The Game with Alex Hormozi - Winning In A Recession | Ep 193

Episode Date: March 31, 2020

"Winning doesn't teach us much, but losing sure does." Today, Alex (@AlexHormozi) discusses how to win in a recession by redefining what winning means and understanding which of four entrepreneurial archetypes you fall under. He also emphasizes the importance of putting in hard work and enduring through difficult times.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(0:39) - Reshuffling of demand in recession.(2:19) - Successful companies preserved cash flow.(2:55) - Redefining winning as surviving.(4:36) - Four categories of entrepreneurs in the current market.(11:33) - Losing teaches more than winning.(12:36) - Redefining winning, understanding type, and taking action is key.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

One of the nice reminders is depending on what side of the coin you're on to realize that it's not your fault if you're down and it's also not your fault if you're up. Welcome to the Jim Secrets podcast where you 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 that we have learned along the way. I hope you enjoy and subscribe. Good morning, everyone. Happy Tuesday. I wanted to make a quick video for you guys on winning in a recession. And Layla and I've been spending a lot of time basically looking to. at what companies did during the last recession because history a lot of times a really good teacher. Now it's the same as this recession now, you know, that we're in or about to go into. No, it's not. But there's definitely some lessons that, you know, we're taking from this that I figured I'd share.

One of them is kind of defining what winning even means, right? And so in a recession, you know, in this, in this weird recession, there's been a basically a reshuffling of the deck of demand overnight and everyone was dealt a new set of cards, right? And some guys are experiencing overwhelming growth to no effort over their own, and others are getting crushed, again, to no real effort on their own. And so one of the nice reminders is, depending on what side of the coin you're on, to realize that it's not your fault if you're down, and it's also not your fault if you're up. So it's because there was any smart maneuver, it's just because the debt was redel.

Now, that being said, if you look at some of the companies, that did really well. A lot of them did a couple, a lot of things that were similar. One is that they eliminated more costs than they were comfortable with earlier on so that they can conserve cash flow. All right. You look at GE, some of the big companies that did well in the last recess, they're not doing it all right now,

but in the last recession, they came out strong. The next thing was they, a lot of them ended up cutting prices. And increasing the investment. value that they were providing. And so it's like, wait, how do I cut prices and increase value? That's kind of where the innovation comes in. It's like, how can we do more for our customers and charge less? And believe me, I'm the biggest advocate in the world of keeping your prices high, but I'm also a realist. And so I want to share the things that we're seeing from history that proved effective in kind of some of these times. One of the things that's also useful is defining what winning looks like.

And I think one of the things that we can beat down an entrepreneur more than anything is expectations. And so in thinking that we're going to grow during a receding economy, not as likely, especially for a discretionary expenditure, as much as we wish to say that we are an essential good, you can see that the government and the world at large has said that gyms and fitness in general are not an essential business. you can put your statements about that, you know, out there if you want to, but it's not going to change anything. And so I think redefining winning is surviving is very useful. So as much as you may see posts and things of people winning, I will tell you this, and I'm also saying this half to my community, is that the wins are many times isolated or they're in one-off circumstances. Somebody has a single good day of sales. I would not extrapolate that for every single day of the month. And I'm saying that because I want to hopefully conserve your mental well-being,

so that you don't think, wow, I just suck at life. I'm horrible because everyone's going to have a hard time. And so you just need to redefine winning is getting through. And really, you're going to feel like you're just barely surviving, and that is what surviving feels like. Here's the good news is that for the entrepreneurs and the gym owners that get through this, there will be an outsized opportunity on the other side, right? Because there's going to be a consolidation of the market.

There's going to be on the back end of this, more demand than there is supply. And gym owners are going to very quickly be able to assume a lot of market share. And that's where you grow and where you get disproportionate returns and you get higher profit and higher growth than the rest of the market at large. And if you think about how this is going to look for a lot of businesses coming out of it, the ones that experience disproportionate growth will also have a disproportionate decline in growth. You know, toilet paper all of a sudden, if everyone buys lots of toilet paper now, what are they going to do in the future? They're going to already have enough toilet

paper, right? I'm just saying simplistically, but it does work like that at a macro scale. And one of the things I had a discussion with Mike R.C., he's a friend of mine. He talks to a lot of gyms every day as well, and it's a big network like we do of gyms. And we were talking about kind of different entrepreneurial archetypes, different entrepreneurial psychographs of the people who are kind of in it right now. And I think there's kind of four categories that if you draw a square that people kind of exist in. I think on the bottom right of that would be somebody who probably shouldn't have been a business

owner. I think those people will get weeded out during the consolidation. And it's just because there are some people that really, you know, struggled in a good economy, right? They're barely getting by in a good economy. And when a bad economy comes, it kind of just shows the weaknesses in their business and even their mindset and their level of commitment to their business. And that's okay. I mean, business isn't for everyone.

And I think that this will create a gut check for a lot of those people. And they may not make it out. I hope they all do. I hope no one goes out of business, but I don't think that's reality. The next category is somebody who underperformed because of talent. And so that's somebody who, and I've seen them in our community, guys who just, get by on talent but don't work super hard. But I think some people who are in this category may rise to the occasion. So all of a sudden when they're backs against the wall, they're going

to double down and learn how good of an entrepreneur they really can be. And I think that's kind of cool because I think a lot of people will level up during this period of time because pressure makes diamonds. And I think that they will realize what they are capable of and it may get, they may come out of this much, much stronger than they were going into it because they realize what they're capable of. And I'm hopeful for anybody who was struggling before that you were in the former, sorry, latter category instead of the former. And I hope from a mind to the standpoint that you adopt that, which is like, was I really trying as hard as I possibly could have before? Was I really doing 100 outbound reachouts every day no matter what? Was I really making sure that

I followed my script with the correct tonality on every sales call no matter what? Did I make sure to follow up with my customers. And if all of this sounds like work, it's because it is. And there's no way to not work through this. All right. So I'm just telling like, what am I doing? I'm going to try and provide more value to the Jimlors community. I'm going to be, you guys will find out tomorrow or later today.

But I'm going to be taking all the, you know, daily calls every single day with all the customers, just something that I haven't done in almost two years. 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 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. So I'm going to try and provide more value to our community to continue to keep everyone engaged and hopefully answer questions at a higher level and just get everyone, you know, peace of mind, et cetera. So those are two of the four archetypes.

I think that you have another archetype of person who's going to just be a winner, right? And winners win. There's the guys who were crushing it before. And these are the guys who during this transition have lost the fewest members because they already had strong communities. They ran fairly lean. And if they didn't, they made the correct entrepreneurial decisions at the right time to conserve cash flow. They made the hard decisions in terms of rent and had the hard conversations with non-accessively. personnel in order to keep the ship upright.

Those people will be in a position at the end of this to consolidate market share. And they will be the ones who come out on top and make the most and really are in a position at that point to truly run a hybrid facility, which is the highest profit model that I'm aware of, which is why I put it out there eight months ago. There was a fourth category. I think it's the person who had that, had that Eye of the Tiger, had a successful gym that was somewhat outsourced, but then it's unwilling to go back in and roll their sleeves up. And I think that that also would be the type of person who will not make it through. So if you had the four quadrants, you've got the low performer who's barely hanging on before this who probably doesn't have the entrepreneurial character traits, who is,

usually not adaptable enough, who's not a quick enough start, who does not pivot, who gets analysis, who gets analysis, wants things to be perfect, is more security driven and just honestly doesn't know what to do and can't lead through crisis. Those people will probably get weeded out. Second category, people who are highly talented, and then we'll be able to rise to the occasion and level up as entrepreneurs during this. And I hope that that's most of the people who are listening, who were not where they wanted to be. Third category is the outright, you know, hardcore winners. guys will always win. And they will make it through.

They might not win as much during the recession, but then they will get outsized returns and basically make up for the wins that they would have had during this period of time in the outsized birth that happens later. And then the kind of guy who used to be, used to be hungry and is no longer. One of the things that I wanted to kind of pass on to you that I've been, I've been chewing a lot on mentally has been really understanding how much much market dynamics can affect an environment. So if you look at investors, there's like an old

invest in saying, which is like a great market with a mediocre entrepreneur will create a great business. A great entrepreneur in a mediocre market will create a mediocre business. And the whole point there is that the market is ultimately one of the biggest deciders. And I'm not saying that so that you can be a victim because you shouldn't be. And you should only control the variables you can control. But I say this more to say, if you see people who are just crushing it right now in different adjacent industries or industries that to no effort on their own because no one had the foresight to think that there was going to be a flu. And if anyone who says that, you know, they didn't short the U.S. economy, right? If they did short the U.S. economy, then yes, congrats.

But most of them did not. And so unless they made that move, they didn't know. And they just got a reshuffle deck of cards where they got aces. And so I'm saying this more, so so that you don't beat yourself up about it because like they didn't do anything special and neither did you do anything wrong right it's just things happen and we have to adapt and so winning in a recession will look like for many people just getting through it and that's why I think the word that I gave from my community is just you just got to endure right that's what you have to tell yourself all right if you used to sell one out of three in person um you're going to have to level up your sales skills because you were selling one out of three in person in a good economy,

in a flush economy. And overnight, now you're selling in a less familiar scenario over the phone or over Zoom and you're selling in a bad economy. And so if one out of three goes to one out of six and your average ticket drops, it becomes harder, right? And getting five nose out of six is rough emotionally. And so what's going to happen? You're either going to crack or you're going to build a character, right?

I think there was this, I saw this meme, I can't remember what it was, independent of your religious beliefs, it doesn't really matter. But it was like, somebody's like, me, make me, make me patient like Jesus. And then it said life. It's like, our God gives me trials and hardship. Right. And so like the things that happen to us end up growing our character more than anything else does. And I think if we can reframe the things that we go through is things that are going to grow us, it can help shift our shift our career. perspective during times that can be trying, right? Winning doesn't teach us much, but losing sure does.

And so if you can relay that to your team in terms of like, we didn't do anything wrong, the deck was reshuffled overnight and dealt, and we were all dealt new hands, right? We didn't like, you didn't fuck up. There wasn't anything big strategic move that wasn't made. It was just like, this is a new reality for now. And I think if you reset that and you can lower your expectation, that doesn't excuse you from working your app. face off because in order to get through it, you're going to work your absolute face off. You're going to have to be willing to do that. And the two categories that I had of the people who are going to lose, the guy who lost his hunger to fight, has outsourced everything, doesn't want to

jump back in and roll up his or her sleeves. And then the person who was basically not really fit for business to begin with, those are the two categories that are going to fall off. But you'll notice that in common, most of them just were not willing to put in the work during this period of time. right the guy who is talented and wasn't working hard enough and then starts to work and the guy who always worked hard and was a winner both of those people make it out right so it's redefining what winning looks like understanding which of those four you are and then hopefully moving towards like action because the only thing that's going to get you out of is it action alleviates anxiety whenever you're stressed I can tell you that working not being busy but working productively

is the only thing that's going to really help you get through this. And so I'll have for you today, my word of encouragement in Durr, you got this. I'm going to try and make more of these just to kind of let you know where I'm at. But I know I just want you know I believe in you. I'm 100% as tied to this as you are. Any stress that you feel, I have a lot of employees and I have a lot of payroll. And I have a lot of gym owners that I serve. and I feel the weight of solving the issues for the industry.

And I just, I'm going to leave you with one final thing is don't be fooled by people's posts. Don't be fooled by people's posts. No one, like, unless, like, no one is going to be absolutely murdering right now, independent of industry. Right. Like there's going to be outsized demand, right, like toilet paper and stuff. But there's, there's problems that are there. I got a call from a friend of mine that grew 600 percent. And he was like, dude, I like, I can't even staff this.

Like my entire supply team is totally screwed because I like, this is going to kill me in six months. Right. And so there's always going to be problems. And so like the grass is always greener and it looks like it, but there's always problems in any business when there's a massive shift. And so just don't beat yourself up about it. Understand that expectations have to change for you first, but it doesn't excuse you from not working your ass off because that's what we're all going to have to do to get through it.