MI328: Learning from Alex Hormozi w/ Tim Calise

24:34Wow. So that was the end of the fund. That was it. Wounded up by the end of June of 2008. Fund was closed down. We went through tax and audit and all of those types of things. And I was a free agent again. So I'm curious, your partner, is he still managing money? You guys made the right call, but it's not what your investors wanted to hear. They wanted the consistent singles. Yeah, that's fascinating. The majority of them, sounds like all of them wanted to get their cash back. Yeah, they all did effectively. And it was interesting because Because the hedge fund world and investment management in general is a what have you done for me lately kind of business.

25:15That's the same Bernie Madoff time period too, right? Yeah, it was right around that same time. He kind of, that all fell apart shortly after. But yes, that was kind of when he was on his great extent and was a big player in the industry. But yeah, so although we had done very, very well over the course of the couple of years, it didn't really buy us a lot of confidence, to be quite frank. Like, you know, at that time, people kind of said, you know, other folks think that they can play well in this industry, you know, in this market. And if you can't, I appreciate everything you've done, but we'll take our ball and go home.

25:44And luckily, in the moment, it was one of the most painful things that had happened to me at that time because I put my blood, sweat and tears into raising this money. And, you know, right when we were going to monetize it and all of that kind of stuff, you know, we get paid very handsomely. It all kind of stopped. But long-term, I kept an asset, which was probably ended up being more important, which was the Rolodex of those investors that came back at the end of 2008 and said, I should have listened to you. You were a good steward for years, and I regret not heeding your advice. And so I still keep some of those relationships to this day.

26:17I remember it was probably the summer of 2007. I had a friend who was a mortgage broker and I remember him saying that he felt like he could literally print money. And he was doing all these whatever, the liar loans and subprime loans. And I just remember thinking at that time, this is not going to end well. The writing, the clues are all there, I think. It's just hard to see it. I think the aspect of greed and whatever is just a big part of human psychology and we just want more and more. Yeah, absolutely. It was fun on a personal that I had bought a lot to build a house in Birmingham. And again, I'm 22, 23 at that time.

26:55And I remember going to the bank and I didn't have, I mean, all of our money was basically made on bonuses effectively at the end of the year, depending on how we did. And I remember submitting the paperwork. And again, I'd never, this was about the first house I ever bought. And I think I made my base salary was like $45 ,000 a year. I mean, it wasn't anything kind of crazy. And they came back and said, you're pre-approved for$2.5 million. And I went, holy mackerel, this is so easy. And then I called my parents and I was like, I got a$2.5 million loan. And they're like, this is not normal. So just so you know.

27:26But it got me thinking of when all of this was starting to kind of coalesce around the market going off the rails. All of these little experiences all lined up to say, this doesn't smell right. And luckily we heated our gut and stick to our morals. So you're ready for a new chapter at this point. I know that you got into the franchise world a little bit after that. So talk to me about how you decided to get into the franchise world and the specific industry that you ended up in. Yeah. So we were in Birmingham, my now wife, I had convinced somehow to move down and we lived in Birmingham with no family around or anything like that.

28:06The work was really the only reason I was there. And so when we shut the company down, we moved back to the Northeast, which is where my wife and I are both from. We moved to Cape Cod, Massachusetts, and there were no hedge funds in that area. There were not a lot of opportunities. And we said, one of the pieces of advice my dad gave me very early on, and I remembered it was, choose where you want to live first and then figure it out from there. And so we said, all right, my in-laws were there and they're fantastic people. Let's move there and then I'll figure it out. My wife and I were division one athletes.

28:35That's how we met in college. And so fitness was always kind of important to us. And I've being a self-proclaimed kind of nerd, I always loved computers. I love technology, all that kind of stuff. And my wife, when we moved, Googled personal training in the town where we were thinking of moving. And there was a banner ad for this company that said automated personal training 24, seven, three 65. And so she clicked on it and said, and it was this new concept that basically took the person out of personal training and replace it with technology. It was prescriptive strength training. And so she showed this to me and she's like, super interesting.

29:08I'm going to go take a tour. So she did. And she said, this is unlike anything I've ever seen. It's kind of pretty neat. And I called the founders. I found their information. And I said, are you taking investors? This is kind of a neat concept. And they said, thanks, but no thanks. We're fully funded. We just closed our, I think it was series A at that time, but we're starting a franchise. Do you want to become a developer? So we became members and checked it out, was really loved it. And so we became franchise developers under this kind of new franchise, mostly because it was a technology company mixed with kind of this idea of we liked fitness and giving back to the market where we wanted to live.

29:42We wanted people to be healthier and, you know, kind of the moral thing that was related to that. And so we got into the franchise business and built a seven-figure gym business over the next couple of years. So were there physical locations? You said it was technology-based. So tell me, like, how, as a gym member, like, what did it look like? So the concept was, if you remember the old universal machine, the single machine with all the arms and legs on it, the initial prototype was that wired up with sensors and put a screen on the front. So think about the experience when most people walk into a gym, 90 % of people either do cardio only because weights are a scary thing and I don't know what to do and that's for other people.

30:23and the 10 % that do it, most of the 10%, 9 % of them do it wrong. And they get injured, they go out too fast, all those types of things. And so we solve for all of that. So the experience was a physical location in usually a strip mall or somewhere nearby in a neighborhood center. You would walk in 24 hours a day, seven days a week, and it would say, good afternoon, Patrick. Today, we're going to do these seven different exercises. We're going to do it at this weight and we're going to do it at this pace. So it took all the thinking out. You didn't have to do exercise selection. You didn't have to worry about form and pacing and all of those types of things.

30:59And it was all optimized, understanding where you are today and where you want to go in over the next year. And we took that into account. So it was a software and a hardware business and at physical locations. And we ended up, the franchise ended up having about 150 locations in 29 states over the next kind of three or four years. and it was coco fit yeah ko ko fit club ko ko that's right yeah it means one-to-one or individual in japanese okay interesting so you started with one you ended up with a total of we ended up with eight at one point okay and do you still are they still around or you still operate them or how did that unfold over the years yeah so we grew to eight and then we can circle back to this a now a very famous YouTube influencer in the business community.

31:45And it gave me the advice to go and sell my gyms and go do something else. So that was when I met Alex and Lilo Hermosi for the first time in 2018. He told me to go sell my gyms. So we exited in 2018, owning our own units at that point. So let's get into that. How did you guys connect? I know a little bit about Alex. It's hard to not. He's pretty ubiquitous everywhere and has done very, very well. So how did you guys meet and connect and why did you listen to him? What was it about him that you decided to take his advice? So the strength of the franchise developer, the franchisor of Coco was they were phenomenal visionaries on the equipment and the software side.

32:27They were technologists. The business model, in my opinion, could have been better. And so as we were developing these kind of five and then eight locations, we ended up acquiring another three-unit chain. So we got to eight locations and I said, I understand the dynamics of this business. We need to do some other things above and beyond kind of what other clubs had been doing. And so I was really tinkering with the business model and I did it from boots on the ground. This is what I'm seeing. We're talking about basic things like we wanted to have multiple tiers of membership. We wanted to have different packages to suit different people.

33:02We got into small group training. This was the rise of CrossFit was around the same time. The Peloton wasn't on the scene yet, but some of the digital fitness brands were starting to come up at that time. And so we introduced some technology into heart rate monitors and things like that. And I was kind of playing with all of this. And then one of the other franchisees said, I saw an ad for this guy, Alex. He owns this company called Gym Launch. And I had a call with him and he said, it's kind of interesting. You should have a call with him too. And so I called him and I said, I have no idea what this is all about.

33:35I'm in a franchise, but what do we want to do? And he gave some advice to us and we went and implemented it. And it worked out really well for us. And so this was 2018. Alex's whole, I mean, at that time, his thing was advising gym owners how to become more business-minded, profitable, market things better. Is that correct? Yeah. So the very quick background on Alex was he was a gym owner. He went to Vanderbilt, was actually in the intelligence space. He worked for basically an NSA level company, you know, organization. Didn't want to do that. Was not his cup of tea. Moved to Southern California.

34:10He'd always been a gym guy. I mean, you can see just his stature. He was a, he's been a power lifter for a long time. Said, I wanted to own a gym. If I'm going to own a gym, I'm going to go to the most competitive market in the country. Because if I can make it there, I can make it anywhere. Packed up his car, drove cross country, went to Southern California, opened a gym. And if you see, for those that have kind of seen some of his stuff, there's a picture of him like sleeping on the floor of his gym. That was the early parts of kind of when this was. And he figured out that he was really good at sales.

34:37So we built a bunch of gyms and then his mom got sick and a few other things. He exited owning gyms and he started to fly out to other people's gyms. And this is where gym launch comes from. Under the model of, if you're going to open a gym, you can hire me to come out to your facility. I will sell the first round of members of yours. and the deal is I keep all the upfront cash and I hand you a member that has agreed to pay you for the next 12 months. That was the basic economics. And he would run the ads. He would set the sales appointments. He would take the sales appointments. He would sell the people, collect the money, the whole nine yards.

35:16And so he did it for one and it worked. Then he did it for two and then three and then demand came. So he started to build a team of people who were flying cross country, staying in the extended stays and all of that. And then it got to a breaking point where all of the people on his team went, I'm going to be on the road 52 weeks a year. My wife's going to divorce me. I hate that. Like, you know, life kind of actually happened. And so he shut it all down. And that is when somebody came to him and said he canceled one of his upcoming trips. And the person said, I really need you. Can you just tell me what you would have done if you were here?

35:47Just give me the instruction manual effectively. And that is how Alex went from physically selling to creating an IP business, a licensing business. He said, yeah, here's what I would do. Take my playbook and see if it works. And it did. This is awesome. I can go and sell information instead of selling me getting on a plane. And that was the beginning part of how do you take a gym and implement a business system that allowed you to make more money than you otherwise would before. and it had in every playbook, how to write the ads, the ads to run, the systems to work, all of those types of things.

36:20And it worked very well and went from zero to basically$40 million a year in revenue in two and a half years. And they have since sold Jim Launch. Yeah, we sold two, a little over two years ago. Yeah, we sold two thirds to a private equity fund. So he's got, his book is$100 million offers, I believe. What is it about him, his belief systems or his skillsets that has made him this phenomenal entrepreneur? Yeah. So the basics of why gym launch was so effective was if you think about the gym industry and go back 10 years or even five, most gyms to acquire a customer did some kind of free offering, try a free class, a free day, a free week.

37:03Even Planet Fitness today is a dollar down, $10 a month. It was all low, low ticket. And Alex had the vision to create a business that had a high ticket front end offer because it allowed you, it gave you the cash, the fuel to do a lot of things that were obviously kind of a virtuous cycle of high ticket. So he launched a six week transformation challenge was effectively the offer. And it was$600. So part of the gym launch concept was not just he was really good at sales and advertising. It was, we now had a vehicle to drive cash flow into, drive cash into a gym, which are chronically undercapitalized.

37:44That was the first domino to fall. So what was so unique about him? Number one was he was a visionary in the space. He also did the gym industry inside and out because he's been doing it since he was in high school, but he understood the industry. He understood the pain points and he understood what needed to happen. And he had the vision to kind of buck the trend and do something that everyone else thought he was crazy to do. That's kind of from the business perspective. The reality is in this market, he is one of the smartest people I've ever met. He is singularly focused and driven like no one I've ever met.

38:15And from a kind of cognitive dissonance, like your brain doesn't understand what's happening. He's as smart as an NSA, you know, kind of level guy. And he looks like a lumberjack. You wouldn't expect a kind of like PE level, you know, nine-stayor guy to wear Crocs and a flannel shirt on stage everywhere he goes. He's a walking, talking pattern interrupt. I mean, that's the reality, but he is so sharp. And my experience with him, I worked basically shoulder to shoulder with him for a couple of years. He has an ability to distill the things that are, we talk about Pareto's law, the 80-20 rule. You focus on the 20 % that yields the 80 % of value.

38:55He has the 99%, 1%. He is wired to understand, if I just hit this one thing, it's going to move mountains. We use this phrase and he uses it quite a bit, which is small hinges move big doors. He was myopically focused on the things that he understood to be the only things that matter. He talks about it today. It's like the season of no. I worked alongside of him during his season of no, and he did nothing but work through making sure that Jim Lodge became as big as it can be and as impactful as it can be. Say more about that, the season of no. I'm not familiar with that. so he talks about this idea of effectively shutting out the outside world to create an extreme level of focus do you want to come hang out do you want to have dinner no do you want to come and watch the game no do you mind giving me five minutes for coffee no it was probably close to 18 months that he did nothing else other than he didn't really see anyone outside of work, it was like, I am, this is my time.

40:00Striking while the iron is hot. And unlike anyone I've ever seen, he understood exactly what needed to happen and he built walls around his attention and no one could get to him. It was, it was unbelievable. And it was, it broke so many beliefs for me because I thought I knew what productivity looked like. It was like child's play before that. It fundamentally rewired what speed was, what focus was. It's probably one of the best experiences I've ever had, you know, as far as kind of a professional development experience. So you sold the eight gyms and then what, what happened next? You then teamed up with him to help him with gym launch?

40:36So the, the transition there was after I spoke to him about our business model in January of 2018, alongside the consulting business that, that we just talked through gym launch also started a company called prestige labs. It was a supplement brand underneath the gym launch umbrella. And in January of 2018, they launched a sales competition. I think it was 2018. And the top 10 sellers of Precise Labs won a trip, a paid trip down to meet Alex and Layla and have a consulting day. That was the payoff. And I was in one of those 10. So fast forward six weeks, we all fly down, we go work out at his home gym and we're having the day and we're sitting at his dining table at his house.

41:18He had Layla and I think there were eight or 10 of us. And everybody going around, it was like, all right, what's your biggest problem that you can, I click, let's solve it right now is basically an ad hoc consulting arrangement with that, that he was doing. And it was, how do I hire people? How do I train my people? You know, all of these kinds of very tactical things. And it came to me and I'm like, I don't have any of these questions because I really like, I'm not passionate about the fitness business. And he goes, you should sell your gyms. You're far too smart for doing what you're doing.

41:42And to use his phrasing, he goes, you're in the wrong opportunity vehicle. And I said, okay, I kind of needed the permission to get out. And so I basically sold my gyms and this was like February or March of, I believe it was 2018. And then June, my phone rings and it's a number I don't recognize. And for whatever reason, I picked it up and he goes, Hey, this is Alex or Rosie. Hi, is there something I can help you with? And he goes, I remember our conversation and I am thinking about doing that. I have an opportunity and here's all the information. Here's how I'm going to structure it. What do you think?

42:16And I said, do you want me to tell you you're right? Or do you want me to tell you what I think you should do? And I guess that was, this wasn't Alex, like on the pedestal, Alex, and everybody knows now, it was like just some guy. And I said, I think you're completely off base. He goes, interesting. Tell me. And I said, I think you should do this, this, and this. And he goes, that's so much better. Thanks. Hang up the phone. And I think it was like a month later he called. I was like, we're building out the executive team here. This thing is going well. Do you have any interest in, and I think I actually implied, I think I was following him or something.

42:42And he said, we're hiring a CFO or a finance person or something. And I said, hey, we'd love to do something with you. I've enjoyed our conversations. And he goes, well, there's this business development role that I have, and I have a CFO role. And I said, I'm not an accountant by trade. I know enough to be dangerous. And he goes, fair enough. I'm going to hire a CFO. Do you want to come over and basically help lead the company on a business development perspective? And I'm like, great, perfect. So June, I started and the rest was history. Basically, it was strapped to a rocket ship. Gym launch was going from zero to, I think when they were on pace, they do a million a month or a million and a half a month at that point.

43:19And then we launched Proceived Labs to 25 million a year in revenue. And then the following year, I built a software product underneath the gym launch umbrella, which was my pet project. Let's take a quick break and hear from today's sponsors. Hey, it's Sean O'Malley, just popping in with a quick message. If you like this podcast, well, I've got great news for you. We've got a handful of other shows for you to explore, from learning about Bitcoin to embracing a richer, wiser, happier lifestyle. Just go into your podcast app and type in We Study Billionaires to find our collection of shows. We Study Billionaires is our flagship podcast, and we've made a name for ourselves over the years by interviewing the best investors in the world, including Ray Dalio, Howard Marks, Joel Greenblatt, and many, many more.

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46:47That's theinvestorspodcast.com slash tip-finance. All right, back to the show. Has he since gone on to do the same model, but in different industries, like outside of the gym world? Yeah. So he, in short transition on kind of how things came to be, that software product that I mentioned, and I can explain why it was relevant, but it was an automated lead gen software. So imagine somebody goes to your website or they fill out a form and first name, last name, email address, phone number. In the fitness business specifically, that is a very weak point in the fitness business process to get that lead to show up in the facility for sales consultation.

47:32Working leads is one of those things that is like oil and water for most gym owners. They just want to be training. They don't want to do the business. And so the numbers were one out of eight leads would ever show up in a facility. Seven out of eight just disappeared into the ether. When we started with gym launch and even when I was running my gyms, we used to be able to get leads for 25 cents in 2012, 13, 14, 15. By 2018, 2019, it was$25, just to give you a sense of scale. So when you're paying 25 cents and one out of seven, seven out of eight disappear, you can still, and you're selling the one into a$600 program, the numbers worked.

48:09you're paying$25, you care a lot. And so we said, we tried to teach gym owners how to work leads. We told them the business model, we gave them the staffing model, we gave them the scripts. They just didn't do it. So we said, we're going to solve the problem for them. So we built a automated lead gen product that took the lead, nurtured it, got them scheduled and got them show up for a sales appointment. Is this via email or is it how was that structured? SMS. But I had a two-person data science team and a 30-person software development team that built this product. And we launched it in January of 2020, officially.

48:46January happened, started takeoff, February, March, you can kind of see where this is going. Then we ran headlong into COVID and we trained the model to get people to walk into a gym. Well, of course, everybody went online almost overnight, effectively overnight. And so we retrained the model to get a prospect to show up for a Zoom consultation because that's where all the coaches were. That took us about a week to get that right and trained. And after the numbers started to look good, like, okay, we're getting leads to show up to Zoom calls with coaches and with gym owners and stuff like that to do virtual coaching.

49:19It took us about another three seconds after that to look at each other and went, we just got a web lead to show up to a virtual consultation via Zoom. We can do this for any industry as long as it's high ticket. So that was one of, so then we started to work with, We ended up in 30 different industries over the course of 2019. Anything that's high ticket from med spas to float tanks to acupuncture to Invisalign, as long as it's high ticket and recurring, you were in our market. And we grew that business. We were doing 1.7 billion a month inside of six months with that product, MRR. So 20 million a year ARR.

49:55So through that experience, what that also allowed us to do was consult with all these different industries, 30 different industries. and alice was phenomenal at what just watching him almost like break the businesses apart and rebuild them in a similar fashion as he did with gyms and it was like okay this is really interesting and then they started we basically redid how a lot of these companies worked and so he then moved after the gym industry then moved into what is now acquisition.com which is basically coaching and partnering with service businesses primarily service and info businesses and that's kind of the early stages of acquisition.com.

50:32Fascinating. And so you've since gone on to advise startups, correct? Yeah. Yeah. Alex is phenomenal. So Alex is one of the best visionaries I've ever seen, great at business models, et cetera. And Layla is one of, if not the best operators, she's a talent. Love both of them. They're both independently amazing at what they do. Their talent would be wasted with someone who's doing a million dollars a year in revenue. They are like 10, 2 ,500 million, like let's go where the big levers are. I know myself and I get excited about, and maybe this is probably something early in my childhood that you could trace back to, but this like David and Goliath idea of I care deeply about helping the small guy shift the balance of power in their favor.

51:20And so I actually have a podcast called Leveling the Field. And that is to speak to this idea of how do I stack the deck and have a lot of the new entrepreneurs that I can work with not face the same level of failure that typically is out there in the marketplace. And so I specialize in the sub$3 million,$3 to$5 million a year revenue businesses. Alex does the bigger stuff. And so we are still close, but I focus on the smaller end of the market. I love that. Kind of the underdog. I love the smaller market that I think it's like the backbone of America, you know, small businesses. So, yeah. You know, in school, obviously, I mean, I have a teenager now and you think about like the grades you get and it's like, well, you know, I got an A in this and A in this and I got a B in this.

52:03And the first inclination is, well, how do we get the B to an A? Translated to how do I take a weakness and somehow turn it into a strength? And this is, you know, everybody believes something different, but I went from trying to learn all sorts of new skills and become something that I wasn't to just stick into my knitting and people systems and run. Like if I woke up every day to run big teams, I would hate my, I just wouldn't be excited about it. Layla, you cannot, like, it is an incredible thirst to get in front of people and manage teams. And it's just not my 4J. I love product. I love pricing.

52:41I love the kind of the views of my, I have a 10 year old son who loves Legos. I like taking the Legos apart and rebuilding them into something, something hopefully more optimized. And that's where I get the great fortune to live each and every day. That's awesome. I love that. So when you're going in and working with some of these businesses, they're recurring, is it still like kind of subscription recurring revenue type businesses? Yeah, my belief is, and I think we've all seen this in some way, shape or form, you can sell something to someone one time. That's marketing, acquisition, etc. Getting someone to stay long term is both a trickier prospect proposition, but driving LTV is just where I'm just wired to do it.

53:24understanding that the hardest part of the whole thing is to acquire the customer. If you can acquire the relationship and then monetize the relationship over time, you have a great chance of actually creating incredible economic wealth for yourself and a lot of value for the customers that you want to serve. And so that's where I live. Memberships, subscriptions, anything with recurring revenue or businesses that want to install recurring revenue in their business. So give me some examples of some of the types of companies you're working with? So I have a non-medical home care business in the Northeast.

53:56I'm helping them both on that business. But what I came to realize very quickly and why I partnered with them, with the founder was he had created all of the playbooks and SOPs to actually launch a very high performing, high margin, non-medical home care business. So we took all the IP and put in its own wrapper. And now we sell that as a course and a consulting arrangement, things like that. We think that business will go from zero to we'll hopefully cross a million in revenue with like 90 % margins in 2024. That didn't exist a year ago. So I have a technology business in the real estate space, pure software.

54:34So I work with them pretty closely. I have someone in the podcast space who's in the production acquisition space. So probably a little bit of like, I get board easily, probably, if you trace it all the way back. But I like the challenge of working with all these various types of companies. I have a company actually in Australia that I'm talking to right now, they do golf simulators and experiences, and they're trying to figure out how do I build a membership business there. I have someone who is starting actually relaunching a company that helps pair large companies with event spaces. It's actually a big issue, I guess, right now, think almost like try to do like a restaurant kind of like resi, but how do you actually do that for large events?

55:17So we're looking at that as a business model across the board, but they all have some basic fundamental building blocks that we instill in each of those businesses. So you're not getting bored for sure. No, I love the challenge. And quite frankly, what it allows me to do is to understand and continue to drive my thinking. And then I can look at like, how does it apply to these different industries? because there's actually a lot of similarities in the process, even if the product is a little bit different. I'm just curious, have you done StrengthFinders 2.0? Have you ever done that? I've done most of them.

55:51I haven't done StrengthFinders in a number of years. You've got to be a learner, I would think. It seems like you love to learn and assimilate information pretty quickly and easily. And I think for me, I was a builder for a long time, you know, it was kind of that kind of avatar. And now I've kind of shifted the balance to be, I'm kind of equal parts builder, but also mentor coach. I think I'm now finding a little bit more balance in those two things. So I can both learn, package, and implement. Gets me very excited every day. Yeah. So when you're coming in and working with the company initially, what are some of the biggest mistakes you're seeing them make?

56:27So I use some of the same principles that we built Jim launch on. So one of them being profitable acquisition. So many companies right now don't think about how they can acquire a customer to profit. So let me break that down for you. What that means is in very simple terms, most people look at advertising and promotion as an expense. And you might call it an investment, but usually a long dated investment. I spend$100 today and my LTV is$1 ,000. I'll get my money back over time. What we install immediately is we understand what our customer acquisition cost is and we understand how we're going to scalability acquire the customer.

57:10And then we have a product that first buying decision pays us back for that acquisition. And ideally the first one is one-to-one and then our primary metric is a two-to-one ratio. So they pay for that customer and the next one. The real estate software business that I mentioned earlier, their LTV, their lifetime value of a customer will ultimately be somewhere in the$10 ,000 to$25 ,000 range. But being a startup, it's like, great, we'll take$25 ,000 over the next five years. Well, fantastic. But what about cash today? So we have put in place, we believe our customer acquisition costs will level out at about$100 per paid user customer.

57:52So we now have a$299 front end offer that we are converting at a very high rate. Is it the end of the world? No. Is it going to pay us back and more? Yes. And so what we're doing is we're basically siphoning, circling those same dollars over and over again. And now we effectively have an unlimited marketing budget. Right. That's interesting. So are you doing all aspects of a company? Are you looking at their cash flow, their marketing, their lead generation operations? Like, are you breaking everything down or do you kind of focus on things like lead generation and marketing? So we do a diagnostic.

58:26I run a diagnostic program basically across the organization, understand where the biggest opportunities are. I can't be the best in the world at everything. And that was something I realized very early on. What I am very good at is to use that Lego analogy is breaking the company apart and putting the bricks back together again. And I have people both on my team as well as people that I work with in concert who are, if you want to run a funnel, for example. I'm not the best funnel builder. I'm not the best headline writer, all those types of copywriter, et cetera. But I have people who are probably the best in their field at each of those.

59:00And so we'll go and work with them in a collaborative format. So yeah, I'm smart enough to know what I'm good at. And it really is the structural pieces. I build the skeleton, the tactical execution. I usually will go to the expert in each of those areas, like affiliates. I have one of the best affiliate marketers in the marketplace today to build all of our affiliate programs. I have, like I said, funnel builders, I have copywriters, I have video folks, et cetera, et cetera. So I kind of have built a bench, if you will. I mean, small businesses are desperately in need of something like this because they're wearing all the hats when they're often, you know, I talked to a guy yesterday who's running a, you know, it's a service blue collar kind of business, but he was doing everything.

59:41And when an employee calls off, you know, he then steps in. So you don't have time to do some of these things that you're talking about. It's so interesting you use that example because that's how the conversation will start, which is like, what's broken? Just lift up the rock and tell me what's under there. And they'll say something like that. I don't have enough money to hire the team. I'm doing everything. That's the symptom. What's the root cause? It's like, your margins aren't there. You don't have the right kind of pricing model. You don't have the right product stack. So we actually kind of take the feeling they have and then get it down to, well, how can we trace that back to the source?

1:00:20And the source usually is, I don't have enough cashflow. I can't hire a team. Well, okay. Well, what are you paying them? I'm paying them peanuts. Okay. So you're getting, you know, you pay peanuts, you get monkeys. Like you kind of follow all these things through. It's like, so if you had the type of budget to hire an A player, would your business be different? Yes. Okay. So what business do we need to have? And I, people that work with me are probably sick of hearing this, but I use the phrase all the time, what needs to be true for you to have the thing that you need? I need to hire the team.

1:00:48I need to not be doing everything. What in the business today needs to be true for you to not be doing everything? I need to have more cashflow. What needs to be true for you to have higher cashflow? I need better product. I need better above all that. And we just keep going. It's like asking the why question. At some point you'll get to the end of that thread. Right. And so in most of these cases where you're working with these companies, are you ultimately working to have some kind of exit strategy in most cases or how do you think about that? So I take an equity stake in every one of the companies I work with right now as a core client.

1:01:23And the reason for that is again, going back to like when I came into the hedge fund industry, I was like, I'm naive. I don't know what I don't know. I am not a consultant. I also don't call myself a consultant, I am a strategic partner. And what I mean by that is like, I don't want to do a, you pay for advice and I am not tied to the outcome. Yeah. Your incentives are now aligned. A hundred percent. And it never sat well with me to say, pay me X dollars and I'll tell you what I know. It just, the alignment wasn't there. And so that's why I do it that way. So in some cases, there's three levers that we pull.

1:01:56So one is equity. The second is a percentage of cashflow. And the third is any kind of base cash compensation, depending on the company, we deploy one or multiple of those just to align interests. And some people don't want to give up equity. So we'll kind of play with those ratios. But effectively, that's how I have structured my own business because I want to be able to wake up. And you want me waking up in the morning thinking, how do I make Patrick as much money as I possibly can today? And that was the best way I could figure out how to do it. It makes so much sense. So you're running or working with multiple businesses.

1:02:27So I'm curious how you're balancing your life. You've got a family. We talked about that. You've got three kids. How do you maintain equilibrium through all of this work that you're doing? Yeah. So in the beginning, I did a horrible job doing it, but I took messy action and figured out what I didn't know to find out what I didn't know. In the beginning of this process over the last, go back 18 to 24 months, I was too deep in the execution part of what I was doing. So I was both kind of guidance strategy as well as execution. And I was running myself ragged, number one. And number two, it was like this carte blanche of, you know, you're paying me a little bit, but I'm also spending a million hours kind of doing things that I shouldn't be doing.

1:03:05And I realized the error of my ways. And so now I really spend on average 30 minutes every week or two with these companies, 30 to 60 minutes. So it's not a huge, and by my total universe, I want to have about 20 companies that I work with over the next couple of years in this format. So it's not hugely taxing in that respect. And then of course, I'm always giving them advice and they have access to me in other ways. So it's not a time issue. It's not like I'm burning the candle at both ends. I coach my kids lacrosse team. I put my kids to like on the bus in the morning. I pick them up in the afternoon.

1:03:38I have done the work 18 to 20 hours a day, eight days a week. I, whether right or wrong, I've chosen to kind of prioritize what I do. And my metric is what's my dollars per hour. And that's how I'm accountable to my wife, which is like, if I'm spending time, it's highly leveraged time. I've just learned that I'm, and a great book that I'm reading right now, if you have not read it, Dan Martell's Buy Back Your Time. For anyone who doesn't know Dan Martell, Dan Martell is a phenomenal guy. He's on YouTube and others. He runs a company called SaaS Academy, and he has the number one coach to software company founders and CEOs.

1:04:17He's built and sold multiple businesses on his own. He just had Richard Branson, I think, on his podcast not that long ago. He wrote a book called Buy Back Your Time. And it is the playbook. If you feel like you're spending too much time and burning the candle at both ends and all of us, you have to read it. It is the best book that I have read recently in this space. I'm going to put it at the top of my audible list here to listen to because it's something I desperately need. I think it sounds really good. I wanted to ask this one last question before we wrap up. Beyond professional advice that you're giving, is there like a piece of philosophy or worldly wisdom that you frequently are sharing with people that you're interacting with and working with and partnering with?

1:05:01Yeah, really good question. So one of the things that I didn't realize explicitly, I knew it intuitively, but somebody articulated it in a way that was really valuable for me. And I said, we were just talking, I was like, how do you, when you tell someone that you're working with me, what do you say? And they said, the thing I appreciate the most is that you lend your confidence in me when I need it the most. And that has stuck with me. And so the things I think about are phrases like, you can't read the label from inside the bottle. And I am a big believer in mentors, in being surrounded by other people, because it's both, they give you insights that you can't see.

1:05:44How often have you gotten a piece of advice if you've ever, and it's like, oh, it was right in front of me. It was so simple. It was right there, but I didn't see it. The more opportunities you have for someone else to give you those insights, the faster you can move. And of course, the network effect of having mentors and a mastermind group or however you build that, that is what I think about a lot because everything that I've ever done, the through line has been not luck, but actively pursuing people who can give me sound insights and then going and actually following those insights. Yeah. And that whole idea leads to, you've got this idea about compressing time.

1:06:25So having those people in your life allows you to do that, right? Absolutely. I mean, it's one of those, we actually talk about kind of paying the ignorance tax. Well, I want to make a million dollars this year, but right now I'm making$300 ,000. So you're paying a$700 ,000 ignorance tax for not knowing or not having the belief systems or the tactics to make a million dollars. fill in your numbers, however you, you know. And I think a lot about that because it's like, okay, what I pay$20 ,000 to know how to make a million dollars in that case. What I pay a hundred thousand dollars. What I pay 500 ,000.

1:06:56Yeah. Cause I'm going to do it for the rest of my life. And this is where you, you know, you get into this kind of chicken and egg thing of like, oh, our masterminds worthwhile. And you know, things like that. You know, we, Alex works with Grant Cardone. I was around at that time. I mean, he paid, he paid Grant a quarter of a million dollars for an hour. You're like, that's crazy. Except what he learned allowed him to be worth$200 million or whatever it is, you know, on paper investment. So I am now very much rooted in, I don't try to learn anything fresh. I go and find the person who can give me the insights because someone else has tried to figure this out before me.

1:07:29It's allowed me to move a lot faster. Yeah, I love it. It's a great place to stop here. Is there anything that we didn't touch on that you, that you wanted to talk about? No, I think this is like, you know, for anyone who's kind of earlier in their life, number one, cash flow is king. I define financial freedom as having passive income, meaning not your active income, greater than your monthly expenses. And I share that simply, I think in the context of this, you know, hopefully the audience is listening. I remember when I was making money early on, it was all about accumulation. What's my net worth?

1:08:02What do I have sitting in the bank? Think about it as an income statement item. How can I find things that pay me in my sleep. Do that and you will buy yourself financial freedom for the rest of your life. And number two, anytime you're doing anything, if you're an entrepreneur starting off, the only metric that matters until you get to about a million dollars in revenue a year is the number of offers that you make. Try to accelerate the number of no's you get and you will get yeses faster than you otherwise would believe. Don't care about any other KPI. Just go out and offer something to someone and learn the process.

1:08:33Because the faster you can do that, the faster you will get to success. So good. I love it. For our listeners that want to learn more about you, get in touch with you, what's a good way for them to do that? As a thank you for listening to the show today, go to Instagram, find timcalise, T-I-M dot C-A-L-I-S-E on Instagram and DM me tip. And I will give you a special gift for listening to the show today to hopefully help you along your way. Awesome. I will definitely include this in the show notes so they can reach out to you. So I appreciate that offer. And I hope people do reach out to you and get the tip.

1:09:10Yeah. And website is timcalise.com. So also information at timcalise.com. Cool. I'll have all of that in the show notes. This has been a lot of fun. I really appreciate you sharing everything you did today. I appreciate it, Patrick. Thank you. Okay, folks, that's all I had for today's episode. I hope you enjoyed the show and I'll see you back here real soon. Thank you for listening to TIP. Make sure to follow Millennial Investing on your favorite podcast app. And never miss out on our episodes. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only.

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