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Transcript

If you’re a business owner or work for one, this presentation may be the most tactical thing that I can do to make you money. I think this one’s going to be a really big hitter, which is why I wanted to do it live for you guys.

So, let me ask you guys a question: who believes that you have to work hard to make money? Real question.

Okay, who believes that no one can outwork them?

Good, at least some honest people in this room. Well, I’m going to attempt to prove some of you wrong who believe that you can never be outworked because I see that on the internet all the time and it drives me bananas.

The reason this is so important is defining work. All of us claim to work every day and yet most of us can’t even define the word.

So, how do you define work? We can use the science definition, which is, you know, work equals force times distance. The problem is that that’s not very useful for knowledge workers, for what we do.

Do we use the time on clock definition, you know, time spent working as our inputs? The problem is, you know, work 16–18 hours a day, and so if everyone is already doing that, then how can one person work harder than another?

So then, do we define it by how hard you try, so the effort that you expend is the work that you do? Well, do you want participation trophies and people just saying, ‘Yes, you tried your hardest’? Is this how you want your employees to gauge themselves? ‘Well, I tried really hard, even though I suck.’ It’s like, well, okay.

If work isn’t force times distance, if it’s not just the time you put in, and if it’s not just how hard you try, then what is work?

We better be clear on what it is we’re trying to do to make money, right, if we’re going to do more of it to make more money.

So, this is my definition, which is: work equals outputs, and outputs equal volume times leverage. Some of you guys have seen this from me before. The plain speak is the number of times you do something times how much you get out of each time you do it. Fundamentally, that’s what it is.

The next question that follows is, well, then how do we work faster, or how do we do more work per unit of time? That’s volume times leverage divided by time. The plain speak is output per unit.

If you want to produce the most per unit of time, please pay attention because I do think this will help you.

How can we get more out of the time we put in, which in the game of business is money? Now everyone’s attention perks up, they’re like, ‘Ah, that stuff, I would like that.’

So, visual for you: volume is the number of times you do the thing, leverage is how much you get out of each time you do it, equals your output. How many times you do it times how much you get equals your output.

Some quick examples, and you guys can tell me whether it’s high or low.

Alright, is this high output or low output? This is low. It’s very hard to do that with very low leverage.

High or low? High. Great.

High or low? Higher. Exactly.

High or low? Highest, because we have a lot of volume on good leverage.

Now we understand what work is: you can either do more activity, do more stuff, or get more for it to get higher output.

Normally, I spend the vast majority of my career talking about leverage, but today I actually want to talk about volume. The reason for that is because, talking to a lot of businesses, I have taken for granted that people do all the volume stuff, and it turns out, after talking to many of you, that is just not true. Here I am talking about leverage because I just assume you work your ass off, and that’s fundamentally false for most of you. I am baffled by how little people actually work when they think they are working.

So, I’m going to cover two things today. Number one, get clear on the input that grows your business the most. Two, remove everything that isn’t that from your life.

My disclaimer is that this is for business owners and specifically your highest-level employees. If you’re taking notes and you’re like, ‘Hey, I want to send this to my team,’ I would recommend because my team saw these slides beforehand, and I had like two guys being like, ‘I’m going to change a whole bunch of stuff,’ and I was like, ‘Great.’ That’s my sign for a good presentation.

Figuring out the right input: let’s say that you want to grow your business. You can either get more customers, or you can make them worth more. That’s it. You either sell more units or increase LTV. Done.

Breaking this into actions: for customers, you either get more traffic, or you convert a higher percentage of the traffic you have. That’s the action. Making them worth more: you raise prices, decrease your cost of goods sold, get people to buy more stuff more times. Those are the things. That’s all you got.

If you look at four things, what do you actually do? Well, to get more traffic, you have to advertise more, better. To increase your conversion, you have to practice sales, or you have to improve your offer. If you want to raise your prices, you just have to grow gonads and decide. By the way, gonads are both sexes, so there you go, there’s my PC for the day. Buy more times, which would be decreasing churn, you have reach outs, you have exit interviews, you do prepayments, you improve your onboarding, you get faster results, you hold events to appreciate members or clients.

But if you look at your time, you do almost none of these things. You’re not doing this stuff now, and that’s why you’re probably not making money, or as much as you want.

If you don’t do this stuff, all the time that you spend ‘working’ has the same impact as doing nothing. It’s kind of like spending your entire week thinking about how you’re going to build and redesign your website and then deciding not to do it, except it’s just more tiresome than just watching Netflix and relaxing.

You’d literally be better off doing nothing than doing the work that you claim to be work that actually isn’t. That’s why most of the businesses here are stuck and why many people watching this at home aren’t growing as fast as they want.

For most of you, especially the smaller businesses, your effort should be disproportionately here (highlighted on the slide above): on getting more traffic, advertising more, advertising better, and higher conversion.

Meaning, your actual activities on a daily basis is letting more people know about your stuff and practicing getting them to give you money when they find out about it. That is what you do on a regular basis with a vast majority of your time.

After all, if you do not have customers, then there is no one that you can raise prices on and that you can get to buy more times and increase their lifetime value.

Let’s pick apart this first one first: advertising more and better. You advertise better by advertising more. Excellence comes from repetition. We even use volume as a measure for skill. I’ve taken 4,000 sales consults; we even say that. We use it as a proxy, and yet we don’t think about that for our own skill in business. If you want to get unreasonably good at advertising, do so much advertising that it would be unreasonable for you to suck after doing that much of it. Again, we’re just defining inputs here.

If you run ads, it means you commit to spending four hours a day scripting, analyzing, writing copy, recording ads, which may mean learning how to use editing software or an iPhone.

If you use outreach, it means spending four hours a day reaching out to people across social media platforms.

If you use content as your primary advertising, then you make content for four hours a day every day, and you make it on every platform.

If you use partners and affiliates, it means spending four hours a day doing outreach, ads, or making content to help your affiliates send you more customers.

These actions become the volume that creates the outputs, which for many of you is more leads.

If you’re hearing four hours a day and thinking, ‘How will I have time to do everything else?’ remember that doing everything else is what’s not growing your business.

This is what your time looks like when your business is stalled.

This is what your time looks like when your business is growing.

So, too many of you, if you’re honest with yourself, your days look like this…

…and expect results that look like this.

So, before you say, ‘But I need to keep doing [insert whatever thing that isn’t growing your business],’ remember, you guys can do whatever you want, but if you keep doing the same stuff and your business isn’t growing, then the stuff that you’re doing is wrong. It is not the right stuff, and you have to learn how to let some fires burn.

Some problems are problems, but they are not the problem of the business today. This is the essence of strategy. You learn to prioritize. Some things are more important than others, which means, yes, you can neglect them for a season.

Then, when they actually become the true limiter of the business, the true constraint, then you focus on them four hours a day until you solve it.

So, if we use these four things as our guide, let’s say you master traffic and you’re getting loads of leads, but you can’t close a barn door if the wind was behind you, right? Then conversion becomes your limiter, and so then you train someone else on the advertising stuff you do because you mastered it, and then spend four hours a day trying to optimize your conversion.

Which might look like this: you might actually track your close rate for a change, you might actually record all your sales interactions and do them from behind the person, you actually see their identity. This is for brick-and-mortar people, and have a sign on your door that says that you record so you can do this legally. Watch game tape of sales that actually worked every single morning. You practice your script out loud, every single day. You hire someone who can give you feedback, ideally daily, on how well you sell. You have a two-minute mental prep before you take consults, every single time. You give a pre-sale questionnaire to every person who walks in the door, if you’re brick-and-mortar, or you have some sort of thing online to get them ready for the sale. You qualify people on the phone better to pre-sell them, and then you actually do that — every time.

You guys getting this? Cool.

All problems are solvable with skills, and all skills are attainable with repetition and feedback. Once you have a skill, you can do it in less time, which gives you leverage. So, you get more for what you do, the better you get at it, the less time it takes for you to do it. You get more time back.

In other words, once you get great at sales, you don’t need to spend as much time on it and you’ll still close the same percentage. You go from growing a skill to maintaining a skill, and it’s much easier to maintain a skill and continue to stay at that same level than it is to gain a skill. It’s kind of like maintaining weight. If you’ve ever lost weight or gained weight, once you get to that level, it’s much easier to stay and maintain than it is to break the…whatever the word is, homeostasis. Same thing for gaining muscle.

Everything you spend your time on has to clearly ladder up to one of these four things. So right now, if you look at your schedule and you’re not laddering up to these four things, you’re not doing the stuff that makes money.

Otherwise, you’re just doing this…

…rather than this.

Still, some of you guys are going to be thinking to yourselves, ‘Well, with what time Alex? I can barely keep my head above water as is. I’m very busy.’ Understandable.

If you have a special snowflake excuse, ‘I’m special,’ you’re totally right. It’s literally impossible for you to do what I’m saying, and that’s why your business will never grow. Cool. That is my talk for today. Of course, you’re right. It will never grow, right? Happy now? You’re totally justified in not achieving your goals. Consider yourself excused.

Alright, so for everyone else, we just have to face reality. Success, the marketplace, your customers — they don’t care about whatever your excuse is. It may be entirely justified. It also doesn’t matter, and they also don’t care. They just care about output. They care about what they can get from you. What’s in it for me? So, if you’re open to the idea that I might know a little bit about making money and growing businesses, I want to get to the second part of my presentation.

That was my 11-year transformation. That’s my before and after.

How to make this easier for you.

So, I said I was going to cover two things. The first is how to get very clear on the inputs that grow your business. Everyone feel very clear on the four things that you need to do and how they ladder up to activities that you spend four hours a day on?

You’re like, ‘Great, but I don’t have four hours a day.’ Well, that’s why we’re going to do the second part, which is removing everything else that isn’t that from your life.

The nice part about this second half of the presentation is that there’s nothing to argue about. It’s just facts. We all have 24 hours a day. I’m good there so far, I’ve just stated facts? Ok.

People who move faster just do better things with their time. You can cut grass with scissors and it will take all day, or you can make one call and have someone else do it. In either scenario, both people get the grass cut.

So, we outlined that you need to spend your time working on those four levers in your business at least four hours a day.

I’m going to show you how to find the time with a combination of habits and buying time. This may be one of the more tactical things that I give you guys that will probably change your life from this whole experience.

First, we have to find time, and second, we will buy time. Let’s start with finding time. There are two types of work that every entrepreneur has: you’ve got maker time, you’ve got manager time.

Maker time is long blocks of uninterrupted time, four to six hours. You only have 14 work blocks per week of this maker time. It’s very, very valuable. It’s low urgency, high importance work. That’s the stuff that moves the business forward. A productive maker calendar is an empty calendar. An interruption always destroys an entire time block. Who here has had a time block where you’re really excited and then a one-hour call comes in at 10:00 a.m. and you’re like, ‘Well, there goes my morning’? Yes, we’ve all been there, and you hate that person.

This is what maker time looks like. Looks great. Look at that beautiful blue space. So much work, so much money to be made.

On the other hand, you’ve got manager time, and we manage both of these things. These are time blocks as small as 5 to 15 minutes. You have 100+ of these per week. The goal is to fill your calendar with these slots if you’re in your manager time. You are a maximally productive manager when you have no gaps. This is usually when you’re spending time training teams, coordinating, communicating, putting out fires.

This is what it looks like when you’re on manager time. This is also my calendar when I’m on a manager day.

Both of these work styles are important. Everyone here has worn both of these hats, right? Okay, but the moment these two hats meet is when disaster happens. If you try to insert tiny slices of management into your making time, you kill half a day. It doesn’t work. And, if you have lots of empty slots between your managing time, it’s also inefficient there too because you’re not doing anything with that time. You might as well fill it with more meetings.

You have to understand what type of work you’re doing when you start the day and explain to your team the difference between these types of work and the importance of those time periods and why you have to prioritize them so the entire business can grow.

Beyond explaining the difference in the type of work, here’s what I did to facilitate maker time because manager time kind of always happens.

Here are the maker habits that I have. One is I decide the one project I need to work on that’s most important, and yes, it can be the same thing for a while. I woke up at 4:00 a.m., I worked until 9:00 a.m. on that work. Five hours. That’s how I work. I turned off all my notifications. I have a dark room. My office now still has no windows, no sound, earplugs. I keep it very, very simple. I want to put everything out of my world besides the work, and I realized that there are no emergencies.

This is something that for all entrepreneurs we have to understand: there are no emergencies. There’s 911, if someone’s dying, in which case call them, not me, and then there’s the emergency that your business isn’t going to grow for the third year in a row, which you need to solve now.

This also means going to bed at the same time every single night, which is a habit that served me very well, and that also includes weekends. If you’re like, ‘How do I do that? I always go to sleep late,’ just wake up early once and be tired. That’s how it works. That’s my brilliant idea. Treat weekends and weekdays the same and realize that drinking costs you two days: the day you drink and the day you recover.

Some makers work late at night after their kids have gone to sleep. Anyone here who have that as their time slot for making? Okay, cool. It doesn’t matter what your time slot is as long as you make time for it. Just find the four to five hours that you can turn everything off.

Working weekends is also a hack that so you can move forward. It’s 104 days a year. The number of entrepreneurs that are like, ‘I take weekends off,’ like 104 days of uninterrupted time? Okay, got it. Understood. Well, I’d love to compete against you. Anyways, those are some of the habits that help me find time to do the things that matter most.

The second is buying time, so let’s talk about that. You are the most valuable person in your business. You produce the most value for the company. If you had a star employee, you’d want to maximize their every waking moment, right? Everybody here has some person they’re like, ‘Man, I just want to clear the way for them. I just want them to keep working, working, working.’

We often do this with our teams, right? We try to empower them, we try to clear their calendars, try to give them help, but we don’t do this for ourselves.

There’s the myth of work-life and personal-life integration or whatever, and this isn’t that talk. Believe me, I don’t care about that talk. What I mean is that we all have one battery, and the problem with your spouse and your kids and your chores and your employees is they all drain from the same source.

You become more productive by eliminating the things that make you unproductive more than you have some Pomodoro time hack.

This is what I really want to have sink in: you will become more productive through elimination than by adding optimization. Just by taking away all the things that are not the things that grow the business.

I also bring this up because no one ever sticks with that stuff anyways. We all see the TikTok hack of ‘put a timer and then take a walk.’ No one does it. No one does it. So, let’s just forget about it. Why bother? But cutting things out, they are permanent reductions in energy drainage that you can reallocate to making more money, doing the stuff that matters.

If we all have 24 hours a day, someone who works on the most important stuff for 16 hours six days a week is going to move way faster than someone who does it three hours per week in real work time. Some of you guys, if you look back on your last week, you’re like, ‘How much real maker time did I make for myself to work on the stuff that grows the business?’ Many times, if you’re really honest with yourself, it’s like four hours.

There’s a reason that someone could actually move 30 times faster than you, and that’s the difference. If you’re doing three hours of productive work or 96 productive hours, it’s just the math. It’s not even close. That’s how you move 30 times faster than somebody else, even though both people “work all day”.

Hopefully, this convinces you about how important this is and maybe why other people you know move faster than you.

Now, let’s get really tactical. The average American spends 50 hours per month on food, groceries, eating, prepping, cleaning. The replacement cost for that is $800 a month. The average American spends 25 hours per month cleaning their home. The replacement cost for that is $500 a month. The average American spends 16 hours per month doing laundry, washing, drying, folding, organizing, dry cleaning, driving to laundromat. $200 a month to replace that.

Which means that for $1,500 a month, you can get 96 hours per month back. That’s two full work weeks every single month.

That means if you can make more than $15 per hour with your time, you should make that trade seven days a week, twice on Sunday, and once for your mom.

This is very much a form of reinvesting in yourself, but you have to use the time that you buy to work to make even more. This isn’t the ‘I will spend $1,500 a month and then I will get 96 hours back and I will watch 96 more hours of Netflix.’ This is not that plan.

I bring this up because I’m amazed at how many people feel like they’re being irresponsible by spending this money. The amount of entrepreneurs that I talk to that will happily hire somebody for $50,000 a year and are unwilling to think about the idea of spending $1,500 a month on things that make them feel fancy or frilly or like excess expenses — is ridiculous. I’ll say that is silly.

But if you could spend $1,500 a month on your most valuable employee, forget about you for a second, your most valuable employee, to have 50% more out of them, wouldn’t you do that every day of the week and twice on Sunday? Of course.

But you are that most valuable employee. You are that person in the business, by far, not even close. It’s you.

I didn’t even get into the free 40 hours a week that people spend. Following sports teams, four hours a week. Replacement cost of not following sports teams? Zero dollars. Watching TV, 21 hours a week on average. Replacement cost? Literally nothing. Scrolling social media, 17 hours a week. Also, literally nothing. Driving to and from work and refilling gas, four and a half hours a week. Replacement cost is $700 a month for Uber. You have somebody else drive you. I tweet on my way to work and I tweet on my way back, it’s where I get my content.

For $1,500 a month, you can still do those fun things. I’m not even taking those out because you’re not going to do it anyways. You’re still going to watch TV, you’re still going to scroll social media, you’re going to do all that stuff. Not even going to try. You can still do that stuff and spend $1,500 a month and get 96 hours a month back.

I want to be clear, this is a one-time investment. You will never get this back. I can’t re-spend the $1,500 and get another 96 hours back. You only get to pull this trigger once.

I’m still amazed at the businesses that are doing 50, 100, $500,000 a month, and they still are analyzing this bill as something that they have even hesitated to spend money on because of whatever narrative they have around why it’s good to clean your own laundry or cook your own food. Sure, if you like cooking and it’s recreational, then fine. But you and I both know that’s not what we’re talking about. It’s lunch on Tuesday. That’s what I’m talking about.

There are so few things that you can spend $1,500 a month on and get 96 hours per month back, and you can only pull the trigger once.

This advice is so simple, and yet when I see rooms like this with the same problems again and again and again, I had to make this incredibly obvious presentation because the only thing that’s easier than doing this is not doing it, which is what most of you will probably do.

You will nod, and you will think about it, and then you will do nothing. You will still cook your food, and you will still drive yourself to work, and you will still clean your house. You’re like, ‘Well, I like my clothes folded a certain way.’ Who cares? Is it worth the business not growing by 50% this year?

Somehow, those of you who do nothing will be amazed why a year later, you’re still in the exact same position, while someone else who took these simple steps 30X-ed their output.

This is how you can actually do your day job as the manager while also giving yourself the time to do what matters most as a maker. Those 96 hours, you can take those four hours a day, and it’s there. That’s just from the stats. That’s not just me. It’s right there. You can have it.

This trading up for time is buying time, and it literally never ends. It’s less valuable work that you trade money for, for more free time to do more valuable work that you then trade to get more money. And you never stop. This whole process never ends.

Bringing this all together, that’s the stuff that actually grows your business. If you work on the right stuff, your business will grow.

Getting more customers, making them worth more.

You want to do as much of that as you can to grow your business as fast as you can, make sure your day looks like this…

not like this…

To do that in the real world, you eliminate everything else that’s not that.

Which you do by:

Understanding and explaining the difference between maker and manager time to yourself and your teams, and giving yourself time every single day to:
- decide the project that matters most,
- wake up a little bit earlier,
- turn off your notifications,
- get in a zone that you can actually work

Investing in your most valuable employee by eliminating 96 hours per month of work for $1,500 a month so that you can actually work not to 2X or 4X more effective — Let me say that again: so you can work not just two or four times more effectively than your competition, but 30 times more effectively than them.

Because they’re, like you, super distracted, have their notifications turned on, are taking calls in the middle of the day, and they too are only working three hours of productive hours a week.

You can absolutely murder them in their sleep by how much you crush them in business if you actually spend the time to do the things that matter, which almost no one does.

It’s crazy because I spend all this time making all this business content about LTV to CAC ratios, and decreasing churn, and making sure your onboarding is streamlined — and people are like, ‘I don’t have the time.’ Find the time. Buy it. It’s right there. It’s for sale.

You maximize your time and actually work on the things that matter, which everyone else will then wonder, when you actually do this, ‘How does he move so fast? How does she move so fast?’

But you will know the secret is that there is no secret. You have one battery, and you just try and eliminate as many drains as you can that aren’t aligned with your goal.

That’s how you can compress multiple lifetimes of growth into one.

Audience Q&A

Any questions on this? Was there anything that was unclear about that presentation?

“What time do you go to sleep?”

“I get in bed at 9:00, I go to sleep by 10:00.”

“You get up at 4:00?”

“I’m probably up — well, today I was up at four, but most of the time I’m up by five. 10 to 5 works fine. I haven’t had an alarm in five to seven years. A long time. I’m a big fan, so I probably should add this, that I think you should have a sleep alarm, not a wake-up alarm. I mean, sleep as long as you can. I don’t know about you, but if I get nine hours of sleep, I’m like, I can cure cancer today. I so rarely get nine. If I get seven, I’m fine. But nine, I literally look at Leila, I’m like, ‘Give me the hardest problems today.’ I’ll just sit in discomfort.”

“Is it okay to make your goal eliminating manager time?”

“Manager time, sure. So, I think — okay, so the question was, is it okay to make your goal eliminating manager time? I see it as a continuum rather than an absolute or a binary.

It’s not like I am 100% maker or I’m 100% manager. I think it’s just how much of that. So, like, Leila’s calendar is flipped from mine. I have four days a week of maker time and one manager day on Mondays, which I just stack the living hell out of. I’m just like, just destroy me, just put everything in there. I expect to accomplish nothing, and I will just make all the decisions and talk to everybody about all the stuff.

The other four days, I work on things that I think matter most, and I also work the weekends. Her schedule is more like this, where she has four days a week where she has her manager time and one day a week that’s maker time. She also spends the weekends doing maker stuff. That’s kind of how she balances it. Because Leila actually runs everything in the business, I take credit for running everything in the business. That’s kind of our division. It’s worked well for us for years. So yeah, recommend.”

“How much time do you spend on fitness stuff in general?”

“I just tweeted about this like ten minutes ago, which is great. So, how much time do I spend on fitness stuff in general?

So, my big advice is get in shape between 18 and 24, and then after that, the maintenance of being in shape takes like 10% of your time, which I was alluding to in the presentation. It takes me very little time to maintain this. I now have a gym downstairs, so it’s super, super easy. But I work out when I can. I usually probably work out three, four days a week, and it’s just downstairs. I do it in the morning or I do it in the afternoon.”

“How do you keep the relationship, not turn off, make it more of a business relationship?”

“So, how do we — I’m repeating it because no one has a mic, just so you know. So, how do we manage being married and being co-managers of the business?”

“Not always talking about the business.”

“Oh, we always talk about business. I think what we don’t do is judge ourselves for talking about business. I think more people get stressed about what they think they should be doing rather than just being like, ‘This is our relationship, these are our rules, which we make, and we don’t think they exist.’ It’s worked fine so far. If one of us wasn’t into business, it would suck. It’s all I want to talk about.”

“Do you have fun outside of work?”

“This is awesome. So, the question was, do I have fun outside of work? The majority of my fun is in work, but Leila and I take like one or two vacations a year that are like three or four days. We try to do it with friends of ours because most of the friends that we have don’t live where we live. Most of the friends that we have — not most, all the friends that we have are all pretty high-level entrepreneurs, and they’re really busy too.

We try and have company there while we can all talk about business and talk about what we’re excited about, and that’s what works for us. The first, I think, three years of our marriage, we didn’t take any — I mean, we didn’t do a honeymoon. We worked the day we got married, we worked the next day. But we do us, though. So, I don’t see this as prescription. We just do what we want to do.

I always hesitate with those questions because people take it as gospel. We really, really spent a long time trying to not care about what anyone else thinks about what we do.”

“How often do you review what the constraint is in the business?”

“Your business constraint doesn’t change that often once you get it right. Once you know, it’s like, ‘Okay, I need to advertise more,’ you just keep doing that until you break something else. Sometimes you can do that for a very, very, very, very, very long time. The constraint then goes — one is chunked down. So, it’s like, you’re advertising, and you’re running ads, but you’re like, ‘I need a second channel.’ So, you’re still — the bigger constraint is still the same. ‘I need more leads,’ but you need to have the constraint of, ‘I need to solve this next acquisition channel.’

It’ll move against the larger constraint of the business. Finally, all the constraints are going to chunk up to, ‘I need to get more customers, I need to make them worth more, and I might need to make them more so that I can get more customers.’ Those will oscillate back and forth on the business.

The big thing that will matter is, kind of, benchmarks. I think we were talking earlier with the guys who were there with the med spa. He had an LTV issue, he didn’t have a leads issue. It’s making sure that we’re solving the right problem. I see a lot of business owners really obsessing, trying to drive down lead costs, and I find it easier to just fix the sales process and add a zero to your price, and then all of a sudden, all your lead problems go away.

I try and find the easiest way to solve problems, which oftentimes isn’t the thing that’s immediately apparent.

So, I’ll tell you a fun story. We have the book launch that is going to come up at some point. I was thinking about some of the goodies that I was going to be giving away. One of the goodies I had was like, legit, 400 more hours of work. I started the project, and I stopped after an hour. I was like, ‘Okay, can I use my second brain cell here and think of something else that I can give away that’s more valuable than this that doesn’t take me 400 hours?’

It took me like an hour to think of something else that was better and took less time. I think sometimes the pendulum swing on the other side of this is if you have tremendous work ethic, then sometimes you want to solve problems the hard way.

This is something that I feel like I’ve found more and more as I’ve gotten doggy years aged in business: there’s usually a more elegant solution if you just take a second and you’re like — I like asking hypotheticals of ‘What would it take to — or if I had to make something more valuable in a tenth of the time, what would I do? If someone 10 times smarter than me had the same problem, what would they do?’

Cycling through those frames helped me attack the problem differently. That helps me a lot. I use those frames a lot when I’m trying to solve things.”

From Video Description (from Alex):

Want to SCALE your business? Go here: https://acquisition.com
Want to START a business? Go here: https://skool.com/games

If you’re new to my channel, my name is Alex Hormozi. I’m the founder and managing partner of Acquisition.com. It’s a family office, which is just a formal way of saying we invest our own money into companies. Our 10 portfolio companies bring in over $200,000,000+ per year. Our ownership stake varies between 20% and 100% of them. Given this is a YT channel, and anyone can claim anything, I’ll give you some stuff you can google to verify below.

How I got here…
21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: “Gym Launch” does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
31 yrs old: Started our family office Acquisition.com. We invest and scale companies using the $42M in distributions we had taken + the cash from the $46.2M exit.
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.
34 yrs old: I became co-owner of https://Skool.com to help the many people who want to start a business online do so.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money — not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,
Alex

*FULL DISCLOSURE*
I make content to make money — just — on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

Find Alex Hormozi on:

Books & free courses: https://www.acquisition.com/books
Podcast: Find his podcast “The Game” on your chosen platform
YouTube: https://www.youtube.com/@AlexHormozi
Instagram: https://www.instagram.com/hormozi
X (formerly Twitter): https://twitter.com/AlexHormozi
Facebook: https://www.facebook.com/ahormozi/
LinkedIn: https://www.linkedin.com/in/alexhormozi/
TikTok: https://www.tiktok.com/@ahormozi

P.S. (from Mike)

“If you introduce something valuable to someone, they associate that value with you.” — Alex Hormozi

If you found this valuable, think of just one person who you think would also find it interesting and share it with them. Great way to build goodwill.

No affiliation with Alex Hormozi

Have an awesome day.

You’re Not Behind: My System for Outworking Everyone was originally published in Hormozi Transcripts on Medium, where people are continuing the conversation by highlighting and responding to this story.

Source

Transcript

Stop trying to get rich. Get better. And, if you get better, getting rich will happen as a consequence.

Getting rich is an outcome; getting better is an input. Most entrepreneurs are focused on the output as the thing, and so they’re scattered in terms of where their focus is because they’re just trying to do everything they can to drive this number up rather than trying to do the thing that creates the wealth.

I see a lot of small business owners circling around, asking the same question, which is figuring out how they’re going to scale, and you’re almost all doing it the wrong way.

John Paul DeJoria said, ‘You don’t want to be in the selling business,’ and everything that I described at this point is very much the selling business. The only way that you can grow that business is by selling more units, by selling more customers, and that’s a very terrible business to be in. That’s also the business that 95% of businesses are in: they’re constantly struggling for leads, constantly trying to figure out where their next customer is coming from.

If this is you, then listen to what I am saying right now.

If your goal to grow your business is to say, ‘Okay, I sell books. Great, I sell books. In order for me to grow my book business, I have to get more people to buy my book and that’s it, period.’ Well, if you do that, you literally have to market and sell for the rest of your entire life, and the only way to grow your business is to advertise more. That’s literally it, the only way to grow.

Unless you’re supremely good at advertising and you learn how to master affiliates, you learn how to master SEO, you learn how to master making content, you learn how to run paid ads, you learn how to do email, you learn how to do outbound, you learn how to do all these things so you can maximize your sales. Unless you do that — and the thing is, and this is what sucks, is that the next month you have to reload all your sales again. You have to start at zero again, and that sucks. That’s how the vast majority of businesses live.

The thing is, it doesn’t have to be that way. You have to look at the back of the business and say, ‘Why are there so many holes in my bucket?’ Pouring more water into the hole-y bucket — everyone understands this conceptually, but we don’t act that way. I say this from experience because, in the earlier part of my career, I only chased revenue and profit. I wanted growth at all costs, but the thing is sometimes the cost of that growth is the long-term growth of the business. You sacrifice the long-term growth so that you can grow faster in the short term.

Big picture, what you want to do is figure out something that people don’t stop buying. I feel like I say this over and over again, but no one does it. It doesn’t have to be a recurring business model; you just have something that people tell their friends immediately about. For example, we sell almost a million dollars a month in books, and I don’t advertise the books. It’s because people read it, then post about it, tell their friends, other people buy the book, and that circle goes on. And it’s because we spent more time on the product.

It’s like the sandwich shop that says, ‘I have to sell more customers into my sandwich shop,’ but their sandwiches are just mediocre. And so they’re going to be stuck forever trying to figure out what the new hook is. To be fair, I wrote a book on offers, and I think that’s important when you’re getting started, but long-term, the offer just gets them in the door. How well you deliver on the offer is what’s going to keep them paying over and over again, it’s going to get them to send referrals.

I’ll tell you a story. I had a friend of mine who started a cookie business, and when he started the cookie business, this is what he did. He went around the country to the top cookie stores and chefs or bakery chefs — I don’t know what they’re called, bakers — and he asked them if he could just hang out with them and learn how they bake their cookies. Some of them said, ‘Pound sand,’ but some of them were like, ‘Sure, you can hang out.’ He learned what they did to bake cookies, and then when he came back home, he baked a new dozen cookies every single day for a year. He numbered all the batches, and he had 365 batches of cookies.

Every time he did it, he gave it to tasters, and then people would say, ‘You know what? I like this. I don’t like this,’ whatever. By the end of that time period, when he opened his restaurant, guess what also happened? The many people who had tasted his cookies, he got their numbers. He was giving free cookies away so that he could figure it out. He also generated leads from his area, and then he opened and had a smashing success of a business selling premium cookies in a local market, which is a tough business to be in, but he crushed it. He did it because he spent 365 days doing the work to figure out the hundred tiny details that make a perfect cookie.

So, if you’re in the sandwich business, if you’re in the SEO business, if you’re in the mechanic business, it’s figuring out what we need to do to make the cookie that much better. That’s the work that no one’s willing to do, and that’s the good news — that’s the opportunity.

That’s the opportunity that most people aren’t willing to do. If you ask small business owners what they need, they say, ‘I need more leads.’ They all say that. Now, if everybody says they need the same thing, to me, that’s a big light bulb that if they’re all pursuing the same thing and none of them are growing, then they’re probably looking for the wrong stuff.

If you’ve been stuck at the same level for a long period of time, listen to what I’m saying right now. You have to find out why people aren’t buying again. You have to find out why people aren’t referring their friends. Sometimes you’re like “Well, when I ask them, they don’t tell me.” Sometimes you have to read between the lines, and that’s the hard part, but that’s the work. That’s the work.

I get a little bit peeved about this because I see so many small business owners that aren’t growing. They’re not growing because they’re always thinking about how they’re going to get more leads, but they’re not realizing the fact that they have to get more leads because they have so many holes in their bucket.

There is a level of advertising that you have to maintain in order to test. My friend with the cookie store had to go out to people, and he had to get them to try the cookies. But the objective, once he had his second batch of cookies, wasn’t, ‘Oh, I need to give out twelve batches a day.’ No, that wasn’t the goal at that point. The goal was to refine the product, refine the service, make it better, get the onboarding, the recruiting, the hiring, the training of the employees so they could deliver the service good enough so that when he scaled, the quality of the product remained the same or ideally had a process in place that it would improve over time.

People rush to scale because they have some sort of insecurity about, ‘I have to make progress.’ But the thing is, not all progress is measured in revenue immediately. Some progress happens at a delay, and one of the biggest progress markers that happens at a delay is product. When we talk about delayed gratification, one of the ways to exercise that muscle of learning to delay reward for the work you do is improving the thing that you deliver.

If you improve your sales, you’re going to immediately see a jump. If you improve your leads, you’ll immediately see a jump, and that’s why it gets so addicting for small business owners. They say, ‘Oh, look, I improved this little sales thing, and look, we’re making more money.’ Yes, you are making more money, but the thing is, you’re not going to make the big money. The monster money comes from the back end.

The reason you can’t afford your leads — there’s never not enough leads. I want to impress this upon you. There is an unlimited amount of traffic in the world across all media. You’ve got radio, you’ve got newspaper, you’ve got direct mail, you’ve got Instagram, you’ve got Facebook, you’ve got YouTube, you’ve got TikTok, you’ve got Spotify ads, you’ve got podcasts, you’ve got affiliates, you’ve got SEO. There are so many different places where eyeballs are.

The problem is not that you don’t have enough leads; the problem is you can’t afford them because your product sucks. This is the problem.

You have to build it back to front. Consistently. Think about this from a competitive moat perspective. If you make the same amount of money per customer as your competition, then you are always going to be in a race to the bottom. When I say race to the bottom, I mean a race to the bottom of CAC. All you’re going to be doing is trying to find little hacks to hack social media, to hack ads, to do whatever, and those hacks are always short-lived.

The biggest businesses — and I look at this a lot because I spend a lot of time trying to think, ‘Okay, how’s Alex going to get to a billion? How’s Alex going to get to ten billion?’ — I look at the biggest companies, and the thing is, have you noticed that the biggest companies aren’t doing the Instagram hacks? Have you noticed they’re not trying to do these little, ‘Oh yeah, if you put this hashtag at the bottom,’ or ‘If you do this little call out or shout out,’ have you noticed that they don’t do that? The reason they don’t do that is because they don’t have to, because they have won the long game. The long game is the LTV game. It’s, ‘How much is a customer worth to me?’

Dan Kennedy said this a long time ago, ‘He who can spend the most to acquire a customer wins.’ I rephrase that as, ‘He who can make his customers the most valuable wins,’ because being able to spend the most is a product of how much you make a customer worth to you, which is a function of what the gross profit is and how many times they buy. The ‘how many times they buy’ function has a direct proportion to how good the quality of the product is. By the way, when you improve the quality of your product, guess what happens? You get referrals.

Now think about this. Again, we have to play this out two, three steps. If you start marketing, let me tell you some truths that will not change. Advertising will always become more expensive. The cost per eyeball will always go up. Look at CPMs on Facebook, look at CPMs on YouTube — the costs per eyeball will always go up, on every platform. And, as you scale, your advertising will go to colder and colder audiences, and it will become less and less efficient. This happens at scale. These are truths. These will not change. These are facts.

If you want to scale a business, how can you scale if you have two things that are going in a linear direction against you? The cost of advertising to reach the eyeball goes up, and the conversion percentage of those eyeballs also goes up (Mike here; I think Alex misspoke and probably meant to say the conversion percentage goes down — that makes more sense here) because you go to a bigger and bigger audience that knows less and less. They’re less problem-aware, and less product-aware, and you have to do more education upfront to a less interested audience. This happens. This is an inevitability. So how do you combat that?

One of the cool ways that you can increase LTV for almost any business is actually building a community around your business. I just became co-owner of skool.com, and, you can go there and we have facilitated and made super, super easy getting a community built, monetized, and thriving. Whether you want to start a community business, which is one type of person, or you’re already a business owner, it’s a great way to increase the LTV of your customers, provide more value to them, and have one place that you can always disseminate all your information, all your announcements to them to continue to extend the LTV. You can go to skool.com/games or just skool.com and you can start for free.

You combat that by having referrals, and referrals come from every sale. If every sale — one, that person keeps buying — and two, they send you another customer, guess what happens? That CAC gets cut in half. You need an equally strong compounding vehicle that works in your favor to maintain your LTV-to-CAC ratio.

When you improve the product you also decrease CAC via referrals, at scale. So it doesn’t matter how much scale you have, if you deliver an exceptional product, you will be able to have — you always know that 1.3 customers, or every customer, brings you 0.3 new customers on top of that. You decrease your cost to acquire by 30%, and you get the LTV boost that happens on the back end as well, which is that they buy more, they spend longer, they’re willing to pay a premium, and so forth.

The third wheel of that, in terms of product, is that product is the end of the brand cycle. If you think about brand as a reinforcing loop, in the beginning, when you start a company, you make a promise. Fundamentally, that’s how you enter the marketplace. You say, ‘I’m going to solve this problem. That is my promise to you.’ Anyone can say that. What builds the business over the long term is your ability to deliver on that promise. Otherwise, it’s the same reason you see all these fucking internet marketers who start a new business every six months. The new business is like, ‘I got to find the next offer,’ because they’re so front-end obsessed. Because they never figure out — what was wrong with their first offer? People bought it; the problem is you couldn’t deliver on it.

Just a little Vegas warning sign, by the way: if you see the same guy changing up his offer every six months, it’s because he doesn’t know how to keep his promises. He lacks the skill of product. He lacks the skill of delivery. He lacks the skill of being able to recruit, hire, and manage a team that can deliver consistently. He lacks that skill. Honestly, what happens to that person? Over time their reputation gets degraded. You start saying, ‘This guy’s a has-been. He’s washed up. All he does is promote new stuff. He’s a shill. He just sells whatever is hot.’

Many of you are that person, and so you keep trying to find new ways to get leads when you can’t keep your promises. If you keep your promises and you put all your focus there, your CAC will go down. It will continue to go down. That’s what’s crazy: the more you do that, the more you reinforce the brand loop. You make a promise, you keep that promise, and then the people you keep the promise to tell other people you kept the promise. That decreases your CAC.

The inverse of that — and there’s a quantitative test for this — if you run advertisements and your cost to acquire a customer increases at a faster rate than the average cost of CPMs (the cost per impression) in your market, then it means you have word of mouth working against you. Think about this. Everyone understands positive word of mouth. We all get that, right? We’re like, ‘Oh yeah, I get referrals.’ Did you know that you have far more negative referrals?

You have way more detractors. You have way more people that when they see an ad of your business, what do they do? They reach out to other people to ask about you, and then people who would have purchased choose not to based on information they get online or asking someone they know. Your conversion rate decreases over time. You complain that ads aren’t working when in reality, all of this is the invisible hand of your product sucking.

I get passionate about this because I see it so many times, and it’s the thing that keeps you stuck. The only way to combat this is to become a world-class marketer and just only know how to sell shit. If you’re selling to a really big market, I’m going to be honest with you. There’s a lot of really big-name marketers that the only reason they make money is because they sell to the ocean of humanity, and they only need one transaction. They spend all their time trying to arbitrage media, as in they know what their cost per impression is, they know how much they make, and they just jam as much as they can in there. But that’s not a business. That is a cash flow job that you get really good at with that skill, but that’s also why marketers have terrible reputations.

Building a brand is, in my opinion, the good side of marketing. The brand is simply the associations that people have with your product, and if those associations are positive, then you build that reputation. You build that positive association, and that takes time.

If you make the brand your end goal, then you will be able to charge higher prices than other people for the exact same thing, and people will purchase from you because, from a value equation perspective, their perceived likelihood of achievement goes up. Their risk associated with the purchase, in terms of what they believe their ease and the ease of achieving what they’re going to get, goes up. Even if your time delay is slower, they have so much conviction that you’re going to deliver on your promise that they’re willing to pay the premium.

Your cost to acquire customers goes down at scale. Brand-driven advertising is more profitable than the pure scammy direct response stuff. It just takes longer. But, the ROAS is insane. It’s not like 2x, 3x, it’s like 30x, 100x. It’s way bigger, and that’s how companies like Apple print money. They print money. Look at their marketing spend; they print money because they have a line of customers that bought their last product, and just by knowing that they have a good reputation of delivering on their promises, they buy the next one.

I’ll tell you a story that happened. One of the first times I really saw this was when I was probably a year into Gym Launch. We’re ripping and roaring in terms of scale, and everyone’s just printing money using the system that we had. I launched something called — I think I called it LNS at the time, which was like “lead nurture system”, something like that. I can’t remember what I called it, but basically — ah, it was ALN. It was “automated lead nurture”. That’s what it was, ALN. I did this big webinar, I did this big launch, and because gym owners are business owners, there were a number of them that couldn’t make it on the live, but they heard that I had sold this thing.

The amount of people that reached out after the webinar, not having seen the webinar, and said, ‘Hey, here’s my credit card number, whatever it is, just give it to me. If he launched it, I know it’s good.’ I had never had that happen in my life. I was like, ‘How do I never stop this from happening again? I want this to always be my norm,’ and it reinforced so strongly how important it was to keep your promises.

There’s a relationship that I think is missed a lot, especially in the info and online space, and I want to hit on this, but it applies to all businesses. There are three lines that you have to keep in touch with: you have the price that you charge, you have the value that they get, and then you have the cost associated with delivering the thing. You want these lines to be as far apart as humanly possible — all of them. You want them to be spread out super, super far. You want to have crazy high value at the top, you want a price that’s a premium, and then you want to have a lot of juice left over relative to your cost.

The way to get that kind of space between your cost and your price is to do the work of the hundred details that your competitors aren’t willing to do.

They’re not willing to find out that when someone walks in the restaurant, if we just find out what their name is at the car, we can greet them by name. Small thing, right? We have the waitresses all write down on the receipt what their name is and say, ‘Thanks for coming in,’ or whatever. We try to make sure that they all get their waters within 30 seconds of sitting down. We make sure that they get their bread within two minutes. We make sure that we check in every five or every ten or whatever we’ve tested has been the right amount. Maybe it comes down to asking the customer upfront, ‘Hey, do you want me to come — is this a fast dinner, or is this something you want to kind of juice and enjoy? I will match your cadence.’ Maybe simply asking the question draws attention to the fact that you care. It might not even matter what you do, but maybe simply asking the question improves their experience.

It’s these 100 BBs, no silver bullets. The good news is that your competition is lazy as fuck. It’s so easy. Think about how many businesses — I do business with a lot of businesses on a personal level, on a business level. I would not recommend most of them. And the thing is, those vendors think that I’m an amazing customer. I’m a hair away from being a detractor.

Many of you have customers that are a hair away from being detractors. Sometimes you’ve got customers who pay for your thing and still tell people not to buy it. My pool guy, when I had a pool — I don’t have a pool anymore — but when I had a pool, that guy was so inconsistent. He didn’t clean stuff all the time. I’d walk out afterward and be like, ‘What did he do — did he even do anything this week?’ But I still paid because it was just such a hassle to change. But I was absolutely a detractor. When my neighbor asked, ‘Oh yeah, who’s your pool service?’ I was like, ‘Don’t use my guy. I just don’t have time to find somebody else.’ They’re like, ‘Oh, thanks,’ and that small business owner is like, ‘Man, I have such a great business.’

We’d have gym owners who thought their gyms were hot shit, and then somebody opens up across the street and literally takes all their customers. What they didn’t realize is the main reason people went to their gym is it was just convenient. They thought all their workouts, they thought all their music, they thought the layout of the gym, the equipment there — they thought all that was important, but the thing that mattered most was that you just happened to be the only gym in a five-mile radius of this spot. A lot of times, the reason that you’re winning, you don’t even know why you’re winning.

Professor Burgelman from Stanford said this: ‘It’s better to know why you have failed than to succeed and not know why.’ I think that’s a very profound statement because for us as business owners, we’re always willing to attribute negative things to outside forces. We’re always willing to say, ‘Oh, you know, COVID happened, my business got hurt,’ or whatever. ‘The economy is bad, credit rates are compressing,’ but we aren’t willing to give outside forces the credit for when we do well. We’re like, ‘Oh no, that was me, that was that marketing initiative. Oh yeah, that’s because we’ve been really working on the team.’ It might just be nothing to do with you at all.

Understanding what are the drivers that actually drove the success are some of the things that you have to find out that your competition doesn’t know. So many business owners just believe in mythology. They just make up narratives around why they’re successful, and they have no way to prove it.

One of the things that I see people just melt in front of me when I ask, they’re like, they basically just tell me a story about their business, they say ‘Well, people don’t do that because,’ and then they insert some make-believe thing. I say, ‘How do you know that?’ and then they just look at me. Like, ‘How do you know that?’ They don’t. They’ve never measured it.

I had a vendor recently who was like, ‘Hey, we need to do this, this, and this with something on media.’ I was like, ‘Okay, why?’ He was like, ‘Well, this is going to create more growth.’ I said, ‘How do you know that?’ and then he gave me another stat, and that stat was derived from the first stat that he said to increase. He said, ‘When this increases, this increases.’ I was like, ‘No shit. Do you know how math works? Of course, of course it does.’ To be clear, I don’t think this was out of malice. But no one thinks, and the good news is your competition doesn’t think either.

If you want to win, you just need to stop — like, whenever someone gives you a ‘because’ statement in your team, just ignore it. If they do give it to you and you insist on trying to listen to it, then say, ‘How do you know that?’ Most of the time, they’re like, ‘Well, you know, gut feel.’ Your gut feelings mean nothing to me. If you haven’t tracked it and you have no data to support it, then you — I can make up things too.

When you hear podcasts of business people and they’re telling you the things that work for them, the crazy thing is that most of the time, they don’t know either. This is what drives me nuts. People are like, ‘Hey Alex, do you think that having a hard childhood, having a troubled relationship with your father — I don’t. We’re fine, right — but do you think that is the reason that you’re so driven?’ I’m like, ‘I don’t know. How would I know?’ I know that I am driven. There’s a bazillion things that have happened to me in my life. I don’t know which one it is, but we create these narratives around it to believe it.

I’m bringing this kind of conceptual idea because right now, many of you are creating stories that you tell yourselves to make yourself feel better about why your product isn’t as good as it should be. But you have an excuse that only you need to believe, and you believe that excuse, so it excuses you from working harder on the stuff you know you should be doing but aren’t.

That work — the work you know you should be doing but aren’t — is the opportunity because that is the work that your competitors also aren’t doing.

I’m telling you from the bottom of my soul, it is so easy to beat people today. They are so soft. They have no work ethic. No one can stick with anything. Everyone’s distracted. They’re on social media, they’re counting their fucking notifications because they can’t stick with shit. They can’t say no.

Sometimes you got to say, ‘Hey guys, we’re going to stay at this revenue level until we get referrals over 30%. We’re going to stay at this revenue level, we’re going to stay at this level of advertising because I don’t want anyone else to know how mediocre our sandwiches are. Why would I tell anyone else? I don’t want anyone to know. If I could test this with no one knowing, I would do it, but we have to advertise a little bit so we can fix our thing.’ But the point of that first phase of growing the business — because you start making sales — is to get better, not to get rich.

The point in the first phase is to learn, not to earn.

If I started a new cleaning business tomorrow, the first year would just be trying to nail the model. I wouldn’t be thinking about what we’re growing every — I wouldn’t care. I would only be focused on how we can make this experience so that no one leaves, and that’s all my obsession is. Because I know that once that happens, whether you sell one customer a month or five customers a month or ten customers a month, your business will not stop growing. If you do not lose customers, your business will not stop growing.

So while every one of your competitors is looking for cheaper leads and trying to find the new place where they do their little hacky Instagram thing, you can sleep well at night knowing, ‘I sold ten customers last month, and this month I’ll sell another ten, but I’ll have twenty. The month after that, I’ll sell ten and I’ll have thirty. The month after that, I’ll sell ten and I’ll have forty,’ and we will just keep fucking growing because I spent a year or two years or five years figuring out exactly what to do that delivered for my customer.

That is the work that no one will do, and that is why entrepreneurship is much more a battle of wills than it is a battle of intellect.

You have to be willing to delay gratification for an extended period of time and eat glass, and that eating of glass is seeing how many failures you have until you get it right.

This is the difference between small businesses and big businesses: their willingness to put up with that long period of time of getting the product right. And once you get it right, you can scale to the moon because you will make more than everyone else on your back end. You will deliver on your promises, your brand will be reinforced with every sale rather than degraded with every sale, and then at scale, you will continue to be able to acquire customers profitably because you have a force that is compounding, which is the referral base of customers that tells other people how good your stuff is while also continuing to purchase themselves.

In Silicon Valley, they have a saying, ‘Break things, move fast.’ I think that was one of Facebook’s early values. That ‘Breaking fast and moving’ stuff is building back to front. That is building the product through iteration so that you can have extended LTV, so that you can have the activation of users. Fundamentally, think about it this way: if Facebook did not get users activated and they were like, ‘We need to spend more on marketing so we can get more users,’ it would never work at scale.

It has to have a compounding vehicle built within the business, and the compounding vehicle in the business for most businesses is the quality of their product. That is the compounding vehicle. You have to get people to continue to buy, or continue to use in Facebook’s case. They have to think about how can we eliminate friction in a hundred different ways so that we can make it smoother. This is what we work on at Skool all the time: ‘How can we make this easier, how can we make this faster, how can we make this more streamlined so that anybody can be successful with it?’

Most small business owners fix one or two things, and then they immediately want to scale. They want to gas the advertising to make more sales. The problem with that is that it does this: you increase sales, and so by percentage growth, it’ll be really aggressive, and then it starts slowing down. You can always tell the growth of businesses like this, especially at the $10, $30, $100 million mark, and they’re not even close to their total addressable market because the only way they grew is through jamming sales and marketing, not through having a product that compounded.

That is the big difference between massive multiples in companies when you sell for 20x, 50x, massive numbers. Because the person who’s acquiring it has no doubt that that business will continue to compound and grow. If the business is purely based on marketing sales, then they know that it’s only as good as its last month. If the marketing director leaves or their sales channel gets shut down, then the business is going to rapidly decline.

Not only does it make the company significantly more valuable, it also makes life a lot more chill as an entrepreneur because you know that this month, like last month, like two years ago, the customer you sold to two years ago, you put all that effort in, they’re still buying today.

Improving your product is the highest leverage thing you can do because every single person gets that product. You work on it one time, and then it’s, you know, cut once, sell a hundred times. Cut once, sell a thousand times. Whereas marketing is a linear relationship. You have to go market more to get more customers. But if you continue to improve the product, that thing can get you a hundred times more customers or massively increase LTV, and so you get a disproportionate return on the effort you put in on making your thing better than you do on getting more customers.

Chunking up, what we’re tracking with product is the price that we’re able to command for our services or our product, the number of recurring purchases that we have from somebody. So if you have a recurring business, it’s the average number of orders that someone’s going to make with your business over a lifetime, or it’s the churn associated with your subscription or membership. These give you the quantitative outputs of a high-quality product.

But the inputs are going to be closer to what are their activation metrics. The way that you look at this is you do something called a regression analysis around, ‘Okay, let’s look at the cohort of customers that don’t cancel,’ because there are hopefully some customers that don’t leave you, and you look at what things occurred, and you have to look at a lot of variables of what things occurred in those customers that haven’t occurred in other customers. Once you find those things that occurred, those become activation points or at least your first guess at activation points.

Then what you do is you drive your onboarding towards that activation point, some people call it a retention point, and then you re-measure again. If you know that once people achieve a sale from SEO for your agency, the likelihood that they cancel goes down precipitously, then all of your effort for onboarding is how quickly can we get them a sale from our SEO. If it’s for weight loss, you find out that somebody needs to lose seven pounds in the first two weeks, and if they lose the weight, then the likelihood that they continue to stay is very high, so then you drive all of your activation, your onboarding, towards getting to that point.

Everything is about looking at the people at the end, looking at the thing that preceded them getting to that point, and then putting all of your focus on getting people to have that experience.

At the most basic level, I had a first book, and many people who bought this book and liked it bought the second book when it came out. Obviously, we had a launch, but the thing is, we still sell thousands and thousands and thousands and thousands of copies of this book every single month. And, even though this book ($100M Offers) is two and a half or three years old or whatever it is, this book still sells thousands and thousands and thousands of copies every month because there’s also new people every month that are getting into entrepreneurship or want to learn about making better offers for their business.

And so, the people who upsold between product one and product two, many of them saw nothing besides the fact that they found out that I had another book out and then bought it. I don’t say that in a self-aggrandizing way, I say that because I’ve lived the other way, and it’s much better to do it this way.

Closing Remarks

If you’re trying to increase LTV, to have a compounding business model, then one of the first things you need to do is do the unscalable. I made an entire video about it. Go check it out. It’ll probably help you.

From Video Description (from Alex):

Want to SCALE your business? Go here: https://acquisition.com
Want to START a business? Go here: https://skool.com/games

If you’re new to my channel, my name is Alex Hormozi. I’m the founder and managing partner of Acquisition.com. It’s a family office, which is just a formal way of saying we invest our own money into companies. Our 10 portfolio companies bring in over $200,000,000+ per year. Our ownership stake varies between 20% and 100% of them. Given this is a YT channel, and anyone can claim anything, I’ll give you some stuff you can google to verify below.

How I got here…
21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: “Gym Launch” does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
31 yrs old: Started our family office Acquisition.com. We invest and scale companies using the $42M in distributions we had taken + the cash from the $46.2M exit.
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.
34 yrs old: I became co-owner of https://Skool.com to help the many people who want to start a business online do so.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money — not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,
Alex

*FULL DISCLOSURE*
I make content to make money — just — on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

Find Alex Hormozi on:

Books & free courses: https://www.acquisition.com/books
Podcast: Find his podcast “The Game” on your chosen platform
YouTube: https://www.youtube.com/@AlexHormozi
Instagram: https://www.instagram.com/hormozi
X (formerly Twitter): https://twitter.com/AlexHormozi
Facebook: https://www.facebook.com/ahormozi/
LinkedIn: https://www.linkedin.com/in/alexhormozi/
TikTok: https://www.tiktok.com/@ahormozi

P.S. (from Mike)

“If you introduce something valuable to someone, they associate that value with you.” — Alex Hormozi

If you found this valuable, think of just one person who you think would also find it interesting and share it with them. Great way to build goodwill.

No affiliation with Alex Hormozi

I hope you found this transcript helpful, have an awesome day.

Stop Trying To Get Rich. Get Better. was originally published in Hormozi Transcripts on Medium, where people are continuing the conversation by highlighting and responding to this story.

Other Title(s):

Your Failures Can Make You Rich (if you write them down)

Source:

Transcript:

Documenting your business mistakes may be the most important thing you do in your entire business career to make more money.

After I lost everything for the second time in my career, that experience was so painful that I was like, “I can’t keep doing this, I can’t keep repeating these same mistakes.” So I was like, “I have to find a way that I can learn from this.” And so, within the next three months, I started my podcast, and the intention behind that podcast was that I would learn to document the things that I was doing and what I was thinking about, and the problems that I was suffering from at that time.

I always thought the concept of having a Jeff Bezos vlog, where once a week he was like, “This is what we’re dealing with at Amazon,” all the way to his current state would have been so valuable. And I always had the belief that I would get to that level eventually. So, you know, delusional or not, I thought, “Why not start now?”

And so I started documenting my mistakes and my successes, and an interesting thing happened: from that point until now, I haven’t lost everything again.

We’ve built a $100 million-plus net worth, arguably a lot more than that, but just for the sake of this video, in that next seven or so years. I’ve been in business for 13, but I lost everything about the halfway point — twice. And so making sure that I learned the right lessons from my mistakes has been, I think, one of the largest contributing factors to me being able to move forward at such a fast rate.

Whether you document it through video or you document it through a podcast or you document it through written, I don’t think matters. I’ve actually done both. So I started with just a podcast, but the ideas for that podcast came from an email thread that I had to myself. Every year, I would start a new email thread called “Lessons and Failures…” and then the year, and it would be hundreds of emails long to myself. And it would just be little tidbits, little one-phrase, two-phrases of like, “Oh yeah, I had this interview with this girl; she did this thing I think that’s awesome.” And then six months later, when I find out that person’s stealing, I’m like, “Oh, that thing that I thought was good is actually not good.” So I’d have these kind of like continuous open-loop stories that I’d be telling about what I think will happen versus what actually would happen, and then it allowed me to have much more crystallized decision-making power in the future because I was like, “Wait a second, I’ve seen this one before, and I know how this one goes.”

And so that happened more and more times. So if you think about it as if entrepreneurship were a video game, you have levels. Have you ever picked up an old video game, and then beat it really quickly to the levels you remember, and then you get to the level you don’t know, and then it’s really slow again? And it’s, I think, entrepreneurship is a lot the same way. It’s because you were like, “Oh, I know where that pothole is. Oh, I know I can go get the extra ammo there. I know how to get this. I know what this director of sales should look like. I know what a director of marketing should look like. Oh, I’ve never run Facebook ads before,” — slow. And then you just die, die, die, die, and you respawn over, and then finally you get through. And then the next time you beat all six levels, and then you also beat the Facebook level, and then you’re like, “All right, well now we’re going to run YouTube ads,” and you’re like die, die, die. And so I see entrepreneurship a lot the same way.

But if there are so many things that are happening every day in business that if you don’t have a way to crystallize the knowledge to document what you’ve done, it’s like you don’t develop this repertoire, at least for me, not as easily, because the nuance of what I remember fades, right? I don’t remember what was the big breakthrough here? I’m like, “I just know that it worked, but I want to know why it worked.” So that when a new situation comes up, I can know how to increase the likelihood that it happens again.

And so, nowadays, I publicly do this stuff through shorts and longs and tweets, but fundamentally the thing that got me into doing it in the early days was the side benefit that people would watch it, but the primary benefit that future me would be able to reference back to this thing and know where I was at that time, what I was struggling with, what beliefs I had. And that was probably the one that was most interesting, it was like: “Hey, if there was a period of time where I was crushing it, how was I seeing the world, and is it different than now?”

So it’s almost like having a time machine. So it’s like, okay, if all of a sudden I get into a losing streak, I’m going to go back to when I was winning, and I’m going to watch some of the stuff that I was doing then so I can keep it top of mind like, “Oh, what’s different between these two things?” But if I don’t have that to reference, then I just have to go off memory, but my memory in the current state is being jaded by my current situation. And so I want to be able to have a source I can go back to, truth, and truth just being things that are documented.

And so, I see this as a really huge problem for a lot of small business owners, or really just business owners in general; is that they make a mistake, but they learn the wrong lesson from it. Dr. Burgelman talked about this where he said, “It’s worse to be successful and not know why than to have failed and know why correctly.” This is me paraphrasing, but that struck me when I heard that for the first time. And I think the reason it struck me was that it took me years to figure out why Gym Launch was actually so successful in the beginning.

Now, obviously, for me, I was like, “I’m 27 years old, took home $17 million in income my first year,” — that’s not revenue, that was profit — “in my first 12 calendar months of the business. Like, I’m so great.” But we are so quick to attribute failure to an outside circumstance, but we don’t attribute success to an outside circumstance. And I had a number of things that were going well for me at that time. I had Facebook ads that were super cheap, which made the stuff that our gyms (customers) were using super cheap and super profitable. For me to acquire customers, gym owners, was also super cheap and super profitable. And so I had these things that were working, you know, I was like, “I’m just such a good marketer.” But it wasn’t that, right? I mean, because years later, when that arbitrage disappeared, it’s like, is the same thing happening?

So what happened is that Gym Launch had to evolve from an arbitrage business to one that won off of execution. And me basically realizing this was “Why is it not printing the way it was before?” It’s like, “Oh, it’s because the context has changed.” And so I became a much better entrepreneur despite the fact that the net income went down. And so learning from that is both humbling but also the only thing that you can do to get better.

And if we see ourselves as the asset that we’re ultimately building throughout our lives, which we eventually just cash in at the end and die anyways, then making sure that I’m getting the right lesson from the scar is arguably the most important thing that you can have to move faster.

Because when you watch that person play that video game again, when they know the game, it’s not like they’re moving super fast. They just don’t make the wrong turn. They go directly for the ammo, they avoid the pothole. They hit the dragon right at the sweet spot because they know where it is because they died 20 other times hitting the wrong part of the dragon that’s not the sweet spot. And so, it’s more efficient movement; they have less wasted moves. I see that the same way as entrepreneurship. The businesses that I have now are so much bigger than the ones that I had before, and they grow so much faster because I know how to go through the first early levels really quickly because of what I’ve documented before.

Here’s what it looks like when it’s wrong. So I’ll talk to, you know, a small business owner who will say, “Hey, you know, I hired a salesperson and then they didn’t work out.” And I’m like, “Cool, so what’d you learn from that?” This is always one of my favorite questions: “What’d you learn from that?” And so I asked this to myself, like, “What’d you learn from that?” And so with this particular individual, he said, “Well, no one can sell like I can sell.” I’ll be like, “Well, I think you might have learned the wrong lesson from the mistake.”

The only thing worse than having the mistake is learning the wrong lesson from the mistake because then you’re bound to repeat it again. And so a fool never learns from their mistakes. A dumb person learns from their mistakes eventually. A smart person learns one lesson from a mistake. A very smart person learns multiple lessons from a mistake. A wise man learns from the mistake of others. The wisest man learns from their successes too. And so the idea is if we think about that as a continuum of how we can move more efficiently through life and get more for every move, it’s making sure that we’re like that person playing the video game that when we go back through, we know what potholes to avoid.

Because imagine if you played the game and you’re like, “Oh, I killed this guy because I hit him in the sweet spot,” and you thought the sweet spot was here, but the real thing was that you had a certain arrow that you picked up earlier in the game. And when you play the game again, you don’t think it’s about the arrow; you think it’s about the spot. And so then you hit the spot again; it doesn’t work. It’s because you attributed the success to the wrong lesson. And so I actually see this happen a lot. I think it’s one of the most common mistakes that happens in entrepreneurship is that people just extrapolate their current view of the world over the mistake.

But fundamentally, the people who are better at business see business more clearly. They can recognize the mistake more easily, and they’re correct because they have a high predictive power. Meaning if they want this thing to happen again, they can predict that it will or what it would take to make the dragon die because they had the right thing, which is it’s actually not the spot or the arrow, it’s both. You’re like, “Ah,” right? And only somebody who’s lived through both of those experiences, well, the next time they came with the arrows that were right, they hit in a different spot; it didn’t work either. So you’re like, “Oh, it’s the combination of things.” And oftentimes it’s not one thing; it’s two or three things that have to happen at the same time for the outcome to occur.

And so when I started ALAN, my third company that I was CEO of at the same time — you can already tell me smiling because of the obvious mistake that I was making. ALAN was a hard business. I’d never been in software before; I’d never developed software before; I’d never had engineers before, product design, UX; I didn’t know any of this stuff. I was like, “I just know that this is,” I knew the problem, and I knew I had product-market fit because I knew exactly what needed to get built, and I knew I had a whole audience that I could sell to. But here’s all the lessons that I learned from that.

Hey, and if you’re in the early part of your business career, avoiding mistakes is one of the most important things you can do in order to move faster. Not to say that you’re not going to make them; you’re going to make a ton of them, but ideally you want to make ones that you can, that you can’t avoid rather than the mistakes you can avoid. And for people just getting started in business, I run something called the Skool Games on skool.com/games. And in there, I take calls; I help people build their first business on the platform, and you can start for free. All right, so if that’s at all interesting, you can go to skool.com/games.

One is software is hard. Second, that you don’t want to get into a features war with competitors. Like competitors in software can easily copy any features you have. And so you want to have other things about your business that gives you more of a moat that protects you from just a race to the bottom and a features war.

The main, probably the biggest lesson I learned from it was, yet again, another lashing from the woman in the red dress. The reason I’m so vehement about the woman in the red dress is that of all the mistakes that I’ve had to learn, she has been the sneakiest and the most devious of them, and the one that I’ve had to learn the same lesson over and over and over again. And I would say, to a certain degree, I’m ashamed of that; of how many times I’ve had to learn not to pursue the woman in the red dress. And it’s like, because every time, you know, now she’s black, now she’s Asian, now she’s white, and now she’s tall, now she’s short. Sometimes she’s wearing a short dress. Sometimes it’s not red; it’s maroon. Sometimes it’s, you know, faded mango for the color. But every time, I’m like, “No, no, no, this time’s different.” And you can probably tell, like, if you have that friend who dates the same girl over and over again, they’re like, “No, no, this girl’s different.” You’re like, “Dude, it’s the same thing.” It’s like super basic, work girl, you know, super tatted up, you know, dad issues, whatever. Right? It’s like “You run the same playbook, man. Like, this is obviously not working for you.” Obviously, I also have no issues with anybody who looks like that. I’m just saying this as an example.

And the main lesson that I learned from ALAN was that — it was the only argument that Leila and I have ever been in, and it was actually a business argument, which I find hilarious. And she just didn’t think that we had the bandwidth to bring on another company and do it. And I argued that she needed to think bigger and that, you know, we had to take big swings and all of that. And I ended up just steamrolling her, and it was a terrible decision for a number of reasons. But one of the biggest ones was that my operator wasn’t on board. Even if she wasn’t my wife, the person who’s going to be running this thing wasn’t on board with it and was telling me, shouting at me quite literally, that she was so spread thin with the current businesses that to take on something else would just make one of them suffer.

And so that’s exactly what happened, right? And so it had nothing to do, and like maybe if I had only done that, then we would have grown it, you know, and been a gazillion-dollar thing. There’s nothing wrong with the concept behind the business. And oftentimes for everybody, there’s often not something fundamentally wrong with the concept behind the business. Like you have some service or some problem that you solve for some specific customer; it’s just all the other stuff, right? And being able to recognize, “Oh, that is not what a sales director looks like.” But until you hire that person, have them, you know, spend six months wasting leads on them and then having them fail, and then hire another sales director, and again six months of not-growth because they’re not closing the way they need to, and then on the third, when you finally find it, you’re like, “Oh, this is what a sales director looks like. This is what a sales director does.” And then guess what happens, is that from that point going on in your life, you know how to beat that level. And so you quickly put the right sales director in, in your second company, your third company, or whatever it is, or a new division in the company, because you know what it looks like when it’s right.

And so I think making sure that it’s like, “Okay, I know how to kill the dragon,” because the sales director can’t just be charismatic. They also have to have systems things, and they have to do both of them, and they have to care about people, or whatever. And so it’s not usually one or two things; it’s usually a handful, and that’s what makes business complex.

Trying to remember all of these little details is so hard that it became so important for me to document those things. And you get the double benefit when you document that you make content about it, and so you can both build your personal brand if you’re into that and get the benefit of documenting the lessons, which is the real benefit as the entrepreneur. And I find it interesting because a lot of people, a lot of business owners who make content ask me, “How do I come up with content ideas?” And I always found that such a silly question because I always have so many things to talk about. And I think it’s because the easiest thing to talk about is “the news”. You just look at what’s going on and you make commentary on it, which is why a lot of channels or people over time just devolve into just news reporters with commentary. But I don’t think that’s the right way to do it.

I prefer to talk about my news because life is always happening. And so, I also have problems, so unless you have no problems in life, which I don’t think anybody watching this has no problems in life, you talk about the problems that you’re dealing with right now and how you’re approaching them. And you can also just do it in arrears. Like if you don’t feel like being vulnerable, fine. Because sometimes there are things in business that you can’t, you know, if you have an employee, say, “I’m dealing with Daniel, who’s behind the camera right now, and I’m like, ‘I got this problem with this videographer,’” you know what I mean? Then I probably can’t talk about it right now, right? But if I could talk about it three, like literally, if we solve something and then three months later I say, “Hey, Dan and I, we’re having this beef, but we figured this thing out; it’s totally cool,” right? And so we just talk about, you talk about a little bit in arrears, and that way you’re not risking anything, client relationships, whatever. But you just talk about your news rather than the news. You’ll always have a source of content, and it’ll allow you to document your business mistakes and successes so that you learn the right lessons.

And so let me tell you how powerful this is. So I had dinner years ago with an entrepreneur who had exited a company that was an e-commerce company, and he had made the majority of their sales on Amazon. This is the early days of Amazon, when you could pretty much just list a product, and it would just grow because there was reviews hacking and there’s all sorts of stuff. And so we had dinner with this entrepreneur, and I remember him saying this: he said, “Isn’t it crazy that you could never have a business as successful ever again? Like this could be the most successful business you ever have.” And it was because he attributed everything that he had in his life to the luck of things working out in tandem. And the reality was that for him, that was true. And for us, it was also true, but we had crystallized the knowledge because we had wanted to study what made us successful. And so since that point, he has not had a business that was more successful than that first one that he had. We have had every one since be more successful than the first one that we had. And the difference was, did you document the lessons, or are you just playing a video game that’s the same game, but you’re acting like a new character, like you’ve never played it before because you never wrote down what you were supposed to do when you got to the first boss or the first pothole?

And I think it’s just as important, like I said, to study your successes. And so like our supplement launch for Prestige Labs was probably the most successful launch in terms of like cleanliness, like no problems of anything we’ve ever done. And the difference between that launch and some of the other ones was that I had my operator on board, the team had been completely trained up, we had an alpha phase, we had a beta phase, we worked through all the kinks in the process, I let them set the date for when the launch was going to be, we were staffed up, we were trained, we had inventory, we had everything, we had all the little holes figured out. And the first month we did $1.7 million in recurring revenue. Recurring. Crazy for supplements. And so the crazy thing about that was I had learned from the mistakes that I’d done before. And so I was like, “How can I not make those?” And also, “This worked out well; how do I make sure that I repeat successful actions? How do I make sure that I check every one of these boxes the next time?” Because nothing feels like success, which is one of Leila’s favorite sayings. She’s like, “Well, we have to remember that it took us a year to do this, and so if we want to do another thing, we can’t think, ‘Oh, we just crushed that, we can crush another one.’” She’s like, “No, the point is that it took us a long time and a lot of work and a lot of buying and a lot of training, a lot of resources for an extended period of time to make this big thing work right the first time.”

And so when we do something else, we have to understand that’s the price that we have to be willing to pay. And having that context, you think, “Wow, okay, I know to beat the next level it’s going to take me two hours, but mom wants to go to the grocery store, so I probably shouldn’t start that level right now because I’m not going to be able to finish it.” And so having the context of what kind of resources am I going to have to put towards this gives you a more realistic view of how many things you can actually take on and do well. And I think — big picture — that has probably been one of my biggest meta lessons, that once I learn how long it takes me to do something well, I learned how few things I can actually do, which means that I have to say no to just about everything.

Steve Jobs was famous for asking his executive team this: he said, “What have you said no to lately?” Because he didn’t want people to just say they’re focused. The focus is everything you turn away from. He said it’s not just turning away from bad ideas; it has to be an idea that you, in your bones, desperately want to do and still choose not to because you said you were going to stay focused on the one thing that mattered most. And that has probably been one of the hardest lessons. It’s the inverse of the woman in the red dress for me because there’s just so many things in the business world that I want to do, I want to try. But knowing how much work it takes to make one thing work very well, and it’s just taken me a very long time to learn this, is that you just can’t do many. You have to learn how to say no.

And once you do start the game with all the lessons, you zoom past all the levels and you get to the hard part, which I call the virgin territory. Right, now it’s how do I hire a CFO, how do I do a business transaction, how do I take on debt in a way that’s responsible, how do I scale to a new acquisition channel, how do I go from five salespeople to 50 salespeople, like what is that process, what does a career path look like for a salesperson, what does a career path look like for customer success, like is this customer support or customer success, like where do I find a good IT director who can actually integrate all of our systems together.

But what’s interesting, I’ve always thought about this, is that we were able to grow so quickly in Gym Launch. Sure, we had the arbitrage of the Facebook stuff that was happening, but I also came into it having run six locations with 30 plus employees and, you know, eight sales guys. And so I was used to 30, 50, sometimes 100 sales a day on my team. And so as soon as we started Gym Launch, I immediately went up to what my level of incompetence was or my level of max competence, right? Equal opposite. I knew what it was like to spend $1,000 a day, I knew what it was like to spend $3,000 a day, I knew what it was like to have eight sales guys taking calls all day long. And so I could quickly scale to that, which is why we went from basically nothing to 26 million that next year because I was used to that level of activity, we just added more zeros on the price tag, but everything else was the same.

And one of the greatest parts about documenting things publicly is that you now become accountable to the lessons you claim you learned. And so I think that if you think about the benefits of documenting business mistakes and business successes publicly, there’s three things.

One is you make it for you, and so it will help you learn the lesson better, and telling the story makes it stick. If you just try and remember a lesson, it doesn’t apply. Elon Musk had this clip that I sent to the whole team, where he talks about how education is all wrong. They have a course on a wrench and they have a course on a screwdriver. He said they shouldn’t teach that way because you don’t have context, your brain can’t remember it. But if you said, “Hey, let’s take apart this engine,” now everyone looks at the engine and says, “Oh, I guess we’ll probably need a wrench.” But now the wrench has contextualized the problem that it helps solve. And so when we tell the stories, it helps contextualize the problem that we’re solving at the time so that when a problem similar to that, when a girl with a red dress comes up and she’s got short hair, you’re like, “Okay, I have one of you guys before; it had long hair, and the dress was, you know, shorter, but I think you’re related.” And so you have the first benefit, which is that you crystallize the lesson.

The second is that you’re accountable to that lesson because there’s people who are watching it who are like, “Hey, I thought you said that you didn’t want to do a lot of these things. You can’t be CEO of multiple things, right?” Right. And so it holds you accountable to that. And then the third benefit is that you actually make money from it because people will identify with your values and your beliefs and say, “Hey, I’d like to do business with you.” If you see that as gravy, then you won’t lose because you never did it for them to begin with.

So instead of giving a non-answer to like, “What’s the one thing that you think you attribute a lot of your success to?” I actually do have some answers.

One is the time-blocking thing that I made a video about the other day, which is like my productivity system or something, some YouTube headline. But basically the maker-manager time, understanding the difference between those things. But the second is that, okay, if I can maximize my maker-manager time, then I maximize the raw unit. But now I want to get the most for that time. And I think this, what I’m talking about today with crystallizing those lessons, has been probably the second most valuable thing that I’ve done in my career. So it’s, I need to make time so I can do the work that matters most, and then I need to document the mistakes that I made so that when I do that work that matters most, I’m actually working on the work that matters most.

And so using the video game analogy, it’s like if ALAN were a video game and I’m trying to win at that game, then I’ve got a co-op player, my wife and business partner, who doesn’t want to play the game, it becomes very hard to win when you’re doing co-op and one player doesn’t want to play or wants to win at a different game, right? And so there are a lot of lessons, not just that one, that I learned from ALAN as a company. And I’ve learned lessons from every company I’ve had, but not being able to look back because it was so long ago would increase the likelihood that I am forced to replay that level again because I wouldn’t remember why I failed.

So if you had to apply the woman in the red dress to a video game scenario, it would really be like trying to play two video games at the same time and win at both. Like, just think about how crazy it is. There’s two ways you can think about it. One is that you literally try and play both games at the same time, which obviously no one’s going to win. What’s crazy is that entrepreneurs do this all the time. The second scenario might be a little bit more realistic is that you’re alternating between games. It’s like one day you play this game, one day you play that game, one day you play this game. But you’ll notice that when you do that, you’re kind of rusty. You kind of got to get yourself back up to speed, you got to learn the keys, you’re just rusty, right? You got to get read up or sped up. Now do that with three games and you’re playing one game, you know, A, B, C, A, B, C. Well, imagine the guy who’s just playing on A. That guy’s your competitor. He’s going to not be three times better than you. He’s probably going to be like six or nine times better than you because not only is he spending three more, 3x the time on the actual game as you, but he also doesn’t have the cost of change and the cost of getting caught up to speed every single time. And so he might be six or nine times ahead. And you’re like, “How is this guy beating me?” It’s like, “Because he’s not doing anything else.”

And so I like to think, “How would I play this game if I had to win? Like there was no option for failing.” Well, I definitely wouldn’t have any, I wouldn’t be playing any other games. I definitely would orient my entire life around the video game. I would definitely make sure that like food was brought to me, you know, drinks were brought to me. I’m, you know, sleeping optimally. I’ve got everything that I need, my lighting, all that stuff would be optimized so that I could just play this game. And the people who make the most money in business call it the game. The reason the show is called “The Game” is because I think everyone is in the game. It’s just that a lot of people don’t know it.

As soon as you realize that you are playing a video game with money in business, then all the same rules apply. And you want to have your Prima officially official strategy guide next to you of all the lessons that you’ve learned along the way. It’s just that this game has way more than 10 keys on a keyboard and way more players because everyone in the world is playing, and there are no rules besides not going to jail. And so you have a true open world game with real stakes and players that have been playing for 60 years who are competing against you. And so I just want to do everything in my power to make sure that I increase the likelihood that I can win.

So if you aren’t documenting your successes, start. If you aren’t documenting your failures, start. You can also not, it doesn’t really matter. When I didn’t do it, I made a lot less money. When I started doing it, I started making a lot more money. And so I would say, do it whatever way you can. If it’s just Twitter and tweeting it, or if it’s an email chain to yourself, or it’s audio messages to yourself or just when you’re driving, whatever version of that it is, as long as you make you the main audience, then you won’t worry about the reviews, you won’t worry about the performance, you’ll just get better at it. And I think that, honestly, having done 700 and something solo podcasts up to this point, I’ve gotten better at talking just because I was forced to. If you listen to my early podcasts compared to now, I’m more articulate. How did that happen? Because I did it a load of times. And so the same thing will happen to you and you’ll actually get practice on making content, on presenting to your staff, on presenting to your team, on presenting to customers by doing it more.

Audience Q&A

“Do you See Leila as you guide?”

So a question from the audience is, “Do you see Leila as your guide?” So I think there’s guide with a capital G and then guide with a little g. So guide with a capital G would be the assumption that like Leila is my guide in life, and the answer would be no. I would say that we’re partners, we do these things together. But within the context of the story, in that instance, yeah, she came in with the insight and that’s what changed the character, got me over the obstacle, and got me to the next thing. And I think we both played that role for one another throughout our careers. And having somebody like that, the hard part is just finding somebody who actually wants you to win. It’s so rare. Everybody has their own agenda, and it’s how you can help them win. And so, I mean, that’s why I think at least, you know, husbands and wives have the most aligned incentives. And so it helps that when they’re selfish for themselves, you can believe, like sometimes they’re wrong, but at least their intention’s correct.

And I think what’s really cool about documenting your mistakes and the lessons from them is that we give such great advice to other people, and yet we don’t follow it for ourselves. And so when you actually write down the advice that you want to give to yourself, it kind of stares back at you, and you’re like, “Man.” And one of the most powerful frames that I’ve had in my life in terms of like navigating difficult situations is if I were coaching myself, if I were mentoring myself, if I were my own guide, what would I tell me? Because the beautiful thing is that you always have complete context with the situation because you’re in it. So you don’t need to tell somebody to try and get them up to speed; you are up to speed. But most people, if I said, “Hey, how do I lose weight?” They’d be like, “Hey, stop eating and move more,” right? But then when it’s you, you’re like, “Well, I have all these other things, I have all these emotional charges around all this crap,” right? But if we listen to our own advice most of the time, we don’t lack information; we lack execution.

“Is talking to your future self just as valuable as learning from your past?”

So the question is, do I get just as much value from my Solomon sessions, basically when I talk to my future self, which sounds really sketchy, but basically I just have a chat message thread with what I imagine to be my 80-year-old version of myself, who’s already accomplished everything that I want to accomplish, has all the lessons learned, and can reflect back on my present situation versus what I’ve learned from my past self? And I think that I’ve learned lessons from both. I think time travel is one of the most useful frames for crystallizing lessons and getting insight into situations where you’re like, “I just don’t know what to do,” because it’s like your present state and your present condition with present influences and things that are going on in your head that are top of mind doesn’t know. But future you definitely will ask a different question about the scenario that oftentimes just erases the importance of it entirely.

“What ‘Big Boss’ are you dealing with?”

So the question was, “Right now, what big boss are you dealing with?” I think that the boss that I am dealing with right now is actually just being patient. And so we have all of the skills we brought from all of the other businesses we’ve owned and run, and we’re applying it to our current business with Acquisition.com. And I think it’s much more of a character trait test for me because the model is working above projections when I started it in 2021. And so it’s doing everything that I hoped it would do and better, which Leila brings up all the time. And I have a huge desire to fuck with shit; like I have a huge — I’m a tinkerer, I like tinkering with things, but most of the time you don’t need to tinker when it is working.

And so I think a lot of times in business, depending on what it is, a lot of things are good enough, like if it’s not the constraint of the business, then it’s just a cost that you force the business to incur by changing anything. Like the cost of change is guaranteed; the upside from change isn’t. And so if you have something that’s working well, then whenever you change it, everything sets back because everyone has to get retrained on a new process, a new anything before it gets back to even neutral, let alone whether it improves or not. And so I think the big boss that I’m facing right now is just a skill thing that I’m learning, which is just letting things grow without getting in the way.

Closing Remarks

And if you guys want to know something very trippy about this, I didn’t start having compounding growth in my wealth until after I started documenting my mistakes. And so until I lost everything the second time, I did not document my mistakes; I didn’t document anything. After that point, 90 days after I lost everything, 90 days, three months, is when I made my first podcast. And from that point going forward, I’ve spent more time thinking about why did this work rather than really anything else. Because if I know why it worked, then I can do it again. And so then I get to like conquer that level, and I just know that I can always skip past it if I know the right “why”.

And speaking of lessons and failures, I just made a video of 13 years of business lessons that I’ve learned in 90 minutes. Go check it out. Enjoy.

From Video Description (from Alex):

Want to SCALE your business? Go here: https://acquisition.com
Want to START a business? Go here: https://skool.com/games

If you’re new to my channel, my name is Alex Hormozi. I’m the founder and managing partner of Acquisition.com. It’s a family office, which is just a formal way of saying we invest our own money into companies. Our 10 portfolio companies bring in over $200,000,000+ per year. Our ownership stake varies between 20% and 100% of them. Given this is a YT channel, and anyone can claim anything, I’ll give you some stuff you can google to verify below.

How I got here…
21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: “Gym Launch” does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
31 yrs old: Started our family office Acquisition.com. We invest and scale companies using the $42M in distributions we had taken + the cash from the $46.2M exit.
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.
34 yrs old: I became co-owner of https://Skool.com to help the many people who want to start a business online do so.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money — not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,
Alex

*FULL DISCLOSURE*
I make content to make money — just — on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

Find Alex Hormozi on:
Books & free courses: https://www.acquisition.com/books
Podcast: Find his podcast “The Game” on your chosen platform
YouTube: https://www.youtube.com/@AlexHormozi
Instagram: https://www.instagram.com/hormozi
X (formerly Twitter): https://twitter.com/AlexHormozi
Facebook: https://www.facebook.com/ahormozi/
LinkedIn: https://www.linkedin.com/in/alexhormozi/
TikTok: https://www.tiktok.com/@ahormozi

P.S.

“If you introduce something valuable to someone, they associate that value with you.” — Alex Hormozi

If you found this valuable, think of just one person who you believe would also find it interesting/valuable and share it with them. They will then associate that value with you, in the form of goodwill.

No affiliation with Alex Hormozi

The Importance of Documenting Your Mistakes was originally published in Hormozi Transcripts on Medium, where people are continuing the conversation by highlighting and responding to this story.

Dickie Bush is an online entrepreneur, writer, and the co-founder of “Ship 30 for 30”, a cohort-based writing course and community that teaches the fundamentals of writing on the internet.

With a background in finance as a former BlackRock trader, Bush shifted to focusing on digital writing and personal progress and is now known for his expertise in digital marketing and productivity.

He recently asked his X/Twitter audience of over 377,000 followers what their favorite book was that they read in 2023.

You can check out all the 700+ replies, the original tweet thread he shared of the top books, or continue below to see his 13 picks for which books were recommended the most.

1. $100M Offers by Alex Hormozi

This book is a game-changer for entrepreneurs and marketers seeking to elevate their sales strategies.

This concise guide offers a revolutionary approach to creating offers that are irresistibly compelling to customers. Hormozi delves into the psychology of buying, teaching readers how to craft offers that not only meet but exceed customer expectations. It’s an essential read for anyone looking to stand out in a competitive market and drive meaningful growth in their business.

The book’s unique value lies in its practical, actionable insights that can be applied across various industries to create high-value offers that attract and retain customers effectively.

Check it out on Amazon

2. Dopamine Nation by Anna Lembke, MD

This is a fascinating book about why we often want too much of a good thing.

Dr. Lembke explains how our brains work with a chemical called dopamine that makes us feel good. But sometimes, we get too much of it from things like phones, games, or sweets, and it can make us feel bad instead.

This book helps us understand why this happens and how to enjoy things without going overboard. It’s great for anyone who wants to learn how to be happier and healthier in a world full of temptations.

Check it out on Amazon

3. Ultra-Processed People by Chris Van Tulleken

This book is a critical exploration of the impact of ultra-processed foods on human health.

Van Tulleken combines scientific research with engaging narratives to reveal how these foods contribute to various health issues.

This book serves as both a warning about the risks of a convenience-driven diet and a guide to healthier eating choices, making it for anyone interested in nutrition and well-being.

Check it out on Amazon

4. Pre-Suasion by Robert Cialdini

A concise, impactful guide on the art of persuasion. Written by one of the most renowned experts in the field.

This book unveils how crucial moments before delivering a message are key to its reception.

Filled with research and real-world examples, Cialdini teaches how to prime audiences for receptiveness, emphasizing timing, context, and word choice.

Ideal for marketers, salespeople, and anyone looking to enhance their persuasive skills, this book is a treasure trove of strategies for influencing effectively.

Check it out on Amazon

5. Breaking the Habit of Being Yourself by Dr. Joe Dispenza

This book delves into how thoughts and emotions can influence our lives.

Combining aspects of neuroscience and quantum physics, it suggests that changing thought patterns can lead to personal transformation. However, readers should note that some of the scientific explanations, particularly those related to quantum physics, may not align fully with mainstream science.

While offering interesting insights and exercises for self-improvement, the book should be approached with a critical mindset, considering it alongside broader scientific and psychological research.

Check it out on Amazon

6. Essentialism by Greg McKeown

A compelling guide for anyone feeling overcommitted and overwhelmed.

This book offers a radical shift from trying to do everything to doing only what is truly essential. McKeown teaches you to focus on the ‘vital few’ rather than the ‘trivial many,’ empowering you to make smarter choices about where to spend your time and energy.

Through practical advice and real-life examples, “Essentialism” isn’t about getting more things done; it’s about getting the right things done.

It’s perfect for those who want to declutter their lives, work smarter, and live with more purpose.

Embrace the Essentialism way to achieve greater productivity, fulfillment, and a meaningful life where less is more.

Check it out on Amazon

7. Meditations by Marcus Aurelius

A rare glimpse into the mind of Roman Emperor Marcus Aurelius. A concise book of wisdom.

This brief yet profound book offers powerful Stoic philosophies and personal reflections, ideal for daily inspiration and navigating modern challenges.

Perfect for anyone seeking wisdom and guidance in leadership and life.

Check it out on Amazon

8. The Myth of Normal by Gabor Maté, MD

An exploration into the potential impact of societal norms, like chronic stress and emotional suppression, on health.

Blending personal anecdotes with critical analysis, Dr. Maté challenges traditional medical perspectives, advocating for a holistic approach to well-being that considers both psychological and physical aspects.

This book invites readers to reflect on the complex relationship between environment, emotional health, and physical wellness, offering intriguing insights while encouraging a critical engagement with its ideas.

Great for those interested in alternative perspectives on health and the societal factors influencing it.

Check it out on Amazon

9. Good Morning Monster by Catherine Gildiner

A riveting book that delves into the transformative power of psychotherapy.

Presenting five extraordinary case studies, Gildiner skillfully reveals the resilience and complexity of the human spirit.

These narratives of personal struggle and triumph are not just for psychology enthusiasts but for anyone fascinated by human resilience and transformation.

Engaging and insightful, this book is a must-read for those seeking to understand the depths of human experience.

Check it out on Amazon

10. Outlive by Peter Attia, MD

A groundbreaking book that explores the fascinating intersection of science, medicine, and personal well-being.

In this insightful work, Dr. Attia, a renowned physician and longevity expert, delves into the latest research and strategies for living a longer, healthier life.

He offers practical advice on nutrition, exercise, sleep, and stress management, backed by rigorous scientific analysis. The book also addresses the psychological and emotional aspects of aging, and how to approach longevity not just as a goal, but as a journey.

“Outlive” is perfect for anyone looking to enhance their understanding of their body and mind, and for those seeking a proactive approach to their long-term health and well-being.

Whether you’re in your twenties or sixties, this book offers valuable insights for anyone eager to optimize their lifespan with vitality and purpose.

Check it out on Amazon

11. The Creative Act by Rick Rubin

A transformative book that delves into the heart of creativity and its profound impact on our lives.

This insightful guide is penned by the legendary music producer Rick Rubin, known for his work with iconic artists across various genres. Rubin shares his unique philosophy and approach to creativity, drawing from his vast experience in the music industry.

The book is not just for musicians or artists but for anyone looking to unlock their creative potential.

Through personal anecdotes, thoughtful reflections, and practical advice, Rubin explores how we can all tap into our innate creativity to enrich our personal and professional lives.

This inspiring read is a must-have for anyone seeking to embrace creativity as a way of being, transform their approach to work, and discover the joy of artistic expression in everyday life.

Check it out on Amazon

12. Elon Musk by Walter Isaacson

Explore the life of Elon Musk, the revolutionary force behind SpaceX, Tesla, and Neuralink, in this captivating biography by acclaimed author Walter Isaacson.

Journey from Musk’s early years to his groundbreaking ventures in technology and space exploration.

Isaacson’s engaging storytelling illuminates Musk’s ambitious pursuits and the impact of his innovations.

This book is a must-read for anyone fascinated by the minds shaping our future.

Check it out on Amazon

13. Broken Money by Lyn Alden

This book delves into the history and future of money, focusing on its technological and societal impacts.

Lyn Alden examines monetary evolution from shells to Bitcoin, and how innovations have shaped money’s role. It also addresses how different monetary systems affect individuals and societies, highlighting issues like inflation in various countries and the challenges in modern monetary policy.

The book aims to provide a comprehensive understanding of money, its history, and its potential future.

Check it out on Amazon

BONUS — 14. Influence by Robert Cialdini

This is the pick of Dickie Bush himself, his favorite book of those read in 2023. He read it to understand the psychology of persuasion, which he now applies in every aspect of his life. He highly recommends this book.

A groundbreaking exploration of the psychology behind why people say “yes” and how to apply these principles ethically in business and everyday life.

Cialdini, a renowned psychologist and expert in the fields of persuasion, compliance, and negotiation, presents six universal principles of influence: Reciprocity, Commitment and Consistency, Social Proof, Authority, Liking, and Scarcity.

This book is not just a collection of theoretical ideas but a practical guide, filled with compelling stories and evidence. Whether you’re a marketer, salesperson, or simply interested in understanding the art of persuasion, “Influence” is an invaluable resource that will teach you how to become a skilled persuader and how to defend yourself against manipulation.

Dive into this bestseller to unlock the secrets of influence and change the way you interact with the world around you.

Check it out on Amazon

Heads Up! 🌟 Just letting you know, some of the links in this article are affiliate links. This means that if you click on them and make a purchase, I might get a small commission at no extra cost to you. It’s a win-win! These commissions help me keep creating awesome content for you. Plus, I only recommend products that I genuinely think are cool. Thanks for your support! 🙌