The Game with Alex Hormozi
Throwback: Money Making Advice You Needed to Know Yesterday | Ep 839
Wed, 19 Feb 2025
Want to scale your business? Click here.Welcome to The Game w/ Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode:Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap
Chapter 1: What is the focus of this throwback episode?
Welcome back to the game. This is a throwback ep. Last year, after our $100 million leads launched, the top 10 affiliates had 10 hours to ask me questions about their businesses and do it for their audiences. And my team went through that whole period and compressed it down to the absolute best moments. Enjoy.
Let's say my only goal was just to get rich AF. What is rich AF? Just so we define it. 100 million. Why not? It's a good number. Cool. You're willing to work hard, but you have limited skills and experience. What business would you start like right now in 2023?
And I have no money, right? I would probably build a boring business in services. And I would probably pick something around the body. You know, I wouldn't just start a design firm because I think that has a high likelihood of getting disrupted or, you know, in some way by AI.
If I were, you know, it's as silly as it sounds, like a nail salon or a lawn care service, things that, I mean, especially body ones, you know, dentist stuff like you still have to go in and get your teeth taken care of. And many times people value the human exchange more than something robotic. So, for example, in the fitness world, like this is my like my data point around this.
There was a brand called Cocoa Fit, and they struggled a ton and then eventually went out of business because they tried to automate personal training. So they created these all in one machines that would you'd have a key fob and it would count your reps. And every time you went to the machine, it would say how to do more and what you did last time. It's a really cool concept.
The problem was their theory was that the reason that people were getting results is that they didn't know what to do when the reality is that no one was showing up at the gym. People hire personal trainers because they want another human to talk to and to hold them accountable to showing up. Same reason like if you had a robot cutting hair, there might be a percentage of the population that do it.
But a lot of women like the going to the hair salon and having that exchange. And so I would probably build a business around services in general would be my way. And then I would continue to scale that. And you could do that at a local chain level and you can make a lot of money doing that. Or you could do it at a national level, which would be like professional services.
I love the idea behind the core stuff that's going to be here forever. Let's say hypothetically, the great fires of Las Vegas burn everything to the ground. Okay, you lost everything. You had to start again. What would you say is the number one thing that you would have done differently to get to where you are now. And I have no reputation, right? No reputation.
Yeah, it burns my reputation on the ground with it. So I actually have lost everything before. And so I know what I did and I probably would have done the same thing. So the easiest way that I did to like go make a hundred grand in a month when I had nothing was that I would go find a business that was local, that I understood, and that I could sell something expensive for.
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Chapter 2: How can you start a business with no money and limited skills?
Like if you know that when you stay up late, like there are times when I will gas it and go past my red line in terms of work. And I know that I'm eating into tomorrow. But if I'm like in a flow and I'm crushing it and the muse shows up and the muse wants to work, then I work. You know what I mean?
But if there's some days on the flip side where I wake up and I just feel foggy as shit and I just like for whatever reason, I ate too much Mexican last night and I don't have it that day, then I might call it earlier. Like the idea of me pushing through and punishing when it comes to the type of work I do. If I were doing a more brute force work, then I would care less. You know what I mean?
If I was just doing reach outs, I was doing cold calls, I was training, personal training sessions, I was cutting hair, I'm just I'm just going to brute force my way through it because I don't need to have higher brain function. And that's not an insult. I'm just saying, like, you're not like thinking of creative things. You know what I mean? You're just you're working the work.
But when it comes to like writing or making presentations or communication of some sort, it's more I try and optimize around how can I maximize over a week how much flow state I can be in so I can just get the most total quality output. So it's not about rules. It's more like which of these things has a highest likelihood of getting me the most. What's up, Kristoff?
In one podcast, you said that your most feared decision in life was to quit your job when you were 22 or 23. My question is, what advice would you give to your younger self if you could in that exact situation?
When you have nothing to lose, it also makes it the best time to make high risk decisions because you have a disproportionate upside. Not quitting if you want to do something else, like if you have this desire to do something else, is like not taking a stranger up on a free lottery ticket on the street. If they give you a free lottery ticket, and you lose, you're back to not having anything.
If you win, then your life changes forever. And so I think a lot of people place a disproportionate amount of weight on the opinions of other people who are going to judge them in the short term because quitting your job is short-term pain for long-term fulfillment.
If that's what if that's what you want to pursue, because the short term pain comes from the judgment of others and likely a back, you know, back step in income. But long term, you're working on the thing that you want to be working on. Now, if you like your job, and you know what I mean, then that probably doesn't apply to those people.
But like, if you're in that situation, it's really a long term, short term sacrifice, which a lot of people aren't able to make.
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Chapter 3: What should you do if you lose everything in business?
So like when I was starting making content, I did it in my closet, right? And there were some hardcore people in the OG Mosey Media days that are like, I appreciate you. That were like, man, I miss the closet videos. Now, I might have lost some of those people when we started making a little bit more polished videos, etc. Some people, not all. I traded losing some audience to gain more.
When you're making a brand move, you're basically always making a bet that you will gain more of your desired audience than you lose by making a change. And so you can approximate or slowly move a brand over time by making more associations in one direction and fewer associations in the other. And so that's how you can move a brand over time. Bud Light made a wrong bet.
They thought, and maybe this is just a corporate group think, right, that if they made an association with Dylan Mulvaney, that they were going to get more people to buy their beer. I mean, fundamentally, that's the only reason you would do it as a company, right? You'd believe that long-term you'd get more people to buy your beer. The problem was that wasn't true.
Now, the interesting thing is that there probably are people who were a big fan of that move. It's just that there were more people who weren't. They were far away. Right. There were more people who were not a fan of that move. And so that became an away from association. And so that is what I am trying to encapsulate and put together into how to brand.
Because now that I feel like I understand it a little bit, I see it as, in my opinion... It's kind of like Neo in The Matrix when he's talking to Morpheus and he says, so you're telling me that I can dodge bullets? Morpheus says, well, when you're ready, you won't have to. And so we learn all these tactics about sales and marketing and show up rates and CRO hacks and all this shit.
But if you have a brand, if you see The Matrix... Everyone shows up to your calls. No one has price objections. Everyone is excited and refers their friends. It just takes longer to make associations because fundamentally, all branding is, is teaching. You are teaching someone to do something. You want them to behave a certain way and you have this red, red card.
And when you see red, it means stop. That's all we're doing. So green lights have strong associate, strong brands. They're positive. Everyone loves green lights, right? Like it's a simple thing. Just no one owns it. But green lights are a great positive association. It's a great brand, right? And so that's the idea of what I'm kind of diving more into.
And I see it as the ultimate cheat code for business. It just takes a long time to do and most people aren't patient.
You're telling me I can dodge business problems?
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Chapter 4: What are the essential skills for making money?
And was it different than some of my other customers? Because one of the things that happens oftentimes is that the first few customers you get are become really sticky. And then you start scaling. And then you have this front revolving door, but you still have your core business of these people that you had in the beginning, right? So why is that?
Because these people got more help from you and actually got delivered more value. And then you basically tried to scale without scaling the value that you delivered to the original customers, right? And so if you're at whatever, 15,000 a month, and you've got five customers, and they're all like having a great experience, and you keep signing people on, they keep leaving.
It's like, okay, well, instead of me trying to sell five this month, why don't I just sell one and do a great job and then not lose them? And that's the key to compounding in a service business once you pay down the inefficiencies of them not knowing what to do yet and being very specific about who you serve and who you don't. We didn't work with personal trainers.
Cycling studios and yoga studios 100% could use our model. We didn't work with them because the founders tended to be psychologically different. Their adherence was super low because they just come from a totally different worldview than the guys who are more fitness, weight loss, transformation focused.
Even though at the end of the day, it's just a membership with a backroom where people work out. But mindset wise, they had a very hard time kind of adopting a different model. Even though monetarily, it totally made sense. Which means you need to have discipline to say no.
100%.
I have 13 companies. I get 1,800 a day who reach out. Right. So you have to say no. It feels weird to say no because a lot of the time I get... That's why most people stay poor. They can't say no. And what happens is you go for the short-term money and you sacrifice the long-term money because then you just get in this operational rat race.
And then you scale up your costs to meet the fact that you took on all these customers that you shouldn't have taken on to begin with. And then you have to pay them every single month. So then you have to keep on taking on customers that you shouldn't have taken on to begin with. And you get in this vicious cycle that you can't get out.
Until you downsize, you take two steps back, five steps back, fix your ego, and then say, I'm only working with these customers because ethically, I know that these are the ones that I have the highest likelihood of success with. Everyone else, I have mediocre success. And I can say it's their fault. I can say it's my fault. It doesn't really matter.
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Chapter 5: How do freedom and discipline balance in entrepreneurship?
And this person has some specific knowledge you don't have. And you should ideally have specific knowledge they don't have. They should be asking the question, like, why do I partner with the people in your community? If I'm an AI developer, right? If you're trying to figure out which of the problems to solve in an industry, it's just value created times ease of implementation.
That's the equation, which if you chunk it up, it's number of potential customers times gross profit per customer. If I have six different problems I could potentially solve, which one has way more people who have it? Which one's easier to do? Which one unlocks the most value?
One thing that we're starting to see as us ourselves actually trying to build one of these AI automation agencies, now AI development companies as well, is that by building a development team that is capable, what is your take and your experience with how important that development resource is?
I mean, it's sure with your event, you must know working with developers can be a complete plan, but having them in-house and having a really good team to rely on as you shoot for those big opportunities can be key. What's your experience being like this and how important do you think that development resource is when you're going for those bigger plays? Very.
Okay. I mean, we were thinking the same thing. So I was glad to know you agree on that. It's the product. Like if you're in a service business, the quality of the people that you use to provide the service is the product. And so those people usually want to be compensated well, because if they are really good, then the places that they're coming from will want to pay more to keep them.
And so you have to give them a great place to work and a financial incentive or some upside that they get exposed to that they wouldn't otherwise. Like you want them to feel like owners. And the best way to do that is for them to actually be owners. If you're trying to get on the cutting edge of technology, then actually having the people who are good at that is the business.
Well, that is a great resource to have. A really killer marketing team under your belt. But the development side of things, I tend to find, at least in our experience, has been a harder thing for us to create.
Because we don't know it. It's easier for you to do the marketing stuff because you're good at it. So you know if someone's full of shit on the interview. You just don't know if anyone's full of shit on the interview because you have no context. The most important hire, which is why I say this, is you need a technical co-founder.
You need somebody who has a real stake in making sure that the people who are coming in are actually good. Not that you're checking a box and saying, hey, I have 14 people on my development team. Anybody in the true high-tech world knows that one amazing developer is more valuable than 100 B developers.
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