ALEX'S SPOTIFY

QUOTES:

Number one, have something extremely expensive to sell that you never even plan on selling. I learned about this anchoring tactic from a friend who said, "Listen, man, you can just put something on your menu of items or services that's 10 or 100 times more expensive, and just by having it there, it'll anchor everything else on your menu."

Especially if you're starting in business with a fear of raising prices, just say, "Hey, there's no way anyone's gonna buy this if I'm gonna make this so expensive no one will buy it," and that's okay. So you give yourself permission to put it out there. But what you will find is that 10% of customers just want to buy the most expensive thing. These are the whales. The only thing worse than making a $1,000 offer to somebody with a $100 budget is making a $100 offer to someone with a $1,000 budget because, in the first scenario, you lose $100. In the second scenario, you lose $900 of the money you should have made but didn’t.

No one knows you exist. Advertise more. We get so sick of our advertising long before our customers or potential customers even remember our names. With so many people in the world and people's attention spread so thin, they're so distracted that in the off chance you actually get an advertisement in front of them, the likelihood that they remember it was even you and the core message is even lower. Many of us have this big fear that we're harassing our audience by repeating ourselves over and over again, but the vast majority of the time, they don’t even know you exist. I like to remind my team and myself that we need to be reminded more than we need to be taught, and so does your audience.

People have messages they want to continue to hear, and every time you repeat that message, they'll have another positive experience with you. The amount of novelty required in content is significantly less than you think. If you're not making 100 minutes of content, doing 100 outreaches a day, or spending $100 a day in ads, no one's gonna know you exist, and that is the biggest threat to your business.

As a founder, it's important to do this because you have to be able to make it rain. Every business at the most basic level has to advertise before it can make money. People cannot give you money until they know you exist. Advertising is a prerequisite for making money in business, and then you must have a product you can deliver on.

You need to make sure that people are recurring, that they are happy, referring others, and staying or repurchasing month after month. If you're not solving that, then you've got a leaky bucket, and that's going to be a problem you'll have to deal with later. The smart move is to fix that stuff now so you can grow a really big business. This is one of the biggest mistakes I made many times early in my career. You start advertising, start selling and acquiring customers, and say, "Oh, that worked. I'll do more of it." And you should do more of it, but within the context of making sure you're delivering. Focus on filling all the holes in the bucket. When you do that, you'll keep growing because, with the same activities, once you fix the holes, you'll keep growing steadily month after month, even with the same level of advertising effort.

Under a million dollars a year, it's one channel, one avatar, one product. I see too many small business owners saying, "Hey, I’ve got two businesses," or "I have seven products," or "I have two different charts," or blah, blah, blah, right? No. Focus on one specific type of customer. If you just say yes to everyone with money, you're basically saying no to your business because you'll never be able to focus and make something really good. You can't serve six customers and make a good product with only $200,000 a month. It just doesn't work—it's too small a volume, you don't get enough reps. You need to do one very specific thing, which means you have to say no to people who aren't the type of person you serve. One problem, one product for that specific avatar, and you get better and better at templatizing it and productizing it. That's not the objective at this stage. You just need to get it reliable so you can then keep tweaking the product and 10x the existing channel.

It took me 12 months for outbound to be responsible for half of my revenue. So it's not gonna happen overnight.

When I started my fitness business, way back when, I started with free. I wanted to get people results, and I said, "I don't have any experience, so please, let me just train you for free." Because of that, I had lower stakes; they didn't pay me money. They were still paying in other ways—time, inconvenience, and all the other things a customer has to do. Those costs are still there. By the way, those hidden costs are the things you want to decrease as much as you can in your product so you can charge more money. Over time, you'll find that the most expensive thing about your product often isn't the price, it's everything else you require a customer to do as a result of the purchase—what things they have to give up that they like doing, and what things they have to start doing that they hate as a result of the purchase.

Where are your testimonials? Where are the people you've helped get results? And they're like, "Well, I don't have any." I'm like, "Why would I believe you?" They're like, "Well, I have this amazing offer, and I'm going to talk about this in number six at length." But if you don't start for free, why should anyone believe you? And if you're doing this for the first time, why would you want to take money for something that you don't even know is good yet?

I always start with free, no matter what it is. Whether it's a new product line in a massive company or one of our portfolio companies, we built out a software product for the existing service base. We said, "Hey, we can now have a DIY version of our services that you can use with this software product." And what did we do? We started for free. We took our top 100 customers and said, "Hey, why don't you try it out? Let us know, give us feedback." And they just kept giving us feedback. Honestly, in the beginning, the fact that some people want to charge for this is insane. They're giving you so much valuable stuff. I'm just happy that they use it. So you start with free, then go with a small amount of money, and then keep raising your prices over time, which I'll get to in a second. For those of you who are worried about your pocketbook, like "I'm fronting all these costs," well, yeah, that's why it's called investing in a business. But people who you work with for free can make you money in three ways: Number one, they can leave you a testimonial. Number two, they can refer you to other customers via word of mouth. And number three, they can actually stay on and pay after a certain period of time when it’s no longer free.

What I want to do is walk you through a hypothetical: Let's say on one extreme, we've got somebody who has an amazing, crazy, awesome offer for whatever, and they promise you the world and beyond. And on the other extreme, the same core product or core service as the first guy, except he has no crazy offer, just 1,000 testimonials. Who is going to get the most customers? This guy. Your proof is going to do more selling than any promise can because promises function as an approximation of the likelihood that they're going to get a result, and proof is always more compelling.

So just a bunch of words on a screen is less compelling than a screenshot of someone's bank account if they made money, or someone saying, "Hey, I lost 20 pounds," which is not as compelling as the picture of them losing 20 pounds, which is also less compelling than a video of them weighing in and then weighing out. The third component for proof that I'll give you is you want high volume. The nice thing is that most businesses actually have a lot more proof than they know. They just never capture it.

Content that begins with pain converts significantly higher. My theory is that the pain relates to the customer or prospect where they're currently at. If you start with the promise, it's too disconnected. But if you start with pain, they relate to the person. Then you can take them through the story of getting the result. But if you start with the end result, it's too disjointed. It's too far away and becomes less believable.

You want to sell at the moment of greatest pain; you want to get a testimony at the moment of greatest satisfaction.

I want to give you some real, hard truth right now. In 2017, if you sold something for $100 that was your only product, and you were running 20% margins as a business, if you did not change your price from 2017 until 2024, that $100 now means that your costs in that business have gone up by 20%, which means your profit is now zero. If you feel like your margins continue to compress year after year, it’s usually because you're not appropriately adjusting your prices. To give you context, $79 in 2017 is the equivalent of $100 today. That would be like you going back in time, where you had a 20% margin business and running it at a $79 price point rather than $100 price point. Just like that, you eliminate all the profit in the business. You have to do the reverse of that because inflation is a compounding threat to your business that every year stacks on top of itself. If you're not making 3% increases in prices at least annually, you're not even keeping up with inflation.

Talk to customers to solve all your problems. Paul Graham said this, and I think it's really good. He said you can solve just about every business problem by talking to your customers. If your advertising isn’t converting, talk to your customers. If your pages aren’t converting, talk to your customers. If the price seems weird, talk to your customers. If the product isn’t delivering, talk to your customers. At the end of the day, your customers are the people you serve, and they have all the information you need to make your product better.

I'm going to solve new customer problems by finding out why people didn’t buy or bought and then left. Then I’m going to figure out how to make my customers more valuable and get them to stay longer by talking to super users and your super fans, or the best customers you have, about what would make this even better.

The call should go something like this: C-L-O-S-E-R. Closer is an acronym. C, clarify why they’re there. What made you hop on the call? What made you take a step, respond to my email, or comment on my post? Whatever it is, they took an action to become an engaged lead, and that is your advantage. Any person that you get on the phone with, with the exception of a true cold call, has responded to an email, commented on a post, responded to an ad, opted in—whatever. You ask them why they did that. That clarifies and gives you authority in the frame because they’ve taken this step toward you, and you’re just receiving, so you say, “Hey, why’d you do that?” Then they’ll tell you what it was. Then you move on to L, which is, “Okay, so what I’m hearing is…” This is labeling the problem. So it sounds like you want this, and this is the problem, or you want to have this outcome, and you haven’t gotten it yet. Does that sound about right? They’re gonna say yes, and you’re like, “Okay, cool.” Then you go to O, and you overview their past experiences. You’re like, “Okay, so what have you done so far to try and make this happen? Why is this so important to you? What else has happened in the meantime that has cost you from not having this occur?” We call this the pain cycle. The reason you do the pain cycle before you sell something is that you want to temporarily increase their deprivation around that outcome.

We’re increasing their deprivation, making them hungrier so that when we make our offer, they’re more likely to take it, which then goes to S, which is you sell the vacation. The reason I say sell the vacation, not the plane flight, is that most salespeople, most new entrepreneurs, want to focus on their features. They want to talk about the flight, TSA, check-in, their bags, their seat—all of these things that are on the way to Maui, their destination. You want to talk about Maui. You want to talk about the “lick-your-fingers” good. What it’s going to be like when they have a full stomach and they’re feeling great with their family at the restaurant. That’s what we want to talk about. We don’t want to talk about how they’re going to order it, the selection, how many times they’re gonna get their drinks refilled. We don’t talk about any of that. We want to talk about Maui. We want to talk about being on the beach with the wind in their hair, with a Mai Tai in hand. That’s what we want to talk about.

Sell the vacation is typically a three-point pitch, which is, by the way, you can separate anything into three points right now. You just chunk up or chunk down based on, “Hey, what does it take to be successful?” It’s like, you need fitness, nutrition, accountability. You need the leads to be timely, personalized, and qualified. Whatever it is. So it doesn’t matter what you’re selling. You can come up with three points, and then people have to say, “Yeah, if I had all three of those things, I would succeed.”

You move on to E, which is, explain away their concerns. What are the specifics they have that are the reasons they’re not buying? This is usually gonna be something time-related, money-related, decision-maker-related, meaning they have to give the decision-making authority to somebody else, or simply them just avoiding the decision for fear of making a mistake. You need to account for all five of those and know how to overcome each of them.

R is to reinforce the decision. Once they have made the decision to buy, you’re not done yet. Now the work begins, which is the next 24 hours. This is crucial to making sure that they feel really wowed and impressed with your business. Most customers will judge a business based on the first 24 hours post-purchase. If you say, “Hey, I’m gonna get you three things in the next 24 hours: you’re gonna get introduced to this person, she’s gonna do this, and this is what’s gonna happen next.” Then you make those promises, and you keep those promises within that time frame, and ideally, you do it even faster than you promised. You want their impression to be like, “Man, these guys are dialed.”

Before you even think about doing something new, do 10 times more of what’s already working. This is one of the things I do as soon as I buy a portfolio company. I go to the head of marketing, I go to the founder, and I say, “Hey, why can’t we 10x what we’re currently doing? Tell me why we can’t.” Honestly, two times out of three they’re like, “I mean, we could.” I’m like, “Then why aren’t we doing that?”

Let me walk you through the five stages of the traditional entrepreneur. For advertising or even for business, they have something that they hear about that they think is cool. So they go into uninformed optimism. They’re really optimistic, but they have no idea. Then they jump into this new thing, and they become an informed pessimist. They find out way more about this thing, and then they’re like, “Wow, this is actually kind of hard.” Then they go to stage three, which is the valley of despair, where they’re like, “Wow, this isn’t working. This isn’t what I thought it was going to be.” Then what they do is... they start over at uninformed optimism because they hear something else is easier. But they miss out on steps four and five, which is they become an informed optimist. They say, “Okay, I understand how outbound works. I understand how paid ads work. I understand how organic works and what it takes to scale and how much work it really is.” Then finally, they get to level five, which is achievement—they actually achieve the goal. But most people just repeat 1-2-3, 1-2-3: uninformed optimism, informed pessimism, valley of despair. They start back over, and they just hit all three of those over and over again. It’s always deceptive to think that the new thing is going to be easier, and the only reason you think it’s easier is because you don’t know enough.

Growth is stressful. Stagnation is stressful. Decline is stressful. That means business is stressful, and the only stress-free people are those who are dead. If you're in business, you need to accept stress as a fact of life, not as something wrong with you or your business.

You become more enduring, tougher, and your tolerance for stress, or what you deem stressful, increases. What's interesting is that I still have the same problems I had when I had a much smaller business. I just don't think they're problems anymore.

The sawdust analogy comes from sawmills. They take trees, put them through the mills, cut them into planks, and at the bottom, there's sawdust. Some intelligent engineer realized that instead of throwing out the sawdust, they could use it. Sawdust is great for plants, mulch, and if mixed with glue, can create more wood products. This created a whole new revenue line from what they already had.

I had a brick-and-mortar business, but we only used the space from 5 AM to 9 AM and then from 4 PM to 7 or 8 PM. The rest of the day, the space was unused. If I were a more clever business owner, I could have rented that space to businesses that use a gym and turf during the middle of the day. That's sawdust—additional revenue that costs nothing. A different term for this is "excess capacity." If you have excess capacity, like Uber with cars or Airbnb with rooms, you have sawdust in your business, so you might as well use it.

Arm your salespeople. Too often, founders and entrepreneurs feel animosity toward their sales teams, thinking they shouldn't pay them much. No, you should be tight with your sales team because they are the cash flow lifeblood of your business. If you don't have sales, you don't have a business, so they deserve esteem. A significant portion of the business should be allocated to supporting them in their core activities.

I arm my salespeople with an Excel sheet containing content that helps overcome specific customer concerns. If you don't have content addressing every main concern customers have about your products or services, create it. The best-converting content will lead to sales, and people will DM you saying, "I didn't know that. Now I'm interested." Compile these into a list so your sales team can send them to customers before or after conversations, schedule follow-up calls, and say, "Let me send you this video; it might explain your concerns."

Unify sales and advertising under one person. At Gym Launch, we had separate sales and marketing departments, and each blamed the other when things didn't go well. But when we unified them under a Chief Revenue Officer (CRO)—which, if you're the founder, is you—it became an acquisition department. Advertising and sales sit on the same continuum. Unifying these departments is one of the highest leverage moves you can make as a founder because it eliminates cross-departmental conflict. Everyone works together to sell customers, with advertising supporting sales, not competing with them.

There are three legs to the stool: every business needs three big functional leaders. One is in charge of acquiring customers. The second handles delivery, ensuring customers get what was promised. The third runs internal operations, supporting the other two functions. This includes legal, HR, and everything required to keep the business running smoothly.

The highest standard should be in charge at every level of the business. Whether it's a department for media buyers, content creators, salespeople, or recruiting, the person with the highest standard and the lowest tolerance for mediocrity should be in charge. This principle applies all the way to the top. If someone in your business has higher standards than you, that person should be in charge.

When I was starting, I made mistakes by promoting people I liked or who had been there longer. But when you have to make tough decisions, you get to explain why the other person got the promotion and what the overlooked person needs to do to get promoted in the future. If you have a winner, they will step up; if you have a loser, they will step out—and that's okay.

When hiring, ensure the person raises the average bar. If each new hire lowers the team's standard, the company will eventually be full of people who aren't good. But if you maintain the bar, requiring that each new hire improves the team, the company will only get better over time.

Want to incentivize people? Give them freedom and invest in them. If you want your team to love you, provide autonomy and invest in their growth.

The hardest work is the work you don't know how to do. This is tough because most of the time, the thing that will make the biggest difference in your business is something you might not know how to do. Entrepreneurs often solve problems they already know how to solve because it feels rewarding. But if you're constantly tackling level two challenges because you know how to beat them, you'll never conquer the level three boss.

Stress occurs when you're solving problems. If you're solving problems you don't know how to solve—welcome to the game. If you knew how to do everything, you'd already be Elon Musk. The journey of entrepreneurship is turning the unknown into the known through trial and error.

Starting something new, whether it's a business, running ads, or learning to sell, always feels daunting. But once you take your first step, things become clearer. In my experience, the faster I take action, the quicker I learn. You learn 100 times more from your first 100 phone sales than from 10,000 hours of reading books about it.

Learning is about applying new behavior to the same conditions. If your behavior remains unchanged after watching a video, you've learned nothing. You can measure how intelligent someone is by their rate of learning, which means how quickly they change their behavior given the same stimulus. Right now, in your life, there are conditions that probably remain unchanged. If your behavior does not change, you learned nothing. Measure every video, every piece of content, every book, every sales exchange, every meeting by whether it changes your behavior. If it didn't, it was a waste of time.

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