whitening is a teeth whitening chain that we own. And when we invest in the business, doubled LTV or rather double lifetime revenue per customer, which sounds like a small thing. But by doing that, we 2.4xed revenue and we seven and a half xed profit per location. That's why I bought the company. I was like, oh, I can crush this. And so I say that as a good incentive for you in terms of making it worth it.

• 20:00Alex Hormozi?

  Like you might be able to double or triple or maybe quadruple the profit of the business by simply keeping going from churn being half people leaving to only 20 or maybe 10% leaving every year. If you do that, the thing will just grow like crazy and you'll just feel good about it. So your the who to solve that problem is there is a customer success person and then mapping the journey. And there's probably a little bit of tech stack that you need to automate a good deal of it so that you don't have as much operational drag.

• 20:23Speaker 02

  Awesome. Thank you so much.

• 20:24Alex Hormozi?

  You bet. Thanks.

• 20:26Speaker 03

  How's it going, Alex? Good to meet you. I'm Austin. I sell medical student coaching.

• 20:30Alex Hormozi?

  A lot of medical. Okay. All right.

• 20:32Speaker 03

  To medical students, of course.

• 20:34Alex Hormozi?

  Yeah.

• 20:34Speaker 03

  For five years straight, the exact same stats.

• 20:37Alex Hormozi?

  Yeah.

• 20:37Speaker 03

  Zero upward trajectory, mostly due to time constraints. I just finished up with my vascular surgery training two, three weeks ago. So now I'm able to contribute more time to the business.

• 20:46Alex Hormozi?

  You're a doctor?

• 20:47Speaker 03

  Yes, sir.

• 20:48Alex Hormozi?

  But you don't practice medicine?

• 20:49Speaker 03

  I haven't started yet.

• 20:51Alex Hormozi?

  And you're like, wow, I could just start surgurizing or I could keep doing this thing that I make the same amount as surgurizing.

• 20:57Speaker 03

  Exactly.

• 20:58Alex Hormozi?

  Cool.

• 20:59Speaker 03

  Which I'm supposed to start in a month, which is a whole nother conversation.

• 21:02Alex Hormozi?

  What are you gonna do? Depends how this conversation goes.

• 21:07Speaker 03

  That was initially gonna be my first question and then I decided against it and here we are.

• 21:11Alex Hormozi?

  Yeah, you're good.

• 21:13Speaker 03

  I figured I knew what you're gonna say for that one.

• 21:15Alex Hormozi?

  Yeah, what am I gonna say?

• 21:16Speaker 03

  There's a much higher ceiling for the company, which I've been working on essentially an hour per day for the last five years. And doing what I will make for a hundred hours a week for the upcoming pursuit.

• 21:27Alex Hormozi?

  Well, you have a focus issue.

• 21:29Speaker 03

  Yes.

• 21:31Speaker 03

  Put a star by that one.

• 21:31Alex Hormozi?

  I'll explain what I mean though. I mean, like you basically have two businesses. One is you being a doctor. The other is you teaching how to get into med school. Right. Or do well in med school. Okay, so I mean, you probably know what I'm going to say.

• 21:43Speaker 03

  Yes.

• 21:43Alex Hormozi?

  Imagine if you worked more than one hour a day. Imagine the possibilities.

• 21:50Speaker 03

  Absolutely. So I tried to, I'm gonna try and.

• 21:52Alex Hormozi?

  One hour is so nothing. It's insane. Like I like an hour is like my rounding error for, I don't even know. It's like for the, I don't even, it's absurd.

• 22:01Speaker 03

  It feels like a lot when you're already burning the candle at both ends, but I know there's definitely more potential. So my actual question is, throughout this last two days, I figured out how to fix the supply constraint, which was myself, my own time for the coaching for the medical.

• 22:16Alex Hormozi?

  You mean the one hour? Yeah.

• 22:19Speaker 03

  So the next issue inherently is gonna be.

• 22:21Alex Hormozi?

  So you know how you're gonna 5X this business? You're gonna from one hour to five hours a day.

• 22:26Alex Hormozi?

  Start at five, be done by noon. You're already a retired doctor. Just act like, you know?

• 22:32Speaker 03

  Something like that. So the next issue is gonna inherently gonna be a supply issue. So.

• 22:37Alex Hormozi?

  Maybe. You mean demand?

• 22:39Speaker 03

  Oh, sorry. Uh, demand issue. Yes, sir. So content's not an issue. I personally have created over 20,000 pieces in the last five years.

• 22:47Alex Hormozi?

  Yeah.

• 22:47Speaker 03

  Put it out on all platforms.

• 22:48Alex Hormozi?

  How many units do you sell a month?

• 22:50Speaker 03

  Generally between five and 10.

• 22:51Alex Hormozi?

  And how, which price point?

• 22:52Speaker 03

  9,000 is our most common price point, which we're gonna, another thing I learned is we're gonna ax our lower ticket stuff, which was cannibalizing our mid to high ticket. So 9K is what we've sold 80% of our revenue for the last five years.

• 23:04Alex Hormozi?

  How many leads a month do you get?

• 23:05Speaker 03

  Good leads, maybe, I wanna say 15 to 20.

• 23:09Alex Hormozi?

  Really? That seems absurdly low. Are YouTube, Instagram, where are you?

• 23:14Speaker 03

  YouTube, Instagram, Twitter. Facebook.

• 23:17Alex Hormozi?

  Seems crazy.

• 23:18Speaker 03

  We have a ton of friction in the sales funnel, which another thing.

• 23:21Alex Hormozi?

  Yeah, like my bet was going to be your sales motions fucked up.

• 23:24Speaker 03

  Yeah.

• 23:25Alex Hormozi?

  Probably.

• 23:26Speaker 03

  If they get on the sales call, if they make it to that point, if I take the call, it's an 80% close rate. My sales guy is around 30 to 35. So the friction was built.

• 23:35Alex Hormozi?

  You're probably sitting on like a three or four or five million dollar business right now if you change nothing. I mean, assuming you work.

• 23:41Speaker 03

  Yeah. That's not a problem for sure.

• 23:44Alex Hormozi?

  Yeah.

• 23:45Speaker 03

  So to increase the amount of leads that we get, one of the biggest problems that we've ran into is getting overseas leads. We put all of our targeting for our ads to be United States specific, other countries, just due to the conversion rate.

• 23:58Alex Hormozi?

  Well, you're doing content. So what percentage is coming from ads versus content or like organically versus paid?

• 24:03Speaker 03

  About 50% of our leads are from direct outreach from our VA. And then about 25 and 25 from ads versus organic.

• 24:12Alex Hormozi?

  You mean organic, they don't, they just go through the funnel and stumble their way through the gauntlet.

• 24:18Alex Hormozi?

  Yeah, I can't dive into it right now, but I'm, I can, I can almost guarantee you that you have a sales motion issue. So if I were to fix this, I would probably, my goal would be, I would want to break your business. By selling so many people that you would feel so panicked and have like crushing anxiety. That you would then be forced to not be the doctor thing because you'd be like, holy shit, I just made like three times or four times my monthly revenue this month. Which means I have a chance at making more than I do as a surgeon and you can always go back to being a surgeon. So like that's, it's like, it doesn't, you don't unsurgeon, right? So.

• 24:55Speaker 03

  Sure.

• 24:56Alex Hormozi?

  Yeah. So you can always just go back if you really want to.

• 24:59Speaker 03

  So tactically, you think, should I hire more DM setters? Should I crank the ad spend to get to that point where the leads are overwhelming me and I have that crushing anxiety to?

• 25:08Alex Hormozi?

  Honestly, we have to, I don't know if like the team manager needs to look at everything, but like we have to, I'd have to look at the product. Like it's going to be more tactical. It's going to be like, what's the lead magnet? How are we qualifying leads? What is, what's the motion that they're going through? Like, what's the agenda for the call? How are we nurturing the product of the call? Like, if we just fix those pieces, like there's probably a double or triple sitting there. And then my goal is that you're like, holy shit, what will I do? And then we'd have to look at the model because it's probably super, actually you might not be that inefficient. You're working 17 minutes a day. So let's still look at the delivery part. But yeah, I'd probably just want to like crank demand because if you can, if we, if you, would you be comfortable working six hours a day? I'd be comfortable working 20. Okay, cool. Well, you can't do that. That's what I did the last five years. Let's settle, let's settle at, uh, let's settle at 10, right? Let's just go crazy, you know, 10x, bro.

• 25:51Alex Hormozi?

  And so we 10x your time. And so as a result, we need to like, if, if that allows you to 5x the business by 10x in your time, because you're both demand and supply. Sure. That would get you to 2 million bucks a year without really adding a huge amount of operational overhead. And you'd still have six hours to kiss the dog and do whatever you still want to do. Sounds good. Yeah, I think that like, sales motion has to get analyzed. It's beyond what I can do right now. Sure. But if it's a laddering up a level strategy question of like, how should you allocate your time to get the highest return? I want to be clear, there are surgeons for sure that do 10, 15, 20 million bucks a year. Like there are ICF that come through. They typically are plastics or they're hyper specialized and have built a big organic following for being the best at. Right.

• 26:34Alex Hormozi?

  And those guys usually run somewhere in the neighborhood of like 70% margins. So like, there's money to be made if you know, like, if you're, if you're good at marketing and you're an exceptional surgeon, then you can make a lot of money. But if that's not where your heart is, because I'm, is it where your heart is? Probably not. Yeah, fair. Then if you already know that now, then like, why bother walking down the path that you already don't? You don't even want to do it and you haven't even started.

• 26:57Alex Hormozi?

  Yeah, I'm pretty sure like, yeah, like it, it only gets worse. So yeah, I think you need to make that call and then you'll open up your time. And then we can obviously have with the sales, the sales motion stuff. Sounds good. Thank you. Thank you, bud.

• 27:10Speaker 04

  Hey, Alex, how are you? Longtime listener, first time caller.

• 27:12Alex Hormozi?

  Oh.

• 27:14Speaker 04

  My name is Ezra Cohen. I sell, uh, low ticket digital video products.

• 27:19Alex Hormozi?

  Yeah.

• 27:19Speaker 04

  To churches, like motion backgrounds.

• 27:21Alex Hormozi?

  I was gonna make the, like, doing better than I deserve, you know, sorry, keep it up. Sorry.

• 27:26Speaker 04

  And then like video editing assets, like film transitions, color overlays to filmmakers and editors.

• 27:31Alex Hormozi?

  So you sell to churches?

• 27:33Speaker 04

  Mm hmm.

• 27:34Alex Hormozi?

  And you sell to editors?

• 27:35Speaker 04

  Yeah, it's two separate brands.

• 27:37Alex Hormozi?

  Okay.

• 27:37Speaker 04

  And I understand what you're gonna say. I know what you're gonna say. I've been advised by your team so far that I should actually keep both.

• 27:42Alex Hormozi?

  And that they're both important and basically they're kind of under one umbrella,

• 27:46Speaker 04

  even though they're different avatars. I am at 1.2 million combined.

• 27:51Alex Hormozi?

  Okay.

• 27:51Speaker 04

  About 350 on the film editing side, but I do about an hour a week on that. And so even lower, an hour a week.

• 27:59Alex Hormozi?

  That's right.

• 28:00Speaker 04

  The other one, I'm kind of going all in on.

• 28:02Alex Hormozi?

  So you're making 6,000 an hour?

• 28:03Speaker 04

  Yeah.

• 28:04Alex Hormozi?

  On that side. Okay.

• 28:05Speaker 04

  Yeah. And the other one, I'm kind of going more all in on, and that's in around 750. So between those two.

• 28:09Alex Hormozi?

  Okay. That one takes all the rest of the hours.

• 28:11Speaker 04

  Yeah. I feel that's what is stopping me is I, again, it's low ticket.

• 28:16Alex Hormozi?

  Yeah.

• 28:16Speaker 04

  Ranging between like 29 bucks or like.

• 28:18Alex Hormozi?

  Church?

• 28:19Speaker 04

  No, the church is like, wait, but that's recurring revenue. That's 348 a year or 708 a year.

• 28:24Alex Hormozi?

  Okay.

• 28:24Speaker 04

  Very low still, but it's above our market. What I feel is stopping me is not understanding the right money model to scale and take this. I mean, I have 170,000 customers.

• 28:35Alex Hormozi?

  Okay.

• 28:36Speaker 04

  So I think it's kind of what you're saying of like a lead. I have a very large lead magnet pool that I could sell into bigger things on both sides.

• 28:43Alex Hormozi?

  Yeah.

• 28:43Speaker 04

  But I want to understand how to do that best.

• 28:46Alex Hormozi?

  Okay. I'm gonna ask like if you can just rapid fire answer for me. So the AV people, you sell digital assets to?

• 28:54Speaker 04

  Sorry, say that one more time.

• 28:55Alex Hormozi?

  Tell me that, who you sell what to again, real quick?

• 28:57Speaker 04

  Video assets to video editors.

• 28:59Alex Hormozi?

  What does that mean?

• 29:00Speaker 04

  Color presets, film transitions, filling burns.

• 29:02Alex Hormozi?

  Template type stuff?

• 29:04Speaker 04

  Grains, things that your, that your team would use.

• 29:06Alex Hormozi?

  They use those in their own.

• 29:07Speaker 04

  Yes, in their own edits.

• 29:08Alex Hormozi?

  Okay. And then on the church side, exactly, what do you sell exactly?

• 29:12Speaker 04

  Basically, motion backgrounds like that, but better.

• 29:14Alex Hormozi?

  Okay.

• 29:15Speaker 04

  Yeah.

• 29:18Alex Hormozi?

  Okay.

• 29:23Alex Hormozi?

  We'll see.

• 29:23Speaker 04

  Yeah.

• 29:25Alex Hormozi?

  So, okay, so you sell these guys graphics, you license them to them for 348 or 708 or whatever it is per year. And how many customers do you have in each of these? And this one is, this is one time and the church is recurring?

• 29:38Speaker 04

  Yes.

• 29:38Alex Hormozi?

  And that's why you're going all in on this side?

• 29:40Speaker 04

  Yeah.

• 29:40Alex Hormozi?

  Versus that side? Where's the 170,000 pool of leads?

• 29:44Speaker 04

  I've been running the video editing asset side of things for the past seven years. And so I just have a, it's just, there's so many loads.

• 29:51Alex Hormozi?

  If you sell to churches and then to say other people can use it too, kind of thing?

• 29:55Speaker 04

  Kind of.

• 29:56Alex Hormozi?

  Okay.

• 29:56Speaker 04

  Sorry. It's confusing to me sometimes as it is to you.

• 30:00Alex Hormozi?

  Yeah. So you, like, the core business is the, is the 750 thing.

• 30:03Speaker 04

  Yeah.

• 30:03Alex Hormozi?

  And then you have, you know, offshoots of assets that get created for those customers. And you say, you guys can just license them from me.

• 30:10Speaker 04

  Yeah.

• 30:11Alex Hormozi?

  But one time though?

• 30:12Speaker 04

  The video editing side is one time church is recurring.

• 30:15Alex Hormozi?

  Why don't you just make the video editing side? Well, I don't really care about that side. Anyway, so let's talk about the church.

• 30:20Speaker 04

  So.

• 30:21Alex Hormozi?

  Yeah. What stops you from, you know, tripling the church?

• 30:23Speaker 04

  So content has been, been a big constraint. I'm a video editor and so I've bottlenecked myself and now I'm finally letting that go and starting to delegate.

• 30:30Alex Hormozi?

  Sure. You're doing it. Strain not to supply constraint on the church side.

• 30:33Speaker 04

  Yeah. So I have plenty of ideas for content that's about to go off.

• 30:36Alex Hormozi?

  What are margins?

• 30:37Speaker 04

  Margins on the church side are probably 60%.

• 30:40Alex Hormozi?

  Okay.

• 30:41Speaker 04

  Good. Yeah. Yeah. Besides that, I feel like there's a high ticket offer or a higher ticket offer of some kind to be able to be a little bit more focused with, or sort of high touch point with churches. Help them build better, you know, processes to have a better visual experience overall. Um, but I'm afraid to jump into that and kind of break the simplicity of automated digital products that I'm used to.

• 31:04Alex Hormozi?

  Uh huh. Uh huh. So 750,000, so you have like 20, like 2,000 ish churches that pay you?

• 31:11Speaker 04

  Yeah.

• 31:12Alex Hormozi?

  Somewhere in there?

• 31:13Speaker 04

  2,000. Yeah.

• 31:13Alex Hormozi?

  Okay. How many churches are there?

• 31:16Speaker 04

  In the country?

• 31:17Alex Hormozi?

  Well, are you US focused?

• 31:19Speaker 04

  Uh, yeah. Okay. We are international. There's 300,000 churches.

• 31:23Alex Hormozi?

  This in Espanol can't be that hard, right?

• 31:25Speaker 04

  No, yeah.

• 31:26Alex Hormozi?

  Accusación.

• 31:27Speaker 04

  Exactly.

• 31:27Alex Hormozi?

  Okay, so, but there's a lot, I'm guessing. So you could get to like, cause I'm just, I'm trying to paint this model out. So it's like, okay, if you're 2000, like, what do you want to have happen? Do you want to sell this thing? Like, what do you, what do you, what do you want to do?

• 31:38Speaker 04

  Not yet.

• 31:39Alex Hormozi?

  Yeah, no, I mean, but like, if you 5X the company, like, I just like, it's kind of like, depends on what you want to do, because you have a good business. And there's a lot of elegance to simplicity. And so if I think that I can sell, you know, a truckload of units, then I'll sell a truckload of units. Like, school is one thing. It's $99, you know, you saw a lot of them, you know?

• 32:01Speaker 04

  Yeah.

• 32:01Alex Hormozi?

  So there's, there's nothing wrong with having just one if it's not getting in the way of LTV. So why can't you market more?

• 32:09Speaker 04

  It's kind of been a, uh.

• 32:10Alex Hormozi?

  You take distributions every month?

• 32:11Speaker 04

  Yeah.

• 32:11Alex Hormozi?

  Okay, so this will be good for everybody. So if you're in a service business, or what I would consider like not SaaS, but sort of digital type business that doesn't traditionally have the same level of stickiness, but has more cash flow and less cap X, meaning you don't have to invest more cash in order to grow. One of the things that took me way too long to learn is that the profit that you have at the end of the year in those businesses is not all yours. And so what I mean by that is there's two primary places where it should be going. So number one is talent. And then the second one is brand. And so if you're in that business, like the branding components, like I have to reinvest in the reputation of the business so that I can continue to grow next year. And so that's kind of like the cap X of service businesses.

• 32:53Alex Hormozi?

  Is like, that's the investment that we have to make in order to scale, which is people and brand. And so if you were to spend $600,000, which is whatever roughly your profit, this, you know, the next 12 months, what would you spend on?

• 33:04Speaker 04

  Uh, I want to go pretty heavy on team to build the brand. Like, I'm basically building a.

• 33:09Alex Hormozi?

  Make more content?

• 33:10Speaker 04

  Yes, like an internal agency that can continue to crank out those, but also, you know.

• 33:15Alex Hormozi?

  Well, AI should.

• 33:16Speaker 04

  Do you waddle neck?

• 33:16Alex Hormozi?

  Waddle the shit.

• 33:17Speaker 04

  So I said.

• 33:18Alex Hormozi?

  AI should be able to do a ton of this. I'd be thinking more in like Claude and GPT instances and less in headcount for what you're trying to do. Like, you want to be like. In the world of AI, which is now, by the way, it's about fewer, better people because everyone like execution, believe it or not, becoming commoditized. So it's going to be, there's higher leverage on skill, taste, and just kind of strategic thinking until eventually that doesn't matter and then we'll all be useless. But looking forward to that anyways.

• 33:43Speaker 04

  So I, I think it's the taste that I'm hiring for.

• 33:47Alex Hormozi?

  Yeah.

• 33:47Speaker 04

  Because yes, you can technically make that stuff. And we have competitors who are making basically AI type feeling stuff that doesn't feel good. And that's why we're beginning to grow because people are coming to ask for our taste.

• 33:58Alex Hormozi?

  Yeah, so we just need to increase demand, which means you need to make more better content. And so if you need to hire a couple of people to do that, that's fine. I mean, that's, it's, it's, you have a relatively straightforward growth path. The difficulty you're going to have is on the recruiting talent side because media talent without a brand is very difficult because anybody who's kind of good can make more money than most people pay them.

• 34:19Speaker 04

  Okay.

• 34:20Alex Hormozi?

  That's going to be your bottleneck.

• 34:21Speaker 04

  Yeah, so you wouldn't even really explore a high, a higher ticket deal.

• 34:24Alex Hormozi?

  Well, I just don't think, I couldn't really think of what a high ticket background would be.

• 34:29Speaker 04

  A lot of churches are volunteer based, so it'd be helping them, helping their, the team leads install better processes for their.

• 34:37Alex Hormozi?

  Well, then you're becoming a church consultant.

• 34:39Speaker 04

  Yeah.

• 34:39Alex Hormozi?

  Feels like a different business.

• 34:41Speaker 04

  Yeah.

• 34:41Alex Hormozi?

  Yeah. I would just say like, why don't we just like

• 34:44Speaker 04

  Just double down.

• 34:45Alex Hormozi?

  20x this thing.

• 34:47Speaker 04

  Okay.

• 34:47Alex Hormozi?

  There's so many times where it's like, hey, to make more money, I could come up with another thing. It's like, you could also just do more of this thing and then figure out, and like, to be fair, the quote hard of this one is just like, how do I get more? And if it's not immediately apparent, that's the hard problem to solve.

• 34:59Speaker 04

  Cool. Awesome. Thank you.

• 35:01Alex Hormozi?

  Yeah, you bet.