How to Know If Your Business Idea Will Work | Ep 875

In this Q&A episode, Alex (@AlexHormozi) answers real questions from entrepreneurs about product validation, decision-making frameworks, pricing strategy, and what it takes to scale without breaking your business. 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.

• 0:02Alex Hormozi?

  You just want to find people who are absolutely unreal. And the litmus test that I have is that you feel this desperation in your core when you talk to them. You're like, I have to have this person. It's not like, oh, I have this role. I guess this is the least bad of the 10 people I've talked to. I would encourage you, if you're ever in that situation, this is the least bad. Just don't, just keep, keep looking.

• 0:24Alex Hormozi?

  Very tactical, right? Des, you got tactical questions? Okay, good. That was, uh, that was the hope and the goal of how we structure it. And what's interesting is that the point that I think is most valuable, because you guys are gonna, you know, go home and, you know, you'll leave here and you'll probably open up a blank document or turn a blank page in your notes, whatever, whatever you do to take notes. And you'll have your pages and pages of stuff that you got from here. But the other blank document is gonna be, what am I actually gonna do? And I just want to make sure that that page has the right three things on it. Because fundamentally, you're not gonna be able to do all the things that you learn here as much as you might want to, right?

• 1:05Alex Hormozi?

  And so fundamentally, the strategy of a business owner is prioritization, right? That's, that's what it means. And so we have to take limited resources, which is time, money, energy, the team that you have, against unlimited opportunities or things that you could deploy it towards. And the people who move fastest in their businesses aren't the ones who necessarily do the most, the ones who get the most for the effort they do. And I think that that, that process of thinking has helped us move faster. And what's interesting about that is there's so much leverage on knowledge. Like, there's so much leverage on knowledge. Like, if you could go back in time and help your young self out, how much faster could you get? It's almost laughable. And the thing is, is that you probably felt like you worked hard then. And you probably feel like you work hard now.

• 1:50Alex Hormozi?

  And there's a version of you that knows five years from now, how much better you could be doing. And that's the value of knowing the right next move. So with that being said, I have the distinct pleasure of doing, answering questions a lot. And Even even within the portfolio, there's basically seven key problems that emerge consistently across businesses, and these are strategic problems. And the reason I think they're so nefarious, or they keep people stuck for sometimes ever, is that they are apparent conflicts, meaning they are rock and a hard place scenarios where both paths seem painful. And so then people just stay stuck because they don't know which one to choose. And so I have developed this little

• 2:33Alex Hormozi?

  moniker for this as my way of remembering it. And I'll explain it to them briefly. And then as soon as we come up, I'll be like, which one is it? So the first is serving too many avatars or being unclear on the person that you're selling to. So it's very common for in the early part of your career, you accept, you know, you have person gets on the phone, they have credit card and pulse, but at least one of those things is required to complete the sale. And you say, sure, you have money and I will take it in exchange for whatever you want. At some point, though, you realize that that isn't really a tangible way to run the business. And so the problem is the rock and hard place scenario is, well, I can stop saying yes to these people, but then that would mean that my short term sales would go down. But if I don't stop saying

• 3:17Alex Hormozi?

  yes to these people, I will never go this business because I have too many onesie twosies that I have to deliver on. So what do I do? Rock and hard place scenario. The next one is data, right? And so we touched on this briefly yesterday, but the speed of the business is going to be based on the speed of the quality of the data, right? If you have higher quality data, if you literally knew what all the data in your business was at the at the snap of fingers, you'd be able to make a lot of decisions really quickly, and you'd be able to move with a lot of certainty and conviction. And I think everyone here has probably had some decisions where you're kind of like, you weren't super sure on. And because you weren't super sure on it, you kind of like, slow dragged your feet. And the result of that is not only did you not execute it well, it also took forever. Whereas when you're like, oh, this is crystal clear. I know what we need to do. You can get something done in a weekend.

• 4:00Alex Hormozi?

  And the thing is, is that if you have that level of certainty, then that weekend can happen every two days. And you can take what takes some businesses a year and do it in three or four weeks. Now, the difficulty thing here is I need this data to make this decision, but it's going to cost me effort and time to get this data. And if I put that effort and time into getting this data, I'm going to lose money. The next one, this is what I call the best seller of this list is this focus, right? It's the one I probably talk about most, most often. And I think it's because it's the, it's probably, at least for me, it's been the one that I've struggled the most with. And it's also the most prevalent because the thing is, is that the more able you become, the more opportunities you can see. And so in the beginning, you have to, you, you struggle to say yes, because you're so afraid, right?

• 4:44Alex Hormozi?

  That's everyone starts, everyone's afraid to say yes, what if I fail, et cetera, et cetera. You're here, so you've already gone past that. And so you got rewarded for saying yes in the beginning. And so then it just becomes this muscle that you flex more and more and more. But in the beginning, you have to say lots of yeses or start saying yes, because you're in kind of exploration mode. You're trying to figure it out. Once you start to get good though, you have to flip that. And it becomes exploitation mode, which is how to get as much as I possibly can of the thing that I currently have. And so to be really crude here, so I apologize to the women in the room, like it only works one way, but you can understand it. Like you can't sleep with every woman. It's not going to happen. And it just, it doesn't work. And so you have to choose, like if you take the hypothetical extreme, you can't do it all.

• 5:26Alex Hormozi?

  And so then you just work your way backwards until eventually you're like, okay, if I just did one thing for 45 years, do I think I'd win? Probably, no, but being real, like my, the guy who lives, like he's my neighbor is the guy who owns Panda Express. Right? Andrew Turn. And so he has sold chicken in a brick and mortar establishment for 45 years. Last year, he took home 935 million in personal income and he offset all of that against his real estate, tax free. He did 3.7 billion top line in sales. 27% net margins in the business, owns the whole thing, 45 years. And so the thing is, is like, a lot of, a lot of the conversations that we'll go over, people obsessed about, am I in the right vehicle?

• 6:09Alex Hormozi?

  But the thing that is by far the bigger predictor is how long you've been in the vehicle, and that you've improved. And so you can't just be in the same vehicle for the whole time. Obviously, like, you could just have one restaurant for three, five years too. But the idea is that you get better, right? But the focus is what allows the compounding to occur. And you never unlock the compounding when you're continuing to switch tasks and switch priorities. And I'll tell you that one of the big reasons that I think many of you are struggling with this focus is because your mission is only to make more money. Because the thing is, is if making more money is the goal, you can't optimize anything against that. Because lots of things make money. It doesn't mean it's the right call. Overexpansion. Okay. So, this is the classic.

• 6:52Alex Hormozi?

  And what's really interesting about over, overexpansion is that it's actually shorthand for under talented. And that's a combination of you, just being real, and/or your team. And so, when you have your one location that's working, then you say, okay, I'm gonna open up, you know, my second location. A lot of times, people get ahead of their skis. They only have one location to go. I'm not in the business anymore, I'm on the business, but they're still working 16 hours a day and only have one location. So, when you leave and start having to work 16 hours a day in the other location, you can't do 32 hours. So, what you're doing over here, it's funny because it's like, oh, I'm not on the floor doing whatever it is that you do at your shop. And so you think, oh, because I'm not fixing cars, because I'm not cracking backs, because I'm not doing dental work, I own the business. It's like, no, you're CEO. You don't really own it yet. You still are employed by the business.

• 7:36Alex Hormozi?

  And the business needs, like, every one of these businesses needs a CEO. And if it's going to be you and both, then both are gonna suffer. And so then what happens is you open the second location, and then your profit over here, which was your cash cow, goes down. And this one doesn't really get as high as the first one did, because you were there for five years before you did your second one. And now you're here, and now you have twice the liability, but you're actually making the same money or less. And you're like, how the hell did this happen? But you're like, you know what the solution is? I should open a third. Because then, this is clearly the model. But then you open the third, and then it is this, right? And I know that some of you are in that pool right now.

• 8:08Alex Hormozi?

  And the thing is, is there's nothing wrong with expanding. It's just expanding too fast relative to the IQ per square foot. Seriously, you just dilute it. So you have to increase IQ in order to increase the square footage to maintain the ratio. The next one is compensation. One of the most common mistakes that I would say business owners under 10 million a year make is that you're wildly miscompensating people all over the business. One, there's huge savings to accrue, but also sometimes you are, the thing that's limiting your expansion is that you're under talented and you're under talented because you don't pay well enough. And so it's like, if I have like another HVAC company comes to me and says, I can't find technicians. And I'm like, well, how much do you pay? And they're like, we pay market. And I'm like, no shit, go above the market. But that's more than we pay everybody else. And you're still profitable, but we wouldn't be profitable if you raise the, raise your prices.

• 8:53Alex Hormozi?

  But I can't because all those customers, you just told me that you can't even take the business that you've got coming in the door. Pick. So compensation, now I had, I'll give you an example. I had a, um, a physical therapy studio that came and, uh, you know, ladies said I, I have my, we're, we're, we're super booked, but we're not really profitable, but we're to full capacity. Everyone loves us. I was like, okay. Huh? She's like, well, I give 50% of all revenue to my therapists. I was like, okay, do they like go market and sell? You basically just like, give them the, just the area to crack backs or whatever it is that you do. He's like, oh no, we do the marketing and the sales and we do all the admin and everything. They just show up for the times that they crack backs.

• 9:36Alex Hormozi?

  I was like, yeah, 50% of revenue. Now you're working on 50, just now you have rent. You've got payroll for everything else. You've got marketing. It's like, yeah, no shit, you're not making any money. Right? And so the issue there was that that was a structural issue. She could not out earn that because even if she raised her prices, the compensation will go with it. And so compensating one, either too low or too high or incorrectly, all three of those scenarios. And the reason it's a rock and hard place is that, well, what if I change my comp? I'll lose all my people, but if I don't change my comp, I'll lose my business. Rock and hard place. The next is underpriced. So that's just the classic, uh, actually the example I just gave, like we're at full capacity and we're not making money. And let's assume that we weren't giving away 50% top line to, you know, something that was fixed.

• 10:20Alex Hormozi?

  It's like, okay, raise the price. But if I raise my price, I'll lose my customers. But if you don't raise your price, you won't make money, which you already aren't making. Right? So being underpriced is one of them. And then finally, a single product.

• 10:34Alex Hormozi?

  So I say these as like, these are some of the biggest common themes that I see. Single product being a guy who had a YouTube channel who sold how to speak English. That was his niche or whatever for Latin Americans. And he had done, basically, his, his sales were flat, but his margins were shrinking. And the main reason, and he was selling, I think, like 800 customers a month digitally. So between $20 and $800 of like language products. And he came and said, hey, I want to start a digital marketing agency. Because it'll be less competitive. I fought this guy for an hour. I'm not even shitting you. I fought him for an hour to try and to try and like nail through his head.

• 11:16Alex Hormozi?

  And he said this, and it was wild to me because I was like, what if we just like called those customers and sold them something else? He's like, no one's going to pay more than $800 for language services. And I was like, who here would pay more when you live in Latin America to be able to have access to the US job market? Right, of course you fucking would. Of course you would. And so he just had this belief that literally he was like, instead of just like challenging this belief, I believe this so hardcore that I'm willing to break this business that makes me a million dollars a year. From my organic YouTube channel and then try and get into what I believe is less competitive. And as silly as what that example sounds like, the amount of business owners that I, I see here, who are also dealing with this, which is, it's, it's a lot.

• 11:59Alex Hormozi?

  And the, the reason that, that, that sounded silly is because maybe some of you have enough experience with social media marketing agencies to know that there's a dime a dozen of those. And so it's incredibly competitive because the bar to enter is zero. It's an internet connection and an iPhone. Right? And so anyways, I, I say all that to say, when you have this idea of like, oh, I want to try this other thing. You also sound like that guy. You just don't know what you don't know yet. Because no business is easy.

• 12:26Alex Hormozi?

  You just don't know enough about it to know what's hard about it. And like, I would say that last year was the first year, and this is continuing to this year in my whole career, where I didn't experience FOMO and I only realized it when I was like, huh, I haven't had FOMO. This is weird. What's that like? And, and I remember because a buddy of mine did 50 million in personal income last quarter. It was Q4, so two quarters ago, just trading from his laptop, trading crypto shit. And he told me, and I honestly was just like, dude, good for you, man. I had zero, old me would have been like, dude, how do I get on this? Like, what is he doing? I'm like, oh, turn on the computer because this is how you turn computers on. And I was like, okay, so it's a candlestick monitor. Like, okay, so Ethereum is back.

• 13:10Alex Hormozi?

  Like, you know, like trying to, trying to figure this out. Like, I have no idea, right? That's not, that's not my hat. And to the same degree, he can't do what I do. And so it's just like, basically, the longer you play the game, the narrower you're going to get because you're going to get better at what you do. And the amount of time it took you to get where you're at now, it'll take that long to do something else. You just don't know enough about it. And that's why it looks so good. Now, if somebody were to come to you and say, hey, you're making money. For everybody here who's making money, if somebody came to you and said, hey, you make money doing your thing, I should do that. Many of you be like, nah, you don't want to do this. You think you want to do this, you don't want to do this, right? Because you know where all the bodies are buried. And the thing is, is that there are always bodies and they are always buried. And then they reach out of the ground and then just drag your soul with them. And you can only find out once you, you know, lie in that grave. We're really making this visual.

• 13:53Alex Hormozi?

  But yeah, with that being said, these are the big seven. Some of you guys are experiencing one or more of these, multiple weight class champions of growth sense. But with that, let's, let's kick off the Q and A and rock and roll. Now, I know you're doing 2.4 million. You saw Occam's two athletes. And the biggest problem that you think is stopping your growth, you'd like to get the 3 million, is that you feel like you need to reposition your offer in some way. Shoot.

• 14:18Speaker 01

  Yeah, nailed it, man. So we have three revenue streams inside of our health clubs, our fitness centers, right? So we run ads for group. That's our highest margin. But then if a deconditioned person walks in, we can get them into one-on-one, then get them back into the group setting. And then when someone does 12 months, 13 months.

• 14:36Alex Hormozi?

  What's square footage?

• 14:37Speaker 01

  6,000 to 8,000 square foot. We have four locations.

• 14:39Alex Hormozi?

  Okay.

• 14:40Speaker 01

  So then when people inevitably want to kind of take breaks.

• 14:44Alex Hormozi?

  Large group or semis?

• 14:45Speaker 01

  So we do large, we're in no man's land. So we're like 16 to 20. Yeah, so um, so that's a book reference. So basically what's happening though is that because we have the 24/7 open gym, which is supposed to be just a way to keep people engaged. And once they get one program again, they reengage with our coaches. Our sales team is kind of using that as low as hanging fruit.

• 15:09Alex Hormozi?

  The downside I mentioned yesterday.

• 15:10Speaker 01

  Right, correct. And so the challenge is twofold, right? So the first one is like, you know, how do we market in a way that we get people to understand it's an ecosystem? We're not in F45 and all those models are good.

• 15:22Alex Hormozi?

  They're never going to understand that's an ecosystem.

• 15:23Speaker 01

  Okay, so very good, easy enough. And then, uh, and then the second.

• 15:28Alex Hormozi?

  How do I get them to know everything about me so they can understand the nuance of how we built this business? Well, they're not, they're going to be like, oh, it's a six week weight loss thing. Sounds good.

• 15:35Speaker 01

  Yeah.

• 15:35Alex Hormozi?

  And then you explain that when they come in.

• 15:37Speaker 01

  Did you ask me how I explain that?

• 15:38Alex Hormozi?

  No, I'm saying, I'm saying, I'm saying you market the thing they want. And then when they come in, you give them the thing that they need. Don't try and explain the thing that they need before you give them the thing they want.

• 15:48Speaker 01

  Got it. Okay, very good.

• 15:50Alex Hormozi?

  All right.

• 15:50Speaker 01

  Simple enough. And then I do have a follow up real quick too, if I can push my luck here a little bit. So, um, when it comes to leveraging my personal story, right? So when it comes to transformation stuff, I was indicted at 22 years old, did 63 months in federal prison. So when we talk about like transformation, like I'm literally said, the city that saw me at my worst is going to see me at my best. How much of that should I leverage? Cause I've never really led with that, but I know now that I'm in the, I'm, I'm literally in the inspiration game. I'm literally in the lead gen and the sales game. And I feel like there could be some stickiness to it.

• 16:22Alex Hormozi?

  What do you want to do?

• 16:23Speaker 01

  I just want to.

• 16:24Alex Hormozi?

  Do you want to sell the, do you want to sell the business? Do you want to own it long term? Like, what do you want to do?

• 16:27Speaker 01

  Man, that varies day to day. I mean, I want to sell it, man. Yeah, I mean, eventually I want to build something that's got value and then I exit.

• 16:33Alex Hormozi?

  Well, then, I mean, you already have a business that doesn't require a personal brand. I wouldn't tack one on.

• 16:37Speaker 01

  Very good, fair enough, easy enough. Fantastic. Thanks, sir. Hey, Alex, thanks for everything you've done and Leila as well, obviously. Uh, my name is Pierce. We, um, do 1.4 million revenue.

• 16:49Speaker 02

  And we'd like to be at five million in three years. And we actually coach online golf, so it's online programs.

• 16:58Alex Hormozi?

  So you sell extra golf to whom?

• 17:00Speaker 02

  To to consumers, so to the average golfer.

• 17:03Alex Hormozi?

  Okay, average people, normal people, alright.

• 17:04Speaker 02

  Yeah, normal people, normal people. So we're looking to um, so what's stopping us from doing that? We had some ideas before we got here. We have some new ideas now that we are here. Data, huge problem for us. Focus is an issue. The way that we make our money is through the online subscription, which is, which is great. It's our passion. It's what we like doing, but we're doing a bad job of it at the moment. We also have, which is nice, because of our social media presence, so we've got brands that are willing to spend quite a lot of money with us. So that part of the business does really well. That's kind of holding up the business. The media side is holding up the business at the moment for sure.

• 17:40Alex Hormozi?

  Okay.

• 17:40Speaker 02

  And then, but so we can generate lots of traffic and get lots of people, but we're not very good at.

• 17:46Alex Hormozi?

  Do you have multiple personalities? Not you, but.

• 17:50Alex Hormozi?

  Multiple faces inside the business that do this.

• 17:52Speaker 02

  There's two of us, there's two main ones, yeah.

• 17:53Alex Hormozi?

  Okay, got it.

• 17:54Speaker 02

  Two main coaches, myself and Andy who's over there.

• 17:56Alex Hormozi?

  Okay, I heard. Okay. So why don't you pick one of the businesses?

• 18:02Alex Hormozi?

  So you said you're passionate about the the membership thing?

• 18:05Speaker 02

  Yes, I think the the thing for us is what we want to be able to do is we want to be able to do this business for a long time. But then potentially set us at the end.

• 18:11Alex Hormozi?

  Okay.

• 18:11Speaker 02

  So it's kind of like this is the thing that we love doing. We love coaching. We love changing lives.

• 18:14Alex Hormozi?

  The media business is for sure more sellable than the other thing.

• 18:18Speaker 02

  Mm hmm.

• 18:19Alex Hormozi?

  The only, because I I I'll explain why. So the thing that's going to matter, like the three big things, like if I had to like, if I had to simplify the long list that you guys have in front of you. Well, it is a pretty simplified list, but like you have really good gross margins. It's growing fast and you have revenue stick. Right? If all three of those things are true, then obviously you have key man risk and things like that that would go with the business. But like if you had those three things, the business itself, the model is very strong. I can promise you that your media people, the people who are buying ad space for you uh will be stickier than the the consumers who are buying golf community stuff. And the margins on media are virtually a hundred percent.

• 19:00Alex Hormozi?

  Now the digital community is also 100%. So they're kind of awash there on gross margin. And then you just have growth rate. Now, one of the beautiful things that I love the most about media business is very unique to media, which is that the way that you advertise is also the way you deliver. So you just have to do one thing, which is get attention. And then you sell the attention, then you just get more attention. And then people find out about your business because you've got attention and then you get more attention. And so if you're passionate about the community thing, which is making content for golfers, right? Why don't you just make more of that content and just make it free and let you get more attention?

• 19:32Alex 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. 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.

• 20:18Alex Hormozi?

  And so if that's at all interesting, you can go to acquisition.com/roadmap, R-O-A-D map, roadmap.

• 20:27Speaker 02

  So that's what, so that's what we do. So we have the, obviously for the, for all our brands that we cover, it's just literally us doing the coaching online. But then it's just the higher level of coaching, I suppose.

• 20:36Alex Hormozi?

  Oh, just like higher ticket?

• 20:38Speaker 02

  Yeah.

• 20:39Alex Hormozi?

  And that's what's making you less money?

• 20:40Speaker 02

  Yeah.

• 20:41Alex Hormozi?

  How?

• 20:43Speaker 02

  Well, we, again, data and focus is our main things that we're looking at.

• 20:47Alex Hormozi?

  Yeah. Well, how many people work for you?

• 20:48Speaker 02

  10.

• 20:49Alex Hormozi?

  Jesus. Seems so odd. It's like 1.4 million, you've got 10 employees. It's a little bit high, right? Are there a lot of VAs?

• 20:57Speaker 02

  So what happened was after COVID, like 2021, 22, we actually grew to 2.6.

• 21:02Alex Hormozi?

  Okay.

• 21:02Speaker 02

  But then as a result of growing the team, scaling the team and thinking that we were picking the right people and we didn't really know how to do it. I think we have struggled since.

• 21:12Alex Hormozi?

  So how'd you go from 2.6 to 1.4?

• 21:14Speaker 02

  And that's mainly big. Well, the brand revenue has gone up and the subscription revenue has dropped.

• 21:20Alex Hormozi?

  Why can't we just do more of this brand revenue? You're like, I've got this thing that I'm not trying to grow that's growing. It's super valuable and it's a high gross margin. The other thing that's really hard that I haven't done really well and it's shrinking. How do I grow that one?

• 21:30Speaker 02

  Yeah.

• 21:31Alex Hormozi?

  You know what I mean?

• 21:32Speaker 02

  Yeah, yeah. And I think this was probably like a natural, like, we know that the best, in our mind, the best product is the membership, because that's where they really get the best of us. And we feel like that's what's going to make it, take it to 50 million, whereas the brand stuff is going to be holding us back.

• 21:48Alex Hormozi?

  Think about the amount of, like, how many $50 million golf coaching businesses do you know of?

• 21:55Speaker 02

  No one.

• 21:55Alex Hormozi?

  Right. How many media businesses? I'll tell you, more than that.

• 21:58Speaker 02

  Yep. Yeah.

• 22:01Alex Hormozi?

  And golf is an awesome niche. Huge spenders. It's one of the few things men spend money on.

• 22:05Speaker 02

  Yeah.

• 22:07Alex Hormozi?

  No, seriously, it's making more money, cars, watches, below the belt, above the belt, right? And then, and then you've got like golf and shooting. And then like, uh, uh, prepper stuff. That's guys. That's it. But we earn a disproportionate amount of money.

• 22:21Speaker 02

  Yeah.

• 22:22Alex Hormozi?

  And so like you are one of the outlets that men spend money on a consumer in a big way.

• 22:26Speaker 02

  Yeah.

• 22:27Alex Hormozi?

  To make you feel better, just for everybody. I'm not really talking to you. I'm talking through everybody else. So there's this great Yoda saying that I say all the time and I really like it, which is, your nose is an ninja bugger mouth, but it takes somebody else to tell your breath smells bad. And so sometimes one of the biggest benefits that we have with the portfolio companies, like all the, the portfolio company is like, they're good CEOs, like they're smart dudes. And do that's, and like, they're intelligent people. It's just like, that's what outside eyes can do. It's just like, oh, really growing thing that has high margins and has a high enterprise value, thing that we're struggling with and not paying attention to that we think is more valuable. It isn't, and going down, and has, and is less scalable.

• 23:02Speaker 02

  Yeah.

• 23:02Alex Hormozi?

  Yeah.

• 23:03Speaker 02

  Thank you.

• 23:03Alex Hormozi?

  Yeah.

• 23:04Speaker 02

  Thanks.

• 23:05Speaker 01

  My name is Brian Hopkins. So we sell micro development housing to investors.

• 23:09Alex Hormozi?

  Micro development. Okay.

• 23:11Speaker 01

  Yeah. So infill housing. Um, we do 46 million in revenue. We'd like to get to 500 million.

• 23:16Alex Hormozi?

  Cool.

• 23:16Speaker 01

  Um, if possible. Um, and our bottleneck is scaling capital and our team structure. So they rely heavily on myself and my business partner.

• 23:25Alex Hormozi?

  To do the fundraising?

• 23:26Speaker 01

  No, to do everything, basically. Yes. Fundraising is what we'd like to focus on.

• 23:32Alex Hormozi?

  Heard. Okay. And so.

• 23:35Speaker 01

  So question is, how do we get Sharon to join us as a GP in our fund?

• 23:38Alex Hormozi?

  Yeah. Sharon's trying to sneak in. Yeah.

• 23:41Speaker 01

  But our question would be is how do we, uh, attract high net worth individuals without using our personal network?

• 23:48Alex Hormozi?

  Just talk to me.

• 23:51Alex Hormozi?

  I mean, you have a, you have a number of paths, right? One is somebody goes, go to somebody already has the, has all those people, right? Option one, that's the affiliate model. You could run paid ads and say, hey, this is my experience, this is my background. If you're a credit investor, check this out. Um, or you could be making content, which I don't know if you are doing that on a regular basis. You could be making content, um, or you could do the outbound method, but like those are fun. Like those are the options, right? There's only, there's only so many ways to get like, have people find out about your stuff. I mean, that's it. Like going to trade shows, I still kind of put into like, you pay somebody else to gain access to their audience. Same, same, same idea. But those are the, those are the different paths. We have a really good kind of like playbook for, for, because what you, what you're looking for is kind of like higher. It works the same as an enterprise sale, even though it's a, it feels different or like it, it quacks different.

• 24:35Alex Hormozi?

  It, it's actually still the same process. And I think that if I had to like, if I had no money, no everything, and I had to start now and I was switching places with you, I would probably hit the conference event stuff. Because that's where it's just super high leverage. You typically want to be face to face with investors. They, I mean, not, you don't want to, but you can. Um, and it's just like the speed to trust is so much faster. Yeah, we have a whole playbook around that, but you should, more than I can share right now in terms of time for everybody else. But I think if I had to pick one of those paths, that's probably the one I would start with. Um, unless you had some like background in like media buying or some other, yeah. That's what I would do. Yeah.

• 25:11Speaker 03

  My name is Ashley Brock and I sell advertising training to business owners. So all paid ads will do five or six million. I'm optimistic. So so we're going to go with six because it sounds better.

• 25:21Alex Hormozi?

  I like five or six. Okay.

• 25:23Speaker 03

  Okay. Yep. I would like to be at 50 million. Obviously not this year. What's stopping me is my capacity for sure. And so my question is, after hearing today that you spend 80% of your time on content, I'm trying to figure out what are the only things that I should do for me? And then what should I delegate? I don't have anybody that I pay more than a hundred thousand. So that's one thing I feel like I'm missing.

• 25:46Alex Hormozi?

  What are your margins?

• 25:47Speaker 03

  My EBITDA, I know.

• 25:49Alex Hormozi?

  Yeah, sure.

• 25:49Speaker 03

  At 2.5.

• 25:50Alex Hormozi?

  On five?

• 25:51Speaker 03

  Mm hmm.

• 25:52Alex Hormozi?

  That's great. That's amazing. Yeah, it's super good.

• 25:55Speaker 03

  I was excited yesterday.

• 25:58Alex Hormozi?

  That was the best reaction. So here's, so the, so you're, I wanna, I wanna answer your question with a perspective shift. So you're now getting to the point where you have enough money where you have to start thinking about return on capital, right? Return on invested capital within a business. And so if you have two and a half million dollars, right? You can think of that as like, okay, well, if I take that out of the business, which you would, because I'm sure it's an LSC or whatever, right? So it's like, okay, so I've got, call it 1.5 million after taxes that I can put in my pocket, which there's nothing wrong with that. I'm a big fan of putting money into pockets. The, the other way of thinking about though is like, okay, well, what if I were to take 200,000 for that? Um, and I take my taxable from 2.5 to 2.3, and then that $200,000 person, it makes me an extra million.

• 26:43Alex Hormozi?

  And so that's where I think the, I still believe that the biggest arbitrage opportunities that exist right now in business are still in talent. And I can tell you right now, I'll tell you a story because I think it'll, it'll drive it home. I'm talking through you to everybody else. So the moment like my, the best talent, one of my, one of my favorite people on earth, see here, it's around here. One of my favorite people on earth, uh, said, said this to me and I've, I've always remembered it since he said, he said, um, your best talent is always in the future. So right now, think about the people who used to work for you, like five years ago. Can you think about that team right now? Could that team run your business right now?

• 27:21Alex Hormozi?

  They would die, right? And you would die too. And so the thing is, is that there's five years ahead of you, looking back today on your team, who feels the exact same way. And so my goal is how do we shrink that gap as fast as we possibly can? So that we can pay down your talent debt. Cause right now that's what your debt is. So basically you're choosing to make more money, but you're paying by making more money, you're increasing your debt for humans. And so businesses can incur lots of different types of debt. And whenever you start a business, you always incur debt. The question is which type of debt you want to incur. You can incur financial debt, you borrow money, then you start the business. But maybe if you borrow money, you can hire people that you otherwise couldn't hire. And so you don't incur as much talent debt or as much management debt. You might incur technical debt.

• 28:05Alex Hormozi?

  Okay. I don't have a CRM. I don't have data. Some of the constraints we talked about earlier, right? Like that might be some of the debt. And so there's different types of debt that you can incur. You have talent debt. And so the goal would be, especially because you're in a service-based business, your business will be capped for sure by the culture that you keep, which is going to be on you. And the people that proliferate that culture is the people you attract. And so if you want to grow this business, which is all based on service, it's all based on people. And so you have to bring people that you gotta be like, if you're not paying more than a hundred thousand dollars a year, it's a hundred percent you who's making this happen, which is kudos to you for being skilled. On the flip side, though, it doesn't have to be that way. And you would be amazed at the talent that you can get when you crack like, you might want to just jump to 250,000 a year and you'll be like, oh my God.

• 28:50Alex Hormozi?

  These people are so much better. And what's scary is when you pay someone 500,000 a year, you're like, oh my God, this is a totally different level of talent. You pay someone a million dollars, you're like, holy shit. I didn't know people could, you made, they, they made people like this. Right? And then eventually you, you get people, you know, like Sharon, and you're like, he's, he's just, he's just better than I am, you know? And maybe someday I'll, I'll convince Sharon, right? And so the point is, is like, you just want to find people who are absolutely unreal. And the litmus test that I have is that you feel this like desperation in your core when you talk to them. You're like, I have to have this person. It's not like, oh, I have this role. This person seems like a pulse and not a moron. I guess this is the least bad of the 10 people I've talked to. I would encourage you, if you're ever in that situation, this is the least bad, just don't, just keep, keep looking.

• 29:33Alex Hormozi?

  Like we will keep, we will keep a role open for weeks or months if we do not find the person. And so we are always actively recruiting and we have a lot of flow. And so you guys got to meet the team this morning, should have a little bit more context. Smart people, very good at what they do. But in order to do that, like those people do not cost 250,000 dollars a year. They're significantly more than that.

• 29:53Speaker 03

  Yeah. I've told myself up until now that I'm saving money by paying less and you're right. It's like costing so much more.

• 29:59Alex Hormozi?

  Yeah, it's, you're all, you're always paying. It's just what you're paying, you, you pay with the thing you care the least about.

• 30:04Speaker 03

  So good. Thank you.

• 30:06Speaker 02

  Yeah, you're welcome. Andrew LaBaron, I convert motels, hotels to apartments, extended stays, crosses some belt states. On track for 14 million revenue this year. Small EBITDA 2.1 net.

• 30:19Speaker 04

  Real estate, high OpEx. Would like to be at around a 30 million.

• 30:24Alex Hormozi?

  Do you have LPs or you fund at all?

• 30:25Speaker 04

  Yeah, we have a Reg D 5060 fund. We partnered with a key man who's now kind of key man risk. Good friend of mine, Richard Wilson of Family Office Club. What I want to do next is create a hotel brand.

• 30:39Alex Hormozi?

  Okay.

• 30:40Speaker 04

  Specifically on the adaptive reuse side.

• 30:42Alex Hormozi?

  Okay.

• 30:43Speaker 04

  Because you have all these empty garbage crappy hotels, motels, and they don't want to pay the pips that Marriott, Hyatt, Radisson want them to pay. So I can come in and say, look, I'll take over. I'll take care of all your operations. Don't worry. I figured all that out. I'm on my umpteenth property.

• 31:00Alex Hormozi?

  Sure.

• 31:01Speaker 04

  Here's what I just need you to do. The issue with that is I'm battling a lot of other buyers and it's hard to get in. It's hard to be the first guy that sees the deal, right? The gatekeeper of these properties or brokers, agents. So that's what's stopping me. I believe I know what I need to do, but I need a little bit more validation and get over my analysis paralysis. But I believe I need to be that thought leader in this space. And if I, my thought is if I am the thought leader in this space, they'll kind of come to me. You know, before the key man was raising all the capital. Well, now I'm raising all the capital.

• 31:36Alex Hormozi?

  Okay. When you say they'll come to me, who?

• 31:39Speaker 04

  Uh, those who have hotels, motels that want to convert them into apartments where I can buy equity.

• 31:44Alex Hormozi?

  Investor side, but the, so you want?

• 31:46Speaker 04

  Actual, yeah, I need pipeline. Correct. I need, I need a pipeline.

• 31:48Alex Hormozi?

  Okay.

• 31:49Speaker 04

  Um, pipeline problems all day long for me. So I feel if I have a channel or some sort of content distribution and it's a blue ocean strategy. In fact, there's only one other guy in here that's actually doing something similar to me. I don't know where he's at, but I just spoke to him. There he is. You're on his podcast. So, um. That's what I believe in. I kind of want that validation.

• 32:14Alex Hormozi?

  Well, I'll zoom out for a second before giving the immediate like, cool. Which is the problem that we're solving is just deal flow. Right? And so kind of like I was saying earlier, like thought leadership is a path. It doesn't have to be the path. If it's the path that you want, cool. But when I think about this, I think about basically what is the the highest reward, lowest risk way of accomplishing whatever the problem is. Right? And so for you, if, or if I'm picking for anybody, it's like, what is your existing skillset? And what has the highest overlap with that skillset so that I have the highest likelihood it's going to work? So if you were like, you know what? I've done face to face forever. That's why it's like, oh, you know what? Let's, let's, let's do the, the conference strategy as, as a, as a good, as a good strategy for the fundraising.

• 32:54Alex Hormozi?

  If you're like, I understand media, I like social media, I want this like deep inside my heart. Then I'd be like, well, I'm not gonna stop anyways. You're gonna do that anyways. Uh, so go, go do the quote thought leadership and make content. If you had a, if, you know, if Ashley was here and she was like, you know what? We're gonna, I know how to run ads for you. Then like, if that was your background, I'd be like, well, let's just run the paid stack. So like, you could absolutely run an ad that just says, hey, if you're a motel owner and you're looking to sell, um, I'd love to talk to you. And you can just generate leads that way. It works fine. Like I was looking at, I wanted to do, um, a deal in the payment processing space like a year and plus ago. Maybe some guys saw this, but like, uh, I ran ads just for like, hey, payment processors doing between 30 and 300 million a year. Like, hit me up if you're like interested or whatever.

• 33:36Alex Hormozi?

  And I think we had 13 qualified companies for $6,000 in spend. Like on the phone, which is absurd, right? If you think about it from a deal flow perspective. And so I only say that this is going to be worth explaining. We have our, you know, big prize and let's assume that it's money for the sake of this conversation. There's going to be, you know, this way. And then there's going to be this way. And then there's going to be this way.

• 34:02Alex Hormozi?

  All of them get up the mountain. And so I think where the quote analysis paralysis kicks in is that you're like, which one is best? And I call it the fallacy of the perfect pick. Is that you think that there's a perfect pack and there just isn't one. There's trade offs on all of them.

• 34:17Alex Hormozi?

  Like you're gonna be in the where you get in trouble is where you, well, the, there's two big places you get in trouble. One is here at the base of the mountain, trying to figure out which one to do. And then you spend a year there when a year on any of them, on the low side, he could have been here on a year here versus you here. You could have been up the mountain further than you are here just because you waited. And the thing is, is that the longer you the wait, at some point, you would have literally got to the top of the mountain on any of them. But the waiting was the cost. The second part where you get in trouble is here or here, where you're like, you know what? This other path, you know, kind of looks a little bit different than this one. And it looks like that one also goes up the mountain and that one looks less steep. So then you go over here, but you're like, shit, this one's less steep, but it's slower. Or you're on the other one that's slower and you're like, but this one's more steep. And then you get there, you're like, shit, this is way steeper.

• 35:01Alex Hormozi?

  And so there's always trade offs that happen in any of these paths. But if you want to be a, you know, a thought leader, just, just recognize that it's going to take time. Like, I would say, give yourself 18 months before you determine whether or not this is a good idea. And you have to commit to that. Like when I started YouTube, the vendor that I had, he made a video about it. The first call I had, I said, I'll do this for 10 years. And if after 10 years it's not working, I'll stop. And he was like, in my entire history, I have never heard anyone say that. He's like, it's all like, how do I get leads in 90 days? And so the fact that you're in a business that is capital aggregation and you're, and you're like, you probably do have a longer time horizon anyways, just on the nature of the business. But I would encourage you to, if you are going to do the quote thought leadership thing, stick to what you know.

• 35:44Alex Hormozi?

  Don't try and be the next Gary Vee or the next me or the next whatever. Cause like, you're not going to beat me at being me, but you will beat me at being you. And so I would just like, only talk about the things that you have the track record for. And that will, that will necessarily narrow the content that you talk about. But the thing is, is that social media, you've probably heard this has shifted to probably interest based media now with interest graphs with the algorithm. And so if you want those types of leads, you have to make that type of content. And the thing is, is the algorithms are getting so good. Like my, if you look at my discover page, it's just metal fabricators. And I was gonna say gym equipment. So it's gym equipment too. Uh, and comedy. Those are like, that's what I consume. I consume gym shit, gym equipment, and I consume comedy.

• 36:27Alex Hormozi?

  That's, that's my whole thing. And the thing is, is that metal fabricators are notoriously bad advertisers. And so on my discover page are like 13 like videos of metal fab guys being like, look at this cable accessory I just welded. I'm like, this is cool. It gets served to me because I'm that audience and I'm a, I'm a great lead to have uh, for that stuff. But like, just don't be afraid. If you see you have like a hundred views, I see tons of videos that have a hundred views, 200 views, 500 views, and I'm exactly who they want watching. And so if that guy, that metal fab shop guy was like, you know what? You know, six things about marriage. I'm like, I don't fucking care. Like, why do I care? Why am I listening to this guy? Right? I, I just want to buy metal, metal stuff. So just show me the metal stuff. And so I would just say like, if you are going to do the motel thought leadership stuff, stick to that.

• 37:09Speaker 04

  Awesome. Thank you.

• 37:10Alex Hormozi?

  Yeah.

• 37:10Speaker 05

  My name is Cherry Salt Flomaggio and I am the CEO for St. Charles Surgical Hospital and the Center for Restorative Breast Surgery, which is the professional side of the practice. And we have a physician in a hospital licensed 39 beds. What we do is breast reconstruction for cancer patients. And we also do genetic testing and we do prophylactic. 50 to 60% of our patients come from out of state, not the country. Because we're the only ones in the United States that can provide every type of reconstruction there is. So we um, our biggest, our revenue right now is about 57 million.

• 37:54Speaker 05

  Where we, our goal is to grow at least 20% of new patients per month.

• 38:02Alex Hormozi?

  Okay, per month?

• 38:03Speaker 05

  Uh, on first stages and then on second stages. There's two parts to the procedure. We meet the goal. We meet the goal all the time for second stages.

• 38:13Alex Hormozi?

  You want a 4X this year? I just want to make sure I understand the question here. So you're saying it's growing by 20% a month or what?

• 38:18Speaker 05

  We, that's our goal is to go 20% per month. On the second stages, we are, on the first stages, we're basically flat. We're, we're keeping our same number. We want 20 new, 20% new patients.

• 38:32Speaker 05

  Per month.

• 38:34Alex Hormozi?

  Okay.

• 38:35Speaker 05

  On first stages.

• 38:36Alex Hormozi?

  Okay, so your second stage is growing.

• 38:37Speaker 05

  Second stages, we have no problem. We're growing. We're absolutely growing.

• 38:42Alex Hormozi?

  Go directly into the second stage?

• 38:44Speaker 05

  They they have the first stage procedure.

• 38:47Alex Hormozi?

  Uh huh.

• 38:47Speaker 05

  And then they can have the second stage within within twelve months.

• 38:51Alex Hormozi?

  Second stage reconstruction?

• 38:53Speaker 05

  The second part of the reconstruction. Where they do the tweaking, the liposuction and so forth.

• 38:59Alex Hormozi?

  So it's like kind of plastics aesthetics a little bit.

• 39:02Speaker 05

  Well, it it's it's all insurance driven and it is. It's not something that women want, but they have. So of course, we we do um the whole nine yards to make them feel good, look good as they were before.

• 39:17Alex Hormozi?

  The second stage, you have no problem?

• 39:19Speaker 05

  The second stages, we're not having a problem with. We're getting those in right away.

• 39:24Alex Hormozi?

  And they go straight in from other people who did the first, they did stage one somewhere else.

• 39:28Speaker 05

  I'll be honest, a lot of second stages to come in from people that were botched from other surgeons.

• 39:34Alex Hormozi?

  Got it. Okay, so you have two separate front ends to the business?

• 39:37Speaker 05

  Right.

• 39:37Alex Hormozi?

  So I'm going to draw this because just want to clarify it. So you have two front ends to the business. You've got in on stage one, and then you've got in on stage two, and then some people go from stage one to stage two.

• 39:50Speaker 05

  Right, they go from one.

• 39:51Alex Hormozi?

  So this, you've got lots of people, you know, an unlimited amount of customers who are going straight to there. And then this is just flat in terms of growth. Okay, is there a problem with this just growing like crazy and this not growing just out of?

• 40:04Speaker 05

  Well, stage two grows. We we do accommodate everyone. We own a hospital. So if we have to work on the weekends, we keep the hospital rolling. We have seven huge OR rooms. We we keep them going constantly.

• 40:17Alex Hormozi?

  Problem that this solves? Why is this a problem?

• 40:20Speaker 05

  Our problem is that we want the first stages, which is the biggest money generating for our patients. In December, December of last year, in two weeks, we did a hundred and twenty second stages in two weeks. The thing that is stopping us right now in the practice is that we're getting patients. We got a hundred and uh seven hundred and something leads in one month.

• 40:50Speaker 05

  We're getting the education calls, we're doing that. Where it becomes a bottleneck is that the insurance company. We're only a network with two insurance companies, we're out of network. So that's where it becomes a problem.

• 41:05Alex Hormozi?

  So do you have a Legion issue or do you have an admin backend issue?

• 41:08Speaker 05

  Well, we have a backend issue, meaning they come in, we educate, all that goes fine. Once they get their benefits and they realize what the out of pocket is. We try to help them, we give them grants and we do financial aids for them. But it's still with the insurance companies. It's still a lot of money coming out of their pocket. The caveat to this is that we did open up an office in the Dallas area, one of our physicians moved to Dallas.

• 41:36Alex Hormozi?

  What can I help you with?

• 41:37Speaker 05

  What I need to help me with is to figure out how I can on the backend. We're looking, we think we need a closer, how do we close the deal? To actually sit with all these patients that I have an issues because they have no out of network benefits or the money is too much out of pocket.

• 41:57Alex Hormozi?

  So I'll one up you.

• 41:58Speaker 05

  We need, and that is something that we're trying to look at. Is it something, do we hire some, a salesperson because they can sell?

• 42:07Alex Hormozi?

  I have an idea.

• 42:08Speaker 05

  Or do we hire someone who is in healthcare that can also, we train to sell.

• 42:16Alex Hormozi?

  Couple things, so first off, I, I would, I'll one up you, which is that you're thinking about this as a who, when I think this is actually, so you've got some things that are people solutions and other things are process solutions, right? And so you have a process solution, you need a sales motion. So it's the entire thing, because if you have a properly designed sales motion, the front desk girl could do it. I know, because I designed these for businesses, like you absolutely can. And so what it'll, what that'll do is it'll actually make it much more scalable because you, it'll, it'll decre- basically a sales motion, so if we think about a sales process, which um, we'll talk about in a second. But if you think about a sales process as

• 42:59Alex Hormozi?

  there's a certain amount of information that a customer needs to understand in order to make a purchasing decision, right? You can have somebody come in cold and then you have a superstar closer. That's supposed to be a star, there you go, who can take them all the way creedle to grave and get the money.

• 43:14Alex Hormozi?

  The less distance they have to travel, the less rare this is, or the more common this is. And so could you, this is kind of like a ways up the mountain thing. Let's say this is your star closer. This is your healthcare worker. And maybe this is your sales process. All of these will get you up the hill. And so the question of like, which one should I do? All of them will probably work. The question is, which one is the highest likelihood of working, given your existing skillset? And so you can design a sales motion. That's option one. If that's within your skillset. Option two is you can hire a closer, assuming you know how to track them and what to look for. Number three is that you could go for the, the, the healthcare person, get them quote, trained up, which then you would try and find somebody who has a kind of a hybrid.

• 43:59Alex Hormozi?

  They have the personality type of somebody who's a closer, but chose a nurturing career, which doesn't always happen. Killers don't tend to be nurturers. Any of those would work, but I think that long-term for the business, the sales process or sales emotion is the thing that should get fixed first because it'll decrease the need for superstars to make the whole business work. And so that's, that's how I approach this from a strategic perspective of solving a problem for the business. And so that comes like the, the problem that you brought up of like, basically they're getting sticker shock. Right? That's the issue. You have a conversion problem. And the thing is, this is so easy to solve. It's like, okay, so what information do they need prior to walking in? How can we pre-frame this or reframe this? And like, is there a way that I can say, hey, some people pay $20,000.

• 44:44Alex Hormozi?

  If you could have your life back, would you be willing to do that if we had financing options? Now, to be clear, insurance will cover some of this. Maybe it'll cover all of it, but we like to be upfront that this could be how much it is. Even just having that step in the sales process will reframe how they perceive everything else. And if you also know, as people coming in the door, we work with plenty of healthcare companies. It's like, we can qualify those leads ahead of time before they come in for the information sessions. We'd say, what, what insurance do you have? All this stuff so that when they come in, we actually already know that Cindy's got Blue Cross, whatever she's got, right? And so we actually already have everyone pre-approved and we already know their limits. And so when they're coming in, we can say, hey, on the left side of the room, you guys are fully covered, you guys in the middle, you guys are 50 50, y'all are fucked. And so. All out of pocket, whatever.

• 45:29Alex Hormozi?

  And so then you can also start catering the messaging to each of those audiences. And maybe instead of doing one information session, you do three. And one is that way you're like, okay, these are all insurance people. I can talk to these people differently. These people, we have to pre-frame the down payment because there have to be some out of pocket. We can run that by collecting information prior to even doing the education. Again, all of this is just looking at what is required to sell somebody. And then putting all of that front loaded so that you only have the people who are the highest likelihood candidates of doing the procedure that are going to be expending, that you're going to expend resources on nurturing. Because otherwise, every single person that you spend resources to educate, who does not buy, you lose money on. And so if we can, if we can triage that upfront, we can save all of this extra money that we're wasting on these people.

• 46:12Alex Hormozi?

  Worst case, you just say, hey, let me just refer you to five different people. And then you can basically kick up an affiliate program with some other people. I know the wording is different for healthcare, but like, we'll start referring you patients. And when you refer other people patients, they tend to refer you patients too. You for the ones that you can't take care of based on how you, how you bill. And there are other places that can. And so you can start sending them that way. And then you start getting more type ones in the door from that. So again, this is a sales motion issue. Like the short-term Band-Aid is we have to find a superstar. But I almost never try and think, oh, the way to solve my business problem is find a unicorn. It's like, sure, because everybody here could solve whatever business problem you have by finding a unicorn. I don't have like, where's my deal flow guy? Actually, we do deal for both of you guys. So it's like, how do I like, how do I solve that? Oh, just find a unicorn, done. Just find somebody who just goes and gets all those things.

• 46:57Alex Hormozi?

  So it's like, well, of course we can do that. But that, but then as soon as that closer walks away, you're screwed again.

• 47:02Speaker 05

  Right.

• 47:03Alex Hormozi?

  So I'd rather build the process, build the motion so that I can have anybody with a pulse still walk through six questions of somebody that we can even have on an iPad that even does the decision-making for them. And then it says, which way would you rather prefer to pay? Does that make sense? That's how to approach it.

• 47:19Speaker 05

  Thank you.

• 47:19Speaker 02

  Hi, Alex. My name is Lucas. I have a portfolio company in Brazil.

• 47:24Alex Hormozi?

  Portfolio company?

• 47:25Speaker 02

  Yeah.

• 47:25Alex Hormozi?

  Okay.

• 47:26Speaker 02

  14 invested business. Last year, we did 110 million in reais, which means like.

• 47:34Speaker 06

  Divided by six. Yeah, yeah.

• 47:37Alex Hormozi?

  Way to anchor, though. It's good.

• 47:38Speaker 06

  Yeah.

• 47:40Speaker 06

  And.

• 47:40Alex Hormozi?

  Multiply by six and then divided by six. You're good. Okay.

• 47:44Speaker 06

  That's real, that's real. But I live in reais.

• 47:45Alex Hormozi?

  No, you're good. Do you own, uh, do you own a hundred percent of all of them?

• 47:48Speaker 06

  No.

• 47:48Alex Hormozi?

  Okay.

• 47:49Speaker 06

  We have like a minority. That's one, one part of my question.

• 47:52Alex Hormozi?

  Yeah, it's gonna suck. Okay, keep going.

• 47:55Speaker 06

  This year, we are aiming for two hundred million reais. And we, I, I always thought it was a smart move to have the minority because I have the, the, the founder aligned on.

• 48:08Alex Hormozi?

  How do you feel about that now?

• 48:10Speaker 06

  Yeah.

• 48:11Alex Hormozi?

  Yeah.

• 48:11Speaker 06

  I, it's good and bad. It's good and bad. Because we can grow really, really quickly. Uh, but we don't have like different inside leaders for each area like you do, like the sales, the HR and the things like that. Do you think that structure could work for a smaller business, especially when you, we have like twenty or thirty percent of the, the share?

• 48:36Alex Hormozi?

  Centralizing services for those companies?

• 48:39Speaker 06

  No, not service, like you do here. You have like the special team to help this, this, this.

• 48:44Alex Hormozi?

  Like, could you or should you do that?

• 48:46Speaker 06

  Yeah.

• 48:46Alex Hormozi?

  No, it won't make sense.

• 48:47Speaker 06

  No.

• 48:48Alex Hormozi?

  Financially.

• 48:48Speaker 06

  Economics.

• 48:50Alex Hormozi?

  Hmm.

• 48:51Speaker 06

  And.

• 48:51Alex Hormozi?

  They're not big enough to afford the talent that you need, that you, like, the talent of this team would eat up one hundred percent or more, you'd literally be losing money. And then you have to really bank on the fact that you can exit these positions. But given the fact that those positions are small and super liquid, that would not be a bet I would make.

• 49:06Speaker 06

  Okay. And mostly of our companies are in info products, so online courses, mentorships, anything like that. How would you protect this type of business considering AI? I think we, we're already seeing that the, the persons are not wanting to.

• 49:21Alex Hormozi?

  Yeah.

• 49:22Speaker 06

  Learn, they want the answer. So how would you actually protect this?

• 49:26Alex Hormozi?

  I wouldn't.

• 49:27Speaker 06

  You wouldn't protect?

• 49:29Alex Hormozi?

  I would try and make as much as you can and look for a different vehicle.

• 49:35Speaker 06

  Okay. Thank you. So my name is Taylor Heron. I run a very high volume cold email agency, basically. We work with a lot of B two B SaaS companies that have Tams over at least 10 million users or B two B service businesses that have LTVs over like 50 grand.

• 49:53Alex Hormozi?

  Okay.

• 49:53Speaker 06

  Quickly, right? We're good at the meeting pathway and also a PLG pathway with SaaS.

• 49:57Alex Hormozi?

  Okay.

• 49:57Speaker 06

  I currently do 2.2 million. I'm pretty sure I can take it to 10 million within the next like year or so. Primarily because because I think I know what to do next, based off of this weekend, even before here, a lot of stuff like that. So if anything, it'll be interesting to just hear you criticize maybe what I think I should do. Right? So we got to 2.2 by the day, having like $10,000 a month retainers. What we're doing is switching to performance models at scale. Where it's like, hey, let me understand your LTV. We'll do a third of, we'll charge a fee roughly equal to, we'll make sure your CAC is a third.

• 50:32Alex Hormozi?

  Okay.

• 50:33Speaker 06

  Maybe that needs to be different, you know, but that's the idea. Switch it to 5K. So it's really easy to close because most people, we tell them five, it's really easy for them to hop into the funnel and just go, yep, let's try this out. And then we have performance setup on the backend. Um, the advantage is that like

• 50:50Speaker 06

  systems that will break, I think, private data and analytics to be able to actually know what properly to do for each client at that type of scale. Cause some of our clients will send like 10 plus emails a month written with AI, one to one.

• 51:10Alex Hormozi?

  Uh huh. 10 plus or like 10,000?

• 51:13Speaker 06

  10 million.

• 51:14Alex Hormozi?

  Okay. Yeah, I got it.

• 51:15Speaker 06

  Per month. Yeah. So this is so interesting. So like the fee sounds wildly underpriced.

• 51:21Alex Hormozi?

  Like you were saying 10 million emails and you're charging $10,000. That sounds absurdly low.

• 51:27Speaker 06

  Yeah, I would say, um, we start it to get them in and we'll send 100,000 test message market fit. The second we find the multiple that we go, cool. I know if I target SaaS founders with this message, there's 800,000 of them. If I hit that list, I'll sign up 601. We can crank it that way. Right? So it's almost to get them in there where we have the

• 51:47Alex Hormozi?

  Is the biggest issue, you're running out of lists?

• 51:49Speaker 06

  No.

• 51:49Alex Hormozi?

  Okay.

• 51:50Speaker 06

  No, because basically it's like, let me email your entire TAM every two months.

• 51:53Alex Hormozi?

  So what else? What else do you think is going to be the, the biggest problem with this model?

• 51:58Speaker 06

  Keeping clients honest, potentially.

• 52:00Alex Hormozi?

  Uh huh.

• 52:01Speaker 06

  Um, on collecting, if it's based off of percentages or whatever it may be. Which is where I also think it's maybe like a systems problem in that I need to have proper integrations to their CRM's to keep them honest. Which maybe I need to acquire or like, uh, get the right developers or something like that. To be able to do that better, what stands out.

• 52:22Alex Hormozi?

  Yeah. So the, the problem that I would foresee is the one that you just brought up, which is what I was hoping to get to. Whenever you switch to performance, performance is always, always the best model on paper. Not always the best model in practice. And it's strongly predicated on the quality of the prospect. So if you have enterprise customers who are basically, who have obligations and have assets and have shit to lose. They tend to follow and adhere to their contracts. Smaller, even sometimes medium business owners, less so in them, are you US? Okay. Yeah. And US contracts mean basically nothing. And so all of these things are kind of like stacked against you. Um, and Alan was a performance basis model. So I like very much understand this business.

• 53:07Alex Hormozi?

  Now we were able to do it only because I controlled the flow of payments. I got paid.

• 53:13Speaker 06

  Hmm. And then give them.

• 53:15Alex Hormozi?

  Remitted.

• 53:16Speaker 06

  Their part.

• 53:17Alex Hormozi?

  So.

• 53:18Speaker 06

  Yeah.

• 53:19Alex Hormozi?

  You always want to control the, the money flow if you do performance. Or you have to have absolute transparency. So like you run the Shopify store. That's why Shopify agencies can do performance. A lot of email marketing for Shopify. They do, they do performance percentages, uh, you know, using Klaviyo and whatnot. And that, that model works great for them because the tracking's clear and most people, no one's going to start a second store to try and cut you out. Brick and mortar, guy walks in, I didn't show, guy closed for 50 grand. How do you know? I you you set up a unfortunately, you set up an incentive system that incentivizes them to cheat you. And if they have to cheat them or to you, they will shoot you. So I'm not a huge fan.

• 54:02Alex Hormozi?

  I would prefer to just factor in basically scaled based on what you know the ROI is roughly to kind of like a North Star metric, which might be,

• 54:13Alex Hormozi?

  you know, for every million emails, it's this. And you might have to just do that custom upfront in terms of like, okay, based on your customer, based on how you're trying to your segment. This is the rate. I'm not the biggest fan of custom pricing, but based on the model that you have, it might make sense, given you probably have fewer customers that are worth more. I'm assuming. What's your churn?

• 54:31Speaker 06

  But probably thirty percent or something like that. But also I've changed my offer.

• 54:37Alex Hormozi?

  Yeah.

• 54:37Speaker 06

  Okay. Yeah, annually, I've changed my offer enough to where it's kind of hard to be like, what's the actual churn on the current offer? But yeah.

• 54:43Alex Hormozi?

  Okay. Why do you, why do the people leave? Cause you charge nothing.

• 54:47Speaker 06

  Well, we used to charge ten Ks flat to be like, here's how many emails we'll send. Right? Most of the time when they would leave, it wouldn't be because of performance and because their offer wouldn't. We weren't able to find a good offer message, message market fit for them.

• 55:00Alex Hormozi?

  So.

• 55:00Speaker 06

  Right?

• 55:01Alex Hormozi?

  Have you been able to separate cohort churn as in like first three months versus three months plus?

• 55:05Speaker 06

  No.

• 55:06Alex Hormozi?

  Okay. So I would consider posit having a two, two part structure where you charge a one time fee that's significantly higher upfront, but has zero recurring. To do the one thing, which is we're going to find message market fit. After that, you solve that problem. You say, hey, if you want, you can go send 10 million emails a month with this messaging and they'll be like, well, we don't know how to do that. And you're like, oh, that's crazy. You know, we do that if you want. And then you can say, let me introduce you to other tier of pricing. And that might be a best of both worlds model. And you will be astonished, by the way, at how much easier it is to sell a one time thing versus an ongoing thing.

• 55:43Speaker 06

  Interesting. I wonder, um.

• 55:45Alex Hormozi?

  Like you can double or triple close rates from a $1,500 a month membership to a $5,000 one time upfront. You can triple close rates at triple the price.

• 55:53Speaker 06

  Uh huh. Yeah, for sure.

• 55:55Alex Hormozi?

  Which is a nine X.

• 55:56Speaker 06

  Does it, does it change your thought process at all when like the like monthly reoccurring, we've been able to achieve with these performance models and huge TAMs, like we're billing some clients like 75 or like a hundred grand a month.

• 56:07Alex Hormozi?

  Okay.

• 56:08Speaker 06

  All of a sudden, right?

• 56:09Alex Hormozi?

  You said you did 2 million.

• 56:10Speaker 06

  Yeah, because the reason I got this idea for the performance is because we got a whale.

• 56:15Alex Hormozi?

  Uh huh.

• 56:15Speaker 06

  I was like, holy shit. Where'd you get in a hundred bucks?

• 56:18Alex Hormozi?

  So we said some customers, there's one customer.

• 56:20Speaker 06

  We just closed another, upsold them into performance and we start like this month.

• 56:24Alex Hormozi?

  Okay. So you have one customer who's doing the big, big whale thing.

• 56:27Speaker 06

  Yeah.

• 56:27Alex Hormozi?

  I'm not trying to, I'm trying to understand.

• 56:29Speaker 06

  Yeah, yeah, of course. Okay. So, so there's one there. It looks promising.

• 56:33Alex Hormozi?

  To go back to what I said earlier, if you have enterprise customers, cool.

• 56:38Speaker 06

  Yeah.

• 56:38Alex Hormozi?

  The fact that you say about it, because I'm using the data you give me. So if you say, I'm doing $2 million a year, we're charging $10,000 a month. I'm going to back, back a napkin and be like, okay, they got 20ish customers. And if they're paying $10,000 a month and sending 10 million emails, it doesn't make any sense, but okay, let's keep going. Beyond that, it's like, okay, well, if you've got 20 customers, at that price point, they're probably low, they're SMDs, they're not, they're not even mid-market. This whale is mid-market. And if you had said, hey, we only deal with, uh, businesses that are doing over 10 million in ARR and are venture-backed or what, you know, whatever, whatever the, the, the criteria are, that I would say I have high confidence that one, they can pay and two, that they even track. Then I would have much higher confidence in saying, yeah, go for it on the performance model. But the biggest risk that you're paying down is that they don't pay you.

• 57:20Speaker 06

  Yeah. Yeah. Yeah. That's the risk. Basically, if you have high confidence of the payment, then the performance.

• 57:25Alex Hormozi?

  I'm all for performance. I mean, I would do $0 upfront. I don't even care. If I know that I can get paid, I'm all in.

• 57:31Speaker 06

  Uh huh.

• 57:32Alex Hormozi?

  I just gotta know that I can get paid.

• 57:34Speaker 06

  Yeah.

• 57:34Alex Hormozi?

  That's the problem. That is the biggest hinge in this thing.

• 57:37Speaker 06

  That's like the biggest risk of going down that path is you're just.

• 57:40Alex Hormozi?

  Yes. Uh huh. You solve that, you solve the business. Yep. That's the, that is the whole business. You solve that, you solve the business.

• 57:46Speaker 06

  Yeah, exactly. Own that.

• 57:47Alex Hormozi?

  Yeah. I built a software to solve it. Like, I get it.

• 57:49Speaker 06

  Yeah, exactly. Makes a ton of sense.

• 57:51Alex Hormozi?

  Yeah. Cause I was going after small guys, so I had to.

• 57:54Speaker 06

  Yep. Thank you.

• 57:55Alex Hormozi?

  Yeah, you bet. Rock and roll.