Build with Leila Hormozi: Episode 209 – Answering Your Questions About Business

In Episode 209 of "Build with Leila Hormozi," host Leila Hormozi delves into a series of business-centric questions sourced directly from her audience. Offering practical insights drawn from her extensive experience scaling businesses to the $100M mark by age 28 and expanding acquisition.com into a billion-dollar portfolio, Leila addresses each query with clarity and depth. This comprehensive summary captures the episode's key discussions, notable quotes, and actionable conclusions.

1. Traits to Look for When Building Your Finance Team

Leila emphasizes the critical nature of the finance team in safeguarding the company's financial health. She advises against assembling large finance departments, highlighting that "most businesses don't need a very large finance team" [00:01]. Instead, she advocates for a lean, highly efficient team where each member wields significant leverage.

Key Traits Identified:

• Reliability Over Ambition: Leila cautions against hiring individuals solely focused on climbing the corporate ladder. She states, "if somebody's going to be handling money and have access to those things, there's really a huge element of needing somebody who obviously that you can trust" [05:40].

• Honesty and Trustworthiness: She underscores the necessity of honesty, asserting, "trust, trust, trust... you have to be able to trust them with your money" [07:20]. Confidentiality is paramount to prevent internal gossip and maintain a harmonious workplace.

• Reserved and Introverted Nature: Leila observes that finance team members often possess a more introverted demeanor, which aligns with the department's requirements for discretion and focused work. "My best finance teams, very logical, very trustworthy, usually a little bit more reserved" [10:15].

Conclusion: When building a finance team, prioritize honesty, trustworthiness, and the ability to maintain confidentiality. Opt for individuals who are introverted and can focus diligently on their responsibilities without the constant need for advancement within the department.

2. My Business Makes Me Unhappy. Do I Keep Going?

Addressing the emotional toll of entrepreneurship, Leila acknowledges the inherent stresses and challenges in running a business. "A lot of people give up too soon... sometimes it takes three years" [15:10], she advises, highlighting that initial hardships are common and often temporary.

Strategies to Cope:

• Redefine Happiness: Leila introduces a personal rule inspired by a friend's advice: "If you think your business is making you unhappy, get happy before you end your business" [18:25]. This involves shifting perspective to find contentment amidst challenges.

• Manage Expectations: She warns against unrealistic expectations, stating, "sometimes I think people are, 'unhappy.' I don't... I don't focus on [happiness]" [20:00]. Accepting that business endeavors come with both highs and lows can mitigate feelings of dissatisfaction.

• Long-term Perspective: Recognizing that success often involves discomfort and sacrifice, Leila encourages perseverance: "Achieving hard goals... it requires a lot of sacrifice, uncomfortable experiences, and... stress that you have to learn to manage" [22:45].

Conclusion: If your business brings unhappiness, first work on adjusting your perspective and managing your expectations. Understand that discomfort is a part of the growth process, and seek ways to find happiness even amidst the challenges before deciding to exit the venture.

3. Do You Follow Intuition or Logic in Business? How Do You Distinguish the Difference?

Leila differentiates between intuition and logic, advocating for a balanced approach that heavily leans on logical, first-principle thinking. "Do you follow your intuition or logic? I say, fuck your mood, follow the plan" [25:30].

Understanding Intuition:

• Pattern Recognition: She explains intuition as a form of subconscious pattern recognition based on past experiences. "It's like pattern recognition... recalling past experiences and deriving conclusions, even if you can't remember the exact details" [26:15].

• Protective Mechanism: Leila shares personal anecdotes where her intuition has prevented fraudulent deals: "We've truly avoided every... fraudulent person because of my intuition" [28:00].

Role of Logic:

• First-Principle Thinking: Emphasizing logic, she states, "I use first principles to think through everything... what makes the most sense for how to accomplish my goals" [29:45].

• Innovative Approach: Rejecting conventional methods, Leila prefers developing unique strategies over mimicking existing ones: "I could figure out a way to do it better... something new and innovative" [31:20].

Conclusion: While intuition can serve as an early warning system based on past experiences, Leila champions logic and first-principle thinking as the foundation for making sound business decisions. Strive to balance both, but prioritize logical frameworks to drive innovation and effectiveness.

4. How Do You Choose a Business Partner?

Selecting the right business partner is pivotal, according to Leila. She questions the necessity of a partner unless there's a clear, strategic reason beyond personal comfort. "Why bring in a business partner? Now, this doesn't mean I think it's a bad idea... but a lot of people think through who should be my business partner... not because they actually need the business partner to make it work, but because they're lonely" [34:00].

Key Considerations:

• Purpose and Necessity: Leila urges entrepreneurs to introspect on why they need a partner. "Why do you need a business partner?" she asks [34:15]. Often, the need can be fulfilled by hiring employees instead.

• Shared Mission, Vision, and Values: A successful partnership hinges on aligned goals and principles. "Do you share the same mission and vision? Do you have shared values, and do you have shared interests?" [36:30].

• Complementary Skill Sets: Leila highlights the importance of partners having different strengths that complement each other. "We have complementary skill sets... I can be really good at what I do, and he can be really good at what he does" [39:10].

• Assessing Impact on Goals: She advises evaluating whether the partnership will facilitate or hinder achieving personal goals. "Is being partners with this person going to make it easier or harder for me to achieve my goals?" [41:00].

Conclusion: Choose a business partner only when there's a strategic need that can't be met by hiring. Ensure alignment in mission, vision, and values, and seek complementary skills that enhance each partner's strengths. Always assess whether the partnership will advance your business objectives effectively.

5. What Are My Thoughts on a Low Margin Business? Less Than 20%

Low-margin businesses present unique challenges and opportunities, as discussed by Leila. She differentiates between types of business goals to determine the suitability of low margins.

Insights:

• Lifestyle vs. Enterprise Goals: "If your goal is to have a lifestyle business, it probably doesn't make a lot of sense that you start a low margin business" [43:20]. High margins are preferable for lifestyle businesses to maximize income while minimizing workload.

• Scalability and Margin Improvement: For those aiming to build an enterprise to sell, low margins might be acceptable initially with the potential to improve them over time through economies of scale and operational efficiencies. "You might start at like 20%, but over time... you can get to somewhere like 35 or 40%" [45:50].

• Risk and Flexibility: Leila expresses discomfort with low margins due to limited financial wiggle room. "I don't like feeling like there's not a lot of wiggle room because I'm going to make mistakes" [48:00]. This perspective has steered her away from certain low-margin ventures like physical products and supplements.

Conclusion: Low-margin businesses can be viable for those intending to scale and eventually sell their enterprises. However, for entrepreneurs seeking immediate financial flexibility and lower risk, high-margin businesses are more suitable. Carefully consider your long-term objectives and risk tolerance when evaluating business margins.

6. Do You Think Doing Business Is for Everyone?

Leila presents a balanced view on the accessibility of entrepreneurship, acknowledging both inherent potentials and limitations.

Considerations:

• Innate Abilities and Skills: She posits that natural intelligence and baseline skills like stress management, emotional regulation, communication, and leadership are critical for business success. "A lot of people have... really low stress management skills, they have really low emotional regulation skills... it's going to be hard" [50:30].

• Timing and Readiness: "Business makes a lot of sense to try and get a lot of these baseline skills... as easy as possible for you to win when you do enter the business arena" [52:15]. Timing one's entry into entrepreneurship when possessing essential skills is crucial.

• Comfort with Discomfort: Leila asserts that business inherently involves discomfort and challenges. "If your goal in life is to be happy and comfortable all the time, I just don't think business is necessarily the route to go" [55:00].

• Purpose Beyond Money: Her motivation stems from a desire to build something meaningful and impactful, not merely financial gain. "I do this because I want to build something epic and... help make people's lives better" [58:45].

Conclusion: While entrepreneurship is accessible to many, it demands specific skills, emotional resilience, and a willingness to embrace discomfort. Not everyone may be suited for the rigors of running a business, especially if their personal goals prioritize continuous comfort and minimal stress. Prospective entrepreneurs should assess their readiness and commitment before embarking on business ventures.

Final Thoughts

Throughout Episode 209, Leila Hormozi provides candid, experience-based advice on navigating the complexities of building and sustaining a business. From assembling trustworthy finance teams to understanding the personal toll of entrepreneurship, her insights are grounded in real-world challenges and triumphs. By emphasizing the importance of logic over mere intuition, the strategic selection of business partners, and the alignment of business models with personal goals, Leila equips her listeners with the knowledge to make informed, resilient decisions in their entrepreneurial journeys.

Notable Quote Summary:

• On Finance Teams: "Trust, trust, trust... you have to be able to trust them with your money." [07:20]
• On Business Happiness: "If you think your business is making you unhappy, get happy before you end your business." [18:25]
• On Intuition vs. Logic: "Do you follow your intuition or logic? I say, fuck your mood, follow the plan." [25:30]
• On Business Partnerships: "Is being partners with this person going to make it easier or harder for me to achieve my goals?" [41:00]
• On Low Margin Businesses: "I don't like feeling like there's not a lot of wiggle room because I'm going to make mistakes." [48:00]
• On Business Suitability: "If your goal in life is to be happy and comfortable all the time, I just don't think business is necessarily the route to go." [55:00]

By integrating these principles, entrepreneurs can better navigate the multifaceted landscape of business development and leadership.