Building a $12,000,000 Business for a Stranger in 25 Minutes

AAlex Hormozi
Advertising/MarketingSmall Business/StartupsManagementCredit/Debt/LoansAir Travel

Transcript

00:00:00This is Joel. He runs a coaching and course business that teaches
00:00:04people how to basically use credit cards to get sweet
00:00:06vacations. Problem is that he's dependent on one platform. If
00:00:09that platform goes away, his business could die basically
00:00:12overnight. I'm Alex Tromosy, founder of acquisition.com, which
00:00:14helps businesses scale. And so let's meet Joel.
00:00:17Hey, Alex. I'm Joel McDonald, founder of Just Get Out of Town,
00:00:21also known as J-Goot.
00:00:22Tell me about the business.
00:00:23We help travelers turn everyday expenses into multiple bucket
00:00:29list vacations every year. Our largest audience is retirees,
00:00:34empty nesters, and business owners.
00:00:36I would not have guessed that. That is really interesting. Okay.
00:00:39The way we help them is through something we call travel hedging,
00:00:43not travel hacking. We differentiate ourselves there.
00:00:46This allows travelers to stretch their vacation budgets three to
00:00:4910 times farther.
00:00:51So what's the difference between hacking and hedging?
00:00:52Travel hacking basically requires that you turn 10 to 20 credit
00:00:56cards a year. And that's why it has such a bad association.
00:01:00Travel hedging is choosing the two or three best cards for your
00:01:05individual spending profile and learning how to effectively use
00:01:08them.
00:01:09So what's the current state of the business?
00:01:10Our trailing 12 month average is 6.4 million. Got a 1.9 profit
00:01:14margin. That's about a 30% profit margin. ROAS is 4.5 to one. And
00:01:19then our LTV to CAC is a very skinny 1.4 to one. We'd like to
00:01:25change that.
00:01:25Yeah. So we want to have it happen.
00:01:26We've got about 12,000 clients that we've put through either our
00:01:30mini memberships or our high ticket coaching program. Our goal
00:01:33is to have 10,000 more in the next year. We'd like to diversify
00:01:36our advertising channels and start to include a lot more
00:01:39affiliate partnerships and charities. I've got a goal of a
00:01:42million donated through partnerships with charities in
00:01:45the next year.
00:01:45Oh, cool.
00:01:46In order to do that, we're going to need to double our revenue.
00:01:48So now tell me about how you get customers.
00:01:50Basically, like I said, it's a book funnel and 85% of our
00:01:53customers come from buying the book.
00:01:55I'm familiar with book funnels.
00:01:57Another 10% comes from conferences, meetups, guest
00:02:01podcasting, we're beefing that up. We're trying to diversify our
00:02:04channels. And then right now, affiliates and charity
00:02:07partnerships are kind of in their infancy, but we do get
00:02:10about 5% of customers there.
00:02:11So what are the problems right now?
00:02:13So our biggest problem right now, single channel advertising. We're
00:02:16heavily dependent, like I said, about 85% on meta. We were kind
00:02:22of hitting the ceiling at 100 grand a month. I spent 150 grand
00:02:25last month and it got 10% extra book sales. It is a loss leader.
00:02:29It's currently taking us about six months to break even, even
00:02:32with the back end.
00:02:33Yeah, second problem.
00:02:34A lot of skepticism in this industry, largely because we are
00:02:37associated with travel hacking. A lot of people assume this is a
00:02:40lot of trouble to save 10 or 20%. The actual savings when you
00:02:44travel the JGoot way is more like 70 to 90%. When people plan a
00:02:49trip, the odds of them getting a great deal on that trip and
00:02:53they've already painted themselves into a corner, say
00:02:55they want to go to Italy in June. The odds of that being a
00:02:58good deal is kind of like placing a chip on roulette.
00:03:00Yeah.
00:03:01Most times it's gonna be very expensive. Every once in a while
00:03:04like one in 20 times they get lucky. The JGoot way of travel is
00:03:07you find the good deals. There are thousands of them out there.
00:03:10You plan your vacation around them. And it's like placing a
00:03:13chip on the roulette table after the marble drops.
00:03:15Anything else that you have?
00:03:16So knowing that you probably have more points than you know
00:03:19what to do with, but not enough time to figure out what to do
00:03:22with them. We put a little itinerary together that includes
00:03:24Singapore suite that typically goes for five to 10 grand
00:03:29apartment. That's another five to $10,000 flight one way. We
00:03:32basically put an itinerary around the world that would
00:03:35normally cost about $70,000 for the five countries that we found.
00:03:40And we showed you how to do it on points for 1800 bucks out of
00:03:43pocket.
00:03:44Love this for us.
00:03:45So basically, we're going to send you from Vegas, to San
00:03:49Francisco, to Singapore, to Abu Dhabi into London and back home
00:03:55through Mexico City great images. And all of these are first class
00:03:58flights that would have normally costed either $70,000 or 7
00:04:05million points. And we put them together for about a million
00:04:08points.
00:04:08It's a clear savings prop, you have to spend money in order to
00:04:12spend money to save money type thing. What percentage of your
00:04:15sales right now are outbound versus about right now. So we
00:04:17just implemented some aggressive outbound, like within the past
00:04:21month, it's been probably 6040 60% inbound 40% outbound, we'd
00:04:28like to really ramp that up, that'll probably be a central
00:04:30feature of what we're talking about. What do you want to have
00:04:32happened with the business, you want to double it, you want to
00:04:34sell them to somebody just want to make money with zero interest
00:04:36in selling this business, right? Well, then this makes it way
00:04:38easier. I just like to impact twice as many people's lives. So
00:04:42now that we've gone through Joel's business, I'm going to
00:04:43work through core areas where he's stuck and what we can do to
00:04:46fix them. And for each area, I'll break down the exact
00:04:48principles and tactics Joel can use to scale which are likely to
00:04:51apply to your business as well. So let's get started with number
00:04:54one, which is being clear whether Joel has a supply
00:04:56constrained business or demand constrained business. I have a
00:04:59bunch of ideas. You want to come on the side and we'll utilize
00:05:01this brand new beautiful paper desk that my team made for me
00:05:04very excited. My first triage question that I'm always thinking
00:05:08through is this a supplier demand constrained business. So this is
00:05:11a demand constrained business, like you can handle more customers. So
00:05:14there's two ways we can think about this. So if we have this
00:05:17from a decision tree perspective, right, it's like,
00:05:19okay, so this is a demand constrained business. Got it. So
00:05:22in order to fix demand, we can go new channel, I know that you're
00:05:26considering doing like the second channels, I feel like there's a
00:05:29lot more that you can milk on the existing one by like a lot just
00:05:32because the nature of this offer is so broad. This is the type of
00:05:36offer that can probably scale like 100,000 plus a day and
00:05:39spend. It's like, okay, so we have new channel, we have lower
00:05:42CAC, which underneath of this we can do through CRO, so
00:05:46conversion optimization. Or you can do the better creative or
00:05:54offer. So this is this is me just kind of sharing how I'm
00:05:59thinking through this. So we can get that or you can just spend
00:06:02more. Right? Which is always a fun one. But given the fact that
00:06:05you said you've had these constraints on whenever you do
00:06:07spend more you like quickly hit a wall, which is fairly common,
00:06:10then it's going to probably be a combination of one of these
00:06:12three things. I'm basically being focused on those pieces,
00:06:16because these are basically the three things that are going to
00:06:18unlock that. So right off the bat with better, where are you
00:06:21getting your UGC so usually user generated content because you
00:06:23have the most visual type of product, the image that I saw is
00:06:27just like you and the team, my god, people take pictures on
00:06:30their vacations. And I feel like your groups probably have crazy,
00:06:33you know, them in front of the Taj Mahal and you know, whatever
00:06:36else. I feel like if you have that kind of like a tic toc
00:06:39style, like, check out this trip that I just booked for under x i
00:06:43think that would destroy. So like video content, yeah, like
00:06:48selfie style, like you I mean, I'm sure you probably get all
00:06:51these like think about these Instagram pages that just show
00:06:54like trips and like all these kind of like hacks and stuff. And
00:06:58a lot of them have like 1 million, 2 million plus and like
00:07:00they're very active, like super engaged. I would model those
00:07:05style videos like we can just try and pull up a good travel
00:07:07page on Instagram. So this style just like this. Okay, with your
00:07:13real like and that's a real person you can tell she's not
00:07:15some model. It's like a real person. And if just had a pin
00:07:19thing on the top that was like I did all this for under $1,800. I
00:07:22think it will work really well. And just run all of it test at
00:07:26all. And I mean, again, we can run it organically like this.
00:07:29It's so visual. This is so visual and people watch these so
00:07:32they can just vicariously live through it. And it's like, you
00:07:34don't have to live through this. You can do this. Okay, that's
00:07:38compelling. The highest point of leverage I think in this
00:07:40business, I'm going to change some backend stuff too. But like
00:07:42if you unlock the UGC loop, this thing will perish. And so I
00:07:47think, are you on TikTok?
00:07:48Embarrassingly low following me.
00:07:52Okay, there's some businesses that it's tougher. If I have a
00:07:54tax savings business, it's like maybe I'm a business owner talking
00:07:57about tax savings. It's not very visual, right? Maybe get some
00:08:00emotion about the story and things like that. That's the
00:08:02angle we'd have to take there. This is so visual. What we need
00:08:05to do is number one, we need to incentivize people to post the
00:08:09reels inside of the story. And when they do that, they get to
00:08:12unlock some sort of checklist that you hold back and you're
00:08:16like, how do we get access to that? It's like, Oh, post a
00:08:18montage of your trip that you're able to do in under 60 seconds.
00:08:23And here's how you do it. And you can show them how to put it
00:08:26together. And I think a lot of people would want to do that. And
00:08:28you probably have a ton of them anyways. But just ask for
00:08:31permission to use them. And then you can get the basic in exchange
00:08:34for permission, they get this extra training or this extra
00:08:36thing, I think that will unlock this is a decentralized content
00:08:39machine. So instead of you trying to be like, Okay, we have
00:08:42to go make more ads. It's like every week, we have 2030 videos
00:08:46that are coming from our community of the trips that they
00:08:49were able to take. And every week, we blast all 30 videos up
00:08:53there, and we see where the winners are. And then boom, once
00:08:55we have the winners, then we just do some and then we try and
00:08:57cut them a bunch of different ways. Okay, so the second thing
00:09:00I said that you just see loop, right? I'll go into more detail
00:09:04in a sec. But that's kind of like the big thing of one.
00:09:06Second one is something I call kaleidoscope. But basically, I
00:09:11know you have one piece of creative, you want to pull it up
00:09:12Michael, the highest converting one of all time. So one of the
00:09:16interesting thing we can do here is like so this image, it's like
00:09:18there's 20 ways to Sunday, we can we can do this. So like you had
00:09:22the AI versions of me that you did it all those, I want you to
00:09:25take this image, and then AIify a bunch of different versions of
00:09:30this. It's like, Okay, how do I make this black and white? How do
00:09:32I do with a sepia filter, we could take this and put it into
00:09:35AI and say, make a three second video of this image, which it
00:09:38would then just make a three second video of it, even though
00:09:40it's just an image. Let's do a cartoonized version. And let's do
00:09:43cartoon in this version and Ghibli and listed like because
00:09:45right now that's trending. And so that will give you 2030
00:09:48variations of whenever you do have your winner blast the hell
00:09:52out of how many more slices and angles that you can take on it.
00:09:55In terms of the copy. What I found in scaling like a
00:09:59campaigns is that when you do have copy that wins, you don't
00:10:01need to change it nearly as often as you think. So like when
00:10:03we ran the school games all last year and pushed it really, really
00:10:06hard. We had one version of the copy that we ran for six months,
00:10:11and then a second version of the copy that we ran for three. In a
00:10:15different company that we own, we spend, gosh, couple hundred
00:10:19thousand a day. And after five years, there's three hooks.
00:10:24There's three like when you find the winners, you just run them.
00:10:27And so I think, so part of it is just like putting your mind at
00:10:30risk of like, what do we need to do this difference? Like, no, you
00:10:32found your winner. So now we just need to like three different
00:10:35versions of the creative. On the other hand, that changes all the
00:10:37time. But with a copy in the messaging, it's like, we just
00:10:40leave that if it's, if it's working, it's like, you can just
00:10:42keep using that over and over again. But I do think this UGC
00:10:45loop will be really big. And then once we have the winners, we
00:10:47kaleidoscope the hell out of them, which is like how, which is
00:10:50like AI, we have filters that we can do. We have, you know,
00:10:54remakes, which is, can I, sorry, it's okay, remake. Can we take
00:11:01this video and then just refilm it? Because these are a lot of
00:11:05these are going to be video based. And so what's interesting
00:11:07about video versus static is that statics work better for a lot of
00:11:10businesses because they suck at video, not because video doesn't
00:11:13work. But good video beats images. Yeah, good video beats
00:11:17images, but images beat bad videos. And so most people are
00:11:20like, oh, statics work like we can't get videos to work when we
00:11:23static to work. It's just cause the videos weren't good. And it's
00:11:25the same thing as people who make content and like, oh,
00:11:27content doesn't work. It's like, no, good content works, but bad
00:11:29doesn't. Do you make Schwartz or anything like that? Very painful
00:11:32and slow growth, but yeah, you need to just get one hyper
00:11:35caffeinated, uh, 20 year old who lives and is brain rotted Gen Z.
00:11:41Um, see, see, I'm using, I'm using this, I'm using the slang,
00:11:45right. Who just really is native. They're plugged in to the
00:11:47platforms because they'll be able to look immediately at your stuff
00:11:50and be like, oh, this is why it's not working. It's like, okay,
00:11:51bucks off. Like you're not using trending audio. You're trying to
00:11:54make these look professional, but they just need to be like iPhone
00:11:56selfie style. And we can use it like a pinned comment on the top
00:11:59of the video. There's so many like meme versions of this. It's
00:12:01like, you can travel around the world for less than a thousand
00:12:03dollars, prove me wrong. And then it's like, and then you'd have
00:12:05troll city right underneath it. Like there's so many different
00:12:09contextual, like trending things that are happening right now. I
00:12:11would say that the number one biggest thing that's limiting the
00:12:14business is better creative. So typically when there's a cap,
00:12:17sometimes it's a money cap, which is like, we just can't
00:12:20afford to spend more. And I'll cover that in a second. But like
00:12:21the creative unlock is usually why someone gets limited. We've
00:12:26scaled to $10,000 there, whatever it is. And it's like,
00:12:28okay, so $10,000 a day is all we can spend based on how good this
00:12:32creative is. And so the easiest, cause I know you come from an ad
00:12:35background. So if you're familiar with the Old Spice
00:12:37commercial guy on the horse, my theoretical view of the world is
00:12:41that if you have a product that everyone could buy, then there is
00:12:44one ad that is good enough that could convert everyone. So that
00:12:47ad took Old Spice from a small player in the men's body wash
00:12:51into the majority of the market with one campaign. That campaign
00:12:55literally took the entire market for them. And it was because it
00:12:59was so good that it could convert everyone. Typically the limits
00:13:01are just that as if you think about how Facebook or whatever
00:13:04spends, it's like they're going to go to the most interested
00:13:07people first, because you're optimizing for conversions. And
00:13:09they'll be like, okay, these are probably a little bit less
00:13:11interested, but still kind of adjacent. And then this is like
00:13:14your CPA starts going up. Okay, now there's this way bigger
00:13:16market over here. And then as soon as you hit you try to break
00:13:19through this wall, your CPA goes up because the creatives not good
00:13:22enough. This UGC loop plus 20 year old crack addict. Yeah, I
00:13:31like that. Who lives on his phone or her phone is probably
00:13:37the unlock here because the best way to test this out is start
00:13:40getting more aggressive with your short form content. They can make
00:13:43these as obviously like organic posts. And then when you find
00:13:46your winners, just take that same post at a five second CTA at the
00:13:51end, and then run that as an ad. It crushes it's a double dip,
00:13:55because you're posting content, and they don't have to waste any
00:13:57money. And then when one crushes you take that, boom, post it and
00:14:00then run it. So that is the content winners. Also, I'm going
00:14:09to bet something interesting here. This is Alex just making a
00:14:11bet with no informed data. Part of the reason that you have
00:14:14avatars that are retirees and business owners is that you are
00:14:19a retiree business owner, and they see your ads and also
00:14:22Facebook's AI read Susan the ad and then displays the ads whether
00:14:26or not you choose to target them based on who is most likely to
00:14:29convert. And likeness is one of the strongest predictors of
00:14:32conversion. It doesn't take an AI genius to be like, Oh, we've got
00:14:35an Asian lady. Let's show this to Asian ladies because Asian
00:14:39ladies are more likely to convert, but they do it through
00:14:41the algorithm. So it's not racial profiling. But if you
00:14:44want to have more diversity in terms of the types of customers,
00:14:46and this is also like you think about this little loop here.
00:14:48Well, there's another one of these that's for Asian ladies and
00:14:52another one of these that's for each of those men. And so like,
00:14:54you could probably get to kind of saturation on each of the
00:14:56circles, even with your existing quality of creative by just
00:14:59having a diversity of avatars in the ads themselves.
00:15:02And so even though we're, we could still target the exact same
00:15:05audience, but the algorithm will go target the subject of the
00:15:08yes, yes. Because they're the most likely to convert. And
00:15:12they're the most likely you'll keep spending because it's
00:15:13converting. So I'm going to write a bunch of these down. And then
00:15:16we're going to just prioritize which one is the most likely.
00:15:19But AI avatars right now are just about good enough to be
00:15:23used. And so you can have these kind of like tick tock, defied AI
00:15:28videos that are 1530 seconds of like, guys, you won't believe
00:15:31it. I just went around the world for under 1200 dollars. And the
00:15:34craziest thing is, it did an injection number one objection
00:15:37number two, objection number three. And the best part is, I
00:15:40got it with this book. And I found it on a random ad totally
00:15:43changed my life. That's it. And they go straight to the book
00:15:46funnel. I think that'll crush all of this means we don't have
00:15:49to do all of that other stuff more more and better. First, if
00:15:53we can, it's just the nature of what you sell is so visual. And
00:15:56people naturally take lots of pictures, they want to share
00:15:58food and travel. This is super visual. Tons of people post
00:16:02about this stuff. Travel tons of people post about this stuff. And
00:16:04I would look at the top travel pages, look at the most viral
00:16:07content they have, and model that for my ad seven hidden gems
00:16:10that you've never heard of before. And it's it shows these
00:16:12like crazy montages. And those things get like gazillions of
00:16:15views. All we have to do is just weave the fact that we have a
00:16:17pin. How do you see the seven gems for under $1,000? Okay,
00:16:20right. Just we just have to just layer a filter of like our offer
00:16:23in front of it. And I think it will. I think you have so much
00:16:26creative like if this is the creative that's been running the
00:16:28business. There's so much room. I think it looks authentic. But
00:16:32again, this is where I think the UGC loop will be big. So one is
00:16:34you can use it with avatars avatars, you don't even have to
00:16:36ask for. But I think the UGC loop is like probably the faster,
00:16:39easier, immediate thing that you can do without having to learn,
00:16:41you know, new stuff. I think that this is really the front end
00:16:44stuff like this is how do we lower CAC with just better
00:16:48creative. So this gives us more from the customers. This expands
00:16:51and multiplies that even more. This gives us a content loop that
00:16:54the 20 year old crack addict is going to be able to make by
00:16:58modeling. Travel pages. Real quick, I'm going to show you the
00:17:11exact 10 stage roadmap from zero to 100 million plus, that less
00:17:16than 1% of companies finish I've now done multiple times. And so I
00:17:19can say with a lot of confidence that these are the stages as
00:17:22headcount increases that you need to get through. And I broke each
00:17:25of these down by eight different functions of the business, what
00:17:28the constraint feels like, like what are the symptoms of it when
00:17:31you're going through it, and then what steps we actually took to
00:17:33graduate. And we've done this across software, physical
00:17:35products, service businesses, brick and mortar, all of this. And
00:17:40it works. And it's my gift to you. It's absolutely free. And so
00:17:43the links in the description, but you just go acquisition.com
00:17:45forward slash roadmap, just enter info and it'll spit it right back
00:17:47to you offering the meat of this is still gonna be the sales team.
00:17:50So the fact that you started last month I think is encouraging. I
00:17:53do think that we can improve dialer pickup rates. What's the
00:17:56benefit of the on the call? We want to make them help them get
00:17:59as much out of the book for the people who don't qualify. Like if
00:18:01they spend less than 5000 a year, they just aren't going to
00:18:05have the muscle memory to learn these strategies. And so when
00:18:08you're saying when you said the $5,000 thing, you're saying if
00:18:10they spend 5000 a year on their vacations, that's too small? On
00:18:14yeah, on travel in general. Yeah. Okay, per year. Interesting.
00:18:17Okay. Does it have anything to do with their credit card spend?
00:18:20Yes, those are the two most important factors. Okay, so. So
00:18:24also 5000 a month. So remember when I was at the very beginning,
00:18:28like other other specific factors that qualify the avatar. So if
00:18:32those are the two factors that are most important for the sale,
00:18:34then those are the two things that I would want to weave into
00:18:36the funnel that we could get. So now it's like if your team's
00:18:39gonna make the outbound dials, and your dialer probably can
00:18:41score leads or should be, you know, prioritizing the leads,
00:18:44then it's like, well, then we're gonna start with all the people
00:18:46who are spending over 5000 on their credit card, and then
00:18:485000 a year on their vacations, then it's like they're two for
00:18:50two call this first and if it's a one out of two call them
00:18:53second and zeros, it's like, maybe we'll get to it for work.
00:18:55So I think lead score, which is then add credit card spend, and
00:19:05lose the other one, and then vacation spend to opt in. All
00:19:12right, one of the things that you brought up was that big list of
00:19:15excuses that come up when you do the pitches. So one of the things
00:19:18that I want to do is we need to call it out before they do. So
00:19:24on the sales call, I want to basically front load all of our
00:19:28damaging admissions. Because you said it's too good to be true.
00:19:32And we even offer this to you to be true. You make it less good.
00:19:36So that it's more blame. That sounds counterintuitive. No,
00:19:39basically, we have to do this. But it's like, our testimonials
00:19:43are often accused of being fake. Yeah, generated AI. Sure. To be
00:19:47true. How old are you? 53. Yeah, you could be like, listen, I'm
00:19:5153. I don't even know how to work AI. So like, these are real.
00:19:53No, but what I would do with the damaging admissions piece is say,
00:19:56listen, before I tell you about the good, let me tell you about
00:19:58the bad. And then I would just start listing off all the things
00:20:01that suck about this. It's like, listen, if you want to only go on
00:20:04a specific day per year, it's not gonna work for you. If that's a
00:20:07problem, then like, I want to tell you that these are some of
00:20:09the issues. If you want to go to top shelf places that were good.
00:20:13So you can have what you want, just not when you want. And so
00:20:16that's the trade. Now, if you're at a different point in your life,
00:20:19you're like, you know, I can take off whenever I want. They
00:20:21don't mind if I take two weeks in September versus the middle of
00:20:23you know, October, or June to your point with Italy, you can
00:20:26backpedal it's almost like selling off the back. Like, hey,
00:20:28if that's a problem for you, then this isn't gonna work. So
00:20:30it's like telling them all the reasons it's not gonna work up
00:20:32front. So that they're like, okay, so then they can self
00:20:35qualify. Okay, I could do that. Yeah. Versus I refuse to do that.
00:20:39There's no way it's too good to believe. There's tons of other
00:20:41things that suck about this. So let me tell you about the things
00:20:42that suck. No, but good thing is, is that after you put all that
00:20:45damaging mission, so now when I tell you what's good about it,
00:20:48you're gonna believe me. But we have to, I think you front load,
00:20:51you want to take all the wind out of their sails, and give them
00:20:53all of the reasons that and then you can weave in overcomes,
00:20:56obviously. But you can do it from the position of like, here's all
00:20:59the reasons it won't work. But a lot of people are like, Oh, my
00:21:02god, they're self qualifying. Because everybody still wants the
00:21:06benefit. They just don't believe it. They want it. They just don't
00:21:08believe it. So damaging emissions front loaded.
00:21:15We went through all of this, but I'm going to simplify this into
00:21:17really just two steps. If that works for you.
00:21:20That sounds great. I'm the master of overcomplicating.
00:21:23I think big picture this right here is thing number one, and I'm
00:21:30actually just gonna go this way. dialer lead scoring. And I think
00:21:34you need to increase your number of salespeople. If we added this
00:21:40all up, we've got call it 250 book sales a day. And then you
00:21:43said you have 40 a month to join the $99 thing for you a week.
00:21:47Well, we're averaging about six 700 a month.
00:21:51Okay, 700 a month. So divided by 30 to 20 ish per day, and then
00:21:56book which is pretty much something like that, I'm
00:21:59guessing. And then Facebook group you said was 1500 per month.
00:22:02Yeah, thousand 15. Okay, so we got 30 here. 30 new Facebook
00:22:07members, we probably get 10% of them who give a phone. Okay, we
00:22:10could just make it required if we wanted to. And I think the
00:22:12reason they would do it is because you say we include a free
00:22:15travel assessment. So I think that's the nugget that we give.
00:22:18And I think you do that for both of these. But here, I'm just
00:22:20going to just use rough math here, obviously, to put a little
00:22:22bit, but we have about 300 prospects per day that are coming
00:22:25in the funnel. If you have 300, I would probably be thinking like,
00:22:30gosh, you're gonna need a bigger team. Like if you really want to
00:22:35work the leads, you'll probably need six guys with a power
00:22:40dialer. Their KPI should be like $300 a day each. And you can use
00:22:43something called a parallel dialer. What it does is it calls
00:22:4510 numbers at once for each of them, you have 5% pickup rates.
00:22:48So you definitely need something like this. But let's just say two
00:22:51people pick up here, it'll automatically connect this one of
00:22:54them in that person and one person, this person. So
00:22:56basically, the bigger the team, the more better it works.
00:22:59That'll be the answer, right? Because it'll just roll to
00:23:00Exactly. And so now you just have massive amounts of dials that are
00:23:03happening. And what you do is you're maximizing talk time
00:23:05instead of them just spending a lot of time just waiting for a
00:23:07connection, they're going to be like connected. And so the
00:23:10efficiency seems also going to go up by a lot. And I think you
00:23:12can actually work these leads because I think that the two
00:23:14doubles probably more than one double in the business. This is
00:23:18a multi X unlock. And this is a multi X unlock. And I don't think
00:23:25there's anything else you have to do. And I think these two
00:23:28things, the nice thing is that like they all will work off what
00:23:31your existing spend is. But this will drive down CAC. All this,
00:23:36this will also drive down CAC. So your LTV to CAC ratio will
00:23:39improve sole profitability. But then what it'll do in the main
00:23:42long term benefit is that it'll break you through this barrier
00:23:46into this much bigger pool. And then you'll be able to continue
00:23:49to spend and scale.
00:23:51Yeah, that's something that I've written off. I started the
00:23:56company for this bigger pool. Yeah, started the company
00:23:59because I was broke. Yes, I had no business traveling, but I
00:24:02discovered it. And it was only by getting past assumptions. Yeah.
00:24:06And I can't advertise that I'm advertising to those people.
00:24:09Yeah. So they pay bills that I'd love to impact them. Yeah. And I
00:24:14think this solves that problem. Yes, you have a demand
00:24:17constrained business. So these are the paths, you know, we can
00:24:21spend more which we tried new channel a little too hard for
00:24:23right now, in my opinion, can we lower costs to acquire? Yes,
00:24:27we're gonna do that through better creative conversion
00:24:29optimization, we could have tweaked the offer, but the
00:24:31offers already converting. So I don't really want to mess with
00:24:33it. These are the two angles that we attacked it from. This is the
00:24:36outside. This is the conversion zone. But easy. Pleasure. Thanks,
00:24:41Alex. Yeah. So if you enjoyed this episode with Joel and want
00:24:43to see how it approach scaling a different business, you can check
00:24:45this out.

Key Takeaway

To scale a demand-constrained $6.4M travel coaching business, the founder must transition from static ads to a high-volume UGC and AI-driven creative engine while optimizing the sales backend through lead scoring and parallel dialing.

Highlights

Joel McDonald's business, Just Get Out of Town (JGoot), generates $6.4 million in annual revenue with a 30% profit margin but faces a thin 1.4:1 LTV to CAC ratio.

The business is heavily dependent on Meta ads (85% of customers), creating a dangerous single-platform dependency and a scaling ceiling at $100,000 to $150,000 monthly spend.

Alex Hormozi identifies the business as demand-constrained and proposes a 'UGC Loop' to create a decentralized content machine using customer vacation footage.

A 'Kaleidoscope' strategy is suggested to maximize winning creatives by using AI to generate dozens of stylistic variations such as animations or filters.

Hormozi recommends 'Damaging Admissions' in the sales process to build trust by lead-loading the limitations of travel hedging, such as date inflexibility.

The scaling plan involves implementing a parallel dialer system and increasing the sales team size to handle roughly 300 daily prospects more efficiently.

Timeline

Introduction to JGoot and Business Diagnostics

Alex Hormozi introduces Joel McDonald, the founder of Just Get Out of Town, a business teaching 'travel hedging' to retirees and business owners. Joel explains that travel hedging differs from hacking because it focuses on using only two or three optimized credit cards rather than churning dozens. The business currently sees $6.4 million in trailing twelve-month revenue with a 30% profit margin and 12,000 total clients. However, they face a skinny LTV to CAC ratio of 1.4 to 1 and are looking to double their revenue. Most customers currently arrive through a book funnel, with 85% of traffic originating from Meta advertisements.

Identifying Scaling Bottlenecks and Skepticism

Joel outlines the primary obstacles to growth, specifically a heavy reliance on a single advertising channel and a high level of market skepticism. He notes that increasing his ad spend from $100,000 to $150,000 only yielded a 10% increase in sales, suggesting he has hit a ceiling. To combat skepticism, he provides an example of a $70,000 around-the-world first-class itinerary booked for just $1,800 using points. Alex notes that the business is clearly demand-constrained rather than supply-constrained, meaning it can handle more customers if the lead flow improves. Joel expresses a desire to impact more lives without necessarily wanting to sell the company.

The Creative Unlock: UGC and Kaleidoscope Strategies

Hormozi presents a decision tree for fixing demand, focusing on lower CAC through better creative rather than jumping to new channels immediately. He proposes a 'UGC Loop' where customers are incentivized to share raw, selfie-style vacation videos in exchange for exclusive training. This creates a decentralized content machine that feels more authentic than professional ads. Furthermore, Alex introduces the 'Kaleidoscope' method, which involves taking one winning ad and creating 20-30 AI-generated variations using different filters and styles. He emphasizes that while messaging stays the same, visual variety prevents creative fatigue and allows for massive daily spending.

The Role of Native Content and Avatar Diversity

The discussion shifts to the importance of hiring 'native' social media talent, specifically suggesting a younger employee who understands platform trends and 'brain-rot' slang. Alex argues that good video content consistently beats static images, but most businesses fail because their videos are too polished rather than authentic. He also suggests using a diversity of avatars in ads, such as different ethnicities and age groups, to trigger platform algorithms to find new pockets of buyers. By using AI avatars to address common objections, the business can penetrate market segments that haven't yet identified with Joel’s personal image. This approach allows the brand to scale horizontally across various demographics without changing the core offer.

Optimizing the Sales Backend and Closing

In the final section, Alex focuses on the sales team and lead scoring to improve the backend conversion rates. He suggests adding credit card and vacation spend questions to the opt-in process to prioritize high-value prospects for the outbound team. To build immediate rapport, he advises using 'damaging admissions' by telling prospects all the reasons why the service might *not* work for them before sharing the benefits. He recommends implementing a parallel dialer to call multiple numbers at once, significantly increasing talk time for the sales reps. Ultimately, these two shifts—better creative and a more robust sales infrastructure—are presented as the keys to multi-X growth.

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