Building a $1,000,000 Business for a Stranger in 69 Minutes
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this episode of The Game with Alex Hormozi, entrepreneur Philip, who left his high-paying tech job at Amazon to start a garbage collection business, faces financial crisis. With $642,000 in revenue but negative $151,000 in profit, Philip desperately needs to turn his business profitable before his second child arrives. (00:21)
• The core discussion revolves around transforming a failing waste collection business into a profitable operation through strategic focus, restructured offers, and scalable door-to-door sales systems.
Speakers
Alex Hormozi
Alex Hormozi is an entrepreneur, founder, investor, author, and public speaker focused on scaling businesses from $100M to $1B in net worth. He hosts "The Game" podcast where he helps business owners solve critical growth challenges through strategic analysis and actionable frameworks.
Philip - Garvey Disposal Services
Philip is the owner of Garvey Disposal Services, a residential waste collection company serving 2,500 customers. A former Amazon software engineer, he left his stable tech career to pursue entrepreneurship in the waste management industry but now faces significant financial challenges with his growing family depending on the business's success.
Key Takeaways
Focus on Single Avatar and Channel
Philip was spread thin across two different customer types (scattered individual homes and HOAs) and five different acquisition channels. (19:34) Alex emphasized the critical importance of choosing one avatar and one channel until reaching $1 million in revenue. They decided to focus exclusively on scattered residential customers through door-to-door sales, as it offered higher margins, easier pricing control, and more scalable acquisition compared to the commoditized HOA bidding process.
Restructure Offers for Positive Cash Flow
The business needed to collect enough upfront cash to cover costs before providing ongoing service. (16:06) They calculated Philip needed $208 minimum per sale ($50 commission + $42 fulfillment costs + $116 bin cost) to maintain positive cash flow. Alex helped design an AB offer structure: Option A at $189 for three months with bin purchase, and Option B at $360 for twelve months with free bin, ensuring 80% take the lower offer while 20% taking the premium offer averaged $270 per door.
Commission-Only Sales Team Scaling
Instead of trying to handle all sales personally, Philip needed to build a commission-only door-to-door sales team. (21:23) With Philip's proven 26% close rate and ability to knock 300 doors per week, scaling to 10 salespeople doing 5 deals per day each would generate 1,500 new customers monthly. This approach required no upfront investment while dramatically accelerating growth toward the 3,000 customer profitability threshold.
Simplify Sales Process Through Role-Playing
Effective door-to-door sales training requires intensive role-playing and script memorization rather than just shadowing. (54:11) Alex emphasized drilling the opening sequence until perfect, since the first five seconds determine success. The sales process should be reduced to four core questions, with extensive practice on common objections. Philip should always work alongside new hires for dual benefits: continuing his own sales while training others.
Strategic Hiring for High-Volume Recruitment
When hiring commission-only salespeople, focus on work ethic over sales experience, and use group interviews to efficiently screen candidates. (62:38) Look for hungry individuals with circumstances that drive performance - young single people or those with families to support. Lower the screening bar since it's commission-only, focusing mainly on screening out obviously problematic candidates while giving motivated people opportunities to prove themselves through performance.
Statistics & Facts
- Philip's garbage collection business serves 2,500 customers with $642,000 in revenue but negative $151,000 profit, representing negative 23% net margins. (00:23) This demonstrates the critical importance of unit economics in service businesses.
- Philip achieves a 26% close rate when door-to-door selling, needing to knock on only 12 doors to get one sale. (05:06) This exceptionally high conversion rate made door-to-door the obvious choice for scaling acquisition.
- The business has extremely low churn at 0.4% monthly, with an 18:1 LTV to CAC ratio for HOA customers ($23,000 LTV vs $1,200 CAC). (11:55) This retention strength justified the focus on growth rather than retention optimization.
