How I Lost Everything (Twice) and Kept Going (Rachel Hollis Interview) | Ep 880

Summary

Podcast Summary: The Game with Alex Hormozi – "How I Lost Everything (Twice) and Kept Going" | Ep 880

Introduction In Episode 880 of "The Game with Alex Hormozi," Alex sits down with renowned author and motivational speaker Rachel Hollis to delve deep into his tumultuous entrepreneurial journey. The conversation centers around resilience, mindset, the reality of hard work, and the invaluable lessons learned from significant business failures.

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1. Alex Hormozi’s Backstory and Early Failures

Quitting a Promising Career Alex begins by sharing his pivotal decision to leave a successful career in management consulting at the age of 22. Despite owning a condo and achieving what many consider a "rock top" position, Alex felt unfulfilled and feared a monotonous life.

• [01:22] "The whole quitting process took me six months from when I decided that I didn't want to do this anymore until I actually quit."

Facing Family Disapproval The hardest part of his decision was convincing his family, especially his father, to support his choice to pursue an unknown path.

• [02:07] "Quitting the job actually felt like the easy part. The harder discussion was getting my family to be on board with the idea that I was going to quit my job."

Initial Entrepreneurial Attempts Alex recounts his early ventures, including attempts in the frozen yogurt business, test prep, and the fitness industry. Each endeavor taught him critical lessons about partnerships, investment, and the harsh realities of running a business.

• [09:07] "I joined this mentorship for gym owners. I didn't own a gym. I'm also 22."

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2. Lessons from Failures and Resilience

Embracing Failure as a Teacher Alex emphasizes the importance of viewing failures as opportunities to learn and grow. His approach involves continuous adaptation and extracting actionable insights from each setback.

• [07:16] "What the heaviest thing in the world isn't iron or gold. It's an unmade decision."

Mental Framework for Overcoming Adversity He introduces his concept of solving "for zero," focusing on sustaining operations and turning failures into setups for future successes.

• [84:32] "Do more, do better, do more, do better. And we just keep doing it."

Support Systems and Personal Relationships Alex discusses the role of his partner, Layla, in his journey, highlighting how personal relationships can both support and challenge entrepreneurial endeavors.

• [38:02] "Layla picked me up from prison or jail or whichever one it is."

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3. Entrepreneurial Mindset and Strategies

Focus and Specialization Rachel and Alex talk about the dangers of "shiny object syndrome," urging entrepreneurs to focus on one venture to maximize success.

• [59:10] "Shiny object syndrome. Chasing multiple rabbits and catching none."

Volume and Consistency in Marketing Alex shares his philosophy on marketing volume, emphasizing consistent output over chasing viral content.

• [83:32] "If I have a magic wand, and I cut the other 77 and you just did that. How easy would it be to double the business?"

Data-Driven Decision Making He underscores the necessity of collecting and analyzing data to understand customer behaviors and optimize business operations.

• [69:34] "You have to know everything from click to close and from close to renewal."

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4. Handling Criticism and Legacy

Distinguishing Criticism from Insults Alex explains the difference between constructive criticism and personal insults, advocating for focusing on actionable feedback.

• [88:12] "Criticism is a discrepancy between actual and desired... That is an insult."

Overcoming the Fear of Judgment He discusses how accepting the inevitability of being forgotten can liberate entrepreneurs from the paralyzing fear of judgment, enabling them to take bold actions.

• [90:13] "Why should I give them the power to speak over me in my life?"

Freedom of Choice Through Acceptance of Mortality Alex reveals his unique approach of confronting the concept of death to free his mind from societal expectations and familial pressures.

• [93:39] "I will not make content that insults people."

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5. Current Success and Insights

Transition to Investment and Acquisition After multiple business ventures, Alex and Layla transitioned to investment, focusing on companies with high customer retention and sustainable revenue models.

• [56:18] "We started making investments in companies that were, when we started this, it was going to be elearning businesses."

Building a Sustainable Business Model He advises entrepreneurs to prioritize products or services that customers never want to stop buying, ensuring long-term profitability and stability.

• [57:15] "Instead of trying to find a product and then being like, how do I get people to not stop buying this? Just find stuff people already don't stop buying."

Content Strategy and Execution Alex emphasizes the importance of high-volume content creation and the relentless pursuit of execution to build brand authority and customer trust.

• [77:31] "It’s a volume game. And in order to accumulate more volume, you have to allow for time to pass."

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6. Notable Quotes with Speaker Attribution and Timestamps

• On Hard Decisions and Sacrifice

  • Alex Hormozi [01:58]: "The quickest story is that I ended up quitting my... getting my family to be on board with the idea that I was going to quit my job."

• On Overcoming Failures

  • Alex Hormozi [22:55]: "Instead of trying to find a product and then being like, how do I get people to not stop buying this? Just find stuff people already don't stop buying."

• On Data and Business Growth

  • Alex Hormozi [69:34]: "The actual constraint of the business isn't the action you need to take, or rather the action you need to take is to get the data."

• On Handling Criticism

  • Alex Hormozi [88:30]: "Criticism is a discrepancy between actual and desired... That is an insult."

• On Legacy and Freedom of Choice

  • Alex Hormozi [93:39]: "If I can accept that [death] as zero, then everything that I get to do in my life is free range."

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Conclusion

In this candid and insightful episode, Alex Hormozi and Rachel Hollis explore the depths of entrepreneurial resilience. Alex's stories of losing everything twice and his unwavering determination to rebuild serve as powerful lessons for aspiring business owners. The key takeaways revolve around the necessity of hard work, focus, data-driven strategies, and a resilient mindset. By embracing failures and maintaining clarity of purpose, Alex exemplifies how to navigate the unpredictable terrain of entrepreneurship successfully.

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Key Takeaways:

• Embrace Failure: Use setbacks as learning opportunities.
• Focus on One Venture: Avoid spreading yourself too thin with multiple projects.
• Volume and Consistency: Maintain high output in marketing and content creation.
• Data-Driven Decisions: Collect and analyze data to optimize business strategies.
• Resilient Mindset: Overcome fear of judgment and stay committed to your vision.

For those seeking motivation and practical advice on building and sustaining a successful business, this episode is a treasure trove of wisdom drawn from Alex Hormozi’s remarkable journey.

Transcript

[Alex Hormozi]

Welcome back to the game. This is a guest spot on Rachel Hollis's podcast. Main things I talked about in this podcast are the reality of hard work and sacrifice. You can't get around it. Learning from some of our failures and investing in companies in the early days of acquisition dot com. And I also mentioned a little bit, as is the hormozy way talk about death to gain freedom of mind. There is a little bit of my story in this one. And so if you are somebody who's heard my story, then I would, you know, skip for a little bit and then you can get to the me stuff that is not. Not my story that you've probably already heard. All right. Rock and roll. Love you. Enjoy.

[Rachel Hollis]

Okay, so I know this is annoying, but I do feel like we have to give a tiny bit of your backstory to the audience who has not met you before, because a big part. I'll just, like, lead you down the garden path in advance. A big part of what I'd love to talk to you about today is mindset, because what I'm so in love with in your story is how many times it has all fallen apart and that you've rebuilt yourself, because I feel like the world is in a place of really needing that conversation. So will you take the audience on a backstory of how you got to where you are today?

[Alex Hormozi]

Yeah. And I will highlight my exceptional proclivity for finding a way to lose everything. You know, pulling defeat from the jaws of victory.

[Rachel Hollis]

Yeah. Yeah.

[Alex Hormozi]

The quick story is that I was in management consulting out of college, got to what I would consider a rock top experience. Where I was 22. I owned my own condo on, like, a pretty nice high rise, had a balcony. I was looking over the city and I was like, is this it? Like, I'm just. I just do this until I die and maybe marry somebody. And I was like, this feels terrible. And so I quit. That whole quitting process took me six months from, like, when I decided that I didn't want to do this anymore until I actually quit. And I still think to this day that was the most. The. The hardest decision I've ever made, because I think in the beginning, it's like, you. You. You have to forego what you know for something that is unknown.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so you. You can quantify what you have to lose, but not what you have to gain. And I think that's what makes the decision so hard. Now, obviously, on the other side, it's very easy in retrospect. Like, I can't believe it Took me so long. It's like, yeah, but you didn't know.

[Rachel Hollis]

Yeah, right.

[Alex Hormozi]

It's like saying, oh, I should have just, you know, invested into the stock market. For every year, for 20 years, I'd be. It's like, yeah, but every single time you're about to do it, it's like, oh, but it's down now. Or, but it's about to go. Like, there's all this uncertainty. Maybe it's different now, but just for context, for the audience, so that I don't seem more heroic than I am, I ended up quitting my. I'll say quitting my family. Not hardcore like that, but more so. Like, the harder discussion was getting my family to be on board with the idea that I was going to quit my job. More so than me. Like, quitting the job actually felt like the easy part. The telling everybody else that I was changing my life was the hard part. And so I drove across the country, and when I was in it, like, halfway point, I called my dad to let him know that I'd quit my job and that I was gonna do this other thing. And he was like, well, just come over. We'll talk about it. Cause he'd, like, talked me off the figurative ledge a bunch of times over the last however many months. And I was like, I'm gone. And then that's when, obviously, he was upset about it.

[Rachel Hollis]

I feel like that's an important moment to pause because there are a lot of people listening who have these dreams and ideas, but are terrified of the people closest to and what they will say. And I think, because I know your story, I know that culturally it was really important for your dad that you went to college and had this amazing job, and he sounds like a pretty authoritative force in your life. Totally. So did you care that you were disappointing him? You finally got to the place where you're like, fuck it, I'm out, or.

[Alex Hormozi]

Yeah. So the biggest decisions I've had in my life have always been in the face of imminent death or what feels like it. I don't want to go into this like it's a sappy moment or something, but when I say I had, like, that rock top moment, it was. There was a period of time while I was in that job where I just hope I wouldn't wake up the next day. And so, like, there's, like, levels of being sad about things, and I think trying to operationalize sadness, like, what is sadness? It's a perceived lack of options. That's why it feels so hopeless. You Just don't know what to do. There's nowhere to. Like, you're. Like. You just feel very trapped. And so basically, the conclusion that I made was, if I would rather not be alive than what I'm currently doing, one of our dreams must die, his or mine. And so I think my father's dream for my life had to die in order for mine to live. And so I guess upon realizing that, it made the stakes of the decision so much larger. And at the same time, it made my. For lack of a better term, give a fuck around his perceived judgment of the decision. It minimized it a lot. And so that's what allowed me to kind of move forward. Basically, I had to accept the fact that I would be dead to my father for an extended period of time. And so I was like, well, I'd rather be dead to him than dead to me. And I think that's what allowed me to really make the decision. But I basically went into it with, I will accept the fact that he will not talk to me again, and I will accept the fact that most of the people that I know will not. Will not be around me. Now, as you play it out long term, some people come back, some people don't, whatever. But, like, in the moment, I had to be, I think, willing to lose it all on the emotional side in order to do what I wanted to do with my life.

[Rachel Hollis]

It's funny, because I've experienced not the same path at all, but so many times. People will look at the success that I have now and ask women especially, like, how do you convince the people who love you that your dream is a good idea? How do you convince them? How do you convince them? And I'm like, you don't. You prove that you can do the thing you're saying. And then suddenly everyone is like, oh, we always do it. We knew she was gonna be huge. And I'm like, fuck you. Did not. I just feel like so many nuggets in what you're saying for people who are.

[Alex Hormozi]

I'm gonna look up a quote. Yeah.

[Rachel Hollis]

Finding themselves in the same place right now of like, oh, I need to convince so. And so I need to convince my husband. I need to convince mom and Daddy. No, you need to stop putting energy into trying to convince those people and convince yourself.

[Alex Hormozi]

So Epictetus has this really good quote.

[Rachel Hollis]

Let's go, Stoics.

[Alex Hormozi]

He says, if you're ever tempted to look for outside approval, realize that you have compromised your integrity. If you need a witness, be your own. Okay? And so I think to the same degree. It's like, how do I get my husband or my. Whatever, my kids, my cousin, my uncle, that person who I give all the power in my life to, how do I get them to approve of me? How do I get them? Realistically, what you're asking for is permission.

[Rachel Hollis]

Yes.

[Alex Hormozi]

Which means that you're actually not in.

[Rachel Hollis]

Control of your life a million percent.

[Alex Hormozi]

And so I think a great frame for anyone who's in this spot is asking for support, not permission, number one. And number two, being willing to accept the fact that they will not support you.

[Rachel Hollis]

Yeah. Oh, absolutely. And there is a freedom that comes in that it's like, I'm just gonna go do this thing, and we'll see how it turns out. But it does free up so much energy for you to focus on.

[Alex Hormozi]

Oh, it's huge. It's like you have this massive exhale.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

That, like. And everyone who's had one of these hard decisions that's pending in your life, whether it's the quitting the boss or telling the husband or whatever it is, it's like, as soon as you do it, you're like, why did I wait so long? You're like, you don't realize how. How heavy it is. One of my favorite kind of little isms is the heaviest thing in the world isn't iron or gold. It's an unmade decision.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And I think that a lot of people are carrying around too many of them.

[Rachel Hollis]

Yeah. There's a great Tim Ferriss quote that I steal a lot, which is, the quality of your life is often determined by your willingness to have tough conversations. And I think a lot of people listening probably need to have a conversation like that with their version of your dad.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

So you're halfway across the country, you have this call. You're like, peace out. What happens then?

[Alex Hormozi]

Then I show up at a gym owner's front doorstep because I'd found him on the Internet.

[Rachel Hollis]

Why that?

[Alex Hormozi]

Because I. So I had. I wanted to be an entrepreneur. I wanted to start a business. I had three different ideas, so I was either going to do frozen yogurt.

[Rachel Hollis]

I don't know why I laughed. I'm so sad.

[Alex Hormozi]

No, it's fine.

[Rachel Hollis]

It would just be amazing if you were, like, the king of movies right now. Yeah.

[Alex Hormozi]

And I'm. Hey, in a different timeline, I might be. I wish I was, like, in Cincinnati so I could be, like, the froyo king of Cincinnati. Like, I want to have a city associated. Yeah, exactly. Like, I want Frozen Nation. Oh, dude. It Would have been, Actually, if you.

[Rachel Hollis]

Guys do a live event, you should do a pop up like that, because.

[Alex Hormozi]

The insider peeps would know I can talk about Frozen. I know a lot about the business. I really do.

[Rachel Hollis]

No, I've heard you. I've heard you give advice to things. I'm like, okay, you could do this with any category, actually. Okay, sorry. So test prep was an option.

[Alex Hormozi]

So test prep was the. Was the third business. And that one, I was good at standardized tests, so it kind of. And it didn't require a ton of startup costs. And so between the three, I actually was leaning towards doing first. I looked at the froyo thing. I only had $50,000 saved up, and it cost, like $200,000, or at least that's what I found online. And I was like, I don't know if I can do it. And so then I was like, okay, maybe I'll do the test prep thing. I spent, like four months basically creating curriculum and all this stuff, and I was gonna partner with one of my professors from Vanderbilt to do it together. The long story short is that I flew back in, I presented all the stuff, and I was like, so this is what we'll do. And he's like, this is awesome. And then he just took it and.

[Rachel Hollis]

He stole it from you.

[Alex Hormozi]

I don't use those words, but I know he used it, and I didn't have it. And so.

[Rachel Hollis]

Yeah, and you've had some bad luck with partnerships.

[Alex Hormozi]

Horrendous. Yeah. So, yeah. I used to tell Layla that my big red flag with her is that she was into me.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Yeah. I was like, the big thing. I was like, the thing that really throws me off about you is that you like me. I was actually really disheartened at that point because I was like, this was going to be my thing. I had the whole business model worked out and everything. And I was always into fitness. And so that was kind of the third. Kind of third bucket. And, you know, the guys that I worked with were like, dude, you. You do nothing but talk about fitness. Like, we're tired of you talking about fitness. Just, they were like, we'll chip in to help you start a gym. And so that was when I started looking into the fitness business stuff. I found a guy who had a fitness business mentorship, and it was for gym owners. And so I drove across the country, and I showed up at his front door, and he was like, what? Everyone has this idea in the movies that people were like, oh, my God, this is gonna be it. He was Just like, I've got meetings right now. Now you can, like, hang out at the gym if you want. And I was like. He's like, well, where are you staying? I was like, I don't know. And he was like, what do you mean, you don't know? I was like, I just got here. I was like, there's my car. That's all my stuff. He was like, all right, well, you can. You can stay at my place tonight. Which is super generous of him. And so I stayed at his place.

[Rachel Hollis]

What city are you in at this point?

[Alex Hormozi]

I was in Chino Hills.

[Rachel Hollis]

Okay.

[Alex Hormozi]

So I went from Baltimore to Chino hills straight through 36 hours. I packed all my food, didn't stop.

[Rachel Hollis]

You wore the diaper and just. Yeah, yeah, like that astronaut. Okay, great.

[Alex Hormozi]

All in.

[Rachel Hollis]

Cool.

[Alex Hormozi]

Yeah, I didn't wear diapers. I. I just. What I did do, the secret is I just didn't drink fluid. And then it's like, I just got my fluid from the food and call it a day. I'm just being real. I was like. I was. I wanted to. I wanted to leave Baltimore behind me. I was like, this is. I'm going. Yeah, I wanted to go. And so, anyways, I got there, started being basically. I think this is kind of interesting, so I'll bring it up, which is. I joined this mentorship for gym owners. I didn't own a gym. I'm also 22. Just for context here. All right. And this is, like, a lot of old grizzly, like, grizzly dudes, you know, who own gyms. It tends to be the archetype. And I'm like, hey, guys. Some of the best money I ever spent. Because the first time they had, like, a meetup, I was like, yeah, so, you know, I'm trying to start a gym, and I'm thinking about this, and they were like, oh, no, you want to have, like, rent has to be below this. And I was like, well, this is how many square feet? They're like, oh, you don't need that. You need this. And I was like, okay, well, this is the equipment I was buying. They're like, no, that stuff that brand breaks. This one has just great marketing, terrible product. This one, although good girls will slip and break their shins on it. Don't do it. And I'm like, oh, my God. And they're like, oh, you should get. Is these ones. These ones. You can get them at, like, these auctions that are like. So they just. I. I saved, like, $200,000 and probably, like, three years of mistakes from that first, just like all the things that they had made mistakes on, I just was sitting there just taking notes out of curiosity.

[Rachel Hollis]

Were these gym owners who were not going to be in the area you wanted to build a gym? They weren't direct competition. Y there's so much mad value in that. I started as an entrepreneur, as an event planner and I was so desperate I didn't know what I was doing. And I wanted to find other people who would talk to me about the business just like you're saying and nobody. It was like so closed door policy because everyone was terrified of competition, small business stuff, well, it's total small business. But what I ended up finding a wealth of information with were vendors within my industry. So the florist, the photographer, the baker, they all knew the best venues, the best people to work with. Don't talk to these clients. You should be charging them this much. And they became my community. So if you can find that group of people where there isn't inherent competition like readily available, I feel like you can find your gold mine and zooming.

[Alex Hormozi]

Out even one level to push on this. For anybody who is worried about helping a competitor out. I have found that a business will fail or succeed based on how good the business owner is. And let's say that there are three event planning business owners that you know in an area. There are probably like 500 event planning businesses in that area and you probably will never know any of them. And if all three of you help each other, there will just be three good event planning businesses and the other 497 will not have an advantage. And so I would encourage you to disregard the idea that there really is competition. And I now you know, I'm friends with a lot of the people that some people might consider like, I mean like in the M and a world for private equity, it's like we share deal flow. Like hey, this is a company that's probably not as much of a fit for me. Like maybe like you might want to take a look at it. And I think you just get a lot more out of collaboration and I think the world's significantly larger than most people give it credit for. And so.

[Rachel Hollis]

Well also if you're an entrepreneur and you have that kind of scarcity mindset, you're fucked, truly. You're only gonna see the most basic level of opportunity and you're gonna burn out.

[Alex Hormozi]

So yeah, so I learned all this stuff. I spent three months kind of being like a mini apprentice, just like watching everything, soaking it in. The guy who sold the mentorship group just allowed me to be his like ea, essentially working for free or actually getting paid. I got paid minimum wage.

[Rachel Hollis]

Okay. But honestly, I think that's a really good tip for. If you're listening to this and you don't have responsibilities, you don't have a family, and you have the opportunity to go apprentice for someone, it's a gold mine. And you're gonna learn stuff you would never learn otherwise anyway.

[Alex Hormozi]

And I've repeated this process over and over again in my life. And so I think I actually do. I am grateful for the work that I did as a management consultant, which was the first job I had at a college, the one that I was miserable at. But I am grateful for doing it because it taught me the learning process. And so as a consultant, if you want to, you have to like, I'm 22 and I have to go into a room with like four star generals and all these, you know, lieutenants and colonels and all this stuff, whatever. I have to then go present or compile information in a way that has to be better. And some interesting insight that they don't know as 30 year literal veterans of the career, of the path. And you have to do that in three months. And so the process of rapid learning for a consultant is you go and talk to experts and then you ask them every question you can about what they think about everything. And then you say, can you give me three to five other people who you respect, who you think have really good insight on this? And they give you three to five people. And so then you do the same thing with them and then you ask them for three to five people. And so eventually you kind of like map the network of expertise because the same names will start coming up over and over. You're like, I already talked to Tom, already talked to Jack. And then you'd have like 600 pages of notes. And then you recategorize the notes by topic. And then you basically, you take that and then you distill the notes down into kind of the clearest. Like this is what the kind of priorities are. And that's how we would go into how do we, you know, use satellites to kill the most bad guys based on resources, like between different, you know, armed forces, like just wild stuff. And I'm 22.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so I was doing like space, cyber and intelligence for the military back. That was my first thing out of college. And so taking that idea though of like experts already consolidate information for you ahead of time. So no one has A lack of information. It's everywhere, right? The problem is sifting through it. And so when you go to an expert, they've already done a huge amount of the lifting to sift through the information for you so that you can just get the best information as fast as possible. And so that's why I was willing to pay as a 22 year old to go to this gym mentorship thing, because I was like, well, they know more about gyms than I do and I'd rather not waste five years trying to figure it out.

[Rachel Hollis]

If someone's hearing this for the first time, how would you tell kids today to properly disseminate the right expert to take advice from? Because now anybody with a TikTok is like an expert in the field and it's leading people so astray. So how. I know this sounds super basic, but how can you figure out who actually knows what they're talking about?

[Alex Hormozi]

It's a really good question. It's a really good question. I'll walk through how I think about it, which is you have, in degrees of expertise, you have people who, you have your close friends. These are the worst people to listen to because they have no idea. And they'll just give you opinions. And let's say if you're in the wanting to make money space, if they are poor, they will likely give you more poor person advice, which is probably not the good advice. After that, you've got, you know, strangers on the Internet. Above that, you have people who have done what you want to do, which I think is at least the first real foothold into this of like, maybe some good information here. And then you have above that, people who have helped people like you get to where you want to go and have repeatable kind of like metrics around, like how they can do, like how they've helped people do that. And then I think the ultimate version of that is someone who has both been there themselves and helped other people. Just like you get to where you want to go in a way that's measurable, that you can see, like, okay, this percentage of people do this, you know, it works out. And so that's probably from how I would look for vetting. The second thing is a totally different take on this, which is that expect that you will not succeed the first time and that you will need to learn from multiple people in order to kind of make it your own. And the easiest kind of visual of this is like, if you imagine you've got a bridge and you have to like assemble all these bricks on the bridge to get to the other side. It's unlikely that the first person that you talk to will give you, let's say there's a hundred bricks to get to the other side. It's going to give you 100. They might give you 80 because you know nothing. So it's really easy for them to get you a bunch of bricks. But you might be like, wait, but I didn't get a dollar to the other side because the dollar's got to walk away. The cross the bridge, the dollar can't jump. It's got to walk all the way. All the bricks. Dollar has no, you know, no jumping ability. And so, so then it's like the next person you go to, you know, you pay and get help, or you just watch their stuff, whatever, and it's like. And they give you another 10. So now you're at 90, but you're like, man, I haven't. I'm. I still haven't made anything yet. And then all of a sudden you, you know, somebody gives you the last 10, and you're like, this guy's a genius. But really, it's kind of like saying, oh, well, I hate my arithmetic teacher because once I learned calculus, I was like, oh, this guy's an idiot. It was like he just laid the foundation. Yeah, no, but it's ridiculous. But like, we, like, I see it all the time on, like, Internet stuff. Like, I used to consume this guy stuff, and now I consume this guy stuff, and the other guy is bad. It's like, you needed this guy to get to this guy, like the requisites. And so the meta concept for me is directional rather than exact. So I asked myself the question, will this person get me closer to my goal or not? And if it is closer, then I will start walking that direction. When I get a little bit more information, I'll course correct. And I think that that series of approximations is a much faster way than trying to have what I call the fallacy of the perfect pick, which is that people will just stay for years trying to pick perfectly, when really it's like, well, I know it's not that way, so let's go north. And then as we go there, we'll ask more people. And they're like, well, it's kind of this way. And you're like, okay, it's northwest. And then you start working your way towards it. And that's how I kind of wander towards my destinations.

[Rachel Hollis]

Yeah, I actually love that advice. I was just talking to my husband about this. This Morning, he was at the gym and he's like, man, there's this guy at the gym. I see him there every single day, like full on, decked out. Like those shirts with like the very. You probably own one just like total gym, bro. He has all the equipment and his body never changes. I see him every day. His body never changes. And I feel so bad for this guy. Cause I'm like, how do you not realize that whatever you're doing is not working for you? And I was like, oh, that's a great. That's a great analogy for me to talk to Alex about that. What does that self awareness look like to understand I've started on this path. This is year three of doing the same thing. And it's not getting me anywhere.

[Alex Hormozi]

Yeah. It's interesting when you said that, my immediate thought was a different direction. So I'm a circle. Circle around.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

So one what's interesting is that when I have. I have been made a fool of for assuming that my goals are everyone's goals.

[Rachel Hollis]

That's real.

[Alex Hormozi]

And so I so with the guy. Because obviously I have a lot. I've spent a lot of time in the gym. No, personally. And then business wise, what's interesting is that the reason someone buys is not the same as you sold. Not always. And so sometimes people come. I remember I was having this conversation with a lady was in the same position, right? So she's been here for six months. And I'm like, janet, what the hell? Like, you look the same.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

You know, and mind you, she's been paying me for six months. And she was like, I love coming. And I was just like, yeah, but like, you wanted to lose weight, you came here to lose weight. You're not losing weight. Like, you know what's going on. And I was almost a little bit aggressively. I didn't have as much, you know, tacit knowledge of navigating the situations as a 23 year old talking to a 40 year old woman about her weight right after her second child. Whatever. Yeah. And then it kind of dawned on me. I was like, she's not here for weight loss. I sold weight loss because that's what I assume I would want.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

But she was here. Like there's a saying we have in the gym world, which is they come for the bikini, they stay for the community. Right. And so, you know, community is one of the things that someone might want. The other is like some people just like want to feel good, so they just want to get their sweat on and they just want to feel good or whatever. Some people, it's their penance. Right. It's like, I went out last night and I'm going to work out just so I can cancel it out.

[Rachel Hollis]

Right.

[Alex Hormozi]

And that's. That's their version of it. And so I have, over time, been like, if you want to come to a hundred events, then you might be coming for a different reason. And so to the same degree, I think through, like, okay, how a customer derives value from a product or service is their choice.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so it's been helpful also from a product perspective in thinking about different customer archetypes in terms of what their goals are so that we can maximize value across all archetypes. Because if we only solve for the person who just wants to lose weight, there's actually a smaller percentage of people who actually want to lose weight versus respond to weight loss advertising, which is a different thing.

[Rachel Hollis]

Absolutely.

[Alex Hormozi]

And so anyways, that was immediately where my head went.

[Rachel Hollis]

Yeah, I love that.

[Alex Hormozi]

Obviously, I've dissected fitness goals for a little bit.

[Rachel Hollis]

Yeah, no, I love that. That's so real. And it's a really good reminder, too, the idea that not everybody is after the same goals. But I do think I would love your perspective if you're willing to give it on. If you are wanting, you want to raise the revenue numbers you want to do, and it's just not working. But you are working so hard, you're sort of spinning your wheels.

[Alex Hormozi]

Yeah. Typically, at least in a revenue situation. But I would say the same thing for a fitness goal or relationship goal. I think it's more or less the same. Is that so under the assumption, and this is a big assumption, that you are working all the time, which when we look under the hood, I would say that that is not often the case. There's the perception or the feeling that this is hard. And therefore, because it's hard all day, I must be working all day. But those two are not the same thing.

[Rachel Hollis]

What does it look like from your perspective, which I know is gonna be intense, to work really hard, like, no bullshit. What does it actually take from your perspective?

[Alex Hormozi]

Yeah, I'll probably be canceled in the culture that we have today for how I work. I get it all the time. I get a lot of hate for it, which is ironic because I'm like, you don't need to work the way I work.

[Rachel Hollis]

You don't have to do this.

[Alex Hormozi]

You can do whatever you want.

[Rachel Hollis]

It is a very funny thing about. Everyone will ask, how do you do it? How do you do it? How do you do it? And you're like, okay, this is how I do it. And people are like, how dare you? That's not a problem. Like, don't do it then. Don't do it.

[Alex Hormozi]

So I will, I'll give two answers. So the first is that so really tactically, I'll give the tactical answer first and then I'll give the larger answer. So I work seven days a week. I take off days when I feel like I need to take off. I don't subscribe to the 5 day, 2 day setup or even holidays in general. They are almost entirely man made. The weekend system is only in the last hundred years that that was a thing. And so I reject the vast majority of kind of like societal norms for working to the same end. I know that I can work usually pretty well about. I can work twelves, but pretty much straight through. But I would say that I usually work from like 5am to call it like 5. Like 5 to 5 works fine for me. And on the weekends maybe it's like five to three, something like that. And that works well. And if I feel a day where I'm like, man, I like, I need a day, then I take a day.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And that's. And so that's just like how I work. And I've done that for a long time.

[Rachel Hollis]

And I'm gonna guess I'm reading between the lines here. A big distinction is that you enjoy working. Oh yeah, I love to work. Yeah, I love to work too. If I did not have four kids, I would legitimately work 18 hours a day, every single day. And I often believe the universe put me in this exact scenario because it knows that I would have slowly destroyed myself by working nonstop because otherwise, like, when they finally are grown, buckle up. But I think that's the thing that people don't get, is if you genuinely love it, if it's so much fun to do because it is. Assuming you found a path that you're into. It doesn't feel maybe like it might for someone else to go work at the bank. Like it feels like something completely different.

[Alex Hormozi]

Yeah. Someone will take their context and then project it onto your situation and say, I could never do that. That's terrible. And because I could never do that, I have to find something wrong with you and your character in order to make myself feel okay. That I didn't take that step.

[Rachel Hollis]

Absolutely.

[Alex Hormozi]

From a little bit. Also more tactical is I tend to organize my day. For me, I work best in the morning in terms of like, my brain's freshest and so I will work. I call it maker manager time. And so maker time is like there's nothing on my calendar and I make stuff. There's manager time, which is meetings and everything else, slacks, whatever. I think that you cannot mix the two times. And the unfortunate part is if you want to start something, I Recommend Like a 4, 4, 4 schedule. So it's like 4 hours of promotion, which is letting people know about your stuff. Because otherwise like your biggest threat to your business is that no one knows you exist.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

The second four hours is delivering what you promised to those people who find out about your stuff. And then the third four hours is figuring out what you need to do next. Now you can change those four blocks about where you do them. The figure out what to do next is probably the first four hours. The promotion might be the second four hours and delivery might be the third four hours. But fundamentally that's how I would divide it out if I were starting out. And then the more leverage you get, the more you can have kind of more maker time. Like Layla and I have kind of shadow images or like contrast schedules. So I would say four or five days a week for me, I have basically nothing on my calendar. And then I have two days where I just tell our team I was like, just load me up. Just put as many things on my calendar as you can. Because if you think about the nature of management, the goal of a manager is to have no blank space on their calendar and to maximize as, have as many interactions as possible to make as many decisions as they can to move things forward.

[Rachel Hollis]

It's my actual nightmare.

[Alex Hormozi]

And that, but that is, that is like super, like, I mean it's, it's an effective, that's how you manage. Right. And so the, the problem is the alternative is makers, where, you know, a manager has, can have time blocks as small as five minutes on their calendar, where they're, they can move things forward. For a maker, the time blocks are you have like two a day. And so you're looking at four to six hour blocks is one block. And like there's, there's memes about this but like there's nothing worse than a 10am meeting and nothing else on the calendar because it's like, okay, well that's my morning. Because you're not going to like really get into whatever you're trying to do. Right. And so. Because if you're doing maker stuff, you want to lose yourself into the work.

[Rachel Hollis]

Absolutely.

[Alex Hormozi]

And so the problem is when makers, managers have to work together because the Manager says, hey, it's only five minutes. Why is this a big deal? And the maker's like, well, that's half my day. And so you have to protect that kind of at all costs. And so if you're like, well, Alex, it must be nice to not be able to have things on your calendar for many days in a row. First answer, yes, it is nice. Second answer, it wasn't always that way. And so the reason I. I mean, partially that I wake up so early is because I come from the fitness world, and it's just like, I think that habit dies hard. But the guy that I. That I did that little mentorship with, and I came from a job that started at 10am so it was a totally different, like, shift for me. And I got to the gym at 4, so it was a totally different perspective. And so he worked 12 hours a day, and he had multiple kids, but he was a family man too. And so he just figured out, he's like, I need to work 12 hours a day, though. And so he would work four to four and then he would go home, pick the girls up from school, and then have dinner with them and be president and be dad or whatever. And so I would get to the gym at 4. And so I basically just would know that between 4am and noon, I would get all of my moving stuff forward done. And then afternoon, I just knew my day was shot. I was like, I'm just gonna be doing fires and doing everything else. And so I think that split has worked really well for me. And like, to this day now, if for whatever reason, something has to get booked on the calendar and it's like, on an empty day, they book back to front. And so it'd be like, the first appointment would be at like, 4:30 in the afternoon so that I have uninterrupted time until then. And the second one, they'd be like, at 4 to 4:30. And so they book me back to front. And so those few things have helped tremendously for getting things done. The larger. So I said that was gonna be really tactical in terms of, like, the work bigger picture. I think what's really interesting about entrepreneurship is that it is always hard. And I think what makes it hard is that you don't know the nature of the sacrifice that you will have to make to get to the next level.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so a lot of people, myself included, I always. And I still, I always, like, make this fallacious thinking process where I think, like, oh, whatever I have to do to get to the Next level is just more of what I'm currently doing. And it's just. What's hard about the next level for whatever it is, is you have to sacrifice something different.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so the currency changes to get to the next level. So it's like you're paying in pesos, and then you're paying in dollars, and you're like, oh, I have to pay more dollars. It's like, no, no, no. Now you have to pay more rupees or you have to pay more euros. And you're like, wait, I have to pay more euros? I didn't think I would have to give euros up. Like, I have to pay. So it's like you actually, the currency of the thing you pay for changes. And so, like, in the beginning, you know, the first person they have to conquer is you. Right. And I don't think that ever really ends, but, like, you know, you have to get over yourself. And then the next one is like, you have to conquer, you know, not being beholden to the desires of friends and family. But, like, it's a different currency. You're like, I thought it was going to be all about cold calls and advertising. It's like, well, you have to first get over the fact that everybody is around you, doesn't want you to do what you're doing.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Because it reminds them of the risk that they were unwilling to take. But anyways. But it's like, you have that, and then it's like, okay, what's the next thing that's going to. Then you have the mechanics of the business. It's like, okay, now you switch into that mode. You have to learn all this new language, and it's a whole new field. Right. So you start learning that, and you're like, okay, so I think I'm gonna have to learn a new field. Well, you have to keep doing that. But then the next level is like, okay, well, now I have to deal with people. And so you have employees and you have management. You have all that stuff. And you're like, oh, my God. Okay, so this is a whole thing. And then at another level, it's like, then you have legal stuff that starts happening. You're like, oh, God, this. So, like, it just. It does. But the thing is, you have to keep paying in dollars. And then you start now also paying in euros, and then you start also paying. And so it's. And so. And I think that because most people who I've seen who either quit entrepreneurship or what I would consider, like, stop the good fight, they're like, I'm good here. Is that it gets to a level. And I want to be clear, I don't think there's anything wrong with this. They get to a level, like, I don't really want to pay in euros.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And I think that's fine. And I think people mistake my message, and I'm like, I'll talk about what it takes. You can decide whether that's worth it for you.

[Rachel Hollis]

Absolutely. Yeah. God. So good. I have distracted you from this journey many times, but we're on a journey together. I know we're on a journey together, but for those people who are building or don't know the story, I don't want to miss out on this. So how'd you go from working for that guy? No, this is.

[Alex Hormozi]

We're so far from this.

[Rachel Hollis]

No, this is my favorite kind of conversation. Cause we're offering these nuggets along the way, and I'm the one interrupting you. It's not your fault. But how did you go from a Being essentially an assistant to this guy to starting your own gym?

[Alex Hormozi]

So I'll speed run this. So I, you know, I took all the advice that I could. I found a place that was 45 minutes from his place, maybe an hour from his place in Huntington Beach, California. So Chino has done a beach. Like, I'm not competing, right, for that for anyone who's worried. And I didn't have enough money to pay for two rents. And so I slept at the gym, which seems like more hardcore than it felt. I just felt like it was like a fun adventure. I was 20 something. I was like, all right, I'll sleep at the gym. But started the gym. I found out two weeks before the gym happened. I was supposed to have a partner who's gonna be 5050 with me. He backed out. So then all of a sudden, I was gonna have some savings, but I'd already signed the lease. So I was like, all right, so all of my savings are going into this. And so I had basically the $50,000 that I had. Went into the gym, and I had basically no money. And rent was $4,972 a month. And I'd never made money before, not really. I only found this out a year later that I looked at my processing for my first month of business, and what was settled. Post fees, like, not payment plans, whatever. Like, what actual cash was processed was $4,972. No, I found it out a year later. Like, I never. I never. Like, I'd never pull up My processing stuff. That wild.

[Rachel Hollis]

Yeah, yeah.

[Alex Hormozi]

So I slept at the gym and I went to this little thing two weeks earlier that was this new marketing thing that was Cutting Edge. 2013. It was called Facebook ads. And so I went to a two day workshop on Facebook ads in 2013. And that is honestly, like, if I had not gone to that workshop, I don't know if I'd be here now. On one level, you'd be like, well, I would have tried again. I would have maybe. But having a big, massive first loss would have sucked. And so I learned Facebook ads and I started running ads and it worked. And by month nine, I had managers and trainers and all that stuff and it worked out. And by month 15, I had my second location. And every six months after that, I opened a new location. I decided I wanted to do a turnaround business. So I was like, you know, I'm really good at filling these gyms up. I could fill the gyms faster than I could build them. So I was like, you know, it'd be easier if I just went to gyms that already existed and just filled them up and just figured out something around that. And so I spoke on a stage for showing what I was doing with my gyms. And to this day, kind of weird. I've never been more bombarded afterwards, which is weird because it was like, not a huge stage. And I had people for two days around me nonstop.

[Rachel Hollis]

And I got like, was it a conference for gym?

[Alex Hormozi]

No, it was like an Internet marketing conference. And so. And. But there were fitness people there. And I had 120 people give me their contact information. So I've never had this happen. One guy gave me his credit card and just said, charge me and tell me what I get later. And I was like, I'm a gym owner. I don't like. I have gyms. Like, I don't like. I just got asked to speak, so and so anyways, I got home and I called the guy up and I was like, do you really want me to charge the card? And he was like, yeah. So I charged the card for $5,000. And he was like, what do I get? And I was like, I don't know, but I'll make you more than $5,000. And so it just so happened that he had a gym that he was about to open. I was like, perfect, I'll fly out and I'll launch a gym for you. And so that was when Jim lynch was born, flew out to his gym and launched his gym and launched a couple others in the area while I was there, just reached out to people and was like, hey, want me to just send more people to your gym? And the deal is I get to keep the money and you get to keep the customer free. Like, that sounds like a pretty decent deal. And people suggested that I started doing these launches, started working out. The guy that I did that first launch with was like, hey, man, we should do more of this stuff together. I'm a really good entrepreneur. And I was like, oh, cool. I'm young and I have six locations, but I am insecure, and so I don't value that. And so I was like, yeah, I should partner with you. And he said, yeah, but here's the deal. I have, you know, I'm a little illiquid right now. And so, you know, my credit's a bit weird divorce, you know, misunderstanding. You should sign and personally guarantee all the stuff and fund all the new locations, and we'll just split it 50, 50, and then you can also work them, but, like, I'll come behind you and, you know, operate them. So I ended up being like, okay, this launch thing works. So I sold my six, put all the cash into this new, like, launch, and go model where he was going to come behind me. And the first jam crushed the launch that we were going to do together. And one morning I wake up and all the bank account is just empty. And I was like, that's not good. And it was just a deposit straight to him. And I was like, that's weird. And so I hit him up. And I was like, hey, like, what's going on? And he was like, hey, I was just taking my half. And I was like, that was all of it? And he was like, well, I figured you're just skimming. And I was like, so you're accusing me of stealing? I was like, you haven't even been here. Like, first off, you haven't been here. Second, like, what? And so I was like, I'd never been accused of any. Like, I was like, I can't even imagine this. And so I had a mentor who I was talking to at the time. And he was like, might have been a misunderstanding. He was like, print out the bank statement, Go line by line and just show them where all the expenses were. And I was like, okay, I'll do that. So I printed it all out, I highlighted everything, I annotated it, and I went to go meet with him. And I remember being like, let's just figure this out. I've got the stuff. We'll go through It. And he pushed it off the. He's like, I don't need to see that shit. And as soon as that happened, I just remember, like, my stomach dropped. I was like, oh, I just got robbed. And I was like, oh, fuck. Because, you know, I had my. I had six gyms. So, like, it was years of work that went into this new thing, and then it was gone. And I was like, what do I do? Anyways, very stressful time for me. I got into a head on DUI collision, walked away. 60 miles an hour. Yep, walked away. Layla picked me up from prison or jail or whichever one it is.

[Rachel Hollis]

You were drunk. You were drunk.

[Alex Hormozi]

I was drunk.

[Rachel Hollis]

Oh, dang.

[Alex Hormozi]

I was drunk. I was stressed.

[Rachel Hollis]

Oh, wow.

[Alex Hormozi]

I was. I was at a low point. You might. You might consider.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so she was like, hey, you know, we're dating at this time. We're six months into dating, bless her heart. Yeah. And she came with me a month. So a month after we met, I was like, I'm gonna do this launch thing. And mind you, when she met me, I have multiple gyms.

[Rachel Hollis]

Yeah, you're crushing.

[Alex Hormozi]

I'm crushing. Just got off stage. All these people want to do business with me. I'm, you know, I'm the man. And then, you know, fast forward six months, she's coming out with me to do these launches because I wanted her to learn how to do it so that we could, you know, do more of these together.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And she was like, hey, we should. We should go back to doing that thing that worked instead of this whole partner thing. And so Layla went and launched a gym in Hawaii. I had to keep this gym running, but I didn't want to sell any more customers because it was clear that he wasn't going to run it. And so I had to watch the very small amount of savings that I had left go to payroll and rent. But I couldn't generate sales because if I sold, then I'd have to keep pushing out. When I would close the gym. I ended up closing the gym and basically losing everything else that I had at that point in paying for all, like, refunds and things like that. But everyone talks about harder to start a business, much harder to shut one down.

[Rachel Hollis]

Oh, my God. So hard.

[Alex Hormozi]

Much harder. So I had Layla write the checks. I was like, I can't do it. Like, this is years of my work. Like, my whole. Everything I have. And so anyways, we're back at zero again. So that's. You can consider that big failure number one.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so at this Point. We're starting the launch business. And so we're like, we're going to go all in on this. She's like, focus, please. Because I also had a chiropractor agency, a dental agency. I had this launch business, and I had my six gyms. And so when I had the dui, my mentor was like, your stress will kill you.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so from the beginning of this, I said, I only make my decisions when confronted with apparent death. And so this was the second time that I made one of these big decisions, which is I basically ended all my partnerships. So I called up, I was partnered with a guy on a couple of the locations back home. I said, hey, I'm out. And then I talked to the people I was partnered with on the chiropractor and the dental agency, and I was like, I'm out. The problem was that I was the one that was bringing all the business in. And so they're like, well, what are we gonna do? I was like, your half? Yeah, you know, like, figure it out. Those all failed eventually, which was sad. But I was out. We started the new launch business. And so Layla's like, okay, this is what we're doing. I'm gonna get all my friends from high school to quit their jobs and we're gonna go all in on this. And so she got her six friends from high school to quit, all of them to quit their jobs and join us in this. Like, we're gonna launch gyms now. And of course, because I'm dumb, I was like, yeah, we'll go from one to six a month immediately. Cause I was like, we gotta make up for lost time. We would be here if I hadn't been an idiot. So we have to start there. We had one month in between when I basically lost everything and when I'd set up these next launches and when her friends were gonna quit. And in that month, one gym came up and I was like, this is perfect. This will replenish the bank account so that we can fund these new launches. And so a launch, for context, would make about $100,000 in a month. A guy hits me up out of nowhere and says, hey, I saw you speak at this thing years ago. I've got a newborn baby on the way and a two month old, and I need a job. And do you have anything in sales? And I was like, well, I have this gym I'm thinking about launching. And he was like, I can't really travel. And I was like, okay, well, this is where it is. And he was like, that's 10 minutes from me.

[Rachel Hollis]

Oh, cool.

[Alex Hormozi]

Crazy. Like, he met me at not there. Like, just random. I was like, all right, this actually might work. Because he could just. Because it's all day when you're set, like when you're doing a launch, like, it's, you know, 12 hours, 14 hours a day of sales all day long. And so I was like, if I get the 14 hours back, I could build all the materials that I need for this for the real business, and that could be great. And so we launched the location. It does awesome. The guy crushes it. We do $100,000 in sales. But what's weird is that all of a sudden I'm like, where's the. Where's the money? Like, I'm spending money on ads. I'm looking at the payment processor and it's saying successful, but there's nothing coming in. And so I call Heartland, which is my processor. And I was like, hey, like, it's too. My deposits come on Tuesdays. Like, I've been doing this for many years. Like, why is it not there? And they're like, oh, it might have just been like something, I don't know. It'll come in next few days. Didn't come next Tuesday, nothing again. And I was like, okay, it's been two weeks. Like, what's going on? So I called back up and they're like, oh, the person you talked to probably didn't know we're doing an annual review of accounts. And I was like, I've been with you for like five years. Like, what do you mean annual review? And they're like, ah, it's just a new policy, blah, blah. And I was like, okay, so now the next Tuesday hits. And so there still hasn't been anything. This is now Christmas Eve. And I'm now at Leila's parents house because I've lost everything and I'm a winner. And I get on the phone with them and I was like, I am not getting off the phone until you send me the money. Like, I was like, it felt weird being like, it's my money. Yeah, but like, it was my money, you know, like, just take your fee and deposit it, whatever. And they were like, well, we've seen some irregular activity. And the issue was one, we'd done all those refunds at the gym that I had had that I had to shut down. The second issue was that I was processing payments for different states and areas out of my local gym processor. But I didn't know how this worked. I was 20 something, right? So I'm processing transactions in Virginia in a gym in California. And it just didn't make any sense. And so they were like, we're going to shut your account down and we're going to hold on to all of this for six months. And I was like, that's. What do you. What do you. How. I was like, how is this legal? Like, I was like, this is like theft. I was like, just. I was like, if you need to keep some of it to cover whatever, like, fine, keep it. But like, give me, like, give me, give me half. Like, give me something. And they said no. And so at this point, I had $23,000 left in my bank account from the launch that Layla did to cover our asses during all the refund period. I owed $22,000 in commissions to the sales guy. To the sales guy for sales that I had not collected on.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so it was kind of one of these, like, moral, like, what do I do? And so I sent him $22,000 because he was with the guy, the kid and the baby and whatever. I just didn't want to give myself the opportunity to not. I just was like, just send it. That was the screenshot that I have $1,000 left in my bank account in December of 26. Sorry, December of 2016. So I still have that screenshot because I was like, remember this?

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so that was tough. That was the second time that I kind of lost everything. Big mistake there. And then. So then, you know, Layla has all of her friends quit their jobs, but I have no money, so they all quit their, like real jobs to do this with me, and I have nothing. And so this is when I told Layla that I thought that she should probably leave me. It would be a wise choice. I was like, this is probably not going to go well. Statistically, this is really low likelihood. Like, I can appreciate, like, I still have some brain power. Like, I don't think this is going to work. But I was like, but I'm not, I'm not. I'm going to do it, but I don't think it's going to work. And so I still had my gym credit card that had a hundred thousand dollar limit on it. I went to go turn on the ads because it was for New year's. So it's 26. This is Eve, right. I was like, we can make it all back, you know, like, come on. And so we're, we're. So here we are. Were. So I turn on all the ads the next Day after getting off the heartbreaking call on the 24th. On the 26th is when I turn all the ads on. And I was like, I'm going broke at $3,300 a day of money that I don't have to make this work because I have six guys, hotels, airfare, per diem's for food, and then marketing spend for the location every day. And that was shoestring. Like, those guys were living in hovels. I'll just be honest with you. Like, they were young dudes, too. They. They stuck it out. But within the next, you know, month, we made exactly the amount of money that my credit card bill was. So I basically broke even. But, like, we had payment plans that were coming after that. So I was like, okay, this could work. The next month I. I made like an extra. We did like $100,000 the first month. The next month we did like 170 or 80 or something like that. And I was like, this might work. I made like 30 or $40,000 in profit. Like, holy hell. Like, this will work. The next month we did another. A little bit more and made a little bit more profit. I was like, this. This could be a thing. But then all of a sudden, Layla hits me. Like, she. She taps my shoulder one morning, I'm working early, and she was like. She just turns her laptop towards me. She was like, what's this? And it was just. It was just like this never ending waterfall of negative transactions. And I was like, what's going on? And so it turns out that the gym owners that we had sold all these people into, we had one guy get on a chair inside of his gym and just say, like, this is too many people. I can't handle this. Just refund and go home. And we'd already left the gym. Like, we'd already launched the gym, filled it up, and our guys at the next gym. But, like, the way business works is that you don't run 100% margins. And so if you have to refund 100% of your sales, you had costs. Like the credit card company will take 100%, but you had costs that you spent that you don't have that money. So that happened. And then Ward got around, and then the second gym owner did that as well. He did a little bit more cleverly. He said, hey, I saw how much you paid that guy. I'm the one delivering the service refund with him. You can sign up for me for half after I already paid the price of basically the cost to acquire our customer paid the commissions paid, the marketing paid, the hotel for the sales guy, all that stuff. And so I learned a very important lesson, which is that you need to control the money and the delivery. And so that was my big lesson there.

[Rachel Hollis]

Yeah, I just heard. I've been listening to your stuff forever, and I just heard this story the other day because I was listening to the audiobook. No, no, the audiobook from the newest book. And I was like, oh, my God, how many times have they been wiped out? Ye Such, like, brutal inside of it, but such a superpower. Like, if you actually look. Because I think about this with you guys from, like, this was not that long ago to where you are today. And I think you have this super skill of moving fast because you've got your ass kicked so many times. And the difference is you're standing back up, you have the knowledge of why it went wrong, and you're moving forward at a quicker pace. But how the fuck do you stand back up the. I don't know, millionth time you feel like you've been screwed over.

[Alex Hormozi]

Yeah, I think it's always been looking at the don't I call it, which is like the. The other path. So I saw. I teach this with sales, too, which is that, like, someone will present with some sort of obstacle. And a lot of times it's like, I mean, you can obviously overcome the obstacle, but I think it's a lot more powerful to be like, I understand this is your concern, but what about all the other things you could do that aren't this? And it's just selling against the don't. It's like, so like, the biggest competitor in fitness is not the guy down the street. It's the couch. Like, that's who you're competing against. For me, like, in these situations, it was like, this sucks. But the alternative is what? Like, I stop and like, that was just, like, not really an option. I used to repeat this stuff to myself a lot, which is like, you'd be amazed what you can accomplish when you have no choice. And so it just, like, wasn't a choice. It wasn't on my. On my. My menu of things that I could do.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And I was like, I'll just try again. You know, I'll just try again.

[Rachel Hollis]

Yeah. In 2020, I had. My business was based on live events, which is a brutal time.

[Alex Hormozi]

Mine was on gyms.

[Rachel Hollis]

Yeah, Great, great. Had 60 employees, had, you know, four huge events on the docket for the rest of 2020. And just slowly, yeah, just absolutely wiped out. And truly swear To God. The reason that I could stand back up and go again is for kids. I'm the person who supports my family. Like, these are my kids. I gotta take care of them. There is no other option. Because there is a sort of wounded part of me that would've loved to just been like, fuck all this. I'm gonna take what I have and go, I don't know, live on a farm and just be okay. But that. That, like, you gotta. You gotta find something in you. And honestly, if you don't have something that's easily accessible, create something. Create something in your own mind. Create an enemy. Like, prove the girls from middle school wrong. Like, prove your parent wrong. Like, do something to make yourself stand back up. Because it's like, God, you might be so close to a breakthrough, and if you walk away now, you're never gonna know.

[Alex Hormozi]

Yeah. I see a lot of it as, like, chapters in a book. We're like, this isn't where I want the story to end. And so we just get to. It's like, I think if you continue, it's like, I'm just gonna keep writing. Like, we're just gonna. We're gonna add another chapter and another chapter has. And here's the interesting thing, is that regression to the mean is normal. So, like, if things are good, it's likely that there'll be less good in the future. Yeah, if things are bad, it's likely there'll be less bad in the future. And so I'm like, okay, well, things are. I mean, it's hard for things to get worse than this, but, like, you know, I have high probability that it'll get better.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And I think Joe Rogan has this really great way of framing it, but it's like, a lot of video games, you kind of, like, wake up as a character and then you have a backstory, but then it's like, at that point, you decide what you want to do with the character.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so in a lot of ways, it's like, this is just my backstory. And in a very, like, weird, you know, weird, woo woo way, it's like, the past doesn't exist. And so if I had started at zero, I had already started at zero before, and I've started at zero multiple times now. And so it's like, I know what to do because I've been at zero before, and I was really excited the first time. I was at zero. Why should I be heartbroken now?

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Except now I have way more experience than the kid did in the beginning. So I probably have a way better shot than he did. And he was stoked, so why shouldn't I be stoked?

[Rachel Hollis]

Yeah. That's sick.

[Alex Hormozi]

There's a friend of mine, Brett Castillo, you might know her. She asked a really good question on, like, bad situations, which was like, how could this be awesome? So it's like, I'm about to get divorced. How could this be awesome? I'm about to get sued. How could this be awesome? Like, in what storyline or what timeline would this terrible thing be awesome? And what do I need to change about myself and my surroundings so that. That becomes the pivotal moment to basically become the foundation for the next thing?

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so, yeah, I'll close the loop for everybody. We ended up basically having to make $150,000 in profit in the next 30 days. And I never made $150,000 in profit ever, in a month. I worked 48 hours. Asked Layla said, you know, she was. Had these side clients that she was doing fitness with because she had a personal training business before that, and that was basically paying for the groceries. Layla was basically supporting. So, like, Jim Lodge was making all this revenue, but, like, no profit and, like, making money, just losing everything. Making money, losing everything. And. And I was like, how long does that take you? And she's like, I don't know, four hours a month. She's like, why? Because you thought I was, like, attacking her. And she's like, why? Like, hey, it pays for her food. And I was like, I'm not. I'm not saying it's bad. I was like, four hours, that's not bad. You're making four grand a month? I was like, you know, four hours. 40. I was like, if we did 40 hours, it'd make 40 grand, you know, a week. That's not bad, right? And so I, like, took a bunch of prescription stimulants and, like, didn't sleep for two days and banged out, like, one of the best sales letters.

[Rachel Hollis]

Adderall.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

Oh, my God.

[Alex Hormozi]

One of the best sales letters ever written. And it was. And it was. It was Layla's story of how she lost £100 and then did a fitness competition. She was like, this is ridiculous. She's like, this is so heart wrenching. And you don't even know my story. She's like, I would, you know, I was like. I was like, my thighs are rubbing together because I was overweight. And I was like. And I would always wear the coverall, like, when I was on the beach with my family, because I didn't Want anyone to see. And I would always be on the edge of pictures. I just tried to think of all these, like, terrible moments. Anyways, I started running ads to it. She started. We just started doing sales and doing, like, a thousand bucks a day in sales. And I was like, okay, at this point, we had eight sales guys. Because I had to sell more to start to. I had to keep selling more every month to cover the refunds from the month before of these gym owners who were doing this. I didn't know a way out.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

So that was how I was. I started doing that, and then that's when it was actually really stressful because I was like, I have to just keep selling more to cover refunds from the month before. Like, this is not sustainable. And so that's when we started doing this thousand bucks a day. I was like, great. I take the eight guys, bring them in. We can do 8,000 a day. Almost all profit. We could get $150,000 of profit. So I got really excited, and so I ate more gyms that were supposed to launch the next month. And I was calling them up, and I was like, hey, like, we're out. We're changing our model. Like, you know, wish you the best. And that's when, you know, I said, I'll just. I'll. I'll show you how to do it, rather than me flying out there and doing it myself. And. And then the guy was like, well, how much? And I said, I just picked a big number because I wanted to get him off the phone. I was like, $6,000. And he was like, 6K. He was like, done. And I just remember. I just remember, like. Like, floating out of myself, being like. Because I'm used to selling memberships here. Like, I'm used to making 300, 400, $500 sales, $200 supplement sales. Like, that was the. So me adding me 10x or 12xing, what I'm used to collecting was like, just, like, an unfathomable number. And you said, yeah. I was like, holy shit, six grand. And I had seven more calls that day. So then I was like, okay. He's like, well, when do I get my login? And I was like, it was Friday. I was like, Monday. And so. And he was like, okay, cool. Called the next guy, same conversation. And he was like, how much? And I was like, eight grand. And he was like, yeah, done. And I was like, holy shit. And so by the end of the day, I collected $60,000. And I was like. And Layla came in from Doing all these sales, doing weight loss sales. I was like, how's your day? She got so two for two. And I was like, that's awesome. And I was like, I think. I think we're still in the gym business. And now, now she's like, you just told me, you just told me we were going all in on Queen Transformation, which we called it. Like, you heard this whole sales letter you sold me on how we're not doing the in person thing, we're doing the online thing. And I was like, yeah, I think we were just doing it wrong.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

I then called back all the 30 plus gyms that I'd done turnarounds for and was like, hey, remember how I just made 100 grand out of your gym? And really upset about it because I'm just some kid and you're an experienced gym owner. And I still filled it up. Want me to show you how I did it? And they were like, yeah. And so I just went back, got 30 more sales, and I was able to cover the $150,000 and basically refunds I was going to have to pay for within 30 days and got like back to neutral, back to zero.

[Rachel Hollis]

Yeah, I was, I was, I was.

[Alex Hormozi]

$150,000 poorer than zero. Yeah.

[Rachel Hollis]

Just wanted to get even.

[Alex Hormozi]

And so. Yeah. And so then. And then that's when. That's when Jim Mulch took off. And so that's when it. So I'll give you the. I'll give the rest of the story is the is. Is. Is less fun. Less. It's like we went from, you know, zero to four, four and a half million a month.

[Rachel Hollis]

In the fact that you just said it's the less fun part.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

I mean, that probably says something about your psychology, but actually this is the, this is the victorious moment, is that it went on to be very successful. You guys launched a supplement brand as well. Did you sell both of those? Are you still retained? Yeah. Okay, so you sold those together. Now you're an acquisition. Will you tell us a little bit about that?

[Alex Hormozi]

Yeah. Hopefully the audience is bored of tears yet.

[Rachel Hollis]

Are you kidding? They are peeing their pants right now. They love this conversation.

[Alex Hormozi]

Layla and I had probably taken about 40 million in distributions from gym launch during the time that we owned it. And then the sale was 46. And so we had a decent enough amount of money to start like a family office. Well, from, from, from investing perspectives, like, that's small. Like, you need about 50 to like really start a true family office.

[Rachel Hollis]

Got it.

[Alex Hormozi]

Otherwise it's like Fractions different. You know, I mean, we're like, I think we can, we can do this. And so we started making investments in companies that were, when we started this, it was going to be elearning businesses to try and basically run the same playbook that we did with jumaj. It turned out that was not a good model for a variety of reasons. We have now just transitioned to taking larger and larger stakes in companies and we now really just look for revenue retention, which is the only thing that we really care about. And then because we know how to do the marketing, sales. And so it's like we just want to find products or services that people never want to stop buying.

[Rachel Hollis]

Right.

[Alex Hormozi]

And I will tell you, for anybody who's listening to this, one of the big pieces of advice that I can give you is that instead of trying to find a product and then being like, how do I get people to not stop buying this? Just find stuff people already don't stop buying.

[Rachel Hollis]

Yeah, it's a lot easier.

[Alex Hormozi]

It's like if you're like, I promise you that there is nothing that you can do to a gym membership to get someone to stay more than their insurance or their Internet. Yeah, it just like just. Yeah, it's just, it's just the, it's the dynamics of the, of the service or business and so. And that, that, that took me probably like two years to learn. Yeah, so there's, you know, two years and in one minute.

[Rachel Hollis]

Well, and I think elearning in a lot of ways, I know this is going to feel maybe harsh for people who are in the elearning business tends to be trendy. So certain things will spike and become more popular. Yeah, become more popular. Something that blows up in 2020 or might not be relevant in 25. And I've heard you guys talk about that, that you're interested in businesses that are retaining profit, not just hitting a certain revenue goal which is so crucial. So that's the big learning in the last couple of years. How long have you guys been doing it now?

[Alex Hormozi]

The first deal was 2020.

[Rachel Hollis]

Okay, okay. So it's been a, it's been a.

[Alex Hormozi]

Hot minute, I would say. Investors usually are like 10 year cycles. So I'm like halfway through a cycle. Basically learned, I mean, learned a lot. Most of the things I learned will probably not be interesting to the audience, but.

[Rachel Hollis]

But yeah, let's steal some mindset, right? Yeah, no, no, no. I would love to steal a bit from your brain too because I've heard you now and I really want to encourage the audience. Your podcast is fantastic and I feel like you guys do a great job of doing so many different types of content, which I love, because it's not all going to be relevant to every type of business owner. But what are some of the biggest mistakes you see new business owners make or the most common questions you get in that from the newbies?

[Alex Hormozi]

I'm pumped for this. Great. So there are five that I see that happen on a regular basis.

[Rachel Hollis]

Great.

[Alex Hormozi]

And they come from apparently impossible choices, overcompensation of employees, structurally. It's like, for example, I've got people at my chiropractic clinic and I pay the therapist 50% of revenue. Tough to scale, underpriced my facility. I'm using brick and mortar. But this works for you. Could be digital. Doesn't really matter. I'm at capacity and I'm not making profit.

[Rachel Hollis]

Yeah, you're not making profit. That's a pricing issue. Yeah, a million percent, but.

[Alex Hormozi]

And with each of them, though, there's an apparent rock and hard place scenario, though. If I pay people less, I'm gonna lose all my therapists and I'll lose my business. If I raise my prices, I'm gonna lose all my customers. Right. Like, and next one is woman in the red dress. So more commonly known as shiny object syndrome. Chasing multiple rabbits and catching none and spinning your plates because. And if you at least backtrack into the story there, like, I had a chiropractor agency, a dental agency, I had six gyms, and I was doing a launch business. I made no money. I mean, I made revenue, but I didn't have enough attention to go deep enough on anything. So all I was doing was pure fires all the time, which is one, a miserable existence. But two, you just make way less money and the guy you're competing against who's beating you is only doing that.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And that's the thing. And I think it's actually, believe it or not, I actually think it's arrogant to believe that you can do multiple things and beat somebody who's only doing one.

[Rachel Hollis]

That's so real. I'm on a book tour right now and I do a Q and A at the end. And this woman stood up in, I want to say, Toronto. Toronto. And she's like, I have a business and I'm doing this and I'm doing this and I'm doing this and I'm doing this. And I was like, can I tough love you right now? Yeah. And I said, you don't have a business, you have a bunch of side hustles. None of these things are connected. You got to pick one. You got to go all in, and a lot of people need to hear that. I've never thought about it as ego, but you're exactly right. Like, why are you the one person who can successfully navigate 10 businesses at once? Of course you can.

[Alex Hormozi]

Well, Elon does it, and it's like, well, he has a million staff members, and he. Yeah, we won't even talk about it because he's an alien, and so it doesn't really matter, but, like, for all of those mere mortals and this. I'll tell you, this little framework. So if you're like, well, Elon did it. It's like, well, did you, you know, drop out of whatever Ivy League school that you. He dropped out of and then code from scratch, zip 2 when you were 21? No, you didn't do that, so you're probably not Elon. Yeah, well, I'm going to be the next Warren Buffett. Did you buy your first stock at age 7? Did you make a huge purchase right after Pearl harbor got bombed? When you thought the nation, like, when people didn't know if America know Charlie.

[Rachel Hollis]

Munger, like, do you. No, you are not the same.

[Alex Hormozi]

No, it's just like, okay, I'm gonna. I'm gonna have a Holdco, and, you know, I'm 30 years old.

[Rachel Hollis]

It's like, with love, let's be real. I say this with so much love, and I'll take this on myself, too. If you were a phenom, we'd know it by now. Yeah, if you were a genius, we'd already know. So just assume that you're gonna work hard like a lot of other people and find a way. If you were those people, we would already know. There's this great quote. I was a little nervous. I was on my run this morning. I was like, jesus, I hope I don't accidentally quote Alex to Alex. I listened to so many podcasts, but I heard this thing the other day that was like, if you're the guy, you don't have to tell anybody you're the guy. Like, if you're her, you don't have to tell anybody you're her. We already know. So, yes, good advice. You're not Elon. So pick one freaking thing.

[Alex Hormozi]

The next is over. Expansion. I just opened my second location, and I'm just talking brick and mortar terms, but this applies for everything, and it's almost like the shiny object one, except the businesses are interrelated, and it was the correct next Step just not now. And so typically, over expansion is actually a function of being under talented.

[Rachel Hollis]

And so, yeah, someone just got punched in the stomach right now. Someone's just like, oh, I needed that.

[Alex Hormozi]

And so. And when I say under talented, there's two. Two components of that. One is there's you. Right. The other side of it is that the talent on your team is just insufficient. And so, like, could you have gone to the second location? Could you start that second product line or the second service line? Absolutely, if you had enough bandwidth for you, which you can only get back with somebody else who's good. Right. And so that's. It's usually a who issue for over expansion. Number five is you're serving too many different types of customers. And I want to be clear, it's super normal in the beginning for you to have one qualification for a customer, which is credit card and pulse. So I guess that's two very normal. The problem is as soon as you start selling a little bit more, you're like, oh, my God, I have to. Like, I have so many different things that I have to deliver. And this guy's a little bigger, this guy's a little smaller, but my product's not that. Whatever. You have to pick. But. And obviously this, again, these are rock and hard place scenarios, but this is half my business is this type of avatar. At some point, I'm fast forwarding a little bit, but usually it's between 1 and 3 million is where you have to start being like, I have to be narrow on my avatar. And the fear is. And for each of these, the fear is logical and also wrong. And that's what's really interesting. So Rory Sutherland, big marketer that I love, he's chairman of Ogilvy, he talks about psychological and logical solutions. And so, for example, if I want people to like the elevator ride better, so people complaining, for example, that the elevator ride is too slow, slow, you could then think, okay, we'll have to reinstall a new elevator that has a bigger engine and make it go faster. Right. And that would cost us lots and lots of money. An alternative is just put mirrors inside the elevator so they can stare at themselves and no one notices the fact that it's slow. Psychological solutions. And so what's interesting is that, like all logical solutions, if you have a logical problem, sometimes you have to use a psychological solution rather than logical ones, because the logical ones have already been tried and don't work.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so when you have the apparent rock and hard place, there's usually A different way around it, which is that, like, how could this be awesome? So what if when you change your compensation structure, your team feels more at ease because the business actually has a profit and has a chance for expanding so that they can have a career path? Yeah, what if that was how you positioned it? Which is, I've walked, I've had to do this myself. But also for other people. If you're underpriced, it's like, well, what if when I raise my prices, I attract better customers and because I have more profit, I can attract better talent and I can ultimately provide a better service and they're lower maintenance and like, all of these things cascade down from this higher price. If I focus all of my attention on one thing. I remember I met a business owner who was telling me, I don't call it all the businesses he had, and I was like. And I knew roughly, I think, how much money he was making, and it was not a ton. And I think he had 78 things that he was involved. It was the biggest thing I've ever seen. And he couldn't name them all. And he's like, I have an Excel sheet that has them all. And I think he was doing about eight figures a year, which I know some people were listening to. This is like, oh, that's a lot. I promise you, between 78 businesses, doing that would be unbelievably stressful. And who knows what the profit is, right? And so then I said, if I had a magic wand, and I said, which of these 78 is the one that you're like, this is my baby. This is the one that I think could go all the way. I was like, do you know which one it is? He was like, yeah. And I was like, if I waved a magic wand and I cut the other 77 and you just did that. I was like, how easy would it be to double the business? He's like, oh, my God, I could do it in my sleep. And I was like, then why don't you do that? Yeah, that's like how you handle that one. The over expansion is. And this is the tough one, you either got to. And it usually happens at that. That same like, million, 2 million ish level. And I have a theory around it, which is that if you think about the cost of talent, right? So let's say you have a 20% margin business and you're doing a million dollars a year. So you're making $200,000 a year in profit. You either have to work double time or you have to not have a profit and bring someone in who's really good. Those are basically your two choices. And they're both tough because.

[Rachel Hollis]

Open a second location. Yeah, right.

[Alex Hormozi]

And so like that's, I mean by the way, this is why you get compensated as a business owner. Outsized returns because you take outsized risk. That's why we get paid what we do, because we're willing to lose it.

[Rachel Hollis]

All right.

[Alex Hormozi]

And so but it's, it's based, it's usually right at that size 1 to 3 ish because your margin is almost equate, equates to one or two good employees. And so you have to make this bet and, or you just work like crazy. It's one or the other. And so when you're in that over expansion area, it's like you just have to work like crazy and then train someone up or you have to bring someone in and then obviously they can, they can help you take it over. The third path is that you just accept the fact that you don't have who you need. You cut the, cut the short term loss for the long term gain so that you can get the one location or one product or service. Right. So that I like this framework of cloud scale zero, which is like every business that I've had that's been exceptional has been a business that I didn't start to become a business. They became, they were things that I just was like, I'm just going to make some money. And then, and I don't want to work a lot. And when I do that. Because you actually solve for zero ahead of time. And so you're like, I'm solving for something that is super profitable. That doesn't take a lot of time. It's like, well shoot, then why can't I do a ton of that? And that's what ends up happening. Whereas every time I've been like, I want to just build a huge business, I was like, I end up building something that doesn't like actually work.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so it's just very weird that every time that like when I look back on my life, the times that I've like, I've had to make money or wanted, you know, to make money and not build a business is when I build a business, when I build a business, I don't make money.

[Rachel Hollis]

Yeah, yeah.

[Alex Hormozi]

Just kind of like interesting. So that, that's solving the over expansion issue. The avatar issue you solve with data, which is you look at all the customers you sold up to this point and you're like okay, look at the top 10% and say, what did these people have in common? And so I think about it in terms of demographics, like, what do they look like? Where are they from? I think about it in terms of psychographics, which is like, how do they think? What are their beliefs and values? And then I think about actions. So what things did they do while a customer that other people did not do that caused them to be successful? And so then I start selecting for those people in the advertising and the offer so that we just only get those people. And so if you're in that spot, my recommendation is you don't have to kill your business. Just start advertising only to the one avatar, which is usually the higher up avatar. I'll just give you the code. It's probably the guy who's. That's probably the one that you have fewer of, but that are better. It's probably that one you advertise to them. And what happens though is that you will still get the, the minnows that are coming, but you'll get a greater proportion of the better ones by just saying, I'm only working with these better ones. And you can basically slowly shift the percentage of the pie so that a smaller and smaller percentage are minnows until eventually you can, you know, maybe when you're at 80%, you just say, I'm not taking minnows anymore because of distraction. I just want to work with whales.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so that's the transition there. The bonus sixth problem that small business owners have is no data daddy, as I like to call it, which is that they don't know anything about their business.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so, I mean, if you've seen like Shark Tank or anything like that, like the thing that they always tell her was like, just know your numbers, because you can't. If you don't know what to do, it's because you have no data.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so the actual constraint of the business isn't the action you need to take, or rather the action you need to take is to get the data. Because when you have really clean data, the, the, the next step actually is usually pretty obvious. So you look like a genius from the outside because you're making these good decisions and the business continues to grow. But you know that deep down it's just because you collect good data.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so it's like, you know, you just, you should be able to know what happens from click to close and from close to renewal. And you should know what all of the metrics are between those steps. And I mean, at the most minute level, because that's where all the alpha, to use an investment term like, that's where all the huge gains in business growth come from. It's like, okay, let's say we've got, you know, a 2% CTR on our ads. Fine. We've got a 20% conversion or landing page. Okay. It's a little bit low, but fine. And then we've got a 7% schedule rate. We're like, ooh, okay, well, we could probably go from 7 to 30. And if we did that, we would 4x the business. Ooh, that feels like that's worth tackling.

[Rachel Hollis]

Right?

[Alex Hormozi]

Right. But you're like, I don't know how to do it.

[Rachel Hollis]

You don't even know. That's the thing. It's like, I don't know what to do because you don't know what the reality, you know, where the holes are given. Just to break it down to a basic level in case people don't know some of the, the terms that you're using. So I'm imagining like you own a small town coffee shop and you, you know, you've done your best. You're, you're, you're just getting things done. You're making sure there's enough coffee. Are the muffins there? You're just doing the, like, the things of running your business. But you hear you talking right now and you're like, I don't. What data? What would I need? So, for example, what is the average, what's the average tally for each customer that comes through? You know, if you're like, oh, I have no idea. Okay, well, if you have no idea, you don't know how to improve those numbers. So if you find out that the average person who comes through spends $6 and, well, here's a easy hack. What if I train the people who are at the cash register to ask if every single customer would like a muffin to go with their coffee? What's the percentage of people who increase? And suddenly it's 10, 50 per person and you're increasing the value of that interaction. But if you don't have those specific data points, you don't know what to push on again. I was at this mastermind this week and they would do hot seats. So people were, you know, talking about their business. And I'm not in the mastermind, I'm just there as a, as a speaker. But every person who would ask, they'd ask questions to, they'd say, you know, how much did he make? Last year. And they'd say, we did between. And I'm like, you don't know your numbers. You didn't do between. An entrepreneur knows exactly down to like, oh, man, we really wanted to do 2 million, but we did 1.73. Those are our numbers this year. There's no between. The average person pays almost. I'm like, girl, you don't like. You're stretching. So knowing that kind of information, like you said, helps to figure out what to actually move against. Like, for instance, if you can get, if you can book 20 calls and you know for a fact that you're really good at closing, you can close 50% of those customers. So great. If I get more calls, can I close more? Just for anybody who didn't understand, this is great.

[Alex Hormozi]

And for. I'll just say that for. If you're, if you're sub a million in revenue, the answer is almost always more. And there's a math reason behind that. And so, like, improve, you know, because if you're submillion and you are actually, you know, making. You are making sales and you are making a profit, you have priced it such that you haven't. You're not selling $5 bills for $4. Let's assume that that's true here. All right, if that's the case, I'll give the simplest example I can, which is that. But if I have one salesperson who works for me, and let's say that guy does outbound and he generates, you know, business for our IT services, whatever, I could probably try and take his close rate from 30% to 40%. I could probably do that. How much time would that be? How risky is it? How likely is it to happen? We can go through all that, but it would probably be better to just hire a second sales guy to do the outbound. Cause that would have a high likelihood of doubling my business. Now later on, when you have 20 sales guys, you then have to see, okay, if I'm at, you know, we're at 30 to get to 40, okay, that would be a 33% improvement in revenue. If we made, if we just got everybody to go from, you know, 30 to 40, okay, that sounds reasonable. But the alternative would be to get that same increase with 20 guys that have to hire seven more sales guys. And so then you look at the risk adjusted return from each of those actions and say, okay, well, I think there's a higher likelihood that I could just improve the sales guys from 30 to 40. Then onboard hire train, recruit seven more productive sales guys. That are at the same KPI as the rest of the team. And so you'll actually notice that it's a little bit like a pinball or like an accordion, where it's like, you'll do more and then you do better, and then you do more, and then you do better. But in the beginning, you're usually just not doing nearly enough. And I'll give you this little ism that I end up repeating a lot, which is that volatility is a symptom of low volume. So if you're like, man, you know, it's word of mouth. And I. You know, I get. I get a sale every. You know, every every month, I get one or two sales that come in. So the reality is that there's a certain amount of advertising that is occurring. So a certain amount of people are telling other people, a certain amount of posts on Facebook, a certain amount of outreach attempts that you make are creating one to two sales per month. The businesses that are doing one or two sales a day are doing that amount of advertising activity per day.

[Rachel Hollis]

Yes.

[Alex Hormozi]

And so I'll tell you the story. Cause I think it'll resonate with the audience. So when I was younger, when I started my gym, and there was a period of time where, like, lead costs went up because some Facebook change, whatever. I talked to a mentor of mine, and I said, you know, how are you advertising? And he was. He had 22 locations, and it was tanning stuff. And he said, I use flyers. And I was like, okay, I'll use flyers. I'll try that. And so I printed out flyers, and I put 300 flyers out on cars or whatever. And, you know, I waited to go collect my money, and one guy called, and he said, are you the guy who put the flyer on my car? And I was like, yeah. And he was like, you dinged my Mercedes? And then I was like, ah. And I hung up. I just like. And he never called again, thank God. But anyways, I called my mentor back, and I was like, hey. And he was like, hey, how'd the. How'd the flyers work out? And I was like. I was ready to, like, give him, like, a talking to. I was like, it didn't work, huh? You know, like, what are you going to say about it now? And he took it really. He was just, like, really great. He gave me a lot of grace. He was like, well, what was your test size? And I was like, what do you mean? He was like, well, what'd you test? Like, how many did you put out? Did you test first. And I was like, why put out 300? And I was like, 300? And he was like, oh, man. We test with like, 5,000. And I was like, oh. He's like, and then after that, we do 5,000 a day. So he was doing 150,000 flyers a month. And I thought that 300 was a campaign. And so a lot of times when you're starting out, you have such a dramatic misunderstanding of the sheer volume that people who are ahead of you are doing. So, like, Mozy Media us, we put out 450 pieces of content per week. It's a lot. It's 60 or 70 a day. I can't do the math. Somewhere in there. Right. And so when people are like, well, I won't even get into the. Like, must be nice. But, like, you're making one post a day on Instagram and you have seven, and I have 450. And I've also been doing it longer.

[Rachel Hollis]

Right.

[Alex Hormozi]

And So I have 450 a week. Times. Years.

[Rachel Hollis]

Yes.

[Alex Hormozi]

And so we, like. It is a volume game. And in order to accumulate more volume, you have to allow for time to pass. Like. Like. And, you know, hypothetically, could I get to a thousand a day? Probably. I'm just. We're just not there yet. And I'm sure five years from now, look back. Like, I remember when I was doing 60 a day. My God, I was so cute. You know, give myself a little.

[Rachel Hollis]

But also just to give people a frame of reference.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

How much has social grown for you in the last.

[Alex Hormozi]

Oh, a ton.

[Rachel Hollis]

Five years.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

Because you're in the millions now.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

And I swear, when I started following.

[Alex Hormozi]

You, like, 10K on Instagram.

[Rachel Hollis]

Yeah. Like, you've grown so much.

[Alex Hormozi]

Yeah. I think we have, like, 13 or 14 million.

[Rachel Hollis]

Yeah. Yeah. No big deal.

[Alex Hormozi]

Yeah. I mean, who's counting? But. Yeah. No, but I like to bring this up, which is that just like Rich was saying earlier with, like, you'd know if you were the guy or you'd know if you were the girl. I think we're making this for everyone who's not that.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so I didn't have a clip go viral and then all of a sudden become this person.

[Rachel Hollis]

Right.

[Alex Hormozi]

This was a deliberate choice that I was like, I'm going to try and do this. I started by making three. I mean, I started in July of. Well, if you on the podcast, like my. So this is actually kind of probably the coolest thing I think about my story. Hopefully in the future that will be cold. Is that 90 days after I had lost everything the last time. Clarity on dates. 90 days after I lost everything the last time is when I started my podcast. And so, one, if you're like, I'm at zero, like, what do I have to say? Well, there's that. Number two. My rule was that I only talk about things I know. And so the first 300 episodes are just like, how to run a gym, because that's all I knew. So it was called Gym Secrets. And it was like. And I had six locations. So I had some stuff that I, like, I could talk about, but I just didn't go into topics. I was like, I just. This. When someone walks in, this is how, you know, Like, I just talked about what I knew. And for years it was at, you know, 100 pod, you know, downloads. And then it went to. I think it took like four years to get to like 2000 downloads an episode. Not a lot of people listen to Gym Secrets. You know, I bring this up because the whole thing is documented from zero to here. And I think that's like, that. I think to me, that's like the coolest thing. And so, you know, a couple years ago, I started doing the YouTube. That was like my next big commitment. I was like, I'll make three YouTube videos a week. And then I had a guy randomly reach out to me and say, hey, these shorts things are going to be a thing. And he was like, you already have longs. I'll just take the stuff you already have and make them into shorts. And then that did really well for us. And then we were like. And then we started bringing it in house. And that's pretty much what we've done ever since. It's just, do more, do more, do better, do more, do better. And we just keep doing it.

[Rachel Hollis]

I keep referencing this thing that I was at this week, but there, everyone's trying to figure out the next marketing hack. Like, what's this thing and how does it. I was there to speak about books because I've had a lot of success as a writer. And they were like, what do you do? And I was like, well, you show up for your audience every day for 15 years and you just provide a shit ton of value again and again and again and again and again. And every once in a while I like, hey, guys, I have a book. And then everybody buys it. That's my whole plan. That's what we do and master plan. Exactly. Like, I just, I don't. I've never figured out ads. I don't know how to I don't have a funnel. I don't have. And it was like, but what is the book a lead for? And I'm like, nope, just readers just trying to, you know, have. But I, that's. Don't commit to something if you aren't willing to give a decade, because I really don't know any other way. Yes. Could you have something go viral? Can something pop off unexpectedly? Can you hit a trend right when the wave is cresting? Absolutely. But I don't know how you have a long term play if you're not actually trying to provide value in a real way.

[Alex Hormozi]

I think so. This is, this is just something that I feel like I've seen across a lot of business owners because I talk to many of them. That's basically my, my full time job. It takes about five years to figure something out and it takes about 10 for you to probably realize the success that you were hoping for in one or two. So just like, just as a, as a, as a baseline for anyone who's listening to this, it's like you're like, okay, you know, let's say you have some corporate job that's, you know, you make $150,000 a year, you will for sure make less money for the next two, three years. Then now you might make revenue very different than what your take home is. Right. Like you might start making sales, but you imagine that it's, you're immediately like that one, that revenue is profit and it's not, and that you're gonna immediately have more time, you're gonna have less. There's all these. To be fair though, sometimes it's good to be ignorant of it so that you take the jump. But it's, it's literally just harder, takes longer and you make less for a while.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And I say this as somebody who was a management consultant before this. Like I had saved $50,000 when I was 20. Do I know it was just because I made decent money and I was prudent with my spending. But it took five years before, like we figured out the gym launch thing. Now I had the locations that made money. But then you make mistakes and you will lose things and you will take back steps. And so I think, you know, I talked to a really close friend of mine last night and he said this and he said, you know, in my 20s, it was all about the destination. And he was a Goldman Sachs guy. Like for those who don't know, it's a, probably one of the most prestigious investment banks. Guys there make 10, $20 million a year at the higher levels. Like very smart people and very A type A driven area. And he said, in my 30s, I realized it was about the journey. Right. He said, and in my 40s, I realized it was about the company. And so I was like, I can't wait to see what it is when it's 50s, you know, like, you know, but like, I just, I really like that process. And so I think if you solve for forever and you can go for a very long time. Like When I started YouTube, I told the vendor that I was working with, I was like, I'll make a call whether I keep doing this in 10 years.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And he was like, at six months, I was the fastest growing whatever that he'd had. And he said, I just want you to know that I've never in my whole career had anybody say that they were going to do this for 10 years. He said, Everybody is always like 30 days, 90 days if they're like, you know, long term thinking or whatever. And I was like, I just figured if I do so much of it that it would be unreasonable, that I suck. I'll probably be better than average.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so there's a certain amount of volume that's required to get good. And so my approach has always been like, violence is the answer, which is just unbelievable amounts of execution and just trying to get, just get. I remember I read Outliers when I was in college, I think, which is Malcolm Gladwell's book. You talk about 10,000 hours. It was such a pivotal book for me to read because it set the bar for what I expected volume to look like.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so it's like, well, if I want to be a master, something like, I. One, I have to start now. Like, oh my God, I'm so old. But secondly, the part that I thought was really interesting was that like Bill Gates, he considered like a genius or virtuoso coder at like six or seven years, whereas some people would take like 10 or 12. And so that one little nugget for me gave me the realization that like, oh, I can cram. I can take 10 years of normal work and cram it in four or five.

[Rachel Hollis]

Absolutely.

[Alex Hormozi]

And so that's where saying, like, you know, I have the rule of 100 for people who are starting out for getting their first customers. So you make, you know, 100 outreach attempts per day. You spend $100 in ads per day, or you make 100 minutes, you work for 100 minutes on content and you post it. And if you do and you post.

[Rachel Hollis]

It is the key. That is key. Get it out of your draft folder and on to social media.

[Alex Hormozi]

And I'll tell you why you have to do it in a second. And then you do that for a hundred days. And I promise you, if you do that, you will have a customer.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Period. You will have a customer. And what's crazy is that I get these screenshots of people who are like, holy shit, dude, I'm on day 31. And, like, and they show me their stats on, like, TikTok or Instagram or whatever, and they're like. And look at the leads that, like, they just do it. You know what I mean? And, like, if you actually count it out and you actually do the whole, like, I have never to this day had somebody do the full hundred, all three and not have customers.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And the reason you have to put it out and do the. Do the outreach, test the ads, if you're gonna do ads or just do. Or do the content. Is that the only. At least. My favorite way to learn is to do a huge amount of effort, a lot of repetitions, and then look at the data of the last hundred and say, what were the top 10%? What do these have in common? Okay, my next hundred are gonna be just like those.

[Rachel Hollis]

Yes.

[Alex Hormozi]

And then you do 100 more of that, and then because of variability and variety of life, you're going to have another top 10% of those and say, what did those have in common? How do I do more of that? And this is the process of learning that you won't get in any course because it'll also be specific to you.

[Rachel Hollis]

Can I also add something, too? For people who are using social media as a way to talk about their business is to make sure that you're paying attention to the right metrics. Because there's such a hustle for views. Not all views are created equal. Not all followers are created equal. And you could get a million views on something that will not be relevant to your business at all, but will create sort of vanity metrics that make you believe that your channel is really successful. But if it is not making you money in the way you want to make money, it's not the right video. It would be better to try a different style, different approach, long form versus short form. Like change it up to get the right kind of customer. Because there's so much content right now telling people how to game the algorithm, and it's not actually serving you.

[Alex Hormozi]

No. As a. As a visceral example, if I go up to a stranger and slap them. And then, like, I will probably get a lot of views.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Does that increase or decrease the likelihood someone will purchase something for me? Probably not. Right. It just sounds like. It's just sometimes I just like asking the. Just the simplest question. When you look at this meme that you're posting, does this increase or decrease the likelihood that someone's going to buy from you?

[Rachel Hollis]

Right.

[Alex Hormozi]

In all likelihood. It just does nothing. It does neither.

[Rachel Hollis]

Wasted your time.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

Because you spent nine hours trying to make that one video.

[Alex Hormozi]

Right. And so that's always been our litmus test in terms of basically what we're. I think what we're really teasing out here is the difference between getting views and building a brand. And building the brand is what are the. What are the pairings and associations that I want people to associate me with? And that's the people that I appear with. That's the subject matter that I discuss and everything else that is. That surrounds that. What are the values that I have that come through in the content? And I will say that me personally, the more I just try to think like. And this is probably useful if you have a customer that is your favorite customer, and if you don't have a customer, think about who that customer might be. Make content for them. And if you just do that, you will be already, like, in the top 10%. Yeah.

[Rachel Hollis]

For real. I want to talk to you forever, but I want to be conscious of your schedule and a very busy day that you have ahead of you. I just want to say one more thing to you before we wrap up. I know you talk a lot about not really caring about your legacy.

[Alex Hormozi]

Sure.

[Rachel Hollis]

Which is fascinating. But whether or not you care about what it is, it's going to be really big, and it's going to be really impactful. As someone, you don't think I'm your demographic, but I receive a lot of help from you and have for years, through the books, through the podcast, really want to encourage listeners to go check them out. So whether or not you care that you have a legacy, you do. And you help a lot of people with what you do, and you don't have to help people the way that you do. So I am grateful for your time and your wisdom, and I know the audience is, too. So thank you for being here.

[Alex Hormozi]

Well, I appreciate it.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And I would. I would love to respond, if that's okay. And if we. If it. If it ends up sucking, you can take it out. This has been something that I think is so interestingly in the last 24 hours, I had like two massive accounts try to like, take attacks at me because of this. No, yeah, no, it's fine. My worldview allows me to deal with these things. Right.

[Rachel Hollis]

But also people who create content just shitting on other people's content.

[Alex Hormozi]

Wholeheartedly agree. Yeah, wholeheartedly agree. And I feel like I can actually like, make this as about. Like, I will not make content that insults people.

[Rachel Hollis]

Yeah, same.

[Alex Hormozi]

And I think there's, and it's probably useful for anyone who's listening, the difference between an insult and criticism. So criticism is a discrepancy between actual and desired. Hey, Sandy, you didn't show up. You haven't shown up on time three days in a row. The expectations that you set up, you show up at 9am this is criticism. And because of that, you're a lazy piece of shit. That is an insult. And so basically making a judgment is where insults come from. Pointing out to an observable discrepancy is what criticism is. For those of you who are like, how do you deal with criticism? It's like, well, make sure that it's criticism and not insults. Yeah, I had most people insult me. It's fine. I survived about this. And I really want to take the opportunity, if you'll allow me. I am just the ultimate believer in freedom of choice. And many people, there's both sides of this. On one hand, there's many people who don't start because of. Out of fear of what other people are going to say about them, and that ends up paralyzing them. And so when I talk about death and the fact that most people will move on in weeks, not years, and like, they're gonna go from the funeral and go to a pizza place and they're all just gonna like, have dinner and then they're gonna like, go to school the next day. It's crazy, but it's also reality. And I think in minimizing that, for me, when I stay this message, it's so that people, it decreases the perceived fear around taking the action and potentially failing. No one's gonna care anyways.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

On the other extreme, I think that there are many people who want a legacy. And I tend to take a universe look at it, which is if I try to make it real, I'll say, okay, do you know who your great, great, great grandfather is? You probably don't know their name and they're the reason you're here today. And so that's not that long ago.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

And so we have this and I think it's just we all have a desire to matter. We all have that. And I, in my life, that obsession handicapped me, which is why I make so much kind of countering that, which is that I think I've had deep seated fears around judgment of others and things like that. And so I have to constantly remind myself that these people will not even be at my funeral.

[Rachel Hollis]

Yes.

[Alex Hormozi]

And like, if they're not going to talk about me at my funeral, why should I give them the power to speak over me in my life? And so that's the essence of what I'm getting at. And I can understand that when I make these comments about how people at your funeral are going to argue over your belongings and that they're going to talk about the food and the venue and some people aren't going to make it because something came up because they were busy. Some of the people that you love and care about today aren't even going to be there because they haven't even been there in 20 years in your life and your friends, family won't even know to have invited them. And does it even matter if they're invited because you're already dead? Yeah, a lot of people get very triggered by that. And I think it's because humans have a fear of death and that makes sense. But I think that for me, trying to use death as my ultimate motivator insofar as if I can embrace the idea that I will die and I will eventually be forgotten, call it now everyone's 10,000 years, 100,000 years, eventually I will be forgotten, right? There'll be a star, you know, the sun will have a mega death and who knows, right? Like, whatever. And when, I mean, who are we really paying attention to? The people in the 1100s, are we really, you know what I mean? Like, okay, there's six people who. We've had one book, you know what I mean? That, like, okay, maybe, right. And that's not that long ago.

[Rachel Hollis]

Right?

[Alex Hormozi]

Right. The reason I solve for like or try to really look death in the face and become comfortable with it is because if I can accept that as zero, then everything that I get to do in my life is free range. It's carte blanche. I can make my own way. And I think that that has been something that has given me tremendous freedom of action and agency around being able to make up my own damn mind for my own life. And I think that that is why I hit on that and I push on that button because also because I have so many people who message me being like I was borderline suicidal. And when I really thought about it, the way you broke it down, I was like, all these people that I cared so much about, their opinions, like, they don't even. They're not even gonna remember me.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Like, they were, like, they're gonna have, like, a couple jokes too soon about my death. Too soon, bro.

[Rachel Hollis]

Yeah.

[Alex Hormozi]

Like, they're gonna say it, like, you know, like it's gonna happen. And I think that that allows me to not take my failures as seriously or my successes.

[Rachel Hollis]

Yeah. And I think if that idea resonates with people.

[Alex Hormozi]

Yeah.

[Rachel Hollis]

Take it. And if it doesn't, ignore it.

[Alex Hormozi]

It's so simple, and I'm good with it.

[Rachel Hollis]

If you're, like, through this idea, then.

[Alex Hormozi]

By all means, do.

[Rachel Hollis]

Yeah. Well, I am grateful for. For you and your work. Thank you. I apprec. Yeah. And thank you so much for coming on the show. Seriously, this was such a treat.

[Alex Hormozi]

Yeah. Instead of leaving a legacy, try living one.