How to Pivot and Succeed in Business (on the Founder Podcast) Pt.1 July ‘23 Ep 604

In a candid discussion, Alex Hormozi and the host explore the intricacies of entrepreneurship, sharing personal stories and business insights. Hormozi, known for his unique blend of Ivy League intellect and street smarts, discusses his journey from considering an MBA to building his fitness empire and now focusing on his broader venture, acquisition.com. He emphasizes the importance of playing "the game" of business, which he enjoys beyond its monetary rewards, and the need for businesses to have compounding mechanisms for growth. Hormozi also shares a critical piece of advice for those seeking mentorship or opportunities: provide undeniable value first without expecting immediate returns, and target individuals just a few steps ahead rather than the unreachable top. He illustrates this with personal anecdotes, including his own initial struggles and the pivotal decision to quit his job and drive across the country to start anew in the fitness industry.

• Demonstrating initiative and skill is essential for success.
• Identifying a need for another person is a basic yet crucial hurdle.

You have to show the initiative. You have to have some skill. You have to demonstrate that you have the skill and that you can identify a need for another person.

The quote emphasizes the importance of taking initiative, having skills, and the ability to recognize others' needs as fundamental steps for achievement.

• Alex Armozi is building a business empire with acquisition.com.
• Known for his business acumen, combining Ivy League knowledge with street smarts.
• Alex has a distinctive appearance and attitude, not caring about others' opinions.

What's up, everybody? Buddy. Today we are joined by a good friend of mine, Mr. Alex Armozi. Alex is in the middle of building a massive empire with acquisition.com.

The quote introduces Alex Armozi, highlighting his ongoing business ventures and his unique blend of intelligence and practicality.

• Alex enjoys the "game" of business, which motivates him.
• He engages with business through various mediums, including writing books and creating content.
• His interest in business extends beyond monetary outcomes.

I just enjoy playing the game. I think that's like the biggest part of it. And so I write books about business. I make content about business. And when I'm not doing those things, I'm doing business.

This quote reveals Alex's passion for business, which drives him to be involved in multiple aspects of the industry, not solely for financial gain.

• Alex analyzes businesses, such as restaurants, to understand their operations.
• His curiosity extends to various aspects of a business, including sourcing, staffing, and marketing.

You go to a restaurant, you're like, man, how many tables do you think they turn through here? And what do you think they get these shrimp at.

The quote demonstrates Alex's inquisitive nature about business operations, constantly seeking to understand how businesses function and succeed.

• Alex jokes about certain businesses possibly being fronts for illegal activities.
• Observations of businesses with low customer traffic lead to speculation about their true nature.

There are some places that have to be cover ups for the Mafia, because, for example, Arby's, there is never a car there.

This quote humorously suggests that some businesses with seemingly little activity might be involved in illicit operations.

• Transitioned from gym launch to acquisition.com.
• Focus on investing in media and expanding beyond a niche market.
• Decision to sell Gym Launch was influenced by the realization of a limited total addressable market (TAM).

We've been massively investing in media overall, because the overarching idea, when I decided to step down from gym launch, was that gym launch, in my opinion, was going to eventually become an investment company.

Alex explains his strategic shift to investing in media and his decision to move away from Gym Launch to pursue a broader market with greater potential.

• Importance of considering TAM when scaling a business.
• Alex's realization that he needed to target a larger market.
• The decision to sell Gym Launch was partly due to the desire to avoid being pigeonholed as the "fitness guy."

The biggest thing that I saw as my takeaway was I was just in a pond and everyone else was going after an ocean.

This quote captures Alex's pivotal insight that led to his decision to sell Gym Launch: the need to aim for a larger market to achieve greater growth and avoid being confined to a niche.

• The necessity of having compounding mechanisms within a business for sustainable growth.
• Alex's experiences and discussions with other business owners about the importance of choosing the right business vehicle from the start.

You have to have one or multiple compounding mechanisms within the business in order for it to be able to reach without force.

Alex stresses the significance of having mechanisms in a business that allow for growth without excessive force, indicating thoughtful business model planning is crucial for long-term success.

• Media has a significant compounding effect on audience growth.
• The audience grows exponentially over time; a small initial audience can grow into a much larger one.
• The speaker illustrates this with the example of audience growth from ten to eleven people versus from ten million to eleven million.

"Media has a huge compounding effect, like your audience itself compounds. So it's like 10% more people find about me every month. And when you have ten people, you go to eleven, but when you have 10 million, you go to 11 million, and it just takes time."

• This quote emphasizes the concept of compounding in media and audience growth, highlighting the exponential nature of such growth over time.

• Speaker A graduated from Vanderbilt in three years and worked in a boutique strategy firm with a focus on defense contracting.
• Despite the job looking good on paper, Speaker A was not satisfied and considered changing companies.
• The realization that they did not want their future to mirror that of the firm's partner led to a period of depression.

"So I graduated in three years from Vanderbilt because I just did extra credits and did summer work and whatnot so I could get ahead. And then I got a consulting job at a boutique strategy firm that did defense contracting. So they did space cyber intelligence, or at least those are the projects that I worked on. It looked really good on paper, it sounded great at cocktail parties, but I really did not enjoy the work."

• This quote provides background on Speaker A's education and initial career path, as well as their dissatisfaction with the career despite its prestigious appearance.

• Speaker A contemplated pursuing an MBA but questioned its relevance to their goals.
• The decision was made to invest savings into starting a business rather than accruing debt from business school.
• The speaker rationalized that achieving a monthly income from a business equivalent to the median income of an MBA graduate would validate the decision.
• The hardest decision for Speaker A was quitting their job at the age of 22, driven by the desire not to disappoint their father.

"I could take the 50 grand I have saved up and start a business and learn that amount. And median income coming out of business school at the time was 120 grand. So I was like, I just got to get to ten grand a month from my own savings with a business to then kind of equate the two."

• This quote explains the financial rationale behind Speaker A's decision to start a business instead of pursuing an MBA, focusing on the potential income comparison.

• Speaker A struggled with the desire for paternal approval and the conflict between living their own life versus the life their father envisioned.
• Despite their father's happiness with their career, Speaker A felt it was not the life they wanted.
• The decision to quit and start a business was delayed by six months due to the struggle with disappointing their father.
• The speaker's downside decision-making process led to the realization that the worst-case scenario was manageable and provided a path forward.

"I didn't want to disappoint my dad. It was interesting because the happiest time in my father's life was the saddest of mine."

• This quote captures the emotional conflict Speaker A faced between fulfilling family expectations and pursuing personal happiness and fulfillment.

• Speaker A experienced a period of self-education through self-help books but realized they needed to take action.
• The decision to leave their job and start a business was made without informing their family, to avoid being dissuaded.
• Speaker A's relationship with their father suffered following the decision, with limited communication for years.
• The speaker considered various business ideas, including a frozen yogurt stand and test prep, leveraging their strength in standardized tests.

"I realized after my 20th self-help book that my life was the same. And some of the books said things that contradicted one another. And so finally, it was actually like, downside decision making, which is like, what ended up driving it for me."

• This quote reflects Speaker A's realization that consuming self-help content was not leading to actual life changes, prompting them to make a decision based on evaluating the worst-case scenario.

• The concept of input-output equations for success is introduced, highlighting a straightforward relationship between effort and outcome.
• The speaker practiced problems for 4 hours a day for 16 weeks to achieve a score above Harvard's mid-score.
• The speaker believes in the potential to teach others this method of achieving success.

"It was just straight up just like, problems score. And so I was like, great. Input output equations for success. I can do that."

This quote emphasizes the speaker's recognition of a direct correlation between the number of problems solved and the improvement in test scores, which formed the basis of their study strategy.

• The speaker considered various business options, including franchises and test prep, but faced financial and partnership challenges.
• A chance encounter with a woman seeking nutrition advice led to an unexpected payment and the realization that there was potential to earn money from such services.
• The speaker reached out to gym owners to work for free, which eventually led to an opportunity that helped them enter the fitness industry.

"And so then it was just test prep and gyms because I was into fitness already."

This quote reflects the speaker's process of narrowing down their entrepreneurial focus to areas where they had personal interest and perceived opportunities.

• The speaker took a significant pay cut to pursue a career in fitness, valuing the experience and education over immediate financial rewards.
• The notion that stepping back can be necessary when starting something new is highlighted.

"And I went all the way back to basically being a trainer, which doesn't even require a college education or the experience I had for, I think it was like, I don't know, $12 an hour or something like that."

This quote illustrates the speaker's willingness to forego a higher salary and utilize their education in a less conventional way for the sake of gaining valuable experience in a new field.

• Alex Armozi underscores the importance of gaining experience and education over short-term financial compensation.
• Working for free under a mentor can significantly enhance one's career prospects.
• Successful entrepreneurs value and are likely to accept the offer from a person willing to work for free in exchange for mentorship and learning opportunities.

"Dude, I think that's such a key principle that a lot of people don't quite understand is, like, the value of experience and education in doing what you want to go and build is worth so much more than the short term dollars that you're going to get paid."

This quote from Alex Armozi highlights the long-term benefits of gaining experience and education in a desired field, even if it means forgoing immediate financial rewards.

• It is advised to seek mentorship from someone just a few steps ahead rather than a highly successful individual who is less likely to have the time or need for free labor.
• Offers to work for free should be compelling and provide clear value to the mentor.
• The principle of giving first involves providing value without the expectation of reciprocation.
• Taking initiative and providing value upfront can lead to opportunities and recognition from potential mentors.

"And so caveat number one is like, you want to go to somebody whose supply demand of free labor is in your favor. So if somebody's one or two steps ahead of you, they probably don't have a lot of people saying they want to work for free right?"

This quote advises aspiring individuals to target mentors who are more likely to benefit from and appreciate free labor, as they may not be inundated with such offers, unlike highly successful individuals.

"My life is not better off because you're in it now. Your life is going to be significantly better because I'm in it."

This quote reflects the reality that the mentor-mentee relationship is often more beneficial for the mentee, and therefore, mentees must offer significant value to make the arrangement appealing to the mentor.

"You just do it and then send it to him. And then you keep doing it and keep sending it to him. And I'll bet you that if you do that for ten, 5100 days, straight Chris will be like, well, damn, this kid is really, really hungry."

This quote emphasizes the importance of proactive giving, showing commitment and value to a potential mentor by taking initiative to deliver work without being asked, thereby demonstrating dedication and increasing the likelihood of forming a mentorship relationship.

• Initiative is crucial; one must show they have the skills and can identify others' needs.
• Most people fail to overcome the basic hurdle of taking initiative and demonstrating skills.

t what you're good at, and we have to think all this, like, I'm doing all this work for you, right. Instead, it's like you have to show the initiative. You have to have some skill. You have to demonstrate that you have the skill, and that you can identify a need for another person.

This quote emphasizes the importance of taking initiative to demonstrate one's capabilities and the ability to understand and meet another person's needs.

• Adding value is key, but must be done with understanding of the recipient's needs and expectations.
• The two caveats are: demonstrating skills and ensuring the value provided exceeds the cost of time for the person you're trying to help.

I freaking love that. That is probably the best explanation I've ever been given with the two caveats. Because, yes, I've always believed the principle of, like, hey, add value and whatever, but, man, those freaking two caveats are 100% true.

Alex Armozi appreciates the nuanced explanation that adding value is not enough; it must be done with the awareness of the recipient's perspective and the value of their time.

• Time is valuable, and its worth varies depending on the person.
• Providing value must account for the opportunity cost of the person's time.
• The higher up the person, the more valuable their time, and the greater the value that needs to be provided.

One of the costs they don't qualify is how much your time is worth, right? So let's say right now, market rate. Like any CEO who wants a big exit says, hey, chris, I'll pay you 25,000 an hour to have your time, right?

This quote discusses the concept of opportunity cost and how one's time can have significant monetary value, especially for high-level individuals like CEOs.

• To reach influential individuals, one must prove their worth to intermediaries first.
• The strategy involves trading up the value chain to get closer to the desired influential person.
• Directly reaching out to top-tier influencers like Elon Musk without proving value is ineffective.

So you got to be able to make 10 million a year for me. For me to give you an hour a week of my time. I'm not being a dick here. I'm just saying, like, that's just the math, right?

The speaker outlines the high standards for value exchange when dealing with someone whose time is extremely valuable, highlighting the importance of providing substantial value.

• Look at what the individual is currently doing and how you can help do it more or better.
• Identify what they are not doing that they should be, and offer to help with that.
• Provide value by taking actions that incur no cost to the individual but offer them benefits.

All right. Two easy ways that you can identify what somebody ahead of you might want, that you could offer them for free, right?

This quote provides practical strategies for identifying and offering value to someone in a higher position, emphasizing the need to enhance what they are already doing or to fill in gaps in their activities.

• Helping someone leverage their time by identifying and evaluating opportunities can be highly valuable.
• Demonstrating value through due diligence and presenting well-researched opportunities can lead to recognition and trust.
• Creativity in providing value is essential, and one must think from the perspective of the person they are trying to help.

Like looking and evaluating or whatnot. If somebody went and actually sifted through a deal and said, chris, this is the reason, hey, not only am I bringing you a deal, but I did all the due diligence and the research, and here it like, and can cut out a lot of my time, my effort, or whatnot, and would actually physically bring it to me.

Alex Armozi explains how someone can add value by doing the groundwork on potential deals, saving time for the person they're trying to impress, and thereby providing significant value.