← The Game with Alex Hormozi
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- [00:02]
Alex Rosi
If you can make the decision fail, and then go back and do the other path in less time than it would take you to gather the, the data for the right path, then you make a failure in judgment by not deciding. And I think that's a very key point.
- [00:20]
Ezra Cohen
Please welcome the stage the author of.
- [00:21]
Alex Rosi
The $100 million series and host of the game, Mr. Alex Rosi. How was this morning? Good. Okay, awesome. Yeah, we split this up into kind of theoretical frameworks day one and then we do very tactical day two. And the reason for that was. Well, we thought about it, but. But the big reason was mostly like if you're going to have the opportunity to talk to the team. Team's not bad, right? Yeah, they're pretty good. I think in some ways one of the biggest belief breakers that I get a lot of feedback on is, you know, in a traditional service based business, it's usually the founder and then everyone else is just like multiple orders of magnitude worse than them. And then we're like, yeah, my team will take care of everyone's like great, like super exciting. And then you just cancel immediately. That's why most service businesses don't scale. And hopefully in meeting the team you got to have a better understanding of like why acquisition.com does the revenue it does has the size companies we have. It's because we have very competent people and they're not cheap to be really candid with you. And so I bring this up because I remember when I had my first private equity deal or was in that process, there was this moment where I was sitting at this long table. There's a managing partner at the end of the other side, half a billion dollar fund. They had their team. And then there was my team on this side. And so this really stark contrast visually. And I was doing the math on what he was going to make on the fund, which is somewhere in the neighborhood of like 200 million, 300 million personally, over five years at a super efficient, efficient tax rate, all liquid. And then I was looking at my team and it became incredibly apparent to me why he was going to make so much more money than I was. And so it was a very jarring example for me. And I thought, man, whatever I do next, I want to make sure that I have people like this around me. And so that's partially why you got to meet the team that you did. But also if you have the context in terms of how we accelerate value in a business from day one, then when you do have the opportunity to ask the questions, you're going to ask ideally, or hopefully you should ask the ones that will generate the most impact in the business. And so I'll give you an example of this. I had a gentleman a few months back who came in and he said, hey, can you go over the closer framework? And so he was one of the questions. And I said, okay, well, what's your close rate right now? He said, 40%. And I was like, okay, so you got excited about this, booked this in your calendar, waited for the day, took time off from the business, flew out here, stayed at the hotel, did the full day one. And then you have your opportunity, get a, get a question asked. And the one thing that you choose to ask about is something that is in no way going to change your business. 40%'s not your constraint, man. He's like, I just love sales. And I was like, yeah, obviously he already knew the closer framework. And so I, I bring it up because oftentimes the things that we love are rarely the things the business needs. And so a lot of times the business is almost like the inverse of the need. Like your constraint will typically be not the thing that you are good at. And what's interesting is that we typically think it's the thing we're good at because the business excels in the beginning because of that thing that we are good at. And so if you're really good at product, really good at team, then you'll be like, I need to do more of this stuff. It's like, dude, your marketing blows, right? On the other side, you've got the really heavy promoters who are like, man, what's the next ad traffic hack or new content, viral trend, whatever. But the route is the product sucks and so the business is never going to compound. They never get sufficient ltv and so they cannot spend anyone. They think it's going to be another trick to lower cost, lower CAC or lower, lower lead cost. The reality is just the product sucks, right? And usually we have to chase the hard thing. And so I'll explain what I mean by that. If there's no hard part about the business you're in, that sucks. And so what happens is that we will often waste our time trying to solve easier problems rather than the one problem that if you just solve that, the rest of your problems would go away. I mean, and fundamentally, this is what the theory of constraints is really about, is that, you know, there's a lot of tiny hacks that you can do to improve conversion rate, improve ads, et cetera, but there's usually A big problem that you need to put most of your resources towards solving. And if you do that, then you get to crush everybody. The way that I like to frame this though is I remember there was a business I was working with that had had a lot of revenue, but they had no enterprise value. So it's just like a cash flow machine. But not, it was all one time transactions, et cetera, and wanted to switch towards a SaaS model. And so a SaaS model for that business, if they were able to keep the same revenue levels with like good SaaS metrics in terms of retention, would've added somewhere in the neighborhood of like 200 or 400 million in enterprise value to the business. So a lot of money. And so I was talking to the founder and he is like, dude, this is just so hard. And I remember saying, well, that's why they pay you $400 million for solving it. Right? And so I bring this up because like, sometimes some of the problems that you have, I have to frame them and like there's just a big pot of gold that's gigantic on the other side of this, which tends to just motivate me a little bit more, or at least, you know, it works for me. So with that being said, I've had the distinct pleasure of being able to talk to a lot of businesses over the last couple of years since we started doing this, January of last year. And what's really interesting, you started to, you know, patterns start to emerge. And there are basically seven kind of call it deadly sins that I have noticed as common themes for entrepreneurs. And what's very difficult about them is that they are typically a choice between two apparently hard things. One that's hard today, one that's hard forever. And most times the entrepreneurs will stay stuck until they make this decision because decisions will slow you down more than anything else because you can stop doing, you can basically wait to make them forever. And a lot of you guys have unmade decisions right now I'll explain these seven kind of growth sins or kind of decision impasses. And my hope is that you guys probably have some notes from today and yesterday. Yes. Okay. Pages and pages of notes. If you go home and try to do all those things, then I will have failed you because that is not how you will get ahead. You're going to get on, you know, get in your car, get in your Uber, get in your hotel room, get on the plane, whatever, and you're going to have an open piece of paper next to you at some point, hopefully and you say, okay, I've got eight pages of notes. What am I actually going to do? Right? And hopefully on that next piece of paper, you only have one to three things. And those one to three things are the things that will get you the highest return for the effort and money and time that you allocate towards it. And so, fundamentally, strategy is making sure you pick the right things. And the reason that we've been able to disproportionately grow our companies and what we've done is because we've been pretty good at picking those things. And so, like, if you're like, what is strategy? I think it's a big amorphous word, but basically it just means really good decisions around where we put our shit so we get more back. With that said, let me walk through the issues that most people struggle with. Number one is avatar. I've got two different types of customers. I got residential, I got commercial. I've got poor people, I got rich people. I've got whatever, right? You have your two, two or three different avatars you might serve. And you're like, well, Avatar 1 is 40% of my business. I prefer Avatar 2, but if I get rid of Avatar 1, I won't be able to pay my bills. But if I Keep serving Avatar 1, I'll never be able to get the operating leverage in order to actually expand this thing, and I'll stay stuck forever. Most of the time, you just have to make the call and it's going to suck. And it means that your ego is going to go down for a little bit because your revenue is not going to be what it was. And so whatever scoreboard or whoever you report to that somehow has, like, hold over your ego about whether you're making progress or not, I would encourage you to delete it because you will just stay stuck for a very long time. So if you have a clear avatar that you think you are better at serving, then serve that avatar. The next is data. This was the most recent that I've added to this list, which really just comes down to I have this very important decision, and I would be able to make this decision if I just had the information to make the decision. But I don't have the information. Which then means, okay, what resources are required to make to. To gather that information? Why I don't have the resources because I'm so scatterbrained. Which means that fundamentally, you need to stop doing everything else and just focus on putting the resources in place or processes in place or technology in place or all three in order to capture the data so that you can make an informed decision. There's also the opposite way of doing this, which is you just make the fucking call without the data, because you can't have perfect data at all times. Because sometimes the opportunity disappears by the time you do have all the information required to make the decision. If you can make the fail and then go back and do the other path in less time than it would take you to gather the data for the right path, then you make a failure in judgment by not deciding. And I think that's a very key point. The next one is focus, which is just, hey, I've got a yoga studio. I also have a chocolate factory. I'm really trying to have a platform all in one, one stop shop for, you know, whatever. I'm sure that you have a great reason for why you have that second business or that third business. It's just not good enough. Like, if you were that good, you would just make the one business bigger. It's better to have one $2 million business than two $1 million businesses for a variety of reasons, but the most basic is your competitors who are beating you are only focused on one, and that's why they're beating you. The next is overexpansion. And this is an interesting one because there's no like line in the sand that says, oh, you have overexpanded. But the reality is that you're under talented, you have insufficient talent on the team, and as a result, you got above, you got ahead of your skis. You have one location, it was working well. And then you say, cool, we'll open up our second location. I'll take my best guy from here, put him there so they can stand this one up. They'll backfill themselves and all of a sudden revenue from this location drops. This location doesn't go up as high as the first one. Now you have the same revenue you did before, but now you have twice the overhead. And you're like, oh, I think the solution here, since this is now baseline, is to open a third location. People do that a lot. Some of you are nodding your heads. And so what do you do in one of these situations? Right, Well, I can't. If I shut down the location, I've got a lease I put build out in, but I can't afford to bring someone else on because I just dropped my profit in order to do this and I used up my savings. What's the call? Right. And it's almost always going to be, I Stay here forever or I do something very hard. And I would encourage you to lean into that very hard decision because it's the thing that's going to get you out of it faster. It'll just be more painful. So it's like you take your 10 years of waffling pain and you compress it into six to 12 months. And it's very easy to say yes to pain for six to 12 months before you've jumped into it. But then you're six months in and you're like, this fucking sucks. And then you're still six months to go, right? So I just got out of a season like that. So ironically, the launch is, like, not, like, painful for me. It's work, but it's not painful. I went through a very hard season, the beginning of this year, just because we had to headbutt our way through. But otherwise it's like, what else are you going to do? Just sit in it? So over expansion, the next one is compensation. So rock and hard place here if you, you know, I'm. I'm paying my people too much sometimes. It's too little. A too little situation is, hey, I've got a plumbing company and phone's ringing off the hook, but I can't even service all the business because there's so few technicians that are good. I say, what are your margins? Person says, my margins are, you know, decent. I say, great. What do you pay your technicians? They say, market rate. And I'm like, what are we talking about here? Pay them better, get more guys, increase revenue. Like. Like what? What's the. What's the decision on the other side? I've got a, you know, physical therapy clinic, and I were at full, you know, full capacity. All the beds are full all day long. Everyone's happy. Except I don't make any money. Okay, why? Well, I give my therapist 50% of revenue. All right? Are they, like, doing their own marketing costs, own sales? Like, you know, fronting the. The cost of the bed and the materials? Oh, no, I do all of that. I just give them 50% of the revenue. It's like, well, yeah, I mean, that would make sense. Why? You make no money. That makes sense. And so. But what do I do? Do I change their comp and then lose my team? Or do I just not make money forever and run a nonprofit? It's funny because the majority of businesses in the US do not make money over half. Either lose money or break even every year. So this is not a small problem. This is a big problem. Profit is unnatural. It's not a normally occurring thing. You have to force it and you have to keep the line because people will spend your money happily. And so having that kind of discipline is difficult. It's a discipline. Profit is a discipline. I'm proud to say. Actually, I have not had an unprofitable year since I've been in business. Kind of neat. Thank you. So, compensation. So what do you do? Right. Next one is underpriced, which I would estimate just from my conversations with y' all here, probably about half of you are underpriced. About half. Same situation as the therapist. But let's imagine that they're compensating appropriately. You're still everything's capacity, everyone's happy, blah, blah, blah. Well, now, if I raise my prices, I'll lose all my customers. You won't, you won't. You'll lose some and then you replace them with better ones and you'll make more money. And then finally you've got single product, which this happens more in like E commerce and sometimes the digital, which is, you know, you see a creat or somebody who's got a big following who has one product that they sell, they're able to do so profitably, but they're not making that much money and their margins are compressing every year as they add staff or they try to do advertising and it feels like this vicious cycle. So they're not sure what to do. The reality is that they're selling hundreds of units a month of whatever the thing is. But we're not just like calling those people up or reaching out to them in another way to just sell them something else. And so if instead of thinking of those as customers, you think about them as highly qualified leads, then all of a sudden kind of the business model changes in your head. You're like, oh, this is just offset CAC so that I can then sell my main thing. And it's just the business is missing the main thing. You really just have a lead generation machine that does it, that just makes a little bit of money rather than honestly the makings and the foundation of a monster, which is a great problem to have. But some people don't recognize that they have a monster by the tail. So with that being said, I will try and point to what problem I think it is as we go, as we go through these and let's rock and roll. Oh, also, I try not to answer their question, try not to talk to you. I try to talk through you, to everybody else in terms of how I'm thinking about it. So when I'm answering the question, I'll half answer your question and half kind of address everybody else. Cool. Rock and roll. Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla and I spent probably an entire quarter putting together our scaling roadmap. It's breaking, scaling into 10 stages and across all eight functions of the business. You've got marketing, you've got sales. You've got product. You got customer success. You've got it for, you've got recruiting, hr, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30ish pages for each of the stages. Once you answer the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to add acquisition.comroadmap r o a D map roadmap.
- [14:40]
Amir
Hey Alex, big fan from the gym launch days. My name is Amir. I don't know if you heard own a medical practice. We're kind of closing in on 3 million revenue.
- [14:49]
Alex Rosi
Correct.
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Amir
We'd like to grow. Grow down. My question, what's the most overlooked operational system that adds the most leverage in scaling a service based medical business like hrt? And if you could only hire one person to help implement that system, who would it be and what would their role look like?
- [15:07]
Alex Rosi
It's a very targeted question. I think it'll depend on the business right now. Are you local or are you, are you local or are you national?
- [15:13]
Amir
Just local.
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Alex Rosi
You're local. Okay. So people come in person.
- [15:16]
Amir
Yes.
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Alex Rosi
Okay, got it. What's your primary lead source? Metta Meta. So ads.
- [15:20]
Amir
Yeah, ads and revenue. Sorry, Referrals.
- [15:23]
Alex Rosi
Sure. What's the split?
- [15:24]
Amir
Probably 30, 60 referrals. 30, 60 meta.
- [15:28]
Alex Rosi
Okay, heard. What's CAC? What's LTV?
- [15:30]
Amir
LTV would be probably 4K.
- [15:34]
Alex Rosi
I would say that's LTV. Yeah. What's CAC? What do you spend for on per month on ads? How many new customers do you get?
- [15:41]
Amir
We spend about 25k per month now.
- [15:45]
Alex Rosi
Yeah. Okay. And AdWords. Excuse me, AdWords or Met or meta? Both. Both. Okay. Yeah.
- [15:51]
Amir
And we get probably out of that, we get roughly around 150 new patients.
- [15:58]
Alex Rosi
Okay, so like 2.25ish per per patient. Ish. Okay, so you're making like 20ish to 1. That's not bad. Okay, so 20ish to 1. And I'm guessing margins are good. Yeah. Great. From a capacity standpoint, do you have more square footage that you can service more customers with?
- [16:14]
Amir
Yes, we have more square footage.
- [16:15]
Alex Rosi
How many, how many more customers can you take right now per month? Sales, velocity wise?
- [16:19]
Amir
100, 200.
- [16:20]
Alex Rosi
Okay, so you can double right now. Okay, so then what breaks when you double?
- [16:26]
Amir
Nothing breaks.
- [16:27]
Alex Rosi
Well then why don't you double? No, to answer your question. So like the thing that breaks first is going to be the operating constraint. And so then what stops you from doubling? Can you spend twice as much money? Yeah, so why don't we spend twice as much money? We should do that. That sounds good. So if you had twice as many people, would they all be able to be serviced? Yeah. I love this. For us. I don't really know what the issue is. Are you doing this right now, month over month?
- [16:51]
Amir
No, we're kind of stagnant.
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Alex Rosi
So then why, why?
- [16:54]
Amir
That's what, that's why I'm here.
- [16:55]
Alex Rosi
Why don't we spend more money? Just because it's like you got to mental barrier of a thousand bucks a day and you're like, I don't want to spend more than a thousand a day.
- [17:01]
Amir
I mean, I think my personal observation or thinking was that we should be more efficient with the money we're spending. Like I was thinking, like, okay, our.
- [17:09]
Alex Rosi
Conversion rate is 20 to 1. Should be like 40 to 1 maybe. I mean, you can always get more efficient. I wouldn't say it's the limit of the business. Like if we're just zooming, zooming out, the only thing that's really gonna matter long term is that you keep people forever. That's the only thing that matters. What are your long term goals?
- [17:26]
Amir
Long term goals? Yeah, ideally, I mean, we would like to grow, expand, you know, nationwide if possible.
- [17:33]
Alex Rosi
Would you expand to multiple locations locally first? Yeah.
- [17:36]
Amir
Okay, we have two right now.
- [17:39]
Alex Rosi
Okay, so if you could have four or five in your local market, you'd be fine with that? Yeah. Okay. Yeah. The way, I mean, the way to do this is that you, you basically want to reverse engineer forever stick. Now, HRT is a product that tends to keep people pretty long time because it's hard to get off. Right. They might switch, you switch providers, but once you're on, you kind of Stay on. So as long as you're. What's your churn do you know right now?
- [18:02]
Amir
Probably 40.
- [18:04]
Alex Rosi
40. 40% annually. Yeah, 40% annually. So you keep 60% of your customers every year?
- [18:12]
Amir
Maybe less. Maybe we keep like 50%.
- [18:15]
Alex Rosi
Okay, so 50% leave, 50% stay. All right, so that would be something that I would be looking at. So yeah, if I were to solve this in order, I hear where you're coming from, from, like because you're local, you need to make sure that you don't just burn through your reputation, which you might be at.50% of your customers leaving every year, especially on a product that's typically as, as sticky as that. I mean, that's. If you come from the gym world. Did you go through gym launch? Yeah. Yeah. So you learned how to market and sell. You just didn't learn how to product. Yeah. So I think you, I think your instincts are right. I think we have to fix Churn and we have to fix the sales motion. Part of it is going to be how the expectations are being set on both the marketing and the sales call and the offers that are, that are top of funnel and kind of the handshake between kind of step one, two and three and what are the, kind of the key activation points and the conversations that have to be had. So if, if you did have a lot of profit, I would probably grab someone from, from the software world and customer success to build out the customer success like pathway for you so that you can fix the Churn issue. So to your point, I hear where you're saying we're like, yeah, you could spend more, but you'd be churning out of people. So I think your, your instincts right there fix the hole in the back. And then number one, if you just do that, the business will probably double. Like if you can cut your churn from call it 50% per year to 20% per year or less, then the business will just double on its own in two and a half years. You just did nothing. You just kept everything the same. But the thing is, disproportionately that would drop the bottom line. So your profit would significantly more than double by doing that. I'll give you guys a fun example. So we Whiten is a teeth whitening chain that we own and when we invest in the business, doubled LTV or rather double lifetime revenue per customer, which sounds like a small thing, but by doing that we 2.4x revenue and we 7 1/2x profit per location. That's why I bought the company. I Was like, oh, I can crush this. And so I see that as a good incentive for you in terms of making it worth it. Like, you might be able to double or triple or maybe quadruple the profit of the business by simply keeping going from churn being half people leaving to only 20 or maybe 10% leaving every year. If you do that, the thing will just grow like crazy and you'll just feel good about it. So your the who to solve that problem is there is a customer success person and then mapping the journey. And there's probably a little bit of tech stack that you need to automate a good deal of it so that you don't have as much operational drag.
- [20:24]
Amir
Awesome. Thank you so much.
- [20:25]
Alex Rosi
You bet. Thanks.
- [20:26]
Austin
How's it going? Alex. Good to meet you. I'm Austin. I sell medical student coaching.
- [20:31]
Alex Rosi
A lot of medical. Okay. All right.
- [20:33]
Austin
Two medical students. Of course.
- [20:34]
Alex Rosi
Yeah.
- [20:35]
Austin
$500K revenue per year. Profits about 400. Been doing that for five years straight.
- [20:41]
Alex Rosi
80% margins. That's tough.
- [20:42]
Austin
For five years straight, the exact same stats.
- [20:44]
Alex Rosi
Yeah.
- [20:45]
Austin
Zero. Upward trajectory, mostly due to time constraints. I just finished up with my vascular surgery training two, three weeks ago, so now I'm able to contribute more time to the business. You're a doctor. Yes, sir.
- [20:55]
Alex Rosi
But you don't practice medicine.
- [20:57]
Austin
I haven't started yet.
- [20:59]
Alex Rosi
And you're like, wow, I could just start surgerizing or I could keep doing this thing that I make the same amount as surgerizing.
- [21:05]
Austin
Exactly. Cool. Which I'm supposed to start in a month, which is a whole nother conversation.
- [21:10]
Alex Rosi
What are you gonna do? Depends how that was, how this conversation goes.
- [21:15]
Austin
That was initially gonna be my first question, and then I decided against it, and here we are.
- [21:18]
Alex Rosi
Yeah, you're good.
- [21:20]
Austin
I figured I knew what you were gonna say for that one.
- [21:23]
Alex Rosi
Yeah. What am I going to say?
- [21:23]
Austin
There's a much higher ceiling for the company, which I've been working on essentially an hour per day for the last five years. And doing what I will make for a hundred hours a week for the upcoming.
- [21:35]
Alex Rosi
Well, you have a focus issue.
- [21:36]
Austin
Yes. Put a star by that one.
- [21:39]
Alex Rosi
Explain what I mean. I mean, like, you basically have two businesses. One is you being a doctor. The other is you teaching how to get into med school. Right. Or do well in med school. Okay. So, I mean, you probably know what I'm going to say. Yes. Imagine if you worked more than one hour a day. Imagine the possibilities.
- [21:57]
Austin
Absolutely. So I tried to. I'm gonna try.
- [21:59]
Alex Rosi
When I was. So nothing. It's insane. Like, I I like an hour is like my rounding error for I don't even know. It's like for the. I don't even. It's absurd.
- [22:09]
Austin
It feels like a lot when you're already burning the candle at both ends. But I know there's definitely more potential. So my actual question is, throughout this last two days, I figured out how to fix the supply constraint, which was myself my own time for the coaching for the medical.
- [22:24]
Alex Rosi
You mean the one hour? Yeah.
- [22:27]
Austin
So the next issue inherently is going to be.
- [22:28]
Alex Rosi
Do you know how you're going to 5x this business? You're going from 1 hour to 5 hours a day. Start at 5, be done by noon. You're already a retired doctor.
- [22:37]
Austin
Just act like you know something like that. So the next issue is going to inherently going to be a supply issue.
- [22:45]
Alex Rosi
So maybe you mean demand or.
- [22:47]
Austin
Sorry, demand issue. Yes, sir. So content's not an issue. I've personally have created over 20,000 pieces in the last five years.
- [22:54]
Alex Rosi
Yeah.
- [22:55]
Austin
Put it out on all platforms.
- [22:56]
Alex Rosi
How many units do you sell a month?
- [22:57]
Austin
Generally between 5 and 10.
- [22:59]
Alex Rosi
And which price point?
- [23:00]
Austin
9,000 is our most common price point, which we're going to. Another thing I learned is we're going to ax our lower ticket stuff which was cannibalizing our mid to high ticket. So 9k is what? We've sold 80% of our revenue for the last five years.
- [23:12]
Alex Rosi
How many leads a month do you get?
- [23:13]
Austin
Good leads. Maybe I want to say 15 to 20.
- [23:17]
Alex Rosi
Really? That seems absurdly low. Are you YouTube? Instagram? Where? Where are you?
- [23:22]
Austin
YouTube, Instagram, Twitter, Facebook.
- [23:25]
Alex Rosi
Seems crazy.
- [23:26]
Austin
We have a ton of friction in the sales funnel, which another thing.
- [23:29]
Alex Rosi
Yeah. Like my bet was going to be your sales motion's fucked up.
- [23:32]
Austin
Yeah, probably if they get on the sales call, if they make it to that point. If I take the call, it's a 80% close rate. My sales guy is around 30 to 35. So the friction was built.
- [23:43]
Alex Rosi
You're probably sitting on like a three or four or five million dollars business right now. If you change nothing. I mean assuming you work.
- [23:49]
Austin
Yeah, that's not a problem.
- [23:52]
Alex Rosi
For sure. Yeah.
- [23:53]
Austin
So to increase the amount of leads that we get. One of the biggest problems that we've ran into is getting overseas leads. We've put all of our targeting for our ads to be United States specific other countries just due to the conversion rate.
- [24:06]
Alex Rosi
Well, you're doing content. So what percentage is coming from ads versus content or like organically versus paid?
- [24:11]
Austin
About 50% of our leads are from direct outreach from our VA and then about 25 and 25 from ads versus organic.
- [24:19]
Alex Rosi
You mean organic. They don't. They just go through the funnel and stumble their way through the gauntlet? Yeah. Yeah. I. I can't dive into it right now, but I'm. I can. I can almost guarantee you that you have a sales motion issue. So if I were to fix this, I would probably. My goal would be I would want to break your business by selling so many people that you would feel so panicked and have, like, crushing anxiety that you would then be forced to not be the doctor thing, because you'd be like, holy shit, I just made, like, three times or four times my monthly revenue this month, which means I have a chance at making more than I do as a surgeon. And you can always go back to being a surgeon. So, like, that's, like, it does. You don't. Unsurgeon. Right. So true. Yeah. So you can always just go back if you really want to.
- [25:07]
Austin
So tactically, you think, should I hire more DM setters? Should I crank the ad spend to get to that point where the leads are overwhelming me? And I have that crushing anxiety to.
- [25:16]
Alex Rosi
Honestly, we have to. I don't know if, like, the team that I just look at everything, but, like, we have to. I'd have to look at the pro. Like, it's going to be more tactical. It's going to be like, what's the lead magnet? How are we qualifying leads? What if. What's the motion that they're going through? Like, what's the agenda for the call? How are we nurturing the pride of the call? Like, if we just fix those pieces, like, there's probably a double or triple sitting there. And then my goal is that you're like, holy shit. Well, I do. And then we'd have to look at the model, because it's probably super. Actually. You might not be that inefficient. You're working 17 minutes a day, so we'll have to look at the delivery part. But, yeah, I'd probably just want to, like, crank demand. Because if you can. If we. If. Would you be comfortable working six hours a day?
- [25:49]
Austin
I'd be comfortable working 20.
- [25:51]
Alex Rosi
Okay, cool. Well, you can't do that. So let's just.
- [25:53]
Austin
What I did the last five years.
- [25:54]
Alex Rosi
Let's settle. Let's settle at. Let's settle at 10. Right? Let's just go crazy, you know, 10x, bro. And so we 10x your time. And so as a result, we need to, like, if. If that allows you to 5x the business by 10x ing your time because you're both demand and supply. Sure. That would get you to 2 million bucks a year without really adding a huge amount of operational overhead. And you'd still have six hours to kiss the dog and do whatever you want to do.
- [26:18]
Austin
Sounds good.
- [26:19]
Alex Rosi
Yeah. I think that like salesperson has to get analyzed. It's beyond what I can do right now. Sure. But if it's a laddering up a level strategy, question of like how should you allocate your time to get the highest return? I want to be clear. There are surgeons for sure that do 10, 15, 20 million bucks a year. Like there are ICM that come through. They typically are plastics or they're hyper specialized and have built a big organic falling for being the best at. And those guys usually run somewhere in the neighborhood of like 70% margins. So like there's money to be made. If you know, like if you're, if you're good at marketing and you're an exceptional surgeon, then you can make a lot of money. But if that's not where your heart is. Because I'm. Is it where your heart is? Probably not. Yeah. Fair then if you already know that now, then like, why bother walking down the path that you already don't. You don't even want to do it. You don't even start it. Yeah, I'm pretty sure. Like, yeah, like it, it only gets worse. So yeah, I think you need to make that call and then you'll open up your time and then we can obviously help with the sales. The sales motion stuff.
- [27:16]
Austin
Sounds good.
- [27:16]
Alex Rosi
Thank you. Thank you.
- [27:17]
Ezra Cohen
Hey Alex, how are you? Longtime listener for some caller. Oh, my name is Ezra Cohen. I sell low ticket digital video products.
- [27:26]
Alex Rosi
Yeah.
- [27:27]
Ezra Cohen
To churches. Like motion backgrounds.
- [27:29]
Alex Rosi
I was going to make the like doing better than I deserve, you know. Sorry. Keep it up. Sorry.
- [27:33]
Ezra Cohen
And then like video editing assets like film transitions, color overlays to filmmakers and editors.
- [27:39]
Alex Rosi
So you sell to churches and you sell to editors.
- [27:43]
Ezra Cohen
Yeah, it's two separate brands.
- [27:44]
Alex Rosi
Okay.
- [27:45]
Ezra Cohen
And I understand what you're going to say. I know what you're going to say. I've been advised by your team so far that I should actually keep both. And they're both important and basically they're kind of under one umbrella even though they're different avatars. I am at 1.2 million total combined.
- [27:58]
Alex Rosi
Okay.
- [27:59]
Ezra Cohen
About 350 on the film editing side, but I do about an hour a week on that. And so even lower. An hour a week. That's right. The other one, I'm kind of going all in on.
- [28:09]
Alex Rosi
So you're making 6,000 an hour on that side. Okay. Yeah.
- [28:13]
Ezra Cohen
And the other one I'm kind of going more all in on and that's around 7:50. So between those two.
- [28:17]
Alex Rosi
Okay. That one takes all the rest of the hours. Yeah.
- [28:19]
Ezra Cohen
I feel that's what is stopping me is I. Again, it's low ticket ranging between like 29 bucks or like church. No, the church is like. Wait a. That's recurring revenue. That's 348 a year or 7,08 a year. Very low still, but it's above our market. What I feel is stopping me is not understanding the right money model to scale. And take this. I mean, I have 170,000 customers.
- [28:42]
Alex Rosi
Okay.
- [28:43]
Ezra Cohen
So I think it's kind of what you're saying of like a lead. I have a very large lead magnet pool that I could sell into bigger things on both sides.
- [28:50]
Alex Rosi
Yeah.
- [28:51]
Ezra Cohen
But I want to understand how to do that best.
- [28:53]
Alex Rosi
Okay, I'm going to ask like if you can just rapid fire answer for me. So the AV people you sell digital assets to.
- [29:02]
Ezra Cohen
Sorry, say that one more time.
- [29:03]
Alex Rosi
Tell me who you sell what to again, real quick.
- [29:05]
Ezra Cohen
Video assets to video editors.
- [29:07]
Alex Rosi
What does that mean?
- [29:08]
Ezra Cohen
Color presets, film transitions, filling burns, template.
- [29:11]
Alex Rosi
Type, stuff, grains, things that you're. The team would use those in their own. Yes. In their own edits. Okay. And then on the church side, exactly what do you sell? Exactly?
- [29:19]
Ezra Cohen
Basically motion backgrounds. Like that, but better.
- [29:22]
Alex Rosi
Okay, yeah. Okay, we'll see. Yeah. So, okay, so you sell these guys graphics. You license them to them for 348 or 708 or whatever it is per year. And how many customers do you have in each of these? And this one is. This is one time. And the church is recurring. Yes. And that's why you're going all in on this side. Yeah. Versus that side. Where's the 170,000 pool of leads?
- [29:51]
Ezra Cohen
I've been running the video editing asset side of things for the past seven years. And so I just have a.
- [29:57]
Alex Rosi
It's just there's so many loads. If you sell to churches and then just say other people can use it too kind of thing.
- [30:03]
Ezra Cohen
Kind of.
- [30:03]
Alex Rosi
Okay, sorry.
- [30:05]
Ezra Cohen
It's as confusing to me sometimes as it is to you.
- [30:07]
Alex Rosi
Yeah. So you like the core business is the 750 thing. And then you have, you know, offshoots of assets that get created for those customers and you say you guys can just license them from me. But one time though, the video editing.
- [30:20]
Ezra Cohen
Side is one time. Church is recurring.
- [30:23]
Alex Rosi
Why don't you just make the video editing side? Well, I don't really care about that side anyway. So let's talk about the church. So. Yeah. What stops you from, you know, tripling the church?
- [30:31]
Ezra Cohen
So content has been. Been a big constraint. I'm a video editor, and so I've bottlenecked myself and now I'm finally letting that go. Starting to delegate your desire.
- [30:38]
Alex Rosi
Strain, not supply constraint on the church side. Yeah.
- [30:41]
Ezra Cohen
So I have plenty of ideas for content that's about to go off.
- [30:43]
Alex Rosi
What are margins?
- [30:44]
Ezra Cohen
Margins on the church side are probably 60%.
- [30:48]
Alex Rosi
Okay, good. Yeah.
- [30:49]
Ezra Cohen
Yeah. Besides that, I feel like there's a high ticket offer or a higher ticket offer of some kind to be able to be a little bit more focused with or sort of high touch point with churches, help them build better, you know, processes to have a better visual experience overall. But I'm afraid to jump into that and kind of break the simplicity of automated digital products that I'm used to.
- [31:12]
Alex Rosi
Mm. Mm. So $750,000. So you have like 20, like 2000ish churches that pay you. Yeah. Somewhere in there.
- [31:20]
Ezra Cohen
2000, yeah.
- [31:21]
Alex Rosi
Okay. How many churches are there in the country? Well, are you U.S. focused?
- [31:27]
Ezra Cohen
Yeah, we are international. There's 300,000 churches.
- [31:30]
Alex Rosi
This in Espanol. Can't be that hard, right?
- [31:32]
Ezra Cohen
No, yeah.
- [31:33]
Alex Rosi
Acquisition.
- [31:34]
Ezra Cohen
Exactly.
- [31:35]
Alex Rosi
Okay, so, but there's a lot, I'm guessing, so you could get to, like, because I'm just, I'm trying to paint this model out. So it's like, okay, if you're 2,000, like, what do you want to have happened? Do you want to sell this thing? Like, what do you. What do you. What do you want to do? Not yet. Yeah, no, I mean, but like, if you 5x the company, like, I just, like, it's kind of like depends on what you want to do because you have a good business and there's a lot of elegance to simplicity. And so if I think that I can sell, you know, a truckload of units, then I'll sell a truckload of units. Like, school is one thing. It's 99, you know, just sell a lot of them, you know? Yeah. So there's. There's nothing wrong with having just one if it's not getting in the way of ltv. So why can't you market more?
- [32:16]
Ezra Cohen
It's kind of been a.
- [32:17]
Alex Rosi
You take distributions every month. Yeah. Okay, so this will be good for everybody. So if you're in a service business or what I would consider, like, not SaaS, but sort of digital type business that doesn't traditionally have the same level of stickiness, but has more cash flow and less Cap X, meaning you don't have to invest more cash in order to grow. One of the things that took me way too long to learn is that the profit that you have at the end of the year in those businesses is not all yours. And so what I mean by that is there's two primary places where it should be going. So number one is talent and then the second one is brand. And so if you're in that business, like the branding components, like I have to reinvest in the reputation of the business so that I can continue to grow next year. And so that's kind of like the capex of service businesses is like that's the investment that we have to make in order to scale, which is people and brand. And so if you were to spend $600,000, which is whatever roughly your profit, this, you know, the next 12 months, what would you spend on uh, I.
- [33:12]
Ezra Cohen
Want to go pretty heavy on team to build the brand.
- [33:14]
Alex Rosi
Like okay, I'm basically building a make more content. Yes.
- [33:18]
Ezra Cohen
Like an internal agency that can continue to crank out those. But also, you know, well, AI should be bottleneck.
- [33:25]
Alex Rosi
Sorry. AI should be able to do a ton of this. I'd be thinking more in like Claude and GPT instances and less in headcount for what you're trying to do. Like you want to be like in the world of AI, which is now by the way, it's about fewer better people because everyone like a lot execution, believe it or not, becoming commoditized. So it's going to be there's higher leverage on skill, taste and just kind of strategic thinking until eventually that doesn't matter and then we'll all be useless. But looking forward to that anyways.
- [33:51]
Ezra Cohen
So I think it's the taste that I'm hiring for.
- [33:55]
Alex Rosi
Yeah.
- [33:55]
Ezra Cohen
Because yes, you can technically make that stuff. And we have competitors who are making basically AI type feeling stuff that doesn't feel good. And that's why we're beginning to grow, because people are coming to us for a taste.
- [34:05]
Alex Rosi
Yeah. So we just need to increase demand, which means you need to make more better content. And so if you need to hire a couple of people to do that, that's fine. I mean that's, it's, it's. You have a relatively straightforward growth path. The difficulty you're going to have is on the recruiting talent side because media talent without a brand is very difficult because anybody who's kind of good can make more money. Than most people pay them that's going to be your bottleneck. Yeah.
- [34:29]
Ezra Cohen
So you wouldn't even really explore a higher ticket deal.
- [34:32]
Alex Rosi
Well I just don't think I couldn't really think of what a high ticket.
- [34:36]
Ezra Cohen
Background would be A lot of churches are volunteer based so it'd be helping them helping their the team leads install better processes for their well then you.
- [34:45]
Alex Rosi
Become a church consultant. Yeah Feels like a different business. Yeah yeah I would just say like why don't we just like just double down 20x this thing. Okay. There's so many times where it's like hey to make more money I could come up with another thing it's like you could also just do more of this thing and then figure out and like to be fair the quote hard of this one is just like how do I get more and if it's not immediately apparent that's the hard problem to solve. Cool. Awesome.
- [35:08]
Ezra Cohen
Thank you.
- [35:09]
Alex Rosi
Yeah you bet.