Harsh Business Truths You Need To Hear TODAY | Ep 206 - Build with Leila Hormozi

Summary

Podcast Summary: "Harsh Business Truths You Need To Hear TODAY | Ep 206"

Podcast Information:

Title: Build with Leila Hormozi
Host: Leila Hormozi
Description: How can you create an unshakeable business? My name is Leila Hormozi and I crossed $100M by the age of 28. Now I’m growing acquisition.com into a billion-dollar portfolio. In this podcast, I share the lessons I’ve learned in scaling big businesses and helping our portfolio companies do the same. Buckle up, Let's BUILD.
Release Date: November 15, 2024
Episode Title: Harsh Business Truths You Need To Hear TODAY | Ep 206

Introduction

In Episode 206 titled "Harsh Business Truths You Need To Hear TODAY," Leila Hormozi delves into the often uncomfortable realities of running a business. Drawing from her extensive experience scaling businesses and advising entrepreneurs, Leila shares candid insights aimed at preparing listeners for the unvarnished challenges of entrepreneurship.

1. The Reality of Leadership: Embracing Struggle and Uncertainty

Leila opens the episode by highlighting the persistent struggle faced by CEOs and founders. She emphasizes that leadership is inherently fraught with challenges that lack straightforward solutions.

Leila [02:30]: "Being a CEO or being a founder that leads a business, whichever one you consider yourself is fucking hard."

She discusses the psychological strain of craving certainty in an uncertain environment. Leila argues that the pursuit of certainty often leads to suboptimal business decisions because it stifles adaptability and timely action.

Leila [05:15]: "If you crave certainty, this is painful... trying to create certainty, you probably don't create the best solutions for your business."

Leila shares her personal journey of overcoming discomfort with uncertainty, highlighting that embracing the unknown is essential for growth and success.

2. Decision-Making in the Absence of Data

Moving forward, Leila addresses the common misconception that decisions should always be data-driven. She points out that in reality, data is often incomplete, flawed, or unavailable, forcing leaders to make tough calls with limited information.

Leila [10:45]: "Most of the time, you don't have all the fucking data."

She stresses the importance of taking action despite uncertainties, as procrastination driven by the need for perfect information can hinder business progress.

Leila [12:00]: "Decision making without all the information is literally your job."

Leila advises entrepreneurs to normalize operating with incomplete data and to prioritize movement over perfect analysis, acknowledging that mistakes are part of the journey.

3. The Challenges of Hiring and Firing

Leila delves into the complexities of building and managing a team, particularly the difficulties associated with hiring and firing.

Leila [18:20]: "Hiring and firing, you will fuck up constantly."

She explains that even with ideal hiring practices, misalignments in values and performance are inevitable. Leila advocates for swift action when identifying both high performers and underperformers to maintain team effectiveness.

Leila [20:10]: "Act quickly. When you can tell that you've got a winner, hire them. When you can tell someone's making it harder, fire them."

Leila also shares her experiences with the emotional and operational disruptions caused by these decisions, reinforcing that imperfection in management is a reality every leader must face.

4. The Power of Honesty Over Perfection

A significant portion of the episode is dedicated to the concept that honesty trumps the pursuit of perfection in building trust within a team and with customers.

Leila [28:35]: "Perfection doesn't create trust. Honesty does."

She argues that being truthful about business challenges, uncertainties, and mistakes fosters a culture of transparency and reliability. Leila contrasts this with the pitfalls of being "nice," which often leads to sacrificing long-term functionality for short-term comfort.

Leila [30:50]: "Nice is sacrificing long-term function for short-term comfort. Nice is telling people what they want to hear rather than the truth."

Leila emphasizes that maintaining honesty, even when delivering bad news, strengthens team cohesion and trust, ultimately contributing to a more resilient and effective organization.

5. Embracing Imperfect Action

Concluding her discussion, Leila underscores the necessity of taking imperfect action as a fundamental aspect of entrepreneurship. She encourages founders to prioritize progress over perfection and to accept that mistakes are an inevitable part of the business landscape.

Leila [35:25]: "Take messy action, take imperfect action. Be honest with yourself, with your team, and with your customers."

Leila reassures listeners that striving for perfection is less beneficial than being genuine and proactive, advocating for a mindset that values honest effort over flawless execution.

Conclusion

In "Harsh Business Truths You Need To Hear TODAY," Leila Hormozi provides an unfiltered look at the challenges of building and leading a business. By addressing the inevitability of struggle, the limitations of data-driven decisions, the complexities of hiring and firing, and the paramount importance of honesty, Leila equips entrepreneurs with the realistic perspectives needed to navigate the turbulent waters of entrepreneurship. Her candid advice serves as a crucial guide for those seeking to build resilient and trustworthy businesses.

Key Takeaways:

Embrace Uncertainty: Accept that uncertainty is a constant in business and learn to operate comfortably within it.
Act with Incomplete Information: Make decisions even when data is not fully available, understanding that perfection is unattainable.
Swiftly Manage Your Team: Hire quickly when you find a good fit and don't hesitate to fire underperformers to maintain team effectiveness.
Prioritize Honesty: Cultivate trust through transparency rather than seeking to be liked by being superficially nice.
Take Imperfect Action: Focus on progress and genuine effort over flawless execution to drive business growth.

Leila Hormozi’s insights in this episode provide invaluable guidance for entrepreneurs seeking to build enduring and trustworthy businesses amidst the inherent challenges of leadership and growth.

Transcript

A (0:00)

What's up, guys? Welcome back to Build. And today I want to talk about the harsh business truths that everybody needs to hear. This is super top of mind for me because I think just in the last few weeks I have found myself disclosing a lot of these truths to not just my team, but also entrepreneurs that, you know, are in our portfolio, that come to our workshops, that, you know, ask me questions online. And, you know, I was having this discussion because I was on a walk with Alex and then one of our leaders on the team, we were talking about, you know, we had had an event and somebody had asked me a question and basically he was like, do I have a marketing problem or a product problem? And as I listened to his business, I was like, well, both, because the product kind of sucks and so it's hard to market the product because it doesn't. It's not that good. When I gave him the response to his question, essentially I told him like, hey, in order for you to make an amazing product in the industry you're in, you would basically need a different company. Here's what I would do if I were you, given the resources and such that you have. A lot of my team was like, well, why would you say that to him? Because that's kind of discouraging. And I was like, discouraging as it may be, I'm not here to sugarcoat things to people and not help them. I'm here to actually help them. Right? And I think there's a difference between being nice and being kind. And I think that being nice leads to shitty business advice. Being kind leads to feeling shitty in the moment, but actually being able to improve. And, you know, for this gentleman, I told him, I was like, listen, this is your first business. Like, it's not going to be Tesla, it's not going to be SpaceX. And so, like, that's okay. Let's do the best with what we've got and just know what you can do better next time when you start the next one. You know, I'm on my fourth business now, and each time I start a new business, I take the lessons that I've learned from the last one to understand what to do for this one. But what it really got me thinking about is how advice is always based on ideal circumstances and just on ideal. Right? And so, like, everything that I preach on here, every piece of advice I give you guys, every time I talk about how to treat your team, how to lead, how to manage, how to build a business, how to build a CS function A sales function, marketing, you know, operations, events, whatever it might be. I'm speaking in terms of ideals, but ideals rarely happen, okay? Ideals rarely happen. Business is not perfect, and neither are people. And so the reality is that most of the time, you're operating kind of in the muck, and that is most of business, and that is most of being a founder and a CEO is having to deal with the fact that you're not going to be able to create ideal because maybe you don't have the resources, maybe it's the wrong timing, Maybe it's going to take a year to get there. And so I wanted to address some of the situations that I see arise a lot for people and that I freaking deal with all the time that are not ideal, but they're just the truth. The first one is how much of a fucking struggle it is being a CEO or being a founder that leads a business, whichever one you consider yourself is fucking hard. The reason it's hard is because you face situations that do not have straightforward solutions, okay? And so the reality is, if you're somebody who craves certainty, this is painful. The reason it's painful is because if you want certainty, right, you're not going to get it. And in trying to create certainty, you probably don't create the best solutions for your business. And so that's why I see so many people fail here, because they're constantly trying to create certainty where there doesn't need to be or shouldn't be in their business. And because of that, it's actually not best for the business. What I've realized, for myself at least, is that there's so many times where I want to make a decision, but I want to be really sure it's the right decision. And in that time that I take to be really sure, the returns of being, quote, really sure are lower than if I were to just. Just fucking try it. And so, like, a lot of people come on Q and A's that I do where they come to our workshops, they ask me a question that they've been sitting on for like six months or a year. Should I build this tech or this tech? Should I do use this CRM or this CRM? Should I hire or fire this person? Should I fire this person that's been here? Jesus, just go fucking try something. It's because people are afraid of failure, because they crave certainty and because they don't want to, quote, be a failure. What you have to do is accept that there are no perfect solutions and you will never act so Perfectly, that everyone thinks you're perfect as well. Trying to act imperfectly will get you better results than trying to act perfectly. And this is just something that I've had to learn with time. Because a lot of times people wait, they procrastinate because they're just, quote, unsure. But it's like your compulsive need for reassurance is ruining your business and slowing it down. And so that's the first thing is, like, you have to embrace the fact that there's uncertainty and there's struggle, and you just have to get comfortable with it being uncomfortable. And if you're not that kind of person, naturally, I want you to understand that you will get used to it. I am not naturally the type of person who loves uncertainty, but I have forced myself since I was a teenager to learn because I recognize that I can't get the life I want unless I learn to deal with it and be okay. Being uncertain, you can do it too. The second thing is that a lot of the times when people are trying to make decisions, they want to base off the data. So do I, because shit in, shit out. But here's the reality. Most of the time, you don't have all the fucking data, okay? Most of the time, people, even when you have a perfect data capture system, there are errors, there are human errors, there are biases that sometimes we're not collecting the right data. Even when we want to make the best decisions. There's a lot of times where it's very difficult because we don't have the right data. And so we have to make tough calls either with the wrong data or without all of the right data or information. And we have to accept the fact that sometimes we're going to fail and we're going to make the wrong call. A lot of the times, you know, when I talk about, okay, we've got to follow the data, follow the data. Here's what I'm going to tell you guys. Most of y'all don't have the fucking data. You're going to have to make calls despite not having it. Because you probably don't have an entire team like mine who can, like, go in and build a data model system overnight. Instead, what you have to learn to do is to make those decisions for yourself and to understand the fact that decision making without all the information is literally your job. And it sucks because you're like, well, shit, if this is true, this could be wrong, but I don't have a way of knowing it's true. Yes, that's Correct. And that's business. And so if you feel like right now you operate blind, tough, but a lot of us gotta do that. And I think that we just have to normalize this. And yes, there are. I always tell people, get the data, look at the data. What's the ltv, what's this? But you know, what I also know is that most of the time you don't have any of it. And so we still have to make a decision to move the business forward because we don't have six months to wait to get the right data. And that just is what it is. And does that mean things are perfect? No. Guys, this is why businesses fail. Because all these things that I'm stating right now are true. And it doesn't mean good things, it means bad things. It means that we have to make a shitty decision sometimes. And they will be, they will have bad outcomes. But what's worse is not making a decision. And then you're surely never going to grow your business. Business is risky and we have to accept that. And trying to pretend otherwise is just untrue. The third truth is that hiring and firing you will fuck up constantly. Okay? This is something that I've been doing for a decade and I still make the wrong decisions. I will tell you what I have learned, which is like, act quickly. When you can tell that you've got a winner, hire them. When you can tell someone's making it harder, fire them. There's all these other things that go with it though. And here's the thing, is that most of the time when I'm speaking to this and I tell people, okay, how to hire well, how to fire well, what they probably don't know that I also experience is that there's always more complexities to these situations, right? Like nobody ever has a hard time firing somebody who's blatantly evil or, you know, intentionally destroying their business. Guys, most people want to do well. It's just that their version of doing well is not yours or what means well to them actually is bad for your business. And so, like, you just don't have aligned interests. In many situations, this means that this person might be loved by many. This person may do some things very well, but this person might not be worth the pain in the ass. At the end of the day, when I talk about how to fire well, how to hire well, I talk about in terms of ideal situations, but most of the time the people's stuff is messy, right? Like we're trying to hire somebody, but we can see they have A flaw. Okay. Is that flaw something I can deal with? Is something I can't deal with? Okay, I'm going to hire this person. Four people on my team said that they think they're a fit, but then these two people said they're not. Like, what do I do? These situations arise all the time. And so my biggest piece of advice to you is, again, you have to learn to act imperfectly, to do things imperfectly, and to be okay being judged for bad decisions. Because guess what? You will make bad decisions. We try our best not to. I'm all about mitigating bad decisions, but I also don't want to paint an unrealistic picture of what business is to you guys. And I feel like sometimes people think because I can't do it the way Layla told me to, I shouldn't do it. I don't know any situation where I've had to fire someone where it went perfectly. Like, there's definitely always people who are spooked, no matter how atrocious. The reason I'm letting someone go is which most of the time, I can't fucking tell them anyways. I've never had a situation where I fired somebody and stuff hasn't been worse after they left for a moment, because maybe something was dropped, maybe something was forgotten, whatever. Or I uncover that they were just doing something terrible. And I've never had a situation where everyone understood, kept doing their jobs without asking me about the situation. No, most of the time, I have to. You know, it's like a whole disruption. I experience all the same things that you guys do, and I still do these things anyways. I just don't judge myself for the fact that things don't go perfectly right. Same with hiring people. People come to me and they're like, well, I've hired the wrong sales manager twice. I'm like, okay, so what do I do? Like, maybe it's not sales manager, or maybe there's just not any good people for my company. Maybe I'm like, dude, come on, you don't have a skill. It's going to take you a while. It's going to suck. You're going to mishire people. The unfortunate truth is that we can't fire you because you own the company. So you've got to fire them because you picked the wrong person. Which is like, the terrible truth of running a company, but it is the truth, right? It's messy. Which brings me to the next point, which is, you know, a lot of people get to this point and they're like, okay, I get it. This shit is messy. We can't be perfect. I understand, but what do I tell my team? The one thing that I've told my team time and time again is no matter what, what you can expect from me is I will be honest. Honesty is fucking critical, especially when you're in the mess of this. Okay? So even when the news is bad, like bad bad, keeping the team in the loop and being honest, that is what creates trust. Perfection doesn't create trust. Honesty does. If I just sum up this whole podcast, that's what I would say. Perfection doesn't create trust. Honesty does. Be honest about the situations you're in. Be honest with your team about your skills. Be honest with people about your decision making ability. Be honest with people about the information you have. Be honest about your uncertainty. Be honest with people who ask you for advice. Be fucking honest. Most people want to be honest, but they're just nice. I want that to sink in for you guys. Most people want to be honest, but instead they're just nice. Nice is sacrificing long term function for short term comfort. Nice is telling people what they want to hear rather than the truth. And I've had to really overcome this for myself in building a business because I, like many of you, would prefer if people like me. But I've had to learn that most of the times when everybody really likes me, I'm probably one, not being true to myself. Two, maybe I'm not being 110% honest because most people don't want to hear the truth, but the truth is the only thing that will grow your business and that will actually create trust. The important thing to remember here is that nothing is perfect, but you have to address these situations anyways. And what is worse than being imperfect is not taking action. And so take messy action, Take imperfect action. Be honest with yourself, with your team, and with your customers. I hope you guys have a great rest of your day and I will see you on the next one.