Throwback: Money Making Advice You Needed to Know Yesterday | Ep 640

Summary

Podcast Summary: The Game with Alex Hormozi – "Throwback: Money Making Advice You Needed to Know Yesterday | Ep 839"

Introduction In Episode 839 of The Game with Alex Hormozi, released on February 19, 2025, entrepreneur and business magnate Alex Hormozi revisits pivotal moments from his $100 million leads launch. Compiled from intensive Q&A sessions with top affiliates, this episode distills invaluable money-making insights, strategies for scaling businesses, and personal anecdotes from Hormozi's journey to a $1 billion net worth.

Defining "Rich AF" and Starting a Business with Limited Resources [00:23 - 02:03] The episode opens with a candid discussion on what it means to be "Rich AF," establishing a target net worth of $100 million. When asked about starting a business with limited skills, experience, and no initial capital, Hormozi advocates for building a "boring" service-based business. He emphasizes industries resistant to automation, such as personal services (e.g., nail salons, lawn care) and healthcare (e.g., dentistry), highlighting the enduring value of human interaction.

Business Resilience and Overcoming Failure [02:03 - 03:25] Hormozi shares his resilience by recounting a hypothetical scenario where he loses everything. He explains his strategy to generate swift revenue by fronting capital to secure bulk service deals with local businesses, thereby minimizing risk and maximizing profit margins. This approach underscores the importance of adaptability and strategic negotiation in business recovery.

Essential Skills for Wealth Creation [03:25 - 05:19] When prompted about the three most powerful skills for making money, Hormozi identifies:

1. Building – Developing products or services.
2. Selling – Effective marketing and conversion strategies.
3. Leading – Leadership to scale operations. He emphasizes that exceptional products reduce customer churn and enhance word-of-mouth marketing, making them crucial for sustainable growth.

Balancing Freedom and Discipline in Entrepreneurship [05:19 - 07:07] Addressing work-life balance, Hormozi discusses an 80/20 approach. He acknowledges the necessity of occasional late nights when in a productive flow but also recognizes days when stepping back is beneficial. This flexibility allows entrepreneurs to maximize productivity without succumbing to burnout.

Lessons from Personal Relationships and Business Growth [07:07 - 10:28] Hormozi narrates a pivotal moment involving his partner, Layla, who demonstrated unwavering support during a financial downturn. Her ability to step up during crisis situations exemplifies the critical role of loyal and resilient team members in scaling a business.

Insights from "100 Million Offers" and "100 Million Leads" [10:28 - 12:16] Hormozi contrasts the strategic importance of crafting compelling offers versus generating leads. He posits that while creating great offers (as discussed in his books) is essential, the primary driver of business growth remains effective lead generation. Implementing these strategies requires a balance between creative offer development and consistent marketing efforts.

Approaching Book Summaries and Education [12:16 - 14:01] Discussing the value of book summaries, Hormozi expresses skepticism, preferring to engage directly with detailed content to extract nuanced insights. He believes that true mastery requires deep understanding beyond what summaries can provide, advocating for thorough education and continuous learning.

Meta Skills and the Importance of Learning How to Learn [14:13 - 24:27] Hormozi delves into the concept of meta skills—skills that facilitate the acquisition of other skills, such as learning how to learn effectively. He underscores the significance of clear behavior training through reinforcement (rewards) rather than punishment, promoting long-term habit formation and mastery.

Branding and Its Strategic Impact [24:27 - 33:23] A significant portion of the episode is dedicated to branding. Hormozi breaks down the essence of a brand as a collection of positive associations that elicit desired behaviors from the target audience. He illustrates this with examples like Taylor Swift's strong, positive brand and Bud Light's missteps affecting overall brand perception. Effective branding, according to Hormozi, involves deliberate association strategies to influence customer behavior positively.

Operational Excellence and Scaling Service-Based Businesses [33:23 - 55:04] Hormozi offers comprehensive advice on scaling service-based businesses, particularly agencies and consulting firms. Key takeaways include:

• Niche Focus: Specializing in a specific industry or avatar to enhance expertise and reduce churn.
• Talent Quality: Recruiting high-caliber talent is paramount, as the quality of service directly impacts growth.
• Operational Systems: Implementing scalable processes ensures consistency and efficiency as the business expands.
• Customer Selection: Prioritizing high-value customers over short-term gains to build a sustainable business model.

He warns against overextending by trying to serve too broad an audience, emphasizing the importance of saying "no" to non-ideal clients to maintain operational focus and quality.

Sales Strategies and Building Trust [55:04 - 74:56] Hormozi shares insights on effective sales techniques:

• Adherence to Scripts: Ensuring sales teams follow proven scripts to maintain consistency and effectiveness.
• Training and Rewards: Incentivizing adherence to processes over mere closing success to foster long-term sales proficiency.
• Trust Building: Leveraging strong branding to naturally enhance credibility, reducing the need for aggressive sales tactics.

He advocates for a structured approach to sales calls, where the initial information sharing is handled through standardized materials, allowing sales professionals to focus on closing deals with high-probability customers.

Selling Emerging Technology and AI [74:56 - 80:20] Addressing the sale of emerging technologies, Hormozi advises focusing on the tangible outcomes rather than the technology itself. He emphasizes selling solutions and value propositions that resonate with clients' needs, irrespective of whether the underlying technology is AI. According to him, most AI businesses lack genuine utility and business acumen, making their offerings less robust and sustainable.

Final Thoughts and Scaling Roadmap [80:20 - End] Concluding the episode, Hormozi highlights the significance of building strong development teams and fostering an environment where top talent can thrive. He reiterates the importance of aligning customer selection with business goals and maintaining operational excellence to support scalable growth.

Notable Quotes

• Alex Hormozi [00:38]: “I would probably build a boring business in services.”
• Alex Hormozi [03:32]: “The three core skills are building, selling, and leading.”
• Alex Hormozi [05:19]: “It's not about rules. It's about maximizing quality output.”
• Alex Hormozi [14:05]: “Learning is natural, but teaching specific behaviors is the real challenge.”
• Alex Hormozi [24:07]: “Branding is about changing desired behaviors in your target audience.”
• Alex Hormozi [39:43]: “Top-tier accountants transform into fractional CFOs.”

Conclusion Episode 839 serves as a treasure trove of actionable business strategies and personal insights from Alex Hormozi. By blending practical advice on scaling, branding, and sales with personal resilience stories, Hormozi provides listeners with a comprehensive roadmap to achieving substantial financial success and sustainable business growth.

Transcript

[Alex Hormozi]

Welcome back to the game. This is a throwback app. Last year, after our $100 million leads launch, the top 10 affiliates had 10 hours to ask me questions about their businesses and do it for their audiences. And my team went through that whole period and compressed it down to the absolute best moments. Enjoy.

[Unknown]

Let's say my only goal was just to get rich AF.

[Alex Hormozi]

What is rich AF? Just so we define it.

[Unknown]

100 million.

[Christoph]

Why not?

[Unknown]

It's a good number.

[Alex Hormozi]

Cool.

[Unknown]

You're willing to work hard, but you have limited skills and experience. What business would you start, like right now? 2023.

[Alex Hormozi]

And I have no money. Right. I would probably build a boring business in services, and I would probably pick something around the body. You know, I wouldn't just start a design firm because I think that has a high likelihood of getting disrupted or, you know, in some way by AI. If I were, you know, it's as silly as this sounds like a nail salon or a lawn care service, things that, I mean, especially body ones. Dentist, stuff like you still have to go in and get your teeth taken care of. And many times people value the human exchange more than something robotic. So, for example, in the fitness world, like, this is my, like my data point around this. There was a brand called Cocofit and they struggled a ton and then eventually went out of business because they tried to automate personal training. So they created these all in one machines that would. You'd have a key fob and it would count your reps, and every time you went to the machine, it would say how to do more and what you did last time. It's a really cool concept. The problem was their theory was that the reason that people weren't getting results is that they didn't know what to do when the reality is that no one was showing up to the gym. People hire personal trainers because they want another human to talk to and to hold them accountable to showing up. Same reason. Like if you had a robot cutting hair, there might be a percentage of the population that do it, but a lot of women like the going to the hair salon and having that exchange. And so I would probably build a business around services in general would be my way. And then I would continue to scale that. And you could do that at a local chain level and you can make a lot of money doing that. Or you could do it at a national level, which would be like professional services.

[Unknown]

I love the idea behind the core stuff that's going to be here forever. You know, let's say, hypothetically, the great fires of Las Vegas burn everything to the ground. Okay, you lost everything. You had to start again. What would you say is the number one thing that you would have done differently to get to where you are now?

[Alex Hormozi]

And I have no reputation, right?

[Unknown]

No reputation.

[Alex Hormozi]

Yeah, it burns my reputation on the ground with it. So I actually have lost everything before. And so I. I know what I did, and I probably would have done the same thing. So the easiest way that I did to go make 100 grand in a month when I had nothing was that I would go find a business that was local, that I understood and that I could sell something expensive for. I would front the capital to market, I would work the leads, and I would sit at the front desk and sell, and I would negotiate what they would be willing to do a big bulk of services at scale for. So, for example, if I wanted to find a chiropractor, and I'd say, hey, if I sent you 100 customers this month, what's the lowest rate? You would do all 100 customers for this level of service? And then I would just negotiate that down, and then I would spend as much as I could and sell it for as much as I can so I can make the spread. And then they would service the customers, and for them, it's a zero risk offer because they don't have to do anything. I front everything else, and then for me, I don't have to do anything but market and sell, and I can take all of that. And so, like, when I lost everything, I immediately was able to make 100 grand the next month by doing that playbook.

[Unknown]

In your opinion, what are the three most powerful skills that someone should develop if they want to make a lot of money?

[Alex Hormozi]

I mean, the three core skills. Are you going to learn how to build, you got to learn how to sell, and you got to learn how to lead.

[Unknown]

Just like that. There we are, like, in terms of maybe, like, hard skills that someone should really focus on learning to develop that like sales, copywriting, leadership. What would you say are the most important?

[Alex Hormozi]

Well, those are the three big buckets, right? So it's like one is that, like, leadership is just the internal bucket of getting people to do what you want them to do at scale. Right? And then from a selling perspective, I include that in all things that are marketing, letting people know about your stuff, promotion, and actually converting people into customers. And then the third piece of building product and services is so that at scale, if the product is good enough, then you won't lose customers. And if it's exceptional, the product Itself will get you more customers. And so most businesses taken to their natural extreme on a promotional level typically are leaky buckets because the product actually sucks. And most businesses suck in general because most products aren't good and most people want to cancel very quickly and don't want to continue to use them. Which is why very, very good companies are very rare. Most of them generally are mediocre or not good. And so I prefer to solve a business from back to front, which is like, can we find something that people actually like and want to continue to use and continue to pay for? And then the marketing is almost a commoditized skill. Like it's very easy to let other people know about your stuff and do so louder and louder and louder, provided the product is good. And then the internal has to get run with a leader that can attract the talent to continue to do this because quickly the business will bottleneck based on the founder and their expertise. Or usually they have a niche. They might be product people, they might be tech people, they might be finance people, they might be whatever. And then they have to be of the character to attract the talent that will allow them to get to nine figures or whatever it is that the goal is.

[Unknown]

You mentioned on a recent podcast with Tom Billy that you don't have rules. So I, for example, you know, I quite often end up working up until midnight, 2am, 3am and basically fucking up my sleep schedule because I have too much freedom, right? Cause I'm self employed. So how do you kind of strike that balance between freedom and discipline? You know, if you're driven and you want to accomplish big things, it's, it's.

[Alex Hormozi]

It'S kind of 80, 20. Like if you know that when you stay up late, like there are times when I will gas it and go past my red line in terms of work. And I know that I'm eating into tomorrow, but if I'm like in a flow and I'm crushing it and the muse shows up and the muse wants to work, then I work. You know what I mean? But if there's some days on the flip side where I wake up and I just feel foggy as shit and I just like for whatever reason I ate too much Mexican last night and my, you know, I just, I don't have it that day, then I might call it earlier. Like the idea of me pushing through and punishing when it comes to the type of work I do. If I were doing a more brute force work, then I would care less. You know what I mean? If it was just like if I was just doing reach outs, I was doing cold calls, I was training personal training sessions, I was cutting hair. I'm just gonna, I'm just gonna brute force my way through it because I don't need to have higher brain function. And that's not an insult. I'm just saying like, you're not like thinking of creative things, you know what I mean? You're just, you're working the work. But when it comes to like writing or, or making presentations or communication of some sort, it's more, I try and optimize around how can I maximize over a week how much flow state I can be in so I can just get the most total quality output. So it's not about rules. It's more like which of these things has the highest likelihood of getting me the most. What's up, Kristof?

[Christoph]

In one podcast you said that your most feared decision in life was to quit your job when you were 22 or 23. My question is, what advice would you give to your younger self if you could in that exact situation when you.

[Alex Hormozi]

Have nothing to lose? It also makes it the best time to make high risk decisions because you have a disproportionate upside. Not quitting if you want to do something else, like if you have this desire to do something else is like not taking a stranger up on a free lottery ticket on the street. If they give you a free lottery ticket and you lose, you're back to not having anything. If you win, then your life changes forever. And so I think a lot of people place a disproportionate amount of weight on the opinions of other people who are going to judge them in the short term. Because quitting your job is short term pain for long term fulfillment. If that's what, if that's what you want to pursue. Because the short term pain comes from the judgment of others and likely a back, you know, backstep in income. But long term you're working on the thing that you want to be working on. Now if you like your job and you know, I mean, that probably doesn't apply to those people, but like, if you're in that situation, it's really a long term, short term sacrifice which a lot of people aren't able to make.

[Christoph]

The second question. Let's think that my audience don't know anything about Laila except that she's your partner. But I think she has exceptional knowledge and she's a really good personality. If you could only tell one story about her that Makes a complete picture about her. What would it be?

[Alex Hormozi]

So Layla had quit her job to join me to start gym launch. This is when we were doing turnarounds, so we're flying around the country. So she quit her job after knowing me for only a month, and then started basically living with me in motel rooms. She had built up a book of business, so she was actually giving up something that she had spent two years building to pursue this thing with me. And we were new. Like, we had just started dating. About six months into that, I told her that I needed a break. And the she actually asked me. She was like, it sounds like you don't really want me to be here. Do you want me to leave? And I was like, yes, that would be great. I had just lost all the money from the partner. I had this location that I had to either shut, shut down and had no cash to do it, and I had to service all these contracts I didn't have the money to service. And I also had, like, three other businesses that I was trying to run at the same time. I had a chiropractor agency, I had my gyms, I had Jim launched the turnaround business. I had a dental agency, all of those with different partners. And I was the one who did marketing sales for all of it. And so I was just so spread thin. And so she. I needed to generate money to basically pay the bills of the gym that I couldn't pay, that the money had just gone out the door for right after me saying, I don't think we should be together. She had to leave, like, the next day to go to Hawaii to launch a gym for this guy that she's no longer dating, that she quit everything to leave. Tough situation that 9 out of 10, not even 999 out of 100 girls would have just said no, have been like, I'm just going to go back home and, you know, try and get all my clients back. But she didn't do that. So she flew out to Hawaii. I didn't have enough money to give her, like, a nice place. And so I had her split an Airbnb with five guys, five dudes, and Layla, not ideal. And so she worked out of the Airbnb and, well, realistically, she worked out of the gym most the time and did the biggest launch that we'd ever done. And so, like, when my world was crumbling around me and I really needed her to come through, she stood tall. And she did it in a time that I probably didn't deserve that level of loyalty because I Hadn't shown her any. And so she did that. And then I made enough money from her launching that gym that I could pay off all the bills of the gym that was going under that I just lost all the money on to basically come out breaking even so that we could actually go back all in on gym launch and get rid of the other companies.

[Christoph]

Oh, man. I think I haven't heard this story before. What went through, through your mind? I. I can't really believe this and understand it.

[Alex Hormozi]

Well, when she did that, I wanted to be with her. She had extended me loyalty that I had not given her. There was probably a few defining moments in our relationship. That was the first big one.

[Christoph]

Thank you very much for sharing this. The next one is kind of basic question, but I'm really curious about the answer. What was your biggest takeaway of writing 100 million offers and also 100 million leads?

[Alex Hormozi]

The offer is a strategic question that influences all aspects of the business and is also a mental exercise that people can feel like they're making progress on their offer a lot faster. Leads is a lot more about activity and implementation. And so people can get ideas from like the lead magnet chapter. But then you have to start reaching out to people, posting content or running ads to start getting leads in the door. Right. And so there's a little bit bigger of a hurdle with leads than there is offers. But it's also the. The main driver of business is letting people know about your stuff. And so I think that many people will mentally masturbate to the idea of making these amazing offers. But I think former people make money by actually letting people know about their stuff, which is leads.

[Christoph]

What went through, went through your mind when, when you rewrote it for the 18th or 19th time.

[Alex Hormozi]

So unless I can work once and have something provide value on an ongoing basis, which is a high leverage activity, then it makes no sense. I think most people shouldn't write books because the amount of work it takes to make a great book that actually lasts the test of time is extremely difficult.

[Christoph]

I think I read a blog post where they said how to write a blockbuster blog post. And there was a chart where they said if you put in like 100 hours to write only one blog post, there maybe will be a million views. But if you put like 50 hours, there maybe will be just 10,000 views.

[Alex Hormozi]

It's exactly that. There's diminishing marginal return, but an increase, an exponential increase in absolute returns. You know, the gold, the gold medal sprinter in the Olympics versus the silver medalist, like from a Business context, the person who's at the gold medalist might have worked 10 times more right to get this much more out. But what's the difference in absolute of gold versus silver? Everything just being this much better. People are like, well, I don't want to work 50 more hours to be this much better. But being this much better might make you the best at that. Whatever the blog post is or that business or that solution. And the amount of winner takes all, the economy has shifted towards people want the lowest risk solution. And so if you have the best solution, then it is the lowest risk thing to buy. And so to be number one versus number two, 80% of the economics, sometimes 90% of the economics go to number one. And so it makes absolute sense to work 10 times harder even though you might only be this much better from a marginal perspective on the chart of rankings that might make you 10 times higher.

[Christoph]

Some context we have like a book summary application where we give also exercises and tips to implement the book. What's your average take on books? And I mean book summaries, Is it good? Did you use them before?

[Alex Hormozi]

I don't read many book summaries. Mostly because you rely on the person who's doing the summarizing to find what they think is the most valuable thing for you. Right. Because a lot of times what I find if I read a book, the nuggets that I find are not the main concepts, it's actually the details. If you don't know anything about a topic, then the summaries are great to give you a latticework, a framework to understand the rest of the information that you're going to consume. But once you have a basic understanding, it's in the edges, which is where you can expand your knowledge. Right. And so there's, there's not a lot of shortcuts to getting really good at something.

[Christoph]

Now a bit of selfish question, but I'm really curious about your thinking. Yeah? Yeah.

[Alex Hormozi]

Okay.

[Christoph]

So you remember you had a video where you scaled a no strip business to 50 million in six minutes. Could you do this with a book summary app?

[Alex Hormozi]

Basically do a breakdown of a book summary. So it's an application.

[Christoph]

Yeah, it's a, it's a subscription based application.

[Alex Hormozi]

Yeah, got it. What's the price point?

[Christoph]

$10.

[Alex Hormozi]

Okay. What's. What's churn?

[Christoph]

I think 15 to 20%.

[Alex Hormozi]

Monthly or yearly?

[Christoph]

Monthly.

[Alex Hormozi]

Monthly. Got it. So you have to fix that first. At the end of the day everything's going to be cac to ltv. So like if there was one single metric that I'm going to look at a business, it's CAC to LTV ratio. So how much it cost me to get somebody and how much I make from them over the lifetime until that metric is better than the competition. So like Blinkist, right? I think that's a one that's like that I would have to look at their LTV and what are the things that they're doing that like why am I, why are people going to come to me versus them, right? So either I have to be more niche in my selection of books so that I'll have a wider selection for a narrower audience. Like competing against Amazon is very tough, but if you, if you, if you niche down into a specific topic, then you can actually have a wider selection. Because Blinkist is just going to take the, the best sellers, right, for every, every category because that's going to be the most people and they're VC backed and they're funded and they can acquire customers at a loss for a long period of time, acquire market share. And unless that's the game you're trying to play, then you have to play different, which is I want to, I want to be really specific about the avatar that I want to go after. And so that's where you do a little bit of research ahead of time and say, okay, is there an underserved market that might actually a have a big reading preference? So like salespeople is one of the most common professions on planet Earth. From a personality perspective, how many sales guys read all the time? I don't know. I would have to, I would have to look into that. And so you might be like, okay, well sales guys aren't the guy, but maybe HR specialists read a ton. Okay, well if they read a ton and there's like Blinkist might have one book on hr, but I could put a hundred different things that are related to that or one degree separated and then I can create the illusion of a wider selection of topics, but around a narrower, narrower avatar or concept, right? I would start there and then over time you can expand if you want to and just reach, you know, you go adjacent, you go to finance or you go to whatever. Like this is me just spitballing again, like I did the no strip thing. From the economics perspective, you have to get LTV to the point where like your churn should be under 3% in order to make this really work. Once it's under 3%. Monthly. Yeah, monthly. I mean ideally you want to maintain 80% annually at least. If you want this thing to be a big thing. All of my attention would be only focused on that. Like, until you fix that, there's no point in acquiring customers because there's going to fall out the back end. Like there's literally no point because then you're also getting lots of people in that will then say that that thing sucks. You know what I mean? I'm not saying it sucks, but I'm just saying like they're, they're. A friend of theirs is going to say, hey, I signed up for this thing. They're be like, oh, I tried, I didn't like it. And then they're like, oh, okay, maybe I won't, I won't stick on it. I want to be so quiet about what I'm building until all my metrics are right and then I want to blow the doors off. But most people want to keep hitting these income goals rather than looking at the, the metrics of the business that are actually going to drive the long term goal. Because like anyone can market their way to 100,000 or a million a month even with an app like this. If you blow enough money, enough people find out about, you can do it, but then you can only maintain it as long as you're spending that much money. The moment your, your spend drops, your income drops. And that's not a business that I want to be A part of our.

[Christoph]

USP is that we are doing, we are, we are in Hungary and we are doing it in Hungarian and there is no other application in Hungary.

[Alex Hormozi]

Okay, that's great.

[Christoph]

If we scale to maybe Poland, we would do it in Polish and not in English. And that's a usp.

[Alex Hormozi]

I like that. And I mean then at that point I would just look at, I tried model as closely as I possibly can. The number one player in the US from a UX perspective, from the selection of titles, all that kind of stuff. And then I would, and I would see if my metrics change if I do that. If not, then it's like there's some assumption that I'm basing this business off of. That's not right.

[Christoph]

In the Danny Miranda podcast, I think you talked about skills versus meta skills. Could you expand this?

[Alex Hormozi]

Maybe a meta skill is a skill that helps you acquire more skills. Learning how to read is a meta skill. Like learning how to learn is a meta skill with the broadest brushstroke all the way chunked up. Learning to learn well quickly and retain information and be able to implement it is, is a skill. You give a hundred people a course Right, that's free. The difference between the people who are going to be successful and not successful are the ones who already have sufficient meta skills to be able to then use the information and implement it. Like at one polar extreme you've got somebody who's completely incompetent, right? Who like you have to teach them how to turn on a computer. And on the other extreme I can say, go build me a company and the person can do it. So this person can translate a directive into each of the sub buckets and knows how to do that. And so it's really like your success percentage basically is predetermined by how low you break down the skill requirements for someone to be successful. So like the reason that I write the books at the grade level that I do isn't so that people who are experts don't get value from it. It's so that it makes it even easier for experts and it makes it attainable for people who don't know. So I can get 70% of people who read the book to get leads versus 10% of people to get leads. If I just cut out some of the steps and made assumptions about their skill level the last 10 or 20%, the people who are experts are still going to benefit from. I'm just also going to include turn on your computer. Here's how you do that. And from the software perspective with what you're doing, that's also how you get a way larger percentage of your clients to activate. Typically we make assumptions because we assume that every customer is just like us and so they have the same meta skills as us and they have the same interpretation or perception of the world and the UX and so that that assumption isn't true. Like all you have to do is, and I'm sure you've done this, like you look at people scrolling on your app and you see the heat maps and you're like, why are they clicking that button? Because they have different skills and experiences that they're bringing to the table. And so then we just continue to accommodate it, break it down to the level that you could show it to a three year old and they would immediately know how to use it. Like the fact that babies learn how to use ipods is an indication of how, how simple they have made it to humans to use and that's why they have such mass adoption.

[Christoph]

How would you teach someone how to learn?

[Alex Hormozi]

We already know how to learn. It's just that most people don't know how to teach. Everybody learns stuff all the time, right? If I. If you touch a stove and it's hot and it's. And it. And it burns you, you learn not to do it. Again, like, learning is. Is natural. Like, we all learn. But people who want to teach a specific behavior don't know how to do it. And so it really just comes down to three things, which is, what do I reward, what do I punish, and what do I extinguish, right? So reward is you give a carrot, right? After someone does something. Punish is you. You. You know, you zap them or you smack them after they do something or extinguishes, you do nothing, Right? So if your wife walks in and she got her. Her nails painted neon orange and you don't like it, you might not want to punish her, because that's probably going to have negative ramifications in the rest of your life, but you might extinguish it. So you might not say anything about the nails, or you might say something different. She's like, do you like my nails? I might say something back like, I'm happy that you got what you want. What we're doing is what behavior are we training? And so if you think about learning or teaching as training, I think it's a much more useful word to think through, because at the end of the day, you have only taught someone if their behavior changes in the same context as in if I want you to say these words when the phone rings, and if I say, cool, we're going to put you through this training, and then the phone rings, and then you don't say the words you have not learned and I have not taught you. And so it's, how many times can I simulate this experience, this stimulus, the context, so that I can have them do the behavior I want within the context that's going to trigger it, and then reward them immediately. And that's how you have a feedback loop that trains people to do something.

[Christoph]

So that is why the streaks in the application and the gamification and those stuff. How would you restructure the education system if you could? Yeah, sorry for this question.

[Alex Hormozi]

No, you're good. You're good. I would focus almost exclusively on meta skills. Teaching people how to learn step one, and then teaching people the things that are the next level underneath, which is learning how to write, learning how to read, learning how to speak, learning how to do math. Like, those are the building blocks of everything else that follows. And in the school of Alex or the school of Hormozi, everyone passes. Only when you learn, there are only 100 percents. And you continue to do it until you learn the arbitrary division of grades along age is ridiculous to me. And I think if there were a lot more clarity around the goal, which is like, until you can read 10 pages out loud without making a mistake, you do not move on. If you can do that in a day, fantastic. If you can. If it takes you a year, okay, I don't judge you on that. It's just, how long will it take you to learn the skill? So a good buddy of mine, Dr. Cashy, taught an autistic kid how to read. He couldn't stay still reading for more than one word at a time. And then he would, like, have fits or whatever. And so he came to train the child on how to read with a bag of Skittles. And so when the kid would read a word, he would give them a skittle. When he would read more words in a row than he ever had, like a record, he would give him two Skittles. So he rewarded the behavior, and then he had big bonus rewards when he would unlock a new level. And so he kept doing that, and within one afternoon, he had him reading a full page. What is the behavior that I want to reward? How can I reward more of it? Now, none of it was punishing. He didn't smack him when he messed up. When he read less, he still gave him one to reward him for the activity. And then when he read more, he gave him extra reward as the kid becomes less full on Skittles, and he's like, you know, sugar, he, like, doesn't want any skills anymore. The skittles become a proxy for approval, and they work just the same.

[Christoph]

How do you know that? When to. When to punish, when to reward, or when to extinguish?

[Alex Hormozi]

We try very hard to almost exclusively reward because punishment changes behavior faster, reward changes behavior longer. It just takes longer to work, right? Like, if someone, you know, calls me Alex and I don't like that, and I slap them and I say, never call me that again, I might change their behavior really quickly. If I leave the room and someone else says, walks in, they might say, I was talking to Alex because I'm not there to punish them. And so punishment only works as long as the source of punishment is there and the person doesn't get accustomed to the punishment, because punishment itself becomes desensitized over time. And so to effectively punish someone, if you want to consistently punish, then you have to increase the intensity and variety of punishment over time because otherwise people get desensitized to it. If you're always mean and yell at all of your employees, eventually they stop caring. So you have to increase the level of your threats. Right. You then have to say, I'm going to fire you, I'm going to kill you. Right. You have to make these threats increase because you create the, you increase the intensity and the variety of how you claim to punish them. Reward. You can reward long enough that you can then extend the gaps between reward to eventually you don't need a reward anymore and people will continue to do the activity because they have always done it.

[Christoph]

So it's the exact example with the Turkeshi and the guy.

[Alex Hormozi]

Yeah, I would imagine if he was doing this over and over again, he'd prove the point. He's not like a full time reading teacher. The concept is that he would read and then maybe the next time he comes in, he gives a mosquito every other time he reads. And the next time I buy every third time and the next time it'd be only when he, when he hits a new record. If I can get the kid to read long enough that he actually starts to like the story, then the story starts reward in and of itself and then I can move away and then the kid reads without me. And so fundamentally that's what you try to do when you train any activity is that most people who are experts at anything get rewarded from the activity itself because once you develop a level of mastery in the skill, you enjoy it because you're good at it.

[Christoph]

So we hope, I hope we will meet again and maybe speak longer.

[Alex Hormozi]

Thank you very much, dude, I appreciate you. Christoph, thank you so much. Thank you for inviting your community and hopefully your community got value from the event and hopefully they use the books and, and grow the economy in Hungary and, and all get, you know, way, way better at whatever it is they're doing.

[Unknown]

You are incredibly committed to education and self improvement. How do you select what you will pursue for education? There's so many possible topics. So what process do you go through to select what you're going to be educating yourself on? And how do you also select potentially someone to educate you on that topic?

[Alex Hormozi]

We do everything off the theory [e-mail], which is basically that a system will grow until it's constrained, until it's limit. So it's kind of like the idea of the, the weakest link. Right? So it's, it's finding what the weakest link in the chain is where the constraint of the system is so that we can decontrain it and then grow to the next natural constraint. It's a very simplistic look, but it's extremely effective because it just cuts down all the noise into, like, if I had to pick one thing that is the big limitation of this business, what would it be? And so then we just get laser, laser focused on solving that one problem, solve that problem, and then we move on to the next constraint. And if we solve that problem and the business doesn't grow well, then we pick the wrong constraint. And so sometimes the constraint is your ability to judge what the constraint is, which is why, you know, wisdom is one of the hardest things to earn, which comes from experience, right, Is that you're able to, you know, recognize patterns. And so for me right now, to answer the other part of the question, I'm focused on learning about brand stuff right now. So brand is my big topic that I've been diving really deep on brand and media. And I'll probably write a book on brand just from the findings that I have. Because I don't think there's many good books on brand. Because you can, I could read you 20 different definitions of brand and branding and they all sound like cockamamie. And so coming up with an operationalized version of what that means so that it can actually be useful. And I, I try to learn this stuff so that I can use it, and then whatever I learn, I just, you know, pass it forward. Because branding for me, despite being now, quote, known for this or like an organic content guy, I've only been doing this two years. Like, this is brand new to me. Like, I, you know, I have way more experience on the paid outside. That's what I did for the last decade. And I, you know, people got to see a tiny taste of that when I was launching the book. But that's, that's the big thing is finding out what the constraint of the business is. And if you need to chunk all the way up, it's, if you want to grow a business, you have to sell more clients or make them worth more or decrease risk. Those are the, those are the things that are going to grow the value of a company. And so just simply asking the question, like, why do we not have 10 times more customers or why are we not making 10 times more money? And then figuring out what the answer to that question is oftentimes is the.

[Unknown]

Constraint just because you're saying, hey, I'm, I'm currently educating myself on, on branding. And that's fresh for you. What would you say is like a major takeaway in terms of education for the topic of branding that you're just like, I wish I would have maybe known this when I started to try to learn about this two years ago.

[Alex Hormozi]

This is like a Pandora's box. If I start talking about it, it might be like 10 minutes. So I, I can, I can riff on it, but like buckling the audience. So if we look at the origins of what a brand is, right? Where do brands come from? Brand comes when you brand cattle, right? That was the original use of a brand. And so why would you brand cattle? Because you want to change the behavior of people who look at the cattle. So if you have a cattle that doesn't have a brand and the cattle that does, the people who are looking at it will behave differently. If the, the cow doesn't have a brand, I might take the cow for myself or I might kill it, or I might eat it, I might do whatever. But if the cow has a brand on it and I know the guy, I might return the cow to him. Right? So it changes what I do. All right, that's important point. So the point of a brand is to change or elicit a desired behavior in the widest percentage of your target audience. All right, now, how do you do that? You do that by making associations between something they don't know, your brand in the beginning with something that they do know that is positive and rewarding, if that's what you want. Right. And so the index to 4 by 4 box of what brand really is, you have the, the, the direction. So you've got away from and towards. And then you've got strength, so very high and very low. So, you know, if you have a really weak thing that's away from, it's like, I kind of don't like this thing, you know, slow, wi fi, you know, like whatever, like bad brand. On the flip side, you might have a political party which, depending on the audience, might be super strong and away from or towards. Now, Taylor Swift, for example, would be someone that I would say has a very strong brand and towards. There's not a lot of people who really hate Taylor Swift and a lot of people who really love Taylor Swift. Right? So it's positive and it's strong. Right. Somebody like Ray Romano, if you heard that, you know, like Tim Allen from the old sitcom days, might be someone who is positive but weak. A lot of people know who he is. Am I going to show up to his event? Probably not. The idea is that in order to build a brand, we simply pair things that people know, things that they don't know. The things they don't know is our logo, our tagline, our company with things that they do know and think are positive. If you were to think about the brand as a bouquet of flowers, it's like having many flowers in a bouquet. And so if I were to break the bouquet and spread all the flowers, there is no bouquet. But simply by gathering them together, by making associations, I create something new. And that bundle of associations is the brand. Now, if I were to break one of the flowers or make it rotten, it would affect the appearance of the entire brand. And so that's why if you make a single mistake, a Dylan Mulvaney move for Bud Light, you can affect the entire brand. If I get a DUI or somebody, you know, gets, you know, accused of doing some sort of terrible, heinous act, right, it affects the entire brand. R. Kelly, bad brand. Now, right? Despite all the positive, the one broken rose or the one rotten flower affects the entire bouquet. We have to be very deliberate about what associations we want to make with our own brand so that we can continue to positively associate ourselves. And the point of the brand is that we get a desired action or behavior from a specific audience. The idea of growing the brand a lot of times is that you sacrifice some audience for other audiences. So, like, when I was starting making content, I did it in my closet, right? And there were some hardcore people in the OG Mosey media days that are like, I appreciate you, that were like, man, I miss the closet videos right now. I might have lost some of those people when we started making a little bit more polished videos, etc. Some people not all right, I traded. So I traded losing some audience to gain more. When you're making a brand move, you're basically always making a bet that you will gain more of your desired audience than you lose by making a change. And so you can approximate or slowly move a brand over time by making more associations in one direction and fewer associations in one than the other. And so that's how you can move a brand over time. Bud Light made a wrong bet. They thought, and maybe this is just a corporate group think, right, that if they made an association, Dylan Mulvaney, that they were going to get more people to buy their beer. That, I mean, fundamentally, that's the only reason you would do it as a company, right? You believe that long term you get more people to buy your beer. The problem was that wasn't true. Now, the interesting thing is that there probably are people who were a big fan of that move it's just that there were more people who weren't, they.

[Unknown]

Were far away, right?

[Alex Hormozi]

There were more people who were not a fan of that move. And so that became an away from association. And so that is what I am trying to encapsulate and put together into how to brand. Because now that I feel like I understand it a little bit, I see it as, in my opinion, you know, it's kind of like Neo in the Matrix when he's talking to Morpheus and he says, so you're telling me that I can dodge bullets? Morpheus says, well, when you're ready, you won't have to. And so we learn all these tactics about sales and marketing and show up rates and CRO hacks and all this shit. But if you have a brand, if you see the Matrix, everyone shows up to your calls. No one has price objections. Everyone is excited and refers their friends. It just takes longer to make associations because fundamentally all branding is, is teaching. You were teaching someone to do something, you want them to behave a certain way. And you have this red, red card. And when you see red, it means stop. That's all we're doing. So green lights have strong associates, strong brands. They're positive. Everyone loves green lights, right? Like it's a simple thing, just no one owns it. But green lights are a great positive association. It's a great brand, right? And so that's, that's the idea of what I'm, what I'm kind of diving more into. And I see it as the ultimate sheet code for business. It just takes a long time to do and most people aren't patient.

[Unknown]

You're telling me I can dodge business problems?

[Alex Hormozi]

I'm telling you that once you have a brand, they become irrelevant.

[Unknown]

You talk about deleting problems as your favorite way of solving them.

[Alex Hormozi]

Yes.

[Unknown]

How do you decide what's deletable versus what's not? Because I can imagine the, the person who really loves that strategy doing nothing and just deleting all problems. So how do you prioritize a problem worth solving versus a problem that is deletable?

[Alex Hormozi]

Well, it's just percentage likelihood of impact chunking all the way up to like, will this cost me number of sales? Like sales velocity, will this decrease the lifetime value of customers and will this increase or decrease the likelihood that whatever I'm doing right now continues to occur? So we're trying to value a company, right? We look at what's the sales velocity, how many customers they sell, what's the lifetime value of every customer. Because then you can Extrapolate what their run rate is going to be at at scale, at max, unless we change something. And then you divide that by risk, which is how likely is it that there's going to be an outside event that's going to change this thing from continuing to occur, this box of making money, how likely is that? They will, it will continue to grow or at least stay the same. And so if I have a problem, I have to be able to track it back to one of those three things. And if it doesn't really track one of those three things or there's another problem that has a much higher likelihood impact in terms of it's higher likely and it has a greater effect size, then I'm going to prioritize that. It's just that oftentimes if someone's like, man, I really think we should change the colors on the site, I would just say like, what's the likelihood? Like, I have been notorious for having ugliest shit sites my entire career. And you can make branding, make associations and I think there's, there's an argument there, but what's the likelihood that it's going to affect how many companies do a deal with us? It hasn't up to this point. And so is it a constraint of the business? No. Is it something that I could improve? Absolutely. There's also 100 other things I could improve. I could also send more emails, which I don't do. Like there's lots of things I could do, but what are the few things or the one thing that matters most which then ladders back up to what is the constraint of the business?

[Unknown]

If I look at the highest price competitor in my market and I one up them and then they one up me potentially? Like, is there ever a point in which we just say, like, we're price premium enough or do we always have to go for the top? Like how do you make the determination of premium?

[Alex Hormozi]

There's basically four positions in the market. You have luxury all the way at the top, which is technically a veblen good, which means when I increase the price, demand goes up. And that's because there's an association with the price that makes it more valuable. So the fact that everyone knows how expensive it is affects the value that I get that I get from it. The fact that everyone knows The Rolex is 100 grand, the one that I'm wearing, whatever, then I actually, it makes the Rolex more valuable. So it becomes a virtuous cycle. Which is why LVMH is one of the Most valuable companies in the world. Then you have premium, which is basically the above average. So it's there, you have to pair utility with the premium in luxury. The, the, the extra price tag is the value. Whereas with premium, like BMW is premium, they're not luxury. They are a little bit better at a lot of stuff. And so you pay a premium because it is a little bit, they use better materials, it breaks less, whatever, right? And so then you have your, you know, your mid tier, your, your run of the mill, your commoditized space, which sucks. And then you have your low cost leaders which they make their entire business on. How can I drive efficiencies in operations at all levels of the business so that I can be the lowest priced person in the marketplace, right. And still make a profit? To, to route to your question of like when is enough enough? The key indicator for me and most of this, like the quote, higher ticket world, you're not luxury goods. The fact that it's expensive is not the reason that people want to buy it, right? It's. So it's actually technically a premium. I'm more extreme about the price to value discrepancy than anything else. And a lot of people get into trouble because they raise the price so much that it is, it's just an excess of the value they provide. And so then they actually create a negative experience. Like if Chipotle were $50, people would probably not like Chipotle even though the product is really good. But at $50, I don't know. And so the reason why so viral, you know, I mean, it's like the price to value discrepancy is so good that they tell their friends, right? And so that's where this kind of marriage of how can I just short circuit people's brains from value perspective, which is what I try to do with the books and the courses, so that it becomes viral on its own. And then my cost to acquire customers is zero. And so then everything after that is just gravy. Or the four variables when you're using this is you've got the price, the value at the top, which is what they get, right? The price is what they pay. You've got your cost of goods to deliver and then you have your profit left over. And so it's playing with those four variables so that you can maximize the, the amount of absolute profit that the company makes. Pricing high has become shorthand. And where I think people get a lot of benefit from the offers book is that when you price higher, you automatically weed out shitty customers. And I think many times that is the real reason that a lot of people's businesses grow from that price. Now, obviously there's more profit, there's, you have access, things that you can, that you can deliver on. But a lot of people don't actually take that excess money to create a better experience. They do a gotcha and then they never get anything from that customer again. And so that's the wrong way to use it. But if I had to think like, okay, what are the reasons that, you know, a company might be successful that does charge premium is that they actually reinvest the premium price into a superior product. And they are very clear about the avatar that they go after and what the quantitative requirements are that are black and white, that they know from looking at their best customers, their top 20, top 5% of customers, and then saying, we're only going to cater to these customers in the future because the likely that we can give them a great outcome is higher. And then that can create, you know, you can merit or earn the premium that you have because you have data that supports that. If you are this type of person, we can get you this type of result.

[Unknown]

What does the ideal experience with an accounting firm look like to you? And I asked, because one of the things that stuck with me is you said you've never done your own books. Like, you've always considered that something that was delegatable, important to delegate. You've also referenced bringing, I believe, accountants in house, kind of going back and forth between outsource and in house. So what does that ideal relationship look like to you now? And maybe what did that ideal relationship look like when you were going through your first, you know, seven figure and eight figure company?

[Alex Hormozi]

A lot of professional services should look at WI fi for inspiration. You're like, what does that even mean? You don't, you don't want to like clap when the WI fi is working, you just notice when it doesn't. And so you just want it to be in the background. You just want it to work right. And so a lot of companies are like that. Like, there's a lot of services that people think they need to like, over, you know, communicate stuff on, like, I just want the financials to be accurate and I want them to be timely. That's it. And I want things broken down in a way that allows me to make business decisions. And that's where, like, I think the top tier of accountants transform into fractional CFO and CFO kind of materials where they actually help you Use this data to make informed decisions about the business. Is there a way that I can translate what we do into how it would affect a business owner's life? So I'll tell you a little story because I think this might be really relevant. This will be really relevant for you guys. Mozy Nation, real quick. If you are a business owner that has a big old business and wants to get to a much bigger business going to fifty hundred million dollars plus, we would love to talk to you. And if you like that or would like to hear more about it, go to acquisition.com you can apply anywhere on the page and talk to one of our team and see if we can help you get there. So one of our portfolio companies has had a ton of growth. Three years, they went from one location to I think we're at 38 locations now, right? All self funded off cash flow. All right, so really, really tremendous growth in three years. And it's compounding. So it's growing faster and faster. And when we were at about 30 locations, we were stuck at 30 locations for like two quarters. And so I got on the phone with the CEO and he was like, dude, I just, I just feel like I don't know how many locations I can open based on cash flow. And because they had net receivables, were a little bit extended, things like that, right? I like shook the screen for a second. It was a zoom call. I was like, I need you to freeze frame this feeling you have right now. It's like, okay. I was like, think about this feeling you have. I was like, what you are feeling is finance as the constraint of your business. You do not have a finance function that is operationalized enough. Like you do not, like you are underdeveloped in the finance function. You have a bookkeeper who's not that good. As soon as he, like I could see, it just clicked. I was like, that is the constraint of the business. Until we get the finance function in, you're going to just be operating blind. And then once you know we have this much cash flow, we can open two locations a month or three locations a month. Then you can be more aggressive with everything else because you're confident that you're not bankrupting the company accidentally on your own. If I were an accounting firm, I would try and pinpoint the problems and relate them to how it's going to affect growth in the business. Like how is the constraint so that you can talk in the language that a business owner is going to understand. Like they just how many I'll bet you, like, if I could see everyone's hands. How many people in your audience, all the business owners is go to the right, go to the bottom and say, so we made more money this month. Great. And so I think adding that level of strategy of like, by the way, I think this is a little fat compared to other companies that we're looking at. This is a little bit under. Compared to other companies we're looking at. And this might be an area of opportunity. Little things like that that actually add value to the business. If I were somebody who is in charge of account, I'd like to get.

[Unknown]

This answer in less than 60 seconds because I have. I know we gotta go. And I want to be respectful of your time. This has been incredibly informative. How much of a skill should you develop or how much should you educate yourself before hiring for it? So, for example, like, do I need to be a sales manager before hiring for sales management?

[Alex Hormozi]

What you, what you hit at is one of the hardest parts of business. You need to make an informed decision without context, which is why being an entrepreneur, you end up becoming a jack of all trades so that you can have enough context to make at least an informed decision. And so I'm going to steal a playbook out of. Oops, wrong shoulder. There we go. Out of Layla's book here. And I'll give you my tactic around this, which is you want to interview for people who are sales managers and you don't want to hire anyone for a little bit, which sounds tough, but what you want to do is you basically want to interview for information. Now, if you meet a gold star, that's amazing. But you want to talk to people, and if you know more about it than they do, they should be teaching you. And once you talk to 10, 20 people, they're basically like expert interviews for what it should look like. And so then you get a very good idea of what the role should look like after listening to people, and you'll get an understanding of the level of nuance. And I'll give you this one little tidbit that is super powerful when it comes to judging skills. The quality and quantity of data that someone chooses to collect around their particular department is almost directly proportional to their skill. And so, for example, I have lots of marketers who are like, I'm in a. My product's amazing. And I say, cool, Tell me your metrics are. I was like, what's time to value? Right? What are the key activation points? Like what's churn, Right? Like, just some of These metrics, and they're like, well, dude, our refund rate's really low, right? But I'm like, okay. I was like, well, what about the marketing side? They're like, well, CPMs are this, this is our click through rates. This is our, you know, this is our conversion on the page. This is our percentage, the schedule is our percentage to show this is a percentage open rate. This is a percentage. Like they go through all this stuff. And I'm like, right, So I can see very clearly that you're a better marketer than you are at product. And so simply getting an idea of the quality and quantity of the data that someone collects around their department will get. Like, when we hired our director of people, it was the first time that I had someone actually tell me metrics I'd never heard of. And I was like, she's the lady, she's the gal.

[Unknown]

My community loves you. And that's how we are here. And I literally got like 150 questions. I had to narrow it down to five or six. It was so hard. You mentioned something in the $100 million offer that to hit your first 100k you don't need a lot, you just need an offer to sell. And that's exactly what we did. But right now we are hitting a bottleneck and our biggest bottleneck is operations. And I want to know how exactly you got out of gym launch operation. Because we have a very similar business model for service providers.

[Alex Hormozi]

For what service providers?

[Unknown]

Mostly agencies and digital consultants with lead generation and sales. Way we do it is with one on one consulting and in a group coaching format.

[Alex Hormozi]

So coaching models in general tend to be very difficult to scale because the reason people come to you is for expertise. In order to get other people to provide that expertise, then you have to create lots of experts who then eventually walk off and start the business on your behalf and take your customers with them. I would say like there's a couple different approaches. So the first is that there's the law firm and the McKinsey kind of consulting model. There's a track to become a partner in the business and then that's kind of the whole business structure. So there's a way to share in the profits. They do make lots of money, but the owners of those end up having to dilute themselves out. Not that there's anything wrong with that. You can make lots of money doing it, but that is, that is a version of the model. The other way is to productize the basically get narrower on the solution that you're providing and productize it to the greatest degree possible so that anyone could do it even if they have no knowledge of it. In terms of like the implementation of the thing. That is more the direction that we went with gym launch because we had a very specific. We don't even, we didn't even work with all gyms just to show how narrow we were with it. We worked with only micro gym owners. We have now expanded to health clubs as well. The five or six years that I was doing it before we sold, we were only micro gyms. And so just to show like how incredibly narrow that was, someone had to have at least 30 members assigned, lease one employee and be running this type of model for them to be a customer. And then if they fit all those things, we could generate a lot of revenue using our playbooks. I could have somebody who had no gym industry, no expertise whatsoever, and still say, send this email, say these words, here's 10 recordings of people doing this exact same thing. This is the expected value. And so that's like from the delivery perspective. Now, operating the business overall comes from talent and being able to find people who are just as smart or smarter than you. And people say that, but like when you actually meet somebody who's smarter than you and then they admire an aspect of what you've done so that they start to work for you, that's where you really start to have the magic happen.

[Unknown]

What are some of the things that agency owners should avoid doing if they ever want to scale in your experience?

[Alex Hormozi]

Okay, so what things should an agency owner avoid when they're trying to scale?

[Unknown]

Yep, yep.

[Alex Hormozi]

I mean, the same things that any business owner would want to avoid when they're scaling. Agencies tend to fall into the, you know, they, they tend to fall into the bucket of trying to be everything to everyone. So maintaining the discipline to be very focused about the problem that you're solving and who you're solving it for. And I think that solves 90% of the problems from a strategic perspective for any small business owner, including an agency. The second piece is that if you're in a service based business, the quality of your talent is going to be directly proportional to your growth because you're, you're basically selling people, fractionalized people. That's what service businesses are. Right? You're selling some level of training that you're able to give and having more efficiency than an individual business owner would have. Like the classic small business owner lead gen agency that charges $2,000 a month. The idea is that if they Were to hire somebody full time to run these ads, it would cost them five or six thousand dollars a month. But you have copywriters, designers and media buyers and page designers who all work a fraction of their time for this one business and they can get it more efficiently. And you can still do it at good margins. Right? Like that's fundamentally what service businesses are. And so the quality of that talent and the culture that you have at the business to attract and keep that talent are the kind of the key or the crucial pieces of the success of the model.

[Unknown]

You mentioned something in the book where you mentioned the agency model where you hire an agency to learn the stuff and you internalize it. And then when you have stopped learning, you replace an agency. But teaching agency models, agency businesses, how to become irreplaceable, in your perspective, how should one go there? Should we start with one business, then upsell the next and upsell the next and upsell the next offer?

[Alex Hormozi]

Creating the irresistible offer isn't necessarily about having a zillion products. It's more about explaining and communicating the many small things that you have to do anyways. And so rather than saying like, I'm going to generate leads for you, that's like one outcome. But there's many things that have to happen along the way. You have to create landing pages, you have to write copy, you have to, you have to have follow up sequences, you have to work the leads, you have to have scheduling, you have to, you know, you have to split test, you have to make new creative. Like there's lots of things that have to happen in order to just get the single result. And it's just making sure that we're delineating those things. Because an unbeknownst or an ignorant business owner, I say ignorant in the technical sense. Like they just don't know, would have no idea what you're doing. You're like, yeah, just go get me leads. It's like, well, it's much easier said than done. And if I was doing it from an outbound perspective, I'd be like, well, I have to warm up domains, I have to, you know, spin up different accounts, I have to split test different email openers, I have to split. Like you have to explain all the steps and they're like, wow, there's a lot more work that goes into this. Now I can, I can appropriately value this price tag that you've ascribed to whatever the service is. So that's piece one. In order to be irreplaceable, oftentimes you'd have to go after significantly bigger customers. If you're an agency for Fortune 1000, for Fortune 500 companies, it would be so costly for them to spin up at scale the level of talent that's required to do like programmatic media buys across 100 different platforms in different countries. And then the likelihood that they want to leave or do this on their own is significantly lower. The idea that any service provider is going to become truly irreplaceable, like any business can do anything on their own. And I would prefer to put myself out of business and do it in a way that aligns my customers with me than have a model that I know is is basically has a timer for obsolescence.

[Unknown]

Not everybody works with Fortune 500 companies, right? Sometimes you, many people they might work with, you know, small and medium businesses, they help them. Let's say you become a marketing agency for chiropractors and New York, you become so good at that in general, people won't leave you because you are just good at that particular service.

[Alex Hormozi]

And the thing is, the small business owners are really tough because they're the problem. Like they're super erratic, they're super volatile, their cash flow is lumpy. They don't know where their next paycheck's going to come from. And to no fault of your own, they can cancel because they just can't make payroll that month. Look at the biggest agencies that exist. Ogilvy, you have Vayner, you know is up there now. Who do they service? Massive companies. Why? Because the quality of the customers are higher. And so they know that when they sign a contract they actually stick with the contract. We all know that if you have a small business owner who signs a 12 month agreement for agency services, he's good for three months. The biggest model that I've seen for small business owners from a marketing perspective was an agency that was running $300 a month. $300 a month price point because they had figured out and like there's a key here is that like those business owners are so price sensitive, it's not whether you can sell them, it's whether you can keep them on their worst months. The price isn't based on the value that you can deliver on the best month, but how much you can keep on the worst month. Because that's where the churn comes in. The best model that I saw was doing SEO for small business owners and they had completely automated every aspect of was basically just a playbook. And I think it generated reviews and maybe a couple phone calls. A month. But at a $300 a month price point, if they got one or two phone calls a month, it was worth it. So the bar to get over to, to ascribe value and especially on something that I call like a nuisance business, where it's like, I know I should be maintaining my reputation, I know I should be doing some of this stuff, okay, for two or 300amonth. I don't feel guilty about not doing it because this is being handled.

[Unknown]

We are in a consulting model, right? What happens is some clients actually do the work and they get results. And some clients, they need a lot of follow ups and they need a lot of accountability from you. How do you maintain that? Like, I know I'm getting very nitty.

[Alex Hormozi]

Gritty into this, but I'm good with nitty gritty. You talk to basically one of the core problems of all B2B businesses, which is that you end up taking over the person's entire business until eventually they're like, yeah, if you could just send me a check every month and you do you run the business, that would be awesome. That's why being very disciplined about problem definition from the services that you provide, number one, and here's the one that everyone messes up who you pick. It's not like even if you work with chiropractors, right? As that example, you don't necessarily even want to work with all chiropractors. You look at the customers that you have right now that are the best customers, like the top 20% or the top 10%, you say, okay, what characteristics do these people have that other people don't have in my client list? And that's both from the soft, the hard perspective. What are the quantitative differences? They have a certain size business, they're over a certain amount of month, they have a number of locations, they have a certain amount of employees, number of customers. Like, you just get all that data on them. And then also what was the experience that they went through when working with me? And was it different than some of my other customers? Because one of the things that happens oftentimes is that the first few customers you get become really sticky and then you start scaling and then you have this front revolving door. But you still have your core business of these people that you had in the beginning, right? So why is that? Because these people got more help from you and actually got delivered more value. And then you basically tried to scale without scaling the value that you delivered to the original customers, right? And so if you're at whatever 15,000amonth and you've got five customers and they're all like having a great experience. And you keep signing people on, they keep leaving. It's like, okay, well instead of me trying to sell five this month, why don't I just sell one and do a great job and then not lose them? And like, that's the key to compounding in a service business. Once you pay down the basic, pay down the inefficiencies of them not knowing what to do yet and being very specific about who you serve and who you don't like. We didn't work with personal trainers, cycling studios, and like yoga studios. 100% could use our model. We didn't work with them because the founders tended to be psychologically different. Their adherence was super low because they just come from a totally different worldview than the guys who are more fitness, weight loss transformation focused, even though at the end of the day it's just a membership with a back room where people work out. But mindset wise, they had a very hard time kind of adopting a different model, even though monetarily it totally made sense. Which means you need to have discipline to say no.

[Unknown]

Dude, this is so hard to say no to this new upcoming business because you know it can help them, but they just don't fit your criteria a hundred percent.

[Alex Hormozi]

Dude, I have 13 companies, I get 1800 a day who reach out. Right, so you have to say no.

[Unknown]

It feels weird to like say no because a lot of the time I get or so we specifically stay poor.

[Alex Hormozi]

They can't say no. And what happens is you go for the short term money and you sacrifice the long term money because then you just get in this operational rat race and then you scale up your costs to meet the fact that you took on all these customers that you shouldn't have taken on to begin with, and then you have to pay them every single month. So then you have to keep on taking on customers that you shouldn't have taken on to begin with. And you get in this vicious cycle that you can't get out until you downsize. You take two steps back, five steps back, fix your ego, and then say, I'm only working with these customers because ethically I know that these are the ones that I have the highest likelihood of success with. Everyone else I had mediocre success. And I can say it's their fault. I can say it's my fault, it doesn't really matter. All that I know is that the likelihood that they achieve what I think they should achieve is low, period. So I'm not going to sell them.

[Unknown]

Aren't you afraid that the TAM will go smaller?

[Alex Hormozi]

Like, of course you can build a niche an inch inch wide and a mile deep. There's 30 million small businesses. You don't need to service them. Like there's, there's 50,000 gyms that fit the model that we have now. If you want to build a $10 billion company, then yeah, you're going to have to go after a bigger problem. But if you want to build a nine figure company, you can do that in almost any industry.

[Unknown]

So you mentioned that when you started out, you started with the first five customer framework. That was awesome. And then you just grew with referrals. So this question came from a fitness consultant herself and she said that with the competition that the fitness market is, how do you stand out?

[Alex Hormozi]

Honestly, it's just being authentic. 99% of the fitness market just looks at what other influencers are doing and say, I'll copy that and I'll do stuff like that. But then you just do a worse version of what somebody's already doing. Zooming all the way out. Fitness. Like, there's no secret. Work out more, stop eating shitty. You'll look better over a longer time horizon. Like that's what it is, right? There's going to be a subset of an audience that is like you genuinely and they want to get there. They could get fitness information from Alex, but if I'm a, you know, a 45 year old Indian mother, I'm probably not going to be her source for fitness information, even if I see the identical stuff as another 45 year old Indian mother. Now if that 45 year old Indian mother looks at my fitness content and tries to make content like mine, it's gonna seem weird. You can stick out by actually being yourself. I know it sounds trite, but the real, like this is real. There are so many unique aspects of someone's life and the things they're interested in compared to other people that if you just lean into those differences, those, those unique as the things that you're actually into that are weird, right? Rogan's into aliens and mushrooms and comedy and fighting. Who would have told him, like, you should be Joe Rogan and you're going to have people who like some aspects and then the super fans will be people who overlap on two or three of the interests that you have. If you picked my brand to be like dessert, working out philosophy, business, marketing, sales, they're different. They're people who follow me because they only like the Business and money stuff. They're people who follow me because they only like the philosophy stuff. They're people who follow me because they just think the desserts and cab stuff is funny. Like it just depends on what someone's going to come in for. But if you're just you, then you can stick with it for the long term. And that's what's going to build over time and make you, quote, stand out. Because there is only one version of you that's lived your life. So just live it publicly.

[Unknown]

Thanks a lot, man. I think we are at the end of our tenure. Thank you very much for being here and keep writing great books.

[Alex Hormozi]

I hope, I hope you make so much money from the book and just. And crush it. Because at the end of the day there's more problems than any one person can solve. And I hope we build businesses to solve them. So explain to me how the franchise works.

[Unknown]

Yeah, so we have a lot of clients that want to work with us and we have a lot of closers that want to work with us. And Johan and I, we just can't manage everything ourselves. It's just too many people. We had two options. Option number one is place managers to replace us, right. And then give like two to three accounts, client accounts to each manager. So they can manage them obviously and we can scale that way. The problem with that was that, that managers only get paid so much and they only care so much about the business itself.

Right.

But when it comes to partners, they get 50% cut. They get exactly what we are getting.

[Christoph]

50, 50.

[Alex Hormozi]

The franchise thing is interesting because I feel like you would be able to achieve that simply with a profit share rather than getting investment in equity and all like the. Because if speed is the goal, then you could basically do the makeshift in terms. Because like they're. I'm assuming many of them aren't planning on selling. Right. And so the only reason the equity would be valuable is if they're going to sell it sometime in the future. And buying, quote, more locations isn't really a thing either. I would imagine that just like it'd be a lot faster just contract, you know, basically put, put legal language around getting a profit share in the structure, you know, the cut that you have. Like many companies have scaled sales orgs, you know, I mean like insurance brokerages are just massive sales orgs. Like real estate agents are massive sales orgs. And so they don't necessarily have equity. You know what I mean? Equity deals, because those can just get litigious and there's lawyers and just take, I'm sure you guys have already seen this. Like it just takes more time. And I feel like there might be like you could probably remove a couple of the components to get the same behavior, which is ultimately what you're trying to do is get people who act like owners. So that's just, that's me just shooting right off the cuff of just looking at it. So that's kind of why we kind of came up with the franchise model to put like a nice barrier there. So it's for people who like have the experience in the space of running an agency or like scaling, managing high ticket sales teams. But now you're getting like the infrastructure that we've kind of built over the past four years. I mean you could still do all that without the, without the franchise agreement. But what problem are you solving? Why are you not bigger?

[Unknown]

It's a management problem, just in general. We're bringing on more partners and doing it faster and doing it more in a more organized way. So what you said, it does make sense because that will remove some friction and it would allow us to bring more people without risking, you know, the, the equity in any way.

[Alex Hormozi]

I mean based on the model you have, you guys can own 100% of the, you know, like the franchisor. But even if you, if it was just like, you know, the, the main co, you can still have streams because you have the software. So tracking becomes the issue. But since you already have that infrastructure built, the ability to just make sure that they get overrides. Now if you want to put, you know, a $10,000 buy in or something, just because you feel like that increases commitment levels, I mean, that's fine. But if you look at like a Chick Fil A, for example, are you familiar with their, their model?

[Unknown]

Yeah.

[Alex Hormozi]

Right. And so they, you know, each location probably costs. I actually don't know the build out cost, but I would imagine it costs at least a million, probably one and a half to build a location for Chick Fil A. And the operators put $10,000 in. And so it's more of a symbolic gesture than it is like them actually, you know, contributing capital to whatever the thing is. But they actually don't own equity in the business. So they get a 50, 50 profit share after a royalty that goes to Holdco. Just looking at what they've been able to build, it seems that, that that structure works without the equity in terms of eliciting the behavior that you guys are going for. But from everything that you said, even right at the Beginning you were like, well we needed something that was more scalable because obviously we had lots of people. There's many people who have scaled businesses with lots of people. And so it sounds like it's actually a talent deficit. Like you need to hire somebody or bring someone who's a high level operator who has scaled a sales driven org.

[Unknown]

What's revenue right now, revenue for the phone sales organization? Well, every month is different. Around like 4 million right now per month.

[Alex Hormozi]

Is that GMV? So like gross, gross sales volume and then you're getting whatever 20, 25% on that. Yeah. So you'd be looking at a, at somebody who's scale to sales org from you know, 10 million to 100 million and who's really ops heavy. So you want somebody who looks like, who's very, very leadership driven. Not a systems person. That's not the right person. You're looking for somebody who's who you admire. Take this the way I mean it. You need an adult, right. And it doesn't, that's not a function of age. Just saying you need someone who has experience doing this. Because if I were looking at like if I were going to go buy in, right. To phone sales, the first thing I would do is hire an operator. Because right now all the things that you've described have been people issues. So if I'm operating on the theory of constraint, which is what we do, I would say okay, well then people issues seem to be the main problem for this business. So I'm going to hire somebody who has experience in this particular domain in a sales org who has gone from X to Z.

[Unknown]

Million dollar question, where do you find such people?

[Alex Hormozi]

Well, you guys are sales guys, right? So it's outbound. Outbound is the easiest thing to do. You could also run ads, but the best people already have jobs. And I mean you guys know this from, from your business, right? And so it would be, it would be outreach. Outreach is the, is the easiest thing to do. Go to LinkedIn. And LinkedIn has so many tools now like search for people who meet these, you know, these three or four job titles. Probably like a, like a senior vice president or a VP of sales. Sales director might be a little too low, but probably a VP of sales or VP of Sales Ops, something like that. Like you'll have to play with the title. It is kind of like an ad in advertising. Like you have to play to figure out when you get the right avatars on the phone. But as soon as you get it to click then you're like okay, these are the types of people I want. And then you talk to as many as you can. And the limits test that I have for high level talent is that I should be learning from them on the phone call. So if I feel like I have to teach them stuff, they're not the right person. Like if they're teaching me things, which is also great because then you can keep taking notes and after 20 or 30 phone calls you're like, okay, I have a very good idea of what excellent looks like. And I can make a more educated decision on the type of person that I want. But that person who's very operational should be a people driven leader, especially in this type of org.

[Unknown]

For the second part of this call, we would like to just bring our partners too and just ask them sales question in general and learn from you.

[Alex Hormozi]

You know, with our model, do you believe that we should utilize group selling methods like webinars, seminars, events. That way we can compress the timeframe, we make money or just focus on one to one sales. I think it depends on the product that's being sold.

[Unknown]

Usually products above $30,000. And that's why we're focusing on like one to one model right now.

[Alex Hormozi]

I think you can do. So the way that I like building sales orgs is having repeated sales materials and then individualized. So like repeated sales materials are going to be like the VSLs, the webinars, things like that. But you're not, you're not closing on those webinars. You're just qualifying and setting. And so I want sales guys to be doing as little information spewing as humanly possible and really being able to start the call with so you ready to buy? And then yes or no. And then work your way so you have 60 minutes to close rather than okay, great. Now like discovery. Like let me talk to you about how we might be able to help you. Because if you, because then sales guys get really tired of saying the exact same pitch, then they sound like robots. Then they get zoned out because they're saying something they're not listening. And so the talk ratios get way off. And so I prefer having as much of the standardized information sharing being done before the call so that the closer's time can be maximized to closing rather than just like teaching. But I wouldn't be trying to pitch 30k stuff directly to a payment page. I'd probably be pitching that to, you know, qualifier set calls.

[Unknown]

Yeah, that's how we're, we're doing it right now. But we've Seen some other people, they have like live webinars, you know, and they have the sales guys on the live and even though they're selling super high ticket offers, they try to like do that communication slash information stage of the call, like just through the chat. And then once they show a level of interest, then they get them on the call.

[Alex Hormozi]

Well, they're using the webinar as the set.

[Unknown]

Correct.

[Alex Hormozi]

At the end of the day, there's a certain amount of information that someone needs to have or some amount of like exposure that they have to have to a brand or a product for them to, you know, make a buying decision. And so that can be a long set and then a short close. It can be set webinar close, it can be a long webinar, then a close. Like there's just a certain amount of selling. You know, the Runway for the plane has to be a certain length. Doesn't really matter where you slice it. It just has like this is amount that the majority of people need to have before making a purchasing decision. Now some people might need less and that's okay because they probably got it beforehand from other things that they've consumed. So if you want to say, okay, how do I sell? Well, I want to increase the likelihood that some, that the the highest percentage of people buy. Then I want to create an experience that the highest percentage people get all of the information that they need prior to the closing conversation. And so if you do a webinar as a big set thing, I mean to me that's the same, I mean that's all the same. Like if you run ads to webinar ads to vsl, then they go to a scheduler or you know, if you have a live call team where you have a number that becomes the CTA and then the call team's answering calls in real time. Operationally, I wouldn't, I wouldn't upend my entire business because of just a slightly different way of doing it. Because I, I think it's more happy to glad as long as your throughput is good and you're, you know, like you're making money and you're growing right now. I would, I don't know if that would be the constraint of the business. So like, I think the stuff that we were talking about earlier, like that seems more of the constraint than kind of the individual tactics. You know, in the example you gave.

[Unknown]

What'S your method for building trust and credibility on a sales call in like.

[Alex Hormozi]

The fastest way possible?

[Unknown]

Like what method, what approach do you often take? For that?

[Alex Hormozi]

Well, I mean brand matters more than anything, like right off the bat and the, you know, the vast majority of like the, the hard closing tactics and hard sales tactics have to exist in lieu of not having a brand. Right. It's like we have to make up all this hard stuff. It's kind of like in the matrix when it's like when you're good enough you won't have to dodge bullets or like you're saying I can dodge bullets. It's like, well, when you're ready you won't have to. So like the brand is when you're ready, you won't have to. But if you don't have that, which is the big thing that you should have, but if you don't have that, then it's the same things that you would normally do. You're going to try and find common ground, be relatable. A lot of it just comes down to how well do you understand the avatar. Right. So I think a lot of sales teams under, under prepare by, under understanding the avatar, the prospect and over educate on the product. Like if I understand what a 45 year old woman's suffering from, I can basically do the same sales call and at the end of the call say I can pitch therapy, I could pitch, I could pitch weight loss, I could pitch a gym membership, I could pitch, you know, I could pick cleaning services. It doesn't really matter because if I understand the avatar really well, I'll be able to speak to her pains.

[Unknown]

And what you said is true. Like brand is extremely powerful and with the clients that we take on for agency, do you recommend that we go for people of very strong brands and take that approach?

[Alex Hormozi]

That's, that should always be the focus.

[Unknown]

Right? Like where's go for the brand and from there.

[Alex Hormozi]

Yeah, strong brand, strong product for sure. Fair question though. Yeah. Relatability, common ground. What's been the number one reason you've seen show up rates increase or decrease? It's, it's 100 golden babies, no silver bullets. So when we, when we go into a company we have something called lead nurture checklist. And so it's just like 17 things that we do and each of them adds like 2 to 5%. And so that's how we can get something from like 30, 40% show rates to 85% show rates. It's just doing a lot of little things. So I, I would not look for like the one trick. It's just like, okay, how quickly are we responding? How, how much information do we provide them beforehand? Are we providing a personalized video? Like, can we give them a gift card for showing up that they can share a coffee with us? Like, just how many different things can we add in to increase the likelihood that they show? Can we, can we create an open loop between the set and the close that they're going to get information that they are. They got their, their interest piqued? Is there a way that we can say that we're going to show them that we're going to do a certain amount of work on their behalf and we're going to give them the deliverable on the next call? Right. So they have a huge incentive, they have huge curiosity so that they would want to show up. Like, this is particularly true in insurance products. So, like, we have an insurance company and so like, we create personalized insurance plans. It's like, okay, well, how do we get more people to show up? But we don't want to send them the insurance plan that we're going to make them before the call. We just say, we'll explain it to you on the call. Yeah, we implement a lot of those tactics as well. Probably there's some stuff that you're doing that we currently don't have at the moment as well.

[Christoph]

I don't know if it makes sense.

[Alex Hormozi]

To share on this call, but you said there's kind of like 17 things. Is it possible you can maybe like, send it to us? No. So. Oh, no. All right. Honestly, it really depends on what the business is. If we're looking at an insurance business versus a weight loss business. Like, it's more applying a principle across. But that being said, the big one, that's, that's probably missing, like, it's usually the big obvious thing, which is we can always do the hundreds of little tactics, but you're trying to dodge bullets rather than like winning before you start, which is like, why, why do so few people trust you? Like, that's the big. That's the big, like, I see the matrix. And then everything else becomes irrelevant. So for acquisition.com our show rate on calls is nearly 100%. So if we call, if we say, hey, we'd like to find out more about your business. Today is Tuesday. Our next opening is Thursday of next week. So nine days from now, show rate's still 100% because of brand. We actually don't need to do any of those tactics now. We have those tactics so that we can help the companies that don't have those level of brands. But like, you want to stack the deck, you want to answer the question, why does no one trust me? And solve that. Otherwise you're always going to deal with these issues like, do the fundamentals for sure. But the big, the big things that'll matter most is who you're choosing as your customers. So Vista, you guys heard of Vista Private equity? So they're the biggest, they're the biggest software, private equity. They've got a gazillion dollars, whatever. The way that they look at a business is that they do a customer analysis and so they look for the 80, 20, right? They look for the 20% of customers that are worth more than everyone else. And they then do a customer analysis and say, what do these 20% have that the other 80% don't? And then they exclusively look for customers that are that 20%. And then they say no to everyone else. And so then what happens is if the sales velocity remains unchanged, they 5x the business. So sometimes you'll make more money just by saying no so that you can have the capacity to say yes to the few guys that matter more. And if you're not getting more of those people, then solving that problem rather than saying like, how do I keep getting, how do I, how do I polish a turd? Instead of going from that perspective just saying like, maybe I just should not try to polish turds because it's still a turd, right? And like, how do I get the people who are much better companies to be attracted to my business? And if you have a customer list that people aspire to be like, then you'll get more and more people. Like that's where, that's like kind of the branding side for you guys, which is, how can I associate with better quality brands so that other better quality brands realize that what we do is legit? You can try and optimize the shit out of something, but like usually it's the big obvious stuff and we don't look at the big obvious stuff because they're actually harder problems to solve and they take longer. But it's where the most value is unlocked. What's the ideal frequency and the topics of coaching calls that would increase the overall performance of setters and closers. So I would say it's less about the topics of the calls and more about what you're training repeatedly and what you're rewarding. So sales is one of those really interesting businesses or like, you know, departments that you can see very clearly. Like, you guys have probably seen different sales teams and they have very different cultures. And so it'd be like what are the cultures that create the highest performance in our experience? You know, you can go on, on either extreme. You can have a very punishment driven culture which is very individualistic, or you can have a very team driven culture which is typically reward based. What you want to reward is adherence to the script, not closing. Like that's a huge shift for most sales teams. If you reward adherence to the script, then what happens is you get everyone to follow the script. Now if they aren't closing, then you need to change the script. But it's much easier to change the script once you've taught adherence than it is to have a bunch of lone wolfs who do anything they can to close the deal, which then impacts your brand. So like a really simple, you know, tactic we did at one of our chains was we just said, cool, we'll give them five bucks if they follow the script. Whether they close the. Now mind you, the, the tickets are smaller, right? It's just higher, higher volume. We'll give them five bucks if they follow the script. And if they close or they don't close, they get paid either way. You know what's interesting, the thing they're most curious about when they send their managers is do I get the five bucks for the adherence? Even though they make three times more on the close. So we still, we still give them benefits for closing, but they want to know whether they got the approval of the Manager. Because the $5 actually matters less than the approval from the manager saying, you did a good job. The $5 is more of a token.

[Unknown]

That makes a lot of sense.

[Alex Hormozi]

And if you can imagine, because you, everybody here has sold before. If you got on a call and you knew that you could get paid no matter what just for following the process, it takes some of the pressure off. Like think about like you hopped in the car, like, I'm just going to make sure that I get my bone no matter what on, on the adherence. But guess what happens when everybody hears to the script. Script you close more. Because sales is one of the biggest issues where you have false positives, where someone goes rogue and then closes and basically gets reinforced for doing the wrong thing. And then they start doing the thing that they did that one time that worked. And then it doesn't work over and over again. So they change their behavior, they learn the wrong thing. And so then you have to course correct. Right? That's why sales like it's all about adherence. And then then we can be really strategic about really making sure the script is beautiful and crisp and concise and we just. And we just drill the team on adherence.

[Unknown]

The big topic I want to address is how to sell emerging tech.

[Alex Hormozi]

You don't sell emerging tech. It's selling the plain flav versus the vacation. If I could tell you that your financials would be absolutely accurate and updated in real time, would you want that? How much would you be willing to pay compared to what you currently pay? A lot more. Great. What if I said I could do it for less than what you're currently paying? Are you interested? Great. This is what I need. The fact that I'm using AI is irrelevant.

[Unknown]

You just sell the outcome and then you. Not really.

[Alex Hormozi]

No one cares. AI is great for YouTube clickbait, but for. For sales, it's irrelevant.

[Unknown]

That was like, one of the main talking points. Wanted to get across what else you.

[Alex Hormozi]

Want to do for the next 16.

[Unknown]

You must be getting a ton of businesses, a lot of AI businesses that are coming across your desk right [e-mail]. what are the things that's making sort of jumping out at you, and what are the sort of commonalities between things that make you really go, oh, well, that. That seems to have some kind of staying power?

[Alex Hormozi]

The best majority of AI businesses that I look at are dogshit. And so they're either. They're not real AI, which is 99% of them. They're basically just built on ChatGPT, which is fine. There's nothing wrong with that. But I'm just like, let's not claim that we're creating AGI. On the other hand, it's people who have no business acumen. And so they're like, it's totally different. Like, the normal laws of business don't apply. It's like they have always applied and they will always apply because they're just how business works. Right? Those are the vast majority of people that I see in that. I do think that AI implementation for Main street is an enormous opportunity. So AI ifying, if you will. And I don't think. I think your first conclusion is right, which is being the custom guy is tough. You know what I mean? It's just. It's all things to all people, which is nothing to no one if I'm talking to the audience. Now, if you guys want to get into this world, what you want to do is look at an industry or an avatar that you understand well. And so one of the things that, like Y Combinator and some of these. These great, like, you know, legendary investors look at is how much time a founder has suffered and lived Through a problem, I can talk about breathing because I've had two nose surgeries. I've been falling asleep on my hands since I was in eighth grade so that I could breathe. So, like, I've lived with the problem for a long time and I've tried many different types of solutions. So I have tons of industry knowledge. If I were to start a company like that, if you have a job right now or have had any type of job, you've worked in a business, that's a great baseline of background knowledge that's difficult to just jump. Like, even if you were a server at a restaurant for two years, you still will probably know more about restaurants than 99% of people who aren't in the restaurant industry. Like, I don't know anything about how restaurants work because I've just never really worked in one. You could probably be aware of because you now also have this understanding of what AI can do to think, okay, there's a hundred problems in a restaurant. Is there one very specific problem that I can solve? Well, and is very similar between restaurants because as soon as you get the point A to point B, you can create the clear value proposal and you can message around that getting extremely specific, which is, I think what you were saying that you give the advice to is super smart and it makes the problem set really narrow to solve so you can become an expert that's an inch wide and a mile deep. The reason that most people don't do that when they're starting out is because you don't have enough demand. You have so few leads that come to you that you're like, well, I mean, shit, I need to pay rent this month. And I only got four leads this month. And all four, four are completely different. But I need the money. And so I get it. Redeploy that cash into getting really concentrated on your marketing, which is what offers and leads is all about, so that you can find that specific avatar that you can over and over again repeat. Which is also why referrals are so strong, because if you do a good job, they will send you other people just like them.

[Unknown]

The question is, is yes, I can pick a niche to do this AI automation. I can build AI solutions and sort of targeted one. But what is the opportunity that I should target within the niche? And that comes down to either a, as you said, industry experience that you already have or sort of be what we've said is finding some sort of partner within the industry. So we say you can either try to pay them for their time as a consultant or you can just message enough people and say, hey, look, I'm looking to bring these kind of solutions to the industry. Would you be willing and working, working on this with me? I need a little bit of your specific knowledge, but in exchange I'll create this thing and you can refer, you can basically have first dibs on sharing it to your network and you can make some money that way.

[Alex Hormozi]

So yeah, I definitely wouldn't do it as a consulting relationship. The thing that you're going to be selling is the product. And so having a consultant who's the one who's in charge of the primary value that you're driving is not a good idea. And so you'd want somebody who's long term incentivized to continually improve the product, continue to innovate the product, see the things that are coming around the corner to keep it up to date, make it better, make it stronger, et cetera. It really just comes down to how to have a normal business partnership. So all the normal rules of business apply and this person has some specific knowledge you don't have. And you, you should ideally have specific knowledge they don't have. They should be asking the question, like, why do I partner with the people in your community if I'm an AI developer? Right. If you're trying to figure out which of the problems to solve in an industry, it's just value created times ease of implementation. That's the equation which if you chunk it up, it's number of potential customers times gross profit per customer. If I have six different problems I could potentially solve, which one has way more people who have it, which one's easier to do, which one unlocks the most value.

[Unknown]

One thing that we're starting to see as, as us, ourselves actually trying to build one of these, these AI automation agencies now AI development company as well, is that by building a development team that is capable. What is your take on your experience with how important that development resource is? I mean, it's sure your event, you must know working with developers can be a complete plan, but having them in house and having a really good team to rely on as you shoot for those big opportunities can be key. What's your experience being like this and how important do you think that development resources when you're going for those bigger plays?

[Alex Hormozi]

Very, very.

[Unknown]

Okay, we were thinking the same thing, so I was glad to know you agree on that.

[Alex Hormozi]

It's the product like if you're in a service business, the quality of the people that you use to provide the service is the product. And so those people usually want to be compensated well because if they are really good, then the places that they're coming from will want to pay more to keep them. And so you have to give them a great place to work and a financial incentive or some upside that they get exposed to that they wouldn't otherwise like. You want them to feel like owners and the best way to do that is for them to actually be owners. If you're trying to get on the cutting edge of technology then actually having the people who are good at that is the business.

[Unknown]

Well, it is a great resource to have a really killer marketing team under your belt. But the development side of things I tend to find, at least in our experience has been a harder thing for us to create because you don't know it.

[Alex Hormozi]

Like it's easier for you to do the marketing stuff because you're good at it. So you know if someone's full of shit on the interview, you just don't know if anyone's full of shit on the interview because you have no context. The most important hire, which is why I say this is you need a technical co founder. You need somebody who has a real stake in making sure that the people who are coming in are actually good, not that you're checking a box and saying hey, I have 14 people on my development team. Anybody in the true high tech world knows that one amazing developer is more valuable than a hundred b developers. This is the hardest part of business is hiring people who are really good at something without knowing the in depth knowledge. And that's where like leveraging somebody who might not want to work for you that you do think is brilliant to at least interview or double check on how good they are is really valuable. That's where like building a network becomes important and getting even some tests of aptitude for them to take so that you can at least get some sort of baseline. But it's all going to be about how skilled that person is. Because ideally if they were as good as you are at marketing, then you guys would probably have a really successful business.

[Unknown]

We've been fortunate enough to find that magical sort of technical profounder. So we're starting to get them really well compensated, both getting an even as well. So we are off to the race and that's completely changed our business. I can't even stress for, for anyone of you in here that that key hire is just a complete gauge. I'm sure you've had it Alex, in your businesses where you've just found that right person and just completely changes things.

[Alex Hormozi]

All right, appreciate you guys. Thank you and appreciate the community. Thank you guys for showing up. Hopefully the book serves you guys well. So do you feel like in general, do you think? Real quick, guys, I have a special, special gift for you for being loyal listeners of the podcast. Layla 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 Alex Acquisition Com Roadmap, R O a D map Roadmap.