The Game with Alex Hormozi - Old must die for the new to live... | Ep 107

Episode Date: February 21, 2019

Learn from the past and keep moving forward. Today, Alex (@AlexHormozi) discusses the importance of embracing change and letting go of old business models to achieve growth and success, even if it means short-term losses. He emphasizes that accepting mistakes and making informed decisions is crucial for personal and business growth.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:(0:32) - How to overcome fear and embrace a new business model(1:43) - Letting the old die for the new to live(7:51) - Accepting short-term losses for long-term gains(9:48) - Owning your decisionsFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

So I'm calling this the old must die for the new to live. And what's up, Mel? It's a concept that I think a lot of people don't grasp when they're trying to grow or change or make some changes in their business or improve themselves. And it's a question that I get all the time because for a lot of the gyms that we work with,

we recommend a radical switch in their model, a radical switch in how they train their sessions and how many sessions they train in terms of their pricing and their packaging and all of these things that they need to do. and sometimes even the cost that they pay their trainers. And so a lot of these changes obviously come with, you know, for the entrepreneurs, like this huge fear of like, well, what if everything breaks?

What if everything disappears? And first off, when we do these massive changes, most of the times nothing happens and it is fear. But I actually want to come at this from a different side, more from like the vibe of the business in general, like the spirit of the business. And it's that the reality is that the old business has to die in order for the one to live. And so a lot of times we don't want to confront that, but we're in this vehicle, this business model that we know sucks. Right. Like if you're if your current experience,

your reality has been the last three years, you know, let's say, let's say you grew the first year and then the next two years, you pretty much stayed the same amount, right? You know that if something does not change, it's going to stay the same, which means you know that the model, the vehicle that you are in is not working. The problem is not that you don't have more customers. The problem is that the customers you have aren't getting more customers because the model you have is not providing sufficient value for them to want to bring more people in. And so you have more churned than you can make up for on the front end.

And that's the problem, right? The issue is that. And I can't, so like here's an example. And this is like one of the multiple stories that happened just recently. There was this girl who preps our food for us, right? So she makes all of our food like to the macro, personalized for us and it's it's great saves me a ton of time and food's good so like and she's a cool cool girl she's really young and she's like just getting her foot into the entrepreneurial

door so I feel like I'm half donating to the charity of entrepreneur entrepreneurialism but she's like man I'd really like to do this full time and I was like okay well I was like tell me your business model right she's sitting you know she's in my kitchen cooking all this food and I was like okay let's look at what this looks like if your week is actually full. And she still wasn't making the amount of money that she wants to make if her week was full. And so she currently had like three customers. We were one of them. And then there was two other ones that she had as like legacy customers. And so and one of them was asking for two days a week of prepping for the same pay as one day. And so she's basically getting paid half on this one.

And then the first customer she had was like a legacy customer's first wish she ever signed up. And that one was paying like even less than the split person. Right. And so I was like, you have to change your pricing so that it actually makes sense so that you can make a profit, right? And she understood fundamentally. And so then she goes, she changes her pricing whatnot. She changes from charging hourly to charging on a weekly basis, puts it on recurring, sells it as a package instead of selling her time, et cetera. And she emails everyone about the change, which was a big no, no, you should never do that. Especially if you have a tiny little client tell me she should have got on the phone or spoke with them in person.

But that was a mistake on her part. But that's okay. The point is, after that happened, two of the three people left. Okay, so we were the only one who left. So she's like, I'm a little nervous because I took your advice and two thirds of my customers left, right? Two thirds being two out of the three she had. And I was like, right. Now, those people, you know, we're taking up two or three of your five days and were not paying you in a way that would allow you to make the profit or revenue that you need to make in order to do this full time.

right she's like right i was like okay you need to let the old model die for the new one to live right and so this happens all the times with jims where there's there's this fear of like well what if and the reality is even if that happens this model can grow and scale and be profitable at full capacity the model that you've had before cannot do that and so it's a fool's errand to keep trying to play that game when you know it doesn't work. You know it's going to lose, right? And so we keep telling it, like, we have this fear, and it's 100% irrational because at the bottom line, we already know that doesn't work. You already know it doesn't work. And yet we still don't want to lose it, but we know it doesn't work, right? And so, like, this goes with personal transformations,

the decision, like, if you want to change a part of your, you know, like, let's say, like, I don't want to start, you know, I don't want to drink anymore. Okay. Well, You can't just, like, not drink some of the time and then only drink on weekends or only drink after 6 o'clock at night. You know, whatever, right? Like, those things, like, you have to let the old thing die for the new thing to live, right? You want to go to church. You want to be a Christian. You want to act a certain way, whatever it is, right?

You can't just act a certain way five days a week and then two days a week not act that way. You have to go all in on that new thing. Hey, guys, real quick, if you're new to the podcast, I have a book on Amazon called 100, million dollars offers that over 8,000 five-star reviews and it has almost a perfect score. You can get it for 99 cents on Kindle. The reason I bring it up is that I put over a thousand hours into writing that book. And it's my biggest gift to our community. So it's my very shameless way of trying to get you to like me more.

And ultimately make more dollars to that later on in your business career, I can potentially partner with you. So that's my give. Go check it out. Amazon and back to the show. And sometimes there's a hiccup that happens when you change, but change is part of growth. right and so if you're in your business you know you need to make a change don't fear the short-term step back be hopeful for the long-term growth that's going to happen as a result and so is that like

you have to let the old die for the new to live and if you know you need to change your pricing or you know you need to change your fulfillment because you're already at full capacity but you're not making money that's a model problem like that's a problem with pricing that's a problem with the fulfillment like if your trainers are making more than you are there's a problem right like These are issues. And if you make those changes, there will be a short period of time. Or maybe if you cut your trainer pay, for example, and I'm not for cutting trainer pay, but I'm saying if it has to happen, sometimes the economics of the, like sometimes a yogurt

store doesn't pay the people behind the counter $25 an hour. Why? Because it's just not in the economics of the business, right? It's just not. Right. So if that is how you're set up, you're paying your person behind the counter who's doing, you know, who's dispensing yogurt, $25 an hour. I'm saying this figuratively, if you have to change that, that means you might lose some employees.

And that means you might have to go find some new employees. But you know that if you don't do that, you're guaranteed to stay where you're at. There's a point in the matrix where Neo gets in the car. It's raining. They stop under the bridge. And they're like, lift up your shirt so they can put this, you know, like to suck out the bug that he had in his stomach or whatever. And he's like, what's going on? I'm freaking out.

And before he says, yes, they like stop, they crack open the door. And she looks at Neo and she's like, don't go down that road. You know where it goes and you know that's not where you want to be. And so, like, I feel like that's the message for like the business model that you have that you know doesn't work for you. Is that like you know where that road goes. You've been walking that road for the last two years. And I know that's not where you want to be.

And so like take the switch, take the new opportunity, like shed the old identity to get into the new one, accept the short term loss or like discomfort that's going to happen with changing a habit, changing a pay structure, changing a model, changing pricing. The person who's like, like, for example, that girl, the customers who left her, right, are good riddance for her, right? If you have people who are paying you $49 a month for large group training, right? And then they're like, well, I can't believe you'd raise this to $150 a month. Good riddance.

They're pain in the ass. And they're not worth the revenue they're bringing in. They're not. Right? It just doesn't make sense for the model. So you have to accept that and accept that sometimes like, I mean this, I'm not trying to get biblical with you guys on Sunday, but like you have to prune the tree, right? Like trees grow by pruning, which means you have to cut off old branches.

And cutting things is painful. And not only that, you cast them into the fire afterwards. You get rid of it. You burn it. You're done with it. And you go all in on the new direction. You go forward despite the chatter, the noise that's going to happen from all these people who want to give you business advice, who are your customers. They're incentivized to stay at $49 a month.

It makes sense for them to argue with you. It makes sense for them to put doubt into your mind about that decision because for them, they get less now. right because you made decisions in the beginning without the proper information you didn't know and that's okay you didn't know but now you do know and so if if you if you act in ignorance no one can blame you you didn't know but if you know and then you choose not to do what you know you need to do that's fear and that is your fault and so that's the difference you have to own it you have to own the decisions that are going to change there's going to be discomfort and you have to let the old die in order for the new to live because the new is the only thing that's going to get you where you want to go.

So lots of love to legend community. And if you all aren't crushing it, you should be. And if you're not with us, you should totally comment and like hop on because the water's warm and we've got some things rolling out that are going to continue to have all the gyms that are working with us, crush it with new offers that are already converting, new profit mechanisms, new acquisition systems, all the all the Gucci. I'm just so pumped. There's so much good stuff coming out.

But anyways, I won't ruin it. I won't spoil it as much as I usually do anyways. Keep you guys on the flip side.