← The Game with Alex Hormozi
The Game with Alex Hormozi
How I Made Millions Without Being the Best - Part 1 (The Iced Coffee Hour Reshare) | Ep 901
01:20:22
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- [00:02]
Alex Hormozi
I think a huge amount of the delay that happens when people are starting out is the amount of time it takes for them to realize there is no easy way. So they spend a huge amount of time, they figure out what the. What how to do it, and then they spend a really long time trying to figure out if there's an easier way. And then they give up trying to find an easier way. And then they just start the hard way. Because the hard way is the only way.
- [00:23]
Graham Stephan
Alex, thank you so much for coming on the Iced Coffee Hour. Really appreciate it.
- [00:27]
Alex Hormozi
Thanks so much for having me.
- [00:28]
Graham Stephan
I've been a huge fan of your Twitter lately. It has been on fire. You seem to be tweeting all the time. Really insightful stuff. Recently you tweeted that it has never been easier to be successful. Why do so many people feel like it's not?
- [00:41]
Alex Hormozi
I think it's just never been easier to be distracted. So it's like, it's like the bar has never been lower, but the bar is even lower to. To not do it. And I think people have never been more comfortable than they are today. And so it's like Netflix and chilling and like Uber and doordash and all of that stuff has just made everything like, comfort kind of comfort is like, we're like, comfort maxing right now. And so, like, all of these other tools, like, you know, these software platforms and AI and all this stuff is like, lowered the bar for people to make content or start businesses or advertise or whatever they want to do. But it's just like, it's so hard to take a risk when you could literally just do nothing. And the way that, like, society is now, it's like, you. You're not going to go homeless and you're not going to starve. So, like, which I see as the most exciting part because you could just. You could take a huge shot, and the worst case scenario is like, you're not going to starve and you're going to have shelter.
- [01:33]
Graham Stephan
So do you think it's a blessing or a curse?
- [01:35]
Alex Hormozi
I would say it's a blessing. I mean, at the end of the day, I think technology is always going to move things forward. So that's like, it's never been easier than it is today and 20 years ago, it was never easier than it was then up to that point. So it's like, it'll always get easier for people to start businesses, which I think is a good thing in terms.
- [01:49]
Graham Stephan
Of optimizing for comfort. What is the downside of purely just being Someone at home scrolling all the time. How big is it for them not to reach their potential?
- [02:02]
Alex Hormozi
I think it's a. It's a. It's a them thing. So I don't see it as a problem at all. I mean, I think it's only a problem if you're making some sort of demand of the universe that your life must be a certain way. And so I think that's where. And it's kind of all the shoulds. Like, I should. Like, my life should have meaning. My life should have this impact. My life should. All these things. If you believe that, then, yeah, it'll be an issue because it's a con. Like, I believe in conditional shoulds, not absolute shoulds. So, like, if this. Then you shouldn't probably scroll on your phone as much if you want to get in shape. Like, maybe don't eat more than you burn. Like, but don't eat more than you burn is a general statement. It was like, do whatever you want. That's. That's your. It's your life. I just have the issue when people want something different than the way they act.
- [02:41]
Layla Hormozi
Do you think it's overall lowered the bar for excellence? Like, a lot of people can kind of just become successful by happenstance or by luck now?
- [02:49]
Alex Hormozi
I think there are definitely people who get lucky. Repeat and serial entrepreneurs. Less so. I've only really encountered maybe like a couple people in my career from the entrepreneur side that I'm like, this guy was just lucky. I think there are elements of luck, but it's like luck becomes a, A. Like it becomes gas more than the thing that, like, built the car. It's like they were going to be successful. They just got way more successful because they had, like, kind of multiple things kind of aligned.
- [03:11]
Graham Stephan
Can you give us some examples of luck like that?
- [03:13]
Alex Hormozi
Yeah, sure. Like, if you were. If you were an Amazon in 2013, 14, 15, and you put up a product, you could just crush. Like, you didn't have to, like, really know anything. There was just all this demand that was there. If you were running Facebook ads in 2011, it was just like, not hard to crush. If you. If you were doing SEO in like, 2008 and seven with, like, you could literally just put like, coffee in, like, white, white font on a white background. So the whole background of a website just said coffee. But, like, if you looked at the site, you wouldn't see it. But if you, like, took a cursor, you could just see it just says coffee. Because the algorithms weren't like that advance and so you could just rank and get all of Google's traffic. So there was just like a lot of the things that were lucky were just like, typically, I'll put it differently, luck will come from a supply demand discrepancy within a window of time. And so where there's a huge amount of demand and a small amount of supply, and then you happen to be one of those people who gets in on that. Now, that being said, part of that is like recognizing opportunity. And so, like, to what degree is that luck? You know, I think the question of whether it's luck or not is whether you can repeat it.
- [04:19]
Graham Stephan
So I'm curious where those opportunities are today, because it seems like every few years in hindsight, you could look back and be like, that was the best time to do that.
- [04:26]
Alex Hormozi
Yeah.
- [04:27]
Graham Stephan
What are. What's going on today that people aren't recognizing the potential in?
- [04:30]
Alex Hormozi
I think there's micro and macro opportunities. So, like, from the macro perspective, I think we've had like three big ones. So at least in my lifetime. So it's like we've had Internet, which is like kind of opportunity number one. Opportunity number two is kind of like web 2.0, which is social, and then opportunity three is AI. Yeah, so there's the three macro ones. Now underneath of that, it's kind of like, well, Facebook ads was kind of like a. Like an opportunity kind of like within that. And then like Google search was an opportunity. Like, all of those are gonna like, sub kind of like micro opportunities. Like, I think like TikTok shop right now, a lot of people are kind of kind of like in The Amazon of 2013, 14, like, I know a lot of people who are. Who've really never done much, and then just like within 60, 90 days are doing a million a month. And it's just because there's a huge supply demand discrepancy between the amount of influencers that are there that want to make money and the amount of products to sell. And they will just continue to populate it until eventually it becomes a stabilized market. But it's like when those, when those market, those land grabs occur, that's when there's typically outsized returns to be had.
- [05:29]
Layla Hormozi
What do you think people need to be able to capitalize on these opportunities?
- [05:32]
Alex Hormozi
I think. I think you have to have skills.
- [05:37]
Graham Stephan
Straight up.
- [05:37]
Alex Hormozi
Yeah. Like, you just have to have skills. Like, I remember it was really funny. Like our first ever conversation that we had, I was like, man, if I had your amount of following, I was like, I'd be a billionaire. And I saw that as a supply demand, like, and even so, like when you asked just a few minutes ago, like, you know, what's the, what things are there now? Like, I still kind of see social media still thinks there. I still think that opportunity exists for people if you're good. But maybe it's less so than when Instagram came out in 20, whatever year it was when you could just like just post pictures of you on the sunset and have like a million followers and people would just buy because you just had this insane reach. But I saw it as a, as a, as a. The fact that we can still, the fact that we could still advertise ourselves and get paid to do it is still mind boggling to me that, that like opportunity exists. Like you can build a brand and get paid to do it, which I think is insane.
- [06:28]
Layla Hormozi
Okay, so now it's arguable that you have his brand, if not even a bigger brand. Are you, did you accomplish that goal?
- [06:36]
Alex Hormozi
I, I won't be public about what our stuff is valued at, but I think that we've done well.
- [06:41]
Graham Stephan
Yes.
- [06:41]
Alex Hormozi
Yeah, the classic answer.
- [06:43]
Layla Hormozi
Yeah, that makes, that makes a lot of sense.
- [06:46]
Alex Hormozi
Yeah. I don't want to make claims around things. Market, market values for enterprise value for illiquid assets like private equity investments and you know, companies that are owned really depends only on the time that somebody's going to buy it. I have had some of the biggest banks that you've heard of, Blackstone, things like that, out to this headquarters to see what we have going on. And they've been like, this is insane.
- [07:06]
Graham Stephan
What do they look for when like Blackstone shows up?
- [07:09]
Alex Hormozi
So what they want is what every investor wants, which is what, you know, I, I tried to set out to do in the very beginning, which was they want proprietary deal flow. So they want people who want to specifically do deals with one person. So it's not like they're shopping. They're like, I want to do a deal with you. And ideally you have some sort of captive market or niche. And so for acquisition.com, we are kind of low mid market in terms of what, what companies or businesses are kind of attracted to my stuff. And so it's typically the business is doing like between one and a hundred million dollars a year. And so, and this was kind of the thesis of acquisition in the beginning was like, okay, everything sub a million. There's tons of people who, you know, help people get their first customer a few hundred thousand dollars in revenue, first five clients, things like that. Like there's tons of kind of like the coaching, consulting, whatever, you know, or coaching course world is there. Then if you go like a hundred million and up, then you've got like McKinsey, Bain, BCG, Deloitte, PwC, EY, like a lot of these Gartner, like all these kinds of consulting firms that deal with like kind of above there. There's just not a lot like the 1 to 100 million range. And what's interesting about that particular range is that that's where a huge amount of like alpha is created in terms of investing returns. And so like for example, if you have a business, this is probably to lose half the, half the audience. But if you have a, if you have a business that's doing, call it like $3 million in EBITDA or profit, right. Per year and you can make a handful of tweaks and get it from 3 to 8 million. The $3 million EBITDA business might be worth $12 million. Maybe the $8 million EBITDA business can probably get somewhere between like 80 and $100 million in a sale. And so it's like you have a huge multiplier effect that increases once you get above about $5 million in profit. And especially as you approach Ted, where you now become a target for institutional grade investors because they can write, they have to put to work hundreds of millions of dollars. And so they basically become the customer of buying the product, which is the business that you created. And so our thesis of acquisition.com was like, well, we want to get people right before they're at that, that level, buy at really small prices, make the changes in the business and then capture this huge upside.
- [09:11]
Graham Stephan
So I'm always curious why they would sell in the first place. Like 10x revenue seems pretty good, but what does a business get out of that if they're, if they're hoping it'll, you know, it'll take 10 years to, to maybe make their money back. Or why would a business sell? Yeah, or why would a business sell if they could scale up even further from that and sell for way more?
- [09:35]
Alex Hormozi
There's a, there's. Okay, there's so many reasons, but so one just for the audience. So 8 million in EBITDA would be bottom line rather than top line for the transport for like a lawn care business, something like that. But with regards to why would an owner sell? A couple reasons. Well, a lot of reasons, but there's the common ones, which is like divorce that sometimes happens. They get forced to sell, they have dissolution of partnerships, the partners aren't getting along. That happens a lot. Beyond that, you have a very common one which is just chips off the table. They're like, you know, I've been reinvesting all the profits in the business, or, you know, Maybe it makes $8 million in profit, but I put, you know, 4 million back in every year to. To continue to, like, buy more lawnmowers or whatever else you need to do, right? And so maybe over that period of time, maybe they have like, I don't know, $5 million or $10 million saved up after taxes. But when you're looking at an $80 million check with 20% capital gains, you're looking at whatever $64 million post tax. It's like, it's a 6 1/2x increase in your net worth. And you know that, like, you're done, done. And so you're like, something could happen. Because the thing is, every business owner. So one of the interesting things about being an entrepreneur business owner is like, you always know where all the bodies are buried in your own business. And so you always see all the negatives. Because also, entrepreneurship is a forcing function for pain. Because all. And Elon talks about this. So this isn't, you know, my original idea, but basically, you get all the worst problems that no one else wants to solve. Because, like, if something's going well, then you're not needed. It's going well. And if somebody else wants to solve it and there's something wrong, well, somebody else will solve it. So it's only the worst problems that only you can solve or that no one else wants to solve that you get. And that's pretty much like what your day is every day. And so you always almost in some ways have to be this super optimist because you deal with nothing but negative data all day. And at some point, some people just get tired of doing that. And so there's a de risking component. Some people just like one out. And a lot of people, it's like, hey, if I had $50 million, I had $10 million, whatever the number is. They're like, I set out to set my family up, and I want to, you know, chill and be on the beach. Now, we all know that they just get bored within three months, but sometimes you have to express that for yourself.
- [11:25]
Graham Stephan
So where do most businesses get stuck?
- [11:28]
Alex Hormozi
I think businesses get stuck at all different levels because all you'd have to do is just look at the revenue breakdown. It's like 95% of businesses are less than a million dollars a year. So A lot of businesses just like barely even get to the million dollar in revenue point above that. It's I think it's 1 in 250. So it's 0.4% get to $10 million a year.
- [11:46]
Graham Stephan
So is that a market problem or an problem?
- [11:49]
Alex Hormozi
I think it's almost always an operator problem. Like unless you like in people will name these like really random weird businesses where someone like tries to come up with something entirely new. But I see there's kind of like three kind of types of big type buckets of risk in terms of picking an opportunity. You've got like a product market fit risk, which is I'm going to come up with something that no one's ever done before and see if people want it. That's like an Uber. Like we've like, let's see if strangers will pick up strangers in taxis. Like maybe it sounds like it may sound crazy at the time. Right. So that's a product market fit risk issue. Those are in my opinion extremely risky. The second category are technical risk issues. So like if I just said, hey, I can come up with an AI salesperson that can take all your phone calls for you, I don't need to guess whether people are going to want that. They're for sure going to want it. The problem is how likely you can actually do it. It's the difficulty of actually solving the problem. Right. The Uber thing, it's like, well, there's some techno risk there too, but will people even want this versus they want it. I don't know if I can deliver it. And then the third category is what I would say is the, the vast majority of business owners, which is just execution risk. There's other long care businesses that do $100 million a year. The path is really literally in front of me. The only risk is whether I'm skilled enough to do it. That's it.
- [12:58]
Layla Hormozi
So what are the biggest operating obstacles you've personally ran into trying to scale acquisition.com into a billion dollar business? And how did you overcome it?
- [13:05]
Alex Hormozi
Yeah, well, I'll say this suffering is constant. It's just that the nature of the suffering changes. And so it's like the hard is always hard and it just. And I think what makes it more difficult as, as the business continues to develop is that you end up trading things that you didn't expect you'd have to trade. And so like in a lot of people's minds it's like, oh, I can push really hard. It's like it stops being about how hard you can push at a certain point. Sometimes it's about how long you can wait. Sometimes it's about how focused you can stay. Sometimes it's about what kind of person you're able to attract to the business. Sometimes it's just the quality of your decisions. Right? Well, a lot of times the quality of your decisions. And those are just kind of like micro examples. But, like, you know, in the very beginning, you have to overcome a lot of environmental issues. It's like you have your friends and family who are telling you that it's not going to work, whatever, and they think your idea is stupid. And so you have to overcome that. And then maybe you have to overcome your own limiting beliefs. So you have to overcome that. And then you start doing things and you start advertising and letting people know that you have stuff and selling them on your services, your product. And then quickly, you have to learn, like, the first level of management. So it's like, okay, well, now it's not me, it's me and maybe a couple of, you know, virtual assistants. And then you're like, okay, this is too much for part timers. I need some full timers. So you have to level up to basically being a manager, which you haven't done before. And then once you're a manager, it's like, okay, well, I'm managing this half. I have to get somebody else. And you get your first manager, and then all of a sudden, you have multiple managers. Now you're a leader, right? And then you have to attract leaders, which is a totally different skill because you have to lead leaders. And so at every level, I see entrepreneurship as a forcing function for pain, but also a forcing function for progress in that you will stay in pain until you progress, and then you will find new pain.
- [14:42]
Graham Stephan
So what's something that you've tweeted or said that people clearly agree with but just don't implement?
- [14:49]
Alex Hormozi
I feel like we could pull it up. Where do you want to start?
- [14:52]
Layla Hormozi
You think Twitter is like a high ROI activity for you?
- [14:55]
Alex Hormozi
Twitter? It's like, I can't help myself.
- [14:57]
Layla Hormozi
You just can't.
- [14:58]
Alex Hormozi
That's.
- [14:58]
Layla Hormozi
That's one of your indulgences?
- [14:59]
Alex Hormozi
Yeah. Like, let's see. Let's see. What. What. What did people not understand about this? Suck at something. Work for free. Lots of times suck less. Wait until people ask for free work and you can't take them on. Now you have more demand than you have supply. Begin to charge money. Boot out the free clients for paid clients, and then offer to keep working with those clients. For money. Congrats. You have a business, so I will.
- [15:20]
Graham Stephan
I agree with that. Now. Now, here's a counterpoint to that. It is hard to take people from free.
- [15:25]
Alex Hormozi
Yeah.
- [15:25]
Graham Stephan
To paying for a service.
- [15:27]
Alex Hormozi
Totally.
- [15:28]
Graham Stephan
What is your way around that?
- [15:29]
Alex Hormozi
Well, it depends. So it depends on how. How high value the service is, number one. And number two is we start with free because you need to get reps. Cause you probably suck. And so it's like you're really getting free feedback from people that otherwise, like, shouldn't because you will be terrible. But the transitioning people from free to paid really comes down to just how good you are. And if you are like. So, for example, if I. If I was redoing all your YouTube thumbnails and I said I would do it for free now at your level. So everybody's listening. Don't immediately DM Graham, because he already has something. Right. But, like, the thing is, just go for somebody who's like one tenth of grand size, who can't really afford it, give that guy the thumbnails. And if your thumbnails beat his thumbnails, he will. If you're like, okay, well, I have now all these people who are paying me, so you can pay me what they're paying me, or I'm just going to work with them. At that point, he'll either pay if he's making any money on his channel or he won't. But, like, there's a. There's real value that's being created there. But the idea is you want to get your roster filled so that at that point. And I think part of this, I give this as advice because a lot of people in the beginning don't believe they can charge anything. And so it's like, fine, don't charge. Get better. And then once you literally can't take people on, it's like, dude, I can't take you on. And then they're like, well, what would it take? And you're like, oh, money, money. I could do that. I could do it for money. And then now it's like, you actually can help someone break through the belief of like, yeah, you can ask. You can ask for money for stuff.
- [16:44]
Graham Stephan
Do you think there's something to look out for for people who just want something for free and will never pay for it?
- [16:48]
Alex Hormozi
Well, I'll say this, my big caveat. For free, if I'm going to give it away is I have to give. I'll give something away for free. I'll give tons. I'll give stuff away for Free. That cost me money if it's to a qualified prospect. So if I'm giving, you know, if I'm trying to get into enterprise IT services, right. I'm not going to start with a local I, you know, dry cleaning business who can't afford what I would like to eventually charge. So I want somebody who has, you know, band, which is budget authority need timing. So do they have the money to spend? Do they have the authority to make the decision? Do they have the need for this specific thing? Is now a good time? If I can get those four things, I'll give that person free stuff. Like if it's like, hey, I'm only doing back massages for billionaires, fine. Then like you gotta be a billionaire and I'll give it to you for free. Eventually I'll charge. But no, the homeless guy on the, on the corner of the street will also take free massages, but he'll never be able to pay. And so it's not that we want to give free to anyone, it's just that we want to get the most qualified prospects, get good feedback from those customers which they, we should treat them like customers so that we can then eventually charge people just like them based on the feedback that we got. Otherwise we'd be building a product for somebody who's the wrong person.
- [17:48]
Graham Stephan
How do you make your offer unbeatable then where it's unfair?
- [17:52]
Alex Hormozi
Yes. If people feel stupid saying no. So I think so a couple things. So there's, there's four elements of value as I've kind of defined it in the book, the a hundred million dollar offers book. So you have the dream outcome, right, which is like, what is, what am I actually going to give this person? Every product is a dream outcome. Every service is a dream outcome, which is like, what's the thing that they want to have happen? Okay, cool. So that's going to be our baseline in terms of value. Like if I'm going to help somebody make an extra million dollars a year or $10 million a year, that's going to be a baseline, but there's still going to be a discount that's applied to that. And there's basically three factors that apply to that discount. Number one is how fast is it going to happen? Number two is how much effort is it going to take on behalf of the customer. And then number three is how likely is it to occur. And so fundamentally those are the elements of value that are either multipliers or detractors of what you can ultimately charge a customer for whatever it is that you sell. So how do I make it fast, how to make it easy, and how to make it risk free? And so within each of those components, like part of the way of making it risk free to them is If I have 10,000 other people I've done this for, it's much less risky. Right? That's proof. Right. You could also do that with covenants and terms. You can either do it based on performance that shifts more of the risk to you. You could also just give guarantees and satisfaction. You could get guarantees that are conditional based on things that they do. Those are all elements of things that you can do to decrease risk, which you can reverse into price. And so said differently, I could say, hey, I'll charge you $5,000 to do this thing. And if someone says, well, no, it's like, okay, well, I'll do it for $3,000, but I won't give you a satisfaction guarantee. And then what you'll find happen is like, oh, well, I'll do it for 5,000 with the guarantee. So people will resell themselves on a higher price if you take away a component that's valuable. So that's, that's the risk. 1. From a speed perspective, I would say that the more I've studied, like human behavior, sales, persuasion, marketing, the more I really lean into speed. Like, if you want to enter any new marketplace, just look at what everyone else is doing and see if you can do it in half the time. And there's just so much value in speed. Like, humans are so immediate, reward focused. Like, almost every business can offer a speed version. So it's like you're a YouTube thumbnail agency and you say, cool, I'll get you thumbnails in a week. Normally it's like, oh, if you want for 50% more, I'll get them to you in 24 hours. And for 300%, I'll get to them to you in the next 60 minutes. Same cost to you. It's the same work, but you just give someone priority access and it's all margin. So it's like you can always play with speed as another variable of value. And then the third element has two pieces to it, which is ease. Like, how does it have two elements? Well, one is, what are the bad things that I hate doing that I get to not do as a result of buying? Right. All the stuff I don't like, you're going to take away. Great. But I also want to make sure that I don't prevent someone from doing the things they do enjoy Doing right. And so I give a classic example of, like, if you sign up at a gym, all of a sudden you have to start doing things you don't want to do. But you also have to stop drinking margaritas, you have to stop Taco Tuesday, you have to stop having cupcakes, and stop having your McFlurries. So it's like you have to give up stuff you like and you have to do stuff you hate, which is why it's such a hard sale.
- [20:38]
Layla Hormozi
So do you study psychology in order to be a more effective salesperson?
- [20:42]
Alex Hormozi
I wouldn't say I study psychology. I would say I just look at data of business. Because I, the, the, the one advantage that I have is I have a, a huge amount of data that I sit on top of between the companies that we invest in, the companies that come use our services on the advisory division, and the companies that, well, the companies we own are the companies we invest in. And so it's like I get to see a lot of different data. And so when we make changes into a sales process or a change in terms of an offer, I could see the improvements in conversion rates. And so that's where a lot of my, like, theses have come from.
- [21:12]
Layla Hormozi
Are you ever surprised by the data or is most of it kind of just confirming your intuition?
- [21:16]
Alex Hormozi
All the time. I get surprised all the time.
- [21:18]
Layla Hormozi
What's been like, one of the biggest surprises about this data?
- [21:21]
Alex Hormozi
Yeah, we had a, we had a company that sells B2B services, and I had this guess that based on, basically we could collect the data of the size of the revenue of the companies that were basically leads that were coming in the funnel. And so I wanted to shut off the bottom third of the leads because they were the lowest revenue leads, and just have the team focus on the top 2/3. And so I was like, hey, just pull, pull the sales data. Cause I'm going to bet that all the conversions happening on the top end and the conversion rate was actually evenly spread. And so I was like, huh, like, almost to the percentage point. I was like, that is not what I would have expected. And again, that could be unique to that specific business. I would still posit that in general, more qualified customers buy on average more and spend more money just in this particular business. And maybe that means that that business mispriced, which would be a different problem. But given that data, I was like, huh, that's interesting. We have people who are 10 times the size buying at the same rate as people who are one tenth the size wild. And it's way more of a stretch for these people than it is for these people. So maybe we're missing our men.
- [22:17]
Graham Stephan
Do you ever find out why? Have you dug into that and why the bottom?
- [22:21]
Alex Hormozi
I, It's a, it's a great question because like, I, I try. It's really hard to say why, because like, I think a lot of people like to use because, because it's very compelling. But I just try and stick with like, this is the data that I have within this given context and in this situation it worked. And I know there are principles like things that are fast will sell better than things that are slow. Things that are easy will sell better than things that are hard. Things that are risk free will sell better than things that are not risky. Like, I can take that to the bank. So like, I try and think, like, what are the few principles that will always be true and then the rest is application.
- [22:52]
Graham Stephan
What's something that you track within a business that most people don't even look at?
- [22:57]
Alex Hormozi
I would say the, I'd say I'll give you a handful of metrics that I track so you'll be like, I didn't need that many. So if I had to solve for two things, it would be gross margin and revenue retention. So fundamentally, like, what do we make per sale in terms of like, is there a lot of margin that's there? If so, like, that's an, that's more attractive to me. And then secondarily, how likely is that this person's gonna continue to buy from us next year and the year after that. So if I have a business that I have hypothetically, a hundred percent gross margins, a hundred percent revenue retention, that's an amazing business. They literally just print money and they never lose it. Like, that's cool. That's a very attractive business. So if I only knew those two things, the only other thing I'd wanna know is what's my cost to a car customer versus my lifetime gross profit per customer? So how much money does it cost me to get somebody and then how much do they pay me over time? And so basically that fundamental. The LTV to CAC ratio or LTGP to CAC ratio, I know fancy acronyms, but that ratio between those two numbers is the fundamental economic arbitrage that exists within businesses. And fundamentally that's why private businesses will get the highest returns in terms of returns on capital. Because in, in, in, in so few places, like if you were to put it in the S and P factor and those companies are already at scale and it's harder for them to grow, you know, at huge, huge percentages. Maybe let's say you put a thousand dollars in and you get 10%. So you're 1100 bucks at the end of the year. In a business, you could put a thousand dollars into paid ads and make $30,000 in gross profit in 24 hours. Like, that happens all the time. And so it's like, that's how somebody can go from $0 to a billionaire in four years because the returns on capital are absurd. And this is also what I think one of the big opportunities of. Of social media is, is that like, okay, why is social media so powerful? It's because it drives CAC to zero.
- [24:34]
Graham Stephan
Do you trust customer satisfaction?
- [24:36]
Alex Hormozi
I take it as I'll. I'll take surveys. So we survey across all the companies that we have. Because I like to have leading indicators in terms of, like, what's going on. I like, I care more about the reason whys that they give. It's kind of like the comment section. Like, I care more about that, but I care far more about renewal rates. So if we're getting bad scores but everyone's buying, then it'd be like, okay, well, we found something that people need but hate that they have to buy from us, and they'll be very quick to switch. But as of right now, there's no one else who can do it either better, faster, or cheaper than we can. But I would. Renewal rate, like, how you spend your money is what I care the most about. Sure. I'd say what you think. It's kind of like, what do you want? And people are like, I want faster horses versus the car. So it's like, I care about that a little bit, but I care far more about what the data suggests about personal behavior.
- [25:17]
Graham Stephan
How often do you get a no? And it's actually a no.
- [25:21]
Alex Hormozi
What do you mean?
- [25:22]
Graham Stephan
How many. When you make an offer to somebody and they say, no, I'm not interested, how often is that able to be.
- [25:28]
Alex Hormozi
Turned around across what setting is that? In a sales setting?
- [25:31]
Graham Stephan
In a sales setting, I think it.
- [25:33]
Alex Hormozi
Depends on the reason the person said no. So it. That would. That would be like. It would be a discovery question after that. So it'd be like, well, what are the variables you're using to make the decision? And sometimes, like, I think there's a. There's a big difference between a no based on value or no based on details or no based on authority or no based on timing. Like just kind of said budget authority and timing. These are the Kind of the components. Well, how do we make sure that we can. Can I control, Can I. Can I overcome some of these issues now? If someone's like, love what you have. I don't buy coats because I live in Panama. I'm like, okay, there's no need. Like, I could try and sell whatever. Like, hey, I've got a gym membership. Why aren't you signing up? It's like, well, you're in Iowa and I live in Florida. Like, like, I'm never going to get there. Like, so it's like, where. Yeah, it depends on the reason for the.
- [26:16]
Graham Stephan
Now, what if it's a price issue? Where do you draw the line between lowering the price and cheapening the product? Never getting someone who's qualified or keeping the price the same but losing the sale?
- [26:28]
Alex Hormozi
Yeah. So I, I'm a very firm believer in never negotiating with terrorists, including price terrorists. And so if someone wants to look, like if someone says, hey, can you do it for cheaper? You know, we always, we train on saying, like, we can do it for more. And people are like, okay, yeah, I got it. I'll buy at that price. But the price that you quote is the price that you've stick to. Otherwise, every. As soon as you negotiate once, every price you have is negotiable, which sucks as a business. It is a pain in the butt, and I hate it. So. And you want price standardization anyways because you don't want different people getting sold, different prices. People could talk. It's kind of sucks. So my big thing is price and terms. And so if we have this price, if I'm going to change it, then I will also change terms. So if someone's like, hey, I. I would love to buy the $5,000 thing, but I can't afford it. If we've already looped a couple times and said, okay, why can't you afford it? Why. How important is this to you? What would it cost you to. To not do this? You know, quantify as many of these things as possible, and they're still like, I literally just don't have this amount of. This is. Here's my bank account. I have $3,000. I will buy it for $3,000 then. And then it's just like, I can't ethically sell you the same thing as somebody else for $5,000. For $3,000, I can't do it. What I can do is I can remove a component. So let's look at these things that we have here. We have this guarantee. I can remove the guarantee. And I can knock a thousand dollars off. Does that work? Okay. Also, instead of, you know, coming to the gym, you know, three times a week, if you come to the gym twice a week, will that work for you? Great. Well, let's just do that. And you can do one workout at home. So I'll, I'll, I'll want to change the terms of the agreement if I'm going to change price, but I can't. I won't just say, sure, I'll do it for less. I just won't do that.
- [27:56]
Graham Stephan
Why do you think that most people fail? Is it a skill gap, a belief gap, or is it just distraction?
- [28:03]
Alex Hormozi
I think it depends on how we define failure. So for the people who don't start, then it's probably a belief issue. Like, they, they didn't. They failed by never starting. And that's the vast majority of the people. They fail before they start the race. Of the people who do start the race, I think just for. For people, $7 million, almost all. You know what? It's not. I won't even say that it's at all levels. Distraction is a huge one. They start six businesses in the hopes that one of them will take off because they fundamentally don't understand how business works. Like, you only have. You have very constrained resources in terms of time, money, effort, human capital, people, and you have to allocate all of those things to one business to just have a hope that it's going to work. So I think focus is a massive one. So that's kind of equal opposite of distraction. And then in terms of beliefs, the belief is the early days. Distraction kind of is pervasive. Sometimes it's just business model things, which I would just translate up to skill deficiencies. So once someone gets started, there's, there's. I think there's just two buckets. You've got. You've got procedural knowledge and declarative knowledge, which is basically the two types of knowledge that exist, which is knowing how to do something and knowing that something exists or that something's possible. And so this is where people talk about mindset, manifestation, whatever. It's like, fundamentally, it's just like you have to believe that something's possible. And so if you meet somebody who's doing $10 million a year and they're the same age, as you grow in the same hometown, you're like, well, I guess that's possible, right? And all of a sudden it's like, man, my perspective totally changed. Like, my mindset, I manifest it. Who knows? Whatever but like, you fundamentally now believe it can happen. Cool. So then the only delta that you have is how to do it. Right. That's procedural. So I could talk, like we could talk about private equity all day on here and someone could listen to every private equity podcast in the world. You understand that people are doing it, but you don't understand how to do it. And you can understand all the steps, but until you go through it, there's. You won't, you won't know how it works. And then once you do, then you can do it again.
- [29:44]
Graham Stephan
So what's some of the low hanging fruit that people could start implementing today that'll make a long difference. That'll make a big difference long term.
- [29:53]
Alex Hormozi
I think shrinking the time between when you make a decision and when you take action on the decision is probably one of the strongest correlates with like high, high producers.
- [30:03]
Layla Hormozi
You always talk about that. Was there like a specific moment that you kind of had that realization and then ever since you made that decision, you're going to decrease that amount of time that like the business went exponential.
- [30:13]
Alex Hormozi
So two things. So one is if you define a God being as omnipotent, then as they think things, things would exist. And so if someone is ultimately powerful, that means like the moment they think of it, it happens, right? And so it's like, okay, if that's the hypothetical ideal, then everything reversed from that is less and less powerful. And so if I want to be a more potent person or less impotent, then I should shrink the time between when I make a decision and when I act on that decision and try to make it into a reality. So that's number one. The second issue, or when it comes to decision making, is that the vast majority of speed, I think that happens within a business comes down to speed of decision making. Like, there are so many decisions that have to occur every single day that most of the time, and you guys experience this within your own business, it's like, you know, the team says, hey, what do we do with here? And then you're like, okay, let me think about that, or let me give you a couple, like, give me a day or two and I'll come back to you. But one of the good frameworks that I have is just asking myself the question, will I get more information to make this decision? If the answer is no, then make the decision like you're not going to get more information to make it, so you might as well just make it now. And so that the interesting thing about that is like that Speed, though. A lot of times people take, let's say, seven days to make a decision or even a month to make a decision. But if I can make a decision now and then make a second decision two minutes later, make a third decision two minutes later, like, in a very real way, I could. I could operate a thousand times the speed somebody else's. And I think that's fundamentally like, how Elon operates and how he can just get so much stuff done. He also obviously distributes a lot of decision making to people who are intelligent.
- [31:39]
Graham Stephan
How important is intuition when it comes to making a decision that you just feel one thing over the other?
- [31:46]
Alex Hormozi
Well, I think. I think intuition is just like a really, really amorphous word for having a history reinforcing with variables that you can identify or have trouble. Trouble identifying. So it's like, you know, this girl walks in. I've got a bad feeling about her. That's my intuition. Well, you have a history of seeing lots of women walk in. And if you have people or women who looked a certain way or acted, you know, the way they carried themselves, the way they dressed, the way their hair looked, the way they did their makeup, the way they talk, the way they breathe, the way they. All these other variables that you're taking in. If somebody else in the past you had a negative experience with, you would then say, oh, I get bad vibes. Because it's just harder for you to be like, hey, subconscious. What was the variable that you identified that was similar to this other past experience that sucked harder to do? So do I trust intuition? I will definitely pay attention to it. Will I believe that it's some magic power? No, I just think it's just like, there's something that I haven't been able to identify. Maybe if I spend more time thinking about it, I could maybe, you know, like, oh, it wasn't this. It wasn't this. It wasn't that bad. You know, this is what it was.
- [32:44]
Graham Stephan
Now, you've met a lot of people, I'm sure. Do you have a BS meter to tell people? Let me say, do you have a BS meter to tell if people are fake or if they're just maybe a bit of a fraud?
- [32:57]
Alex Hormozi
I don't. I don't know if I have a BS meter. I think that asking questions can help a lot. So, like, if someone just walked in and said, like, I am a this. I'm like, I don't know, maybe, you know, If I ask 10 more questions about that thing, and I know more about that thing than they do, then I would have a better idea. If someone's talking about how to train a sales team and they're like, I know how to do that, I'd be like, okay, well how do you think about this? You know, how do you think about this? And if they gave bad answers, then I'd be like, okay, we don't really know how to train a sales team. And so it depends on my skill level within that domain that someone's supposed to, you know, be good at. But beyond that, I think that people have a lot. I think, I think people have far more. I think people have far more experience deceiving other people than we do protecting against deception. So I think there's always going to be people who are more skilled at deception than people who are better at detecting it. And so I'll say, honestly, I operate from the perspective that I don't know and that I'm probably being deceived and would I still do it anyways within these guardrails? And so I just try and operate that way.
- [34:03]
Graham Stephan
Mine tend to be if someone's doing really posed photos in front of expensive cars, usually it depends on the industry. Bad vibes usually head to toe, designer. Like if they're really. If this is an iced out watch.
- [34:18]
Layla Hormozi
Like it had diamonds on it.
- [34:19]
Graham Stephan
And then, which is fine.
- [34:22]
Layla Hormozi
You have to be in the music industry. I feel like that's, that's gotta be.
- [34:27]
Graham Stephan
Usually that's a red flag. And then also when they describe what they do and you still don't understand how they make their money. There have been some people that just say, oh, I do this and that. I'm like, I don't get it. You explain it and they explain it and I still don't understand. And then it turns out the dude's just like siphoning money from somebody else. And it turned out the whole thing was smoke and mirrors. I'm like, I had a feeling about.
- [34:51]
Alex Hormozi
That guy that I will say, well, it's funny because you say that because like, then it gets into a domain that I feel comfortable with where if someone's like, well, this is how we market, blah, blah, blah, blah. This is how we sell. This is how we price. This is how we, you know, anything that's business related, I'll be like, no, that doesn't make sense. Yeah. And it's like, I'm like, I don't know. Like I'm, I feel, I feel confident enough in my, in my, my skill level to say like, no, that doesn't, doesn't make Sense. But yeah, so I think it's gonna. It's be. It's gonna be domain specific for me to be able to say, like, I'll have a better judge of character. But still, even then, you know, I get, I get. I get. I want to say deceived, but, like, I make wrong picks all the time. You know, like with team and people, you know, hiring things, like, it happens, you know, just part of the game.
- [35:31]
Layla Hormozi
What about things that are too good to be true? How often are people pitching you things that seem to be that way and they're actually accurately representing their skill or the value of their business?
- [35:41]
Alex Hormozi
It's. I think the too good to be true is. Happens all the time. And it is. I. I've yet to see something that has been too good to be true. I think chatgpt, when it came out, I was like, that's too good to be true. And then it was so, like, then they became a gazillion dollar company. I was like, okay, that checks out. That tracks. But most things that are too good to be true, like the saying, exists for a reason.
- [36:02]
Graham Stephan
When do you think the last time is that you've drastically changed your opinion about something?
- [36:07]
Alex Hormozi
It's a really good question.
- [36:08]
Graham Stephan
That was a ChatGPT question.
- [36:10]
Alex Hormozi
Oh, it was. I know that.
- [36:11]
Graham Stephan
I'm kidding.
- [36:12]
Alex Hormozi
That was a me. It's Jeff. And I drastically changed my opinion about something. Well, I'll give you two. So. I mean, this is in years, though, so they're bigger. So I used to believe. This is kind of funny. So my eighth episode of my podcast, which was 2017, was Stop Branding. And I was like, branding is stupid. Like, just run ads with an offer. That's all that matters. Like, do outbound. Like, that's the only thing that drives sales. And it was because I just understand the power of brand. I didn't understand how to brand, and I didn't understand the benefits of it. Once I understood the power of brand, it's like I've completely 180 on that. Like, brand is everything. So I'd say that's something that I've changed my mind on, which is why I started making content. All this stuff. The. The second one is I. I mean, I built acquisition.com on the thesis of doing many, many smaller minority deals and taking companies right at that kind of, like, alpha level that I was referencing earlier. I would say now in some ways, I feel like I have. Was it re. Redone the wheel, like, redeveloped the wheel, reinvented the wheel into much more of a Very standard private equity firm, which is like, we go after bigger companies. And the main reason is like, the reason that a lot of people don't like those smaller businesses is because there's so much work that has to get done. You have to. It's like you have to turn the whole team. Like, there's just so much to get it over the hump. Whereas something at 5 million, 10 million, 15, 20 million dollars in profit, it's like they already have infrastructure in place. You can actually do things a lot faster in the business in some ways because there's resources. And so I would say that I've. I've shifted my perspective there, which is much more akin to, I could have just listened to Warren Buffett and done it that way. But I figured, no, I just learned it myself, which is like, it's better to get wonderful businesses at a fair price than, you know, fair business at a wonderful price.
- [37:55]
Layla Hormozi
Was there data or like a personal experience that supported that?
- [37:59]
Alex Hormozi
Yeah, I mean, we did 20. We did 20. It was either 22 or 24 deals in the first 24 months of acquisition dot com. And like, portfolio theory has reigned true. Like, 90% of our returns have come from two companies, you know, and so. But those companies, if I had to make a bet, I probably would have bet that those would have been. They had the strongest operators, they had the strongest. Just general intelligence of the teams, you know, good opportunities. Like, they said they had checked more boxes than, like, I didn't have to use as much imagination to see it working. Yeah. And so I think the downside about me as an entrepreneur slash investor is that I am an optimist. And so I can see the version of the business that I think could be awesome. And I get really excited about that. But you have to buy based on what it is today, not what it could be.
- [38:45]
Layla Hormozi
How important is intelligence in entrepreneurship?
- [38:47]
Alex Hormozi
I think it depends on what level of success you're shooting for.
- [38:51]
Layla Hormozi
Okay.
- [38:51]
Alex Hormozi
So I think that. I think, like, if you were like, I want to get into AI, like, you've got to be probably really smart. And I think it's. It's not even because, like, you're the one who's going to be the engineer doing it. It's like, you need to be smart enough that an engineer who couldn't do that is impressed by you. Right. Like, so I think, I think it's really in the recruiting aspect where high intellect, if you will matter more if you were, you know, use the lawn care example. Like, you can succeed in the lawn Care business without being brilliant. You can succeed in the gym business without being brilliant, you can succeed in a lot of businesses, I'd say most businesses without being, you know, you know, above 50% IQ. I think there are, there are skills which people say as traits that are more important. I think courage is incredibly important. I think high agency. So the ability to make your own decisions without being influenced by others. I think, I think honestly, just like perspicacity, like being able to endure and persevere. Because one of the really interesting things about entrepreneurship is that you get. Life gives you this, like these unlimited lottery tickets and you just pay time to get them, but you just can always get them to cash them in. And even if you cash 10 tickets in and they don't don't work, it's like you still have 11th one, you still have a 12th one. And so a lot of people just will choose not to cash their tickets in at all or even grab the tickets to begin with. And I think that that ability to persevere is what gives you more shots on goal. And you only need one really big win to change your life forever. And so it's really just sticking with it. And I think that's the like, on a long enough time horizon, somebody who sticks with it just gets enough, like they just get so many chances that something, that luck does happen.
- [40:24]
Graham Stephan
So on those two businesses that you said are outliers, what percentage would you allocate to being the person in charge of running it versus the business itself?
- [40:34]
Alex Hormozi
Man, I'll say 50. 50. Like I was leaning, I was going back and forth. It's like, you know, because Uncle Warren has, you know, great manager, bad market, bad market wins. You know, good market, bad manager, good market wins. I think that like, the market is for sure the most powerful thing. But if we control for market, like, you know, if you're selling toilet paper and Covid, you're going to make money whether you're an idiot or not, like it's going to work. But I think the vast majority of marketplaces are not on either extreme. You're not selling to newspapers and you're not selling toilet paper during COVID Most businesses are just kind of like in the middle. They're in markets that are just normal. And in those situations, the business model obviously has to be sound. But the business model is a reflection of the entrepreneur. And so if we remove market, then I'll say it's entrepreneur for sure. But market is more important. If it's in one of these extremes.
- [41:18]
Graham Stephan
What qualities do you see in those people. Are there similarities between the two?
- [41:22]
Alex Hormozi
Yeah, there's, you know, it's interesting cause there's like there's, there's for sure similarities. I think there's far fewer than most people expect because like even if you look at the top entre, like I think Bezos and Elon are some of the goats of all time in terms of entrepreneurship. So different in terms of their personalities, the way they behave, their even values, like all those things. I think they have some significant differences but in terms of like what are the commonalities about how they operate? They all, they focus on speed, they focus on having an exceptional product. Both of them talk about just, I mean Elon doesn't say customers test, he says products obsessed. But they, they translate to the same thing which is like they focus on product first above everything else. They're super long term focused. People might have, you know, some, something to say about me saying this but like I think they both have high ethics. They're like, oh he's devil, but whatever, I won't even come. But high ethics, high customer obsession, long term perspective, huge ability to tolerate pain and the ability to tolerate risk, which is to, to have the courage to do it. And because both of them had so many moments where they just went all in on Amazon or all in on Tesla or SpaceX or whatever. It's like you have to have some ability to make, to, to go big and bet the farm. And I think that, that every entrepreneur, that almost every entrepreneur that I know who's made it really big has had a moment where they're like this could not work. And I'm just going to try and make it work.
- [42:40]
Layla Hormozi
It's so interesting because I feel like there's a huge trend online right now and also maybe for the past like five, ten years of There can never be an ethical billionaire. Do you think in order to get to that level of wealth there needs to be a time where you compromise your ethics? Or do you think that's just a bunch of stuff that people like, like to throw out there to maybe self aggrandize?
- [42:58]
Alex Hormozi
I think it's. Well, as somebody's. Whatever, go ahead. As someone who's. I am biased so I'll state my bias. I am trying to hit it or in process of hitting it. And so I obviously don't think that there's an ethical like that you have to. I think I'll say it differently. If you took a random slice of the population just, just America or even the world, you're Going to have a certain percentage of people who are ethical and have a certain percentage of people who are not ethical and the skills to run a business, I think, can operate in some ways independently of those things. So you can become super financially successful and be unethical, and you can be super financially successful and be ethical. And so I think that you'll have a distribution that is normalized at the top as much as you do in the middle. Like, how many people are divorced, how many people are married, how many people are, like, you're going to have. How many people have kids, how many people don't have kids? Like, you're going to have a random distribution there. And I think people will just cherry pick bad actors. And there's also, like, allegations based on, like, regulations. Like, if you look at all the big fortune, whatever companies, it really starts to come down to, like, what do you. If we. I mean, it gets into ethics, which is a totally different can of worms. But if you were to say, like, you know, the tcpa, which is telephone, consumer protection agency, whatever, they go after a company and it was because the company didn't put the right language on their, you know, landing page. And because of that, they sued Facebook for $700 million. Is Facebook being unethical or are they operating in ignorance? Oftentimes when you have more laws than you can keep track of and. Or somebody makes an oopsie, those things happen. And so it really depends, like, okay, well, are we now saying that Facebook's unethical? Now, I'm not saying that I think that they're good for the world, but I'm saying fundamentally, like, I think mistakes can happen. And so the idea that people will say a billionaire might be unethical is probably different than a billionaire has made mistakes. And I think those are two very different things. Because, for sure, every billionaire has made mistakes and for sure has done things that they wish they hadn't, because that's what humans do in life. Real quick, guys, I have a special, special gift for you. For being loyal listeners of the podcast. Laila and I spent probably an entire quarter putting together our scaling roadmap. It's breaking, scaling into 10 stages and across all eight functions of the business. So you've got marketing, you've got sales, you've got product, you got customer success, you've got it. You've got recruiting, hr, you've got finance. And we show the problems that emerge at every level of scale and how to graduate to the next level. It's all free and you can get it personalized to you. So it's about 30ish pages for each of the stages. Once you enter the questions, it will tell you exactly where you're at and what you need to do to grow. It's about 14 hours of stuff, but it's narrowed down so that you only have to watch the part that's relevant to you, which will probably be about 90 minutes. And so if that's at all interesting, you can go to acquisition.com roadmap R O A D map roadmap.
- [45:49]
Layla Hormozi
What's a mistake you made recently that may have either cost you time, money or credibility?
- [45:55]
Alex Hormozi
Oh, God. I invested in a company that I didn't do enough due diligence and they were doing some things that weren't compliant that I found out about later. And I just said, I don't want to be associated. And I lost millions of dollars and I just said, I'll give you the equity back. I don't even want it. I just don't want to be associated. And so there.
- [46:16]
Graham Stephan
What could you have done differently on screensight? What do you look for when we.
- [46:21]
Alex Hormozi
Probably could have reviewed the internal data better, probably could have done more in depth interviews with some of the key employees, could have done more, you know, customer call reviews, both on sales side, marketing side, and also on the delivery side, we probably could have done more of that.
- [46:37]
Graham Stephan
Was there.
- [46:38]
Alex Hormozi
It was a relatively small deal for us though. But like, still, ethically it was.
- [46:41]
Layla Hormozi
Was there any tells? Maybe beforehand you kind of worked the.
- [46:45]
Graham Stephan
Guy that was posing in front of his cars in his iced out Rolex?
- [46:48]
Alex Hormozi
No, we didn't have any of that. But no, it was like, yeah, I'm gonna, I'm gonna for sure catch, catch some dogs.
- [46:55]
Layla Hormozi
If you were to observe all of the mistakes that acquisition.com makes and assign it like a pie chart, would you say the largest slice of the pie would be lack of due diligence or. Where do you think you lose the most return or value?
- [47:07]
Alex Hormozi
Where are the mistakes that we make? Honestly, I think the biggest mistakes we make are hiring. I think it's people, but it's really, I mean, fundamentally it's going to be people at all sides. Like people on the deal side, it's going to be people. Like even when you're bringing in talent, like it's a deal, like you're signing an agreement between two parties in exchange for money, you know, so like it's, I mean, you just, you have. The thing is the number of deals that we have to do every day, every week, Every month, every year is a lot. And so we're just going to make mistakes. We're going to try our best to learn from them and we're ultimately going to be rewarded by the quality of our decision making. But we're going to mess up.
- [47:38]
Graham Stephan
When do you know how to cut the business or try to fix it? Like, in that case, I would be looking at that and thinking, well, is it worth trying to or is it just. Yes, we can't work with these.
- [47:49]
Alex Hormozi
No, it's a good. It's that last thing you just said. Yeah, that's really what it comes down to. So if someone I think is. Knows about it and hasn't done anything about it, and then we find out about it and say, hey, you should do something about it, and then they don't do anything about it, that's where I'd be like, okay, this isn't going to work. If, you know, a founder's made aware of it. It's kind of like the TCPA thing. Like if, let's say you had opt ins on a page and you just didn't have like all the disclosures that you're supposed to have to make it compliant to like text somebody or call somebody or whatever. Right. If someone did that, I'm not gonna be like, oh my God, this guy sucks. I'd be like, oh, he didn't know. Like, let's, let's fix this stuff. And so that's kind of an example. Now it really comes down to the willingness of the founder to make, to make things right. I don't think that's anybody. Yeah.
- [48:31]
Layla Hormozi
Do you have assessments of ethics of the people that you end up partnering with? And how important would you say ethics are? Do you not really consider it? And you just kind of look at, you look at the data as you suggested. Because, because you can ask someone why they do something and they could say whatever they want, but you don't necessarily know until you've known them for a while.
- [48:46]
Graham Stephan
I feel like there should be a personality test, like the Jordan Peterson personality test. Do you have them? He does.
- [48:52]
Layla Hormozi
You paid 10 bucks or 15 bucks or something. Understand myself.com, i think is what it is. Yeah, we took it, but it was a really. And you can also compare.
- [49:00]
Alex Hormozi
I'm a latte.
- [49:02]
Layla Hormozi
A latte.
- [49:03]
Alex Hormozi
Like, you know, like there's like, I'm a pepperoni pizza. Like the, like, what kind of pizza. Like, I'm joking. Is like fake.
- [49:08]
Graham Stephan
I'm Slytherin, by the way.
- [49:09]
Alex Hormozi
Yeah, for sure. I'm for sure. Slower.
- [49:11]
Layla Hormozi
It's. It's interesting because you can also, with this data, compare how two personalities will interact with one another. So, for example, Graham and I, we were pretty different in a lot of stories, but it did say that we had good cohesion.
- [49:22]
Alex Hormozi
Oh, sweet.
- [49:23]
Graham Stephan
Yeah. But they had studies for, like, business and for personality and for relationships with large data.
- [49:29]
Layla Hormozi
You could probably get a pretty good approximation interest.
- [49:32]
Alex Hormozi
I don't think we have enough data to actually do, like, big data, like, analysis for that. So if you're thinking of 20s, 30, it's like, it's not a lot. It's not you, like 30,000. Lot more n to have statistical power. We actually used to do a lot more tests earlier on, and I think we ended up foregoing them. Same on the recruiting side, we used to do a lot more like personality testing, things like that. Mostly because the recruiting team ended up being like, over reliant on tests and then would just like, have a star candidate and they'd be like, well, they, they scored. I'm like, this guy's just like, bring this guy in. And so we ended up doing away with it. I think everybody wants a test to tell them the answer. And so I think in a. In a. In a job where you have a lot of decision making that has to occur, it's hard to not default to tests because it's so quantitative that you want to just like. It's just kind of like trading algorithms. Like, if the algorithm says I should, like, you want to have that. And so fundamentally, either it's like, you know, I tend to be somewhat binary in this, but, like, either we believe this a hundred percent or we kind of don't. And the only times, and I'll quote Layla on this one, but like, if we do have a test that we're gonna have somebody take on, like a recruiting side, the only time that we would really use it, if it's a red flag in that it seems like it's completely contrast from what we're seeing. And so if someone's like, oh, I'm really det. Oriented, I'm really timely. I'm really whatever. And then they get on. They're like, I'm a creative and I'm so all over the. And I'm like, that doesn't make sense. So then we're just like, okay, now it's just an ethical issue. They're just lying.
- [50:55]
Layla Hormozi
So you're saying you don't want to focus on qualifying someone because if you're testing them, that means you probably have some dissonance between what you think about them and what they say about themselves. And if you.
- [51:04]
Alex Hormozi
Yeah, yeah, I think you will like, by this is what more as a, you know, company owner than anything else, which is, like, if you tend to give a team a tool and they have to make a lot of decisions and the tool supposedly helps them with the decision, the. The law of least effort will typically reign, and they'll just start using the test to make all the decisions. And I think that makes for worse decisions than actually just using everything else.
- [51:26]
Graham Stephan
So if someone's studying you, let's just say, what do you think is the biggest misinterpretation of your strategy or character?
- [51:33]
Alex Hormozi
I think most people think that I'm meaner than I am. I think he's a sweetheart.
- [51:38]
Layla Hormozi
Guys, Alex is really a nice. So nice on and off camera. Very, very outstanding gentleman.
- [51:43]
Alex Hormozi
Thank you. I think that. And then also in, like, a different setting than, like, a podcast. You know, it's like. You know, it's a dip. Like, when I'm with my team, I joke around a ton of. And so I'd say, like, I do a lot of jokes a lot. And I think I have. I mean, Daniel could probably say, but I think. Yeah.
- [51:59]
Graham Stephan
What's your funniest joke?
- [52:01]
Alex Hormozi
Good. Say give us a joke. I have a lot. I've. I have tons. Can't reveal. Yeah, A lot of I've, like, dirty jobs.
- [52:07]
Layla Hormozi
Yeah.
- [52:07]
Alex Hormozi
In a very real.
- [52:09]
Layla Hormozi
Like, a true grandma, man.
- [52:10]
Alex Hormozi
Yeah, a lot of. A lot of. A lot of. That's what your mom said.
- [52:13]
Layla Hormozi
That's Graham's favorite, too.
- [52:14]
Graham Stephan
I love it.
- [52:15]
Alex Hormozi
It's a classic. It's a classic for Jack.
- [52:17]
Graham Stephan
I'm always like, yeah, okay, Mom.
- [52:19]
Layla Hormozi
Mom's gonna watch this.
- [52:20]
Alex Hormozi
I know. Yeah.
- [52:21]
Layla Hormozi
Cats out the bag.
- [52:22]
Alex Hormozi
Yeah. Smoke show. No, but, no, I'd say that those are probably the two. The two bigger misconceptions.
- [52:29]
Graham Stephan
So moving on from that, how do you eliminate distraction?
- [52:33]
Alex Hormozi
Oh, this is fun. Okay, so I eliminate it by eliminating it. And that sounds ridiculous, but, like, I think the vast majority of productivity hacks can get boiled down to remove everything that isn't work. So, like, my office has no outside light. I try to minimize all the sound in the office. I also put on earplugs and headphones. There's a great app that you can use that, like, blocks your phone. So, like, nothing can get through. So including texts, phone calls, slacks, everything. Not just social media. Like, it's a dead element, essentially, and you have to physically move across the building, which is how I do it for Mine to like un. Mess up your phone and then I just have a clear idea of the work that I need to do. And so it's like when you eliminate everything else and then I just set a kitchen timer for when I. How long I expect a task to last. That is when I'm like peak productivity per unit of time because there's nothing else to do.
- [53:25]
Graham Stephan
So is this science or is this just you? Because eliminating. Eliminating natural light.
- [53:30]
Layla Hormozi
We see your office after this. I want to get a peek at that.
- [53:33]
Graham Stephan
Yeah, you do this. But why eliminate, why eliminate light?
- [53:38]
Alex Hormozi
Would we eliminate. Yeah, it's fine. Yeah.
- [53:40]
Graham Stephan
Why light? For me? Like I, I get, oh, I get.
- [53:43]
Layla Hormozi
So distracted by life.
- [53:44]
Graham Stephan
I get boost by like seeing the outdoors and seeing greenery. This is nice.
- [53:48]
Layla Hormozi
It doesn't work for me, man.
- [53:50]
Alex Hormozi
Yeah, and I'll. I'll be clear. Like if you find something that works for you, I'll say do that. And for anybody who's like, I do. Do it your way. I don't care. Like, I'm just saying this is what's. Yeah, I do think there's a decent amount of data that suggests that anything that is not the work distracts you from the work.
- [54:05]
Layla Hormozi
How do you differentiate between distractions and rest?
- [54:09]
Alex Hormozi
Great question. So I think there's, there's like kind of like micro macro. So like from a micro perspective, if you work for 60 minutes or 45 minutes or whatever, and then you're like, okay, I need a break. If you take the five or 10, you know, 10 minute, like walk around the building or walk outside, to me that's where you can get your natural light and all of that stuff. But then you come back and then you're fresh again and then you hit it. I see that. I see that rest as productive because it increases the overall net production over a larger period of time. So if you work like that for 12 hours and you worked without doing that, maybe you can only work eight hours or you can work the same 12, but you don't get as much done. So for me it's really just the net productivity of a human being is what they get done over a period of time. So productivity has a temporal component to it and an output component. So maximizing output per unit of time is productivity as I define it. And so it is okay. Anything that increases that rate of work, which for the most part is just deleting the things that aren't work, because few people actually work faster. You just don't work when you want to be working. And so I Think if you just limit all the time that you're not working, when you want to be working, you work a lot more. And if you've ever done the timer thing, which I would highly recommend you see, if you, like, you truly take your phone away and you block out every single notification and you have, you know, you have the script a YouTube video or write an email or make a script or whatever you have to do for your business or write and make a landing page, you'll notice that, like, you'll be like, oh, my God. And then you'll look, it's been like eight minutes, and you're like, oh, my God. Like, you're like monkey brain.
- [55:30]
Graham Stephan
How is that not like sleeping? When I keep looking at the time and thinking, oh, man, another 10 minutes went by, that's another 10 minutes I'm not going to be sleeping. Do you ever look at the time and see, oh, ten minutes went by. Now I only got this amount of time and reminds. Focused on the time and not the task.
- [55:44]
Alex Hormozi
I don't think about that at all, actually. If I. If I like, if eight minutes goes by and I'm. And I. And I worked the eight minutes and I'm like, oh, my God, it was only eight minutes. I'm like, I have so much time. Like, I did all that in eight minutes because I was focused all the time, and I only went to go reach for my phone at eight minutes. I'm like, oh, my God, I have. I have six minutes.
- [56:00]
Graham Stephan
So you don't see the time as a distraction?
- [56:02]
Alex Hormozi
No, not really.
- [56:02]
Layla Hormozi
What? Getting into that deep focus. If you're going around and taking maybe like 15 minutes every hour and a half or so, how do you switch context again to go from like enjoying the sunlight or enjoying relaxation into deep focus?
- [56:16]
Alex Hormozi
I think it's probably like most skills, it's just practice. I think the more you work, the better you get at working. I mean, I know that how I worked when I was younger, I was not nearly as productive as I am now. I also worked on things that were lower leverage. So it's kind of like I get two. Two benefits. Like, I get more done per unit of time, and the things I work on create more.
- [56:33]
Layla Hormozi
Do you have any distractions that still sneak past your filters?
- [56:37]
Alex Hormozi
Oh, no. I mean, not on the phone. I mean, that thing's done Twitter like it's cooked. Twitter. No, I mean, when I. When I'm working, I'm not gonna.
- [56:43]
Graham Stephan
What about music? You listen to music?
- [56:45]
Alex Hormozi
No.
- [56:46]
Graham Stephan
Silence.
- [56:47]
Alex Hormozi
Yeah, I have earplugs and headphones like it's true silence.
- [56:50]
Layla Hormozi
What do you listen to when you lift?
- [56:52]
Alex Hormozi
Oh, just like the same songs I've had for like 15 years. Let's not really change. I like Linkin Park a lot. Like a little Linkin Park Hybrid Theory. The new one. Is that the new one that came out?
- [57:02]
Graham Stephan
No, Hybrid Theory is like the 2000s in the heart.
- [57:04]
Alex Hormozi
I only cut the album covers where it's like that black one. The black and white one with Roman and like. I think so. Yeah. That's a, That's a good one. I am horrendous at like the words on like, I, I cannot tell you the words of any song. And I've listened to the same songs for like a decade.
- [57:20]
Graham Stephan
I don't know lyrics either. I listen to the melody but not the words.
- [57:23]
Alex Hormozi
Yeah, I don't. Maybe Lincoln Park. I don't know the. I don't know the. I don't know the album name. I like, I barely even know it's Linkin Park. Okay. But I just know because I, I like that radio station.
- [57:32]
Graham Stephan
But what else besides Lincoln Park?
- [57:33]
Alex Hormozi
I listened to 50 Cent. I like 50 Cent. Get rich or Die Trying. I like that entire album. Fabulous has a lovely album. His first one, I think. I think it was self named. I think Fabulous. I like that album. I. I still also like some of my white boy music. I still listen to Little Green Day. Little Green Day Blind, Little Third Eye Blind. That's good. A lot of times Layla will just send me. Cause she's like always up to date on like what's. What's Hot and popping off. I also really like UK rap. Huh. I've actually found that as a little sub genre that I only. Only because Spotify recommended it for me. But yeah, like Band For Band, which is a cool song. I like that. But yeah, I, I like. I, I only have like, you know, 20 or 30 songs that I can listen to like in a workout. So it's like I kind of have like a list of a hundred and they randomly shuffle and that's like my life.
- [58:16]
Graham Stephan
How often do you skip the song?
- [58:18]
Alex Hormozi
It depends on what kind of set I'm doing. Okay. It's like if I'm. If I'm early, like if I'm about to hit a work set, like I want to make sure it's a good song. But I think that's everybody.
- [58:26]
Layla Hormozi
Huh? Okay.
- [58:28]
Alex Hormozi
Yeah, you guys, I'll show you guys. Yeah, you guys haven't seen the gym, right?
- [58:31]
Layla Hormozi
I know, I saw the, the. It's like a hydraulic something or air compress something. That was incredible.
- [58:37]
Alex Hormozi
I'll show you the new thing that just came out. I think it's gonna change the whole driven tree. I think it's going to change the diplomat.
- [58:42]
Layla Hormozi
Is that, that I, I saw this, a Will Tennyson video where it's like you do like three reps of a chest press or something like that and it, it maxes out your strength. It's along all different.
- [58:52]
Alex Hormozi
Yeah, it's a different thing.
- [58:53]
Layla Hormozi
Okay.
- [58:54]
Alex Hormozi
It's different, but similar concept. I've wanted to see that. Yeah.
- [58:58]
Graham Stephan
So do you think distracted people then just want it less?
- [59:03]
Alex Hormozi
Oh, I don't even know how to find wanting it less. I would say that for whatever reason they're being more rewarded from their current path than they perceive the reward of the path that they're trying to get on. Like, it's, I mean I just, I think of everything in carrots and sticks. That's like they have enough stick of other people judging and enough carrot of staying the same that they don't change. They just have to overcome inertia. They just can't do it for whatever reason. And I don't want to pretend like I have some like superhuman willpower. It's just like, you know, I had, you know, it's funny because like when I quit my job, which was still to this day the hardest decision I've ever had to make in my whole life because believe it or not, I'm actually very risk averse. I could take bigger bets now, but it's because I have more. And so like, if I lose, it's not like the end of the world. But at the time there was like risking everything or what felt like risking everything. And that was, was, it was because I was so miserable. It was the only reason I was able to, to do it. Like if, if I had been employed at probably just even a different job at a different place, I probably would have been fine. And I don't think I'd ever even be here. So I don't think I had a high like predisposition towards entrepreneurship like some people do. They're like, I've been entrepreneur my whole life. Like I wasn't. I didn't start any businesses. I did well in school. It wasn't like, oh, school failed me. Like, I did well in school. Like, I studied hard, I got good grades. I graduated three years from interval. Like I did well. And then I got a good job, you know, in terms of, on paper after that. And it was only like when I had done Two years there and that normally you'd go to, like, business school. That I was like, I hate this. I don't want to do this again. And I would rather take a shot.
- [60:31]
Layla Hormozi
So it's spurred from being discontent with where you were at. That's interesting because that is exactly what led to me trying out all these different business ideas and this starting up this thing with Graham. But I never asked you, like, why. What would. What motivated you in that beginning that planted that seed to try to, you know, become big in real estate or on YouTube? Was it because you were discontent with where you were at or just.
- [60:51]
Alex Hormozi
Yeah.
- [60:51]
Graham Stephan
Honestly, it's the stupidest thing. It was that entry. Yeah. It was data. It was doing data entry. I wanted to be an investment banker just because I was like, they make a lot of money. I just wanted to be successful.
- [61:04]
Alex Hormozi
Yeah.
- [61:04]
Graham Stephan
And I would email all of these investment firms just asking to do anything for free. I'm like, I'll get you water. I'll make copies. Just let me do anything and I'll. I'll just be there. And I emailed maybe like six, seven places that I found on Craigslist. Like, two of them turned out to be like, MLM companies. And one emailed me back and said, yes, actually, we're looking for a data entry position. If you want to interview it, come on in. And I interviewed and it looked fantastic. And they had like a sales team in the front and a back off, back office in. In the back.
- [61:38]
Alex Hormozi
Yeah.
- [61:38]
Graham Stephan
And they hired me to do data entry at. I think back then it was like $8 an hour.
- [61:42]
Alex Hormozi
Yeah.
- [61:43]
Graham Stephan
And I was so excited to go in because they made you wear like a suit every day. And I was like, I get to wear a suit to work. That's so cool. And I went in there and everyone is a zombie.
- [61:53]
Alex Hormozi
Yeah.
- [61:53]
Graham Stephan
And everyone just hated life. And the first, like, day was okay, but I started getting in trouble for stupid things. Like I wanted to wear a headphone to listen to something throughout the day. Yeah. And they said I couldn't do that.
- [62:09]
Alex Hormozi
Okay.
- [62:09]
Graham Stephan
And then I made a comment about they had styrofoam cups. And I said that, like, the paper cups were better for the environment. And they said, we're not changing. They got really upset that I even made that suggestion. And then I went up to the CEO's office one day. This is all in the first week, just to say hi to the guy and introduce myself. And I'm like, I've just started working here. And he wasn't in the middle of Something, and he was friendly to me. But I got called into the manager's office later that day, and they said, hey, there's a chain of command. Like, you can't just go up to this person and talk to him. You have to talk to this manager, get their approval. It goes to me. And then I could. Yeah, it made no sense, but I hated it there. And the only time that people came to life was Friday at, like, 4pm and you started seeing people laughing and joking around and, like, being themselves. And then I remember there's, like, they had, like, a casual, like, one day a month. They had, like, a casual day where people could wear, like, jeans into the office. I thought that was just stupid after a while. Like, I didn't get it. But yet that. That single job made me hate life so much that I would do anything to never return to that. Because I honestly thought, if this is the next, like, 40 years, all right.
- [63:15]
Alex Hormozi
Yeah, this is it.
- [63:16]
Layla Hormozi
Then you were willing to do something for free, which was assistant to the real estate thing.
- [63:20]
Graham Stephan
Correct. But also during that time, they had a sales team in the front. I said, I'd be a great salesperson. I just want to do sales. And they were making like, a hundred, like 300 grand a year doing, like, phone sales. I wanted to do that. And I was told, you have to work your way up. You have to do data entry to go into the mail room, to go into, like, this thing, to this thing. And then it would. That was like, years away. And they also told me no one would trust me because I was 18 at the time. Like, no one trust you on sales. And. Yeah, so. And then I got into sales and did well.
- [63:50]
Alex Hormozi
Yeah, that didn't matter at all.
- [63:51]
Graham Stephan
But that, for me was like the big. The six weeks. It was only there six weeks, but that made a lifetime impact.
- [63:57]
Alex Hormozi
I want to highlight one thing that you said, which is just for anybody who's. Who's listening. Graham said, I'll do anything. And then they said, well, we do have this roll open. Do this. I would strongly recommend, if you want to, quote, do anything, then just look at the jobs they have available and try and do that. So rather than just going, like, empty, just be like, oh, you have a data entry position. I'll do that for you. And then in all of the extra time, that's where you try and have lunch with people. That's where you try and basically build your network within the business so you can start leveraging, like, relationships to gain more skills, and then you can start, you know, Moving your way and learning what you want to learn.
- [64:29]
Graham Stephan
Yeah, that was.
- [64:30]
Layla Hormozi
I agree with that.
- [64:30]
Alex Hormozi
That was.
- [64:31]
Graham Stephan
That was a tough one in that business, though, because I was the only one who was 18. Everyone else was like, 35 to 50.
- [64:38]
Alex Hormozi
Yeah. But, like, because I know that you get tons of people who reach out saying, like, hey, I'll take your coffee for you. Hey, whatever. And the thing is, is like, a couple points. One is Elon doesn't need someone to take his coffee. Like, he's got very skilled professionals who will never mess up his coffee and also do a hundred other things that are paid gazillions just to make sure that his time is book to the second. Right. So, like, one is like, I would. I would either shoot much lower. And now you might be like, wait, shouldn't I shoot for the stars? Like, you can do whatever you want if you want a higher likelihood, I think shoot for people just one or two steps ahead of you. If you've got a buddy who's doing. He's got his own car washing business and he's doing $200,000 a year, it's like, see if you can help that guy. He probably will happily take your free labor. It's really just, like, levels. Like, if somebody can afford somebody to take their coffee for them and manage the schedule and manage their email and not have them get bothered by, like, hey, can you mentor me in the meantime? Like, it's like, dude, I'm. I'm working, right? Like, I can't. Like, oh, so I'm just. This is what we're gonna do. So I'm just gonna coach you for. For. In exchange for coffee, because we value my time at coffee. Not a. It doesn't make sense. Now, obviously the person who says that doesn't understand that fundamentally, which is why they're in the position they're in. So I understand, like, I have some grace for it, but I try to spread that message so that people get it. But one is try and target people who are one or two steps ahead. If you're just trying to be like a. A helper, but if you want to get into, like, learn a specific skill from a business, look at all the entry roles, and then just apply to those jobs and then reach out. Be like, I will do anything and I'll be the best data entry person you ever had, do that. And you have a way higher likelihood of getting in the business. Because now you're actually meeting their current lead. It's not them meeting your needs.
- [66:04]
Graham Stephan
What about applying to businesses? That don't need your help or aren't hiring. One of my things. I always thought it was great to approach places you'd want to work and just say, I'll take on any role.
- [66:14]
Alex Hormozi
I think it's like, I think it depends on, depends on the visibility of the company. So if, if the company has like a really big social media presence, they have so many people doing that that the supply demand of people asking for that specific thing is super not in your favor. If you went to a business that's not based on that, like you go to an electric, you know, like a H vac company, you probably could find some work there that they'll let you do. And so I think it's again, it's like, try and shoot where like the big, the big arbitrage in life is finding supply demand discrepancies that are in your favor. And so you have a supply of work, they have a demand. Now if there's way more supply, so many people offering it, then they can dictate their own terms. And if they don't need it, then they don't need it. Yeah.
- [66:56]
Graham Stephan
What's holding people back from excelling beyond average, do you think it's talent, belief, motivation? There's not a carrot.
- [67:04]
Alex Hormozi
I think people don't do very much. I think people do a lot of talking about doing and not a lot of doing. And I think it's the doing that does everything. And I think that's the, and whether it's lack of motivation, lack of focus, lack of, like, lack of a hundred different things, it just comes down to number of actions taken per unit of time. And I think the vast majority of people just wildly underestimate the volume that's required. And I think that's like, I, I, I hit on this so hard because like, like when I'll tell you a story to illustrate the point. When I, when I had my first gym, I had a mentor who told me that he got all this leads off of flyers. And so that's what he did. And so I put out a flyer and I waited two weeks, and one guy called me and said, hey, you dinged my Mercedes. And I was like, it's the only call I got. So I called him as we're up two weeks later, and I was, he was like, hey, how'd that go? And I was like, ready to give. I was like, it didn't work. You know, like, and he was like. And he, like, totally took it in stride. And he was like, well, what was your test size? And I was like, what do you mean? He was like, what was your test amount? I was like, well, I mean, I put out 300 in total. And he was like, oh, man. He's like, hard to know if anything's going to work with 300. He's like, we test with 5,000 per batch. He's like, and then once we find a winner, he's like, we do 5,000 flyers a day. And I was like, oh, so he's doing 150,000 flyers a month for his business. And I had done 300. And this is why, like, I think the vast majority of people dramatically underestimate how much volume it is. Like, I mean, right when we started this, you're like, it seems like you tweet all the time. It's like, I post that often on a lot of platforms now. Twitter is my home base for how I. Where everything is generated from. But, like, we make 450 pieces of content a week. And so people were like, hey, man, I've been making content for 90 days. And now it already put them in the top, you know, 1%, because everyone gives up. But if you actually made a post every day for 90 days, I'd be like, it's amazing. That's 90 posts. I do that in two days. And so. But they get there and they're like, but I'm not Mr. Beast yet. You know, And. And it's just. And there's just. People think that someone else is doing two times or three times as much, but it's more often that they've done a thousand times or like 2, 10,000 times the amount of work that they have. Like, if you counted the amount of videos that you've put out in terms of longs and shorts or minutes of content that you've put out over the last four or five years compared to somebody, it's not even. It's like. It's so, so ridiculous, the discrepancy. Same thing with sales guys. They're like, hey, I've been. I've been selling for 90 days. I'm like, okay, so how many calls a day do you take? And they're like, I end up taking, you know, five or six live calls. I'm like, okay, so you've been doing it for 90 days. You've taken like 400 live calls. It's like, okay, well, this is john. He's closed 4,000 deals. Not calls, taken deals. That's why he's better than you. It's just like, there's just a dramatic Misunderstanding and that probably with a 30% closure, he's taken 12,000 calls. It's like he's done 300 times the work you have. Like, it's a lot or 30, but, like, it's a lot more than people.
- [69:47]
Graham Stephan
So how do you compete with that guy? Because I bet there's a lot of those guys out there.
- [69:52]
Alex Hormozi
You start. I mean, I think it's like, you just start. And I think it's like. I think a huge amount of the delay that happens when people are starting out is the amount of time it takes for them to realize there is no easy way. So they spend a huge amount of time they figure out what the. What. How to do it, and then they spend a really long time trying to figure out if there's an easier way. And then they give up trying to find an easier way, and then they just start the hard way, because the hard way is the only way. Hmm.
- [70:15]
Graham Stephan
How often do you get emotionally tied to outcomes?
- [70:19]
Alex Hormozi
I would say less and less over time. I'm sure that there are. It depends on the outcome. Yeah, it depends on the outcome.
- [70:23]
Layla Hormozi
What outcomes are you still emotionally tied to, even though you may know better?
- [70:26]
Alex Hormozi
Well, I think if the book launch for my next book that comes out, like, if that goes well, I'll be stoked. If it doesn't go well, I'll be bummed. Like, you know, like, those are, like. And I'd say on a micro level, like, we always hope that, you know, YouTube video does well. You know, we hope that, but obviously we have our constraints of, like, okay, well, do I want this to be for a business owner audience, or do I want this to be for more of a beginner audience? If it's beginner audience, I have to kind of recalibrate my expectations because it'll get way more views. So it's not like I'm a robot. I think I would say that my. My emotional regulation's just gotten better over time. It's not like it doesn't exist.
- [70:55]
Layla Hormozi
What other parts of your identity have you had to kill to become where you are right now?
- [70:58]
Alex Hormozi
Plenty.
- [70:59]
Layla Hormozi
I know one was attachment to the approval of your dad. That's something that's been spoken about quite often. Any other.
- [71:05]
Alex Hormozi
Yeah, I think so. It really depends on how we define identity. But if we define that by the actions that we take. Like, if you were to describe somebody like he is this way, you really describe it by the actions that person does. Right. It's very hard to say someone is something without doing something about it. Right. We Even describe people by what they do. Like, he's a carpenter. He is selfish, which means that he acts. And selfish ways. Like, it's all based on activity. And so for me, like, the changes in behavior which then ladder up to identity, I've had to become more patient. I've had to figure out. Which I define as figuring out what to do. In the meantime, I've had to just have times where I'm like, I just. I need to let. I just need to let the. Let the turkey cook. I just gotta let it cook. There's nothing like, I shouldn't. The right. The right task for me to do is nothing I've had to learn.
- [71:45]
Layla Hormozi
That wasn't an easy change to, like, permanently address that.
- [71:48]
Alex Hormozi
No. And I don't think it's permanent. I think you have to fight it every day, like addiction.
- [71:52]
Layla Hormozi
And so you think there are certain characteristic traits people just naturally have or aspects of their identity that they will have for their entire life. They just have to be able to detect which ones keep them weak and then adds an active battle for the rest of their life.
- [72:03]
Alex Hormozi
So I guess instead of anthropomorphizing, so kind of like humanizing the things that we're fighting against in terms of behavior, it's more thinking. Like, I have been rewarded in the past for behaving in this way. And so it's hard for me to change that behavior. But I realize that that behavior no longer serves me. Now you're still gonna have the memory of the reward of doing that thing over and over again. And so what's really tough about human behavior is that punishment fades, but reward sticks. Meaning, like, when you go out and drink, if you drink too much, the next morning you're hungover, and you're like, I'm never gonna drink again. But then a week later, you're like, you remember the reward, but you don't remember the punishment. Right. It's the same reason that people go back to ex boyfriends and ex girlfriends. It's like, they remember the good times, but they forget about the bad times. So punishment fades, but reward sticks. And so the hardest behaviors to change are ones that have rewarded you in the past, because you will tend to remember the reward and want to repeat them. And so the only way to really beat those is to find something to do instead that rewards you better.
- [72:58]
Graham Stephan
What's one of the things that worked for you in the beginning that stopped serving you as you've gotten bigger or more successful?
- [73:05]
Alex Hormozi
Well, one of the biggest ones that I talk about is when you, when you, when you quit the job and you start entrepreneurship, you get rewarded really big for taking a risk for doing something different. But you don't need to take those kind of existential risks all the time. And the problem is that you get a massive reward for doing so in the beginning. And then you almost have to immediately unlearn that and then stick with this current path for an extended period of time. But you kind of always remember the hit of trying something new. Which is why I think so many entrepreneurs tend to always want to do lots of new things when most of the time they need to just get better at the thing that's in front of them and confront whatever problem they don't know how to solve so they can get that thing to the next level. And so they think that by doing something new because that's what worked for them in the past, that's going to get them to the next level, when in reality, they just end up distracting themselves and trying to chase two or three masters at a time and never getting there.
- [73:49]
Graham Stephan
What's a small hill you're willing to die on that some people might just think is trivial?
- [73:53]
Alex Hormozi
I'm trying to think small hill that I'm willing to die on that manifestation is bullshit and action is the only thing that matters.
- [74:02]
Graham Stephan
Wouldn't you say that manifestation is the first step before action?
- [74:07]
Alex Hormozi
So if we, it depends on how we define manifestation. So if we define manifestation as like an electrical signal occurs in your brain, sure. But I don't think that's how most people describe it. So I would say be totally on board with manifestation if we defined it as knowing that, like, I know that this is possible, like I saw this, or I have some perspective that has changed. To me, that's just knowledge. So if you have knowledge that you can start a bank, you have to have the knowledge that you can start a bank before you start a bank. That makes sense. So, fine, but the bank doesn't occur until you take the action. But the idea of like, the mindless ideation of like, I'm going to manifest my husband into existence is, I think, relatively bullshit. Now, that being said, there are some people who do that and then also take actions that then change their circumstances and then they get the husband and then they misattribute what was the thing that caused it. And so for me, I think, I mean, fundamentally the position that I'm in is trying to identify causal relationship as accurately as possible. And so, you know, the logical proof that I use with this is just simply you know, mindset plus no action, no outcome. You know, mindset plus action outcome. No mindset, action outcome. So the action's really gonna be the only thing that's going to.
- [75:14]
Graham Stephan
I would argue that mindset, you need some sort of mindset to have the action. Like I'm, I'm kind of big into manifestation. So it's, it's interesting to, for me, like, to me like the example of.
- [75:24]
Alex Hormozi
People get so upset by this, by.
- [75:26]
Graham Stephan
The way, whenever I find it really interesting.
- [75:27]
Layla Hormozi
What's their main contention with it?
- [75:29]
Alex Hormozi
Well, they have a history of being reinfor force for talking to other people about manifestation. And so they want to talk about if other people nod and smile and agree with them. And those are all pro social behaviors. And so I think it makes sense that they would do that. Again, it depends on how we define manifestation, which I've yet to find anyone who's been able to define it. Well, actually you can define really easily. And so that's the, that's the part, right. So it's like, it's really just this word that has all these positive connotations.
- [75:50]
Graham Stephan
I just think it helps you with focus.
- [75:52]
Alex Hormozi
So like what is manifestation?
- [75:53]
Graham Stephan
Let's say the, let's just say the, the boyfriend, girlfriend example where you manifest the perfect.
- [75:58]
Alex Hormozi
But what is manifestation?
- [76:00]
Graham Stephan
You thinking clearly about your wants, needs, goals, what to look for, who this prioritization.
- [76:07]
Alex Hormozi
Correct.
- [76:07]
Graham Stephan
Now by manifesting that, you're going to be on the lookout for those sort of qualities.
- [76:12]
Alex Hormozi
The manifesting, the prioritization or the minute. Like you we said prioritization and then manifestation.
- [76:16]
Layla Hormozi
So I think the problem is that you're kind of using a derivative definition of prioritization.
- [76:20]
Alex Hormozi
This is fundamentally why I have an issue.
- [76:22]
Layla Hormozi
And because you're using manifestation to indicate some sort of data or information, a lot of people that have a different definition of manifestation are going to apply.
- [76:31]
Graham Stephan
That to their definition of people know what manifestation is.
- [76:35]
Alex Hormozi
That's, that's actually my point.
- [76:37]
Layla Hormozi
People think like you sit down and you manifest something and then they think it's going to walk right through that door. Like they think that cosmically everything just like somehow get bestowed.
- [76:48]
Graham Stephan
That's doing better than nothing. But I don't think so.
- [76:52]
Layla Hormozi
There's, there's data that shows that you can trigger the same dopamine receptors when you think, think about getting a billion dollars than when you get a billion dollars. Like it's, it's a similar thing. Obviously it's going to be a lot less intense when you think about it. But when you daydream about all these amazing things that are happening, it doesn't actually change the. The reality of your existence. It's only giving you small dopamine.
- [77:11]
Graham Stephan
When. When you could get yourself to have a firm belief that something is going to happen and that nothing is going to get in the way, your actions are going to be reinforced by that.
- [77:19]
Alex Hormozi
Well, the action is the only thing that will matter.
- [77:22]
Graham Stephan
I think there's got to be a belief in yourself to stick with those actions.
- [77:25]
Alex Hormozi
You have declarative knowledge, but also those are skills. And so, like, so if someone tries a hundred times versus ten times, I'd say the fact that they took more action is the reason they got to where they're trying to go. Now. When we try to get to like, why did they do that? I don't think anyone has the answer to that. I think the reason for that is because no one knows why they do.
- [77:42]
Graham Stephan
I think they have a core belief in what they're doing, so they're fed that dealing is going to have an outcome.
- [77:46]
Layla Hormozi
To defend Graham. When I first reached out to Graham to try to provide value. Exactly. I mean, I sat in my room, like, manifest in this podcast. I. I had no skills whatsoever. The only thing that I had was high confidence in my aptitude and, and confidence and competence. Like, I knew that I could provide value, but it was more of just like something that existed in my brain. I don't know if I necessarily had evidence to support that.
- [78:09]
Alex Hormozi
Sure.
- [78:09]
Layla Hormozi
I just knew that I was competent enough. And so maybe I manifested that. One could argue that.
- [78:14]
Alex Hormozi
So the big. The big zooming all the way out here just for. For context. I think the reason that people get really up in arms about it is because, like, I mean, these are. These are dogmas, right? These are belief systems which people operate at their very core, which really just means ways of being, which means ways of behaving and ways of talking is included in that, in terms of behavior. But people have a very hard time defining what the hell they're talking about when we ask some of these words that are amorphous. And so I have, by and large, just removed them from my vocabulary so that I can describe the observable. And it has been probably the single most productive thing that I have done in my career. And so is it a small hill? It is probably the only hill and the main hill that I will die on, which is that behavior rules everything. And you have a history of past, you know, reinforcers or punishers for a set of behaviors and you repeat them in the future. And that's the only thing that I'll say about why someone does something. You've been rewarded in the past for reaching out to people, for doing things. And it can be cross domain. So it's like, maybe you reached out to girls and they was able to jump into business and you were able to reach out to business owners. So cross domerals, though. Well, I know that. I know, but you get the idea of, like, it's across. But, like, those are just sets of skills. Those are behaviors. And so focusing exclusively on behaviors and unbundling terms that are amorphous has been, I think, the key to my ability to communicate to people, train staff, and kind of enlist people to where we're trying to go. That has really been like, when people are like, man, I feel like Alex is so good at making things clear. It's like, because I just do not use amorphous language. And if I want to use the term, I will define the term. So now by the observable.
- [79:45]
Graham Stephan
But I believe to shift belief starts with mindset.
- [79:49]
Alex Hormozi
Well, it's like we're starting, like, what's belief? What's mindset? What's manifesting? This isn't up to po. Like, I actually, I just want to help. Not. Not you guys, everyone else. No, but I. I just. I don't think it serves people. And that's why. And, like, I just don't, like, necessarily. Like, I mean, yes, you feel great about it. I'm glad that if you. If you had the option between making 100 phone calls and sitting there and manifesting, you will get further making 100 phone calls. And so I'm trying to decrease the amount of time it takes people to just do the thing.