Alex Hormozi tells the story of how he started Gym Launch — and nearly destroyed everything twice before it worked. He lost his entire net worth to a fraudulent partner, lost it again to a payment processor freeze on Christmas Eve, spent January running $3,300/day in ads on credit cards he couldn’t pay, and only survived because Lea refused to leave. The episode is the origin of the story that became a $26M first full year.
Speakers: Alex Hormozi (guest, founder of Acquisition.com), Sam Parr (host), Shaan Puri (host)
Five Gyms and Hood Rich [00:00:00]
Alex: Leila and I started dating in April of 2016. I immediately said: I’ve got this idea for something called Gym Launch. I want to fly out to gyms and do turnarounds — I can fill them up faster than I can build my own.
Sam: Context — at the time you had a couple of gyms?
Alex: Five gyms when I met her. Bank balance looked like about $20K a month in cash flow. I had two corporate locations that were a little smaller. I was 25, 26. I was hood rich — I could buy whatever I wanted, live where I wanted, go out to eat. And so I started the turnaround business.
I made $100,000 in cash in 21 days. I was like: holy shit, this is awesome.
I came back. She picked me up from the airport. I had this big stack of contracts. I said, hey — we can finally go on that date, because I hadn’t taken her on a date in three weeks. She said, help me process these. She processed the contracts in 45 minutes, saw it was $100K, said, “Is this legal?” I said yes. She said, “I’m in.”
The First Time I Lost Everything [00:06:00]
Alex: A few launches in, one of my gym clients says: let’s partner. Instead of you doing turnarounds and walking away, I’ll open gyms behind you and run them. At the end of a year you could own 24 gyms.
And the fact that he’d been indicted for fraud — I told myself it was a misunderstanding. He said, “You should sign all the leases because I had a little run-in.” I personally guaranteed the leases and put up all the capital. Because I’m 25 and don’t know what I’m doing.
We launched. 376 new members at opening — massive for a CrossFit-style gym.
Then I woke up one morning and all the cash in the bank account was gone. I called him and said: what’s going on? He said: “Oh, that was my half.” I said: what do you mean your half? You just took all the money out. He said: “I know you’ve been skimming.”
I came back with all the bank accounts, every transaction highlighted. I said: let’s go through this together. He threw the papers off the table. He said: “I don’t need to see that.”
Got it. I just got all my money stolen.
The problem: right before that happened, I had sold all five of my gyms and put all the cash into one account. Five years of building — gone.
Christmas Eve With $1,000 [00:14:00]
Alex: Leila said: forget the partnership model. Go back to turnarounds. You made money doing that.
So the next launch — a guy on Instagram messages me, says he has a kid on the way and a one-year-old and needs work. He happens to live 10 minutes from the gym I’m launching. I hire him. He does $100K in sales in 28 days.
Then I wait for my deposit. Deposits always hit Tuesdays. Tuesday hits — nothing. Wednesday, Thursday, Friday — nothing. I call Mindbody, the payment processor. They say it’s a “standard annual review.” I wait another week.
It’s Christmas Eve. I have about $23,000 left. I get them on the phone and say: I’m not getting off until you tell me what’s happening. I need to pay my guys.
They tell me they’re holding the funds for six months. Because I was processing turnaround gyms through my brick-and-mortar location — flying into Calgary, Canada, running it through Huntington Beach, California. They flagged it as suspicious activity.
I owed $22,000 in commissions to the guy with the babies. I didn’t want to give myself the option of not paying him. So I sent him the money.
I had $1,000 left. It’s Christmas. We’re at Leila’s family’s house.
She’d already told six of her personal training clients to quit their jobs and start with us December 26th — six simultaneous gym launches. I was going to be running $3,300 a day in ads, hotels, rental cars, sales rep commissions. For six gyms. At the same time.
With $1,000.
She Said She’d Sleep Under a Bridge [00:22:00]
Alex: We’re in the spare bedroom at her parents’ house. Mini furniture everywhere — it’s the grandkids’ room. I’m sitting in this tiny chair. I said: hey. This could go horribly wrong. And if you want to leave, I understand. I wouldn’t stay with me if I were you. I am a sinking ship right now.
She grabbed my chin. She said: “I would sleep under a bridge with you if it came to that.”
And I just felt relief. She’d quit her job to join me doing these turnarounds. All she’d seen — besides the very first launch — was me getting kicked in the teeth for eight straight months.
The next day I said: well, I still have a $100,000 limit on my Amex from the five gyms. They hadn’t updated the fact that I was broke.
So I put $3,300 a day on the credit card — with no way to process incoming money.
The Credit Card Runway [00:28:00]
Alex: I needed payment processors, but with no track record and no brick-and-mortar address, the only ones who’d take me were high-risk processors — casino-type outfits charging 10% reserves and 6-7% processing fees. 17% off the top. But I needed the cash.
I got one turned on with a $50K monthly limit. I needed $200K. They said: do well, and we’ll expand.
I got it turned on three days before the end of January.
This whole time — spending $3,300 a day, collecting signed contracts with credit cards, but not actually processing anything. Customers are calling: hey, I haven’t seen the charge come out. We’d say: yeah, getting to it.
Three days before February: first $50K processor hits. I run that in a day — so much backlog. Good news: it resets on the 1st. So I run another $50. Then I get two more processors at $50K each. I can now cover the $100K I’d burned through at $3,300/day.
I was out of it.
The Third Time I Lost Everything [00:35:00]
Alex: Three months later, I lost it all again. And that was probably the hardest.
The model had a hole: I was selling, and the gym owners were delivering. Then they started telling customers to refund me — sign up with them directly for half price after I left. I’d already fronted hotel costs, ad spend, sales rep commissions. One out of five gym owners was doing this.
The more I sold, the more refund risk I exposed myself to. I had to sell more to cover the first month’s refunds, then even more to cover the next month. A death spiral.
Sam: The first two were out of your control. This one — the model was broken.
Alex: Yeah. I had to make $150,000 in profit in 30 days or I was done. I had no idea what I was going to do.
The Pivot That Built Gym Launch [00:40:00]
Alex: Leila was still running her online fitness coaching — about $4K a month, four hours a week. I said: that’s not a bad business. What if we cut the gym owner out entirely and sell directly to consumers?
I spent 48 hours, took a ton of Adderall, and wrote the best sales letter of my life. Got ads live in 48 hours. We started doing $500 to $1,000 a day. I called it Queen Transformation, written in Leila’s voice — she’d lost 100 pounds and competed as a fitness athlete. Great before-and-after. She was the product.
We’re now doing $1,000 a day. I have eight sales guys. I do the math: if each guy closes even once a day, I can cover costs and make $150K. This could work.
Then I called all the gyms that were supposed to launch that month. I said: we’re not flying out. They freaked out. One guy says: I need this. I was like — well, if you can’t close but you want to know how I did it, I’ll show you for $6,000.
He said done immediately.
I still had seven more calls that day. Next one: $8,000. Done. Next: $10,000. Done. By end of day I’d done $60,000 in cash collected.
I called the 30-plus gyms I’d previously turned around. “Remember that thing I did? Want me to show you how I did it?” Almost all of them said yes — because they’d seen me pull $100K out of their gym.
I did $240,000 in sales that next month — almost all profit. Paid off the refunds. I was clear.
That became Gym Launch.
The First $100K [00:47:00]
Sam: Have you ever felt richer than that first moment of being out of the mess?
Alex: Never. It’s in the offers book — the last chapter. The first time we had $100,000 — four or six weeks after that pivot — I showed Leila on the phone. I pulled it up. It was in the personal account, not the operating account. I said: we did it. We can screw up for three years and we’re going to be fine.
To this day that is 100% the richest I’ve ever felt. I think it’s because of the relative change. Going from $1,000 to $100,000 is a 100x increase in a month. The human feeling of that is irreplaceable.
Shaan: And then the full first calendar year of Gym Launch after that — what did you do?
Alex: Year one: $6.8 million top line, $3 million in profit. The full next calendar year: $26 million, $16 million EBITDA. It was just as wild for me as it sounds for you.