1 Hour of Alex Hormozi on Getting Rich

0:00Are there different tiers to wealth that you've noticed like for people that go from zero to 100, 100 to a million? What are those tiers and when do you see diminishing returns? >> I think Felix Dennis has a a book called like it's like how to be rich I think it's how to be rich I'll teach you to be rich or how to be rich something like that. Anyways, it's funny but like the first chapter he breaks down like 11 levels of wealth and he says basically after 400 million dollars liquid he's like that's when you're truly wealthy.

0:28>> [laughter] >> And he's he was you know he was worth that much money. He's like at that point it's like you can really do whatever you want. I do think that the jumps are much smaller in the beginning in terms of what makes it really big difference. I think going from anything to about six figures a year is a material change. I think going from like you know even 10,000 a month to 20,000 a month is a significant change. Going from there to about 40 or 50 is another change. And if we think about like how we're defining the change it's usually like what are the variables that affect someone's daily living. So it's going to be where they live um the you know the schools that their kids can go to the vacations they can take where they can stay uh the food they eat the clothes they wear.

1:04Like those are all but almost all of those are affected mostly I'd say like up to kind of like that 1% earning level which is about 500,000 dollars a year. Now you can live a baller lifestyle 500 but not really save anything. And so if you're a responsible saver it really depends on your saving um I'm actually a lot like Grant believe it or not even though I I I spend money because Layla spends money but like by percentage of income I spend a very small percentage of my income. Um and so it really just depends on your appetite for saving versus spending. Uh and I think that's entirely personal cuz it's really just a question of risk. Like how much risk I'm willing to take on. But um beyond that there's that's just a ratio but after that it's like you know you're you have nicer and nicer houses. You go on nicer and nicer vacations. You travel private you know maybe that's at a couple million bucks a year you start traveling private.

1:55After that again it's like it's just like you're buying boats and you're buying houses. Like there's you can't at a certain point you really can't consume any more of it. I will say this is that I do think that, and this is controversial, but I do think that money because you know they did a study it's like up to $70,000 a year and now like inflation adjusted probably closer to 100. I actually think it continues to go up beyond that, but I think the problem is that people have a skill deficiency in terms of how to spend money.

2:21I think most people know how to spend money effectively up to $100,000 a year in terms of how to make their life better, but they don't know how to spend it above that in terms of like things that improve their lives. Like I think but I think it's a learnable skill. I think you can get better at spending money to make your life better. And so for me things that make my life better are going to be things that buy me time back, things that basically are all the annoyances and frustrations in my life if I can pay and make those go away, those are things that net enhance. And then long term in terms of purpose, it's like if you find something meaningful, you can actually devote real resources and make a change or an impact which I think is, you know,

2:53>> Yeah, you should see the updated study on that. That whole $75,000 thing got debunked. No, it was that was done in a in in a different country with So they did one recently well within the last 10 years of the United States and they found that I think it was about $150,000 was where you get peak dollar to value ratio. It continues up but diminishing returns and they found that it that diminishing returns really stopped about $650,000 a They found that over a million dollars a year you actually have lower quality of life and I'm guessing it's because you have more problems, money problems, career issues, or maybe friends are not friends with you or you have fake people or which is another like a whole another thing. But it was really yeah, 650, 700 grand and then it just kind of tapers after that.

3:45That seems super super believable. But like after you know, five or 10 million dollars a year in income like for next strata is like I don't know, 25, maybe 30, 40 million a year in income like where you can do like even, you know, crazier things I guess, but at a certain point when you can buy the hotels you stay at it's like okay like whatever. I don't know. I don't have a need for a mega yacht. I think Leila wants one though.

4:09>> She should buy a hotel. >> [sighs] >> Don't say it too loud. >> [laughter] >> Every guest gets to a point in my podcast where they won't tell the truth about something. There's a line they won't cross. Here's my version of it for you. >> Mhm. >> What's the one thing about money you believe that you've never said in a video?

4:38I'm I I very much struggle to answer that question because I feel like I've scrubbed every surface of money that I've that I've that I've seen. You know what I mean? Like how to store it, how to keep it, how to make it, how to multiply it. How to get people to give it to you, how to give it to other people. You know, the the upsides of money, the downsides of money. Like and a lot of it is just cuz like money isn't even a thing.

5:03Like it's just it's just a a generalized means of exchange. Like that's really it. And so I don't think there's like some deep dark secret of money. Like it's just a unit of measurement for us to store, you know, to measure value. And that's why I fundamentally like you don't even make money, you earn money by exchanging by giving value and getting it back and then getting money as a monetary exchange for you giving something and then them not giving you anything back so they have to give you money. Right? If you do something for someone else and they provide value back, you don't need to exchange money cuz hopefully the value was equal. If the value was unequal, you have some value and the rest is made up with money. It's just the the way that that we we balance account more than anything, but many of the talking heads that I see on the internet talking about money will use vague terminology and try to anthropomorphize money in terms of trying to make it human or some sort of amorphous thing or they'll add mysticism to it or manifesting it or attracting it or there's energy money has a frequency.

6:13They make up all this stuff. And I think it's because they cannot be clear with their language in observable terms and it is easier to confuse people with rhetoric in terms of words that sound good when set together than the reality of what money really is. And so because they cannot be clear about giving instructions because they are not good enough to do it. There's a quote that I was told a lot when I was younger which is um I don't agree with it. It was said by somebody that I don't partic- I don't particularly enjoy.

6:44Um but the individual said, um if you cannot impress them with your intelligence confuse them with your [ __ ] And um I would say that like I would say I live my life in the exact opposite of that of of uh do not try to impress people with your intelligence and also do not speak [ __ ] Just tell the truth. State the facts and all truths the number one thing that we say in this marketing department above all else. But the thing is is that it's the whole truth.

7:10That's the hard part. It's the it's all the way down. It's six layers down truth. How like how true can this be? Um I'll give you a I'll give you a story that to illustrate this example. There was a guy who had a um he had a company that taught people how to like trade stocks which is like a little okay. Day trading is probably not the and he's teaching day trading. And so um he he asked to meet and I was like I was very skeptical of this conversation to begin with. He said, "Hey, I want to grow this business." And I said, "You have a big flashing Vegas lights above your head, which is if you're so good at trading, why should I listen to you?"

7:52And so he's like, "Well, I have $100 million in verified earnings from trading." I was like, "Okay." This is by the way why I took why conversation. I was like, "Okay, that's fine. Then why are you selling courses on it instead of just like going making trades?" He's like, "Well, I want to make I want to impact people and blah blah." I was like, "No, you don't, dude. No, you don't. What do you like Please tell me the truth cuz I will be able to help you if you tell me the truth." And this went back and forth for a little bit until eventually he was like, "I I couldn't sleep. I lost weight. The amount of stress that trading it ruined my life. I couldn't find anyone to date because I had to trade 24 hours a day and it just ruined my health and my dad died at 50 and I just saw myself going to the same path and he's like, 'I've made enough and I don't want to keep doing this as my main thing.'" And I was like, "That's the truth. So, in your marketing, you need to tell the whole truth, which is you need to say that, which is trading ruined my life.

8:50It's also the only thing I'm good at. And so if you want to make enough money to ruin your life, I can show you at least how I did it. I can't promise it's going to happen for you. Um and my hope is that you make enough that you stop doing this and can do something else. That is a compelling marketing message. Is it believable? Much more. >> I would buy that cuz I would like >> Cuz you believe it. Yeah, cuz you believe it though. And so that's the thing is it's like people look for these angles in marketing, but like the the rarest stuff out there is the whole truth.

9:18>> [laughter] >> Yeah, do you want to do something really hard? >> You tell the whole thing. You tell the whole thing, the whole truth. And that is what will make uh compelling advertising. So, to the the whole the whole truth of money is more so that people who lack skills around money make up words. that sound good, that mean nothing, and confuse many people. And as a result, they take action on things that do not result in any money making, and are confused as to why it doesn't work, because their model of reality is flawed.

9:54And I would say that the vast majority of content they put out there, the reason I define terms so aggressively before I make statements or before I answer a question, it's like, "Well, are we agreeing on these terms?" is because unless we agree on terms. The reason every agreement that makes any sense, the first part of every legal agreement, which means that we have communication that has stakes, is a recital of [ __ ] definitions. What does territories mean? What does non-compete mean? What are like we have to define these terms. And so, it's it's funny because like I was uh at a podcast the other day and they were like, "Well, what do you mean by that?" And they like try to throw it at me. And I was like, "I will define anything that I say because I stand by the words that I'm saying. I choose these words for a reason."

10:34When someone asks a question, and then I ask them, "What do you mean by that?" And then they get flustered. I'm like, "Well, then you're asking me to answer a question for a word that you cannot define. So, how am I supposed to get you what you want if you don't even know what you're asking?" I had an exchange recently with um >> [laughter] >> with uh um someone in this company um that uh not that recently, but uh that they made a request that I speak to them um more more politely or kinder.

11:07And I said, "I'm super happy to. What does that mean to you?" And so, it ended up being that they wanted me to put a prefix before I before I made statements. So, it's like, "Could you just ask these as questions rather than as statements?" And I said, "To be clear, if I do if I say it as a question instead of a statement, you will deem that kindness and and and politeness has been has been checked." They were like, "Yes." I was like, "Done." And literally, as soon as I started doing that, they were thrilled to tears. I was thrilled to tears, too, cuz I want to communicate in a way that is your preference. If your preference doesn't cost me anything to do that I'm happy to to oblige, right?

11:40But the thing is is that so many people use these words, and these words are used every day. Kindness, politeness, empathetic, energy, you know what I mean? Vibe. Until we define what they mean, we're just making noise at each other assuming the person knows when we don't even know. When someone says I'll know when I see it, that just means that you haven't defined it yet. If you want to see it more, tell them what you want to see.

12:06And that takes work. Because you have to think, "Oh, man, Susan's so lazy." They're like, "What makes Why is she lazy?" Like, what did she do to cause you to say that? And then eventually, it gets really down to like she's pretty slow on Slack to respond to [ __ ] Okay. Well, if you want Susan to not be a lazy Susan, um then we just need to say, "Hey, Susan, just respond to Slack faster. People will start stop thinking you're lazy."

12:34That's it? Great. It's just like when you drill down, it's like you can become clear with your communication. And so, I would say that the vast majority of my communication around money, my attempt at all, has been absolute truth, and truth as I define it is an observable reality. And I try to use only terms that I can say that I can see with my eyes so that other people can also see it with their eyes and do with their hands and feet. >> Oh, if you had to go from zero to $100,000 in the next 3 months, how would you do it? Maybe if you can break it down for me in five steps.

13:03>> Sure. Um 7,000 total, 100,000 a month, or 10,000 a month? >> 100,000 total in 3 months. Uh no employees, just you. >> It's not me, though, right? It's my skills, but not me. >> Yeah. >> Okay. That makes [laughter] Right. And I don't have And I have And I have no network, and I have no connections, and I have no any of that.

13:28I don't have my phone with me. >> You can use Claude. >> Um I I So, when you were starting out, you want every customer to be worth it. And so, I think one of the mistakes that happens when people are earlier is they don't sell expensive enough stuff. And so, like if it's very hard for you to get a customer, then you better make sure that customer is worth it, which means instead of thinking about scalability, we think about how basically potential money made from every person is what you want to maximize. And so, that means that potential value created has to be maximized, which means that we might do unscalable things in the short term in order to generate cash flow. And so, I'll give you an analogy, and then I'll give you the steps, but um or not an analogy, a story, but when I when I started my first gym, I did personal training uh with one client, and that client came 90 minutes a day, 5 days a week, which is a super like a super client.

14:25And I ended up making, I think it was like $4,000 a month in total from that one client. And that client and that model of me just doing one-on-one like that obviously doesn't scale. But I was running my gym, the business, all around that. And the gym, I would just take the cash and basically reinvest in more equipment, or I'd or I'd spend more on ads to get more people in, whatever it was, but like I lived on the $5,000 a month that I was getting uh from the personal training client.

14:50And so, the fastest way to get to $100,000 is not the fastest way to get to a million or 10 million. And so, this is the big misconception with the question. And so, like if I wanted to get to $100,000, I would go to a business and say And the thing is is like I have already done this cuz I've already lost my money before and had to go do this. So, I This is what I did. I went to a local business, and I said, "What are the packages you have?" And then I said, "What's the cheapest that you're willing to do deliver these packages for?" And I said, "Okay, if I go get you customers, and I sell it, can I keep this percentage of what I sell if I go get them and I sell them and then you get the customer for life after that. And as soon as I had some businesses that said yes, I then got them customers and I kept the money and then they delivered the services and got customers for free.

15:40And so when I lost everything, I made $100,000 the first month after I lost everything. And so within the example, it's like I did that in 30 days. And so you can absolutely do that. It's just that you have to work like a maniac and fundamentally it was I had an offer that worked that I knew worked for a specific local business, which was a gym. So I knew I could run a weight loss challenge and I knew I could spend money on the ads and I didn't have to spend a lot because you know, if you can get 10 to one, you spend 100 bucks, you have a thousand and then after you have a thousand, you spend 10, now you're you spend one, you make 10 and you're good to go, right? Um And so that was so then I would just limited by the facility's ability to handle customers.

16:20So I would try and find the most empty facilities because I knew I could sell them till they were full usually within three weeks. And so that is literally what I did. So step-by-step, I had an offer, number one. Number two, I had ads that I could record with my phone. Step three, I posted those ads and pushed them to a landing page. Step four, the landing page, this is at the time, just went to a Google Sheet. Uh step six, I called the leads on the Google Sheet to make sure that they got scheduled. And then uh I think I'm on step seven, I would meet with those leads and I would present the offer that I advertised to them and then I would get them to give me money for that offer and then I let the business handle the delivery of the services and I got the cash.

17:02It's the easiest business that you can run. It's one person. It's functionally an affiliate business. If you were going to think of the easiest offer right now, what might it be? Uh I mean cuz I think a lot about winners effect and how people Like I to to give people I don't know, those tactful gems even though they're not useful long-term because long-term is just the fundamentals, but to establish some type of winner's effect.

17:31>> Well, the nature of the offer is going to have to be some So, one is you have to decide whether you're B2B or B2C, right? So, am I going to sell to consumers or am I going to sell to businesses, right? If I had no knowledge of anything um and I just knew just basic AI stuff. It's not that difficult to go into a normal business to say, "Hey, can I observe your business for free and come with an AI plan that saves you at least $100,000 and would you be willing to give me a third of the savings or 20% of the savings that I get you if I could demonstrate that it will save that amount of money?"

18:06Most businesses would say yes. And this is like it's nothing up front. I just need these commitments. Like I don't I don't think like And then someone might say, "Okay, well, how do I get in touch with those businesses?" You've got two feet and two hands, you can knock on a [ __ ] door. Like you have a phone with you know, you've got two thumbs, you can text people, you can DM them, you can call them, can email them. Like you can post content about it. Like there's 100 ways. You just got to let people know about it. And the thing is is like is that an in-demand service right now? Yes.

18:34And so the issue is more that people just don't have any skills. Like if you have skills, making money is not that hard. You do something for somebody else that they don't know how to do. So, that means you need to learn how to do [ __ ] So, learn how to do stuff and then do it for somebody else who doesn't want to learn how to do stuff, which really just comes down to like you have to be willing to work. >> What's the one thing people waste most of their time on that doesn't actually make them money? >> I mean everything that is not the work.

18:58Like I have one plaque on my on my wall that says focus is subtraction. Like everything that is not the thing is a distraction. So, if we define commitment as the elimination of alternative, people are not committed. And so the most focused person in the world, most focused video game player in the world would not eat, would not sleep, would not drink water, and they would only play video games. And anything that is not video games would then be less focused. So, if you drink water, you're less focused than the guy that plays 100%. Now, is that sustainable?

19:25No, but for the period of time that person was playing, that person would be the more focused person. And so, there are a very small number of activities that generate money. And most of everything else is just noise. Like, you have to let people know that you exist. You have to make them an offer that solves a specific problem in exchange for money. You have to get agreement from them, and you have to exchange money for services, and then you have to deliver that product or service to them. Like, it's it's I don't even like I don't know what else there is. Like, I don't know how it gets that complicated.

20:00Like, that's it. And people get I think I think really what it is is like people get paralyzed by trying to pick perfectly. They turn around and they're like, "I want to have the perfect business." Well, like, unless you're Bezos or Zuck, who actually started their first business and are still in their first business as a gazillion-dollar company, the vast majority of entrepreneurs that I know, your first business is not your last business. It is your first stepping stone. And so, I just try to get people to concentrate on on get a stranger to give you money to do something or for something that you make for them.

20:34That's it. Like, that's that's all of business. It's literally just accepting money from a stranger. So, you like you need a way to process money. You need an LLC if you want to use credit cards. You can do it for cash and not have any of that [ __ ] Like, I actually I struggle with the question cuz I'm like, "What part are we missing here?" And I think it's because there's so many people who say a lot of words that they don't understand and confusing a large percentage of people. It's like, "Well, you have to start with a morning routine." It's like, bro, you don't need to do any of that. You need to let somebody know that you can do something for them and ask them if they want you to do it for them for money.

21:05>> Money doesn't buy happiness past $70,000 per year because spending money effectively is a skill and most people never acquire it. As someone who earns more than $70,000 a year, what have you learned about the skill of spending money effectively? >> So So it's so funny cuz people assume that there are not levels to skills. Um and I remember seeing, you know, my first billionaire start spending money and I was like, "Whoa, that's a thing. Interesting."

21:31Um and a lot of people who even do make money or save a lot of money never learn how to spend it well. Now, I'm not saying blow it on stupid things, but the the 3D learning that you described with um I was with Bill. He spent money to create that experience. And it was probably worth it. And so the most people just limit themselves to house, car, food, travel.

21:56That's That's the majority of it. But there's so many other things that you can do with money that improve your daily experience. It create memories that will pay memory dividends for a long period of time. Um and the biggest The easiest ones to basically pay down our time. And so it costs roughly $1,500 a month to get about 90 hours a month back if you add up uh driving, gas, preparation, cooking, cleaning of food, cleaning of your dwelling, cleaning and prep of your clothing.

22:34If you put all of those things together with the average American spends per week, it's about 20-ish 25 hours a week that they spend doing all of those things for themselves. And so 90-ish hours per month and the cumulative cost of fixing all that stuff is about 1,500 bucks a month. >> Would that be a maid housekeeper, person who maybe could also cook or maybe a cook is separate? A Uber, daily >> Yeah. >> uh

23:00>> At the low end, later you can have a personal driver, but yeah, totally. >> Just those two? Those are the only two? >> Well, then you have uh, food prep. >> I would do uh, a nanny. >> had a one yeah, one-stop-shop housekeeper >> Probably cost a little more there, but yeah. >> Yeah, but it would fold two roles into one. >> Yes. And so, but thinking about that, and we have our $70,000 per year, you know, cap, but if we're assuming, okay, we're making more than that, if you make a million dollars a year, it's like, okay, would you be willing to spend 70 to get somebody who does all of those things for you?

23:29And you get 100 hours a week. Well, as if you get the 100 hours back, let's just say it's let's say it let's keep it at $5,000 a month for what we're willing to spend, so more than that. Okay, so if you can make more than $50 an hour with your free time, or you simply would pay $50 to get more free time. >> to lie in a hammock. >> That to lie in a hammock, then it's worth the trade, or go wakeboarding. And so, I think the that most people have who who start making more money, they just stop at nice house, nice car, maybe nice clothes, and places to eat, occasional travel that they spend once or twice a year. That's it. That's all they do. But, there's so many ways to improve your existing environment.

24:03>> I get the sense that it's actually the middle level. It's the people who maybe on 100 grand a year in USD, maybe sort of 70 grand, they're the ones who are likely to probably need this information the most, because if you're up to the half a million, a million a year, or something like that, it's like, you you've probably realized that this is something that you can spend money on. >> People don't. I talk to entrepreneurs all the time. >> Well, that's that's >> It's one of the first things I do when I'm looking into a company, I say, "What do you like, do you have do you have a housekeeper? Do you have a like and we go through all this stuff cuz highest ROI money I can spend as an investor is getting 100 hours a month back for the entrepreneur for 50 grand.

24:41My god. >> Well, I mean, the yes, that's crazy. Uh, and also, if you are someone who to whom an additional 50 grand a year of income would be 30% [snorts] of your net worth, or 30% of your annual income, making 150 grand a year, For you, this opens up a lot more than it actually does for the guy that let's say that I guess when you're making a million each hour that you would then spend would be worth more, etc., etc. But, yeah, it's a that overcoming that sense of I can do this for free.

25:12>> Yeah. >> Therefore, I shouldn't pay someone to do it. >> Guilt of spending. >> This sense of opulence and wastefulness entitlement. Um overcoming that has been a real a real challenge for me, and it's good that I've been around people like Bill, yourself, and uh it's almost like it's a very specific type of ambition. And it's not ambition in the material sense. It's ambition in the life quality sense.

25:39>> Freedom. >> Yeah. >> Optionality. >> I want to be a millionaire. >> Yeah. >> What would you say to him? What advice would you give to him? He says, "Listen, I've heard you're doing all these podcasts, you're running around, and I've been filming the camera, but I've been filming, I've been listening. >> Yeah. >> And this millionaire stuff, this sounds amazing. So, what advice How old are you, Caleb?" >> 29. >> What advice would you give to 29-year-old Caleb if he said to you, "Alex, how do I How do you Knowing me, how do you think I become a millionaire?"

26:08>> So, there's a lot of ways to do it. It just depends on which way you want to go. So, I say first off, you can stay at acquisition.com. That'll probably happen on a long enough time horizon just because we're going to get really big. We're already pretty big, and we're just getting started. Um so, like I I genuinely believe that, and that's 100% my goal is that every single person that that we have um becomes very, very wealthy um because I'm going to die, and it's not going to matter anyways. And if everybody else can make some, too, great. Um so, that is a path.

26:37Another path is he peels off and goes on his own and starts a business of some sort. And so, it depends on whether he wants to make the business itself what his core skill is, which would be like media and maybe services around media, or using the skill that he has of media in an opportunity and he gets two or three other people to maybe co-founded with him who have other complimentary skills and then he just runs that division or portion of the business within the larger context. And that's like a classic question of like I'm really good at making wallets. Like, what do I do? It's like, well, you can continue to make them and then when you can't make as many as you have demand cuz you're so good at it, you can either raise the price and just continue to keep raising the prices until eventually become Versace of of of wallets and you make tons of profit, but you don't have tons of units and that's okay and you're a luxury brand. Or you put on the put on the business owner hat and you say, "Okay, how do I mechanize the wallet building process and I become more businessy."

27:33And so I think it's like, do I want to be the artist or do I want to be the entrepreneur? Both of them are fine. It depends which one you feel like you're more naturally inclined to or have a higher likelihood of success doing. I like the game of business. I've played lots of different games in terms of industries. Like, I like the game overall. I don't feel like I have a particular art. Like, I don't think I'm really good at any aspect of business. I feel like I've been decent enough to not make one of them the constraint. Like, I'm not a great copywriter, but I'm good enough that that's not going to be the limiter. Like, I'm I'm good enough like I'm good enough at hiring that I can make sure that that's not the limiting factor. Right? And so that's kind of how I think about it in terms of business growth overall and so it'd be the same thing with Caleb is like we have to identify what the constraint of the of the system is and then de-constrain it.

28:15>> When you say talent stacking, I heard you say that a few times. What do you mean by that? >> So, this is one of my favorite topics. Um many skills like 1 + 1 = 5 when you put them together. So, let's say you have somebody who's really good at math in the beginning. That of as a skill not super monetizable, right? Okay, well then you learn bookkeeping. Okay, well now you had a proclivity for math, but you learned something that um has value in the business world. Okay, then you learn to you know get your CPA and now you become an accountant. Okay, more valuable. Um then you start studying around uh tax law and insurance and you're like oh significantly more valuable. Then you learn how to how capital markets work and how debt markets work, right? And and you understand how mergers and acquisitions work and all of a sudden you're a CFO.

29:03And then you learn how to sell and promote a little bit and all of a sudden now you're a rainmaker. And so you still needed to be good at math. But when you stack these other skills on top of it the original math skill becomes significantly more valuable when you have these skills on top but each one kind of requires the one before which is why one of the things I hate about kind of the entrepreneurial world a little bit is like they'll learn something new and then poopoo the thing before. It's like I'm not upset at the teacher who taught me arithmetic cuz I learned algebra.

29:30One was necessary for the next. And so um as entrepreneurs a lot of times it takes I think the self-awareness to say like where am I at on my skill stacking adventure, right? And each skill every skill you add to your skill tool belt makes the rest of your skills more valuable which is why I think it's so cool which is why I'm such a big advocate for education overall. That's I mean mission of acquisition.com make business successful for everyone. Um that's why we put all this free stuff out there is cuz like if we can give people enough skills they'll be able to stack them on their own and then just achieve whatever they want in a totally different way if you'll allow me to go there. It's like you look at Jay-Z, right?

30:08Maybe he was somebody who naturally had rhythm, right? And so then all of a sudden he learned how to rap, okay? Took his rhythm put it in a rap, okay? And then he made his first CD, okay? And then he learned how to promote. Ooh, significantly more valuable. And then he learned how to make a label. And then he learned how to recruit other artists. And so he still needed to learn how to know how to promote the other artists. If he didn't know how to promote at all he wouldn't have been able to do it. But once he had the label he got significantly more leverage on the skill of promotion and he could recognize people because of his skill in rapping and rhythm. And so like each of these skills stacks on top and then eventually he he pinnacled into Beyonce as his as his top skill. I'm just kidding. Um I was just going to say [laughter] like where is he going?

30:50Uh but no, but like that's the idea. So like and that's why I'm just like learn the skill, find the next skill and and the nice thing is that it doesn't even matter how disparate the skills are. Like if Jay-Z's really good at math and understands capital markets and understands the label, those combined turn into another cool melange, right? A little French word, like mix of skills that's like unique to Jay-Z and the longer you play the game, the more skills you get and the more unique your mix of skills is. And that to me is like the coolest part about business and just like education in general.

31:21>> Levels of wealth. So you are very open about kind of net worth and money and stuff and I I just love the way you talk about it in a so such a matter-of-fact way. Um one thing that um I I've been curious about is like what are the levels of wealth at beyond which like you get significant diminishing returns? People say 75K is the peak happiness and then but like clearly there are people that you know, 300K is better than 75K, a million is better than 300K. Like have you have you got in mind a rough sort of ladder of at what level of wealth unlocks certain certain things?

31:54>> Yeah, I think there's like the I don't have to worry about any basic needs level. Um and then there's the I don't have to worry about discretionary spending level within reason. You know what I mean? Like I can get I can go out for drinks, I can go to a fancy restaurant and it's not going to, you know, affect me. I can buy appetizers and not just buy, you know, the cheapest thing on the menu with no appetizers, no alcohol and call that the dinner. So Layla spends a lot more money than I do cuz we just have different but that being said, I spend money on other stuff. So like I spend a lot of money only on information. It's all I spend my money on. It's just information, access, like that's all I spend my money on.

32:30Um and that stuff is expensive, you know what I mean? She offered one guy 350 grand for an hour um so I could just learn from him, you know what I mean? Just for context. So like we'll spend whatever it takes to learn anything. Yeah. But like it's always been the highest return for me. So for me it's just an I like sure, let's go. You know what I mean? Like I just I I've made so much every every penny I've made has come from knowledge. And if I can buy someone else's 10 years and say if I can save a year of my life for 350 grand, why would I not spend that? You know what I mean?

32:59>> So we've got needs, we've got discretionary spending where you're not worried about appetizers and stuff. What What's beyond that? >> then you have what I would consider like luxury wealth, which is probably like, you know, 100 grand a month. But it it all depends on what you're willing to save. And so like Leila and I have always lived on less than 10% of what we make. So whatever we make it's 10% of that is what we're kind of willing to spend and I don't even think we spend that now. Um, we probably spend about 5% of what we make. Still a lot of money, but it's not a lot relative cuz we're both actually pretty risk averse. But we're not illogical cuz some people I know there's some people in the in the YouTube space I was having a conversation with her, you know, clearing clearing eight figures and are like splitting entrees at dinner.

33:37I mean, dude, like you we literally made more money than this dinner cost while sitting here. You know what I mean? Like I was I was having a conversation with my father-in-law and he offered to pay for for lunch or something and I was like, while we have waited in line, I have made more money than this lunch costs. Let me cover lunch. I don't care. So it really depends on your on your your savings versus uh spending uh percentage that you're comfortable with. So that's the big multiplier on those levels, but I think those are the three levels and it just depends on what that percentage is for you. So if you're a five to one person, I want to make I want to save 80% spend 20, then your needs for before when you go from needs to uh you know, for level one discretionary, you need to still 5x your income to do that, but it's just that that's a smaller percentage. So I do think that's individual. I'm super risk averse ironically.

34:27>> So what do you do with the cash? Like if you're spending 10% or and sort of what happens to the other 90%? Are we Are we now going S&P 500 or is that still like >> [laughter] >> No, I I count it. Um we invest, but I have a bigger I kind of a bigger play for what we're going to do. So, right now I'm just stacking it. And I I've always been a pretty big cash stacker. Um I always have a lot of liquidity. I just feel better with it. People are like, "You're not getting the return." I was like, "Dude, I make a ton of money. I don't like that's not like What What am I getting the return for?"

34:54So, I would rather have big chunks of cash that I can go on big offense when I want it than It's just a different way of doing things. You know what I mean? I also have Leila, and so she handles a ton of stuff internally. And so, I wouldn't be able to do some of the investment stuff that we do I probably wouldn't do some of the investment stuff we do right now that takes a little bit more time, like deal analysis, et cetera, uh if I didn't have her. So, like if I didn't have Leila and I was just trying to live the most passive chill lifestyle, I'd probably just put everything into a dividend ETF.

35:22Makes 3-4% a year and still gets the appreciation. And I would just love paying down or paying up that dividend check every month and just watching it go up. And it would probably just become a game for me uh because it's truly passive. You know what I mean? Like that's just truly zero management passive income, which I do like from a cash flow perspective. And qualified dividends for anyone who's curious gets taxed at capital gains rates, which are lower. So, even if you make a ton of money, you're still only paying, you know, 20-23% depending on where you're at. So, for me, I was like, "Okay, that works.

35:50I'll still It's still relatively tax efficient to get the the cash flow from the from the from the investment." Um but for me, though, I am going to take bigger risks with the wealth I have because it's the kind of the next level of the game for me is taking big bets. Um >> So, what does What does that look like? Broadly. >> You'll see more stuff from me on the media side um probably in the in the next 12 to 18. Uh I'll be probably making really major investments in media. Um because like, you know, the Here's a fun one which you can appreciate from a YouTube perspective.

36:24It cost me like less than a dollar or it just cost me a dollar, or whatever. It's around a buck per subscriber per month. Now, I'm taking my entire media team cost, which goes across all platforms, which is not really fair. But if I were to if I even took that whole media team and put it against YouTube, um it cost me around a dollar-ish a month per subscriber. And I make more than a dollar a year per subscriber just in AdSense.

36:52So, like from a return, you know what I mean? Like that doesn't include like where I actually make money, which is my you know, my deal flow side. Um So, it's you know what I mean? It's like, well, then I should, you know, put my money there. And I will be I'll be taking bigger and bigger chunks of companies. Uh right now we do minority deals, but I will be taking majority uh interesting companies where it makes sense. Uh so, it's like if I see a company that makes sense within the entire portfolio, so I'll give you an example. So, like if somebody has an accounting firm, it'd be great to just have the accounting at HoldCo, and I'll just buy 100% and then I can provide those services internally. And then because of the buying power that I have between the entire kind of conglomerate, for lack of a better term, you know, if I have you know, 200 250 million dollars a year in in business that I can push towards something, it's like I'm not going to push that kind of money towards something that I don't own majority of, at least. So, those are kind of the two directions that I'll probably go. And it's just reinvesting more in the team.

37:48Um and, you know, taking I mean, from a from a money allocation perspective, more of that would go towards the majority purchase than the team. But that's just, you know, fundamentally how I see it. Like I'll get better returns on that stuff than I will in the S&P. And I have to take If I want to get to a billion, I have to make some bigger bets, which is fine. >> What's the goal here? Is the goal to get to a billion? Like what is the price you are paying? >> 10 billion. Yeah, the goal is to get to 10 billion. Um but the the mission is to just make real business knowledge available for everyone.

38:16And so, that's that's what I'm trying to do. And so, everything I do aligns to that. That's why I make the books, that's why I make the courses. That's why we do the YouTube stuff. That's why we make the shorts. That's why we do podcasts. That's why we do all of it. Um it's just to make real business education available to everybody. But I have to answer the question, why should I listen to you? And I want to be unassailable in that perspective, A. And then B, I do believe that I'll gain more perspective as as things grow. So it's more that I'm just curious what I'm going to learn going from, you know, a $200 million a year portfolio to a billion dollar a year portfolio to a $10 billion a year portfolio. And so I have wished that Jeff Bezos and Elon Musk and Warren Buffett would come out with a course. I mean, wouldn't that be amazing? But they didn't. And so my goal is to just document the path that we learn along the way. Um and you know, when I die, hopefully there'll just be a whole bunch of people who are younger than me who make way more money than I do at my age because they were able to just shortcut a lot.

39:09>> Why is that the mission? Like I'm making business education available. Like what what's the kind of emotional resonance with you for that thing? >> Cuz that's what set me free. >> Free as in free from the corporate wage slavery. >> Yeah, from oh, everything. Not even corporate wage. Like I'm free. I can do whatever. I don't have to do anything. If I didn't want to. So I just get I just get optionality, which is all I want. I just want to have options. And so I wouldn't have that if all of this stuff didn't exist. And I have had many mentors and many coaching programs and many courses. And so, you know, I would say that I differ from the vast majority of the talking heads in the business space in that I, to my knowledge, am the only one who came up through that world. Like if you look at Andy Frisella, you look at Ed Mylett, you look at Gary. You know what I mean? Like there's there's they've None of them came up through learning stuff on YouTube, going to seminars, going to coaching programs. I did.

40:01So I'm a huge advocate for the for for for alternative education and, you know, paying for skills as fast as you can. >> To what extent do you think about the balance between, I guess, optimizing for freedom freedom, fun, flexibility, all of that, like living whatever life you want kind of vibes versus some people say that once you get to a certain point you realize that oh actually more money, more status, more success, more freedom is not actually a thing and actually the thing I care about is investing in a relationship and like having a family and having kids and like buying a house and the sort of putting down roots versus having wings kind of vibe.

40:37>> I have options. So, if I change my mind, I can change my mind. Um but as I see it right now from where I sit, the thing that lights me up every day is is making business knowledge available to everyone. And uh I mean I spend an inordinate amount of time like I spend so much time on those books and presentations that I make when I give speeches and stuff like every presentation I make up to this point in my career has been custom.

41:03And that takes me like 3 days, you know what I mean, to make a presentation. So, like if you've seen Last Dance, Michael Jordan, there's this there's this moment where he says that he always has to bring his all because it's the there's some person who spent hard-earned money and it's the only game they're ever going to see and he wants to bring his best for that. And so that's how I see it. You know what I mean, like there's people who will never, you know, they spent real money to be there and it was like they're hoping that they can get one thing from this thing that's going to like change their life.

41:31And I would honor that. >> Hi, so I am a new business owner. I will be 1 year in December, so thank you to that. Um cuz I wouldn't have gotten here without both of you and all of your content, so I appreciate it. I'm not sure if this is even the right question. The thing that I'm the most ignorant about is the accounting and like the legal structures of my business. So, please correct me if this is the wrong question to ask, but how should I structure myself from a tax and legal perspective to look appealing for an investor in the long run, especially if I'm a sole proprietor right now and I have no idea like what's the right direction to go?

42:05>> I would ask this before we answer the question, which is what type of business are you? >> I'm a a agency. >> I was going to say something totally different. >> I have to second that, although I'm sure you're going to say say it. >> Yeah, it doesn't matter. >> Doesn't? >> Yeah. >> You can change later. >> Yeah, yeah. Like, what matters is you make lots of money, plenty of people be interested. And they're like, oh yeah, we need to like reincorporate these things. It happens all the time. >> We reincorporate all the businesses we invest in. We have to do the legal work for them because they're all [ __ ]

42:33>> It's very common also for It's also common for an acquirer to So, zooming out for a second, a lot of acquirers prefer to purchase assets because they have they basically the liability will die with the old LLC. So, there's an advantage to that. The disadvantage for the founder is they have to pay regular income on that because it's an asset sale. And not it wouldn't be recognized as capital gains. This depends on what country you're in whatever in the US. And so, the like founders want to sell the entire company, the entity, so that the liability goes to somebody else and they get capital gains. And so, the nature of the transaction will like those those are all negotiated at point of sale. So, like GymLaunch for example, we sold the entity and the liability and everything with the purchase. The original LOI that they gave us was an asset purchase.

43:16And we said we don't want to do that. And so, then they transitioned. So, all that to say, it's super common for people to reincorporate during the sales process and it is part of the negotiation, so just don't worry about it. Just protect yourself, have an LLC, just don't worry about it. >> Last thing I'll say is this. The reason it doesn't matter is also because the structure acquisition.com has versus Sequoia versus A16Z all different. So, they actually want you to be, you know, some of them want you to be a C corp, an S corp, an LLC. It just depends on the firm structure.

43:43>> Yeah. >> So, it really depends on who you sell to, which means might as well not worry about it now cuz they're going to just restructure you anyways. >> Just make lots of money. >> We'll do. Um I do have a follow-up question. So, what's the short-term goal cuz I again I'm super ignorant about it and you hear all these I don't mean to judge anyone, but it seems like when it comes to taxes a lot of people seem a little skeevy about it and I'm not quite sure what's the right direction. >> disgusting. Um No, for real. I mean, like it's literally something that we talk I mean our lawyer is like so mad about it because the amount of businesses that we look at that we partner with that they've been given the wrong advice by these strip mall CPAs who are like, "Hey, I'm going to You don't want to pay taxes." And you're like, "Really? Okay.

44:21I can do all that in my business account?" >> still waiting for the billionaire tax cut, but anyways. Um so it hasn't really happened. Uh the the the two the two big actual shelters are real estate professionals who can take 100% of depreciation against the regular income and charitable foundations. You can donate up to 30% of your income and then not have that be taxed. So it's an effective savings of like nine or nine-ish percent on on your regular income. Besides that, where you live is going to be the biggest thing.

44:46And so there's a reason that we're here and we were in Texas like the first thing I'll do is like I only really care about the four-mile radius that I live around anyways. That's all that affects my life, but I you know, the difference between 50% taxes and 37 isn't 13%. It's about a third in terms of if you think about take home, the difference between the two. And so like move to tax, you know, efficient uh jurisdictions. You are business owners, so you can expense some some life expenses through there, so that's pre-tax money. But beyond that, um Leyland I've been very much by the book because when we try to reverse engineer uh outcomes, it's like, "Okay, what are all the things that can kill us? And how do we systematically remove each one of these things that could that could kill us?" And if you remove everything that can kill you, by default, you you keep living and keep fighting. So that's kind of how we think about it.

45:33>> I'll say one little story. So there's always like little tax things that people were trying to pitch us probably until last three years. And so for the first, you know, five, six years of business, it's like there's this thing and it can save you all this money and it's that, whatever. And there was like one that we got like really close to. And then I was like, "Alex, I don't know. This guy, he seems a little slippery. You know what I mean? When I say slippery, I mean gross." And we're like, "Yeah." And so we ended up >> guy? >> Yeah, he was a slippery guy. And I was like uh he looks like a snake. And so we didn't end up doing this thing. It was apparently this tax vehicle, whatever.

46:02Uh yeah, he's in prison now. >> [laughter] >> This actually happened three times. >> Yeah, this happens all the time. >> So, we have three separate people where I've been like, "I think this guy's legit." >> [laughter] >> And I'm like, he's like literally has like, "I will steal your money and you will go to jail." >> I'm the eternal optimist of the two of us. No, but I I I'll say that like I pretty much put a kibosh on this mostly because the amount of effort and time that went into So, I mean, I I refer to Charlie Munger on this, but he's like, "95% of tax saving schemes, even if they're legal today, will be illegal and unwound in the next 5 years.

46:34The IRS system hasn't caught up to it, and then you have to pay back taxes and interest and penalties." Right? So, even if you think you're in the clear because someone does your taxes this year, the IRS is literally 4 or 5 years behind right now. Like, I got like, I think in 2021 I got a notice about my 2016 taxes. Like, they're so behind. And so, people basically have this running head start where they can sell people for years on schemes that basically don't work. Um and so, anyways, 95% of them he said are swampland, and the 5% of that that are legitimate, typically they fall in those buckets.

47:02It's usually real estate or some sort of charitable thing. But, is it worth the time of kissing the other 19 toads versus like just make more money? >> Right. So, if I'm going to be looking for an accountant or someone and they're like, "Oh, I'll take you know, save you on all these taxes." Just like run away. >> Just find someone who's by the book and is willing to sign off. >> I would say just in general, somebody advertises their services by how much they're going to save you, they're probably not the person like I that's a very general statement I'm making, but they're probably like The people that do our taxes are not like, "Hey, we're going to save you all this money." They're like, "Yes, there are strategies and we can look and I will cite the law of number 60 and and the you would have to do." And you're like, "Oh my god, that sounds awful."

47:41And then you're like, "All right, we're good. It's fine." >> Yeah, like whatever. >> [ __ ] pay it. >> Just make more. >> Got you. Thank you so much. >> You don't understand the value of enterprise value. Of course you build net worth without taxes, but it's fictional numbers that can't liquidate. I like cash flow, hard cash. Thanks to B L C C T G J. Um let me tell you why enterprise value [ __ ] matters. So, enterprise value is important for a variety of reasons. Enterprise value dictates how valuable something is. So, Stripe for example, is not publicly traded, but people are willing to invest money in it and so the founders can get liquidity. And so, what you want is to be able to spend something. But the thing is is that that comes from the position of not of already not having enough.

48:25So, let me explain. Once a business actually has enterprise value, it usually is already generated had the ability to generate more than sufficient cash flow for the owner. Which means that all the excess cash flow that the that the business generates is going to be transferred to the owner in a tax inefficient manner. And so then what happens is that you want to have growth in your net worth that isn't affected by taxes, right? And so, if you say, "I want cold hard cash."

48:51Cool, bro. You want to pay your rent. I get it. After you're done paying your rent and after you pay your house off and after you pay for your parents' house and after you pay for their cars and your cars and your kids' schools and all of that, there's still cash flow coming in. And then you're like, "Well, I want to upgrade my cars." Okay, great. "And then I want a vacation." Cool, cost 100 grand if you want to be a [ __ ] baller. Okay, then what? Right. Then you want the most effic- efficient tax vehicle for building wealth, which is your enterprise value.

49:20Guess what else you can do with a high-value enterprise? You can take loans against it. You can get lines of credit. It becomes an asset. You can raise capital on of that. Right? There's levels to this game. If you want to move up levels, you need to play a different game. And you have to graduate. If you can't If you don't know where your rent's coming next month, [ __ ] enterprise value.

49:47Being super real here. [ __ ] enterprise value. If you have those things satisfied right, who are trying to get bigger, who are trying to scale, um enterprise value becomes increasingly important. Basically, the bigger you get, the more you satisfy your needs and the people around you's needs, at some point, then it becomes about the game. And to be clear, I'm not saying this game is the only game worth playing and there's not other games in life that are worth winning, but in the game of business, net worth becomes the objective measure.

50:17And so, that's how that works. >> We sell motocross training. >> Okay. >> So, we we hold 5-day camps >> Cool. In person? >> Yes. >> Cool. >> Yeah. So, this has been cool because I start to the gears are turning as far as how to run a good event. So, thank you. >> Yeah. >> Um what we did to be able to get our projection to 26 to the 4 million is we scaled down our single-day tour dates.

50:43We were we we did more in 24. >> Love this formula. >> We went all the way to We scaled from 70 single-day tour dates in 23 to 140 of them in 2024, and it was just a ton of operational drag. I mean, it was like we were like a rock >> Twice as much. >> It was nuts. But what we realized and looking back on it is the bottom 20 of those were net negative, the the next 20 were net less than a thousand dollars, so inconsequential. And then I started looking at in 2024, we did three of the 5-day camps kind of as a test run. Each of those net well over a hundred grand each, and I'm like, well, hang on a second, this is the answer.

51:21So, this year, I told the team at first I called them, I said, "Hey, I just had an epiphany. Here it is. We're going to do 10 camps." And I said, "Actually, no, you I'm we're actually going to do 25." And they're like, "Wait, 25? What do you mean 25?" >> Yeah. >> My question is, do I continue to my >> Were you just able to charge more for the 3-day than the 1-day? >> Uh the 5-day >> some arbitrary sorry.

51:44>> So, the 1-day is $300, which is probably not enough. The 5-day is $1,200, which is definitely not enough. Uh so, that's what part of the question, too. >> Cool. >> Um I want to continue to scale the 5-dayers and scale down the single days, but my fear is we basically own the space. Nobody else does what I do. It's pretty large market. Um there is one copycat company, and he's trying to hit all these single day tour dates in the regions that we're doing them. So, I'm afraid if I scale them down too much, we won't be able to

52:15>> copy the model that makes them money. >> Say that again. >> He's going to copy the model that makes no money, right? >> Say it one more time. >> He's going to copy the model that makes no money. >> That's a great point. Yeah. >> Love this for us, right? >> [laughter] >> I hope he does. >> Okay, I could Honestly, I could go home right now and I'd be happy after that. >> Yeah, you're right. You're right, and I feel more confident that I don't think he could do what we could do anyways, but he certainly can't do what we can do in a 5-day event. I mean, we we've run those 5-dayers like nobody else, so.

52:48>> Okay. >> Um >> So, you kept pushing on price, so let's just handle that real quick. Um why can't you charge more? >> I definitely can. The reason I haven't is because I started riding dirt bikes when I was two. I turned pro when I was 16. >> help people I want to build a brand. >> had no money, so I didn't want to out-price the people that were me. Does that make sense? >> Yeah, do you make like content? Is that the primary way that you get customers? Yeah. Okay. So, you do that for free? >> Yep.

53:14>> And those people look at that for free? >> Everything's free. Yeah. >> Right. And so, I've We've 22 million subscribers. There's 100 people here. A lot of people get [ __ ] for free. I think that Let me say it differently. If you like you will never help in person even a tiny fraction of a percent of the people that you've helped for free. It's just not the world is not structured that way.

53:39You will be able to monetize 1% of the people, maybe, right? If you're lucky, that you've actually helped in the model that the way media exists today. It might change, but for now, that's how it works. And so, I think you have some sort of guilt that you can't help somebody, but you won't be able to expand your footprint or the media without the cash flow to grow. And so, if you turn this into a billion-dollar company, which why couldn't you, right? I mean, the market's big. Right? If you were to turn this into a gigantic company, do you think you'd make a bigger impact than you do now?

54:12>> Yes. >> Right. And in order to do that, it takes money. >> Yeah. >> And so, you can you can serve the person who can't afford it for free, and then you serve the people who can't afford it for the the correct price. >> And we do have a crazy amount of free content. It's a based on not knowing anything about the industry, what would you change the price from from 1,200 bucks a week? >> I can't tell you what the actual number is, but I can say what's your closure right now?

54:41>> I don't know. >> Do you sell on the phone or via checkout? >> I want to begin selling on the phone. We have a a website landing page. We just began doing ClickFunnels because what made me sign up for this, I'm like, we have to do that. >> Yeah. Are you working with us after this? >> Mm. No, I think I should, but I'm afraid that I don't have enough I'm afraid I don't have enough data yet because like when I was filling this thing out >> But you don't have the data of like and I don't I promise I don't care. Like I mean, I don't need the money. I I mean that.

55:09Um the like I the reason I bring it up is just because like you're going to build a sales motion. There's a lot of mistakes that you can make there, and getting it right the first time is worth it. >> So, now would be a >> And all of a sudden, the pricing power might not be like 300 to like 400, might be 300 to 3,000. And you'll be like, I can't even do that. You for sure [ __ ] can. >> Would you give up on the single dayers completely and just only focus on >> look at the unit economics.

55:35>> Say it again. >> We have to look at Is my thing not loud? the unit economics. >> just so stuffed up right here. I >> Oh god, okay. >> Just reading your lips, [laughter] yeah. >> No, you're good. Yeah, we just have to look at the unit economics. So, we just have to, you know, open the open the hood, pop it, and just like look at both both different event days. Oops. We'll Sometimes sometimes the single like I we had a we had a business that had uh um a It was a brick-and-mortar service business, had two models, a micro model, and like a bigger facility model. The bigger facilities uh obviously had more revenue and more absolute profit, but the return on capital and return on effort for the small ones was like 5x.

56:09[snorts] And so, even though like the founder was like, "Oh, the but I love having these you know, these big whatevers." It was like, "We can expand so much faster, and we can get to our 10-year goal in 3 years if we do the one day or the one the mini version." So, we just have to look at it. Um and all we're really optimizing for is return on capital, human capital and financial capital. That's all like if you think about if you were if you boil a business down to its most basic unit, it's an economic arbitrage between what it costs you to make more money. It's all this. And then the difficulty of of continuing to do that. And so, that means that we spend a certain amount of money to get someone in, which for you is going to be the cost of your media team and your time.

56:43That's the cost, right? On the on the back end, it's what do we make from these people who come in the door, and what stops us from doing more of that thing, right? >> [clears throat and cough] >> And so, if there's a model that right now we can can spin that wheel faster and it costs us less here, that's the better model. I just don't know which one it is. And in terms of pricing, we just continue to go up until willingness to pay stops, and then we just stay there. The nice thing Here's the >> I have a hunch that the conversion's very high.

57:10>> Yeah. >> Yeah. Obviously. >> You'll be able to afford it. >> [laughter] >> But but my but the the the the main point though, um You said something. I had my It was a good one. It was a good one. Um Yeah. Oh, um I'll remember it when I talk to somebody else. >> [laughter] >> But yes. >> What was the thing that you said that it hit me like in the face your competitor is going to copy a broken model. So you should hope he does that.

57:43Yeah, and I'll land the plane on that for you too, which is that you will never go out of business focusing on the customer. And I'll tell you a quick story. So the biggest business mistake that I've made the two most costly business mistakes I've made one of them has nothing to do with this. This is the other one >> [laughter] >> which has everything to do with this. I had a competitor that ended up taking a bunch of my top testimonials that were that we kind of converted to semi employees because they were big evangelists back in the gym launch days.

58:14And as soon as they took them and they were they were big ads for me. All of a sudden they were running ads for this other guy. So it's kind of like when the Verizon guy went to the AT&T remember that that that switch over that actor. It was kind of like that and this guy was offering one on one coaching to help people out. I never did that and so and they were cheaper. So they were cheaper. They were doing one on one and they had some of my top, you know, customers becoming advocates and they said that the 10 of them had come together. They partnered he partnered with these 10 people or something like that and when that happened I got rough my feathers got all ruffled and I was like it's war time. We got to you know, we got to go to the mattresses. We got to really you know, change the change the business up and so I did this big kind of like relaunch internally to my existing customer base.

59:00And um I said we're and I did this big value stack and then I said you're going to get all this extra stuff not for the same price you're paying me but for less and so I took my existing recurring base and I reduced my revenue by $500,000 top line per month. And so that translated cuz we take it off top line and and the cost went up. So I increased my costs and I took my top line down by 6 million.

59:27And I ended up losing in profit somewhere in the neighborhood of 6 to 7 million dollars a year for that business at the time. I then ended up selling that business, obviously, and the business never recovered that profit. It stayed there. And when I did make that move, the first [snorts] comment in the chat after I dropped that it was less, was a complaint that I had not done it earlier.

59:53So, it was not thank you so much for lowering the price and giving us more [ __ ] It was I can't believe I was paying more. And I was like, I want to [ __ ] kill myself. >> [laughter] >> And and here was the best part of all. My churn changed zero. So, I just cut my top line by 20%. Churn remained the same because the willingness to pay change that I made, I basically reduced it from call it $3,000 a month to $2,500 a month, it actually made no real difference in whether someone would cancel or not.

1:00:25It was past a threshold that this is a lot of money. And so, it changed nothing. I just made less money. And then when I sold the company, that six got multiplied by a lot. And so, that probably cost me in the neighborhood of probably 50 million million dollars. And so, the big lesson that I learned there was that I shouldn't and that that competitor ended up killing that business because it wasn't [ __ ] profitable.

1:00:51And so, I I was the market leader and someone came in to undercut me, and then I said, "Oh, I'll copy the moron." >> [laughter] >> It's easy to let happen. >> Yes. And so, don't lose 50 million dollars. Let him Let him figure that out for himself. You just focus on the customer and you'll win. >> Yeah. Good answer. >> Appreciate you. >> If you like this video and you're business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so you can click here and you can check it out.

1:01:28Again, absolutely free. And since you're a business owner, I appreciate you and enjoy.