The Game with Alex Hormozi - Gym Launch's Greatest Failures... and what I learned | Ep 146

Episode Date: August 28, 2019

"Your work will expand, given the amount of time you have." Today, Alex shares his greatest lessons and failures, including stepping too far away from the business, over-hiring, and miscommunicating changes to the community. He emphasizes the importance of learning from mistakes and continuing to pay it forward to others.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:(1:00) - Stepped too far from gym launch, resulting in problems.(2:49) - Expected cold traffic to act like warm traffic.(5:04) - Wait until capacity exceeds utilization ability.(6:48) - Listened to a small group of customers wanting more things.(7:50) - Failed to articulate hybrid well to existing community.(9:37) - Opening up to trainers made gym owners feel disenfranchised.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Hello everyone. I hope you're having an amazing lunch on this fantastic Thursday. I have had this one on my mind for a super long time and hopefully it comes out in a series of hearing thoughts. But I was sharing the greatest lessons and failures that I've had as Jim Litch CEO since we have started. And I thought I would share them with you because I shared these at the Coach's Mastermind. And I thought that you might want to know what they were. So maybe you cannot make the same mistakes that I did and potentially have the lesson instead of having the experience to gain the lesson. So the first mistake, well, I've made many, many, many mistakes, but I'll just do the last 12 months. And I think a lot of times when people talk about their mistakes, it's like, it's really easy to talk about mistakes that have happened like two years ago because then you can be like, look, I've succeeded and come past them.

But I'm going to tell you ones that I've made like two months ago, a month ago, right? And so starting a year ago, one of the first mistakes that I made is I stepped too far away from gym launch. And so I stepped too far above. This is a mistake that I see a lot of the gym owners make in our community. So I hope all of these lessons are entrepreneur lessons that you can apply to your own business. It just happens at different levels, but it's the same mistake. And the thing is, a lot of these mistakes are dichotomies.

They're mistakes of going too far in one direction, which is why it's like, should I be too just or should I be too merciful? It's good to have both, but you have to walk. the middle path and sometimes you have to walk one way more or the other right in this instance i was too far away and i now know what the telltale sign of that is and so this is how i can identify if i'm too far away if i think that everything is going really well in a department which for you may just be your business in general or one component of your business then i'm too far away because there are always problems there are always mistakes there are always things that can be

And if you don't know where all the holes are, where all the skeletons are, all the bodies are buried, if you don't know where those are, then you're too far away. And so that has become my litmus test for understanding where I'm getting too far away in the business is if I don't know what's wrong with it, then it means I'm too far. And so that's the first mistake that I've made. I mean, not the first mistake, I've made many, many mistakes. Just in terms of the first one I wanted to talk about, that mistake led to us over hiring. in January. And so I actually, we got our team up to 130 people in January, and we currently have 85.

And we cut them for no reason that had to do with revenue. We were still doing great. We had our best month ever. And I ended up realizing that all these people just didn't have anything to do. Like I'd hired all these people, but they actually weren't doing anything. And so that kind of leads to the second problem or mistake that I made was I experienced. I expected cold traffic to ask the same way as warm traffic with regards to an offer. So when we rolled out supplements, it was a massive success for the Jim Woods community.

We did like $1.7 million in the first month. And it was awesome. It's been pretty much stayed there. But what my expectation was that was not met with reality was that cold traffic, because I was like, dude, there's no ads. There's no ad spend. Like you literally run one internal play and you just make a ton of money. It's really that easy.

This will be the ultimate offer. What I didn't realize is that there was two beliefs that needed to be broken, not one. And so whenever you sell a new offer, you always want the opportunity to have one belief that needs to be broken. Ideally, you have attractors and beliefs that need to be broken, right? Ideally, you have multiple attractors and only one belief. This one had only, this one had multiple attractors, but multiple beliefs that need to be broken. That was ultimately the reason it didn't work. And the two beliefs were, you should sell supplements.

you should sell prestige. And that's what I didn't understand. I thought there was only one belief that I needed a break, which is that you should sell supplements. And there was actually, in fact, too. And so that's where everyone would get stuck up in cold traffic. So people who didn't know us, who didn't trust us, who didn't know who Dr. Cashie was,

and then he worked for the Olympic committee and all this stuff, right? They didn't know that. And so there were two beliefs that needed to be broken out one. And that is what prevented it from being a smashing coal traffic offer. And so I hired a, a sales team. I hired customer service team to fulfill what I believed was going to be the increase in demand and it didn't happen. And so what I ended up happening is I had to cut all these people because they didn't have anything to do. Right. And that took a cultural hit, right? On those

departments they've since recovered and the people who are there now the absolute best people, which in some ways is kind of great because you don't know who are going to be the total A players, but if you hire 20 people, you know from 20 who the top five are and then you end up getting and sometimes better staff. And that was a side benefit, but I would definitely not have the cost of having to hire that many people and then letting them go because of anticipated demand.

So the next lesson I had was that you only hire when it hurts, right? You want to wait until the capacity exceeds your current ability to utilize. And a lot of times you have more utilization capacity than you think you do. Everyone thinks that they are overworked, right? Every employee in general think that they work really hard because that's who we are as humans, right? Everyone thinks that they work really hard.

But most people can work more, right? And so the thing is that your work will expand, given the amount of time you have. When we had 20 people for customer service on just the Presti's Lapside team, they all said they were busy. We now have a staff of five doing the exact same work. Five, right? Doing the same work.

And based on the calculations we have, we still have 30 or 40% capacity, right, with that team. And so, like, that was a lesson for me, only higher when it hurts. don't hire before to mid right and my thought was is i want to have an amazing experience for everyone who comes in so we can anticipate it be ahead and give it like like i said give an amazing experience and that wasn't the case we didn't need to real quick guys you guys already know that i don't run any ads on this and i don't sell anything and so the only ask that i can ever have of you guys

that you help me spread the words we can out more entrepreneurs make more money feed their families make better products and have better experiences for their employees and customers And the only way we do that is if you can rate and review and share this podcast. So the single thing that I asked you do is you can just leave a review. If it takes 10 seconds or one type of the thumb, it would mean the absolute world to me. And more importantly, it may change the world with someone else. The next mistake that I made was, what was the next mistake I made? I think that the next mistake that I made was actually, I was listening to a small base of customers that wanted more.

more things. And so this is something that I'd say is something overall that I think that I made a mistake as, that I'm currently actively trying to rectify. But people want new things, right? And so I want to give those people new things. But as our customer avatar has changed, a lot of people come in now just want things that are, want things to be better, the same things, rather than more additional things. And so I made lots of like internal plays and we made lots of trainings on management, lots of trainings on leadership, all the things that people needed, right? But people wanted things that were, wanted fewer things that were deeper, if that made sense. And so that was one of the lessons that I have learned in going through this process. One of the other lessons that I have now

learned is about hybrid actually. So here's one of the mistakes that I made with hybrid. I failed to articulate it well to my existing community, right, of Jim Lawrence. And so when I marketed it externally, like, I'm a marketer. Like I need to make it have pizzazz. It needs to look new and different, right? That's the point. And it's been super successful, right, from that standpoint.

But I had. so many gym owners freak out and think that I wasn't going to help gym owners, despite the name of the fucking group being gym lords, right? My mistake, because I gave them a scenario where they wouldn't need to necessarily have the gym that they have. But the other scenario is that you keep your gym, right? But I didn't articulate that well enough. And the term hybrid is something that I've branded. You can see it all over the internet now.

Everyone's talking about hybrid, right? Because we branded it so well. But the problem was, if I had just said, hey, guys, we're going to, add another level of service and we're going to call it accountability that's it no one would have freaked out it's fucking accountability it's all this right you should put a different wrapper on it but I did not communicate that well to my existing try and so when I look at the take rates from our coaching group it's only like 25% of the gyms in the gym work me have even tried to do that right they've even decided to try and those guys have

done really well and I've a shitload of testimonials I'm excited to launch But the thing is that I did I failed to communicate that well and I failed to explain to our gym owner community that like I am here to help gyms the point of hybrid the point of adding additional level of service that doesn't cost you money and equipment doesn't cost you square footage and just adds more profit is to make gym owners more money, which is the point. The next mistake that I think that I made is by opening it up to trainers, I think that some of the gym owners that we have felt disenfranchised, even though it's literally the exact same model. I think I could have maybe communicated that better. And so with each of these things that happen, I feel like they're just lessons. You know what I mean? So the lessons that I learned when I was too far away is that if I don't see anything negative

about a department, I'm too far. The lesson I learned when we over-hired was that you need to hire what it hurts. Like you got a really stretch capacity before you hire more people, right? And usually people always have more capacity than you think they do. And even than they think they do. And always having a team of A players, which was an inadvertent benefit of having that large influx and then cut that we had. The next lesson that I learned was around Bolton was that you have to have one single belief that needs to be broken in a sale, right? One single belief that needs to be broken.

When there are multiple beliefs, the sale becomes significantly harder. and the likely that it's going to be a grand slam offer is super low. And so I learned that, right? And I actually just didn't, I thought there was only one belief, but that ended up that there were actually two. And then the next one was messaging around hybrid. If I had just said, hey, guys, we're launching this new program. All it is is an additional level of service on top of what you already do at your gym,

and we're calling it accountability, right? That's what we're going to call it, accountability, and you're going to get 30 people to pay an extra $200 a month, and you're going to be able to three extra profit. If I had just said that, I probably would have had a way higher take rate internally. And if I could have done it again, I would have released it that way. And then said, hey, guys, by the way, I'm going to call this hybrid so it sounds sexier, but I'm not changing it.

It's still just accountability, but I'm going to call it hybrid externally so that people get excited about it. Okay. And that's what I would have done. But these are the mistakes that we make. You know what I mean? And there were some gyms who left. We're like, we don't think Alex wants to help gyms anymore. I just don't know what I would need to do to get someone else.

I'm not going to start up. Literally all I do is all gyms, you know what I mean? And like the last lead did release was driving people into a gym. Like it's all we do. But the thing is when someone has that, there's always truth. You know what I mean? I could point fingers and be like, how could you think that? But it's like there's always going to be a mistake that I made.

And so I guess, you know, the biggest lessons that I've learned from all of those things is that like, you're always going to fuck up. You know what I mean? And the thing is, is that like, especially when you have decisions to make, you don't know what the right answer is. And you never will know what would have happened if you had done it the other way. And that's just part of the game, you know. And so I share that with you because maybe you are too far away. Maybe you overhired. Maybe when you articulated a change to your community, you could have, like, we as entrepreneurs love change, but I have realized now that

humans hate change. No matter how well I sell it, everyone fucking hates change. I, maybe we on this call, are weirdos. We love change. We thrive in chaos, right? I love the excitement of something new. But most people, your employees, your clients don't like change. In fact, they hate change. And so articulating change, I think I could have been less,

don't be an idiot, here's the facts, follow the math. I could have been less around that. I've been a little bit more empathetic with my communication. communication. So anyways, we have some sick ass stuff coming out next Friday. I'm so pumped. We have some really, like, the next two release calls are going to be fucking epic. I'm so pumped. I've been, like, waiting for a lot of these things. But anyways, have an amazing day, guys. I hope this, that would be found value in this in some way. And maybe you have one of these things that you have made a mistake about. But anyways, thank you to all the hybrid crushers.

I have a shit lit of system one is. I'm excited to launch. For those of you who have been implementing it. And anyways, have an amazing day, guys. Keep being awesome. And I'll get you guys soon. Bye. Bye.