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The difficulty with information is, it's really valuable the day before you get it.

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It is not as valuable the day after you get it.

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Welcome to the game where we talk about how to get more customers, how to make more

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customers, how to keep them longer, and the many failures and lessons we have learned

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along the way. I hope you enjoy and subscribe.

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Hey, here he is, Mr. Alex Hermosi himself. Alex White is going on. Welcome to the fighting

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entrepreneur. This has been a long time coming. I'm sorry I've had to reschedule you twice,

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but I have a good excuse. We had a baby. You and I had a podcast, our first one scheduled,

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the exact time. It was within a half an hour of the time my baby was born. I remember messaging

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your assistant a day before I was like, I don't think I could have been able to be at work tomorrow.

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So, then, thanks for finally making it here. I got so many questions to ask you.

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Congrats, first of all, on all your huge success, companies selling, book, and now social media

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sensation. I don't know where to start so much to ask you, dude. So, tell me something. We'll

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start with this. I'm going to start with a question. It's just like, what's the evil plan here?

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What's the master plan? Let's start with the end in mind, and then I've got a bunch of

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questions to kind of specifically get into it, but social media, I mean, you're doing it.

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This is hard work, putting this kind of content. Tell me the big vision that you're going towards.

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I mean, the big vision at this point is to document and share the best practices

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of building world-class companies. That's the mission of the business, and so that is what we're

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ultimately trying to have happen. We wanted to build a business that builds businesses,

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because after having the three exits that we had last year, it was more around like, okay,

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now that we've kind of done that, understand the process, et cetera, it's much more about buying

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and building now, because the whole liquidity event, as much as it's like an interesting milestone

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from an entrepreneurial perspective, you then get this big glob of money, and you're like, well,

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what am I going to do with this big glob of money? Well, I guess I'm going to go buy more assets

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with it. You're like, well, what kind of assets am I going to buy? Well, I mean, I do know business,

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so maybe I'll start buying this, and then you end up just like trading equity for one thing,

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for trading basically back into equity and other things. And so after we made the transaction,

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it was like, okay, well, this is where we feel like we have a competitive advantage. I'm not

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real estate mogul. I mean, I haven't been doing that. That's not a world where I feel like I have an

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edge, but in the business services world, education world, et cetera, just traditional business,

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I feel like we're pretty strong there, and we can have a value add in addition to capital and time.

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And so we wanted to build a hold code that would be able to scale companies quickly if they fit

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within our kind of buy box. And so that's ultimately what we did, and the social media side is,

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can we provide value to 99% of people without really selling anything? And then for companies that

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find value in that who are, you know, 3 million, 10 million, our average company right now,

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does 17 million top line at the time of this making, which is date stamp this, August 16th,

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2022. And so that's kind of the range that we're looking for most of the skies are looking for,

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you know, getting to 50 or getting to 100 million, and then having some sort of exit.

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Got it. So do you have a particular, like you're building acquisition.com? I've heard you throw

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around a billion dollar portfolio. Is there a numerical goal that you're going for? Like what's

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your next kind of mantle that you're shooting for? The first one would be to get Leila on the

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Forbes list for women, which is you have to have a network of over 250 million. So that's probably,

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you know, in the near future side, after that would be a billion dollars in Gross portfolio revenue.

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And then after that would probably be, you know, maybe I make it on the guys list, which is,

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I would say substantially higher than the gross list. And that's no insult to women,

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that's just those are just the stats. Got it. All right. So in the next, the next goal you're

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going for is 250 million. Are you guys public about your current net worth? Yeah. What is that?

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So 100 ice. All right. I figured I was going to say, because I've seen a couple of podcast episodes

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that are the 100 million dollar man. And then of course, I saw one for Leila as well. So one thing

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is how many companies are inside of acquisition dot com right now?

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Right now 11 11 companies. Do you guys have like a particular rhythm? Is it like one every quarter

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or like what do you what's is there a goal there? There isn't a goal. So that's been something

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we're pretty deliberate about because we didn't want to try and force acquisitions. We don't

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want to want to do a deal. So we didn't want to even have incentives around that. We we actually

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recently just started saying that we weren't even going to put any kind of we didn't even want

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to report on it because we didn't want to draw attention to it. So it's much more about

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gross portfolio revenue, which is what we drive. And so you know, you can grow gross

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gross portfolio revenue through acquisitions in terms of getting new companies in or by growing

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these companies. And I will say, you know, transparently, it's a lot easier and a lot faster to just

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grow the quickly existing companies than just like onboarding yet another one. And so it's much

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more about like picking right, which I'm sure you can imagine like in the only need one Facebook.

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And so it's definitely not a quantity game from that perspective. It's definitely like a

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pick right and wait game. Got it. And you said your highest one right now is 17 million a year

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that you acquired. No, our average or average company. Yeah, our average portfolio company. Yeah,

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no, our largest company did 11 million last month. Amazing. And when and what were they do? Like

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was that a recent acquisition? Like do you have a story, a cool story? That's an older one.

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That were they doing when you acquired them? 20 per month. No, they were doing they did 20

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that year before. That's awesome. That's amazing. All right, I got so many questions. I'm

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going to try to bounce around here a little bit. All right, because I'm like, we're already inside

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acquisition.com. I didn't even want to really go that far into it. So your goal is really to grow

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the portfolio revenue, which I like that as a goal. That's a cool goal because like you just said,

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you could do it by either just growing your existing companies, which would be a great incentive

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for you because that's why you know, you invested in them and that's why they had you invest in them.

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One of the things you said, I want to talk to you about this because there is and I heard

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you say this on some podcast and this was one of those moments where I stayed in my car. So I

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parked at my office and like stayed in the car kept listening and like rebounded it and listened

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again. And I was like still in the parking lot for 10 minutes, which I've never done before.

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Here's why. Okay. I'm going to come out in the open and say this. I have tried to build technology

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now multiple times. I think I heard you say at a different day on a podcast that you burned about

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$3 million. Well, if you feel bad, don't because I think my calculation comes up to about 15.

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I have given it a long go for a long time. And this was a year where I just said, no,

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I suck at it. Like I don't I can hire VPs, high-powered VPs and it doesn't seem to work.

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The only other thing I can think of is if I were to get at some point, a very passionate,

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now this is all stuff I realized on my own and I was thinking on my own was like, if I got a

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really passionate co-founder who I really trusted and loved and that was the technical hand.

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And all I had to do was marketing and sales like maybe I have a shot at building a tech company.

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But the obsession with building a tech company is because everyone's just evaluations and sass and

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you know, ARR and MRR and I just lost so much money and the episode I was listening to you just

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said, I don't care about any of that. I'm building like simple, traditional information businesses

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and they're still going to be worth a lot. Can you talk a little bit about that? Because you've

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done a lot of thinking about that and it provided me some good hope. So talk about that. Yeah,

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for sure. And I would add the caveat that we're like open to you learning businesses because

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they can be structured as what I would consider traditional service businesses. So the portfolio

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that we have is an exclusively learning. It's we have brick and mortar chains. We have different

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different things, you know, just traditional professional services businesses, things like that.

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But big picture, it's like information as a service is the way that I kind of see it. It's like

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that's really what, you know, coaching information businesses are, which is we're helping

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somebody achieve an outcome and we assist the process and we just happen to have some sort of

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learning portal that assists in that. Two degree, which gives leverage and adds to margin.

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And so like I just see them as just service businesses like by and large. That's what they are.

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You know, with the exception of just like truly just selling courses and whatnot, but, you know,

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of course selling businesses is going to have less enterprise value because it's transactional

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nature. There's nothing we're carrying. And so from a value perspective, somebody who's buying it

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wants to look at the predictability of the future revenue and how likely it is to A happen and

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B grow and be bigger. And so it's like if we can answer those two questions that it's very likely

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that this thing will continue to happen. And second, that it's going to be bigger in the future

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than it is today, then it's going to be a company that's valuable. Most information companies as

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they currently exist are very founder driven, face driven, and they sell in a transactional model.

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So it's like if that person disappears, the likelihood is low. And in terms of whether it's

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bigger in the future or not, it's like they already missed the first one. So it's like I have

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been worth getting into. But if you have a large, you know, addressable market that you can go after,

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and you have some sort of recurring nature that can be, you know, attached to information,

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then it becomes a service business and service businesses can be sold for 10, 15 times, you know,

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EBITDA without an issue. So it's really just making sure that the business itself can be transferred

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from one owner to the other, that the likelihood that it grows and the likelihood that it continues

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to thrive is high. I mean, that's fundamentally how I see it. So we build those companies and then

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reverse it. You know, like that's what they that's what a future buyer would want. And we just

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reverse that in the present, which just also so happens to be what any owner would probably want is

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a company that doesn't rely on them that has high likelihood of existing tomorrow. And should

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ideally be bigger than it is today. 100%. Okay. So your goal is to get a company that you feel

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comfortable has a 10 to 15 X EBITDA exit in its potential future. Is that are you going to start

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at some point exiting or right now for the foreseeable future? Are you guys all about just growing

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that portfolio revenue or let's say tomorrow someone comes along as willing to offer a good deal

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to buy out one of your companies? Is that on the docket for you right now? Yeah, no, we're actually

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in diligence right now with an offer for one of our portfolio companies we took on two years ago.

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And so the founder told me when he started, he's like, this is my exit number. He's like, I don't

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want to be fancy about it. Someone offers me that after fees taxes everything that's in my bank

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account, I'll take the deal. So I was like, okay, so we ended up getting approached by premoniquity and

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they made an offer and he said, that sounds good to me. And so we're in the diligence process as we

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speak. Awesome. So the thing is we're minority, we're minority stakeholders. So if the founder wants

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to exit, we will assist in that process. What percentage do you try to go to usually take?

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We're typically in the 20 to 30 percentage. And are you buying that percentage or is it more like

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your services in exchange for equity? Depends on the deal. Depends on the deal. We've read in checks,

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we've not written checks, it depends on the deal. But by and large, the types of companies that we're

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taking on are high cash low businesses that have low capital expenditure. So if a business needed

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capital to expand, like let's say they wanted to, you know, have more corporate locations and they

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were expanding brick and mortar than there'd be an argument for where the capital would go that would

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be, you know, needed to fuel business growth, right? But the vast majority of businesses that we

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take on are not in that circumstance. We don't work with e-commerce particularly for that reason

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because they tend to be just big capital sucks. Hey guys, real quick, if you're new to the podcast,

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I have a book on Amazon called 100 million dollar offers that over 8,000 five star reviews and

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it has almost a perfect score. You can get it for 99 cents on Kindle. The reason I bring it up is

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that I put over a thousand hours into writing that book and it's my biggest gift to our community.

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So it's my very shameless way of trying to get to you to like me more and ultimately make more

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dollars so that later on in your business career, I can finish the part with you. So that's my

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gift. Go check it out. Amazon and back to the show. So 10 to 15 X of EBITDA, let's say you do get,

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so it seems to me like a typical information marketing business, right? So I want to sell in

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courses, they have a backend coaching program or whatever, that's not, you know, going to be right

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out the box a acquisition.com target. Well, let's say someone comes to you. That's what it does

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look like and they and you say, hey, not for me right now, but they're very insistent. They say,

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tell me what you want me to do so that in one year, you are interested. What advice do you give

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them so that that becomes an investible company? So oftentimes we will work with companies that are

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in that, well, I say often, it's not like, you know, we've 11. So we have to take it on a handful

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of companies that have been in that situation because the transition from founder face forward to

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enterprise company is one that takes, you know, two years ish to really fully like kind of

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wash the fingerprints off. You know, the spirit of the founder is always going to be there, but,

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you know, whether they're in the ads, whether they're in the fulfillment, those are the two primary

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places that they have to be removed. So the easiest one to remove is from the ads and then the second

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place that they have to get removed is from, you know, if it's an information business, it's going

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to be the content itself. And then like subsection of like the delivery would be like, if there's calls

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or there's events or there's workshops or there's webinars, things like that, we have to remove

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them from there. And so jumping ahead, because I know we talked a lot about it beforehand,

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when we were able to sell gym launch and proceed labs as a bundle, proceed labs as an e-commerce

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branch of the business, we were not at our own events. So like, we did not speak at our own

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events. We didn't show up. We didn't have coaching calls that we were attending. There was no

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trainings that we were educating people on. The only direct reports that we had were just the

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CEO and CEO of the company. And that was it. So we didn't have the weekly meeting. We weren't on

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the monthly list. We attended the quarterly and we had our weekly one-on-one just with the CEO and

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CEO. So that was the level of, you know, at which we had to be able to pull ourselves away from

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the, from the company to make it a sellable asset. And that you had already set up before you got

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approached by the buyer. Like that was already there. You got approached by the buyer after all that

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was done. So this one was a different process because we actually went out. We went to market,

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whereas the one that I was talking about earlier, like we got approached. So it's just, you know,

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as fortuitous. But no, we went to market. And so it was actually a two-year process for us. We

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went out to market kind of preliminarily, talked to different bankers, et cetera. And we're like,

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what do we need to do to sell this? And then basically just gave us the checklist of all the things

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that were wrong. And so it was like, it's to founder face forward. So there's too much keen man risk.

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It's, you know, dependent on one or two primary acquisition channels. We'd like to see more

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diversity of acquisition. We'd like to see lower turn in your, you know, in the licensing, et cetera.

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So they kind of gave the laundry list of things that they wanted. And, you know, the last one was like,

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if you can prove this out, and maybe in a adjacent space that shows that there's like growth potential,

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you know, in the business, then it becomes, you know, increasingly more attractive as each of those

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boxes get checked. And so it took us about two years to basically execute on that, which was like

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hiring out, you know, the entire leadership team, which got Layla and I out of the day to day,

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and out of the ads. We built a 26 person cold call team to, which at the time, the sale,

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over half of our sales came from cold calls and cold emails rather than just paid ads,

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which was a nice, honestly, direct response person coming from that background,

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having this knowledge that no matter what was going to happen, we were going to have sales is

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really, really nice. And then in terms of the recurring, we, you know, we did a lot of different

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things in terms of the customer experience, the onboarding process, remixing the product suite so

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that we could better match avatars to products, allowed us to, you know, put the turn in half

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over that period of time. And then we proved out an enterprise product suite, which was three times

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more expensive than our current product. And we basically sold a representative sample into

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that showing that that product suite would have legs for the next owner to be able to build out.

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So that was, that was kind of the process of what we had to go through with Jim lunch to make it

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a sellable exit where we could just get a check and walk away without an earn out, without

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seller financing, without a consult back period. The day we signed, that was the day we walked away.

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All right. So I want to definitely come back to Jim lunch because I want to understand that

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business model. I've had a few, you know, obviously watched a little bit and had some aha moments.

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But before I go there, so let's say someone comes to you today, they're, they have a, I don't know,

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I want to pick a random nature. And for a minute, assume you, assume you, you like the nature,

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interested in the net. Yeah, yeah, you like the person, you know, personal development. They're in

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personal development. They have a webinar. It sells a thousand dollar course. And they got something

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else behind it, coaching. And they're like, Alex, I'm not going to leave you alone until you

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figure out how to make my company investible for acquisition. Tell me what, give me that checklist.

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What do you want me to do? How do you turn someone that's doing a one time transactional webinar,

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you know, business? What, what, where's your bring go? Where do you see that person then

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turning it into more of a gym launch type of business that could be exited?

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So one big, big strategy things and then kind of like more tactical. So strategically,

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the reason I like niches, like, you know, physical therapy, hairstylists, realtors,

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gym owners, whatever is that. Once you basically figure out the model, you can copy and paste a

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tremendously personalized solution to many people, which then gives you a very valuable thing that

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doesn't cost much. And most of those businesses have recurring needs. And so we can basically look

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at what the needs of the business are and say, how many of these can we fill and then envelope the

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customer in all the additional services they will need on a consumable basis. And so the difficulty

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with information is it's really valuable the day before you get it. It is not as valuable the day

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after you got it. But there are other things that are consumable. Accountability is consumable.

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Community is consumable. These are things that you would value it today and you value it tomorrow,

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right? And so we try and peel apart what are the parts of the solution that we're offering that

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are consumable versus one time. And so once we peel those out, we can make those elements a recurring

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basis on the back end that starts to build up MRR and the business and make it reliable. And

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honestly, just solving that problem is the primary emphasis in the beginning is what is the

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recurring product market fit that people will continue to stay and pay for within this opportunity

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vehicle. In the personal development space, it would have to be probably something that was much

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lower cost because they're not business owners. So it would likely be things that would be tools

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that would assist them. So it might be, well, if they started an LLC, they're going to need tax

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services, they're going to need clickfunnels, right? Like they're in the bizzah very early entrepreneur

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stage. So what do they need? They need a website. That's a recurring thing they're going to need to have.

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So it's like peeling apart all the little need to have in personal development. They're not going

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to have a lot of revenue. So it's going to be probably lots of little due dads and widgets that

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would create that recurring base. Got it. So it sounds like though, and this is what I've heard

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before and this will be a perfect transition into Jim launch. But to me, it sounds almost like

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your favorite, right? It's almost a copy paste of Jim launch. It's almost like, how can we do

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Jim launch? But for like, I don't know, I like pizza. So I was like, think about pizza today. It's

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like pizza restaurants, right? Or like, like you said, like hair salons or spas or any. So it sounds

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like pick a local business that is a business owner. They're successful. They they have cash flow,

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they have money and show them how to build that business and come up with the licenseable model

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for them to use. And they will pay five figures a year to license this. And that's the model that

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not only gets your interest, but that was the same model that got the interest of your buyers.

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I mean, and it doesn't have to be brick and mortar. It's more that I love businesses that sell a

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particular way of making money. So rather than say like, make money online, like that's tough.

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You know what I mean? It's just it's too varied. There's too many different avenues. Someone

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can go down. But if it's like, Hey, here's how you start a rank in rent website business. Then

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it's a very specific opportunity. So we can create specific solutions to them that we predict their

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note. We know they're going to need. And so we can just A, provide more value B. We know where the

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path is going. And so that we can basically, I don't want to say siphon, but plug into whatever

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future revenue streams we help them build. And then a big function of that is like, how good is

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our customer success? Like, are we able to very consistently get these people result? In which case,

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we build our back end. And so that way we become much more aligned because the enterprise values

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can be based on the likely that we can take somebody from whatever vehicle they're in into our

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vehicle and make them successful. Because then the more successes we have, the more MRR we go.

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Okay. Great. So Jim launch was was that the big breakthrough? Was it you went from selling? I know

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your story, but you you were going to gyms one at a time doing all their work. And then from there,

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you had a day where you took some calls and you're like, wait, what the hell? Like I can sell this

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for 6,000, 7,000, 8,000, 9,000, you know, and just sit in one place. So from there, you went and

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landed up on a licensing model. And so talk me through that a little bit. And like in the end,

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when Jim launch was sold, what were the key product offerings and where did most of that revenue

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come from? Like, what was the product offering where you're like, oh, that was that was the big

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breakaway for us? Yeah, there's there's always two products. I tend to like simple products weeks.

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So we had a front end, we had a back end. Jim launch was a product that basically sold a turn

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key acquisition system. So it was, you know, use these ads, use these pages, insert your name here,

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use these emails, insert your name here, use these meal plans, grocery lists for preparation

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instructions, eating out guides and put your put your logo on it and press go. You know what I mean?

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And people will start walking in your door. Here's the things you say to them. Here's 20,000

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recordings of other people selling the exact same thing. This is how you price it. This is how you

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downsell somebody to sell you upsell somebody to sell you tie and supplements, all these elements.

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It was just a turn key kind of acquisition system. The back end program was like, okay,

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well, then what would you sell them on a recurring basis? So if you think about that business,

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what are the things people need? They need new ads because ads fatigue. So rather than, you know,

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so you can, you can give those ads once you know that their tests didn't work, you can add the

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accountability portion. You can have all the systems to scale the team. So it's going to be to add to

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the trainers, add to the sales guides, add to the front desk girl and the recruiting process in order

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to get those people in place. All of the CRM that they used was actually just a white label CRM

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that we partnered with. That was a gym-specific one. And so for each of those things, they just

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kind of became revenue streams that we're able to tie into on the back end and sell a much longer

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term kind of deal. And so it was just front end back end and we just try to ascend the people that,

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you know, were successful at implementing the front end because then we knew they'd be successful

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at implementing the back end. And that was it. Very simple one.