"What If My Competitor Copies My Whole Business?" — Transcript

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1. 0:00Hey Alex, thank you. Uh my name is AJ. I
2. 0:02own a Did you hear it? The what? Did you
3. 0:04hear my question from before or do I
4. 0:06have to restate the whole thing?
5. 0:07>> Uh restate it. 1.2 million
6. 0:10>> Yes, 1.2 million in 2024. 2025
7. 0:16>> 25 we doubled it to 2.2.
8. 0:18Um
9. 0:19this year we're projected to do four.
10. 0:22Really the goal would be, you know, in
11. 0:23the short term probably by '27 if we
12. 0:25could be a million dollar a month
13. 0:26company. What we did to double it this
14. 0:28year
15. 0:28>> you sell to what?
16. 0:29>> Say that again?
17. 0:30>> What do you sell to who?
18. 0:31>> Uh we sell motocross training.
19. 0:33>> Okay.
20. 0:34>> we hold five day camps is what I'm kind
21. 0:36of realizing.
22. 0:37>> Yes.
23. 0:37>> Cool.
24. 0:38>> Yeah. So this has been cool because I
25. 0:39start to the gears are turning as far as
26. 0:41how to run a good event. So thank you.
27. 0:43>> Yeah.
28. 0:45Um
29. 0:46what we did to be able to get our
30. 0:48projection to 26 to
31. 0:50the 4 million is we scaled down our
32. 0:53single day tour dates.
33. 0:55We were we we did more in '24.
34. 0:57>> Love this formula.
35. 0:57>> We went all the way to we scaled from 70
36. 1:00single day tour dates
37. 1:02in '23
38. 1:04to 140 of them in 2024 and it was just a
39. 1:08ton of operational drag. I mean it was
40. 1:09like we were like a rocket not a store.
41. 1:12>> It was nuts.
42. 1:13But what we realized in looking back on
43. 1:15it is the bottom 20 of those were net
44. 1:17negative. The the next 20 were net less
45. 1:20than a thousand dollars so
46. 1:21inconsequential. And then I started
47. 1:23looking at in 2024 we did three of the
48. 1:25five day camps kind of as a test run.
49. 1:27Each of those net well over a hundred
50. 1:29grand each and I'm like, well hang on a
51. 1:31second. This is the answer.
52. 1:33So this year I told the team At first I
53. 1:36called them I said, hey I just had an
54. 1:37epiphany. Here it is. We're going to do
55. 1:3910 camps. And I said, actually no you
56. 1:42we're actually going to do 25 and
57. 1:43they're like, hey 25? What do you mean
58. 1:4525?
59. 1:46>> Yeah.
60. 1:46>> My question is do I continue to
61. 1:51my
62. 1:52>> Were you just able to charge more for
63. 1:53the three day than the one day?
64. 1:55>> Uh the five day camps
65. 1:56>> worth while? Sorry.
66. 1:57>> So the one day is $300, which is
67. 1:59probably not enough. The five-day is
68. 2:01$1,200, which is definitely not enough.
69. 2:05Uh, so that's what part of the question,
70. 2:06too.
71. 2:07>> Cool.
72. 2:07>> Um,
73. 2:09I want to continue to scale the
74. 2:10five-dayers and scale down the single
75. 2:12days, but my fear is we basically own
76. 2:14the space. Nobody else does what I do.
77. 2:16It's pretty large market. Um, there is
78. 2:19one copycat company and he's trying to
79. 2:20hit all these single day tour dates in
80. 2:22the regions that we're doing them. So,
81. 2:23I'm afraid if I scale them down too
82. 2:25much, we won't be able to
83. 2:27>> copy the model that makes the money.
84. 2:28>> Say that again?
85. 2:29>> He's going to copy the model that makes
86. 2:30no money, right?
87. 2:32>> Say it one more time.
88. 2:32>> He's going to copy the model that makes
89. 2:34no money.
90. 2:35>> That's a great point. Yeah.
91. 2:40>> Love this for us, right?
92. 2:43I hope he does.
93. 2:44>> Okay. [laughter] I could
94. 2:46Honestly, I could go home right now and
95. 2:47I'd be happy after that.
96. 2:50Yeah, you're right. You're right, and I
97. 2:52feel more confident that I don't think
98. 2:54he could do what we could do anyways,
99. 2:55but he certainly can't do what we can do
100. 2:57in a five-day event. I mean, we we run
101. 2:58those five-dayers like nobody else, so.
102. 3:00>> Okay.
103. 3:01>> Um,
104. 3:01>> So, you kept pushing on price. So, let's
105. 3:02just handle that real quick.
106. 3:04Um,
107. 3:05why can't you charge more?
108. 3:08>> I definitely can. The reason I haven't
109. 3:10is because I started riding dirt bikes
110. 3:12when I was two. I turned pro when I was
111. 3:1416.
112. 3:15>> Help people I want to bubble wrap.
113. 3:16>> had no money, so I didn't want to
114. 3:17outprice the people that were me. Does
115. 3:19that make sense?
116. 3:20>> Yeah, do you make like content? Is that
117. 3:21the primary way that you get customers?
118. 3:23>> Yeah.
119. 3:23>> Okay. So, you do that for free?
120. 3:25>> Yep.
121. 3:26>> And those people get that for free?
122. 3:27>> Everything's free. Yeah.
123. 3:28>> Right. And so,
124. 3:31I've we've 22 million subscribers.
125. 3:33There's 100 people here.
126. 3:35A lot of people get you for free.
127. 3:37I think that
128. 3:40Let me say it differently. If you like
129. 3:42you will never help in person
130. 3:45even a tiny fraction of a percent of the
131. 3:46people that you've helped for free.
132. 3:48It's just not the The not that way. You
133. 3:51will able to monetize 1% of the people,
134. 3:55maybe, right? If you're lucky, that
135. 3:56you've actually helped in the model that
136. 3:58the way media exists today. It might
137. 4:00change, but for now, that's how it
138. 4:01works.
139. 4:02And so, I think you have some sort of
140. 4:04guilt that you can't
141. 4:06help somebody, but you won't be able to
142. 4:08expand your footprint or the media
143. 4:11without the cash flow to grow.
144. 4:13And so, if you turn this into a
145. 4:14billion-dollar company, which why
146. 4:15couldn't you, right? I mean, the
147. 4:17market's big. Right? If you were to turn
148. 4:19this into a gigantic company, do you
149. 4:20think you'd make a bigger impact than
150. 4:22you do now?
151. 4:24>> Yes.
152. 4:25>> Right. And in order to do that, it takes
153. 4:27money.
154. 4:27>> Yeah.
155. 4:29>> And so,
156. 4:32you can you can serve the person who
157. 4:35can't afford it for free,
158. 4:38and then you serve the people who can't
159. 4:39afford it for the the correct price.
160. 4:42>> And we do have a crazy amount of free
161. 4:43content. It's a Based on not knowing
162. 4:45anything about the industry, what would
163. 4:46you change the price from from 1,200
164. 4:48bucks a week?
165. 4:49>> I can't say what the actual number is,
166. 4:50but I can say, "What's your closure
167. 4:52right now?"
168. 4:54>> I don't know.
169. 4:55>> Do you sell on the phone or via
170. 4:56checkout?
171. 4:57>> I want to begin selling on the phone. We
172. 4:58have a a website landing page. We just
173. 5:01began doing ClickFunnels, because what
174. 5:03made me sign up for this, I'm like, we
175. 5:04have to do that.
176. 5:05>> Yeah. Are you working with us after
177. 5:07this?
178. 5:08>> Mhm. No, I think I should, but I'm
179. 5:10afraid that I don't have enough
180. 5:12I'm afraid I don't have enough data yet,
181. 5:13because like when I was filling this
182. 5:15thing out,
183. 5:15>> you don't have the data of like I don't
184. 5:17I promise I don't care. Like I mean,
185. 5:19I don't need the money. I I mean that.
186. 5:21Um
187. 5:22the
188. 5:23Like
189. 5:24I The reason I bring it up is just
190. 5:25because like
191. 5:27you're going to build a sales motion.
192. 5:28There's a lot of mistakes that you can
193. 5:29make there, and getting it right the
194. 5:30first time is worth it.
195. 5:34>> So, now would be a good
196. 5:35>> And all of a sudden, the pricing power
197. 5:36might not be like 300 to like 400, might
198. 5:38be 300 to 3,000. And you'll be like, "I
199. 5:40can't even do that." You for sure
200. 5:41[ __ ] can.
201. 5:43>> Would you give up on the single dayers
202. 5:44completely and just only focus on
203. 5:46>> look at the unit economics.
204. 5:47>> Say it again.
205. 5:48>> We have to look at Is my thing not loud?
206. 5:51The unit economics.
207. 5:52>> No, I'm just so stuffed up right here.
208. 5:53>> Oh god, okay.
209. 5:54>> I'm just reading [laughter] your lips,
210. 5:54yeah.
211. 5:55>> Okay, you're good. Yeah, we just have to
212. 5:56look at the unit economics. So, we just
213. 5:57have to, you know, open the open the
214. 5:59hood, pop it, and just like look at both
215. 6:00both different event days. Uh we'll
216. 6:03Sometimes sometimes the single like I we
217. 6:05had a we had a business that had uh
218. 6:07um a it was a brick-and-mortar service
219. 6:09business, had two models, a micro model
220. 6:11and like a bigger facility model. The
221. 6:13bigger facilities uh obviously had more
222. 6:15revenue and more absolute profit, but
223. 6:17the return on capital and return on
224. 6:19effort for the small ones was like 5x.
225. 6:21[snorts]
226. 6:21And so, even though like the founder was
227. 6:23like, "Ah, the the I love having these,
228. 6:25you know, these big whatevers." It was
229. 6:26like, "We can expand so much faster and
230. 6:28we can get to our 10-year goal in 3
231. 6:30years if we do the one day or the the
232. 6:33mini version." So, we just have to look
233. 6:34at it um and all we're really optimizing
234. 6:37for is return on capital.
235. 6:39Human capital and financial capital.
236. 6:41That's all like if you think about if
237. 6:42you were if you boil a business down to
238. 6:43its most basic unit, it's an economic
239. 6:45arbitrage between what it costs you to
240. 6:46make more money. It's all it is. And
241. 6:48then the difficulty of of continuing to
242. 6:49do that. And so, that means that we
243. 6:51spend a certain amount of money to get
244. 6:52someone in, which for you is going to be
245. 6:54the cost of your media team and your
246. 6:55time. That's the cost, right?
247. 6:57On the on the back end, it's what do we
248. 7:00make from these people who come in the
249. 7:01door, and what stops us from doing more
250. 7:03of that thing, right?
251. 7:05>> [clears throat]
252. 7:05>> And so, if there's a model that right
253. 7:06now we can can spin that wheel faster
254. 7:08and it costs us less here, that's the
255. 7:10better model. I just don't know which
256. 7:11one it is. And in terms of
257. 7:13pricing, we just continue to go up until
258. 7:15willingness to pay stops.
259. 7:17And then we just stay there. The nice
260. 7:19thing Here's the
261. 7:20>> a hunch that the conversion is very
262. 7:21high.
263. 7:22>> Yeah.
264. 7:23>> Yeah.
265. 7:24Obviously.
266. 7:24>> You'll be able to afford it.
267. 7:26But but my but the the the the main
268. 7:28point though
269. 7:30um
270. 7:30You said something I had my It was a
271. 7:32good one. It was a good one. Um
272. 7:37Yeah. Oh, um
273. 7:40Ah, I'll remember it when I talk to
274. 7:41somebody else.
275. 7:43>> [laughter]
276. 7:43>> But yes,
277. 7:44>> What was the thing that you said that it
278. 7:46hit me like a in the face?
279. 7:48>> Uh your competitor?
280. 7:49>> copy something
281. 7:50>> He's going to copy a broken model, so
282. 7:51you should hope he does that.
283. 7:52>> Okay.
284. 7:53That would be my sell to the team, not
285. 7:54that I need to sell the team on it.
286. 7:55>> Yeah, and I'll land the plane on that
287. 7:56for you, too, which is that
288. 7:58you will never go out of business
289. 8:00focusing on the customer.
290. 8:02And I'll I'll tell you a quick story.
291. 8:03So, the biggest business mistake that I
292. 8:06I've made the two most costly business
293. 8:08mistakes I've made. Um
294. 8:10one of them has nothing to do with this.
295. 8:12This is the other one.
296. 8:13>> [laughter]
297. 8:14>> Which has everything to do with this.
298. 8:16Um I had a competitor
299. 8:17that ended up taking a bunch of my top
300. 8:20testimonials that were that we kind of
301. 8:22converted to semi-employees because they
302. 8:24were big evangelists back in the gym
303. 8:25launch days.
304. 8:27And as soon as they took them and they
305. 8:28were they're big ads for me, all of a
306. 8:30sudden they were running ads for this
307. 8:32other guy. So, it's kind of like when
308. 8:33the Verizon guy went to the AT&T,
309. 8:34remember that that that switch over that
310. 8:36actor? It was kind of like that. And
311. 8:39this guy was offering one-on-one
312. 8:41coaching
313. 8:42um to help people out. I never did that.
314. 8:45And so and they were cheaper. So, they
315. 8:46were cheaper, they were doing
316. 8:47one-on-one, and they had some of my top,
317. 8:49you know, customers
318. 8:51uh becoming advocates. And they said
319. 8:53that the 10 of them had come to get they
320. 8:54partnered he partnered with these 10
321. 8:55people or something like that.
322. 8:57And when that happened
323. 8:59I got rough my feathers got all ruffled
324. 9:01and I was like, "It's wartime. We got to
325. 9:04you know, we got to go to the
326. 9:04mattresses. We got to really, you know,
327. 9:05change the change the business up." And
328. 9:07so, I did this big kind of like relaunch
329. 9:10internally to my existing customer base.
330. 9:12And um
331. 9:14I said, "We're in I did this big value
332. 9:16stack." And then I said, "You're going
333. 9:17to get all this extra stuff
334. 9:19not for the same price you're paying me,
335. 9:21but for less."
336. 9:23And so, I took my existing recurring
337. 9:25base
338. 9:26and I reduced my revenue by $500,000 top
339. 9:29line per month.
340. 9:31And so, that translated cuz we take it
341. 9:33off top line and and the cost went up.
342. 9:34So, I increased my costs and I took my
343. 9:37top line down by 6 million.
344. 9:40And I ended up losing in profit
345. 9:42somewhere in the neighborhood of 6 to 7
346. 9:43million dollars a year for that business
347. 9:45at the time.
348. 9:46>> [gasps]
349. 9:48>> I then ended up selling that business,
350. 9:49obviously, and the business never
351. 9:52recovered that profit.
352. 9:53It stayed there.
353. 9:55And when I did make that move, the first
354. 9:58comment in the chat after I dropped that
355. 10:01it was less was a complaint that I had
356. 10:03not done it earlier.
357. 10:06So, it was not, "Thank you so much for
358. 10:07lowering the price and giving us more
359. 10:09shit." It was, "I can't believe I was
360. 10:10paying more."
361. 10:12And I was like,
362. 10:14"I want to [ __ ] kill myself."
363. 10:16>> [laughter]
364. 10:17>> And and here was the best part of all.
365. 10:19My churn
366. 10:21changed to zero.
367. 10:24So, I just cut my top line by 20%. Churn
368. 10:26remained the same. Because the
369. 10:27willingness to pay change that I made, I
370. 10:29basically reduced it from, call it
371. 10:31$3,000 a month to $2,500 a month, it
372. 10:33actually made no real difference
373. 10:35in whether someone would cancel or not.
374. 10:37It was past a threshold that this is a
375. 10:39lot of money, and so it changed nothing.
376. 10:41I just made less money.
377. 10:44And then when I sold the company, that
378. 10:46six got multiplied by a lot. And so that
379. 10:48probably cost me the neighborhood of
380. 10:50probably 50 million dollars.
381. 10:53And so the big lesson that I learned
382. 10:54there was that I shouldn't and that that
383. 10:56competitor ended up killing that
384. 10:59business
385. 11:00because it wasn't [ __ ] profitable.
386. 11:03And so I I was the market leader,
387. 11:05and someone came in to undercut me, and
388. 11:07then I said, "Oh, I'll copy the moron."
389. 11:12>> It's easy to let happen.
390. 11:13>> Yes. And so, don't lose 50 million
391. 11:15dollars.
392. 11:17Let him Let him figure that out for
393. 11:19himself.
394. 11:19>> [laughter]
395. 11:20>> You just focus on the customer, and
396. 11:21you'll win.
397. 11:22>> Yeah.
398. 11:23Good answer.
399. 11:23>> Appreciate you.
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