The Game with Alex Hormozi - More, Better, New: The Order of Strategic Leverage (GymCon Day 1) - Pt. 2 | Ep 559

Episode Date: July 6, 2023

"If it doesn't map to that, forget about it. Just cut it." Today, join Alex (@AlexHormozi) as he guest speaks during Day 1 of GymCon to talk about the importance of focusing on the highest leverage activities in a business and how to prioritize tasks based on impact and ease. He emphasizes the need to solve the root issues in a business, rather than relying on new marketing tricks or hacks. This is part 2 of the talk.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:(1:16) - Strategy frameworks to get more customers and scale business(8:41) - Make the right decision with impact and ease(11:34) - Obsession with product leads to compounding success(18:44) - Rate of learning: same condition, new behavior(21:31) - 8 ways to get more customers(26:46) - Make it efficient with little operational drag and capitalFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

And what's wild is that a lot of you guys think you have that skill. You only do when it comes to cookies, but not when it comes to money. And so you, like, give your clients all these lectures about self-discipline and being hard and believing in your better self. But like, you will take actions that are in direct contradiction. The wealthiest people in the world see business as a game. This podcast, The Game, is my attempt at documenting the lessons I've learned on my way to building acquisition.com into a billion dollar portfolio. My hope is that you use the lessons to grow your business and maybe someday soon, partner with us to get to $100 million and beyond. I hope you share and enjoy.

So right now, there's a lot of shit that you guys probably learned so far. You're going to learn tomorrow and the rest of the day, et cetera. If it doesn't do one of these three things, toss it. Number one. Number two, you might only be able to do one of them or two of them. And so then you've got to pick, okay, of all of these things, which of these has the highest likelihood of working with the least amount of effort? You do that one first.

And as silly as this sounds, many of you won't do this. And the reason I say this is because I talk to people who are making a million a month, a million a week, and they sometimes forget, too. So, like, when you have the same conversation over and over again, you start to develop frameworks around it. All right? And the first framework that I wanted to give you around strategy is how does this get us more customers? How does this make them worth more? And how does this increase the likelihood that those two first things don't stop happening? If it doesn't map to that, forget about it.

Just cut it because there are other things that will do that that we should be doing instead. Cool. Now, the second framework is going to go one level down. What, who, how? So, usually when you do this whole thing, you get a big list of whats, right? These are all the things I got to do. What, what, what, what? You're like, fuck, there's a lot of what's?

Who's going to do it? Most time, you're like, me. Right? The difference in the guys who become bigger business owners and the ones who don't is they have to think, how can I get my team to do this for me? Now, this is not a team talk, but I am telling you that the reason that gym launch went from three million a year, whatever it was to 37 and still cranks, was because of Layla. Because I was like, we're going to make it the Alex show. She's like, that's a terrible idea. And so she built a team and started empowering the team. She's like,

you can't do that. She started taking things off my calendar. I was like, hey, I like that. She's like, no, not for you. That's for Sandra. Look, I got six Sandras. They all want to work. And so what ended up happening is, has anyone given a task to someone on your team? And they actually just did a great job with it. And you're like, oh, thank God. That was awesome. Anyone had that happen? Okay. So big businesses do that all the time. And you just do it lots of Sandra's. And if you can't give shit to any Sandra's, then you're the problem because you have really low standards and you're a pussy. You can't have hard convos. So what did it? Like literally, it comes down to that big macho guys can't tell the female trainer that she sucks. Can't do it.

We can't do it. And so what happens is we have this big list of what's and then we put Santana on the first two and we're like, but man, it'd be cool if we could do some of these other ones. Who should we give it to? And then we start assigning the who's. But here's a fun trick. If you've given the same who, the same thing, 12 weeks in a row like each quarter and the what's not done, the who's the problem. Winners win. And I'm sure that the best people that you have on your team hit the ground running, started taking shit off your plate immediately, started executing, everybody loved them. Remember what that felt like. That blueprint is what talent looks like. And you just have do more of that, get more of those people, which then opens up the next thing, which is,

I'm not the type of leader who will attract that type of talent. I don't have time to get into fixing you right now, but that is what the next thing that happens is. Okay, fantastic. So, TikTok over for this strategy session. Go to the next one. All right. Oh, good. I'm great. I'm crushing on time. Next framework for you. More better new. So as soon as we figure out that we have the highest strategic leverage activity that we can in a business, we then ask ourselves, can we just do more? Why can't we do more? I want to do more. More money. Let's do that. More, more, more, more. Right? Or we say, can we do it better? We don't have to invest in any new resources. Just do it better. We're going to go from calling leads in 30 minutes to calling leads in under

five. Deal? Fantastic. Once we do all the mores and all the betters, then and only then do we do New. Now, here's how most small business owners decide what they're going to do. New. And the thing is, is a lot of you guys are going to come back from here with lots of new. And you're going to be like, hey, team, I'm going to vomit all over you. I'm going to make no plan. It's going to be awesome. And they're just going to be like, let's give it a week. He'll forget about all the things he said. And we'll go back to normal. Real talk. It's going to happen. Jim launch, since we sold it to whatever, is years ago, whatever the time was, 2021. I'm so proud of Kale and the team because they consistently ask, thank you, how can we do more of what we're doing, how can we do it better?

Jim Wancher's going 40% since Alex and Lela exited the majority share. We still own 30% of it. And I think in a lot of ways, Kail's a better CEO than I am because I also like new shiny things too. But Kail is super disciplined. He's an exceptional CEO. There's a lot to learn from him. How can I do more? How can I do it better?

So it's like, hey, dude, I think we should be getting on TikTok. He's like, you know what we could also do? We'd fucking double our cold call team. Do that. What do we do that? What do we do that? What's the likelihood that if we double our cold call team, we'll make more sales? Hi.

We already have a trodden path there. Let's just do more of that. But what about TikTok? It's like, yeah, likelihood that we're going to get sales. I don't know. We've never done it before. I don't know. But what about this kid I saw on the internet?

He's making millions. Let's just double our cold call team. And then let's look at our better and say, like, do you think we can clean the numbers more? Do you think we can improve the script? Do you think we can follow up faster? Do you think we can personalize the reachouts more? Probably.

And so right now, this is real, real. The thing that is killing most of you guys is the desire to 10x in 90 days and then not doing it and trying something new and hoping for a silver bullet that never comes. It's just, it's 100 golden babies. Like the big businesses, it's just golden babies.

It's just improving lots of little things over and over again. The 40% improvement that Jim Wanchus had since we sold our majority share has, there's been no one thing. And man, wouldn't I love to make that short video? There isn't one thing. We just improved a lot of little things. And that creates the big outcome. And so right now, you probably have this big list of should do's.

Like, I should do that. I should probably email my list sometime. Right? at some point. I should do that. I should probably do more cold DMs or do more reachouts. I should probably make more ads to run. I should probably do that. I should probably figure out our pricing and optimize it. I should probably create that sales training program or get my team to go through that sales training program. I should probably set up a role playing cadence for my team so they sell better. But you know what's new? That sounds cool. The should do's if you actually

just route all the things that you need to do down and then you tick them off and you realize that it takes two years to build an exceptional business and you did nothing but just actually do all the shit you know you should be doing, usually build a pretty exceptional business. It's the rush that kills everyone. It's the hope that this new thing is somehow going to shortcut the work that needs to be done. And like this has just been true and true because the thing is that that list for a $10 million company is longer and bigger. That list for a $100 million company is longer and bigger. And it's just shit that needs to get done.

And so the faster you can confront the work that has to get done, the faster you start getting the getting, getting to the getting. There you go. This is making sense? All right. Now, you're going to have a lot of different things. You're going to have a lot of different things that you could do, right? And you've noticed this is the central theme.

It's like you've got a lot of decisions to make, and I just want you to make the right one. I want you to make the one that makes the most bang for the buck. And an easy way to order this is impact ease. There we go. So when you have your big list of shit, just put it as one, two, three, four. Just put a number next to it. Really easy. Lots of impact.

Really easy. Do these first. Then once you've done all of those, hey, don't consume any more information. Once you've done, wait, I haven't fit. Once you do all of these, then start working on these. Then start working on these. Then fuck these. I really want to rebrand the logo.

Why? No one knows that you exist to begin with. What are we talking about? You're like, I want to rebrand. It's like you have a nameless, no one has any association with your first thing. Like Xerox is just made up letters, right? They created a brand because branding is the consistent action of associating the unknown with the node, right? I know I'm supposed to talk about social media branding.

I didn't think it was going to be super important for you guys because you don't need to for now, in my opinion. Not because it wouldn't benefit you, but because there are other things that I think would benefit you more. Just to be clear. Okay. Now, I'm going to give you this little tirade, and then I may have time, but I may have time. but I may not have time at the end for Q&A. We'll see. So oftentimes the things that is limiting the business is the big, obvious thing. So we have really big egos about our business. We assume that it's exceptional. We assume that it's excellent, right? But in your heart of hearts,

you probably know that if you were actually fucking exceptional, you would not be asking questions about how to get more leads because you would have people referring their friends. And referrals, by the way, are nonlinear in that they are exponential in nature, two bring four, four bring eight, et cetera. So the book, the $100 million offers book, was probably my first big experience with that because I spent like a very long time writing it. And then I gave it away for 99 cents.

And I made one post. And I think this one I had like 20,000 Instagram followers in total and I didn't have really any of the platforms. And that book to this day sells more copies every month than it did the month before. And like last month that sold 25,000 copies. It's like almost a thousand. books a day, a thousand customers every day. No marketing spent. Just word of mouth, right? And 14,000

five stars. And so, like, it's the big obvious thing. And from being in the room with millionaires and billionaires and decade billionaires, the thing that has become so clear to me is that the people who are obsessed with their product are the ones that get the compounding. And so every business needs to have some sort of compounding vehicle within. it, otherwise you're going to spend the rest of your life trying to promote it. So think about this way. If I spend two years trying to write a book, and at the end of the two years, it's exceptional, I'm going to give the alternative example first. If I spend two months writing a book and I publish it and then I have to spend the rest of my life trying to promote it to get people

to buy it, it's a tough life. Low leverage. On the flip side, if I spent two years trying to build something fucking incredible and then let my customers market it for me for the rest of my life, more work up front, less work long term. It's just that being willing to delay satisfaction or gratification is, in my opinion, the single greatest skill that you can develop. And what's wild is that a lot of you guys think you have that skill. You only do when it comes to cookies, but not when it comes to money. And so you give your clients all these lectures about self-discipline and being hard and

like, you know, believing in your better self. But like, you will take actions that are in direct, contradiction, that same thing. It's just we're switching calories for dollars. Same thing. And so when I see a lot of the business, like the gym owners that struggle, it's just the big obvious thing. The sandwich sucks. They're like, dude, what's the new marketing thing for like gyms? I'm like, have you tried your sandwiches? They are terrible. Why would you want more people to know? Right? Like, it's real though. Right? Like imagine I had a mediocre book, which is what most people would have. and then I spent tons of money trying to market it.

Why would I do that? It sounds ridiculous when you think about it. You're like, I'm just going to let everyone know I'm mediocre. That would suck. But that's what a lot of people in this room do every day. And so the thing is, is that, in my opinion, if I were to start a gym over today, I would consistently work on the actual product, the experience, the way people get greeted, the trainings for all of the teams, into the world's simplest model.

And until people were not leaving, I would, would not be worried about bringing more customers in. Once you get that right, then when you're pouring all this gas in, you can catch it. Because if you've got to hole out the other side, your constraint is the fact that people don't stay. And so the biggest thing that you have to solve for, because now we buy into a lot of brick and mortar chains, it's one of my favorites, unsurprisingly, is LTV, or Lifetime Gross Profit over everything. The guys who can spend the most money on marketing are the ones who make the most money from ads. So when you see these massive marketing companies or these massive campaigns that are out there, it's not because they're better at

marketing. It's because their LTV enables them to spend as much as humanly possible in the marketing. If you print cash on the back end, you can get silly on the front end. This has to sink in. Like, this has to sink in. And I keep being repetitive about this because I continue to get the same questions whenever I go. And it's like, what's the new marketing trick? What's the new hack? It's like you have to solve the root issue. And it's kind of like the, it's like the gal who's like, hey, is it keto? Is it intermittent fasting? Is it, you know, like I'm just trying to give the parallel here. Like that's what you sound like. You don't get it. You got to understand how to count your macros. It is what it is. Done. And so like in the business, it's like you have to figure out how to get the

mouse trap to work, even at its simplest level so that people actually like the thing you have. And I just feel like so many of the gyms that I see and I go to, it's obvious. It takes five seconds to see why they're not successful. And the gym owner, because they're in it, can't see it because their ego, their identity is attached to it. Because you think that if your gym sucks, it means you suck. And that's not true. So you have to break that. You should be like, oh, yeah, we suck at that.

Onboarding, non-existent. Churn, through the roof. You should see my trainers slaving with each other. It's terrible. Place absolute pig stock, right? So what's your plan? I'm going to market it. I'm going to market it.

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 is that you help me spread the words so 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 ask you do is you can just leave a review. It'll take you 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. So to give a quick, a quick recap, and if I have time for Q&A, I will. One, brand is making associations between things that are intangible with things that are tangible and unknown. So things that people like, if I hold a bunch of bricks of gold on stage or I hold a bunch of stacks of cash, you will make associations of money with me. And if you didn't know who I was, you would assume that I have something to do with money. That would be your assumption. That would be the association. If I stand next to a porn star,

you would assume other things, right? Associations. And so if you want to build the brand, associate the service that you have with the intangible ideas you want the prospect to believe about you. So if you want them to think that you are clean and you are friendly and that you care, and start there. Magic Want. If you feel sad, immediately translate that into, I do not know what to do next. It massively simplifies this very like, painful experience. It's been really helpful for me. So if you feel hopeless or you don't know what to do, it means you just don't have options. Like you don't perceive that you have options. It's a lack of options. So you just have to become informed. All right? So whenever I think sadness,

I think ignorance. It's like, oh, that's solvable. And then I can start attacking it. On the flip side, if you have lots of options and you feel anxiety, it's because you don't know how to pick, which means you have to prioritize. It means you have a lack of strategy. Strategy is getting the most bang for the buck. It is allocating finite resources against infinite options. And some of the biggest strategic moves are outside the board. And that's where sometimes having gym launch, other people, et cetera, is helpful because you have outside eyes. So your mouth, inch below your nose, but you still need somebody else to tell you a bad breath.

I heard that the other day. I really liked it. Right now, there's a constraint in your business. If you do not know what the constraint of your business is, you will not solve it. You'll continue to do the shit you have been doing, and that has not been getting you what you want. So right now, unless you change the activities you do, you will not change the getting that you are getting. So if you go back, so I'll give you a different one. So intelligence and learning. This will be fun. So the definition of intelligence, as I define it,

is rate of learning. It's a speed. Someone learns fast. They're smart. Someone learns slow, or a little slow, right? Rate of learning. Okay, what does learning mean? This is how you can remember it. Same condition, new behavior. Which means the phone rings, and I trained you, and you answer it one way before I train you,

and then I have the same condition, the phone rings again, and then after I trained you, you behave differently, you have learned. If you come to this event and you do things and then you leave this event and you do the same things, you have learned nothing. Which means that change in behavior is the way that you can measure intelligence. The speed at which you change behavior within the same conditions is your rate of learning. The faster you do that, the smarter you are. So some of y'all are, hold on, I've got to figure out the political one. dumb.

But again, when I define words or operationalize them, it becomes a lot more under my control. So I'm like, man, I don't want to be stupid. It's like, they got to do this thing. I went to this marriage seminar, and they say that when my wife walks in the door, I should say something nice to her. Damn, right? Walks in the door, you went to the seminar and you're like, nice blast. She's like, is that the top one or the bottom?

I don't know. One of them. Right? And so same condition, new behavior. It's also a great way to teach your team, which is like, I'm going to present this condition. We're going to train. And when I present this condition again, I need you to change your behavior. That's what learning is. And so everybody here, if you don't know what to do, then you're not going to be able to change your behavior, which means you're not going to get an outcome. So most of the success that I've had is my effort to try and boil everything down into an inputs to outputs equation. I remember when I was studying for the GMAT back in the day, I found this research study that showed that the number of problems that you solved was in direct correlation with the score you got on the test. And I was like, oh, yeah, okay, this is a clear input output. Like, life isn't always this clean.

But I was like, fantastic. So I did about a stack of phone books this high. I did four hours a day for 16 weeks of problems. And then I scored above a Harvard Smith score. I didn't start there, but I had the grass. I was like, the more problems I do, the higher my score is. And by the time I got to the actual test, I was like, I've literally seen every one of these problems before, and I've done all of them 100 times. Right?

So it's being really easy. And so if you don't have the inputs outputs equation, which will be the last thing I do because KEL asks me to talk about leads, then you're not going to get there. All right. So I'm going to give you guys a sneak peek. You can write it down. You can't take pictures or talk about it. There's only eight ways to get customers. You've got warm outreach.

You've got cold outreach. you got paid ads, got content. These are the only four things that you can do. So if you claim that your constraint, because everything's amazing about your gym and your trainers aren't sleeping with each other,

and the gym's really clean, and people don't churn, and you're priced appropriately, and you have a really good onboarding experience, and people get reached out on a regular basis to check in on them to show that you actually give a shit. You do all that stuff, right? And you think that your constraint is more marketing,

which, by the way, everyone thinks that's what it is. And if you keep thinking that, nothing changes, just, maybe wrong. Anyways, let's talk about leads. So these are the only four things you can do. You can either post content, do warm reachouts, do cold reachouts, or run paid ads. Simple. I like to quantify this by the rule of 100, which means you either spend 100 bucks

of down ads, you do 100 cold outreaches, you do 100 warm outreaches, or you do 100 minutes of content. You do it every day. And if you want to get there faster, do more. Because you'll also get better, because you did more. just like the problems on the GMAT test. If you're not doing this stuff, what are you doing? You might be thinking about marketing or advertising,

it might be strategizing, planning. You're not doing any of it. And the amount that you get will be directly proportional to how much of this stuff you do. This is how you let other people know about stuff. That's it. That's all there is. Now, OOP is other people.

You've got your customers who can refer you people. you've got affiliates who can send you people, you've got employees who work for you, and then you've got agencies. Those are the other four types of people who can get you the stuff. If you think about it, any of these four do these on your behalf. This, by the way, is leverage. If I can go get my customers to tell everybody about my book, then I won't have to. If I can get affiliates, all the chiropractic,

places in a five-mile radius from my gym and all the massage studios in a five-mile radius from my gym to just give a free month with any new customer they have because they know that I will treat them right, then I can just have 200 different businesses that come to me. Now, do those 200 businesses come out of the sky? Nope. What would you do? Warm reachouts, cold reachouts, run ads, or make content targeting those people. Then they'd come and then they do those things on your behalf. Agency will do those things on behalf. Or if you do all that stuff, then you cold outreach, cold outreach, warm outreach, paid ads, make content to get employees. And then the employees will do those things on behalf. Is this simplifying some shit? Right now, business can feel confusing. And

usually it's because we have not defined terms. If you define the terms, then you can know what you're actually talking about rather than like making noise with your face. Okay. If you don't make noise with your and just know what you're talking about, it becomes a lot easier because the variables become defined. And so if you want to get more leads, you have to do these things. If you want to get even more leads, you get other people to do these things for you, which starts with you doing these things to get those people. That's it. I have three minutes. So, I'm going to see if I missed anything. By the way, giving away really good free stuff, great way to get more people to opt into your thing. Just in case anybody needed to be convinced about doing free stuff.

All right. It covered branding. Covered all this stuff. All right. Let's talk about this last three minutes. Last TikTok of the day. Who here wants to know what it looks like when it's all the way right? Yeah? Talk about scaling it? Okay. So this gives you a little bit of vision for the future. So we love local brands. They're great. They're wonderful capital compounding vehicles. what you need to know is how much does it cost to open a facility? All right? Cost to open. Then you've got to know your top line revenue or more specifically your bottom line profit per facility. The ratio between these things, let's say it's cost me $100K to open a facility,

and let's say I make $100K per year, then I have a 100% cash and cash return. Who here remembers what the stock market is? Less than that, right? Which is why I like it. Now, this would not be that interesting to me. Why? Because I know there's a lot of operational drag associated with opening a facility just to make a hundred grand. Right?

And so the idea is, how can I, is there a way that I can get a more leveraged model so I can make maybe like 250 to 500,000 per facility? And then maybe even if it costs me 500 to make 500, then I only have to open one fifth as many facilities in order to compound my cash. Now, the way to do this, and this is one of the things that I've observed with some of the most successful franchisers in the space, is you have your facility. Now, it has been your special child. You have lots of doodads and lots of whiz bangs that you've attached to it, specialized sessions, blah, blah, blah, blah. The franchises that are the most successful,

simplify it. Even if their corporate or headquarters has like all this stuff, when they want to scale, they massively simplify. They think, how little square footage can I possibly use? Because I'm not using this to fulfill my ego. I'm using it to fill my bank account. Big difference. How little can I make this so that I'm really,

efficient with capital. And then how can I make it as little operational drag as possible? I can do it with six people, but can I do it with three? How would I incentivize those people? I know I went from like super dirt, sorry, clouds to dirt here. But that's, that is how you unlock going from five locations to 50 locations. And then you start building the machine that builds the locations. So then you have launch teams that fill it up before it opens. You turn it over to management. They keep running it. And the big key of making all of these work, is that it can't just be based off some unique acquisition channel because those all eventually go away.

All advertising platforms will eventually become too expensive and they will eventually die because attention always moves. And so the only way to become enduring with your business, like if you really want to not, like if you want to sleep well at night, you have to fix the back end. If you know that if you don't sell any new customers, you're still going to be fine next month and you do that for three or four more months and you'll still be fine,

that's the perfect business to then go market. But like, that's the boring work that no one wants to do. I'm going to end with this one thing. A franchisor of a really popular, not really popular, they had, I think, 20 locations, franchise came to me. And he's like, my franchise isn't working, right? And they had, I think, six corporate stores, 14 franchised. And the average store cost about a million bucks to open.

and they made about $150,000 in profit per year. Right? It's like you might as well just like invest in a stock and just not bother, right? Like that's what you have to think with. And when I saw that they were doing, I think the average was like 1.3 in top line and 150 and bottom line. And I think they were running like a very small margin. I thought to myself, I think it's actually less than 150.

Point is shitty margins. He was trying to figure. out how to market its franchise better. How ridiculous is that, right? But the thing is that, like, many people who are in this room are thinking the exact same way. And so instead, what I said was, hey, man, I actually think your margins blow. And I think you have a lot of interest, because that's why I took the call. I knew the brand. And I was like, I think you have really good products. I think you just, you just have to get the ops right. So get your margins in check, right? You've got this menu that has 500 items on it, boil it down to the top 15 that everyone usually

does. Look at all the ingredients, buy type, see if we can negotiate. better deals with vendors because we're going to consolidate all over demand, we'll get more volume, et cetera, et cetera. And so what I did was, I said, hey, we've got 12 months. I want you to spend one month, 12 months in a row to get 1% profit back. Month one, you get 1% back. It's all you have to do. It's my only thing that's 1% back. And next month, you're going to find another 1%. Next month, you're going to find another 1%. That's all you have to do it. Hey, if you find 3 months ahead. Next month, another 1%. And 12 months from now, you're going to find another 1%. And 12 months from now, you would have a business that would be sellable, would be investable,

and would have already tripled or whatever was the profit of that and made it a scalable enterprise. But he had spent 10 years, 10, trying to scale the franchise. When it was the big obvious thing, the sandwich just wasn't that good. The sandwich in the literal sense was okay for the customer, but it was terrible for the investor. So you had to fix the model. And so I think right now a lot of everyone here,

as much as everybody loves to come for leads, that's great. A lot of you guys are just serving mediocre sandwiches. And I think if you spent a year eating your own sandwich, you would immediately see all the things that are wrong with it. You'd fix that. And then the rest of your life, you'd be able to scale this thing.