Throwback: How I Made My First Million (In Profit) | Ep 858

0:00Welcome back to the game. Today I talk about how I made my first million. and the big difference was focus, honestly. There was a clear transition point in my life where I went from doing business and I've been doing this for years and becoming a, I mean, crazy to say this, but a millionaire. It seems so cringe to say it. I think even saying cringe is cringe now. I think it's like old people stuff now. Anyways, how I made my first million and there were significant changes in my behavior and this podcast zooms in on that exact moment and the shift in behavior and then the resulting outcome. And I think you'll probably be able to take one, two, maybe more things from this episode that could potentially help you out.

0:40I want to talk to you about how I made my first million dollars in profit. Mind you, the reason I'm so big on profit rather than revenue is that at that point, I had already made, you know, I was already making a couple million dollars a year between all the different things that I was doing, but I was taking home basically nothing. Because I was so spread thin, I wasn't paying attention to profit. I was just looking at revenue, trying to beef myself up and feel status rather than thinking about what I was actually taking home. And I told you in a different video how I got in a head-on collision in a DUI at 60 miles an hour on the highway and walked away from it.

1:12And that was kind of the catalyst that ended up changing my life in a lot of ways, mostly because I decided to confront decisions that I'd been putting off and make hard calls that I didn't want to make to force myself to focus on one thing. And so what I want to do in this video is talk to you about the result of that decision and what kind of happened and transpired in the next six to 12 months, which is anything, anything but a Cinderella story. I made the calls. I went all in on gym launch. I basically fire sold my other businesses. And just as a quick tangent on that, like a lot of times, I think the great thing that we have is sitting right in front of us after we let go of the things that are holding us down.

1:49I'm a big believer in the theory of constraint, which is, you know, a system will grow to up to it's basically its bottleneck, right? And then until you relieve that, like systems will grow as long as they're not constrained and so most of us are constrained in many ways and we just do not recognize them which is why we have things called limiting beliefs it is a constraint right and for me in a very real way i had constraints in terms of um all the different things that i was allocating my attention to i had you know i think literally like nine or ten business businesses i'll use quotes here um that i was trying to run at the same time and i was spread so thin that i could barely allocate anything and i was working every hour of the day and i was drinking half a bottle of johnny walker at night so i'd just go to sleep and so So anyways, I got in the head-on collision, I decided to make the next move, which was going all in on gym launch.

2:29And this is the beginning of yet another hard road ahead. And so at this time, for those of you who don't know, I started flying around and doing done-for-you gym launches. And so what that was was basically Layla and I would go and do a gym turnaround. I didn't like to use that word because I didn't think gym owners liked it. I was originally going to call it gym rescue, but no one wants to be rescued, so I called it gym launch and everyone was okay with that name. We would fly out to brick and mortar facilities. We'd sit at the front desk. I would spend my own money on everything. So the offer was pretty simple.

2:58I said, I would fill your gym in 30 days for free. That was the offer. I was like, I'll spend my own money on the ads. I'll spend my own money on the hotels, the food, the everything. And the deal is I just get to keep the upfront cash that I collect. And then everything afterwards that's contract value, you get to keep. It was a pretty compelling offer, right? They didn't have to do anything, right? They would just say yes. And then I would show up. I think I had to ask them for$500 to reserve the date just to make sure that they wouldn't like not be there but I made it a refundable deposit but anyways I would fly out and we would spend all the money in marketing and we would sell on average when Layla and I would go we'd sell on average about 200 people in 21 days so we'd average about 10 sales a day and then we would take you know then we'd fly to the next one this is kind of what we had been doing in 2016 and I was doing this while also having six gyms and two agencies and and and all these other things that were going on and I was spread wildly too thin and that's when I got in the DUI and then decided to end everything except for gym lunch.

3:53We ended up basically I had to shut I had to I sold five of the six gyms I shut down the two agencies and then I had one gym that was left over and I put the money from the sale of those other businesses which is not a lot into kind of the last facility the the partner that I had at that facility ended up feeling like I had been taking distributions somehow from the business, which I hadn't. And then he took what he believed was rightful compensation for him not being involved in that gym anyways, and basically took the rest of the money out of the account. And so I basically was left with nothing.

4:29So I was truly at this, you know, rock bottom moment of just gotten a DUI. I just got rid of all my gyms. I put all the money from those gyms into this last facility. That money got taken. And I then decided to close that one gym down. And then when I did that, I couldn't sell anymore at that facility to generate cash flow because I wanted to close it down. I didn't want to be involved in that gym anymore. And so I basically stomached rent and payroll out of there with no new cash flow coming in. And I watched my bank account basically go from some money to no money. And so at the end of that, we shut the gym down.

5:07I got tons of refunds and things like that that ended up happening afterwards because people are weird when you shut a business down, so heads up. And so we just kept, but the coach that I had at the time was just like, just write the checks, do right by everyone, and you'll be able to, you know, escape this thing unscathed emotionally. And more or less, I did, I was able, like, that was some of the best advice I ever got. Like, I just, I didn't try and pursue anything with the partner. I just wrote the checks for all the customers who, even if we had fulfilled the services. I just wrote the checks.

5:39And I actually didn't. Layla wrote the checks because I was so like destroyed by this entire decision, you know, process. But anyways, I was completely, you know, clean slate at that point. I think all in all, I had$23 ,000 left over at that point. And so after selling six businesses and all this stuff, I had like nothing left. And this was hard for me because I just spent four years building, you know, six facilities and all that stuff. And I almost had nothing to show for it. And that was one of the biggest lessons that I've had is that like you have all these skills and experiences and character traits that you developed to show for it.

6:10Like the entrepreneurial journey is one that improves you, not anything else. And so that's why I'm such a big believer in that stuff, because like I had these things, these assets that I did not value. And what's crazy is that in the next, you know, 30 days or so, we did a hundred something thousand in sales. And so I was like, oh wow, we, uh, we can do this. And so anywho, um, actually I think what ended up happening is I had almost no money and then we did a launch. And then I, after all the cost and everything I think I had twenty something thousand in money for me. The next month Laila and I said we were just focusing purely on this business.

6:44She told all of her friends from high school to quit their jobs, right? So she had six friends from high school that all were doing MLM, Shake Mix stuff and she said hey you know you should quit that and start selling this stuff we can make a hundred bucks a pop instead of you know making five dollars on Shake Mix and they were all like awesome let's do it. In between month between I think was like November-ish going into January, which is when we wanted to slate the six gyms that we were going to launch at the same time, which of course makes sense, right? Why go from one to two when you could go from one to six?

7:11Because it's a brilliant idea of Alex's, right? And so we had one month in between where I was going to go launch a gym with Layla. We were going to do like a hundred grand-ish and then I was going to be able to, that was kind of going to be the restart money, right? So here's what happens next. I get a text from a guy and he's like, hey, my brother lives in the same city as where you're starting your new gym. And I was like, or not starting, doing a launch. I was like, okay. And he's like, yeah, he's a salesman. He really needs a job. He's got a baby and he's got another one on the way and it might be a good fit.

7:41And so anyways, I knew I needed to take a month to kind of put all the resources together to start doing the launches at six at a time and training those sales guys and everything. So I was like, okay, that might work because then I don't have to spend all day selling. And so anyways, I trained him and he crushed it. In the next 30 days, he did, I think 120 ,000 in sales in December, which is like a hard month to do it in and be it was a great first you know launch for somebody who's new which also kind of proved the model to me because i had done it leila had done it but we never had someone else who wasn't like super tied to me doing it obviously leila was more invested than just you know just an employee right at the time and so uh it was awesome so i was like super excited i was like sick this hundred grand is going to be the launch money for the next thing this will be great and so um at this point leila says this guy's a winner i'm going to take him home to meet my family, which is hilarious because I was not a winner at that time.

8:32And so anyways, I'm at her, at her family's house Christmas Eve. And we had been selling for three weeks at this point. So we had, you know, 70, 80 ,000 in sales at this point. And what was weird was I was running all the money through just my gym processor. Cause I still, you know, maintain the processing, like my POS. And, and so anyways, I always got deposits on Tuesdays and I was like, huh, this is weird. We haven't gotten a deposit since like, I didn't get a deposit last Tuesday. And I was like, okay, that's odd. And I called them and they're like, Hey, you know, uh, I gave it like three or four days.

9:03Cause I was like, you know, maybe it's delayed or something. And it had been a holiday cause it was in the holiday season, whatever. And so, um, the deposit is supposed to hit. It doesn't, I wait some days, keep checking, doesn't hit. I call them, they say, Hey, you're in an annual review. Uh, it's standard, nothing to worry about. And I was like, that's weird. I've been with you guys for five years. I've never had an annual review. Interesting. And then waited a couple of days, called again, was like, Hey man, like we're really going to need these funds like I need you to deposit these and they're like yeah it's we're just working through some final things blah blah blah I was like all right and so Christmas Eve I call them and we're supposed to launch six gyms starting on the 26th so two days later I call the guys up and I was like I'm not getting off the phone until you send me the money like I'm not like I need there's a hundred grand that's sitting there like I need that money the guy was like sorry you know we're seeing some regular activity in your account and this is because we had written all these refund checks for, for clients when I was closing down the gym, the last gym that I had.

10:01So there's been some irregular activity. This isn't the way that, you know, you're not, it seems like you have a virtual business now. That's not what this is intended for. This is supposed to be for a single brick and mortar location. So we're going to hold on to all the funds for six months. And I, I lost, I lost it. And for those of you who don't know me, when I lose it, I don't actually get like explosive. I just get incredibly cold and very mean. And so I probably said some of the meanest things like I didn't cuss I was just like I destroyed the person's character that I was talking to on the phone like that person questioned like why they were alive and so anyways I got off the phone and uh Layla and I's parents are supposed to go to the movies because it's it's it's Christmas Eve and her dad was like you know he seems a little stressed she's like is he always this way and um and of course I was a little bit stressed at that time um and so here's what was crazy is that as we're going to the movie theaters, I'm just like completely numb.

10:54I just was like, I feel dead on the inside. And so we go to the theaters, the movie's playing in front of me. I'm not even watching the movie. Layla holds my hand and she's like, what's going on? I was like, I'll tell you later. Um, she takes my pulse. My resting pulse was like 120 in a dark movie theater at age 27. Um, I was stressed out of my mind. And so we left the movies. Um, and I told her, I was like, the money's not coming. And she was like, what do you mean? And I was like, they're keeping it. And she's like, can they do that? And I was like, apparently. Like, this was the first time I'd even known this, that a processor can hold money.

11:25And so anyways, I got home. I still owed the salesman from the last month who had done that huge launch. Like all these sales that had happened, somebody had sold them, right? But I didn't collect the money from it. And so I owed a$22 ,000 commission check and I had$23 ,000 left. And it was on money that I never received. And so in congruence with the lesson that I had learned from, you know, the clean exit of all these other things, which was like, just do right by everyone. And then you won't have any emotional scars that you'll carry with you. And so I wrote the check. Um, actually I wired it for$22 ,000 and$1 ,000 left.

11:59Um, and that's when we got home and I told Layla, you know, everything that I'd done. Um, I was like, I have a thousand dollars left and we were supposed to launch. She had told her six friends to quit their jobs. Um, and we were going to start launching gyms two days later on the 26th. Um, and I was like, I have a thousand dollars and I have a credit card that has a hundred thousand dollar limit. I was like, I will do this. I was like, but this could go horribly wrong. So you don't have to stay with me if you don't want to. And, um, that was like, this was the moment for me that I, that I knew I was going to marry Layla.

12:31And she said, I would sleep with you under a bridge if it came to that. She's like, we'll get through it. And that was what I just like, I wanted to like, you know, I would, I would have been teary, but I was so emotionally numb at this point that I just wanted to just like keep moving forward and keep, keep, keep getting through it. And so anyways, 48 hours later, I make all the ads, I set up all the campaigns, all the funnels, all the everythings. And I remember turning the campaigns on for all the six locations that we're going to do. It's like off to on, off to on, off to on, off to on. And I remember I was sweating.

13:02I was literally sweating when this was happening because I just felt such dread. I was like, this could literally just ruin me. Like right now I have no money, but I'm not in debt. And I'm going to be going in debt at a rate of$3 ,300 per day of money that I do not have. And so anyways, I turned it on and the six guys were at the locations. And it was$3 ,300 a day because I was paying for hotel, airfare, food, car, ad spend, and commissions every single day for six guys. And I had, remember, I had$1 ,000, right? And so it was all coming out of a credit card. in the next 30 days. And we ended up getting canceled by the processor, right?

13:40I told you this at the beginning of the story. So I started all this and I had no way to process money. So these guys are getting leads, they're making calls, they're closing deals, and I can't process the money. All right. And so we're sitting there, right? And these contracts are just coming in, right? And we had them scan them. So we had this mobile app and we had this central Dropbox, which of course is not PCI compliant. I had no idea what PCI compliance was. And so we had this one lady that we used to work at my jib that I was paying part-time to process this. Mind you, I didn't understand what like how much work this was because we were doing like 50 sales a day, right?

14:19Between these locations at like 500 bucks a pop. And I was paying someone for part-time four hours a day of contract work, which was just insane. It was like, it was probably two people's worth of work. And I was paying somebody part-time. It ended up that ended up blowing up because she couldn't do that and her full-time job. So And and we didn't even have a way to process the money anyways, right? And so anyways, we're we're I'm calling everybody. I know to try and figure out I was like Hey, can you process this and then you can keep 10 % and just send me the rest of the money and people were like I don't know man Like I don't know if I want to do that and so no one would process the money for me And so I called you know every person I knew and then I finally got in touch with a guy named Alex Roy at the time who specialized in like high risk processing, which is basically the category I was in at that time.

15:02And he said, I can get you set up. And I was like, okay, cool. He said, but given the record that you have right now, because you just refunded all those, all those people at the last location, he's like, they're going to want a reserve, which means they keep a certain percentage no matter what. And they're going to put a limit on how much you can, you can, you can charge. And I was like, okay, cool. He said, they'll give you a$50 ,000 limit. And I was like, dude, I need like four times that. And he was like, sorry, man, that's what I can get you. And so the last week of January, all right, so we were doing, you know, we're doing five, six, you know, thousand a day in sales, maybe more than that.

15:34And I had no way of processing it, right? And then the last week I get this processor for$50 ,000 and I run, I run$50 ,000 in a day, right? And he's like, okay, here's the good news is that it's per month. So it was the end of, he's like, so this week you can do 50 and the next week you can do 50. And then I'll see if I can get more lined up, more processors at 50K to allow you to start processing for them. And I was like, okay, fine. Hey guys, love that you're listening to the podcast. If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, you know, drawn out stuff.

16:06Sometimes it can help hit the brain centers in different ways. You can check on my YouTube channel. It's absolutely free. Go check that out if that's what you are into. And if not, keep enjoying the show. So next week we do 50 on that same processor and then we set up another one and another one and another one and I was able to like catch this this falling plane as it's going and we ended up somehow I think we ended up processing 100 grand actually that first month I think he got two people he got somebody like the last day of the month and I processed another 100 sorry another 50 to get 100 for that first month and the next month I had three processors so I was able to process 150 and things actually started working out right so you know we did a hundred thousand which basically just covered my credit card bill which is doing 3300 a day right so I just boom I'm back to zero again but at least I like had a way of getting out of this thing right so the next month I think we did 150 or 180 I have the chart in my book hundred million dollar offers I can't remember what it was but it was somewhere in there and so a process that February and we actually had a profit that month so I was like holy cow like Like, I think we made like 30 or 40 grand.

17:12And I was like, oh my God, I think we might get out of this, right? But wait, there's more. There's more to the story. It gets worse. And so I think I'm in the homestretch, right? And so then March rolls around, all right? So at this point, people that we had sold in January, we were selling six-week weight loss programs at local gyms. All of a sudden, I see this massive hit on the bank account for 100 grand. And I was like, whoa, what's going on? What happened? And it turned out that two of the facilities that we had launched in January, and this is now at end of February, beginning of March, they told a number of their clients, hey, if you refund, you can just sign up through me and I'll do it for less.

18:01And so we had already paid for the airfare, the flights, hotels, commissions, ad spend for all these sales. So, you know, the margin on this was lowish, right? I was probably running 20 % margins. And that 100 ,000 completely wiped out all of the savings that I had had over the last month or two, right? And it was actually more than I could even handle. And so we had to sell more to cover the refunds. And so this is where things got even more fun. And I say that sarcastically. So this is what happened next. February, we do more money. March, I know that we have to sell even more. So I hired two more sales guys.

18:37We do eight launches that month. And that's to cover the refunds that are starting to come in from January. All right. You can probably see where this is going. The refunds start getting worse. There's more and more and more. It turns out after everything, 35 % of all of our, of all of our sales that we were making were getting refunded, which is an astronomical number that is hard to even comprehend. And it was because we had no control over the fulfillment, right? So we were selling and then other people were filling on contracts that we had sold. And so, and there was a lot of, you know, Hey, just refund, sign up through me.

19:07Don't worry. like, cause we'd be gone, right? We were already, we'd already left the location and these people were getting fulfilled on contracts. And so we didn't have the relationship with the customer, the business owner did. And so it was a really dumb model from that perspective. Um, I learned, right. One of the lessons I learned there was control the, like, you want to control everything end to end if you want a life lesson. And so anyways, the next month, uh, we're, we, we, we have to sell more. And so I think we did 280 ,000 the next month and I was like, okay, cool. But all of the access cash that came from that, from like the profit went into funding these refunds from the month before.

19:39And then refunds just kept going up. And so I knew that in April, I was going to have to sell even more to cover the refunds from February and March. And I felt like I was in a death trap. I was like, I don't know how to get out of this. Like every month I have to sell more to cover the refunds from the month before, but then the cash from these things, I'm going to need to cover the next month and sell even more. And honestly, I had no idea what I was going to do. And so all of a sudden, Layla at this point, because she still has one foot out the door a little bit because she was like, I don't know about this guy.

20:07Um, and so this whole time she'd been living on like$3 ,000 a month that she was getting from her like online coaching business. So she had transitioned her personal training clients to online. Um, and she was doing like three grand a month from that. And I was like, Hey, why don't we take the middleman out of this? We know how to mark and sell weight loss. Let's just sell it online, which by the way is a massive transition from doing brick and mortar. Um, but anyways, I was like, you know, I was in absolute desperation. And so I wrote one of the best sales pages of my entire life out of just sheer need.

20:31It took me two days to write the sales, the sales letter, maybe three. And I didn't even like get up from the computer. I was just writing the sales letter. And so, um, I started running traffic to it and we started doing a thousand bucks a day, um, of just online. So there was no margin. There was no, uh, it was all margin, right. Minus ad spend. And I was like, Holy cow, this could work. Right. And so we had eight sales guys. And so I was like, okay, we can tell these guys, they don't have to sell at gyms anymore. They can sell from home. They can see their wives and we can do 8 ,000 a day. Cause if we're doing a thousand, just, just with her selling, we could do eight, seven, eight more guys and do 8 ,000 today.

21:02And so I told the guys the next month, the gyms that were lined up to launch the next month, hey, we're not going to, we're not going to be doing this anymore. Sorry. We're going to be going another direction. And they were like, Hey man, like we need this. And I was like, sorry, man. Like I, it's just, it's just, I'm not doing that model anymore. And they were like, well, can you show us what you're doing? Cause like my friend told me that you signed up like 200 people at his gym in like three weeks. And I was like, nah, man, sorry. And he was like, dude, please. Like, and I was like, I'm not flying out there, man.

21:32I'm sorry. I'm not doing it. Um, and so anyways, push comes to shove. I was like, fine, I'll show you how to do it. I was like, but I'm not flying out there to save your ass. You can't sell. He's like, no, no, no, that's fine. He was like, well, how much to show me how to do it. And, um, at the time I picked what was the highest number I could possibly imagine in my head, which was$6 ,000. And I said that because I didn't want him to say yes. And, um, cause I didn't want to do it. I just wanted to move on because I was so hopefully at this point, you see how jar, you know, scarred I was by all of these experiences leading up with us.

22:01Um, and the guy said, okay. And I looked at the phone and was like, you gotta be kidding. And I was like, holy crap. And so it was$6 ,000. And then I had seven more guys that I was supposed to call, you know, to tell them that I wasn't going to do their launch the next month. And so the next conversation I had, I was like, well, shoot, if I'm going to do it. I guess, I guess I have to make it now that I sold one of them, this whole program. Um, next guy, same conversation with the same way. And he was like, well, how much? And I was like, eight grand. And he was like, okay. And I was like, holy cow.

22:32And then, uh, every single one after that, uh, said yes. And I ended up doing$60 ,000 in sales in a day. And I, I looked at Layla and I was like, we might be able to get out of this. And, um, at that time, as much as people talk about the romantic, like vision and strategy and, and impact and saving lives and all this stuff, like it wasn't any of that. I was just trying to be able to not be in debt and pay the, pay the bills that were mounting every single month off. And so I knew that I needed to make like 150 ,000 in profit in the next like 30 days or so in order for this to work. Right. And, um, this was the only way I could do it.

23:08And so what I did was I, I called, you know, those guys, they all bought. And then I called up every gym that we had launched at that point, which was like 32, I think. And I called every one of those guys and was like, Hey, you know how we filled your gym up? Want me to show you how I did that? And they were like, yeah, that would be great. That's exactly what we did. And so I ended up doing like 300 ,000 in sales the next month, selling a digital product, which was actually more like a consulting type thing. And here's what's crazy. The next 30 days, the average gym that used the consulting program, gym launch, did$30 ,000 in collected cash, not contract, not contract, not anything like that, but$30 ,000 in sales in the next 30 days.

23:53And, uh, and then that is when everything took off like a rocket because every single one of those guys told every person that they knew that was in the gym space, like, dude, I just did this thing and it killed. That was what gave birth to gym launch as it became the consulting company, the licensing company, um, where we license out all the materials, all the ads, all the copy, all the scripts, how to set up the, the, the lobbies. And the thing is, is that when people ask me about the story and this is, you know, now we're six months into 2017 at this point. So I've gone through like the hardest 18 months of my entire life.