Podcast Summary: The Game with Alex Hormozi
Episode: These 3 Things Will Make Your Business Unstoppable | Ep 815
Release Date: December 30, 2024

Introduction

In Episode 815 of The Game with Alex Hormozi, host Alex Hormozi delves into the three pivotal strategies that can render a business "unstoppable." Drawing from his extensive entrepreneurial journey, Hormozi shares actionable insights on customer selection, product iteration, and authentic business identity. This episode serves as a comprehensive guide for business owners aiming to scale sustainably while avoiding common pitfalls that lead to failure.

1. Stop Selling Small Customers

Hormozi begins by addressing a fundamental mistake many businesses make: targeting and serving small customers. He emphasizes that a significant number of businesses fail because they cater exclusively to volatile, small-scale clients, leading to high churn rates and unstable revenue streams.

• Structural Churn: Hormozi introduces the concept of "structural churn," where customers leave not due to dissatisfaction with the product or service but because of inherent instability in their own businesses. For example, he recounts a conversation with a small gym CRM provider that faced a high churn rate simply because a third of gyms went out of business annually.

• Market Selection: He argues that certain business models are ill-suited for small customers. Using the advertising agency industry as an example, Hormozi notes that the most successful agencies serve large, stable clients rather than small, transient ones.

• High-End Targeting: Hormozi advocates for targeting higher-end customers who bring more consistent revenue and exhibit lower churn. He cites Shopify's impressive 60% annual customer retention rate as a benchmark, despite serving prosumers who are inherently more volatile than enterprise clients.

• Pricing Strategy: Sharing insights from an agency owner who successfully pivoted to serving small businesses by lowering prices to ensure affordability even during clients' worst months, Hormozi illustrates how aligning pricing with customers' financial stability can reduce churn and enhance business reliability.

Notable Quote:

"If you sell to beginners, you're going to have to either sell a really big ticket one time that's based on an emotional purchase...or you have to create something with a crazy high price-to-value discrepancy."
— Alex Hormozi [05:30]

2. Keep Improving Your Product: The ASK Method

Once a business has secured a stable, high-value customer base, Hormozi underscores the importance of continuous product improvement to maintain competitiveness and customer satisfaction.

• ASK Method: Hormozi outlines a strategy he refers to as "ASK," which involves:

  1. Surveying Customers: Identify those who achieve the best results.

  2. Interviewing Them: Understand what they did differently to succeed.

  3. Identifying Common Actions: Distill the unique behaviors that lead to success and implement strategies to encourage all customers to adopt these behaviors.

• Product Iteration: He contrasts the "rank and build" model—where businesses develop features based on customer votes, potentially leading to convoluted products—with a more streamlined approach that focuses on essential features enhancing the core value proposition.

• Customer-Centric Development: By deeply understanding customer needs and behaviors through direct feedback and observation, businesses can refine their offerings to better meet market demands and increase the perceived value among their clients.

• Case Study: Hormozi shares his experience with his software company, Alan, initially targeting gym owners but pivoting to serve agencies after realizing that agencies provided more stable and reliable revenue despite their customer churn.

Notable Quote:

"You can solve every business problem by simply talking to your customers."
— Alex Hormozi [27:45]

3. Don't Pretend to Be Something You're Not

The final strategy focuses on authenticity and aligning business identity with core strengths and operational realities.

• Authentic Branding: Hormozi warns against businesses attempting to rebrand or reposition themselves inaccurately, such as a service-based company trying to adopt a software company’s identity to achieve higher valuations.

• Valuation Metrics: He explains that high-value multiples in software companies stem from robust unit economics and scalable revenue models, not merely from branding. Service businesses often struggle to match these metrics unless they adopt scalable, tech-enabled solutions that significantly enhance efficiency and profitability.

• Case Example: Discussing a solar company contemplating expanding into software to boost valuations, Hormozi advises against it unless the business can genuinely meet the operational and economic standards of a software enterprise. Pretending to be a software company while maintaining service-based metrics can lead to undervaluation and misaligned business practices.

• Focus on Core Metrics: Instead of chasing labels, Hormozi emphasizes optimizing key business metrics—such as revenue retention, incremental margin, and logo retention—to organically enhance enterprise value. He suggests that businesses should focus on what they do best and seek to improve within their authentic operational framework.

• Long-Term Success: By staying true to their business identity and continuously enhancing their value proposition, companies can achieve sustainable growth and higher valuations without misleading stakeholders or diluting their core offerings.

Notable Quote:

"Success comes down to doing the obvious thing for an extraordinary period of time without convincing yourself that you're smarter than you actually are."
— Alex Hormozi [50:10]

Conclusion

Alex Hormozi's Episode 815 provides a strategic blueprint for building an "unfuckable" business. By focusing on serving stable, high-value customers, continuously iterating products based on deep customer insights, and maintaining authentic business identities, entrepreneurs can create resilient and scalable enterprises. Hormozi's practical advice, enriched with real-world examples and actionable steps, offers invaluable guidance for business owners striving for long-term success.

Final Notable Quote:

"If this was valuable or a wake-up call on maybe some of the things that you are doing or should be doing or should stop doing, it would mean the world to me if you sent this to anybody else who would benefit from it."
— Alex Hormozi [1:15:30]

Additional Resources

• $100 Million Offers Book: Hormozi references his book for more detailed strategies on crafting compelling offers and improving customer retention.
• $100 Million Leads Book: Offers insights into referral strategies and customer acquisition techniques.
• Extra Chapter - "You'd First Avatar": Available for free at acquisite.com/avatar, providing further guidance on identifying and targeting ideal customer avatars.
• $100 Million Scaling Training: A 14-hour comprehensive training program on scaling businesses, available for free at acquisition.com/training.

This episode is a must-listen for entrepreneurs and business owners seeking to refine their strategies, enhance customer loyalty, and build enduring, high-value enterprises.