Q&A. Growth Is Just Constraint Removal | Ep 933

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.

• 0:01Speaker 00

  Please help me welcome, host of The Game, author of the $100 million series, Guinness World Record holder, Alex Ramos.

• 0:21Alex Hormozi?

  Okay, fantastic. Talk fast. Ready to rock and roll? All right. Yes, sir.

• 0:27Speaker 02

  Hi, my name is Mike Krausen. I sell go high level to online fitness coaches. I would need $2 million in revenue and would love to be at $1 million a month.

• 0:35Alex Hormozi?

  Okay.

• 0:36Speaker 02

  This is what is stopping me.

• 0:38Alex Hormozi?

  So what is stopping you right now? Why can't you do more of what you're currently doing?

• 0:41Speaker 02

  Yeah, we basically developed and built up a better product because we had terrible retention.

• 0:46Alex Hormozi?

  You had terrible retention?

• 0:47Speaker 02

  Terrible retention.

• 0:47Alex Hormozi?

  And now you have good retention?

• 0:48Speaker 02

  Yes, so we stopped.

• 0:49Alex Hormozi?

  What's churn now?

• 0:50Speaker 02

  7%.

• 0:51Alex Hormozi?

  Monthly?

• 0:52Speaker 02

  Monthly.

• 0:53Alex Hormozi?

  Okay.

• 0:53Speaker 02

  I have $9,000 LTV.

• 0:56Alex Hormozi?

  Okay, what's CAC?

• 0:58Speaker 02

  4.6 to 1.

• 1:01Alex Hormozi?

  Okay, so it's like 1,500 bucks?

• 1:03Speaker 02

  Yeah.

• 1:03Alex Hormozi?

  Okay, cool. Got it. So how do you get customers right now?

• 1:07Speaker 02

  We have 40% come through strategic partnerships of other mentors, business sending their clients to build out the funnels.

• 1:13Alex Hormozi?

  Okay.

• 1:14Speaker 02

  And then organic, and I would say the last piece is actually the Meta Ads or Instagram Ads.

• 1:19Alex Hormozi?

  Are those working and profitable?

• 1:22Speaker 02

  Yes.

• 1:22Alex Hormozi?

  Okay, so two of those are reliable. Word of mouth, we'll just put a pin in for now. So fundamentally, why can't we either do more Meta slash Facebook ads? Or more strategic partnerships in terms of the outreach required to get more of those people onboard?

• 1:38Speaker 02

  Yeah, we totally think that Meta is where to go. We used to do it, we turned it off.

• 1:41Alex Hormozi?

  Cool, okay.

• 1:42Speaker 02

  My real question, I think, on that is how do I make the CRM sexy on the front end to get somebody to actually inquire?

• 1:50Alex Hormozi?

  Are the ads working right now?

• 1:53Speaker 02

  I wouldn't say we're spending enough to say yes.

• 1:55Alex Hormozi?

  What are you spending?

• 1:56Speaker 02

  Two thousand a month.

• 1:57Alex Hormozi?

  Oh, okay. So, yeah, that's.

• 1:58Speaker 02

  We just have them on.

• 1:59Alex Hormozi?

  Yeah. Got it. Rule of thumb for everybody, just side note. I can't really test a campaign unless I'm willing to spend 2X my target CAC as just a test of whether this works or not. So it's like, if my target CAC is 2K, it's like, if I don't spend at least 4K, it's like, you can't know anything. Because the cadence of feedback is so slow on 2000. It's every two months, you'd be able to get like a sale inefficiently. And so you would, because I have to be willing to spend more than my target CAC so that I can then get it efficient. Assuming that I'm going to literally knock it out the gate on the first shot is unlikely. Okay, so from an offer perspective, what problem does GoHighLevelStuff solve for the online fitness coaches?

• 2:44Speaker 02

  We really break it down into four different funnels. We have basically mini chat killer. We have the link in bio, which is your lead magnet. We have.

• 2:52Alex Hormozi?

  So there's a pain there, which is you have followers, want to turn your followers into customers without DMing anyone? It's going to be the automate, it's going to be the pain of being in the DMs all day, I would imagine. They're all online fitness coaches? Yeah, and I'm guessing most of them are on Meta or IG or whatever as their primary way of getting customers.

• 3:12Speaker 02

  Instagram primarily.

• 3:13Alex Hormozi?

  Yeah, and then maybe some like 20% on LinkedIn doing, is he executives, whatever?

• 3:19Speaker 02

  Yeah, I would say none of actually are on LinkedIn.

• 3:20Alex Hormozi?

  Okay, so it's just IG?

• 3:21Speaker 02

  Yeah.

• 3:21Alex Hormozi?

  Yeah, so at least you have a very targeted avatar. So it's like, hey, you having trouble turning your Instagram followers into customers? All of this can be automated. We'll show you in seven minutes how to do it. And that's the lead magnet. And then it works a case study of somebody who had ideally 7,000 followers and then was able to get to this many sales per month. Intimidating. That's what I would, that's what I would, that's what I would lead with would be like, here's five different coaches who all had less than 5,000 followers who are all able to get five clients a week. Right, that sounds sexy. Just using our automation. That would be my angle, but fundamentally it would just be like boom, 5K studies. Let me break down each of these and each of the five would represent different psychographics

• 4:06Alex Hormozi?

  or avatars. So it'd be like jacked, white bodybuilding dude. And then it'd be like skinny vegan dude who's older and black. And then there's Asian girl vegan powerlifter. And then moms over 50 lady, like all of them have their own niches. And I would just show that it, because everyone's concerned after you say, hey, I'm an online CRM is will this work for me? And so you just be like, yes, it will work for you. And so that would be basically a representative that I would use there. That's what I would do as my first shot. But then yeah, VSL, sales call, close. Trying to accelerate as much of that cash upfront as you can. This is like a bingo, bingo, money, bingo type play.

• 4:45Speaker 02

  No, for sure. Yeah.

• 4:47Alex Hormozi?

  What parts, what part worries you?

• 4:49Speaker 02

  I don't think any part worries me as much as just we're not a mentorship group.

• 4:53Alex Hormozi?

  Yeah.

• 4:54Speaker 02

  And so trying to sell the CRM with the automation process. So then another guru, if you would. But just trying to find the right messaging. We know this, this is where we're supposed to go. The idea was like, before I just tried and figured it out.

• 5:08Alex Hormozi?

  Yeah. I'll tell you what I did when I had an identical business with Alan. It wasn't just online, but it was brick and mortar primarily, but same idea. Me marketing directly to SMBs sucked. And so I just marketed to agencies. And so to your point, like you're not a guru, you don't want to get in the guru business. I didn't want to be in the SMB guru business. I just found people who had agencies that were Cairo agency, whatever agency. And I said, hey, use my platform. I'll do this shit that you don't want to do. And then they constantly would have clients coming in and out, but the people, but they stuck with me for less.

• 5:45Speaker 02

  So saying we should run a, from an ad strategy campaign to

• 5:49Alex Hormozi?

  Gurus.

• 5:50Speaker 02

  Business mentor.

• 5:51Alex Hormozi?

  Yeah. If you're a fitness business coach, hit me up. We'd love to do this stuff all for you and we have stickier revenue than you do. And so like the pains for those people, aren't you tired of giving people the keys to the kingdom and having them leave three months later?

• 6:06Alex Hormozi?

  Wouldn't it be nice to have some recurring revenue that would actually stick year over year? Imagine if you could have customers from three years ago, or every customer you've ever sold in your whole life still paying you? How different would your business look? Probably materially, each of those are probably hooks that I would test. And I don't know which one would work, but one of them would. And then that, as soon as I know, then crank. But I would probably go there, especially if you're like, because what will happen is if you actually go straight to the quote fitness coaches, they'll be like, great, I have this thing, how do I get leads? And then you're like, fuck.

• 6:36Speaker 02

  Yeah, it's a whole nother process.

• 6:38Alex Hormozi?

  So you'll end up having to get into that when in reality, the people, you have to meet customers who have the problem to solve. You don't want to generate demand, you want to channel it.

• 6:49Speaker 02

  Yeah, as the coaches that normally are already doing 10K, or like our ideal clients.

• 6:53Alex Hormozi?

  Great. I don't know what the LTV to CAC difference between the two would be. I can tell you that I know like on our side with Alan, it was absurd when we went one level up.

• 7:02Speaker 02

  Yeah.

• 7:02Alex Hormozi?

  So just going, because in agency, it's like, I could acquire an agency for $5,000. And then the agencies would pay to onboard with us and they'd pay 25,000, number one. And then number two, then each one that would onboard, let's say they had 50 customers, they'd pay a thousand per customer, so we had another 50 grand. And then we had the recurring, which on the backend was like 30% of top line. So it was a super profitable model for us. But it worked for them because they didn't have to do any of this backend shit, which we did. So if I had to, like, how do you get there faster? Would probably be just go up one level of. But when you do that though, realize you will now serve two customers. You'll basically have to have a customer success manager for the gurus.

• 7:44Alex Hormozi?

  And then you'll also have to have success on this side to make sure the customers are happy. So be two sided.

• 7:50Speaker 03

  My name is Katie. I sell new construction homes to first time home buyers. We do 200 million in revenue.

• 7:58Alex Hormozi?

  Amazing.

• 7:58Speaker 03

  We would like to be at 300. And land acquisition, the constraint of our industry is what's stopping us?

• 8:07Alex Hormozi?

  So you, getting land has been the issue?

• 8:09Speaker 03

  Yes.

• 8:10Alex Hormozi?

  Okay. So where do you currently, where do you source land deals now? Is like the permitting or just? Okay, so it's mostly just getting farmers to give up their land?

• 8:19Speaker 03

  Yeah, anyone who owns land.

• 8:22Alex Hormozi?

  Sure, but they just have a lot of it.

• 8:23Speaker 03

  Yeah.

• 8:25Alex Hormozi?

  Word. So what's the current strategy that you use to get farmers to give up their land?

• 8:30Speaker 03

  Find out who they are.

• 8:31Alex Hormozi?

  Okay.

• 8:32Speaker 03

  Do a lot of digging to find out who has land available and calling them.

• 8:37Alex Hormozi?

  Are you buying lists?

• 8:39Speaker 03

  No, there's not. It's readily available in the MLS. Like, we have access to the information.

• 8:45Alex Hormozi?

  Okay.

• 8:45Speaker 03

  Yeah.

• 8:46Alex Hormozi?

  So the issue is, there's just no more names to call?

• 8:50Speaker 03

  It's not about the lead of land. It's getting it from the point of acquiring it, ready to build on. So

• 8:58Alex Hormozi?

  Is the permitting?

• 8:59Speaker 03

  It's the development of the raw land to finished lot. Could be anywhere from two to 10 years, depending on the project.

• 9:07Alex Hormozi?

  Super cheap.

• 9:08Speaker 03

  And we don't want to put our cash just rotting out in the 10-year timeline with no return. So we like to purchase it from the, a developer that does it for us. We can find the leads and find the land, but we don't have the people to develop it, to get it to us.

• 9:26Alex Hormozi?

  At your size, have you considered either, one, pillaging the best developers' talent? Bucket A. Bucket B, just, at your size, you can just do the acquisition?

• 9:41Speaker 03

  Become the developer yourself, you mean?

• 9:43Alex Hormozi?

  Like, yeah, we'll just buy one. Yeah, buy one so you can just basically vertically integrate what you're trying to build.

• 9:49Speaker 03

  Yeah, we should probably do that.

• 9:51Alex Hormozi?

  You have the capital to do it, and I'm sure you have really good lending relationships anyways. And those businesses, I don't know what kind of margins those run, but like, I'm sure, like, I would look at who are, like, my first steps would be, like, if I was, like, transplanted in, I'd be like, okay, who did we buy land that was developed from over the last 10 years? And I would get all of those names. And then I would be smiling and dying slash trying to fly out or fly them out to say, Some of those guys are gonna be older. Some of those guys aren't gonna give a shit anymore. And they've got a good team or whatever. And I'd be like, great, like, how can we make something work here? And I'd be looking at doing a deal that way. Because it depends, obviously, at your size, it's buyer build. And it really depends on how entrenched the inroads are and how, from like the zoning and all that bullshit,

• 10:35Alex Hormozi?

  how relationship dependent it is at the levels that you're looking at. I'll give you a completely different example. But if you think about like OpenAI and some of the new AI stuff that's going on there. One of the strategies that's becoming more prevalent is rather than trying to buy these AI companies that, let's say they've got 30 geniuses that work there and trying to buy that company for a billion dollars. They just look at the top 20 of the 30 people who don't have, who have, maybe they got diluted because of the way the VCs ran the deal or whatever. And then they just say, hey, I'll give you, and you've seen these like $100 million signing bonuses, probably like flying around on Instagram. It's, and it sounds absurd, but it actually is more efficient to give one person

• 11:16Alex Hormozi?

  or the four key people in the business $100 million than buy the business for $4 billion. So it's just a pure allocation of capital play. And so from a buy versus build, if you can strip the talent out and they can keep the relationships and then you can rebuild it, that'll be the most efficient way to do it. But the, and then again, the test is, is, that would be my hypothesis. Like, how ingrained are those inroads? If they're super entrenched and very difficult to transport those relationships, then I would be looking at, I'll just buy the whole co. Older guys oftentimes will actually take super long earn out periods because it just becomes an annuity for them. So sometimes they're willing to take 15 year seller financing just to know that they're going to get paid and collateralize it against the business. And you already have assets and so do they.

• 11:59Alex Hormozi?

  And so that can actually be a really, it's a win win structure for many of them.

• 12:03Speaker 03

  Yeah.

• 12:04Alex Hormozi?

  Just as a consideration, but that's probably, I would, you're at the size now, rather than you say, here's how I'd build a land development business. That's probably how I'd think about it.

• 12:12Speaker 03

  I think we have just been avoiding it because it's a distraction from home building. It's like a completely different business.

• 12:19Alex Hormozi?

  I think that every business at a large enough scale becomes a business of businesses.

• 12:22Speaker 03

  Okay.

• 12:23Alex Hormozi?

  So like Amazon is not just like a business. It's like there's AWS and there's the white label business. And then there's the logistics and distribution. There's so many elements. There's the video and the media side. There's so many different elements of Amazon that you might be at the stage where it might make sense. So it does come back to the goals. If you know that you're, do you feel confident that you'll just stay at 200 million? Are you going to grow at 20% if nothing happens? Or what's the current growth rate? Are you stuck there?

• 12:47Speaker 03

  We've been stuck.

• 12:48Alex Hormozi?

  Okay.

• 12:49Speaker 03

  Yeah.

• 12:49Alex Hormozi?

  Then you probably do need to, if that is the constraint of the business, it's like we build on every piece of land that we can get. That's the constraint.

• 12:56Speaker 03

  Alright.

• 12:57Alex Hormozi?

  So then that, so then I think about, so the quantified version of what a constraint is, it's the highest return. It is the allocation of resources that yields you the highest return. And so if you focus on, so fundamentally, so why would we not want to do that? It's like, this is the place where we will get the highest return in the business. And the nice thing with that is that constraints oftentimes are not like 10, 20, 30% improvements. They can be like order of magnitude improvements. All of a sudden you can go to a billion because you opened up five times the land.

• 13:27Speaker 03

  Nailed it.

• 13:28Speaker 04

  Thank you.

• 13:28Alex Hormozi?

  Yeah.

• 13:29Speaker 04

  My name's Eric Stoffers and I'm not a paid spokesperson, but I'm going to speak for all the entrepreneurs. You put together an amazing group here, not just of entrepreneurs that you curated, but the acquisition team. We've learned so much. So thank you for that.

• 13:39Alex Hormozi?

  Thank you.

• 13:41Speaker 04

  My company is Bioaccelerator. We're one of the top stem cell companies in the world. Right now, that's what we're known for. We're actually a biotech platform, so we have a lot more behind the scenes. So what we do right now, what we sell for revenue is our services, our healthcare services in stem cell and exosome. We're 24 million. We want to be at 250.

• 14:01Alex Hormozi?

  Okay.

• 14:02Speaker 04

  Actually 500, but I was sandbagging for this. But there's a lot of things stopping us. One of them, I'm afraid, that has been uncovered is our level of expertise, possibly including me. I think we're doing better than anybody in the world. I'm biased, obviously, but we're pioneering an industry. So there's no real great blueprint. That's my excuse. But I've raised capital for both for this business and my previous real estate career. But it's been in small chunks of 5 million, 10 million, 15 million.

• 14:32Alex Hormozi?

  Like full more rounds or like friends and family?

• 14:35Speaker 04

  Both. So for this company, I seeded it, Angel Seed, and then a Series A. We're on a Series B right now. That's about my level of expertise.

• 14:43Alex Hormozi?

  Okay.

• 14:44Speaker 04

  But when we really need to get out to scale, we're gonna have to get a lot more money. And I'm noticing and starting developing these relationships that it's a much different conversation when you start asking for a hundred million versus five or 10.

• 14:56Alex Hormozi?

  Yeah.

• 14:57Speaker 04

  So I guess my question gets down to what would be a good suggestion, knowing that I don't want to leave the company and get kicked out yet?

• 15:06Alex Hormozi?

  How much equity do you have left? Or do you have?

• 15:08Speaker 04

  Uh, 65%.

• 15:09Alex Hormozi?

  Okay, so you still have a good chunk. Okay. And then 35% is all investors or their team?

• 15:15Speaker 04

  Okay. I have some, yeah, team members also.

• 15:17Alex Hormozi?

  Okay.

• 15:18Speaker 04

  Key players, yeah. Chief medical officer, stuff like that.

• 15:20Alex Hormozi?

  So is the issue that you've had the conversations and people are saying no to the higher valuation in order for you to get the capital you need?

• 15:27Speaker 04

  Yeah, a little bit of that because really, we have a lot of technology that hasn't, it's been proven in our clinic and it's ready to basically scale if I could get the money for the manufacturing to build the extra laboratories. And so I don't want the valuation to be squeezed so much that it squeezes me right out of a power position.

• 15:47Alex Hormozi?

  Yeah.

• 15:48Speaker 04

  That's the issue.

• 15:50Alex Hormozi?

  Do you, do the existing investors who have come in so far, do they have, because like, you can absolutely maintain control and still be a minority shareholder. Zuck has 100 to 1 voting rights. And so if there's a business that requires more capital, but they still trust you, but understand that it requires more capital to get to where you want to go, then you could still maintain the control you want, as long as they buy you.

• 16:15Speaker 04

  Yeah, the people we have right now are like that. We have some professional athletes and celebrities, a lot of people that were like really good patients of ours.

• 16:23Alex Hormozi?

  And then they wrote you checks?

• 16:24Speaker 04

  Yeah, and then they wrote us checks. But they're not really big funding partners.

• 16:27Alex Hormozi?

  Yeah. So fun, this is just a sale.

• 16:32Alex Hormozi?

  That's all it is. And so I would, I would encourage you to probably think less about, this is gonna sound really, less about the facts and more about the story. Now, facts do make for great stories. But the question that we have to answer is like, what would you need to see in order to believe? And so if I'm talking to, so when we're thinking, we're about to, let's say we want to raise a round in 2026, right? I'm having these conversations now with 10x the amount of potential kind of like investment partners to understand what they're, what each of them needs to believe or needs to see in order to feel confident to make the bet. And once I have that kind of big list, then I can narrow that down to, okay, this guy's unrealistic, this guy's unrealistic.

• 17:17Alex Hormozi?

  This we can do and it's going to cost us this much. And so sometimes it's a tiny race to just get this one need to believe to be believed. And then you can ladder into this other thing. And so I think about it as I want to go find my customers, find out what they want and then build the thing they want. Now, to be clear, that's not like trying to derail the vision, like you want to build another person's company. But it's typically, they're all going to just try to pay down risk. That's all they're paying down, right? Or want you to pay down for them. So from a control perspective, that's super manageable. If you did it today, it's like, maybe you lose half the equity that you have, but now you have a company that you raised. How much cash do you need?

• 17:58Speaker 04

  To finish this round, 5 million, but we want to go out and raise 126, 22.

• 18:02Alex Hormozi?

  Okay. And what, and you want to raise that at what, a billion at?

• 18:05Speaker 04

  No, half a, half a bill.

• 18:06Alex Hormozi?

  Okay, 500 million is what you want to raise it at. You want to sell 20% and get 100 million in cash?

• 18:11Speaker 04

  Yeah.

• 18:12Alex Hormozi?

  Okay. They're, they have to see basically what risk are the people who bought in at 20? Or what's your current valuation, the last round?

• 18:21Speaker 04

  50 million.

• 18:22Alex Hormozi?

  Okay, so that's a 10x difference in valuation. What risk did the 50 million dollar round take on that they are now rewarded for with the 500 million dollar round? That's a question, I don't know.

• 18:37Speaker 04

  In my mind, we've de-risked this more than any other platform on the planet, but there's still a lot of regulatory risk.

• 18:42Alex Hormozi?

  Okay.

• 18:43Speaker 04

  So there's a lot of unknowns that the 50 million round didn't know, like in, in the sense that now Florida and Utah and some other states are starting to change their thought process on stem cell. So it's starting to look more de-risked in that, from that.

• 18:56Alex Hormozi?

  So directionally, the only, has there been any technological change or sales velocity change or avatar change? Has there been any new finding that fundamentally changes the game? Because again, I'm trying to help build the story here. Because that's all we're selling here is that we raised at 50, now we're raising at 500 and the reason is?

• 19:17Speaker 04

  Oh yeah, we'll have a lot of reasons. Yeah, because with the, yeah, sorry. I guess I wasn't understanding. Yeah, we're going to build a laboratory that we've already proven our technology that we've been delivering for years and we're just going to be able to scale it. So I think it'll be a revenue.

• 19:29Alex Hormozi?

  And that wasn't there at 50?

• 19:30Speaker 04

  Yeah.

• 19:31Alex Hormozi?

  And that was not there at 50?

• 19:32Speaker 04

  That was not there in 50.

• 19:33Alex Hormozi?

  Okay, great. And so to me, it's like, these are the, this is what has changed and now fundamentally changes the nature of the business. That is it. So it's like, this is a $10 billion business. There are three more assumptions that have to be proven true. We proved this one right, which is why we are now, because it's, they're all discounts on a $20 billion business of the likelihood that you actually achieve that. Like at least that's the thinking process most VCs, or at least good VCs come in with is like, they're only making money on multi, multi-billion dollar companies. And so it's how many assumptions do I have to believe will be true? And the fewer assumptions that need to be true, the higher the valuation, because the higher the likelihood. And so if we're like, this was actually the riskiest of the four that have to happen.

• 20:16Alex Hormozi?

  And that's why we have the biggest step up in our valuation. Because now it's just a capital constraint, not a assumption constraint. We've already de-constrained this. And from the regulatory risk perspective, all the directions are pointing green, not red. That's how I'd position it.

• 20:30Speaker 04

  Okay.

• 20:31Alex Hormozi?

  It is for sure pitched though.

• 20:32Speaker 04

  Yeah. Yeah, I get kind of in the weeds of the nuts and bolts and people just, their eyes glaze over.

• 20:38Alex Hormozi?

  They don't know the science.

• 20:39Speaker 04

  Yeah.

• 20:40Alex Hormozi?

  They just want to know that they're going to make a lot of money. And so it's going to be a sale on you and a sale on the story.

• 20:47Speaker 04

  Okay, yeah, thank you.

• 20:47Alex Hormozi?

  I was just like, do not be a scientist for the pitch.

• 20:50Speaker 04

  Yeah, no, I, I, oh, I'm not, so.

• 20:53Alex Hormozi?

  Yeah, I was like, we can help you with that if you need it. Yeah.

• 20:57Alex Hormozi?

  Thanks.

• 20:58Speaker 05

  Hey, Alex.

• 20:59Alex Hormozi?

  What's up?

• 20:59Speaker 05

  My name is Francis Seguilo. I am a real estate wholesaler.

• 21:03Alex Hormozi?

  Okay.

• 21:04Speaker 05

  We're currently averaging about $450,000 a month.

• 21:08Alex Hormozi?

  Okay.

• 21:08Speaker 05

  In revenue. I would like to be at a million.

• 21:11Alex Hormozi?

  That's your spread? That's what you're making, or that's like house volume?

• 21:16Speaker 05

  That's gross.

• 21:17Alex Hormozi?

  Okay. So what's your, what's your spread on that? What's your take on that?

• 21:21Speaker 05

  So we are at 40%. So right around 250, 240.

• 21:25Alex Hormozi?

  Interesting. Weird. That's high.

• 21:30Alex Hormozi?

  What kind of, what are you wholesaling?

• 21:32Speaker 05

  All right, so here's the.

• 21:34Alex Hormozi?

  He's like, have you heard of brothels?

• 21:37Alex Hormozi?

  So imagine a brothel, but now it's all midgets. Okay, keep going. You're good.

• 21:41Speaker 05

  Okay, but here's the challenge we run into. So we're currently at 450 average, yeah? We've had 700K months this year already.

• 21:49Alex Hormozi?

  Okay.

• 21:50Speaker 05

  The challenge is every time we get to those numbers and I try to, hey, you know what? It's time to ramp up. For some reason, we tend to tank to 200, 250.

• 21:59Alex Hormozi?

  Okay.

• 22:00Speaker 05

  I'm sick. I have cause to believe it's the sales team and just.

• 22:06Alex Hormozi?

  Okay.

• 22:07Speaker 05

  They have those power months where everyone takes home 20, 30 grand.

• 22:11Alex Hormozi?

  Uh huh.

• 22:12Speaker 05

  And then the month after it's.

• 22:14Alex Hormozi?

  Are they pure commission or is it split?

• 22:16Speaker 05

  So there is a base salary.

• 22:17Alex Hormozi?

  Okay. What's the split between commission and base?

• 22:21Speaker 05

  So they're at 42 base.

• 22:24Alex Hormozi?

  Okay.

• 22:25Speaker 05

  Uh, per annum. And then 10% of the assignment fee.

• 22:28Alex Hormozi?

  Okay.

• 22:29Speaker 05

  Of the fee.

• 22:31Alex Hormozi?

  All right. This is. So you have an ops issue, which is sales ops. And so it's, this is going to be much more weedy in terms of like tactics to answer this question. But it's, there's probably like 20 things that you need to be doing and you're probably doing like 13 of them. And the other seven are going to be the thing that make the difference. And creating the consistency to the team. That's at the surface level.

• 22:55Alex Hormozi?

  At the deep root of this is who's the leader of the sales team?

• 22:59Speaker 05

  I do have a sales manager.

• 23:01Alex Hormozi?

  Okay, so he or she is the problem. Because like, sales at the end of the day is a culture game. Everything's a culture game, but like, sales, you can feel it so quickly when things are good or not good, because the performance, the feedback clips are so fast. But for whatever reason, you do not have a culture of consistency within your team. I would wager that script adherence is low, because you have such variability in close rates. Unless there's a change in lead quality, which would be something else. But are the leads the same, like, this month as last month?

• 23:40Speaker 05

  Yes. The leads are the same.

• 23:41Alex Hormozi?

  Yeah, so it's a sales discipline issue, which then comes down to the training cadence, the scripting, how people are being managed on a daily basis and weekly basis in terms of their career goals, how like, you're doing morning, like, it's, this is all sales ops. I could like, just start talking about sales, but this is a pure sales ops issue. And so, at the, there's a two-step, like, I would approach this in two steps. Step one is, we should do all the stuff that we are not currently doing, or we should be doing. Everyone should be reading the same script. If they're not reading the script, why are you on this team? We need to have training that's every day to make sure that they are saying things the right way. We need to make sure that everyone memorizes the script. Some of you guys might have seen the YouTube video I posted like, two days ago about this.

• 24:26Alex Hormozi?

  But like, they have to read the script. If they are not saying the script word for word, you cannot be on this team. You cannot take these calls. I'm getting these leads, and not for you to go cowboy and make shit up. And that, then, if we cannot solve that problem, because for whatever reason, you keep trying it, and they don't adhere, and they go off-script, because they just want to close the deals, it means you have a cultural issue, which is a leader problem. Because it means the leader is reinforcing behaviors that get people to go off-script. And there's no consequences for doing it. And so, if you want to have a consistent, world-class sales team, the process has to always go above the player. No one is above the process.

• 25:07Alex Hormozi?

  And I do think that ninety-five, maybe ninety-eight percent of sales teams have no idea how sales training, how sales culture, any of this stuff works. They just hire a bunch of people, see who closes deals, fire the rest. And so then you just have a bunch of mercenaries who work for you. But there is no culture, there is no team, and it's every man for himself. And that is what creates this volatility in sales. And some guy says something and he closes a deal and the other guy says, I'm gonna try that now. And there's no consistency across the board. And that also gets you in trouble long-term because they start promising things and making deals that you can't cash.

• 25:43Speaker 05

  That makes a lot of sense. I, up until now, we have scripts, but they're more of suggestions.

• 25:49Alex Hormozi?

  Guidelines, yeah. No, it's, I've done a lot of sales. This is a straight out of the book checklist problem. We have to do all of these things. If we do this entire checklist, we will get this outcome. If we can't do this checklist, the leader is the problem because they don't know how to reinforce culture, which then means that they're not able to get the right people on and the wrong people out, which sometimes means we might have to fire half the team to get the right people in so that we can build the culture we need to get to where we want to go. Because you are in, I showed the shapes of businesses, you are in a sales and marketing business. There's functionally no delivery. Like, you're just basically, you guys do an outbound or like smiling dialing, or do you buy leads from setting teams?

• 26:31Speaker 05

  Inbound, it's Google Ads.

• 26:33Alex Hormozi?

  Google Ads?

• 26:33Speaker 05

  Yeah.

• 26:34Alex Hormozi?

  Okay, so you have inbound leads that are coming in and then you close. Like, that's the business. Like, you buy media, you sell shit. And so this has to be a core, like, you have to be world-class at this if you want to be world-class at wholesale.

• 26:48Speaker 05

  Gotcha.

• 26:48Alex Hormozi?

  But that's the constraint.

• 26:49Speaker 05

  In the event that I have to let go of half the team, they're just not good enough?

• 26:54Alex Hormozi?

  Yeah.

• 26:54Speaker 05

  Where do you suggest I look for?

• 26:57Alex Hormozi?

  It's not about where, it's about how. So, it's not like I'm gonna find... The better you get at training sales and creating consistent sales processes, the less skill someone can have and create a consistent outcome within your team, which becomes the arbitrage of your business. Just like I said, the cleaning thing before, if the whole constraint of that business is going to be finding, basically taking a human being and then turning them to a great cleaner that actually shows up on time, you have to take the raw input of somebody who has no skill and just has work ethic, just has energy, and in 14 days, you can get them closing deals on wholesaling. That box is the value that your company, that is your IP, that is the trade secret. That's how your company is valuable. And so when I say who versus how, like where do I find these people? You could run Indeed Ads and find like,

• 27:42Alex Hormozi?

  for this caliber of salesperson, they're everywhere. The issue is then what is the process and what are the expectations we're setting for those people as they walk in? And so typically, when you're doing high-volume sales like you are, how many guys you have on the team?

• 27:56Speaker 05

  Currently seventeen.

• 27:57Alex Hormozi?

  Okay, so when you have that, that is mid-sized, someone comes in, usually you get constrained because the amount of churn you have and people quitting, leaving is about equal to what you have to hire, and that's what keeps you stuck, right? And so it's a process issue on the demand gen side for talent. And so usually we look at that and say, okay, what part of this can we screen ahead of time? So it's let's send them the script before they even show up. So people apply, we send them the script, and then send us a 60-second video of you saying the script. And then from the 60-second videos, we're going to invite people to a group call, not one-on-one because we don't have time for that. And we're going to go quick drill, say the script, give a piece of feedback, see how they do it again. If they could take the feedback well and they were prepared, great, it means they're coachable, they have work ethic.

• 28:42Alex Hormozi?

  Awesome, now we can take you to a job offer call. Somebody, you know, has attitude on the coaching, they're out. If someone doesn't show up prepared, they're out. Very easy screening. And so you take 10, you pick two, pick three, they go to the next one, you make job offers. And that's the flow. But like, the entire sales process of selling them on selling for you sets the frame for how the company operates. Like, how disciplined you are and how militant you are in terms of how you set the frame for this. This is how we fucking do things here. Either get in or get out, I do not care, but we win. And if you can set that frame, you will attract winners. And winning is not for everybody. And so that means that on the team, there's probably some losers. And it's not for everybody.

• 29:26Alex Hormozi?

  So that's the decision you make, and that's from top down. So there's the tactics, and then there's the root issue. I would try this first. If this doesn't work, you have to probably gut things.

• 29:36Speaker 04

  Thank you.

• 29:37Alex Hormozi?

  I know he's the only person struggling with sales here.

• 29:42Alex Hormozi?

  I saw like more notes, like, okay, group interview, yeah. Go ahead.

• 29:46Speaker 06

  Wow, I'm super nervous.

• 29:48Alex Hormozi?

  Oh, don't be.

• 29:50Speaker 06

  So I actually, there is someone that I ran into at a house party that was pivotal for you.

• 29:56Alex Hormozi?

  Pivotal for me?

• 29:57Speaker 06

  Yeah, you mentioned in a podcast.

• 30:00Alex Hormozi?

  Okay.

• 30:00Speaker 06

  That they, that they inspired you to create content.

• 30:06Alex Hormozi?

  Okay.

• 30:07Speaker 06

  And I was too shy to say hello. So can you imagine how I feel right now?

• 30:12Alex Hormozi?

  You're crushing it.

• 30:13Speaker 06

  Thank you. Okay, so my name is Sasha. I sell designer bags and sunglasses.

• 30:19Alex Hormozi?

  Cool.

• 30:20Speaker 06

  And we do about six million a month. No, so sorry, a year, sorry, six million a year.

• 30:24Alex Hormozi?

  Still cool.

• 30:26Speaker 06

  And I would like to do thirty-eight million.

• 30:30Alex Hormozi?

  Precise.

• 30:31Speaker 06

  Yeah, thirty-eight million.

• 30:32Alex Hormozi?

  Okay.

• 30:33Speaker 06

  And what's stopping me is recruiting.

• 30:35Alex Hormozi?

  Why thirty-eight?

• 30:37Speaker 06

  Just because I figured a hundred thousand a day, something like that, round up, down, something like that.

• 30:41Alex Hormozi?

  Okay. Got it.

• 30:43Speaker 06

  Just a roundabout. And obviously more.

• 30:47Alex Hormozi?

  Yeah, yeah, okay.

• 30:49Speaker 06

  I was thinking thirty-eight would be fair.

• 30:50Alex Hormozi?

  Yeah, that works.

• 30:52Speaker 06

  And it is just recruiting.

• 30:54Alex Hormozi?

  Recruiting is the bottleneck, as you're saying?

• 30:56Speaker 06

  Yeah.

• 30:57Alex Hormozi?

  Okay, got it.

• 30:58Speaker 06

  My house cleaner was my first employee, and she just, and because I consumed yours and laid out content so much that I was like, I'm gonna be these two people in one. That's me. Be these two people. And as a result, I have a great team.

• 31:14Alex Hormozi?

  Okay.

• 31:15Speaker 06

  Really great team. And it's just a matter of being militant in the recruiting process.

• 31:21Alex Hormozi?

  Okay.

• 31:22Speaker 06

  The, we do sell on whatnot quite a bit.

• 31:24Alex Hormozi?

  So who do you have what's stopping you? So you make money, six million dollars a year selling handbags. And sunglasses. For you to sell more handbags and sunglasses, you need more people to do that?

• 31:35Speaker 06

  Yes, because we, we only go live for about five hours a day because we get tired. It's just me and the, me and, I have three salespeople, but it's just we get tired, we could, if we were live more often, we could create more.

• 31:50Alex Hormozi?

  You're going live on like your Instagram page or your what?

• 31:53Speaker 06

  On whatnot.

• 31:54Alex Hormozi?

  Okay, got it. And do you have a big following there?

• 31:57Speaker 06

  A hundred and ten thousand.

• 31:59Alex Hormozi?

  And so you're just selling to that same base? And if you just sold for longer, you would make more?

• 32:04Speaker 06

  A lot more. I could do a hundred grand in the show.

• 32:06Alex Hormozi?

  Okay. So you just need two more salespeople who are going on camera?

• 32:10Speaker 06

  But yeah. And then the recruiting as well.

• 32:14Alex Hormozi?

  Recruiting for what?

• 32:15Speaker 06

  Packing, because we do a lot of.

• 32:18Alex Hormozi?

  You do your own 3PL or not third party, but you do your logistics? Why?

• 32:23Speaker 06

  Why do we do it ourselves? And I know you can have other people do it.

• 32:29Alex Hormozi?

  Boy, oh, boy. Yeah. Step inside. Yes. So functionally, like because of the nature of the business that you're in, we have to think, we have to consolidate resources. I'm not normally somebody who's let's cut parts of the business out, but unless your shipping is some key differentiator that you have, like Amazon, shipping became a competitive advantage, right? But unless that's like some differentiator, then shipping for the most part is pretty commoditized. And there are people who all day long, they think about saving 15 cents on cardboard boxes and tape and packing peanuts and all that shit.

• 33:08Alex Hormozi?

  And I think that you having to like think about that and run a functionally a warehouse at the same time as running a marketing and sales and talent business slash media, that's not where the value is. The value is in the distribution and the sales. And so I would say, can we outsource this so that?

• 33:28Alex Hormozi?

  Can we outsource this, the logistics part? So that you can just go all that, because all we had to do is you get two more salespeople and you get to a hundred thousand a day? We should do that.

• 33:39Speaker 06

  We have to physically show the product, like.

• 33:41Alex Hormozi?

  I'm not saying you don't have some product on hand. You just don't need a warehouse.

• 33:46Speaker 06

  No, we do need it because it's. Go.

• 33:49Alex Hormozi?

  Okay.

• 33:50Speaker 06

  We run probably about.

• 33:52Alex Hormozi?

  So you're like, we sold this item to this person is how you do it?

• 33:55Speaker 06

  Yes.

• 33:56Alex Hormozi?

  Okay.

• 33:58Alex Hormozi?

  Got it.

• 33:58Speaker 06

  Like a warehouse, it's, yeah.

• 34:00Alex Hormozi?

  Okay, that's fun. Alright, so you just need to hire more people. So what's stopping you from hiring more people?

• 34:06Speaker 06

  The talent.

• 34:08Alex Hormozi?

  The talent to hire more people?

• 34:10Speaker 06

  I'm learning now, that's why I'm here.

• 34:12Alex Hormozi?

  Oh, you're good, you're good. So I'm saying like, you have two sets of roles. You've got warehouse folks and you've got people who can get on camera. So what are you currently doing to get each of those people?

• 34:23Speaker 06

  We had ads on Indeed.

• 34:25Alex Hormozi?

  Okay.

• 34:25Speaker 06

  But I didn't realize how militant it had to be until I came here. It's, it makes a lot of sense. I know that there's that many interviews that are required.

• 34:34Alex Hormozi?

  And that's more for the warehouse side, correct?

• 34:37Speaker 06

  Both, because sales is...

• 34:39Alex Hormozi?

  I think that you'd be able to find salespeople, like, I would probably look at Amazon affiliates.

• 34:47Speaker 06

  How much would you pay them?

• 34:49Alex Hormozi?

  Percentage.

• 34:51Speaker 06

  That's the thing, now, okay, so it takes skill to do what we do.

• 34:55Alex Hormozi?

  Yeah.

• 34:55Speaker 06

  It takes skill.

• 34:56Alex Hormozi?

  Agreed.

• 34:58Speaker 06

  For example, my girl is better than me.

• 35:00Alex Hormozi?

  Great.

• 35:01Speaker 06

  She's better than me, and it's, not only is it motor skills, it's presentation and entertainment, like...

• 35:09Alex Hormozi?

  Dude, I, I get it. I understand. I did a live for three days. I got it. Yeah.

• 35:17Speaker 06

  So finding and training that, that's definitely a process and takes time.

• 35:22Alex Hormozi?

  Yeah. The question is whether you want to buy or build. Do you want to buy the talent or build the talent? Building the talent is cheaper, takes longer, harder. Buying the talent is faster, more expensive. Which one do you, which one feels right for you?

• 35:35Speaker 06

  So when it comes to the, so we have, we're not always, so we are profitable per show, yes.

• 35:44Alex Hormozi?

  Okay.

• 35:45Speaker 06

  Profitable per show.

• 35:46Alex Hormozi?

  Uh huh.

• 35:46Speaker 06

  But sometimes what ends up happening is, let's just say it's a Wednesday, right?

• 35:51Alex Hormozi?

  Are you on cash-based accounting or accrual? Probably cash.

• 35:55Speaker 06

  Yeah.

• 35:56Alex Hormozi?

  So you might, if, basically if you run a physical products business, which you do, here, you're like, okay, we made money, now let's take all of that profit, gross profit that we had, and go buy more shit so we can sell more shit, right? And so this is where, like, you probably have, what's your, like, what's your financial, the financial side of the business, the financial ops look like?

• 36:17Speaker 06

  My accountant does it.

• 36:19Alex Hormozi?

  Your who?

• 36:19Speaker 06

  My accountant.

• 36:20Alex Hormozi?

  Oh, your accountant does it. Okay.

• 36:21Speaker 06

  Yeah.

• 36:23Alex Hormozi?

  You will need to have soon a relatively strong finance person who can give you better forecasting so that you can, it's not just like how much cash you have in bank account, let's go buy more shit. It's we can only afford to buy this much, given this growth rate that we want to have. Otherwise, you will get into these probably cash crunches that you're feeling right now. It's not that the business isn't profitable because I'm guessing the headcount's not super high.

• 36:46Speaker 06

  So our shows will make anywhere from five to seven thousand profit, depending on like the volume that we did that day. So we know the profit like per show. However, that's where the skill comes into play. If a show is not going well, we need to have that person trained to be able to do the thing. And so that's why not knowing how much to pay them is

• 37:07Alex Hormozi?

  I think doing a percentage would make sense.

• 37:09Speaker 06

  Percentage of profit?

• 37:11Alex Hormozi?

  Yeah, like a salesperson.

• 37:13Speaker 06

  Okay.

• 37:14Alex Hormozi?

  And so you can buy or build that. So you buy it as I would just go to mini micro influencers who are already like on Amazon hawking stuff. And be like, they already do live streams and they already do sell shit. And I bet I could teach them to do this for me. That is a buy version because you already know it's already proven. You're just saying, hey, do it under my umbrella. The build version is that you have to kiss a lot more toads and try and look for who has already built in a bunch of soft skills. And then you can hire for the smallest skill deficiency that you know how to train.

• 37:46Speaker 06

  Okay. So Amazon. Affiliates.

• 37:49Alex Hormozi?

  You could do either, but yeah, obviously this is going to be a lower risk thing. And then you'd have to have some agreement that they're going to only sell for you for X period of time.

• 37:55Speaker 06

  Good contract. Yeah.

• 37:56Alex Hormozi?

  Like a contract.

• 37:57Speaker 06

  Thank you.

• 37:57Alex Hormozi?

  Yes. But I would, but big picture, because I want to make sure that you're good. The Indeed warehouse stuff, that's just commoditized. You have a warehouse, maybe you have to have it for your business, but I don't see that as that's not a core differentiator. You might, you're not different because you have a warehouse behind you. That's not special. So the roles that you have there, it's like, they need to be like, have a pulse, have a good leader there, let them just deal with it. Your star factor is going to be your ability to train people to sell.

• 38:26Alex Hormozi?

  And so that's like, where's your, what is, what is the true pinpoint of where the most I get's created for you as the founder, the entrepreneur, is that you need to be able to take somebody and teach them to sell.

• 38:36Speaker 06

  I, yeah.

• 38:39Alex Hormozi?

  And you have to break it down in, in terms of the most concrete language you possibly can't. And so think of everything purely in terms of behavior and you do not use any amorphous words. So it's, I need you to have higher energy. That means nothing. I need you to raise your voice. I need you to talk faster. I need you to have your shoulders back. You have to describe things that people can see and then other people will describe them as having high energy, having charisma, having confidence. And so if you want to teach someone to present, you have to tell them what to do with their body and their voice and that will be far faster for you. And what you'll find is the training lap, the reason it takes so long for people to train or they can, where they can't train, salespeople or presentation people is because

• 39:20Alex Hormozi?

  they literally do not use words that other people understand. This is the problem. This is why most companies cannot teach people to do shit because they say, have more charisma. And then the person listens and is like, I'll translate that into what I think charisma means, which who fucking knows what they think it means, right? And then we're just playing this telephone game where no one agreed on what are the behaviors I want you to do. That will compress the amount of time that'll take you to get them, one, up to speed and two, long-term, if you can develop the sales training, then you can have a stable of stallions that are on 24/7 for you, working in your barn. I don't know why it's animals now, but let's go with it.

• 39:59Speaker 06

  So that, that's actually, that brings up a good point. So I, I have, so my girl, like I said, she's my house cleaner, shows up at my door one day. She's like, hey, I want to be you. And she's like, I'm a copy and paste of you and she became me.

• 40:16Speaker 06

  Now there's a little bit, a little bit of a, how can I, because obviously I had to learn the care part, like from Leila. So I learned the care part and now I have it, but then I've seen her, I've seen situations not go the way that they should because she's too, she's a copy and paste of me from yesterday. So I'm starting to see those.

• 40:41Alex Hormozi?

  What's the problem?

• 40:43Alex Hormozi?

  We'll just put her in front of the camera, have her sell and get her out of the building. If she can sell.

• 40:49Speaker 06

  Yeah.

• 40:49Alex Hormozi?

  So let her sell. Don't have her manage people. Have her sell.

• 40:52Speaker 06

  Got it. Understood. Thank you.

• 40:55Alex Hormozi?

  This is good talk. Yeah.

• 40:58Alex Hormozi?

  Yes, sir.

• 40:59Speaker 07

  Hi Alex. My name is Sebastian. Four years learning. Thanks for everything.

• 41:03Alex Hormozi?

  Yeah. Thanks for coming out from Australia.

• 41:07Speaker 07

  Melbourne. Yep.

• 41:08Alex Hormozi?

  Melbourne. Nice. Sick.

• 41:11Speaker 07

  Blue Sense Digital, we sell paid ads and growth advisory to eight and nine-figure econ brands.

• 41:17Alex Hormozi?

  Sweet.

• 41:18Speaker 07

  We do three and a half.

• 41:19Alex Hormozi?

  Okay.

• 41:19Speaker 07

  We'd like to be at 10 and 20.

• 41:21Alex Hormozi?

  Okay.

• 41:23Speaker 07

  Feel super clear on our top priority against our supply constraint.

• 41:27Alex Hormozi?

  Oh, talent?

• 41:28Speaker 07

  Yeah. Talent acquisition and first getting LTGP on talent. Something that's unclear is we've just established this past 12 months, our leadership team. So we have two team leaders ahead of growth and ahead of strategy. They're all just on salary at the moment, but putting together or building an incentive, a great incentive plan for them as a group to carry us as we two and three X headcount.

• 41:56Alex Hormozi?

  I would just go profit share pool, 10 to 20%, and then they get slices of that slice so it caps. So basically, it's like if you say, simple math, $100 a year of profit, $20 is always going to be allocated or 20% is always going to be allocated to all leaders. And so they get slices of that pool, but then you always have 80. And then they think like you do, which is if we're going to bring this leader and we got to give up some of this pie, but they should be able to grow the pie, which is the exact same math that all of us do when we bring someone in.

• 42:27Speaker 07

  Yeah.

• 42:27Alex Hormozi?

  And so it gets them thinking more like owners. That's the simplest way I could break it down. Are you planning on trying to sell the business anytime soon?

• 42:33Speaker 07

  Potentially. Yeah.

• 42:34Alex Hormozi?

  Okay. If you want, you can include a profits interest in the sale, which you can have be proportional to their interest.

• 42:41Speaker 07

  Yep.

• 42:42Alex Hormozi?

  And then if they leave, it comes back to you.

• 42:46Speaker 07

  Yep. How would you apportion that percentage split against those different roles?

• 42:52Alex Hormozi?

  It's gonna be, so first off, you're gonna wanna leave probably 2/3 for future talent, if you wanna go big. And so, do not be like, "Okay, I'm gonna blow my whole, like, slice of pie on these people," because the best talent is in the future. It's not right now. But I'll give you the pitch or the walkthrough that I have with, with somebody who's in this position, is that, and this will probably apply to half of you, who here has somebody that they were considering tying into your business? Okay, so I'll give you quick, big-picture advice. If you never wanna sell the business, don't give shares away. The only thing that is guaranteed 10 years from now is that you will still be in the business. That's it.

• 43:34Alex Hormozi?

  Everything else is not guaranteed, so I would not encourage you to give real shares away. Thing one. Thing two. There are four things that equity provides. One is cash flow. The second is sale bonus, sale dollars. The third is risk. And the fourth is control. And so, when I have a conversation like this, I'd be like, "Okay, cool. So, do you want any risk?" And they're like, "No, I don't want any risk." And you're like, "Okay, cool. So, we don't want that." I'm not gonna give you control, so that's off the table. So, all we have left are cash flow and the chance that we sell. And that's what we're gonna do. And I'm sure in Melbourne, I know the legal situation, but there's a version of, we'll

• 44:16Alex Hormozi?

  give you a profit share, which comes off bottom line, and in the event of a sale, you'll get a sale bonus. Now, the issue with that is it's going to be taxes income, at least it is in the US if they have a sale bonus, rather than capital gains. But there is no real other alternative, because either they have to take on risk and not get control and pay taxes on you gifting it to them, or they have to buy it and give you money. Most people don't wanna do either of those things, and you have to agree on a valuation. It's a whole fucking mess. And so, it's easier to say, "I'll give you some money today, and if we sell, you get money tomorrow, and if you leave, you get neither."

• 44:50Speaker 07

  And then that sale, you might have just had that, the sale number, is that predetermined?

• 44:55Alex Hormozi?

  There's a zillion ways to slice this, but the simple way is if you have a 10% profit share, like for the whole company, and somebody, let's say, gets 10% of that, so they have 1% of the profit. You could say, when we sell, you will get a proportional amount relative to the total for that 1%. So they get 1% of the sale.

• 45:14Speaker 07

  Sure. Yeah.

• 45:16Alex Hormozi?

  And when you write that, make sure that it's the percentage of cash, not calculated on the total value of the sale.

• 45:21Speaker 07

  Yeah. Sorry, last thing.

• 45:23Alex Hormozi?

  I got fucked on that one before, so, there you go.

• 45:25Speaker 07

  Stoked. The head of growth is pretty much the sole sales guy.

• 45:31Alex Hormozi?

  Uh huh.

• 45:32Speaker 07

  Um, or our first sales guy, non-founder led. He'd be at this table, commission on Clipper sales plus this percentage of profit share, or it's one or the other?

• 45:42Alex Hormozi?

  Is he a founder?

• 45:43Speaker 07

  No.

• 45:45Alex Hormozi?

  It just sounds like he's your sales guy.

• 45:46Speaker 07

  Correct. Yeah. New role for us. Yeah.

• 45:49Alex Hormozi?

  He gets commission?

• 45:50Speaker 07

  Yeah.

• 45:51Alex Hormozi?

  He already participates.

• 45:51Speaker 07

  He's at the leadership table.

• 45:52Alex Hormozi?

  Uh huh.

• 45:53Speaker 07

  The other guys at the leadership table.

• 45:54Alex Hormozi?

  Does he do marketing?

• 45:56Speaker 07

  He started to, yeah. He's developing into, backfilling that head of growth role.

• 46:02Alex Hormozi?

  Giving equity to a sales guy is like one of those day one mistakes that I'd prefer you avoid.

• 46:07Speaker 07

  Yeah.

• 46:07Alex Hormozi?

  So I, if that guy's like really ambitious and really hungry and smart and you think that he's going to be there long-term, I would say, I want you at the leadership table. I don't think you're ready there yet. This is what I would need to see, and just make it quantifiable.

• 46:19Speaker 07

  Yeah.

• 46:19Alex Hormozi?

  He need to get, he needed master demand gen, which creates five deals a week, five deals a month, whatever that number is that you'd act, like if he actually did this, you'd be like, you earned it. So whatever that is.

• 46:30Speaker 07

  Sweet. Thank you.

• 46:31Alex Hormozi?

  Lock and roll. Yeah, you bet. Was this helpful for somebody else? Okay. This is how you have the convo though. It's much easier than like, why won't you give me, it's like, you don't even want equity. Do you want to pay me? No. Do you want to pay taxes? No. Okay, great. Do you want risk? No. Okay, great. I'm not going to give you that. So you want these two and I can do that for you. Yeah.

• 46:48Speaker 08

  Hello, Alex. I'm going to piggyback on Dr. Stem Cell and just thank you for

• 46:53Alex Hormozi?

  That's El Senor. He went to the... Sorry.

• 46:56Speaker 08

  Letting us learn from you and your team.

• 46:58Alex Hormozi?

  Thank you, Ben.

• 46:58Speaker 08

  My name's Trenton. We sell roofing in the Metro Detroit market.

• 47:03Alex Hormozi?

  Sweet.

• 47:03Speaker 08

  We're going to do about 3 million this year. We'd like to be at 10 million.

• 47:07Alex Hormozi?

  Okay.

• 47:08Speaker 08

  Quick context, we were primarily a storm contractor.

• 47:13Alex Hormozi?

  Yeah.

• 47:13Speaker 08

  Storms have vanished in our market, which was...

• 47:17Alex Hormozi?

  What the hell, right?

• 47:18Speaker 08

  Yeah.

• 47:18Alex Hormozi?

  It's global warming back here. Climate change, whatever.

• 47:21Speaker 08

  Actually, the best thing that ever happened because it allowed me to step into retail.

• 47:26Alex Hormozi?

  Okay.

• 47:26Speaker 08

  So, over this last year, I've really had to rebuild my business because right before that, we had hit 2, 5 million 2 years in a row.

• 47:34Alex Hormozi?

  Okay.

• 47:34Speaker 08

  And now we're seeing this drop off. So, my biggest constraint or what's stopping me is that for the last 8 years, all of our lead gen has been from...

• 47:44Alex Hormozi?

  Weather?

• 47:45Speaker 08

  From doors.

• 47:46Alex Hormozi?

  Okay.

• 47:46Speaker 08

  So, it's been 100% door-to-door lead gen. And now, when we're trying to knock for retail, it seems to be heavier of a weight on the team.

• 47:56Alex Hormozi?

  When you say retail, what do you mean?

• 47:59Speaker 08

  Like, just people on market that need a roof.

• 48:01Alex Hormozi?

  So, like residential?

• 48:01Speaker 08

  Residential.

• 48:02Alex Hormozi?

  Okay, got it.

• 48:03Speaker 08

  Yeah.

• 48:03Alex Hormozi?

  And when you were doing door knocking before, you were knocking on?

• 48:06Speaker 08

  Residential doors.

• 48:06Alex Hormozi?

  Okay, so it was the weather was the difference?

• 48:08Speaker 08

  But we were getting funding from the insurance company.

• 48:09Alex Hormozi?

  Got it, word. Okay.

• 48:10Speaker 08

  Yeah.

• 48:10Alex Hormozi?

  Okay, so, keep going.

• 48:12Speaker 08

  So, now, with me being a door-to-door guy, purchasing leads and all that was sacrilegious to me.

• 48:19Alex Hormozi?

  Okay.

• 48:20Speaker 08

  So, there's some limiting beliefs there that I started to explore last October. We bought leads and...

• 48:27Alex Hormozi?

  I just want to be lead curious. That's all I'm asking for.

• 48:29Speaker 08

  Yeah. I'm very lead curious now. And, but I basically got slaughtered learning this.

• 48:36Alex Hormozi?

  Yeah. Just don't be an acquisitionary binary. Be non-binary with your leads. Like, as many as you want.

• 48:42Speaker 08

  Yes. No, that's what I'm trying to do here. And when we did purchase leads and I was able...

• 48:46Alex Hormozi?

  You get the unedited version, by the way. Yeah, go ahead.

• 48:49Speaker 08

  And when we started to stack the guys' calendars, there was a big culture shift.

• 48:54Alex Hormozi?

  Yeah.

• 48:55Speaker 08

  Where we actually saw like more buy-in from the guys, but then like the door knocking just

• 48:59Alex Hormozi?

  Yeah, because it was easier.

• 49:01Speaker 08

  It was way easier. But like our CAC and all that was absolutely horrid. So I'll spend seventy-five hundred dollars just to acquire one customer over the summer. And it wasn't sustainable.

• 49:14Alex Hormozi?

  What do you make from a customer?

• 49:16Speaker 08

  On average, sixty-five hundred dollars.

• 49:18Alex Hormozi?

  So that does not work?

• 49:19Speaker 08

  No, it doesn't work.

• 49:20Alex Hormozi?

  Yeah.

• 49:21Speaker 08

  And it was just like a lot of the marketing agencies that we worked with were like younger people. They were like using AI tools, go high level like. So we decided that we were going to build it in-house.

• 49:31Alex Hormozi?

  Okay.

• 49:31Speaker 08

  So with that being said, now it comes into a leadership issue because I need somebody that like knows how to market better than I do so that I can focus on training and.

• 49:45Alex Hormozi?

  Can I pause you real quick?

• 49:46Speaker 08

  Yes, please.

• 49:46Alex Hormozi?

  Okay, cool. So you're at three, you want to get to ten, you rebuilt it from storm chasing to just straight up door knocking whenever. Fine. I think that was a good idea. You had a door knocking team. You took the same sales guys, brought them on leads that you got them. They got lazy, fat, and don't want to do door knocking anymore. Great rule number one, outbound and inbound are separate teams.

• 50:08Speaker 08

  Yes.

• 50:09Alex Hormozi?

  Inbound is what you graduate to. And so if you're an absolute savage, like you just take children's souls and just rip them out every day because you're a terrible person. But you're just unbelievable at sales. Then and only then do you get the opportunity for me to feed you leads because these are the most expensive leads that we have to work very hard for to make sure. And like we cannot waste them on anybody who cannot close everything. And so, thank you. Oh, that was an amen.

• 50:38Alex Hormozi?

  So first off is the team should be separate, but you're in this mix now. You're in a little bit of a mess. And so my two cents would be like, take the, because I'm sure their commissions have gone down since they now are selling nothing, basically.

• 50:49Speaker 08

  Yes.

• 50:49Alex Hormozi?

  Yeah. So I would say, guys, my fuck up. I went to this thing. He told me I did this big boo, which is inbound and outbound were together, which is not how it should be. Everybody get back on the streets. You guys do that. And then for the absolute savages of you, because you can usually have far fewer people on inbound, that becomes the Christmas tree of the career path.

• 51:08Alex Hormozi?

  Because on inbound, I can feed you and you can do five sales a day. You can't do that door knocking. But you can do it if I'm feeding you leads that are already qualified, already set, already gone through a VSL, whatever, in the sales motion. And then those guys can absolutely clean up, but you earn the opportunity to get that level of commissions. Now, the commission structure should also be different on inbound because you have to pay for those leads. So it's a different role. They graduate to it. It's more volume, lower per, but it's more reliable, which guys with families, things like that. If you have a bad day, you close two, and a good day, you close seven. It's different than you have a bad day, you can close 000. It's much more stressful. And so guys will be happy to even give up. They'll even make the same money, but just have to be more reliable.

• 51:52Alex Hormozi?

  And you don't have to be at the sun.

• 51:55Speaker 08

  So then we should hire for inbound sales?

• 51:58Alex Hormozi?

  Yeah, or take one of the guys you have who's really good at it and put everybody else back on the streets. So you just funnel everything to that guy. Because then you can iterate faster because you're new on this. And so you never want to have too many news. Because it's kind of like the brick analogy I gave at the beginning. The more news there are, the more likely something's going to fuck up. And so it's like, I know this is an absolute savage salesperson. If they're closable, he'll close them or she'll close them. And so then the only variable we have is just what offer/lead source am I getting? And what process are you going from lead to talking to them? Those are the only variables you have to play with and control. It's much easier to iterate on that and then get it to go faster.

• 52:35Speaker 08

  Okay. Okay. And then, okay. So then I want to hire a marketing director or leader to manage that. Now, Tim was blowing our minds in the workshop.

• 52:48Alex Hormozi?

  He does do that. Our Asian Clark Kent.

• 52:50Speaker 08

  Yeah.

• 52:52Alex Hormozi?

  Racist today?

• 52:53Speaker 08

  I was almost going to say he was a ninja, but I didn't want to. He was in those anyways.

• 52:59Alex Hormozi?

  He's Chinese, I'll have you know.

• 53:02Speaker 08

  Samurai.

• 53:02Alex Hormozi?

  Yeah. You're good, keep going.

• 53:05Speaker 08

  But he was talking about when another guy was talking about a constraint and he was talking about the trade-off of, okay, so you could spend $6,000 a month, you don't want to spend basically 100 grand to replace the person. What I'm trying to figure out is, I think I've answered my own question, I won't keep going here. It's, I've been working on the wrong problem, I think is what the situation is, and I'm trying to make sure-

• 53:28Alex Hormozi?

  Can I simplify this for you? Outbound team goes out, inbound team becomes the one guy, you need to hire a marketer person who actually knows what they're doing, probably pay more than you expect, but then that person will be worth it. Your entire business is sales and marketing, so you should have the core elements of the business in-house.

• 53:42Speaker 08

  Okay.

• 53:42Alex Hormozi?

  Great. If you need help with the sales process, we can help.

• 53:45Speaker 08

  Excellent. Thank you.

• 53:47Speaker 03

  Alex, this will be your last question.

• 53:49Alex Hormozi?

  Ah, it's gotta be like the best question ever.

• 53:53Speaker 09

  Hello. So my name is Evan. I sell duct cleaning supply to duct cleaners. This year, we will do 1.2 million in revenue, and I think I'd like to be around three and a half.

• 54:08Alex Hormozi?

  Okay.

• 54:09Speaker 09

  And I think what is stopping me is just being clueless.

• 54:13Alex Hormozi?

  Okay, cool. So, let's give you clues. So, let's do one more. How do you get customers now?

• 54:21Speaker 09

  Strictly organic.

• 54:22Alex Hormozi?

  Can you take more customers than you have?

• 54:24Speaker 09

  Yes.

• 54:24Alex Hormozi?

  Okay. So, you don't do anything, that's why. Alright. No, I mean like it's word of mouth, there's no like demand gen that's happening. Alright. So, I've got good news and bad news. The good news is that your business probably, you probably are good at what you do because you've been relying solely on word of mouth. So that's the good news. The bad news is that you're going to have a steep learning curve for what you have to do next. And so, you basically have to pick. Do you want to do outbound as your way of getting customers, which could either be door knocking, it could be emailing, it could be cold calling, but you gotta be Instagram DMing, it could be anything. But outbound? You could do paid ads to get customers? You can have affiliates, so you do those things to get affiliates? Or you could post content? Those are your options. Which of these do you feel like you are best equipped to do?

• 55:11Speaker 09

  Probably pay it ads, but one of the things I was thinking like is creating a higher value per customer, a good option.

• 55:18Alex Hormozi?

  Okay.

• 55:19Speaker 09

  Instead of trying to get more customers.

• 55:21Alex Hormozi?

  Okay.

• 55:22Speaker 09

  I don't know which route to go.

• 55:25Alex Hormozi?

  So you'd want to double how much customers are worth?

• 55:27Speaker 09

  I guess utilize my existing customer base with more consumables, so there's more repeat orders. So like they're ordering more.

• 55:35Alex Hormozi?

  So duck cleaners go clean ducks?

• 55:37Speaker 09

  Yeah.

• 55:38Alex Hormozi?

  Correct. And you sell them?

• 55:40Speaker 09

  We sell them the cleaning supplies, which is really high profits. And then we started selling some consumables, but they're low profits. They might buy 500 a year, but it's only like $6 a unit or something.

• 55:54Alex Hormozi?

  Uh huh.

• 55:54Speaker 09

  So there's not too much money in that yet.

• 55:56Alex Hormozi?

  Okay.

• 55:58Speaker 09

  I guess the solution-

• 55:59Alex Hormozi?

  But are they buying regularly from you? It's just like, how many customers from other new customers versus repeat customers?

• 56:05Speaker 09

  We average 80 new customers a month.

• 56:08Alex Hormozi?

  Okay. So you do not have a lot of repeat business?

• 56:11Speaker 09

  No.

• 56:12Alex Hormozi?

  How?

• 56:13Speaker 09

  Unfortunately, but fortunately, the equipment I sell is really good, so it doesn't break down frequently.

• 56:19Alex Hormozi?

  But on the consumable side, what percent are all those repeat customers?

• 56:24Speaker 09

  Consumables, yeah, those would all be repeat customers. There's just, even though the margins are, there's just, you can only make so much selling a $6 product. So I don't know if there's a way, I don't know, maybe through-

• 56:38Alex Hormozi?

  Yeah.

• 56:39Speaker 09

  Selling them education to maybe that be-

• 56:42Alex Hormozi?

  No, fundamentally, you have a normal business. There's a zillion businesses that work this way. Auto dealerships work this way. Large equipment works this way. Like ink and printers work this way. You sell, you have three, you basically have three wheels of revenue in this business. You've got, you sell the machines, you sell the stuff that the machines use, and you sell the service around the machines. That's the three-pronged approach. And so, your ability to extend the customer LTV is going to be around the second two, not where most people will even like, the more sophisticated business will sell these at cost at a loss because all their margin is on the consumables and on the service. Now, you can sell bigger customers so that those $6 things times 10,000 of those starts to add up.

• 57:26Alex Hormozi?

  Or we can sell more on the front end, but either way, the core focus of your business, like if I had a two-step approach for you, core focus number one is we have to know that we're retaining 90, 95% of those people on an annual basis on all the consumables. So every year, I should know that 95% of those people are, they have to buy it from somewhere and they should all buy it from me. And so what ends up happening is your business starts, that becomes like the annuity of the business. So you acquire these new customers to sell machines for, whatever, and then this base of service and consumables just continues to rise over time and that's super profitable. That's the game. Now, you said that you wanted to grow the business by making them more valuable. I think you will have a hard time making the individual more valuable. I think it would be easier

• 58:07Alex Hormozi?

  for you to sell a higher tier customer, so somebody who cleans more ducks, so that they can buy in higher volume or buy for entire fleets, whatever. That would be the path, but it'll be a different sales motion than you currently do. And so you have, you are at a crossroads where if you want to have significant growth, you'll either have to have a new acquisition, you'll have to have a new acquisition system basically either way, because you're either going to have a new acquisition system for a new type of customer or a new acquisition system for your existing customer. If I had my druthers, I'd probably rather you start with new acquisition system, existing customer, because you already know that flow. Once you have that, then I'd be willing to go out market.

• 58:45Speaker 09

  Gotcha. So would a good first step be to reach out to our existing customer bases with, explaining to them we have consumables? Like, we don't do any outbound to existing customers.

• 58:55Alex Hormozi?

  Yes, that would be an excellent idea.

• 58:57Speaker 09

  Gotcha.

• 58:58Alex Hormozi?

  We have things available for purchase. You should purchase them from us.

• 59:01Speaker 09

  That makes sense.

• 59:02Alex Hormozi?

  And so realistically, you should probably get them on a cadence or a subscription with the sale of the initial product. So I don't know what the offers that you use would probably be on the scope right now, but that's where a lot of the alpha is right there, is what kind of maintenance programs are we selling upfront? What kind of incentives are we giving them for subscriptions upfront? Like, the entire business, and here, again, I have more good news for you, is that you've been making the money that you are with none of the actual pieces that make your business make money, make money. Which is great news. And so we just have to put these other two... Wheels in place and then develop the motions around those and like the profitability of the business will go up a lot, like a lot, dude. Like you've got the front, you've got the hard part of a profitable business without the profitable part of the profitable business.

• 59:47Alex Hormozi?

  So we just have to bridge that mode. That's it. Yeah, that makes sense. Yeah, I think that's my only question. Okay, great. So, sales motion change, offer change, and then there's gonna be a re-engagement on the back end. Those are the three things for like today. All right, cool. Thank you. Rock and roll. Appreciate you. Okay, fun, exciting. We had a brothel, lots of exciting things.