The Game with Alex Hormozi
Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849
10 Mar 2025
Wanna 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
Full Episode
Hey guys, welcome back to the game. This is a guest spot on Impact Theory with Tom Bilyeu. I had a blast doing this particular episode. We're breaking this into two parts. We go deep on a ton of topics. It's me, so it's going to be business related. I don't get to go this deep on stuff often, and so it was enjoyable.
Alex Hormozy, welcome back to the show. Thank you so much for having me. Truly a pleasure. Let me ask, why do smart people stay poor?
They don't do the things that makes people rich. And I think they probably convince themselves that they're smarter than they are. And so if you were smart, then you would be rich. And so then it follows that there's probably a series of traits of behavior that you don't do either because you think you're above them or you don't know about them.
So either it's a declarative knowledge deficit, meaning you don't know about the thing, which has nothing to do with the intelligence. Like if somebody eats an apple, sorry, banana, and they're from a different country and they just eat it through the skin, it doesn't mean that they're stupid. It means they're ignorant, which is very different. That's a declarative deficit.
Then there's procedural deficits, which is knowing how to. And I think one of the big difficulties with smart people is they have tremendous amounts of declarative knowledge and very little procedural knowledge. And so it's like saying you read a book on how to do a private equity deal and you know everything that has to happen, but you've never done a private equity deal.
It's probably unlikely that you know how to do a private equity deal. And so delineating those things has been helpful for me. And since the procedural knowledge has significantly more utility on a daily basis from a moneymaking perspective. I have reduced, or at least this is me, you know, transitioning to me, but like I've reduced the amount of time that I spent on declarative knowledge.
And I try to get to the procedural part of it as fast as I possibly can, because I know that I'll learn significantly more by failing and doing it than, you know, reading 100 books on sales versus doing 100 phone calls. Like you'll learn a lot more in the first 100 calls.
It's interesting. This to me is I'm always trying to get entrepreneurs to one thing from first principles, which most people don't even know what that means. So you start by defining it. But this feels like that getting to understand the essence of what it is so that you understand it the way that somebody understands a combustion engine.
So you can get in and be like, well, I know what has to happen for this car to go. And if I know what has to happen, you can break it, you can pull it apart and I'll be able to put it back together because I actually understand how this works. So how does wealth creation work?
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