The Game with Alex Hormozi - The Importance of Mindset and Dedication in Entrepreneurship (with Ali Abdaal) Pt.1 - Oct. ‘22 | Ep 533

Episode Date: May 6, 2023

"Everyone knows something.” Today, join Alex (@AlexHormozi) as he guests on Deep Dive with Ali Abdaal to talk about various topics related to entrepreneurship and making money, including pricing strategies, achieving multiple millions, and transitioning from a low-income job to a six-figure income. He also offers advice on how to achieve financial success and stresses the importance of having the right mindset and dedication. This is part 1 of the interview.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.Check out the episode on Ali Abdaal’s YouTube Channel!Timestamps:(1:39) - Pricing strategies and achieving millions(8:41) - Transitioning from employee to entrepreneur(16:16) - Trading time for money to learn & pay down ignorance debt(29:59) - Benefits of learning vs. earning(36:31) - Increasing income through skill developmentFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

And so the idea is you start not with the intent of saying this is going to be the one thing for the rest of my life, which is the fallacy that employees have, that whatever they pick is to me, they think they're going to do for the rest of the lives. When in real, it's, I just have to do a thing that I'm good enough at that I can learn the game. And the thing is, once you start taking steps, the next step becomes illuminated. 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 than the many failures and lessons we have learned

along the way. I hope you enjoy and subscribe. Yeah, so thank you so much for taking the time. This is a conversation I've been looking forward to for. a while because I've discovered your stuff around the time you were blowing up seemingly on all of the social platforms. And then I came across your book and I listened to it inaudible. And around the same time, all of my friends had also discovered the book. And they were just like, we were all messing being like, oh my God, have you read a hundred million dollar offers? It's just absolutely

sick. And it's just like jam packed with value. So firstly, thank you for that and for providing that as a 99 cent service to the world broadly. How did you think about pricing for that for that book, by the way. I mean, I think it's always like what's the, you know, what problem we're solving? And so for me, like the point of the book is not to make money from the book. The point of the book was to, you know, help as many businesses make money and then, I mean, the play for acquisition. Notcoms are a very long play, you know what I mean, which is just I believe that there's lots of, I think that the biggest inflow of deals will actually come in five years from all the people who've consumed the stuff and have gotten to, you know, three, five, 10, 20 million and they want to work

with Acquisition.com who are not at that threshold yet. but it's guys who want to go to 100 and they're capped at 10 and they're trying to figure out what to do. That's what I'm making all the stuff for. But yeah, so the problem that we're solving is like, how do we get this in as many hands as possible? And so giving it away for free, I actually don't think would have gotten as many hands because I wanted to use, because if Amazon makes money, Amazon will push it. Right. And so I did make. And so at 99 cents, Amazon gets two thirds of the revenue from the thing.

If I was at $2.99, then I get two thirds and they get one third. And so my, at least my mental argument was it's easy to sell a 99 cent thing. I can tap into the traffic that Amazon will provide and what problem my solving, which is mass distribution, you know, as many people as possible. And I think there is also a tiny element of free versus paid. There's like an emotional difference of like I paid something. I mean, it's a difference between a customer and a lawyer. You know what I mean?

And so that was at least the thought process behind it. And yeah, I just, that was it. There wasn't too much more thought than that. So one of the things that you open a lot of your content with is the phrase to the effect of, my name is Alex Wormozy, I ownacquisition.com, and I'm going to help you get to $3 million in revenue. If you're more than $3 million in revenue, then talk to me. I want to acquire you. But if you're less than $3 million in revenue, I want to help you get there and I have nothing to sell you. And that's interesting. So it's interesting, A, because the way people were describing you when it was sort of on the grapevine when you first started blowing up was that, that

phrase that and and I have nothing to sell you and that was that that really tapped nicely into some something in the zeitgeist where everyone knows someone's always trying to sell you something and then just the fact that you're so blasé about throwing the word three million out there where for most people they hear that number and they're like shit their pants because like three million's a lot of money but the way you seem to talk like it's it's it's almost like it's it's not and it helped like for me at least helped me change my mindset around multiple millions to the point is that it didn't seem like such a big deal. So I wonder if you can just kind of speak to that a bit. Like, what's the philosophy behind the introduction?

Yeah. I mean, so many of the things that I feel like I've gotten some notoriety for have been, you know, sheer accidents. It's, it only seems masterful in retrospect than more than it was, you know, intelligent design. I got frustrated because a lot of people were like, he's just trying to sell a course. This is like early on. Because, you know, and I was like, I'm not, I have nothing to sell you. I was like, I have nothing to sell you. I was like, I have nothing to sell you. And so the very first video, I can't remember which one it was. I just said it like, I was just annoyed when I said that. And then, you know, the comments just like poured on it for this. Like, oh, so I just need to be more like more explicit about this. People just don't know.

I was like, I have nothing. I have a 99 cent book. Like, you know what I mean? Like if that. And that's actually the one thing that I've struggled with is because like the internet doesn't do a while with nuance. And so they're like, you know, some people are like, he's trying to make money. I'm like, dude, like, yeah. And the book does make money. The book makes probably about 60,000 a month in income. Oh, wow. I make from the book. Yeah. So I mean, like, it makes money. But like relative to my income, it's just like it's irrelevant. Like it doesn't even, you know what I mean? Like it doesn't, it doesn't, it doesn't, my top employee makes a million plus a year. Like it doesn't do anything for me.

So it's just like for context, right? So anyways, all that's say, the thinking process was more just me trying to be explicit. And in terms of talking about three million, I may even change it. I may, I've changed on a lot of my profiles to 10 million and up. But the biggest issue that most people have between zero and three specifically is just ignorance. People just don't know what to do. You know what I mean. And so like just, you know, getting to six figures is literally just like sell something to someone. Like that's it. It's all you have to do to get six figures. Like one channel, one product, one avatar. Like that's it. You don't have to do anything else. And then, you know,

when you get you want to get to seven figures, then you just do that and then add the word consistently. which is you do you know you input put the inputs in the system in a way that's consistent so that you get a consistent output so it's whatever way you acquired those customers whether it was reachouts whether it was content whether it was paid ads whether it was affiliates whether it was referrals whatever the thing was that got you the customers cool do that consistently and you'll be in a million you know what I mean which is which is still only 20k a week it's not like a huge number you know one to three is usually increasing output of that that main thing to a small degree and really just like baseline efficiencies and building out the core team.

So usually at that point, going to one to three is getting the person out of delivery to a large, you know, to a large extent. And usually they get their first kind of first follower, first like one or two. I'm trying to think the right word, how to say this. Competent individuals who are helping them out. And then, you know, a handful of front line. And so it's usually like companies that's, yeah, three million. They're like five to 15 employees.

And so, and there's usually really only like twoish good ones. And the rest are okay, right? And so at that point, you know, going from three to ten is usually where we can, it's the minimum level that we take people on. And it's not because there's something magical about three million is that three million typically checks two boxes. Box one is that they have product market fit at some level. People want something from them. Like something they're selling is resonating enough that they can generate sales. And the second thing, I guess there's three boxes. One is that. The second is that they have at least one reliable acquisition channel that they're currently doing. And the third is that they have a core team in place. So they've demonstrated

product market fit. They have a reliable acquisition channel, just at least one. And they have a core team in place, which may be relatively dysfunctional and have very few key players, but at least they have some semblance of structure. And so if they meet those minimal requirements, then we can at least start from at least some level of leverage to start helping them grow. Okay. So I'd love to talk a lot about that initial bit that you sort of threw away with like, Oh, one product, one channel, one one avatar. So for a bit of context, a couple of weeks ago, I happened to be on vacation on some Greek island. And I posted an Instagram reel of like, hey, this is the creator life.

I'm working on my iPad and stuff. And there are a few comments from people being like, I'd love to live this sort of lifestyle, but I just don't know where to start. And that sort of that idea of I'd love to be able to, you know, if we imagine 99.9% listening to both people listening to this, if you told them they could make six figures a year doing what they love, they'd be like, mind-blown, would absolutely love that. So I wonder if we can kind of explore that zero to six-figure jump or sort of process. Let's say someone has got a full-time job. Let's say they're working in, I don't know, consulting or something corporate. And they love the idea of, I want to make a living doing what I love. How would we break that down? And this is under the assumption that they hate doing what they're doing. Yes.

I was like, because I always like to be clear. I've got employees that make million bucks a year plus. So like you can absolutely become filthy, wealthy. And that's income, right? And so a lot of businesses that are at $10 million a year, the owner might only take a million bucks in income, depending on margins, et cetera. And so like a lot of employees will wish for, they see top line as income, which is just a very employee mindset. They're like, oh, if I make six figures a year, I'll make six figures a year. It's like, well, if you really want to make six figures a year, I'll probably make $500,000 a year. You know, I mean, revenue wise, at least, if you don't want to have just bought yourself another job, right? Because so let's talk through this transition.

So if you're an employee, when you make the switch, you're still an employee. You're just employee of a different business that you happen to own, and you are basically 100% of the expenses. And so the business itself actually makes no money. You as the sole employee of that thing and the boss gets to call your own shots, but you were still the employee, right? So you're wearing all the hats, et cetera. And so it's relatively nuanced. You know what I mean? Like if you had a six for consulting job and then you start consulting on the side, for example, through your own LLC, you have the same job.

You just got rid of the person who is giving you direction and now you are responsible, right? The thing that most people have to do is they have to go get money, right? You have to go make money. And the way you do that is you sell stuff, right? And the way that you can even begin the conversation to sell stuff is that you have to have people who show interest in the thing, which means you have to make your products known. And we do that through advertising, right?

And there's five ways to advertise, which I just went over earlier. And so it's like, pick one of those five ways, start doing it on a consistent basis, bring people in. What do you sell them? That's what the $100 million offers is for. It's like, this is how you figure out what to sell. and then you sell them the thing. And then after that, you'll have some delivery. Now, usually if you have a consistent method of advertising and selling with what to sell from the offer,

then you can start getting people to help you on the level of delivery you have, which comes down to breaking the delivery into chunks rather than holistically and saying, how can I specialize the labor? Because you trying to say, I just need somebody to do what I do is silly, right? You need to figure out, how can somebody do, how can I get five people to do 20% of what I'm doing and do it consistently? right? And then you can increase your advertising. Sales is a very high leverage thing in the beginning. If you spent all day selling, just you, you would have enough for five people to do work. Right? And so then you would have a business. So let's say someone's listening to this and they're thinking, all right, cool. I know, like I've read Alexis Berkey. He's telling me I've got,

I've got a seller thing. I don't know what to sell. I don't have any skills. I don't, I don't know what I could possibly offer to the world. How do we break that down? Yeah. This is actually a topic that I cover more in the Leeds book that's coming out. soon, soon, relative terms, six months-ish. Everybody knows something,

all right? And so the idea is, what do you have, like everyone has unique depth of knowledge in certain areas, because you've been alive and your eyes and ears have taken inputs, period, right? And so I like to think of people starting, like,

so if you look at, have you familiar with Y Combinator? Yeah. So, yeah. Yeah, so Y Combinator is one of the most successful, you know, I don't know if they're tech. technically VC. They're seed capital, startup, investors in Silicon Valley. And they have a various

gender deal structure and they have criteria for what they look for in companies. And one of the most important criteria that they look for is past experience. And so they're okay with somebody who's super young, et cetera, but they want to, they want you to have experience in the industry because there's just so much ignorance debt that you have to pay down if you literally know nothing about an industry. Like there's just so much, like if your dad was a mechanic, you know so much about cars, just by osmosis of being around a mechanic for 18 years. And so I like to think, past jobs you've held, you will know stuff about that industry. The jobs of your parents are things that you will know about that industry. And then you've got personal interests.

And so I think that if I had put those into three buckets, it's like parent stuff, past jobs of self and current interests. And so it's like, of those three things, which of those three buckets It's do you think you could help someone do a thing better? And so the idea is you want to sell the most valuable thing, right? And so the mouse valuable thing is, what is the problem that I can help somebody else solve that I could charge the most money for? Or in reverse, that could make them the most money. And then I will be able to charge a percentage of the money that I'm able to make somebody

else in this thing. Now, that's in a B2B setting. In a B to C setting, it would be how valuable do people perceive the problem that they have as, right? Whether it's like, I can teach music, tons of people want to be able to learn. how to, and if you're better, you know, because you've had a side interest in that. Awesome. Maybe you have a side interest because you're really good at editing the songs. Well, there's tons of musicians who would love, who hate that part and would love to have

that. So it's like, we all know how to do stuff. And all we have to do is package the thing that we're doing. And I think the big problem is that people expect that they're going to have a perfect business. But if you look at the track record of all, I can't think of an entrepreneur besides Jeff Bezos, who's a freak of nature, whose first business becomes the most valuable business in the world is most people have a graveyard of failures behind them. And so, The idea is you start not with the intent of saying this is going to be the one thing for the rest of my life, which is the fallacy that employees have, that whatever they pick is to me, they think they're going to do for the rest of the lives. When in real it, it's,

I just have to do a thing that I'm good enough at that I can learn the game. And the thing is, once you start taking steps, the next step becomes illuminated. You trying to think a hundred steps into the future when you have no context is irrelevant because chaos is going to break your plan anyways. And so do what you know. Exchange, I like service businesses to start because they are, in my opinion, the lowest risk to start because you're just, it's just your time, right? So service businesses, meaning do stuff for money? Like, mowing the lawn or cleaning windows or like, service, clean houses, like whatever. Like all of those are just service businesses, right? And they're fine. And a lot of people think

they need to have some novel idea to start a business. I mean, the best, in my opinion, if you're getting into it, the best way to start a business is just look at what everyone else is doing and just try and do it better. Like, I mean, and there's obvious holes. Like, if you've gone to, if you've gotten your dry cleaning, it's like, can I do this in half the time? As this guy. If I do the lawn care, what are the things people hate about long care? Oh, they leave the, the trimmings are around the edges. They're all all shitty.

The person doesn't speak English that well. Like, well, cool. Then I've got advantages, right? So it's like, what are things that I already know how to do or I have past experience? And what things, because I have past experience, I know that other people struggle with, that sucks about this thing. And then I will solve that specific problem. And it could also be a problem that other people solve too.

You just try and do a little bit better. Like, it's just not rocket. You know what I mean? And then you exchange, you start selling your time for money. So yes, you're still trading time for dollars. You don't need to read Rich Dad, Poor Dad, just yet, right? You're still trading time for dollars, right? But the point is that you're trading that time for money in order to learn not to earn. You need to earn in order to pay your rent, et cetera. But the major thing you're doing is you're paying down ignorance debt. So the vast majority of your income is coming in the terms of, in the form of education rather than

earning. Yeah, there's a few things there that I think really interesting. The first is that I think if we think of sort of how an employee thinks versus how an entrepreneur things or a business owner, an employee sort of mindset is often sort of the activity that I'm doing, whereas the entrepreneur is more like the specific problem that I'm solving. And I found that when people in our team have started doing freelance work and now they have more of an idea of what a creator business looks like and they can solve a specific problem. They're just like, oh, my God, it's so easy to make money. Whereas before, they were thinking of their service as like, oh, I offer writing as a service or something like that. But as soon as you connected to a problem that preferably a business

has, because businesses can pay for it, suddenly the eyes light up and you realize, hang on, what does money even mean if it's seemingly so easy to make it? Yeah. I like what you're saying about service-based businesses, because it's not that sexy. Like, when you hear people on podcasts, you don't tend to hear of someone who built a service-based business and it went really big. You tend to hear the stories of like the tech entrepreneurs that built an innovative product and stuff. They don't see the hundred failed startups. Like the failure rate on tech startups is just as high as everything else, except it usually takes capital and it doesn't take capital to start a service business. So with you, my understanding is that you quit your

corporate job and started the gym business. And I wonder if we can kind of explore the story there a little bit more. I can actually even rewind. There was a half step in between there. So this is also covered in the leads book, but I'll give a sneak peek. So what I did is I actually, because I'd been interested in fitness, right? That was my interest. So like I had past experience. I was obsessed with fitness. I've been at that point, I was 23. I've been training for eight years. I had several state records. So like I was a pretty, you know, I was pretty into it, right? And it was to the point where people were asking me for stuff, you know, workout programs and things like just because they knew my interest, right? And so as a, as a quick, you know, pro tip for everybody, if you've got stuff

that people ask you to do for them because you're good at it. Maybe you're good at tech. It's like, can you help me set up my like Wi-Fi and stuff? You know, blah, blah, blah. It's like, that means you're solving problems. You can chart, like what people ask you to do as a favor is an indication of the things that you can charge for later, right? So I had all these people who were asking me, not all these. I mean, a handful of people who had asked me for programs and stuff. And so what I did was during my last year of consulting, I started something called the free training project. And so the free training project was I would charge $500 to $1,000, but I wouldn't charge it. They had to donate that to the charity of their choice in exchange

to work with me. Right. And so that way, I wanted people to value it, but they weren't paying me directly. So they'd get it right off. They felt good. I had a ton of goodwill. Also in the marketplace, too, because I was like, I'm doing all this stuff for charity. I got, I got all these people reaching out to me like, this is so cool, blah, blah, blah. And so after a year of doing that, I had probably, I don't know, 12 really good test, like great before and after pictures that I had collected from my clients. And I told them that was part of the deal. I was like, you have to donate it.

I would like to do this for real later. But you have to let me use your testimony. And they were like, that's fine. So once I had that, I had this first, you know, 10, 12 customers who had great before and after pictures. I transitioned. Many of those customers said, hey, I'm going to do this full time now. Are you comfortable paying the same amount you're paying to charity except just

making it charity of Alex because Alex can't eat either. And so, and that was actually how I transitioned from not-for-profit or donating everything. And I'd even set up the entity. I just told them to literally donate it and send me the screenshot. I didn't even do anything like that. And so I didn't have a website. All I had was an LLC and a PayPal account. So like for everybody's like, I don't know how to start a business. I was like, you literally just need a bank account and a way to process money. That is it. Like two things. And you can Google how to figure out. If you can't figure it out from Google, entrepreneurship might not be for you. But you look like, think about there's 30 million business in the United States. 30 million other people have figured this out, which means you can

too. So bank account, payment processing. Make the first 10 free or some sort of charitable thing so that people like don't feel weird or you don't feel weird about selling, et cetera. After you have it, after you're providing the service to people, you can transition people from free service to paid service. And if they don't want to start paying you, then that gives you insight is to either you suck, right, or they suck, which is also possible too. But either way, a certain percentage of those people will continue to stay and pay you. And now you have income. Now, you can also ask those people for referrals, which is exactly what I did. So I think half that business came in just for, I got, you know, the initial ones came in from friends and family and

me posting. And so I was, I'll close the loop on what I said earlier. A year later, after I had this testimonials, I made a public post being like, hey, I've got this thing now. I made a website, which is, that was my big announcement. I made a website. I still have the post. I found it. It's 2013. I was like, I made a website and I am now open for business. And so if you would like, you know, training stuff, let me know. This is what I'm doing now. And I had some testimonials and go check out the site, whatever. And so from there, I was able to get, I think, about 20 guys who were willing to let me do just like almost bodybuilding type stuff. Because I was kind of like what I was parloafing bodybuilding back then. And so I think I want to say I got 20 guys at two

hundred bucks a month. And so I was making $4,000 a month from those people. And it took me four hours every Saturday to do the fulfillment. What was the fulfillment? I would just update their training programs and send them nutrition, like update their macros, updated meal plans. And then like, new workouts split for the week, et cetera. And then I, and everyone had my cell phone and I would just text them the new stuff and if they had any questions, they could hit me up. Like, it was a very simple business. And so that's what I did. It was just one-on-one online, and it only took me four hours on Saturday morning. And to show you what kind of person I am, I hated it, even though I loved fitness. I hated having to do something the same thing every day, like on the delivery side.

So I ended up having the genius idea of saying, oh, I need to own a gym because then I'll be a business owner. I'm really just self-employed right now. And so that's what got me to start my gym, rather than probably doing the wiser decision and saying, okay, this cost you four hours a week and you're making four grand a month. Maybe you should do this for 40 hours a week. But doing more of it to me felt like a horrible idea. So I didn't want to do anymore. How did you jump from that to therefore I should probably own a gym? Oh, I don't think that's that the inferential jump was not high. Yeah, it was not an intelligent one. I always thought I was going to own a gym. I mean, that was the, not always. I had done a so so these are the three things that I was decided. between for my business. I was decided between a test prep company because I was really good at standard eye testing. And I had a process for how I, how I did it. I had a yogurt business idea because I was a big pro yo guy. Yeah, I know. I was like, I'm an avid consumer of this shit. Yeah. I feel like I know and I hated. There's so many things I knew that I thought I could, I actually know a lot about the yogurt business now. And I was good at fitness. So those are the

three things that I felt like I could do for anybody's listening. Like those are the three that I was picking between the yogurt business cost $250,000 to start up. I didn't have that money. So I couldn't do that one. I had saved about 50 or 60 grand. I can't remember, was 50 or 60 at the time. I was 23. And then the test part business, I actually did a ton of work on. And I was going to partner with a professor from my university to do it with me. And so I set up all of the initial materials. And based on a miscommunication, I'll just put it that way. He ended up either taking the materials and not, using them without me to start a business consulting thing. Either way, it became clear that what I thought was happening versus what he thought was happening were not the same thing. And that left

a very sour taste in my mouth with test prep. I do think it was the smarter business. I probably should have done. And so all that was left was fitness. And so fitness, I was like, I already know that. People already want me to help them with it. So I'll just start that. And so the gym was the, what I would have said is like the legit business. I didn't think that the online thing was legit. Remember, this is 10 years ago. So like it wasn't. It wasn't, no one even thought it was, that was a concept of legitimate business. You know what I mean? So I was really early days on it. And so, you know, from there, I hit up 40 gym owners to see if I could just basically apprentice for them and just work for free. One guy hit me back. He had a mastermind. I joined his mastermind for $10,000, even though I didn't have a gym. And I said, are you sure that it makes sense for me to join? He was like, oh, yeah, sure. And it did actually make sense for me because then I can learned from all the mistakes that everybody else was making before I started. So I was like, okay, this works. And so I learned all the stuff that I could from that mastermind and from him.

He ended up signing me as an employee. Yeah, yeah. A couple of questions on that front. Yeah. So. 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, $100 million plus. We would love to talk to you. And if you like that, we would like to hear more about it. Go to acquisition.com. You can play anywhere on the page and talk to one of our team and see if we can help you get there. The test prep thing is interesting. I didn't know that part of the story. So my first business that went well was also a test prep business. And I still have the Evernote document from 2012 where I was like,

shit, I need to make some money. What am I good at? And what could I possibly do? And it was like, test prep and web design. I was like, cool, let me make a test prep course thing and let me advertise it on a website because back then it was hard to make a website look pretty. And that's what ended up making the money initially. On the gym front, so it seems to to me like there's two leaps there. Leap number one is I want to do this thing, like I start a gym maybe, and therefore I'm going to work for free. I want to own a business.

Yeah. I want to own a business. Therefore, I'm going to work for someone for free. That seems like a bit of a leap, which these days seems very unfashionable to even say because everyone then goes down your throat for being, that's only available for the privilege, et cetera, et cetera. And then beyond that also. What's available for the privilege?

Working for free thing. Yeah, the working for free thing. It's quite unfashionable to suggest that people work for free. I mean, I was making $4 a month from my little online thing. So I made money from that. Now, I offered to work for free, but he quickly was like, I don't feel good about it. I'll just pay you. And so he paid me.

He paid me like minimum wage, but I mean, I think I made like, I don't know, $2,800 a month, whatever it was. I don't even remember what it was because I made more from the four hours a week on Saturday than I did from that. But again, the point wasn't to earn. You know what I mean? It was to learn. And I had saved up $50 grand.

So I knew I could live for, you know, at least two years on that. I tried to live on. I was, I spent 400 bucks a month splitting a bedroom. And then I ate, you know, I spent $100 a week on food. I was eating, you know, I was spending nothing to live. And then the rest of my time was at the gym trying to learn. The thing that's always struck me about you, like, when I've heard other interviews, is that you're so matter of fact about all of this stuff.

And whereas to me, like, at every stage of the journey, I know people who are at that point who have gone the other way and decided, you know what, oh, I couldn't, I couldn't possibly leave my 40k year job, even though I'm living with my parents and I don't have any kids or anything. I couldn't possibly leave that and take a pay cut because that would be bad. And you're supposed to make more money as you go older rather than less. And do you kind of get that problem? I guess the sorts of people you speak to these days are mostly the sort of three to 10 million plus rather than the people that are struggling to get started.

But I imagine most of the people that follow you tend to be in the beginner camp. 88%. How do you know that? We have a survey on our site. Oh, yeah. Nice. Yeah, so 88% of people want to start a business. At least that follow me. So I wonder if you can speak more to this idea of like learn versus earn. Because I think that's a good model. And this idea of paying down ignorance debt.

I think that's a great model that more people could. Yeah. It's the most expensive cost. Like right now, everybody costs everybody, it costs me a billion dollars a year to not be, to not know what to do to make a billion dollars. Or I do know how to make a billion dollars and I just have to wait and pay down my time debt, which is what I feel like I'm doing right now. I'm just paying down time. And so I think understanding whether it's a lack of knowledge or it's just a timeline thing, like those are big differences at the baseline, right? You could be doing the right thing, but just be 10 years behind when it's going to come to fruition. You will get outsized returns

on the information, right, on the knowledge and the lessons that you will learn. And so you want to pay that ignorance down as fast as you can because as soon as you have that knowledge, you'll be able to skyrocket straight to 20, 50, 100, 500,000 a month, like very quickly because you know how to do it. Right. So people are like getting obsessed about these microchanges. When the big scheme changes, like this is why, in my opinion, all of the money that someone would be spent.

And like this is relatively controversial. It's a whole S&P 500 versus S&E 500. But like you will get a significantly higher return investing in your own ability to make money than you will in any, any market. And so if you look at all the vast majority of very, very wealthy people, they have tremendous earning capacity, right? They know how to do stuff that makes money. Right. So it's like, we got to go get that. And so there's really not like, if you were to, if you were to, if you were to dollar cost average, $1,000 into the S&P 500 for, for, you know, 50 years, sure, you'd also not live a fun life, but you could do that if you wanted to. You could do that. You absolutely could, right?

Or you could take that $1,000 a month, join a mentorship program every year. You know what I mean? This is why my whole argument against like college is not that I'm against college. I think it's just. overpriced. And so you could take 200, like, you want to, you want to have a trippy thought. In the U.S., you can get a student loan for the full amount of college, about $200,000. If you go to like a really nice private school, like that's what you can get subsidized through the government, $200,000 and you don't have debt payments for like a very long time. Here's a crazy thought. You could take that $200,000. You could buy a fucking rental property that makes you $4,000 a month. And then you would literally exit the system before we even got into it with the money that they're giving you to become a worker, which is just fat. And he wouldn't even have to

pay the pay down the debt service for the real estate. A buddy of mine did this. He's a PhD student. He got grants to go to school. He still took out the student loans. And he finished his PhD with 20 homes and $10,000 a month of income from, from doors that he didn't even have debt service on because it was student loans. Crazy, just as a fun side of. Yeah. I know. So, but I won't even get into that one. But if we just think, okay, I'm paying $2,000 a month if I'm working for, not working, if I'm going to school for $25,000 a year, it's $100,000 for four years, whatever, I pay $2,000 a month. Is there another place that I could spend $2,000 a month and get a superior return on my ability to earn money? And my argument would be, yes, there are many places, most places, arguably, will give you a better

return on your money than a traditional four-year degree at this moment, right? And so you take the $2,000 a month, you go and you buy a six-month mastermind on placing ads. You buy a six-month thing on selling. You buy a six-month thing on making courses, whatever. Maybe it takes you 18 months. Well, you're still two and a half years ahead of the other guys. So what? You know what I mean?

Yeah. I think this is like a key mindset shift because I'm just thinking there's so many conversations I've had with friends and people in my audience over the years where it's like, you know, they've got like a regular job, maybe earning. 50K or something. And they're like, oh, or even 30K, like, whatever. And they're like, I know I want to make some money on the side. Therefore, um, you know, talk to me about investing. I, I like, do I pick stocks or index funds? And I'm like, I mean, index fund, but like, hang, like, how much money, how much money do you make? Yeah. You're poor. There's no, like,

you're not going to make, you're not going to make breathtaking. And the thing, and here's, here's the thing is when you, when you do the dollar cost average thing, because everyone likes to put it in the Excel sheet, everyone gets Excel rich. The thing is is that by the time you retire with $4 million on that Excel sheet, four million dollars will be a million dollars today, which is not a lot of money. Now, people are like, that is a lot of money. It's not when you're trying to live on it. And you got like 30 more years to live. It's not, it's not a lot of money, right? And that's in, you know what I mean? Like, it's just, if you just take the compounding of 4% a year on inflation and do that for 40 years and then see what the

money really looks like, right? Like, people aren't taking the inflation into account. And that's just not because it's hot topic now. That's just always, whatever it is. I think it's around 4%. It's been the compounding rate of inflation. And so, point. is. And this is the simplest example I have that can illustrate the concept. The same PhD guy, though, good friend of mine, he has a daughter. His daughter got a job at a bowling alley, minimum wage. She just, you know, lets people to the tables and get some shoes or whatever. Doesn't matter. She could spend $500 and get a weekend certification to become a phlebotomist. All right, flobotomist draw blood for people. All right. All right. All you need is a two-day certification.

So you get the certification cost $500. Her earning capacity would go from $7 an hour to $25 an hour. just from that one thing. So she has two options. She could wait eight weeks, save up the money, and then spend the money on their certification, right? And then her earning capacity would go up. It would triple immediately. Or she could borrow the money from her parents and then do it that weekend, pay the money back the next week from the earnings that she had, and then be seven weeks ahead of her other path, right? Or she could save up the $500. and put it in the S&P 500 and make $2.50 a year. Nice.

And so the thing is they're making these assumptions and they're just not thinking through the math, which is like the problem they have is they don't make enough money. They have an income problem. They don't have an investing problem. Right. The nice thing is that if you're poor right now, it means you have learned how to live on less, which is a good habit. So keep living on not a lot.

But then this is where like, this is where I don't understand people because like my plan B for like if the gym didn't work. Because you have to, like, for me, it's always risk mitigation. So plan B was, if I didn't want to do the entrepreneurship thing after that, I'd have a good story for business school. So that was, that was one path, which they love, you know, having people try stuff, whatever. The other path was, and this is probably the real path. As soon as I started, I knew I wasn't going to go back, was that I would strip at night and I would

drive Uber. So if I drove over during the day, I could make, I knew if I drove all day, if I drove 12 hours a day, I could make like 80, 90 grand a year. If I just did that. And then at night, in four or five hours, I could probably pull another 150 in. And so I could make 250,000 a year just stripping and driving Uber, maybe even more. Now, once I got the first level of skills, as I learned how to sell, I realized that my base

levels, my base level opportunity rose because then I was like, I could just sell cars and make 400,000 a year and keep my clothes on. Right? I could just sell cars. And then I wouldn't have to stretch. So that became my, you know, my new baseline. Now, once I knew how to, once I knew how to market and sell, then my new baseline became actually what started, which became my intermediary model between when I owned my chain of gyms

and when I started doing gym launch was when I flew out and would do the turnkey sales system. Because I knew how to market and I knew how to sell. And so what I did was I would just run ads. I would spend the money on the ads. I would get the leads. I would work the leads. I'd sell the leads. And I kept all the cash.

So when I did that on my own, no employees, I'd make $100 grand a month. Like zero employees. I mean, I had to work 14 hours a day. but that's all I did. If I did that for a month, I would make $100. And so that became my new baseline, right, of how much I could make on my own. And so, like, my baseline has continued to rise as my skill set has improved. And so I could go down that trajectory.

But basically, going back to the girl, going back to the girl, a lot of people are in the girl's position and are saying, I am going to save my $500 with the next eight weeks and try and earn $2.5 to $5 a year on that money when they should be trying to solve the problem. How do I create another $50,000 a year? income. Well, let me, like, boom, she can triple earning capacity. And if she lives on the same 750, she now has a thousand dollars, whatever that is, $25 an hour times times 2000, she's making 50 grand a year. So now she can still live at her parents' house, have $30,000 a year. And for $30,000 a year, you can go buy any education you want in the world. Any skill you want is available for $30,000

year. Any, any sub-10 million dollar skill. I'll put it that way. So we're the girl, we want to spend money on increasing our ability to own more rather than trying to screw around with 3% returns in the S&P 500. Yeah. So hence, sort of when you're working for free and maybe, I don't know, taking a bit of pay cut apprenticing for someone else, you're understanding, you're learning how the business works and you're learning how specifically that business works, i. The gym business, because you maybe wanted to own your business and you're interested in

fitness. And you're also learning how generally business works through like sales, marketing, operations, all of that sort of stuff. So what happened next in your story? Yeah, so I joined the mastermind, and then he quickly was like, you know what? It felt weird for him to not pay me because I was just there all the time. So he started paying me, whatever it was, minimum wage. And so I was there from 4 a.m. to 4 p.m. every day with him.

So that was what we did. So 4 a.m. to 4 p.m. I was there with him every day. And then he would go home. I would stay for a few more hours to just work out, hang out at the gym. So I was pretty much there all day every day. And then for the next, I think 12 weeks, that's what I did, is I just hung around the gym, learned, learned how to sell, learn how stuff worked, learned that email. I learned sales was a thing.

I didn't know the term sales. I didn't know email lists existed. Like, I didn't know any of the stuff. Like, I truly had no idea how any of the stuff worked. And so I learned a lot very quickly just from observing normal business happening, right? And I think small businesses are more useful for people to be at because like corporate, it's so specialized because the coverage is so big. You have such a myopic view of how business works.

You have no idea. You are actually the very special cog that does one thing, right? So you don't see the holistic view. Whereas small businesses because everything's so shrunk down, you can see end-to-end how things work. It's like, we do this, we do this direct mail piece, a certain percentage called phone, we set the appointment, they buy a membership, they go to the trainer who helps them. Like, you know what I mean?

Like, you can see the whole lifecycle, right? So 12 weeks later, I was do it. Every weekend, I would go out and look for locations. When I found a location that I liked, I still had my 50 grand saved up. And so then that's what I spent, I spent, I think most of that to outfit the facility. I think I had 10,000 left over because I knew I had two months worth of rent, saved up. It was $5,000 a month in rent. And honestly, in retrospect, it was one of the riskiest things I've ever done. Like, I went straight to a $5,000 a month lease and I had no

idea what I was doing. That's a lot for rent. Oh, I'd never even made money before. I mean, like, I didn't, it was funny because I can only think about this in retrospect, but like the online business that I had, I didn't have a reliable way of getting customers. I just like the people that I knew and I immediately was making money from that, but I wasn't keeping everyone always and they're starting to go down. And I was like, ah, what do I do? So I was like, oh, I'll just sign a lease for way more money than I've ever made in my life. That sounds like a reasonable thing to do.