Hormozi Teaches Me Everything He Knows in 90 Minutes

**SPEAKER_1** (0:01)
You probably recognize this guy, Alex Hormozi. He's known as the 100 million dollar man, and he's probably the most popular business teacher on YouTube. So last week, I flew to Vegas, and I asked Alex to teach me the things in his new book, Money Models. How to make money, thank you.

**SPEAKER_2** (0:15)
Yeah.

**SPEAKER_1** (0:17)
He says that this one concept has made him more money than anything else in his career. How would we improve our business by thinking in money models?

**SPEAKER_2** (0:24)
So let me walk you through the actual economics of this. If 10 percent of people buy something that's 10 times expensive, so you double your revenue. So the classic upsells, you can't have X without Y, right? You can't have a burger without fries or whatever, right? It's like what? You can't have X without Y.

**SPEAKER_1** (0:36)
I recorded the whole session and I want to share that with you here today. All right. If I reset your bank account and your followers, change your name and face. So I reset you to zero. How long do you think it would take you to get a million bucks in your bank account?

**SPEAKER_2** (0:48)
Well, having lost everything twice, I'll tell you what I did.

**SPEAKER_1** (0:51)
What do your haters get right?

**SPEAKER_2** (1:05)
You got a new book.

**SPEAKER_1** (1:06)
If I read this book, and it's going to start a little campfire in my head, what's going to happen from Money Models?

**SPEAKER_2** (1:11)
You will love this book if you liked offers. So a Money Model is a deliberate sequence of offers. Many businesses have more than one offer. So it's how do we sequence those in the right way that accomplishes a financial objective. And so the financial objective for this book and what I try to go for for every business I have is something that I've always called client-financed acquisition. And so the reason that we've been able to scale-

**SPEAKER_1** (1:32)
One user pays for the next user?

**SPEAKER_2** (1:35)
Yes, and a slight tweak on that. Which is, so it's 2X, CAC plus COGS. So this is the big thing that we want. So it's basically gross profit in 30 days. So I guess I could move this over here, but it doesn't matter. Gross profit in 30 days is greater than 2X CAC plus COGS.

**SPEAKER_1** (1:55)
Let's just explain the terms, people don't know. Gross profit, so you're not talking about overheads in this. So gross profit, CAC, cost of a customer acquisition, COGS, what it costs you to deliver the product or service that you deliver. And what you're saying is my bar, my golden rate, my golden number I'm trying to hit is, I want to take the cost to deliver the service and get the customer, double it, and in 30 days I need to be hitting that number. That's my goal. Whether that came on the first offer or what you're saying now is the second, third, fourth thing I sell them along the way, along their customer journey.

**SPEAKER_2** (2:23)
It's exactly that.

**SPEAKER_1** (2:25)
Can you do like a stupid, tangible example?

**SPEAKER_2** (2:27)
Yeah. So the first business I ever did this in was the gym business. And so it's a really simple example because everyone gets it too. So when I came into the gym business, what the vast majority of businesses did is they would run low ticket like $21, 21 days, they run a free month or free 14 day trial, whatever. That was the primary way of getting people in. And so let me walk you through the actual economics of this.
And so if you have a business, let's say old way, right, someone comes in, let's say you pay whatever, $10 a lead, that's your CPL, cost per lead, and then you can convert, let's say you're getting 20% of these people to start a trial. So that means that it costs you $50 to start a trial. And then one out of three of those trials, which is the industry average, convert. And typically the conversion for like a boot camp or something like that is going to be about $99 a month, right? That's what it costs.

**SPEAKER_1** (3:14)
Here's your CAC, and here's the first 30 days.

**SPEAKER_2** (3:18)
Exactly. And so you're upside down here. Now, not only that, it probably took you two weeks to like between when you got the lead, before you got the trial, and then 21 days, now you're at five weeks. And so by the second month, now you're like, okay, I got 99 times two. Now, that doesn't even take into the account that 99 is not all free, there's costs involved there. But let's just say that these guys are amazing and they're running 100% margins. And so it's like, okay, so this is going to take 60 days for this business to basically recoup the money. Now the problem is that in the gym industry, especially many customers leave within four months. And so it's a very tough way to make a buck. And so what I kind of came in and started doing was we'd run these challenges and I'd spend the same amount of $10. I'd had the same-