Podcast Summary

The Game w/ Alex Hormozi

Episode 12: Payback Period PPD | $100M Lost Chapters Audiobook
Date: November 14, 2025
Host: Alex Hormozi

Episode Overview

In this episode, Alex Hormozi dives into a crucial concept for business growth: the Payback Period (PPD). Using the accessible language and his trademark practical examples—including a hypothetical lemonade stand—Alex unpacks how understanding your payback period enables you to finance growth using customer revenue rather than outside investment. The episode explores how refining your CAC (Customer Acquisition Cost) and optimizing payback makes rapid, capital-efficient scaling possible for any business, big or small.

Key Discussion Points & Insights

1. Defining Payback Period (PPD)

• What is Payback Period?
  • The amount of time it takes to break even on the amount spent to acquire a new customer.
  • Fast payback is what makes businesses attractive, as they turn money much faster than typical stock market investments.
• Why It Matters
  • Shorter payback periods allow rapid reinvestment and acceleration of growth.

"Payback period equals the time it takes to break even on what you spent to get a new customer."
— Alex Hormozi [00:13]

2. Lemonade Stand Example: Bringing Concepts to Life

• Hypothetical Numbers:
  • Charge $10/month; avg. customer stays 5 months ($50 lifetime revenue).
  • 80% gross profit margin ($8/month gross profit).
  • $40 lifetime gross profit per customer.
• Making It Relatable
  • Alex repeatedly notes that while numbers are simple, the principles apply to any business—just add or remove zeros.

3. Understanding Business Growth Potential

• Beyond Gross Profit:
  • Knowing Lifetime Gross Profit alone isn’t enough.
  • Must consider Customer Acquisition Cost (CAC) and Payback Period.
• Real Example:
  • If you spend $100 to get a customer who pays $50/month, and you get $50 back in the first month and another $50 in the second, your payback period is 31 days.
• How CAC is Calculated:
  • Add up all marketing, sales, and creative costs, then divide by the number of new customers.

4. Speed of Payback Compounds Growth

• Doubling Example:
  • Doubling your money every month gives you an 8x return in three months, whereas doubling every three months gives you only 2x.
• Practical Takeaway:
  • Shortening your payback period is a force multiplier for growth.

"Doubling our money in one month versus three months may not seem like that big of a difference, but it is ... That is why payback period is so important. My most prized metric: 30 day cash."
— Alex Hormozi [06:02]

5. The Power of '30 Day Cash'

• Definition:
  • 30 day cash is the gross profit generated from a new customer within the first 30 days.
• Why 30 Days?
  • Typically, you can get 30 days interest-free via credit (e.g., credit cards), enabling you to repeatedly reinvest with little personal cash.
• Customer-Financed Acquisition:
  • When 30 day cash exceeds CAC, you can keep acquiring customers "for free," repaying credit with the gross profit before interest accrues.

"If I can increase my 30 day cash above my CAC then it means I can get free customers using other people's money."
— Alex Hormozi [09:51]

6. Step-by-Step Cash Flow Example

Normal Lemonade Business:

• CAC: $20, Payback Period: 2 months, $8 gross profit/month
• Takes 3+ months to be cash positive per customer

Wonderful Lemonade Business:

• CAC: $1, Payback Period: 7 days, $8 gross profit/week
• Profits compound quickly, reinvesting gross profit into rapid, exponential customer acquisition

"Since our CAC is so low and our payback period is so fast, we could pay back our original $1 CAC almost immediately. Then we could reuse the $7 of gross profit left from the first transaction to go get ourselves seven more customers."
— Alex Hormozi [28:20]

7. Crowdfunding Your Growth with Customers ("Other People's Money")

• Start with minimal investment (just your first CAC).
• Use quickly-generated gross profit to acquire more customers.
• No need for outside capital; the business finances its own growth.

"We crowdfunded the growth of our business using customers and a clever acquisition system. I've been playing with the house's money for almost a decade now, and by the end of this book, you can too."
— Alex Hormozi [36:15]

Notable Quotes & Memorable Moments

• On Risk and Time:
  "If you had unlimited time to pay back a debt, your likelihood of repayment assuming ethical behavior approaches 100%. The shorter the window, the less likely."
  — Alex Hormozi [07:39]
• On Optimization:
  "How much money you make, how fast you make it, and what it costs you to make it all factor into your ability to create a wonderful business."
  — Alex Hormozi [22:55]
• Getting Meta:
  "Day 60. We decide to write a book on acquisition. Joking."
  — Alex Hormozi [33:32]

Key Timestamps

• 00:00–03:00 – Introduction to Payback Period; basic business returns vs. stock market
• 03:01–08:30 – Setting up the Lemonade Stand model; defining margins, LTV, and CAC
• 08:31–12:00 – Calculating CAC, and why 30 Day Cash is the key for small businesses
• 12:01–19:00 – Day-by-day breakdown of customer acquisition and cash recoup
• 19:01–25:00 – The 'Normal' Lemonade Business: slow cash recovery
• 25:01–36:00 – The 'Wonderful' Lemonade Business: fast reinvestment and explosive growth
• 36:01–End – Summing up: scaling with customer cash and the "house's money"

Conclusion & Takeaways

Alex Hormozi’s episode demystifies an advanced growth concept—showing how mastering your payback period and understanding the interplay of CAC and gross profit turns slow, risky scaling into a fast, nearly self-financing growth machine. He brings these principles to life through entertaining, easy-to-follow math and hypothetical scenarios, urging listeners to “find a clever way to get your customers to pay for your growth.”

If you’re building or scaling a business, this episode offers a masterclass in customer-financed growth.