Helping Educational Business Owners Scale

AAlex Hormozi
Small Business/StartupsAdvertising/MarketingManagementBuying/Selling

Transcript

00:00:00- I've been in business for 14 years.
00:00:01Last year, our companies in total
00:00:02did over $250 million in aggregate revenue.
00:00:04I co-owned the platform Skool,
00:00:06which is over 22 million users.
00:00:07And Skool's a platform that allows people
00:00:09to start and scale digital businesses.
00:00:11And so I have access to quite literally
00:00:13millions of data points on what makes digital businesses work
00:00:16and what doesn't.
00:00:17And so in this video, I'm answering your questions
00:00:18about how to scale.
00:00:19- I sell dreams and I built an ecosystem
00:00:21to make it happen, essentially.
00:00:22- What does that mean?
00:00:24- Let's get into it.
00:00:25I start off flipping homes.
00:00:26- Okay, thank you.
00:00:28(laughing)
00:00:30- I start off flipping homes and it got to a point where--
00:00:32- I saw hope and opportunity.
00:00:34- Hey, it works.
00:00:35(laughing)
00:00:37I flip houses, got to a certain point.
00:00:39We had about 30, 40 consecutively
00:00:40every year of the same market. - What's revenue?
00:00:41- Revenue is about four mil.
00:00:43- Okay.
00:00:44- Just not line itself.
00:00:45But then it got to a point just too much competition,
00:00:47had a hard time being profitable per flip.
00:00:49So then developed a model where we convert competition
00:00:53to collaboration.
00:00:54Started a contracting company instead of buying the product,
00:00:56becoming the product.
00:00:58And then started a coaching channel
00:00:59where I feed this ecosystem.
00:01:01Vertically integrated HVAC company, roofing company,
00:01:04dumpster company, contracting, the whole nine yards.
00:01:07So I'm teaching people how to do it
00:01:09and I'm giving them the process on how to do it.
00:01:10All that is different revenue drips for me.
00:01:13What's stopping me?
00:01:15I got too busy too fast and owner-operator for a long time,
00:01:19up until about three months ago.
00:01:20Hired a COO.
00:01:21Now transitioning a lot of the operation stuff onto her.
00:01:25Really, I don't know what the fuck I'm doing
00:01:27'cause like I'm trying to transition myself out.
00:01:29I don't know how to run a COO.
00:01:30- Are you trying to transition out of the role
00:01:32or out of the company?
00:01:34- A little bit of both.
00:01:35So out of the role because to be honest,
00:01:38I don't really care about the revenue growth factor.
00:01:41I care more about the impact.
00:01:43So I promise I made myself is that I want to impact
00:01:45at least like a one million lots before I die.
00:01:48So how do I do that?
00:01:49I'm not going to be doing like flipping homes
00:01:50at a small scale.
00:01:52But I built a company that's so based in locality
00:01:54that I'm trapped within it.
00:01:56Because it's so local, my team is there,
00:01:58my resources, my companies.
00:02:00The coaching program only makes sense because it's local.
00:02:03But because of my market size,
00:02:05there's only so many people I can get consecutively
00:02:07every time unless I keep dropping prices,
00:02:09the opposite of increasing prices.
00:02:11So what does that mean?
00:02:12I have to go to a national stage.
00:02:14How do I take this coaching at a massive scale?
00:02:18And that's where I'm stuck at
00:02:19'cause I'm too busy in the operations.
00:02:21And that's where Amy came in as a COO
00:02:22to kind of help me get out of it
00:02:24and focus on the next phase of the origin story.
00:02:27- So dude, like I appreciate the national scale vision.
00:02:32I think you could probably get to given the ticket size
00:02:36and how you can monetize the customer
00:02:38in all these hundreds of ways.
00:02:39Like the reason you would do that setup
00:02:42is so that you could dominate a local market.
00:02:45You're not dominating a local market right now.
00:02:46You're barely getting started.
00:02:48And so you could probably realistically get
00:02:50between Fayetteville and Raleigh,
00:02:53you could probably get to 100 million a year.
00:02:56- Justin, I'm not gonna loan.
00:02:57- Yeah, and I think if you just take your eyes off of like,
00:03:00I wanna conquer the entire world, it's like maybe,
00:03:02but like in order to conquer the world,
00:03:04you have to conquer a country first, right?
00:03:06And before you conquer a country, you gotta conquer a city.
00:03:08And right now you haven't conquered a city.
00:03:09And so what happens is when armies overexpand, they collapse.
00:03:14And so you need to fortify your base better
00:03:16'cause 10 a month is nothing.
00:03:18- So what do you recommend?
00:03:19Do I try to automate what I have?
00:03:22Or do I just put myself more into it and dump it down?
00:03:25- Yeah, I think you should just ignore the national thing.
00:03:28- Yeah.
00:03:29- And let me just ask the simple question.
00:03:31Can you, could you sell 20 people a week right now?
00:03:35Not like, let me say it differently.
00:03:37Can you handle 20 people a week?
00:03:38- We will be soon.
00:03:41- Okay.
00:03:42- Now that CO has kind of taken over.
00:03:42- So you could have an eight X increase in sales
00:03:46within your current infrastructure.
00:03:47So that would take you from four to 32.
00:03:51That solves the revenue problem, not the impact problem.
00:03:54- Do you make content?
00:03:58- I don't have time.
00:03:59(laughs)
00:04:00Yeah, if you couldn't tell, yeah.
00:04:02But that's where I'm slacking the most.
00:04:05Yeah, it's the content.
00:04:06- It would be far easier for you to just make content
00:04:10about the stuff you're doing,
00:04:11impact millions of people that way.
00:04:13Then try and get every single person
00:04:17in America to be a home flipper.
00:04:19- And that's not achievable anyway.
00:04:20- I agree.
00:04:21- It's more about the financial education,
00:04:22like selling the dream of like you could be something more
00:04:25than just what you think you are and where you came from.
00:04:27- And you can make content about that
00:04:29and you can distribute it for free with leverage.
00:04:31It's a beautiful thing.
00:04:32And so like you can be legit
00:04:34because you have a legitimate business
00:04:36and then you can talk about it
00:04:38and help all these other people.
00:04:40And then you just keep growing this thing.
00:04:42- Okay, so double down locally.
00:04:44- Yeah, you already have all the,
00:04:45like you went through whatever the hell you did
00:04:47to go through and build all that stuff.
00:04:48It's like you just built it and you're like,
00:04:50you know what, I'm gonna leave it now
00:04:51and I'm gonna do another thing.
00:04:53It's like, no, like I'm glad you brought the COO in,
00:04:55but it's probably so that she can do
00:04:57some of the stuff you're doing now
00:04:58so you can do the stuff you know you should be doing
00:04:59but you're not.
00:05:00And so if you wanted the impact, you see you don't have time,
00:05:02you have the COO, go make some content.
00:05:03It's not gonna take that long anyways.
00:05:04And that way you can scratch your impact itch.
00:05:07And then for everything else, it's like,
00:05:08you need to learn how to run paid ads and sell shit.
00:05:10'Cause like you for sure can sell 20, 50, 100 people a week
00:05:13in a local market, no problem for the offer that you have.
00:05:16- Should I increase pricing to make it better
00:05:19or should I keep it where it's at
00:05:20given that it does feed my other channels?
00:05:22- You probably have a better time
00:05:23just like charging a hundred grand
00:05:25and saying you'll do that stuff for free or at cost.
00:05:27- Yeah.
00:05:30- But yeah, I mean, can you raise prices?
00:05:34It's just like, can you sell and can you like, yes, you could.
00:05:38Typically an offer like this is a hundred grand.
00:05:40So usually they have a done with you style offer
00:05:42that's between 15 and 25.
00:05:44And then there's a total turnkey offer, which is $100,000.
00:05:48No one in my market can afford that, that's the problem.
00:05:51- That is just not true.
00:05:52No one in your market that has heard of you
00:05:56through word of mouth and you emanating your presence
00:05:58into the workshops that you run,
00:06:00one's a quarter or whatever can afford it.
00:06:03If you run ads, yes.
00:06:05It's just that like, how many people show up to your thing?
00:06:08- The venue holds 55 is packed out every time.
00:06:11- Yeah, so you have 55 people a month that come in the doors.
00:06:14- Every three months, yeah.
00:06:15- Every three months, right, dude.
00:06:17So it's like, the way this looks in reality
00:06:20is you'll bring a hundred people in the room
00:06:23and you'll do three of those in a day
00:06:26and you'll pitch and you'll close 10, 15,
00:06:28you'll close three or five at the, you know, like the 100K
00:06:31and you'll close a handful at the, you know,
00:06:34call it 15 to 25K and that's the business.
00:06:38So you'd like, you're like, you see 200 people a year
00:06:41and you're like, my market can't afford it.
00:06:43It's like, well, those 200 can.
00:06:44It's like, look at 2000, I'm sure there are some.
00:06:46Let me give you a stat.
00:06:479% of people in America have a million dollars
00:06:51in terms of their net worth.
00:06:52So if you include, like, value their home at like 9%,
00:06:55it's significantly higher than you think it is.
00:06:58They just look older.
00:06:59Real.
00:07:01- Okay.
00:07:02- We sell motocross training.
00:07:03- Okay.
00:07:04- So we hold five-day camps.
00:07:05What we did to be able to get our projection to 26
00:07:09to the four million is we scaled down
00:07:12our single-day tour dates.
00:07:14We did more in 2014.
00:07:16- Love this for us.
00:07:17- We went all the way to,
00:07:19we scaled from 70 single-day tour dates in '23
00:07:23to 140 of them in 2024
00:07:26and it was just a ton of operational drag.
00:07:29I mean, it was like, we were like a rock big non-tour.
00:07:30- Twice as much.
00:07:31- It was nuts.
00:07:33But what we realized in looking back on it
00:07:35is the bottom 20 of those were net negative.
00:07:37The next 20 were net less than a thousand dollars,
00:07:40so inconsequential.
00:07:42And then I started looking at, in 2024,
00:07:44we did three of the five-day camps,
00:07:46kind of as a test run.
00:07:47Each of those net well over 100 grand each
00:07:50and I'm like, well, hang on a second.
00:07:52This is the answer.
00:07:53So this year, I told the team,
00:07:55at first I called them, I said,
00:07:56"Hey, I just had an epiphany, here it is.
00:07:58"We're gonna do 10 camps."
00:08:00And I said, "Actually, no, we're actually gonna do 25."
00:08:03And they're like, "What, 25?
00:08:04"What do you mean 25?"
00:08:06My question is, do I continue to my--
00:08:10- Were you just able to charge more for the three-day
00:08:12than the one-day?
00:08:13Why did they make some, sorry.
00:08:15- So the one-day is $300, which is probably not enough.
00:08:18The five-day is $1,200, which is definitely not enough.
00:08:22So that's part of the question, too.
00:08:25- Cool.
00:08:26- I wanna continue to scale the five-dayers
00:08:28and scale down the single days,
00:08:30but my fear is we basically own the space.
00:08:32Nobody else does what I do.
00:08:33It's a pretty large market.
00:08:35There is one copycat company
00:08:37and he's trying to hit all these single-day tour dates
00:08:39in the regions that we're doing them.
00:08:40So I'm afraid if I scale them down too much,
00:08:43we won't be able to--
00:08:44- You'll be the model that makes the money.
00:08:45- That's a great point, yeah.
00:08:47(audience laughing)
00:08:50- Love this for us, right?
00:08:51(audience laughing)
00:08:53I hope he does.
00:08:54- Okay, I could, honestly, I could go home right now
00:08:57and I'd be happy after that.
00:08:58(audience laughing)
00:09:00Yeah, you're right.
00:09:02You're right, and I feel more confident
00:09:03that I don't think he could do what we could do anyways,
00:09:05but he certainly can't do what we can do in a five-day event.
00:09:08I mean, we've run those five-dayers like nobody else, so.
00:09:10- Yeah, and I'll land the plane on that for you, too,
00:09:12which is that you will never go out of business
00:09:14focusing on the customer.
00:09:15And I'll tell you a quick story.
00:09:17So the biggest business mistake that I've made,
00:09:20the two most costly business mistakes I've made,
00:09:22one of them has nothing to do with this.
00:09:25This is the other one,
00:09:26which has everything to do with this.
00:09:29I had a competitor that ended up taking
00:09:33a bunch of my top testimonials
00:09:34that we kind of converted to semi-employees
00:09:36because they were big evangelists
00:09:38back in the gym launch days.
00:09:40And as soon as they took them,
00:09:41and they were big ads for me,
00:09:43all of a sudden they were running ads for this other guy.
00:09:45So it's kind of like when the Verizon guy
00:09:47went to the AT&T, remember that?
00:09:48That switch over that actor?
00:09:50It was kind of like that.
00:09:51And this guy was offering one-on-one coaching
00:09:55to help people out, and I never did that.
00:09:58And they were cheaper.
00:09:59So they were cheaper, they were doing one-on-one,
00:10:01and they had some of my top customers becoming advocates.
00:10:06And they said that the 10 of them had come together,
00:10:07they partnered.
00:10:08He partnered with these 10 people or something like that.
00:10:10And when that happened, my feathers got all ruffled,
00:10:14and I was like, it's war time,
00:10:17we gotta go to the mattresses,
00:10:18we gotta really change the business up.
00:10:20And so I did this big kind of relaunch internally
00:10:23to my existing customer base.
00:10:25And I did this big value stack,
00:10:30and then I said, you're gonna get all this extra stuff,
00:10:32not for the same price you're paying me, but for less.
00:10:36And so I took my existing recurring base,
00:10:39and I reduced my revenue by $500,000 top line per month.
00:10:44And so that translated, 'cause we'd take it off top line,
00:10:46and the costs went up.
00:10:47So I increased my costs,
00:10:49and I took my top line down by six million,
00:10:51and I ended up losing in profit
00:10:54some of the neighborhood of six to $7 million a year
00:10:56for that business at the time.
00:10:58I then ended up selling that business, obviously,
00:11:01and the business never recovered that profit.
00:11:04It stayed there.
00:11:05And when I did make that move, the first comment in the chat
00:11:10after I dropped that it was less
00:11:12was a complaint that I had not done it earlier.
00:11:15So it was not,
00:11:15thank you so much for lowering the price
00:11:17and giving us more shit.
00:11:18It was, I can't believe I was paying more.
00:11:21And I was like, I wanna fucking kill myself.
00:11:24(laughs)
00:11:26And here was the best part of all.
00:11:28My churn changed zero.
00:11:31So I just cut my top line by 20%, churn remained the same.
00:11:34Because the willingness to pay changed that I made.
00:11:36I basically reduced it from,
00:11:38call it 3,000 a month to $2,500 a month.
00:11:40It actually made no real difference
00:11:43in whether someone would cancel or not.
00:11:44It was past a threshold that this is a lot of money.
00:11:48And so it changed nothing.
00:11:48I just made less money.
00:11:50And then when I sold the company,
00:11:51that six got multiplied by a lot.
00:11:54And so that probably cost me
00:11:55in the neighborhood of probably $50 million.
00:11:58And so the big lesson that I learned there
00:12:00was that I shouldn't,
00:12:01and that competitor ended up killing that business
00:12:05because it wasn't fucking profitable.
00:12:06And so I was the market leader
00:12:09and someone came in to undercut me.
00:12:11And then I said, oh, I'll copy the moron.
00:12:14- It's easy to let happen.
00:12:15- Yes. - Yeah.
00:12:16- And so don't lose $50 million.
00:12:18Let him figure that out for himself.
00:12:21You just focus on the customer and you'll win.
00:12:23- Good answer. Thank you.
00:12:24- Appreciate you.
00:12:25If you're a business owner,
00:12:26I'd like to invite you out to come to our headquarters
00:12:27in Vegas to see how we scale businesses
00:12:30using what we call the value acceleration method,
00:12:33which is a compilation of all the stuff that we've learned,
00:12:35breaking down different businesses
00:12:37across different industries.
00:12:38And if that sounds at all interesting,
00:12:40you can click below and book a call
00:12:41and we'd love to potentially meet you and see you in person.
00:12:44- I sell coaching to real estate agents.
00:12:46I do two and a half million.
00:12:49I'd like to double it.
00:12:51What's stopping me?
00:12:52That's a good question.
00:12:53Your boy, Ed, he seems to think I could be just super famous.
00:12:56And he's like, you need a brand manager.
00:12:59- Yeah.
00:12:59- And so he's like, you need somebody
00:13:01that has already kind of achieved that with someone else.
00:13:04- Yeah.
00:13:05- So I guess my question is how do I find that person?
00:13:07'Cause 99% of the stuff out there is scams, basically.
00:13:12- Totally.
00:13:12And I would even define them as scams.
00:13:13I just people with that are not that competent.
00:13:16- Scam.
00:13:17- I think it comes down to deception,
00:13:20whether they intended to see or just aren't that good.
00:13:23But back to your point.
00:13:25Yeah, I agree.
00:13:26So fundamentally, if you want to just make more money
00:13:28and you are a brand that promotes itself,
00:13:31then you need to advertise more.
00:13:32Are you constrained on your delivery?
00:13:34- Delivery as far as the fulfillment?
00:13:36- Yeah.
00:13:37- No, it's group coaching.
00:13:38It's easy.
00:13:39- So you could double the amount of customers
00:13:40you have right now and it wouldn't be an issue?
00:13:41- The triple, quadruple, yeah.
00:13:42- Okay, well then, yeah.
00:13:43I mean, this is a pure advertising play.
00:13:45You probably, I mean.
00:13:47- I'm interviewing sales guys and I'm looking at paid ads,
00:13:50like hiring people for that.
00:13:51So like, I'm getting into that.
00:13:53- Yeah, the paid side is gonna give you,
00:13:55call it like a one time three to five X off of a baseline,
00:13:59not a promissory guarantee.
00:14:00Just saying like, that's what I would say is kind of typical
00:14:04if you've gotten to this point off of just organic.
00:14:07Obviously we can help you with that stuff.
00:14:08But like the long-term kind of like well
00:14:12that you need to keep digging is you want to,
00:14:16so think about like this.
00:14:19So you have, just imagine this as your audience.
00:14:23Right now you're monetizing these people, right?
00:14:26The people who are just like super hot,
00:14:27they love you forever and you continue to promote
00:14:30and this gets filled up with new eyeballs
00:14:32and then they come up because they see your stuff
00:14:33and then they give you money, yay, right?
00:14:36So if you, when you start doing,
00:14:40if you do more organic and do it across more platforms,
00:14:43do it more consistently, do it with higher volume,
00:14:44do it with higher quality, then what you're gonna do
00:14:46is you're gonna grow this base.
00:14:49This percentage will stay about the same,
00:14:50but now it's gonna go to here, right?
00:14:52So then that dollar sign goes up.
00:14:53That's a great long-term play
00:14:55and you just want to keep growing the pyramid.
00:14:57What ads will do is that ads will keep this the same
00:15:00and then it'll move this line down.
00:15:02And so you want to do both.
00:15:04So like in the short term, if I was like,
00:15:06how do I like double your business?
00:15:07It's like, that wouldn't be that difficult.
00:15:09I would just be like, cool, just pull the ad lever, it's done.
00:15:11But if we were looking at a 10 year horizon,
00:15:14then I would say, well, we need to do both of these
00:15:15in parallel, we need to continue to plant the seeds
00:15:18and then the ads kind of reach off the top and skip.
00:15:22- That makes sense.
00:15:23- Yeah, for sure.
00:15:24So how do you find an ad manager?
00:15:25I mean, a brand manager?
00:15:27- So. - That's good.
00:15:29- Yeah, the best thing, I mean, we just poach.
00:15:32We just, I mean, just outreach.
00:15:34Hey, you've crushed it with so-and-so,
00:15:35can I pay you more to do it here?
00:15:37- Right, I guess how do you realize
00:15:39who those people are to poach, like who?
00:15:42- Look at the brands that you admire
00:15:44and then reach out to them
00:15:46and offer them more money to do it for you.
00:15:48- But you see the brand,
00:15:49but you don't really know who's behind the brand.
00:15:51LinkedIn, like Frank can help, like.
00:15:55- Yeah. - Solvable.
00:15:57- Gotcha. - For sure solvable.
00:15:58Yeah, I mean, and most of the people
00:16:00who are really good at media stuff
00:16:01do have some presence anyways on their own,
00:16:03so they don't make themselves invisible.
00:16:05Like you could probably chat GPT search
00:16:08who are the people who are involved with that.
00:16:10- Here's my question.
00:16:11Like, is that something that could be outsourced?
00:16:15- You mean recruiting?
00:16:16- No, no, no, no, no, not the recruiting part,
00:16:18like the brand manager part.
00:16:19- No, I wouldn't recommend it.
00:16:20- Yeah, bring somebody in-house.
00:16:22- Thing is, so what are the core things to the business?
00:16:25So for every business you have attraction,
00:16:26you've got conversion, you've got delivery, right?
00:16:28Those are the things that are core to every business.
00:16:30IT, recruiting, finance,
00:16:33I see all of these functions as ancillary
00:16:35that aren't core to value creation for the customer.
00:16:39They're things that must occur for the business
00:16:40to continue to be a business,
00:16:41but not things that are core for the value to be created.
00:16:44And so for you,
00:16:45your brand is arguably the most important asset
00:16:48that you have and for sure would not be something
00:16:50that I would outsource.
00:16:51- So bring somebody in-house, working directly for me.
00:16:53- Yeah, I would poach somebody.
00:16:55Obviously we've done, we've hired a lot of media people,
00:16:57you know, I'll be with that.
00:16:59But beyond that, I would probably,
00:17:01if I'm doing order of ops, you'll probably be,
00:17:04'cause the thing is, is right now, are you selling,
00:17:07you're selling, who's doing the sales?
00:17:09- Well, so I do it in a challenge.
00:17:12- Okay. - And that's the only time
00:17:13I offer it, you know.
00:17:14- You do one to many, five day thing, something like that.
00:17:16- Yeah, yeah. - Okay.
00:17:17- And so I'm gonna switch to book a call,
00:17:18single-cell guy, close. - And do it on a recurring
00:17:21kind of evergreen basis, or still do it in this launch format?
00:17:23- I'll do it both, I'll do both.
00:17:25- Yeah, but okay, but you're selling straight to checkout.
00:17:28Got it.
00:17:30Yeah, that motion, as soon as you turn on ads,
00:17:35is going to break in all likelihood,
00:17:37because it's totally different selling to cold
00:17:39than it is to warm.
00:17:40And so the motion- - What do you mean break?
00:17:42- You will not convert the same percentage you currently do.
00:17:44- Yeah, no doubt, no doubt, no doubt.
00:17:46- By a lot.
00:17:47- And so the whole, the economics of the entire funnel
00:17:50will change, and so that'll take some adjustment in motion.
00:17:53So just more like preparing you for that,
00:17:54'cause that's what comes next.
00:17:55- Yeah.
00:17:56- So high-level recruiting for brand manager,
00:17:58that's gonna start building the base.
00:18:00And then ads plus sales motion
00:18:02are gonna have to come in tandem,
00:18:04because they both have to be good.
00:18:05The ads have to be good, and the sales motion has to be good.
00:18:08If the ads are great, and the sales motion sucks,
00:18:10it won't work.
00:18:11If the sales motion's great and the ads suck, it won't work.
00:18:12- Cool, thank you very much. - Does that make sense
00:18:13for next steps?
00:18:14- What's up?
00:18:15- Does that make sense for next steps?
00:18:16- Yeah, go to LinkedIn and poach somebody.
00:18:18Got it.
00:18:19(laughing)
00:18:19- We sell sales coaching and lead gen to financial advisors.
00:18:24We're at 6.6 million.
00:18:26We'd like to be at 20 plus.
00:18:28- Okay.
00:18:29App down, paid ads, events, how do you sell?
00:18:31- Paid ads.
00:18:32- Okay. - Yeah.
00:18:33- Straight to via cell to phone team?
00:18:35- Correct.
00:18:36- Cool. - Yep.
00:18:37- Yeah, biggest thing is churn,
00:18:38as with pretty much all agencies.
00:18:40So we've basically transitioned from lead gen company
00:18:44to sales coaching company,
00:18:46'cause we know that advisors can't close.
00:18:48No offense to any advisors in here.
00:18:50But yeah, so we're doing a lot of sales coaching now.
00:18:54So we have like the big head, long tail,
00:18:56where we can sell the lead gen on the back end.
00:18:59- Okay.
00:19:00- So yeah, the main question is,
00:19:02have you seen other agencies successfully pivot
00:19:04from lead gen to sales coaching,
00:19:06or in like very non-sales or industries
00:19:10where founders or business owners are sales deficient,
00:19:13have you seen companies successfully train
00:19:16their clients on sales?
00:19:18- Yeah, sure.
00:19:19- So like a gym lunch, how did you guys successfully do that
00:19:23across thousands of gyms?
00:19:24- We had something called Boiler Room.
00:19:26We trained their trainers and front desk people every morning
00:19:29and drilled them, role played,
00:19:31and separate them in the groups the same way
00:19:32we would our own team.
00:19:33So we just did it every morning for them.
00:19:35And it was just an add-on.
00:19:36- Just group role play basically?
00:19:38- Mm-hmm.
00:19:39Just like you'd have a sales manager meeting
00:19:40where you'd role play whatever particular part
00:19:41of the script they were all struggling with.
00:19:43And so we break sales training from the team side,
00:19:47not on the one-on-one side, into five parts.
00:19:48We've got intro, we've got disco, we've got offer,
00:19:51and then we've got objections and looping.
00:19:53And then fifth A is basically whatever
00:19:55is kind of the hot topic of what's the thing
00:19:57that we think is going to benefit the team the most.
00:19:58And so that's kind of how we rotate through.
00:20:00We have to keep each part of the script crisp,
00:20:02otherwise they'll fuck up something.
00:20:03And so that keeps the sword sharp.
00:20:06And that's what we did across the team.
00:20:09We do that for our teams too.
00:20:11But I think it's likely that it's under,
00:20:14basically you need to provide more value
00:20:16or you need to lower the price.
00:20:17And so if you want to tackle churn,
00:20:19it has to be like there are for sure businesses
00:20:22that work in the space that you're at.
00:20:23I think big headlong tail is a great model.
00:20:26Like charge the upfront and then just make
00:20:28the continuity much, much smaller.
00:20:30So it's a no brainer.
00:20:30Like they almost pay that just to be kind of in the network.
00:20:33And so this is, I'll just, I should have said this earlier,
00:20:36but it's like, I try to answer the question
00:20:38so that it affects as many people as possible in this room.
00:20:40But the problem with information and kind of quote coaching
00:20:43or education type businesses is that people try
00:20:47to make continuity out of the front end value
00:20:51that you're providing.
00:20:51And then the value drops once you have the skill.
00:20:55And so you have to separate out the consumables
00:20:57from the one-time things.
00:21:00The one-time things also have significantly more value
00:21:02than the consumables do.
00:21:03Now, sometimes they don't have the money
00:21:04to pay for the one-time thing
00:21:05because they don't have the skill
00:21:06the one-time thing would give them, right?
00:21:08That's kind of the issue.
00:21:09So in order to separate it, it's like,
00:21:11you just have to think,
00:21:12what are the things that they get on an ongoing basis?
00:21:14And if we only sold that, what would the price point be?
00:21:16Likely significantly lower.
00:21:18And if we got from that skill,
00:21:20it would be significantly more.
00:21:21But once they have the skill,
00:21:23assume they have the skill on the ongoing basis.
00:21:25What would they still pay for?
00:21:27Now you have the lead gen thing.
00:21:29- Really?
00:21:30I mean the lead gen.
00:21:31- Oh, everyone wants it.
00:21:32No one can deliver it.
00:21:33- When they learn how to sell using our process, they stay.
00:21:36- Okay.
00:21:37- So the biggest thing is just making sure they actually-
00:21:39- They just don't know how to close.
00:21:40- So it's like, it's activation as well.
00:21:42So like getting them to come in and actually engage
00:21:45because most advisors-
00:21:46- Is it all remote?
00:21:47- It's all remote.
00:21:48And they don't, they also don't like sales.
00:21:50Like the word sales,
00:21:51like they like cringe inside when they hear it.
00:21:54So we've literally like banned the word sales.
00:21:56Like we just say consulting.
00:21:58We don't call them sales calls.
00:21:59We call them consults.
00:22:00So like, you know, like that.
00:22:02But yeah, I'm just curious.
00:22:04- So it sounds like you just have to get better
00:22:06at training them?
00:22:07- Yeah.
00:22:08So your issue though,
00:22:10is that if someone gets activated, they stick for sure.
00:22:15- For sure.
00:22:16- Well then all of the effort we have
00:22:17is how do we get them activated, like better, faster,
00:22:20which is gonna be a function of two things.
00:22:21One is gonna be, are there some avatars that are better
00:22:25than others, right?
00:22:26So we only sell those avatars.
00:22:28And we split that into three buckets.
00:22:29You've got demographics.
00:22:30What do they look like?
00:22:32Right, you've got the quantifiable, which is like,
00:22:33what are the, what size business do they have, whatever.
00:22:36And then you've got the, I said demographics
00:22:41and there's quantifiable.
00:22:43There's a third one, I can't remember.
00:22:44But those two at least get you on a headstart
00:22:47in terms of segmenting the traffic.
00:22:48So you can be like, this is who the avatar is.
00:22:50These ones have a significantly higher likelihood
00:22:52of converting.
00:22:53And what'll happen when you do that is your CAC will go up,
00:22:56but then your stick problem will get fixed.
00:22:58- Okay.
00:22:59- So like, for example, if I sold everybody who identified
00:23:02as a fitness person,
00:23:03then Jim Walsh would never have been able to exist.
00:23:06Because I would have had too many shitty customers
00:23:08who are personal trainers, who've got 10 clients, whatever,
00:23:11and they can never pay and it doesn't matter what I do.
00:23:13And so for me to deploy the resources required
00:23:16to actually get them up to snuff,
00:23:18I have to have somebody who at their onset can pay more
00:23:21so that I can actually help them.
00:23:23- Okay.
00:23:23- Because below a certain extent, it just needs to be DIY,
00:23:25which is a different business,
00:23:26not the business I wanted to be in.
00:23:28So there's probably some advisors that are better
00:23:31that you need to basically scan out and say,
00:23:33all these people were not gonna service
00:23:34'cause they have a low likelihood of actually working.
00:23:36And maybe you need to adjust price
00:23:37to only accommodate those people
00:23:38and that newer avatar that's better.
00:23:40So this is becoming really an avatar issue.
00:23:42And then obviously the ops on the back end
00:23:43in terms of activation is what do,
00:23:45oh yeah, that's the third bucket, the behaviors.
00:23:47So what are the people who have the right demographics
00:23:50and the right quantifiable?
00:23:51What behaviors did they do
00:23:53that caused them to activate and stick?
00:23:55And what did the other people who look like them not do?
00:23:58And then that becomes the activation process
00:23:59we reverse engineer.
00:24:01- Makes sense.
00:24:02Quick last question.
00:24:03How did you optimize for time to value at your launch?
00:24:07And how can we potentially do something similar?
00:24:09As far as deal cycles are-
00:24:10- Yeah, we'd email their list,
00:24:11they make a sale in the first seven days.
00:24:13- Okay, so just reactivation.
00:24:14Okay, sweet, appreciate you.
00:24:16- If you are doing a million dollars or more a year
00:24:19and you'd like to get to 10 million or a hundred million
00:24:22dollars, I can promise you absolutely none of that.
00:24:25But what I can do is create an environment
00:24:28where you can actually talk to other business owners
00:24:30and players within those businesses
00:24:31that are doing those numbers.
00:24:33And for me personally, the big breakthroughs that I had
00:24:36in my business was when I came in with an open mind
00:24:38and was like, I don't know what I don't know.
00:24:40And so you probably have one of those,
00:24:42like how do I get my content to scale?
00:24:44How do I recruit these first salespeople?
00:24:45How to recruit my 20th or my sales by VP of sales
00:24:47or director of sales?
00:24:48Every single level of this game has more complexity
00:24:52than the last.
00:24:53And so if that sounds at all interesting,
00:24:54I'd love to invite you out to our headquarters
00:24:56for two days to talk to me and the team,
00:24:58director of sales, director of marketing,
00:24:59director of strategy, director of ops,
00:25:01director of investment,
00:25:02all the people who actually run our portfolio
00:25:05at acquisition.com.
00:25:06And as a bonus, all the other business owners in the room
00:25:09are doing a million dollars plus.
00:25:10And yeah, so this is your invitation.
00:25:11So if that's interesting, click book call.
00:25:13If it's a good fit, love to invite you out here
00:25:14and maybe see you in here in Vegas.

Key Takeaway

Scaling to $100 million requires dominating local markets through high-ticket offers and content leverage rather than premature national expansion or defensive price cutting.

Highlights

Expanding to a national stage before dominating a local market often leads to organizational collapse due to overextended resources.

Cutting recurring subscription prices from $3,000 to $2,500 resulted in a $6 million annual profit loss while failing to reduce customer churn.

The top 9% of Americans possess a net worth of at least $1 million, indicating a larger high-ticket customer base than most local business owners assume.

Replacing 140 single-day tour dates with 25 five-day camps increases net profit while significantly reducing operational drag and logistics costs.

Successful sales training for clients involves daily 'Boiler Room' drills focused on intro, discovery, offer, objections, and looping.

Timeline

The Pitfalls of Premature National Expansion

  • Local businesses with $4 million in revenue often have the infrastructure to scale 8x by increasing sales volume within their current market.
  • Attempting to conquer a national stage before securing a city base leads to army-style collapse from overextension.
  • Content creation serves as a high-leverage tool to achieve massive impact without the operational burden of managing every customer personally.

A house-flipping business owner stalled at $4 million in revenue despite vertical integration into HVAC and roofing. The bottleneck was an 'owner-operator' trap and a desire to go national to increase impact. Shifting focus to local dominance and free content distribution allows for 20 to 100 sales per week without geographical overreach.

Pricing Strategy and High-Ticket Market Reality

  • High-ticket offers typically range from $15,000 to $25,000 for 'done-with-you' services and $100,000 for total turnkey solutions.
  • Local markets contain more wealthy individuals than visible through word-of-mouth, with 9% of the population holding a million-dollar net worth.
  • Paid advertising reaches the segment of the market capable of affording $100,000 offers that organic workshops often miss.

Business owners often underestimate their local market's purchasing power because they rely on limited data from small workshops. Moving from 200 annual leads to 2,000 via paid ads reveals customers who can afford premium pricing. Pricing should reflect the value of the 'done-for-you' result rather than the perceived local average.

Maximizing Profit by Reducing Operational Drag

  • High-frequency, low-cost events often result in net-negative or inconsequential profits due to high operational costs.
  • Consolidating services into longer, higher-priced formats like five-day camps generates over $100,000 in net profit per event.
  • Focusing on the most profitable delivery model creates a moat that copycat competitors cannot easily replicate.

A motocross training business scaled from 70 to 140 single-day dates, only to find the bottom 40 dates were unprofitable. Transitioning to 25 five-day camps at $1,200 each provides a clearer path to $4 million in revenue. This shift prioritizes customer depth and profit margins over raw volume of tour dates.

The $50 Million Lesson on Price War and Churn

  • Lowering prices to compete with undercutting rivals often fails to change customer churn rates.
  • Reducing top-line revenue by 20% can permanently damage company valuation and lead to massive losses during an exit.
  • Market leaders should avoid 'copying the moron' who offers unsustainable, non-profitable pricing.

A defensive move to lower monthly rates from $3,000 to $2,500 cost $500,000 in monthly top-line revenue and millions in eventual sale value. The price drop did not improve retention because customers who find a price 'expensive' rarely change their behavior for a 16% discount. The competitor who triggered the price war eventually went out of business because their model was never profitable.

Building Brand Assets and Sales Infrastructure

  • In-house brand management is a core value-creation function that should never be outsourced to external agencies.
  • Paid advertising combined with a robust sales motion can 3x to 5x a baseline established by organic growth.
  • Switching from warm organic leads to cold paid traffic requires a fundamental adjustment in the sales funnel and conversion expectations.

For a $2.5 million coaching business, scaling to $5 million requires aggressive recruitment of 'poached' talent from admired brands. The transition to paid ads usually 'breaks' existing checkout processes because cold audiences require different handling than warm organic followers. Success depends on the parallel development of high-quality ads and a disciplined sales team.

Solving Agency Churn Through Customer Activation

  • Client churn in agencies is often a failure of 'activation'—getting the client to perform the behaviors that lead to their first win.
  • Segmenting customers by demographics, quantifiable traits, and behaviors identifies the avatars most likely to stick.
  • Generating 'time to value' within the first seven days, such as through email list reactivation, secures long-term retention.

Agencies often struggle when clients lack the skills to handle the leads provided. Implementing 'Boiler Room' style daily role-play training helps clients overcome their fear of sales (or 'consulting'). By reverse-engineering the behaviors of successful clients and only selling to high-likelihood avatars, agencies can fix churn and justify higher upfront fees.

Community Posts

View all posts