Reps, Sales, and Pounding the Meat (with Andy Frisella) Pt.1 Mar. ‘23 Ep 558

In this episode, the hosts and guest Alex Hormozi discuss the challenges and strategies of entrepreneurship, particularly in the fitness industry. Hormozi shares his journey from a defense contractor to a successful gym owner, detailing his innovative approach to pre-selling gym memberships through Facebook ads and weight loss challenges. Despite a major setback involving a fraudulent partner, Hormozi's resilience led him to pivot to a licensing model for gym owners, which rapidly scaled his business and profits. The conversation highlights the importance of perseverance, learning from failures, and leveraging pain points as motivation. Hormozi's story exemplifies how entrepreneurial grit, combined with a willingness to adapt and a focus on sales skills, can lead to remarkable success.

• Entrepreneurship begins with utilizing what you have at your disposal.
• Passion often develops after starting out; initially, it might be absent.
• The pain points that people experience can drive the development of a business or product.

"The first rule of entrepreneurship is use what you got."

The quote encapsulates the entrepreneurial spirit of resourcefulness, emphasizing the importance of starting with whatever resources, skills, or experiences one has available.

• Alex Hormozi's story began with a dislike for his job in defense contracting, prompting a move to California to pursue his passion for fitness.
• At 22, he had saved $50,000 to start a business and sought mentorship from a gym owner.
• He opened a gym in Huntington Beach, initially sleeping on the floor due to financial constraints.

"I got shit to slept his place."

This quote indicates the sacrifices and unconventional methods Alex employed in the early stages of his entrepreneurial journey.

• Facebook ads played a crucial role in the growth of Alex's gym, allowing for rapid acquisition of new members.
• The use of Facebook ads was a stroke of luck and coincided with the early days of the platform's advertising capabilities.

"This is two thousand and thirteen. So I was like, I mean, talk about like stroke of luck, crazy coincidence."

This quote highlights the fortunate timing of Alex's adoption of Facebook ads, which significantly contributed to his business success.

• Alex's business model involved pre-selling memberships and using the funds to build out the gym.
• He offered six-week weight loss challenges where customers would get their money back if they lost a certain percentage of body weight.
• The model included selling supplements and converting challenge participants into long-term gym members.

"So if you were two hundred, you lose twenty pounds, et cetera."

This quote illustrates the simple yet effective challenge criteria that incentivized customers to join the program.

• Alex conducted one-on-one consultations to sign up new members, capitalizing on his sales skills.
• He emphasized the importance of "reps" in sales, referring to the number of sales interactions he had to improve his skills.

"I always refer to that as my rocky cutscene. Like no one knew where I was and I was just hitting the meat in the basement and just getting those repetitions in."

The quote metaphorically describes the intensive, behind-the-scenes work Alex put into mastering the sales process.

• Before starting his gym, Alex learned from other gym owners' experiences, which helped him avoid common pitfalls.
• The idea for his gym's promotional challenge was inspired by an existing promotion and iteratively improved upon.

"So it's like, oh, don't go too small because of this. Don't go too big because the rent, like, hey, keep it under this per square foot."

This quote reflects the valuable lessons Alex learned from other gym owners, which informed his own business decisions.

• Alex asserts that selling is the most valuable skill in business.
• He argues that if you can sell, or influence others to do things, you can build a successful business with minimal expertise in other areas.

"If you can convince somebody else to do every other thing that is required to do in the business, then you can have an amazing business and only know how to do one thing, which is get other people to do stuff."

The quote highlights the power of persuasion and salesmanship in entrepreneurship, suggesting that these skills are foundational to business success.

• Effective leadership involves influencing others to work towards a common goal.
• Sales and leadership are closely related; both require the ability to motivate and guide others.

"Leadership sales, if you like. Okay, well, what's leadership? Well, it's being able to influence other people to do the thing you want them to do."

This quote connects leadership to sales, emphasizing their shared core of influencing others' actions.

• The success of a company is significantly influenced by its mission and values.
• Employees need to understand how their roles and the company's mission align with their personal growth.
• Many business owners fail to convey this alignment to their employees, which can lead to a lack of engagement and ultimately business failure.
• The speaker emphasizes the importance of being hands-on in the business, especially during the early stages of growth.

"Your mission, your purpose, your values of your company really come from you showing the people that work for you how their lives are going to benefit by actually listening to what it is that you ask them to do."

This quote highlights the necessity for leaders to communicate the company's mission and values in a way that shows employees the personal benefits of their work, fostering a sense of purpose and commitment.

• Small businesses have a unique dynamic that is particularly interesting to the speaker.
• The speaker enjoys the hustle and learning experiences that come with running a small business.
• Acquisition.com is mentioned as a platform for picking up companies that are still in the process of figuring things out.
• The speaker sees potential in businesses, such as a chain of teeth whitening studios, to optimize sales processes and increase profitability.

"The whole dynamic of small business is super interesting to me, dude."

The speaker expresses a passion for the challenges and learning opportunities present in small business environments, finding them more engaging than larger corporate settings.

• The process of selling requires nuanced communication and the ability to read and respond to customer reactions.
• Real-life interactions, rather than digital communication, are crucial for developing sales acuity.
• The speaker discusses the importance of practice ("reps") in mastering sales techniques.
• The analogy of wrestlers reacting instinctively on the mat is used to illustrate the need for salespeople to be equally adept and spontaneous in their interactions.

"The acuity that you have to have to read someone can only come from that scenario. There's no coach that can teach you."

The quote stresses the importance of firsthand experience in developing the ability to read and respond to customers effectively, a skill that cannot be fully taught but must be learned through practice.

• Wrestling is mentioned as a powerful life teacher, providing lessons in resilience and personal growth.
• The speaker reflects on the experience of wrestling and how it relates to the discipline required in business and sales.

"Wrestling has been an awesome life teacher for me."

This quote connects the discipline and mental fortitude developed through wrestling to the skills necessary for success in business and personal endeavors.

• The speakers share similar stories of entrepreneurship, particularly in the fitness and supplement industries.
• The discussion reveals the commonalities in their paths, including speaking engagements that led to further business opportunities.
• The speakers bond over their shared experiences and the challenges of selling products that people need but may not necessarily want.

"It's just crazy hearing it. It's cool."

This reflection on the similarities between the speakers' entrepreneurial journeys emphasizes the shared challenges and milestones that entrepreneurs often encounter, regardless of industry.

• The speaker recounts an experience of being overwhelmed by interest after a conference presentation, leading to a flood of business opportunities.
• The story progresses to discuss the strategy of launching and scaling gym businesses through sales and marketing tactics.
• The speaker meets a partner, Leila, who becomes instrumental in the business's growth.
• The narrative includes a pivot from gym ownership to helping other gym owners launch their businesses successfully.

"So got the gyms going. I spoke at that conference, right? And I talk about this. Hey, this is what I'm doing."

This quote introduces the story of how the speaker leveraged a speaking opportunity to expand their business influence and create new ventures, demonstrating the power of sharing knowledge and expertise.

• The speaker details the process of conducting gym launches and the financial success that followed.
• A partnership is formed to scale the business model, but it eventually leads to a challenging situation where the speaker's partner takes half of the company's funds.

"So I got the gyms going. I spoke at that conference, right? And I talk about this. Hey, this is what I'm doing."

The speaker outlines the initial success and subsequent partnership that arose from demonstrating their business model at a conference, illustrating the opportunities that can come from showcasing one's work.

• The speaker emphasizes the importance of word-of-mouth marketing for the podcast and encourages listeners to share it with others.
• The speaker's personal story is used to illustrate the effectiveness of personal recommendations and organic growth.

"The only way this grows is through word of mouth."

This quote underscores the significance of word-of-mouth promotion as a key driver for the growth of the podcast, reinforcing the traditional yet powerful marketing approach.

• Speaker A was accused of stealing and sought advice from a mentor on how to handle the situation.
• The mentor suggested printing out bank statements and reviewing them line by line with the accuser.
• Speaker A followed the advice and prepared to confront the situation with detailed financial evidence.

"He's like, print out the bank statements and just go line by line with him. And I was like, that sounds reasonable." "So I print out the bank statements and I literally did the whole thing went, and I drove over to where he was, and as soon as I sat down with the thing, he just took. He was like, I don't need to see."

The quotes explain the mentor's advice to Speaker A and Speaker A's actions to resolve the accusation by bringing detailed financial records to the meeting. The mentor's guidance was practical and aimed at resolving the issue transparently.

• Speaker A discovered that the accuser had committed fraud by wiring money to a girlfriend in Sweden.
• The accuser had a history of fraud, which Speaker A knew about but chose to overlook due to believing in second chances.
• Speaker A reflects on the naivety of trusting someone with a known fraudulent past.

"Yeah. And so he had wired the money to his girlfriend who lived in Sweden. It was gone into oblivion. And he had been indicted for fraud." "I already knew that when I started. He was like, it was just a big misunderstanding. And I was like, I believe you, bro."

These quotes reveal the fraudulent actions of the accuser and Speaker A's initial trust despite knowing the accuser's history. Speaker A's good-hearted nature led to a decision to give a second chance, which resulted in a difficult lesson.

• Speaker A was left managing a gym with significant financial responsibilities and no cash flow.
• The struggle included draining savings to cover payroll and overhead without the ability to bring in new cash.
• Speaker A's decision to trust someone with a history of fraud led to a significant financial setback and the closure of a newly launched gym.

"And so now I've got this gym that has payroll trainers, lease, and there's no cash." "And so I drained my savings every week with payroll and rent and overhead because I couldn't bring new cash in."

The quotes highlight the financial difficulties Speaker A faced as a result of the fraudulent actions of a business partner. The situation led to the depletion of savings and the eventual closure of a gym, illustrating the consequences of misplaced trust.

• Speaker A worked on a gym launch in San Diego, which was successful but faced issues with payment processing.
• A processor held funds due to a review, leading to a cash flow problem during a critical sales period.
• Speaker A had to negotiate with high-risk processors to continue the business, incurring high fees and limits on processing amounts.

"Guy crushes. It does one hundred and something thousand sales." "Anyways, they're like, just call. It should be fine next week."

The quotes describe the successful launch of a gym and the subsequent issues with a payment processor holding funds. This created a bottleneck in cash flow, causing stress and financial strain during a period that should have been profitable.

• Speaker A resorted to using a high-risk payment processor with exorbitant fees and reserves.
• A refund crisis occurred when gym owners encouraged members to refund and re-sign up directly with them, bypassing Speaker A's business.
• The refunds amounted to a significant loss, and Speaker A faced the challenge of recovering $150,000 in profit within a month.

"It's one hundred and fifty thousand in refunds. God, that I didn't have." "You know what I mean?"

These quotes convey the magnitude of the refund crisis Speaker A faced, with a large sum of money being refunded by customers due to actions by gym owners. The situation was dire, and Speaker A was tasked with finding a rapid solution to a substantial financial shortfall.

• Leila, Speaker A's partner, had been successfully running online personal training, which became the new focus of the business.
• Speaker A decided to market and sell Leila's online training program to recover from the financial crisis.
• The shift to direct-to-consumer sales was a strategic move to stabilize the business and generate profit.

"So I'm going to call all the guys, all the gyms that were supposed to launch the next month." "Whole thing. And finally I was like, dude, I'm not flying out there."

The quotes illustrate Speaker A's decision to pivot the business model from gym launches to online personal training. This change in strategy was a response to the refund crisis and the need to find a more sustainable and profitable business model.

• Speaker A offered consulting services to gym owners who still needed help after deciding to exit the gym launch business.
• The consulting offer was unexpectedly accepted, leading to a new revenue stream.
• The success of the consulting and online personal training helped Speaker A recover financially and stabilize the business.

"So I was like, six thousand dollars. Which I know that sounds ridiculous now. But I was like, yeah, I get it. Who would pay six thousand dollars for something, right?" "And he was like, oh, done."

These quotes capture the moment Speaker A realized the potential for consulting services as a viable business model. The acceptance of the high consulting fee marked a turning point in the business, providing a new direction and hope for recovery.

• Speaker A and Speaker B discuss a business venture where they sold licenses for a training system.
• Speaker A had already created 80% of the system as internal training for sales, nutrition, and other aspects.
• The only missing components were the ads and landing pages.
• Speaker A managed to sell the system to various gyms and collected $60,000 in one day.
• Layla, mentioned by Speaker A, was still closing deals for a weight loss product while Speaker A shifted business direction.

"So anyways, in one day, I did sixty thousand dollars in cash collected selling air." This quote emphasizes the rapid financial success Speaker A experienced by selling a product that was not fully tangible or complete at the time of sale, highlighting the potential for high profitability in the right market conditions.

• Speaker A decided to change business direction due to the success of the initial sales.
• They covered all chargebacks and refunds with the new business model.
• The gyms that adopted the system saw significant financial improvements, averaging $30,000 in new cash within the first 30 days.
• This was life-changing for gym owners who typically had low net income and worked long hours.
• The success of the system led to a rapid increase in revenue for Speaker A's business, with monthly earnings growing exponentially.

"And so I called all those guys up and sold almost all of them into the thing. We did like three hundred thousand, like in profit." This quote highlights the effectiveness of the licensing model and how it led to substantial profits by leveraging existing relationships and proven results.

• Speaker A and Speaker C reflect on how difficult situations bring out the best in entrepreneurs.
• Speaker A talks about the relentless drive to succeed and not stopping despite challenges.
• Speaker B, Alex Hormozi, shares his perspective on using pain and anger as motivation in the absence of passion.
• Speaker C agrees with the idea that hardship can reveal and build character and skills.

"I think a lot of times the hard times reveal you. I think a lot of people have that savage that's inside and they just haven't had the environment to pull it out." This quote suggests that difficult circumstances can expose an individual's true potential and resilience, which may not be evident under normal conditions.

• Speaker A and Speaker C discuss how adversity can lead to significant personal and business growth.
• Speaker C emphasizes the importance of using what you have, including pain and anger, to drive success.
• Speaker A shares the importance of doing right by everyone and walking away clean from difficult situations.

"All you do is do right by everyone. And then he's like, the only way you can walk out of this is by knowing that you don't have any strings in the back of your mind of like, something's going to come back." This quote underscores the value of integrity and resolving all obligations, which allows one to move forward without lingering concerns or regrets.

• Speaker A recounts advice from a mentor about handling resentment and the desire for revenge.
• The mentor suggested that success is the best form of revenge, as it diminishes the relevance of those who wronged you.
• Speaker A applied this philosophy to the situation with the older gentleman who had wronged them in business.

"Success is the only revenge. And all you do, he's like, is you just become bigger than them. He's like, so that who they are, in reference to you, shrinks into irrelevance." This quote conveys the idea that achieving greater success is a more effective and dignified response to being wronged than direct confrontation or retribution.