I started four businesses that cracked 10 million in a row I want to share the Frameworks and lessons I learned from the many mistakes that led to those four in a row so that hopefully the next business you have or the current business you're on and Achieve that level and Beyond so the first big company I built was called gym launch it was a licensing business for gym owners as in I had a model and I would license that model to them they would use those things they'd make more money the average would make an extra hundred thousand dollars a year in profit business at its peak was worth about 150 million dollars and then covid hurt that
business and I ended up selling it for 46.2 million to American Pacific group which is a private Equity Firm out of San Francisco the first 10 customers I got from gym launch I got somebody to pay a VA in the Philippines to scrape crossfits database and then send me the list of emails I then uploaded them to Facebook made it look like audience off of those marketed to get a webinar which no one watched and then I had 80 leads from people who had opted in and none of them bought or scheduled a call and so I looked up every one of the emails manually and I like friended them on Facebook I messaged them and then I got a few of them on the phone to pay me 500
bucks to go out to fly to their gym and actually do the turnaround once I started the licensing version of the model which is the one that really gave me the scale I was able to sell something that had virtually 100 margins the first month I think I did like 120 000 in sales and the next month I did like 300ish and then High fours and then 780 and all I was doing was just selling more units and then we hit a million the next month we would look at whatever problems the gym owners that we were with were currently suffering from so it could be there suffering from churn or they could be suffering from margin issues they could be suffering from
they're not getting enough lead close rates aren't as high as we want them to be we would then create a hypothesis around what we thought might work we would survey the community and say who has the best conversion rates if that's what we wanted to fix and then we'd invite 20 of them onto a call we would take all the notes to figure out what things they were all doing and here's the important point we didn't say great we're going to do all these things we try to see the few things that they were all doing then we'd say hey guys this is a big deal this is like worth the cost of change you're gonna have a demonstrated long-term benefit to the
business for context my best gym did about 600 000 a year our average gym who's a gym Lord made six hundred thousand a year big picture is that the product has to be exceptional if your customers are in love with your product which takes more time because people are like oh you threw this thing together it's like it took six years for me to put all those pieces together and then finally be able to monetize that deliverable and like that little inch between good and great is yours but the return you get on it from the word of mouth that compounds is hard to Fathom one of the other big secrets of gym launch was that we had a very different
approach to acquiring customers the traditional model of most businesses in general is lost leader you know you get someone in for some sort of free thing you lose money on the acquisition you make it up in LTV I came with a different model and I've since done that in every single business I have so this is one of the important Frameworks that I want to pass to you and it's something called client Finance acquisition so client finest acquisition basically means you get the customers to finance the acquisition of the next customer so all you have to do is have enough money to get the first sale and if you make more in the first sale then the cost to
acquire that customer and the cost to fulfill that customer plus the cost to fulfill that next customer and the cost to acquire the next customer you eliminate Capital as a constraint in the business you can put a dollar in and get two customers back then that next customer buys you two more and two more and two more all my gyms were able to just Crush everyone else because we could outspend I've taken that aggressive acquisition perspective to every one of the businesses that I've had we had many many terrible things that happened during the launch I mean one we had coveted which was tough you know for gym owners uh in general a
third of all of our clients went out of business another thing that we did that was really bad was we over hired for our support I had hired an inexperienced director of customer service she was a Frontline rep that we just promoted all the way through I work ethic but no experience and so she hired 35 reps and we only needed five so we had to lay off 30 people and then that became a thorn in our side for the next two three years because our glass door got smashed the biggest reason Jim launch was successful one is that it was timing we identified Arbitrage on Facebook ads before anyone else did and we created a turnkey system around how to monetize it I was running
ads on Facebook in 2013. you could put a girl with a bikini and say click here now like it was the wild the second thing because of that Arbitrage the average gym was taking home an additional thirty thousand dollars in cash in their first 30 days that was the average if you take a business where the average business owner is making thirty six thousand dollars a year in profit and then you add thirty thousand dollars in the first month of working with them you don't need to worry about marketing technically my return on marketing was a hundred to one for the first 18 months in the business but it's because I probably could have just not marketed at
all and I would have had the amount of people that came in so like who knows if the ads were doing anything but everybody from the outside was like this guy's ads are everywhere like he's killing it so many people who are copycats Mickey Mouse gimmick [ __ ] people who just used old versions of our stuff to try and sell out of like all the stuff you would imagine all those guys went out of business because they didn't have the deaf Prestige Labs was my second big company which actually was really a sister company to gym on you built the whole thing of an affiliate base that we acquired through gym launch and so like the first month of being
fully operational did 1.7 million I didn't want to sell supplements for a very long time because I was like supplements you just need to eat eat right and work out this woman wouldn't leave my office she's like my friend says I need supplements like fine so I wrote her list like go get this stuff going she came back the next day with the things and she was like I just want to make sure I got the right stuff and I saw the receipt and it's 700 on the receipt and the thing that I had sold her was 400 Baht and I was like [ __ ] that I'm gonna sell supplements so I would recruit a gym owner and I would say hey we're teaching you all this
marketing and sales stuff over here if you just sell every person's supplements it will cover the cost to acquire a customer just from the physical products and the Beautiful Thing with selling physical products is that there's no added fulfillment one of the problems is the more you sell the more you have to deliver right and so it's kind of this double-edged sword where the moment you swipe the credit card you're like oh [ __ ] now I have to deliver on this right they didn't have to do anything they literally just swiped the credit card and then we managed centrally we would ship it direct to the consumer I wanted to create a brand only gym owner sold no
one else could sell it we priced it on our home site higher we priced at 30 percent higher on the main side so there were significant savings on top of that we gave them a very good selling system because I learned you know a lot about selling supplements I made it a recurring subscription so now they got to have two recurring subscriptions per customer I picked the first 10 customers from distribution base already I rolled out 10 locations and then the next month I rolled out 20 or 30. next month I rolled out another 20 30 and then we did the big launch to everyone there's lots of little things that we did that were gym specific that no other supplement
company could do which has given us a nice moat in that space cost me four million bucks to start Prestige Labs about a million of that went to the tech so we created our an entire point of sale for supplements that was specifically made for Jim so every gym would get a retail kit so they'd have a full wall of products they would have a kiosk which is a stand with an iPad type thing on it apple-fi didn't really exist that we had to build this whole thing and then the other three-ish million went into just product biggest difficulties with it the supply chain so like if you run out of one ingredient on one product like you can't sell the
product there are also legal firms that will buy all your products and try and test to find something that's off or unrepresented or whatever there's predatory law firms that as soon as you have a patent they'll just try and find people to Sue and they'll just like basically rev share all the amount of money they can get the end consumer is just not sticky and that's just because people don't stick with Fitness stuff in general for a long time so the biggest lesson I have for you guys mosination round Prestige Labs is that I probably shouldn't have done it that's the railroad it is a good business but I think that if I had allocated more time
to just making gym launch better gym launch would have been bigger and because Jim won't stop growing the year I launched Prestige Labs I just became CEO of two companies rather than CEO of one the third business I started use allen.com still around today doing great I saw where chat was going and I saw where Ai and machine learning were going a few years ago and I figured if I were able to aggregate all of the data from every single type of small business all scheduling brick and mortar in-person appointments I'd be able to predictably show what days of the week what times of day what kind of follow-up sequences got the most amount of people to shop and
since we were compensating on percentage of people that showed up we were highly incentivized to solve that problem and I learned a ton about how to get the most throughput for leads and I've used that in every one of the portfolio companies that we have and you can usually add 20 30 40 to the throughput on ads simply your scheduling process I first started it to solve the problem for gym owners because one of the biggest constraints is that people don't work their leads amazing I know um but the average gym was getting nine percent of leads in the door when they had to work them manually we were able to get just under 20 of leads in the door without them doing
anything and the average front desk person costs 2 000 plus a month and we could do it for a fraction of that sold the first kind of customers of Allen by going to our distribution base and saying hey do you want to try this thing what was interesting is that we very quickly realized that we couldn't expand outside of our distribution base the Breakthrough was that I realized that we needed to get agencies on board rather than getting small businesses on board because they'd be like great I can work my leads how do I get leads and we're like oh [ __ ] they don't know how to get leads so then we started selling agencies which had another degree of
Leverage because if you saw an agency they could have 50 small business owners underneath of them I did two webinars with people who had big agency audiences so now you go up another level I could make one pitch and in one pitch get a thousand customers that was when this thing really took off I did two pitches and within six months we were doing 1.7 also ironically per month through the software company Allen was the business that I probably learned the most lessons from I ended up selling that business as well 75 of it to a strategic buyer who's still running it and doing a good job with it and hopefully they'll have a big exit in a few years and that was an all
stock deal so under NDA I can't tell you but I can tell you we did 12 million in the trailing 12 months before the sale that being said lesson one is that you need to have an in-house CTO if you're going to be if you're going to get into software I developed software for Prestige Labs I use the exact same development shop to make the software for Alan I regret that development shops honestly they're as close to a complete scam as you can come to because if you really are going to build a software company you need to build a software company like that's it like you need to build a software company it's like having a marketing agency and having a
white labeled marketing agency doing all your delivery it doesn't make any sense number two is that you want to run pricing surveys early because we unlocked four times the pricing Power by simply repackaging how we charge exploring different ways to charge based on usage based on recurring fees different apis this is especially true with software because there's so many different ways you can charge compared to maybe traditional service the third thing is having aligned incentives with your customers often just makes you more money and so that business had a tremendous amount of scale because we had so much alignment with every single
stakeholder the small business owner wanted people to show up the agency owner wanted people to shop and we got paid based on shops so everybody was aligned top down the fourth thing throughput on appointments when you're scheduling for sales calls or in-person appointments the amount of days per week that you are open the hours that you are open and the increments of time matter a lot like 50 to 200 percent would be like marketing doesn't work for me and they had one time sought for an hour per week that they were willing to take their customers on that's just stupid there's no other way to say it the people who made the most money who had the most
throughput are the ones who gave the most availability gave the most flexibility their customers were open the most days and they unsurprisingly got more people to schedule and show up there's a reason small business owners stay small they make small business owner decisions so acquisition.com so this is the fourth business portfolio companies that right now does over 200 million dollars a year and I make these videos so that you can hopefully pass 3 million 10 million Etc and then we can invest in your business to help it grow from this I started with the question what can I do forever and then work backwards from there so it's like there
has to have a lot of Leverage I need to have a capital company vehicle so the first 10 Investments that we found some people I knew from you know beforehand and I would say that the relationship had shifted more and more to like basically an advisory role anyways and the rest of it has been uh people who read the book who watch videos who listened to podcasts who come in who already are aligned with our values we'll always look at anything as three or more but most the businesses are over five the average business right now is doing 17 million so acquisition.com is the first business that was really like built on a personal brand and inbound
with content so that's been like the biggest change compared to the other businesses there's pros and cons to it like it's a slower business overall if you are used to doing a transactional business where you're doing multiple sales a day going into a business model where you have one every month is very different and there's a lot of conversations that happen that don't amount to anything the thing that excites me most about acquisition.com is I learn more now than I ever have because I'm exposed to more businesses at a higher level I believe that the purpose of life is to learn um that is my purpose of life then enabling myself
to learn in as many ways as humanly possible maximizes that so we co-own all these businesses because I want to learn how solar sales work I want to learn how mortgage sales work like knowing a lot about a lot of things allows you to cross-pollinate ideas that work well in one industry and then apply them to another one and then get outsized returns as we saw how quickly and how easily acquisition.com grew the biggest part of that was because we hired from the top down there was so much that we could automatically delegate to people who were better than us at their respective Things director of sales director of marketing director of people
director of I.T director of portfolio operations as good as but better than us who are teaching us every other business I've had I hired from the bottom up this one I went from top down and I will always do that from here on out you can really only do that if you're well capitalized that's why Venture people raise money because you can get more Talent before the business can really afford the talent because at the end of the day every business incurs debt it's just what kind of debt so are you incurring financial debt are you incurring management debt cultural debt technical debt and the question is which one do you want to pick and have to pay
down later and so for us being the bank was willing to pay down financial debt to not have to pay any of the other debt down in the future because ultimately on a longer time Horizon we'd move faster and the other thing is that we have made recruiting Talent the single core competency of the business most of the companies that we're bringing on the entrepreneur needs more talent and we have the ability to recruit Talent better than most people because one we have so much inbound that comes in two we as a private Equity Firm have more Prestige than most of the companies that are in our portfolio and so we can recruit and people respond to a private
Equity Firm who has portfolio companies more than they respond to Joe's dry cleaning and then we have somebody at holdco who will help train them on our way of doing business so they get it right the first time a portfolio company when their managers are getting stuck or their director is still getting stuck they talk to our director of sales and if you're a business owner and you'd like to scale to 50 100 and Beyond we'd love to partner with you on it we have the track record that we have because we've done it multiple times and the biggest costs that you have in the business is what you do not know and so if we can help you pay down ignorance
Entrepreneurial Journey of Alex Hormozi
Strategic Business Growth
Product-Market Fit Importance
Innovative Customer Acquisition
Overcoming Business Challenges
Hiring and Talent Management
Continuous Learning and Improvement
The Genesis of Gym Launch
Building a Business from the Ground Up
Mastering Product and Market Alignment
Revolutionizing Customer Acquisition Techniques
Navigating Business Obstacles
Talent Acquisition and Team Building
Lessons from Successive Ventures
Final Insights and Entrepreneurial Advice
The podcast transcript titled "I Built 4 Businesses In A Row To Show It's Not Luck," features Alex Hormozi, a successful entrepreneur and founder of Acquisition.com, detailing his journey and strategies in building four successful businesses consecutively. The transcript is a treasure trove of insights, structured around Hormozi's business ventures and the key lessons he learned from each.
First Business: Gym Launch:
Hormozi begins with his first major company, Gym Launch, a licensing business for gym owners. He explains the model's success, where gym owners would implement his strategies to increase profits significantly. Despite challenges like COVID-19, Gym Launch achieved notable success, eventually selling for over $46 million.
Strategies for Business Growth:
The conversation delves into Hormozi's strategic approach to business growth, emphasizing the importance of a hands-on approach, especially in the initial stages. He shares how he manually reached out to potential customers, demonstrating the value of persistence and personal engagement in business development.
Importance of Product and Market Fit:
A significant lesson from Gym Launch was the need for an exceptional product that truly resonates with the target market. Hormozi stresses the importance of understanding customer needs and continuously refining the product to meet those needs effectively.
Customer Acquisition and Financial Models:
Hormozi discusses innovative customer acquisition strategies and financial models that were pivotal in scaling his businesses. He introduces the concept of client-financed acquisition, where the revenue from the first sale is used to finance the acquisition of more customers, eliminating capital constraints.
Challenges and Overcoming Obstacles:
The transcript also covers various challenges faced, including overstaffing and negative reviews, and how these were turned into learning experiences. Hormozi emphasizes the importance of resilience and adaptability in overcoming business hurdles.
Lessons from Subsequent Ventures:
Hormozi’s subsequent ventures, including Prestige Labs and acquisition.com, are discussed with an emphasis on the different challenges and strategies employed. He highlights the importance of hiring top talent, aligning incentives with customers, and creating scalable business models.
Final Thoughts and Advice:
In conclusion, Hormozi shares his belief in the power of learning from experience and the importance of continuous improvement. He encourages aspiring entrepreneurs to invest in their skills and knowledge, adapt to market needs, and remain persistent in the face of challenges.
In summary, "I Built 4 Businesses In A Row To Show It's Not Luck" is a descriptive and well-structured guide through Hormozi’s entrepreneurial journey. It offers valuable insights into the world of business building, highlighting the importance of hands-on involvement, customer understanding, innovative financial strategies, and the continuous pursuit of improvement.