Hardwired Entrepreneurs, Grand Slam Offers, & More... (on Foundr Stories) Pt. 1 Feb '22 Ep 434

In a revealing conversation with host Alex Hormozi, the podcast delves into the nature versus nurture debate of entrepreneurship, the misconception that software companies are the sole avenue to immense wealth, and the art of crafting irresistible offers. Alex shares his personal journey from a disillusioned employee to a successful entrepreneur, detailing his transition from the fitness industry to launching several multimillion-dollar businesses, including gym launch, a supplement company, and acquisition.com. He emphasizes the importance of product-market fit and provides insights into his risk-averse investment strategy aimed at guaranteed wealth accumulation. Additionally, Alex discusses his views on education, the value of skills over money, and his philanthropic approach to wealth, revealing his intention to donate his fortune posthumously to prevent the pitfalls of inherited wealth. The conversation also touches on Alex's ambitious goal to become a billionaire within ten years through strategic business investments, rather than pursuing the high-risk, high-reward path of starting a software company.

• Debate on whether entrepreneurs are inherently born or can be developed.
• Alex believes it's a combination of innate traits and external stimuli.
• Entrepreneurs may range from being naturally inclined to entrepreneurship to those who are less likely to pursue it without specific circumstances.
• Alex identifies himself as not being hardwired as an entrepreneur from the start.
• Personal dissatisfaction with a previous career path led Alex to entrepreneurship.
• Alex's entrepreneurial journey began with a passion for fitness, which evolved into a passion for business.

"I think it's a nature nurture thing. So I think that there are some people who are hardcore could never live another way, and there are some people who will never be entrepreneurs. But I think there's a whole lot of gray in between that depends on stimuli and circumstance."

This quote explains Alex's viewpoint on the entrepreneurial mindset, suggesting that while some individuals may be naturally inclined or disinclined toward entrepreneurship, many people fall somewhere in between, influenced by their life experiences and environment.

• Alex challenges the notion that only software companies can lead to billionaire status.
• He points out that many people have become extremely wealthy without starting a software company.
• Alex warns against the misconception that software is the sole path to significant wealth.

"Do you have to have a software company in order to become a billionaire? I'll give you my thoughts on this often overused path and the many dangers of thinking that it's the only way to become ultra, ultra wealthy and the many, many, many people who have not."

The quote expresses skepticism about the common belief that founding a software company is the only route to becoming a billionaire, emphasizing that there are numerous paths to achieving substantial wealth.

• Discusses the importance of creating offers that customers can't refuse.
• Alex provides a brief insight into his philosophy on scaling a business, which he calls the "three P's": Promotion, Product, and People.
• The stages of business growth are categorized by these three P's, each relevant to different revenue milestones.

"How to craft an offer that's so good people feel stupid saying no."

This quote summarizes the goal of creating an offer in business: to make it so compelling that customers would find it difficult to decline.

• Alex narrates his career path, starting from his education to various jobs and entrepreneurial ventures.
• He transitioned from management consulting to defense contracting before pursuing his passion for fitness.
• Leveraged his knowledge in consulting to connect with experts and accelerate his learning.
• His entrepreneurial journey included starting a gym, learning about Facebook ads, and eventually scaling his business through a licensing model.
• Alex's journey was not without challenges, including heartbreak, bankruptcies, and failed partnerships.
• He founded multiple companies, including a gym launch, a supplement company, a software company, and acquisition.com.

"Then we started a supplement company twelve months later. Then we started a software company twelve months after that. And then we started the parent company, acquisition.com."

This quote outlines the sequential business ventures Alex undertook after his initial success with his gym business, demonstrating his entrepreneurial growth and diversification.

• Alex reflects on his own entrepreneurial disposition and how circumstances influenced his career choice.
• He positions himself on a spectrum of entrepreneurial inclination, closer to the middle rather than an extreme.
• Alex's shift to entrepreneurship was driven by a desire to escape emotional pain from his previous career.
• The opening of his gym marked a turning point where his interest in business surpassed his interest in fitness.

"The only reason that I think I even got into this was because I so disliked the career that I was on that candidly, I just wanted the emotional pain to end."

The quote reveals the personal motivation behind Alex's pivot to entrepreneurship, highlighting that his entry into the field was more a result of seeking fulfillment rather than a predestined path.

• Alex discusses his book "100 Million Dollar Offers" and its success.
• Transparency in sharing financial success and the decision to give away wealth posthumously.
• Belief in imparting skills and knowledge rather than just financial resources.
• The book and other content Alex produces are meant to educate and empower others in business.

"I think the most valuable thing that I can give isn't money, which we do give, but it's the skills."

This quote emphasizes the value Alex places on sharing knowledge and skills as a means of contributing to others, which is a key motivation for writing his book and creating educational content.

• Alex and their partner made a conscious choice to prioritize their business, Gym Lunch, over social activities.
• They made this decision when the business was generating substantial revenue.
• The motivation was the responsibility they felt towards their employees and their families.
• This period of intense focus was viewed as a necessary season of their lives.

"About a year into gym lunch, once we transitioned to licensing, we were doing about two and a half million a month. And we said, we can't mess this up, and we've got too many families, too many employees who rely on us."

The quote explains the reason behind the decision to focus solely on their business due to its success and the responsibility they felt towards the stakeholders involved.

• Alex does not believe in leaving an inheritance or creating a legacy through wealth.
• They believe that equal opportunity is the foundation of America and inherited wealth can be detrimental.
• Alex compares money to a powerful tool that requires skill to be used effectively.
• They would not leave money to their children, believing it is essential for individuals to earn their own way.

"I don't think that inherited wealth does anyone any good. I think it ruins people."

This quote reflects Alex's belief that inherited wealth can negatively impact individuals, suggesting that it is better for people to earn their own wealth.

• Alex aspires to be a billionaire but is not emotionally attached to this goal.
• Achieving the goal is seen as exciting, but not achieving it would not be a cause for upset.
• The approach to wealth is pragmatic and goal-oriented without emotional dependency.

"The easiest way for me to explain is I want to have a very big goal. That sounds exciting, but I have absolutely no emotional investment."

The quote indicates Alex's mindset towards their financial goal, emphasizing the lack of emotional investment in the outcome.

• Alex plans to invest in niche businesses similar to those they have successfully scaled.
• The strategy involves acquiring and growing several businesses each year.
• Alex is confident in their ability to significantly increase the value of these businesses based on their experience.

"We're just going to be investing in businesses that are similar to the ones that we scaled and participate in the growth."

This quote outlines the straightforward business investment strategy that Alex intends to employ to reach their financial goals.

• Alex believes formal education in America has failed many people.
• They argue that the debt incurred from education is disproportionate to the value it provides in terms of income potential.
• Alex suggests alternative education can be more beneficial than traditional college education.
• The quote from Nabal Ravikan about technology's impact on consumption and production is used to emphasize the value of being the best in a specific field.

"The problem is that the promise is underlivered, right? And people go in and get the same level of income after they get a degree as what they could get before."

This quote highlights Alex's critical view of the return on investment provided by formal education in America.

• Alex predicts increased fragmentation in education, with more specialized niche learning replacing generalist approaches.
• They question why e-commerce is not a major undergraduate study given its practicality in generating income.
• Alex sees a gap between the demand for high-value skills and the supply provided by traditional education.
• Thesispindacquisition.com aims to capitalize on this gap by identifying and supporting experts in various niches to provide alternative education.

"My bet that in my thesispindacquisition.com is I want to find the people who are the best at their specific thing... And then wrap the model that already know how to deliver, provide exceptional service, provide great value, how to teach effectively so that people can understand the concepts and then ultimately make a lot of profit and then participate in that process."

The quote summarizes Alex's business thesis for Thesispindacquisition.com, focusing on leveraging expertise in specific niches to provide valuable alternative education and services.

• Both speakers share similar views on education but choose not to delve deeply into the topic.
• The implication is that they could discuss education extensively, indicating its complexity and their passion for the subject.

"We share similar views on education, and that whole system won't go too deep because could talk about it forever."

• This quote suggests a shared understanding and potentially critical perspective on the education system, but the speakers decide to focus their conversation elsewhere.

• Alex has a goal of reaching billionaire status within ten years, barring major economic crises.
• The goal is based on achieving a certain level of EBITDA and the valuation of the company's portfolio.
• Alex acknowledges the goal may sound unreasonable but has a plan based on asset allocation and expected returns.

"I think that in ten years, we could get there."

• Alex expresses confidence in reaching the billionaire milestone within a decade, considering current assets and strategic planning.

• Alex intends to continue with what has been successful after achieving the billionaire goal.
• Acquisition.com is designed to benefit all parties involved, creating a value-creating ecosystem.
• The structure allows consumers to gain value, companies to grow with investment, and team members to earn significant income.

"So what would be next is just continuing. Alex's boring recipe for success is just keep doing what's working."

• Alex plans to maintain the strategies that have proven successful, emphasizing consistency over constant change.

• Acquisition.com is structured to provide benefits to all parties: consumers, partner companies, and team members.
• Consumers receive free valuable content, partner companies receive investment and growth support, and team members have high earning potential.
• The ecosystem is meant to create independent wealth and opportunities for reinvestment for all involved.

"I'm trying to design it so that every single party that touches it benefits."

• Alex's intention with Acquisition.com is to create a mutually beneficial ecosystem where every participant gains value.

• Despite recognizing software as a fast track to wealth, Alex chooses not to focus solely on starting a software company due to risk analysis.
• He prefers a diversified investment approach that compounds capital with lower risk.
• Alex admires Charlie Munger and Warren Buffett, which influences his decision-making and investment strategy.

"It's a risk analysis, which is I could probably hit bigger, but the risk that I don't hit it is high."

• Alex explains that starting a software company could yield high returns but comes with substantial risk, leading him to choose a more diversified and lower-risk investment approach.

• Alex and his wife Leila spent 18 months deciding on their next venture, considering personal preferences and non-negotiables.
• Alex prefers not to manage a company end-to-end again and seeks variety to maintain his interest.
• He knows he gets bored with projects after about 24 months, so participating in multiple companies is appealing.

"I don't know what's something that I won't get bored of because for me, I get bored in about 24 months."

• Alex's personal preference for variety and his awareness of his own attention span influence his decision to engage with multiple companies rather than focusing on a single venture.

• The offer is seen as the initial spark in the business exchange process.
• The sequence of steps in starting a business is crucial, with the offer being the first step.
• Entrepreneurs often focus on fixing later steps like copy or ads before ensuring a compelling offer.
• The offer is about providing value that makes it easy for customers to say yes.
• Alex emphasizes the importance of product-market fit and creating a product that encourages virality and positive reviews.
• Scaling should focus on improving the product once initial traction from promotion is gained.

"I see the offer as like, the spark where we're actually giving them exchange for their money."

This quote underlines the offer as the starting point of value exchange in a business, highlighting its importance in attracting customers.

"And so my belief is like the three P's of scaling that I adhere to is zero to a million is promotion, one to 10 million is product, ten to 100 is people, right?"

Alex outlines a scaling framework based on the three P's: promotion, product, and people, indicating the focus areas at different stages of business growth.

• Alex has experience in scaling companies quickly, reaching monthly revenues of $1.7 to $2 million.
• He discusses the growth of three different companies: Prestige, Gym Launch, and Allen.
• Each company's growth trajectory and revenue milestones are shared to illustrate his scaling expertise.

"So prestige launched 1.7 million a month by month, I think like four. Gym launch hit 2 million a month within twelve months of us hitting us switching to licensing. And then Allen was at 1.7 as well."

Alex provides concrete examples of his success in scaling businesses, showcasing his ability to generate significant revenue in a short time frame.

• Alex finds software the most challenging industry to scale due to its unique requirements.
• He explains the three pieces of business scaling: acquisition, product, and ops (or shared services).
• Mastery in customer acquisition and product delivery is crucial, as well as strong operational capabilities.
• Alex acknowledges his lack of technical expertise in software and the mistake of not having a technical co-founder for Allen.
• He emphasizes the importance of product-driven growth for software companies, especially for achieving high valuations.

"With software, to your point, getting 100 million ARR to get the ten x multiple that you're going to get on it, it's about having net negative churn and that's going to be all product driven, right?"

This quote stresses the significance of product quality in software businesses, as it is essential for reducing customer churn and achieving high company valuations.

"I was blind negotiating is how I'd say. I would say, hey, can we change this button? Right? And then you'd say, it takes a month. And I'd be like, feel like you can do better than that. I had no idea it could have taken two years."

Alex reflects on his disadvantage in negotiating software development timelines due to his lack of technical knowledge, illustrating the challenges he faced in scaling a software company.