Snippet 19: Alex Hormozi Explains How To Start Your First Business
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Oh, by the way, before we get into this episode, I would love to tell you a little bit about Life Notes. Now, Life Notes is a weekly-ish email that I send completely for free to my subscribers, and it contains my notes from life. So notes from books that I've read, podcasts I'm listening to, conversations I'm having, and experiences I'm having in work and in life. And around once a week, I write these up and share them in an email with my subscribers. So if you would like to get an email from me that contains the stuff that I'm learning, almost in real time as I'm learning it, you might like to subscribe. There is a link down in the show notes or in the video description.

As a quick pro tip for everybody, if you've got stuff that people ask you to do for them because you're good at it, maybe you're good at tech. It's like, can you help me set up my Wi-Fi and stuff? It's like, that means you're solving problems. What people ask you to do as a favor is an indication of the things that you can charge for later. Right? So...

I had all these people who were asking me, not all these, I mean, a handful of people who had asked me for programs and stuff. And so what I did was during my last year of consulting, I started something called the Free Training Project. And so the Free Training Project was I would charge $500 to $1,000, but I wouldn't charge it. They had to donate that to the charity of their choice in exchange to work with me.

Right. And so that way I wanted people to value it, but they weren't paying me directly. So they'd get a write off. They felt good. I had a ton of goodwill also in the marketplace too. Cause I was like, I'm doing all this stuff for charity. I got, I got all these people reaching out to me like, this is so cool, blah, blah, blah. Right.

And so after a year of doing that, I had probably, I don't know, 12 really good test of like great before and after pictures that I had collected from my clients. And I told them that was part of the deal. I was like, you have to donate it. I would like to do this for real later, but you have to let me use your testimony. And they were like, that's fine. So once I had that, I had those first 10, 12 customers who had great before and after pictures donated.

I transitioned many of those customers that, hey, I'm going to do this full time now. Are you comfortable paying the same amount you're paying to charity except just making it charity of Alex because Alex can't either. And that was actually how I transitioned from not-for-profit or donating everything. And I'd even set up the entity. I just told them to literally donate it and send me the screenshot. I didn't even do anything like that. And so I didn't have a website.

All I had was an LLC and a PayPal account. So like for everybody's like, I don't know how to start a business. I was like, you literally just need a bank account and a way to process money. That is it. Like two things. And you can Google how to figure out if you can't figure it out from Google, entrepreneurship might not be for you. All right. But you look like, think about there's 30 million businesses in the United States, 30 million other people have figured this out.

which means you can too so bank account payment processing make the first 10 free or some sort of charitable thing so that people like don't feel weird or you don't feel weird about selling etc after you have it after you're providing this service to people you can transition people from free service to paid service and if they don't want to start paying you then that gives you insight as to either you suck right or they suck which is also possible too but either way

A certain percentage of those people will continue to stay and pay you. And now you have income. Now, you can also ask those people for referrals, which is exactly what I did. So I think half that business came in just for... The initial ones came in from friends and family and me posting. And so I'll close the loop on what I said earlier. A year later, after I had those testimonials, I made a public post being like, hey...

I've got this thing now. I made a website, which is, that was my big announcement. I made a website. I still have the post. I found it. It's 2013. I was like, I made a website and I am now open for business. And so if you would like training stuff, let me know. This is what I'm doing now. And I had some testimonials and go check out the site, whatever. And so from there, I was able to get, I think about 20 guys

who were willing to let me do just like almost bodybuilding type stuff. Cause I was kind of like what I was powerlifting bodybuilding back then. And so I think I want to say I got 20 guys at 200 bucks a month. And so I was making $4,000 a month from those people. And it took me four hours every Saturday to do the fulfillment. What was the fulfillment?

I would just update their training programs and send them nutrition, like update their macros, updated meal plans, and then like, you know, new workouts for the week, etc. And then I and everyone had my cell phone and I would just text them the new stuff. And if they had any questions, they could hit me up. Like it was a very simple business.

And so that's what I did. It was just one-on-one online and it only took me four hours on Saturday morning. And to show you what kind of person I am, I hated it. Uh, even though I loved fitness, I hated having to do something the same thing every day. Um, like on the delivery side. So I ended up having the genius idea of saying, Oh, I need to own a gym because then I'll be a business owner. I'm really just self-employed right now. Um,

And so that's what got me to start my gym rather than probably doing the wiser decision and saying, okay, this cost you four hours a week and you're making four grand a month. Maybe you should do this for 40 hours a week. But doing more of it to me felt like a horrible idea. So I didn't want to do any more. So how did you jump from that to, therefore, I should probably own a gym? Oh, I don't think that's... The inferential jump was not high. Yeah, it was not an intelligent one. I always thought I was going to own a gym. That was, I mean, that was the... Not always.

I had done a, so, so these are the three things that I was deciding between for my business. I was decided between a test prep company because I was really good at standardized testing. Um, and I had a process for how I, how I did it. I had a yogurt business idea cause I was a big yo, fro-yo guy. Yeah. I don't, I don't, I was like, I'm an avid consumer of this shit. I feel like I know, and I, and I hate it. There's so many things I knew that I thought I could, I actually know a lot about the yogurt business now. Um,

And I was good at fitness. So those are the three things that I felt like I could do for anybody who's listening. Those are the three that I was picking between. The yogurt business cost $250,000 to start up. I didn't have that money. So I couldn't do that one. I had saved about $50,000 or $60,000. I can't remember. It was $50,000 or $60,000 at the time. I was 23. And then the test part business, I actually did a ton of work on.

And I was going to partner with a professor from my university to do it with me. And so I set up all the initial materials. And based on a miscommunication, I'll just put it that way. He ended up either taking the materials and not and using them without me to start a business consulting thing.

Either way, it became clear that what I thought was happening versus what he thought was happening were not the same thing. And that left a very sour taste in my mouth with test prep. I do think it was the smarter business I probably should have done. And so all that was left was fitness. And so fitness, I was like, I already know that. People already want me to help them with it. So I'll just start that. And so the gym was what I would have said is like the legit business. I didn't think that the online thing was legit. Remember, this is 10 years ago.

So like it wasn't... No one even thought it was... That was a concept of legitimate business. You know what I mean? So I was really early days on it. And so, you know, from there, I hit up 40 gym owners to see if I could just...

basically apprentice for them and just work for free. One guy hit me back. He had a mastermind. I joined his mastermind for $10,000, even though I didn't have a gym. And I said, are you sure that it makes sense for me to join? He was like, oh yeah, sure. And it did actually make sense for me because then I could learn from all the mistakes everybody else was making before I started. So I was like, okay, this works.

And so I learned all the stuff that I could from that mastermind and from him. He ended up signing me as an employee. Yeah. A couple of questions on that front. So yeah, the test prep thing is interesting. I didn't know that part of the story. So my first business that went well was also a test prep business. And I still have the Evernote document from 2012 where I was like, shit, I need to make some money. What am I good at? And what could I possibly do? And it was like test prep and web design. I was like, cool.

cool. Let me make a test prep course thing. And let me advertise it on a website. Cause back then it was hard to make a website look pretty. And that, that's what ended up, ended up making the money initially, um, on the, on the gym front. So it, it, it seems to me like there's two leaps there. Um, leap number one is I want to do this thing. Like I start a gym, maybe, uh,

And therefore, I'm going to work for free. I want to own a business. Yeah. I want to own a business. Therefore, I'm going to work for someone for free. That seems like a bit of a leap, which these days seems very unfashionable to even say because everyone then goes down your throat for being that's only available for the privileged, et cetera, et cetera. What's available for the privileged? Working for free. Yeah, the working for free thing. It's quite unfashionable to suggest that people work for free. Oh, all right. I mean, I was making four grand a month from my little online thing.

So I made money from that. Now I offered to work for free, but I, he quickly was like, I don't feel good about it. I'll just pay you. And so he paid me, he paid me like minimum wage, but I mean, I think I made like, I don't know, 2,800 bucks a month, whatever it was. I don't even remember what it was. Cause I made more from the four hours a week on Saturday than I did from that. But again, the point wasn't to, to, to earn, you know what I mean? It was to learn. And I had saved up 50 grand. So I knew I could live for, you know, at least two years on that.

Um, I tried to live on, I was, I spent 400 bucks a month splitting a bedroom. Um, and then I ate, you know, I spent a hundred dollars a week on food. I was eating, you know, I was spending nothing to live. And then the rest of my time was at the gym trying to learn.