In this episode, Alex, the founder of acquisition.com, shares his entrepreneurial journey and vision to grow businesses to their fullest potential. He discusses the competitive nature of business, viewing it as a game, and his strategy for achieving a billion-dollar portfolio. Alex emphasizes the importance of setting realistic goals and creating a buffer for success, preferring to under-promise and over-deliver. He describes his approach to scaling up by onboarding operators and investing in talent acquisition, even considering reducing his personal cash flow to reinvest in his team. Moreover, Alex reflects on the emotional aspects of selling a business, the loss of cash flow, and the importance of having a mission beyond monetary success. He also explores the concept of wealth, the efficiency of private enterprise versus government in capital allocation, and the potential societal impact of a 100% death tax. Lastly, Alex and the host, Lewis, delve into the psychological traits of successful individuals, such as impulse control, a sense of deserving greatness, and dealing with feelings of inadequacy. They conclude by discussing business strategies, particularly focusing on service-based businesses with high gross margins and low capital expenses, as well as the increasing ease of entering the business arena due to technology.
"Business has only gotten easier to get into. It's gotten more competitive and easier to get into. And so I think that what happens is just the arena gets bigger, so you got more gladiators, so it's more competitive, but more people can walk it."
This quote explains the current state of the business environment, highlighting the ease of entry and resulting competitiveness due to more participants in the market.
"I tend to be that way because I have probably a little bit different approach with goals. I want to hit every goal. I don't like missing goals."
This quote reveals a personal approach to goal setting, emphasizing the importance of achieving every set goal and not falling short.
"I would probably onboard more operators faster... I would spend more aggressively on talent acquisition... I would eliminate all the cash flow to me. And 100% of the money would go into the team."
This quote outlines specific strategies for accelerating business growth, such as expanding the team and reallocating financial resources from personal gain to business investment.
"I'm so security driven... I've just grown accustomed to this... I probably need to be a little bit more of a risk taker than I am."
This quote highlights the speaker's personal financial security needs and the potential need to take more risks to achieve accelerated business growth.
"Many of the people that I know who have tremendous amounts of money have huge fears around being poor... I'm very risk averse."
This quote discusses the common fears among wealthy individuals and the speaker's own risk aversion, which shapes their entrepreneurial decisions.
"I use cash flow from businesses as evidence to the fact that I'm not a failure... I would have to change how I measure success, and then I'd have to reinforce the behavior in a different way."
This quote explains the current method of measuring success through cash flow and the psychological shift needed to prioritize business growth over personal cash flow.
"I'd really have to reengineer the conversation I have with myself around how I value myself."
This quote highlights the need for Alex to reassess his internal dialogue regarding self-worth, especially if external measures of success were lost.
"Yeah, definitely be a good enough thing, for sure. Yeah. It's just like, maybe not as good as I think I am."
Alex expresses his intrinsic fear of inadequacy and the impact it has on his self-perception.
"If you think about us as kids, right? How do you orient yourself with the world? You get reinforced or punished at all phases."
This quote reflects on how childhood experiences shape the need for external validation, which continues to influence adult behavior.
"It's need for external validation. 100%."
Alex pinpoints the need for external validation as the primary internal obstacle he needs to overcome to reach his goals.
"I think I need to be able to validate myself."
Alex emphasizes the importance of self-validation as opposed to seeking external validation to feel good enough.
"The line in the Bible that always scared me the most was to who much is given, much is expected."
This quote reveals Alex's motivation to achieve success based on the gifts and opportunities he believes he has been given.
"Like, wealthy people choose higher leverage opportunities."
Alex discusses the strategies used by wealthy individuals to select businesses that offer higher leverage and the importance of low capital expenses for cash flow and growth.
"And so I think that when people, like, when you look at many of the biggest businesses that exist, they have phenomenal gross margins."
This quote emphasizes the common trait among successful businesses of having high gross margins, which allows them to sustain and grow even during tough economic times.
"But if you're building a service based business for us, by all means, I have to get gross margins above 80%, which means five times the cost of goods."
Alex highlights a rule of thumb for service-based businesses to aim for gross margins above 80%, implying a pricing strategy where the service is charged at least five times the cost of providing it.
"And so what happens is a lot of people are able to have access to things that were once only for the wealthy, but now become for the common men because the cost basis decreases as a result of technology."
Alex explains how technology democratizes access to products and services by reducing costs, which historically were only available to the wealthy.
"And that's where niching down and being very specific about the avatar becomes important, especially when you're starting, because then you can productize the service."
This quote stresses the importance of targeting a specific customer segment (avatar) and standardizing services to increase efficiency and margins.
"If I were just to use history as a guide, business has only gotten easier to get into. It's gotten more competitive and easier to get into."
Alex reflects on the historical trend of business becoming more accessible, albeit more competitive, which he predicts will continue.
"And if there were 100% death tax, because obviously this is aligned with my belief that all of it disappears anyways."
Alex shares his personal view that all wealth is transient and that a 100% death tax aligns with the inevitability of losing all possessions at death.
"I think that billionaires would become far more giving, and as they approach the end, they know they can't keep it."
This quote suggests that a 100% death tax would motivate the wealthy to be more philanthropic, knowing they can't retain their wealth after death.
"The idea that we're going to somehow, because the desire for legacy is the desire to cheat death, that's what it stems from."
Alex discusses how the pursuit of legacy is fundamentally an attempt to overcome the finality of death and to create something lasting.
"And so we fool ourselves into thinking that the accolades and the material success and the books we write, whatever, are going to last forever."
This quote reflects on the human tendency to believe in the enduring impact of our achievements, despite the eventual disappearance of all things.
"I think what would happen is you'd create far more ingenuity and innovation around social enterprise before they die, solving problems, knowing that the wealth would eventually disappear."
Alex suggests that knowing about an impending 100% death tax would encourage billionaires to proactively and creatively use their wealth for social good.
"I don't think a lot of people would just be dumping their billion to the government. I think just knowing that they had to would then trigger them to."
This quote posits that the wealthy would prefer to allocate their resources effectively rather than let the government, a less efficient entity, distribute their wealth post-mortem.
"So I actually felt interesting, and I probably still feel poorer now than I did before the exit." This quote illustrates the counterintuitive feeling of feeling poorer after receiving a large sum of money due to the cessation of regular income.
"Losing the team is hard because when you sell a company, you sell the people." This quote emphasizes the emotional difficulty of parting with a team that one has worked closely with when a business is sold.
"What happens if we don't have a purpose?" This question posed by the other speaker underlines the significance of having a sense of purpose beyond financial success.
"And so it was, again, a very mind trip experience where I'm like, well, maybe I should just hold it as an asset that just produces cash flow." This quote captures the internal conflict Alex experienced when the business improvements made it more appealing to keep.
"I think the likelihood that the choice will ultimately yield more impact for more people." This quote reflects Alex's belief that his decision to sell and focus on new ventures will be more beneficial in the long run.
"It's art. Art exists not to do something. It exists to exist, right?" This quote from Alex captures the philosophy that businesses, like art, should be created for their inherent value and purpose, not solely for immediate profit.
"The three things that I think were in common of the ultra successful were inflated sense of self, as in, they thought that they deserved big things. They wanted to go after big things." This quote identifies the mindset of successful individuals who aim high and have a strong belief in their own potential.