OPPORTUNITY COST...How I went from $200k to $30M a year
In this solo talk, Leila Hormozi recounts the pivotal decision she made in 2016 to leave a successful but unfulfilling fitness training career and co‑found Gym Launch with Alex. She explains how she applied a decision‑making framework centered on distinguishing sunk costs from opportunity costs. By quantifying the expected earnings of her existing online‑training business (about $200K per year) against the projected upside of Gym Launch (approximately $3 million in the first year), and by accounting for the $10K investment already made in her fitness career, she demonstrated a clear financial advantage to switching. Hormozi emphasizes that emotions can trap people in “grit‑it‑out” mode, while writing the numbers on paper removes bias and reveals the true opportunity. The framework led to a $100 million+ ROI over five years, generating $20‑30 million annually. She concludes with advice for entrepreneurs to evaluate decisions with hard data, focus on opportunity cost, and avoid being held hostage by sunk costs.
Chapters
So today what I want to share with you is the decision-making framework that I used that has paid me between $20 and $30 million every year for the last 4 years. And so what that looks like is figuring out if you need to grit it out or quit it. And so let me take you back to when I made this decision, which was definitely the best decision I made in my entire life. It has continued to pay dividends, and that was in 2016. And so bringing you back to that time, I had finally achieved a level of success that that many would deem to be where they would stay, right? It's not something that you really try to get past. And what that was and what it looked like for me was being really successful at what I did in fitness, right? And so what I had done is I moved out to California from the small town in Michigan that I had lived in, and I started my own, uh, essentially career in fitness, right? So I built up in-person clients, online clients. I started doing bikini competitions. I did really well, and I had everything that I thought I really wanted, right? Um, I think that I set out and the vision for myself I had created was to be really successful in business, really successful in fitness, and have a great life, right? I thought that that's what was going to make me happy. And here's the thing is that I actually hated it. And the reason I hated it was for a couple of reasons. The first one was that I realized after really taking time and like sitting with myself is that it didn't align with my values, right? And so I remember being in a gym in California and thinking to myself like, this entire career is just image-based. Right? And I had set off wanting to help people lose weight, but what I realized is that just becomes a lot about vanity. Right? It's not really about health. It turns into more vanity related. And though I think that's great and I like looking good, it wasn't something that I wanted to do all day, every day with all of my time. And competing kind of went with that. I felt that there are many other ways that are more productive to inspire people. And so it just didn't jive with me anymore. The second thing is that I was making a lot of money, but I had literally no time. And so any of you who have been in a job where you have to work to earn more money probably know that once you make the amount of money you want to make, you have literally no time. So it's like, why do I even want more money? I have no time to even spend my money, if that makes any sense. And so that was the second reason. And then the third reason was that I couldn't even focus on the thing that I was truly passionate about. And so I believe that most humans want to help people inherently, right? And that there's some way, shape, or form that work is an expression of that. And what I realized was that those things were what I was innately good at, right? Like I was already gifted in helping people. And what I wasn't gifted in was the business side of things, right? And so inherently, all of my attention went to the things I wasn't good at because I was a one-man show. And so all of my attention was then focused on the business side of my fitness business and not the part that I really enjoyed, which was helping people and transforming their lives. And so for those 3 reasons, I ended up realizing one day I was sitting in the parking lot and I was supposed to go in and train some sessions. And I started crying just out of stress and exhaustion. And then I realized that I'd been crying every day for like the last 2 months. I would sit in the parking lot, I would cry before work, before I went in. And I thought to myself that day, I was like, gosh, like, I can't keep doing this. You know, something has to change. I know I need to do something differently. And so there were a few things going on in my mind of what I could do. But I happened to have just met this man on Bumble in my 30-minute lunches that I would just swipe the entire time. Who suggested to me that we go into business together. His name was Alex, and he suggested that we start a company called Gym Launch. And I remember one day I came to his apartment. It was probably in the second week we were dating, and he had already started the LLC and it was sitting on his counter. And I realized in that moment, I was like, man, I really want to do that. Like, I feel like I'm not getting where I want to be with where I am right now, but I am really scared to take the next step. And so what I want to explain to you is how I made that decision and how I broke it down in my mind. Okay. And so I figured like I need to go get some space. And so I went with one of my friends who is considered more successful trainer, and he actually was starting his own franchise at the time. And so I was like, listen, I've got this opportunity, but who I identify with is somebody who sticks with things long term, right? I identify with being someone who does the hard work, who sticks out with what they say they're going to do, who's loyal. Who doesn't do people wrong. And in my mind, leaving my clients is doing something wrong. He explained to me how he made the decision to start his own franchise rather than continuing down the fitness path. And so that's when he explained to me sunk cost versus opportunity cost, right? And this is a concept that many talk about, but I don't think many people actually apply it to their decisions. And so this is the first piece of the framework is really considering what is a sunk cost, right? Well, it's the investment that you have made that you are usually reluctant to drop. Right? And so you've made an investment. I made an investment of at least 3 years in hard time to build my client roster, right? And then probably around $10,000 including like moving costs, courses, things like that to invest into my education for being an online trainer. But the opportunity cost on the other side is what you lose if you stick with the sunk cost, right? So if I stick with the sunk cost, then I literally lose out on this opportunity because of it. And so that is why he decided to start a franchise. I remember we were on this hike in, I think it was La Jolla, when he was telling me about that and I was like, crap, I'm totally just focusing on the sunk cost and I'm terrified of the opportunity cost that I could lose by not doing this, right? But I'm also terrified of sticking with, of saying goodbye to this thing that I knew, to telling all my clients and not working with them, to quitting the part-time in-person training, to everything that I was doing, right? I knew what it meant for my life and it meant that every aspect would have to change, including myself and my identity. Right? Because for so long I prided myself upon being someone who stuck with doing the hard things. And so if you're in a spot right now where you feel like I'm sticking with doing the hard work, what I beg you to look at is have you gotten to a point where you have seen the fruits of your labor? Because that was where I was and I was living out the thing that I had wanted for so long. And I realized it didn't actually align with what I, what I thought I wanted. And I think a lot of people get there and then out of stubbornness and fear, they stay there. Even though it's not aligned with our values. And the reason you'll know it's not aligned with your values is that you feel like crap most days, right? You're not energized, you're not excited for work, you're not excited to do what you're going to do. And so this is the framework that I used to make this decision. And so I think that emotions don't necessarily demand action, but facts do, right? And so it's always just looking at the evidence. And so I think that's why making a decision based on a framework and numbers is much more helpful than not. Right, than doing the opposite and just following our feelings, which I don't think is actually productive. And so what I did is I wrote this down, right? I've got my online training opportunity, and then I've got gym launch, right? The sunk cost, or what I want to call the investment, for the online training was about 3 years of hard time. Actually, it'd probably been about 12 years because that's how long I've been doing fitness, in fitness, working fitness jobs, right? But it was 3 years of hard time and maybe $10,000 in costs. Okay. Gym launch, I had invested nothing into at that point. Okay. Opportunity cost or potential of each opportunity, right? Online training, you guys can think whatever you think about making 6 or 7 figures a year with an online trainer. Most people make probably $200K a year if you take out all the costs of marketing, sales, hiring people, etc. Right? So it's just a really high-paying job. So on average, maybe I could have made $200,000 a year there. That was what I thought was probable. Gym Launch, Alex mapped out the numbers and it was like, okay, we can probably make $3 million a year in our first year. Right? So right there, there's a huge discrepancy. Now, if you'll notice, I also put the $200K into the investment or sunk cost of Gym Launch, meaning that I essentially lose this opportunity if I take this one. So immediately then I say, okay, online training, $10,000, $200K potential. That means that total net is $190K versus Gym Launch. Is zero down, but there is the opportunity cost of the $200K I'm not gonna make in the online training. So then it's $3 million that it has as an upside potential, which then brings you $2.8 million a year. And so that is actually how I made the decision. And here's the thing about making these decisions is that everyone looks at it and they're like, it's easy to put on paper. And I'm like, right, but paper doesn't lie. Your feelings are gonna keep you stuck and miserable. And so most people make decisions based off their feelings. And that's why they continue to grit something out. Especially if you're watching this video, you're probably the kind of person, if you own a business, You're really good at being miserable and being okay with it. Right? You're good at being miserable. But in reality, most of the time when you're keeping yourself miserable, you're also keeping yourself from the next opportunity. And so I was lucky enough that this opportunity actually yielded me over, in the last 5 years, over $100 million ROI. And so I would say that it was good that I didn't follow my gut and I actually took the leap based on the math. Right? And so if you're making a decision and you're trying to figure out, do I quit my job? Do I go start a business? Do I quit my business and start a new business? I beg you to put this together, right? Because I think that that's the main reason people don't make the decisions. They're so focused on the sunk cost. The sunk cost is irrelevant. The past does not exist, right? Instead, we wanna focus on the opportunity cost and you wanna be able to write it down because when you write it down, you get it on paper, you take all of the emotion out of it. So I hope that was useful for you. That is the one decision that I made. And it's funny because if you think about it, right, this one decision changed the entire course of my life and it was hard to make, but it didn't take much time. And so think about all the time you're spending like gritting out the thing you're doing now, if that's how you feel. If you just took even a hundredth of that energy and put it towards making one really good decision, how much more return you would get on your investment. So I hope that was useful for you. If it was, hit the subscribe button. I'll see you on the next one.
