← The Iced Coffee Hour
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- [00:01]
Alex Hormozi
This episode is brought to you by Shopify.
- [00:03]
Graham Stephan
Upgrade your business with Shopify, home of the number one checkout on the planet. Shop pay boosts conversions up to 50%, meaning fewer carts going abandoned and more sales going cha ching. So if you're into growing your business, get a commerce platform that's ready to.
- [00:17]
Alex Hormozi
Sell wherever your customers are.
- [00:19]
Graham Stephan
Visit shopify.com to upgrade your selling today.
- [00:22]
Alex Hormozi
Manifestation is bullshit and action is the only thing that matters. A huge amount of the delay that happens when people are starting out is the amount of time it take takes for them to realize there is no easy way. This is the blueprint to becoming a millionaire, and I'm going to walk you through the levels to becoming one.
- [00:41]
Graham Stephan
So where do most businesses get stuck?
- [00:43]
Alex Hormozi
Suffering is constant. It's just that the nature of the suffering changes. It stops being about how hard you can push. Sometimes it's about how long you can wait. Sometimes it's about how focused you can stay. One of the really interesting things about entrepreneurship is that you get these unlimited lottery tickets. You just pay time to get them. And so a lot of people just will choose not to cash their tickets in at all. And. And you only need one really big win to change your life forever. And so it's really just sticking with it.
- [01:07]
Graham Stephan
What's going on today that people aren't recognizing the potential in?
- [01:10]
Alex Hormozi
There's a huge supply, demand, discrepancy right now. I know a lot of people who have really never done much and then just like within 60, 90 days are doing a million a month.
- [01:25]
Graham Stephan
Alex, thank you so much for coming on the iced coffee hour. Really appreciate it.
- [01:29]
Alex Hormozi
Thanks so much for having me.
- [01:30]
Graham Stephan
I've been a huge fan of your Twitter lately. It has been on fire. You seem to be tweeting all the time. Really insightful stuff. Recently you tweeted that it has never been easier to be successful. Why do so many people feel like it's not?
- [01:42]
Alex Hormozi
I think it's just never been easier to be distracted. So it's like it's ne like the bar has never been lower, but the bar is even lower to not do it. And I think people have never been more comfortable than they are today. And so it's like Netflix and chilling and like Uber and doordash and all of that stuff has just made everything like comfort or like comfort maxing right now. And so like all of these other tools, like, you know, these software platforms and AI and all this stuff has like lowered the bar for people to make content or start businesses or advertise or whatever. They want to do. But it's just like, it's so hard to take a risk when you could literally just do nothing. And the way that, like society is now, it's like you, you're not going to go homeless and you're not going to starve. So, like, which I see as the most exciting part because you could just, you could take a huge shot and the worst case scenario is like, you're not going to starve and you're going to have shelter.
- [02:35]
Graham Stephan
So do you think it's a blessing or a curse?
- [02:37]
Alex Hormozi
I would say it's a blessing. I mean, at the end of the day, I think technology is always going to move things forward. So that's like, it's never been easier than it is today and 20 years ago. It was never easier than it was then up to that point. So it's like it'll always get easier for people to start businesses, which I think is a good thing in terms.
- [02:51]
Graham Stephan
Of optimizing for comfort. What is the downside of purely just being someone at home, scrolling all the time, how big is it for them not to reach their potential?
- [03:03]
Alex Hormozi
I think it's a them thing. So I don't see it as a problem at all. I mean, I think it's only a problem if you're making some sort of demand of the universe that your life must be a certain way. And so I think that's where it's kind of all the shoulds. My life should have meaning. My life should have this impact. My life should all these things. If you believe that, then, yeah, it'll be an issue because I believe in conditional shoulds, not absolute shoulds. So, like if this, then you shouldn't probably scroll on your phone as much if you want to get in shape. Like maybe don't eat more than you burn, like, but don't eat more than you burn. As a general statement, it was like, do whatever you want. That's. That's your. It's your life. I just have the issue when people want something different than the way they act.
- [03:42]
Jack
Do you think it's overall lowered the bar for excellence? Like a lot of people can kind of just become successful by happenstance or by luck now.
- [03:49]
Alex Hormozi
I think there are definitely people who get lucky. Repeat and serial entrepreneurs less so. I've only really encountered maybe like a couple people in my career from the entrepreneur side that I'm like, this guy was just lucky. I think there are elements of luck, but it's like luck becomes a, a, like it becomes gas more than the Thing that, like, built the car. It's like they were going to be successful. They just got way more successful because they had, like, kind of multiple things kind of aligned.
- [04:13]
Graham Stephan
Can you give us some examples of luck like that?
- [04:15]
Alex Hormozi
Yeah, sure. Like, if you were. If you were an Amazon in 2013, 14, 15, and you put up a product, you could just crush, like, you didn't have to, like, really know anything. There was just all this demand that was there. If you were running Facebook ads in 2011, it was just not hard to crush. If you. If you were doing SEO in like, 2008 and seven with, like, you could literally just put, like, coffee in, like, white. White font on a white background. So the whole background of a website just said coffee. But, like, if you looked at the site, you wouldn't see it. But if you, like, took a. A cursor, you could just see it just says coffee. Because the algorithms weren't like, that advanced. And so you could just rank and get all of Google's traffic. So there was just like, a lot of the things that were lucky were just like, typically, I'll put it differently, luck will come from a supply demand discrepancy within a window of time. And so where there's a huge amount of demand and a small amount of supply, and then you happen to be one of those people who gets in on that. Now, that being said, part of that is like recognizing opportunity. And so to what degree is that luck? I think the question of whether it's luck or not is whether you can repeat it.
- [05:23]
Graham Stephan
So I'm curious where those opportunities are today, because it seems like every few years, in hindsight, you could look back and be like, that was the best time to do that.
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Alex Hormozi
Yeah.
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Graham Stephan
What are. What's going on today that people aren't recognizing the potential in?
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Alex Hormozi
Well, I think there's micro and macro opportunities. So, like, from the macro perspective, I think we've had, like, three big ones. So at least in my lifetime. So it's like we've had Internet, which is like kind of opportunity number one. Opportunity number two is kind of like web 2.0, which was social. And then opportunity three is AI now. So there's the three macro ones now underneath of that, it's kind of like. Well, Facebook ads was kind of like a. Like an opportunity, kind of like within that. And then like, Google search was an opportunity. Like, all of those are kind of like sub, kind of like micro opportunities. Like, I think like TikTok shop right now, a lot of people are kind of kind of like in that Amazon of 2013, 14, like I know a lot of people who are, who've really never done much and then just like within 60, 90 days are doing a million a month. And it's just because there's a huge supply demand discrepancy between the amount of influencers that are there that want to make money and the amount of products to sell. And they will just continue to populate it until eventually it becomes a stabilized market. But it's like when those land grabs occur, that's when there's typically outsized returns to be had.
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Jack
What do you think people need to be able to capitalize on these opportunities?
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Alex Hormozi
I think you have to have skills.
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Jack
Just straight up.
- [06:42]
Alex Hormozi
Yeah, you just have to have skills. I remember it was really funny, our first ever conversation that we had, I was like, man, if I had your amount of following, I was like, I'd be a billionaire. And I saw that as a supply demand, like an even so like when you asked just a few minutes ago, like, you know, what's the. What things are there now? Like, I still kind of see social media still thinks there. I still think that opportunity exists for people if you're good. But maybe it's less so than when Instagram came out in 20. Whatever year it was when you could just like just post pictures of you on the sunset and have like a million followers and people would just buy because you just had this insane reach. But I saw it as a. The fact that we could still. The fact that we could still advertise ourselves and get paid to do it is still mind boggling to me that, that like opportunity exists, like you can build a brand and get paid to do it, which I think is insane.
- [07:36]
Jack
Okay, so now it's arguable that you have his brand, if not even a bigger brand. Are you. Did you accomplish that goal?
- [07:43]
Alex Hormozi
I. I won't be public about what our stuff is valued at, but I think that we've done well.
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Graham Stephan
Yes.
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Alex Hormozi
Yeah. The classic answer.
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Jack
That makes a lot of sense.
- [07:54]
Alex Hormozi
Okay. Yeah. I don't want to make claims around things. Market values for enterprise value for illiquid assets like private equity investments and companies that are owned. Really depends only on the time that somebody's going to buy it. I have had some of the biggest banks that you've heard of, things like that out to this headquarters to see what we have going on. And they've been like, this is insane.
- [08:16]
Graham Stephan
What do they look for?
- [08:18]
Alex Hormozi
So what they want is what every investor wants, which is what, you know, I tried to set out to do in the very beginning, which was they want proprietary deal flow. So they want people who want to specifically do deals with one person. So it's not like they're shopping, they're like I want to do a deal with you. And ideally you have some sort of captive market or niche. And so for acquisition.com, we are kind of low mid market in terms of what, what companies or businesses are kind of attracted to my stuff. And so it's typically the business is doing like between one and a hundred million dollars a year. And so and this was kind of the thesis of acquisition in the beginning was like okay, everything sub a million. There's tons of people who, you know, help people get their first customer a few hundred thousand dollars in revenue, first five clients, things like that. Like there's tons of kind of like the coaching, consulting, whatever, you know, or coaching course world is there. Then if you go like a hundred million and up, then you've got like McKinsey, Bain, BCG, Deloitte, PwC, EY, a lot of these Gartner, like all these kinds of consulting firms that deal with like kind of above there. But there's just not a lot in the 1 to 100 million range. And what's interesting about that particular range is that that's where a huge amount of like alpha is created in terms of investing returns. And so like for example, if you have a business and this is probably to lose half the, half the audience, but if you have a, if you have a business that's doing, call it like $3 million in EBITDA or profit per year and you can make a handful of tweaks and get it from 3 to 8 million. The $3 million EBITDA business might be worth $12 million. Maybe the $8 million EBITDA business is, can probably get somewhere between like 80 and $100 million in a sale. And so it's like you have a huge multiplier effect that increases once you get above about $5 million in profit. And especially as you approach 10, where you now become a target for institutional grade investors. So that because they can write, they have to put to work hundreds of millions of dollars. And so they basically become the customer of buying the product which is the business that you created. And so our thesis of acquisition.com was like, well, we want to get people right before they're at that level, buy at really small prices, make in the business and then capture this huge upside.
- [10:22]
Graham Stephan
So where do most businesses get stuck?
- [10:23]
Alex Hormozi
I mean businesses get stuck at all different levels. Because all you'd have to do is just look at the revenue breakdown. It's like 95% of businesses are less than a million dollars a year. So a lot of businesses just like barely even get to the million dollar in revenue point above that. It's I think it's 1 in 250. So it's 0.4% get to $10 million a year.
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Graham Stephan
So is that a market problem or an operator problem?
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Alex Hormozi
I think it's almost always an operator problem. Like unless you're like in. People will name these like really random weird businesses where someone like tries to come up with something entirely new. But I see there's kind of like three kind of types of big type buckets of risk in terms of picking an opportunity. You've got like a product market fit risk, which is I'm going to come up with something that no one's ever done before and see if people want it. That's like an Uber. Like we've like, let's see if strangers will pick up strangers in taxis. Like maybe it sounds like it may sound crazy at the time, right? So that's a product market fit risk issue. Those are in my opinion extremely risky. The second category are technical risk issues. So like if I just said hey, I can come up with an AI salesperson that can take all your phone calls for you, I don't need to guess whether people are going to want that. They're for sure going to want it. The problem is how likely you can actually do it. It's the difficulty of actually solving the problem. Right. The Uber thing, it's like, well, there's some techno risk there too, but will people even want this versus they want it? I don't know if I can deliver it. And then the third category is what I would say is the, the vast majority of business owners, which is just execution risk. There's other long hair businesses that do $100 million a year. The path is really literally in front of me. The only risk is whether I'm skilled enough to do it. That's it.
- [11:57]
Jack
So what are the biggest operating obstacles you've personally ran into trying to scale acquisition.com into a billion dollar business? And how did you overcome it?
- [12:05]
Alex Hormozi
Suffering is constant. It's just that the nature of the suffering changes. And so it's like the hard is always hard. And it just. And I think what makes it more difficult as the business continues to develop is that you end up trading things that you didn't expect you'd have to trade and so, like, in a lot of people's minds, it's like, oh, I can push really hard. It's like it stops being about how hard you can push at a certain point. Sometimes it's about how long you can wait. Sometimes it's about how focused you can stay. Sometimes it's about what kind of person you're able to attract to the business. Sometimes it's just the quality of your decisions, right? Well, a lot of times the quality of your decisions. And those are just kind of like micro examples. But, like, you know, in the very beginning, you have to overcome a lot of environmental issues. It's like you have your friends and family who are telling you that it's not going to work, whatever, and they think your idea is stupid. And so you have to overcome that. And then maybe you have to overcome your own limiting beliefs. So you have to overcome that. And then you start doing things and you start advertising and letting people know that you have stuff and selling them on your services, your product. And then quickly, you have to learn, like, the first level of management. So it's like, okay, well, now it's not me, it's me and maybe a couple of, you know, virtual assistants. And then you're like, okay, this is too much for part timers. I need some full timers. So then you have to level up to basically being a manager, which you haven't done before. And then once you're a manager, it's like, okay, well, I'm managing this half. I have to get somebody else. Then you get your first manager, and then all of a sudden, you have multiple managers. Now you're a leader, right? And then you have to attract leaders, which is a totally different skill because you have to lead leaders. And so at every level, I see entrepreneurship as a forcing function for pain, but also a forcing function for progress, in that you will stay in pain until you progress, and then you will find new pain.
- [13:41]
Graham Stephan
So what's something that you've tweeted or said that people clearly agree with? Just don't implement.
- [13:48]
Alex Hormozi
I feel like we could pull it up. Like, where do you want to start?
- [13:51]
Graham Stephan
Now, if there's one thing I absolutely can't stand, it's wasting money. And I know we've all done it. We've signed up for subscriptions that you don't really realize in the moment, you forget about them, and then pretty soon you're charged out the wazoo for things that you never really needed or used. That's why, no joke, I started using today's sponsor Rocket Money. With Rocket Money, I could see all my subscriptions in one place. I could easily cancel the ones I'm not using, and then I could put that money back in my pocket.
- [14:15]
Jack
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- [14:31]
Graham Stephan
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- [14:43]
Jack
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- [14:57]
Graham Stephan
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- [15:06]
Jack
That's rocketmoney.comiced rocket money.com/iced. Thank you so much to Rocket Money for sponsoring this episode.
- [15:12]
Alex Hormozi
Where do you want to start?
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Jack
You think Twitter is like a high ROI activity for you?
- [15:17]
Alex Hormozi
Twitter? It's like, I can't help myself. You just can't.
- [15:20]
Jack
That's. That's your indulgences.
- [15:22]
Alex Hormozi
Yeah. Like, let's see. Let's see. What? What. What did people not understand about this? Suck at something. Work for free. Lots of times suck less. Wait until people ask for free work and you can't take them on. Now you have more demand than you have supply. Begin to charge money, Boot out the free clients for paid clients and then offer to keep working with those clients for money. Congrats. You have a business, so I will.
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Graham Stephan
I agree with that.
- [15:43]
Alex Hormozi
Now.
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Graham Stephan
Now, here's a counterpoint to that. It is hard to take people from free.
- [15:47]
Alex Hormozi
Yeah.
- [15:48]
Graham Stephan
To paying for a service.
- [15:49]
Alex Hormozi
Totally.
- [15:50]
Graham Stephan
What is your way around that?
- [15:52]
Alex Hormozi
Well, it depends. So it depends on how. How high value the service is, number one. And number two is we start with free because you need to get reps because you probably suck. And so it's like you're really getting free feedback from people that otherwise, like, shouldn't because you will be terrible. But the transitioning people from free to paid really Comes down to just how good you are. And if you are like. So, for example, if I, if I was redoing all your YouTube thumbnails and I said I would do it for free now at your level. So everyone who's listening don't immediately DM Graham because you already have somebody, right? But, like, the thing is, just go for somebody who's like 110 of Graham size, who can't really afford it, give that guy the thumbnails. And if your thumbnails beat his thumbnails, he will. If you're like, okay, well, I have now all these people are paying me, so you can pay me what they're paying me or I'm just gonna work with them. At that point, he'll either pay if he's making any money on his channel or he won't. But, like, there's a, there's real value that's being created there. But the idea is you want to get your, your roster filled so that at that point. And I think part of this, I, I give this as advice because a lot of people in the beginning don't believe they can charge anything. And so it's like, fine, don't charge. Get better. And then once you literally can't take people on, it's like, dude, I. I can't take you on. And then they're like, well, what would it take? And you're like, oh, money, money. I could do that. I could do it for money. And then now it's like, you actually can help someone break through the belief of like, y. You can ask for money for stuff.
- [17:08]
Graham Stephan
Do you think there's something to look out for for people who just want something for free and will never pay for it?
- [17:13]
Alex Hormozi
Well, I'll say this, my big caveat. For free, if I'm going to give it away is I have to give. I'll give something away for free. I'll give tons. I'll give stuff away for free that cost me money if it's to a qualified prospect. So if I'm giving, you know, if I'm trying to get into enterprise IT services, right, I'm not going to start with a local, you know, dry cleaning business who can't afford what I would like to eventually charge. So I want somebody who has, you know, bant, which is budget authority need timing. So do they have the money to spend? Do they have the authority to make the decision? Do they have the need for this specific thing? Is now a good time? If I can get those four things, I'll give that Person, free stuff. Like, if it's like, hey, I'm only doing back massages for billionaires, fine. Then, like, you got to be a billionaire and I'll give it to you for free. Eventually I'll charge. But no, the homeless guy on this on the corner of the street will also take free massages, but he'll never be able to pay. And so it's not that we want to give free to anyone. It's just that we want to get the most qualified prospects, get good feedback from those customers, which we should treat them like customers so that we can then eventually charge people just like them based on the feedback that we got. Otherwise, we'd be building a product for somebody who's the wrong person.
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Graham Stephan
How do you make your offer unbeatable.
- [18:14]
Alex Hormozi
Then where it's unfair if people feel stupid saying no? There's. There's four elements of value as I've kind of defined it in the book, the $100 million offers book. So you have the dream outcome, right? Which is like, what is. What am I actually going to give this person? Every product is a dream outcome. Every service is a dream outcome, which is like, what's the thing that they want to have happen? Okay, cool. So that's going to be our baseline in terms of value. Like, if I'm going to help somebody make an extra million dollars a year or $10 million a year, that's gonna be a baseline, but there's still gonna be a discount that's applied to that. And there's basically three factors that apply to that discount. Number one is how fast is it gonna happen? Number two is how much effort is it gonna take on behalf of the customer? And then number three is how likely is it to occur? And so fundamentally, those are the elements of value that are either multipliers or detractors of what you can ultimately charge a customer for whatever it is that you sell. So how do I make it fast, how do I make it easy? And how to make it risk free? And so within each of those components, part of the way of making it risk free to them is If I have 10,000 other people I've done this for, it's much less risky. That's proof, right? You could also do that with covenants and terms. You could either do it based on performance that shifts more of the risk to you. You could also just give guarantees and satisfaction. You could guarantees that are conditional based on things that they do. Those are all elements of things that you can do to decrease risk, which you can reverse into Price. And so said differently, I could say, hey, I'll charge you $5,000 to do this thing. And if someone says, well, no, it's like, okay, well, I'll do it for $3,000, but I won't give you a satisfaction guarantee. And then what you'll find happen is they're like, oh, well, I'll do it for 5,000 with the guarantee. So people resell themselves on a higher price if you take away a component that's valuable. So that's the risk one. From a speed perspective, I would say that the more I've studied, like, human behavior, sales, persuasion, marketing, the more I really lean into speed. Like, if you want to enter any new marketplace, just look at what everyone else is doing and see if you can do it in half the time. And there's just so much value in speed. Like, humans are so immediate, reward focused. Like, almost every business can offer a speed version. So it's like you're a YouTube thumbnail agency and you say, cool, I'll get you thumbnails in a week. Normally it's like, oh, if you want for 50% more, I'll get them to you in 24 hours and for 300%, I'll get to them to you in the next 60 minutes. Same cost to you. It's the same work, but you just give someone priority access. And it's all margin. So it's like you can always play with speed as another variable of value. And then the, the third element has two pieces to it, which is ease. Like, how does it have two elements? Well, one is, what are the bad things that I hate doing that I get to not do as a result of buying? Right. All the stuff I don't like, you're going to take away. Great. But I also want to make sure that I don't prevent someone from doing the things they do enjoy doing. Right. And so I give a classic example of, like, if you sign up at a gym, all of a sudden you have to start doing things you don't want to do. But you also have to stop drinking margaritas, you have to stop Taco Tuesday, you have to stop having cupcakes, and stop having your McFlurries. So it's like you have to give up stuff you like and you have to do stuff you hate, which is why it's such a hard sale.
- [21:02]
Jack
So do you study psychology in order to be a more effective salesperson?
- [21:06]
Alex Hormozi
I wouldn't say I study psychology. I would say I just look at data of business. Because the one advantage That I have is I have a huge amount of data that I sit on top of between the companies that we invest in, the companies that come use our services on the advisory division and the companies that, well, companies we own are the companies we invest in. And so it's like I get to see a lot of different data. And so when we make changes into a sales process or a change in terms of an offer, I could see the improvements in conversion rates. And so that's where a lot of my like, theses have come from.
- [21:38]
Jack
Are you ever surprised by the data or is most of it kind of just confirming your intuition?
- [21:42]
Alex Hormozi
All the time. I get surprised all the time.
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Jack
What's been like one of the biggest surprises about this data?
- [21:46]
Alex Hormozi
Yeah, we had a, we had a company that sells B2B services and I had this guest that based on, basically we could collect the data of the size of the revenue of the companies that were basically leads that were coming in the funnel. And so I wanted to shut off the bottom third of the leads because they were the lowest revenue leads and just have the team focus on the top 2/3. And so I was like, hey, just pull, pull the sales data. Because I'm going to bet that all the conversions happening on the top end and the conversion rate was actually evenly spread. And so I was like, huh, like almost to the percentage point. I was like, that is not what I would have expected. And again, that could be unique to that specific business. I would still posit that in general, more qualified customers buy on average more and spend more money just in this particular business. And maybe that means that that business mispriced, which would be a different problem. But given that data, I was like, huh, that's interesting. We have people who are 10 times the size buying at the same rate as people who are one tenth the size Wild. And it's way more of a stretch for these people than it is for these people. So maybe we're missing our message.
- [22:46]
Graham Stephan
Did you ever find out why? Have you dug into that and gotten to the bottom?
- [22:50]
Alex Hormozi
I, It's a, it's a great question because like, I, I try. It's really hard to say why, because like, I think a lot of people like to use because, because it's very compelling. But I just try and stick with like, this is the data that I have within this given context and in this situation it worked. And I know there are principles like things that are fast will sell better than things that are slow. Things that are easy will sell better than things that are hard. Things that are risk free will sell better than things that are not risky. I can take that to the bank. So I try and think, what are the few principles that will always be true? And then the rest is application.
- [23:22]
Graham Stephan
What's something that you track within a business that most people don't even look at?
- [23:26]
Alex Hormozi
I'll give you a handful of metrics that I track. You'll be like, I didn't need that many. So if I had to solve for two things, it would be gross margin and revenue retention. So fundamentally, like, what do we make per sale in terms of is there a lot of margin that's there? If so, that's more attractive to me. And then secondarily, how likely is that this person is going to continue to buy from us next year and the year after that? So if I have a business that I have hypothetically 100% gross margins and 100% revenue retention, that's an amazing business. They literally just print money and they never lose it. That's cool. That's a very attractive business. So if I only knew those two things. The only other thing I'd want to know is what's my cost to acquire a customer versus my lifetime gross profit per customer? So how much money does it cost me to get somebody and then how much do they pay me over time? And so basically that fundamental, the LTV to CAC ratio or LTGP to CAC ratio, I know fancy acronyms, but that ratio between those two numbers is the fundamental economic arbitrage that exists within businesses. And fundamentally that's why private businesses will get the highest returns in terms of returns on capital. Because in, in, in, in so few places, like if you were to put it in the s and P500, those companies are already at scale and it's harder for them to grow, you know, at huge, huge percentages. Maybe you, let's say you put a thousand dollars in and you get 10%, so you're 1100 bucks at the end of the year. In a business, you could put a thousand dollars into paid ads and make $30,000 in gross profit in 24 hours. Like that happens all the time. And so it's like, that's how somebody can go from $0 to a billionaire in four years, because the returns on capital are absurd. And this is also what I think one of the big opportunities of social media is that like, okay, why is social media so powerful? It's because it drives CAC to zero.
- [25:05]
Graham Stephan
Do you trust customer satisfaction?
- [25:07]
Alex Hormozi
I take it as I'll take surveys. So we survey across all the companies that we have, because I like to have leading indicators in terms of what's going on. I care more about the reason whys that they give. It's kind of like the comment section. I care more about that, but I care far more about renewal rates. So if we're getting bad scores but everyone's buying, then it'd be like, okay, well, we found something that people need but hate that they have to buy from us and they'll be very quick to switch. But as of right now, there's no one else who can do it either better, faster, or cheaper than we can. But I would. Renewal rate, like, how you spend your money is what I care the most about. I would say what you think. It's kind of like, what do you want? And people are like, I want faster horses versus the car. So it's like, I care about that a little bit, but I care far more about what the data suggests about purchasing behavior.
- [25:50]
Graham Stephan
When you make an offer to somebody and they say, no, I'm not interested, how often is that able to be.
- [25:56]
Alex Hormozi
Turned around across what setting is that? In a sales setting? In a sales setting, I think it depends on the reason the person said no. So there would be a discovery question after that. So it'd be like, well, what are the variables using to make the decision? And sometimes, like, I think there's a. There's a big difference between a no based on value or a no based on details or a no based on authority or a no based on. Based on timing. Like, just kind of said budget authority and timing. These are the kind of the components. Well, how do we make sure that we can. Can I control, Can I. Can I overcome some of these issues now? If someone's like, love what you have. I don't buy coats because I live in Panama. I'm like, okay, there's no need. Like, I could try and sell whatever. Like, hey, I've got a gym membership. Why aren't you signing up? It's like, well, you're in Iowa and I live in Florida. Like, like, I'm never going to get there. Like, so it's like, where. Yeah, it depends on the reason for the no.
- [26:48]
Graham Stephan
What if it's a price issue? Where do you draw the line between lowering the price and cheapening the product and getting someone who's qualified or keeping the price the same but losing the sale?
- [26:59]
Alex Hormozi
Yeah. So I'm a very firm believer in never negotiating with terrorists, including price terrorists. And so if someone wants to look like if someone says, hey, can you do it for cheaper. We train on saying we can do it for more. And people are like, okay, yeah, I got it. I'll buy at that price. But I. The price that you quote is the price that you've stick to. Otherwise, every. As soon as you negotiate once, every price you have is negotiable, which sucks as a business, and it's a pain in the butt, and I hate it. So. And you want price standardization anyways, because you don't want different people getting sold different prices. People could talk. It's kind of sucks. So my big thing is price and terms. And so if we have this price, if I'm going to change it, then I will also change terms. So if someone's like, hey, I would love to buy the $5,000 thing, but I can't afford it. If we've already looped a couple times and said, okay, why can't you afford it? How important is this to you? What would it cost you not do this. You know, quantify as many of these things as possible, and they're still like, I literally just don't have this amount of. This is. Here's my bank account. I have $3,000. I will buy it for $3,000. Then in that instance, like, I can't ethically sell you the same thing as somebody else for $5,000. For $3,000, I can't do it. What I can do is I can remove a component. So let's look at these things that we have here. We have this guarantee. I can remove the guarantee and I can knock $1,000 off. Does that work? Okay. Also, instead of, you know, coming to the gym, you know, three times a week, if you come to the gym twice a week, will that work for you? Great. Well, let's just do that. And you can do one workout at home. So I'll want to change the terms of the agreement if I'm going to change price. But I won't just say, sure, I'll do it for less. I just won't do that.
- [28:30]
Graham Stephan
Why do you think that most people fail? Is it a skill gap, a belief gap, or is it just distraction?
- [28:36]
Alex Hormozi
I think it depends on how we define failure. So for the people who don't start, then it's probably a belief issue. They failed by never starting. And that's the vast majority of the people. They fail before they start the race. Of the people who do start the race, I think just for people sub a million dollars, almost all. You know what? It's not. I won't even say that it's at all levels. Distraction is a huge one. They start six businesses in the hopes that one of them will take off because they fundamentally don't understand how business works. You have very constrained resources in terms of time, money, effort, human capital, people. And you have to allocate all of those things to one business to just have a hope that it's going to work. So I think focus is a massive one. So that's kind of equal opposite of distraction. And then in terms of beliefs, the belief is the early days. Distraction kind of is pervasive. Sometimes it's just business model things, which I would just translate up to skill deficiencies. So once someone gets started, I think there's just two buckets. You've got procedural knowledge and declarative knowledge, which is basically the two types of knowledge that exist, which is knowing how to do something and knowing that something exists or that something's possible. And so this is where people talk about mindset, manifestation, whatever. It's like fundamentally it's just like you have to believe that something's possible. And so if you meet somebody who's doing $10 million a year and they're the same age as you grow in the same hometown, you're like, well, I guess that's possible. Right? And all of a sudden it's like, man, my perspective totally changed. Like my mindset, I manifest it, who knows, whatever. But like you fundamentally now believe it can happen. Cool. So then the only delta that you have is how to do it. Right? That's procedural. So I could talk like we could talk about private equity all day on here and someone could listen to every private equity podcast in the world. You understand that people are doing it, but you don't understand how to do it. And you can understand all the steps, but until you go through it, you won't know how it works. And then once you do, then you can do it again.
- [30:23]
Graham Stephan
So what's some of the low hanging fruit that people could start implementing today that'll make a big difference long term?
- [30:28]
Alex Hormozi
I think shrinking the time between when you make a decision and when you take action on the decision is probably one of the strongest correlates with high. Producers.
- [30:39]
Jack
Always talk about that. Was there like a specific moment that you kind of had that realization and then ever since you made that decision, you're going to decrease that amount of time that like the business went exponential.
- [30:49]
Alex Hormozi
So two things. So one is if you define a God being as omnipotent, then as they think things, things would exist. And so if someone Is ultimately powerful. That means, like, the moment they think of it, it happens, right? And so it's like, okay, if that's the hypothetical ideal, Then everything reverse from that is less and less powerful. And so if I want to be a more potent person or less impotent, then I should shrink the time between when I make a decision and when I act on that decision and try to make it into a reality. So that's number one. The second issue when it comes to decision making Is that the vast majority of speed, I think, that happens within a business comes down to speed of decision making. Like, there are so many decisions that have to occur every single day that most of the time, and you guys experience this within your own business. It's like, you know, the team says, hey, what do we do with here? And then you're like, okay, let me think about that, or let me give you a couple. Like, give me a day or two and I'll come back to you. But one of the good frameworks that I have is just asking myself the question, will I get more information to make this decision? If the answer is no, then make the decision. Like, you're not going to get more information to make it, so you might as well just make it now. And so that. The interesting thing about that is, like, that speed, though, a lot of times people take, let's say, seven days to make a decision or even a month to make a decision. But if I can make a decision now and then make a second decision two minutes later, make a third decision two minutes later, like, in a very real way, I could. I could operate a thousand times the speed somebody else's. And I think that's fundamentally like how Elon operates and how he can just get so much stuff done. He also obviously distributes a lot of decision making to people who are intelligent.
- [32:16]
Graham Stephan
How important is intuition when it comes to making a decision, that you just feel one thing over the other?
- [32:23]
Alex Hormozi
Well, I think. I think intuition is just like a really, really amorphous word for having a history of reinforcement with variables that you can identify or have trouble. Trouble identify. So it's like this girl walks in. I've got a bad feeling about her. That's my intuition. Well, you have a history of seeing lots of women walk in. And if you have people or women who looked a certain way or acted the way they carried themselves, the way they dressed, the way their hair looked, the way they did their makeup, the way they talk, the way they breathe, the way they. All these other variables that you're taking in. If somebody else in the past you had a negative experience with, you would then say, oh, I get bad vibes. Because it's just harder for you to be like, hey, subconscious, what was the variable that you identified that was similar to this other past experience that sucked harder to do? So do I trust intuition? I will definitely pay attention to it. Will I believe that it's some magic power? No, I just think it's just like there's something that I haven't been able to identify. Maybe if I spend more time thinking about it, I could maybe like, oh, it wasn't this. It wasn't this. It wasn't. I'd be like, you know, this is what it was.
- [33:22]
Graham Stephan
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Jack
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- [34:12]
Graham Stephan
The offer, by the way, is only for US customers with minimum financial commitment. See if you qualify for half off@oracle.comiced again. Oracle.comiced with the link down below in the description. Thank you so much, Oracle, for sponsoring this episode. And now let's get back to the podcast. Do you have a BS meter to tell if people are fake or if they're just maybe a bit of a fraud?
- [34:33]
Alex Hormozi
I don't. I don't know if I have a BS meter. I think that asking questions can help a lot. So, like, if someone just walked in and said, like, I am a this, I'm like, I don't know, maybe, you know, If I asked 10 more questions about that thing and I know more about that thing than they do, then I would have a better idea. If someone's talking about how to train a sales team and they're like, I know how to do that? I'd be like, okay, well, how do you think about this? You know, how do you think about this? And if they gave bad answers, then I'd be like, okay, we don't really know how to train a sales team. And so it depends on my skill level within that domain that someone's supposed to, you know, be good at. I think that people have a lot. I think, I think people have far more. I think people have far more experience deceiving other people than we do protecting against deception. So I think there's always going to be people who are more skilled at deception than people who are better at detecting it. And so I'll say, honestly, I operate from the perspective that I don't know and that I'm probably being deceived and would I still do it anyways within these guardrails? And so I just try and operate that way.
- [35:39]
Graham Stephan
Mine tend to be if someone's doing really posed photos in front of expensive cars, usually it depends on the industry. Bad vibes usually head to toe, designer, like, if they're really ripping.
- [35:53]
Jack
And Gucci, like, it has diamonds on it and stuff.
- [35:56]
Graham Stephan
Unless you're in the music industry, which is fine. You have to be in an industry.
- [36:00]
Jack
Music industry. I feel like that's, that's got to be.
- [36:03]
Graham Stephan
It can be. Usually that's a red flag. And then also when they describe what they do and you still don't understand how they make their money, there have been some people that just say, oh, I do this and that. I'm like, I don't get it. You explain it and they explain it and I still don't understand. And then it turns out the dude's just like siphoning money from somebody else. And it turned out the whole thing was smoke and mirrors. I'm like, I. I had a feeling.
- [36:28]
Alex Hormozi
About that guy that I will say, well, it's funny because you say that because, like, then it gets into a domain that I feel comfortable with.
- [36:33]
Graham Stephan
Yeah.
- [36:33]
Alex Hormozi
Where if someone's like, well, this is how we market, blah, blah, blah, blah, or this is how we sell. This is how we price. This is how we, you know, anything that's business related, I'll be like, no, that doesn't make sense.
- [36:42]
Graham Stephan
Yeah.
- [36:42]
Alex Hormozi
And it's like, I'm like, I don't know. Like I'm. I feel, I feel confident enough in my, in my, my skill level to say, like, no, that doesn't, that doesn't make sense. But yeah, so I think it's going to, it's. It's going to be domain specific for me to be able to say, like, I'll have a better judge of character. But still, even then, you know, I get, I want to say deceived, but like, I make wrong picks all the time. You know, like with team and people are, you know, hiring things. Like it happens, you know, it's just part of the game.
- [37:10]
Jack
What about things that are too good to be true? How often are people pitching you things that seem to be that way and they're actually accurately representing their skill or the value of their business?
- [37:19]
Alex Hormozi
It's, I think the too good to be true happens all the time. I've yet to see something that has been too good to be true. I think chatgpt, when it came out, I was like, that's too good to be true. And it was so like, then they became a gazillion dollar company. I was like, okay, that checks out, that tracks. But most things that are too good to be true, like the saying exists for a reason.
- [37:38]
Jack
How important is intelligence in entrepreneurship?
- [37:40]
Alex Hormozi
I think it depends on what level of success you're shooting for. I think, like, if you were like, I wanted to get into AI, like you've gotta be probably really smart. And I think it's not even because, like you're the one who's gonna be the engineer doing it. It's like, you need to be smart enough that an engineer who couldn't do that is impressed by you. Right? Like, so I think, I think it's really in the recruiting aspect where high intellect, if you will matter more if you were, you know, use the lawn care example. Like you can succeed in the lawn care business without being brilliant. You can succeed in the gym business without being brilliant. You can succeed in a lot of businesses, I'd say most businesses without being, you know, you know, above 50% IQ. I think there are, there are skills which people say as traits that are more important. I think courage is incredibly important. I think high agency. So the ability to make your own decisions without being influenced by others. I think honestly, just like perspicacity, like being able to endure and persevere. Because one of the really interesting things about entrepreneurship is that you get. Life gives you this, like these unlimited lottery tickets and you just pay time to get them, but you just can always get them to cash them in. And even if you cash 10 tickets in and they don't don't work, it's like you still have 11th one, you still have a 12th one. And so a lot of people just will choose not to cash their tickets in at all or even grab the tickets to begin with. And I think that that ability to persevere is what gives you more shots on goal. And you only need one really big win to change your life forever. And so it's really just sticking with it. And I think that's the like on a long enough time horizon, somebody who sticks with it just gets enough like they just get so many chances that something that luck does happen.
- [39:16]
Graham Stephan
What percentage would you allocate to being the person in charge of running it versus the business itself?
- [39:21]
Alex Hormozi
Man, I'll say 50. 50. Like I was leaning, I was going back and forth. It's like, you know, because Uncle Warren has a, you know, great manager. Bad market, bad market wins. You know, good market, bad manager, good market wins. I think that like the market is for sure the most powerful thing. But if we control for market like, you know, if you're selling toilet paper and Covid, you're going to make money whether you're an idiot or not, like it's going to work. But I think the vast majority of marketplaces are not on either extreme. You're not selling to newspapers and you're not selling toilet paper during COVID most businesses are just kind of like in the middle. They're in markets that are just normal. And in those situations the business model obviously has to be sound. But the business model is a reflection of the entrepreneur. And so if we remove market then I'll say it's entrepreneur for sure. But market is more important. If it's in one of these extremes.
- [40:11]
Graham Stephan
What qualities do you see in those people? Are there similarities between the two?
- [40:15]
Alex Hormozi
Yeah, it's interesting because there's for sure similarities. I think there's far fewer than most people expect because like even if you look at the top entrepreneurship, I think Bezos and Elon are some of the goats of all time in terms of entrepreneurship. So different in terms of their personalities, the way they behave, their even values, all those things. I think they have some significant differences. But in terms of what are the commonalities about how they operate. They focus on speed, they focus on having an exceptional product. Both of them talk about just, I mean Elon doesn't say customer success, he says products obsessed. But they translate to the same thing which is like they focus on product first above everything else. They're super long term focused. People might have, you know, something to say about me saying this but like I think they both have high ethics. They're like, ah, he's the devil. But whatever, I won't even come leave it there. But high ethics, high customer obsession, long term perspective, huge ability to tolerate pain and the ability to tolerate risk, which is to have the courage to do it. And because both of them had so many moments where they just went all in on Amazon or all in on, on Tesla or SpaceX or whatever, it's like you have to have some ability to make, to go big and bet the farm. And I think that every entrepreneur that almost every entrepreneur that I know who's made it really big has had a moment where they're like, this could not work. And I'm just going to try and make it work.
- [41:37]
Jack
It's so interesting because I feel like there's a huge trend online right now and also maybe for the past five, ten years of there can never be an ethical billionaire. Do you think in order to get to that level of wealth there needs to be a time where you compromise your ethics or do you think that's just a bunch of stuff that people like, like to throw out there to maybe self aggrandize themselves?
- [41:55]
Alex Hormozi
Well, as somebody's, whatever, go ahead.
- [41:58]
Jack
Is someone.
- [41:59]
Alex Hormozi
I am, I am biased so I'll state my bias. I am trying to hit it or in process of hitting it. And so I obviously don't think that there's an ethical like that you have to. I think I'll say it differently. If you took a random slice of the population, just America or even the world, you're going to have a certain percentage of people who are ethical and have a certain percentage of people who are not ethical. And the skills to run a business I think can operate in some ways independently of those things. So you can become super financially successful and be unethical and you can be super financially successful and be ethical. And so I think that you'll have a distribution that is normalized at the top as much as you do in the middle. Like how many people are divorced, how many people are married, how many people are like you're going to have, how many people have kids, how many people don't have kids. You're going to have a random distribution there. I think people will just cherry pick bad actors. And there's also like allegations based on like regulations. Like if you look at all the big fortune whatever companies, it really starts to come down to like what do you, if we, I mean it gets into ethics, which is a totally different can of worms. But if you were to say like, you know, the TCPA, which is telephone consumer protection agency, whatever, they go after a company and it was because the company didn't put the right language on their, you know, landing page. And because of that, they sued Facebook for $700 million. Is Facebook being unethical or are they operating in ignorance? Oftentimes when you have more laws than you can keep track of or somebody makes an oopsie, those things happen. And so it really depends, like, okay, are we now saying that Facebook's unethical? Now, I'm not saying that I think that they're good for the world, but I'm saying fundamentally, like, I think mistakes can happen. And so the idea that people will say a billionaire might be unethical is probably different than a billionaire has made mistakes. And I think those are two very different things. Because for sure, every billionaire has made mistakes and for sure has done things that they wish they hadn't. Because that's what humans do in life.
- [43:58]
Jack
What's a mistake you made recently that may have either cost you time, money, or credibility?
- [44:03]
Alex Hormozi
I invested in a company that I didn't do enough due diligence, and they were doing some things that weren't compliant that I found out about later. And I just said, I don't want to be associated. And I lost millions of dollars and I just said, I'll give you the equity back. I don't even want it. I just don't want to be associated.
- [44:21]
Graham Stephan
What could you have done differently?
- [44:23]
Alex Hormozi
Could have done better due diligence?
- [44:24]
Graham Stephan
What do you look for when we.
- [44:26]
Alex Hormozi
Probably could have reviewed the internal data better, probably could have done more in depth interviews with some of the key employees, could have done more customer call reviews, both on sales side, marketing side, and also on the delivery side, we probably could have done more of that.
- [44:43]
Jack
If you were to observe all of the mistakes that acquisition.com makes and assign it like a pie chart, would you say the largest slice of the pie would be lack of due diligence? Or where do you think you lose the most return or value?
- [44:54]
Alex Hormozi
Honestly, I think the biggest mistakes we make are hiring. I think it's people. But it's really, I mean, fundamentally it's going to be people at all sides. Like people on the deal side. It's going to be people like, even when you're bringing in talent, it's a deal like you're signing an agreement between two parties in exchange for money. You know, so, like, it's. I mean, you're just. You have. The thing is, the number of deals that we have to do every day, every week, every month, every year is a lot. And so we're just Going to make mistakes, we're gonna try our best to learn from them and we're ultimately gonna be rewarded by the quality of our decision making. But we're gonna mess up.
- [45:25]
Graham Stephan
When do you know how to cut the business or try to fix it? Like in that case, I would be looking at that and thinking, well, is it worth, worth trying to or is it just we can't work with these people?
- [45:36]
Alex Hormozi
No, it's a good, it's that last thing you just said. That's really what it comes down to. So if someone I think is, knows about it and hasn't done anything about it, and then we find out about it and say, hey, you should do something about it, and then they don't do anything about it, that's where I'd be like, okay, this isn't going to work. If, you know, a founder's made aware of it. It's kind of like the TCPA thing. Like if, let's say you had opt ins on a page and you just didn't have like, like all the disclosures that you're supposed to have to make it compliant to like text somebody or call somebody or whatever. Right. If someone did that, I'm not gonna be like, oh my God, this guy sucks. I'd be like, oh, he didn't know. Like, let's, let's fix this stuff. And so that's kind of an example. It really comes down to the willingness of the founder to make, to make things right. Nothing that's anybody.
- [46:18]
Graham Stephan
Yeah.
- [46:19]
Jack
Do you have assessments of ethics of the people that you end up partnering with? And how important would you say ethics are? Do you not really consider it? And you just kind of look at, you look at the data as you suggested. Because, because you can ask someone why they do something.
- [46:30]
Alex Hormozi
Yeah.
- [46:30]
Jack
And they could say whatever want. But you don't necessarily know until you've known them for a while.
- [46:34]
Graham Stephan
I feel like there should be a personality test, like the Jordan Peterson personality test that you have them. He does.
- [46:39]
Jack
He's paid 10 bucks or 15 bucks or something. Understand myself.com, i think is what it is. It's interesting because you can also, with this data, compare how two personalities will interact with one another. So, for example, Graham and I, we were pretty different in a lot of categories, but it did say that we had good cohesion.
- [46:56]
Alex Hormozi
Oh, sweet. Yeah.
- [46:57]
Graham Stephan
But they have studies for like business and for personality and for relationships with.
- [47:02]
Jack
Large data, you could probably, probably get a pretty good approximation interest.
- [47:06]
Alex Hormozi
I don't think we have enough data to actually do like big Data, like, analysis for that. If you're thinking of 20s, 30s, like, it's not a lot. It's not enough. You need like 30,000. You need a lot more n to have statistical power. We actually used to do a lot more tests earlier on, and I think we ended up foregoing them. Same on the recruiting side, we used to do a lot more like, personality testing, things like that. Mostly because the recruiting team had to be a, like, over reliant on tests and then would just like, have a star candidate. And they'd be like, well, they. They scored. I'm like, this guy's a stud. Like, bring this guy in. And so we ended up doing away with it. I think everybody wants a test to tell them the answer. And so I think in a job where you have a lot of decision making that has to occur, it's hard to not default to tests because it's so quantitative that you want to just like. It's just kind of like trading algorithms. Like, if the algorithm says I should, like, you want to have that. And so fundamentally, either it's like, like, you know, I tend to be somewhat binary in this, but, like, either we believe this a hundred percent or we kind of don't. And the only times, and I'll quote Layla on this one, but like, if we do have a test that we're going to have somebody take on, like the recruiting side, the only time that we would really use it, if it's a red flag in that it seems like it's completely contrast from what we're seeing. And so if someone's like, oh, I'm really det. Oriented, I'm really timely. I'm really whatever. And then they get on. They're like, I'm a creative and I'm so all over the end of, like, that doesn't make sense. So then we're just like, okay, now it's just an ethical issue. They're just lying.
- [48:33]
Jack
So you're saying you don't want to focus on qualifying someone because if you're testing them, that means you probably have some dissonance between what you think about them and what they say about themselves. And if you.
- [48:42]
Alex Hormozi
Yeah, yeah, I think you will, like, by. This is me talking more as a. As a, you know, company owner than anything else, which is like, if you tend to give a team a tool and they have to make a lot of decisions and the tool supposedly helps them with the decision, the law of least effort will typically reign and they'll just start using the test to make all the decisions. And I think that makes for worse decisions than actually just using everything else.
- [49:04]
Graham Stephan
So if someone's studying you, let's just say, what do you think is the biggest misinterpretation of your strategy or character?
- [49:10]
Alex Hormozi
I think most people think that I'm meaner than I am. I think he's a sweetheart.
- [49:16]
Jack
Guys, Alex is really a nice guy.
- [49:18]
Graham Stephan
So nice on and off camera.
- [49:19]
Jack
Very, very outstanding gentleman.
- [49:21]
Alex Hormozi
Thank you. I think that. And then also in a different setting than a podcast, it's, you know, it's a. Like, when I'm with my team, I joke around a ton. And so I'd say, like, I do a lot of jokes a lot. And I think I have. I mean, Daniel could probably say, but I think. Yeah.
- [49:38]
Graham Stephan
What's your funniest joke?
- [49:40]
Alex Hormozi
Can't say it. Give us a joke. I have a lot. I. I have tons of. Yeah, I have a lot of. I've, like, dirty jokes are like.
- [49:46]
Graham Stephan
Yeah.
- [49:46]
Alex Hormozi
Inappropriate.
- [49:47]
Jack
Like a true grandma, man.
- [49:49]
Alex Hormozi
Yeah, a lot of. A lot of. A lot of. That's what your mom said.
- [49:53]
Jack
That's. That's Brand's favorite, too.
- [49:54]
Graham Stephan
Love this.
- [49:55]
Alex Hormozi
It's a classic. It's a classic for Jack.
- [49:57]
Graham Stephan
I'm always like, yeah, my mom's gonna watch this.
- [50:00]
Alex Hormozi
Yeah.
- [50:01]
Jack
Yeah. Cat's out the bag.
- [50:02]
Alex Hormozi
Yeah. Smoke shower. No, but, no, I'd say that those are probably the two. The two bigger misconceptions.
- [50:09]
Graham Stephan
So moving on from that, how do you eliminate distraction?
- [50:12]
Alex Hormozi
Oh, this is fun. Okay, so I eliminate it by eliminating it. And that sounds ridiculous, but, like, I think the vast majority of productivity hacks can get boiled down to remove everything that isn't work. So, like, my office has no outside light. I try to minimize all the sound in the office. I also put on earplugs and headphones. There's a great app that you can use that blocks your phone so nothing can get through. So including texts, phone calls, slacks, everything. Not just social media. It's a dead element, essentially. And you have to physically move across the building, which is how I do it for mine to mess up your phone, and then I just have a clear idea of the work that I need to do. And so it's like when you eliminate everything else, and then I just set a kitchen timer for when I. How long I expect a task to last. That is when I'm like, peak productivity per unit of time, because there's nothing else to do.
- [51:07]
Graham Stephan
So is this science, or is this just you? Because eliminating science. Eliminating natural light. Why light? For me, Like, I get boost.
- [51:14]
Jack
Oh, I Get so distracted by light.
- [51:16]
Graham Stephan
I get boost by like seeing the outdoors and seeing greenery. It's nice.
- [51:20]
Jack
It doesn't work for me, man.
- [51:22]
Alex Hormozi
Yeah, and I'll be clear. Like, if you find something that works for you, I'll say do that. And for anybody who's like, I do it, do it your way, I don't care. Like, I'm just saying this is what's for me. I do think there's a decent amount of data that suggests that anything that is not the work distracts you from the work.
- [51:36]
Jack
How do you differentiate between distractions and rest?
- [51:39]
Alex Hormozi
Great question. So I think there's, there's like kind of like micro macro. So like from a micro perspective, if you work for 60 minutes or 45 minutes or whatever, and then you're like, okay, I need a break. If you take the five or 10, you know, 10 minute, like walk around the building or walk outside side, to me, that's where you can get your natural light and all of that stuff. But then you come back and then you're fresh again and then you hit it. I see that rest as productive because it increases the overall net production over a larger period of time. So if you work like that for 12 hours and you worked without doing that, maybe you can only work eight hours or you can work the same 12, but you don't get as much done. So for me, it's really just the net productivity of a human being is what they get done over a period of time. So productivity has a temporal component to it and an output component. So maximizing output per unit of time is productivity as I define it. And so it is okay. Anything that increases that rate of work, which for the most part is just deleting the things that aren't work, because few people actually work faster. You just don't work when you want to be working. And so I think if you just limit all the time that you're not working, when you want to be working, you work a lot more. And if you've ever done the timer thing, which I would highly recommend you see if you like, you truly take your phone away and you block out every single notification and you have, you know, you have script a YouTube video or write an email or make a script or whatever you have to do for your business, us or right, make a landing page, you'll notice that like, you'll be like, oh my God. And then you'll look, it's been like eight minutes and you're like, oh my God. Like you're like monkey Brain, like, wants to reach for something.
- [53:05]
Graham Stephan
Sleeping. When I keep looking at the time and thinking, oh, man, another 10 minutes went by. That's another 10 minutes I'm not going to be sleeping. Do you ever look at the time and see, oh, ten minutes went by. Now I only got this amount of time, and your mind's focused on the time and not the task.
- [53:18]
Alex Hormozi
I don't think about that at all, actually. If I. If I. Like, if eight minutes goes by and I'm. And I. And I worked the eight minutes, and I'm like, oh, my God, it was only eight minutes. I'm like, I have so much time. Like, I did all that in eight minutes because I was focused all the time. And I only went to go reach for my phone at eight minutes. I'm like, oh, my God, I have. I have six more.
- [53:33]
Graham Stephan
See, the time is a distraction.
- [53:35]
Alex Hormozi
No, not really.
- [53:36]
Jack
Do you have any distractions that still sneak past your filters?
- [53:38]
Alex Hormozi
Oh, not. I mean, not on the phone. I mean, that thing's done like it's cooked.
- [53:42]
Jack
Twitter.
- [53:43]
Alex Hormozi
No, I mean, when I. When I'm working, I'm not going to music.
- [53:46]
Graham Stephan
You listen to music? No, only when it's silence.
- [53:49]
Alex Hormozi
Yeah, I have earplugs and headphones. Like, it's true silence.
- [53:52]
Jack
What do you listen to when you listen Lift?
- [53:54]
Alex Hormozi
Oh, just, like, the same songs I've had for, like, 15 years. What's not really change? I like Linkin Park a lot. Like, Little Linkin Park. I listen to 50 Cent. I like 50 Cent, get rich or Die Trying. I like that entire album. I still also like some of my white boy music. I still listen to Little Green Day, Little Third Eye Blind. Little Third Eye Blind.
- [54:12]
Graham Stephan
That's good.
- [54:13]
Alex Hormozi
But, yeah, I only have, like, you know, 20 or 30 songs that I can listen to, like, in a workout. So it's like I kind of have, like, a list of a hundred, and they randomly shuffle, and that's like, my life.
- [54:23]
Graham Stephan
How often do you skip the song? Song?
- [54:25]
Alex Hormozi
It depends on what kind of set I'm doing. Okay. It's like if I'm. If I'm early, like, if I'm about to hit a work set, like, I want to make sure it's a good song, but I think that's everybody.
- [54:33]
Graham Stephan
So do you think distracted people then just want it less?
- [54:36]
Alex Hormozi
Oh, I don't even know how to define wanting it less. I would say that for whatever reason, they're being more rewarded from their current path than they perceive the reward of the path that they're trying to get on. Like, it's. I mean, I just, I think of everything in carrots and sticks. It's like they have enough stick of other people judging and enough carrot of staying the same that they die. Don't change. They just have to overcome inertia and they just can't do it for whatever reason. And I don't want to pretend like I have some like, superhuman willpower. It's just like, you know, I had, you know, it's funny because, like, when I quit my job, which was still to this day the hardest decision I've ever had to make in my whole life, because believe it or not, I'm actually very risk averse. I can take bigger bets now, but it's because I have more. And so, like, if I lose, it's not like the end of the world, but. But at the time there was like risking everything or what felt like risking everything. And that was, was. It was because I was so miserable. It was the only reason I was able to, to do it. Like, if. If I had been employed at probably just even a different job at a different place, I probably would have been fine. And I don't think I'd ever even be here. So I don't think I had a high, like, predisposition towards entrepreneurship like some people do. They're like, I've been entrepreneur my whole life. Like, I wasn't. I didn't start any businesses. I did well in school. Oh, school failed me. Like, I did well in school. Like, I studied hard, I got good grades, and I graduated in three years from Vanderbol. Like, I did well. And then I got a good job, you know, in terms of. On paper after that. And it was only like when I had done two years there and that normally you'd go to like, business school, that I was like, I hate this. I don't want to do this again. And I would rather take a shot.
- [56:10]
Jack
So it's spurred from being discontent with where you were at. That's interesting because that is exactly what led to me trying out all these different business ideas and then starting up this thing with Graham. But I never asked you, like, why, what would. What motivated you in that beginning that planted that seed to try to, you know, become big in real estate or on YouTube. Was it because you were discontent with where you were at or just.
- [56:30]
Graham Stephan
Yeah, honestly, it was. It's the stupidest thing. It was that accounting entry. Yeah. With data. It was doing data entry. I wanted to be an investment banker just because I was like, they make a lot of money. I Just wanted to be successful.
- [56:42]
Alex Hormozi
Yeah.
- [56:43]
Graham Stephan
And I would email all of these investment firms just asking to do anything for free.
- [56:48]
Alex Hormozi
Yeah.
- [56:48]
Graham Stephan
I'm like, I'll get you water.
- [56:50]
Alex Hormozi
Yeah.
- [56:50]
Graham Stephan
I'll make copies. Just let me do anything and I'll. I'll just be there. And I emailed maybe like six, seven places that I found on Craigslist. Like, two of them turned out to be like MLM companies. And one emailed me back and said, yes, actually, we're looking for a data entry position. If you want to interview it, come on in. And I interviewed and it looked fantastic. And they had like a sales team in the front and a back off back office in the back.
- [57:17]
Alex Hormozi
Yeah.
- [57:18]
Graham Stephan
And they hired me to do data entry at. I think back then it was like $8 an hour.
- [57:23]
Alex Hormozi
Yeah.
- [57:23]
Graham Stephan
And I was so excited to go in because they made you wear like a suit every day. And I was like, I get to wear a suit to work. That's so cool. And I went in there and everyone is a zombie.
- [57:33]
Alex Hormozi
Yeah.
- [57:34]
Graham Stephan
And everyone just hated life.
- [57:36]
Alex Hormozi
Yeah.
- [57:36]
Graham Stephan
And the first, like, day was okay, but I started getting in trouble for stupid things. Like I wanted to wear a headphone to listen to something throughout the day and mindlessly.
- [57:47]
Alex Hormozi
Yeah.
- [57:48]
Graham Stephan
And they said I couldn't do that.
- [57:49]
Alex Hormozi
Okay.
- [57:50]
Graham Stephan
And then I made a comment about they had styrofoam cups. And I said that, like, the paper cups were bad, better for the environment. And they said, we're not changing. They got really upset that I even made that suggestion. And then I went up to the CEO's office one day. This was all in the first week, just to say hi to the guy and introduce myself. And I'm like, I've just started working here. And he wasn't in the middle of something and he was friendly to me. But I got called into the manager's office later that day and they said, hey, there's a chain of command. Like, you can't just go up to this person and talk to him. You have to talk to this manager, get their approval. It goes to me and then I can.
- [58:21]
Alex Hormozi
It.
- [58:22]
Graham Stephan
It made no sense, but I hated it there. And the only time that people came to life was Friday at like 4pm and you started seeing people laughing and joking around and like being themselves. And then I remember there's like they had like a casual, like one day a month. They had like a casual day where people could wear like, jeans into the office. I thought that was just stupid after a while. Like, I didn't get it. But yeah, that. That single job Made me hate life so much that I would do anything to never return to that. Because I honestly thought, if this is the next, like, 40 years future cast it.
- [58:56]
Alex Hormozi
Yeah, you're like, this is it. I'm.
- [58:57]
Jack
That you were willing to do something for free, which was assistant to the real estate thing.
- [59:01]
Graham Stephan
Correct. But also during that time, they had a sales team in the front. I said, I'd be a great salesperson. I just want to do sales. And they were making like a hundred to, like 300 grand a year doing, like, phone sales. I wanted to do that. And I was told, you have to work your way up, you have to do data entry, to go into the mail room, to go into, like, this thing, to this thing. And then it would. That was like years away. And they also told me no one would trust me because I was 18 at the time. Like, no one trust you on sales at all. And. Yeah, so. And then I got into sales and did well.
- [59:31]
Alex Hormozi
Yeah, that didn't matter at all.
- [59:33]
Graham Stephan
But that for me was like the big to six weeks. It was only there six weeks, but that made a lifetime impact.
- [59:38]
Alex Hormozi
I want to highlight one thing that you said, which is just for anybody who's. Who's listening. Graham said, I'll do anything. And then they said, well, we do have this roll up and do this. I would strongly recommend, if you want to, quote, do anything, then just look at the jobs they have available and try and do that. So rather than just going, like, empty, just be like, oh, you have a data entry position. I'll do that for you. And then in all of the extra time, that's where you try and have lunch with people. That's where you try and basically build your network within the business so you can start leveraging, like, relationships to gain more skills. And then you can start, you know, moving your way in and learning what you want to learn.
- [60:12]
Graham Stephan
What about applying to businesses that don't need your help or aren't hiring? One of my things. I always thought it was great to approach places you'd want to work and just say, I'll take on any role.
- [60:23]
Alex Hormozi
I think it depends on. Depends on the visibility of the company. So if the company has a really big social media presence, they have so many people doing that that the supply, demand of people asking for that specific thing is super not in your favor. If you went to a business that's not based on that, you go to an electric H Vac company, you probably could find some work there that they'll let you do. And so I think again, it's like, try and shoot where, like, the big arbitrage in life is finding supply, demand discrepancies that are in your favor. And so you have a supply of work, they have a demand. Now, if there's way more supply, so many people offering it, then they can dictate their own terms. And if they don't need it, then they don't need it.
- [61:02]
Graham Stephan
What's holding people back from excelling beyond average? Do you think it's talented? Talent? Belief?
- [61:08]
Alex Hormozi
I think people don't do very much. I think people do a lot of talking about doing, not a lot of doing, and I think it's the doing that does everything. And I think that's the. And whether it's lack of motivation, lack of focus, lack of, like, lack of a hundred different things, it just comes down to number of actions taken per unit of time. And I think the vast majority of people just wildly underestimate the volume that's required. And I think that's like, I, I. I hit on this so hard because, like, like, when I'll tell you a story to illustrate the point. When I had my first gym, I had a mentor who told me that he got all of his leads off of flyers. And so that's what he did. And so I put out a flyer and I waited two weeks, and one guy called me and said, hey, you dinged my Mercedes. And I was like, it's the only call I got. So I called him as we're up two weeks later, and I was. And he was like, hey, how'd that go? And I was, like, ready to give. I was like, it didn't work. You know, like. And he was like. And he, like, totally took it and tried. And he was like, well, what was your test size? And I was like, what do you mean? He was like, what was your test amount? I was like, well, I mean, I put out 300 in total. And he was like, oh, man. He's like, hard to know if anything's gonna work with 300. He's like, we test with 5,000 per batch. He's like, and then once we find a winner, he's like, we do 5,000 flyers a day. And I was like, oh, so he's doing 150,000 flyers a month for his business, and I'd done 300. And this is why I think the vast majority of people dramatically underestimate how much volume it is. Like, I mean, right when we started this year, like, it seems like you tweet all the time. It's like, I post that often on a lot of platforms. Now, tweet Twitter is my. My home base for how I. Where everything is generated from. But, like, we make 450 pieces of content a week. And so people were like, hey, man, I've been making content for 90 days. And that would already put them in the top, you know, 1%, because everyone gives up. But if you actually made a post every day for 90 days, I'd be like, it's amazing. That's 90 posts. I do that in two days. And so. But they get there and they're like, But I'm not Mr. Beast yet, you know, And. And it's just. And there's just. People think that someone else is doing two times or three times as much, but it's more often that they've done a thousand times or like 2, 10,000 times the amount of work that they have. Like, if you counted the amount of videos that you've put out in terms of longs and shorts or minutes of content that you've put out over the last four or five years compared to somebody, it's not even. It's like. It's so. So ridiculous, the discrepancy. Same thing with sales guys. They're like, hey, I've been. I've been selling for 90 days. I'm like, okay, so how many calls a day do you take? And they're like, I end up taking, you know, five or six live. I'm like, okay, so you've been doing it for 90 days. You've taken, like, 400 live calls. It's like, okay, well, this is john. He's closed 4,000 deals. Not calls, taken deals. That's why he's better than you. It's just like, there's just a dramatic misunderstanding. And that probably with a 30% closure, he's taken 12,000 calls. It's like he's done 300 times the work you have. Like, it's a lot. Or 30, but, like, it's a lot more than people are saying.
- [63:53]
Graham Stephan
So how do you compete with that guy? Because I bet there's a lot of those guys out there.
- [63:58]
Alex Hormozi
You start. I mean, I think it's like. You just start. And I think it's like. I think a huge amount of the delay that happens when people are starting out is the amount of time it takes for them to realize there is no easy way. So they spend a huge amount of time. They figure out what the. What. How to do it, and then they spend a really long time trying to figure out if there's an easier way. And then they give up trying to find an easier way. And then they just start the hard way. Because the hard way, the only way.
- [64:24]
Graham Stephan
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- [64:42]
Jack
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Graham Stephan
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- [65:19]
Jack
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- [65:34]
Graham Stephan
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- [65:49]
Jack
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- [66:08]
Graham Stephan
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- [66:16]
Jack
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- [66:24]
Graham Stephan
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- [66:42]
Jack
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- [67:01]
Graham Stephan
How often do you get emotionally tied to outcomes?
- [67:04]
Alex Hormozi
I would say less and less over time. I'm sure that there are. It depends on the outcome. Yeah, it depends on the outcome.
- [67:10]
Jack
What outcomes are you still emotionally tied to even though you may know better?
- [67:13]
Alex Hormozi
Well, I think if the book launch for my next book that comes out, like, if that goes well, I'll be stoked. If it doesn't go well, I'll be bummed. Like, you know, like those are like. And I would say on a micro level, like, we always hope that, you know, a YouTube video does well. You know, we hope that, but obviously we have our constraints of like, okay, well, do I want this to be for a business owner audience or do I want this to be for more of a beginner audience? If it's beginner audience, I have to kind of recalibrate my expectations because it'll get way more views. So it's not like I'm a robot. I think I would say that my, my emotional regulations just gotten better over time. It's not like it doesn't exist.
- [67:43]
Jack
What other parts of your identity have you had to kill to become where you are right now?
- [67:47]
Alex Hormozi
Plenty.
- [67:49]
Jack
No one was attachment to the approval of your dad. That's something that's been spoken about quite often. Any other.
- [67:54]
Alex Hormozi
Yeah, I think so. It really depends on how we define identity. Um, but if we define that by the actions that we take. Like if you were to describe somebody like he is this way, you really describe it by the actions that person does. Right. It's very hard to say someone is something without doing something about it. Right. We even describe people by what they do. Like, he's a carpenter. He is selfish, which means that he acts in selfish ways. Like it's all based on activity. And so for me like the changes in behavior which then ladder up to identity. I've had to become more patient. I've had to figure out which I define as figuring out what to do in the meantime. I've had to. Just had times where I'm like, I just. I need to let. I just need to let the. Let the turkey cook. I just gotta let it cook. There's nothing like I shouldn't. The right. The right task for me to do is nothing I've had to learn.
- [68:36]
Jack
That wasn't an easy change to, like, permanently hard.
- [68:40]
Alex Hormozi
No. And I don't think it's permanent. I think you have to fight it every day, like addiction.
- [68:43]
Jack
And so you think there are certain characteristic traits people just naturally have or aspects of their identity that they will have for their entire life. They just have to be able to detect which ones keep them weak, and then it's an active battle for the.
- [68:54]
Alex Hormozi
Rest of their life, I guess, instead of anthropomorphizing. So kind of like humanizing the things that we're fighting against in terms of behavior, it's more thinking, like, I have been rewarded in the past for behaving in this way. And so it's hard for me to change that behavior. But I realize that that behavior no longer serves me. Now you're still going to have the memory of the reward of doing that thing over and over again. And so what's really tough about human behavior is that punishment fades, but reward sticks. Meaning, like when you go out and drink, if you drink too much, the next morning you're hungover, and you're like, I'm never going to drink again. But then a week later, you're like, you remember the reward, but you don't remember the punishment. Right. It's the same reason that people go back to ex boyfriends and ex girlfriends. It's like they remember the good times, but they forget about the bad times. So punishment fades, but reward sticks. And so the hardest behaviors to change are ones that have rewarded you in the past, because you will tend to remember the reward and want to repeat them. And so the only way to really beat those is to find something to do instead that rewards you better.
- [69:49]
Graham Stephan
What's one of the things that worked for you in the beginning that stopped serving you as you've gotten bigger or more successful?
- [69:56]
Alex Hormozi
Well, one of the biggest ones that I talk about is, is when you quit the job and you start entrepreneurship, you get rewarded really big for taking a risk, for doing something different. But you don't need to take those kind of Existential risks all the time. And the problem is that you get a massive reward for doing so in the beginning, and then you almost have to immediately unlearn that and then stick with this current path for an extended period of time. But you kind of always remember the hit of trying something new. Which is why I think so many entrepreneurs tend to always want to do lots of new things when most of the time they need to just get better at the thing that's in front of them and confront whatever problem they don't know how to solve so they can get that thing to the next level. And so they think that by doing something new, because that's what worked for them in the past, that's going to get them to the next level. When in reality, they just end up distracting themselves and trying to chase two or three masters at a time and never getting there.
- [70:41]
Graham Stephan
What's a small hill you're willing to die on that some people might just.
- [70:44]
Alex Hormozi
Think is trivial, that manifestation is bullshit and action is the only thing that matters.
- [70:49]
Graham Stephan
Wouldn't you say that manifestation is the first step before action?
- [70:54]
Alex Hormozi
So if we. It depends on how we define manifest. So if we define manifestation as like an electrical signal occurs in your brain, sure. But I don't think that's how most people describe it. So I would say be totally on board with manifestation. If we define it as knowing that, like, I know that this is possible, like I saw this, or I have some perspective that has changed. To me, that's just knowledge. So if you have knowledge that you can start a bank, you have to have the knowledge that you can start a bank before you start a bank. That makes sense. So, fine, but the bank doesn't occur until you take the action. But the idea of the mindless ideation of I'm going to manifest my husband into existence is, I think, relatively bullshit. Now, that being said, there's some people who do that and then also take actions that then change their circumstances and then they get the husband and then they misattribute what was the thing that caused it. And so for me, I think fundamentally the position that I'm in is trying to identify causal relationship as accurately as possible. And. And so, you know, the logical proof that I use with this is just simply mindset plus no action, no outcome. You know, mindset plus action outcome. No mindset, action outcome. So the action's really going to be the only thing that's going to.
- [72:02]
Graham Stephan
I would argue that you need mindset. You need some sort of mindset to have the action Like I'm, I'm kind of big into manifestation. So it's, it's interesting to, for me, there you go. Like, to me like the example of.
- [72:13]
Alex Hormozi
People get so upset by this, by the way, when I bring.
- [72:15]
Graham Stephan
I find it really interesting.
- [72:16]
Jack
What's their main contest? Attention?
- [72:18]
Alex Hormozi
Well, they have a history of being reinforced for talking to other people about manifestation. And so they want to talk about, have other people nod and smile and agree with them. And those are all pro social behaviors. And so I think it makes sense that they would do that. Again, it depends on how we define manifestation, which I've yet to find anyone who's been able to define it. Well, actually you can define really easily. And so that's the, that's the part, right? So it's like, it's really just this word that has all these positive connotations.
- [72:40]
Graham Stephan
I just think it helps you with focus.
- [72:42]
Alex Hormozi
But like what is manifestation? Manifestation.
- [72:43]
Graham Stephan
Let's say the, let's just say the, the boyfriend, girlfriend example where you manifest the perfect.
- [72:48]
Alex Hormozi
But what is manifestation?
- [72:50]
Graham Stephan
You thinking clearly about your wants, needs, goals, what to look for, who this person?
- [72:56]
Alex Hormozi
Prioritization.
- [72:57]
Graham Stephan
Correct. Now by manifesting that you're going to be on the lookout for those sort of qualities.
- [73:02]
Alex Hormozi
The manifesting, the prioritization or the man like you we said prioritization and then manifesting.
- [73:06]
Jack
I think the problem is that you're kind of using a derivative definition definition of prioritization.
- [73:10]
Alex Hormozi
This is fundamentally why I have an issue.
- [73:12]
Jack
And because you're using manifestation to indicate some sort of data or information, a lot of people that have a different definition of manifestation are going to apply that to their definition.
- [73:22]
Graham Stephan
I just think people know what manifestation is.
- [73:25]
Alex Hormozi
No, they don't. That's, that's actually my point.
- [73:27]
Jack
People think like you sit down and you manifest something and then they think it's going to walk right through that door. Like they think that cosmically everything that just like somehow get bestow like law of attraction.
- [73:38]
Graham Stephan
I don't think that's doing better than nothing.
- [73:41]
Jack
But I think there's, there's data that shows that you can trigger the same dopamine receptors when you think about getting a billion dollars than when you get a billion dollars. Like it's, it's a similar thing. Obviously it's going to be a lot less intense when you think about it. But when you daydream about all these amazing things that are happening, it doesn't actually change the, the reality of your existence. It's only giving you small dopamine.
- [74:01]
Graham Stephan
When you, when you could get yourself to have a firm belief that something is going to happen and that nothing is getting it away. Your actions are going to be reinforced by that.
- [74:09]
Alex Hormozi
Well, the action is the only thing that will matter.
- [74:11]
Graham Stephan
I think there's got to be a belief in yourself to stick with those actions.
- [74:14]
Alex Hormozi
You have declarative knowledge, but also those are skills. And so like, so if someone tries a hundred times versus ten times, I would say the fact that they took more action is the reason they got to where they're trying to go now. When we try to get to like, why did they do that? I don't think anyone has the answer to that. I think the reason for that is because no one knows why they do that.
- [74:31]
Graham Stephan
I think they have a core belief in what they're doing so that dealing is going to happen.
- [74:35]
Jack
An outcome to defend Graham. When I first reached out to Graham to try to provide. We manifested this exactly. I, man, I sat in my room.
- [74:41]
Alex Hormozi
Like, you manifested this podcast.
- [74:43]
Jack
So I, I had no skills whatsoever. The only thing that I had was high confidence in my aptitude and, and confidence and competence. Like, I knew that I could provide value, but it was more of just like something that existed in my brain. I don't know if I necessarily had evidence to support that.
- [74:58]
Alex Hormozi
Sure.
- [74:58]
Jack
I just knew that I was competent enough and so maybe I manifested that one could argue, argue that.
- [75:03]
Alex Hormozi
So the big, the big zooming all the way out here, just for context, I think the reason that people get really up in arms about it is because, like, I mean, these are dogmas, right? These are belief systems which people operate at their very core, which really just means ways of being, which means ways of behaving. And ways of talking is included in that in terms of behavior. But people have a very hard time defining what the hell they're talking about when we ask some of these words that are amorphous. And so I have by and large just removed them from my vocabulary so that I can describe the observable. And it has been probably the single most productive thing that I have done in my career. And so is it a small hill? It is probably the only hill and the main hill that I will die on, which is that behavior rules everything. And you have a history of past reinforcers or punishers for a set of behaviors and you repeat them in the future. And that's the only thing that I will say about why someone does something. You've been rewarded in the past for reaching out to people, for doing things. And it can be cross domain. So it's like Maybe you reached out to girls and they was able to jump into business and you were able to reach out to business owners. So it was definitely girls, though. I know that. I know it's hypothetical, obviously not Jack, but like. But you get the idea of, like, it's across, but, like, those are just sets of skills. Those are behaviors. And so focusing exclusively on behaviors and unbundling terms that are amorphous has been, I think, the key to my ability to communicate to people, train staff, and kind of enlist people to where we're trying to go. And I think that, like, that has really been, like, when people are like, man, I feel like Alex is so good at making things clear. It's like, because I just do not use amorphous language. And if I want to use a term, I will define the term by the observable.
- [76:38]
Graham Stephan
But I believe to shift belief starts with mindset.
- [76:42]
Alex Hormozi
Well, it's like, we're so. It's like, what's belief? What's my what? Like, what's belief? What's mindset? What's manifesting? You are going with. This is like, this isn't. Not to put, like, I actually just. I just want to help. Not. Not you guys. Everyone else. No, but I. I just. I don't think it serves people. And that's why. And that's. And like, I just don't. Like, now some people are like, I mean, yes, you feel great about it. I'm glad that if you. If you had the option between making a hundred phone calls and sitting there and manifesting, you will get further making a hundred phone calls. And so I'm trying to decrease the amount of time it takes people to just do the thing.
- [77:11]
Jack
It's funny, the. The first podcast we had with you, you were mentioning that you had recently removed the word.
- [77:19]
Alex Hormozi
I think it was should.
- [77:20]
Jack
It was should.
- [77:21]
Alex Hormozi
Yeah.
- [77:22]
Jack
You had also removed, like, Because.
- [77:24]
Alex Hormozi
Yeah. Causal relationships. We don't know.
- [77:26]
Jack
You. You. You remove all of these words and every single podcast, you're like, I've since this word. And now I guess it's just like, you've gone to the meta. Of just reducing amorphous descriptions of things.
- [77:39]
Alex Hormozi
Just to the observable.
- [77:40]
Jack
Just to the observable.
- [77:41]
Alex Hormozi
On this existence. It's been. It will be. I'll call this. I think that the book that I write on behavior will outsell all of my books put together.
- [77:48]
Graham Stephan
Tell us about the book on behavior. I'm curious.
- [77:50]
Alex Hormozi
Well, it's not. It's. It's. It's outlined.
- [77:52]
Jack
You're cooking now.
- [77:53]
Alex Hormozi
Yeah. It's, it's cooking. But I, I have this belief and it's probably my own limitations, but I want to have a publicly verified billion dollar plus net worth so that I can then I think have the pedestal, or at least the pedestal, not the right word.
- [78:12]
Jack
Credentials.
- [78:13]
Alex Hormozi
I'll give you an explanation of what I mean by this. So it's like in the beginning we have to start defining terms of like, what's the meta concept that I kind of operate off of? And the biggest one is fundamentally that what is learning, right? Like what is learning?
- [78:27]
Jack
Adaptation.
- [78:29]
Alex Hormozi
So it's, it's same condition, new behavior that's fundamental. Like from a, from a behavioral science perspective, it's like if you were. So if you're, you know, person is condition A and then we teach them something when they re enter condition A, they change their behavior. So it's observable. So same condition, new behavior. If you, the phone rings and you say xyz and then I say, hey, don't say xyz, say zyw. The phone rings again, you say xyz, you haven't learned. If you say zyw, you, you have learned. If you say something else, you've learned but the wrong thing, right? But fundamentally it's a change in behavior within the same condition. And so it's like, okay, if we say that as, as kind of like tenant number one, the next tenant is like, okay, then what is intelligence? So intelligence is going to be rate of learning. So if I have to do that, you know, example 10 times with, you know, Jack and five times with Graham, then Jack has less intelligence than Graham does. In this context. This is a hypothetical Jack and hypothetical Graham. These names are completely taken at, at random. But then it's like that. But, but the reason I think that's important is because then it allows people to have direct influence on their own intelligence. So if you learn faster, you change your behavior faster than somebody else, then you can in a very real way be more intelligent than them. And so when we asked originally, like, you know, do you have to have raw intelligence? I think it depends on what type of intelligence we're talking about when it comes to learning behaviors. This is how I define it. But beyond that, it's like, okay, well then like a lot of words have been like, so what's an excuse? So like an excuse is a statement to avoid punishment. Just very simple. It's like, okay, that's what, it's a statement that like someone says something like, what's an excuse? Like, show me when an excuse has occurred. And by looking at patience, I've defined this plenty of times because I had to use it all the time, which is figuring out what to do in the meantime. So if you say to a young kid, be patient, they don't know what that means. It's a bundled term. It means nothing. Be patient. It means nothing. So how would I give some directions on how to be patient? Figure out something else to do. That's all you have to do. We are all being patient right now for our S&P 500 accounts. We're doing something else. That's all we have to do is just something else. And so it makes patience operationalized. How can I do patience? I have a very.
- [80:16]
Jack
So you're really just kind of redefining all of these words, or at least.
- [80:18]
Alex Hormozi
Simplifying the words that are important. And by defining them, it's more putting them into a context that we're all.
- [80:24]
Jack
Talking on the same plane?
- [80:26]
Alex Hormozi
Well, it's defining them within the observable universe. That way we can all agree. These are the things that we see. When someone has exhibited resiliency, it means that they've returned to a baseline of behavior. And how resilient they are depends on how quickly they do that. If someone's not very resilient, it means that they extend the change in behavior for a long period of time. If they're permanently traumatized, it means they never change their behavior. Right? So it's like, what's trauma? Right? Trauma is a permanent change of behavior based on an aversive stimulus, a negative stimulus. Right? But then the question is, okay, if we have this trauma, right? And then people are like, I store trauma in my spine. It's like, what. Where is there. Is there a hard drive in your. Like, where. What cell is this being? People just say things. And so it's just. It's a permanent change of behavior from something bad happening. Okay, now, if you're a little baby and you touch a stove and it burns your head, hand, and that's a aversive stimulus, and you change your behavior, you don't touch hot stoves. Again. Was trauma bad?
- [81:21]
Jack
I love that. I actually, like, once you said that you're redefining everything into terms of the observable universe. I think that. That, like, I. Yeah, it'll be.
- [81:29]
Alex Hormozi
I think it'll be my most. I think it'll be my most successful.
- [81:31]
Jack
I'm curious, though, for something as I would say, like.
- [81:35]
Alex Hormozi
Like, what's courage? What's courage? Right? So the interval of time A potentially bad thing affects whether you do it.
- [81:40]
Jack
What about something that's so no like purpose or meaning? Those I feel like are really like. I can't imagine how to define those.
- [81:48]
Alex Hormozi
I don't know. I think they're definable. It just takes a long time to really think. Like. The question you have to answer is, what would someone do for me to say purpose has occurred?
- [81:56]
Jack
I guess maybe that's why it's so hard.
- [81:58]
Alex Hormozi
That's why. Because you have to completely shift how you're seeing things and be able to observe them kind of like firsthand. And so it's like, what's authenticity? It's how you behave when you have no risk of punishment.
- [82:08]
Jack
And someone that obeys all of the terms that you've outlaid in that book, it's not obeying.
- [82:12]
Alex Hormozi
It's just like this is. I have to define these terms in order to talk about them because they're also amorphous. And if I never define them, then I would just be making face noise and other people would be perceiving my face noise in whatever way they think it means, which they haven't defined anyways. And so then there'd be a lack of communication. I think fundamentally good communicators are able to transfer ideas efficiently because they use language that everyone understands and ideally things that everyone can observe with their own. Your eyes. And so that's. I try and stick to everything being observable. And so as a result, it's made persuasion way easier. It's being the most important one is that like, if I want to train, which is. Happens a lot in the business setting, it's like, how do you train someone? And you're like, be more confident. What does that mean? Tell a six year old, be confident. It means nothing. It means nothing. They might just say like that means talk louder. I don't know what that means. Right. And so it's a bundled term. So we have to break the term down. It's like, okay, well this is actually a series of many behaviors underneath of confidence that when taken in aggregate, we then describe that person. Person is confident. So maybe they look at you in the eyes when they talk. Maybe they nod their head when they're listening. Maybe they repeat back the last thing that you said. Maybe when, when there's, when there's something that has potential risk or downside, they're willing to do it. Like these are all things that we can observe. And they say, okay, well if you have these, these, you exhibit these traits, these skills in this setting. People describe you as confident. Does that make sense? And so being able to break things down like that has allowed me to help my team when I'm like, hey, you know, I've told this story before, but basically, I had a guy who, you know, a lot of people were saying, hey, this guy's acting like a dick. But he was a star performer. So we're like, okay, well, let's see if we can save him, you know? And so he talked to three or four of the leaders in the company, and he was still a dick. And so I was like, what'd you tell him? We're like, oh, we told him to stop being a dick. I was like, okay, well, so I ended up meeting with him, and I was like, I want to be clear. I don't really care if you're a dick or not. I do care if people describe you as a dick. And I want to like. The purpose of this meeting is to decrease likelihood that anyone talks about me. About you again in a negative context. Cool. Great. So that was the agenda. It's like, all right, so in order for that to occur, let's talk about the things that when you do them, people don't like them, and they call you a dick. So it's like when you interrupt people during a meeting, they think you're a dick, and they call you a dick. Later, when you tell someone how to do their job, they call you a dick, and you try and force your agenda, whatever. It was two or three examples. And he was like, so that's all I have to do. I was like, yep, that's all you have to do. He's like, but what if I present this thing and then they don't execute on it? I was like, then that's not on you. That's on the manager. And I'll talk to the manager and make sure that they're executing, but that's not on you. That's not your role. And so once that got clear, all of a sudden, he just stopped doing the three things that everyone. The three behaviors that people then laddered up to saying he's a dick. And then they stopped calling him a dick. And then everyone's like, oh, he's like, night and day, totally different. But it was just like, no one's specific with their language, and so no one knows what anyone's talking about. And I think the vast majority of people don't communicate well with one another because both people are saying words that neither person understands, and no one's defined anything. And that's why most people can't communicate at all. And that's why most people are dissatisfied with their life. And that's why they can't manage their relationships because they're like both people get upset. No one knows how to communicate. And then that's it. They're just like, they want the other person to guess what behavior they don't like. And so it's like, even if I said, oh, you know, John's lazy, you have to think. And this is why most people don't do this, because it takes work. You have to think, okay, I think John's lazy. Why do I think John's lazy? What occurred, what did I observe that then made me think that now you might find out? It's like, you know what, he's actually just slow to respond. Okay, is there anything else? There was one meeting, he came ill prepared. Is there anything else? No, I think that was actually it. Okay, so when I go to John, instead of being like, hey, you're lazy, I'm going to say, hey, I need you to speed up your responses to under five minutes. And when you come to a meeting, have your notes ahead of time, just send them to me. All of a sudden, John's not lazy anymore. But it's because it was this very micro thing that we then ladder up to this amorphous term that no one can understand. And, and so this has been a huge area of interest for me in defining reality. And I think that honestly, it's helped me navigate reality really well and make higher quality decisions.
- [86:08]
Graham Stephan
If someone reads his book, how would it be actionable for them to get those ideas across with somebody else who hasn't read the book?
- [86:14]
Alex Hormozi
And they would have to define the terms. They would have to define the terms.
- [86:17]
Jack
It's getting a complicated word and then simplifying it into the layman.
- [86:20]
Alex Hormozi
Right? So then we don't have. Well, they're currently not communicating with that person. So, like, how would they talk to somebody who hasn't read the book the way they always do, which is nothing. Which. The thing is, the point that you hit on underpins the fact that most people can't communicate well at all. And so if a lot of people want to be different than they are, and I am first in line on that, there are many things that I've wanted to be different about myself for a very long period of time. And this book and these ideas have been the culmination of trying to change these things about myself. I would say I want to be more authentic and I'M like, well, what's authenticity? How do I be more authentic? What do I do? Well, it's like, okay, well, authenticity is how you behave when there's no risk of punishment. And so if there's no risk of punishment, how you behave, basically, if you're alone and no one can find out about what you do, that's you authentically. Now, the problem is that in society, we also have rules that govern other people's behavior, right? Which means that the only truly authentic person is someone who behaves the exact same way alone as they do in public, which will probably have something to do with your preferences. And so can you be truly authentic? Only in that subset of people who act with complete freedom, and when they act with complete freedom, act within the rules of the law. Anyone else who has any inclinations to do anything that's outside of society's preferences or the rules that govern how we interact with each other or the laws, right? Has to, by the very definition, not be authentic or be less than 100% authentic. And I see many of these traits as not binaries. Are you authentic or not authentic? But how authentic are you? And also in this setting, and if it's like, man, this sounds like it's a little bit more complex. It's like, yeah, welcome to reality.
- [87:55]
Graham Stephan
So how have you been holding yourself back in terms of authenticity?
- [87:59]
Alex Hormozi
Well, it's also the question of, is being 100% authentic something that is. I should be.
- [88:06]
Graham Stephan
I mean, realistically, probably not.
- [88:08]
Alex Hormozi
Right? And so again, but the thing is, once we define the term, we actually can have a discussion about it, because now we're all talking the same language. Language, and it's much more productive. And it's also way less charged from a. Like, if we had never defined the term, then you would have maybe been like, what do you mean? Like, you don't think you're authentic? I'd be like, well, not 100% of the time. It's like, wait, so you're lying to people? Right? It's like, we don't define the term. And then all of a sudden we're attacking each other rather than just saying, like, well, no, I. I act differently in private than I do in public to a certain degree. I walk around naked. Like, if I walk around naked in public, that would probably be. But I'm being a little bit inauthentic right now. I'm wearing clothing. I normally wouldn't wear clothes. Clothing, Right? You know what I'm saying? Like, and so again, that what it does is it adds nuance. But B.F. skinner, who's a famous behavioral scientist, said if many variables exist, many variables must be studied. And so a lot of people want a very neat box with clean lines and say like, this is the way it is. And I don't think reality is that way. Like it's not. Is this person honest or dishonest? Is how honest are they? How loyal are they?
- [89:08]
Jack
I'm curious. You take a blank slate person, they read and apply everything that you write in this book. What does their life look like a year down. Down the road, five years down the road?
- [89:17]
Alex Hormozi
Great question. So it's the book will by no means be a. Here is how to live life. Because that assumes that I know and that I think they should do something. I think it's more. If you want these things, these are the recipes for achieving them. So if you want to be perceived as patient, figure out things to do. In the meantime, if you want to be perceived as authentic, behave more in a way that you were that you do in private and public. If you want to, you know, be perceived as more courageous than decrease the time between when you perceive something as risky and when you take action on it, like all of a sudden it's like, oh, so I want these traits. And so this would, in my opinion, be the first way that at least the first place I've seen where there's like a recipe, like do this. How would you explain it to a child who doesn't know what the words mean? And I think that's what allows. Well, I mean, it's what allowed me. It's what has allowed me to exhibit more traits that I wanted to have versus traits that I didn't want to have. And until I had that, I just was like, why do people describe me this way? Just because I couldn't break down what I had to change, but what I did to change basically reality.
- [90:22]
Jack
You're in a great position to talk about it too. It's interesting because you've mentioned this years ago that you had an issue, I think it was with anger and you also had the patience thing. But it does appear as though you've made pretty significant strides in applying corrective behavior.
- [90:35]
Alex Hormozi
Yeah, to those more on patience, less on anger, but better.
- [90:40]
Jack
And, and how does anger affect negatively? Maybe your business or your life? Like, what have you noticed?
- [90:48]
Alex Hormozi
Okay, well, I'd say that the negative effects of anger for me have probably just come in, in almost entirely from the way that people treat me. Not in terms of negative outcomes, business wise. I think the reason that I still have anger is because it has so served me. So I think we repeat things that have served us in the past. And so I think one of the reasons that people misunderstand why they do things is because people ask the question, what triggered that? You heard that? It's like, oh, something triggered this behavior. But it's not about what happened before, it's about what happened after the last time you did it. So I'll give you a real example. So if Layla gets upset, and this is something that I've really actively worked a lot on, if Layla gets upset and she gets like, she cries, if we're having some, you know, whatever, I had a tendency to try and comfort, comfort for a short period. And then if that didn't work, I would get angry. When I would get angry, she would get scared. When she would get scared, she would stop crying. And so when I got angry, she stopped crying. And so I learned that if I got angry, I got my wife to stop crying. And so it was a very reinforced. I only figured that out later. And so it's a very reinforcing thing. It's like, oh, if I can, this gets lay little to stop crying, right. And so to the same degree. So I've been rewarded in that setting. But obviously she's like long term into roads. So then I have to work on that, right. If I value the relationship, which I do, but the same context with my team, right. If I am quick to anger or be cold or sharp with someone and it doesn't even have to happen often, like if you do it once or twice, or even if you do it in front of somebody not directed to towards them, they're like, well, I never want. Because modeling is a great way that people learn. If someone shows up late and I yell at that person, then that everyone else is still afraid of me and doesn't want to shop late either. Right. And so what happens is the flow of communication from other people to me slows down because they're afraid of getting punished by me. And so I see that as not positive for the business is me not having the information. Now how do I cover for that? Well, I have somebody like Layla who always gets all the information and that's why she's CEO and doesn't have direct reports. And so we've been able to manage that within the business operationally. But in terms of me personally, like, I want to be better about that. And so that's like an example of something that I'm working on.
- [92:57]
Jack
What's interesting Is I. I kind of have a similar thing in terms of, like, if I. If someone's emotional to me, I have very, very little patience, unfortunately for it. And it's one of my shortcomings.
- [93:07]
Alex Hormozi
Yeah.
- [93:07]
Jack
Since you fixed that, how have you noticed?
- [93:09]
Alex Hormozi
Fixed, you know, better.
- [93:11]
Graham Stephan
Sure.
- [93:11]
Jack
Okay. Since you try to improve upon that, how have you noticed that. That change in. In real, observable ways?
- [93:18]
Alex Hormozi
Well, I mean, Layla has now also. Because she understands how this stuff works too, because we talk about all the time. Like, she has tried to reinforce whenever angry and she's upset. And so either in the moment or immediately afterwards, she's like, thank you for not getting upset and thank you for being there for me and thank you for just hugging me and just waiting it out, essentially. And so I just have to remember that when I'm in those settings. And the more time she reinforces it, the less strong the other reinforcer is, the stronger the new one is. A lot of this stuff has come from suffering, being like, why can't I be this way? I want to be this way, and I can't. Why can't I? And it's like, because I don't know how. Why don't I know how? Because I have no words that have described how to do it well, so how do I change this in reality? And so it's been. It's been the result of. Of. Of a lot of seeking and a lot of pain. And that's. So I don't. I don't see it as logical. I see this as just descriptive. Like, this is. This is how it works. But.
- [94:11]
Jack
But you're able to.
- [94:13]
Alex Hormozi
To.
- [94:14]
Jack
To assign a new timeline in terms of when you learn something to. To. To a longer period of time rather than most people which assess things over a shorter period of time. For example, Example, like, you know when you would get angry at Layla, like, she would quiet, and you're like, okay, like, this works. But then you're able to then see way deeper into the future and then make decisions based off of that.
- [94:33]
Alex Hormozi
You mean that this isn't going to work long term? Yeah, like, well, yeah, I'll get feedback. And I mean, to be fair, I'll get feedback immediately afterwards where, you know, she might not be happy. You know what I mean? And so I think, like, it comes down to what are the things that we want to change and then how do we change them? And ideally, we want to have some sort of reward cycle as fast as possible with that new behavior. Behavior. And that's. I think that's how Fundamentally, you can change what you do, which then ladders up to who you are.
- [94:58]
Graham Stephan
Moving on from that. In terms of acquisition.com how has your criteria changed for businesses over the last two years?
- [95:06]
Alex Hormozi
It's just much bigger. It's just the businesses have to be a lot bigger. They have to be billion dollar opportunities. Now when I first started, I think honestly when I first started the goal was like $50 million opportunities. And then it became like $250 million opportunities. It's almost like 5x actually like every, every like 18 months or so. It's almost 5x.
- [95:26]
Graham Stephan
So how does it work exactly? A company reaches out to you and they say, hey, we want to.
- [95:31]
Alex Hormozi
They'll go through acquisition.com on the site.
- [95:33]
Graham Stephan
And then, and what do they do? They submit their info that they want money or they want to sell or what is it?
- [95:39]
Alex Hormozi
So we have, we have, we basically have three kind of places that someone can go. So for like seed capital, SaaS, software type startups, we have ACQ Ventures, which is our venture arm. And so those are typically like smaller checks that are between like 50 and a million dollars, like check sizes. And so we do, you know, a lot of those deals. We do probably like a couple deals, three, four deals a month. Sometimes like December. Did four, I think we did four in January. Like we, we do a decent amount of deal volume there. And those deals are much more like meet the founder, understand the idea. Cool. We can, we can just deploy. We have the private equity side which is kind of like the, the big, big, the big boy side and those big businesses, like if we're going to do a deal, they're all bespoke based on the valuation of the business, where we think the business can go, what our value add is. And typically in that side, it's like right now we're 40% SaaS, 40% B2B services and then 20% consumer services. And we're shifting over time towards just a blend of SaaS and professional services that just tends to be where we just do really well. And so that's on the private equity side. And then we have the advisory division which we started in January of last year, which is companies that are like not really portfolio ready. And so that's kind of like that, you know, 1 million, 10 million, 30 million, sometimes dollar per year business where it's like they need to change a couple of things. And the reason that happened was for the three years prior to January of last year, we, you know, we'd look at a business, we do 4, 5 6, you know, diligence calls. Get to understand the business. And a lot of times, like, 90 times out of 91, we'd be like, not a fit for us or not fit for us right now. Maybe change these two things, move this metric up, and when you do, like, call us back. And what ended up happening is a lot of founders were like, this was more valuable than anything I've ever had to go through. And thanks for doing it for free. And for me, it was like, it was actually super expensive. Cause I'm doing that 90 times, times however many calls, lots of companies. And I was like, I wonder if we could do this in a way that we could charge to the same basically assessment of a business and say, here's all the things that we would do, here's how we change it. And so then we, you know, we, we. We wanted to see if people were interested in. So January, I was like, hey, if anyone wants to come out to headquarters, you can meet my portfolio team. We' of assess the business and be like, these are the blockages to either making it more valuable or scaling it. And so it's like, you'll meet with my head of marketing. He'll be like, okay, change this on your webpage, change this on your ads, change this on whatever. Meet my head of sales. If sales is constraint, these are the things that we do. And people have really, really, really liked it. So it's been exceptional. And I think the reason that it works so well is that there's kind of what I was alluding to at the beginning is that there's just not a lot of help at that one to $100 million range. And I think we can provide that.
- [98:15]
Graham Stephan
And so how do you make money from that? Are you taking distributions from the company? Sold some.
- [98:20]
Alex Hormozi
No, no, they just. We sell it as an advisory service. It's just a service. Oh, overall. Oh, no. We have distributions that come from the private equity side. Okay. The venture checks. Obviously, I'm not going to see anything for that for 10 years. And then services, just normal business.
- [98:35]
Graham Stephan
Why don't you have a website or a place where, where people could see the companies that you've invested in?
- [98:40]
Alex Hormozi
It's a good question. It's something that I've gone really back and forth on. The main reason is like, when I sold Gym Launch, I sold Prestige Labs, which was a sister company that did supplements and sold through the distribution base. And I remember in the diligence meetings for that, it was like a huge point of contention that I had a 10,000 person Instagram following at the time. And they were like, are all the sales coming from your Instagram and the business doing like 20 million a year, just the supplement side? And I was like, no, it's not coming. They're like, well this could be an issue for us if like we can't have complete control of the Instagram. And how do we know you're going to keep promoting, promoting it? I was like, my Instagram is not driving like 10,000 people does not make a 20 million. Like I promise you. And seeing how sensitive they were to kind of like key man risk around, you know, an acquisition, I was like, okay, if I do deals and I grow my brand, I don't want people to know what the companies are because I'm gonna have to go like, I'm gonna write a check, but then if I publicly associate with it, then I'm gonna have to go with the deal later. So like for example, school that was purposely like a brand association plus money obviously that went into it. But I know that I'm in that, I'm in that for the long haul, you know, I mean like I'm going to be with school for many, many years. And so my key man risk is something that I'm willing to basically deal with. Whereas if I buy a, you know, an H VAC business I publicly associate with it, a potential acquirer will want me to sign other non competes. I'll have to have some provisions around promotion and I just didn't want to do that. I have gone back and forth on it though. To be really like I've gone back and forth.
- [100:06]
Graham Stephan
It seems to me like there would be a net benefit on it reminds.
- [100:08]
Alex Hormozi
Me, I've gone back and forth. I have gone back and forth like.
- [100:11]
Graham Stephan
A Shark Tank business where it's like as seen, Shark Tank is pretty big. And you could argue that the business you bring to that will drive up the valuation to a point where even without you, it's still higher than if you were never involved.
- [100:25]
Alex Hormozi
Agreed. So then the next thing that goes is if I have all of these different things that I'm like pseudo promoting, then it almost feels like I'm shilling a lot of things.
- [100:34]
Graham Stephan
No.
- [100:34]
Alex Hormozi
And so that's been, that's been where I've been.
- [100:36]
Jack
I would just as a viewer of you, not that anyone like, not that I would question your credibility, but I think that it would, it would bring a lot more clarity where I actually.
- [100:44]
Alex Hormozi
I've gone back and forth on it. It. I mean I've gone back and forth.
- [100:46]
Jack
And I think it would attract a lot more businesses where you could say, hey, when you started with acquisition.com you were valued at this much. Your revenue is this much. But now look at you.
- [100:52]
Graham Stephan
Here's the other thing. I think it would help you negotiate better terms saying that you're going to be on this website where it's even a hundred companies and I think it's important you put them all in the same place so that it's not like you're promoting this or promoting that or you, you should never talk about these businesses unless in a podcast setting where you're giving an example.
- [101:13]
Alex Hormozi
The other. The other. Yeah, I mean I've been very, I've been torn on it. I was like, you know, like I' been very like. Because of all the reasons I just said. But the other one is kind of like the, the compliance thing that I just said. Right. Like if, if a company could you imagine like a company does something stupid and companies do stupid things. Even if I wrote a venture check to a business and then. And the company does something, I'm an owner and any, any you know, reporter or you know, clout seeking YouTuber would then be like her Moji is saying, doing this instance, like how is that.
- [101:45]
Graham Stephan
Different from why Combinator where they're very public? A lot of these, like even some of these private equity funds are just.
- [101:51]
Alex Hormozi
Like, that's their value prop though. YC value prop is Harvard's value prop is like the, the main thing they get is.
- [101:57]
Graham Stephan
Yeah, but there are plenty that go through Y Combinator that just turn out to be, you know. Yeah, maybe not the best.
- [102:03]
Alex Hormozi
Yeah. But I think it's. Well, Y Comb is kind of unique in that. Like, I mean to be fair, if, if, if a Harvard grad does something bad, Harvard takes a hit. But is a law of luxury. I told you it's going to work both ways.
- [102:14]
Graham Stephan
I think. I think it's going to hurt you if a business reflects on you and if you do something, it reflects on all the businesses. I think it goes both ways. I think the net benefit is like a 51 to a 49, like 40% down.
- [102:27]
Alex Hormozi
Like I have, I have gone back and forth to the T where I've been like, I'm gonna, I'm gonna make all of our stuff public. I think we are make, I think the ACQ ventures if I'm not mistaken. I think our ventures things are public. So it's really just the private equity side.
- [102:42]
Graham Stephan
What about school? What was your mindset behind that?
- [102:44]
Alex Hormozi
School is Interesting one. So, you know, for me to, again, this is like, you know, using brand to promote something, right? You know, it'd been four years that have been making content and really never promoted anything. And when I look at my audience, I make business content almost exclusively, but still like 60 something percent of my audience is people who want to start a business, not people who have a business. And I think that's just the nature of just humans. Like there's way more people who don't have businesses than people who do. You know, 9% of business, 9% of people own business and 91 don't. And so if we're at 30% or 33%, people who are in my audience own businesses. We're three or four times represented on like overrepresented by business owners because I make business content. Anyways, to the, to, to answer the question, I was like, is there something that I can do with this larger audience that can help them get started in a scalable way that would provide value to everybody? And so I, you know, I, I got approached by a gazillion companies, probably like you do over the years for, for the audience and the access and the distribution that we have. And Skool was a company that I had been following since 2018. So I've known Sam for a long time and I just kept watching it and it just kept getting better and better and better. And the, it's just like all I heard was good. It was just all good word of mouth because I'm so concerned with my reputation too that I'm like, if I, if I promote anything and it's not awesome, you know what I mean? Like I could take a hit. And so that company was just compounding month over month over month just on word of mouth. It had zero marketing whatso. It had amazing customer retention in terms of people who started communities and also member retention. People were in communities. So it's like people are in there getting good experience. People who are starting communities are getting good experience. And I think that there's a big movement in general like meta towards communities overall. And so I thought like from a macro perspective, I think it's a good, it was well, well timed and well placed. And then beyond that from a long term strategic perspective, like it has network effects built in. And so even in an AI world, like I think think it will, it will do, it'll do great. And so for all those reasons, it was also something that would work for people who were just getting started. And so that's why I, I invested in school and then I promoted it. So I thought it would help the, the 60 something percent that didn't have businesses get started. And also for the 30 something percent of people who had businesses who wanted to start, you know, like have a place that's not like an email list for all their people to, to house, I saw it as a much better option than like a discord.
- [105:10]
Graham Stephan
Or do you worry when it comes to school? The one thing that I've seen in terms of a bit of a complaint sure seems to be that there is at some level this like MLM aspect to it where I've seen schools that people promote that teach you how to make money on school.
- [105:26]
Alex Hormozi
Yeah.
- [105:27]
Graham Stephan
So like a school for school.
- [105:29]
Alex Hormozi
I think that's just going to happen no matter what. Like there's, there's YouTube channels about how to make YouTube channels. There's like, if there's anything that someone has figured out to generate a living, then there's going to be people who sell how to do that thing. And so I think if we chunk up a level, the question is, is there something wrong with that? Right. And then number two, the MLM component. So I can break that in two parts. The MLM thing is just like we have a referral commission which is like not a very uncommon strategy. And the Internet affiliate. Yeah, yeah, the Internet doesn't really deal with nuance, but it's not like it's multi level. An MLM has multiple levels. This has one. You refer a friend, you get a percentage, like a credit, like anything. Like if I refer you business, you probably give me 20%. So like, like you know, whatever. But yeah, that's just because the Internet doesn't deal with nuance. So that's the. Not mlm, the single sl, the single level marketing that exists there in terms of what people do with their community. We're, we're pro free speech, anti censorship. Like if it's legal, you can have a community about it. You know, if you want to have a community about painting, have a community about painting. You want to be community about Facebook ads, have community about Facebook. You want community about finding the perfect cologne for you, you can have that. You want to have one about painting model cars, you can do that. You want to have about how making sick beats. I'm just naming all, just off the top of my head, all different communities. And if you want to have one on how to make a school community profitable, have like we're not going to say like you can't start a community about that. Like how can we do that with millions? We have tens of millions of users. Tens of millions. It's very big. It's much bigger than people think it is. And so like either you have to start saying making this rule and that rule and then you get down the whole rule strap, or you just say like you can make a mean about whatever you want as long as it's legal. And that's, that's how. That's where we decided to draw the line.
- [107:06]
Jack
Should we create a community about how to podcast or just podcast it?
- [107:10]
Alex Hormozi
You could, I'm sure it crush.
- [107:11]
Jack
You think it would crush?
- [107:13]
Graham Stephan
Would it?
- [107:14]
Alex Hormozi
Yeah, I don't know.
- [107:15]
Jack
We've been thinking about making, making content like talking about production equipment.
- [107:19]
Alex Hormozi
Isn't that mlm?
- [107:20]
Jack
Searching a podcast about how to podcast. Then you have to ask is there anything wrong?
- [107:24]
Graham Stephan
That's why J loves it, right?
- [107:25]
Alex Hormozi
Exactly. And this is a great question. Question is what's. And, and so what, Dan? What's wrong with it?
- [107:30]
Jack
I'm gonna out myself right here. I think there's nothing inherently wrong with an mlm. However, they're used in really inappropriate ways a lot of the time. But inherently nothing wrong. It's just an affiliate program.
- [107:42]
Graham Stephan
I feel where it goes wrong is people are deceptive about maybe the practices or, or the buy in.
- [107:48]
Alex Hormozi
I can, I've studied this. It's so much. It's like I can, I can say it very succinctly. The problem is that the promise doesn't match the deliverable. Okay, that's it. It's false expectations. That's it. Fundamentally, the vast majority of people who advertise, especially in the information space, do not advertise compliantly. And so as a result, they make promises they can't keep. And so people get false, false expectations. That being said, do I think there's anything inherently wrong about saying like, I learned how to do this. I put tons of hours into compiling all this stuff and if you like me and you like my style of teaching, you can buy it from me in this video course. And I know you still to have one. Like the. The question is, I don't think there's anything inherently wrong with education or even profiting from education. Colleges do it. Why do. Why can colleges do it and get give people 0 ROI and no one says college is a scam. Well, some people do, but the vast majority of people still think college is not a scam. It's simply because they don't promise anything. That's it. That's fundamental. Like it just comes down to that if you just don't promise anything, then you're kind of in the clear. If you're like, hey, I put together a course on how I, you know, how I succeeded as a, as a realtor. I make no promises to whether I'm going to follow it or it's going to be perfect for you. I just share the stuff that worked for me. If you want to go check it out, it's whatever, it's over here, you can go check it out and buy it. I don't think anyone's like, screw this guy. Now some people will be because that's the Internet. But like anybody what I would consider to be reasonable. No. And I think to, you know, to a large degree, like we can't listen to everyone because you will have people who are just upset about you not sharing your stuff as people who are upset with you sharing it and so might as well upset the people who don't pay you.
- [109:16]
Jack
Vegas Matt also put it really well because he was involved in one before. You know who Vegas Matt is? He's a YouTuber here in Las Vegas. He's massive YouTube channel on gambling. But, but he said that MLMs are effectively better because the money actually goes to the people that are closing the sale rather than giving it to advertisers that are just going to inundate people.
- [109:35]
Alex Hormozi
Oh yeah, they just take the, I mean from a business model perspective, you take your advertising, you basically take your entire allowable cost to acquire a customer and say instead of giving that to anything, I will just give that all to my sales team and then I will incentivize them to recruit other salespeople so that we can have a continued distributed base. So that instead of having a sales manager who's getting paid a base salary and a small percentage of everyone's sales, it's just like it's all performance. And having the multi level structure allows you to recruit teams just like you would in a business. Wait, all businesses are pyramids? Are all businesses pyramid schemes? Like you know, come on, like it's Illuminati, you know, like we just say things. But no, I don't think there's anything inherently. I think the where people get in trouble is making deceptive claims and making false promises or promises that they know to not be true. And the associations. So basically MLM has a bad brand as a bad brand it does. There's enough negative associations that people who might be Otherwise really good MLMs still take the heat for the bad ones. People who sell information and education will take the heat for all the people who sell the bad ones. And so that's the. That's the rub. I don't think there's anything wrong with selling education.
- [110:42]
Jack
It is interesting how deeply rooted that hatred is for a lot of people. It is, like, the most sensitive topic for a lot of people. I'm curious, are there any business models that you kind of secretly hate because. But they're highly profitable. Maybe because they're, like, intellectually lazy or, like, just morally lazy maybe too?
- [111:00]
Alex Hormozi
Um, no.
- [111:02]
Jack
You'd say anything.
- [111:03]
Alex Hormozi
I, I very much stand from the position, like, if it's legal, then, you know, do. If someone is willing to exchange money. Like, again, capitalism based on voluntary exchange between two parties, and both parties make the exchange voluntarily because they both believe they'll be better off. Now, the belief part is where deceptive components come come into play. Right. But inherently, I don't have an issue with someone make. Like, I don't claim to have a moral superiority that my way of making money is better than someone else's way of making money. Now, my business might be perceived as more valuable to an investor, which is a different thing. So if you're like, are there business models that make cash flow but don't have inherent value? Yeah, there's tons of those. But do I see that as bad? No, I just see it as different and that's fine.
- [111:45]
Graham Stephan
So if someone were to take school as an example and just copy it and do their own thing, why do you think that business would fail?
- [111:53]
Alex Hormozi
Network effects. We already have tens of millions of users. It's very hard to do.
- [111:56]
Graham Stephan
And what if that's also the details?
- [111:58]
Alex Hormozi
Why doesn't someone just copy Facebook? It's like they could just copy it. Exactly. It's like, yeah, the people aren't there.
- [112:02]
Graham Stephan
What if there's another influencer who's backing, like, school 2.0.com not to say they.
- [112:09]
Alex Hormozi
It's. It's also easier said than done, you know, to copy. Like, it's. There's a lot of details on how it's programmed and how it works and what content gets surfaced and what algorithms run. Like, there's a lot of details in the business that make it. And it's, it's, it's. The product is so detail driven. It's all the tiny things. It's not like you could copy the colors in the layout. And there have already been plenty of people who've done that, but they don't go anywhere. And so. But we could say that about any business.
- [112:33]
Graham Stephan
Yeah. What do you think is the best business right now? Because it seems like from my perspective, just on a high level, the subscription model is doing really well. Charging one price for the year or like break it down monthly. That seems to be the new thing. So like what's. From your perspective, what changes is that.
- [112:51]
Alex Hormozi
In like the digital creator space?
- [112:53]
Graham Stephan
General.
- [112:53]
Alex Hormozi
Yeah.
- [112:54]
Graham Stephan
But, but every, every business has. Has gone to now the subscription model. Like I'm paying more. I remember when I used to be able to buy Adobe Photoshop for like a hundred bucks.
- [113:02]
Alex Hormozi
Yeah.
- [113:03]
Graham Stephan
And now it's like 30 bucks a month or like $40 a month for the same thing.
- [113:07]
Alex Hormozi
Yeah. Is it a ripoff or. If we're willing to pay for it, it's just inappropriately priced.
- [113:10]
Jack
I'm extremely willing to pay for it.
- [113:12]
Alex Hormozi
If anything.
- [113:12]
Jack
It's a good deal. Shout out to if you want to sponsor. Like we'll be an affiliate.
- [113:17]
Graham Stephan
Yeah, I would love that, man. I would be shilling Adobe all the time.
- [113:20]
Alex Hormozi
Will you believe in it?
- [113:21]
Graham Stephan
Yeah.
- [113:22]
Alex Hormozi
Maybe you should reach out though. I feel like you'd push it so hard.
- [113:24]
Graham Stephan
Worth it.
- [113:25]
Alex Hormozi
Yeah.
- [113:25]
Jack
Great deal. It's not expensive. It's incredible.
- [113:27]
Alex Hormozi
It's a great deal.
- [113:28]
Jack
Anyone with half a brain would want to buy link down below, get 15 bucks off.
- [113:32]
Graham Stephan
But you know, before you go into that, I will say the biggest benefit or the. The best business that gets on all the time. YouTube Premium. People hate spending money for YouTube because it should be free. I love YouTube Premium. Love it. I think it's worth every penny.
- [113:47]
Alex Hormozi
People just think they just project their own of like why they sh. They should. I shouldn't. I'm like, what you should. That. That YouTube should pay all the servers and all the compute that they. The workers that work at YouTube should just be free. Like it's just like. It's just this demand of the universe that like everything, everything has to be given to me or else. Or else I'll be upset.
- [114:07]
Graham Stephan
I think we make more money if people watch the ads versus getting YouTube Premium and watching the video without the ads. I think the ads pay more all things.
- [114:16]
Jack
Consider YouTube claims that the premium views are worth more. Which, which I would believe because if they're paying 15 bucks a month, then.
- [114:22]
Graham Stephan
You just kind of have to.
- [114:23]
Jack
Okay. But then you just kind of have to do some simple math and they need to watch like a million million videos in a month.
- [114:28]
Graham Stephan
I don't know the breakdown on that.
- [114:29]
Alex Hormozi
So I will answer the question that you originally asked, which is why is the subscription economy like doing. I. I'll just Only answer specific to kind of creators because I have a ton of obviously with school, and then I am being one myself. I actually just think that there's never been more creators and at the same time there's never been less trust. And so people don't trust other people as much. And so people are consuming significantly more content prior to making a purchase. And the purchase that they make in general, the first purchase are lower ticket on average. So maybe 10 years ago people would immediately see one video, hop on the phone and pay $5,000 for something or $10,000 for something. And that's just. It's significantly less likely now and they're far more likely to buy, grab a book or grab a, you know, a $29 thing that they can try and see if the, if the quality of the product is or quality of the community, the quality of the subscription is what they deem it's, it's supposed to be worth. And then they're willing to, you know, pay them for more expensive things. So I think that what is more publicly seen is the subscriptions. I still think many of these businesses that, that do bigger profit numbers tend to also still have backends that are more premiumly priced either in terms of services or products or whatever. But the thing that is advertised on the front end for the vast majority of people kind of like you have your top of funnel shorts and then you have your longs and then that converts into your kind of like low ticket and then that ladders up into the, you know, 5% of those people or 10% or whatever percentage ascend into.
- [115:54]
Graham Stephan
You know, a higher level in terms of hiring people. How do you spot an A player?
- [115:58]
Alex Hormozi
I will say that I have yet to have an A player that I don't know is an A player within the first week or two.
- [116:04]
Graham Stephan
What are the signs they meet?
- [116:06]
Alex Hormozi
So like support, right? They decrease the likelihood of failure. So they are taking things off my plate really quickly and they're proactive in terms of their decision making and the actions that they take out of a lot, a lot of it is really just a tremendous amount of activity. High activity, high alignment. If you have both those things, you have somebody who's moving a lot of things in the right direction and ideally you get a lot of attention back. And so if my life gets worse when someone starts, that's a bad sign. And if my life doesn't change when they start, that's also not that good of a sign either. Now, of course, there's a little bit of onboarding you're gonna have some of that, that's sure. But by and large, I want to see some dramatic changes in how my time is getting allocated from bringing somebody in, especially if they're taking. Taking things off my plate. But I think that works at all levels.
- [116:49]
Graham Stephan
And what's one of the things that you still insist on doing personally, even though you could outsource it?
- [116:54]
Alex Hormozi
Well, all the books I write. All the books I write, all my emails I write. I mean, I, I do all the recording tweets. All the tweets are mine. All the tweets are mine. Honestly, every, every piece of written word that comes out of acquisition.com is me. And that is a huge amount of work. And so it's either me, because they took it as a transcription from a video that I talked, or I wrote it. There's only one exception to that. But LinkedIn, same thing. Facebook, same thing. It's all tweets are actually my. We were talking about this earlier, but tweets is my biggest secret weapon for how I create so much content. It's everything. It's the wellspring. So the tweets are my stream of consciousness in real time. And then those tweets become tweet reels. They become shorts. If they're high performing, I'll just say them. Many of those shorts put together become longs. That'll be, you know, business advice or brutally honest, you know, advice. I wish I had had things like that. It's just 20, 30 tweets put together with a little bit more anecdote. LinkedIn posts are multiple tweets along the same thing put together. Facebook, same thing. So like TikTok, same thing, like everything actually. And my emails are high performing tweet concepts that then get repurposed into email. So everything stems from like that one stream of consciousness. And I think, like, as a creator, you have to find whatever that, that lowest friction method is for you. I always used to email myself, like ideas, quotes, lessons, thoughts. And I used to use that as my method for making podcasts. And then I just had this like, duh, realization of like, instead of just like emailing myself, I could just email the world via tweet and I would just like tweet them. And it also made me a much better writer because you have to be so concise with your language that I think has actually improved my writing from the book's perspective.
- [118:46]
Graham Stephan
Have you said anything that's recently gotten backlash?
- [118:48]
Alex Hormozi
I think I had a LinkedIn post that got taken a little bit out of context. So I have somebody who writes my LinkedIn, but it's my words. But he took it from a podcast like this and just took it there and then just took an image and put it together. And it was. It was basically like, hey, for 10 years, I didn't, like, go to football games. I didn't play fantasy. I didn't go out. And I, like, skipped friends weddings. Like, do whatever it takes to get where you want to go, right? And the amount of people that were like, so two. Two different big backlashes. So backlash. One was just like, this guy's hustle porn. Like, all he wants to do is tell people to sacrifice, and I'll. I'll address that in a second. And then the other was like, what kind of life would you. Like, I would never skip a friend's wedding. Like, this guy's priorities are all out of whack or whatever. And so both of them come down. I think kind of like the. Do you. Do you have an issue with somebody's business? Is like, do I have an issue with how someone lives their life? No, it's like, different. Different destinations. Like, there's a. There's a guy who, like, is probably a lifestyle entrepreneur and likes to, like, talk shit about my stuff. And, like, I make in, like, a week what he's made makes in a year, and he's a big, you know, whatever. And all I can think of when I say is, like, we have different goals, dude. Like, we have different goals. Like, I don't, like, of course. Like, it's like looking at professional bodybuilder, like, and he's like, well, I train twice a day, and I weigh all my food and, like, I get massages and I do stretching, and it takes me about five or six hours a day to do all the bodybuilding stuff that I do. And then some crossfitters, like, that's ridiculous. I only work out three days a week. This guy is trying to give you bodybuilding porn. It's like, bro, he's way bigger than you, and he has different goals than you do. And so it's just this whole idea of should itis of, like, they shouldn't do that. They should do it my way, which fundamentally just is like, my life is based on my preferences, and their life is based on theirs. Duh. And so if you want to go to your friends weddings, by all means, go to your friends weddings. I don't care. You know what I mean? Like, if you want to have a dog, have a dog. Like, I share the things and like, the one line that I repeat over and again is. Is like, my life is a documentary, not a sermon. I'm not telling people to do things the way I do them. I just share what has worked for me. And if it works for you, great. And if it doesn't, I love you. I love you all the same.
- [121:13]
Jack
Where I see a lot of the backlash is just because it comes off as dogma for everybody.
- [121:18]
Alex Hormozi
Sure.
- [121:18]
Jack
But if you added the stipulation of like to those that want to build a successful business, but that's also not necessarily like, you don't need to cater to the people that aren't going to listen.
- [121:26]
Alex Hormozi
You have footlong disclosures at the end of every one of your podcasts posts. It's like, I can't. If I had put all the disclosures in my tweets, I wouldn't have tweets. I would just have disclosures. So it's one. I think. I think Naval said something about this. But basically it's like for a post to get reach, it will have to have some sort of level of polarity. And to have a level of polarity, you have to remove context. And so it's basically like you can have complete context and no one can see it. Or you can be willing to stand on one line of gray and say no. For me, if. If more people were willing to delay gratification a little little longer because they saw some of my stuff rather than take immediate reward, I can live with that.
- [122:02]
Jack
It's interesting. Every time we talk to you, you're. You always say, oh, yeah, I recently did this. I recently evolved this. I have since developed this. You always have something that you had just done. Most of the time, oddly enough, it's not even adding things, it's eliminating things.
- [122:19]
Graham Stephan
Usually words you're not doing or yes.
- [122:21]
Jack
Making your criteria more strict. What some. Something right now that you're currently working on. And maybe you don't have full clarity of it, but you're seeking clarity.
- [122:31]
Alex Hormozi
Well, I mean, how I'm going to launch my next book is something that I'm thinking about just from a timing perspective. So that's something I'm thinking about. Honestly, a lot of my attention goes towards what I'm going to try not to do. And so it's an accurate observation because, I mean, if you listen to all the greats, you listen to Jobs, you listen to Bezos, you listen to Elon entrepreneurial greats, it's like they all talk about focus because it's so hard to do it's so hard because the bigger you get, the more juicy and tantalizing the opportunities become, right? And it's like. And you have to just be like, nope, we're just going to keep doing this thing that I know all the pains of, and we're just going to confront the issues we have and we're going to work through them one at a time. When it's like, oh, but there's this amazing thing that could be fast and easy. And it's like, it's just fast and easy because I. I don't know enough about it. And I just have to. And like, I've just been burned enough times jumping over that bridge to know that, like, the grass is greener. I just don't know enough. And the fact that I think it's attractive means I don't know enough. And so 2024 was the first time in my life where I've not had fomo. And that was a first, my whole career where I didn't have a moment where I was like, I should be doing that instead of this. And I've been doing this, you know, I've been the entrepreneur game for a minute. And that was. It was only like, I realized in retrospect, I was like, that was an accomplishment. That was a huge win for me because I've always, always had that. Like. Like a buddy of mine, close friend of mine, did like $50 million in net earnings in Q4 just from trading crypto. No employees. Like, just. Just traded crypto, made 50 million in profit. And I, I remember thinking in that moment, I was like, good for you, man. Like, no idea how you do it. Don't want to know. I'm going to keep doing my thing. But, like, at so many other points in my career, career, I would have been like, oh, my God, teach me what you're like. I want to learn what you're like. And I would completely take a mile off the ball. And the thing is, I think I've gotten this. A snowball that's finally started to roll. And I say this now, hopefully knock on wood, like, it'll stay that way, that I'll manifest it teaching. I hope that I can stick with. Stick with it. And because I continue to get rewarded for sticking with it. And it's been the hard, like acquisition.com by. By duration is the hardest single business that I've the longest duration that I've only done one thing. So that's been pretty cool.
- [124:56]
Graham Stephan
Besides Jack's mom.
- [124:57]
Jack
Okay, we're cutting that.
- [124:59]
Alex Hormozi
Yeah. Why she was amazing. She didn't tell you?
- [125:02]
Jack
No, she told me all about it, actually. I think.
- [125:04]
Alex Hormozi
Did she tell you to call me dad?
- [125:05]
Jack
I think you are. I think I'm entitled to some. Am I in the will?
- [125:13]
Alex Hormozi
Took that like a champ.
- [125:15]
Graham Stephan
So once you hit a billion, your laugh starts turning into aos.
- [125:18]
Alex Hormozi
Laugh Bezos laugh.
- [125:20]
Jack
Gosh, that completely threw me out. I had something I miss in the cannon. That's also what she said.
- [125:27]
Alex Hormozi
Yeah.
- [125:31]
Jack
All right.
- [125:32]
Alex Hormozi
That was snowball. Snowball. It's rolling up. I hope that I can stay focused for an extended period of time.
- [125:38]
Jack
Yeah, that's sounds like something that Graham and I need to hear. Exactly. Because we're so focused on making the content and fortunately like, like most of our revenue comes from the sponsors and so we're able to travel around the world. We're able to spend money on the flights and the accommodations and the crazy.
- [125:55]
Alex Hormozi
The watches, the dripping production, the crazy $15 Casios. Yeah. The G wagon.
- [125:59]
Jack
We're able to, to do what we do because of, because of the sponsors and, and, and right now it's enough. But we want to always be improving. So now we're thinking like, well, what if we created a product or service and we're always having discussions.
- [126:10]
Alex Hormozi
Yeah.
- [126:11]
Jack
About how we can do that. But I, at some point I always wonder like, like if we just focus on making better content, then we get better, like higher paying sponsors, same sponsors, we love the sponsor. Higher paying sponsors because we're getting more views and it's like a cycle because of that. But, but part of me also wonders like, should we focus our efforts in something else?
- [126:29]
Graham Stephan
My, my thought with that is that I am happy also doing what we're doing now. And I kind of worry that like we're good at this thing. If we take our eye off the prize. We don't. But if we take the eye off what we're good at now, are we just adding more onto the plate where we don't need to, or we have a really great balance and a great life and things are going well and.
- [126:50]
Jack
If we're just trying to create something for the sake of creating something, then maybe it won't be perfectly terrific. But right now if we're just focusing on making the best content for you guys, the ones watching, then hopefully it's a pretty good product.
- [127:02]
Alex Hormozi
Well, I have so many thoughts on this. Do we have five minutes? Because I think I have a very in depth answer for this. So basically I see this as a spectrum. So it's a continuum that exists for and this is specific for creators in terms of how to monetize. And so it's basically a spectrum that has risk and capital and effort kind of on either side. So like low risk, low capital effort, high risk, high capital, high effort. So all the way on the left you have sponsorships, right. Which is what you're doing now. Cool. You make money from doing the same thing. Agree to the right of that would be like an affiliate relationship. Like Adobe says, hey, we'll give you 20% of all of them lifetime. It's like, okay, cool, Adobe, hit them up. You have an affiliate relationship. The next is when it starts to get a little bit, you have, you have your, your, your, your, your drop ship, right. Your white label. You find somebody who just puts. And you did this with a coffee, I think back in the day, right. Like you have that kind of middle ground. So somebody else is going to manage everything. I'm just going to promote it, but I'm going to own the brand and that's, that's that. The next degree here is where you have, you find an existing business where you can negotiate some percentage of equity in the business and ideally distributions and, or royalties, which I'm a big advocate for creators to do both because you have costs associated with running the business, running your business, your side of the marketing, right. And the business makes money because it's monetizing with whatever traffic you're sending. But you need to keep advertising. And so having some either, you know, profit share or some royalty on top line or some sort of, some sort of cash flow still needs to come back because not all companies sell. Actually the vast majority don't sell. And so I think it balances some of the risk for a creator. But that would be a minority deal, especially with a company or a product that you really like. And so if Adobe were smaller and would give you a percentage of, you know, the company, that would be one where it's like, and ideally this is, I mean this, this is me turning the tables and speaking to you as an investor. It's the best is when you can write a check too because then it's like there's no expectations. I'm going to promote this because I believe in it and because I want it to grow and I want to get a good, a crazy return on the money that I put into it. And so you'll have some blend that's going to, of that deal, but usually for minority stake and maybe some performance tranches that kick in based on how well you do it and then the final one, the final frontier is where you actually do everything yourself. The whole thing, soup to nuts is like you're starting a business. That's Jimmy with the feastables, right? Like he's really just starting a chocolate thing and finding cocoa nibs in Africa and doing all this stuff, right. And so the upside is typically higher on this side, lower on this side in terms of the enterprise value of, you know, what you're promoting. But so is the risk and the, the difficulty. And the idea that I think a lot of people miss out on is like it's so much about the partners that you're bringing in on the side that they have to like, in my opinion, for a true partnership to work, they have to be able to be successful. Successful without you. And if they're already growing, they're already successful. This is like school, like school. School's gonna be successful either way. I just wanna pull the future towards this faster. You need a partner who is as good as you are or better, ideally just amazing at that thing. And you're amazing at this thing. And then it's like the sum of the parts is what is where the magic happens. But those are basic. That's basically the continuum. But if you're gonna do anything to the right of the right of center there, and you're not just like, I'm either sponsoring or doing an affiliate deal, I think you can do, I think the best deals is kind of like the school. You put cash in, you buy a big stake, you also promote. Those are deals where it's like, I think again in terms of behavior, what is this going to change about what I do? And I would like to do deals that change as little or nothing about what I do. If I'm always going to make content anyways, and I'm already getting 2/3 of people who want to start a business, then I don't need to change anything now. It's still high leverage because I just point them in a direction. I'm like, hey, I vetted this. I think it's awesome. I think it's a really good product. Check it out and it's free trial. If you don't like it, cancel. Right? That, that is basically my. And I, I would use that if I were you guys as my decision making variable. Which is you at both accurately said it. We're really good at this thing. And the more we do this thing, we better, we get at it, we get more views, we get the sponsorship continue to grow. Fine, we can do some of these other deals, as long as it changes nothing about what we do. And so I think that's. And that's the frame that you have to enter those conversations with, which is like I'm already, already sponsoring. So me slotting your product in which I also happen to own a piece of and get some kickback on, it doesn't change anything about what we do. But then that gives you some long term upside and maybe a higher distribution.
- [131:33]
Graham Stephan
This would be really interesting. How about this for anybody watching? If you have a business that you think would align with what we're doing and you want the distribution, I'd be really interested to see who reaches out from this.
- [131:45]
Jack
That's a great idea. And also Adobe and also if you guys.
- [131:50]
Graham Stephan
Yes.
- [131:51]
Jack
Would be interested if we were to create. Because Graham and I have thought about this and we've helped a lot of people just in consulting with content, specifically podcasting, you guys think that there would be demand for that. So that's something that you'd want to see. If we went all the way in depth, pre production production, post production research, etc, let me know.
- [132:08]
Graham Stephan
I'd be open to that too. Yeah, I tried something on my own. I'll just talk about it briefly. I put a little feeler out there for like a networking, working community and I was shocked. We got thousands of people who reached out who said, I just want to be a part of a network of like other entrepreneurs on school perhaps. No. So we started at the very top of the list. People who made more than 10 million a year. And I just didn't even think of. I just wanted to go and talk to these people. I probably talked to like 20 people. It's, it's, it's the least scalable thing I could possibly do because I'm like talking one to one with super. It's not okay. Not when people want.
- [132:45]
Alex Hormozi
I see that focus in his eye.
- [132:47]
Jack
Don't go up against that.
- [132:49]
Graham Stephan
So far we got a group of like a dozen people who are doing over 10, who are doing over 10 million people. And it's, it's just the coolest group of like, it's something magic when you're, when you have a small community like that versus something that's too big. I'm big on communities, but I say when it's, it's not scalable in the sense that once you get. It seems like from. I've spoken with quite a few people on this. Once you get more than like 30 or 40 people, you start to lose that one on one connection that made it Special.
- [133:14]
Alex Hormozi
Yeah, it's really about subgroups. So if you look at like is it scalable at the current model? No, but are communities scalable? For sure. So if you look at, well you look at Y Combinator, they have a much larger community than that. And it's really cool. If you look at Vista, not Vista, vistage, which is a community model. If you look at ypo, if you're familiar with them, young professionals organization they run, they're, they're national and they have chapters and. But they keep the forums to like eight people. And so that's how they keep the. To the. You have access to the whole network. Cause you're like, oh, I'm also a YPO person. I got vetted. I, you know, I'm above a certain level. So you have that kind of cred. But like the, the actual super close knit group is, is like eight people and they meet in person. And so that's why I think they're like, I think for sure there's, there's demand for something like that because people want. All successful people want to be around other successful people because it's really lonely.
- [134:04]
Graham Stephan
That was the one thing I was surprised about when, when I was speaking with all of this. Those people, only one of them said that their goal was to make more money. Only one. And that meant that maybe 30 people said I don't care about making more money. All I care about is meeting other people who share the similar problems that, that I've gone through. And most of most of the problems are pretty surface level it seems like. And it's like tax planning, estate planning, raising a family, random business issues that come up, inheritance, whatever.
- [134:31]
Alex Hormozi
Yeah.
- [134:32]
Graham Stephan
Things like this, this. But I was shocked how common everybody. All this. The commonalities between everybody.
- [134:38]
Alex Hormozi
Human problems have existed in human lifetime. So.
- [134:41]
Graham Stephan
So I thought that was interesting.
- [134:43]
Alex Hormozi
Yeah.
- [134:43]
Jack
What is your experience of loneliness?
- [134:48]
Alex Hormozi
I. I really like being alone. So I don't get super lonely. To be super like candid with you, I think that there are experiences that feel isolating where you're like no one else is dealing with this. But usually isolation is kind of like shame. It only exists in the dark. Like if you go out and say like hey, I'm dealing with this thing with my marriage, I'm dealing with this thing with my weight. I'm dealing with this thing in business. Like there's a zillion other people who are dealing with that. My mom used to say this thing that I really liked a lot. The news is always the same. It's just the names change. I thought that was actually like, pretty profound. It's like if you look at the headlines of the news, it's like, you know, banks default, interest rates, rates up, housing crisis. Like, it's like those headlines have existed for a very long time. We just change. It's just. We just change who's involved. And even, even the bad ones, like, girl gets abducted, like, just change the names. But it's the same stuff. Humans doing human things. And so I think that context. But it's still. It's one thing to know that hypothetically, another when you meet somebody who's going through the exact same thing. And I think that makes people feel less isolated. But spending time alone, for me personally is like of the most. I like. I like being alone.
- [135:55]
Graham Stephan
Are there different tiers to wealth that you've noticed? Like, for people that go from zero to 100, 100 to a million?
- [136:00]
Alex Hormozi
Sure.
- [136:01]
Graham Stephan
What are those tiers? And when do you see diminishing returns?
- [136:04]
Alex Hormozi
I think Felix Dennis has a. A book called, like, it's like how to be Rich. I think it's how to be I'll teach you to be rich or how to be Rich, something like that. Anyways, it's funny, but like the first chapter, he breaks down like 11 levels of wealth. And he says basically, after $400 million liquid, he's like, that's when you're truly wealthy and he was worth that much money. He's like, at that point, it's like you can really do whatever you want. I do think that the jumps are much smaller in the beginning in terms of what makes a really big difference. I think going from anything to about six figures a year is a material change. I think going from even 10,000amonth to 20,000amonth is a significant change. Going from there to about 40 or 50 is another change. And if we think of how we're defining the change, it's usually like, what are the variables that affect someone's daily living? So it's going to be where they live, the schools that their kids can go to, the vacations they can take, where they can stay, the food they eat, the clothes they wear. Like those are all. But almost all of those are affected mostly, I would say, up to kind of like that 1% earning level, which is about $500,000 a year. Now you can live a baller lifestyle, 500, but not really save anything. And so if you're a responsible saver, it really depends on you're saving. I'm actually a lot like Graham, believe It or not, even though I spend money because Leila spends money, but like by percentage of income, I spend a very small percentage of my income. And so it really just depends on your appetite for saving versus spending. And I think that's entirely personal because it's really just a question of risk. Like how much risk am I going to take on? But beyond that, that's just a ratio. But after that, it's like, you know, you're. You have nicer and nicer houses, you go on nicer and nicer vacations, you travel, travel private. You know, maybe that's at a couple million bucks a year. You start traveling private after that. Again, it's like, it's just like you're buying boats and you're buying houses. Like there's there. You can't, at a certain point, you really can't consume any more of it. I will say this is that I do think that, and this is controversial, but I do think that money, because, you know, they had a study, it's like up to $70,000 a year and now like inflation adjusted is probably closer to 100. I actually think it continues to go up beyond that. But I think the problem is that people have a skill deficiency in terms of how to spend money. I think most people know how to spend money effectively, up to $100,000 a year in terms of how to make their life better. But they don't know how to spend it above that in terms of things that improve their lives. But I think it's a learnable skill. I think you can get better at spending money to make your life better. And so for me, things that make my life better are going to be things that buy me time back. Things that basically are all the annoyances and frustrations in my life. If I can pay to make those go away. Those are things that net enhance. And then long term, in terms of purpose, it's like if you find something meaningful, you can actually devote real resources and make a change or an impact. Which I think is, you know, you.
- [138:49]
Graham Stephan
Should see the updated study on that. That whole $75,000 that's been debunked. No, it was, that was done in a, in a different country with so great.
- [138:58]
Alex Hormozi
You would know. So I did one recently. Yeah.
- [139:00]
Graham Stephan
Well, within the last 10 years of the United States.
- [139:03]
Alex Hormozi
Okay.
- [139:03]
Graham Stephan
And they found that, I think it was about $150,000 was where you get peak dollar to value ratio. It continues up, just diminishing returns, but diminishing returns. And they found that it. The diminishing returns really stopped about $650,000, about top 1%. They found that over a million dollars a year, you actually have lower quality of life. And I'm guessing it's because you have more problems, career issues, or maybe friends are not friends with you, or you have fake people.
- [139:31]
Alex Hormozi
You got to manage money, which is another, like, a whole nother thing. Right.
- [139:34]
Graham Stephan
But it was really. Yeah. 650, 700 grand, and then it just kind of tapers.
- [139:38]
Alex Hormozi
Yeah. After that, I would. That seems super, super believable. But, like, after, you know, five or $10 million a year in income, like, for the next strata is like, I don't know, 25, maybe 30, 40 million a year in income, like, where you can do, like, even, you know, crazier things, I guess. But at a certain point, when you can buy the hotels you stay at, it's like, like, whatever. I don't know. I don't have a need for Omega Yacht. I think Layla wants one, though.
- [140:04]
Graham Stephan
Should buy a hotel.
- [140:08]
Alex Hormozi
Don't say it too loud.
- [140:11]
Jack
Alex, thank you again for coming on the podcast. It's always great to see you.
- [140:16]
Alex Hormozi
Yeah.
- [140:16]
Graham Stephan
This is your fifth time on Believe It Is.
- [140:18]
Alex Hormozi
It really?
- [140:18]
Graham Stephan
It is.
- [140:19]
Alex Hormozi
Yeah.
- [140:19]
Graham Stephan
We've had no other guests, if we.
- [140:21]
Jack
Count the you and Layla. The duo show.
- [140:23]
Alex Hormozi
Okay, the duo show. That's fair.
- [140:24]
Jack
Yeah.
- [140:25]
Alex Hormozi
Yeah, that's cool.
- [140:26]
Jack
Maybe in a year, guys, we'll see him back on once a year, hopefully, and we'll see what he's eliminated from his life one year from.
- [140:32]
Alex Hormozi
I've eliminated happiness from my life. I've just seen it as a distraction, interaction.
- [140:36]
Graham Stephan
Just don't. Don't eliminate podcasts for us. Stop doing podcasts.
- [140:40]
Alex Hormozi
Yeah, I'll do many, to be honest with you. But no, you guys, you guys, we always have good conversations. I'm glad we got to where we did. And I only took it because your mom told me that it would mean a lot of debt. Yeah, I have a big debt to pay off there.
- [140:56]
Jack
Thank you so much for watching.
- [140:58]
Graham Stephan
Till next time.
- [140:58]
Jack
And thank you to the sponsors.
- [141:00]
Alex Hormozi
Adobe.
- [141:00]
Graham Stephan
Thank you, sponsors.
- [141:01]
Jack
You know what to do. Until next time.