The Game with Alex Hormozi - The Pressure to Innovate: How Challenges Drive Success (on Real Talk with Zuby) Pt.1 - June ‘23 | Ep 579

Episode Date: August 26, 2023

"That first one is zero to one. That's the hardest. And that's where I think most of the life lessons are.” Today, join Alex (@AlexHormozi) as he guests on Real Talk with Zuby to share his journey from starting a chain of gyms to selling multiple companies for millions of dollars. He emphasizes the importance of education and how it can't be taken away from you. 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 Real Talk with Zuby’s YouTube Channel!Timestamps:(4:23) - Teenage angst and parental approval.(10:02) - Seeking father's approval and depression.(26:48) - Opening gyms without fronting money.(34:36) - Financial desperation and risky decisions.(48:29) - Lessons from financial ups and downs.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Education is the only thing that no one can tax you out of. You can't lose in a divorce, and the government can't take it from you. 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. What's up, ladies and gentlemen, boys and girls around the world? I would like to welcome you back to the Real Talk with Zubi podcast. Today, we are coming to you live from Las Vegas, Nevada.

We've got a very special guest in the house, had to travel all the way out here to come see him. over the pond, over the coast. And I'm here today with one and only, Alex Hormozi. Welcome to the show. Thank you for having me. I'm very honored. Awesome, man, Alex. It's so good to have you on the show.

I've been following you for a while, listening to your interviews, listening to the videos you're putting out there on YouTube and other platforms. And first of all, I love what you're doing. It's awesome. It's inspiring. So for people who have been living under a rock and are not familiar with who you are and what you do, please introduce yourself to the audience. So I own a portfolio of companies right.

now that makes a good amount of revenue. Before that, I sold three companies in 2021, two for 46 million and one for an undisclosed amount. That was an all-stock deal. Before that, I owned a chain of gyms that I grew organically, started sleeping on the floor there. And before that, I was a guy who graduated college, didn't know what to do. Went into management consulting for two years, decided I didn't like that and decided to, quote, pursue my passion, which was fitness at the time. And it was also the only business of the three businesses I thought of starting that I could pretty much start without too much money. And so I put my $50,000 I had saved up at 23 into that. And so I kind of reversed told you the story, but that's more or less how I got to where I'm at

now. And so now we, after we sold the companies, we started Acquisition.com, which is the portfolio. And the whole idea was, I'm a big believer that there's magic between something old and something new. And so, you know, the investing private equity model is not new by any means. But like social media and influence is kind of still a new thing overall. And so I'm I was like, I wonder if there's something in between there where we can use social media to build trust, provide value, and then hopefully just have companies come inbound that are like, hey, I've read all your stuff. I've gone through, like, I love how you do business. We do business the same way. And so it would create a more lubricated deal process. And that was just kind of a theory when we started it. But it has worked out. And so that's what we do now. So we just, we buy businesses, both majority and minority interests in them and help them grow. That's awesome, man. Well, I think a lot of people who know you will sort of be aware of you and everything you're doing just over the last few years as you've come to more prominence and become a public figure. But I'm always curious with any guest that I have on or anyone I'm speaking to who's achieved success in something.

I'm always curious to go way back and find out more about their life journey. So tell me more about your growing up, what was Alex Hormosey like as a kid and through school. I was an only child for the first half then my dad remarried and then I had two step siblings. I was pretty much just raised by my dad for the most part. So I was a pretty quiet kid, just did my homework, did my sports, kind of kept to myself for the most part.

Once I got into middle school, that was really tough for me. Getting to high school, I started to like, I went through puberty kind of earlier. So I had like muscles. There's pictures of me on the internet. Like, I was pretty fit.

And I had pretty good jeans. for that stuff. And so that's actually what kind of got me into fitness was I had a teacher who was like, hey, he's like, you lift. I was like, no. He said, you've got the jeans. He's like, I'll show you after school if you want. So I went with this guy after school and he showed me how to work out during my freshman year of high school. And it looked like I worked out. And that kind of set a little bit of the direction of my life. That kind of got me into what I would consider my relatively angry phase of my life. You know, late high school, early college. I had a very like, what was me? Outlook on life. I felt like I had been wronged, whether it's true.

or not as kind of relevant. But that was how I perceived the world at that point. What did you feel you were wronged about? You know, teenage angst, but, you know, I felt like I had a bone to pick with both my parents in general. The classic feelings of being misunderstood, not giving your liberty, you know, having approval from parents withheld from you despite, at least for me, I tried very hard to gain the approval of my parents. And so, you know, I was on three varsity sports teams. I was the editor-in-chief of the literary magazine, the vice editor of the newspaper. I was in shape. Like, you know, I tried to do everything I could, but I felt like it was continued, like the goalpost continued to move. And that's fine,

because at the end of the day, like, where I am today, I'm grateful for who I am. And I can blame them both for that. But coming up, I definitely didn't have the perspective, I think, that I do now. And so I was an angerer kid. Everything kind of broke through for me around like 19-ish. Okay. I had this psychology course that I was taking in college, and we had to write an essay about someone we knew who had a mental disorder or something, like because it was psychology. So you had to like pick something and then tell the story of how they could have potentially gone in that direction from their perspective. So it's a really interesting assignment. And I wrote about my mother. And in so doing, one of my favorite quotes, Pascal is, and he was the mathematician, Pascal's triangle,

Blaze Pascal. He was also a Christian theologian, so kind of interesting. And He said, to understand is to forgive. And so when I wrote my mother's story from the fact that she was, you know, born in France, came here when she was four, got beat up as a kid because she, you know, didn't speak English, the classic, you know, foreign, you know, and this was, before it was frowned upon to beat up foreigners. We've progressed in some ways. Yeah, yeah, we progressed. And so, in so anyways, I was thinking about that, and her father was a super immigrant from Serbia.

And so, you know, you have a Serbian man who escaped the Nazis with his family, comes here, builds a life for himself, and kicks them up out of bed no matter what every morning. Like, just militant. And that's okay because that's, you know, he realized the opportunity they had. But I was like going through this and thinking, you know, it makes sense that she had some, like, she is this way. Right. And so all of a sudden I remember coming back from college and seeing her, and I didn't see her that much beforehand. And I just remember this kind of very disarming moment being like, I can't be. be angry with you. And then she just looked at me and was like, I get it. I get it. It was tough.

Yeah. I'm like, I'm sorry. And then she just like burst into tears and, you know, and it was like a nice moment there. So that was like a big life lesson for me. It was like most of the times if I'm angry, it means I don't fully understand the situation or both people's context. And so I think that was kind of a big, a big breakthrough for me as a person. So I was like, huh, this person that I've like held all this anger towards. If I just like, if I understood more, my anger came from ignorance. Yeah. And so that's been a frame that I've tried to approach situations. And when I start feeling angry about something, I'm like, what do I not understand? And that kind of helps me diffuse those things.

And so I think over time that's helped me in business scenarios and business settings make better decisions. Yeah. Because, I mean, we're all human. We all have emotions. But, you know, the degree to which we allow the emotions to affect our decisions, I think, is the thing that we have some level of control over. Yeah, absolutely. And that's powerful. And I think that of all emotions and feelings people can have, I think resentment is one of the most deadly ones.

both for yourself and for other people. I think it's so limiting. And I think there are so many people in this world. You know, sometimes with good reason who feel and harbor resentment towards other people within their family, people they've met, people who wrong them when they were in school,

20, 30, 40 years ago, sometimes even their own spouse or their own children, whatever it is. And it just eats people up. And it's such an impediment because if you are angry. I mean, there are times when you can use anger as a motivator if you channel it well to go on and do something successful, but it can just be, it can be disruptive and disruptive and it manifests

in all these sort of different ways. And I just think there's so many people in this world right now walking around with that within them. You see it offline, you see it online, just that person who, you know, you post a video of you working out. And they're like, mad at it. And it's like, I'm like, why, why are you angry? Why you lashing out at someone posting a video or a photo? of them in the gym. And it's like, all right, there's something that's, I'm not trying to psychoanalyze everyone, but I'm like, man, there's something going on in the background there. And you're not angry at this person, but there's something here that's like triggering you. So you had this breaking point at 19 where you really shifted your mindset.

Were you already an entrepreneur at this time in any sort of way? I was in zero, zero ways. Okay. So, yeah, at that point, I kind of got my shit together, darned. That's okay. I got my stuff together. And I started cleaning up my act. So I had been kind of like a party boy leading into that.

So I just always was out drinking, always partying, always just chasing after girls. And then at that point, I was like, I need to take life seriously because this is, my track is not good. And so I kind of applied the same thing that I was doing in high school from an achievement perspective back in college. And then I did well the last two years because I graduated in three. and kind of followed the path, got a job as management consultant, which was, at least for me, it was investment banker, management consultant. The primary reason was they made the most money.

And so that's why I picked it. I used to be a management consultant as well. Oh, yeah, where? Yeah, yeah, yeah, yeah. No, we were a subcontractor under Booz Allen, so it was defense contracting public sector stuff. Anyhow, in a past life, I had a top secret clearance and all that fun stuff that came with it.

It sounds only cool to say. Yeah. But did that for two years, realized I didn't really enjoy the work. And that was when I got really depressed. It was a very hard time in my life at that point because I felt like I had done everything I was supposed to do and it had resulted in what I had hoped. And so at this point, I had moved back home. So I went to school away from home, went back home. Where was home at this point, by the way? Baltimore. Baltimore. Okay. And so I went back home, had this job. And I'd done at this point everything that

my father had wanted me to do. And it was his approval that I was seeking. And the thing is, is like I had his approval, but it didn't hit the way I wanted it to. And so what I realized was I didn't have my own approval. And so in realizing that, at least for me, the source of my depression was that I was not proud of who I was because I did not feel like I was free. Because I felt like I had made a lot of the decisions I'd made up to that point in my life because of expectations of other people that I was trying to meet. Got it. And so having met those expectations and not met mine, my own, I felt a big discrepancy. And so it was about six months of me going back and forth of like, I really want to get into fitness or I want to start my own business.

And I would, you know, I'd always call my dad up and he'd be like, ah, you know, give a time, you know, go to, you know, whatever, whatever. And so then I was in the process of applying to business school and, you know, do your two years and then you do that whole game. And the first question for Harvard's, for HBS was, how will Harvard Business School MBA help your short, long-term goals? And I stared at the question for like three days. And I realized for me, it didn't, because I wanted to ultimately start a business. And so I thought about, okay, well, $100, $180,000 plus the opportunity cost of the time versus what I can learn in two years, not spending $180,000 and making money during that period of time.

And I looked at the average incomes after HBS was like between 120 and 180. And I was like, I think I could figure that out. Yeah. And so I still didn't get my dad's approval. And so I ended up actually driving across the country from Baltimore without telling anyone. And I called my dad halfway through or halfway across the drive, being like, hey, by the way, I'm going to be doing this thing. And he was like, ah, just come over, we'll have lunch, we'll talk about it.

And I was like, I'm in Ohio. And then it kind of like snapped, rightfully so, I guess. And yeah, and we had a pretty hard time for the next five years. Didn't really talk too much to either of my parents because I was just trying to run this gym. And so that's when I went to California and started a gym without knowing anybody, which was honestly not as scary as it should have been because I was ignorant. Okay. But I do remember when I was sleeping on the floor of the gym and I was reading those motivation manifestos.

it was not as cool as I thought it was going to be because you want credit for the Rocky Cut Scene, but when you're in the Rocky Cut Scene, it's a lot longer than 30 seconds. Oh, yeah. And so, you know, I'm sleeping in a warehouse where there's cars that drive over the top of it and there's these metal partitions and this concrete box.

It was like, and it would sound like a gunshot. And so I was sleeping there, and so I'd wake up every hour of the night to new cars driving over it. And I pretty much didn't sleep for the first like six to nine months of me being in business

because I would wake up at four, the first people show up at 4.30 in the morning, teach all the sessions, which ended at 10. Then I would do, I would work the leads that came in overnight and clean the gym, set up the workouts for the afternoon, first people show up at 4, 4 until 8 taught sessions. And then I would do my sales consults from 8 until 10, meeting with people.

And then from 10 o'clock until I couldn't keep my eyes open. I'd run credit cards, do the billing and all that kind of stuff. And then I'd wake up again at 4. And so it was just kind of this blur of life for me at that time. and I honestly don't think I would have been able to get through it if it had it been for the amount of resentment I had for my parents at that point and it was just the fear of going back not successful that continued to drive me through that.

And so like a lot of people when they're thinking about starting a business or going on their own, they're like, I just, I don't know what I'm passionate about or like, I just can't find my, you know, whatever the thing is. You know, the vision for me was don't be broke. Yeah. And the motivation was not let my parents. be right. And so I'm a big fan. Like, it's cool. You know, a lot of people see where we're at now and they're like, must be nice. And the real answer is yes. It is much nicer now than it was then. And I can

have bigger visions that can motivate much higher tier people, you know, to go towards a cause. But the thing is, like, when you're started, you don't have that luxury. And I'm a big believer in the first rule of entrepreneurship is use what you got. And so if you've got pain, you've got anger, you've got shame, you've got fear, whatever that. You've got insecurities. Yeah. If you don't have the passion, use the pain. It's so interesting you telling that story because there are a lot of parallels with what I did after leaving my management consulting job.

People don't understand the grind, right? There's this period, oftentimes it's seven to 15 years of just intense grind where the amount of work you're putting in versus the reward you're actually getting back is so minimal. And then, of course, you reach a certain stage after a decade. plus and you start getting the, oh, must be nice, or you got, or you got lucky, or oh, you know, I wish, you know, I got that lucky or whatever it is. And I think that's often because people see the end result, although this is not the end stage, right? They see that, but they completely missed the 10 to 15 years prior to it. And they weren't there for it. And they probably would not trade their comfort to go through all the nonsense and all the rejection and all the discomfort. So for me,

myself, I studied at Oxford University. I graduated with a degree in computer science at the age of 20. And I did music full time for a year, but then I moved it to London, worked in the corporate world, management consultant for three years, 2008 to 2011. By the time I went full time with my music, I'd put out three independent releases, sold a few thousand CDs just traveling around, selling on the street hand to hand. And then from, literally from 2011, when I went full time, 2011 to early 2019, I was just hustling. I was just out there. My primary income for the first six years, literally just being out there on the street, I'm sure in certain cities, whether it's Vegas or New York or L.A., London, you've come across guys selling their CDs in the street, right? So that was me. I was just out there

every day, five, six days a week, traveling all over the UK, North, Southeast, West, rain, snow. UK doesn't have the best weather. Snow, sun, whatever. I was just out there on the street all day talking to people. I sold over 25,000 CDs hand to hand. Wow. To sell 25,000 CDs, you know how many people you have to talk to. A lot. So when I tell people, I've met over half a million people in real life. They always like, oh, no, you just talk on Twitter or whatever.

I'm like, dude, you've missed the past 15 years. I was just out there. And then eventually 2014, I started doing pop-up shops. So, you know, in shopping malls, you get those little kiosks in the middle. So my friend and I, we started our own shop. And we were selling our hats, t-shirts, CDs. we stab our own brand headphones. So we were selling all that. So from 2014

to early 2019, that was my main bread and butter. So I'd do one pop-up shop a month for kind of half the month. Just be in there. Make a small profit. Sometimes barely break even because you have to pay all the rental fees for the shopping mall and all that for the space. And you have to pay for all the merchandise and all that. And that was it. I told people this on Twitter last year, but I think

something important for people to know about my own story is 2020 was the first year that I made more money than I used to making my corporate job. I left my corporate job at 24. So it wasn't until I was 33 years old that I surpassed what I was doing back then because so many people thought, oh, you know, oh, you're a rap. People think if you're a rapper, you're just making money, right? Just because magic, right? And people don't understand the grind that goes into it. So I even had people who thought that I went into this for explicitly, oh, you did you just want to make more money? I was like, dude, if I want to just make money and

be comfortable. I've got a degree from Oxford. I would have just stayed on that corporate path and you know what I mean, just stayed there. It would have been comfortable, but people miss all that. And then, yeah, so it's interesting. There's a lot of parallels with that story. So coming back to you starting this gym in California, what made you actually want to do that? And why in California? Because that's a, if you're in Baltimore, that's a, seems a little, I know you're into fitness. Yeah, that's very far to just go over and start a gym. Yeah. So there was two reasons. One was I wanted to as far away from home as I could. Okay.

And that was, it sounds more dramatic than it was. It was, I just wanted space. You know what I mean? I didn't want to be in a day's drive away. Like I wanted to be in my own area. Because I think the thing that I felt like, I felt very constrained, I felt like I was trying to meet the expectations to other people.

And so I just wanted to have, go to a place where as little of that physically could affect me emotionally. Yeah. The other reason was I was between South Beach and California because they were the two fitness capitals, in my opinion of the world at that point, or at least in the U.S.,

And so my thought process was, if I can win there, then I can win anywhere. And so I want to go where it's most competitive so that I can learn the best, most cutting-edge stuff, and then win there, and then I can kind of expand nationally. At least that was my thought going into it. That was the main reason. And to a point you said earlier, I think people would be willing to do the grind, but they can't do with the uncertainty. Because the thing is, like, if you say, hey, hold your breath, and the person starts holding the breath, it's easy to do that if you know the person's going to say you can. and breathe again in 10 seconds. But if you just sit there, and you're like just staring at them,

like I feel like that's a lot of what the entrepreneurship thing is. It's like you save up some money and then you take the dive and you hold your breath and you're like, how long am I going to have to hold my breath? And the answer is you just don't know. Yeah. And so I think that's the answer. I think that's the thing that most people are afraid of. And for me, that was my big fear because I just didn't know how long it was going to take.

I knew I wouldn't stop, but I'd know how it was going to take. Yeah. I love that analogy. I think another core part of it for someone like yourself or someone like, myself is we had taken the more normal option to begin with. So you know, it's almost like you're doing that. And there's also a rope that you know you can grab onto. So for some people, it truly is sink or swim. There's people who they've got no family whatsoever. They're going to fall flat on their face and be on the street if they don't make it. You know, if it's like, oh, you've got a

university degree. You worked in the corporate world before. It's like, man, I know I can just grab this thing and live a quote unquote normal life. And be. comfortable, but you're still there holding your breath with this delusional level of self-belief knowing, I know somehow, some way this is going to work out. I don't know how long it's going going to take. It could be five, seven, ten, 15 years. And also people don't understand it, right? People are there like, why are you holding your breath? Like, why don't you just be a normal person and do what normal people do? Why are you going through the, why are you sleeping in the gym? Yeah. Like, what are you doing? Right? With me, I'd be, I'd be just all over the place.

Just when I left my job, I got a Volkswagen transporter van, and I wrapped it in purple with the Zubi logo on the side. I still got it. It's called the Zubi tank. And you would just go on road trips off and down the country. You'll fill it up with CDs and just travel around. And of course, to keep costs down, I mean, I didn't normally sleep in my van. I did a couple times. But I just stay in like the cheapest hotel possible. I'm going to Manchester for a week. I'm just going to stay in the cheapest, crappiest hotel. Or if I've got friends there, cool, I'll stay on their sofa, I'll stay on their floor or whatever. because if I go, you know, I'm not making that much money. I'm going making on a good day, maybe 100, 200 pounds. Yeah.

And then if I go and I get a 100 pound hotel, it's like, well, what's the point? Yeah, I'm not making any profit at all. So there's a lot of discomfort. And then with a musician grind, you add to that the gigging as well. So traveling around and doing shows. And again, people are like, oh, wow, you're on tour. That's awesome. Maybe it's awesome at like the top level where you don't need to organize anything yourself

and you just show up, you know, collect a giant bag of money and perform a couple songs, which everyone already knows. the words too and you don't actually need to wrap. But if you're a lower level, lower level independent artist, like touring is a grind. It's not fun. You have to bring your A game. You've got to bring your A game. Even if there's 10 people in the crowd.

You can go there. You know, you're looking at the crowd. Half the audience is the staff. Right? The sound, the sound man. The people working at the bar, the security guys, whatever. And you've got like five, six like hardcore fans who have been following you on MySpace or on YouTube or whatever. You know, those ones you don't even break even. Hey guys, love that you're listening to the podcast.

If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, you know, drawn out stuff. Sometimes it can help hit the brain centers in different ways. You can check on my YouTube channel. It's absolutely free. Go check that out if that's what you are into. And if not, keep enjoying the show.

This is all the stuff that I like talking about it because I wish more entrepreneurs and more creative people did. I think so many interviews and so many conversations, it starts with here and now. It's like, oh, cool, I'm here. I'm here. I'm already a millionaire. And this is all my stuff now. And it's like, well, wait, how did you?

I'm more curious how someone made the first million than how they made the next however made. Because that first one, zero to one, that's the hardest. And that's where I think most of the life lessons are. So with that said, let's continue on this journey from you setting up this gym in California and sleeping in it,

having the trains going over your head. What was the first success? So I was fortunate, very fortunate. And so I want to let the record show. I am just a lucky person. And everything I have is from genetics and picking the right parents. That way, nothing I have is my own. But I moved out there.

I'll back up because I think this might be helpful for some people. So when I decided to go to California, I had emailed, I think, 40 or so gym owners that looked like they were doing okay online. No one got back to me except for this one guy. His name was seven figure Sam. That was what his thing was. And so he was good at helping gyms be more profitable.

And so I got on the phone with him, and I told him that I was going to be there. And he was like, all right, whatever. I mean, you're in Baltimore. And so I just drove for 36 hours. And then I showed up on his doorstep. And he was like, are you serious? And I was like, yeah, what's up? Let me learn.

And he's like, I have things to do. Like, you can like, where are you staying? He was like, I don't know yet. He was like, Jesus. He's like, you can stay at my place tonight. And so it was really nice of him to do that. And then the next day, you said, you know, you can be my apprentice. He said, I get to the gym at four.

So be here at four. and I states, and he works till four. So he would work 12 hours. You'd do four to four. He's like, all these people think they can't have a family because he had kids and a wife. And he's like, they just aren't willing to wake up early. He's like, I get home at four and I spend the rest of mine. And I was like, huh, that's interesting.

And so I was able to learn the ropes relatively quickly. I only did it for three or four weeks, just kind of like shouting them around, understanding the business a little bit. And then I found a spot. And he connected me with somebody in his group of gym owners that you guys should partner on this thing. And so we were going to split a location together because I had, you know, some savings. He had some savings.

He had some savings. were going to do it, which by the way, terrible way to do a business partnership. You guys have the exact same skill set and might as well to split the money. Anyways. So needless to say, the night before we were supposed to sign the lease, the other guy backed out. And so all of the sudden, I had to stomach the whole thing and all the money and all the different costs, which ended up being one of the biggest blessings in disguise. But a week before that, that guy had said, hey, let's go to this marketing conference.

And this is 2013. And at that marketing conference, it wasn't even a conference, a workshop. It was 10 people. The guy taught this thing called Facebook ads. It's 2013. It's talking about luck. You know what I mean? Like, CPM's there.

So cost for impressions for anybody who's listening. It's like, that's what you have to pay to advertise. And on Facebook, it was like $3. And so I was running ads for a gym as soon as I opened the gym. So that allowed me to, I remember the first month, I made the exact amount of money that my rent was, which was $4,972. And mind you, I'd never made $4,972 of my, like, me,

making it. I went from a job to that. That was where actually the panic said it. I was like, what if this doesn't work? I was like, I'm just going on this. And I had $5,000 saved up. So I'd spent like 45 or whatever opening the gym. And I had one or two months of rent's worth of money and then I was out. That was it. And so I broke even on that.

And then the next month I signed up the same amount of people. So we did $10,000, then $15,000 and $25,000, all the way up to $35,000 a month at that gym. By month nine, I, you know, had trainers and I had a manager and it started working. And so month 15, I opened my second location. And then I opened up a new location every six months after that. I mean, I can get in the tactics around this. But the way that we were able to do is I had a pretty cool model, which allowed us to get a ton of customers for a low cost and a high amount of cash up front.

So we could liquidate our acquisition cost, and then we still had the back end. So people would, I could get paid to get customers, which is why I could open every gym at full capacity on the first day. And so I didn't even have to front the money for the new gyms. open. I would pre-sell them, use the cash from the pre-sale to buy all the equipment, paint the walls, get the sign, all that kind of stuff. And so I would open up in the black without ever having to front any money. And that's what allowed me to grow really quickly from like 23 to 26 in terms of my age. And so at that time, I had six locations. These are all in California. Five were in California. And then the sixth one I opened in Virginia. Okay. So there's where there's,

here's where it starts to get interesting. Okay. So I start to get to this point where I'm like, you know what? I've got five gyms. I was actually kind of bored. I was like, is this all is the life. I reached like a different, you know, moment. And I had seen this guy speak at this conference and he talked about internet marketing and all that kind. And I didn't know anything. I didn't know much about it. And so I like Googled his name again. And it was like, hey, I've got a mastermind. And so I was like, all right, whatever, I'll sign up for this thing. So I sent up for it. And I explained my whole business model. And he says, right after I go through this like 30 minute, way more taxable than when I just went over breakdown of like how I get

all my gym's profitable and all this stuff. And he's like, shouldn't be running gyms, man. And I, it actually crushed me in the moment. I was like, what do you mean? This is like my whole vision. United Fitness was like, I got this really strong brand at the trademark. I was like, we're going to be America's gym.

Yeah. And it was like, I think you should be showing other gyms how to do what you do. He's like opening a full capacity. It's like, that's not a thing. I was like, oh, really? Honestly, because I was so in my own bubble,

I was like, of course you would open a full capacity. Why not do that? Yeah. It's way better. And so I actually from there started doing these gym turnarounds. So I started flying because I had the time. So I started flying. to gyms and turning them around.

So I'd camp out in front of them. I'd run my ads and I would do all the sales myself and I'd sell them into the gym. So I'd just fill a gym up and the deal was I got to keep the money I brought in and then they would keep the customers to get the back end. So it was no risk for them. And I didn't have to worry about dealing with the gym. So I just made all the money of opening a gym

except I didn't have to open a gym. And so I did 30 turn rounds over the next few years. So you're like the Gordon Ramsey of gymsy. Kind of, yeah. I mean, we'd be like, I think you're using the footage wrong. Like I, you know, it kind of became like a system. But the rewind to, of me doing the first one, I think I did two or three launches in like a month. I made like a hundred

grand, take home. And I was, that was way more than I made from my gym because there's cost and all the other things. Sure. And so I was like, holy crap, no employees. I just made a hundred grand. Like, this is what I should be doing. And so I sold all my gyms in 90 days. I was just, I just fire sold them because I just, I thought this was the opportunity. And of course, at this point, like, everybody in my life is like, you work so hard to have these five gyms. What do you mean? You're just giving them away, whatever, whatever. And so the first guy that I ended up doing the thing with. That mastermind guy had an event.

And so he asked me to speak on local businesses. So I spoke and I had 100 people come up to me afterwards because they got all their business cards saying like, what can I buy from you? And I was like, nothing. I'm a gym owner. Like I have nothing to sell you. But one guy said, here's my credit card.

He said, charge me for $5,000 and let me know what I get later. And I took the credit card. I mean, I was like, okay. I mean, I didn't take you. I got the number. And so anyways, when I got back from the conference, I called the guy up right before I was actually going to run it. I was like, are you sure?

And he was like, yeah, run it. So I ran the card, went through. And I was like, okay. And he's like, cool, what do I get? And I was like, oh, well, you know what? I promise you, I'll make you more than $5,000. And so, again, luck, child of luck. He had a gym.

So this wasn't a gym conference. Just by chance, the guy had a gym. And by chance, he was opening one up. Okay. And so I was like, perfect. I'll fly out and do it. And that was the first gym I actually launched. And so that was what got me into figuring out how to like help other gymers do it.

That's what got me into it. Now, this guy in particular was like, dude, I can run these things. If you just open one up every month, I'll just come behind you and I'll like staff it. And then we can open a new gym every month. I was like, that sounds great. And so when I did sell my gyms to go all in on this kind of new opportunity, after I transferred all the money over to the account that we had shared, because I thought that's how you did it.

Like one morning I woke up to the second gym I was launching with this guy. And all the money was gone. I was like, ooh, that's not good. That was all of the savings from the five years of me doing these gyms and selling them. That's tough. And so, I called him up. I was like, hey, what happened? He was like, well, I know you're skimming.

I was like, what do you mean? He's like, well, that was just my half of the profits. I haven't taken anything out. I was like, there's stuff. And I had pre-sold like 370 people into this new location, which is a monster launch for a microchum. But there was no cash to run the business. And I had all these contracts I had to deliver on. And so at this point, I had sold my...

five, I have this one in Virginia. And I just like, I said, what do I do? And this point is when, you know, my wife at the time was just my girlfriend. And she was like, you know, we should probably keep doing that other gym thing where you just like fly out, watch the gym and move on because that was working. And this guy's trouble. And so I lost all the money. And then I had, I think I had like $25 or $30,000 just not in that account. And I funded all the payroll and I didn't sell any new customers because I didn't want to own a gym and run it because I was like, I'm already done with that season in my life. And so I just watched my personal savings just dwindle. And then I was able to shut it down in six weeks. And I paid every refund that I needed to

to basically start over again. And at this point, we go to my girlfriend's parents' house for Christmas to meet them because I was this guy from the internet. That was killing it. And I told her to quit her job to join me to do this gym launch thing. And of course, now we have no money and I have no place. And so I'm staying in her bedroom and I'm working in their grandkids room with like a little chair. And so I'm like, I've got my laptop. I'm crunched over trying to like do work. But I was like, I can't believe this is my life. And so to your point about like the parachute of like, I could just be a management consultant. Like what am I? You know what I mean? But here I am five years later. And I was like, I have nothing to show for this. And this is what I think is kind of

interesting is that I had nothing on paper to show for it, but I had all the skills that I developed because over that time period, I'd done 3,000 sales, just like you with the CDs when I was just selling memberships. And so she got six of her friends to quit their jobs as well. Wow. Yeah, to start this thing, mind you, we hadn't started yet. Wow. And it was going to start with all this money that I didn't have because it just got taken. And so is now Christmas, so we had this one more launch I was going to do that I lined up and we needed to crush this launch. And by chance, again, child of luck, I am born of luck. A guy reached out to me that he'd seen me speak something like two years earlier and was like, hey, do you have any sales jobs? And I was like,

well, actually, kind of, maybe, where are you? And he was like, San Diego. And I was like, that's actually where the gym is that I'm trying, he had no idea. I was like, well, where in San Diego? He was 10 minutes from the gym that I needed to do this launch at. And I was like, you know, if I could get this month back, I could get all this other stuff ready. And so we launched the gym. The guy crushed it at $100,000. in the first month. And I was like, okay, I'm scot-free. But I saw the credit cards went through

where we're stacking the contracts, but I was looking at the bank count and like, nothing was happening. I was like, what's going on here? And I knew Tuesdays, if anybody's a small business owner, like, you know what days you get deposits? You know what I mean? You're like, you know your deposit days.

And Tuesdays was always my big day because I got all my weekend money and it was always drop on Tuesdays. And so Tuesday comes and like nothing happened. And then Wednesday and Thursday and Friday, and then I called them up. They're like, oh, it's a standard reviewer account. We do it every year.

It's like, I've been with you guys five years. I've never had a review. Okay. You know, next Tuesday hits, nothing. I was like, okay, what's going on here? And so I called you more times. They didn't give me the time of day. And then finally, it was Christmas Eve.

And I got on the phone with their support. I said, I will not get off this phone until you send me money. I need the money. Yeah. Because all of her friends were starting on the 26th, two days later. And the long story short of this is they said, it's been a regular activity. You're processing credit cards in different areas.

And this is supposed to be for a local gym, because I didn't know that you had to switch payment processors. if you had a new business. So I'm running all this revenue through one location. Like a location that was meant for a gym, which made no sense. And so, rightfully so, they were like, this is suspicious. We're going to stop it. And so they held all the funds.

And so I didn't get the money. Yeah. And so I had at this point exactly $23,000 left in everything. I just remember each of the moments. $23,000 left. I owed him $22,000 in commissions for sales that I'd ever got. Yeah. And so I didn't want to give myself a chance to think about it.

So I wired him 22, and I had $1,000 left. It was December 2016. Yeah. So if everybody was like, see, we're doing that. Like that was 2016 December, $1,000. And so I still had my credit card from all my gyms, even though I didn't have them anymore. I still had the card in the MX hadn't changed my limit yet.

And so I had $100,000 on my card. And so two days later, I pushed the ads live for six sales guys to be launching six different gyms in areas. I didn't have a way to process money, but I had a way to spend money, which was a terrible. combination. And so I'm spending $3,300 a day. Three thousand, three hundred a day. Wow. I had 1,000 total. So by lunch, I was now broke. And by dinner, I was $2,000 in debt. And that was rental cars, airfare, hotel rooms, commissions, ad spend, everything for six guys. And to be fair,

I did not treat these guys well from a, like, they were saying at the cheapest motel. I was like, just deal with it. You know, get McDonald's. I don't care. And so at the end of the month, I had all these contracts and I still couldn't run the money, called everything, everyone I couldn't. Finally, I got a high-risk processor. So if you don't know what that is, like, when you go to Chappala, they have a normal bank that processes their money. But if you see, like, online gambling and, like porn and casinos and stuff, like, they go to high-risk processors who pay way higher fees and they have all these crazy terms. And so I got one that said, sure, we'll process for you, but we get 10% of all revenue. Boy. Yeah, that was the fee. And at this point, I was so desperate. I was like, fine, just take it. Like, I just need to process money. And so I got a 50, thousand dollar limit mind you, I'm spending $3,300 a day. If you add it up, that does not work. So I do $50,000 on the last day of January. And the guy who set it up when we say, hey, good news is it's 50k a month. So it starts per calendar month. So on the first February, you can run another 50. Okay. So I did 50 and then 50. And that 100 grand covered my credit card bill to like to the dollar. And so for everyone who's tracking at home, I'm still broke. And so then I got two more online for 50 and 50. And then they bump

my limit on the other one, whatever. And so that next month, we did 200-something thousand in sales, and I made like $30,000 in profit. I was like, but then the next month, the next month, the gyms that we launched, the six gyms that we launched in January, and then we launched another six in February, I, Layla tasked me on the shoulder because I'm thinking, I'm like, entrepreneurial genie.

I'm like, I'm a Phoenix baby. Like, you know what I mean? I come back. And so she taps me on the shoulder, and I'm like, what? What is this my love? Like, queen, you know. And she just spins her laptop towards me and she's like, look at this.

And I was like, what am I looking at? And it was our bank account. And it was all these negative transactions. And each one of them was as big as the rent that we now were able to afford. It was like a thousand bucks. And I'm just seeing like 500, 500, 500, 500, 500, 500, 500, 500, 300, 500, like all the way down.

And she just kept scrolling and scrolling and scrolling. And I was like, what is going on? And she said, hey, well, you know those gyms that we were selling the memberships at, I have a cell phone for all of them to call me for support issues, whatever. And all these people were saying that this gym owner stood up on a chair because we had sold too many people into his gym and he just told them all to refund. He said, just refund.

Go home, I don't want to deal with this. Because it wasn't their money. You know what I mean? Like the deal was we would collect the cash. They would service the customers and they got the back end. But some guys like when you have a 70 person gym and you take it to 270 in 30 days, they can't handle that. Yeah, you just triple, quadruple their gym.

And so again, I was an inexperienced entrepreneur. I didn't know that. And so I was like, just deal with it. You have all these customers. but they didn't collect any revenue. So it was just incurring cost for them to do this. I understand a little bit more now. And that was like $50,000.

And I was like, oh, shit. And then darn. And then two days later, another wave hit. And it was a different situation where the guy saw that we had made $40, $50,000 from his gym. And the average gym owner for perspective takes some $36,000 a year. So when you see that crossway down the street,

they're not killing it. They're probably getting killed. He saw us some kids from the internet take out $50,000 from his place in a month. And he didn't make that last year. and so he was like, hey, everybody just signed up with them, refund through them, and I'll let you do it through me for half the price. Oh, boy.

Yeah. And so now, and mind you, I'd already had all these processing issues, so I'm freaking, I'm like, oh, my God, we're going to lose processing again. And I will tell you this, when you don't have the ability to process money, it is very hard to do business. Because, like, I couldn't sell my way out of not being able to process money. There's nothing I could do. And so I now have to somehow, and it ended up being $150,000 in total.

I was like, I have to come 150 grand in 30 days in profit. And this is after just going through, oh, man. After losing it all from the theft thing. And then after losing it all again from the processing thing. And then now we're doing it again. So here I am. And I have to figure out of like 150 grand and 30 days. And so I'm just like staring at the screen.

And I try to like brainstorm. It's like, okay, what if we sold everybody's supplements? What if we, you know, I'm just thinking. And so Layla, we're sitting, you know, I got up earlier. I was really getting up. I really couldn't sleep. But she gets up the next morning or two mornings later, and she starts working on her laptop.

And she had this little side business of personal training clients that she was doing online. She had transitioned. She was a personal trainer before. And so all of a sudden, I like starting targeting. It's okay, how much money do you make from that?

She's like, I don't know, like four grand a month? And she's getting defensive. She's like, hey, it pays for the rent and our food. You know what I mean? Like you're a big entrepreneur ideas?

Like you just make a lot and then lose a lot. Like ours pays money, you know, like he puts food on table. I was like, no, no, no. I don't know. But how much time does it take you? She's like, I don't know, two hours a week. And I was like, you make $4,000? I was like, that's not a bad gig. And that's it.

There's no other cost you. It's like, no. I was like, I got it. So what if I start running ads and we'll just sell direct to consumer? We already know how to this whole gym thing hasn't worked out. Like, let's just sell weight loss. And so she was like, is this really what we're going to do? And I was like, yeah, let's do it.

And so I built the best sales letter of my entire life, started running ads to it. And she starts taking phone calls. And we started doing $1,000 a thousand bucks a day. And it's all profit. product. And so I'm like, holy crap, okay, well, that, this is kind of working. Now, if I have my, at this point, we had eight sales guys, because I had to start out selling the refunds to cover the refunds. Yeah, it was terrible. And did you still have her six friends working for you at this time? Yeah, and we added two more. Okay. And so she started doing $1,000 a day. And I was like,

wait, if we get the eight guys, they could each two $1,000 a day. It's $8,000 a day with basically no cost. I was like, that's $2.40, minus commissions. I was like, we could, we might could get out of this. Just to clarify, how were you doing the 1K a day? Yeah, so we're running ads to a sales page that was like, hey, we're doing a 16-week transformation. It's called Queen Transformation. I made her brand, because Lela lost 100 pounds. So I had all these pictures, like had this whole story. And so we went from there to just scheduling. Got it. Scheduling link and then a group. So she would post-comcast. Yep, Facebook ads. And then she would post content in a group and anybody who commented she were trying to get on a call with. Just like, just normal, you know,

online hustling. That was the plan. And so I was like, okay, well, I'm going to call the gyms up that are supposed to launch next month and let them know that we're not going to be flying out. And so I call the first guy up and I tell him the whole story. I was like, hey, we're not doing anymore, blah, blah, blah. And he said, dude, you launched my buddy's gym and you crushed it for him.

I know you can do this and I need this. I just maxed all my credit cards. I refinanced my house for this gym. Like, I really need, like, I just need customers, man. And honestly, at this point in my life, I was at such a low point that I was like, I don't have a lot of empathy right now. My empathy tank was low.

But anyways, what ended up coming out was I was like, listen, man, I can't do it. But he said, can you just show me how to do it instead if you can't fly out here? I was like, well, I'll show you. But if you can't close, I'm not flying out there. He said, no, it's fine. And so he's like, well, how much?

And so I said, the highest number I could think of at the time. Because I wanted him to say no because that I think was working. I just wanted to do that. So I said $6,000. And he's like, $6K? I was like, yeah. And he's like, oh, done. And I remember just staring at the phone.

And then, like, pushing my jaw back into my, I was like, oh, what card do you want to use? Start with a four? You know, like, I start going through that. And I wrote it down to like some napkin. And then Layla comes back in 15 minutes later. She's like, I just got another one for 500 bucks. I remember someone I was selling the thing for. And I was like, I just sold our whole way of opening gyms for $6,000.

She was like, what? I thought we were doing weight loss. I was like, yeah, I know. Maybe gyms is the right thing. We're just doing it wrong. So you sold him the blueprint. Yeah, got it. Basically all the ads, all the landing.

pages, the scripts, the show, because I already built all that stuff internally for my team. So, like, everything was done. The only thing that wasn't done was how to run the ads. But, like, I had a training for the gym owners so that they could, like, process the people and, like, give them nutrition, out all plans that were all white labeled. Everything was done. I just didn't have the ads part. So I just basically filmed an ad training on how I'd ran the ads. And I'd let them use videos of me because I knew those videos converted the best in every market. And so, you know, the guy was like, when do I get it? And I was like, uh, Monday. And it was a Friday. So I had to like put all this stuff together. And so telling Layla between lunch and like between mouthfuls. And that next Monday, or so over the weekend, I told her, I was like, I'm going to call these other guys up.

And so that Friday, I finished calling seven more guys and did $60,000 in sales that day. 16. 60. Yeah. Wow. One day. And that was the day my life changed. Wow.

And so that was when I was like, holy shit. It's like, this is working. And I saw that I could get the 150. $50,000 that I needed to just cover the bill on the refunds. And so she's like, well, what's the plan now? I was like, well, we did 30 launches. I'll just call all those guys up too. So I called all those guys up over the next, you know, week or so.

And we ended up doing like, I want to say high $200,000 in sales, but of this 100% margin product. And then from there, each one of those guys that used our whole blueprint, because they were now making the money instead of me. And they didn't have all the costs I did. I had to fly somebody out there at hotels, all this, like, they didn't have any of that. just like brand the ads and then they'd make money. The average gym collected over $30,000 in new cash in the first 30 days.

Wow. I mean, that's how I did it, right? That's how I was able to fund all these launches. So like it worked. So they would get a 30 to one return on advertising up front before the back end. That's massive. That's how I opened all the gyms for free. And so these guys, they loved me.

If you ever want to know how to like make friends and business, make people money. And they were like, what else you got? And I was like, oh, well, I have this. three-year thing that's a licensing which shows you everything else about how to run a gym, not just getting clients in the door, but like how I structure semi-private, how I do high-ticket stuff,

how I run the class more efficiently. Like my whole model, not just the front end. And that's when the word of mouth just went nuts. And what year was this? This is 2016. So December 16 is when I lost everything for the second time.

And this is now like April-ish of 2017. So all this happens in like four or five months. Mind you, the period where I just went to go see Laila's parents, My mother had just admitted the hospital, and I'd gotten in a DUI head on collision also in that same time period. Oh, wow. Rough spot. But here we are, April-ish, and then it just took off like a rocket.

We did 480 the next month, then 780, then a million, then 1-2, then 1-5, then 1-8, then 2, then 2-2, then 2-4. And we kept going. For month? Yeah, per month. So the first full calendar year, we did 26 million top line, 17 million and take-home. And I had been looking at bankruptcy lawyers 18 months earlier. Wow. And that like 18 months before that.

And this is selling the blueprint to how to run a gym from start to finish. Yeah, we turned into basically, it was basically just a licensing program. So we just licensed because what we would do is we would test out ads in every market. And so I'd spend like 50 grand testing ads in, you know, 10 or 20 representative markets, find the winners. And we already had the back end system down. So we would basically just license these winning ads because one of the most expensive things when you're running a local business is ads that don't work. Yes. And so if every one of them is just like a home run,

an ad, then you just print. And we already had the money printing system, which needed to make sure that they had leads. And so that's what we did. And so it was incredibly high margin. I mean, very high margin. That was when you talk about like, what was the big clicking point, getting my first gyms to start working? I made some money. And then I went up into a higher leverage business vehicle, which, you know, licensing and media just as higher margins than brick and mortar stores. Not that there's anything wrong with brick and mortar stores because you get really good returns on capital there. Like, we're heavily invested in change. person like because I like brick and mortar. I just, I love the model. But when we did this,

it took off and then, you know, the next year we grew more and we started a supplement line. And that did like 20th's first year because we sold through this distribution base of gyms because I had a supplement selling system because I knew how to sell supplements in gyms because I did it. And so it was just, you know, when I had that rock bottom moment or which one, when I had the moment where I was like, I just lost everything, I hadn't lost the skills and the education that I learned in that process. And so that was the thing that was valuable. And so that was a really good perspective shift for like, and I should have known better because my father's Iranian. And so he fled during the revolution. And he was always big on education, which most of

my grandparents are. And he always said this to me. And I still take it with me was, he said, education is the only thing that no one can tax you out of. You can't lose in a divorce. And the government can't take it from you. Because we had had everything obviously confiscated, because that's how the revolution works, by the way. They're like, that's not your house. That's our house. That's not your money. That's our money. And so he had nothing. You know what I mean when he came here. And so, but he was a doctor. Yes. And so he was able to start a new in the U.S. without being able to speak English. Again, that kind of empathy thing of, you know, I think what my dad was able to do in the U.S. coming much later in life, you know, not even being able to speak the language and then becoming a doctor and he started his own private practice.

In some ways, it's more impressive than, you know, what we've been able to accomplish because we got that head start. And so, again, child of luck. But that was the Jim Walsh story. Wow. Wow. That's an incredibly powerful story because there are so many, there are so many lessons. in there. And I think something that's so important about that and you kind of touched on it is that if you go through this kind of process and ups and downs, you develop both a skill set and a mentality that you simply cannot shortcut your way through. And it's interesting because you are forced to innovate many, many times, right? Like if it were not for these, it sucks that these

financial situations out. Like that sucks, man. Like I can't even imagine that. Like, I'm taking some else before, but like that completely sucks to be going from doing well to being broke, to doing well, to being broke again, right? And then you've got this pressure and you know, okay, I need to come up like, I mean, talk about pressure. Okay, I need to come up with 150 grand in the next 30 days. Anyone listening, imagine putting yourself in that situation. You've got 30 days to make 100, like your mind is going to be like spinning. Like every single tactic, angle, skill set you have, it's like, all right, I need to find a way to make this happen. And you made it happen. And without that type of pressure, I don't know, like the pressure forces the innovation.

So as much as it sucks, it's powerful. And with everything that you go on and do now and in the future, you've got that. It can't be taken away. It can't be taken from you. I mean, if you see some of the ways that, you know what I mean? Like, I love to see people have success in anything now, right? But now in this age of the internet, we do live in a time where there are some, There are some kind of quick and easy ways to make a lot of money that, yes, they require you pulling the trigger and being proactive, but there's also some luck in there, right? You throw $1,000 into some meme crypto coin, right? And it blows up and you've turned your $1,000 into a couple million. Yeah. And you sell and awesome, you've made a few million.

The problem with that is you didn't really learn anything. Yeah. Right? So if you were to lose that money and go back to where you were, if you've built up, up a business or you've got a skill set, you're a doctor, or whatever it is, you know you can build back up from zero, but in those type of situations, you're a little bit screwed because you never, you didn't put in that time and effort and develop those skills. And, you know, maybe you can get lucky again and you might find the next one that's going to do a thousand X or a

10,000 X, but maybe you can't.