Why Constant Changes Kill Growth | Ep 862

In this tactical episode of The Game, Alex (@AlexHormozi) explains why changing too much too fast kills growth. He unpacks the 20% drop rule, the ICE framework, and how sometimes the most scalable move is doing less. 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 Mentioned in this episode: Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap

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

• 0:00Alex Hormozi?

  There are probably 100 things that you have on those notes and each of them you're like, this could give me 5% more, this give me 10% more, this give me whatever. If I know them and have a 20% guaranteed cost, that whether it works or not, I'm going to have this happen. It changes what things I'm willing to take a bet on.

• 0:17Alex Hormozi?

  So how's this morning? Good? Yes? Tactical? Okay, good, that is the objective and hopefully it puts a little more context on what I was talking about yesterday, which is, all right, there's probably 100 questions you could have potentially asked, but ideally, or hopefully, you ask the questions that you think could get you the highest return. And that's fundamentally why we laid out that way. To frame this Q and A, I I want to go over a couple of small things and then we'll kind of dive into it. So, one of the big ones is, everyone here probably has a lot of notes from this morning and yesterday. And when you get back in your car or you go to on the plane, you're gonna open up your laptop, you open up your notes, and you'll probably open up some sort of fresh document and be like, okay, what am I actually gonna do? Right? Because you have all these ideas. And kind of the objective for me,

• 1:02Alex Hormozi?

  when I think about how to prioritize within a business, AKA strategy, it's making sure that we get those one to three things that we're going to change correct. And I want to introduce a little bit of a concept that's taken me too long to understand, and it's really, really hard, which is this. There's a lot of things that you can do to grow the business. You have a lot of ideas that you're coming off on. And so let's, let's imagine that this line represents your current revenue level. Whenever you make a change in the business, my estimation is that we see about a 20% decrease in revenue as a result of a change, especially if it's a manual change. We're changing a sales process, we're changing a customer service process, something that involves humans, we're changing something that they're doing. We'll typically see a 20% decrease guaranteed, simply because of the cost of change.

• 1:47Alex Hormozi?

  But once I kind of like realized this, it changed what things I decided to choose to change to begin with. Meaning, there are probably 100 things that you have on those notes and each of them you're like, this could give me 5% more, this give me 10% more, this give me whatever. If I know them and have a 20% guaranteed cost, that whether it works or not, I'm going to have this happen. It changes what things I'm willing to take a bet on. And so for me, my kind of minimum litmus test for this is I need to see at least a 20% bump, or believe I can see a 20% bump from any implementation that I'm going to run, or I'm not going to take the guaranteed 20% loss. And so part of this comes into something called ICE, which is kind of an investor terminology. But basically you have impact, confidence, how likely, like how big of a difference is it going to make?

• 2:32Alex Hormozi?

  How likely is that to happen? And then you've got ease, which is basically the value equation without speed. And so if we're looking at any of the implementation that you're thinking about, about putting in the business, I'd be like, okay, how, you know, how big of an impact do I think this could have? How likely do I think this is to occur? And then how fast and how easy do I think I can make it happen? And so typically we'll organize it in that way. And you'll probably figure out pretty quickly, if I were to implement two things at once, what do you think would happen, right? And so you'd have two negative 20% decreases. And so the end result of like basically taking this ideology to its natural extreme means that you basically can't change that many things in the business and expect it to grow.

• 3:12Alex Hormozi?

  And so that end result for me has been, and I'm going to be crude on purpose, is that some shit stays fucked. And so like, there's a lot of things that I would love to do to improve this experience for everyone here. I've got a list like many pages long, but every time I do implement a change, it negatively impacts the next, the next group because it was a change. Now, the next one after that, it starts to recover and come back up because the team learns whatever that process was. They get better at it. And then maybe the one after that goes even higher and that's great. And so what happens is like, I, I've gotten addicted to not changing things because people tend to, because the flip side is if you change nothing, so let's say you have no change that occurs, you'll have something usually that's in like the, like a two to 3% increase

• 3:55Alex Hormozi?

  that happens pretty much no matter what, because people just get better at their jobs. Sales guys just get a little bit more comfortable, customer service guys get into a rhythm. Like it just works and it just works a little bit better because most people like to make their jobs easier. And so they tend to just do it a little bit better. That's what specialization, specialization of labor is all about. And so I would encourage you that when you have this list, That you're going to have for, you know, your one, two and three that you're going to go home with. Think about ICE when you're putting that together and make sure that you're going to make your biggest swing worth it. If you have a change that can get 2X the business, then yeah, take the 20% tip, no question. Right. But there are some changes that just aren't good enough to be even worth the guaranteed cost. Does that make sense?

• 4:35Alex Hormozi?

  This took me a really long time to understand and is almost like, I would say like a stepbrother to the focus on the macro scale of business model focus. Let's not start a second business, which probably a third of you have, but even within the business, it's staying focused on keeping the main thing, the main thing. And the hard part is, is it's hard because the thing that's often limiting you in the business are hard problems. New things are easy problems because you can always just whip something up and promote it and make money. But the hard problem is like, okay, I can't scale past this current level because I need to recruit like three really niche employees. Well, you're going to have to do it either way. And so you might as well just confront the hard that's in front of you. And so being able to spell that out to myself and be like, this is the hard.

• 5:19Alex Hormozi?

  The hard is the not knowing how to do this thing and I have to figure it out and not knowing where to find these people. But I'm going to have to figure it out. And so it's like taking all that energy where you're like, I don't know how to do this. So I'm just going to do the thing I know how to do, which is, I say this and I see like all the smiles and like nods in the audience right now. But you have to keep fighting that muscle because in a lot of ways, it's almost like an addiction for entrepreneurship. It's like, we like to do new things and also like addiction, you just have to fight it every day. This is just because a lot of you guys are going to be implementing some of the things that you walk away from here. I just want to make sure, number one, that the few things that you choose to do, that they're absolutely worth it. And that many of the things on that list, I'd rather you just forget about because after you do the first three things, all the, all the pieces on the board are going to change. You're going to have new resources, new problems.

• 6:00Alex Hormozi?

  And number, you know, five, four, five, six, seven, eight might not be like, once you do one through three, number four might not be number one. You'll have another thing that'll be number one that you didn't even think about. Which is why I'm not super obsessed with very long-term planning. So I thought this might be a good primer before we get into this. As a good way of thinking through this, and this is like, I wish I could transfer this to you because this is probably from a skill perspective, one of the things that has made me the most money is basically just saying I'm not going to do new things. And if I'm going to do it, it better be worth it. Because I'm going to pay a price immediately with my team being confused, feeling whiplash, saying, what is this thing? I didn't feel like it was communicated well. It doesn't matter how well you communicate, it's not communicated well enough because they don't just immediately know it.

• 6:42Alex Hormozi?

  Okay, cool. Let's do Q and A's. All right. So you had a hundred and seven thousand, you went to get to a million.

• 6:46Speaker 01

  Biggest issue is hiring. Hundred fifty.

• 6:48Alex Hormozi?

  Hundred fifty, excuse me.

• 6:52Alex Hormozi?

  You want to get to a million?

• 6:53Speaker 01

  Yep.

• 6:54Alex Hormozi?

  And your biggest issue is hiring?

• 6:55Speaker 01

  Yep.

• 6:56Alex Hormozi?

  What do you sell?

• 6:56Speaker 01

  I sell content, so.

• 6:58Alex Hormozi?

  Content?

• 6:58Speaker 01

  Yeah, so we do videos, like marketing materials for real estate agents looking to market their personal brands and properties.

• 7:05Alex Hormozi?

  Okay, so personal branding for them?

• 7:07Speaker 01

  Correct.

• 7:08Alex Hormozi?

  Okay, got it. So what stops you from doing a lot more of that?

• 7:13Speaker 01

  So I'm a young entrepreneur and I basically based my own brand off of being a young entrepreneur. My.

• 7:19Alex Hormozi?

  And now you're just gonna be a middle young white guy?

• 7:24Speaker 01

  So my business partner.

• 7:26Alex Hormozi?

  I assume you know what you're dealing with because like when I came up, I started making a lot of money at like twenty-six, twenty-seven. And they're like, Alex is so young. And now I'm just like thirty-six and no one really gives a fuck.

• 7:36Alex Hormozi?

  But yeah, sorry, keep going.

• 7:37Speaker 01

  The only problem is like clients find out my real age and I use my, I technically use my age as a leverage to what I sell. So social media, I grew up with social media, so you know, I know social media better than sixty-year-old agents do.

• 7:52Alex Hormozi?

  Okay.

• 7:53Speaker 01

  So my constraint.

• 7:55Alex Hormozi?

  What's up? What's the issue? Just the pitch is wrong?

• 7:57Speaker 01

  No, people don't trust necessarily older people in my business. We based our brand off of being young.

• 8:05Alex Hormozi?

  Okay.

• 8:05Speaker 01

  So.

• 8:06Alex Hormozi?

  You're still young.

• 8:07Speaker 01

  Yes, but when I hire someone like a new shooter.

• 8:10Alex Hormozi?

  Yeah.

• 8:10Speaker 01

  Or a director of operations who's twenty-five and above, they don't necessarily. Yeah, they don't necess.

• 8:20Speaker 01

  I want to say too.

• 8:20Alex Hormozi?

  It's boomers. Yeah.

• 8:21Speaker 01

  Yeah, boom boomers.

• 8:25Alex Hormozi?

  So, but what are you saying though? Like.

• 8:27Speaker 01

  It's it's more of a trust issue with clientele.

• 8:30Alex Hormozi?

  It's like totally in your head, man.

• 8:32Speaker 01

  Really?

• 8:32Alex Hormozi?

  Yeah, a hundred percent. You care. No one else cares. You even think they're old.

• 8:38Speaker 01

  Hey, I don't think I don't think they're old.

• 8:39Alex Hormozi?

  Oh, but like you a little bit because you're bringing it up. Right? So like, like, no one cares. Did you guys care that Jacob Popovich is 22 at the same time? We have people who are in their late 30s and 40s. People just care about how good you are. So like, people will care about your age for the two seconds before you open your mouth. And then as soon as you open your mouth, all of it's like, that's like the the the the absolute thinnest surface level of judgment that someone will make. In general, younger people will know less than older people in general.

• 9:10Speaker 01

  Yeah.

• 9:10Alex Hormozi?

  But there are also Mark Zuckerberg, who's a billionaire at 21. So there's obviously people who know more at a younger age. So you just have to demonstrate expertise.

• 9:20Speaker 01

  Okay, can I follow up with another question? So on a scaling aspect, we have a lot of realtors, you know, asking us in different areas like Texas, California to come produce the work out there.

• 9:32Alex Hormozi?

  Yeah.

• 9:32Speaker 01

  Because our content is kind of one of one. It's different and it's providing a lot of value. I'm looking at I'm looking at it as more of like a 1099, you know, contracting videographers and teaching them, you know, in that state or region to shoot that kind of property. But I'm also looking at it as kind of like a franchise. What would you do in that situation?

• 9:51Alex Hormozi?

  For for a franchise to be something that you'd really want, it's simply you're going to have some sort of like franchising is just a model for raising money.

• 10:00Alex Hormozi?

  And you dilute selling the most expensive version of it, which is that you're going to give all of the upside away, except for a small royalty, and you're going to do a huge amount of the work. And so in your business, you don't require really any capital to expand. Right? So we wouldn't franchise. So that doesn't make sense. If you wanted to have revenue retention for these people who are in, you know, different markets, I could see two different ways that you could do it, or really three. So one is they fly to you. And then you just book, you do like one day of recording and you get 90 days or six months worth of content for them. And I think that would be a very strong value prop and you could probably charge 25 grand for that. That's number one. The other way is that you could fly out, you could fly somebody out to do that. That's the second version, also still charging a lot of money.

• 10:44Alex Hormozi?

  The third way is you can, I guess, find people, basically run ads locally to find videographers to go capture the footage and then you what, edit centrally?

• 10:52Speaker 01

  We would, we have a team in-house to edit and we're so like the shots, like learning the correct shots and for us to edit.

• 10:57Alex Hormozi?

  So you edit centrally, they, they capture locally, right? So I think I would just consider hiring those people on behalf of the client. And then just charging and upcharge on the rate that you're, like if you, you know, pay them $4,000 a month, you charge five. And, but they're paying you five, you pay the person four. And then that way you'll have built in revenue retention because it's much harder to fire an employee than it is to fire a vendor.

• 11:27Alex Hormozi?

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

• 12:06Alex Hormozi?

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

• 12:23Alex Hormozi?

  But you would just basically fractionally own a lot of these relationships.

• 12:27Speaker 01

  So look at it more as like a vendor.

• 12:28Alex Hormozi?

  Yeah. And as soon as someone says they're going to cancel, say, oh, that's great. I had such a waiting list in your area. I'm just going to have that guy shoot your competitor. This is so helpful. That works out great.

• 12:37Speaker 02

  My name is Justice. I'm a short form content creator in the. Product review space. So right now I'm doing about one hundred and twenty million views a month, just short form. But seventy-five percent of my revenue comes from brand sponsorships.

• 12:49Alex Hormozi?

  Okay.

• 12:49Speaker 02

  But I'm realizing.

• 12:50Alex Hormozi?

  You review products?

• 12:51Speaker 02

  Yeah.

• 12:51Alex Hormozi?

  Okay, so you are UGC.

• 12:53Speaker 02

  Pretty much UGC. Worn faceless as well. So it's like not really a personal brand type of thing.

• 12:58Alex Hormozi?

  Cool.

• 12:58Speaker 02

  I'm realizing the current business model isn't as like scalable and sustainable long term, just for me. What would be a good roadmap for someone like me who's a.

• 13:07Alex Hormozi?

  Why is it scalable?

• 13:09Speaker 02

  It's just, I think like a little, part of it's like unfulfilling and a lot of it is like.

• 13:14Alex Hormozi?

  All right, I'm gonna pause you right there because I think this is really viable.

• 13:16Speaker 02

  Yeah.

• 13:17Alex Hormozi?

  For everybody. I hear that sentence all the time. I have this business, it's working, I don't think it's scalable, I should do a different business. If we reframe this as I'm doing her business, it's working and now it's hard. And so I'd like to do something easy. Can you tell me something easy?

• 13:34Alex Hormozi?

  That's, that's what I hear. And so I'm bringing this up because it kind of hits to kind of what I was talking about earlier, like. You have to confront the problem, but like the other side of that problem. So the way that I, the way that I talk about this to our founders within the portfolio. Is like, let's say that, I'll just give a simple example. Let's say that we have to, I'll, I'll loop back to your question. Let's say that we have, you know, a key hire that when this key hire comes in, we could add, you know, five million, ooh, nice screen, there we go. Five million dollars in profit of the business. All right, this would be a really, I say five, five million top, top line, two million dollars in profit of the business. But this is somebody we're gonna have to pay, you know, five hundred K a year to unlock this. Okay? So this is gonna be a pretty specialized role that we're looking for. Now, a founder might say, hey, can we just like figure out a way to not have this role?

• 14:16Alex Hormozi?

  No, I think it's a worthwhile question to pursue, but sometimes you just need the role, right? And so this two million dollars, let's say at a seven X enterprise valuation. Is gonna be an increase in fourteen million dollars in enterprise value, which if you own the business, goes straight to your net worth, tax free. And so if I say back to the founder, hey, you think you could find this one person for $14 million? All of a sudden, it feels better. You're like, you know, $14 million, I could find it. Right? And so I tried to think about like, what is this going to unlock in the business? What is this create to enterprise value? And then I try and put a ticket to kind of the hard that I'm trying to go through. Like, we had a different portfolio company where we had to put in this. I talked about them yesterday. We had to put in this tech, tech component to it. And I was like, well, currently, the company's probably valued at like 80.

• 15:00Alex Hormozi?

  If we can get this fully integrated, we could be valued in the 200s. It's like, man, but building a whole developer team, we'd have to recruit a, you know, head engineer. We'd have to, you know, bring all these other people in. I was like, yeah, I mean, we'll also get paid $150 million to do it. So, you know, worth it. So it's like, it's hard and worth it. So anyways, please continue. So it's not scalable.

• 15:20Speaker 02

  Yeah, I appreciate that. Sometimes I'm struggling to figure out like what to optimize for. Cause just like chasing views as a content creator isn't always like the best thing to do, especially because I don't have a product to sell. And since I review 50 products a month, if I make one product, there's only so many times I could post a video about it, right?

• 15:36Alex Hormozi?

  But there's so many products.

• 15:38Speaker 02

  Yeah. I mean, are you saying like, why do I review so many products?

• 15:41Alex Hormozi?

  No, I understand why you review so many products, but there's so many more products to review. Basically, why is this not scalable? Why can't you review 500 products a month?

• 15:48Speaker 02

  I, I can. I think that's a possibility. It would be like figuring out if the business model is going to be served towards brands. Because that is the driver of the business. It's 75% of the revenue. Or if I'm approaching it from the wrong way and I'm just like, I should just double down on like long form YouTube. Cause I haven't even posted a long form YouTube video.

• 16:04Alex Hormozi?

  But you get paid on the short form, that they probably repurpose as ads.

• 16:09Speaker 02

  They, yeah, they run ads behind it. So they usually are paying for like the usage rushes behind that. So it is a, you know, a possibility. And then another thing is just me getting in my head about creating a bunch of me's who is just doing the same thing. Cause it's basically like a formula because I'm not a type.

• 16:24Alex Hormozi?

  You do a lot of faceless though.

• 16:25Speaker 02

  Yeah, that makes sense. Yeah.

• 16:26Alex Hormozi?

  I mean, yeah, it's just like, I, I do 50 and I do majority faceless. Why can't we do 500? I mean, do you run good margins?

• 16:34Speaker 02

  Yeah, we have 80% margins.

• 16:35Alex Hormozi?

  Right. Yeah. Let's do more of that.

• 16:37Speaker 02

  Two more?

• 16:38Alex Hormozi?

  Yeah.

• 16:38Speaker 02

  Sweet. Thank you.

• 16:40Alex Hormozi?

  This is good talk.

• 16:43Alex Hormozi?

  Simple threads, four locations, oh, small threads, sorry. Small threads, four locations, three are new. One is the old one you had for 16 years.

• 16:51Speaker 03

  Yeah.

• 16:51Alex Hormozi?

  Yes, and the, one of the big issues is we don't have enough data and we have a, have a better CRM so we can track.

• 16:57Speaker 03

  And you're, you were right. Last night I went home and dug into the data I do have.

• 17:01Alex Hormozi?

  I want to.

• 17:01Speaker 03

  Just by raising my revenue to five million instead of three million and getting rid of the data challenge, it makes my company worth six million dollars.

• 17:10Alex Hormozi?

  Amazing.

• 17:11Speaker 03

  Woo.

• 17:11Alex Hormozi?

  So that would, so that's.

• 17:13Speaker 03

  I need to make more money.

• 17:14Alex Hormozi?

  Yeah.

• 17:15Speaker 03

  That's my.

• 17:15Alex Hormozi?

  Me too.

• 17:16Speaker 03

  So my question is, last year I dabbled in organic content.

• 17:22Alex Hormozi?

  They're usually like crypto. I was like, here we go. All right.

• 17:25Speaker 03

  And had some success. I had videos that got like two and a half million views.

• 17:30Alex Hormozi?

  Basic.

• 17:30Speaker 03

  But, you know, brought me people that weren't necessarily in my market.

• 17:35Alex Hormozi?

  Uh huh.

• 17:36Speaker 03

  Which I'm okay with because the ultimate goal is to have stores everywhere. So it, it could be okay. But my current thought is time wise, because I, I, you know, I like working, but I work a lot. I work like 90 hours a week. Is if I were to kind of go down this a little more time and energy into organic content creation to then use it to do paid local ads. What should I be making content about? That's where I got stuck. So I was doing like two kinds of content. Like, kind of like thrift content, which isn't really what I do.

• 18:08Alex Hormozi?

  Instead of thinking about what type of content, think about what will be valuable for the person that I'm trying to attract.

• 18:14Speaker 03

  Okay.

• 18:14Alex Hormozi?

  So think about all the problems that moms have, specifically the moms that you were talking to. So maybe single child or single sex child, whatever, moms. And the nice thing is that they have lots of problems. And so you just make your content around that and then you just try and tie in the product.

• 18:29Speaker 03

  Okay. And then run targeted local.

• 18:33Alex Hormozi?

  You post as many of those as you can. The ones that take off, you take those, make them into ads. Yeah. And if you don't want to even put a CTA in the organic, you can just make the organic content. When you have the winner, you take that one and then stitch on five seconds of a CTA at the end and then run that as the ad.

• 18:50Speaker 03

  Oh.

• 18:51Alex Hormozi?

  Yeah, super easy. It's a really good strategy for anybody. Like if you if you're like trying to get it like if you're right now are predominantly paid. And you want to start doing a little bit more content. I do think it's a good idea in general, just because you'll get more conversions on a lead nurture perspective because. People get on the phone, they're like, what is this person or who is this person? Then they'll look at your account. They're like, oh, okay, they're alive. And so, but basically it's just free. I just see it as free testing. So you just get you post as many times you want. You can just see relative to the other other other pieces that you have. These ones outperformed. Great. Now I'll make these and that. So just provide value. Here's other like here's three ways that you can, you know, save on repairs for, you know, kids torn clothes or here's how to get stains out of these things. Or if you're if you're the type of person who like sees this is like, I'm never gonna do that. Awesome. Come to simple threats. Like, I keep saying simple. Sorry. Small threads. We got you covered.

• 19:36Speaker 03

  Okay.

• 19:36Alex Hormozi?

  That helps?

• 19:37Speaker 03

  All right, that helps. Thank you.

• 19:38Alex Hormozi?

  Easy. All right.

• 19:39Speaker 04

  Hey, Alex. My name is Jean-Paul and I sell healthcare listing services for doctors. I guess I I work with P I attorneys, personal injury attorneys. And so I what I'm trying to figure out, like, I'm trying to figure out my bottlenecks in the business. I think one of the biggest ones is that a lot of.

• 19:57Alex Hormozi?

  You work with personal injury attorneys?

• 19:59Speaker 04

  So my clients, my paying clients are physicians, like healthcare providers.

• 20:04Alex Hormozi?

  Okay.

• 20:04Speaker 04

  Okay. And then the reason why they hire us is because we're trying to get leads from personal injury lawyers.

• 20:10Alex Hormozi?

  Uh huh.

• 20:11Speaker 04

  For like car accidents, slip and fall.

• 20:13Alex Hormozi?

  Well, if someone slips and falls and they need to get repaired, it's like you're the repairman.

• 20:16Speaker 04

  Yeah, kind of.

• 20:17Alex Hormozi?

  Being a doctor, repairman. Yeah, but lots of repairmen. Got it.

• 20:20Speaker 04

  So my my the hardest thing is trying to figure out how the P I lawyers are sending referrals to the doctors. And a lot of the physicians that I work with only want to know how many referrals they're getting versus, you know, like trying to brand them and doing like, you know, the full spiel of marketing.

• 20:39Alex Hormozi?

  Yeah.

• 20:39Speaker 04

  They just want to know, hey, how many leads am I getting or how many, you know, referrals are am I gonna get?

• 20:44Alex Hormozi?

  Yeah.

• 20:44Speaker 04

  A lot of these referrals are worth a lot of money. It's not like.

• 20:46Alex Hormozi?

  Yeah.

• 20:47Speaker 04

  Alright, so that's where I'm at. I don't know, like we're expanding into Arizona and Texas and I'm planning on hiring somebody there in each state.

• 20:56Alex Hormozi?

  Is this a, is this a problem to solve or is this just like overhead?

• 21:00Speaker 04

  This is a problem solve.

• 21:01Alex Hormozi?

  Okay.

• 21:02Speaker 04

  So I'm, what I'm trying to figure.

• 21:03Alex Hormozi?

  Is it limiting your ability to grow?

• 21:05Speaker 04

  Yes.

• 21:06Alex Hormozi?

  Why?

• 21:07Speaker 04

  Because a lot of the physicians expect a certain amount of leads per month.

• 21:12Alex Hormozi?

  Okay.

• 21:12Speaker 04

  And so it's, it's obviously it's hard because accidents don't just happen in the same city, right? Over and over.

• 21:20Alex Hormozi?

  What if driverless cars come and then it's like no accidents happen? Now what are we gonna do? Right? Okay.

• 21:25Speaker 04

  Okay.

• 21:26Alex Hormozi?

  Okay, so let me just, let me pause you real quick. So I think, so part of this is probably how it's being framed with the physicians, right? So one is you could just reframe it based on revenue, like basically revenue volume. So it'd be like, cool, we're gonna usually send you around twenty thousand dollars worth of revenue volume. Sometimes it's gonna be from two or three cases. Sometimes it's gonna be from, you know, five or six. It'll depend. Obviously, we can't make sure that everyone's gonna be paralyzed. I'm sorry.

• 21:48Speaker 04

  Ha, ha, ha, ha.

• 21:49Alex Hormozi?

  Of course. Right? But I think if you just reframe instead of lead counts of revenue volume, which is ultimately what you care about anyways, like leads translate to revenue. And if you're saying that there is some variability there, I think that the lead number will no longer matter nearly as much based on how you're just framing it. And in terms of the whole branding and all the other stuff, I think that's a different business. And so I, either you would start that as an additional service that you charge separately for, based on its own value proposition. Or my preferred method, don't do that and just continue to do the main thing that's working.

• 22:18Speaker 04

  Got it. Cool.

• 22:19Speaker 05

  My name is Mike. My wife and I are here. We started a company with your content. Super gratitude, super grateful, man. We, we exited for over twenty million.

• 22:28Alex Hormozi?

  Amazing.

• 22:29Speaker 05

  Appreciate.

• 22:29Alex Hormozi?

  Alright, you're right.

• 22:30Speaker 05

  I bet you're doubting me. Your, your books are worth their weight in gold, bro.

• 22:33Alex Hormozi?

  Thanks, man.

• 22:34Speaker 05

  Anyhow, we're, we're at a crossroads because we're, we're building a new company based on our passion project. We started a company that taught do it yourselfers how to remodel their kitchen and bathroom using epoxy over old countertops to make them look like natural stone. So with that idea, we found that, you know, we, we really hit home with the DIYers, but a lot of our, people that saw our YouTube, we, we built over one point five million YouTube subscribers and a lot of them didn't want to do it themselves, but we couldn't serve those customers. And so there's a shortage of contractors in the US. So we're really gonna reach out to, to young people that maybe don't wanna go to college.

• 23:10Alex Hormozi?

  Or old people.

• 23:10Speaker 05

  Or old people.

• 23:11Alex Hormozi?

  Right.

• 23:12Speaker 05

  Or, or middle aged.

• 23:13Alex Hormozi?

  Thirty year olds.

• 23:14Speaker 05

  So we're, we're really, we're, we're going to, we're building a trade school right now. We're going to teach these, these people how to do the trade, how to, I've already proven the lead gen so that I can give them all the leads they can handle because that's really the harder part of the business for them to learn. My question is, we can either charge upfront for this school, cost about 20 grand for us to train somebody. Or we could, we could, we have a big following, we could attract the people to apply. Train them on our dime, maybe lock them in with a, you know, if you leave before two years or whatever. But would, and then we own the businesses in all these different areas. Or should we, should we, they would own it, we supply leads and, and cut the liability.

• 24:00Speaker 05

  That's really the crossroads we're at.

• 24:01Alex Hormozi?

  Yeah, there's a lot of different models from the position that you're in right now, which is probably why you feel the heartburn. The first thought that I had was just like, and instead of or, like, maybe I want them to pay $20,000 to make sure that they're legit. And I'm going to get a percentage of all the business that I send them.

• 24:18Speaker 05

  My, my concern with that is if you look at a franchisee, which we're not going franchise, but if you look at that avatar, they're probably not the hustler who's as hungry as the kid with nothing who want that, that's just, that's my passion. I want to help the kid that has nothing.

• 24:34Alex Hormozi?

  Okay.

• 24:35Speaker 05

  Well, I can finance it, you know, we could finance it and help him earn it back, but.

• 24:39Alex Hormozi?

  Well, to help the kid who has nothing, you can just make all the content free, right? Which you do now.

• 24:44Speaker 05

  Yeah.

• 24:44Alex Hormozi?

  So that kid already has been helped from you. If he wants more help from you, he can pay and he can save up his shackles. So if instead of 20, if you want to make it five, you want to make it 10 and you can offer, you know, nice financing terms, you could do that. I, I will just tell you that there's, I get where your heart's coming from. It's, it's, it's very tough to go free and deliver a lot to people expecting that they're going to do something. They typically will need to have some skin in the game. If you're going to put skin in the game, you're going to want them to put skin in the game.

• 25:12Speaker 05

  Still own it, charge for the school?

• 25:15Alex Hormozi?

  Yeah, I think you can play with the price. Okay, great. Mrs. Mike, yes.

• 25:22Alex Hormozi?

  Yeah, it's otherwise you're just gonna have a bunch of freebie seekers who are gonna come. And then you're also like the enforceability of the backend contract and then repaying you is probably gonna be a little bit of a nightmare. I would prop like if it were me, I would control the sales and then hand them the deals so that I could collect the payment and then distribute payment to them rather than expecting them to pay me.

• 25:41Speaker 05

  For the leads?

• 25:42Alex Hormozi?

  Yeah.

• 25:43Speaker 05

  Got it.

• 25:43Alex Hormozi?

  So I was like, I'd rather just basically build a centralized phone team that could close the, close the, the deals or whatever. And then, you know, send the deal to the person.

• 25:53Speaker 05

  Got it.

• 25:53Alex Hormozi?

  And if they're coming from your content, then they already have trust you probably like it makes sense that they would buy from you. Yeah, be like, cool. One of our licensed contractors will go out there. Licensed contractors go through to your training. You know, they're vetted by us. And also just like, think about it like Harvard. You pay to go. You don't get guaranteed a graduation. So it's like, I would just let them know. It's like, we will not graduate you if you're not good.

• 26:15Speaker 05

  Right.

• 26:16Alex Hormozi?

  So, yeah. Or we kick you out, just like a school. Like real schools have standards and you pay and you might not graduate. Like normal school. So just do the same thing.

• 26:29Speaker 05

  Just your kid won't be screwed up when they leave my school.

• 26:31Alex Hormozi?

  Was that?

• 26:32Speaker 05

  Your kid just won't be screwed up when they leave my school.

• 26:34Alex Hormozi?

  Yeah.

• 26:35Speaker 05

  Thank you.

• 26:35Alex Hormozi?

  Oh, yeah, you're back.

• 26:36Speaker 01

  My name is Max. I sell tech and operations consulting to law firms. We started about six months ago and.

• 26:44Alex Hormozi?

  We have price clients and we have other ones that are thirty six to eighty K and they have a three hundred to six hundred K packages. And we need to figure out which one has the highest LTV to CAC ratio and which one you can convert most easily. So what is the issue?

• 26:56Speaker 01

  That's correct. Essentially, well, first of all, I have no idea what I'm doing.

• 27:00Alex Hormozi?

  Okay.

• 27:00Speaker 01

  Started about six months ago.

• 27:02Alex Hormozi?

  First step.

• 27:04Speaker 01

  Second thing, I think we just have a fulfillment issue. And so my question is, at what point? Do we consider productizing the service? From what I understand, it's kind of what you've done with GymLaunch.

• 27:17Alex Hormozi?

  Yeah.

• 27:18Speaker 01

  At what point would it be worth doing, doing that, if at all?

• 27:21Alex Hormozi?

  You said you wanted to sell this eventually, right?

• 27:23Speaker 01

  Yeah.

• 27:24Alex Hormozi?

  Yeah, I wouldn't do that.

• 27:25Speaker 01

  Okay.

• 27:26Alex Hormozi?

  Yeah. So you have the same issue that Justice has, which is like, I have this hard thing in front of me. Can you tell me there's an easy way? The easy way will create a business that's significantly harder to sell. And so then you'll be at that point and be like, how can I sell this business? I'll be like, you can go back in time and not do this.

• 27:41Speaker 01

  Right.

• 27:41Alex Hormozi?

  So like, basically, you're in a high, you're in a high skill service business. It's a professional services business. Most professional services businesses are supply constrained. It is easy to sell high-end professional services if you are good at what you do. It is hard to find other people who are good. This is the trade. But if you build a firm like that, you build a very valuable company.

• 28:06Speaker 01

  And, and another, just on a side note, again, I don't know what I'm doing. I got, I got a 500K in, in investment coming in soon.

• 28:15Alex Hormozi?

  Why?

• 28:16Speaker 01

  It's been, my, my boss just.

• 28:17Alex Hormozi?

  No, but why are you taking investment?

• 28:19Speaker 01

  I don't, so we haven't finalized this yet, but I'm considering whether to do it or not.

• 28:24Alex Hormozi?

  Yeah.

• 28:24Speaker 01

  But that.

• 28:25Alex Hormozi?

  No.

• 28:25Speaker 01

  You don't see any point in.

• 28:26Alex Hormozi?

  Why do you need money? You, you don't run a capital expensive business. Like, what are you gonna use the money for?

• 28:32Speaker 01

  I guess to hire great people.

• 28:35Alex Hormozi?

  But the business model should be able to hire great people. Like, you're not a tech, like, there, it's, it's, it's very rare that you need to bring on outside capital. Far rarer than most people expect. If you want to build a platform, you want to build a school, yeah, you gotta do that. Because you need to get zillions and zillions of users and you have to build this exceptional product before you monetize. So yeah, someone's gonna front the money on the bet that it's gonna be worth a lot more later. Your business makes money today on work it does today. And if anything, you can sell the work before you even have the person. And so like, you, you, you have a negative cash flow cycle. You have no, you don't have to like front inventory for months ahead of time. You don't have to do any of that. So you have a service business. So we just need to make the business make money. You're already profitable, I'm assuming. Right? So you don't need the 500 grand. You have deals that are worth 500 grand. Right?

• 29:18Speaker 01

  Yep.

• 29:18Alex Hormozi?

  From what you told, yeah. So why would you, like, why would I give a chunk of the way of the company to have somebody who's permanently gonna be involved in my business for the cost of one deal? It's like, just sell another deal.

• 29:27Speaker 01

  Gotcha.

• 29:28Alex Hormozi?

  Work a little extra on your own time and then not, don't take that guy's money and just have the money.

• 29:34Speaker 01

  Okay.

• 29:34Alex Hormozi?

  You know what I mean?

• 29:35Speaker 01

  And, and you, you absolutely think then it shouldn't be, you know, because I feel like I'm creating extra problem that I. Otherwise wouldn't have to have being the the whole high skill talent thing if I just went down the productized route. You think it's really.

• 29:45Alex Hormozi?

  When you say products, are you talking about the thirty six to eighty K price point?

• 29:48Speaker 01

  Yes.

• 29:48Alex Hormozi?

  That's fine. I'm okay with that. But again, it's going to go back to what I originally said, which is we just have to look at the LTV to CAC between those with the different avatars. If the LTV to CAC is literally the example I was just saying, if you have a hundred thousand dollar thing that cost me thirty, then I make seventy. Or something that costs ten thousand dollars that costs a hundred. I'd rather just sell six more of the ten K things, provided I have the ability to sell that. So it's like, I want to find something that has really good revenue intention, really good gross margins. If I have that, then I can just sell the shit out of it. And then I'd rather just sell five times more of that than try to come up with the, you know, high touch one that's going to like is a more immediate ticket today, but it's going to quickly, I'm going to quickly get constrained. So I'm basically pushing out my constraint. Based on what problem I'd rather solve today.

• 30:30Alex Hormozi?

  So the question back to you is, do you think you can? So what are the gross margins on? Let's say the average on the thirty six to eighty K is fifty thousand. That sound fine?

• 30:39Speaker 01

  Yeah.

• 30:39Alex Hormozi?

  Okay. So let's say fifty K is the average price. What's the gross margin on that?

• 30:42Speaker 01

  Not too sure.

• 30:43Alex Hormozi?

  Okay.

• 30:44Speaker 01

  Yeah, we're quite early on, so.

• 30:45Alex Hormozi?

  Yes.

• 30:45Speaker 01

  Half of that.

• 30:47Alex Hormozi?

  Okay. And then with the two hundred K thing that you do, what's the gross margin on that?

• 30:54Speaker 01

  Fifty percent.

• 30:55Alex Hormozi?

  That's gross margin? So you're running thin net margins because that means you're starting at fifty and you gotta pay everything else.

• 31:01Speaker 01

  Yeah, I mean, at the moment, we we are getting this fulfilled by really expensive, highly certified guy that's been in.

• 31:08Alex Hormozi?

  Outside of the business.

• 31:09Speaker 01

  Yes.

• 31:09Alex Hormozi?

  You're basically white label selling his stuff.

• 31:11Speaker 01

  We do what we can on the inside, but we we accepted quite a few projects, so.

• 31:15Alex Hormozi?

  Okay, then the follow up question is, can you more easily sell four times as many of the low touches, the high touch?

• 31:23Speaker 01

  Yes.

• 31:24Alex Hormozi?

  Then do that one. If your gross margin is the same and you can sell more than four times as many on that one, then do that one. Basically, we're just looking at number of units sold times gross margin. The one that makes the most money.

• 31:34Speaker 01

  Got you. So I think it always just comes back to the point of the.

• 31:37Alex Hormozi?

  The LTV. Yeah. The category. Okay. Thank you so much. Yeah, you bet.

• 31:40Speaker 06

  Sup Alex.

• 31:40Alex Hormozi?

  What's up?

• 31:41Speaker 06

  My name is Wu. First of all, thank you. You helped me turn my senior design project.

• 31:45Alex Hormozi?

  Name of the day.

• 31:47Speaker 06

  It's Wu Wu without the who.

• 31:48Alex Hormozi?

  Yeah. No, that works right.

• 31:50Speaker 06

  Thank you. You helped me turn my senior design project at college into my business. Last year, it's my second year in business. Last year, we did one fifty.

• 31:57Alex Hormozi?

  Amazing.

• 31:58Speaker 06

  And I want to get to five hundred.

• 31:59Alex Hormozi?

  Were you one of the schools I talked at?

• 32:01Speaker 06

  No.

• 32:01Alex Hormozi?

  Okay, cool. No, I just figured I was.

• 32:03Speaker 06

  Yeah, I would love to be a five hundred K. And the one thing that's stopping me is right now it's just me selling. So ninety percent of our sales come from in-person presentation.

• 32:12Alex Hormozi?

  What do you sell?

• 32:12Speaker 06

  We do digital business cards primarily in real estate.

• 32:16Alex Hormozi?

  Digital business cards for real estate?

• 32:17Speaker 06

  Yeah.

• 32:17Alex Hormozi?

  I know somebody else who's in real estate. How old are you?

• 32:21Speaker 06

  Me? I'm twenty seven.

• 32:22Alex Hormozi?

  Twenty seven?

• 32:23Speaker 06

  Yeah, I'm old.

• 32:26Alex Hormozi?

  Never mind. Never mind.

• 32:30Alex Hormozi?

  Yeah, but it's digital business cards, though. It's an NFT. There you go. Web three.

• 32:35Speaker 06

  He's on it. I'm the only sell this person. I have a few vendors. So more better new. When I'm online memo that. My options are one, duplicate myself, hire salespeople to do what I do, sponsor events, pitch and sell. Or number two, basically transcribe my sales process online. And I wanted to hear what you think is the better move.

• 32:57Alex Hormozi?

  What's the value prop of a digital business card?

• 32:59Speaker 06

  So essentially, we connect to, it's like a, I don't know if I'm, am I allowed to say like brand names? Linktree?

• 33:05Alex Hormozi?

  Sure.

• 33:05Speaker 06

  Okay. It's like Linktree on steroids, Linktree, your phone and your CRM all connected. It builds your CRM on like an automatic.

• 33:13Alex Hormozi?

  Okay. So people opt in when they scan the QR card?

• 33:16Speaker 06

  Yeah, and then that info will go to their CRM, essentially. And it like, it's got other features like business card scanner. You scan your business card, that info goes to your CRM.

• 33:25Alex Hormozi?

  You want to grow this?

• 33:27Speaker 06

  So just to be sure, I'm not trying to sell. I just want to make money and to sell more expensive things later. Right now, I'm just using this to make money.

• 33:35Alex Hormozi?

  To make money?

• 33:36Speaker 06

  Yes.

• 33:36Alex Hormozi?

  Yeah, no herd.

• 33:39Alex Hormozi?

  Dude, I think, I think if you sold something else, you'd make way more money.

• 33:43Speaker 06

  I agree.

• 33:43Alex Hormozi?

  Okay.

• 33:48Alex Hormozi?

  But it's some hard pitch.

• 33:51Alex Hormozi?

  Like what you have is a hard pitch. Cause I'd be like, your digital business card is, here's my Instagram. That's my digital business card. If you want to find out more about me, watch some content. You know?

• 34:04Alex Hormozi?

  What else are you into selling then? Like I just, I, I just, I don't know if this is funny, but you can sell, like you obviously have the skill of sales. And so I'd rather you just like use that on a better opportunity vehicle.

• 34:14Speaker 06

  Got it. Okay.

• 34:15Alex Hormozi?

  It's like, this world is just crumbling.

• 34:19Speaker 06

  You want to hire me?

• 34:22Speaker 06

  Well, if you can fast.

• 34:24Alex Hormozi?

  Yeah, so.

• 34:27Alex Hormozi?

  Ari's, is Ari over there? Oh, it's Stephanie. Stephanie's right there. Stephanie's works in our recruiting. You can talk.

• 34:32Speaker 06

  Okay, Stephanie, we'll talk, but on a real note though.

• 34:34Alex Hormozi?

  Oh, that was the real? That's not a real offer. All right. Neither was mine.

• 34:40Alex Hormozi?

  Two can play that game.

• 34:41Speaker 06

  On a real note though, like, I don't know what I'm doing. What do I do in the meantime to make money?

• 34:45Alex Hormozi?

  Yeah. So you're selling, Sue, who had this idea for this digital business? Well, there's your senior whatever thing, right?

• 34:51Speaker 06

  Yeah.

• 34:51Alex Hormozi?

  Senior project. Yeah. One of the big issues I take with, and when I do my entrepreneur talks at like colleges and stuff, the big thing that I, that I hate about those classes is that they try and make seniors invent something. It's like, it's very like invention heavy. Like everyone thinks it's Shark Tank, like I have to invent something that doesn't exist. When you can pretty much just like go look at any business that exists and just do that and probably make way more money. Like you start a long hair business tomorrow, like knocking door to door and probably get to two or three million dollars a year. Just with your existing skills, like, like you're able to, you know, shake hands and kiss babies and close. And so like, like you could sell solar and make, you know, 800 grand a year on your own. Income. So I was like, I'm just saying, like, there's, there's like, I think I would be looking at.

• 35:34Alex Hormozi?

  So when I was, when I was doing the presentation yesterday, I talked about how like now I look for products that people don't cancel. I would look for products that people don't cancel. Probably the, the people that are similar to who you already sell to. I would look for that product and then I would use all my sales skills on that rather than trying to explain to them why they need a digital business card.

• 35:52Speaker 06

  Got it.

• 35:52Alex Hormozi?

  Basically for your current pitch to work, you have to, you have to create a problem and then solve a problem all within one presentation. Right? And also explain some stuff that they don't understand how it works, right? So it's kind of like three things. I'd rather just like talk to somebody who immediately already knows the problem that they have. And I'd be like, I can solve that. And I know from the history of that industry that they don't cancel. And that they're just going to buy from me because they like me better.

• 36:16Speaker 06

  Awesome. Well, can I have a follow up question to that?

• 36:18Alex Hormozi?

  Sure.

• 36:19Speaker 06

  Okay, so would you recommend?

• 36:20Alex Hormozi?

  We were asked on the other one.

• 36:22Speaker 06

  Would you recommend that I get like a sales position at another company? Or just like sell more expenses?

• 36:28Alex Hormozi?

  Definitely not here. So, no, I mean fundamentally, every entrepreneur is a salesman at heart. Like we're the promoters and so like you can obviously sell for somebody else or you can sell for yourself. A good way to learn a new industry is to sell within that industry, kind of learn the ropes and then try to basically just figure out lead gen for it. Once you have that, then you have lead gen and sales. And so the only thing that you'd really need would be delivery. If you're good at sales and I'm good at training sales, which is a different skill. Then it comes down to like, can I like, this is where like insurance sales are incredibly profitable. Like there's really no delivery. You just sell the product, right? And then there's these massive behemoths that deliver the risk essentially. There's so many businesses that are basically demand constrained where people stick. You just want to find one of those that you like, that caters to the existing avatar you currently sell to.

• 37:10Alex Hormozi?

  Cause you already know that avatar well and if we're talking speed to money and then sell that.

• 37:14Speaker 06

  Got it. They got it. I'll switch vehicles.

• 37:19Alex Hormozi?

  All right.