Practical Ways To Grow Your Business | Ep 802

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.

• 0:00Alex Hormozi?

  If we can't clearly state our goal, we certainly won't hit it. Right? You're not gonna hit it by accident, for sure.

• 0:06Speaker 01

  So I'm wondering, like, you know, yesterday when we looked at the van, like,

• 0:09Alex Hormozi?

  Sure.

• 0:10Speaker 01

  Can the business model itself be a detractor? Like, if, I'm trying to think of how big can we grow this in the current model?

• 0:18Alex Hormozi?

  Yeah.

• 0:18Speaker 01

  Before we have to look at SaaS, or products, or people become, you know, obviously a big, uh, big issue in this type of business. So how big can this go in this type of model?

• 0:29Alex Hormozi?

  Yeah, I think it can, um, I mean, it can't, it's very unlikely it becomes a billion-dollar-a-year sales business. The biggest problem with it, so the two big problems of that business are revenue retention, number one, and number two, depending on the model, if you have, like, coaches. Because coaching doesn't scale. I mean, you can get to whatever, 20, 30 million a year, but it kind of like, it becomes very difficult, typically after that, because

• 0:56Alex Hormozi?

  getting somebody to be as good as you, this is actually what I made my whole podcast on this point. So like, um, so if we scale, let's just say, a one-on-one business as a, as a most rudimentary version of this, you can then go down to one-on-four, one-on-eight, one-on, you know, one-to-infinity, right? So you scale that way, basically more and more fractionalized access to you, or your knowledge, whatever. This way, we have other people, other people, right? More other people, uh, where you still have one-on-one, but it's other people who are doing this. And so here, you templatize fractional, like, uh, break apart the pieces into constituent parts, and then you train people on the, on the smaller pieces so they can replicate in theory.

• 1:40Alex Hormozi?

  In practice, I think what ends up happening is that, let's say I have a glass of milk. If I, if I say, "Hey, we're gonna go to one-on-four, one-on-eight," I pour that glass of milk into a shot glass, and I say, "Do you still want it?" Now, if the milk's amazing, they're still gonna take the shot glass. The alternative here is where I have that glass of milk, and I have an equal-sized glass of milk, but I pour a little bit of milk in there, and then I just pour a lot of water in. And I said, "You want this really diluted glass of milk, but it's the same amount as what you had before." And so I found that I think more businesses do a better shot going this way. Then going this way. Now, the third path is what I think is the best version of this. And so if you think about knowledge businesses, there's tons of massive knowledge businesses.

• 2:21Alex Hormozi?

  So Ernst & Young, McKinsey, Bain, all started by people who put their name on the building, right? Accounting firms, law firms, consulting, all of those fundamentally have the same thing. There was a guy who was really smart and really good at some stuff and was able to get people to give him money. The difference is that these models are predicated on basically a career path. So they are supply constrained. And so the problem with most coaching businesses is that like, hey, you have a pulse. And in seven days, I'm going to get you to, you know, give you a roster of clients so I can keep selling them. But the problem is that if, if you can teach somebody in seven days, how to teach somebody else,

• 3:01Alex Hormozi?

  either you didn't teach them fully what you do, or what you do is so simple that it's not valuable. More often than not, it's the first thing, which is like, I taught you 10% of what I know, but I'm still going to charge more or less the same price either way. And then that's what creates this churn factory. And so the reason all of those companies have our supply constraint is that finding really intelligent people. And then they have a career path where it will take them 10 years to get to a partner or whatever managing director, you know, status. And they start as analysts, then become senior list, then become VPs, and then become principals. And like they, they work up their, work up the ladder, but they have huge earning potential. So somebody who is intelligent and hardworking and could actually do a job as good or better than you,

• 3:45Alex Hormozi?

  doesn't want to work as a coach. So there are people like, Neil's not here for this one. Like there are people who are very, like you guys might my team, like they're very intelligent people, but they don't want to be, they're not coaches, right? And they're very silent experts for these particular things. And so this is actually many to one. So instead of one-on-one, it's many people who are experts for one customer. And so I see these as the three kind of delivery models that, that evolve over time, pros and cons. This one just doesn't, scales quickly, but then it stops because churn becomes too big. This one is much slower because it's supply constrained. But if you get really smart people, you can build a really big firm, which is evidenced by all the vast, massive firms.

• 4:27Alex Hormozi?

  This one, you have models like Tony Robbins, who, Tony Robbins, even if you're honest, you know, there's 10,000 other people watching, it's still valuable. To, to zoom back into, to, to your question.

• 4:42Alex Hormozi?

  I would probably be thinking of a, is the goal to sell?

• 4:47Speaker 01

  The goal is for the company to be around after I die.

• 4:50Alex Hormozi?

  Okay.

• 4:50Speaker 01

  But I don't want to sell it.

• 4:51Alex Hormozi?

  Well, the, but you do want to sell it.

• 4:55Speaker 01

  I mean, I don't have the immediate.

• 4:57Alex Hormozi?

  Sure, okay, got it. You want to be enduring, I got it. So then the only thing that I'm solving for is revenue retention. That's really it. It's just revenue retention. And so, obviously, the hair solution we're talking about earlier, like if there were products that became the core business, then that becomes a very interesting model. The problem with that for gym launch specifically is that people were able, like gyms, like gyms who use our process, sell their services for so much more than they make on product. And so that was the issue. And so it was just like always a bolt on. And so if they got distracted, they would just keep selling services, which I didn't make anything on. With the hair business, they make so much more on hair than they do on their cut and color, whatever, like small services,

• 5:41Alex Hormozi?

  that they immediately just start switching to selling hair. And so it becomes the core economic engine of the business. And that's what creates the revenue retention for them, but not as much for supplements, for example. And so for your business, it's either figuring out, is there hair that they can sell that they won't stop selling, which means it has to be the core business, which I feel like is tough because almost all your people are practitioners, given what you just said. Or I have to give some sort of tool that they all have to use on a regular basis, which would be SaaS or some sort of hardware that helps them like make better assessments that then they can charge more, whatever the hell, right?

• 6:12Speaker 01

  So it almost becomes like build the Kindle, but get them on Prime type of thing.

• 6:15Alex Hormozi?

  Oh, that's 100% the model.

• 6:17Speaker 01

  Yeah.

• 6:17Alex Hormozi?

  Yeah. And so like gymowners.com is what gym launch is going to become or already is in the process of transitioning into. And that's, that's in my opinion, the only way to transition those things into, one, like it's not, we don't do it to build enterprise value. We do it to retain customers, which then creates enterprise value.

• 6:37Speaker 01

  Cool, that's fine.

• 6:37Alex Hormozi?

  Yeah, and it's also really hard.

• 6:41Speaker 02

  Yeah, so I have a, uh, I've got a motorcycle YouTube channel.

• 6:45Alex Hormozi?

  Cool.

• 6:45Speaker 02

  Um, 2.3 million subscribers, uh, top line is 3.7.

• 6:50Alex Hormozi?

  Sweet.

• 6:50Speaker 02

  Most of my money comes from ad revenue.

• 6:52Alex Hormozi?

  Interesting.

• 6:53Speaker 02

  And we sell, uh, a couple hundred thousand dollars comes from products. I'm just wanting to know, uh, I feel like I'm leaving something on the table, something big.

• 7:00Alex Hormozi?

  Are you doing a lot of sponsorships in addition to ad rev- like, it's not just YouTube ad revenue, it's...

• 7:05Speaker 02

  Most of it's YouTube ad revenue.

• 7:06Alex Hormozi?

  Is it really?

• 7:07Speaker 02

  We just started ramping up sponsorship.

• 7:09Alex Hormozi?

  That's amazing. That's crazy. What's your, what are your RPMs?

• 7:14Speaker 02

  30.

• 7:15Alex Hormozi?

  Interesting. But then you get a ton, you just get a crazy amount of views. What, uh, how many views do you get a month?

• 7:20Speaker 02

  10 to 15 million, long form.

• 7:22Alex Hormozi?

  Something doesn't add up there.

• 7:24Speaker 02

  Uh, the automotive gets much, gets pretty good, uh, I see, uh, RPMs.

• 7:30Alex Hormozi?

  Well, yeah, but like, I'm, I'm just doing the math there. So if it's like 10 million views a month, times, so that's mil, so that's, uh, 10,000 times 30, I guess, no, that's right. It's, it's long form.

• 7:43Speaker 02

  Long form.

• 7:43Alex Hormozi?

  Oh, got it. Okay, that makes sense. Got it, got it, got it. Okay, cool. So, um, super cool. That's great. So, uh, that's the main ad, ad revenue. What are the, what are the people on your channel selling? What are the advertisers who advertise on your channel sell to your customers?

• 7:57Speaker 02

  I don't know.

• 7:59Alex Hormozi?

  Okay, so, literally, to part today, after, in five seconds, make a community post and say, hey, what are the ads that you see on my channel? Comment below. And you will get, because fundamentally, the people who are advertising on your channel are the ones who are getting the highest return. They're the ones who are paying you 3.5 million dollars a year, not YouTube.

• 8:19Speaker 02

  Right.

• 8:19Alex Hormozi?

  And so it's like, if it's worth 3.5 million to them, then it's gotta be, sorry, if they're willing to pay me 3.5, they're probably making at least 10, probably 20 off of that. Now, you would be able to get even more than that because they trust you rather than just some random, uh, slice.

• 8:33Speaker 02

  Right.

• 8:33Alex Hormozi?

  And so then I would look at, uh, the product mix of what things are being sold. And I look at which of these ones is, uh, one that either you could go directly to them and say, hey, I know you're advertising on my channel. Why don't we, let me figure a little deal out here. Uh, so... So you've got, you can have products that you own. You can have sponsorships, or you can just run affiliate, which is similar to these, but just kind of different in terms of the characteristics. So, oh shoot, and then partnerships. So if somebody has like a really expensive thing that's very hard to do, like let's say somebody's, you know, got, they've figured out how to build mini motorcycles or something, whatever. It's like, I might say like, how can, how can we partner on this so that I can push you traffic and promote and endorse and whatever?

• 9:18Alex Hormozi?

  And then you have some element of cash flow, but a huge, you know, a huge chunk of equity of that business. Basically, you would pitch them, this is how I position it. I would say, and you've got some cash too. So I would, the, the magic here is putting money and brand behind something. So it's like, you have three people in your, in your marketing department. I am the marketing department of a business that's 20 times bigger than yours. And so I'm going to bring my entire marketing department. It's like a reverse aqua hire. I'm like letting you aqua hire me, but I'll put some cash in the deal too. And let's split this, or whatever, and we can go to whatever this next level is. So that would be like, this would be maybe the most complex, but the biggest bet for you, that you could get like crazy, crazy returns.

• 10:01Alex Hormozi?

  These things are all, I would say, smaller bets. Like if you're not selling sponsorships, you probably should, just from a media company. So it's like, do you want to optimize for how much profit you make? Cause you could just become, if you're just motorcycle media, then you just sell ad space. So not only do you get ad revenue, you just also sell ad space. And I'm guessing you could probably do, probably double the revenue that you have right now, maybe more, just by selling ad space. And that would just all drop to the bottom line, that would be it. And, but the first step of still getting who are all the people advertising is a great first, like that's my leads list of hitting those people up. And the nice thing is it's like really warm reach out. So you're like, you already advertise on my channel, so. Let's make this official, right? The affiliates is like if they're not like willing to trust you, you can get a percentage of the revenue that you send.

• 10:46Alex Hormozi?

  I'm not as big of a fan. I'd rather you do sponsorships, but if you need to like prove it out early or something, you can do that. And then this last category is just like, if you were to develop a product, what would you sell? If that's not your space, then I would rather you just find what's the thing that makes the most money on my channel? And then how do I make a deal with them that makes sense? That's probably what I would do.

• 11:08Alex Hormozi?

  Cause like, I don't want to go build school. I was like, I'll just bring a bunch of money and then buy it. Like it just, that made more sense. But I'm not going to start another software company. That's a huge distraction for me. But I have all these people who want to start a business and I should put them somewhere.

• 11:25Speaker 03

  How you doing, Eric?

• 11:26Alex Hormozi?

  Yes, sir.

• 11:27Speaker 03

  So I just, I just want to go through my main funnel and just using the theory of constraints. So I do organic traffic and I have my CTA, which captures 46,000 people. This is for this last quarter, 46,000 people engage with that CTA and it kicks them into an AI conversation.

• 11:47Alex Hormozi?

  This is physical therapy, right?

• 11:48Speaker 03

  Yeah, this is chronic pain, head, neck and

• 11:50Alex Hormozi?

  Yeah, just for everybody else.

• 11:51Speaker 03

  And it's a membership course, $99 a month.

• 11:54Alex Hormozi?

  Okay.

• 11:56Speaker 03

  So the 46,000 people, they do the CTA, they go into that automation. 50% of them engage with the automation and 50% do nothing.

• 12:06Alex Hormozi?

  All right.

• 12:06Speaker 03

  Of that 50%, 3% make it to the bottom of the conversation.

• 12:11Alex Hormozi?

  Okay.

• 12:13Speaker 03

  And of that 3%, 17% sign up.

• 12:17Alex Hormozi?

  Okay.

• 12:19Speaker 03

  And of that 17%, about 40% of them canceled during the free trial. So 60% of them pay.

• 12:25Alex Hormozi?

  Sure.

• 12:25Speaker 03

  70 day free trial.

• 12:26Alex Hormozi?

  And this is all automated, right?

• 12:27Speaker 03

  I pay someone like

• 12:28Alex Hormozi?

  Sure. It's not you.

• 12:30Speaker 03

  Yeah.

• 12:30Alex Hormozi?

  How many sales is that translating into per day?

• 12:34Speaker 03

  Per day?

• 12:35Alex Hormozi?

  Per week, whatever.

• 12:36Speaker 03

  It's about 25 a week.

• 12:39Alex Hormozi?

  25 a week.

• 12:39Speaker 03

  25 a week, yeah.

• 12:40Alex Hormozi?

  Yeah. You just immediately make so much more money if you just got on the phone and sold them something for three grand for a year.

• 12:46Speaker 03

  Yeah.

• 12:47Alex Hormozi?

  I told you that yesterday.

• 12:50Speaker 03

  So, okay. If, if, if keeping that membership

• 12:53Alex Hormozi?

  I made a whole podcast about that this morning.

• 12:56Speaker 03

  Right.

• 12:57Alex Hormozi?

  About you.

• 12:57Speaker 03

  Just increase the value.

• 12:58Alex Hormozi?

  Just about you. Yeah, which is like, you're trying to make something scalable rather than trying to make it valuable. Make it valuable first.

• 13:06Alex Hormozi?

  And the thing is, is like, when you make something really valuable, the premium price that you can attach with it gives you the resources to then make it scalable. When you try to make something scalable before you make it valuable, you just keep running into these issues where no one wants to buy my thing. But I got it all automated. It's like, yeah, no one cares. You know what I mean? I'm not saying you, but I'm saying in general, yeah. I think, I'm just saying like, you will be able to probably 5X your business if you just get on the, like, once people do that 3% level, I just have them book a call. Talk to one of our experts. If you do that, you'll make more money. That's the, that's the thing.

• 13:37Speaker 04

  I have a D and D publishing business, making Dungeons and Dragons books.

• 13:40Alex Hormozi?

  Cool.

• 13:40Speaker 04

  And I've spent a ton of time doing the theory of constraints to the product development.

• 13:44Alex Hormozi?

  Sure.

• 13:45Speaker 04

  Where I have a background in like IT, DevOps, so I've been optimizing that. And I've been realizing that I've been neglecting the rest of the funnel for like the whole businesses.

• 13:55Alex Hormozi?

  You sell on Amazon? You sell Shopify? What do you sell?

• 13:57Speaker 04

  Primarily, I do it right now through like Kickstarter's. So a bunch of crowdfunding campaign, people give you a bunch of money to build this product. You then build that product.

• 14:04Alex Hormozi?

  So you have a publishing business, basically?

• 14:06Speaker 04

  Yes.

• 14:07Alex Hormozi?

  Okay, got it.

• 14:08Speaker 04

  Yes, and so.

• 14:09Alex Hormozi?

  Do you have a pen name?

• 14:10Speaker 04

  Sorry, do I?

• 14:11Alex Hormozi?

  Do you have a pen name?

• 14:12Speaker 04

  Uh, no, it's all under mine.

• 14:14Alex Hormozi?

  Okay, but like, so you're an author?

• 14:16Speaker 04

  Yes.

• 14:17Alex Hormozi?

  Okay, cool.

• 14:18Speaker 04

  Yeah, so I've made two books. I'm working on my third. I got a handful of like other supplements and stuff.

• 14:22Alex Hormozi?

  Okay.

• 14:23Speaker 04

  And so I've done, I don't know, maybe like 30,000 in Facebook ads, miscellaneous other advertising methods, but that's not my skill set and not where I'm good at. So I'm trying to think like, like as going through the exercises, revenue is definitely my biggest constraint at this point. It's like, I've done all the other stuff too much. I've been focused on that. And so I can make a better product faster, but I have, need a better way to sell it. Like I need a better way to bring in customers. And so a bunch of the people have had great ideas on things to try. Like dipping my toes into TikTok, doing miscellaneous things on my email list.

• 14:56Alex Hormozi?

  Yeah, TikTok shop is kind of an interesting answer to buy.

• 14:58Speaker 04

  Yeah, that's, that's what Caleb had recommended. So if I, if, if you were in my shoes and you took like a step back to look at the business as a whole, where would you look at trying to apply your resources to really like build up that revenue as efficiently as possible?

• 15:12Alex Hormozi?

  Do you have, um, but all, is all of your revenue comes from Kickstarter? Or they go to Amazon afterwards and then it becomes like.

• 15:17Speaker 04

  I would say ninety percent of it's coming through Kickstarter and then.

• 15:20Alex Hormozi?

  On a regular basis?

• 15:21Speaker 04

  Uh, there's a project that launches every year. Well, the first project took about fourteen months to get to the second one.

• 15:27Alex Hormozi?

  But you only have two books.

• 15:28Speaker 04

  Yes, so I have a third project that I've already done.

• 15:30Alex Hormozi?

  So you have a launch business right now?

• 15:32Speaker 04

  Right now, yeah.

• 15:32Alex Hormozi?

  Okay, so there's like basically no revenue between launches?

• 15:36Speaker 04

  Yeah, people can go buy the stuff in between launches on Shopify that I've got set up. Um, and I've been thinking about setting up Amazon.

• 15:42Alex Hormozi?

  You should set up Amazon.

• 15:43Speaker 04

  Yeah.

• 15:44Alex Hormozi?

  We sell fifty times more books on Amazon than Shopify.

• 15:47Speaker 04

  Okay, so would the, the next play to increase?

• 15:49Alex Hormozi?

  I do a million a month in books.

• 15:51Speaker 04

  Okay.

• 15:52Alex Hormozi?

  Oh, it's just as silly to me. You know, we're like, silly, ridiculous. The books are free.

• 15:58Speaker 04

  So, so setting up Amazon?

• 16:00Alex Hormozi?

  I'm like, they're free. You don't have to buy them. They're like, well, buy them.

• 16:04Speaker 04

  So, setting up Amazon would be like the best revenue boost, ignoring doing any marketing pieces?

• 16:08Alex Hormozi?

  Tomorrow, yeah, for sure.

• 16:10Speaker 04

  Alright.

• 16:11Alex Hormozi?

  Cause here's what's really interesting is that I, I, did you watch my, uh, traffic ranking, uh, video? I put out like, it's three videos ago. It's very recent. Anyways, I'll just tell you.

• 16:20Speaker 04

  I don't think so.

• 16:21Alex Hormozi?

  So what's really interesting is that people don't think about Amazon as a traffic, like a social media or traffic source. But I think like thirteen percent of customers that, well, let's just test this. Watch my theory just look flop on this. Did anyone buy my book first? One, two, look at this.

• 16:39Alex Hormozi?

  Cool. Okay, that's cool for me. Anyways, okay, um, so people will buy the book and then they'll find me later somewhere. And they'll be like, oh, that's the guy that wrote that book that I like. And so Amazon actually gets me customers. There's this whole misnomer that like you will have to have an audience in order. You have to have an audience to have a big launch, but if you have a good product, which it sounds like you do, then when you have ten thousand five stars, I buy books. If there's any business book that's ten thousand five stars, I'll buy, I'll just buy it.

• 17:06Alex Hormozi?

  And so number one is I would do Amazon for sure. Like for sure, it's where 90% of people buy books. It's like you're not on the biggest platform that people buy and sell books from. Now, you can still do your launches. I still launched through Shopify, so I can still own the customer base and all that stuff. But between, by all means, like kick it up there and do it in multiple formats and multiple languages. Like right now, I think we have like 30 or 40 SKUs from two books. So it's like we have all four formats and we have two books. And then we have them in five languages. And we have them on 13 platforms. So we have it on Kobo Digital or Koba, we have Drafted Digital, we have like,

• 17:49Alex Hormozi?

  it's kind of funny about publishing, it's fresh in my mind. Ingram, if you've heard of that, Spark, if you Google it, it'll come up. And so all that to say, I think you just need to, like, the first thing I would do this quarter is maximize all distribution of the books on all platforms that people buy books on. The first thing. The second thing I would do was try and expand my audience. Like right now, like, let's just use all of the distribution that already exists. Let's do that first. And then you can do TikTok strategy, whatever you want to do to basically market any other product that this works. Now, long-term, once you get your third book out, it actually unlocks a bunch of stuff because you will be able to be profitable with ads because you'll be able to sell bundles.

• 18:32Alex Hormozi?

  You can sell three books at a time and you can sell really three, but it's like six books because you're going to do audio and audio, digital and hardback times three is nine books. And so you can get away with like basically a $99 or 125 or 149 in terms of price tag and you'll be able to arbitrage the traffic that way.

• 18:49Speaker 04

  Okay, you would never buy one of these as like an audiobook? Because it would be, I mean, essentially you're using this as like

• 18:56Alex Hormozi?

  Oh, got it.

• 18:56Speaker 04

  To build your character and stuff like that. But I think the platform could still make sense then for doing.

• 19:01Alex Hormozi?

  I'll say this.

• 19:02Speaker 04

  Yeah.

• 19:02Alex Hormozi?

  You would be surprised.

• 19:05Speaker 04

  I would be very surprised.

• 19:06Alex Hormozi?

  Yeah, but like you'd be surprised. My workbooks are audio, but they're workbooks. So people buy them on audio.

• 19:13Speaker 04

  I don't know if I've ever seen anyone try that, but that doesn't mean it couldn't be done.

• 19:16Alex Hormozi?

  People listen, like, listening is a very different experience. And a lot of times people are like, okay, just having in the background. Because what's interesting, like I get a lot of people tell me like, oh yeah, I've listened to your book six times.

• 19:30Speaker 05

  Yeah.

• 19:30Alex Hormozi?

  Right, and it's just because like, listening, your comprehension is significantly lower than visual because it's a second attention stream. You're doing other stuff too. And so it's like every time they listen to it, they get something else. It's the same book, and so it might, dude, it'll take you a half day to narrate it. Like, throw it up. If people hate it, you can take it down.

• 19:47Speaker 04

  Yeah. Alright, thanks, appreciate it.

• 19:49Alex Hormozi?

  Yeah, you bet. And 50% of, it's increased, it used to be 25, but it's slowly increased, I think, not 50, I think it's like maybe like 40% of our sales or audio.

• 19:59Speaker 05

  I have a hair extension business. We educate stylists how to make more money, and salon owners with hair extensions, with the product. I want to know how gym launch was structured, because I know that that's how we need to structure our offer.

• 20:09Alex Hormozi?

  Mm-hmm.

• 20:10Speaker 05

  So can you tell me a little bit about that?

• 20:12Alex Hormozi?

  Yeah, I mean, I think I've talked to like, three different businesses that do what you do, recently, so it's very top of mind.

• 20:22Speaker 05

  Yeah.

• 20:23Alex Hormozi?

  So, big picture, the model that seems to work the best is, and it is similar to Gym Launch and Prestige Labs, which is the, we will show you how to do the thing, right? And then you can also sell our thing, once I've taught you how to do the thing. And so the recurring revenue comes from reoccurring revenue, in that they continue to buy the hair extensions, and then on the front end, it really comes down to, like, what makes that business very valuable, is proving out what percentage of customers who buy the education become permanent hair sellers.

• 20:57Speaker 05

  Yeah, 80.

• 20:58Alex Hormozi?

  80. So, and when I say that, so it's year over year, they continue to sell. Right, and so, the smart cookie move is to, what are you pricing the front end at?

• 21:07Speaker 05

  The education.

• 21:08Alex Hormozi?

  Mm-hmm.

• 21:09Speaker 05

  We're kind of making a new offer, but for under six-figure stylists, it'll be $500 a month, six-figure to salon owner, it'll be $2,000 a month, salon owner $4,000 a month.

• 21:20Alex Hormozi?

  Alright. The reason I ask is that, if you have a backend where, you know, you probably run, what, 50% margins on the hair, or something like that? Is that about right?

• 21:29Speaker 05

  65.

• 21:30Alex Hormozi?

  Great, great. I like, I don't even, like, I wouldn't even care about the education. The majority of the enterprise value will come from, is the hair side bigger than the info side?

• 21:40Speaker 05

  It's 90% of our business.

• 21:41Alex Hormozi?

  Oh, is it? Okay, yeah. Well then, I, in some ways, would almost like, lower the barrier, because... If that's the monetization, then it's, then the question to solve for is, how do we get the absolute most amount of people to sell hair? And so you could think about it as offset CAC for the hair business, more than its own business and its own right. And don't get me wrong, like, I'm all for it. If I had to make money or not make money, I'd rather make money, right? But when we're talking about like penetration of market share, because you're trying to like flip people into your, you know, selling your stuff, then if, if I could prove that for $300, I could get somebody activated and they actually would sell hair,

• 22:24Alex Hormozi?

  and I would sell 20 times more people, and I make all my money on the hair anyways, then I would, it basically, it's almost like creating artificial friction.

• 22:33Speaker 05

  Yeah.

• 22:34Alex Hormozi?

  I'm saying, I'm not saying go to 300, because they might say yes at 300, 1,000, 2,000, like, go to the highest that sells the most, without getting into that next like tier of losing buyers that you otherwise would have had.

• 22:47Speaker 05

  Should they pay for education or just their product spend? So this is an exchange of value?

• 22:51Alex Hormozi?

  It's a good way of doing it. Like, we did that with Prestige Labs. We would have them buy, it's a little bit different because it's consumable, but we would have a salon, for example, or a gym, buy supplements, a stack for each of their trainers. I'm a little high, if they can turn this down a little bit. And so the, all the trainers at the gym would all go, you know, do a 30-day challenge or whatever. They'd use the products, and then they would be, they would have conviction that it actually worked. And so then it made the sales on the backend so much easier, like, hey, I just did it, look at my before and after pictures, like, this stuff's really good. And so in order to activate them, we had them buy something like $5,000. Ed would probably know, I think around $5,000 for the product. And then he gave them basically the education for free.

• 23:36Alex Hormozi?

  So you still had that, like, you still have that, that buy-in? Yeah, you still have that buy-in. And you know what's crazy is that you'll prob, you'll be amazed, you'll be able to sell way more product. Well, you probably already know this. It's way easier to sell product than it is to sell info. Way easier. Because you don't have to, like, they get it. Like, everybody here who sells info, like, when you start, if you ever sell, like, physical stuff, you're like, "Oh, my God." Because we're so used to selling, like, an empty box of air, being like, "This is very valuable." But when you actually have something in your hands, it's like, "Oh, my God, this is so much easier." Like, you can see it, and look, put it on your hair, it's, ah, you know? So, anyways, does that help?

• 24:10Speaker 05

  Yeah, it does. Thank you so much.

• 24:11Alex Hormozi?

  Yeah. Don't, like, break your business tomorrow, but, like, I would experiment with just what, what allows me to spend the absolute most amount of money to get the most people selling here. That's the problem to solve.

• 24:23Speaker 06

  Hi, Alex.

• 24:23Alex Hormozi?

  Yes, ma'am.

• 24:24Speaker 06

  My name's Julia.

• 24:25Alex Hormozi?

  Hello, Julia.

• 24:25Speaker 06

  And I'm an online fitness coach for women over 50.

• 24:28Alex Hormozi?

  Cool.

• 24:29Speaker 06

  Because I do my job so well.

• 24:31Alex Hormozi?

  Over 50?

• 24:32Speaker 06

  Yeah.

• 24:32Alex Hormozi?

  Oh, okay.

• 24:33Speaker 06

  Yeah, there's a...

• 24:33Alex Hormozi?

  I would've thought over 30, but, okay, that's fine.

• 24:35Speaker 06

  Anyway, because women have so much success in my program. After 12 months, 18 months, they're gone. I don't know what to offer them after that, but I also have a huge opportunity to tap a high net worth individual community, where, instead of paying $1,000 a month for six months or 12 months, 24K to 100K a year. And one of the reasons I came this weekend was to figure out what direction I should go in. I got a whole lot of other valuable content that I wasn't expecting, so thank you. But where should I focus my energy? Because, really, when my clients reach their goal, they're gone.

• 25:18Alex Hormozi?

  I wouldn't worry about the revenue retention piece for your business. So, this is a really good exercise for anybody, is, like, I try and think of, like, what are the, what are the biggest people in the space do? Like, what are, what do those, what do those businesses look like? And so, like, Weight Watchers, Jenny, I'm not, I'm not saying you're the same thing, but just, like, in the space of weight loss, which is the space you're in, almost none of them have revenue retention. And so, like, Tinder, for example, I don't know if it was them, but one of them was like, "The point of this app is to get deleted." Not all businesses have to have revenue retention. But this is where, because people get single again, and then they come back. Or they get fat again and come back, right? So, there's, there's the, it becomes more reoccurring than recurring, in terms of revenue.

• 26:00Alex Hormozi?

  But I think all of this comes bound to, or bubbles up to, what your goal is.

• 26:06Speaker 06

  To have an impact and make lots of money.

• 26:09Alex Hormozi?

  Well, you already have the impact, and you're already making lots of money, so it has to be different than that.

• 26:12Speaker 06

  No, it's not enough, but anyway.

• 26:13Alex Hormozi?

  Me neither.

• 26:14Speaker 06

  Yeah.

• 26:16Speaker 06

  I guess my goal is to reach as many people as I can.

• 26:20Alex Hormozi?

  Well, then make it free.

• 26:21Speaker 06

  Say again?

• 26:22Alex Hormozi?

  Then just make it all free.

• 26:23Speaker 06

  I can't, no.

• 26:24Alex Hormozi?

  Okay, so then what's the goal?

• 26:26Speaker 06

  To make money.

• 26:27Alex Hormozi?

  Okay, fine. So do you want to make money by selling it? Or do you want to make money by growing the revenue of the business?

• 26:33Speaker 06

  Growing the revenue, but in a model that I love doing.

• 26:37Alex Hormozi?

  Well, I was pushing back on the impact whatever thing because I also talk to business owners all day. I'm like, I hear that shit all the time. Because if that were true, then you wouldn't be like, okay, I want to sell even fewer people at a higher price, right? I don't care, to be clear. Make money, I'm all for it. I just, I want the... If we can't clearly state our goal, we certainly won't hit it, right? You're not going to hit it by accident, for sure. So if you just said, hey Alex, I want to triple the profit of this business, I'd be like, cool. Well, now we can actually like pull this apart and actually, and take this. Now, you might have your own things around that, but like, it's just much easier for me. So what's revenue right now? What's bottom line?

• 27:14Speaker 06

  The top line revenue the last two years is like 700K.

• 27:17Alex Hormozi?

  Okay. What's bottom?

• 27:20Speaker 06

  You know, when we did all that stuff, I was like...

• 27:24Alex Hormozi?

  You're good. Can I just say it's not super high?

• 27:25Speaker 06

  I don't know my numbers. I'll just admit it right now.

• 27:28Alex Hormozi?

  You're good, that's fine. So you have something that's working, right? So people are, and they're paying you a thousand dollars a month. Okay, so the issue that you have, I'm guessing, is marketing.

• 27:39Speaker 06

  Market?

• 27:40Alex Hormozi?

  Yeah, no, advertising. You're not, like, not enough people know you exist.

• 27:43Speaker 06

  Yeah, that's definitely a constraint.

• 27:45Alex Hormozi?

  Right, so I certainly would not advise you to do anything new right now. I think you need to sell more. Can you handle more customers?

• 27:53Speaker 06

  Uh, yeah.

• 27:54Alex Hormozi?

  Okay, then I would, I would be trying to sell more.

• 27:57Speaker 06

  And sell more at what's making money now, or to focus also on that?

• 28:01Alex Hormozi?

  Do you have decent margins on what you sell now?

• 28:04Speaker 06

  No, absolutely. I have zero ad spend. I don't have any employee... I do have consultants that I pay, but...

• 28:09Alex Hormozi?

  Yeah, so you actually have the classic small influencer issue, which is, anybody who's organic typically wants to create many products because they only have one base of customers. And so the only way they can think to make more money is to sell them something else. But it's... You really just see your organic audience as the jumpstart to then continuing to sell to colder and colder traffic. Because otherwise, you start five businesses and every single person here has probably seen the influence that has five different revenue streams. They all add up to in total a million dollars a year, but they're like, you know what I should do at a sixth? And so this will be different, right? So it's just that you only know one way to advertise. And so you're looking at all these things that need to change about my business, but you just need to advertise more.

• 28:50Speaker 06

  Okay, good.

• 28:52Alex Hormozi?

  Yeah, that's honest, like, I wouldn't add any complexity to the business that you already have. Now, if you want to add an anchor product that's a hundred grand, I'm all for adding super high anchors. Why not? So when you add an anchor, by the way, the way this works. So I learned this technique when I went to a suit shop. And I was poor and I was told that I needed a nice suit. And so I went there and I said, I'm gonna pay five hundred dollars, that's my max for getting a suit. I go in and a friend of mine set up the connection. So he's like, this guy is awesome, blah, blah, blah, blah. So I get there and he does my measurements and he lines up this big rack of suits. And so he puts the first one on and I was like, man, you're like a boss. And he's like, so you like that one? I was like, yeah. And so I pull, you know, I look at the tag and it says sixteen thousand dollars.

• 29:36Alex Hormozi?

  And I was like, oh shit, I like my, the blood just drained from my face. And I was like, this is a car.

• 29:43Alex Hormozi?

  And so I was like, ah, and he saw that I like shit my pants in his nice new pants that I was wearing.

• 29:51Alex Hormozi?

  And he said, do you care about the, the brand? And I was like, no, don't care about the brand. And he was like, I got you, sport. He like took, he like took one off and put another one on me in like one move. And this one, I even look in the mirror. I just like looked at the tags. I was like, and it was two grand. And I was like, okay, I can, I can swing this. At least I'm not gonna, you know, because my friend made the intro. I didn't want to, you know, be an idiot. Which now I would give zero fucks about, but anyways. And so I ended up spending like five hundred dollars on like socks and handkerchiefs at this place and I walked out spending twenty-five hundred dollars. And only after I walked out did I realize that I spent five times of my budgeted amount wise. And this guy was a fourth generation tailor. He knew exactly what he was doing.

• 30:32Alex Hormozi?

  Because he had the one that was 1/8 the price already there. And so, when you have an anchor upsell, the way you want to do it is there is something called primary and secondary features. And so, the primary feature of the suit for me is to look cool. The secondary features of the suit would be, what's the material? What's the brand? Like, all of those things. And so, what you do is you have your anchor at 25,000, 50,000, whatever you want. And then, you get the gasp, and people shit themselves. And 1 out of 10 people are like, "Awesome, that sounds great." And you're like, "Holy shit, this guy just spent 50 grand on this." And he probably would have been like, "Holy shit, this guy, this kid just spent 16 grand." I was like, 24. Of course, I didn't have 16 grand, right? But he still put it on me. The secondary features are the things that are not material to most people, so that what

• 31:15Alex Hormozi?

  you can do is basically deliver 90% of the same product for 1/10th the price. And then, people are like, "This is up, like, I'm pulling one on this guy." He doesn't know that he sold me a suit that's almost the same as this $100,000 suit. And you're like, "This guy is about to buy a $5,000 suit that's really a $500 suit, because I showed him a $100,000 one first." And so, you just change the things that aren't material to most people, and you want to come to the rescue. It's like, "Hey, do you care if you have my cellphone or are you good just with Slack?" It's like, "Oh, Slack's fine, yeah." It's like, "Okay, cool, well, then, we can still pretty much get you there, vacation, plane flight, just slightly differently." So, I think if you add the anchor upsell in, and then, all of the cash that you get from the few people who take that, pour it all into advertising.

• 31:54Speaker 06

  Perfect. Thank you so much.

• 31:56Alex Hormozi?

  You bet.