The Game with Alex Hormozi - $1.2M Avoidable Mistake | Ep 280

Episode Date: February 25, 2021

Don’t take more than you can handle. Today, Alex (@AlexHormozi) talks about the mistake he committed during the time he was running Gym Launch, how this mistake not only cost him the value he was bringing to clients but also cost him millions. He also shares advice to avoid this kind of mistake.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 on his path from $100M to $1B in net worth.Timestamps:(1:05) - Gym owners lack data tracking, unaware of churn and profit.(3:17) - Advice: Don't take on too much at once.(4:52) - Keep business simple for it to grow big.(6:00) - Learn to say no, emotions affect decision-making.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Everything is always our fault as entrepreneurs. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. What is going on, everyone? Happy Thursday. I want to make this video to continue the series on mistakes. I have many, many of them. And this one is a hard one.

Everything is always our fault as entrepreneurs because we're the ones who make the decisions. And ultimately the buck stack stops with us, right? Like if you make a bad hiring decision and that person sexually harasses someone, it's ultimately your fault. You're the one who's liable, right? Because you should have done more background checks or you should have seen it in the way the person acted or whatever, right? But it is your fault.

And so this mistake was 100% of my own. They are all 100% on my own, but this one was especially mine. And this was because in the gym space, I continue to have, you know, I'm a huge proponent of data tracking, which maybe I'll marry these two things together. Maybe I won't. I don't know. We'll see what goes.

One of the biggest issues is that gym owners don't have good tracking for their data, right? They don't know what their turn is. They don't know what their revenue is. They don't know the net profit is. They have no way of organizing their customers and saying the messages and organizing between trainers and providing accountability and all these other things that they have to do. So they live between, you know, Google Docs, right?

There's Google Sheets, Google Docs, and taping things together and having a process or somewhere and it's just this huge mess, right? And there are some CRMs that are out there, but they're usually partial solutions. And so I was like, you know what? I'm going to build the best CRM for gyms. That's what I'm going to do. And I made so many mistakes with this. And so I spent the next nine months building out a CRM. And I spent about a million dollars in development and way more than that in time and labor on my own team. And really my own time, because this is what I put all my time an effort into because this was going to be the next thing. And I built the CRM.

And we realized that at that point we now had our supplement company and we had our service company. And I realized that I could not open a third company. I was like, I can't do this. I've already got too much stuff on my plate. And so I didn't make the mistake of opening a third one, but I did make the mistake of making the investment in it. And so to this day, I have a fully functioning gym CRM that's about nine weeks from being done.

in development, and it cost me a million dollars. And the lesson that I learned from that is don't bite off more you can chew. Don't get into a space that you don't understand. So like I'm not a software developer. I should have had a software partner or not a third party developer making these things because that person, like you need somebody who owns it. You know what I mean? You need somebody who's really vested and not just billing by hours and that was a huge mistake

for me, like massive. And so anyway, and if you are going to ever start a software company, you need to have a CTO who's a, like a, you need to somebody who has a, you need to somebody is an equity stake who knows a ton about software. I'm just telling you right now. That's what you need to do. You could take that one to the bank. But I spent, I spent I think 1.1 or 1.2 million dollars

on this software. And that was, I mean, that's profit money, right? That's money that was money that would have gone into my pocket. And I spent it there, right? And I don't have anything to show for it, except for this one lesson, right? Which is don't bite off more than you can chew. Don't start multiple business at the same time.

And it also ended up being a huge distraction for my team, right? They were so excited and they're not paying attention their normal responsibilities because they're so excited about this new thing. And that was all me. And Layla actually advised against it. She was like, we don't know what that is. And I was like, no, it's going to be awesome. And so I overpowered and I blew through it. And it was 100% on me. So that was another million dollar mistake that I made in my career. And so if you're looking at, if you have something that's working, don't just take that and try and start another

business. Like take that and figure out what you're going to do with your money that's not business related. You have to create your second game, which is beyond the scope of this video. Mosy Nation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to $50 million plus. We would love to talk to you. And if you like that, we'd like to hear more about it, go to acquisition.com. You can apply anywhere on the page and talk to one of our team and see if we can help you get there. You have to have a game beyond your game, right? You have the game that's making you money, and then you have to have the game that makes your money, right? It uses your money to make more money.

There is something to be said for reinvesting in your business, but you want to be reinvesting in things that are already what you're currently doing and doing more of them rather than doing another thing, another business, another build out, another whatever, that just adds complexity to your business. I've said it before, but I'll say it again, like scale zero, simple scales, and you have to make, you have to keep the business stupidly simple in order for it to get as big as you want it to be. So most of that is saying no. And the harder, and the bigger you get, the more money you have, the harder it gets the same. know, because the things you can do with the more money you have become cooler and cooler and cooler. I use the story of the woman in the red dress from Matrix, if you guys have seen the movie. You know, the woman in the red dress walks by and Neo, like, you know, turns his head or whatever. And the thing is, is like, at every level of entrepreneurship, you have to learn how to say no to a hotter and hotter woman in the red dress, a hotter, a hotter, shiny object.

You know, if you're making $100,000 a year, then, you know, pursuing a $10,000 opportunity isn't nearly as attractive, right? So you've learned how to see no to that. But if someone comes to you with another $100,000 opportunity, you might be like, man, that sounds pretty cool too. But by doing that, you'll end up destroying your main thing. And it literally never stops at every level. If you're doing 10 million a year and you have another $10 million opportunity, you have to just say no.

And it's the hardest thing in the world because we're entrepreneurs. We love new things. We love excitement and all of that. But I'll leave you with just even another quote that I like, which is, I want to be energized and not excited. If I'm excited, it means I'm emotional, which means I'm about to make a bad decision. So you don't want to be excited. You want to be energized.

You want to be stimulated. buy whatever you're going to do. And most of the times, new things are exciting. And so I automatically try and shy this off. And this has been a lesson that it has taken me so long, so long to try and learn this because I've made this mistake so many times. And so, yeah, I'm giving you the advice I would give myself when I was younger is like, find the game, pick the game, do more of the game,

take the money out of the game and put it into something that you trust. and just continue to play what you're playing and keep getting better at that rather than trying to start yet another thing and another thing. So hope you found that valuable. Take that to the bank. Save yourself a million dollars of headaches. And I hope to see you in the next video.

Bye.