The Game with Alex Hormozi - The Obstacles to My Success (on Behind the Brand with Bryan Elliot) Pt. 1 - March '22 | Ep 491

Episode Date: January 28, 2023

“This is not the life I want to lead. I am not happy doing this every day. I would prefer to not be alive if this is what my life will be continuously.” Today, join Alex (@AlexHormozi) as he guests on Behind the Brand with Bryan Elliot and takes us back to when it all started, the trials and tribulations he had to endure, and the day his journey as an entrepreneur would change forever. 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 Behind the Brand’s YouTube Channel!Timestamps:(0:40) Alex’s early beginnings in business & trying to live up to expectations(10:07) - Fear as a driver to hustle and the use inversion thinking(17:30) - Finding interests in business and fitness (together)(21:11) - The hardships Alex had to face and learning them the hard way (36:19) - Early blueprints of Gym Launch and finally cracking the code to their success (43:01) - “I had to learn how to do business on my own in order to learn how to partner later”Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

It's a much harder question to answer, what are the things that bring me joy than answering the question, what are the things I hate? You're like, well, I hate my job and I hate my relationship and I hate the city. Okay, those are all very changeable. 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, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. Everyone, I'm Brian Elliott. Welcome to another episode of the show. Alex, thanks for having us to your homegrown mission control.

It's great to be here in Las Vegas. Thank you for having me. I'm very excited. I guess having me and we're having each other. I guess. Having me on your show. Well, I usually ask my guest, how did you get this job? This job. Yeah. So I was a management consultant right out of college.

I did space cyber and intelligence for the military, which sounds much cooler than it really was. But I had a top secret clearance. It sounded really good at dinner parties and just about only. Only that. And, you know, one day I looked out from my balcony because I had a really nice place because I could afford it at the time. And I was like, is this it? And I was, you know, in my young 20s. And, you know, at that point, I had done everything that I think I was supposed to do. So I was, you know, I did well in school. I, you know, was president of all the clubs, you know,

graduated in three years, got the good job. And I realized that it was, I was living, you know, a life for me that my father wanted me to live. And so that was kind of, you know, I went, I faltered back and forth for probably a period of six months of really not wanting this to be my life, but not wanting to let my dad down. And so at some point, the thing that kind of pushed me over the edge was I can either, you know, die to myself or I can die to my father. And at the end of the day, you know, I have to survive. So I will, if I make this decision and he no longer wants to be my dad, then I can accept that. Wow. Is that extreme then? Yes.

Wow. Say more about that. Are you an only child? Yeah. So only child raised by a single father, Middle Eastern. He was born in Iran. And, you know, everything in my life up until that point was really just to make him proud. So it was very much a seeking approval, seeking validation kind of drive at that point in my life. And so the idea of disappointing him or not getting his approval felt like death. And at that point, I was actually contemplating not living, which is why that it really, and it's a common theme if you have I've watched some of my YouTube stuff. Mortality has been the single biggest driver and the biggest decisions that I've made in my life and it has become a more routine process

for decision making for me in general because I think it provides clarity and it provides context to most of the decisions we have, which the vast majority of them don't matter, which is helpful in and of themselves. And then beyond that, it helps me make the decisions that I think removes everyone else from the playbook

because if you study subjective well-being and how people perceive how they're doing in their own lives, it looks like a smiley face. So seven-year-olds think they're killing life. And then it drops dramatically between 20 and 30. And then there's still a little bit more of a dip right around 45. That's like when people are their truce, they hate life the most. And then it kind of slowly goes up until like 55, 60, and then it shoots right back up again when people see that they're going to die and that life is short and that they can make the decisions

without worrying about the ramifications of other people. and some of the people they were worried about are also dead. Right. And so it was using that context for that biggest decision that's been duplicated many times in my life since then, because if I have a good decision-making algorithm, I try and reuse it as many times as I can. Yeah, there's a lot there.

No, I like it. It's just making me think. I mean, I have watched maybe all of your videos, so I have some context, but let's unpack it for the audience a little bit. So, you know, when we're seven, let's expand that a little bit. I mean, we don't have a care in the world.

The artist or whatever we want to be has not been beaten out of us yet. No one's told us that we are not what we think we are. We're still popping wheelies and climatries and falling out and that's okay. And then you get to your 20s and 30s and the rubber hits the road a little bit. And if you've made money, I guess,

and if that's your way of validating your work or that's your sign of success, then you're okay. But if not, you're kind of hosed. And then in your 40s, I'm guessing you start to have more life experience. 50s, maybe you start caring less what people think. And then fast forward all the way to maybe near death. And then you really get to a point where you don't care what anyone says and you really boil it down to what's important.

And probably I'm guessing that's love, relationships, legacy. and then you're just like, peace out. Is that pretty accurate? I think for most people, yes. For me, specifically, the legacy piece less so, but I think for most people, yes. And why is the legacy piece less important? More so, and whenever I get into this topic,

I think some people get sensitive about it, and so I just like to put the disclaimer like, this is not me judging your beliefs, and me stating my beliefs is in no way a judgment on anyone else. But if you just look at expanding the time horizon over a much longer period of time, If you look at it in 10,000 years or 100,000 years, or a million years, right? All of a sudden, you know, and the easy way to test this is to go backwards, right?

Which is, do you know your great, great, great, great, great, great, grandfather? Probably not. And then if you look at it from a how much has somebody achieved standpoint, I happen to be in an interesting situation where my great, great grandfather was in the ruling class in Iran. And he had 400 children. So he would literally, you know, like ruled and had a lot of wealth. he had a lot of wives to create 400 children, right? And I actually still can't remember his name because my dad told me one time and I can't remember it.

And I've never seen any of the quote legacy that I'm sure he felt like he was leaving. And so if that was that level of success and legacy and only four or five generations later, I don't even remember the man's name nor do I have any piece of that legacy. Yeah. It seems a little bit irrelevant. Yeah, I totally see what you're saying. And that context matters. I mean, Prince died a couple of years ago.

Right? Right. See, I had no idea. Are you serious? Yeah, no idea. I don't know. Prince. Prince.

I thought he was formerly known as. Did he get that removed too? He's now back to being? I think it toggled back to Prince. And then, unfortunately, he, I think he overdosed, accidental overdosed, and he passed. And, you know, one of the greatest musicians of all time. And I didn't think about him until you just said this. Yes.

So what chance do I have? I'm screwed. Yeah, and I think on a long enough time horizon, we're all screwed. And I think in some ways people find that incredibly disheartening. But an equal opposite is you can't find it both disheartening and also not freeing, because all of the decisions that we're making that are not for ourselves or are subject to change that we feel pressure from, whether that be society, societal, I'll put quotes there because that's a big word. Or family, friends, expectations that we perceive other people to have of us.

If you can just relinquish all of those chains, I think it's incredibly freeing. And I choose to live that way. Yeah, I also think. Or try to. I still definitely feel it. No, that's fair. That's fair. And I think also that may help us, that advice is good because it helps us live in the moment.

Because even if you believe in something after, that's still in the future. Yeah. And there's a question mark because no one actually knows with knowledge. Yeah. at least someone with a pulse doesn't know what happens or if something happens. So you might as well live in the present, make the best of it. Yeah. An interesting one that I thought through around that was a lot of us, not a lot of us,

all of us, have 100% experience not being alive, right? It was before we were born, we were not alive. And so we know what that was like. There was nothing that we can recollect. And so I would imagine that that's the closest experience that we can have to not being live yet again, which to me is not that frightening. Yeah. And it is freeing, you're right, because it's both humbling to know that you don't matter

in the grand scheme of things, but at the same time, you matter infinitely if you just focus on the present and the mark that you're going to leave here and now. I contemplated, I had to die to my father or die to myself, and I realized that I would rather die to him, which pretty much ended up happening. And so my fears were relatively justified. He was not in support of the things that I wanted to do. I ended up quitting that job, sold everything I had, packed my car, went to California, because that's where I thought the land of fitness opportunity was because that was the only thing I really enjoyed. I mentored under a guy for a few months to try and at least learn the ropes.

Started my first facility, slept on the floor for the first nine months, which was a very terrible experience for me. And timestamp the age for me now? I was 23. Okay. I left at 22 and I turned 23 two weeks after my gym open. Got it. So you graduated early. You got that dream job and then you bailed.

Yeah. Yeah. Two years. And that was really at the time. It was at a splitting point where I had done two years and the kind of career path traditionally is like two to four years of management consulting. And then you go back to an Ivy League for your GMAT. And then from there you go into, you know, you can go do investment banking. You can do private equity. You can do, you know, some of the bigger white collar jobs. But I didn't want more of

what I had. And so I thought that I would have a better shot taking $200,000 in two years, which is what the, you know, economic equivalent of what the degree was. And starting something on my own. I figured I would learn more in the first two years and with that money and maybe even have a business by the end of that period of time that made an equivalent amount of money compared to what I would have had as a job offer. Let me ask you, I talk a lot about signals on this show to other people. In my personal life, I've had signals that were subtle, some more overt. The subtle ones I missed and then I had to learn later. But how did you, what signals did you get? I mean, you're saying, like, I wasn't feeling it. But like, so where was your?

your motivation because I see you as this hustler, this go-getter, this salesperson, you know, who just is all about gobbling up new opportunities. It transcends beyond that now. But like at first, it sounds like you were just all about the go-gett. But how did you know, like you drifted into fitness because you were into maybe, you know. I mean, at first I was driven by fear. Okay. It was all fear. Fear of failure, feel of disappointment. fear of other people's judgment. What did your dad end up saying? Did he say, good luck with you?

No, he thought he was stupid. He thought I was wasting my life. Yeah. And wasted a degree that he'd spent money on and wasted a good job, opportunity that he had set up for me, all these things. Right. In his defense, did he immigrate here? Yeah.

Okay. So in his defense. 100%. Right. And I just want to tell the audience. So they're not like, but, but, but it's like, you know, if you have... Justified in saying that. Yeah.

If you escape from a country. where there's trauma and impending danger, then your son squanders an opportunity, you might get a little anxious about that. 100%. I mean, my dad came here with $1,000, you know, and a medical degree. Yeah.

And then built everything. Didn't even speak English. Right. I think Gary Vy said this, but I think what he did was harder than what I've done. Like I got to stand on his shoulders. Okay. You know.

In what way? I mean, I speak English. You know, like, just the basics. Like, I speak English. I went to a good school. Just all the support infrastructure known and unknown that was around me. Yeah. To, you know, to be successful.

Yeah, I think it's healthy to recognize your privilege. Yeah. But at the same time, you know, it came with lots of baggage too. Interesting. Okay. And so you had signals which were mainly fear-based. Yeah. And I mean, the biggest thing that made the decision for me, I would say I had the logical decision

and then I had the emotional decision. The emotional decision was, I don't want to do it. do this. This is not the life I want to lead. I'm not happy doing this every day. I would prefer to not be alive if this is what my life will be continuously. And I was like, well, if that is what, if I would prefer to not be alive, then that kind of opens up my decision calculus. And what was it, I'm trying to put my finger on. What was it that made you happy? Was it just the freedom to do what you want? I didn't know what made me happy. I knew it was not making me happy. Okay. So I think that's another important lesson, too, if I can just extract them, which is

one, you know, I'm sure a lot of people watching, they feel the same kind of pressure. They want to be what other people expect them to be if, you know, if that's who you are. And that's totally normal. But we should always remember, you know, the context in which that advice is given could be given through the lens of a certain, they live that certain, a certain lifestyle, a certain time frame. But also, you know, you said, it's a process of elimination sometimes, isn't it? Like, you don't always know. The reason I think about this is I've got son who is an eighth grade and sometimes I see him look looking very serious and I'm like son what's up how are you how are you feeling it'd be that bad it's kind of like you know you can see kind

of the face kind of going in you see him a deep thought and like what are you thinking about right now he's like I don't know what my college major is going to be yeah I'm like bro you're an eighth grade why are you thinking about that right now but like I think that's a thing whether you're young or middle age, you're trying to figure out what you want to be when you grow up. You're trying to have it all figured out. It seems like we don't like uncertainty. But I think your message if I'm hearing you is sometimes you have to try it on for size to see if it fits or not. And you get it on. You're like, well, I thought that dream job was going to be like perfect, but turns out, you know, it's tight in the crutch. You know, it's like, I need something different.

Mm-hmm. And I think giving yourself permission to do that. And as aside to what you were saying about my dad, like education saved his life. Like, he was only able to leave the country because he was educated. And so there's very deep roots there. I'm not going to appreciate that. But for this context or for my life, it just wasn't appropriate. Right.

And when we did come to terms later, the only time he's ever apologized to me in my life, he said, after his apology, he qualified and said, but to be fair, in my time, I would have been right. Oh, absolutely. And he would have been. It's just not the same time, right? Yeah, yeah, absolutely. It wasn't that it was inappropriate. It was just out of context and didn't necessarily translate to this new life and new opportunities you had.

Yeah. Yeah. I think that's so important. I can't imagine how many people are sort of, you know, suppressed to the point of their parents or the people that have influence around them put on them. Or sometimes it's on ourselves. Yeah, it's most. I mean, mostly.

I love the saying, you know, in our 20s, we're concerned about what everyone thinks about us. In our 40s, we don't care what anyone thinks about us. And in our 60s, we realized that no one was thinking about us to begin with. Right. And I just feel like that's, I mean, who else have you thought about today besides yourself? Probably not. I mean, you have your kids, which is an extension of yourself. But you know what I mean?

Yeah. Not a lot. And so most people are like that. And, you know, we have a lot more leeway than I think we give ourselves credit for. And I think the more that I have now, you know, I'll say accomplished with quotes in material success, the more I am excited about the things that I can do. And that was why the opening of the book was like, there are no rules. And it just took me a very long time to realize that. And I continue to unlearn rules that I thought existed, you know, as I continue to, you know, go on this journey.

Yeah, I love that idea of unlearning. I think we all just try to go back to being like we were when we were children. Like if, like, just because when you're a child, you're purely present, right? You're just present in the moment. And I don't like the word happy very much. I prefer using joy because you can be, you can mourn joyfully, right? Because it's, it's a, it's internal rather than happiness, which I feel is more like happenstance. It's more from external. And so, you know, what are the things that bring me joy?

What are the things that I find, you know, find joy in? And I think for anyone who's listening, it's a much harder question to answer, what are the things that bring me joy, than answering the question, what are the things I hate? And it's easier to correct those first. You're like, well, I hate my job and I hate my relationship, and I hate the city.

Okay, those are all very changeable. And a lot of times you get there by inversion. Well, if I wanted to destroy my life, I wanted to have the worst life possible, what would I do? And then taking all those things that you would do to really destroy your life and make your life miserable and then reverse them. It's a much easier way to solve the positive psychology equation, in my opinion. Yeah, I love that. And I remember this Picasso quote, which is, I think he said, everyone is born an artist. Yeah.

Right? And then eventually we get convinced that we're not. Yeah. And we have to really just strip away and get, you know, get back to basics. And I'm using art metaphorically, too. It's like what you do at Acquisition.com or what you did in the fitness industry or what I'm doing with film, you know, this can be considered our art. 100%. It might not that great.

But, you know, everyone can be an artist and perfect their art, you know. I love that. Okay, so you get to fitness. You're the apprentice to a master. You're not swole yet, I'm guessing. I was less swole. You're getting there. I was actually, I had already, I was, you know, I was competing at that point.

So I was, but I was a strength competitor. So I was very strong for my body weight. Dead lifts. Yeah, as a power lifter. And then I started my gym. And that was the first day that fitness became second in my life. So up into that point, I was fitness obsessed. And everybody I worked with was like, dude, you should quit this job and start a gym.

It's all you talk about all day. And it was what I was obsessed with. And so maybe like my go-getting was really directed towards that. And I figured this was the only thing that I did, I did know that I liked. that. And so I was like, okay, I'll do more of that. And then when I started the gym, I realized that I was doing none of that. I was starting a business, which had nothing to do with, I mean, insofar as I was selling fitness, there was a component of it, but the vast majority of my day had nothing to do with fitness whatsoever. But I did find out that I liked business more than fitness.

And that was, and that's where I think that there's been a lot of luck in my life where, you know, I just so happened to really enjoy the thing that happens to be rewarded by the marketplace with a lot of money. You know, like, that is where I feel like there's, there's a lot of of luck that has lied up of my life. And it's in indirect ways like that. I just happen to love this. And so I, and because of that, I will do it for a long period of time for more than most people and enjoy learning about it and talk to people in my free time and do everything I can because it's just the thing I like. And it just so happens to be rewarded monetarily. Well. Yeah. And also, you know, the physical benefits from it, right? I mean, you can literally,

you put in the work, you can see the result, right? It's one of those. very empirical, right? It's very measurable. Right, but it's like, yeah, it's, and I think I've heard you talk a lot about choosing the right market. Like if you're not in something that can scale, you might rethink that if scalability or profitability is your goal, perhaps you're not in a market that can scale.

Yeah. And we can talk about that in a minute. Okay, so you build it, you build, you build the your repertoire and then you start acquiring gyms what are you doing? No so I opened up four more locations

so I had five total on in Southern California Was it under the umbrella of this? So I had four under that umbrella and then the fifth one I did on my own so I ended up starting the gyms on my own nine months in I let two partners in for lack of a better term

I sold two thirds of the equity in my business for basically nothing and at that point I was already making $20,000 a month take home. And they said that it wasn't valuable. And in some ways, they were right. And in other ways, they were not. Either way, that is what happened.

And then from there, I stayed in that partnership. I ended up staying in partnership with one of the guys. We didn't work well with the other guy. And then after that guy was no longer the partnership, I disagreed with the other partner over time. Not on a personal level. We actually got along really well, but just business strategy-wise, I wanted to be a premium price leader. He wanted to be the low-cost leader.

And so we ended up just meeting in the middle, which was a very mediocre business. And so I wanted to start my own facility with kind of like my own credo. And that was the fifth gym, which was Body Force Lake Forest. And that gym did really well. That gym I acquired compared to the other four. The other four I started, this one I acquired. And I acquired for no money down for $50,000 over a year. And so I basically took the whole gym over and then had.

I had to pay $4,000 a month to the owner. And I made $50,000 in the first month. And so I was like, this is great. And that's when I realized that I made so much money launching and opening gyms. And then I didn't even really care as much about the running afterwards. I mean, I knew how to do it. I just liked the launches. They were more exciting.

And so I had this idea for a model where we'd fly around and just like launch and fill other people's gyms. And so this is right around the time that I'm my now wife. And so I pitched her the idea on our first date and asked her to quit her job, which was obviously the most reasonable thing to do. When you're talking to the top sales rep at 24R Fitness, which she was at 23. And so it's like, listen, this may not work out, but we'll make a ton of money together. You should work with me. She didn't say yes.

So I went and I launched three gyms. I came back five weeks later and I asked her to help me process the contracts. So we ended up processing like $120,000 in an hour. And she looked at me and she was like, is this the thing that you started? And I was like, yeah. She's like, is it legal? That was her first question. Is it legal?

I was like, yeah, it's legal. And she was, can you teach me how to do it? I was like, yeah, she's like, all right, I'm it. And so that was when she quit her job. And then she and I started launching these gyms together. We did that for almost a year. It's still very, very, very hard time for me financially. Mostly because I was just way, I had so many poor decisions.

I was paying off at all times. I then ended up saying, you know what, I'm going to sell my gyms and transition. During this period of time, I got a DUI, head-on collision, my mother went to the hospital. That's why I actually did those first gyms because they were all around the hospital because I wanted to keep busy. And so, you know,

there was a lot of bittersweet during this whole period of time. Like that processing contracts was after I came back from like the hospital with my mom. So it's just like just a lot of different like things I was going through. And selling the partnership that I had there

was really hard for me. Again, it was like this, you know, need for validation approval. And I had noticed that over my life until I've solved this problem, It kept reoccurring, which was I always wanted to find father figures. And so the guy that I did the apprenticeship with, like at the very beginning of the story, I was saying earlier, like, I ended up getting in a really weird financial situation with him,

which didn't end well. We ended up making up years later. It was fine. But like there was a long period of time that we were estranged. Both of those guys came in, very father-like figure feelings. I got in a partnership with another. So I kept repeating the same mistake until I had to learn. I was like, you keep doing this.

So maybe you should stop. And I looked at my track record, and all the businesses that I had only owned myself, I made a ton of money in. In all the businesses that I partnered with, I had made no money and lost money in. And I was like, huh, maybe I should do more of that. So at this point, you know, we're launching the gyms and whatnot. And I sold all the gyms and entered another partnership with one of the guys that I had launched. He's like, dude, I'll come behind you.

You shouldn't be giving up all the backside, like back end of all these launches. It's like, I'll come behind you and fill the, you know, and manage the gyms. And that way, every gym you launch you own. So at the end of the year, you can own 12 gyms. And you can just launch them and fill them. He said, but I have some financial, you know, issues, nothing big. I was indicted once, no big deal. Big misunderstanding.

And I was like, of course. And he's like, so you'll have to sign everything for all the money, all that stuff. But we'll split it. And I was like, sure. Of course. Why wouldn't we? So I sold all my gyms, put all the money into the bank account for the new business that we were going to start. You know where this is going.

Sold 400 people, which is a massive launch. for a small gym in a matter of like six weeks, woke up, all the money was gone. He was like, that was my half of the profits. I was like, if you haven't made any profit, we started the gym with the money. He was like, well, the fact that you spent it is your fault, not mine. And so like that, all the money I had done from all my gyms at this point in four years of my life was gone. And I was saddled with a gym that had no money in it with 400 members and payroll that I didn't have money to pay for. And I couldn't sell people because if I sold them, I would have to continue to fulfill them and I didn't want to be in I didn't want to own more gyms I just sold all my

gyms and so at that point I sent Layla to go launch a gym in Hawaii she crushed it she did a hundred thousand and collect it and that was enough to fund all the refunds for all of the members to gracefully which was not graceful exit the facility wow yeah I mean talk about signals missed signals um learning lessons the hard way brutal But also, I mean, story in my life, I could talk about similar things where I just, I literally had to get beat up and continue to making the same mistake. So very relatable. Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth.

And so I don't run ads. I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast that you, you do the exact same thing. So if it was a review, if it was a post, if you do that, it would mean the world to me, and you'll throw some good karma out there for another entrepreneur. I'll speed the rest of.

Yeah, no, you're good. It's just so much. It's so fascinating. There's, like, not even. There's way more bad that happens after that. So, but the thing is, I'm telling this, and all this happened in like a nine-month period. So this was just insane. And so, like, my mother getting sick, the ending the partnerships, the new partnership,

the money getting taken, my DUI, head-on collision. So the head-on collision actually was the next big catalyst for me, because that was yet again. I was faced with my own mortality, and it re-reprioritized things again. It was like, hey, idiot. Yeah. And so at that point, I had a partner that I had two marketing agencies with, by the way, started that on the side, a chiropractor and a dental agency. I had my five gym locations with a different partner. I had now the one, current location that I had started with the new partner, right? And I had the launch business where we're launching, turning around to launchers. And I'm 26. Yeah. I'm imagining,

you know, those plate spinners. You've got at least nine plates going. I was drinking a half a bottle of Johnny Walker Black every night to function, not to, like, not to get drunk, to not to feel back to not being stressed. That was the only thing. And like some people have like I would never have called myself an alcoholic, but it was like I still functioned fine. I never was drunk at work or anything like that. I just every night I would just drink that to like breathe. Yeah, that was your escape.

Yeah, it was. It was very much escape because I wasn't handling the things that I needed to handle. And so I had a coach at that time who was really more of just a therapist. And he said, Alex, your stress is literally going to kill you. And so that was right after I had the DUI and the head-home collision. And so he said, you need to change stuff. Like, what are you afraid of? you almost died, so fuck it.

And so I ended that partnership. I ended the partnership with the agencies. Believe it or not, even after the money was taken, I was still in a partnership with him. Because I was like, maybe he's right. I knew that it was fraudulent when I showed him the financials and highlighted everything and was like, there's no other money that was here and he didn't want to look at it.

And that's when I was like, oh, he doesn't actually think that I took the money. He was making a reason. So anyways, I got out of all of that stuff. I lost all my money. And then I was back at zero. And this was now, this was November of 16. So I'm now three or four years later from me opening the gym on the floor. So a lot of this stuff happened quickly.

At that point, we went to go launch a gym because Layla was like, hey, I quit my job for this. So, you know, can we like still do the thing you said you were going to do? And so we realized that, okay, I'm going all in on the gym launch business. and I went to go launch this gym in San Diego and this guy had reached out to me because he'd like follow me because I made some content about gym stuff, not much. And he said, I've got a new born kid. I really need this money.

Like, let me sell for this gym. And it just so happened to be 15 minutes from his house. Like, I had gyms all over the nation that I was doing one at a time and he happened to reach out to me and it happened to me next to his house. So I figured, all right, maybe someone's looking out for this guy. Okay, cool. Sell it and it'll give me time to get all the materials ready so we can launch way more gyms next month.

He crushed it. It does $100,000. in sales, which was like a big launch. And I owed him $22,000 in commissions. After Layla's launch and paying all the refunds and everything, I had $23,000. So I paid him the $22, and the $100,000 that I made from the sales number came. Because the processor, because of the refunds from the gym before, shut us down and said, there's a regular activity.

There's too many complaints, blah, blah, which was reasonable. I shut a gym down right after. Right. And so they said, we're going to hold on to this $100,000. And so I now had $1,000 total. during this period of time before I knew that we weren't going to be able to get the money, Layla had told her six best friends to quit their jobs and joined us at Jim Watch. And so I find out on Christmas Eve at Layla's parents' house where I'm meeting them for the first time,

that I had, one, lost all my money. Two, all of her friends had quit their jobs and are going to start selling for us the next on the 26th, so two days later. And on that 26th, 3,300 a day was going to start getting devoid. it for my account because I didn't have the money that was supposed to be coming for that hundred grand. And so I sat Layla down and was like, I pulled the credit card out and I was like, I have a $100,000 limit on this card. It was from all my gym. So it was like my master like working capital card. I was like, but I want you to know that like you can leave now and we're cool. Like

I won't judge you like cart blanche, you can leave and we're like I was like this has a very low likelihood of working. This is probably like a 10 to 15 percent shot that this actually works. and that's when she said I'll I'd sleep with you and her Richard came to that and so that was what I knew

that like we were like she was it she was the one she's with me ride or die like she's the girl up in America yeah

and so what a moment yeah it was great it was actually honestly I felt numb at the time from everything but later I can appreciate it so we started

the start the count starting and debit at 3300 today here's the catcher we started doing you know What was it? We did like 200 grand in the first month, so that's 7,000-ish a day. This is where it gets hairy. I didn't have a processor. So we're getting $7,000 a day in contracts that I cannot process.

And the money is still coming out. Right. At the end of the month, I get one processor turned on after calling every single favor. I was calling friends up like, hey, can you process contracts? I'll give you 10%. Just send me the money after it. And they're like, this sounds really sketchy. No.

And they were right to not do that. Yeah. Yeah. So, processors gets turned on at the end of the month, but they said, hey, it's a new business, so we'll give you a $50,000 limit. I was like, dude, I need $200,000 like yesterday. They're like, $50,000 is the limit. So I called the guy up and he said, well, it's per month.

So, and I got it like two days before the end of the month. He said, so you can run $50,000 today. And in two days, you can run $50,000 again. So I was like, okay. And that's what I did. I ran $50,000. And then two days after earned $50,000, which was enough to cover the $100,000, the $3,300 a day that was coming out on the card.

So I made literally, I made the $1,000. like $100 in profit that first month. And then he got two more turned on. So I got up to like 180 or so. And then he doubled the 50 to 100. So we had 200,000 in limit the next month. So we hit the full 200 the next month, but we're still billing from shit from last month while still making and still playing catch up. But we made like a little bit of profit that month. So I was like, okay, I think I'm in the clear. I think we might have. But wait, there's more. And so now we're going into March. So this is January is the first full month. February is when we're starting. We're playing catch up on processing. March comes. And I just wrote the store out of my book, so all the

details are fresh. We get the call. Layla comes up to me. I'm like thinking life is good. I think we're out of everything. And she's like, she's like white. And I was like, what's going on? And she turned her laptop to me. And there was just scrolls of negative transactions on our account. And I was like, what am I looking at? She was like, these are all refunds. I was like, again, how? We already did all the refunds from that gym. Like, we can't, they can't refund again. Like, we already gave all the,

because I thought he was from the gym from, like, way back that I had to shut down. She was like, no, one of the gym owners that we launched, got up on his chair and told everyone to refund. He just said, go home, I can't deal with all this, because we had taken a gym from 70 to 270 clients in a month. It was three, I mean, it was just, it was just unfath. The amount of infrastructure that's required to handle that,

which I hadn't thought through. I was like, you want A plus sales of marketing. We will sell your gym. We'll blow your gym up. Yeah. And so that's what we did. And then he refunded everything. So that just blew all the profit from the month before.

And that was horrible. But then I was like, okay, one-off circumstance happens. Not a big deal. Like, we'll get through it. We'll just do more launches. It's fine. Two weeks later. She comes back again.

And she's like, it's happening again. I was like, what are you talking about? She was like the refund thing. I was like, he can't refund. Like, no one can refund. Like, we already gave all the money back. What do they want? And she said, no, two.

gyms told the clients to refund and then buy the same services from them for half price since we had left after selling. So it's like someone comes in, we sell them a membership, you know, for the way we did it. We'd do a six-week program for like five or six hundred bucks. They would pay for it. We'd keep that money for the marketing sales hotel, rental car, everything, ad spend, commissions. That's what we'd keep. And whatever was left was the profit, right? After that, that Jim got all those customers for free to convert. Yeah. So it's like, you got really, yeah, you got really high qualified customers because these are. aren't trial customers. They're paying, you know, 600 bucks to be there. So like, they care. They'll

show up. They'll follow instructions. And you should if you're doing a right, convert 70% on the back end. So like, you just got to wait. You got to provide fulfillment for six weeks. And most gyms at fixed costs, not a lot of variable costs. And so they didn't really need to staff up that much, not a ton, right, to handle that. And so these guys are just like, you know, would be cooler as if we just told them all to refund and then we got half the money. Right. And then that gives them a reason. And they had the, and they had the relationship with the clients. I did. But I held the bag for the processing. So anyways, they, they did that. And that's when, so we had 150,000 in refunds. And again, I have no money. And so it was like this impossible situation where I looked

at Layland, I was like, okay, if you fly out and I fly out, we can both do $100,000, and we can make sure the gyms don't do anything stupid, then we can cover the $150. And I just remember this other thing that she said to me, which was like, Alex, like, we can't sell our way out of this. Like, if we do that we're just going to create more, like there's going to be more refunds, like the amount of refunds is just going to keep going up. And so I didn't, I really didn't know what to do. And so at that point, she had this little side business because she still wasn't sure how things were going to work out. So she was doing like through or $4,000 a month from all our personal training clients that she transitioned online. And as I'm trying to like think of every possible idea under the sun, including like me being a

prostitute, didn't matter. I just was like, whatever I can make to get $150,000. Yeah, I didn't. I mean, but it wasn't even $150,000 in revenue. It'd be $100,000 in profit. that I had to come up with. Otherwise, her friends were gonna get paid, right? You can feel the stress. So I sit her down and I was like, wait. So three or four thousand dollars, what's your cost and then?

She was like nothing. It's like, okay, what if we blow your business up? Forget my business. Clearly I suck. It's like, what if we just blow you up? And so she said yes. And I spent, pretty much every weeky moment after that, writing the best sales copy of my entire life,

writing an amazing ad campaign and launched everything within like 48 hours. And then within a few days, we were doing a thousand bucks a day. of just her selling over the phone with no fulfillment. It was just like online programs for her weight loss program. And I was like, this could work. Because if I get the eight sales guys that we had at the time to come not have to travel anymore,

they'd all do $1,000 a day. We'd do $8,000 a day. After commissions, we'd have about $150,000. Yeah, yeah, yeah, exactly. And I was like, and no gym owners. No one's going to refund because no one's telling them to refund. And so that was the plan. I told her the plan.

She was good with it. And so we had eight gyms that were supposed to launch the next month. So I called those guys up and I was like, hey, we're not doing it anymore. change the direction, whatever. And the first guy tells me this long story about how his friend had referred him and that we had saved his friend's gym and how he was going to lose his house

and then he had refinance everything. He'd maxed out of his cards. He'd quit his job, spent two years not making any money for the gym, and that he needed this. Soob story. Yeah. And I said, cool, not really my problem. Because, like, everything that happened to this point, I was like, my level of give a fuck was very low.

And so I said, sorry, man. And he's like, can you at least show me what you did at my first? friends place and I'll just try and do it myself. And at this point, I needed money, right? And so I was like, maybe. But I also didn't want to go create this whole thing because I knew the value of focus. I'd learn that lesson at this point. And so I said, fine. I'll show you how to do it, but I'm not going to fly out there to save your ass if you can't sell. And he said, no, that's fine, it's fine. And so he said, how much? And at the time, I picked the highest no record I possibly think of because

I thought, I wanted him to say no, so I could move on with my life. Yeah. What's your IP worth? Yeah. And so I said, $6,000. Mind you, this is the system was doing $100,000 in every single deal we launched in a month. And he's like, deal. And I still remember, I looked at the phone and I was like, holy shit. I kept, and then I just like, cool, what card do you want to use? And I wrote it down on a napkin and finished the phone call. I went over to Leland.

I was like, holy shit. I was like, this guy just paid $6,000 for like all of our sales scripts and all this stuff. Yeah. How soon did you realize you left a ton of money on the table? Well, this was the moment. And so I was like, I think there's something here. And so I went and called the rest of the guys that were supposed to launch the next month. There's seven more guys.

And, you know, next guy, how much, $8,000? Next time, how much, 10 grand? And then I did $60,000 in sales that day. You know, you're seeing how elastic it was? Yeah. And there's. Yeah. And I saw it 60 grand in one day.

And it was a day it changed my life. And so that's when I was like, I think we're still in the gym business. I think we're just doing it wrong. She's like, so we're not doing the weight loss thing? I was like, I guess not. I think we're going to do this. She's like, well, how are we going to get new customers? I was like, well, we don't need to worry about that yet because I'm going to call the 30-something

other gyms that we did the launches for and be like, hey, remember how I filled your gym up? Want to see how I did it? And within the next month, I think we collected $200,000 in cash, but we ended up doing like $400,000 in sales. So let me ask you more about this system. Yeah. Was it like written down somewhere? Yeah, it was my whole gym opening system.

It's like how I would do these launches. Did you have videos? in like a module, okay, what, step one, two, three. So the way that I had structured this, the old gym launch version is we would fly out to do these turnarounds. Well, I have more questions about this. Oh, sorry. Well, I want to ask you because I'm sure that there's a lot of people who want to create

modules or learning modules or teaching modules, whether they are doing it in-house for them people or they want to learn or maybe create their own. The courses are a big thing, right? But so, like, were these underproduced, well-produced, over-produced? Like the videos, was it like? A mixture of both. Okay. Yeah, because I had hired a guy to do like really professional videos when I did the original

launch, like the old school one, that walked the gym owners through like, here's how to service these customers. Here's how to do nutrition consults. Here's how to sell supplements. Here's how to sell the membership on the back end. And those are all like really nicely done professional videos. And so I had everything there already for the back end. The sales training, I had already trained my sales guys with.

So that training already existed. The scripting and that sales training was brutal and fucking awesome. Still, like, it's interesting because when you make a training with the intention of like, someone has to go through this and sell shit on the other side and it's my money on the line, it's different than when you try and make a course on sales. Right. Because people try and make a course on sales and justify the cost that they charge someone for it. Mine was an hour-long training that taught someone how to fucking close.

And it was this particular product at this price point for a gym. So it was super specific selling, right? Here's I set the chairs up. Here's how the office needs to look when they walk in the door. This is a joke you make. This is how you do the tour. When they sit down, make sure they set up on the weight, make sure they look at the weight. They cry they buy.

Make sure they sit down. Like, you know, you did the whole thing, right? And it was all methodical, strategic. I'd done 4,000 of these. Like, we know this conversation like that. I could still do it. Still. And so, anyways, all that stuff was documented.

The only thing that wasn't documented was just the ads and the landing pages. And I said to show how to place them. Yeah. So all I had to build was just that. And we're just talking about Facebook ads or Google ads. Yep. It was Google and Instagram. Or sorry, Facebook and Instagram.

Yep. And we already had the ads. They didn't even make them. I was like, this is the ad. And they would use my video. I knew my videos worked. So it was just like, boom, post this, goes to this page, which is a copy page to the page that I already made. Change the name of the city.

Right? Like, that's it. I was like, and when they, like, here's how you work the leads, which was the sales training in the guys had. Here's how you sell them. Sales training the guy said. And then the back end, they already had the training for it. It was proven. It was already there.

I just didn't have the ads part, like documented. So I documented that. And I sent it out. I called the other guys. We crushed it. And then the average gym that, of those first like 30 or 40 that bought did $30,000 an additional collected cash, not membership. not like contract value, like cash collected in their first 30 days.

So you're a hero? Overnight. They were just like, overnight success. And then, I mean, as soon as that happened, they're like, what else do you have? And I was like, well, glad you asked. You know, I have my three-year licensing where I'll give you all the rest of the things that I used to run and scale my gyms. And so that became Jim Legacy, which is the back end of gym launch, which was the two programs that we had front-end and back-end, which fundamentally is actually exactly how I did weight loss programs. We had front-end and back-end.

We had a fine end program. We sell them a continuity. same process. They just added zeros. That's all it was. And there was no, the cost of goods is significantly lower because it's licensing. You know, licensing materials, licensing ads, licensing pages. It's not, you know. Yeah. And if I can just point out what I'm hearing too is you got rid of partners. Right. I'm not against them now. I, I had to learn, I had to learn how to do business on my own in order to learn how to partner later. Yeah, but I also think, you know, self-awareness is key.

Like sometimes, you know, Nidal is a great tennis player. He doesn't play doubles that I know of, right? He's a solo player for a reason. Or, you know, and we had Russell Wilson on the show, who's the quarterback now of the Denver Broncos from the Seahawks, and Russ is a team player. So if you're a team player, you know, and that works for you, that could be fine. And your model, it wasn't working.

It was not. And you weren't getting the hint until you finally did. Yeah. I think Lela was a strong nudge there. Yeah, but those are super good lessons for people who may not have to make them the hard way. That's... If you're going... And this is, because I get questions like this all the time for newer entrepreneurs.

It's like, you know, either they're in a partnership, and this is how most people partner. Hey, we like each other. And we kind of like the subject. Let's get into business together. Terrible reason to get into business together. But like Wycombinator, we were talking to this offline two seconds ago. While a combinator has shown that three partners, three founders, is actually like the sweet spot. Like three to four-ish actually works the best for.

building huge companies. Now, that's huge companies. Not everybody's trying to build a huge company. And the founders that they have have very specific roles and functions. So you've got the guy who's the head of coding, and then you've got the promoter who's head of sales and marketing. Then you have the operator, typically, which would be kind of the third leg of the stool, which is kind of the minimum three roles that exist. And so if you are going to partner with people, they have to have a clear role or responsibility that is different than yours. Complementary skills. 100%. So complementary skills, aligned values. And if you are partnering, the splits don't need to be even. And that's often a common thing, which is like, okay, there's three of us,

therefore we should have thirds. That isn't necessarily true. You know, like some people might be bringing a bigger network or, you know, other things to the table that tip the scales. And that's, you know, that's part of business. But all that to say, I'm not against partnerships. I at that time did not understand how to partner and therefore was only able to successfully have business when it was just me.