The Mind-Blowing Reason A Competitor Made Twice As Much As Me
Summary
- When I was 24, I was confidently generating returns of 15 to 20 to 1 on MySpace ads within my local market.
- A new competitor entered my area, and despite converting fewer leads (10% to my 25%), he was out earning my business.
- I was spending $100 a day on advertising, while he was investing $500 a day.
- While my smaller ad spend made decent profits, my competitor was making twice as much, even after scaling up his spending.
- The critical lesson I learned is that absolute profit is what really counts, not just efficiency in lead conversion or ad spend.
- In business, your methods might become less efficient as you scale, but that's a normal part of growth and should not deter you from aiming to earn more.
Video
How To Take Action
A good way of doing business is to focus on the big picture. If you're making 15 to 20 times what you put into ads like I did on MySpace when I was 24, that's great. But don't stop there. Look at your competitors. If someone's earning more than you even with a lower lead conversion rate, ask yourself why.
I would suggest investing more in advertising if you're seeing a good return. I stuck to $100 a day and stayed smaller, while my competitor went for $500 a day and made double what I did. It doesn't matter if you are more efficient at converting leads if the end profit is not as high.
Remember, as you scale, things might not stay as efficient. Your lead conversion might go down, or you might have to spend more to make more, but that's okay. That's what growth looks like.
Here's what you specifically need to do:
- Check your ad returns. If you're making more than you spend, go ahead and spend more.
- Keep an eye on the competition. See how much they're spending and earning. Don't just copy them, but learn from their strategies.
- Understand that growth might make your numbers look different. Making a bigger profit overall is more important than how efficient you are.
Do these things, and you could grow your business just like I learned to do. Be smart about scaling up and aim for the most money, not just the best percentages.
Quotes by Alex Hormozi
"I was getting 15 to 20 to 1 returns in a local market"
– Alex Hormozi
"He was doing like he was selling more people than we were"
– Alex Hormozi
"I was converting 25% of my leads like I was killing it"
– Alex Hormozi
"It's just about who makes the most money"
– Alex Hormozi
"All your stuff will get less effective… that's part of scaling"
– Alex Hormozi
Full Transcript
so i was i was 24 and i was running ads in my space and i was getting 15 to 20 to 1 returns in a local market and i've been doing this for like a year at this point so i was like i felt pretty good about myself and then there's this competitor who moved into my area and somehow we hopped on the phone and uh and he was just killing he was just killing it he was doing like he was selling more people than we were i was like what the is this guy doing right and he told me that he was converting how many percent of his leads is converting and i was converting two and a half times more leads than he was like i was he was converting 10 i was converting 25 of my leads like i was killing it but i was like what the like how is this even possible i mean i was spending 100 a day and he was spending 500 a day and he would spend 15 000 and he would make 60 and keep 45 and i would spend three and make you know whatever 25 or whatever it was and i you know i was making 22 and he was he was making twice as much money as me even though he was spending five times as much and that's when i was like wait none of this matters like it's just about who makes the most money and so at some point you're gonna like just everyone all your will get less effective i'm just telling like it will be less excuse me less efficient in terms of spend but that's part of scaling you
