Diagnose Before You Scale. Q&A | Ep 943

Summary

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Podcast Summary

The Game with Alex Hormozi

Episode: Diagnose Before You Scale. Q&A | Ep 1001
Date: February 5, 2026
Host: Alex Hormozi

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Overview

In this episode of "The Game," Alex Hormozi answers live Q&A from entrepreneurs looking to scale their businesses. The unifying theme: diagnose bottlenecks before making big moves. Alex dives deep on sales ops, training, company culture, team structure, incentive plans, and how to systematically overcome the operational and leadership issues that block scalable growth. The conversation is candid, tactical, and rooted in Alex’s belief: “No one is above the process.”

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Key Discussion Points & Insights

1. Building Consistent Sales Teams and Culture

(00:02 – 06:39)

• Problem: Many companies face volatility in sales performance, often because teams lack process discipline and culture; salespeople are often mercenaries, not teammates.
• Alex’s Core Insight: The process and culture have to come before individual "star" players. Consistency comes from strong leadership, clear scripts, and daily training.
• Memorable Quote:

  "If you want to have a consistent, world-class sales team, the process has to always go above the player. No one is above the process."
  — Alex Hormozi [00:02]

• Actionable Advice:
  • Every salesperson must follow the same script.
  • Daily sales training is essential; script adherence should be non-negotiable.
  • The sales leader sets the culture—if people aren’t following process, it’s a leadership problem.

Tactics for Hiring and Training

• Screen sales candidates by:
  • Sending script pre-interview; request a 60-second video of the candidate reciting it.
  • Run group interviews, test script delivery, give feedback, and see who is coachable.
  • Only advance those prepared and receptive to coaching.
• Quote on Recruitment:

  "It's not about where, it's about how. The better you get at training sales and creating consistent sales processes, the less skill someone can have and still create a consistent outcome."
  — Alex Hormozi [06:46]

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2. Scaling E-commerce via Recruiting and Operations

(09:42 – 20:33)
Sasha’s business: $6M/year designer bags & sunglasses, aiming for $38M.

• Issues: Limited by sales team size and operational capacity; unsure about logistics (in-house vs outsource), hiring for live sales presenters and warehouse roles.
• Alex’s Recommendations:
  • Outsource non-differentiating logistics:

    "There are people who, all day long, think about saving 15 cents on boxes and packing peanuts. That’s not where the value is. The value's in the distribution and the sales."
    — Alex Hormozi [12:02]

  • Recruiting strategy: Consider micro-influencers or Amazon affiliates for live selling talent. Choose between buying experienced talent (“faster, more expensive”) or building your own (“cheaper, takes longer”).
  • Pay stucture: Pay a percentage of show profit.
  • Key area for founder: Develop a concrete, behavior-based framework to train sales team (e.g., specify actions like “raise your voice” rather than “have more energy”).
  • Memorable quote:

    "You need to be able to take somebody and teach them to sell... describe things that people can see and do. Don’t say ‘have charisma’, say ‘raise your voice, shoulders back’..."
    — Alex Hormozi [18:36]

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3. Incentivizing and Structuring Leadership Teams

(20:40 – 26:11)
Sebastian: Digital agency for ecom brands, $3.5M → $10–20M target. Want to incentivize new leadership team.

• Profit Pool Incentives:

  • Use a profit share pool (10–20% of company profits) allocated among leadership, reserving portions for future high-caliber hires.
  • Avoid actual equity unless selling; Instead, provide cash-flow and sale bonuses, but not risk or control.
  • Strategy on equity dilution:

    "The best talent is in the future. It’s not right now. Leave probably 2/3 for future talent if you want to go big."
    — Alex Hormozi [22:32]

• Caution on Giveaways:

  • Don’t grant equity to salespersons too early. Instead, provide commissions and set clear, quantifiable promotions into leadership.
  • Only reward true, proven value.

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4. Adapting to Market Changes: Retail Roofing Example

(26:17 – 33:06)
Trenton: Roofing company, $3M/year, pivoting from storm to retail sales.

• Sales Team Structure Lesson:

  • Outbound (door knocking) and inbound (lead-fed sales) teams should be separate due to different skillsets, workflows, and compensation structures.
  • Elevate only top performers to inbound sales roles—frame it as a reward and career path.
  • Quote:

    "If you’re an absolute savage... then and only then do you get the opportunity for me to feed you leads. These are expensive and cannot be wasted."
    — Alex Hormozi [29:30]

• Hiring for Growth:

  • Hire a legit marketing leader, even if it costs more.
  • Keep core sales and marketing in-house for reliability and control.

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5. Raising Value per Customer & Organic Growth Challenges

(33:12 – 39:22)
Evan: Sells duct cleaning supplies, $1.2M/year, wants $3.5M.

• Diagnosis: Revenue is purely organic, mostly one-time equipment sales. Lacks repeatable systems for customer retention and consumable sales.
• Alex’s Solutions:
  • Target high retention (90–95%) on consumables; create a recurring revenue base.
  • Up-sell maintenance programs and subscriptions at point of machine sale.
  • Consider moving “up-market” to larger clients, but only after optimizing post-sale monetization with existing customers.
  • Quick Win:

    "Reach out to your existing customer bases... We have things available for purchase. You should purchase them from us."
    — Alex Hormozi [38:18]

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Notable Quotes & Memorable Moments

• On Sales Culture:

  "If they were not saying the script word for word, you cannot be on this team. You cannot take these calls."
  — Alex Hormozi [03:31]

• On Leadership:

  "If we can't do this checklist, the leader is the problem because they don't know how to reinforce culture."
  — Alex Hormozi [05:38]

• On Hiring Process:

  "The entire sales process of selling them on selling for you sets the frame for how the company operates."
  — Alex Hormozi [08:14]

• On Training:

  "Don’t ever manage people. Have her sell."
  — Alex Hormozi [20:26]

• On Lead Gen Mindset:

  "I want you to be lead curious. That’s all I’m asking."
  — Alex Hormozi [27:47]

• On Incentivizing Leadership:

  "If you never want to sell the business, don’t give shares away. The only thing that is guaranteed 10 years from now is that you will still be in the business."
  — Alex Hormozi [23:13]

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Timestamps by Key Segment

• 00:02 – Opening insights on sales process over talent
• 00:50 – Francis's wholesaling question, diagnosing team volatility
• 02:48 – The importance of sales leadership and culture
• 06:39 – Recruiting, training, and team resets
• 09:42 – Sasha's ecom recruiting & logistics bottlenecks
• 12:02 – Outsourcing non-core ops; structuring sales training
• 18:36 – Behavioral sales training; scaling through systemization
• 20:40 – Sebastian: profit pooling, retaining future talent
• 22:32 – Guarding equity, structuring for growth
• 26:17 – Trenton: inbound vs outbound sales specialization
• 29:30 – Graduating sales stars to higher-value roles
• 33:12 – Evan: growing LTV, shifting from organic to proactive
• 38:18 – Quick win: outbound to inactive customer base
• 39:22 – Closing thoughts

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Final Takeaways

• Process and discipline—executed daily—beat individual heroics for sustainable, scalable sales.
• Founders should obsess over how they recruit, train, incentivize and structure for growth, not simply where to find talent.
• Scaling is an act of constraint diagnosis: address ops, leadership, and incentive misalignments before adding fuel to the fire.
• Move from “doer” to “teacher”: codify tribal knowledge into teachable steps.
• Always forecast cash and protect roles that create the most enterprise value.
• Market changes and revenue plateaus are often solved by segmentation, clarity, and process—not just effort.

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Transcript

[Alex Hormozi]

If you want to have a consistent world class sales team, the process has to always go above the player. No one is above the process. And I do think that 95, maybe 98% of sales teams have no idea how sales training, how sales culture, any of this stuff works. They just hire a bunch of people, see who closes deals, fire the rest. And so then you just have a bunch of mercenaries who work for you. But there is no culture, there is no team, and it's every man for himself. And that is what creates this volatility in sales. And some guy says something and he closes a deal and the other guy's like, I'm going to try that now. And there's no consistency across the board. And that also gets you in trouble long term because they start promising things and making deals that you can't cash.

[Francis Seguillo]

Hey, Alex, what's up? My name is Francis Seguillo. I am a real estate wholesaler. Okay. We're currently averaging about $450,000 a month in revenue. I would like to be at a mean.

[Alex Hormozi]

That's your spread. That's what you're making. Or that's like house volume.

[Francis Seguillo]

That's gross.

[Alex Hormozi]

Okay, so what's your spread on that? What's your take home on this?

[Francis Seguillo]

So we're at 40%. So right around 250. 240.

[Alex Hormozi]

Interesting. Weird. That's high. What kind of. What are you wholesaling?

[Francis Seguillo]

All right, so here's the.

[Alex Hormozi]

He's like, have you heard of brothels? So imagine a brothel, but now it's all matrix. Okay, keep going, you're good.

[Francis Seguillo]

Okay, but here's the challenge we run into. So we're currently at 450 average. Yeah, we've had 700k months this year already. The challenge is every time we get to those numbers and I try to, hey, you know what? It's time to ramp up. For some reason, we tend to tank to, you know, 200, 250.

[Alex Hormozi]

Okay.

[Francis Seguillo]

I'm sick. I have cause to believe it's the sales team and just, you know, they have those power months where everyone, you know takes home 20, 30 grand. And then the month after it's like.

[Alex Hormozi]

Are they pure commission or is it split?

[Francis Seguillo]

So there is a base salary.

[Alex Hormozi]

Okay, what's the split between commission and base?

[Francis Seguillo]

So they're at 42 base.

[Alex Hormozi]

Okay.

[Francis Seguillo]

Per annum. And then 10% of the assignment fees.

[Alex Hormozi]

You have an ops issue, which is sales ops. And so it's good. Like, this is going to be much more weedy in terms of, like, tactics. To answer this question, but it's like, there's probably like 20 things that you need to be doing, and you're probably doing like, 13 of them. And the other seven are going to be the thing that make the difference in creating the consistency of the team. That's at the surface level. At the deep root of this is who's the leader of the sales team.

[Francis Seguillo]

I do have a sales manager.

[Alex Hormozi]

Okay. So he or she is the problem. Because, like, sales at the end of the day is a culture game. Well, everything's a culture game. But like sales, you can feel it so quickly when things are good or not good because the performance, the feedback loops are so fast. But for whatever reason, you do not have a culture of consistency within your team. I would wager that script adherence is low because you have such variability in close rates. Unless there's a change in lead quality, which would be something else. But are the leads the same like this month as last month?

[Francis Seguillo]

Yes, the leads are the same.

[Alex Hormozi]

Yeah. So it's a sales discipline issue, which then comes down to the training cadence, the scripting, how people are being managed on a daily basis and weekly basis in terms of their career goals. How, like, you're doing morning. Like, it's. It's. This is all sales ops. I could, like, just start talking about sales, but, like, this is a pure sales ops issue. And so at the, like, there's. There's a two step. Like, I would approach this in two steps. Step one is we should do all the stuff that we are not currently doing or we should be doing. Everyone should be reading the same script. If they're not reading the script, why are you on this team? Right? We need to have training that's every day to make sure that they are saying things the right way. We need to make sure that everyone memorize the script. Some of you guys might have seen the YouTube video I put out like two days ago about this. But, like, they have to breathe the script. If they were not saying the script word for word. You cannot be on this team. You cannot take these calls. I'm getting these leads and not for you to go cowboy and make shit up. And that then if we cannot solve that problem because for whatever reason, you keep trying it and they don't adhere and they go off script because they just want to close the deals. It means you have a cultural issue, which is a leader problem, because it means the leader is reinforcing behaviors that get people to go off script, and there's no consequences for doing it. And so if you want to Have a consistent world class sales team. The process has to always go above the player. No one is above the process. And I do think that 95, maybe 98% of sales teams have no idea how sales training, how sales culture, any of this stuff works. They just hire a bunch of people, see who closes deals, fire the rest. And so then you just have a bunch of mercenaries who work for you. But there is no culture, there is no team, and it's every man for himself. And that is what creates this volatility in sales. And some guy says something and he closes a deal and the other guy's like, I'm gonna try that now. And there's no consistency across the board. And that also gets you in trouble long term because they start promising things and making deals that you can't cash.

[Francis Seguillo]

That makes a lot of sense up until now. I mean, we have scripts, but they're.

[Alex Hormozi]

More of suggestions, guidelines. Yeah, I mean, I've done a lot of sales. Like, this is a straight out of the book checklist problem. Like, we have to do all of these things. If we do this entire checklist, we will get this outcome. If we can't do this checklist, the leader is the problem. Because they don't know how to reinforce culture, which then means that they're not able to get the right people on and the wrong people out. Which sometimes means we might have to fire half the team to get the right people in so that we can build the culture we need to get to where we want to go. Because you are in, like I showed the shapes of businesses you are in a sales and marketing business, there's functionally no delivery. Like, you're just basically like, are you, are you guys doing outbound or like smiling and dialing? Or do you buy leads from setting teams inbound?

[Francis Seguillo]

Yes. Google Ads.

[Alex Hormozi]

Google Ads, yeah. Okay, so you have inbound leads that are coming in and then you close. Like that's the business. Like, you buy media, you sell shit. And so like this has to be a core. Like you have to be world class at this if you want to be world class at wholesale. Gotcha. But that's the constraint in the event.

[Francis Seguillo]

That I have to, you know, let go of half the team because they're just not good enough.

[Alex Hormozi]

Yeah.

[Francis Seguillo]

Where do you suggest I look for?

[Alex Hormozi]

It's not about where, it's about how. So it's not like I'm going to find like the better you get at training sales and creating consistent sales processes, the less skill someone can have and create a consistent outcome. Within your team, which becomes the arbitrage of your business. Just like I said the cleaning thing before, if the whole constraint of that business is going to be finding, you know, basically taking a human being and then turning them to a great cleaner that actually shows up on time, you have to take the raw input of somebody who has no skill and just has work ethic, just has energy and in 14 days you can get them closing deals on wholesaling. That box is the value that your company, that is your ip, that is the trade secret, that's how your company is valuable. And so when I say who versus how, like where do I find these people? You could run indeed ads and find like for this caliber of salesperson, they're everywhere. The issue is then what is the process and what are the expectations we're setting for those people as they walk in. And so typically when you're doing high volume sales like you are how many guys you have on the team currently?

[Francis Seguillo]

17.

[Alex Hormozi]

Okay. So when you have that, that, I mean it's you know, mid size, someone comes in, usually you get constrained because the amount of churn you have and people quitting, leaving is about equal to what you have to hire. And that's what keeps you stuck. Right. And so it's a process issue, kind of on the demand gen side for talent. And so usually we look at that and say, okay, what part of this can we screen ahead of time? So it's like let's send them the script before they even show up. So people apply, we send them the script and then send us a 60 second video of you saying the script. And then from the 60 second videos, we're going to invite people to a group call, not one on one because we don't have time for that. And we're going to go quick drill, say the script, give a piece of feedback, see how they do it again, if they can take the feedback well and they were prepared, great. It means they're coachable, they have work ethic. Awesome. Now we can take you to a job offer call. Somebody you know has attitude on the coaching, they're out. If someone doesn't show up prepared, they're out. Very easy screening. And so you take 10, you pick two, pick three, they go to the next one. You make job offers and that's the flow. But like the entire sales process of selling them on selling for you sets the frame for how the company operates. Like how disciplined you are and how militant you are in terms of how you set the frame for this is how we Fucking do things here. Either get in or get out. I do not care. But we win. And if you can set that frame, you will attract winners. And winning is not for everybody. And so that means that on the team, there's probably some losers, and it's not for everybody. So that's the decision you make, and that's from top down. So there's the tactics, and then there's the root issue. I would try this first. If this doesn't work, you have to probably gut things.

[Francis Seguillo]

Thank you.

[Alex Hormozi]

I know he's the only person struggling with sales here. Everyone's like, I saw, like, more notes. Like, okay, group interview. Yeah, yeah, go ahead.

[Sasha]

Okay. So my name is Sasha. I sell designer bags and sunglasses. Cool. And we do about 6 million a month. No, sorry, a year. Sorry. 6 million a year.

[Alex Hormozi]

Oh, cool.

[Sasha]

And I would like to do 38 million.

[Alex Hormozi]

Precise.

[Sasha]

Yeah, 38 million.

[Alex Hormozi]

Okay.

[Sasha]

And what's stopping me is.

[Alex Hormozi]

Why 38?

[Sasha]

Just because I figured, you know, 100,000 a day, something like that. Round up down. Something like that.

[Alex Hormozi]

Okay.

[Sasha]

And got the roundabout. And I mean, obviously more.

[Alex Hormozi]

Yeah. Okay.

[Sasha]

But I was thinking 38 would be fair.

[Alex Hormozi]

That works.

[Sasha]

And it is just recruiting.

[Alex Hormozi]

Oh, recruiting is the bottom. I. Cause you're saying. Yeah, okay. Got it.

[Sasha]

My house cleaner was my first employee, and she just. And because I consumed yours and Layla's content so much that I was like, I'm gonna be these two people in one. That's me. Be these two people.

[Francis Seguillo]

Oh.

[Sasha]

And as a result, I have a great team. Really great team. And it's just a matter of being militant in the recruiting process.

[Alex Hormozi]

Okay.

[Sasha]

The. We do sell on whatnot quite a bit.

[Alex Hormozi]

So who do you have? What's stopping you? So you make money, $6 million a year selling handbags and sunglasses. And sunglasses. For you to sell more handbags, sunglasses, you need more people to do that.

[Sasha]

Yes. Because we. We only go live for about five hours a day because we get tired. It's just me and. Well, me and I have three salespeople, but it's just. We get tired. We could. If we were live more often, we could create more.

[Alex Hormozi]

You're going live on, like, your Instagram page or your what?

[Sasha]

On whatnot.

[Alex Hormozi]

Okay, got it. And do you have, like, a big following there?

[Sasha]

110,000.

[Alex Hormozi]

And so you're just selling to that same base. And if you just sold for longer, you would make more.

[Sasha]

A lot more. I could do a hundred grand in the show.

[Alex Hormozi]

Okay. So you just need, like, two more salespeople going camera.

[Sasha]

But yeah. And Then the recruiting as well.

[Alex Hormozi]

Recruiting for what?

[Sasha]

Packing. Because we. We do a lot of.

[Alex Hormozi]

You do your own three pl or not third party, but, like, you do your logist. Why?

[Sasha]

I didn't. I didn't know you could have other people do it.

[Alex Hormozi]

Boy, oh, boy. Yeah. Step inside. Yes. So functionally, like, because of the nature of the business that you're in, we have to think, like, because we have to consolidate resources. I'm not normally somebody who's like, let's cut parts of the business out, but unless your shipping is some key differentiator that you have, like Amazon shipping became a competitive advantage. Right. But unless that's like, some differentiator, then shipping, for the most part, is pretty commoditized. And there are people who, all day long, they think about, like, saving 15 cents on cardboard boxes and tape and packing peanuts and all that shit. And I think that. That you having to, like, think about that and run a. Functionally a warehouse at the same time as running a marketing and sales and talent business, media, that's not where the value is. The value's in the distribution and the sales. And so I would say, like, can we outsource this, the logistics part, so that you can just go all in? Because all we had to do is you get two more salespeople and you get to 100,000 a day. We should do that.

[Sasha]

We have to physically show the product.

[Trenton]

Like.

[Alex Hormozi]

No, I'm not saying you don't have, like, some product on hand. You just don't need a warehouse.

[Sasha]

No, we do need it because it's like, go, go, go, go.

[Alex Hormozi]

Okay, Speed.

[Sasha]

We run probably about.

[Alex Hormozi]

So you're like, we sold this item to this person is how you do it.

[Evan]

Yes.

[Alex Hormozi]

Okay, so.

[Francis Seguillo]

Got it.

[Sasha]

It's kind of like a warehouse. It's. Yeah.

[Alex Hormozi]

Okay, that's fine. All right. So you just need to hire more people. So what's stopping you from hiring more people?

[Sasha]

The talent.

[Alex Hormozi]

The talent to hire more people.

[Sasha]

Well, I'm. I'm learning now. That's why I'm here.

[Alex Hormozi]

No, no, you're good. You're good. So I'm saying, like, you have two sets of roles. You've got warehouse folks, and you've got people who can get on camera. Right. So what are you currently doing to get each of those people?

[Sasha]

Well, we had ads on. Indeed.

[Alex Hormozi]

Okay.

[Sasha]

But I didn't realize how militant I had to be until I came here. It's. It makes a lot of sense. Right. I know that there's that many interviews.

[Alex Hormozi]

That are required, and that's More for the warehouse side.

[Evan]

Correct.

[Sasha]

Both. Because sales is.

[Alex Hormozi]

I think that you'd be able to find salespeople. Like I would probably look at Amazon affiliates.

[Sasha]

How much would you pay them?

[Alex Hormozi]

Percentage?

[Sasha]

Well, that's the thing. Now it's so. Okay, so it takes skill to do what we do. Yeah, it takes skill.

[Alex Hormozi]

Like agreed.

[Sasha]

Like for example, my girl is better than me, Grace better than me. And it's like not only is it motor skills, it's presentation and entertainment.

[Alex Hormozi]

Like I. I get it. I understand. I did a live for three days. I got it.

[Sasha]

So finding and training, that. That's definitely a process and takes time.

[Alex Hormozi]

Yeah. The question is whether you want to buy or build. Do you want to buy the town or build the town? Building the town is cheaper, takes longer, harder. Buying the town is faster, more expensive. Which one do you. Which one feels right for you?

[Sasha]

We're not always. So we are profitable per show. Yes.

[Alex Hormozi]

Okay.

[Sasha]

Profitable per show. But sometimes what ends up happening is like, let's just say it's a, a Wednesday. Right.

[Alex Hormozi]

Are you on cash based accounting or accrual? Probably cash.

[Sasha]

Yeah.

[Alex Hormozi]

So you might like if basically if you run a physical products business, which you do here, you're like, okay, we made money. Now let's take all of that profit, gross profit that we had and go buy more so we can sell more. Right, Right. So this is where like you probably have. What's your, like what's your financial. Financial side of the business? The financial ops look like.

[Sasha]

My accountant handles it.

[Alex Hormozi]

Your who?

[Sasha]

My accountant.

[Alex Hormozi]

Oh, your accountant does it. Okay.

[Sasha]

Yeah.

[Alex Hormozi]

You will need to have soon a relatively strong finance person who can give you better forecasting so that you can. It's not just like how much cash we have in bank account. Let's go buy more. Shit. It's like we can only afford to buy this much given this growth rate that we want to have. Otherwise you will get into these probably cash crunches that you're feeling right now. It's not that the business isn't profitable because I'm guessing the headcount's not super by.

[Sasha]

So our shows will make anywhere from like 5 to 7,000 profit depending on like the volume that we did that day. So we know the profit like per show. However, that's where the skill comes into play. Like if a show is not going well, we need to have that person trained to be able to do the thing. And so that's why not knowing how much to pay them is the.

[Alex Hormozi]

Well, I mean I think doing a percentage would make Sense percentage of profit. Yeah, like a salesperson.

[Sasha]

Okay.

[Alex Hormozi]

And so you can buy or build that. Right. So you buy it as. I would just go to many micro influencers who are already like on Amazon hawking stuff and be like, well, they already do live streams and they already do sell shit. And I bet I could teach them to do this for me. That is a buy version because you already know it's already proven. You're just saying, hey, do it under my umbrella. The build version is that you have to kiss a lot more toads and try and look for who has already built in a bunch of soft skills and then you can hire for the small skill deficiency that you know how to train.

[Sasha]

Okay, so Amazon affiliates.

[Alex Hormozi]

Well, you could do either, but like, yeah, I mean, obviously this can be a lower risk thing. And then you'd have to have some agreement that they're going to only sell for you for X period of time.

[Sasha]

Like a contract?

[Alex Hormozi]

Yeah, like a contract.

[Sasha]

Thank you.

[Alex Hormozi]

Yes, but I would. But big picture, because I want to make sure that you're good. The indeed warehouse stuff that's just like commoditized. I mean, you have a warehouse, maybe you have to have it for your business. But like, I don't see that as like, that's not a core differentiator. You might, you're not different because you have a warehouse behind you that's not special. So the roles that you have there, it's like they need to be like, have a pulse, have a good leader there. Let them just deal with it. Your, your star factor is going to be your ability to train people to sell. And so that's like, where is your. What is. Like, what is the true pinpoint of where the most value gets created for you as the founder, the entrepreneur is that you need to be able to take somebody and teach them to sell. And you have to break it down in, in terms of the most concrete language you possibly can. And so think of everything purely in terms of behavior and do new. Do not use any amorphous words. So it's like, I need you to have higher energy. That means nothing. I need you to raise your voice. I need you to talk faster. I need you to have your shoulders back. You have to describe things that people can see and then other people describe them as having high energy, having charisma, having confidence. And so if you want to teach someone to present, you have to tell them what to do with their body and their voice. And it will be far faster for you. And what you'll find is the training lab. The reason it takes so long for people to train where they can, where they can't train salespeople or presentation people is because they literally do not use or words that other people understand. Like, this is the problem. This is why most companies cannot teach people to do shit because they say, have more charisma. And then the person listens and is like, I'll translate that into what I think charisma means, which who fucking knows what they think it means? Right? And then we're just playing this telephone game where no one agreed on what are the behaviors I want you to do that will compress the amount of time that it will take you to get someone up to speed. And two, long term, if you can develop the sales training, then you can have a stable of stallions that are on 24, 7 for you working in your, in your barn. So that, I don't know, it's animals now, but let's go with it.

[Sasha]

So that, that's actually, that brings up the point. So I, I, I have. So my girl, like I said, she's my house cleaner, shows up at my, my door one day. She's, she's like, hey, I want to be you.

[Alex Hormozi]

Yeah.

[Sasha]

And she's like, I'm a copy and paste of you. And she became me.

[Alex Hormozi]

Yeah.

[Sasha]

Now there's a little bit, like a little bit of a. How can I. Because obviously I had to learn the care part, like from Layla. So I learned the care part and now I have it. But then I've seen her. I mean, I've seen situations kind of like not go the way they should because she's too, she's a copy and paste of me from yesterday. So I'm starting to see those.

[Alex Hormozi]

What's the problem? We'll just put her in front of the camera, have her sell and get her out of the building. If, like, if she can sell.

[Sasha]

Yeah.

[Alex Hormozi]

So let her sell. Don't ever manage people. Have her sell.

[Sasha]

Got it. Understood.

[Alex Hormozi]

Thank you.

[Sasha]

Got it.

[Alex Hormozi]

Good talk. Yeah, thanks.

[Sebastian]

Alex. My name is Sebastian. Four years learning. Thanks for everything.

[Alex Hormozi]

Yeah, thanks for coming out from Australia. Melbourne. Yep, Melbourne. Nice. Sick.

[Sebastian]

Loose ends.

[Alex Hormozi]

Digital.

[Sebastian]

We sell paid ads and growth advisory to eight and nine figure Ecom brands.

[Alex Hormozi]

Sweet.

[Sebastian]

We do three and a half.

[Alex Hormozi]

Okay.

[Sebastian]

We'd like to be at 10, then 20.

[Alex Hormozi]

Okay.

[Sebastian]

Feel super clear on our top priority against our supply constraint.

[Alex Hormozi]

Oh, talent.

[Sebastian]

Yeah. Talent acquisition and first getting LTGP on talent. Something that's unclear is we've just established this past 12 months our leadership team. So we have two team leaders, ahead of growth and ahead of strategy. They're all just on salary at the moment, but putting together or building an incentive, a great incentive plan for them as a group to carry us as we 2 and 3x headcount.

[Alex Hormozi]

I would just go profit share pool, 10 to 20% and then they get slices of that slice so it caps. So basically it's like if you say like simple math, $100 a year of profit, $20 is always going to be allocated or 20% is always going to be allocated to all leaders. And so they get slices of that pool, but then you always have 80 and then they think like you do, which is like, if we're going to bring this leader and we got to give up some of this piece, but they should be able to grow the pie, which is the exact same math that all of us do when we bring someone in. And so it gets them thinking more like owners. That's the simplest way I could break it down. Are you planning on trying to sell the business anytime soon?

[Sebastian]

Potentially, yeah. Okay.

[Alex Hormozi]

If you want, you can include a profits interest in the sale which you can have, be proportional to their interest. And then if they leave, comes back.

[Sebastian]

To you, how would you apportion that percentage split against those different roles?

[Alex Hormozi]

So first off, you're going to want to leave probably 2/3 for future talent if you want to go big. And so do not be like, okay, I'm going to blow my whole like slice of pie on these people because the best talent is in the future. It's not right now, but I'll give you the pitch or the walkthrough that I have with somebody who's in this position. And this will probably apply to half of you who here has somebody that they were considering tying into your business. Okay, so I'll give you quick, quick big picture advice. If you never want to sell the business, don't give shares away. The only thing that is guaranteed 10 years from now is that you will still be in the business. That's it. Everything else is not guaranteed. So I would not encourage you to give real shares away. Thing one, thing two. There are four things that equity provides. One is cash flow. The second is sale bonus sale dollars. The third is risk. And the fourth is control. And so when I have a conversation like this, I'd be like, okay, cool, so do you want any risk? And they're like, no, I don't want any risk. And you're like, okay, cool, so we don't want that. I'm not going to give you control. So that's off the table. So all we have left are cash flow and the chance that we sell. And that's what we're going to do. And so I'm sure in Melbourne, I don't know the legal situation but like there's a version of we'll give you a profit share which comes off bottom line and in the event of a sale you'll get a sale bonus. Now the issue with that is it's going to be taxed as income. At least it is in the US if they have a sale bonus rather than capital gains. But there is no real other alternative because either they have to take on risk and not get control and pay taxes on you gifting to them, or they have to buy it and give you money. Most people don't want to do either of those things and you have to agree on evaluation. It's a whole mess. And so it's easier to just say I'll give you some money today and if we sell, you get money tomorrow and if you leave you get neither.

[Sebastian]

And then that sale, you know, I've just said that the sale number predetermined.

[Alex Hormozi]

There's a zillion ways to slice this. But the simple way is like if you have a 10% profit share like for the whole company. Right. And somebody let's say gets 10% of that so they have 1% of the profit. You could say when we sell you will get a proportional amount relative the total for that 1%. So they get 1% of the sale. Sure. Yeah. And when you write that, make sure that it's the percentage of cash not calculated on the total value of the sale.

[Evan]

Yeah.

[Sebastian]

The head of growth is pretty much the sole sales guy or our first sales guy, not a founder led. He'd be at this table commission on clipper sales plus this percentage of profit share. Or it's one of the other.

[Alex Hormozi]

Is he a founder?

[Sebastian]

No.

[Alex Hormozi]

It just sounds like he's your sales guy.

[Sebastian]

Correct. Yeah.

[Alex Hormozi]

I don't new role for us.

[Sebastian]

Yeah.

[Alex Hormozi]

Well he gets commission.

[Sebastian]

Yeah.

[Alex Hormozi]

He already has a leadership table. Uh huh. The other guys at the leadership table do marketing.

[Sebastian]

He started to.

[Evan]

Yeah.

[Sebastian]

Is developing and he's backfilling that head of growth role.

[Alex Hormozi]

Giving equity to sales guy is like kind of like one of those day one mistakes that I prefer you avoid. Yeah. So I. If that guy's like really ambitious and really hungry and smart and you think that he's going to be there long term, I would say I want you at the leadership table. I don't think you're ready there yet. This is what I would need to say and just make it quantifiable. You need to get like you needed master demand gen, which creates five deals a week, five deals a month, whatever that number is that you like. If he actually did this, you'd be like, you earned it. So whatever that is.

[Sebastian]

Sweet, thank you.

[Alex Hormozi]

Yeah, you bet.

[Trenton]

My name's Trenton. We sell roofing in the metro Detroit market.

[Alex Hormozi]

Sweet.

[Trenton]

We're going to do about 3 million this year. We'd like to be at 10 million. Quick context. We were primarily a storm contractor. Yeah, storms have kind of vanished in our market, which was hell, right? Yeah.

[Alex Hormozi]

Global warming back here, you know, climate change, whatever.

[Trenton]

Actually the best thing that ever happened because it allowed me to step into retail.

[Alex Hormozi]

Okay.

[Trenton]

So over this last year I've really had to like rebuild my business because right before that we had hit to 5 million two years in a row. And now we're seeing this drop off. So my biggest constraint, or what's stopping me is that for the last, you know, eight years, all of our lead gen has been from weather from doors.

[Alex Hormozi]

Okay.

[Trenton]

So it's been 100 door to door lead gen. And now when we're trying to knock for retail, it seems to be like, like heavier of a weight on the team.

[Alex Hormozi]

When you say retail, what do you mean?

[Trenton]

So like just people in market that.

[Alex Hormozi]

Need a roof, it's like residential.

[Trenton]

Residential, okay. Yeah.

[Alex Hormozi]

And when you were doing door knocking.

[Trenton]

Before, you were knocking on residential doors.

[Alex Hormozi]

Okay, so it was the.

[Trenton]

Well, we were getting funding from the insurance company.

[Alex Hormozi]

Got it. Word. Okay. Yeah, yeah. Okay, so keep going.

[Trenton]

So now with me being a door too guy, like purchasing leads and all that was like sacrilegious to me.

[Francis Seguillo]

Okay.

[Trenton]

So there's some limiting beliefs there that I started to, you know, explore. Last October, we bought.

[Alex Hormozi]

I want you to be lead curious. That's all I'm asking.

[Trenton]

Yeah, I, I am, I'm very lead curious now and. But I basically got slaughtered learning this.

[Alex Hormozi]

Acquisitionary binary, you know, I mean like be non binary with your leads. Like as many as you want. Yes, yes.

[Trenton]

No, that's what I'm trying to do here. And when we did purchase leads and.

[Alex Hormozi]

The unedited version, by the way. Go ahead.

[Trenton]

And when we started to, you know, stack the guys calendars, there was a big culture shift where we actually saw like more buy in from the guys. But then like the door knocking just.

[Alex Hormozi]

Yeah, because it was easier.

[Trenton]

It was way easier. Yeah, but like our CAC and all that was Absolutely horrid. Right? So I was spending, like, $7,500 just to acquire one customer over the summer, and it wasn't sustainable. So I make from a customer, on average, $6,500.

[Alex Hormozi]

So that does not work.

[Trenton]

No, it doesn't work.

[Alex Hormozi]

Yeah.

[Trenton]

And it was just like, a lot of the marketing agencies that we worked with were, like, younger people. They were, like, using AI tools, go high level, like, so we decided that we were going to build it in house.

[Alex Hormozi]

Okay.

[Trenton]

So with that being said, now it comes into, you know, a leadership issue, because I need somebody that, like, knows how to, you know, market better than I do so that I can focus on training and.

[Alex Hormozi]

Can I pause you real quick?

[Trenton]

Yes, please.

[Alex Hormozi]

Okay, cool. So you're at 3. You want to get to 10. You rebuilt it from storm chasing to just straight up door knocking whenever. Fine. I think it was a good idea. You had a door knocking team. You took the same sales guys, brought them on leads that you got them. They got lazy, fat, and don't want to do door knocking anymore. So great. Rule number one, outbound and inbound are separate teams.

[Trenton]

Yes.

[Alex Hormozi]

Inbound is what you graduate to. And so if you're an absolute savage, like, you just take children's souls and just rip them out every day because you're a terrible person, but you're just unbelievable at sales. Then and only then do you get the opportunity for me to feed you leads, because these are the most expensive leads that we have to work very, very hard for to make sure and, like, we cannot waste them on anybody who cannot close everything. And so thank you. That was an amen. And it's so. So first off is the team should be separate, but you're in this mix now. You're in a little bit of a mess. And so my. My 2 cents would be like, take that, because I'm sure their commissions have gone down since they now are selling nothing. Basically.

[Trenton]

Yes.

[Alex Hormozi]

Yeah. So I would say, guys, my fuck up. I went to this thing. He told me. I did this big boo boo, which is inbound and outbound. We're together, which is not how it should be. Everybody get back on the streets. You guys do that. And then for the absolute savages of you, because you can usually have far fewer people on inbound, that becomes the Christmas tree of the career path. Because on inbound, I can feed you and you can do, like, five sales a day. You can't do that door knocking. Right. But you can do it. If I'm feeding you leads that are already qualified, already Set already gone through a VSL whatever in the sales motion. And then those guys can absolutely clean up. But you get. You earn the opportunity to get that level of commissions. Now the commission structure should also be different on inbound because you have to pay for those leads. So it's a different role. They graduate to it. It's more volume lower per but it's more reliable. Which guys with families, things like that. If you have a bad day you close two and a good day you close seven. It's different than you have a bad day. You can close 000. Right. It's much more. It's much more stressful. And so guys will be happy to even give up. They'll even make the same money but just have it be more reliable. They'll be make and you don't have to be in the sun. So.

[Trenton]

So then we should hire for inbound sales.

[Alex Hormozi]

Yeah. Or take one of the guys you have who's really good at it and put everybody else back on the street. So you just funnel everything to that guy who. Because then you can iterate faster because you're new on this and so you want to. You never want to have too many news because kind of like the brick analogy I gave at the beginning, the more news there are, the more likely something's going to fuck up. Right. And so it's like I know this is a absolute savage salesperson. If they're closable, he'll close them or she'll close them. And so then the only variable we have is just what offer slash lead source am I getting and like what process are going from lead to talking to them. Those are the only variables you have to play with and you can control. It's much easier to iterate on that and then get it to go faster.

[Trenton]

So then I want to hire a marketing director or leader to manage that. Now Tim, like was blowing our minds in the workshop.

[Alex Hormozi]

Like he does. He does do that. Our Asian Clark Ken.

[Francis Seguillo]

Yeah.

[Trenton]

He was. It was. Yeah.

[Alex Hormozi]

Racist today.

[Trenton]

I. I was almost going to say he was a ninja, but I. I didn't want to. He wasn't anyways. So he Chinese.

[Alex Hormozi]

I'll have you know. Samurai. Samurai.

[Trenton]

Yeah. But he was talking about when. When another guy was talking about a constraint and he was talking about the trade off of. Okay, so you, you know, you could spend $6,000 a month. You don't want to spend, you know, basically 100 grand to replace the person. What I'm trying to figure out is I think I've answered my Own question. I won't keep going here. It's. I've been working on the wrong problem. I think is what the situation is. And I'm trained to make sure.

[Alex Hormozi]

Can I justify this for you? Outbound team goes out. Inbound team becomes the one guy. You need to hire a marketer person who actually knows what they're doing. Probably pay more than you expect, but then that person will be worth it. Your entire business is sales and marketing. So you should have the core elements of the business in house. Okay, great.

[Sebastian]

Excellent.

[Alex Hormozi]

If you need help with the sales process, we can help.

[Trenton]

Excellent. Thank you.

[Evan]

So my name is Evan. I sell duct cleaning supply to duct cleaners. Their year, we will do 1.2 million in revenue. And I think I'd like to be around three and a half. Okay. And I think what is stopping me is just being clueless.

[Alex Hormozi]

Okay, cool. So let's give you clues. So let's do one more. How do you get customers now?

[Evan]

Strictly organic.

[Alex Hormozi]

Can you take more customers than you have?

[Evan]

Yes.

[Alex Hormozi]

Okay, so you don't do anything. That's why. All right, so no, I mean, like, it's word of mouth. There's no like demand gen that's happening. All right, I've got. I've got good news and bad news. The good news is that your business probably, you probably are good at what you do because you've been relying solely on word of mouth. So that's the good news. The bad news is that you're going to have a steep learning curve for what you have to do next. And so you basically have to pick do you want to do outbound as your way of getting customers, which could either be door knocking, it could be emailing, could be cold calling, but you gotta be Instagram dming. It could be anything. But outbound, you could do paid ads to get customers. You can have affiliates. So you do those things to get affiliates. Or you could post content. Those are your options. Which of these do you feel like you are best equipped to do?

[Evan]

Probably paid ads. But one of the things I was thinking, like, is creating a higher value per customer a good option instead of trying to get more customers?

[Alex Hormozi]

Okay.

[Evan]

I don't know which route to go, I guess.

[Alex Hormozi]

So you'd want to double how much customers are worth.

[Evan]

I guess utilize my existing customer base with more consumables. So there's more repeat orders. So, like they're ordering more.

[Alex Hormozi]

So duct cleaners go clean ducts? Yeah, correct. And you sell them.

[Evan]

We sell them the cleaning supplies, which is really high profits. Um, and then we started selling some consumables, but they're low profits. Like you know, they might buy 500 a year, but it's only like $6 a unit or something. So there's not too much money in that yet. So. Okay, I guess the.

[Alex Hormozi]

But are they buying regularly from you? Just like how many customers per month are new customers vs repeat customers?

[Evan]

We average 80 new customers a month.

[Alex Hormozi]

Okay, so you do not have a lot of repeat business.

[Evan]

No how unfortunately. But fortunately the equipment I sell is really good, so it doesn't break down frequently.

[Alex Hormozi]

But on the consumable side, what percent are all those repeat customers?

[Evan]

Consumables? Yeah, those would all be repeat customers. There's just like, even though the margins are well, there's just like you can only make so much selling a $6 product. So I don't know if there's a way, I don't know, maybe through selling them education to maybe that be.

[Alex Hormozi]

No, I mean fundamentally you have a normal business. Like there's a zillion businesses that work this way. Auto dealerships work this way. Large equipment works this way, like ink and printers work this way. You sell like you have three, you basically have three wheels of revenue in this business. You've got, you sell the machines, you sell the stuff that the machines use and you sell the service around the machines. That's the three pronged approach. And so your ability to extend the customer LTV is going to be around the second two, not where I mean most people will even like the more sophisticated business will sell these at cost or at a loss because all their margin is on the consumables and on the service. Now you can sell bigger customers so that those $6 things times 10,000 of those starts to add up. Or you can sell more on the front end. But either way the core focus of your business, like if I had a two step approach for you, core focus number one is we have to know that we're retaining 90, 95% of those people on an annual basis on all the consumables. So every year I should know that 95% of those people are, they have to buy it from somewhere and they should all buy it from me. And so what ends up happening is your business starts, that becomes like the annuity of the business. So you acquire these new customers to sell machines for whatever and then this base of service and consumables just continues to rise over time and that's super profitable. That's the game. Now you said that you wanted to grow the business by making them more valuable. I think you will have a hard time making the individual more valuable. I think it would be easier for you to sell a higher tier customer so somebody who cleans more ducks so that they can buy in higher volume or buy for entire fleets, whatever, that would be the path. But it'll be a different sales motion than you currently do. And so you have like, you're at a crossroads where like if you want to have significant growth, you'll either have to have a new acquisition. Well, you'll have to have a new acquisition system basically either way because you're either going to have a new acquisition system for a new type of customer or a new acquisition system for your existing customer. If I had my druthers, I'd probably rather you start with new acquisition system existing customer, because you already know that flow. Once you have that, then I'd be willing to go up market.

[Evan]

Gotcha. So would a good first step be to reach out to our existing customer bases with like explaining to them we have consumables, like we don't do any outbound to existing customers.

[Alex Hormozi]

That would be an excellent idea.

[Evan]

Gotcha.

[Alex Hormozi]

We have things available for purchase. You should purchase them from us.

[Evan]

That makes sense.

[Alex Hormozi]

And so realistically, you should probably get them on a cadence or subscription with the sale of the initial product. So I don't know what the offers that you use. It's probably beyond the scope of right now. But like that's where a lot of the alpha is right there is like what kind of maintenance programs are we selling up front? What kind of incentives are we getting them for subscriptions up front, like the entire business. And here again I have more good news for you is that you've been making the money that you are with none of the actual pieces that make your business make money make money, which is great news. And so we just have to put these other two wheels in place and then develop the motions around those and like the profitability of the business will go up a lot. Like a lot, dude. Like you've got, you've got the front, you've got the hard part of a profitable business without the profitable part of the profitable business. So we just, we just have to bridge that moat. That's it.

[Evan]

Yeah, that makes sense. Yeah, I think that's my only question.

[Alex Hormozi]

Okay, great. So sales motion changed, offer change, and then there's going to be a re engagement on the back. And those are the three things for like today. All right, cool.

[Evan]

Thank you.

[Alex Hormozi]

Appreciate you.