Q&A. From Sales God to Scale God | Ep 931

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?

  I have now the distinct pleasure of doing lots of Q and As for businesses. Selling to rich investors and entrepreneurs who are trying to avoid taxes. You do $6 million in revenue, you would like to be $24 million in revenue. And what's stopping you is that you're 68% of your revenue despite the fact that you have seven agents.

• 0:18Speaker 01

  Yes, seven plus me, and I'm 4 million of your agents.

• 0:22Alex Hormozi?

  No big deal, that's a brag. I don't have your notes.

• 0:27Alex Hormozi?

  Okay, cool, so why can't we do more? So each of you have seven agents that now do 2 billion in aggregate. Are they unskilled?

• 0:37Speaker 01

  No, it's in the industry average. Two of them are quite young and good for their age. So they've done a few hundred thousand dollars each, one 21, one 23. So for their age, they're legitimate.

• 0:48Alex Hormozi?

  Okay, so let's just skip here and say that you have enough human beings in your market to be doing this. Have you had measures for their funnel process?

• 0:58Speaker 01

  To be honest, I've just been designing the system.

• 1:01Alex Hormozi?

  Fun, what a skill. So you're good with your bottle, right? Can you afford to, you have good margins in your 6 million, so we can skin loading?

• 1:10Speaker 01

  Yeah, we have about 4 million.

• 1:12Alex Hormozi?

  Cool, fantastic.

• 1:15Alex Hormozi?

  And that's tax free, by the way. Manpower is the issue.

• 1:17Speaker 01

  There's one unique issue in my market which was.

• 1:19Alex Hormozi?

  My, my, my. So it's manpower's issue. But why can't we do more? So what's the unique thing about your market?

• 1:26Speaker 01

  Yeah, so in the UAE.

• 1:28Alex Hormozi?

  You're getting dispatched on this.

• 1:29Speaker 01

  Yeah, it's cool. You need the office before you can hire the person. She can't hold this because everyone needs a visa. So you actually have to make a big leap, take the office for 40 people and sign up a four-year contract because the government will come inspect.

• 1:45Alex Hormozi?

  How much is that cost?

• 1:46Speaker 01

  The office that we're negotiating at the moment in dollars, like 350,000 plus per year. Yeah, per year.

• 1:55Alex Hormozi?

  Okay.

• 1:56Speaker 01

  So yeah, we're negotiating.

• 1:57Alex Hormozi?

  4 million profit.

• 1:58Speaker 01

  Yeah.

• 2:00Alex Hormozi?

  But you can make 3.6 and then have all the scaling opportunity, you know, to your business.

• 2:05Speaker 01

  We're negotiating the office now.

• 2:07Alex Hormozi?

  Yeah, 10% of your private revenue in growth.

• 2:09Speaker 01

  Yes.

• 2:09Alex Hormozi?

  Okay, so what's the issue?

• 2:12Speaker 01

  Hiring the talent, I guess, goes up so much.

• 2:13Alex Hormozi?

  So that's not the problem anymore, so we nicked that.

• 2:15Speaker 01

  Yeah, it's lower risk.

• 2:17Alex Hormozi?

  Thanks for being a support, by the way.

• 2:18Speaker 01

  I've had a good year, I can say.

• 2:21Alex Hormozi?

  Well, not that good, you gotta scale. So, your market's obviously not an issue.

• 2:26Speaker 01

  Yeah, mine's so good.

• 2:27Alex Hormozi?

  Okay, so let's take out your four.

• 2:29Speaker 01

  Yeah.

• 2:29Alex Hormozi?

  Two million is what it is.

• 2:30Speaker 01

  Yeah.

• 2:30Alex Hormozi?

  And so, seven people equals two million dollars. So let's say three hundred thousand dollars per person, just using rough math.

• 2:35Speaker 01

  Yeah.

• 2:36Alex Hormozi?

  So if you wanna get to twenty-four million, you need eighty reps.

• 2:39Speaker 01

  Yeah.

• 2:40Alex Hormozi?

  Okay, cool. So you need, whatever, seventy-three more reps than you currently do. So what are you doing right now to acquire agents?

• 2:50Speaker 01

  Yeah, not much, like, nothing, to be honest. Yeah, nothing.

• 2:53Alex Hormozi?

  Well, that explains the.

• 2:55Speaker 01

  Yeah, we've only got four desks, basically, so we're in this, like.

• 2:59Alex Hormozi?

  Dude, I'm so past this. So I'll give you this for everybody. There are some negotiations that I have made in my life that were so dumb, in retrospect. And put it differently, if you're going to get office space, for sure if you want your goal, right? The difference in cost of office space between this space and a better negotiated space for the same space, or this space and yet another, office A at a good price, or office A at a mediocre price, versus office B, whatever. The delta there is you negotiate to three hundred thousand dollars a year. So you save fifty pounds. Who gives a shit?

• 3:35Speaker 01

  Yeah.

• 3:36Alex Hormozi?

  Right? Sell the house, whatever. The point is that, let's say it takes you extra time, it's like, you make five hundred thousand a month right now.

• 3:43Speaker 01

  Yeah.

• 3:44Alex Hormozi?

  So, what's that? That's two and a half days of work is generated, right? You can generate the difference in two and a half days. If it takes you a month extra to try and nickel down, who cares? You have the one you're doing right now.

• 3:58Speaker 01

  We had to submit a plan of limitations. Basically, we went on that and then we're done. Price is negotiated.

• 4:02Alex Hormozi?

  It is negotiated.

• 4:03Speaker 01

  I mean, we're trying to get approval from the government to change it.

• 4:06Alex Hormozi?

  Okay, so you're gonna do this space. We're gonna have desks. You have four desks open right now.

• 4:12Speaker 01

  Yeah.

• 4:12Alex Hormozi?

  Okay, so that's like fifty percent growth. So why not more?

• 4:16Speaker 01

  I guess not. I don't take the time to train people as much as I should, so I need to hire that out. Because, see, I'm on a lot, and it's lower risk for me. It's better for me to keep billing what I'm billing. So I need to hire the person who's the hiring.

• 4:30Alex Hormozi?

  I'll softly push back, I'm not against it, this is more just figuring this out.

• 4:36Alex Hormozi?

  At some point, your identity will have to shift from sales god to sales training god.

• 4:44Speaker 01

  Yeah.

• 4:45Alex Hormozi?

  And it'll be about not how good I am at closing, but how good I can make anyone at closing. And so fundamentally, you do behaviors, you do a big laundry list of behaviors that you do. And you being really clear about what those are, and this is what's tough with winners in general, is that a lot of people don't know why they win. Michael Jordan, way better player than coach.

• 5:06Alex Hormozi?

  But there are things that you do that if we codify those things, we can get somebody else to do those things. And if we do that, then they'll sell more and make you money. Right now, you can outburn anyone. You will not be able to, in the business you want to build, outburn everyone.

• 5:25Alex Hormozi?

  And so the sooner you can bridge that gap, the sooner you're gonna start building the business you ultimately want. Now, I'm sure on some level, your ego is tied to how much money you make. But like, big game, right? No one cares what you make.

• 5:36Speaker 01

  Yeah.

• 5:36Alex Hormozi?

  They're gonna care that you built an infrastructure that has eighty guys or a hundred guys that's knocking thirty million a year on, and you're four.

• 5:42Speaker 01

  Yeah.

• 5:42Alex Hormozi?

  Right? And I'll say this, I think you keeping your chops, being the aspirational person, I think there's elements of that, or especially in the space you're in, makes sense. I think that if you were to say, right now, twenty-five percent of your time, so you lose a million dollars a year, I'm saying roughly, you hard block for reinvesting in the team, you will get disproportionate returns, you'll make more than a million dollars back, giving each of those other guys an extra one deal a year.

• 6:09Speaker 01

  Yeah. It's also like, I do all the content, so all of that leads are organic, so like,

• 6:13Alex Hormozi?

  Yeah.

• 6:14Speaker 01

  So the time is, yeah. So it's also, okay.

• 6:19Alex Hormozi?

  So, back to this, what do you have to do to get, where you should fill those like tomorrow, right? You have four desks, why not use them?

• 6:26Speaker 01

  Yeah, yeah.

• 6:26Alex Hormozi?

  But...

• 6:28Alex Hormozi?

  Your entire marketing, you are in the hiring and training business ironically. That's the business you're in. He's our president here at DCQ. He was the former president of Real Brokerage. The super familiar space. Spent all his time doing it. Hiring and training, all recruiting. All they did was recruit agents. And so, he knew that they had a system. If you work through our system and you have our resources, you're gonna sell X houses per year, period. So, once you know that input-output, it's just like, how many people can we put through this black box? Right now, you don't have the black box, because it's up here.

• 6:59Speaker 01

  So, as we go through the process now, we get to document success for sales. And each step, and then trying to get it.

• 7:06Alex Hormozi?

  We walk you through a house. Where do you sit? Has he been walking you through the process of selling a house before? No, okay, this is called the game plan. Let's walk you, blah, blah, blah, whatever. You have to script all this stuff out.

• 7:15Speaker 01

  Yeah.

• 7:15Alex Hormozi?

  Anything someone says to a customer, should be scripted.

• 7:18Speaker 01

  Okay. Okay.

• 7:20Alex Hormozi?

  I think you actually can get to 24 million dollars a year. You could totally do it in 24 months. If you shift your perspective from sales god to sales training god, or sales recruiting god.

• 7:29Speaker 01

  Yeah.

• 7:30Alex Hormozi?

  Right?

• 7:30Speaker 01

  To take that leap, when the new office is done, we start trying to take it now.

• 7:34Alex Hormozi?

  Yeah. And I think that, long-term, the business that you want to ultimately build, is gonna be one where agents that are already good, that are already doing 1 million, 2 million, period, are attracted to your brand because it's big enough, that you can start feeding them weeds.

• 7:48Speaker 01

  Yeah.

• 7:48Alex Hormozi?

  And then you don't have to start taking these people from zero to hero. You can just take heroes and become superheroes.

• 7:52Speaker 01

  Yeah.

• 7:52Alex Hormozi?

  That's where you wanna be.

• 7:53Speaker 01

  That is the goal.

• 7:55Alex Hormozi?

  Of course, we have to build a brand. But going from 7 to call it 20 or 30, and then this firm going to call it, you know, that'd be like 12, maybe 15 million a year that you'd be doing. And you're doing a million a month plus, right? You can actually reinvest a portion of those profits into consistently reinforcing your brand. But, long-term, your big brand should attract talent and reinforce high status, so that people would rather be with you and get mentorship and help from you for their careers.

• 8:23Speaker 01

  Thank you. Thanks, guys.

• 8:26Alex Hormozi?

  Make your growth so nice, you know.

• 8:27Speaker 02

  Alex, you probably didn't know this, but I'm your long-lost Chinese cousin from Australia.

• 8:33Alex Hormozi?

  I believe you.

• 8:35Speaker 02

  My name is Max. I take your mission very seriously. Within 24 hours of your book launch, a month ago, I was so excited, had eight shots of coffee, and I saw the light that morning. My study is a school community called The Money School, inspired by you. I do what you do, but for the Chinese entrepreneur.

• 8:54Alex Hormozi?

  First.

• 8:55Speaker 02

  I had 75 members join within the first week, charging $1,000 each.

• 9:00Alex Hormozi?

  Lifetime, monthly, one-time?

• 9:01Speaker 02

  I'm doing a funding member stage, so it's one sale for life, and then I do $1,000.

• 9:06Alex Hormozi?

  Okay, got it.

• 9:08Speaker 02

  I've got two questions. The first one is, I really want to reach the 1 million monthly rep target on school as soon as I can. What do I need to do?

• 9:16Alex Hormozi?

  Right now, you're at 75K total.

• 9:18Speaker 02

  Yes.

• 9:20Alex Hormozi?

  Okay, so what did you do to get your first set of customers?

• 9:26Speaker 02

  I have a book, I have about 20,000 subscribers, and I summarized your three books in Chinese.

• 9:33Alex Hormozi?

  What am I doing? If you're like, write another book, Alex, it'll be some money. What is the consistent value that you provide to people in Canada?

• 9:39Speaker 02

  So, I've done this for many years, and I've made... I'm not summarizing your book.

• 9:45Alex Hormozi?

  Okay. He's like, I take your content.

• 9:51Speaker 02

  I've been a small-time KOL in Australia for the Chinese.

• 9:55Alex Hormozi?

  KOL?

• 9:56Speaker 02

  K opinion leaders.

• 9:58Alex Hormozi?

  Okay, got it.

• 9:59Speaker 02

  On YouTube.

• 10:00Alex Hormozi?

  Okay.

• 10:00Speaker 02

  I have a group of audience that listen. It might even call them.

• 10:04Alex Hormozi?

  Who's the audience?

• 10:05Speaker 02

  I oversee Chinese entrepreneurs who are studying, making some money.

• 10:09Alex Hormozi?

  Okay, got it.

• 10:13Alex Hormozi?

  So, the thing with membership, who here is a recurring revenue business? Well, then this will, I'm gonna go a little deeper on this, because it's probably valuable for him for you. In order to make a recurring revenue business, actually recurring, one of the big mistakes in the education business, which is the way you're in right now, is that people will take something that is inherently valuable and try to build for it like it's consumable. So, education has super-high one-time value.

• 10:41Alex Hormozi?

  Right? The day before you know how to advertise, advertising is unbelievably valuable. The day after you know how to advertise, why would I pay for something I already know how to do? It goes from huge to zero. That is the problem with education in general. Everybody who has an education business wants to build continuity. Continuity is very hard to build if you purely have education as the primary value proposition. In a school community or any kind of recurring revenue business, you need to create or at least demonstrate consumable value. I'll give you a couple of examples of this. So there is a super low churn community that does 3D printing in school. What they do is they find the hottest trending items and then they create the 3D blueprint. I don't know how this stuff works, but like what are the 3D blueprints?

• 11:25Alex Hormozi?

  And then every week they upload those blueprints to their community. And so because it's trending, it's new, it's consumable. You consume this week's things and next week's the trends are different, right?

• 11:36Alex Hormozi?

  News in and of itself is consumable. Last week's news is no longer valuable. This week's news is, which is why new subscriptions do work, right? Different example, there was a real estate business that did wholesale. They would find all the hot deals in an area, pre-vet them, do their calculation, print, say these are all the hot list. And so every week, every local market, people in their community would see the building. If they liked it, they already knew it was pre-vetted. So that creates this consistent thing that gets consumed. And then next week there'll be new deals and some of those deals are gone. Like GymLaunch, we made new ads that we tested every single month that we would then give to the gym owner. So rather than them spending money, wasting money on production and testing ads that don't work, we would pre-fill, test and hand them only the winners. And it would just take winning ads and run them. But what do you need next month?

• 12:21Alex Hormozi?

  More winning ads. And so that's what gave GymLaunch the super high margins that it had and kept it sticky. Cause it was media functionally rather than quote education. And so we sold the box, which is like, this is the GymLaunch system. This is how you run the gym. This is the price point, the sales process. Once you know the sales process, you know the script into the bundles, you have the white labeled stuff. You got it. It's zero value now. So what we do is we want to sell like if you have... Inputs, you've got a black box, and then you've got output being money, right? This is your one-time thing that's very valuable, but you can only charge for it once.

• 13:03Alex Hormozi?

  This is much smaller, but you charge for it on a recurring basis. You sell the inputs to the machine. So with your business, you'll probably have to niche down, which is why niching is so valuable, because you can actually create the machine and then sell the inputs. Like, I couldn't make ads for 100 different businesses because they're all different, right? I can't test 100 different businesses. If you have a super new or beginner network, you teach them one, two, or three different business models that would work, and then you sell the inputs the same way. If you have medium and larger business owners, it has to be about something different, which is probably going to be network, it's going to be access, group negotiated discounts that

• 13:45Alex Hormozi?

  you can do on behalf of everyone, and that is going to be valued much less than something that's one-time that's going to immediately make them more. Sometimes, I think this is where a lot of entrepreneurs make mistakes, is that there needs to be a very big discrepancy between what you charge that one-time versus the true willingness to pay for the small recurring revenue component of the business. That's okay, provided it's sticky, right? Because if you charge $10,000 upfront and then $500 a month after that, it probably would be relatively sticky if someone's willing to pay 10 and it's $500 a month. As long as the $500 a month was still, like, $10,000 buys you some time, but as long as the ongoing value surpasses the five, usually by three or four X, then you're good to go. So I really just back into how can I provide value to all these people?

• 14:28Alex Hormozi?

  And ideally, in what way can I make it so that each additional member does not detract or dilute the value? The community could actually add to it. Functionally, that's what a network effect is. Does that help?

• 14:37Speaker 02

  Second question. What would it take me to become your global Chinese partner to help share your message with 15 million overseas Chinese entrepreneurs?

• 14:51Alex Hormozi?

  You'd have to have credibility.

• 14:56Alex Hormozi?

  The reason that I think the content that I have has been able to perform really well is because I had the backdrop of proof. The Alex Ramos brand was built off of $100 million net worth prior to this. It wasn't like coaches, coaches, coaches about whatever. I've already done this and that's my proof. I don't need to do this. I do this because I like it and I have other visions in my life, but that proof is the backdrop that everything stands on. If I were to partner with someone, I want them to be bulletproof from a proof perspective in terms of what they had done to prove that they were. Because anyone can repeat the words. I mean, shoot, literally anyone can repeat the words. The idea that like, why does, why does my content outperform yours is because the messenger is 80 or 90% of the context within which the message is received.

• 15:41Alex Hormozi?

  Elon can tweet, "I'm shitting on a toilet right now," and it'll get 200 million views because Elon's the richest man in the world. That backdrop is so embedded in the message that they're inextricable. And so obviously there's core components of value, but the why should I believe you is always the big blaring Vegas lights up of everyone's head. Why should I? Because if you think about why, why is authority compelling, right? Authority is compelling because it actually decreases risk. And so we listen to an authority because we don't have to spend nearly the mental effort to deduce whether this is true or not, or to what degree I think this is risky to follow. If Warren Buffett gives some sort of investing advice, most people would just say, Warren Buffett is the richest man in the world.

• 16:26Alex Hormozi?

  He's arguably the best investor of our generation, therefore I will just listen to him. It's actually a more efficient way to consume information to follow authoritative sources because it takes less cognitive load. That being said, being a high agency as a person, you should separate those things, people are in general. But if you are a high agency person, you should be able to separate messenger for message. No one does though. And so for me, let's use Napoleon's quote, "I'd rather have lucky generals." If I were to do something like that, I would rather something have a big proof point that they can sit on than all of the content makes sense within their context.

• 16:58Speaker 02

  Thank you.

• 16:58Alex Hormozi?

  Do that. Thank you.