In short
The Game with Alex Hormozi - Episode 909: How to Know If Your Business Idea Will Work
Episode Summary In this Q&A episode of "The Game," host Alex Hormozi addresses pressing questions from entrepreneurs regarding product validation, decision-making frameworks, pricing strategies, and scaling businesses without overextending resources. With his extensive experience in building wealth, Hormozi shares insights into common pitfalls entrepreneurs face and strategies for overcoming them.
Key Themes and Discussions
- Importance of Prioritization
- Resource Management: Entrepreneurs must effectively prioritize limited resources (time, money, energy) against infinite opportunities.
- Action Plan: A blank page for action steps is vital; it should focus on the three most impactful actions to take after the session.
- Common Strategic Problems
Hormozi identifies seven recurring issues that hinder business growth:
- Target Audience Confusion: Serving too many customer avatars can dilute focus and hinder growth.
- Data Management: High-quality data is essential for quick and accurate decision-making.
- Focus and Compound Growth: The need to shift from exploration (saying yes to many opportunities) to exploitation (maximizing current opportunities).
- Overexpansion Risks: Rapid growth without the necessary skills or support can lead to operational strain.
- Compensation Issues: Misalignment in compensation can limit talent and scalability.
- Underpricing: Offering services/products below market value can stifle profitability.
- Single Product Dependency: Relying on one product can hinder revenue diversification and growth.
- Dealing with Growth Challenges
- Identifying Market Fit: Business owners often struggle with finding the right market fit for their products/services.
- Building a Scalable Sales Process: Designing a repeatable sales process can minimize reliance on individual sales talent and facilitate growth.
- Leveraging Talent: Hormozi emphasizes the need to hire high-performing individuals, arguing that investing in superior talent often leads to greater returns.
- Real-World Examples
- Hormozi shares anecdotes of businesses struggling with common challenges, illustrating the necessity of proper focus, data management, and compensation strategies.
- He discusses instances of entrepreneurs needing to pivot from product-based offerings to service-based models, stressing the importance of being adaptable in a dynamic market environment.
- Entrepreneurial Mindset
- Hormozi encourages a growth mindset, highlighting that business success often revolves around continuous learning and improvement rather than fixed strategies.
- The importance of understanding the long-term implications of business decisions is reiterated, showcasing the balance between ambition and practical execution.
Key Takeaways
- Prioritize Effectively: Focus on the most impactful actions instead of spreading efforts thin across numerous tasks.
- Understand Your Market: Clearly define your target audience and ensure that your product or service aligns with their needs.
- Invest in Talent: Hiring exceptional talent can make a significant difference in business performance and growth.
- Data Matters: High-quality data leads to informed decision-making, which is crucial for rapid business scaling.
- Be Adaptable: The ability to pivot and adjust strategies based on market feedback is vital for sustained success.
Conclusion In this episode, Alex Hormozi shares profound insights into the entrepreneurial journey, focusing on strategic prioritization, understanding market dynamics, and the importance of a strong team. By addressing common pitfalls and emphasizing the need for adaptability, Hormozi equips listeners with actionable strategies to enhance their business success.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:01You just want to find people who are absolutely unreal and the litmus test that I have is that you feel this like desperation in your core when you talk to them. You're like, I have to have this person. It's not like, oh, I have this role. I guess this is the least bad of the 10 people I've talked to. I would encourage you if you're ever in that situation, this is the least bad. Just don't, just keep, keep looking.
0:24Very tactical, right? Yes. You got tactical questions. Okay, good. That was, uh, that was the hope and the goal of how we structure it. And what's interesting is that the point that I think is most valuable, because you guys are going to, you know, go home and you'll leave here and you'll probably open up a blank document or turn a blank page in your notes, whatever you do to take notes. And you'll have your pages and pages of stuff that you got from here. But the other blank document is going to be, what am I actually going to do? And I just want to make sure that that page has the right three things on it.
0:59Because fundamentally, you're not going to be able to do all the things that you learn here as much as you might want to, right and so fundamentally the strategy of a business owner is prioritization right that's that's what it means and so we have to take limited resources which is time money energy the team that you have against unlimited opportunities or things you could deploy it towards and the people who move fastest in their businesses aren't the ones who necessarily do the most the ones who get the most for the effort they do and i think that that that process of thinking this helped us move faster and what's interesting about that is there's so much leverage on knowledge like there's so much leverage on knowledge like if you go back in time and help your young self out how much faster could you get to reach like it's almost laughable and the thing is is that you probably felt like you worked hard then and you probably feel like you work hard now and there's a version of you that knows five years from now how much better you could be doing and that's the value of knowing the right next move.
1:58So with that being said, I have the distinct pleasure of answering questions a lot. And even within the portfolio, there's basically seven key problems that emerge consistently across businesses. And these are strategic problems. And the reason I think they're so nefarious or they keep people stuck for sometimes ever is that they are apparent conflicts, meaning they are rocking a hard play scenarios where both paths seem painful. And so then people just stay stuck because they don't know which one to choose. And so I have developed this little moniker for this as my way of remembering it. And I'll explain each of them briefly.
2:40And then as we come up, I'll be like, which one is it? So the first is serving too many avatars or being unclear on the person that you're selling to. So it's very common for in the early part of your career, you accept, you know, you have person gets on the phone, they have credit card and pulse, or at least one of those things is required to complete the sale. And you say, sure, you have money, and I will take it in exchange for whatever you want. At some point, though, you realize that that isn't really a tenable way to run the business. And so the problem is the rock and hard play scenario is, well, I can stop saying yes to these people, but then that would mean that my short term sales would go down.
3:15But if I don't stop saying yes to these people, I will never grow this business because I have too many onesie twosies that I have to deliver on. So what do I do? Rock and hard play scenario. The next one is data, right? And so we touched on this briefly yesterday, but the speed of the business is going to be based on the speed of the quality of the data, right? If you have higher quality data, if you literally knew what all the data in your business was at the snap of fingers, you'd be able to make a lot of decisions really quickly. And you'd be everyone here has probably had some decisions where you're kind of like, you weren't super sure on.
3:48And because you weren't super sure on it, you kind of like slow dragged your feet. And the result of that is not only did you not execute it well, it also took forever. Whereas when you're like, oh, this is crystal clear. I know we need to do. You can get something done in a weekend. And the thing is, is that if you have that level of certainty, then that weekend can happen every two days. And you can take what takes some businesses a year and do it in three or four weeks. Now, the difficulty thing here is I need this data to make this decision, but it's going to cost me effort and time to get this data.
4:16And if I put that effort and time into getting this data, I'm going to lose money. The next one, this is what I call the bestseller of this list is focus, right? It's the one that I probably talk about most often. And I think it's because it's probably, at least for me, it's been the one that I've struggled the most with. And it's also the most prevalent. Because the thing is, is that the more able you become, the more opportunities you can see. And so in the beginning, you struggle to say, yes because you're so afraid, right? That's everyone starts. Everyone's afraid to say yes. What if I fail, et cetera, et cetera.
4:48You're here. So you've already gotten past that. And so you got rewarded for saying yes in the beginning. And so then it just becomes this muscle that you flex more and more and more. But in the beginning, you have to say lots of yeses or start saying yes, because you're in kind of exploration mode. You're trying to figure it out. Once you start to get good though, you have to flip that and it becomes exploitation mode, which is how to get as much as I possibly can to the thing that I currently have. And so to be really crude here, so I apologize to the women in the room, like it only works one way, but you can understand it.
5:16Like you can't sleep with every woman. It's not going to happen. And it just, it doesn't work. And so you have to choose. Like if you take the hypothetical extreme, you can't do it all. And so then you just work your way backwards until eventually you're like, okay, if I just did one thing for 45 years, do I think I'd win? Probably. No, but being real, like my, the guy who lives, like he's my neighbor, is the guy who owns Panda Express, Andrew Churn. He has sold chicken in a brick and mortar establishment for 45 years. Last year, he took home 935 million in personal income, and he offset all of that against his real estate, tax-free.
5:55He did 3.7 billion top line in sales, 27 % net margins in the business, owns the whole thing, 45 years. The thing is, a lot of the conversations that we'll go over, people obsess about, am I in the right vehicle? But the thing that is by far the bigger predictor is how long you've been in the vehicle and that you've improved. And so you can't just be in the same vehicle for the whole time. Obviously, you could just have one restaurant for three, five years too. But the idea is that you get better, right? But the focus is what allows the compounding to occur. And you never unlock the compounding when you're continuing to switch tasks and switch priorities.
6:31And I'll tell you that one of the big reasons that I think many of you are struggling with this focus is because your mission is only to make more money. Because the thing is, is if making more money is the goal, you can't optimize anything against that because lots of things make money. It doesn't mean it's the right call. Overexpansion. Okay. So this is the classic. And what's really interesting about overexpansion is that it's actually shorthand for under-talented. And that's a combination of you just being real and or your team. And so when you have your one location that's working, then you say, okay, I'm going to open up my second location.
7:07A lot of times people get ahead of their skis. They only have one location that's good. I'm not in the business anymore. I'm on the business, but they're still working 16 hours a day and only have one location. So when you leave and start having to work 16 hours a day in the other location, you can't do 32 hours. So what you're doing over here, it's funny because it's like, oh, I'm not on the floor doing whatever it is that you do at your shop. And so you think, oh, because I'm not fixing cars, because I'm not cracking backs, because I'm not doing dental work. I own the business. It's like, no, you're CEO.
7:33You don't really own it yet. You still are employed by the business. And the business needs, like every one of these businesses needs a CEO. And if it's going to be you and both, then both are going to suffer. And so then what happens is you open the second location and then your profit over here, which was your cash cow goes down. And this one doesn't really get as high as the first one did because you were there for five years before you did your second one. And now you're here and now you have twice the liability, but you're actually making the same money or less. And you're like, how the hell did this happen?
7:58But you're like, you know what the solution is? I should open a third. Because then this is clearly the model. But then you open the third and then it is this. Right? And I know that some of you are in that boat right now. And the thing is, there's nothing wrong with expanding. It's just expanding too fast relative to the IQ per square foot. Seriously, you just dilute it. So you have to increase IQ in order to increase the square footage to maintain the ratio. The next one is compensation. One of the most common mistakes that I would say business owners under 10 million a year make is that you're wildly miscompensating people all over the business.
8:30One, there's huge savings to accrue. But also sometimes you are the thing that's limiting your expansion is that you're under talented and you're under talented because you don't pay well enough. And so it's like if I have like another HVAC company comes to me and says, I can't find technicians. And I'm like, well, how much do you pay? And they're like, we pay market. And I'm like, no shit, go above the market. But that's more than we pay everybody else. And you're still profitable. But we wouldn't be profitable if we raise your prices. But I can't because all lose customers. You just told me that you can't even take the business that you've got coming in the door.
8:59Pick. So compensation. I'll give you an example. I had a physical therapy studio that came and a lady said, we're super booked, but we're not really profitable, but we're to full capacity. Everyone loves us. I was like, okay, huh? She's like, well, I give 50 % of all revenue to my therapists. I was like, okay, do they like go market and sell? And you basically just like give them the, just the area to crack backs or whatever it is that you do. He's like, oh no, we do the marketing and the sales and we do all the admin and everything. They just show up for the times that they crack backs. I was like, yeah, 50 % of revenue.
9:39Now you're working on 50. Just now you have rent, you've got payroll for everything else. You've got marketing. It's like, yeah, no shit. You don't make any money. Right. And so the issue there was that that was a structural issue. She could not out earn that because even if she raised her prices, the compensation will go with it. And so compensating one, either too low or too high or incorrectly, all three of those scenarios. And the reason it's a rock and hard place is that, well, what if I change my comp? I'll lose all my people. But if I don't change my comp, I'll lose my business. Rock and hard place.
10:09The next is underpriced. So that's just the classic, actually the example I just gave, like we're at full capacity and we're not making money. and let's assume that we weren't giving away 50 % top line to, you know, something that was fixed. It's like, okay, raise the price. But if I raise my price, I'll lose my customers. But if you don't raise your price, you won't make money, which you already aren't making. Right. So being underpriced is one of them. And then finally a single product. So I say these as like, these are some of the biggest common themes that I see. Single product being a guy who had a YouTube channel who sold how to speak English.
10:44That was his niche or whatever for Latin Americans. And he had done basically his sales were flat, but his margins were shrinking. And the main reason, and he was selling, I think like 800 customers a month digitally. So between$20 and$800 of like language products. And he came and said, Hey, I want to start a digital marketing agency because it'll be less competitive. I fought this guy for an hour. I'm not even shitting you. I fought him for an hour to try and nail through his head. And he said this and it was wild to me because I was like, what if we just called those customers and sold them something else?
11:22He's like, no one's going to pay more than$800 for language services. And I was like, who here would pay more when you live in Latin America to be able to have access to the US job market? Right. Of course you fucking would. Of course you would. And so he just had this belief that literally he was like, instead of just like challenging this belief, I believe this so hardcore that I'm willing to break this business that makes me a million dollars a year from my organic YouTube channel, and then try and get into what I believe is less competitive. And as silly as what that example sounds like, the amount of business owners that I see here who are also dealing with this, which is, it's a lot.
11:59And the reason that that sounded silly is because maybe some of you have enough experience with social media marketing agencies to know that there's a dime a dozen of those. And so it's incredibly competitive because the bar to enter is zero. It's an internet connection and an iPhone. Right. And so anyways, I say all that to say, when you have this idea of like, Oh, I want to try this other thing. You also sound like that guy. You just don't know what you don't know yet because no business is easy. You just don't know enough about it to know what's hard about it. And like, I would say that last year was the first year.
12:31And this is a continuing to this year and my whole career where I didn't experience FOMO. And I only realized it when I was like, huh, I haven't had FOMO. This is weird. What's that like? And I remember because a buddy of mine did 50 million in personal income last quarter, it was Q4, so two quarters ago, just trading from his laptop, trading crypto shit. And he told me, and I honestly was just like, dude, good for you, man. Look, I had zero, old me would have been like, dude, how do I get on this? Like, what is he doing? I'm like, oh, turn on the computer because this is how you turn computers on.
13:04And I was like, okay, so it's a candlestick monitor. Like, okay, so Ethereum is back. Like, you know, like trying to figure this out. Like, I have no idea, right? That's not my hat. And to the same degree, he can't do what I do. And so it's just like, basically, the longer you play the game, the narrower you're going to get because you're going to get better what you do. And the amount of time it took you to get where you're at now, it'll take that long to do something else. You just don't know enough about it. And that's why it looks so good. Now, if somebody were to come to you and say, hey, you're making money.
13:30For everybody who is making money, if somebody came to you and said, hey, you make money doing your thing, I should do that. Many of you'd be like, no, you don't want to do this. You think you want to do this. You don't want to do this, right? Because you know where all the bodies are buried. And the thing is, is that there are always bodies and they are always buried. And then they reach out of the ground and then just drag your soul with them. And you can only find out once you lie in that grave. We're really making this visual. But yeah, with that being said, these are the big seven. Some of you guys are experiencing one or more of these multiple weight class champions of growth sins.
14:03But with that, let's kick off the Q &A and rock and roll. Now, I know you're doing 2.4 million. You saw outcomes to athletes. And the biggest problem that you think is stopping your growth, you'd like to get the 3 million, is that you feel like you need to reposition your offer in some way. Shoot. Yeah, nailed it, man. So we have three revenue streams inside of our health clubs, our fitness centers right so we run ads for group that's our highest margin um but then if a deconditioned person walks in we can get them into one-on-one then get them back into the group setting and then when someone does 12 months 13 months what square footage uh six eight thousand square foot we have four locations okay um so then when people inevitably want to kind of take breaks or large group or semis uh so we do large we're in no man's land so we're like 16 to 20 Yeah.
14:50So, um, so yeah, so that's a book reference. So basically what's happening though, is that because we have the 24 seven open gym, which is supposed to be just a way to keep people engaged. And once they get one program again, they re-engage with our coaches. Our sales team is kind of using that as lowest hanging fruits. The downside I mentioned yesterday. Right. Correct. And so the challenge is twofold, right? So the first one is like, you know, how do we market in a way that we get people to understand it's an ecosystem. We're not an F45. And all those models are good. They're never going to understand that it's an ecosystem.
15:23Okay, so very good. Easy enough. And then the second, how do I get them to know everything about me so they can understand the nuance of how we built this business model? They are not. They're going to be like, oh, it's a six-week weight loss thing. Sounds good. Yeah. And then you explain that when they come in. Did you ask me how I explain that? No, I'm saying you market the thing they want. And then when they come in, you give them the thing that they need. Don't try and explain the thing that they need before you give them the thing they want. Got it. Okay. Very good. All right. Simple enough.
15:52And then I do have a follow-up real quick too, if I can push my luck here a little bit. So when it comes to leveraging my personal story, right? So when it comes to transformation stuff, I was indicted at 22 years old, did 63 months in federal prison. So when we talk about like transformation, like I'm literally said, the city that saw me at my worst is going to see me at my best. How much of that should I leverage? Because I've never really led with that. but I know that now that I'm in the, I'm literally in the inspiration game. I'm literally in the lead gen and the sales game. And I feel like there could be some stickiness to it.
16:22What do you want to do? I just want to - Do you want to sell the business? Do you want to own it long-term? Like, what do you want to do? Man, that varies day to day. I mean, I want to sell it, man. Yeah, I mean, eventually I want to build something that's got value and then I exit. Well then, I mean, you already have a business that doesn't require a personal brand. I wouldn't tack one on. Very good. Fair enough. Easy enough. Fantastic. Thank you, sir. Hey, Alex. Thanks for everything you've done and layla as well obviously um my name is piers we um do 1.4 million revenue and we'd like to be at 5 million in three years um we actually coach online golf so it's online programs you sell extra golf to whom to to consumers so to the average golfer okay average people normal people all right normal people normal people so we're looking to um so what's stopping us from doing that we had some ideas before we got here we have some new ideas now that we are here data huge problem for us focus is an issue the way that we make our money is through the online subscription which is which is great it's our passion it's what we like doing but we're doing a bad job of that at the moment we also have which is nice because of our social media presence so we've got brands that are willing to spend quite a lot of money with us so that part of the business does really well that's kind of holding the business the media side is holding up the business at the moment for sure.
17:40Okay. And then, but so we can generate lots of traffic and get lots of people, but we're not very good at... Do you have multiple personalities? Not you, but multiple faces inside the business that do this? So there's two of us. There's two main ones. Okay. Got it. Two main coaches, myself and Andy who's over there. Okay. I heard. Okay. So why don't you pick one of the businesses? So you say you're passionate about the membership thing? Yes. I think that the thing for us is what we want to be able to do is we want to be able to do this business for a long time. but then potentially sell us at the end.
18:11So it's kind of like, this is the thing that we love doing. We love coaching. We love changing lives. The media business is for sure more sellable than the other thing. Mm-hmm. The only, because I'll explain why. So the thing that's going to matter, like the three big things, like if I had to like, if I had to simplify the long list that you guys have in front of you, well, it is a pretty simplified list, but like you have really good gross margins, it's growing fast, and you have revenue stick, right? If all three of those things are true, then obviously you have key man risk and things like that, that would go with the business.
18:38but like if you had those three things, the business itself, the model is very strong. I can promise you that your media people, the people who are buying ad space for you, will be stickier than the consumers who are buying golf community stuff. And the margins on media are virtually 100%. Now, the digital community is also virtually 100%. They're kind of a wash there, a gross margin. And then you just have growth rate. Now one of the beautiful things that I love the most about media business is very unique to media Which is that the way that you advertise is also the way you deliver So you just have to do one thing which is get attention And then you sell the attention then you just get more attention Then people find out about your business because you got attention and then you get more attention and so If you're passionate about the community thing, which is making content for golfers, right?
19:27Why don't you just make more of that content and just make it free and let you get more attention Real quick guys. I have a special special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our Scaling Roadmap. It's breaking scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you've got customer success, you've got IT, you've got recruiting, you've got HR, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level.
20:00It's all free and you can get it personalized to you. So it's about 30-ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com forward slash roadmap, R-O-A-D map, roadmap. so that's what so that's what we do so we have the obviously for the yeah for all our brands that we cover it's just literally us doing the coaching online but then it's just the higher level of coaching i suppose oh just like higher ticket yeah and that's what's making you less money yeah how well we again data and focus is our main things that we're looking at yeah well how many people work for you 10 jesus seems so odd it's like 1.4 million got 10 employees it's a little bit high right are there a lot of vas so what happened was after covid like 2021 22 we actually grew to 2.6 okay but then as a result of growing the team scaling the team and thinking that we were picking the right people and we didn't really know how to do it i think we have struggled since so how'd you go from 2.6 to 1.4 and that's mainly big well the brand revenue has gone up and the subscription revenue has dropped why can't we just do more of this brand revenue you're like i've got this thing that i'm not trying to grow that's growing that's super valuable and it's a high gross margin there's the other thing that's really hard that i haven't done really well and it's shrinking how do i grow that one yeah you know what i mean yeah yeah and i think this is probably like a natural like we know that the best in our mind the best product is the membership because that's where they really get the best of us and we feel like that's what's going to make it take it to 50 million whereas the brand stuff is going to be holding us back think about the amount of like how many 50 million dollar golf coaching businesses do you know of no one right how many media businesses i'll tell you more than that yeah yeah and golf is an awesome niche huge spenders it's one of the few things men spend money on yeah no seriously it's making more money cars watches below the belt above the belt right and then and then you've got like golf and shooting and then like uh uh pepper stuff that's guys that's it but we earn a disproportionate amount of money yeah and so like you are one of the outlets that men spend money on a consumer in a big way yeah helpful thank you to make you feel better just for everybody i'm not really talking to you i'm talking through everybody else so there's this great you just saying that i say all the time and i really like it which is your nose is an inch above your mouth but it takes somebody else to tell you your breath smells bad and so sometime one of the biggest benefits that we have with the portfolio companies like all the the portfolio companies like they're good ceos like they're smart dudes and do debts and like they're intelligent people it's just like that's what outside eyes can do it's just like oh really growing thing that has high margins and has a high enterprise value thing that we're struggling with and not paying attention to that we think is more valuable and isn't and going down and has and is less scalable yeah yeah thank you yeah thanks uh my name is brian hopkins uh so we sell micro development housing to investors micro development okay yeah so infill housing um we do 46 million in revenue.
23:14Amazing. We'd like to get to 500 million. Cool. Awesome. And our bottleneck is scaling capital and our team structure. So they rely heavily on myself and my business partner. To do the fundraising? No, to do everything, basically. Yes. Fundraising is what we'd like to focus on. Heard. Okay. And so... So the question is, how do we get Sharon to join us as a GP in our fund? Yeah. Sharon's sneaking. Yeah. But our question would be, is how do we... attract high net worth individuals without using our personal network just talk to me i mean you you have a you have a number of paths right one is somebody goes go to somebody already has the has all those people right option one that's the affiliate model you could run paid ads and say hey this is my experience my background if you're an accredited investor check this out um or you could be making content which i don't know if you are doing that on a regular basis you could be making content um or you could do the op-on method but like those are fun like those are the options right there's only there's only so many ways to get like have people find out about your stuff.
24:15I mean, that's it. Like going to trade shows, I still kind of put into like, you pay somebody else to gain access to their audience. Same, same, same idea. But those are the, those are the different paths. We have a really good kind of like playbook for, for, because what you, what you're looking for is kind of like high, it works the same as an enterprise sale, even though it's a, it feels different or like it, it quacks different. It's actually still the same process. And I think that if I had to like, if I had no money, no everything, and I had to start now and I was switching places with you, I would probably hit the conference event stuff.
24:47Because that's where it's just super high leverage. You typically want to be face-to-face with investors. I mean, you don't want to, but you can. And it's just like the speed to trust is so much faster. Yeah, we have a whole playbook around that, but you should, more than I could share right now in terms of time for everybody else. But I think if I had to pick one of those paths, that's probably the one I would start with. Unless you had some like background in like media buying or some other yeah that's what i do yeah my name is ashley brock and i sell advertising training to business owners so all paid ads we'll do five or six million i'm optimistic so so we're going to go with six because it sounds better like five or six okay okay yep i would like to be at 50 million obviously not this year what's stopping me is my capacity for sure and so my question is after hearing today that you spend 80 of your time on content.
25:35I'm trying to figure out what are the only things that I should do for me. And then what should I delegate? I don't have anybody that I pay more than a hundred thousand. So that's one thing I feel like I'm missing. What are your margins? My EBITDA. I know. Yeah, sure. At 2.5. On five. That's great. That's amazing. Yeah. It's super good. I was excited yesterday. That was the best reaction. So here's, so the, so you're, I want to, I want to answer your question with a perspective shift. So you're now getting to the point where you have enough money, where you have to start thinking about return on capital, right?
26:12Return on invested capital within a business. And so if you have two and a half million dollars, right? You can think of that as like, okay, well, if I take that out of the business, which you would, because I'm sure it's an LLC or whatever, right? So it's like, okay, so I've got, call it 1.5 million after taxes that I can put in my pocket, which there's nothing wrong with that. I'm a big fan of putting money into pockets. The other way of thinking about it though is like, okay, well, what if I were to take 200 ,000 of that. Um, and I take my taxable from 2.5 to 2.3 and then that$200 ,000 person, it makes me an extra million.
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26:43And so that's where I think the, I still believe that the biggest arbitrage opportunities that exist right now in business are still in talent. And I can tell you right now, I'll tell you a story cause I think it'll, it'll drive it home and I'm talking through you to everybody else. So the moment, like my, the best talent, one of my, one of my favorite people on earth, see here, Sean here, one of my favorite people on earth said this to me, and I've always remembered it since he said, he said, your best talent is always in the future. So right now, think about the people who used to work for you, like five years ago.
27:16Can you think about that team right now? Could that team run your business right now? They would die, right? And you would die too. And so the thing is, is that there's five years ahead of you looking back today on your team who feels the exact same way. And so my goal is how do we shrink that gap as fast as we possibly can so that we can pay down your talent debt? Because right now that's what your debt is. So basically you're choosing to make more money, but you're paying by making more money, you're increasing your debt for humans. And so businesses can incur lots of different types of debt.
27:51And whenever you start a business, you always incur debt. The question is which type of debt you want to incur. You can incur financial debt, you borrow money, then you start the business. But maybe if you borrow money, you can hire people that you otherwise couldn't hire. And so you don't incur as much talent debt or as much management debt. You might incur technical debt. Okay. I don't have a CRM. I don't have data. Some of the constraints we talked about earlier, right? Like that might be some of the debt. And so there's different types of debt that you can incur. You have talent debt. And so the goal would be, especially because you're in a service-based business, your business will be capped for sure by the culture that you keep, which is going to be on you.
28:23And the people that proliferate that culture is the people you attract. And so if you want to grow this business, which is all based on service, it's all based on people. And so you have to bring people that you're going to be like, if you're not paying more than a hundred thousand dollars a year, it's a hundred percent you who's making this happen, which is kudos to you for being skilled on the flip side, though, it doesn't have to be that way. And you would be amazed at the talent that you can get when you crack, like you might want to just jump to 250 ,000 a year. And you'll be like, Oh my God, these people are so much better.
28:51And with scary is when you pay someone 500 ,000 a year, you're like, Oh my God, this is a totally different level. So you pay someone a million dollars a year. And like, Holy shit. I didn't know people could, you've made, they, they made people like this. Right. And then eventually you, you get people, you know, like Sharon and you're like, he's, he's just, he's just better than I am, you know, and maybe someday I'll, I'll convince Sharon. Right. And so the point is, it's like, you just want to find people who are absolutely unreal. And the litmus test that I have is that you feel this like desperation in your core.
29:18When you talk to them, you're like, I have to have this person. It's not like, oh, I have this role. This person seems like a Paulson, not a moron. I guess this is the least bad of the 10 people I've talked to. I would encourage you if you're ever in that situation, this is the least bad. Just don't. Just keep looking. We will keep a role open for weeks or months if we do not find the person. And so we are always actively recruiting and we have a lot of flow. And so you guys got to meet the team this morning. She had a little bit more context. Smart people, very good at what they do. But in order to do that, those people do not cost$250 ,000 a year.
29:51They're significantly more than that. Yeah. I've told myself up until now that I'm saving money by paying less, and you're right. It's like costing so much more. Yeah. You are always paying. It's just what you're paying. You pay with the thing you care the least about. So good. Thank you. Yeah, you do. Andrew LeBaron, I convert motels, hotels to apartments, extended stays, crosses Sunbelt states, on track for$14 million revenue this year. Smalley Vida, 2.1 net, real estate, high OPEX, would like to be at around a 30 million. Do you have LPs or do you fund it all? Yeah, we have a Reg D 5060 fund.
30:28We partnered with a key man who's now kind of key man risk. Good friend of mine, Richard Wilson of Family Office Club. What I want to do next is create a hotel brand. Okay. Specifically on the adaptive reuse side. Okay. Because you have all these empty garbage crappy hotels, motels, and they don't want to pay the pips that Marriott, Hyatt, Radisson want them to pay. So I can come in and say, look, I'll take over. I'll take care of all your operations. Don't worry. I figured all that out. I'm on my umpteenth property. Here's what I just need you to do. The issue with that is I'm battling a lot of other buyers and it's hard to get in.
31:08It's hard to be the first guy that sees the deal, right? The gatekeeper of these properties are brokers, agents. so that's what's stopping me i i believe i know what i need to do but i i need a little bit more validation uh get over my analysis paralysis but i believe i need to be that thought leader in this space and if i my thought is if i am the thought leader in this space they'll kind of come to me you know before the key man was raising all the capital well now i'm raising all the capital okay when you say they'll come to me who uh those who have hotels motels that want to convert them into apartments where I can buy equity.
31:44So not the investor side, but the deal side. Yeah. I need pipeline. Correct. I need a pipeline. Pipeline problems all day long for me. So I feel if I have a channel or some sort of content distribution and it's a blue ocean strategy. In fact, there's only one other guy in here that's actually doing something similar to me. I don't know where he's at, but I just spoke to him. There he is. You're on his podcast. So that's what I believe. And I kind of want that validation. Well, I'll zoom out for a second before giving the immediate like, cool, which is the problem that we're solving is just deal flow.
32:21Right. And so kind of like I was saying earlier, like thought leadership is a path. It doesn't have to be the path. If it's the path that you want, cool. But when I think about this, I think about basically what is the highest reward, lowest risk way of accomplishing whatever the problem is. Right. And so for you, or if I'm picking for anybody. It's like, what is your existing skillset? And what has the highest overlap with that skillset so that at the highest likelihood it's going to work? So if you were like, you know what, I've done face-to-face forever. That's why it's like, oh, you know what, let's do the conference strategy as a good strategy for the fundraising.
32:54If you're like, I understand media. I like social media. I want this like deep inside my heart. Then I'd be like, well, I'm not going to stop anyways. We're going to do that anyways. So go do the quote thought leadership and make content. If Ashley was here and she was like, you know what, I know how to run ads for you, then like, if that was your background, I'd be like, well, let's just run the paid site. So like, you could absolutely run an ad that just says, Hey, if you're a motel owner and you're looking to sell, um, I'd love to talk to you and you can just generate leads that way. It works fine.
33:21Like I was looking at, I wanted to do, um, a deal in the payment processing space, like a year and plus ago, maybe some of you guys saw this, but like, uh, I ran ads just for like, Hey, payment processors doing between 30 and 300 million a year. Like hit me up if you're like interested or whatever. And I think we have 13 qualified companies for$6 ,000 in spend, like on the phone, which is absurd, right? If you think about it from a deal flow perspective. And so I only say that this is going to be worth explaining. We have our big prize and let's assume that it's money for the sake of this conversation.
33:52There's going to be this way, and then there's going to be this way, and then there's going to be this way. all of them get up the mountain and so i think where the quote analysis paralysis kicks in is that you're like which one is best and i call it the fallacy of the perfect pick is that you think that there's a perfect pick and there just isn't one there's trade-offs on all of them like you're going to be in the where you get in trouble is where you well there's two big places you get in trouble one is here at the base of the mountain trying to figure out which one to do and then you spend a year there when a year on any of them on the low side he could have been here on a year here versus a year here.
34:32You could have been up the mountain further than you are here just because you waited. And the thing is, is that the longer you wait, at some point you would have literally got to the top of the mountain on any of them. But the waiting was the cost. The second part where you're in trouble is here or here, where you're like, you know what, this other path, you know, kind of looks a little bit different than this one. And it looks like that one also goes up the mountain and that one looks less steep. So then you go over here, but you're like, shit, this one's less steep, but it's slower. Or you're on the other one that's lower and you're like, but this one's more steep.
34:59And then you get there, you're like, shit, this is way steeper. And so there's always trade-offs that happen in any of these paths. But if you want to be a thought leader, just recognize that it's going to take time. I would say, give yourself 18 months before you determine whether or not this is a good idea. And you have to commit to that. When I started YouTube, the vendor that I had, he made a video about it. The first call I had, I said, I'll do this for 10 years. And if after 10 years it's not working, I'll stop. And he was like, in my entire history, I have never heard anyone say that. He's like, it's all like, how do I get leads in 90 days?
35:33And so the fact that you're in a business that is capital aggregation and you're like, you probably do have a longer time horizon anyways, just on the nature of the business. But I would encourage you to, if you are going to do the quote thought leadership thing, stick to what you know, don't try and be the next Gary Vee or the next me or the next whatever, because like, you're not going to beat me at being me, but you will beat me at being you. And so I would just like only talk about the things that you have the track record for. And that will, that will necessarily narrow the content that you talk about.
36:00But the thing is, is that social media, you've probably heard this has shifted to probably interest-based media now with interest graphs with the algorithm. And so if you want those types of leads, you have to make that type of content. And the thing is, is the algorithms are getting so good. Like my, if you look at my discover page, it's just metal fabricators and I was going to say gym equipment. So it's gym equipment too. Uh, and comedy. Those are like, that's what I consume. I consume gym shit, gym equipment, and I consume comedy. That's my whole thing. And the thing is, is that metal fabricators are notoriously bad advertisers.
36:31And so on my discover page are like 13 like videos of metal fab guys being like, look at this cable accessory I just welded. I'm like, this is cool. It gets served to me because I'm that audience and I'm a great lead to have for that stuff. But like, just don't be afraid. If you see, you have like a hundred views, I see tons of videos have 100 views, 200 views, 500 views, and I'm exactly who they want watching. And so if that guy, that metal fab shop guy was like, you know what? You know, six things about marriage. I'm like, I don't fucking care. Like, why do I care? Why am I listening to this guy?
37:01Right? I just want to buy metal stuff. So just show me the metal stuff. And so I would just say like, if you are going to do the motel thought leadership stuff, stick to that. Awesome. Thank you. Yeah. My name is Sherry Saltifamaggio and I am the CEO for St. Charles Surgical Hospital and the Center for restorative breast surgery, which is the professional side of the practice, and we have a physician in a hospital licensed 39 beds. What we do is breast reconstruction for cancer patients, and we also do genetic testing, and we do prophylactic. 50 to 60 percent of our patients come from out of state, not the country, because we're the only ones in the United States that can provide every type of reconstruction there is.
37:47So our revenue right now is about$57 million. Our goal is to grow at least 20 % of new patients per month. Okay. Per month? On first stages and then on second stages. There's two parts to the procedure. We meet the goal. We meet the goal all the time for second stages. So you want to 4X this year? I just want to make sure I understand the question here. So you're saying you're growing by 20 % a month or whatever? That's our goal is to go 20 % per month. On the second stages we are, on the first stages, we're basically flat. We're keeping our same number. We want 20 % new patients per month. Okay.
38:34On first stages. Okay. So your second stage is growing. Second stage is we have no problem. We're growing. We're absolutely growing. So can people go directly into the second stage? stage they they have the first stage procedure and then they can have the second stage within within 12 months the second stage reconstruction the second part of the reconstruction where they do the tweaking the liposuction and so forth so it's like kind of plastics aesthetics a little bit well it it's it's all covered by insurance and it is it's not something that women want but they have so of course we we do um the whole nine yards to make them feel good look good as they were before the second stage you have no problem the second stage is we're not having a problem with we're getting those in right away they go straight in from other people who did the first they did well i'll be i'll be honest a lot of second stages to come in from people that will botch from other surgeons got it okay so you have two separate front ends of the business right so i'm going to draw this because i just want to clarify it so you have two front ends of the business you've got in on stage one and then you've got in on stage two and then some people go from stage one to stage two right they go from one so this you've got lots of people you know an unlimited amount of customers who are going straight to there and then this is just flat in terms of growth okay is there a problem with this just growing like crazy and this not growing Well, stage two grows.
40:06We do accommodate everyone. We own a hospital. So if we have to work on the weekends, we keep the hospital rolling. We have seven huge OR rooms. We keep them going constantly. What's the problem that this solves? Why is this a problem? Our problem is that we want the first stages, which is the biggest money generating for our patients. In December of last year, in two weeks, we did 120 second stages in two weeks. The thing that is stopping us right now in the practice is that we're getting patients. we got a hundred and a 700 and something leads in one month we're getting the education calls we're doing that where it becomes a bottleneck is that the insurance company we're only in network with two insurance companies we're out of network so that's where it becomes a problem so do you have a legion issue or do you have an admin back-end issue well we have a back-end issue meaning they come in we educate all that goes fine once they get their benefits and they realize what the out-of-pocket is we try to help them we give them grants and we do financial aids for them but it's still with the insurance companies it's still a lot of money coming out of their pocket the caveat to this is that we did open up an office in the Dallas area one of our physicians moved to Dallas.
41:36What can I help you with? What I need you to help me with is to figure out how I can, on the back end, we're looking, we think we need a closer. How do we close the deal to actually sit with all these patients that I have issues because they have no out-of-network benefits or the money is too much out of pocket? So I'll one-up you. We need, and that is something that we're trying to look at? Is it something, do we hire a salesperson because they can sell? I have an idea. Or do we hire someone who is in healthcare that can also be trained to sell? Couple things. So first off, I'll one-up you, which is that you're thinking about this as a who when I think this is actually, so you've got some things that are people solutions and other things are process solutions, right?
42:30And so you have a process solution. You need a sales motion. So it's the entire thing because if you have a properly designed sales motion, the front desk girl could do it. I know because I designed these for businesses. Like you absolutely can. And so what that'll do is it'll actually make it much more scalable because it'll decrease basically a sales motion. So if we think about a sales process, which we'll talk about in a second, but if you think about a sales process as there's a certain amount of information that a customer needs to understand in order to make a purchasing decision, right?
43:04You can have somebody come in cold and then you have a superstar closer. That's supposed to be a star. There we go. Who can take them all the way cradle to grave and get the money. The less distance they have to travel, the less rare this is, or the more common this is. And so could you, this is kind of like a ways up the mountain thing. Let's say this is your star closer. This is your healthcare worker. And maybe this is your sales process. All of these will get you up the hill. And so the question of like, which one should I do? All of them will probably work. The question is, which one is the highest likelihood of working given your existing skillset?
43:41And so you can design a sales motion. That's option one, if that's within your skillset. Option two is you can hire a closer, assuming you know how to track them and what to look for. Number three is that you could go for the healthcare person and get them, quote, trained up, which then you would try and find somebody who has a kind of a hybrid. They have the personality type of somebody who's a closer, but chose a nurturing career, which doesn't always happen. Killers don't tend to be nurturers. Any of those would work, but I think that long-term for the business, the sales process or sales emotion is the thing that should get fixed first because it'll decrease the need for superstars to make the whole business work.
44:18And so that's how I would approach this from a strategic perspective of solving a problem for the business. And so that comes like the problem that you brought up of like, basically they're getting sticker shock, right? That's the issue. You have a conversion problem. And the thing is, this is so easy to solve. It's like, okay, so what information did he need prior to walking in? How can we pre-frame this or reframe this? And like, is there a way that I can say, hey, some people pay$20 ,000. If you could have your life back, would you be willing to do that if we had financing options? Now, to be clear, insurance will cover some of this.
44:50Maybe it'll cover all of it, but we like to be upfront that this could be how much it is. Even just having that step in the sales process will reframe how they perceive everything else. And if you also know, as people coming in the door, we work with plenty of healthcare companies, is like we can qualify those leads ahead of time before they come in for the information sessions. We'd say, what insurance do you have? All this stuff so that when they come in, we actually already know that Cindy's got Blue Cross Bashir or whatever she's got, right? And so we actually already have everyone pre-approved and we already know their limits.
45:20And so when they're coming in, we can say, hey, on the left side of the room, you guys are fully covered. You guys in the middle, you guys are 50-50. Y 'all are fucked. And so all out of pocket, whatever. And so then you can also start catering the messaging to each of those audiences. And maybe instead of doing one information session, you do three. And one is that way you're like, okay, these are all insurance people. I can talk to these people differently. These people, we have to pre-frame the down payment because they're gonna have to pay some out of pocket. We can run that by collecting information prior to even doing the education.
45:46Again, all of this is just looking at what is required to sell somebody and then putting all of that front loaded so that you only have the people who are the highest likelihood candidates of doing the procedure that are going to be expending, that you're going to expend resources on nurturing. Because otherwise, every single person that you spend resources to educate, who does not buy, you lose money on. And so if we can triage that upfront, we can save all of this extra money that we're wasting on these people. Worst case, you just say, hey, let me just refer you to five different people. And then you can basically kick up an affiliate program with some other people.
46:18I know the wording is different for healthcare, but we'll start referring you patients. And when you refer other people to patients, they tend to refer you patients too. You refer the ones that you can't take care of based on how you bill. And there are other places that can't. And so you can start sending them that way. And then you start getting more type ones in the door from that. So again, this is a sales motion issue. Like the short-term band-aid is we have to find a superstar, but I almost never try and think, oh, the way to solve my business problem is find a unicorn. It's like, sure. Cause everybody here could solve whatever business problem you have by finding a unicorn.
46:47I don't have like, where's my deal flow guy? Actually, we do both of you guys. So it's like, how do I, like, how do I solve that? Oh, just find a unicorn. Done. Just find somebody who just goes and gets all those things. It's like, well, of course we can do that but that but then as soon as that closer walks away you're screwed again right so i'd rather build the process build the motion so that i can have anybody with a pulse still walk through six questions with somebody that we can even have on an ipad that even does the decision making for them and then it says which way would you rather prefer to pay does that make sense that's how to approach it thank you hi alex my name is lucas i have a portfolio company in brazil portfolio company yeah okay 14 invested business okay last year we did 110 million in reais which means like divided by six yeah yeah way to anchor though that's good yeah and multiply by six and then divide it by six you're good okay that's real that's real but i live in reais no you're good do you own uh do you own 100 of all of them no okay we have like a minority that's one one part of my question yeah it's gonna suck okay keep going this year we are aiming for 200 million reais and we i i always thought it was a smart move to have the minority because i have the the founder aligned how do you feel about that now yeah yeah i it's good and bad it's good and bad because we can grow really, really quickly.
48:19But we don't have like different inside leaders for each area like you do, like the sales, the HR and the things like that. Do you think that structure could work for a smaller business, especially when we have like 20 or 30 % of the share? Centralizing services for those companies? No, not service like you do here. You have like the special team to help this. like could you or should you do that yeah no it won't make sense no financially economics and they're not big enough to afford the talent that you need that you like the talent of this team would eat up 100 or more you'd literally be losing money and then you have to really bank on the fact that you can exit these positions but given the fact that those positions are small and super illiquid that would not be a bet i would make okay and mostly of our companies are info products so online courses mentorships and things like that how would you protect this type of business consider AI I think we we're already seeing that the persons are not wanting to learn they want the answer so how would you actually protect this?
49:26I wouldn't you wouldn't protect? I would try and make as much as you can and look for a different vehicle okay thank you so my name is uh taylor harron i run a uh very high volume cold email agency basically we work with a lot of b2b sas companies that have tams over at least 10 million users or bb service businesses that have ltvs over like 50 grand okay right we're good at the meeting pathway and also a plg pathway with sas okay i currently do uh 2.2 million i'm pretty sure i can take it to 10 million within the next like year or so primarily because because i think i know what to do next based off of this weekend even before here a lot of stuff like that so if anything it'll be interesting to just hear you criticize maybe what i think i should do right so we got to 2.2 by the having like ten thousand dollar a month retainers what we're doing is switching to performance models at scale where it's like hey let me understand your ltv we'll do a third of uh we'll charge a fee roughly equal to, well, make sure your CAC is a third.
50:32Okay. Maybe that needs to be different, you know, but that's the idea. Switch it to 5K so it's really easy to close because most people, we tell them 5, it's really easy for them to hop into the funnel and just go, yep, let's try this out. And then we have performance setup on the back end. The advantage is that like systems that will break, I think private data and analytics to be able to actually know what properly to do for each client at that type of scale because some of our clients will send like 10 plus emails a month written with ai one-to-one uh-huh 10 plus or like 10 000 10 million okay yeah i got it per month yeah so this is so interesting so like the fee sounds wildly underpriced like you're saying 10 million emails and you're charging ten thousand dollars that sounds absurdly low yeah i would say um we started to get them in and we'll send a hundred thousand test message market fit the second we find the multiple that or we go cool i know if i target sas founders with this message there's 800 000 of them if i hit that list i'll sign up 601 we can crank it that way right so it's almost to get them in there where we have the is the biggest issue you're running out of lists no okay no because basically it's like let me email your entire team every two months so what else what else do you think is going to be the the biggest problem with this model keeping clients honest potentially on collecting if it's based off of percentages or whatever it may be which is where i also think it's maybe like a systems problem in that i need to have proper integrations to their crms to keep them honest which maybe i need to acquire or like get the right developers or something like that to be able to do that better what stands out yeah so the the problem that i would foresee is the one that you just brought up which is what i was hoping to get to whenever you switch to performance performance is always always the best model on paper not always the best model in practice and it's strongly predicated on the quality of the prospect so if you have enterprise customers who are basically who have obligations and have assets and have shit to lose, they tend to follow and adhere to their contracts.
52:49Smaller, even sometimes medium business owners, less so. And are you US? Yeah. Okay. Yeah. And US contracts mean basically nothing. And so all of these things are kind of like stacked against you. And Alan was a performance basis model. So I like very much understand this business. Now we were able to do it only because I controlled the flow of payments. i got paid and then give them remitted their part so yeah you always want to control the money flow if you do performance or you have to have absolute transparency so like you run the shopify store that's why shopify agencies can do performance a lot of email marketing for shopify they do they do performance percentages uh you know using clavio and whatnot and that that model works great for them because the tracking's clear and most people no one's going to start a second store to try and cut you out.
53:43Brick and mortar, guy walks in, I didn't show. Guy closed for 50 grand. How do you know? I, you, you set up a, unfortunately you set up an incentive system that incentivizes them to cheat you. And if they have to cheat them or cheat you, they will cheat you. So I'm not a huge fan. I would prefer to just factor in basically scaled based on what you know the ROI is roughly to kind of like a North Star metric, which might be, you know, for every million emails, it's this. And you might have to just do that custom up front in terms of like, okay, based on your customer, based on your avatar and your segment, this is the rate.
54:21I'm not the biggest fan of custom pricing, but based on the model that you have, it might make sense, given you probably have fewer customers that are worth more, I'm assuming. What's your churn? probably uh 30 or something like that but also i've changed my offer yeah okay yeah annually i've changed my offer enough to where it's kind of hard to be like what's the actual churn on the current offer but yeah okay why do you why do people leave because you charge nothing well we used to charge 10ks flat to be like here's how many emails we'll send right most of the time when they would leave it wouldn't be because of performance and because their offer when we weren't able to find a good offer message message market fit for them.
55:00So have you been able to separate cohort churn as in like first three months versus three months plus? No. Okay. So I would consider posit having a two, two part structure where you charge a one-time fee that's significantly higher up front, but a zero recurring to do the one thing, which is we're going to find message market fit. After that, you solve that problem. You say, Hey, if you want, you can go send 10 million emails a month with this messaging. And they'll be like, well, we don't know how to do that. And you're like, oh, that's crazy. We do that if you want. And then you can say, let me introduce you out either to your pricing.
55:35And that might be a best of both worlds model. And you will be astonished, by the way, at how much easier it is to sell a one-time thing versus an ongoing thing. Interesting. I wonder - You can double or triple close rates from a$1 ,500 a month membership to a$5 ,000 one-time upfront. You can triple close rates at triple the price. Yeah, for sure. does it does it change your thought process at all when like the like monthly reoccurring we've been able to achieve with these performance models and huge tams like we're billing some clients like 75 or like 100 grand a month okay all of a sudden right you said you did 2 million yeah because the reason i got this idea for the performance is because we got a whale i was like holy shit where'd you get in 100 bucks so we said some customers there's one customer we just closed another upsold them into performance and we start like this month okay so you have one customer who's doing the big big wheel of thing yeah i'm not trying to i'm trying to understand yeah yeah of course okay so so there's one there it looks promising to go back to what i said earlier if you have enterprise customers cool yeah where you feel safe about it because i'm using the data you give me so if you say i'm doing two million dollars a year we're charging ten thousand dollars a month i'm going to back back a napkin and be like okay they got 20-ish customers and if they're paying ten thousand dollars a month and sending 10 million emails it doesn't make any sense but okay let's keep going beyond that it's like okay well if they've got 20 customers at that price point they're probably low they're smds they're not they're not even mid-market this whale is mid-market and if you had said hey we only deal with uh businesses that are doing over 10 million in arr and are venture-backed or you know whatever whatever the the criteria are that i would say i have high confidence that one they can pay and two that they even track then i would have much higher confidence in saying yeah go for it on the performance model but the biggest risk that you're paying down is that they don't pay you.
57:20Yeah. Yeah. Yeah. That makes sense. Basically, if you have high confidence of the payment, then the performance can make a lot of sense. I mean, I would do$0 up front. I don't even care. If I know that I can get paid, I'm all in. I just got to know that I can get paid. Yeah. That's the problem. Yeah, totally agree. That is the biggest hinge in this thing. That's like the biggest risk of going down that path. Yes. You're just status. You solve that, you solve the business. Yep. That is the whole business. You solve that, you solve the business. Yeah, exactly. Own that channel. Yeah. I built a software to solve it.
57:49I get it. Yeah, exactly. That makes a ton of sense. Yeah. Because I was going after small guys, so I had to. Yep. Thank you. Yeah, you bet. Rock and roll.
From the publisher
In this Q&A episode, Alex (@AlexHormozi) answers real questions from entrepreneurs about product validation, decision-making frameworks, pricing strategy, and what it takes to scale without breaking your business.
Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast, you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.
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