How I Made My First Million Ep 381

Alex Hormozi shares his tumultuous entrepreneurial journey, emphasizing the importance of profit over revenue and the lessons learned from spreading himself too thin across multiple businesses. After a life-changing DUI accident, Alex focused singularly on his venture, Gym Launch, which initially struggled but eventually flourished through a pivot from brick-and-mortar gym turnarounds to a highly profitable licensing and consulting model. This shift, coupled with a relentless pursuit of providing value and leveraging his skills in better opportunity vehicles, allowed Alex and his partner Leila to amass significant wealth, illustrating that the true assets of an entrepreneur are the skills, character traits, and experiences gained over time. Alex's story is a testament to the power of resilience, strategic pivoting, and the long-term nature of entrepreneurial success.

• Speaker A emphasizes the importance of focusing on profit rather than revenue.
• Despite making millions in revenue, Speaker A was taking home very little due to being spread thin across multiple ventures.
• Speaker A’s DUI accident acted as a catalyst for change, prompting a focus on a singular business.

"I was already making a couple of million dollars a year between all the different things that I was doing, but I was taking home basically nothing because I was so spread thin."

Speaker A explains that although they were generating significant revenue, the profit was negligible due to the lack of focus and overextension across various businesses.

• Speaker A made a decision to focus solely on one business, Gym Launch, after a life-changing DUI accident.
• Speaker A believes in the theory of constraints and relates it to recognizing and addressing one's own limiting beliefs.
• The decision involved selling off other businesses and confronting personal challenges, including excessive drinking.

"I decided to confront decisions that I had been putting off and make hard calls that I didn't want to make to force myself to focus on one thing."

Speaker A discusses the difficult but necessary decision to focus on one thing, which in this case was the Gym Launch business, to improve their situation.

• Speaker A and their partner, Leila, would fly to gyms and perform turnarounds without using the term "rescue" to avoid negative connotations.
• The business model involved filling gyms with new customers within 30 days at Speaker A's expense, with the gym owners keeping the contract value post-launch.
• Speaker A's offer was compelling because it required no upfront investment from gym owners.

"I would fill your gym in 30 days for free. That was the offer. And I was like, I'll spend my own money on the ads. I'll spend my own money on the hotels, the food, everything."

Speaker A describes the business model of Gym Launch, which was to revitalize gyms by increasing their customer base without any financial risk for the gym owners.

• Speaker A faced numerous challenges, including selling businesses for little profit, a partner taking remaining funds, and handling refunds after closing a gym.
• The advice to do right by customers and write refund checks was pivotal in moving past the setbacks.
• Speaker A was left with a clean slate but also with very limited funds, highlighting the harsh reality of entrepreneurial endeavors.

"The partner that I had at that facility... basically took the rest of the money out of the account. And so I basically was left with nothing."

Speaker A recounts the betrayal by a business partner and the financial loss that resulted, marking a low point in their entrepreneurial journey.

• Speaker A reflects on the entrepreneurial journey as a process of self-improvement, valuing skills and experiences gained over financial success.
• After consolidating their efforts, Speaker A and Leila achieved significant sales, proving the potential of their focused business approach.
• The early success post-consolidation was a turning point, demonstrating the effectiveness of their skills and experiences.

"The entrepreneurial journey is one that improves you, not anything else."

Speaker A shares the insight that entrepreneurship is more about personal growth and development than the material outcomes of the business.

• Speaker A and Leila planned to scale Gym Launch by simultaneously launching in six gyms, leveraging their successful business model.
• They recruited friends from Leila's high school network to join their sales team, transitioning from low-profit ventures to more lucrative opportunities.
• A chance text message led to hiring a successful salesman who significantly contributed to sales during a traditionally difficult month.

"Why go from one to two when you could go from one to six? Because that's a brilliant idea of Alex's."

Speaker A humorously comments on their ambitious decision to scale the business rapidly, indicating both confidence and the recognition of the boldness of their strategy.

• The speaker had a business model that was proven successful by himself and Leila, but had not been tested by someone less personally invested.
• Leila believed in the speaker's potential and introduced him to her family.
• The business was doing well with significant sales, but the speaker encountered payment processing issues during the holiday season.
• The payment processor withheld funds due to "irregular activity," causing financial stress for the speaker.

"And so it was awesome. So I was, like, super excited. I was, like, sick. This 100 grand is going to be the launch money for the next thing. This will be great."

This quote highlights the optimism and plans the speaker had for the future of their business, relying on the $100,000 as capital for growth.

"And so anyways, I'm at her family's house Christmas Eve, and we had been selling for three weeks at this point, so we had 70, 80,000 in sales at this point."

The speaker is indicating the success of the business in a short period, emphasizing the rapid sales growth.

"The guy was like, sorry. We've seen some irregular activity in your account."

This quote explains the reason given by the payment processor for holding the funds, which was due to unusual activity in the speaker's account.

• The speaker experienced significant stress as a result of the financial issues, leading to a high resting pulse rate.
• Leila's support during this challenging time was a pivotal moment in their relationship.
• Despite the stress and financial uncertainty, Leila expressed her commitment to staying with the speaker.

"I was stressed out of my mind, and so we left the movies, and I told her, I was like, the money's not coming."

This quote illustrates the moment the speaker had to confront the reality of the financial situation and communicate it to Leila.

"I would sleep with you under a bridge if it came to that. She's like, we'll get through it."

Leila's response to the financial crisis demonstrates her unwavering support and commitment to their relationship.

• The speaker faced the challenge of having to pay a large commission with almost no funds left.
• They chose to honor their financial commitment to their salesman, reflecting a principle of doing right by everyone.
• With limited resources, the speaker pushed forward with launching new gym locations, relying heavily on credit.

"I have $1,000 left. And she had told her six friends to quit their jobs, and we were going to start launching gyms two days later, on the 26th."

The speaker is faced with the daunting task of launching new business ventures with minimal funds available.

"I have no money, but I'm not in debt, and I'm going to be going in debt at a rate of $3,300 per day of money that I do not have."

This quote captures the dire financial risk the speaker was undertaking by moving forward with the business expansion.

• The speaker struggled to find a way to process payments after being canceled by their original processor.
• They sought help from contacts and eventually connected with someone who specialized in high-risk processing.
• The new processing arrangement came with limitations and reserves, but it provided a temporary solution.

"I called every person I knew, and then I finally got in touch with a guy named Alex Roy at the time, who specialized in a high risk processing."

This quote shows the speaker's proactive approach to solving the payment processing issue by reaching out to their network.

"He said, but given the record that you have right now because you just refunded all those people at the last location, he's like, they're going to want a reserve."

The speaker is informed of the conditions for high-risk processing, which includes holding a reserve due to the speaker's recent refund activity.

• The speaker concludes by sharing the challenges and the eventual solution to the payment processing problem.
• They express gratitude for the audience's support and ask for help in spreading the word about their content to assist more entrepreneurs.

"Real quick, guys. You guys already know that I don't run any ads on this and I don't sell anything."

The speaker emphasizes that they do not monetize their content through ads or sales, relying instead on the support and spread of their message by the audience.

• The host emphasizes the importance of listener engagement for the podcast's success.
• They request listeners to leave a review to enhance visibility and potentially impact others.

"The only way we do that is if you can rate and review and share this podcast."

This quote highlights the call to action for listeners to actively participate in promoting the podcast by rating, reviewing, and sharing it, which is crucial for the podcast's growth and reach.

• The host describes a challenging situation where they had to rapidly scale up processing capacity to handle increased business.
• They managed to process $100,000 in the first month, which just covered their credit card bills.

"And I was able to catch this falling plane as it's going. And we ended up somehow, I think we ended up processing 100 grand, actually, that first month."

This quote reflects the speaker's initial success in averting a business crisis by managing to process a significant amount of money, which equaled their expenses, bringing them back to a break-even point.

• The host details the scaling process of their business, increasing from one to three processors and growing their monthly processing amount.
• They experienced initial profit, which gave hope for the business's future.

"So the next month, I think we did 150 or 180... And we actually had a profit that month."

This quote indicates that after a period of just covering costs, the business began to see actual profits, suggesting a positive turn in the host's financial situation.

• The host encounters a significant setback with $100,000 in refunds due to clients being poached by local facilities.
• This wiped out their savings and forced them to increase sales to cover the refunds.

"All of a sudden, I see this massive hit on the bank account for 100 grand... that 100,000 completely wiped out all of the savings that I had had over the last month or two."

This quote describes a critical financial blow to the business, where unexpected refunds erased the progress made in previous months, highlighting the volatility of the business environment.

• A high refund rate of 35% revealed the flaws in the business model, particularly the lack of control over fulfillment.
• The host learned the importance of controlling all aspects of the business to prevent such issues.

"It was because we had no control over the fulfillment... One of the lessons I learned there was control the, like, you want to control everything end to end if you want a life lesson."

This quote underscores the lesson learned about the importance of end-to-end control in business to mitigate risks such as high refund rates and client poaching.

• Faced with a dire financial situation, the host and their partner, Leila, decided to pivot to an online model for selling weight loss programs.
• They successfully transitioned from brick and mortar to online, significantly reducing costs and increasing margins.

"So she had transitioned her personal training client to online, and she was doing, like, three grand a month from that... I was like, hey, why don't we take the middleman out of this?"

This quote reveals the strategic pivot to an online model, which was driven by the need to cut costs and increase profitability, demonstrating adaptability in business.

• The host leveraged their sales expertise to write a highly effective sales page out of desperation, leading to immediate revenue generation.
• They then restructured their sales team to work remotely, capitalizing on the new online sales strategy.

"I wrote one of the best sales pages of my entire life out of just sheer need... And so I started running traffic to it, and we started doing $1,000 a day of just online."

This quote indicates how the host's ability to craft a compelling sales page in a time of need led to a successful pivot to online sales, showcasing the power of effective marketing.

• The host capitalized on their industry knowledge by offering consulting services to gym owners.
• They set high prices for their consulting services, which were eagerly accepted, leading to significant sales in a single day.

"I was like, but I'm not flying out there to save your ass. You can't sell. He's like, no, that's fine. He was like, well, how much to show me how to do it?"

This quote illustrates the host's decision to sell their expertise rather than continue with a failing business model, which proved to be a lucrative pivot.

• The consulting program, "Gym Launch," led to rapid financial success for the host and participating gyms.
• Word of mouth from satisfied gym owners fueled the program's growth.

"And here's what's crazy. The next 30 days, the average gym that used the consulting program, gym launch, did $30,000 in collected cash."

This quote demonstrates the effectiveness of the consulting program and the significant financial impact it had on participating gyms, contributing to the host's business recovery and growth.

• Gym Launch started as a consulting and licensing company.
• In 2017, the company experienced exponential growth, from $100,000 to over $1.5 million in a short period.
• The success was attributed to word of mouth and the effectiveness of the product, not just marketing efforts.
• A system was offered that could make gyms $30,000 on average in the first 30 days, priced at $16,000.
• The founder had extensive experience from running six gyms and launching over 30, which provided knowledge about various market differences, sales training, offer positioning, and maximizing sales efficiency.

"That was what gave birth to gym launch as it became the consulting company, the licensing company, where we licensed out all the materials, all the ads, all the copy, all the scripts, how to set up the lobbies."

This quote explains the inception of Gym Launch and its business model, which involved licensing a comprehensive package to gyms to help them succeed.

"And the thing is that when people ask me about this story, and this is now, we're six months into 2017 at this point. So I've gone through, like, the hardest 18 months of my entire life."

This quote provides a timeline for the growth phase of Gym Launch and emphasizes the challenges faced during this period.

"And the actual product worked, you know what I mean? And I use that as an example because right now I launched the book 100 million dollar offers."

The speaker highlights the importance of a quality product, using the success of their book to illustrate the point that good products sell themselves through word of mouth.

• The speaker emphasizes the importance of developing skills, character traits, and beliefs through challenging experiences.
• The journey to success is long and involves accumulating these assets over time, which become the foundation for future business manifestations.
• The speaker's experience of "eating shit" for years was crucial in building the assets that later led to success.
• The challenges faced while growing the business included maintaining high-quality service and support, training talent, preserving culture, and building infrastructure amidst rapid growth.

"One is that what you are going through now doesn't mean your work works on you more than you work on it. I was developing skills, character traits and beliefs through this entire 3456 year period of just eating shit that I did not know was for me."

This quote stresses that the speaker's difficult experiences were instrumental in developing the skills and character traits that later contributed to their success.

"The businesses are just manifestations of those assets in reality."

The speaker suggests that businesses are the tangible outcomes of the intangible assets one develops over time, such as skills and beliefs.

• The speaker cautions against trying to skip the foundational years of hard work and learning.
• They highlight the issue with people wanting to sell expertise before they have sufficiently developed their own skills and provided substantial value.
• The amount of money made is directly correlated to the value provided to the marketplace.
• The speaker's own path to success was not straight but fraught with difficulty, which ultimately led to significant profits due to the transition from service to media with higher gross margins.

"And so I'm a big believer that the foundation that you set is going to dictate the height of the peak of the pyramid that you want to build within your life and the business that you want to grow."

This quote emphasizes the importance of building a solid foundation of skills and experience to achieve greater success in business.

"Which is why it doesn't make money. Which is why they don't make money, right. Because the amount of money that you'll make will be predicted by the value that you provide to the marketplace."

The speaker explains the direct relationship between the value provided and the financial success one achieves in the marketplace.

• The speaker's journey included transitioning through various business models, each with different levels of profitability and challenges.
• The same skill set was repackaged into different business opportunities, leading to a significant accumulation of wealth.
• The speaker underlines the necessity of acquiring and refining skills before attempting to repackage them for different business models.
• They encourage patience and persistence, sharing their own timeline of success to inspire others in their entrepreneurial journey.

"And that is what ended up creating the fortune that Leila and I were able to amass in this period of time."

This quote reveals the outcome of the speaker's journey through different business models and the wealth that resulted from it.

"I think most people just want to skip that part, which is the rocky cutscene that every single person that I know is successful does that no one wants to talk about."

The speaker acknowledges the often overlooked hard work and dedication behind successful entrepreneurs' stories.

• Alex Ramosi expresses gratitude and love for his audience, providing encouragement for those on their entrepreneurial journey.
• He shares the current revenue figures for his business as a testament to the success that can be achieved.
• The speaker invites engagement from the audience, regardless of their opinion on the content shared.

"My name is Alex Ramosi. I own we do about $85 million a year in revenue. Keep being awesome."

Alex Ramosi introduces himself and shares the impressive revenue figures for his business as a sign of credibility and to inspire listeners.

"And if you didn't like this, then I love you either way. All right, lots of love. I'll see you then. Bye."

The speaker ends on a positive note, showing appreciation for his audience and maintaining a connection with them, regardless of their reaction to his message.