← Build with Leila Hormozi
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What if I told you that building a billion dollar company from zero has nothing to do with working harder and everything to do with building better systems? I went from working at Subway to being the CEO of a 500 million dollar portfolio. And I have learned that there is a reason that 99% of people stay stuck and it is not lack of effort. The first one is culture as a system. Okay? Whether you have a company or you're just starting one, or you're a leader in one, this is something that you want to understand, which is that culture is going to start with you. When you're a kid and you go over to somebody's house and you go over to one friend's house and like, it's like, no elbows on the table, always take out the trash. If you're here, you got to take your shoes off. It's like, if you don't do those things, they're like, you don't get invited back. Then you have your other friend where it's like, you go over. It's like you could wear your shoes through the house. They don't give a shit where you sit and eat. There's food on the ground. That's a culture now. Culture is a system that governs people when you are not in the room. Early in my career at Gemlock, we had hit like 50 million revenue. I remember I was literally on a walk the day that I found out that we hit 50 million. I was like, holy sh. T is crazy. At the same time, I'm like, dude, my operator just quit. I lost my three best salespeople. I had these giant clients who had left and they like made a huge storm on the way out and like start a Facebook hate group. It was awful. At the same time, these two things are happening. I remember thinking, how is it possible to be winning so much on paper and feeling like so about everything else that's going on? And that is when I learned that growth actually does not fix broken systems or broken culture. It actually multiplies all of those things. And so what I realized is like, we had these values in the company and I explained them a lot. Like, I told people of them. I had them everywhere. I said them all the time. I did not enforce them. Culture is not what you say, it's what you tolerate, it's what you enforce. So if you tolerate lateness, that's your culture. If you tolerate low standards, that's your culture. If you tolerate people who are rude to other people, that's your culture. So for a lot of you what happens is that you keep people on your team who don't abide by the culture because they are good performers. Congratulations. Now your whole team thinks that behavior matters less than output. So if you keep high performers who have low culture, or if you keep low performers who also have low culture, you lose respect from the great people on the team, the A players who have abided by your culture, and now you have nobody. That's good. So how do you actually do this? How do you make a culture into a system? The first thing is that it's okay, we have values. We're honest. Integrity, all these things. Well, what the does that actually mean in terms of observable behaviors? What can I see with my eyes? How do I know that somebody's honest? What do they do? What do they say? And so when people say, oh, we value integrity, well, what the does integrity actually look like? We need to know how to observe it. If we can observe it, we can enforce it. You have to be able to observe what you want to enforce. You need to break these things down into observable behavior. I'll give you an example. We have competitive greatness. It means that when the game's on the line, they decide to stay until after dinner or maybe even later to get the job done. Because the game's on the line. They don't say, hey, you know what, I'm going to go home for dinner. They say, I'm going to finish this because I need to finish it. That's competitive greatness, in my opinion. And now is that for everybody? No. And I make people well aware of that before they come to work here. So you can second that. We want to do build rituals that reinforce those behaviors. Okay, so this can look like daily recognition, weekly shout outs, monthly awards. Recognition is literally free. And there's a quote by Mary Kay that supports this very beautifully. The only thing that people want more than money and sex is recognition. And I truly believe that something that we do all the time is like, I will come back to my phone after this, actually. And there's a slack channel that says shout outs. It's just people shouting people out for following the values. That's it. It's just all day, people are doing that. It's reinforcing the behaviors we want. That's the first thing. Now, the second thing is to enforce the behaviors we don't want, which I use what I call an enforcement matrix for this. It's essentially evaluating the people on your team. Because the biggest way to enforce behaviors is by showing People by who you hire and who you fire. That is like, the biggest thing you can do to reinforce a culture is like, who they see go out the door and who they see come in. That's who you tell people. Like, what is most important to this company is the people in it and who you decide to bring in, who you decide to kick out. That's going to tell people everything. Use an enforcement matrix. I use this matrix like this. And on this end of the axiom, you have skill, and on here you have will. I use will. As I say, culture fit. Like, how much do they embody the values? How much skill do they have to do the job? People who have high skill and high will or values fit, I would say those are stars. I want to keep reinforcing and publicly recognizing those people. Promote them, shout them out, put them in front of people, give them more opportunity. People that have neither of those things you want to kick out. If somebody has low values and low skill, why are they in your company? I don't know. Because you're lazy and don't want to get them out or you're passive aggressive. You got to get them out, though. Like, that's terrible. Signaling to these people. These people hate being in a company with these people. They'll leave if you don't get these ones out. Here you have people who have high values fit, but low skill. That's good. That's not a bad thing. Coach those people up. In fact, use the stars to coach the. Develop the people that need developing. Now, we can't have an entire team of them, but we can have a good ratio between these two. And on this end, you have low values but high skill. Those are the people that usually you're going to have to get out to. Now you want to coach them. Hey, you're not adhering to the culture. This is a risk. But a lot of those people, it's harder to coach culture than skill. And so usually you have to end up coaching these people out of the business as well. Now, these systems make your culture real. And culture is what allows your business to run without you. Because culture is what people do when you're not in the room. System two is removing the founder bottleneck. Your business isn't stuck because of your team, your market, your strategy is probably stuck because of you. There are so many things in our life where we become the bottleneck and we don't even know because it's almost like a fish doesn't know it's in water because it's just There, it's just how it is. And I remember the first time that I realized I was the bottleneck is when I was running my first company gym launch, and it was 2019. There were so many things coming my way, decisions. And I realized that I didn't even have enough mental capacity during the day to make those decisions. I remember I came back and I was at an event, had to go run my quarterly the next day, and I came home to like 17 Asana tasks. And they were all asking me to make decisions. And what I realized is like, I am now the bottleneck. People are waiting on me to make decisions. They cannot move forward until I do something. And think about like this. The bottleneck is often at the top, not the bottom. So a lot of people, when they see problems in their company, they go to the bottom. They're like, what's going on over here? Usually problems are upstream. So most of the time it's you. And this is like the hardest thing to see. But your company is really a mirror of you. Every business is capped at the founder's personal capacity. I see across every portfolio. Company is now a talent problem or an industry problem, is truly a founder problem. For example, I have this founder. He was super bright guy, but he was stuck at 10 million for almost like four years. And he kept asking me, what do I need to change? Do I need to change the team, the strategy, the structure? One day I just couldn't take anymore because I was like, this is, you know, four years ago. I was a little nicer than I am now. Now I'll just get straight to the chase. But I was like, no, you need to change. You are still operating like you have a $5 million business. And I remember he looked at me and he was like, okay, so who do I need to become? And that is the question that most founders never ask. They are so busy trying to scale the business, trying to fix the business, trying to fix the people. Fix, fix, fix, fix. They don't look at the hardest thing, which is to look at themselves. They don't ask the question that actually matters, which is, who do I need to be to grow a million dollar $10 million, $30 million, $50 million, $100 million billion dollar company. This is the pattern. You hit a million because you learn how to sell. You hit 3 million because you can delegate a little bit. You hit 10 million because you learn how to actually hire people who can do stuff. And. And then usually around 10 million things, if they aren't growing, start to become way More a leadership issue rather than a product or market issue, because you don't learn how to lead people and how to be a great leader. And so these traits that made you very successful early on, they're the exact same traits that hold you back later or they become useless. And so at some point, those things work against you, like, very common, Moving fast, it actually becomes too chaotic, and people don't want to work for you because they're like, dude, we have a giant company. Like, I have to retrain the team, redo the systems, get a new CRM. Like, we can't just pivot tomorrow. And at some point, other things, like having all the answers, it actually prevents your team from thinking and feeling competent. So in the beginning, when you hire people that aren't super smart and you tell them what to do, they're like, okay, thank you. I didn't know what to do. When you hire smart people and you tell them what to do, it's like, what the. I thought you hired me to. For me to be smart and use my brain. There are so many times when this happens. I remember specifically when I brought on my first executive assistant, and I was like, listen, I don't always know what to tell you what to do, but I'm gonna do my best job to be your boss. Cause I'd never had an executive assistant before. And I remember it got to some point where I could see that she was becoming more capable and able to do more. And I kept still doing certain things that I had done for myself in the past. Cause I'd never had an executive system before. How am I supposed to know? And I remember one day where, you know, emails came through and answered the emails and made these decisions. And I remember she messaged me, she said, why'd you answer your email? And I said, because I did. And then she was like, why are you doing my job? And I was like, oh. So I started to realize, wow, I need to do things differently. Like, I need to be able to let go. And I think in the beginning, it's all about gaining control. And as you grow, it's all about letting go, which is just like, complete opposite of the kind of person that you become. If you want to build a business that runs itself, you have to start with the question, where am I the bottleneck? And then you have to build yourself into the person that has the traits, has self control, the skill, deploys, the competitive greatness to make that leadership sustainable and scalable. That is the hardest part. The business cannot outgrow you. If you can fix yourself, everything else is going to start working. It sounds really hard, but if you think about it, observable skills. What are the observables that you need to acquire to become the person that can do this thing? Watch other people who are at the level you need to be at. How do they act? Success leaves clues. A lot of them act in different ways. You don't see a ton of very frenetic billionaires. Why? Because at that level, that kind of activity, it actually works against you, not for you.