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If I Wanted to Scale Faster in 2026, I'd Do This | Alex Hormozi — Transcript

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0:00Hey, Alex. Thank you. Uh, my name is AJ.
0:02I own a Did you hear it?
0:04>> The what?
0:04>> Did you hear my question from before or
0:06do I have to restate the whole thing?
0:07>> Uh, restate it. Sure.
0:09>> 1.2 million.
0:10>> Yes. 1.2 million in 2024.
0:12>> I heard the money.
0:13>> 2025. [laughter]
0:16>> 25 we doubled it to 2.2. Um, this year
0:19we're projected to do four.
0:22>> Really the goal would be, you know, in
0:23the short term probably by 27 if we
0:25could be a million dollar a month
0:26company. What we did to double it this
0:28year,
0:28>> who do you sell? Say that again.
0:30>> What do you sell to who?
0:31>> Uh, we sell motocross training.
0:33>> Okay.
0:33>> So, we we hold 5day camps is what I'm
0:36kind of realizing.
0:37>> Yes.
0:37>> Cool.
0:38>> Yeah. So, this has been cool because I
0:40start to the gears are turning as far as
0:41how to run a good event.
0:42>> So, thank you.
0:43>> Yeah.
0:45>> Um, what we did to be able to get our
0:48projection to 26 to the 4 million is we
0:52scaled down our single day tour dates.
0:55We were we we did more in 24. We went
0:58all the way to we scaled from 70 single
1:01day tour dates in 23 to 140 of them in
1:062024 and it was just a ton of
1:08operational drag. I mean it was like we
1:10were like a rock
1:11>> on tour.
1:12>> It was nuts.
1:13>> But what we realized and looking back on
1:15it is the bottom 20 of those were net
1:17negative. The the next 20 were net less
1:20than $1,000. So inconsequential. And
1:22then I started looking at in 2024, we
1:25did three of the 5-day camps kind of as
1:27a test run. Each of those net well over
1:29100 grand each. And I'm like, well, hang
1:31on a second. This is the answer. So this
1:34year, I told the team at first I called
1:36them. I said, hey, I just had an
1:37epiphany. Here it is. We're going to do
1:3910 camps. And I said, actually, no,
1:42we're actually going to do 25. And
1:44they're like, 25? What do you mean 25?
1:46>> My question is,
1:48>> do I continue to
1:51>> my Are you just able to charge more for
1:53the 3-day than the one day?
1:55>> Uh the make some earth. Sorry.
1:57>> So the one day is $300 which is probably
1:59not enough. The 5day is $1,200 which is
2:03definitely not enough.
2:05>> Uh so that's what part of the question
2:07too.
2:07>> Cool.
2:07>> Um
2:09>> I want to continue to scale the
2:11fiveayers and scale down the single
2:12days, but my fear is we basically own
2:14the space. Nobody else does what I do.
2:16It's pretty large market. Um, there is
2:19one copycat company and he's trying to
2:20hit all these single day tour dates in
2:22the regions that we're doing them. So,
2:23I'm afraid if I scale them down too
2:25much,
2:26>> we won't copy the model that makes the
2:28money.
2:28>> Say that again.
2:29>> He's going to copy the model that makes
2:30no money, right?
2:32>> Say it one more time.
2:32>> He's going to copy the model that makes
2:34no money.
2:35>> That's a great point. Yeah.
2:40>> Love this for us, right?
2:43>> I hope he does. [laughter]
2:44>> Okay. I could honestly I could go home
2:47right now and I'd be happy after that.
2:50>> Yeah, you're right. You're right. And I
2:52feel more confident that I don't think
2:54he could do what we could do anyways,
2:55but he certainly can't do what we can do
2:57in a 5day event. I mean, we we've run
2:58those five days like nobody else. So,
3:00>> okay.
3:01>> Um,
3:01>> so you kept pushing on price, so let's
3:02just handle that real quick. Um, why
3:06can't you charge more?
3:08>> I definitely can. The reason I haven't
3:10is because I started riding dirt bikes
3:12when I was two. I turned pro when I was
3:1416,
3:15>> etc. Help people. I want to
3:16>> My family had no money, so I didn't want
3:17to outpric the people that were me. Does
3:20that make sense?
3:20>> Yeah. Yeah. Do you make like content? Is
3:21that the primary way that you get
3:22customers?
3:23>> Yeah.
3:23>> Okay. So, you do that for free?
3:26>> Yep.
3:26>> And those people get that for free.
3:28>> Everything's free. Yeah.
3:29>> Right. And so,
3:31I have We have 22 million subscribers.
3:33There's 100 people here. A lot of people
3:36get you for free. I think that
3:40Let me say it differently. If you like
3:42you will never help in person even a
3:45tiny fraction of a percent of the people
3:47that you've helped for free. It's just
3:49not the world isn't structured that way.
3:51You will be able to monetize 1% of the
3:54people maybe right if you're lucky that
3:56you've actually helped in the model that
3:58the way media exists today. It might
4:00change but for now that's how it works.
4:02And so I think you have some sort of
4:04guilt that you can't help somebody, but
4:07you won't be able to expand your
4:09footprint or the media without the cash
4:12flow to grow. And so if you turn this
4:14into a billion-dollar company, which why
4:16couldn't you, right? I mean, the
4:17market's big, right? If you were to turn
4:19this into a gigantic company, do you
4:20think you'd make a bigger impact than
4:22you do now?
4:24>> Yes.
4:25>> Right. And in order to do that, it takes
4:27money.
4:27>> Yeah.
4:29And so
4:32you can you can serve the person who
4:35can't afford it for free and then you
4:38serve the people who can afford it for
4:40the the correct price.
4:42>> And we do have a crazy amount of free
4:44content. So based on not knowing
4:45anything about the industry, what would
4:46you change the price from from 1,200
4:48bucks a week?
4:49>> I can't tell you what the actual number
4:50is, but I can say what's your closure
4:52right now?
4:54>> I don't know.
4:55>> Do you sell on the phone or via
4:56checkout? I want to begin selling on the
4:58phone. We have a a website landing page.
5:00We just began doing ClickFunnels because
5:03what made me sign up for this? I'm like,
5:04we have to do that.
5:05>> Yeah. Are you working with us after
5:07this?
5:08>> No, I think I should, but I'm afraid
5:10that I don't have enough
5:12>> I'm afraid I don't have enough data yet
5:14because like when I was filling this
5:15thing out,
5:15>> but you don't have the data of like and
5:17I don't I promise I don't care. Like I
5:18mean I don't need the money. I I mean
5:20that um the like the the reason I bring
5:25it up is just because like you're going
5:27to build a sales motion. There's a lot
5:29of mistakes that you can make there and
5:30getting it right the first time is worth
5:32it. [snorts]
5:34>> So now would be
5:35>> and all of a sudden the pricing power
5:36might not be like 300 to like 400 might
5:38be 300 to 3,000 and you be like I can't
5:40even do that. You for sure [ __ ] can.
5:43>> Would you give up on the single dairs
5:44completely and just only [ __ ]
5:46>> We have to look at the unit economics.
5:47>> Say it again. We have to look at Is my
5:49thing not loud?
5:51>> The unit economics.
5:52>> No, I'm just so stuffed up right here. I
5:53Oh, god. Okay.
5:54>> Just reading [laughter] your lips. Yeah,
5:55>> you're good. Yeah, we just have to look
5:56at the unit economics. So, we just have
5:58to, you know, open the open the hood,
5:59pop it, and just like look at both both
6:01different event days. We'll Sometimes
6:03sometimes the single like I we had a we
6:05had a business that had u um it was a
6:08brick-andmortar service business had two
6:10models, a micro model and like a bigger
6:12facility model. The bigger facilities uh
6:15obviously had more revenue and more
6:16absolute profit, but the return on
6:18capital and return on effort for the
6:20small ones was like 5x. And so even
6:22though like the founder was like ah the
6:24I love having these, you know, these big
6:26whatevers, it was like we can expand so
6:28much faster and we can get to our
6:2910-year goal in 3 years if we do the one
6:32day or the one the mini version. So we
6:34just have to look at it. Um and all
6:36we're really optimizing for is returnal
6:38capital, human capital and financial
6:40capital. That's all like if you think
6:42about if you if you boil a business down
6:43to its most basic unit, it's an economic
6:45arbitrage between what it costs you to
6:46make more money. It's all it is. And
6:48then the difficulty of of continuing to
6:50do that. And so that means that we spend
6:52a certain amount of money to get someone
6:53in, which for you is going to be the
6:54cost of your immediate team and your
6:55time. That's the cost, right? On the on
6:58the back end, it's what do we make from
7:00those people who come in the door and
7:02what stops us from doing more of that
7:03thing, right? [clears throat] And so if
7:05there's a model that right now we can
7:07can spin that wheel faster and it costs
7:09us less here, that's the better model. I
7:10just don't know which one it is. And in
7:12terms of pricing, we just continue to go
7:14up until willingness to pay stops and
7:17then we just stay there. The nice thing,
7:19here's the
7:20>> I have a hunch that the conversion's
7:21very high.
7:22>> Yeah.
7:23>> Yeah. Obviously,
7:24>> you'll be able to afford it.
7:26But my but the the the the main point
7:29though, um you said something. I had my
7:32It was a good one. It was a good one. Um
7:38yeah. Oh umh I'll remember it when I
7:41talk to somebody else. Um [laughter]
7:43but yes,
7:44>> what was the thing that you said that
7:46hit me like a in the face?
7:48>> Uh your competitor.
7:49>> He's going to copy something.
7:50>> He's going to copy a broken model. So
7:51you should hope he does that.
7:52>> Okay. That was my sell to the team. Not
7:54that I need to sell the team on it.
7:55>> Yeah. And I'll land the plan on that for
7:56you, too, which is that you will never
7:59go out of business focusing on the
8:00customer.
8:02And I I'll tell you a quick story. So
8:04the biggest business mistake that I I've
8:06made, the two most costly business
8:08mistakes I've made. Um, one of them has
8:11nothing to do with this. This is the
8:12other one, [laughter] which has
8:14everything to do with this. Um, I had a
8:16competitor that ended up taking a bunch
8:20of my top testimonials that were that we
8:22kind of converted to semi-mployees
8:23because they were big evangelists back
8:25in the gym launch days. And as soon as
8:28they took them and they were they were
8:29big ads for me, all of a sudden they
8:31were running ads for this other guy. So
8:32it's kind of like when the Verizon guy
8:34went to the AT&T, remember that that
8:35that switch over that actor? It was kind
8:37of like that. And this guy was offering
8:40one-on-one coaching um to help people
8:43out. I never did that. And so and they
8:46were cheaper. So they were cheaper, they
8:47were doing one-on-one. And they had some
8:49of my top, you know, customers uh
8:52becoming advocates. And they said that
8:53the 10 of them had come. They partnered.
8:54He partnered with these 10 people or
8:56something like that. And when that
8:58happened, I got r my feathers got all
9:00ruffled. And I was like, it's war time.
9:03We got to, you know, we got to go to the
9:04mattresses. We got to really, you know,
9:06change change the business up. And so I
9:08did this big kind of like relaunch
9:10internally to my existing customer base.
9:12And um I said, "We're, you know, I did
9:15this big value stack and I said, "You're
9:17going to get all this extra stuff, not
9:19for the same price you're paying me, but
9:21for less." And so I took my existing
9:24recurring base and I reduced my revenue
9:28by $500,000 topline per month. And so
9:32that translated because we didn't take
9:33it off topline and and the cost went up.
9:35So I increased my costs and I took my
9:37topline down by 6 million.
9:40And I ended up losing in profit
9:42somewhere in the neighborhood of $6 to
9:43$7 million a year for that business at
9:46the time. [gasps]
9:48I then ended up selling that business
9:49obviously and the business never
9:52recovered that profit. It stayed there.
9:55And when I did make that move, the first
9:58comment in the chat after I dropped that
10:01it was less was a complaint that I had
10:03not done it earlier.
10:06So it was not, "Thank you so much for
10:07lowering the price and giving us more
10:09shit." It was I can't believe I was
10:11paying more and I was like I want to
10:14[ __ ] kill myself. [laughter]
10:17And and here was the best part of all.
10:19My churn
10:21changed zero.
10:24So I just cut my top line by 20%. Churn
10:26remained the same because the
10:28willingness to pay change that I made. I
10:30basically reduced it from call it 3,000
10:31a month to $2,500 a month. It actually
10:33made no real difference in whether
10:36someone would cancel or not. it was past
10:38a threshold that this is a lot of money
10:40and so it changed nothing. I just made
10:42less money
10:44and then when I sold the company that
10:46six got multiplied by a lot and so that
10:48probably cost me in the neighborhood of
10:50probably $50 mill million
10:53and so the big lesson that I learned
10:54there was that I shouldn't and that that
10:57competitor ended up killing that
10:59business because it wasn't [ __ ]
11:01profitable.
11:03And so I I was the market leader and
11:05someone came in to undercut me and then
11:07I said, "Oh, I'll copy the moron."
11:12>> It's easy to let happen.
11:13>> Yes.
11:14>> And so don't lose $50 million.
11:17>> Let him let him figure that out for
11:19himself. [laughter] You just focus on
11:21the customer. And
11:21>> um I do about $12 million a year.
11:23>> Amazing.
11:24>> I coach real estate agents. Um I teach
11:27them social media marketing and sales.
11:29And my biggest constraint Well, I'm at
11:31the 12 million. I want to get to like
11:3336. Um, and I think it could easily be
11:35done, but not so sure with my avatar.
11:37[snorts]
11:37>> Okay.
11:37>> Um, I think my biggest constraint is I'm
11:39kind of like at a point where I'm ready
11:41to sort of venture past just real estate
11:43agents
11:44>> and but I'm not exactly sure, you know,
11:47what I should be doing and who I should
11:48be going after. Um, I love high ticket
11:52sales. So, we do our we average about a
11:54million dollars a month through selling
11:55high ticket through a three-day virtual
11:57event. I've done it five years in a row
11:59every single month. Um, and so I don't
12:02I'm just kind of this is more of a
12:03counseling session right now with me.
12:05>> I mean, right, every month she does an
12:06event and she still makes money. Isn't
12:07that wild?
12:09>> She's making a million a month in
12:10virtual events.
12:14[laughter]
12:15Real Brazilian dollars, you know. But u
12:19um Okay. So, you want to do more? Um, my
12:25wager is that like you could absolutely
12:27have a $100 million plus business in
12:29real estate. The issue is that there's
12:31no revenue retention. That's the like
12:33you know how to market and sell. No
12:35question. You're great at it. Great on
12:36camera. You can pitch. You can do
12:38events. Like you have all the promotion
12:40skills. You just don't have a thing
12:42that's that keeps people. And so like if
12:44you think about how many people you've
12:46sold over the last five years, like if
12:49you had half of those people still
12:50paying you $2,000 a year, the business
12:52would be $40 million a year right now.
12:54Right. Somewhere in that neighborhood.
12:55>> Totally. Yeah.
12:56>> Right. And so the issue is like if I
12:58could go back in time and redo Gym
13:00Launch, I would have focused 100% on
13:02revenue retention and just basically
13:04disregarded everything else until I
13:05solved that. Because the thing is is
13:07kind of like we were talking about
13:08earlier with the um the leverage for
13:09monetization. Your ability to blow
13:11something up will always be there.
13:13you're always you're like you have
13:14enough skills, you have enough network,
13:15you have enough money that you will be
13:16able to even if things change, you'll
13:18figure it out. I'm not worried about
13:19that. And so like the one like the
13:21deficiency for skills that you have
13:22right now is around finding a service
13:26and or product that people don't cancel
13:28from. And if you can just do that,
13:30that's the thing that will get you to 50
13:32100 plus. Like that's it.
13:35>> So what is it? Well, the thing in real
13:36estate is that like I'm surprised that
13:38you never did like your own brokerage
13:40because your ability to
13:42>> Well, no, I do. I have EXP and I'm like
13:43I'm like top 1% with EXP, you know, but
13:46>> Well, doesn't that keep compounding?
13:49>> Yeah. Yeah. I mean, all it's doing
13:50really well.
13:50>> No, but like every year does Well, when
13:52did you start doing it?
13:53>> Uh about five years ago or so.
13:55>> Okay. So, you started five years ago.
13:56Then what payouts are you getting from
13:58EX or X whatever it is? Uh compared to
14:00>> 20 grand a month, but it's like passive.
14:02I don't do any like I zero zero time on
14:04it. Well,
14:06>> it used to be about 50, but with the
14:07real estate market changing, it's like
14:09>> Yeah. Um, no, I meant like I mean, they
14:13have the Rapture model kind of,
14:15>> you know. I don't love like I think the
14:16thing is is like I feel like I'm over
14:18real estate, you know? They're just a I
14:20love them. So, if this is on camera,
14:22don't tell anybody, but I love realtors.
14:24They're amazing and I always want to
14:25help them and I can because I
14:26>> Yeah. forever and always because they're
14:27great. They're amazing.
14:28>> But I mean, I do the
14:29>> I came up from real estate and like
14:31always grateful. [snorts]
14:31>> It's kind of like when you were at gym
14:32lunch, right? It's like now too I can my
14:34virtual events I'm not even there. So
14:36they run five months and I'm not even in
14:38them. It's recorded. You can't even you
14:40know you won't wouldn't know it. But so
14:41I can I can actually do something
14:43different and and have the time and
14:45energy you know. I just
14:47>> How many hours a week are you spending
14:48on the business?
14:49>> Um I'm kind of a workaholic but I love
14:50it. Like I'm [snorts] you know I just
14:52but I only because I want to because I
14:54really enjoy it. So
14:55>> can I give you a challenge?
14:56>> Yes. I stop work at 5 every day.
14:58>> Okay. Can you stop work at 9:00 a.m.?
15:01>> No. I wouldn't want to. Yeah.
15:03>> Well, I want to challenge you to do it
15:04because I think that you are you have so
15:06much activity level. Like you have high
15:08activity. Like everyone here would
15:09probably say that you have high activity
15:10just from like hearing you talk. Um no,
15:13it's a compliment. Um
15:16you probably do so much in your business
15:18that you're not even aware of.
15:22And so I think that like the challenge
15:23for you is like it's very easy to say
15:26that'll just run and it'll be fine. I
15:27want to start this other thing. But it
15:30it'll it's the same conversation we had
15:31earlier. Like it won't be fine because
15:33there's so many tiny things that you do
15:34because you have so you're so fast in
15:36your activity that like you don't even
15:37notice it. You're like, "Oh yeah, quick
15:39decision there, quick decision there."
15:40It's like it wasn't even a thing. Like
15:41you don't even realize the work that
15:42you're doing. And so I would I'm like
15:45gung-ho. I'm totally fine on Christoph
15:47Make sure open, you know, starting the
15:48Christian More brand and doing whatever
15:50you want to do on that side. If you want
15:51to go mass market because that's like
15:53where your heart's pulling you, fine.
15:55But the challenge would still be like
15:59this thing has to truly run without you.
16:01And so the test is like can you spend a
16:03month not doing anything and have it
16:05still keep making money and you're doing
16:07one event a month. So it's like maybe
16:09you have to do like three or four months
16:11to prove out that it actually works.
16:12Like my preference is six which I think
16:14you'll like pull your hair out and
16:15you're like I like my hair and you know
16:17it'll be a whole thing, right? Um, but I
16:19think like find a hobby that you can do
16:21for six months and you will find all the
16:23holes in the existing business that
16:24could potentially enable you to do the
16:26other thing if you so chose. Otherwise,
16:28like this business will eventually decay
16:30because you the star power won't be
16:32there. Um, and the new thing will start
16:35paying for the old thing and then it'll
16:37be this big mess of like this team is
16:38being used over here too. I'm splitting
16:40resources because I don't want to start
16:42hiring all these other people because
16:43it's pre-revenue blah blah blah blah
16:44blah. I guess I just want something I
16:46love more, you know, like I my you know,
16:48you hate the word mindset, but I love
16:49the word mindset and it's like I I just
16:51more motivation and inspiration, that
16:53kind of thing, but you know, that's not
16:54where the money is because you have to
16:56give them what they want and sell them
16:57what they need kind of a thing, right?
16:58So, I sort of get to do that through
17:00real estate, but I'm I'm capped
17:02>> and I just like I want to do bigger.
17:04>> You're capped with money or you're
17:05capped?
17:06>> Not with not with money. I mean, I could
17:07quit right now. Not like
17:08>> No, I'm saying the business is capped
17:10moneywise.
17:11>> Uh, no. We could still I mean, we're not
17:12as profitable as we were. Well, you said
17:14you want to get to 30 something.
17:16>> Yeah,
17:16>> you could do that within your existing
17:17opportunity.
17:20>> Realers,
17:21>> for sure.
17:22>> There's a million.
17:22>> That's saying how broke they were. Like
17:23the first thing you said earlier, I was
17:24like, "Yeah,
17:25>> they are broke." Totally. But they're
17:26still billion dollar plus companies in
17:28real estate.
17:29>> Yeah.
17:30>> Tons. So, when I said brokerage, I
17:31didn't mean you affiliating someone
17:33else's brokerage and having a rev. I
17:34just meant you owning a brokerage.
17:37>> I'm not going to do that.
17:38>> Okay, that's fine. But I'm so like
17:39that's where like the machine that
17:41you're so good at is attracting
17:42realtors. And so like what machine best
17:44monetizes the attraction of realtors and
17:47so that's where it's like I own escrow,
17:49I have a title company and then you
17:51build the vertical stack.
17:53>> Yeah.
17:54>> That's if you want to build the big
17:55thing and you might not want to do that.
17:56The thing is is like you want to do this
17:58motivation etc stuff. It's like what
18:00stops you from doing that now and not
18:02monetizing it?
18:04>> I I don't know. Oh, I think that's the,
18:06you know, one, one of my coaches said to
18:07me that he thinks that part of the
18:09reason why I'm like not scaling even
18:11more is because I do have this calling
18:12and it's like the calling is keeping me
18:14from scaling more because I should be
18:15going after that, you know? So, yeah, I
18:19told her I needed a counseling session
18:20today. That's what that's what [snorts]
18:21it was about. I'm like, what does Krista
18:22want to do when she grows up? I kind of
18:23feel like that's where I'm at right now,
18:25you know, just not knowing
18:26>> the whole like, you know, holding you
18:28back because your heart's calling you.
18:30I'm like, whatever. There's stuff that
18:31you're not doing that you could be
18:32doing.
18:33>> Yeah. And so either you do it or you
18:36don't do it. Whether it's your heart
18:38calling you, I don't know what that
18:39means. Um,
18:44you've been in this situation for a long
18:45time because it's been five years and
18:47you've been more or less at the same
18:48revenue level, I think, is somewhere in
18:50there.
18:50>> No, down. I mean, we were we were doing
18:5218 million a year. We were So, it's gone
18:54down.
18:54>> Yeah. But over five years, you've been
18:55in the million a monthish range for a
18:57while.
18:58>> Yeah. We just hit 70 million.
18:59>> Yeah. Okay. So, 70 divided by five.
19:02Okay. I mean like [laughter]
19:05um you've been in that range for a
19:06while, right? And so um
19:11this is when I when like if I wanted you
19:13to leave and leave a 10 out of 10 score,
19:15I'd be like you should chase your
19:16dreams, Christa. I think that you can
19:18make the you can dazzle the world. And I
19:21think that your voice is going to change
19:24millions of people's lives. And I think
19:25that you're playing small by sticking to
19:27realtors and you like relinquish that
19:28identity because of what you've
19:30achieved. That's what I would say if I
19:31wanted to get get a 10 out of 10 from
19:32you. Um, if I wanted to give you
19:35business advice, I would say like you
19:37are constrained because you don't know
19:38how to grow this business more and the
19:40next business will
19:41>> Well, I don't even have a sales team. I
19:42have one sales person. Like we have
19:44>> you don't know how to grow this business
19:45more. Yeah.
19:46>> Because you haven't.
19:47>> Yeah.
19:47>> So, like
19:48>> I wouldn't mind making a hund00 million
19:49a year business. I'd be cool with that.
19:51>> Right.
19:51>> That might make me not want to go after
19:52my dreams probably.
19:53>> Right.
19:54>> Well, this is my point. like you were at
19:56like the the whole shiny object just
19:58gets sexier at every level.
20:00>> The better you are, the better the
20:02opportunities you have to say no to.
20:04>> And so like this is why like I make all
20:05the content, but like the work it's like
20:07the work we're avoiding. And I do think
20:09that you being in limbo of like ah
20:11there's this other thing over here. I'll
20:14give you a different analogy. So let's
20:15say that you have a relationship, it's
20:18stable, you've been married for a while,
20:19right? And there's this you're a tennis
20:22coach that is, you know, super
20:24attractive, whatever, and you have this
20:25fiery dynamic, whatever. And the thing
20:27is is that like some of your attention
20:29imagines what that life would be like.
20:31And so, as a result, you don't pay as
20:33much attention to your marriage. Is
20:35there anything inherently wrong with the
20:37marriage? No. But you're not allocating
20:39the attention because this is stealing
20:41your attention. Your shower time, your
20:42your your driving time is like just
20:45living in this hypothetical world that
20:46only has upside and not downside.
20:49Because usually our fantasies just
20:51forget the cost of achieving the
20:52fantasy. There will be just as much [ __ ]
20:54in that business or worse than your
20:56current one.
20:58And so like fundamentally I think that's
21:00what regret comes down to is people just
21:02imagine the upside of a path they didn't
21:04take and don't know the downside.
21:07And so right now you have some regrets
21:09theoretically about this path that you
21:11haven't pursued but not the cost
21:12associated with pursuing it.
21:15And so, like I said, if I wanted to like
21:17get you all raw rod, I would say like
21:18screw this business. You're meant for
21:20the you're meant for the stars. You can
21:21you can do all these amazing things. And
21:23I think that's true. Um, but I still
21:25think that you will run into the exact
21:26same revenue plateau that you're
21:27currently at because you'll still have
21:29to deal with the skill deficiency that
21:31you have and you'll recreate this
21:33business, the new one, faster than the
21:35other one. And then you will still hit
21:37the same plateau. The only thing is
21:38you'll be more stressed because now you
21:39have two businesses to take care of and
21:40you'll probably split the team. This one
21:42will go down. That'll stress you out.
21:43you worry about reputation and then
21:45you'll feel like a fraud over here.
21:47>> Everything you said is super spot on.
21:48Can I just ask one more question that
21:50aligns with it?
21:50>> Sure. I know that this applies to like
21:5210 other people here. So, you're fine.
21:53>> Yeah. I mean, this was everything you
21:54said. It's like it's resonating big
21:56time. So, what we teach I know can help
21:59like local businesses like we've already
22:01tested it. So, I had a beta group and I
22:03taught an attorney, a dentist, solar
22:06coach, like everyone. They were like,
22:08"Oh, I love this."
22:09>> And so, the next thing is we were like
22:11we're ready to launch actually next
22:12month. So it's it's not different. It's
22:14the same exact thing we teach. I mean
22:16everything's the same except we're not
22:18teaching you how to do a listing
22:18presentation. We're teaching you how to
22:19do a video sales letter,
22:21>> right? And so we we're ready to go mass
22:24market.
22:24>> But that's different than the benefit
22:26mot.
22:27>> So this is something that that's like my
22:28dream. This is that something that we
22:30already have kind of going, but we're I
22:32I told you it was going to be accounting
22:33session. So So basically it's like but
22:37then we're thinking how do I go speak to
22:38the masses, right? It's like because
22:40when every time you speak to one, you
22:42speak to no one. The more you speak to
22:43them, the more you Right. So, it's like
22:44that's the the thing. We're we're we're
22:46doing it because but it's it's I know
22:48there's going to be difficulty there.
22:50>> Yeah.
22:51>> But then when I look at like you and I
22:53know I'm not you, but like you you look
22:55at these different people, Russell,
22:56these different ones, they're speaking
22:57to the masses like entrepreneurs,
22:58experts, you know. So, it's like if they
23:00can do it and there's not very like it's
23:02a little sausage festival here. There's
23:04hardly any women that are that are doing
23:06this.
23:06>> If Leila had an invent, it would be
23:07chicks. It's fine. You know, but you
23:08know what I'm saying? Like there's not a
23:10lot. So I feel like there's room for a
23:11woman leader to come in and teach this
23:13to
23:14>> I agree.
23:15>> You know,
23:16>> I agree.
23:16>> So is there a huge risk with that, too?
23:18>> No, I think there's significantly less
23:20risk with that than you going after just
23:22pure personal development with no
23:23business model. just a matter of
23:25figuring out how to get
23:26>> if you want to just take like how to
23:27make viral content and post it on a
23:29consistent basis plus having a video
23:30sales letter as your kind of method for
23:32getting people to turn organic leads
23:33into into paying customers and just go
23:35from this worked in this vertical.
23:37Here's 10 of the proof cases and you can
23:38go mass market. I think that'll work.
23:40>> Okay. Okay. Thank you.
23:42>> Yeah, [laughter]
23:44we should have started there.
23:48Let's imagine that you're in the
23:50absolute biggest red ocean, right? Red
23:52ocean being it's super populated.
23:54There's blood in the water, right?
23:57Do you think the business advice niche
24:01is populated? Do you think there's a lot
24:03of red ocean in business advice?
24:06Yeah, probably.
24:08Right. And so, should I have not gotten
24:11into this?
24:14The bloodier the water, it means the
24:16more fish are there. And so where
24:18there's the fiercest competition,
24:20there's also oftentimes the biggest
24:23rewards. Now that being said, how do we
24:27merge this concept with the idea of you
24:29should niche down? Wait, Alex, I thought
24:30you wrote a book that said, "Hey, the
24:32riches are in the niches." Right? So how
24:34do we merge these two ideas? Let me
24:36explain because I get questions about
24:37this.
24:39In the beginning, you want to
24:41artificially constrain the pond that
24:43you're going after so that you can
24:45compete in a place where the sharks
24:47aren't swimming. Okay? So, you want to
24:50be the biggest guy in a puddle. That's
24:53what you want to do. Biggest guy in a
24:55puddle. And then you say, "You know
24:57what? I'm going to go from a puddle to a
24:59pond because I think I'm I'm too big for
25:02this puddle." And so, you grow. And then
25:03you go to the pond. And then once you go
25:05from the pond, you say, "You know what?
25:06I'm going to go to a lake. Now I'm in a
25:09lake because I'm an even bigger fishy.
25:11Right now I'm in a lake. And then
25:14eventually you get to the point where
25:15you say, you know what, I think that I'm
25:17big enough to go into open class, open
25:20market and fight in the ocean. Now, if
25:23we were to look at this trajectory,
25:26I started as a trainer
25:30and I talked about nutrition and stuff
25:33and then I talked about gym stuff
25:36and then I started talking about
25:40business stuff.
25:43So, you're going to have evolutions
25:46where you can get big enough for a pond
25:48that you can move on from the pond to
25:50the lake and the lake to the ocean. It's
25:54just that it's directly correlated with
25:55your skill and your experience. And so,
25:58the reason that the the riches are in
26:00the niches is that when you're there,
26:02number one, you're competing against
26:03fewer people. And so, the upside is
26:05capped typically. Now, it's usually
26:06capped at way higher than you think it
26:08is, but it is capped to a degree and
26:10that's okay. But as a result, because we
26:13are niched down, we're able to charge
26:14niche prices which give us more profit,
26:16more pricing power because there's fewer
26:18people, there's fewer things to compare
26:19you against, right? And so there does
26:22come a time where you can go uh move the
26:25market, right? Move your market rather
26:27um to go after a different segment or a
26:29broader segment. So let me walk walk
26:33through what you can how to think
26:34through this evolution for a business.
26:37So let's say that your current business
26:40is this little dot here. Okay,
26:43there are five directions that we can
26:45move with this dot. We can go. So let's
26:48imagine this is a you've got a triangle
26:50of a marketplace. Okay, so this is where
26:51you this is where you inhabit. You can
26:54go up market. All right. So for example,
26:58um in my gym launch days, I could
27:01instead of serving single location
27:03fragmented gym owners, I could go to
27:05franchisers, right? multilocation owners
27:08and franchisers. So I have oneoff gyms
27:11here. Now the next direction, so this is
27:14direction number one I can do. Direction
27:16number two is I can go down market which
27:19would be that I could go after trainers.
27:21There's way more trainers. They have way
27:22less buying power, but there's a lot of
27:24them. There's fewer franchisers than
27:25there are gyms and there's fewer uh and
27:28there's fewer gyms than there are
27:29trainers. Pyramid, right? So that's the
27:32second thing we can do. The next thing
27:34we can do is we can go adjacent.
27:38So instead of gyms, I say, you know
27:39what? I think I can help Cyros.
27:44That's what I think I'm going to do. I'm
27:46going to take my systems and go into
27:47chiropractors. That' be an adjacent
27:48market. I could also go broader, right?
27:53Which would mean that I would look at
27:54this way,
27:56which means instead of gyms, maybe I
27:58talk about health and wellness in
28:00general. And so that means that I could
28:01go after Cyros,
28:04med spas,
28:06anybody, you know, weight loss clinics.
28:09Oops.
28:13All of these things are now broader.
28:16Or I can go
28:19narrower. So instead of gyms, I say I'm
28:23only going to work with spin studios.
28:26I'm only going to work with dancing
28:28studios. So this is our
28:31fifth. This is our fourth. This is our
28:34third. So that gives you five directions
28:37that you can go in to change the
28:40direction of the market that you choose
28:41to play in. Now I outlined this and
28:44what's interesting is that most people
28:45who are especially smaller business
28:46owners have never even defined this to
28:47begin with and they pretty much just
28:48accept people's money as long as they
28:50have a pulse and a credit card. There's
28:51obviously two requirements. Well, let's
28:52say pulse is optional. As long as they
28:54have a credit card. Kidding. um that
28:57that uh that they accept. But the thing
28:59is is that like you want to get really
29:01really clear on this um because if you
29:04don't, your customers will be confused
29:06because they won't know what you're
29:08really about. The next principle is
29:10arguably one of the most important, if
29:12not the most important, to scaling your
29:15business. It's figuring out how to solve
29:17your main constraint. You can think
29:18about constraint from a quantitative
29:20perspective as the area in the business
29:22where you will get the highest returns
29:23on effort or improvement. If you think
29:24about it from a manufacturing
29:26perspective, it's going to be the
29:27bottleneck. So, if I've got a four-lane
29:29highway that goes into a one lane and
29:31then to four lane, what's the limit of
29:32the business or the rate of cars going?
29:34It will be a one lane highway. So, I
29:36could make four lanes into five lanes,
29:38it's still not going to change the total
29:39throughput in the system. And so, the
29:40idea is we have to focus on that
29:42bottleneck. And the thing is, and the
29:44reason the theory of constraints is so
29:45powerful is that every business has just
29:47one constraint. But the reality is that
29:48most business owners are not working on
29:50that constraint. they're working on
29:51something they believe to be the
29:52constraint or even more commonly they're
29:54just working all day long not even
29:56thinking about the constraint is hoping
29:57the business will grow. So I'm going to
29:59share a six-part framework for thinking
30:00about constraints to help you identify
30:02any constraint that you have in your
30:03business. This is a a newer framework um
30:06that has only come from doing like
30:0810,000 Q&As's um was thinking through
30:11like what is the actual decision tree
30:13that that I go through in order to do
30:15this and it turns out there is one um
30:18and I'll walk you through it but
30:19basically this is the deconstraining
30:21meta framework that we use as a company
30:24um that you can apply to your business
30:26over and over and over again and I I
30:27walk through this for me. So if I'm like
30:29what should I do next I like I'll just
30:31go through this. So the fundamental
30:34question that we always have to answer
30:36is
30:38why can't we do more right and
30:42the answer to that question or like the
30:44if I say okay who here would like to
30:46grow their business um everyone probably
30:48raised their hands and I would say great
30:50um so why don't you do more of the thing
30:51that you're currently doing now 10 20%
30:54of the time they're like oh I I just
30:57didn't really think about that and I'm
30:58like great well do that first [laughter]
31:00and the reason more is is is is almost
31:03always the best um action to take is
31:05because it's the highest risk adjusted
31:07return move because it already is
31:09working. And so the likelihood that more
31:11of the thing that already works will
31:12also work is super super likely. Whereas
31:17um if you think about how many times you
31:18tried before you actually got this thing
31:20to work, whatever your thing is, how
31:22many failures you had, it's like there's
31:24an unlimited amount of ways that
31:25something doesn't work. There's a finite
31:27amount of ways that it does. And so you
31:30taking experimentation is a very high
31:31likelihood path of things not working
31:33like new almost never works. It's
31:36something worth like new almost never
31:38works. And so that is why more is a
31:41significantly better return on assets if
31:43you look at risk adjusted.
31:45Now there's going to be reasons that
31:46someone says well I can't do more
31:48because and then there's going to be
31:50five reasons that someone does not like
31:52can't do more. And so, um, the the first
31:56common one is
31:58I can't do more because of my market. I
32:01can't I'll write them all and then I'll
32:02we'll go through them. Um, I can't do
32:04more because of my market. I can't do
32:06more
32:07because of metrics. I can't do more
32:09because of my model. They're all We call
32:11these the Mosy Six because they're all
32:14M's. There we go. [snorts] Um, I can't
32:17do more because of money and I can't do
32:21more because of manpower.
32:26So,
32:29I can't do more because um I'm in a you
32:33know, some of you guys might have seen
32:35that clip where the guy was like, "Hey,
32:36I want to make my lounge make more
32:38money." And I'm like, "Okay, well,
32:40where's your lounge?" And he said, "In
32:41the middle of the Sahara Desert." And I
32:42was like, "Okay, well, that's probably
32:44not a good idea." And he's like, "So, I
32:46should advertise more?" I was like, "No,
32:47that's just a terrible idea in general."
32:49Right? Like, he's like, "So, I shouldn't
32:52be in the Sahara Desert." I was like,
32:52"Dear God." Okay. Um, I'm kidding. Uh,
32:55he was a champ about it. But this is a
32:58real constraint
32:59rarely. Like, if you actually live in
33:01[ __ ] Kentucky, and 100% of the the
33:04customers you service aren't [ __ ]
33:05Kentucky, then yes, you will be limited
33:07by [ __ ] It will absolutely limit
33:09you. But you could also like do more of
33:11that in another market, right? Right? So
33:12it's like sometimes it just takes a one
33:13degree of thinking of like okay well I
33:15could just duplicate this somewhere else
33:16right um on this is a you'll see how
33:21cool this model is in a second um but
33:23we're just talking about from the
33:24customer's perspective so uh it's likely
33:27that you are not contra I I service
33:30chiropractors and we're B2B okay great
33:32how many customers do you have 100 okay
33:34well there's 50,000 chiropractors so do
33:36you feel like you're really limited by
33:37your market you really feel like you've
33:38saturated the market of chiropractors no
33:40just no one knows you exist right And so
33:42we need to advertise more and then we go
33:44back to that. Right? The next issue is I
33:46can't do more because I don't even know
33:48what more is because I don't have any
33:50metrics. Okay. So we have a data
33:52constraint. So we have to figure out
33:54what you're currently doing before we
33:56can do more of it. So that should be
33:57kind of some common sense. So let's get
34:00data. But then that becomes the
34:01constraint. Okay great. Once as soon as
34:03we have data then we can go do more. The
34:06next issue um that'll come up of like
34:08why can't I do more? It's like, well,
34:09I'm just not sure my current model is
34:12really what I want to be doing long term
34:14or like if this is the best opportunity
34:16vehicle for the skills that I have. And
34:18there's a lot of like this like what do
34:20I do with my life? That, right? And the
34:24the model issue really comes down to
34:26like
34:28one of the most common things that that
34:29I'll end up responding with is features
34:31versus bugs. is that like so Suzanne
34:34Shifflet who was my CFO um at Gym Launch
34:37phenomenal lady phenomenal CFO um she
34:41used to say Alex I've been doing this 38
34:45years and all businesses have [ __ ] she
34:49was from deep south um she was awesome
34:52and the point was that like
34:54every business has something that's hard
34:56about it and so we often want to switch
34:58opportunities because the thing that's
34:59hard about this business another
35:01business doesn't have that thing that's
35:02hard. It just has another thing that
35:04right now you didn't realize is easy for
35:06you because that's not a component of
35:08the business. So said taken differently
35:11like at one extreme if you do if you're
35:14in the cleaning business cleaning homes
35:16finding people to clean houses for is
35:18really not hard. People are very happy
35:20to not clean and pay someone else to do
35:22it. On the other hand, finding talent
35:26who want to clean houses and are
35:28competent and show up on time and don't
35:30steal and speak English and are honest
35:31and blah blah blah blah blah, right?
35:33Really hard. Now, flip that the other
35:36way. Finding people who want to talk
35:39about fitness and want to even you're
35:41talking about this morning, right? Who
35:42want to talk about fitness, who want to
35:43talk about helping people. Tons of
35:45people will do it and they'll do it for
35:46free. The problem is no one wants to
35:49sign up for fitness services because no
35:51one wants to wake their ass up in the
35:52middle in the morning and go to the gym,
35:55right? And so like all businesses have
35:56components of the business that are
35:58difficult. There's going to be some
35:59businesses that are more supply
36:00constraints, some that are more demand
36:01constraint, but they're all going to
36:02have constraints. Otherwise, if there
36:03were a business that had truly no
36:04constraints, then every business would
36:06just that of that industry would all
36:08just be gazillion dollar businesses. But
36:10they're not because sometimes for short
36:13periods, that is true. And then what
36:14happens? lots of competition emerge and
36:16then you have a constraint. Now we have
36:17pricing pressure etc. And so the idea
36:20that like you're going to find the
36:21perfect business and it's just like one
36:22degree separated from your current one
36:23is probably not true. It's just that the
36:26hard problem that you have in front of
36:27you is the thing that you get
36:28compensated for solving. Like that's the
36:31game. And so the way that I frame this
36:35is like if I solve this problem, if I
36:38have my cleaning business and I figure
36:40out how to have a recruiting engine and
36:42a training engine that can take somebody
36:44who's low skill talent and get them to
36:46be proficient in a way that's more
36:47efficient than my competitors, then I
36:49have an extra 10 or 20 or $50 million of
36:52enterprise value that gets added to my
36:53business. All of a sudden, that feels
36:55like a much more [snorts] desirable
36:57problem to solve if I know I have a $50
36:58million pot of gold on the other side.
37:01And so rather than just saying like,
37:02"Oh, this sucks." It's like, "Well, for
37:04$50 million, I'd be willing to solve
37:05it." And so, for some reason, that just
37:07tends to perk me up a little bit. Okay.
37:09Um, but fundamentally, all all
37:12businesses have [ __ ] All businesses
37:14suck to a degree. And almost all
37:16businesses, if you stick in them for a
37:17long period of time, you can become
37:18exceptionally wealthy. Like the guy who
37:20owns the building that I live in, he's
37:22my neighbor. He owns Panda Express.
37:25>> [snorts]
37:25>> if he were in this room and he says,
37:26"Hey," he got up and said, "Hey, I um I
37:30own a fast casual Chinese restaurant. We
37:32sell Kungpow chicken and General S
37:35chicken and spicy pine, you know, sweet,
37:37sweet, you know, you know that new one,
37:38the one that they came out with like
37:39five, six years ago." Anyways, um and
37:42you know, chicken teriyak and you know,
37:44we've got five locations and you know,
37:46each location does $3 million a year
37:49topline. Um we run 27% Merchants.
37:53Some people in this room would give that
37:54guy advice. You should teach other
37:56people how to how to sell chicken. And
37:58that would be terrible advice for him
38:01because what he should do is keep doing
38:03it for 45 years and they do 3.7 billion
38:06a year in chicken sales with 27% net
38:08margins and take home a billion a year
38:10in cash every year and do it taxfree
38:14because he owns all the dirt in the real
38:15estate. It just took him 45 years. And
38:19so I say this because like most of the
38:21goals that you have are probably
38:22attainable just not on the timeline that
38:24you gave yourself.
38:27And so like even something like think
38:28about how shitty of a shitty right of a
38:31business model that is. Who wants to
38:33scale brickandmortar
38:35fast casual lowskilled labor business?
38:39Most people like I don't want to do that
38:41right raising canes decad billionaire
38:45owns them all. So like is it a super I
38:48don't think you can scale that. Yeah,
38:50you can with work and skill and time.
38:53And so I think that's the piece that
38:54like everyone is so concerned about
38:55getting really rich in the next 36
38:57months that almost all vehicles can get
39:00you super rich in the next 36 years and
39:03many many orders of wealth along the
39:05way. Um we just don't think in those
39:07time horizons and I think that is maybe
39:10one of the bigger things that I can give
39:11you around model. So why can't you do
39:13more? I don't know if my chicken shop is
39:16uh you know the be best opportunity
39:17vehicle well if you keep doing it for 10
39:19years you'll probably better than most
39:20people who do chicken shops and if you
39:23keep leveling up in the game of business
39:24the people we compete against so if you
39:26are in a low opportunity vehicle market
39:28here's the advantage your competitors
39:29typically not that sophisticated if you
39:31want to go after AI whatever then you're
39:33competing against the best capitalized
39:35smartest human beings on the [ __ ]
39:37earth
39:39depends where you want to play right all
39:41businesses have [ __ ] Okay, the next one
39:44is like, why can't I do more? I can't
39:46afford to. Now, this is where it gets a
39:48little bit hairier. Harrier in that
39:49there's more splinters underneath. So,
39:52you can't do more because leads cost too
39:55much.
39:57You can't uh do more because you sell
40:00too few.
40:02You can't do more um because your LTV is
40:04too low. Right? LTV is too low. Sales is
40:07too low or leads too low. Now, this is
40:09where it takes more question answering
40:11and kind of pattern recognition to
40:13figure out which of the problems is
40:14because all you know right now is I
40:16can't afford it, but you might not be
40:18able to afford it because you don't make
40:19enough per customer rather than it being
40:21inherently some marketing problem. This
40:23happens common where you have a business
40:25that has a front end but no backend and
40:26they're like, "Man, I'm making sales but
40:29I have no," they don't know that they
40:31don't have a back end. They just know
40:32that they're not profitable [laughter]
40:34um as a business. But it's like, "Oh,
40:35dude, you have a you have a break even
40:37or slightly break even acquisition
40:38process. Now sell the thing to all those
40:41people." Oh, and now this is amazing
40:43business. It's just like you're just
40:44missing a piece of it. That's an LTV
40:46issue. Or maybe it's a churn problem.
40:47It's like, "Hey, we're acquire
40:48customers. I think it cost us too much
40:49to get customers." It's like, "No, dude.
40:50You turn out in three months. It doesn't
40:52like doesn't matter what the cost of
40:53acquisition is. Like you need to fix
40:54churn." Um, which then has lots of hair
40:57on. Is it a messaging issue? Is avatar
40:58issues? Is an onboarding issue? Like
40:59there's things underneath of that. If
41:02it's um I can't afford to to to
41:04advertise more to get more people um
41:07because my leads are too expensive. It's
41:08like well are they too expensive? Now
41:10there are instances where like we have
41:13good like let's say you're in insurance,
41:14right? And so it's like okay our LTVs
41:15are already almost given to us by the
41:17insurance companies. Uh we close 30% of
41:20people you get on the phone with. It's
41:21just like our leads just cost too much.
41:23Okay, in that instance like their leads
41:24cost too much. So then there it's like
41:26all right we have to increase quality
41:28quality of creative increase quantity of
41:29creative. We have to look at um CRO
41:31within the funnel. All of these we have
41:33to see if we can have better lead
41:34magnets from an offer perspective to
41:35generate the lead. It's like okay, all
41:37of a sudden all those things can drive
41:38down the lead cost and all of a sudden
41:39this business prints and then you have
41:41the the middle of the sandwich there.
41:43The lead costs are fine. We're making
41:44enough per customer. We just can't close
41:46a barn door if it had if it had a handle
41:48on it, right? And so then we have to
41:51look at messaging. We have to look at
41:52scripting. We have to look at um price
41:54points if we have to. We have to look at
41:55the follow process. We have to look at
41:56the training process. with the
41:57onboarding compensation for the sales
41:59guys or or if it's a webinar whatever it
42:01is right what's the messaging that we're
42:02telling to get someone to take their
42:03wallet out and give us money but each of
42:05these things so if we say okay if I
42:07solve all of those things so let's say
42:09you're like I can't do more not because
42:12I have enough people in my market I have
42:14the metrics to know that like what I'm
42:15doing is working I'm fine being a
42:17plumber I have like the lead costs are
42:19fine we closed the amount that we're
42:20supposed to LTV is good I just don't
42:23have enough technicians to go and do the
42:25HVAC services or do the plumbing or I
42:28don't have enough coaches to do my back
42:29end or I don't have enough whatevers,
42:31right? Then you have a manpower
42:32constraint. Here's the cool part about
42:34this model.
42:38And by the way, I did the order wrong.
42:40These should be like this. Metric should
42:42be first, then market.
42:47It's a cycle.
42:49It goes back to the top. So, I don't
42:51have enough manpower. Great. What do you
42:53do to get manpower? Okay, why don't you
42:56do more of that? Well, I can't do more
42:58of that because I don't have metrics
42:59around how I recruit talent. Okay,
43:02great. So, let's say we solve the
43:03metrics. All right. Well, there's not
43:05enough talent in my specific market for
43:07HVAC [snorts] whatevers. Okay, fine. But
43:10maybe there is. Okay. Well, um I'm not
43:14sure if the offer that I have for the
43:18guys is compelling enough. Okay, I can't
43:20afford to. Okay. Well, how much do you
43:22make per HVAC rep or per per coach or
43:25per whatever? Well, I make this. Okay.
43:27Well, then do we have a issue that we
43:29need to change in terms of the business
43:31uh to fix our acquisition of talent or
43:34the acquisition of talent's fine because
43:35the business works. Okay, great. And so,
43:37this whole thing, you just repeat it
43:39again on the other side. So, this is
43:41just how you deconstrain anything,
43:43whether it's supply or demand. So, I
43:44want to dive a bit deeper into the last
43:46M that I talked about, which is
43:47manpower. making the right hires and be
43:49able to train them is one of the highest
43:51leverage things that you can do as a
43:52business owner. Now, one of the most
43:53common push backs I'll get is, "Well,
43:55they can't do what I can do." So, if you
43:57want someone to do something and they're
43:58not doing it, I want to share a
44:00framework that might help. And I call
44:01this the management diamond. Now,
44:04I'll give you the little management
44:06diamond um that I do for employees,
44:09which is a really good framework for
44:11having hard conversations.
44:14But if you want someone to do something
44:15and they're not doing it, you have like
44:18four or five reasons that they're not
44:19doing it, right? The first is they just
44:21didn't know that you wanted them to do
44:22it. [laughter]
44:24Most common. Hey, did you do that thing?
44:25And they're like, what thing? You're
44:26like, damn it, I didn't write it down,
44:28did I? Okay, so we have to write it
44:29down. We have to we have to put a
44:30deadline on it. Fantastic. So now I say,
44:33why didn't you do that thing? They say,
44:35well, I didn't know how to do it. Okay,
44:39well fine. So they didn't know how to do
44:41it. Now let's say we train them. So, I
44:42told you that you needed to do it. You
44:44know how to do it, but um you didn't
44:47know when I was going to do it by Oh, I
44:51need to do that tomorrow. Okay. So, I
44:53knew that you needed to do it. You knew
44:54how to do it. You knew when to do it.
44:56The next is you have something that's
45:00blocking you. So, I knew that. I knew
45:03how. I knew you wanted to do it
45:04tomorrow, but you also told me to do
45:06three other things.
45:08Which one did you want me to do?
45:11And then finally you get into this which
45:13is that
45:15I didn't want to do it which in my
45:18experience is the first place that we go
45:20to as entrepreneurs and typically the
45:22last one that's reality. Most people I
45:25have found when they have a job prefer
45:26to keep it. And I've also found that
45:28most people prefer to feel like they're
45:30doing a good job at their job. And so
45:32it's usually one of these other issues.
45:34And so this provides a really good
45:36framework for having those
45:37conversations. Now, the reason I bring
45:39this up is because we can also have
45:40these conversations with ourselves. I
45:43know I need to do more. Why am I not
45:45doing more? Did I not know that I needed
45:47to do more? Well, now I do. Okay. Do I
45:49not know how to do more? Oh, I don't
45:51know how to do more. Great. Well, now I
45:53have something to attack. That becomes
45:54my to-do. If I don't know how to do it,
45:56I know what to do, which is to figure
45:57out how to do it, right? Um, is it not
46:01urgent enough? Right? Or is there
46:03something blocking me? I would go
46:04recruit more people for my HVAC company,
46:06but right now 80% of my time is dealt
46:08with these customer service issues that
46:11are coming up onesie twoosies all day.
46:12Okay, great. How much does it cost to
46:14replace the onesie twoosy thing? Cost me
46:16$60,000 a year. I have $400,000 in
46:18profit. Am I willing to go from 400,000
46:20to 3040,000 in profit in order to get
46:2380% of my time back? Yes. But that means
46:25I'm going to make less money. Yes,
46:26today. But then I'm going to get 80% of
46:28my time back so that I can then focus on
46:30how to figure out how to do more. And so
46:32it's just it's taking second and third
46:34order consequences down to their natural
46:35end and then ultimately being like okay
46:37this is what I need to do. I literally
46:39went through this process. So post
46:41launch for me I was like okay I have
46:43this bandwidth back. What's the next
46:45conraint of the business? And for me it
46:47was six questions down for me to be like
46:51that's what the issue is and that's what
46:52I'm focused on. And so right now 80% of
46:54my time is dealing with that constraint
46:57which is I'm heavily recruiting
46:58executives right now. That's what I'm
47:00doing with my time. yesterday at four
47:02executive meetings and I have follow-up
47:03notes and and connections afterwards
47:05that I have to do. That's what my time
47:06is right now because that's the
47:07constraint of the business. And then
47:08once that finishes because those people
47:10get onboarded and they do a good job,
47:11I'll go through this again.
47:12>> I'm trying to figure out whether I
47:14should push or I should pivot and I've
47:16been having a lot of trouble pushing and
47:17that makes me unsure.
47:19>> Okay. The only reason that you pivot is
47:21if a fundamental underlying assumption
47:23that you came into the business has been
47:25proven untrue.
47:28If I want to start a uh you know dog
47:33uh lash business where it's like I sell
47:36lashes to to dog dog owners for their
47:39dogs and I think there's going to be a
47:40big market and no one wants it. Then
47:42that would be something I say I'm going
47:43to pivot. If it's uh you know I already
47:47like are other people making money in
47:49your industry selling what you sell.
47:51>> Yeah. Yeah. We got it working. We got to
47:54a million dollars a year in revenue and
47:55then 500k a year in profit, but then I
47:58uh I had a partner and I lost
48:00everything. Long story short, and I the
48:02pro we buy and sell comic books and the
48:04problem is we've been having trouble
48:06getting enough high value deals where
48:08money can be made on the calendar. It's
48:10tons of sellers with like 50 cent comic
48:12books and not enough sellers with five
48:14and $10,000 collections.
48:16>> Okay.
48:19>> Do you think that there's not that many
48:20that exist or you just don't know how to
48:22find them?
48:24It's like 1% of our leads and I've
48:26already looked at all of the ads in our
48:29industry and they've all like it's just
48:32mining through a ridiculous amount of
48:33leads to get like the few gems.
48:36>> Yeah. I mean to be fair there's a lot of
48:38businesses that are like that. So that
48:39not isn't necessarily a bad thing. I
48:41mean you had 50% margins on a million
48:43dollars in business. That's not bad. Um
48:46so I don't want to like you I don't want
48:48to dissuade you from necessarily doing
48:49something that could potentially be
48:51lucrative. Um, what
48:57you make? How much on the average deal?
48:59And how much does it cost you to get
49:00leads?
49:02>> We're We've CRO optimized a [ __ ] out of
49:05landing pages. We got funnel hacked.
49:06Like, I know the page is good. We're
49:08getting 600 leads a month at $10 a lead.
49:12>> Okay. So, it cost you six grand.
49:14>> Okay. Got it. And then six of those
49:16people are potential good customers,
49:18right?
49:19>> Yeah.
49:20>> Okay. I'm averaging I say the average
49:22deal we want is at least two grand, but
49:24we've had some record months where we
49:26got some whales that are 50 or 100k and
49:28that's what makes me like interested.
49:30>> Okay. I think that your issue is that
49:33you're dealing with insufficient volume.
49:36So volatility is a symptom of
49:39insufficient volume. So when you have
49:41like I have some big months and I have
49:43some small months. If I were to say over
49:45a year, do you think you'd have a whale?
49:49Yeah, we'd have we'd have multiple
49:50wheels. I I want to 5x ad spend. Yeah.
49:53>> But then I'm worried that it's not
49:55efficient enough and that the sales team
49:57has to be too good and selling like
49:58we're buying comics. Like training this
50:00I' I've been through all your trainings
50:02like training this where we're buying
50:03the comics versus like collecting money
50:06has been challenging from a commission
50:08and tracking perspective and training.
50:10>> These to me these are not pivot
50:12problems. These are just like these are
50:15business problems.
50:18Like every business has things that are
50:20hard
50:22and the fact that you did a million top
50:24line. Yeah. If you did a million top
50:25line and 500,000 bottom line like to me
50:27I'm like okay so you've already proven
50:29that this works.
50:32>> Yeah. I just keep thinking like this
50:34I've had trouble getting this past me
50:36and I see what you did with gym launch
50:38and I can't help but think like oh [ __ ]
50:39we could scale a high ticket team
50:41teaching all this stuff.
50:42>> Teaching what stuff?
50:45how we run the ads and the setter
50:46scripts and the closure scripts
50:48>> for comic books or for just selling
50:50stuff in general
50:51>> for b for buying and selling comic
50:53books.
50:54>> It's tough, man. Um, I'll tell you why.
50:59Like, all right, maybe maybe I'll like
51:03I'll tell you why this is tough.
51:04Whenever I hear someone say, "I'm really
51:06struggling to make a business work, so
51:07I'm going to teach other people how to
51:09do this thing that I'm not doing well
51:10with." It like makes me like,
51:13you know,
51:14>> I'm not struggling to make it work. I'm
51:16struggling to scale it to the point
51:17where I, you know, build it to a multi
51:19multi multi-million dollar business with
51:21multiple drivers, not just me doing it.
51:23>> Okay. Well, then is there a way that we
51:26can enable
51:28is there a way that we can like arm and
51:30like make an army of people who are like
51:33running your play and then you can
51:35somehow like
51:39not not get a percentage of the deals
51:41that they're like what would they
51:42struggle with if you were to show
51:44somebody how to do this? Like what would
51:45be the biggest issue? Because if they're
51:47if they're being efficient with their
51:48leads, right? they're spending
51:51whatever. Let's say they spend $500 a
51:53month instead of 6,000, right? So,
51:55they're going to get 50 leads.
51:57What are they going to struggle with?
52:00>> They struggle with they don't know how
52:01to get leads. Then they don't know how
52:03to work the leads properly. Then they
52:04don't know how to set appointments. Then
52:06they don't know how to close a deal.
52:07Then they don't know how to properly
52:09sell the comic books. Then they don't
52:10know how to just like keep doing it
52:12again and again. Is there a way that you
52:14could just like give them a menu and say
52:16like like if you could take care of the
52:19them like can you buy the comic books
52:22from them and then resell them and just
52:25basically have them basically
52:27decentralize the sales and then you
52:28still flip them because that would
52:30probably be I would imagine getting the
52:32ability to sell the comics for a lot of
52:34money would be the hard part is my
52:37guess.
52:38>> Yeah. So acquisition so getting more
52:41quality inventory think uh gold versus
52:45scrap metal sure is like analogy like
52:48getting is the definitely the constraint
52:49of the business. The problem is getting
52:51those high quality deals on the calendar
52:53versus just regular you know regular
52:56stuff on the calendar you know where
52:58it's like you're buying tons of 50 cent
52:59comics like that's that's been the
53:01constraint. So, even if we tried to
53:03build like an agent model, like
53:07I'm worried that a we still have to get
53:09those leads on the calendar and
53:10violently spend on ads. And then b,
53:12which we can absolutely do, but and I
53:14and I and I want to do that, but then b
53:16it's like they can screw us. And I'm
53:18worried about like it's hard to track
53:20like how much you can make on this deal.
53:21It's very subjective. It's physical.
53:23It's not like revenue where it's like
53:26clear-cut as to like how much it made.
53:28You know what I mean?
53:29>> Yeah. Yeah. I mean, it's a used car
53:30business.
53:30>> Would be worth it.
53:32>> Yeah. It's a used car business. Same
53:33thing. People come in with a car. It's
53:34used. Now, the issue there is that this
53:36Kelly Blue Book and there's some
53:37standards there, but like I understand
53:39what you're saying. Um, I mean, you kind
53:41of run a digital pawn shop kind of. Um,
53:45okay. So, what do you do? I mean, I'll
53:48say this. I think you have a good skill
53:50set. I'm not sure if flipping this into
53:52a business opportunity is the right
53:53play. Like, that feels meh. I think you
53:56could sell it, but you know,
53:59it's I like I it makes me, you know,
54:05>> yeah, that's why I haven't done it. Like
54:06I if I'm going to go bizop, I want to go
54:09B2B and I want to scale it to something
54:11like Gym Launch. And then I think that
54:12TAM is too small. And I think it has to
54:14be all buying and selling businesses
54:15altogether. And I think I'm not not a
54:18good enough leader yet. I think I need
54:19another two years. And I I'd rather just
54:21own the whole market because I know that
54:22there's two options. you said between
54:24you could own the whole gym market or
54:26you could just license it. So I think I
54:28think I go either way. I think I just
54:29keep running into challenges
54:32scaling it,
54:33>> dude. But I just I just want to
54:34encourage you in saying this like
54:36>> dude, business is [ __ ] hard, man. I
54:39know you know that, but sometimes it
54:40takes someone from the outside to be
54:41like, "Yep, that's that's how it is." It
54:44just like there's hard [ __ ] you know?
54:47Um do you make any content?
54:51Uh, no. I've been all focused. No,
54:53honestly, I haven't because I've been
54:55all focused on trying to solve this
54:56constraint and trying to be disciplined.
54:58Even though I want to start like 25
54:59different things, I've been trying to
55:00solve this one problem.
55:01>> I do think that you building making some
55:03content because like I think comic books
55:05is definitely like a super contentable
55:07like it's super easy. You can show them
55:09people like watch it cuz it's cool. All
55:12of that kind of jazz, right?
55:14Um, but I think it could it could
55:16generate demand for you on the buy side
55:19that would just decrease it would offset
55:22CAC and it would start to build the
55:23brand overall, which is how this thing
55:25becomes long-term a more sellable asset
55:27and how like you're like I want to own
55:28the space. That's how you would own the
55:30space.
55:32>> Then the problem is so the problem is we
55:35run ads on a national level like the
55:36logistics of even buying those deals
55:38that are past local is like like a
55:41traveling circus. It's so cumbersome and
55:43I can't help but think like this is not
55:45I don't think this is the easiest
55:46business to start. But I do think it's
55:48the one I have the highest damage in.
55:50And that's why like despite health
55:51issues and moving lo mov losing
55:52everything twice like I haven't quit.
55:54>> Well, you're not on your third time yet.
55:56So, you're good. Two is two is the is
55:58the is the sweet spot, you know.
56:00>> All right. I I want to help you though.
56:02Um so, here here's here's here's what I
56:05would I would consider as next steps.
56:06And I will say this before I get into
56:07it. Um push and pivot is an eternal
56:10personal question. It's like how much do
56:13I consume versus invest? There is no
56:15right answer. How much risk am I willing
56:16to take? Right? Those are those are
56:19personal questions. So, I just want to
56:20be clear about that. This is me saying
56:22if I were potentially in your shoes,
56:24what I'd consider. I would see there's
56:26two paths. One of the paths is not the
56:28bizop. I would say option one is you
56:30double down on this and you do own the
56:32market. You make the content. You figure
56:33out the sales stuff. You probably need
56:34to increase your ad spend so you can
56:36decrease the volatility. If you were
56:37spending 18,000 a month, that one whale
56:40per quarter would be coming in one time
56:41per month. And you can just know that
56:43law of large numbers it would be there.
56:45Right?
56:48That's path one.
56:49>> That's what that's what I want. I want
56:50to do that. I want to do that. And then
56:52it's just a question of like getting the
56:54rorowaz up high enough. And I've tried
56:55to like downell the list of course and
56:57I've been struggling with the rorowaz
56:59the efficiency there.
57:00>> No, I hear you. But when you get your
57:01whales, your rorowaz is really good.
57:04>> Right.
57:04>> Yeah. Yeah. I was like, "Oh [ __ ] we can
57:06make a lot of money with that." Again, I
57:07would just look at So, okay, I'm going
57:09to I'm going to zoom out because it's
57:10going to be important point for
57:12everyone. So, you spent $72,000 that
57:14year that you did a million dollars in
57:15sales, right?
57:18>> Yeah.
57:18>> Okay. So,
57:20>> no, no, no. But it probably it would
57:21probably be it would probably I'd
57:23probably spend 15,000 a month on ads and
57:25do a million sales.
57:26>> Okay. So, you spent $200,000 or 180 that
57:28year and you made a million in sales.
57:30So, you have 5 to1 minus the cost of
57:32acquisition, right? Right. But the cost
57:33of acquisition, I'm guessing, is not
57:34very much considering you spent whatever
57:37uh because you still made 500,000 in
57:38profit, right?
57:40>> Sure. Yes.
57:41>> Okay. So, the issue is like, okay,
57:44you're spending 70 currently. It's like
57:47we need to triple it and just even if
57:49you're tracking is not like this is like
57:51getting a data infrastructure is just
57:52part of scaling.
57:59Do we need a money model to downell the
58:0199% that aren't a good or the 95% that
58:05aren't a good fit? Like a $97 appraisal
58:08and then you can liquidate gas in that
58:09way.
58:10>> I love that.
58:12I love that. Include with the appraisal
58:14some sort of digital thing um that they
58:16would find cool or valuable.
58:19where I just like call a hundred people
58:21and until and like give a triple
58:23guarantee until they buy it and it's
58:24like like this works. Like I I will like
58:27if you do not get at least $300 of
58:29value, I will it's free. Like yeah, I
58:31like I've tried this so far and they're
58:32like they don't want it. Like they're
58:33too curious and I can't help but think
58:35like there is something that liquidates
58:37this ad. Like I know it's there.
58:39>> Yeah. I would just ask them what they
58:41want. It's an easy way to do it.
58:43>> But all they want is me to buy their
58:45comics and if their comics aren't good,
58:46it's like a problem. Yeah, they're still
58:50interested in something. Um, and it
58:53might just be repositioning how that So,
58:55the the the $97 offer that you have
58:57tried and no one buys is what?
59:00>> So, I tried a course for 37 which was a
59:04which was we'll show you how much it's
59:05worth and how to sell them yourself and
59:06they hated it. You converted at 1%. And
59:09then I started calling a few people here
59:11and there.
59:12>> Was this a selfquidating? How about
59:14this? How about you give uh so one is
59:16you can give like you give priority
59:19number one um to those people it's like
59:22listen we have a lot of people who have
59:23comic books you can jump to the front of
59:24the line by doing this right I do like I
59:28do like the idea of it's 97 and um if we
59:32buy your thing we'll we'll credit it
59:34towards it kind of thing.
59:36>> Yeah. Yeah. I've been try I've been I
59:38tried the course for years and I wrote
59:39seven different VSSLs and I'm like
59:41either this this traffic doesn't won't
59:43convert or I just haven't generated.
59:44>> I don't think it's I don't think it's a
59:46course angle. I think it's I think it's
59:48about the sale, right? So you've got
59:50risk, you've got ease, uh and you've got
59:53speed, right? Those are the elements of
59:55value.
59:57And so speed, it's like I can see you
59:59first, right? The risk component is I
1:00:02can guarantee that I see you, which is
1:00:04like not like you'll go to the top of
1:00:06the pile and I guarantee that you'll get
1:00:08it you'll get your response back for
1:00:10from us within a day, right? Something
1:00:13like that. Um
1:00:15risk reversal is and you know if and
1:00:18when we do it and it's not a fit like
1:00:19we'll give you half of it back or
1:00:21something.
1:00:25So it's not an appra. So we we we score
1:00:28our leads automatically. So we can have
1:00:30our direct leads go to the closer which
1:00:32right now is me. But we have 70% or form
1:00:35DQs. Do we make an an offer on the
1:00:38landing page to the form EQs to
1:00:40>> Yeah.
1:00:44>> Yeah. I mean
1:00:44>> video sales letter.
1:00:46>> We're also I mean there's this whole
1:00:47idea of like we need to make a selfating
1:00:49offer. There's also just the like you
1:00:50got five to one last year and you could
1:00:53just spend the money again and just know
1:00:54that your your volatility will happen
1:00:57and be counteracted with more more
1:00:59volume.
1:01:03>> Yeah. I just know that money is tight as
1:01:05I'm rebuilding. If I just nail this one
1:01:07liquidation thing, we could scale the
1:01:09[ __ ] out of it. And to me, like that's
1:01:10the thing.
1:01:11>> Yeah. Then I mean then you like this is
1:01:13the work of business.
1:01:16Let me let me frame this question
1:01:17differently. Then I got to hop to the
1:01:18next one. But if let's what do you think
1:01:22would happen if you can get the leads to
1:01:23offset if you can offset CAC or even 50%
1:01:25of CAC with some sort of selfquidating
1:01:27offer what would it do for the business?
1:01:31>> Oh my god. We can start bringing in
1:01:32really really good people and and scale
1:01:34it like more.
1:01:36>> And so so let me so let me frame it for
1:01:38you. You only have to solve this one
1:01:40thing and in so doing can build a large
1:01:43$10 million plus business that's
1:01:44sellable.
1:01:47>> Yes. So, it's a it's a instead of
1:01:49thinking like, man, this is a hassle.
1:01:50It's like, yeah, and that's why you're
1:01:51going to create $10 million of value
1:01:53when you solve it. Not bad.
1:01:56>> No, but I've been trying it for two
1:01:57years. I the downell course didn't work.
1:01:59I just
1:02:00>> Well, of course, I don't know if a
1:02:01course is the way.
1:02:07>> You're right.
1:02:10>> Like, if you kept trying to resell a
1:02:11course, it's like that's to me that's
1:02:13not trying for two years. It's trying
1:02:14the exact same thing over and over
1:02:15again. Like you're trying to you're
1:02:16trying to persuade better on a course
1:02:19when that's just the wrong offer.
1:02:26>> So I have to
1:02:27>> you need to find product market fit for
1:02:29something else that somebody who has
1:02:31that wants.
1:02:34>> So I need to talk to every single
1:02:36customer forever.
1:02:37>> Or maybe it's a listing fee, dude. Yeah.
1:02:39Maybe it's a listing fee. Maybe it's a
1:02:41combination of appraisal and listing.
1:02:43So, it's like, listen, we can't buy it,
1:02:44but we have a big network of other
1:02:46buyers, and for $37, we'll send it to
1:02:48our list of other buyers to see who's
1:02:50interested.
1:02:53>> Okay, I'm going to try it.
1:02:55>> Okay,
1:02:55>> I'm going to keep doing this till I
1:02:56figure it out. Thank you, Alex. You're
1:02:57the best.
1:02:58>> Appreciate you, man. No, you're the
1:02:59best, dude. Appreciate you.
1:03:01>> Hey, Alex.
1:03:02>> Hello.
1:03:03>> My name is Maddox. Uh, I sell optical
1:03:06frames to independent optitians and a
1:03:08couple uh big box stores.
1:03:10>> Cool. Um last year we did just over four
1:03:13and a half. Um and the problem that I'm
1:03:18facing is a growing market but a
1:03:19shrinking channel.
1:03:20>> Okay.
1:03:21>> Uh so
1:03:22>> you mean it's consolidating?
1:03:23>> Yeah. Private equity has been rolling
1:03:24up. Um for the last couple years we went
1:03:27from 13,000 independent optitians to 12
1:03:31in like 24 months. Um and also
1:03:35competitors have their own branches that
1:03:37are doing this inhouse. Um, so you know,
1:03:41we're selling a commodity product. Uh,
1:03:43margins aren't great. Uh, kind of been
1:03:45built on relationships and road
1:03:46warriors. And I'm trying to figure out
1:03:48if I continue to ignore the end customer
1:03:52or if I look at, you know, building a
1:03:55consumerf facing brand that has a little
1:03:57bit more leverage, has some inbound
1:03:58demand. Um, that's the
1:04:02kind of crossroads
1:04:03>> revenue. It's been flatlined for a
1:04:07couple years, a few years. Okay. Has it
1:04:10been flatlined because
1:04:13people are not reordering?
1:04:15>> No, we have pretty good um retention
1:04:19and it's built on, you know, personal
1:04:21relationships with the
1:04:22>> rep issue.
1:04:24>> No, it's not that it's an acquisition
1:04:26issue. Um
1:04:26>> you can handle more customers, correct?
1:04:28>> Yes.
1:04:28>> Okay. So then this would be a demand
1:04:31problem.
1:04:32Our
1:04:34reps need to service local accounts so
1:04:37they go and, you know, it's not a
1:04:40onetime sale. They need to be ongoing
1:04:42service. They they want to see them
1:04:43every month or so.
1:04:44>> Okay.
1:04:45>> Um, so we want to make sure that we're
1:04:47able to
1:04:48expand geographically. Uh, but it's also
1:04:52low ticket and long cycle.
1:04:53>> Mhm.
1:04:54>> Um, so
1:04:55>> low ticket, but like they're buying many
1:04:57frames at a time. Correct. So I mean
1:04:58it's just B2B. It's wholesaling, right?
1:05:00Um, so I want to make sure that you
1:05:06don't kill a good thing because of
1:05:07something that hasn't happened yet.
1:05:10>> Because starting the direct to consumer
1:05:12business is an entirely different
1:05:13monster. It's a new brand. There's
1:05:15there's a bunch of stuff there, right?
1:05:17Um, because if you were to think of all
1:05:20e-commerce brands that I would start
1:05:21would be, would frames be the first one
1:05:22you'd start?
1:05:24>> So frames is kind of limited by the
1:05:26prescription complexity. Um, this would
1:05:28be just establishing consumer awareness
1:05:30around a brand, but you could sell
1:05:32peripheral products on glasses, that
1:05:33kind of thing, right?
1:05:34>> Uh, and then
1:05:35>> is that the company that you would start
1:05:36fresh?
1:05:36>> Yeah.
1:05:37>> If you were to like start any company,
1:05:40>> probably because the sales velocity is a
1:05:41lot faster. You don't have to build
1:05:43relationships and, you know, um, take
1:05:46years to open an account that does maybe
1:05:48$1,000 a year. Do you want my blessing
1:05:52to do that or [laughter]
1:05:56uh
1:05:57>> Yeah, that's honestly kind of the the
1:05:58inflection point is like do I do I
1:06:00invest in in in more reps or do I kind
1:06:03of pursue this this other channel?
1:06:05>> Well, I think that what I'm trying to
1:06:06get to is like is the consolidation of
1:06:09the industry actually something that is
1:06:11limiting your business? That is what I'm
1:06:12trying to get to. I mean, I think it's
1:06:13obviously a big boogeyman, but like is
1:06:16it actually changing? like are they now
1:06:19cutting you out and finding somebody
1:06:20else? Okay, this is why I asked um okay
1:06:23cuz you said retention is really good.
1:06:24So if they're cutting you out then
1:06:25retention wouldn't be as good
1:06:26>> for for nonacquired accounts. Yeah,
1:06:29retention is good. If an account gets
1:06:31required it they usually go to a a
1:06:33larger supplier or the supplier
1:06:34themselves is the one that acquires the
1:06:36the practice.
1:06:37>> Got it. So, I would say I I would
1:06:40probably run down one door really hard.
1:06:43Um, which is I would approach the
1:06:45private equity groups and say, "Let me
1:06:48do your whole portfolio and you get a
1:06:50super wholesale deal." Cuz that's all
1:06:52they're doing, right? They're just one
1:06:53level up the food chain from you, but
1:06:55they still need frames. And so, that
1:06:57would be my like because that's the
1:06:58that's the smallest change to your
1:07:00existing business. And I'd rather go
1:07:02attack that. Now, if for whatever reason
1:07:04you're like, I really don't want to do
1:07:05that. Then
1:07:09you can jump from this boat to the next
1:07:11boat. I I hate to kill businesses when
1:07:14like they're not actually dead. You're
1:07:16just flat. Um and so it's just it's a
1:07:20totally different game. Again, there's
1:07:21nothing wrong. There's people here who
1:07:22are doing direct consumer. Like it's
1:07:23just a different different game. And
1:07:25from how many how many years you've been
1:07:27doing this?
1:07:28>> It's been around for 70 years.
1:07:30>> Okay. So this is what you've been doing
1:07:31for a while and you've never really sold
1:07:33direct to consumer,
1:07:34>> right? So that is why like there's a
1:07:37smaller skill gap for you to learn how
1:07:39to sell to private equity and those are
1:07:41bigger bigger tickets and still keeps
1:07:43the existing company you have more and
1:07:44more valuable because you close a
1:07:46handful of those deals and your business
1:07:47goes from 4 million to 20 million and
1:07:49then if you want do you want to sell the
1:07:50business someday or no?
1:07:52>> Yeah. And like guess who would love to
1:07:55also buy it? The customers. And so you
1:07:57kind of get a two birds, one stone
1:07:58effect there where you're going to your
1:08:00potential acquirers and just saying hey
1:08:02let's work out a deal. They might also
1:08:03just say like we'll do this thing if we
1:08:05can get an option in the business to buy
1:08:06it later. Great. Then at least you have
1:08:08an elegant exit that you can work out
1:08:09there because they're going to want to
1:08:10vertically integrate and that's their
1:08:11whole story. So I would rather like
1:08:14maybe do that and then you get a nice
1:08:16little payday worst case scenario and
1:08:18then you'll have cash and you do the
1:08:19next thing. I just am very hesitant to
1:08:21kill something that you spent seven
1:08:23years building when you can take the
1:08:24same skill set, level up a level,
1:08:26potentially also get an acquirer, and
1:08:29worst case just keep making more money.
1:08:31>> I would say this is less killing
1:08:33something. This is and I understand
1:08:34that's a completely different animal. Um
1:08:37I I would say that the the goal would be
1:08:39to generate inbound in a way that we're
1:08:41not currently doing because the reps are
1:08:44serving local
1:08:44>> inbound from optometrists. Mhm.
1:08:46>> I think that's going to be
1:08:49not the most likely. I think you'll just
1:08:51sell people sunglasses.
1:08:52>> Yeah.
1:08:52>> I don't think you're just going to all
1:08:54of a sudden get optometrist inbound. I
1:08:56>> if the unit economics work a lot better
1:08:58for that than they would for selling to
1:09:00private equity. You know,
1:09:02>> it'd be more I'd rather you just run ads
1:09:04to optometrist and say want to get
1:09:06better prices on frames.
1:09:08If you want to get inbound from autotra,
1:09:10let's just go get inbound from autotra.
1:09:13But if that's the case, then the private
1:09:14equity boogeyman's not actually an
1:09:15issue.
1:09:20>> Yeah.
1:09:21>> Right.
1:09:21>> Yeah.
1:09:22>> So this is why is this a demand problem?
1:09:24Right. So if it's just a demand problem
1:09:25and your existing channel doesn't work,
1:09:27but you think you can just go sell ads
1:09:29direct to get optometrists to come buy
1:09:32stuff from you, then we can do that. You
1:09:34can go to private equity. Like either of
1:09:36these are expanding your existing
1:09:37business, which I much prefer to
1:09:38starting a directed consumer line. So if
1:09:40you think that sounds better to you,
1:09:41it's just like cool. Let's just run ads
1:09:43to optometrists and have them fill out
1:09:44forms and then then we can sell them
1:09:46frames. Hunky dory.
1:09:48>> We would be supply constrained in that
1:09:50case and that we wouldn't have a a
1:09:52physical rep in that area to service
1:09:54that account on an ongoing basis.
1:09:56>> Well, when you think that people are
1:09:57going to be reaching out inbound, how do
1:09:58you think you're going to sell them?
1:10:00>> Yeah, that's true.
1:10:02>> Yeah. [laughter]
1:10:02>> All right. I think you can just do a
1:10:04phone sale.
1:10:04>> Yeah.
1:10:05>> Okay.
1:10:06>> And show them the frames. And it's like,
1:10:07oh, yeah. They're like, "Oh, can you
1:10:08have somebody in person?" It's like,
1:10:09honestly, that's actually not how most
1:10:10people do it. Um,
1:10:12so you want to buy them? [laughter]
1:10:14>> Yeah. So on the more better, new, you
1:10:17would just say better.
1:10:18>> Yeah. I would rather you you have two
1:10:20things that we went over that you could
1:10:21do alternative to killing the business
1:10:23and because all of the objections you
1:10:25had on this side will still be present
1:10:27in the alternative scenario with more
1:10:29risk and more distraction. So, if you
1:10:32want to have an inbound channel, which
1:10:33means we just need to increased demand,
1:10:35we either go to the top of the food
1:10:36chain, have them sell super wholesale,
1:10:38and then also potentially have an
1:10:39acquire who knows who you are who
1:10:40definitely will want to vertically
1:10:41integrate, or alternatively, and you're
1:10:43also at the size that they would love to
1:10:44buy you. Um, or alternatively, you run
1:10:46ads to optometrists, and all you have to
1:10:48do is learn a remote sales motion.
1:10:51Learn the PE sales motion, learn the
1:10:52inbound sales motion remotely. Which one
1:10:54would you rather do? That's probably the
1:10:56much lower risk next step to I'm going
1:10:59to start a consumer brand and then hope
1:11:00offers or respond to it.
1:11:03>> Does the sales velocity in a consumer
1:11:05brand versus a, you know, ongoing
1:11:09contractual thing with an account make
1:11:11that any more attractive? You know,
1:11:13>> no, not at all.
1:11:14>> Okay.
1:11:14>> It's the opposite.
1:11:15>> Yeah.
1:11:16>> A B2B business that has super high
1:11:18revenue retention is significantly more
1:11:19valuable than a one-time transactional
1:11:21consumer brand. Unless you have a
1:11:23monster brand, in which case then they
1:11:24basically see the brand as a
1:11:25distribution base they can create new
1:11:26products and sell through.
1:11:28>> Okay, awesome. Thank you. I appreciate
1:11:30it.
1:11:30>> Yep,
1:11:32[applause]
1:11:35>> that was actually a really fun one.
1:11:37>> I run a uh
1:11:40very high volume cold email agency
1:11:41basically. Okay,
1:11:42>> we work with a lot of uh B2B SAS
1:11:44companies that have TAMs over at least
1:11:4610 million users
1:11:47>> or um B2B service businesses that have
1:11:50LTVs over like 50 grand typically,
1:11:52right? We're good at the median pathway
1:11:53and also a PLG pathway with SAS.
1:11:56>> Okay.
1:11:56>> Um I currently do uh 2.2 million. Um I'm
1:12:00pretty sure I can take it to 10 million
1:12:01within the next like year or so. Okay.
1:12:04Um, primarily because um,
1:12:08uh, because I think I know what to do
1:12:10next based off of this weekend, even
1:12:11before here. A lot of stuff like that.
1:12:13So, if anything, it'll be interesting to
1:12:14just hear you
1:12:16>> criticize maybe what I think I should
1:12:18do.
1:12:18>> Okay.
1:12:18>> Right. Um, so we got to 2.2 by having
1:12:22like $10,000 a month retainers.
1:12:24>> Okay.
1:12:25>> What we're doing is switching to
1:12:27performance models at scale.
1:12:28>> Okay.
1:12:29>> Where it's like, hey, let me understand
1:12:31your LTV. We'll do a third of uh we'll
1:12:33charge a fee roughly equal to we'll make
1:12:35sure your CAC is a third at least. Maybe
1:12:37that needs to be different, you know,
1:12:39but that's the idea. Um switch it to 5K
1:12:42so it's really easy to close because
1:12:43most people we tell them five, it's
1:12:45really easy for them to hop into the
1:12:46funnel and just go, "Yep, let's try this
1:12:48out."
1:12:48>> And then we have performance setup on
1:12:49the back end.
1:12:50>> Um the advantage is that like um
1:12:54>> what do you think the biggest problem is
1:12:55going to be?
1:12:56>> Uh systems
1:12:58that will break. I think private data
1:13:01and analytics to be able to actually
1:13:05know what properly to do for each client
1:13:08at that type of scale because some of
1:13:11our clients will send like 10 plus
1:13:12emails a month written with AI one to
1:13:16one.
1:13:17>> Uhhuh. 10 plus or like 10,000.
1:13:19>> Uh 10 million.
1:13:20>> Okay. Got it.
1:13:21>> Per month. Yeah.
1:13:22>> Um
1:13:24so this is so interesting. So, like the
1:13:26fee sounds wildly underpriced. Like if
1:13:29you're sending 10 million emails and
1:13:31you're charging $10,000, that sounds
1:13:34absurdly low.
1:13:35>> Yeah, I would say um we start it to get
1:13:38them in and we'll send a 100,000 test
1:13:41message market fit.
1:13:42>> The second we find the multiple
1:13:45>> um then or we go cool, I know if I
1:13:47target SAS founders with this message,
1:13:49there's 800,000 of them. If I hit that
1:13:50list, I'll sign up 6001.
1:13:52Uh we can crank it that way, right? So
1:13:55it's almost to get them in there where
1:13:56we have the
1:13:56>> is the biggest issue running out of
1:13:58lists.
1:14:00>> No.
1:14:01>> Okay.
1:14:01>> No. Because basically it's like let me
1:14:02email your entire T every two months.
1:14:05>> So what else uh what else do you think
1:14:06is going to be the uh the biggest
1:14:08problem with this model?
1:14:10>> Um
1:14:12keeping clients honest potentially
1:14:15>> um on collecting if it's based off of
1:14:17percentages or
1:14:19>> whatever it may be.
1:14:20>> Yeah. which is where I also think it's
1:14:22maybe like a systems problem in that I
1:14:24need to have proper integrations to
1:14:26their CRM to keep them honest which
1:14:28maybe I need to
1:14:30acquire uh or like uh get the right
1:14:33developers or something like that to be
1:14:35able to do that better.
1:14:37>> Um
1:14:40>> so um
1:14:42>> what stands out?
1:14:43>> Yeah. So the the problem that I would
1:14:45foresee is the one that you just brought
1:14:47up which is what I was hoping you get
1:14:48to. Um, whenever you switch to
1:14:51performance, performance is always
1:14:53always the best model on paper, not
1:14:55always the best model in practice.
1:14:57>> Mh.
1:14:57>> And it's strongly predicated on the
1:14:59quality of the prospect.
1:15:01>> Yeah. So, if you have enterprise
1:15:03customers who are basically who have
1:15:05obligations and have assets and have
1:15:07[ __ ] to lose,
1:15:08>> they tend to follow and adhere to their
1:15:11contracts.
1:15:12>> Smaller even sometimes medium business
1:15:14owners less so. And are you US? Yeah.
1:15:19>> Okay. Yeah. And US contracts mean
1:15:21basically nothing. And so,
1:15:23>> um, all of these things are kind of like
1:15:25stacked against you.
1:15:26>> Um, and Allan was a performance basis
1:15:28model. So, I like very much understand
1:15:30this business.
1:15:30>> Yeah.
1:15:31>> Um, now we were able to do it only
1:15:34because I controlled the flow of
1:15:35payments. I got paid
1:15:38>> and then gave them
1:15:40>> remitted that part.
1:15:42So
1:15:43>> yeah,
1:15:44>> you always want to control the the money
1:15:45flow if you do performance
1:15:47>> or you have to have absolute
1:15:49transparency. So like you run the
1:15:50Shopify store. That's why Shopify
1:15:52agencies can do performance. So a lot of
1:15:54email marketing for Shopify, they do
1:15:56they do performance percentages uh you
1:15:58know using Clavio and whatnot. And that
1:16:00that model works great for them because
1:16:01the tracking's clear and most people no
1:16:04one's going to start a second store to
1:16:06try and cut you out.
1:16:07>> Yeah.
1:16:08>> Brick and mortar guy walks in. He didn't
1:16:11show guy closed for 50 grand.
1:16:13>> How do you know?
1:16:15I you you set up a unfortunately you set
1:16:18up an incentive system that incentivizes
1:16:20them to cheat you
1:16:22>> and if they have to cheat them or cheat
1:16:23you, they will cheat you.
1:16:25>> So I'm not a huge fan. Mhm.
1:16:27>> I would prefer to just factor in
1:16:30um basically scaled based on what you
1:16:32know the ROI is roughly to kind of like
1:16:35a northstar metric which might be uh you
1:16:39know for every million emails it's this
1:16:42and you might have to just do that
1:16:43custom upfront in terms of like okay
1:16:44based on your customer based your avatar
1:16:46your segment this is the rate. I'm not
1:16:48the biggest fan of custom pricing, but
1:16:50based on the model that you have, it
1:16:52might make sense given you probably have
1:16:53fewer customers that are worth more,
1:16:55>> I'm assuming.
1:16:56>> Yeah.
1:16:56>> What's your churn?
1:16:58>> Um, probably uh 30%. Or something like
1:17:02that. But also, I've I've changed my
1:17:04offer. Yeah. Okay.
1:17:05>> Yeah. Annually, I've changed my offer
1:17:06enough to where it's kind of hard to be
1:17:07like, what's the actual churn on the
1:17:09current offer? But yeah.
1:17:10>> Okay. Um, why do why do people leave?
1:17:14>> Um, because you charge nothing.
1:17:18you um well we used to charge 10ks flat
1:17:22to be like here's how many emails we'll
1:17:23send right most of the time when they
1:17:26would leave it wouldn't be because of
1:17:27performance and because their offer
1:17:28wouldn't we weren't able to find a good
1:17:30offer
1:17:31>> message uh message market fit for them
1:17:33essentially right
1:17:34>> have you been able to separate cohort
1:17:35turn as in like first three months
1:17:37versus three month plus
1:17:41>> no okay
1:17:42>> no
1:17:42>> so I would consider
1:17:45>> posit
1:17:46uh having a two two-part structure where
1:17:50you charge a onetime fee that's
1:17:51significantly higher upfront but has
1:17:52zero recurring.
1:17:54>> Mhm.
1:17:54>> To do the one thing which is we're going
1:17:56to find message market fit.
1:17:57>> Mhm.
1:17:58>> After that you solve that problem. You
1:17:59say hey if you want you can go send 10
1:18:01million emails a month uh with this
1:18:02messaging. And they'll be like well we
1:18:04don't know how to do that. You're like
1:18:05oh that's crazy. You know we do that if
1:18:07you want.
1:18:08>> And then you can say let me introduce
1:18:09you to our other tier of pricing.
1:18:11>> And that might be a best of both worlds
1:18:13model. And you will be astonished, by
1:18:15the way, at how much easier it is to
1:18:16sell a one-time thing versus an ongoing
1:18:18thing.
1:18:19>> Interesting. I wonder um
1:18:20>> like you can double or triple close
1:18:22rates from a $1,500 a month membership
1:18:24to a $5,000 onetime upfront. You can
1:18:27triple close rates at triple the price.
1:18:30>> Yeah, for sure.
1:18:30>> Which is a 9x.
1:18:31>> Does it does it change your thought
1:18:33process at all when like uh the like
1:18:36monthly reoccurring we've been able to
1:18:38achieve with these performance models
1:18:39and huge TAMs? Like we're billing some
1:18:41clients like
1:18:42>> 75 or like 100 grand a month.
1:18:44>> Okay.
1:18:44>> All of a sudden, right?
1:18:45>> But you said you did 2 million.
1:18:47>> Um
1:18:49>> yeah, because the reason I got this idea
1:18:51for the performance is because we got a
1:18:53whale.
1:18:54>> I was like, "Holy [ __ ]
1:18:56>> we're getting a hundred bucks."
1:18:57>> So when you said some customers, there's
1:18:58one customer.
1:18:59>> Um we just closed another upsold them
1:19:01into performance and we start like this
1:19:03month.
1:19:04>> Okay. So you have one customer who's
1:19:05doing the big the big wheel thing. Yeah.
1:19:06Correct.
1:19:07>> I'm not trying to I'm trying to
1:19:08understand.
1:19:08>> Yeah, of course. Okay. So,
1:19:10>> so there's one there. It looks
1:19:12promising.
1:19:12>> To go back to what I said earlier,
1:19:14>> if you have enterprise customers,
1:19:16>> cool.
1:19:17>> Yeah.
1:19:17>> The fact that you said because I'm using
1:19:19the data you give me. So, if you say I'm
1:19:20doing $2 million a year, we're charging
1:19:22$10,000 a month.
1:19:23>> I'm going to back back a napkin and be
1:19:25like, okay, they got 20-ish customers.
1:19:27>> And if they're paying $10,000 a month
1:19:28and sending 10 million emails, it
1:19:29doesn't make any sense, but okay, let's
1:19:30keep going. Um, beyond that, it's like,
1:19:32okay, well, if they've got 20 customers
1:19:34at that price point, they're probably
1:19:36low. They're SMBs. They're not they're
1:19:38not even mid-market. This whale is
1:19:40mid-market. And if you had said, "Hey,
1:19:42we only deal with uh businesses that are
1:19:44doing over 10 million in ARR and are
1:19:47venturebacked or what, you know,
1:19:48whatever whatever the the criteria are
1:19:50that I would say I have high confidence
1:19:51that one, they can pay and two that they
1:19:52even track,
1:19:53>> then I would have much higher confidence
1:19:55in saying, "Yeah, go for it on the
1:19:56performance model."
1:19:57>> Okay, cool.
1:19:58>> But the biggest risk that you're paying
1:19:59down is that they don't pay you.
1:20:00>> Yeah. Yeah. Yeah. That makes sense.
1:20:02That's the risk. Basically, if you have
1:20:03high confidence of the payment than
1:20:04performance,
1:20:05>> I'm all for performance. I mean, I would
1:20:07do zero dollars up front. I don't even
1:20:08care. If I know that I can get paid, I'm
1:20:10all in.
1:20:12>> I just got to know that I can get paid.
1:20:14>> Yeah.
1:20:14>> That's the problem.
1:20:15>> That is the biggest hinge in this thing.
1:20:17>> That's like the biggest risk of going
1:20:18down that path is you're just stuck.
1:20:20>> Yes.
1:20:20>> Mhm.
1:20:21>> You solve that, you solve the business.
1:20:23>> Yeah.
1:20:23>> That's the That is the whole business.
1:20:24You solve that, you solve the business.
1:20:26>> Yeah. Exactly. Own that channel.
1:20:27>> I built a software. Like, I get it.
1:20:29>> Yeah. Exactly. [laughter]
1:20:30>> Makes a ton of sense.
1:20:31>> Yeah. Because I was going after small.
1:20:33If you like this video and you're a
1:20:34business owner who wants to break
1:20:35through your current revenue ceiling, I
1:20:36distilled every lesson from scaling 10
1:20:38businesses past 10 million and three
1:20:40businesses past 100 million into a
1:20:42completely free scaling road map that
1:20:43I've used to go from 0 to 1, 0 to 10,
1:20:45and 0 to 100 plus. And so you can click
1:20:47here and you can check it out. Again,
1:20:49absolutely free. And since you're a
1:20:50business owner, appreciate you and uh
1:20:52enjoy.

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