The Game with Alex Hormozi - Sell One Level Up to Scale Faster | Ep 942

Episode Date: February 4, 2026

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 and will learn on his path from $100M to $1B in net worth.Wanna scale your business? ⁠⁠Click here.⁠⁠Follow Alex Hormozi’s Socials:⁠⁠LinkedIn ⁠⁠ | ⁠⁠Instagram⁠⁠ | ⁠⁠Facebook⁠⁠ | ⁠⁠YouTube ⁠⁠ | ⁠⁠Twitter⁠⁠ | ⁠⁠Acquisition ⁠

I can't really test a campaign unless I'm willing to spend 2x my target KAC as just a test of whether this works or not. So it's like if my target Kack is 2K, it's like if I don't spend at least 4K, it's like you can't know anything because the cadence of feedback is so slow on 2000. It's like every two months you'd be able to get like a sale inefficiently. I have to be willing to spend more than my target Kack so that I can then get it efficient, right? My name is Mike Carlson. I sell high level to online fitness coaches. We'd do $2 million in revenue, and we'd love to be at a million a month. Okay.

This is what is stopping me. So what is stopping you right now? Why can't you do more what you're currently doing? Yeah, we basically developed and built up the better product because we had terrible retention. You had terrible retention? Terrible retention. And now you have good retention? Yes.

What's turned now? 7%. Monthly? Monthly. Okay. We have a 9,000 LTV. Okay. What's Kack?

I think it's a 5,000, 4.6 to 1. Okay. So it's like $1,500. bucks okay yeah cool got it um so how do you get customers right now uh we have 40% come through shichy partnerships of other mentors business sending their clients to build out the funnels okay um and then organic and i would say the last piece is actually the meta ads or instagram ads are those working and profitable yes okay so two of those are reliable word of mouth we'll just put a pin in for now so fundamentally why can't we either do more meta slash facebook ads or

more strategic partnerships in terms of the outreach required to get more of those people on board. Yeah, we totally think that meta's way to go. We used to do it. We turned it off. Cool. Okay. My real question, I think, on that is, how do I make the CRM sexy on the front end to get somebody to actually inquire? Are the ads working right now? I wouldn't say we're spending enough to say yes. What do you spend it? 2000 a month. Oh, okay. So, yeah, that's... We just have them on. Rule of thumb for everybody, just side note. I can't really test a campaign unless I'm willing to spend 2x my target KAC as just a test of whether this works or not. So it's like if my target Kack is 2K, it's like if I don't spend at least 4K, it's like you can't know anything because the cadence of feedback is so slow on 2000. It's like every two months you'd be able to get like a sale inefficiently. And so you would, because I have to be willing to spend more than my target KAC so that I can then get it efficient, right? Assuming that I'm going to literally. knock it out the gate on the first shot is unlikely.

Okay. So from an offer perspective, uh, what problem does go high level stuff solve for the online fitness coaches? We really break it down into four different funnels. We have basic mini chat killer. We have a link in bio, which is your lead magnet.

We have, um, so there's a pain there, right? Which is like, you have followers, like want to turn your followers into customers without DMing anyone? Like, it's going to be the,

automate it's going to be the pain of being in the DMs all day, I would imagine. They're all online fitness coaches. Yeah. And I'm guessing most of them are on meta or IG or whatever is their primary way of getting customers. Instagram primarily. Yeah. And maybe some like 20% on LinkedIn doing, you know, busy executives, whatever.

Yeah, I would say none of them actually are on LinkedIn. Okay. So it's just IG. Yeah. Yeah. So I mean, at least you have a very targeted avatar. So it's like, hey, you're having trouble turning your Instagram followers into customers.

All of this can be automated. we'll show you in seven minutes how to do it. And that's the lead magnet. And then it works a case study of somebody who had ideally 7,000 followers and then was able to get to this many sales per month. That's what I would lead with. We'd be like, here's five different coaches who all had less than

5,000 followers who are all able to get five clients a week. Right? That sounds sexy, right? Just using our automation. That would be my angle. But fundamentally, it would just be like, boom, five case studies. Let me break down each of these. and each of the five would represent different psychographs or avatars.

So it'd be like, you know, a jacked white bodybuilding dude. And then it'd be like skinny vegan dude who's older and black. And then there's Asian girl, vegan powerlifter. And then, you know, moms over 50 lady. Like all of them have their own niches. And I would just show that it because everyone's concerned after you say, hey, I'm in online, you know, CRM is, will this work for me? And so you just would be like, yes, it will work for you. and so that would be basically the representative that I would use there.

That's what I would do is my first shot. But then, yeah, VSL, sales call, close. Trying to accelerate as much of that cash up front as you can. This is like a bingo, bingo, money, mango type play. No, for sure, yeah. What part worries you? I don't think any part worries me as much as just, we're not a mentorship group.

Yeah. And so trying to sell the CRM or the automation process, so then like another, crew if you would. But just trying to find the right messaging. We know this is where we're supposed to go. Yeah. The idea was like before I just tried and figure it out.

Yeah. Well, I'll tell you what I did when I had an identical business with Allen. It wasn't just online, but it was brick and mortar primarily. But same idea. Me marketing directly to SMBs sucked. And so I just marketed to agencies. And so to your point, like, you're not a guru. You don't want to get in the guru business.

I didn't want to be in the SMB guru business. I just found the people who had agencies that were Cairo agency, you know, whatever agency. And I said, hey, use my platform. I'll do this shit that you don't want to do. And then they constantly would have clients coming in and out, but the people that they stuck with me for less. Suzanne, we should run from an ad strategy campaign to like if you're business

matured. Yeah. If you're a fitness business coach, hit me up. We'd love to do this stuff all for you. And we have stickier revenue than you do. And so like the pains for those people are, aren't you tired of giving people the keys to the kingdom and having them leave three months later? Right. Wouldn't it be nice to have some recurring revenue that would actually stick you over year over year? Imagine if you could have customers from three years ago or every customer you've ever sold in your whole life still paying you. How different would your business look? Probably materially. Each of those are probably hooks that I would test. Right. And I don't know which one would work, but one of them would. And then that as soon as I know, then Craig. Cool.

But I would probably go there, especially if you're like, because what will happen is if you actually go straight to the quote fitness coaches, they'll be like, great, I have this thing. How do I get leads? And then you're like, fuck. Yeah, it's a hold on the process. Right. Right. So you'll end up having to get into that when in reality the people, you have to meet customers who have the problem to solve. You don't want to generate demand. You want to channel it. Yeah. As the coaches, they normally are already doing 10K or like our idle clients. Great. I don't know what the LTV to Kack difference between the two would be. I can tell you that I know on our side with Alan it was absurd when we went one level up. So just going, because an agency, it's like I could acquire an agency

for like $5,000. And then the agencies would pay to onboard with us and they'd pay $25,000, number one. And then number two, then each one that would onboard, let's say they had 50 customers. They pay $1,000 per customers. We had another $50 grand.

And then we had the recurring, which on the back end was like 30% of top line. So it was a super profitable model for us. But it worked for them because they didn't have to do any of this back-end shit, which we did. So if I had to, like, how do you get there faster would probably be just go up one level of. But when you do that, though, realize you will now serve two customers. You'll basically have to have like a customer success manager for the gurus.

And then you'll also have to have, you know, success on this side to make sure the customers are happy. So it'd be two-sided. Okay. Thank you. Yeah. My name is Katie. I sell new construction homes to first time. home buyers. We do 200 million in revenue. Amazing. We would like to be at 300. And land acquisition,

the constraint of our industry, is what's stopping us. So you getting land has been the issue. Yes. Okay. So where do you currently, where do you source land deals now? It's like the permanent or just like, okay, so it's mostly just getting farmers to give up their land? Yeah. Well, anyone who owns land. Sure, but they just have a lot of it. Yeah. word. So what's the current strategy that you use to get farmers to give up their land? Find out who they are. Okay. You know, do a lot of digging to find out, you know, who has land available and calling them. Do you buying lists? No, there's not. I mean, it's, it's readily available in the MLS. Like, we have access to the information. Okay. Yeah. The issue is there's

just no more names to call. It's not about the lead of land. It's getting it from the point of acquiring it ready to build on. So it's the permitting. It's the development of the raw land to finished lot. Could be anywhere from two to ten years depending on the project. And we don't want to put our cash just rotting out in the, you know, 10 year timeline, no return. So we like to purchase it from a developer that does it for us. So we can find the leads and find the land, but we don't have the people to develop it to get it to.

us. Well, at your size, have you considered either one pillaging the best developer's talent, bucket A, bucket B, just, I mean, your size, you can just do the acquisition. Become the developer yourself, you mean? Like, yeah, well, just buy one. Yeah, buy one. So you can just basically vertically integrate what you're trying to build. Yeah, we should probably do that. Well, you have the capital to do it. I'm sure you have really good lending relationships anyways and those businesses I don't know what kind of margins those run but like I'm sure like I would look at who are like my first steps would be like if I was like transplanted in I'd be like okay who did we

buy land that was developed from over the last 10 years and I would get all of those names and then I would be smiling dying slash trying to fly out or fly them out to say like some of those guys are going to be older some of those guys aren't going to give a shit anymore and they have got a good team or whatever and I'd be like great like how can we make something work here um and I'm I'd be looking at doing a deal that way because it depends obviously. I mean, at your size, it's buyer build, right? And so it really depends on how entrenched the inroads are and how from like the zoning and all that bullshit, how relationship dependent it is at the levels that you're looking at.

I'll give you a completely different example. But if you think about like open AI and some of the new AI stuff that's going on there, one of the strategies that's becoming more prevalent is rather than try and buy these AI companies, that let's say they've got 30 geniuses that work there and trying to buy that company for a billion dollars they just look at the top 20 of the 30 people who don't have who have maybe they got deluded because of the way the vc's ran the deal or whatever and then they just say hey I'll give you and you've seen these like 100 million dollar signing bonuses probably like flying around on Instagram and it sounds absurd but it actually is more efficient to give one person or the four key people in the

business 100 million dollars than buy the business for four billion. So it's just a pure allocation of capital play. And so from a buy versus build, if you can strip the talent out and they can keep the relationships and then you can rebuild it, that'll be the most efficient way to do it. But the, and that again, the test is, is that that would be my hypothesis, like, how ingrained are those inroads? If they're super entrenched and very difficult to, like, transport those relationships, then I would be looking at like, I'll just buy the whole co. Older guys oftentimes will actually take super long earn out periods because it just becomes an annuity for them. So sometimes they're willing to take like 15 years seller financing just to know that

they're going to get paid and you collateralize it against the business. And you already have assets and so do they. And so that can actually be a really, it's kind of a win-win structure for many of them. Just as a consideration. But like that's probably like I would like you're at the size now rather than you say like here's how I'd build a land development business. That's probably how I'd think about it. I think we have just been avoiding it because it's a distraction from home building. You know, it's like a completely different business. I think that every business at a large enough scale becomes a business of businesses. So like Amazon is not just like a business. It's like there's AWS and there's the white label business and then there's the logistics and distribution. Like there's so many elements that there's the video and the media side. There's so many different elements of Amazon, right? That you might be at the stage where it might make sense. So it does come back to the goals. Like if you know that you're, do you feel confident that you're just stay at 200 million or are you going to grow at 20% if nothing happens or like what's the current growth rate? Are you stuck there?

We've been stuck. Okay. Yeah. Well, then you probably do need to, like, if that is the constraint of the business, it's like, we build on every piece of land that we can get. Well, it's like, well, that's the constraint. All right. So then I think about, so the quantified version of what a constraint is, it's the highest

return. It is the allocation of resources that you'll do the highest return. And so if you focus on, like, so fundamentally, so why would we not want to do that? It's like, well, this is the place where we would get the highest return in the business. And the nice thing with that is that, constraints oftentimes are not like 10, 20, 30% improvements. They can be like order of magnitude improvements. All of a sudden, you can go to a billion because you opened up five times the land.

Nailed it. Thank you. Yeah. All right, cool. Thank you. Alex. My name's Eric Stauffers and I'm not a paid spokesperson, but I'm going to speak for all the entrepreneurs. You put together an amazing group here, not just of entrepreneurs that you curated,

but the acquisition team, we've learned so much. So thank you for that. Thank you. So my company is Bio Accelerator. We're one of the top stem cell companies in the world. Right now, that's what we're known for. We're actually a biotech platform, so we have a lot more behind the scenes. So what we do right now, what we sell for revenue is our services, our healthcare services and stem cell and exosome.

We're 24 million. We want to be at 250. Okay. Actually, 500, but I was sandbagging for this. Uh-huh. But there's a lot of things stopping us. One of them, I'm afraid that has been uncovered is our level of expertise, possibly including me. I think we're doing better than anybody in the world.

I'm biased, obviously, but we're kind of pioneering an industry. So there's no real great blueprint. That's my excuse. But I've raised capital both for this business and my previous real estate career, but it's been in small chunks of like $5 million, $10 million, $15 million. Like formal rounds or like friends and family? Both. So for this company, I seeded it, Angel Seed and then Series A, we're on a Series B right now.

That's about my level of expertise. But when we really need to get out to scale, we're going to have to get a lot more money. And I'm noticing and starting developing these relationships that it's a much different conversation when you start asking for $100 million versus $5.10. So I guess my question gets down to what would be a good suggestion knowing that I don't want to leave the company and get kicked out yet? Well, how much equity do you have left? Or like, do you have? 65%. Okay. So you still have a good chunk. Okay. And then 35% is all investors or their team. Okay.

I have some, yeah, team members also. Okay. Key players, yeah, chief medical officer, stuff like that. So is the issue that you've had the conversations and people are saying no to the higher valuation in order for you to get the capital you need? Yeah, a little bit of that. Because really, we have a lot of technology that hasn't, it's been proven in our clinic and it's ready to basically scale if I could get the money for the manufacturing to build the extra laboratories. And so I don't want the valuation to be squeezed so much that it squeezes me right out of a power position.

Yeah. So yeah, that's kind of the issue. Do the existing investors who have come in so far do they have? Because like you can absolutely maintain control and still be a minority shareholder. Like Zuck has 100 to 1 voting rights. And so if there's a business that requires more capital, that they still trust you, but understand that it requires more capital to get to where you want to go, then you can still maintain the control you want as long as they buy you. Yeah, the people we have right now are like that. You know, we have some professional athletes and celebrities.

A lot of people that were like really good patients of ours. And then they wrote your checks. Yeah. And then they wrote us checks. But they're not really big funding partners. Yeah. So, I mean, this is just a sale. that's all it is and so I would I would encourage you to probably think less about as

you sound really less about the facts and more about the story now facts do you make great for great stories um but the question that we have to answer is like what would you need to see in order to believe and so if I'm talking to like so when we're thinking like if we're about to let's say we want to raise around in 2026 right I'm having those conversations now with 10 times the amount of potential kind of like investment partners to understand what their what each of them needs to believe or needs to see in order to feel confident to make the bat. And once I have that kind of big list, then I can narrow that down to like, okay, this guy's unrealistic, this guy's unrealistic.

This we can do and it's going to cost us this much. And so sometimes it's a tiny race to just get this one need to believe to be believed and then you can ladder into this other thing. And so I think about it as like, I want to go. find my customers, find out what they want, and then build the thing they want. Now, to be clear, that's not like trying to derail the vision. Like you don't want to build another person's company. But it's typically they're all going to just try to pay down risk. Like all they're paying down, right? Or want you to pay down for them. So from a control perspective, that's super manageable.

If you did it today, it's like maybe you lose half the equity that you have, but now you have a company that you raise, how much cash do you need? To finish this round, five million, but we want to go out and raise 100 in 26. Okay. And you want to raise that at what? A billion? No, half a bill. Okay. 500 million is what you want to raise it at. So you want to sell 20% and get 100 million in cash. Yeah. Okay. They have to see basically what risk are the people who bought in at 20 or what's your current valuation? The last round. Oh, it's 50 million. Okay. So that's a 10x difference, right, in valuation. What risk did the 50 million dollar round take on the, that they are now rewarded for with the $500 million round.

That's a question. I don't know. I mean, in my mind, we've de-risk this more than any other platform on the planet, but there's still a lot of regulatory risk. Okay. So there's a lot of unknowns that the 50 million round didn't know, like in the sense that now Florida and Utah and some other states are starting to change their thought process on stem cell.

So it's starting to look more de-risked in that, from that point of view, I guess. So directionally, has there been any technological change or sales? velocity change or avatar change? Like, has there been any new finding that fundamentally changes the game? Because, again, I'm trying to help build the story here because that's all we're selling here, is that we raised at 50, now we're raising at 500, and the reason is... Oh, yeah, we'll have a lot of reasons. Yeah, because with that, yeah, sorry, I guess I wasn't understanding.

Yeah, we're going to build a laboratory that we've already proven our technology that we've been delivering for years, and we're just going to be able to scale it. So I think that was up there at 50? Yeah. And that was not there at 50? That was not there in 50. Okay, great. And so to me, it's like, these are the, this is what has changed and now fundamentally

changes the nature of the business. That is, that is it. So it's like, this is a $10 billion business. There are three more assumptions that have to be proven true. We proved this one right, which is why we are now, because it's, they're all discounts on a $20 billion business of the likelihood that you actually achieve that. Like, at least that's the thinking process of most VCs, or at least good VCs come in with. It's like, they're only making money.

on, you know, multi, multi, multi-billion dollar companies. And so it's how many assumptions do I have to believe will be true? And the fewer assumptions that need to be true, the higher the valuation because the higher likelihood. And so if we're like, this was actually the riskiest of the four that have to happen. And that's why we have the biggest step up in our valuation. Because now it's just a capital constraint, not a assumption constraint. Like we've already, we've already deconstrained this. And from the regulatory risk perspective, all the directions are pointing green, not red. That's how I'd position it. Okay.

It is for sure a pitch, though. Yeah, I get kind of in the weeds of the nuts and bolts. And people just, their eyes glaze over. They don't know the science. Yeah. They just want to know that they're going to make a lot of money. And so it's going to be a sale on you and a sale on the story. Okay.

Yeah. I just like, do not be a scientist for the pitch. Yeah, yeah. No, I'm not. Yeah. I was like, we can help you with that if you need it. Yeah.