I Lost $100 Million... Here's What I Learned

Alex Hormozi
27 Mar 202447:18

Summary

TLDRこの動画スクリプトは、事業を通じて失った100万ドルを振り返る内容です。クリプトcurrency、不動産、パートナーシップ、ソフトウェア開発、食品ビジネスなど、様々な分野での失敗を詳細に解説し、それらから学んだ教訓を共有しています。特に、パートナーシップの失敗やソフトウェア開発における技術者的役割の欠如、価格戦略の誤りなどが、大きな損失につながった要因を明らかにしています。これらの経験から得られた知見をもとに、将来の事業においてはどのようなリスクを避け、成功を追求するかを考えるべきです。

Takeaways

  • 🚀 失敗を恐れず、挑戦する。 - 彼は自分の失敗から学び、それらを今後のビジネスに活かすための非常に価値ある経験と見なしています。
  • 💡 自分の専門分野でのみ行動すること。 - 彼は自己の能力と専門知識の範囲内でのみビジネスを行うことを強く提唱しています。
  • 💸 投資ではなく、本格的なビジネスでお金を稼ぐ。 - 彼は投資ではなく、本格的なビジネスを通じてお金を稼ぐことを好んでいます。
  • 🏠 不動産投資は注意する。 - 彼の経験から、不動産投資には注意が必要であると述べています。
  • 🤝 パートナーシップには慎重にアプローチする。 - 彼は、パートナーシップの選び方や、パートナーシップの構造に関する重要なポイントを指摘しています。
  • 🔄 ビジネスの核心を強化することの重要性。 - ビジネスにおいて、基本的なものを改善することは、他のすべてよりも重要であると彼は学びました。
  • 🚫 誘惑に負けず、集中力を保つ。 - 彼は、他のビジネスチャンスに誘惑されがちであることを自覚しており、集中力を保つことが重要だと述べています。
  • 🧠 知識と経験を活用した意思決定の重要性。 - 彼は、ビジネスにおける意思決定には、知識と経験を活用することが不可欠であると強調しています。
  • 💼 従業員やパートナーに対して適切な報酬を与えること。 - 彼は、ビジネスの成功に貢献する従業員やパートナーに対して、適切な報酬を与えることが重要であると提唱しています。
  • 📈 ビジネスの成長戦略を慎重に計画する。 - 彼は、ビジネスの成長戦略を慎重に計画し、長期的な成功を目指ることが重要だと述べています。

Q & A

  • どのような誤った投資が脚本の作者に最も大きな損失をもたらしたか?

    -最も大きな損失をもたらしたのは、cripto投資で、特にエッセントムの投資です。彼は100ドルでエッセントムを購入する予定でしたが、価格が93ドルまで下がったため、購入を中止しました。その後、エッセントムの価格は30倍にも上昇しました。

  • 脚本の作者が実業家として学んだ教訓は何ですか?

    -脚本の作者は、自分の得意なビジネス分野でお金を稼ぐことの重要性を学びました。彼は、投資ではなく、基本的なビジネス活動を通じてお金を稼ぐことを好みました。また、彼は自分の能力の範囲を超える投資を行う際には、リスクが増加することを学びました。

  • 脚本の作者はなぜ、オハイオでの不動産投資が失敗したか?

    -脚本の作者は、信頼できる情報源がなかったため、オハイオでの不動産投資が失敗しました。彼は、低廉な価格で購入された家を修復し、賃貸できると考えましたが、実際には家が電化されておらず、駐車場も破綻していたことが分かりました。さらに、その家を正しく修復するためには、予想外の費用が必要でした。

  • 脚本の作者がパートナーシップで学んだ教訓は何ですか?

    -脚本の作者は、パートナーシップで学んだ教訓は、パートナーシップを結ぶ際には、相手が持っているものを自分たちが持っていないこと、時間、資金、スキルなどであることが重要であることです。また、パートナーシップを始める際には、股权投资をすることよりも、自分が行うビジネスに核心を置くことの重要性を学びました。

  • 脚本の作者はなぜ、自分のビジネスのエゴを押し付けないで、よりシンプルな戦略を好むようになったか?

    -脚本の作者は、自分が持っているビジネスをシンプルで基本的な戦略に焦点を当てることの重要性を学びました。彼は、自分が所有し、運用するビジネスが最も成功し、最も利益を上げることができました。また、ビジネスにおいては、最小限の投資で最大の利益を得ることが重要であることを学びました。

  • 脚本の作者が食品ビジネスに参入した理由は何でしたか?

    -脚本の作者は、フィットネス業界で栄養について話しているため、食品会社を始めることで、既存のサプリメント販売の基盤を利用できると考えました。また、彼はこのビジネスを通じて、フィットネスジムの顧客に食品を販売することを目指しました。

  • 脚本の作者が食品ビジネスで直面した課題は何でしたか?

    -脚本の作者が食品ビジネスで直面した課題は、低い利益率と、ビジネスの复杂性でした。食品ビジネスは、販売価格とコストとの差が小さいため、利益率が高くありません。また、食品ビジネスでは、市場推進、販売、顧客サポート、返品などの多くの費用が必要となります。

  • 脚本の作者がソフトウェア会社を始めた背景は何ですか?

    -脚本の作者は、フィットネスジムのオーナーがリードを稼げなかった問題を解決するために、ソフトウェア会社を始めました。彼はAIの進化とメッセージングの方向性を見て、自動化されたチャットボットを作成し、低スキルの従業員と同様の仕事をすることができたと考えました。

  • ソフトウェアプロジェクトでの失敗から脚本の作者は何を学びましたか?

    -ソフトウェアプロジェクトでの失敗から、脚本の作者は、技術的な共同創業者が重要であることを学びました。技術的な共同創業者は、開発チームをアカウンタブルにし、コードを適切にドキュメント化し、長期的なマージンを守ることができます。また、ソフトウェア開発を外部に委託する際は、プロジェクトの核心的な価値を自分で把握することが重要であることを学びました。

  • 脚本の作者が最も後悔している投資の失敗は何ですか?

    -脚本の作者が最も後悔している投資の失敗は、競合他社が提供するパートナーシップを受け入れたトップジムを奪われ、自社のサービスの価格を下げることです。彼は、他社のサービスに対抗するために、自社サービスの価格を下げ、より多くのサービスを提供することを決定しましたが、これは年商50万ドル以上の損失につながりました。

  • 脚本の作者が得た教訓から、どのようにビジネスを改善する策を立てたか?

    -脚本の作者は、得た教訓から、ビジネスを改善する策を立てました。彼は、顧客とのコミュニケーションを重視し、競合他社に代わって顧客のニーズを満たすことを重視しました。また、ビジネスの核心的な価値を外包することなく、自社のチームで維持することを選びました。さらに、価格戦略を変更する際は、顧客の反応を考慮し、よりプロアクティブな市場対応を行った方が良いと学びました。

Outlines

00:00

💸 投資の失敗とその教訓

この段落では、話者は自分が経験した投資の失敗とその教訓について語っています。彼の最初の大きな損失は暗号通貨に関連しており、エッセントムを買おうとする際にタイミングを見逃したことでした。彼はこの経験から、自分の能力圏外での投資は避け、自信があるビジネス分野での基本的なビジネス活動に集中することが重要であると学びました。また、彼は友人との投資の経験から、大規模な損失を被ることも経験しましたが、その経験から得られた教訓は、今後の投資においてより大きな成功につながったと述べています。

05:01

🏠 不動産投資の失敗とその教訓

話者は、自分の不動産投資の失敗とその教訓について語っています。彼の最初の不動産投資は、友人の提案でオハイオ州の家を購入することでした。しかし、その家は予想とは異なり、電気が引かれていなかった等诸多の問題があったため、修理費用が発生しました。この経験から、話者は「too good to be true」(あまりにも良いので真実ではない)という言葉を信じることを学び、投資には慎重になり、より自分の専門分野に近い分野での投資に重点を置くことを決めました。

10:01

🤝 パートナーシップの失敗とその教訓

この段落では、話者は自分が経験したパートナーシップの失敗とその教訓について説明しています。彼は、自分自身の能力を高めるためにパートナーシップを結んでいたが、結局それは失敗に終わりました。彼は、パートナーシップを成功させるためには、相手が持っているものを自分にはないことが重要であると学びました。また、パートナーシップを始めるとき、自分自身がビジネスを成功させることができるかどうかを確認することが重要であると述べています。

15:01

💼 ビジネスにおける基本的なことの重要性

話者は、ビジネスにおいては基本的なことが非常に重要であると語っています。彼は、自分が過去にビジネスを始めた際に、他のビジネスモデルを模倣してはいけない、そしてシンプルなビジネス原則を守ることが成功の鍵であると学びました。彼は、ビジネスにおいては継続的な改善が求められることであり、最も基本的なことを改善することで大きな成功を得ることができると強調しています。

20:02

🚀 ビジネスにおける「Push」と「Pivot」

この段落では、話者はビジネスにおいて「Push」と「Pivot」という二つの概念について説明しています。Pushは、ビジネスがうまくいかなかった時に努力して乗り越えることを指し、Pivotは、ビジネスの基本的な前提が誤っていた場合に方向転換を行うことを指します。彼は、これらの決定が非常に難しいことを学び、時には大きなリスクを冒すことが必要であると述べています。

25:02

🍲 食品ビジネスの失敗とその教訓

話者は、自分が食品ビジネスに参入してしまった結果、多くの問題に直面し、最終的には大きな損失を被ることになった経験について語っています。彼は、食品ビジネスには低利益で多くの問題が存在することを学び、将来的には別のビジネスチャンスを追求するべきであったと反省しています。また、自分自身の能力を高めるために、新しい分野に挑戦することの重要性を強調しています。

30:03

💻 ソフトウェアビジネスの失敗とその教訓

この段落では、話者は自身がソフトウェアビジネスに挑戦した際の失敗とその教訓について説明しています。彼は、技術的な知識がなかったにも関わらず、ソフトウェアビジネスに参入し、その結果、維持費用が高額になった上に、コードが記録されておらず、他の開発者が代码を理解することができなくなったことを経験しました。この経験から、技術的な共同創業者がソフトウェアビジネスにおいて非常に重要であることを学びました。

35:04

: 付加価値の提供と顧客との関係の構築

話者は、ビジネスにおいては顧客との関係を構築し、彼らのニーズに合わせた付加価値を提供することが重要であると述べています。彼は、ビジネスの成功を追求する際に、顧客からのフィードバックやニーズを無視し、競合他社に注意を集中していたことが、最終的には大きな失敗につながったと反省しています。顧客との関係を構築し、彼らのニーズを満たすことがビジネスの成功につながると強調しています。

Mindmap

Keywords

💡投資

投資とは、資金や時間などのリソースを使用して将来の利益を得るために何かを開始または改善することを指します。このビデオのテーマは、失敗を通じて学んだ投資の教訓を共有することです。例として、暗号通貨への投資や不動産投資の失敗が挙げられ、それらの経験から得られた教訓が説明されています。

💡リスク管理

リスク管理とは、潜在的なリスクを識別、評価、および制御することで、損失を最小限に抑える戦略的なプロセスを指します。ビデオのなかで、話者は自分が失敗した投資において、リスク管理の重要性を学んだと述べています。具体的には、投資においては自分の能力圏外の分野に踏み込んだり、適切なパートナーとの協力を求めることが重要であると触れられています。

💡パートナーシップ

パートナーシップとは、業務や目標を共有し、互恵的な関係で協力することです。ビデオでは、話者が複数のビジネスパートナーシップに関与し、その中で得た教訓について説明しています。特に、能力や資源が補完できるパートナーとの協力が重要であり、逆に能力が重複するパートナーシップは問題を引き起こすことが述べられています。

💡市場動向

市場動向とは、市場における需要や供給、価格などの変動を指します。ビデオの文脈では、話者は自分が市場動向に対して適切な対応をとりくることができなかったこと、つまり競合他社が提供するサービスを模倣し、価格競争に応じることでビジネスを失ったという経験を共有しています。

💡顧客とのコミュニケーション

顧客とのコミュニケーションとは、ビジネスにおいて顧客との間に意思疎通を行うことを指します。このビデオでは、話者が競争相手の分析に注目していたため、顧客のニーズや問題に注意を払わなかったことが、大きな失敗の一つだったと述べています。顧客とのコミュニケーションが不足していると、ビジネスの方向性が損なわれ、最終的には利益に悪影響を及ぼすことが言及されています。

💡ビジネスの基本

ビジネスの基本とは、ビジネスを成功させるために必要な根本的な原則やアプローチを指します。ビデオ中では、話者が「華やかな」戦略や過剰な投資を避け、ビジネスの基本的な要素に集中することが重要であると強調しています。例えば、顧客サービスの改善や効率的な販売プロセスの構築が挙げられ、これらの基本を強化することでビジネスの成長が図れるとされています。

💡収益性

収益性とは、ビジネスが利益を生み出すことの能力を指します。このビデオでは、話者が複数のビジネスモデルを試み、それぞれの収益性に関する教訓を学んだと説明しています。特に、低収益性のある事業に資源を浪費することの危険さや、高収益性のある事業への集中が重要であることが強調されています。

💡自己評価

自己評価とは、自分自身の能力やパフォーマンスを客観的に評価することを指します。ビデオの文脈では、話者が自分自身のビジネススキルや判断力を再評価し、過去の失敗から学び直すことの重要性が述べられています。自己評価が適切に行われなければ、ビジネスにおいて無駄なリスクを冒すことや、改善の余地がある分野を認識できなくなることが警告されています。

💡戦略的リスク

戦略的リスクとは、ビジネス戦略の実施において発生する潜在的なリスクを指します。このビデオでは、話者が戦略的なリスクを取ることの重要性について説明しており、例えば新しい市場への進出やイノベーションを推進することが挙げられています。しかし、戦略的リスクを適切に管理せずに取り組み始めると、大きな損失を被ることも明らかにされています。

💡市場調査

市場調査とは、製品やサービスの需要、市場の動向、消費者の嗜好などを調査研究することを指します。ビデオの内容において、話者は市場調査の重要性を強調しており、自分自身が十分な市場調査を行わずにビジネスを開始したことが、多くの失敗の原因となったと述べています。市場調査を通じて、ビジネス戦略を立てる際に必要な情報を得ることが、成功に導く要因の一つであるとされています。

💡損失

損失とは、本質的には予期されていない負の結果を指します。このビデオでは、話者が過去に経験した様々な損失について詳しく説明しており、その経験から得られた教訓が重点となっています。例えば、無知や衝動的な意思決定、または不適切なパートナーシップが原因で発生した財務的な損失が挙げられ、それらのエピソードから得られた教訓が提示されています。

Highlights

The speaker shares their experience of losing $100 million over their career and the mistakes that led to it.

The first significant loss was due to not investing in cryptocurrency when Ethereum was at $100.

The importance of staying within one's sphere of confidence and focusing on core competencies is emphasized.

The speaker highlights the dangers of FOMO (Fear of Missing Out) and how it can lead to poor investment decisions.

A real estate investment mistake is shared, where the speaker bought a house that was misrepresented and ended up losing money.

The lesson of being cautious with opportunities that seem too good to be true is discussed.

The speaker talks about the pitfalls of partnerships, especially when they are formed out of insecurity or with the wrong structure.

The importance of having a partner who brings something unique and valuable to the table is stressed.

The speaker shares a costly mistake of getting into the food business without fully understanding the industry and its margins.

The concept of 'push and pivot' is introduced, discussing the difficulty of knowing when to persevere and when to change direction in business.

A personal story of losing a significant amount of money due to a bad partnership is shared.

The speaker emphasizes the importance of not being too distant from the day-to-day operations of a business to avoid costly mistakes.

The dangers of outsourcing core business functions without having in-house technical expertise is discussed.

A multi-million dollar mistake of relying on a vendor who couldn't handle the volume of business is shared.

The speaker's biggest mistake was a pricing error, which led to a significant loss in annual profit.

The lesson of listening to customers rather than reacting to competitors is highlighted.

The importance of being proactive rather than reactive in business decisions is stressed.

Transcripts

play00:00

I've lost $100 million over my career

play00:03

and in this video I'm going to break

play00:05

down every single one of my mistakes so

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you don't have to my first big loss was

play00:09

crypto and I'm going to be order these

play00:11

roughly lowest to most amount of money

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at the very end I'll give you the Big

play00:15

Kahuna the one that I lost absolutely a

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shitload on that you'll probably be able

play00:19

to learn the most from in 2017 a buddy

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of mine was like hey man you should buy

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this stuff called ethereum it was 100

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bucks I set up the account I put a

play00:26

million dollars in and like right before

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I'm about to click per purchase at $100

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it like went down to like 93 and I was

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like ah I don't know about this and so I

play00:36

decided not to pull the trigger long

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story short and then you know 30X from

play00:40

there or whatever it was this next time

play00:42

around a few years later it had been

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going like this and then right here

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Bitcoin was at

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$60,000 ethereum was really high too I

play00:50

called my buddy up not the same guy

play00:51

different buddy and I was like hey man

play00:53

I'm going to get it on this and he was

play00:54

like I'll put a million bucks in if you

play00:56

do and I was like fine so we put a

play00:58

million bucks in and then lost 500

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Grand in a matter of weeks but there's

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two things that I think were good

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reminders for me from this whole

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experience the first is that me making a

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million dollar bet at the time was not a

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huge percentage of my income or my net

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worth and I made more than that every

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month anyways I didn't plan on having

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this be how I made money I made money

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doing stuff that are fundamental

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business things and then I basically

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made a bet or a gamble which

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realistically it was just gambling the

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second big point was that warm buff and

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Charlie Monger talk about your sphere of

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confidence business is very much within

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that Marketing sales acquisition pricing

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product those are the things I'm very

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good at now outside of this is probably

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real estate and crypto and a bunch of

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other things that other people do and

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have spent lots of time developing their

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skill set those people should do those

play01:50

things I have no idea and I have just

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noticed the further away I get from my

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core the more money I lose and the

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closer I am to the core of what I'm good

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at the more money I make I will give you

play02:04

a a little tidbit that a a mentor gave

play02:07

to me if you know how to create wealth

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just create wealth don't [ __ ] with

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investing if you know how to make money

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and he gave that to me as advice and I

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try to remember that as like what am I

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good at and so I think it's important to

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think about what are the themes that are

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going to be around these mistakes cuz

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you're hopefully not going to repeat the

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mistake I'd rather you just get the

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lesson without the scar right and so

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number one out of my sphere of

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confidence number two I latched on to

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fomo I saw these people like man I would

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like to make quick fast easy money too

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when everyone thinks something is a good

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idea it's usually a bad idea whenever

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you feel that fomo I've now learned

play02:42

pause so the second big mistake I had uh

play02:45

was in real estate and you'll notice

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there's multiple big mistakes that I

play02:48

will make in real estate over my career

play02:50

and hopefully I sto making them this one

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was actually my first ever real estate

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investment so L and I have been making a

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ton of money uh in gym lunch for a few

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years now I think at the time we

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probably had I want to say like 20

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million bucks in cash so buddy of mine's

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like hey I've got this guy he sells

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houses in Ohio cuz houses in Ohio are

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actually really cheap when I got on the

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phone with the guy and he said yeah I

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buy them for 30 I fix them for 10 grand

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so I have 40,000 and then I flip it to

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you for 50 so I make 10 on the spread

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he's like that's my business model I

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just sell a lot of them I was like okay

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that's cool he's like well do you want

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to buy five do you want to buy 10 what

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do you want to buy and this is from a

play03:25

lesson that I had learned earlier on

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less money I was like why don't I dip my

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toe in like let's not lose a shitload of

play03:31

money if this doesn't work but I said

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why don't I just buy one of these houses

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and see what happens it turned out that

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the house was not in fact a

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three-bedroom it was actually a

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two-bedroom house and the third bedroom

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was actually in a closet that they had

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put a mattress into the house did not

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actually have electricity they were

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running it from the neighbor's house

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illegally the driveway was so in

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shambles that the people couldn't

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actually Park on it so tenants couldn't

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park there fixing the driveway on its

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own was like 7,000 now for a house that

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cost 5050 that's a huge chunk of what

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you put into as an investment now

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remember I'm trying to get like 6,000 a

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year uh a friend of mine who is in real

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estate different friend looked up the

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county records or whatever and found out

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that the guy who had sold it to me

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actually bought the house for

play04:14

$199,000 and had put no money into the

play04:16

house and so his business model was buy

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it for 19 flip it to 50 to people who

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don't know any better that was me and

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the tenant's paying $700 a month now all

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right so that was what we got we were

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able to rent this place for now $700 a

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month doesn't cover the the driveway

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that I had to repair it doesn't cover

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the electricity that I had to actually

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run from scratch into this thing to make

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it livable and honestly really kind

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tenants they were like hey you think you

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know it'd be nice if we could have our

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own electricity and like of course they

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[ __ ] should I didn't know I I was

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buying it out of state what did I have

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to do because he was unlivable I had to

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put him up in a hotel while we had to

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basically make this place livable and so

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that took like 30 days this family isn't

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hotel that I'm paying for this whole

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time as the landlord selling the house

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with the tenant in it I think for

play05:00

$20,000 because I was like just get rid

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of this [ __ ] thing but the thing that

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I lost Beyond just the 30 or $40 or

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$50,000 I lost in the deal was the

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amount of time effort and energy and

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emails and phone calls that went back

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and forth about this [ __ ] thing and

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for context at the time I'm making

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50,000 a day in profit like I like I was

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like just [ __ ] get this out of my

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life what a mistake so anyways I called

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the guy up who sold me the house and I

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was like dude like what the [ __ ] and

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basically sto responding to my my

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attempts to reach out to him because it

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was apparent what he had done and I

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basically was like I just want to let

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you know I'm really grateful that you

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taught me this lesson for so cheap and

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he being the scumbag that he was said

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you're welcome he very much was aware of

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the fact that he was totally running a

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scam let me walk you through some of the

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lessons that I got from this so number

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one is that if it's too good to be true

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it usually is now he was telling me

play05:52

about 25% plus cash on cash returns

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right I caught a a buddy of mine who

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owns a billion dollar fund and I was

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like hey what do you think about this

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thing he he was like this doesn't make

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sense he's like cuz if he really was

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doing that he should just own all the

play06:03

houses like why would he why would he

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sell these houses and I was like no man

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you're just not a Believer too good to

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be true all right usually is and the

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thing is is the hard part about this one

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this one's really deceptive is that if

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you're in early on something sometimes

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it is really good but the thing that

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makes it the to be true part is that if

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no one else is aware of it there's this

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double-edged sword of like am I seeing

play06:23

some opportunity that's going to close

play06:24

in the marketplace or am I just about to

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get [ __ ] robbed

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blind the second thing is you'll see

play06:30

this lovely recurring friend we have

play06:31

here is that I saw my friend making

play06:34

money and I was like oh man I should do

play06:35

it and he was a business guy and I was

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like oh if he's a business guy he can do

play06:38

it I'm a BS guy I could do it he lost

play06:39

his ass too which leaves me to number

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three which is now if someone tells me

play06:43

about an opportunity that they're doing

play06:44

for investing which for me is now a much

play06:46

longer time Ron I say how long youve

play06:48

been in this deal for if someone says

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they've been doing it for less than 2 or

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three years I don't care point three is

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that what's the hold period if I'm

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hearing about something from somebody

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they better be doing it for multiple

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years before I'm going to even consider

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it and so what I would say I do now with

play07:03

these types of things is that one I'll

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do it with somebody but I want to do it

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with the guy so that guy who was on the

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phone with me selling me the property

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what I would do now is to say I'll buy a

play07:13

property that you buy and if they don't

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want to go on with me great then I'm not

play07:17

doing a deal in the beginning I was

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really greedy I was like no I don't want

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anybody have the upside now I'm happy to

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give Partners the upside because the

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more money they make the more they want

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to make it with me and we'll do it

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together and I'd rather have a very sure

play07:26

20% than a really risky 40 and whenever

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I feel that little tickle in my stomach

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or the back of my neck where I'm like

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ooh I feel like I'm missing out I

play07:35

literally just stop and I say wait

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because every huge amount of money that

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I've made has never been from any

play07:42

investment it's been from me seeing an

play07:44

Arbitrage opportunity in marketing and

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sales and seeing that I can acquire a

play07:47

customer for $10 that's worth a th000

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and then saying great let's Jam as much

play07:52

cash as humanely possible into that but

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that takes lots of iterations to get

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there and I was there every single step

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of the way it doesn't just appear on

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some spreadsheet showing how rich I'm

play08:00

going to get so mistake number two my

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little house in Ohio for $50,000 that

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taught me lessons far more valuable that

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have saved me way more than $50,000 over

play08:09

the rest of my investing career so

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$50,000 goes survey

play08:15

says goodbye so my third lovely mistake

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that I had was terrible Partners now I'm

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going to go through a few of these um

play08:23

and I'm going to ladder up to the worst

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partnership I had the first Partnerships

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I made I made because I was insecure I

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made them because I didn't think I could

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do it on my own I just partnered with

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people that I thought would know more

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than me just because they were there

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more or less and this is not any

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disrespect to those people it was my

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mistake not theirs I have had nine

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failed Partnerships in my entire life

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before I started making money nine

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different people that I was partnered

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with I'm going to give you the the

play08:52

nitty-gritty of every lesson I learned

play08:54

from all of them so the first partner

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that I ever took on was an adviser to

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told me hey you should partner with this

play09:01

guy to start a gym all right my very

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first gym and he said he's already got a

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gym in the neighborhood you want to be

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in you can start with his client tell

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base and just go into a bigger gym and

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come together and I was like okay that

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sounds good and he's like yeah you guys

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both have the exact same skill set and

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you have the the exact same business you

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guys should just split it and then I

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will take 10% for putting the deal

play09:20

together so you'll be 45 he'll be 45 and

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I'll be 10 for advising and putting this

play09:25

whole thing together and we both said

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sure now guess what the worst way to

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start a business partnership is you both

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have the exact same skill sets and you

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both bring the exact same thing to the

play09:35

table we're both bringing work and very

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little Capital to the table where we

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have the same business that we're trying

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to do and guess what most people do when

play09:43

they start a business exactly that so

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lesson number one of Partnerships they

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have to have something you don't so they

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either have to have time you don't they

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got to have money you don't or they got

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to got skills you don't that's it if

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they don't have one of those three

play09:55

things one of you isn't needed all right

play09:57

lesson number one they got to have

play09:59

something don't lesson number two you

play10:00

lose the most Equity day one so most

play10:03

people are so anal about how they want

play10:05

to sell their company for this amount of

play10:06

money and blah blah blah blah they're

play10:08

thinking about their Equity but day one

play10:09

they Lop half off and give it to

play10:11

somebody they L 2/3 off and give one/

play10:13

third here and one/ third here because

play10:15

they've got three buddies and they say

play10:16

hey well there's three of us let's cut

play10:18

the pie into thirds and we'll go into

play10:19

business together doesn't work that way

play10:22

because often times the economic

play10:23

contribution is not Equitable if you

play10:25

look at time money skill between all the

play10:27

people that are going to get into

play10:27

business together if you have more than

play10:29

one of those and they have more than one

play10:30

of those well who how much is each

play10:32

person contributing now part of that

play10:33

comes down to negotiation being really

play10:35

honest about it but people want to avoid

play10:37

these hard conversations early on CU

play10:38

they're like well if hey if it works out

play10:39

we make a lot of money it's not going to

play10:41

matter I [ __ ] promise you the more

play10:43

money you make the more it's going to

play10:44

[ __ ] matter I'm not living that from

play10:47

experience you lose a lot of equity day

play10:49

one Equity doesn't need to be equal so

play10:51

for example if you did want to bring

play10:52

Partners in you could have a 955 split

play10:55

just make sure that what people are

play10:57

doing what they're investing in time

play10:58

money and skills is appropriate for

play11:01

their contribution and if they bulk at

play11:03

that then thank [ __ ] God you said

play11:06

that on day one so you don't have to

play11:07

deal with it later now you have this

play11:08

fear well what if I can't do this

play11:10

business without them I promise you you

play11:12

can do the business without them all

play11:14

right every successful business I had

play11:15

during the period after my nine filed

play11:17

Partnerships I did on my own with Lila

play11:19

my OG ride or die partner so I give half

play11:22

no matter what that was from my first

play11:24

two Partnerships that I had the second

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two Partnerships that I had when I got

play11:27

into business with these guys I was

play11:29

going to run the business all day every

play11:31

day I was going to be there I also

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invested capital and I was also the one

play11:34

who knew everything about Fitness and

play11:36

the individuals didn't know either of

play11:39

those things and weren't going to be

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spending all their time in the business

play11:41

like I was they didn't take a salary

play11:42

because they had other income streams

play11:43

they were far wealthier than and far

play11:45

older than I was and I didn't and so I

play11:47

had saved up about $70,000 in the first

play11:50

you know 6 months or so of my business

play11:51

so you're like wait a second you were

play11:53

making money and the business was

play11:54

growing and then you brought Partners in

play11:56

damn straight I did and then I sold 2ir

play11:59

of my my business for the cost it cost

play12:01

me to start it not for what it was

play12:03

making me every month I made 2third of

play12:05

what I got paid for the entire

play12:07

two-thirds of my business because I was

play12:09

a [ __ ] and so not really I was in

play12:11

experience that I didn't know any better

play12:13

it was me paying down ignorance debt

play12:14

which is why I'm making these videos for

play12:17

you so you don't have to do it either

play12:20

okay and if you're the one who's in the

play12:21

business you should get paid as an

play12:23

employee as well like there's ownership

play12:25

and then there's working in the business

play12:27

if you're saying Hey I want to be 50/50

play12:28

in this business but I'm going to be

play12:29

working in in you're not for example

play12:31

which happens a lot I'm 50/50 but I need

play12:34

a manager salary because this is what

play12:36

this would be and that basically makes

play12:38

up for the fact that you're doing the

play12:39

job and taking the risk on make sure

play12:42

that if you're in the business and

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you're doing a job that you get paid

play12:45

like you're doing a job the amount of

play12:46

times I talk to entrepreneurs who like

play12:47

I'm like how much you take home this

play12:48

year and they're like nothing and I'm

play12:50

like why they're like I'm reinvesting

play12:51

everything in the business I'm like okay

play12:53

not making a profit is not reinvesting

play12:55

everything in the business it means that

play12:56

your business sucks and it's much harder

play12:57

to say that and it's wayte sex here when

play12:59

you say hey I'm reinvesting all my I'm

play13:01

reinvesting in growth but if you're

play13:02

actually reinvesting in growth then I

play13:04

would say then what's your return on

play13:05

Capital and if you don't have the answer

play13:06

to that question you're not [ __ ]

play13:07

reinvesting in growth you're just not

play13:09

making money I'm still going to come

play13:10

back to Partnerships I'm staying on this

play13:11

page cuz it's it's going to be a

play13:12

recurring theme mistake number four

play13:14

getting fancy so my first location in

play13:18

Huntington Beach cost me $37,000 to open

play13:20

I had duct tape sandbags from Home Depot

play13:22

that I used the sandbag I couldn't

play13:24

afford the nice ones like I was I had so

play13:27

little money to start this thing thing

play13:29

what's crazy though is that within 6

play13:30

months that business was making 20

play13:31

$225,000 a month right in profit it was

play13:33

making good money but the thing is is

play13:35

that once that business my hunting Beach

play13:36

location started making money I was like

play13:38

okay my next location is going to be

play13:40

really sick so I went from a 5,000 ft

play13:43

Warehouse that was behind an auto shop

play13:45

to an anchor location in a retail Center

play13:48

that was 7,000 ft so bigger more

play13:51

expensive rent big storefront I spent

play13:54

$250,000 to open it up I wanted to be we

play13:56

got glass Lobby we like we [ __ ] you

play13:58

know we did it all up it made the same

play14:00

amount of money as my first location and

play14:03

so the lesson for me was like I

play14:05

literally just burned money so I could

play14:07

say I was investing in the business but

play14:09

all I did was buy [ __ ] that didn't

play14:11

necessarily turn into revenue and so

play14:14

that's why and this is the lesson here

play14:16

so this is D or whatever we're on right

play14:18

is roic I want you to write it down

play14:20

that's return uninvested Capital if

play14:22

you're going to spend money in your

play14:24

business every expense you have on your

play14:25

expense line you should be able to say

play14:27

how is this making me money how am I

play14:29

getting a return on this right if you

play14:31

buy cost of goods you buy you buy

play14:32

products for 10 bucks and you sell them

play14:34

for 30 you have a return there you're

play14:35

tripling your money that's a great

play14:37

investment if you can get if you can go

play14:38

from 10 to eight all of a sudden becomes

play14:39

three and a half or whatever it is right

play14:40

whatever the math is there but where you

play14:42

lose is where you spend $25,000 on

play14:44

something and you do make $25,000 over

play14:46

the next 10 years well [ __ ] that means

play14:48

you make $2,500 extra this year you're

play14:50

just down 22,5 and in a small business

play14:53

you should be making 3 to1 5 to1 10 to1

play14:55

on the dollars you spend because you can

play14:57

when you're small you can be way more

play14:59

more efficient than big or organizations

play15:00

can you can buy leads for a buck and

play15:02

sell $500 things to one out of five

play15:05

spend five bucks spend 20 bucks make 500

play15:07

like you can do that flip and that's

play15:09

where you can make crazy money really

play15:10

quick and that's where that's the main

play15:12

economic engine and so the rule is don't

play15:15

be

play15:17

fancy do the basics all right so I had a

play15:21

really interesting uh business Mentor

play15:23

who uh I called when I was considering

play15:25

selling my uh selling gym lunch years

play15:27

later he had been private Equity CEO and

play15:30

so all he did was basically they Dro

play15:31

this guy in when they buy a company and

play15:33

then he would have the job of tripling

play15:34

it in three years or so and he had done

play15:36

it three times and so I'm on the phone

play15:38

with this guy and I was like so what's

play15:40

your secret man and he's like don't be

play15:42

cute backyard football he's like

play15:44

everybody tries to get get cute get

play15:45

fancy you know when you're you're a kid

play15:47

and you're like okay so we're going to

play15:48

do with a double deep fake and we're

play15:49

going to go AI to the right and we're

play15:51

going to we're going to spin it back and

play15:52

then you're going toss it back to me and

play15:53

then and then Johnny's going to go to

play15:55

the left and then we're going to we're

play15:56

going to toss it to him and then and

play15:57

then we're going to get the he's like

play15:58

what happens I was like I don't know

play16:00

he's like you [ __ ] fumble and you

play16:01

lose the ball right and you lose the

play16:03

game he's like no we play fundamentals

play16:06

football he's like two fat guys in the

play16:08

middle to the right he's like that's how

play16:10

we play he's like don't be cute I did I

play16:12

get too cute right I get fancy with my

play16:14

expenditures right but I also get too

play16:16

fancy in my strategy just saying like we

play16:17

want to provide Superior Service very

play16:19

easy to say very easy to understand and

play16:22

if you do it well most people get it if

play16:23

you do a good job people tell their

play16:25

friends they come back like it makes

play16:26

sense but really hard to do how do you

play16:29

get all of your staff to smile how do

play16:31

you get all of your staff to remember

play16:32

people's names how do you how do you

play16:33

write handwritten cards on a systematic

play16:35

basis so that people see that you're

play16:37

going above and beyond like how do you

play16:38

do those things like that takes systems

play16:39

that takes effort right but the idea of

play16:42

just doing backyard football of just hey

play16:44

if we treat customers well they're going

play16:45

to come back if we provide a good

play16:47

product they're going to come back right

play16:48

we think through the details we actually

play16:50

drink our own Kool-Aid we eat our own

play16:52

dog food so that we know if something

play16:54

comes off I could write a book on

play16:55

business that if I just gave it to

play16:57

people who buy companies it would take

play16:58

me way less effort because I could just

play17:00

write it for them but to be able to

play17:01

write a book that somebody who has no

play17:03

idea how to run a business and somebody

play17:05

who buys companies can both get five out

play17:07

of five value from takes a shitload more

play17:09

work and so that's the kind of obsession

play17:12

that happens with product that when you

play17:15

start getting fancy you don't have time

play17:18

for it a 4.4 product compared to a 4.7

play17:21

product on Amazon in the same category

play17:23

the 4.7 might get 10 times the sales if

play17:26

you see a 4.4 and a 4.7 which one you

play17:28

buying it's like it's it's obvious

play17:30

you're not buying the 4.4 neither does

play17:32

anyone else it's just the game of

play17:33

incremental improvements on the Big

play17:34

Basics that if you just get those right

play17:36

nothing else matters and I got really

play17:38

fancy and I got distracted from the

play17:40

thing that mattered most whatever that

play17:41

was me being fancy now let's go back to

play17:42

Partnerships so I had two different

play17:44

Partnerships um after the first four

play17:47

that I talked about where uh I just was

play17:49

like you know what I've got my gym

play17:50

business thing going I'm going to start

play17:51

doing launches too and then I'm also

play17:53

going to start these agencies right and

play17:55

so I'm going to get partners cuz that's

play17:57

what smart people do I was still the

play17:58

main economic driver in all of them and

play18:00

so I was the one who was doing the sales

play18:03

and doing the delivery what is the

play18:05

partner doing right besides having the

play18:07

idea that we should start a business

play18:08

together all the parns I've had I've

play18:10

learned a ton from and I I wish all of

play18:12

them the best um and it was my

play18:14

deficiencies it was not their fault it

play18:15

was my fault like I shouldn't have made

play18:17

these these mistakes which is

play18:19

why I'm making these videos so that you

play18:22

don't have to make them too I was the

play18:24

rain maker if you're the one who brings

play18:26

in the customers and makes the money you

play18:28

should get a disproportionate share of

play18:30

the proceeds if the business can't

play18:32

function without you but it can function

play18:33

without them you are needed they are not

play18:35

and here's a really hard truth you might

play18:37

think man I need an accountant okay cool

play18:40

most businesses do in fact all

play18:42

businesses do but it doesn't mean that

play18:44

when I start a business I partner with

play18:46

an accountant just because I need it

play18:47

doesn't mean that they have to have

play18:48

equity in it and so just because you can

play18:50

identify a function in a business that

play18:51

is required in the beginning it doesn't

play18:53

mean that you have to have give Equity

play18:55

there like you can hire these people you

play18:56

can have vendors right you can have

play18:58

other companies do this for a living and

play18:59

then you just fractionalize the cost and

play19:01

you pay to them and they have systems in

play19:02

place and at a certain point maybe you

play19:04

bring it in house maybe you don't right

play19:05

but these are decisions that early on I

play19:06

made mistakes for and so the partners

play19:09

that I had had functions that they could

play19:10

do they just weren't core to the

play19:11

business does it get customers in the

play19:13

door is it part of how we deliver you

play19:16

acquire the customer you deliver on the

play19:18

customer that's it and so if they are

play19:20

not core to those things they are

play19:22

probably not people that you need to

play19:24

give Equity to in the beginning or at

play19:25

least any meaningful share to a a

play19:27

completely makes sense partnership is is

play19:29

where one person handles product and is

play19:31

like I will just make sure our thing's

play19:32

absolutely exceptional and the other

play19:33

person's like I will go tell the world

play19:34

about it a phenomenal split a great

play19:36

split that many people do now I'm going

play19:38

to get to the bad one now because I know

play19:40

you guys were waiting for it so I lost a

play19:41

lot of money a lot of money a lot of

play19:44

money and a lot of brain power when I

play19:48

got in bed with a very bad partner so

play19:50

I'm going to tell you what I did and

play19:51

what I did wrong all right so this is

play19:54

number five bad Partners now I had

play19:56

Partners before and they were good

play19:58

partners we had bad Partnerships this is

play20:00

bad Partners so I want to be really

play20:02

clear about the difference all right all

play20:04

the partners I had before ethical fine

play20:06

people nothing wrong with that we had a

play20:07

bad structure and so you have the person

play20:09

and you also have the structure of the

play20:10

relationship that both have to be

play20:11

aligned the bad Partners I'll Define as

play20:13

people who have nefarious intentions who

play20:15

actually want to hurt you this was

play20:16

actually the last partner that I took on

play20:18

so this was punishing enough that it was

play20:20

quote traumatizing it permanently

play20:21

changed my behavior and so I had just

play20:22

sold um so I had six locations at this

play20:26

time with my gyms all right I had bought

play20:29

out some of my past partners which cost

play20:30

me a lot of money and so I had six

play20:32

locations now I shut down one because it

play20:34

was too new and I decided to switch

play20:35

gears because I wanted to start the

play20:36

licensing business and then I sold five

play20:39

now I had big pile of money this is now

play20:41

like basically my egg what I have to

play20:43

show for it for all this work and all

play20:44

the sacrifice I've done at this point

play20:45

I've got this S I was doing gym launches

play20:47

at the time so this is why I made the

play20:48

transition I started flying out to gyms

play20:50

I started making money and I could do

play20:52

like $100,000 in sales in about 3 weeks

play20:55

and I would keep that cash for myself

play20:56

because I had almost no cost besides my

play20:58

airfare my hotel and the ads Bend which

play21:00

usually for me was like 1 to three grand

play21:01

so not a lot and one gym owner was like

play21:04

hey you're leaving so much money on the

play21:05

table red flag number one so much money

play21:10

on table you can't pursue every

play21:12

opportunity so it's the definition of

play21:14

Entrepreneurship that you have to say no

play21:15

which means there's always money you

play21:16

could make you choose to leave small

play21:18

amounts of money on the table so that

play21:20

you can have the one pile of money that

play21:22

is on the table that you're choosing to

play21:23

play at get bigger he's like you're

play21:25

opening these gyms and you're filling

play21:27

them up to full capacity he's like you

play21:28

should own them average gy owner makes

play21:29

$36,000 a year for a full year of work

play21:31

working 80 hours a week I was making 100

play21:33

Grand in 21 days and walking away way

play21:36

better business me being a [ __ ] I was

play21:38

like sure this is what a [ __ ] would do

play21:39

so I should do it he says how about this

play21:41

I used to run this gym $4.2 million year

play21:44

out of I know how to run a gym I don't

play21:46

know the Marketing sales stuff you go to

play21:48

the Marketing sales I'll come behind you

play21:50

and I'll run the gym after you so he's

play21:51

like every month you open a gym you fill

play21:53

it up I'll come behind you I'll staff it

play21:54

he's like every month you can open a new

play21:55

gym and I was like man that means at the

play21:57

end of the year I'll have 12 gyms that

play21:59

means that my ego will go up and I can

play22:00

tell people I have 12 gyms so I launched

play22:02

his gym crushed that and so he's like

play22:04

hey so now let's do this next gym as

play22:05

we're about to sign the lease he says

play22:07

small detail you know I had a little bit

play22:09

of a bad credit situation big

play22:11

misunderstanding but you're going to

play22:12

have to personally guarantee the lease

play22:14

sure makes sense we're Partners I'll

play22:16

personally guarantee it also I mean you

play22:18

just made all this money on my gym you

play22:19

should front the cost for the new

play22:21

location and I said of course also you

play22:24

should run the whole thing and then I'll

play22:26

come after you I was like okay so I'll

play22:27

take the risk do all the money and do

play22:29

all the work and then and then you'll

play22:30

have half and he was like yeah I was

play22:32

like oh steal what a great partner and

play22:34

so I crushed this launch did 370 sales

play22:36

in like 6 weeks like new members I put

play22:38

all the cash into the account like all

play22:40

this cash my big Easter egg because I

play22:42

didn't understand how money worked and

play22:43

so I put all the money into the new bank

play22:45

account for the new nty cuz I was going

play22:46

all in on this new idea and then I wake

play22:48

up one morning cuz I would always check

play22:49

the bank account every morning cuz it

play22:49

was a habit all of a sudden it was at

play22:52

zero or close to zero it was actually

play22:54

just one withdrawal and it was to him

play22:56

huh and he was like oh yeah I was just

play22:57

taking my hat I know you're taking your

play23:00

half off the top he's like I'm just

play23:01

taking my half he's like I did the math

play23:03

he's like this is how much my half

play23:05

should be and I was like first off

play23:06

you're accusing me of stealing second

play23:08

off what I had a coach at the time and I

play23:10

was like dude what should I do print out

play23:11

the financials go line by line and show

play23:14

them where all the cost were and I was

play23:15

like okay so I printed all the all the

play23:17

expenses took me like 3 hours itemized

play23:20

everything and I was like let's go have

play23:21

lunch and like let's go over this I put

play23:23

the papers down and he pushed them off

play23:24

the table I don't need to see that [ __ ]

play23:26

and I was like oh I just got robbed he

play23:30

ended up sending the money to his

play23:32

girlfriend in Sweden and filing

play23:33

bankruptcy so I can Su him so remember

play23:34

when I said like he said oh there's this

play23:36

big misund understanding early on with

play23:37

the whole lease thing he had been

play23:38

indicted for fraud before that I knew

play23:41

about it I have my own demons of like I

play23:43

[ __ ] up in the past two and I'm trying

play23:46

to you know do good now and so I want to

play23:48

always give people that benefit of the

play23:50

doubt and I'm going to say something

play23:51

that probably won't be popular I don't

play23:52

do that much anymore there's just plenty

play23:54

of people I can partner with that I

play23:55

don't have to deal with that for here's

play23:56

my little tldr lesson on this this if

play23:59

someone shows you who they are believe

play24:02

them the first time red flags are red

play24:04

flags for a reason I'm not even going to

play24:06

tell you the amount of money that I lost

play24:07

because I will tell you what's more

play24:08

important is that I lost all my

play24:11

[Music]

play24:13

money and what felt like years of work

play24:17

and so from a loss perspective it was

play24:20

the amount of money was one of the

play24:22

smaller ones in terms of total dollar

play24:23

amount that I lost but in terms of

play24:25

emotional significance I went from a

play24:27

multilocation gym owner to successfully

play24:29

exiting my gyms to losing everything

play24:31

that I had spent years building in 6

play24:33

months use that lesson so you don't have

play24:36

to have the scar mistake number six is

play24:38

the classic example between push and

play24:40

pivot all right so if you don't know

play24:41

what the the push and pivot dichotomy is

play24:43

for most entrepreneurs most people in

play24:44

general that there are some times where

play24:46

[ __ ] gets hard and you need to push

play24:47

through it and there are other times

play24:49

where your fundamental assumptions were

play24:50

wrong and you need to Pivot you need to

play24:51

change directions because the thing that

play24:53

you originally thought was true is no

play24:54

longer or you found out that it isn't

play24:56

and so the hard part is sometimes when

play24:58

you're in the thick of it you're not

play24:59

sure if this is a push or this is a

play25:00

pivot it's one of the hardest decisions

play25:02

in entrepreneurship there are dead

play25:04

bodies on either side of this road and

play25:05

it's hard because you just got to use

play25:06

judgment to be able to make the best

play25:08

guess you can and the thing is you can

play25:09

never replay the game so I graduated

play25:11

three years from vanderbelt and I got a

play25:13

job at a management consulting firm that

play25:14

did space cyber at least the projects I

play25:16

worked on was space cyber intelligence

play25:17

with the military so it's a PT firm

play25:18

defense Contracting that's what I worked

play25:20

on sounded fancy that's why I took it

play25:21

when I was there I had the desire to

play25:23

learn I did learn a lot quickly in the

play25:26

beginning after that period of time

play25:28

which maybe took 6 to9 months I didn't

play25:32

feel like I had more to learn and so I

play25:35

had two options and I took neither of

play25:37

them and I think that was the real

play25:38

mistake I didn't push and I didn't pivot

play25:41

I did

play25:42

nothing I

play25:46

coasted I was actually in that job a

play25:49

fairly bad employee you can look at work

play25:50

environment you can look at people you

play25:52

work with I was a bad employee and I

play25:54

would actually agree with them I didn't

play25:55

get challenged in that last period and

play25:57

so I just read books all day at that

play25:59

point it was either go to business

play26:00

school um or start something else and so

play26:02

that's why I decided to start something

play26:03

else if you are somewhere where you know

play26:05

deep down you are you are not living up

play26:07

to your potential and you are cutting

play26:08

corners and you're looking at the clock

play26:09

and you're trying to just like count

play26:10

minutes and you're like holy [ __ ] it's

play26:11

only been an hour I have seven more

play26:12

hours of this [ __ ] like if you were

play26:14

living like that leave whatever the

play26:16

alternative is is better it was one of

play26:18

the most costy mistakes I made also

play26:20

because of what I started feeling about

play26:21

me you know what I mean cuz I was like

play26:24

am I a slacker do something just don't

play26:26

do this push pivot push being go up let

play26:29

me learn more give me a challenge pivot

play26:32

being I'm going to change career paths I

play26:34

did nothing until it was forced upon me

play26:36

so that was mistake number six where I

play26:37

lost a lot of time and honestly a lot of

play26:39

self-confidence during that period of

play26:41

time which cost me dearly

play26:45

later so my seventh big mistake was

play26:49

actually getting into the food business

play26:50

now the food business per se is a

play26:52

mistake cuz you're like what does this

play26:53

have to do with me it actually has much

play26:55

more to do with getting into a product

play26:56

that I had low understanding of and so I

play26:58

thought okay I'm in Fitness I talk about

play27:02

nutrition I can start a food company

play27:05

right because we have this big

play27:06

distribution base of gyms they already

play27:07

sell our supplements I went all over the

play27:10

US tried to find co-packers who could uh

play27:12

handle the volume that we could do

play27:13

basically overnight in scale which means

play27:15

I had to go to really big companies that

play27:16

could handle that kind of volume we did

play27:18

this big launch we did this big buildup

play27:20

the first month sales were a little

play27:21

disappointing for me so we did like

play27:22

600,000 the first month now you might be

play27:24

like that sounds like a lot of money but

play27:26

let me walk you through the margins of

play27:27

this business so $600,000 and you're

play27:30

like okay where's the M mistake coming

play27:31

from don't worry we'll get there the

play27:33

average meal was 10 bucks so we were

play27:36

selling 60,000 meals per month it's a

play27:39

lot of meals right a lot of meals you

play27:41

think wow this is a successful business

play27:43

well sounds good right times $10 now

play27:45

here's the part that no one wants to

play27:47

talk to you about in the food business

play27:48

my cost was $9 I had to cover every

play27:52

expense that I had in the business

play27:55

marketing sales payroll customer support

play27:59

refunds for [ __ ] that went bad boxes

play28:01

that broke all of that on this $1 I was

play28:05

able to make in this business somewhere

play28:07

in the neighborhood of 7% profit margins

play28:11

that's because I ran this as a skeleton

play28:13

business cuz I knew that it was low

play28:14

margin and I already had the supplement

play28:16

infrastructure for support and so that

play28:18

was a little bit of a help for why I

play28:20

like didn't lose my complete ass on this

play28:22

here's a little fun stat for you

play28:25

80% of my customer support complaints

play28:29

came from this 90% of my profit every

play28:33

month came from my supplements from that

play28:35

line of business so you mean to tell me

play28:38

I just 5x the amount of headache for an

play28:40

extra this much profit just because you

play28:43

don't lose money doesn't mean you didn't

play28:45

lose money honestly I might have made

play28:46

500 Grand on this whole thing but for

play28:48

the amount of work of me building up to

play28:50

a launch using some good will with my

play28:52

audience to say hey use these meals I

play28:54

had a whole separate website build out

play28:56

one if I had just done nothing and

play28:58

taking all of that effort and just put

play29:00

it into the other one that was making 10

play29:02

times more money could I have made 10%

play29:04

more on that business to make up for

play29:05

this [ __ ] yeah I could alternatively if

play29:08

I had just done a different opportunity

play29:09

to go pursue could I have made more

play29:11

money than I did on this one and the

play29:13

answer is yes and the main culprit was

play29:16

that I did not know what I was getting

play29:18

into I didn't talk to anybody in the

play29:19

food business and say hey tell me how

play29:23

you make money real talk the only guys I

play29:24

did know were losing money the co-packer

play29:27

that I that I did this go with was

play29:28

losing money he had to keep raising funy

play29:30

he was not profitable I didn't

play29:32

understand what I was getting into and I

play29:35

split

play29:37

focus and so right now remember we said

play29:40

earlier about there's money on the table

play29:42

there was money on the table and there

play29:43

was this tiny little pile of money and I

play29:45

decided to take my off the big pile of

play29:47

money and go on the small pile of money

play29:49

and I lost a year of effort and buildup

play29:52

and marketing and sales that I could

play29:55

have just directed towards the big money

play29:56

and maybe grow that by 50% here I did

play29:58

all these new things had to figure out

play29:59

all these new problems from ground zero

play30:01

and that's one of the biggest mistakes

play30:02

I've made so many times in my

play30:04

entrepreneurial Journey that now I'm so

play30:06

obsessed about you hear me talk about

play30:08

more better more better more better

play30:09

because I had to learn the hard way of

play30:11

how many times I lost money splitting my

play30:13

focus when I could have doubled down and

play30:15

made so much more so this mistake

play30:17

realistically cost me probably about10

play30:20

to $25 million reason being I ended up

play30:23

selling gym launch and we had a big

play30:25

multiple on that and so if i' had been

play30:27

able to just make two $3 million more in

play30:29

profit on my main business it would have

play30:31

resulted in $10 to $30 million more in

play30:33

money to me that's not hypothetical

play30:35

money like I did sell that company and

play30:37

it was based on profit and that took

play30:38

away from the profit that I would have

play30:39

made

play30:41

so don't do

play30:44

that this is mistake number eight all

play30:47

right so I'm actually going to do this

play30:48

as a two-parter these are two separate

play30:50

mistakes that actually stem from the

play30:51

same principle so I had my lawyer

play30:54

situation and I had my payroll situation

play30:56

all right so I'll tell you both I wake

play30:58

up one day and I look at my emails and

play31:00

there's this email that says cost of

play31:02

living adjustment huh I look into it and

play31:04

it said you have a 0. cost of living

play31:06

adjustment so I meant I had no change

play31:07

and I was like I wonder if this was like

play31:09

a payroll change in entity thing like

play31:12

they were reorg something whatever so

play31:14

gas who's one of our employees who's our

play31:16

executive assistant was like hey I just

play31:18

got a $6,000 raise um thanks I was like

play31:23

Leela what she was like I don't know I'm

play31:25

figuring out right now we had a director

play31:27

of HR who lived in California and she

play31:30

had asked for a raise she was denied a

play31:32

raise because she didn't have enough

play31:34

experience which you will soon see why

play31:36

and so she took it on to herself to say

play31:39

well I deserve more money because I live

play31:41

in a more expensive area she then

play31:43

ordered a cost of living study on my

play31:46

dollar took that very expensive cost of

play31:47

living study and then looked at

play31:49

everyone's pay and said okay if you

play31:53

living in an area where it's cheaper

play31:55

we're not going to change how much you

play31:56

get paid but if you in an area where it

play31:58

costs more we will pay you more now

play32:01

after making this decision unilaterally

play32:03

the way she chooses to announce this is

play32:05

just a blast email to everyone with just

play32:08

the amount that they got paid more so

play32:10

like if I were actually going to give

play32:12

everyone a raise I want to get some

play32:14

[ __ ] credit for it you want to tie it

play32:15

to something that someone does so you

play32:17

can reward behavior that cost increase

play32:20

cost me 600,000 a year of profit for

play32:23

zero additional anything by the way she

play32:26

was in California and so she got one of

play32:28

the largest cost of living increases

play32:30

unto herself she costs me $600,000 a

play32:34

Year everybody just gets erased you now

play32:36

then say like just kidding she's an

play32:38

idiot like what do you do right like

play32:40

just kidding you're actually all not

play32:41

getting paid more very tough situation

play32:43

that I got put in so what we did was we

play32:45

got rid of her so she went from getting

play32:47

a $10,000 raise to getting a zero pay

play32:50

the reason I lost money and this is my

play32:51

principle I'm going to give you know

play32:53

where the bodies are buried if you're

play32:55

too far away from the Apartments if you

play32:58

say hey what's going on and they say oh

play33:00

everything's good and you don't know how

play33:02

to go one layer deeper because you are

play33:05

too far away it means that you don't

play33:07

know where the bodies are buried I don't

play33:08

need to know everything but I do need to

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know what problems that every department

play33:13

is struggling with just so I'm aware so

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I can keep Loops like updates on what's

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going on because I was so far away she

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was able to carry out a cost of living

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analysis and execute a companywide pay

play33:24

raise all without me even knowing until

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it was way too late second mess up my

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CFO Suzanne came in uh to gym launch and

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she said hey are you guys in a lawsuit

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and I was like and I was like why do you

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say that she said well you have a legal

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expense that's $120,000 a month yeah

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that's like you're on a full-fledged

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like multi-million doll lawsuit that's

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going on with like litigation

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arbitration all this [ __ ] and so she's

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like that's how much that cost I was

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like oh I just delegated compliance to

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my team so then

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I clicked down a level and I was like

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hey what are what are we doing that's

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causing all these lawyer bills they're

play34:00

like oh well we do a uh we do a

play34:02

bi-weekly meeting with the entire legal

play34:04

team it's $150 an hour lawyers two 1our

play34:08

meetings a week and you're like well

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that doesn't that just wait and then

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what they're reviewing is all the work

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that their smaller attorneys that were

play34:15

getting built at 200 to 500 an hour are

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reviewing every piece of licensed

play34:20

marketing that we made and that we gave

play34:22

to our lenses and so we were creating

play34:25

tons of marketing hundreds of ads every

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single month we're creating tons of

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trainings hourlong trainings two hourong

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trainings so if I did a 1-hour call

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every day to help my licensees I had

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four lawyers watching every hour and

play34:39

then sending notes on what I could have

play34:42

done to be more compliant now guess what

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I never read any of the notes and guess

play34:47

what neither did anyone else but because

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I said we need to make sure that we're

play34:51

compliant they said great lawyers what

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do we have to do to be compliant they're

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like well why don't you just have us

play34:57

review everything

play34:58

and because I wasn't signing the checks

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and it was someone it was Uncle Alex's

play35:01

money they were like oh great instead of

play35:03

us doing work we'll give it to this Law

play35:05

Firm they'll do the work for us and not

play35:07

only did they not actually Implement

play35:09

anything from all the notes that came in

play35:12

from this they were happy to just have

play35:13

the meetings every week cuz they started

play35:14

getting their buddy buddy with them and

play35:16

of course they were when you pay someone

play35:18

a million dollars a year they'll be nice

play35:19

as [ __ ] to

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you know where the bodies are buried

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part of the reason I brought uh CFO in

play35:25

because I was doing other stuff she

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saved me you know her first month she

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was like well paid for myself I already

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saved you a million bucks a year which

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is true she did save me a million doll a

play35:33

year and I was very grateful for it I

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didn't have the ding on that because I

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was able to solve it but it cost me $1.2

play35:42

million so that's mistake number eight

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multi-million dollar mistake let's go

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number nine you're like does it get

play35:48

worse oh it gets so much worse I started

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a software company Allen uh use Allen it

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was because I wanted to solve the next

play35:54

problem that most gym owners had which

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is that they didn't work their leads so

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we could get leads for them

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or give them ads that they get leads for

play35:59

themselves but they wouldn't work the

play36:00

leads and if you don't work the leads

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you don't make sales it's kind of how it

play36:02

works I saw where AI was going and where

play36:04

messaging was going versus pickup rates

play36:06

and I was like I thought that we could

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create like a really strong automated

play36:10

bot with enough data and enough

play36:11

conversations that we could probably do

play36:13

as good of a job as kind of a low-

play36:15

skilled employee it turned out that we

play36:17

were right and so the average front desk

play36:19

girl at the time or guy at the time

play36:21

would get 10% of leaves in the door and

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we got 19% of the door here was the

play36:25

mistake that I made so Allen was a

play36:28

purely software business I had never

play36:30

built software before I've never written

play36:32

code before and so I did what all very

play36:35

impatient Founders do I just said I'll

play36:38

just go find a software company and just

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have them build it for

play36:44

me and then I'll charge for it here's

play36:47

what actually happened so I went to the

play36:50

software vendor I went through this

play36:51

really long competitive process for

play36:53

people to uh bid the software out

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someone came in and said I can build it

play36:56

for you for 100 Grand or something like

play36:58

that I said sure fine let's do that the

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100 Grand came in and uh the thing

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wasn't built yet but now I have Sun cost

play37:04

fallacy so now I've put money into it I

play37:05

made promises and so I'm like fine we'll

play37:07

keep going and so when it was said and

play37:08

done I think I put 1 point something

play37:11

million into the software now you might

play37:13

be like okay well you spent a million

play37:15

bucks to a software company you had a

play37:16

big distribution base it might have made

play37:17

sense it probably would make sense

play37:20

except once the software was operational

play37:22

and started making money who maintains

play37:23

the

play37:24

software the outsourced development team

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if if you're an Outsource development

play37:28

team and someone needs you to make money

play37:30

and guess what they can see how much

play37:32

money it makes what do you do to your

play37:34

fees you just raise them you just keep

play37:37

eating it up and what else did they do

play37:39

they didn't document any of the code

play37:41

which meant that no one else could go in

play37:43

and start working on it we couldn't have

play37:44

an outside firm come take this offer

play37:46

over because there was no road map it

play37:48

was like writing a book with no table of

play37:50

contents they just consistently increase

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their fees to consistently reduce my

play37:55

margins until they ate up everything the

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mistake that I made in this big one was

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that you need to have a technical

play38:03

founder and the reason I believe that is

play38:06

that name me one massive software

play38:08

company that doesn't have a technical

play38:10

co-founder name me one I'll wait a

play38:12

technical co-founder can hold them

play38:14

accountable right so you could have a

play38:15

technical founder and then have part of

play38:17

your team outsourced but the technical

play38:19

founder keeps them honest keeps them

play38:20

accountable make sure they're

play38:20

documenting things correctly keeps

play38:22

bidding things out and then over time

play38:24

you can start hiring people inh house

play38:25

and inh house doesn't even need to be

play38:26

us-based inh house could be overseas but

play38:28

they still work for you they're loyal to

play38:30

you not to whoever their boss is who

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writes the check who's not you this time

play38:34

obviously with school I'm not the person

play38:36

who is the technological person nor am I

play38:38

trying to contract that person I found

play38:40

the product just amazing amazing

play38:41

developers and they already had an

play38:43

amazing product and then I'm coming with

play38:45

it right I'm I'm boosting on top of it

play38:47

remember I said the core engines of a

play38:48

business you either have to know how to

play38:50

get customers or you have to know how to

play38:51

deliver I was trying to Outsource the

play38:54

core value generation of the business to

play38:56

an outside company that is a fundamental

play38:58

mistake these guys businesses these Dev

play39:00

shops they rely on you making this

play39:03

mistake unless you have a clear plan of

play39:05

having somebody in house who knows more

play39:07

than them about software who can hold

play39:10

them accountable who probably has to

play39:11

have Equity to give a [ __ ] you are just

play39:13

going to be at their Mercy over time I

play39:15

was able to sell to an actual software

play39:17

company that did have developers who

play39:19

could actually read into the stuff and

play39:20

they were able to retrofit the software

play39:22

and incorporate into their business so

play39:23

again I had this big pile of money that

play39:25

I could have just worked on doing more

play39:27

better of and yet again got distracted

play39:29

and if you're like keeping track here

play39:30

like wait there was a food thing there

play39:32

was a software thing yeah like [ __ ] all

play39:35

right so like I I share these lessons so

play39:37

that you don't have

play39:40

to as well okay multi-million dollar

play39:43

mistake number 10

play39:45

vendors this was one where we had a

play39:47

company and I can tell you the amount

play39:50

lost $15 million real money all right so

play39:53

not not hypothetical not opportunity

play39:55

cost cost lost money we were building up

play39:58

for a big product launch in um one of

play40:01

the companies we paid

play40:04

$270,000 for a vendor literally for only

play40:07

one purpose was to have insurance that

play40:10

they could handle the volume that we

play40:11

were going to push through this

play40:12

particular company was like we're pros

play40:14

of this this is all we do that's what

play40:15

I'm paying this insurance bill for is

play40:17

just that it goes okay as the launch

play40:19

approaches I hopped on like one of the

play40:20

vendor calls and the this was now one

play40:22

level lower so this wasn't the owner of

play40:24

the company this is one of his employees

play40:27

he's like oh yeah this is crazy this is

play40:28

breaking all the records we've ever seen

play40:30

we've never seen anything like this

play40:31

before and I was like what I thought

play40:34

this was going to be like another walk

play40:35

in the park like that doesn't that

play40:37

doesn't sound good we're we're having to

play40:38

spin up all these extra systems just to

play40:40

handle it but now we're like 24 48 hours

play40:42

out we wouldn't made able to change this

play40:44

I think it would have been more risky to

play40:45

change it at that point we we do the you

play40:47

know we do the launch even though it

play40:48

went quote well

play40:50

75% of the traffic That was supposed to

play40:53

go to the launch didn't make it there

play40:56

after all the marketing after all the

play40:59

the leaking of the you know the stuff

play41:01

and the Goodwill that was built in that

play41:02

company 75% didn't make it they lied

play41:05

just straight up they lied they lied

play41:07

because they wanted to build their

play41:07

resume because they wanted to say that

play41:09

they they were you know doing something

play41:11

with that particular company um and put

play41:13

it on um on their on their website or

play41:15

whatever if you're going with vendors

play41:18

what the founder of the company didn't

play41:19

do is that he didn't look for references

play41:22