It’s All About the “Not Being Cute” Approach (on BiggerPockets) Pt. 1 Aug '22 Ep 498

In this episode of the Bigger Pockets podcast, Alex Hormozi shares his entrepreneurial journey from management consultant to multimillionaire business owner. Starting with a single gym and sleeping on the floor, Hormozi rapidly expanded to six locations, then pivoted to gym turnarounds and a licensing model for scalability. His business acumen led to the creation of a supplement company, Prestige Labs, and a software company, Allen, which were later sold for significant sums. Now, with his holding company acquisition.com, Hormozi oversees a portfolio generating over $150 million annually. Throughout the conversation, he emphasizes the importance of focusing on one's customer, the necessity of hiring talent over building it, and the pitfalls of "cute" business strategies that distract from the fundamental work of entrepreneurship. His approach to business growth is methodical, highlighting the stages of scaling from six figures to nine, and the shifting challenges at each level, from establishing product-market fit to hiring the right team members to drive growth.

• The success of a business often hinges on a single visionary founder with a supportive team.
• Many businesses are not truly businesses but are more like leveraged jobs.
• The key to business growth is to focus on customer acquisition, increasing customer value, and customer retention.
• Learning from failures and lessons is an essential part of business development.

"It's usually one founder that's breathing life into this thing with lots of little helpers. It's a genius with a thousand hands." "And most businesses aren't worth anything because they're not businesses. They're leveraged jobs."

These quotes emphasize the importance of a central, visionary founder and the distinction between a true business and a self-employed job disguised as a business. Recognizing this difference is crucial for aspiring entrepreneurs.

• Alex Hormozi's career began as a management consultant and defense contractor.
• Discontent with his initial career, he transitioned to entrepreneurship by starting a gym.
• His success in the gym industry led to helping other gym owners and eventually scaling his business model.
• Hormozi's business ventures expanded into licensing, supplements, software, and ultimately forming acquisition.com.

"All right, I'll give the world's shortest play by play milestones. So, I was a management consultant, went to Vanderbilt, graduated, did defense contracting for two years. Really didn't like it. Got my top secret clearances."

This quote provides a brief overview of Hormozi's career trajectory, highlighting his shift from a traditional career path to entrepreneurship.

• Hormozi's approach to business expansion was based on leveraging synergies between related ventures.
• He acknowledges that some of his business decisions were more challenging than necessary and might not be repeated.
• Despite the difficulties, the outcomes of his synergistic approach were highly successful.

"Yeah, I definitely did a whole bunch of things that I probably wouldn't do again and probably wouldn't have done it necessarily in that order, et cetera."

This quote reflects on the nature of Hormozi's business decisions, noting that while not all were optimal, they were part of a synergistic growth strategy that led to success.

• Hormozi's business philosophy is grounded in practical, actionable advice derived from real-world experience.
• He emphasizes the importance of learning from failure and maintaining humility in the face of success.

"No, 100%. That's how I remembered the lessons."

This quote underscores Hormozi's method of learning from his failures by documenting them, which has contributed to his business acumen and success.

• Hormozi challenges popular business myths and emphasizes the importance of individualized approaches to productivity and success.
• He criticizes the "gobbledygook" spread by self-proclaimed business gurus on social media.

"I think it's a big pile of gobbledygook, man."

This quote expresses Hormozi's skepticism towards the multitude of trendy business practices that are often promoted without substantial evidence of their effectiveness.

• Working more is a fundamental principle to doing more.
• Anything that is not contributing to productivity is a distraction.
• The ability to work is a skill that can be trained.
• Preparatory activities can be crutches that hinder productivity.

"In order for me to do more, I must do more. Anything that is not me doing more is detracting from my ability to do."

This quote emphasizes the importance of direct action in increasing productivity and suggests that activities not directly related to work can be counterproductive.

• Many people overcomplicate diets and business strategies.
• The concept of a calorie deficit is a fundamental principle of dieting that is often overlooked for more complex diets.
• In business, the idea is to focus on what works without overcomplicating strategies.

"All diets are sham, and it basically comes down to calorie deficits."

Alex Hormozi simplifies dieting to the core principle of calorie deficits, suggesting that other dieting methods are unnecessary complications.

• Overcomplication can lead to failure in both sports and business.
• Sticking to the basics is often more effective than trying to be overly innovative or complex.
• People often avoid simple truths because they are difficult to accept.

"Don't be cute, right? He was like, just do more of what you're doing."

Alex Hormozi's mentor advises against overcomplication and suggests focusing on doing more of what already works.

• People are susceptible to gurus who promise quick success without the necessary work.
• There is a psychological component that makes people vulnerable to these promises.
• Building skills and experience is essential to achieve significant success.

"There is a part of them that is making them vulnerable to that. Because like you said, they don't want to do the work."

This quote discusses the psychological reasons why people fall for get-rich-quick schemes and the avoidance of the necessary hard work.

• Tracking customer success through data is crucial.
• Data allows businesses to make substantiated claims and provide actionable advice.
• Focusing on customer success leads to more effective marketing strategies.

"We have activation points that we want to track. We know that if someone does XYZ by day 30 or whatever, the likelihood that they stay, or as said, goes up threefold, whatever."

Alex Hormozi discusses the importance of tracking specific customer behaviors to predict and enhance their success, which in turn informs marketing strategies.

• Scaling a business requires different strategies at different revenue milestones.
• To reach six figures, you need to sell one product to one avatar through one channel.
• To reach seven figures, you must be able to acquire customers reliably and consistently.
• From one to three million, building a core team is essential.
• From three to ten million, the focus should shift from product market fit to increasing customer lifetime value.

"So you have one way of getting customers. You sell one thing to one specific type of person. That is all you need to do to get to six figures."

Alex Hormozi outlines the simplicity of reaching six figures in business by focusing on a single product, customer avatar, and marketing channel.

"So you know how to sell one product to one avatar, on one channel in a consistent manner."

To reach a million dollars, consistent and predictable customer acquisition is key, as explained by Alex Hormozi.

"At that point you're at one, two, 3 million ish a year. One to three, you have to build out your core team."

After reaching a few million in revenue, the next step is to build a core team to support further growth.

"Now, at this point, we transition objectives to increasing lifetime value per customer."

Alex Hormozi emphasizes the importance of shifting focus from initial sales to improving customer lifetime value for sustainable scaling beyond three million in revenue.

• Alex Hormozi discusses the challenges businesses face when scaling with a single product.
• As sales increase, margins may compress, leading to less cash flow and the need for constant selling to maintain overhead without significant profit.
• Businesses may need to step back to address issues such as product quality, customer experience, service, data, and infrastructure.
• It's common for businesses to prematurely promote employees who may not be capable, requiring later adjustments in staffing.

"Where if you just sell a single product that might not have as much LTV as you would want, as you scale or put more in, your margins begin to compress."

This quote highlights the problem of diminishing returns on investment as a business scales with a single product, emphasizing the importance of product lifecycle value (LTV) and margin management.

• Alex Hormozi introduces a growth strategy that involves doing "more" of what works, "better" optimization, and adding "new" channels.
• He emphasizes the importance of conversion rate optimization (CRO) and continuous improvement in marketing and sales materials.
• Six customer acquisition channels are mentioned: own lists, cold outbound, content, paid ads, affiliates, and referrals.
• The strategy involves maximizing current methods before expanding to new platforms or media channels.

"Far more aggressively on the acquisition side, which is the easiest moniker that I use, is more better new."

This quote encapsulates Hormozi's approach to business scaling, focusing on enhancing existing strategies and exploring new opportunities for customer acquisition.

• At around $30 million in revenue, founders often feel constrained due to their central role in the business.
• The transition to larger scale requires hiring experienced individuals who can take on leadership roles.
• Employee compensation and recruiting become critical for bringing in people who can drive growth without the founder's constant involvement.
• This shift is essential for scaling beyond the founder's capacities and reaching nine figures in revenue.

"At 30 ish, the founders typically will start feeling constrained because they are the juju behind the entire business."

This quote reflects the bottleneck that founders face as their business grows, necessitating a shift from founder-centric operations to a more distributed leadership model.

• Alex Hormozi and Rob discuss the challenges in reaching the first million in revenue.
• Hormozi advises focusing on identifying the customer avatar and the primary marketing channel.
• The "one channel" concept involves selecting a method, platform, and type of media for customer acquisition and focusing on it exclusively.
• Hormozi emphasizes the importance of a clear path for converting strangers to customers.

"So there's three variables. So you've got, got, you've got media and then you've got the content of whatever you're marketing."

This quote outlines the decision-making process involved in choosing a marketing channel, highlighting the need to consider the method, platform, and media content as key variables.

• Entrepreneurs often experience loneliness, especially in the early stages of business growth.
• Early-stage entrepreneurs may be more competitive with others rather than focusing on self-improvement.
• Over time, as businesses grow and entrepreneurs gain experience, the competitive focus shifts from others to oneself.
• Alex Hormozi shares an anecdote about competitiveness in the weight loss industry to illustrate the irrational fears entrepreneurs may have about competition.

"Entrepreneurship have elements of loneliness, and I think that it changes. I think in the beginning it's a lot harder because you're really competitive."

This quote acknowledges the emotional challenges entrepreneurs face, particularly the loneliness and competitive nature that can be prevalent in the early stages of building a business.

• Alex Hormozi advocates for alternative education and "guru" businesses that focus on teaching money-making skills.
• He points out the inadequacy of formal education systems in meeting the demand for practical skills.
• The growth of education businesses is driven by the need for skills that enable individuals to earn money.
• Hormozi emphasizes the importance of quality and customer-focused education businesses.

"I'm a huge proponent of alternative education. I love the education businesses."

This quote expresses Hormozi's support for non-traditional education businesses that provide valuable skills, underscoring the importance of meeting the demands unmet by formal education.

• Social media platforms like Instagram have made entrepreneurship more visible, inspiring more people to believe they can succeed in business.
• The increase in visibility has also led to a rise in scams and unethical business practices.
• The intention behind an educator or businessperson differentiates between a scam and a legitimate attempt to deliver value, despite skill level.
• There are well-intentioned educators who may not be effective teachers but are genuinely trying to help.

"It's grown because people are seeing on social media all these other people making money, and they're like, this is possible." This quote reflects the positive influence of social media in demonstrating the potential for success in entrepreneurship.

"The downside is, obviously, whenever you have upside, you've got an equal, opposite reaction of people who are scamming people and things like that." This quote acknowledges the negative consequences of increased visibility, such as the rise in scams.

"I think that the difference between a scam and somebody who is trying to deliver is intention." The quote emphasizes the importance of intention in distinguishing between scams and legitimate business efforts.

• Alex Hormozi found mentors and business connections by offering value first rather than directly asking for help.
• Demonstrating skills and pre-emptively helping others' businesses led to reciprocal assistance and opportunities.
• Winners in business tend to give back, and providing unexpected value can lead to fruitful partnerships.
• Alex's proactive approach earned him recognition even in a field where he initially lacked expertise.

"And I think it was because the way that I asked was, I didn't ask." Alex didn't directly ask for favors but instead showed his capabilities, which led to a more positive response from potential mentors.

"I would do work ahead of time to help them with their business." This proactive approach to networking involved offering assistance before asking for anything in return.

"If there was anybody worth anything, because winners give back." The quote suggests that successful people are often willing to help others who show initiative and drive.

• In the early stages of entrepreneurship, learning a wide range of skills is essential.
• Alex Hormozi learned through hands-on experience and personal interactions, valuing one-on-one learning over purchasing courses.
• He traded his expertise in sales for knowledge in other areas of online marketing, demonstrating the value of skill exchange.
• The journey from being a generalist to hiring specialists is a natural progression in growing a business.

"And so all of that, I rewrote so many scripts for guys in that community because it was the only thing I was good at." Alex used his existing sales skills to contribute value to a community, which in turn helped him learn other skills.

"And that's how I learned." The quote indicates that hands-on collaboration and problem-solving were key to Alex's learning process.

• Entrepreneurs must learn to relinquish control and leverage others' skills to scale their businesses.
• Hiring individuals who are better than the entrepreneur in specific roles is essential for growth.
• The struggle to delegate stems from a limiting belief that no one else can perform tasks as well as the entrepreneur themselves.
• Scaling involves trading time for more significant amounts of money and requires a shift from being a jack of all trades to leveraging specialized talent.

"No one can do something better than you. So, a lot of times what happens is people hire people who've never done the thing and then are like, oh my God, I'm better than this person." Alex discusses the common pitfall of underestimating others' abilities and the importance of hiring experienced talent.

"You can't see every email that goes out, you can't approve every post, you can't review every sales call, you can't make every video that's going to be in your course." The quote highlights the necessity of delegation as a business scales beyond the capacity of a single individual.

• Alex Hormozi views the skill of hiring effectively as a core competency for entrepreneurs.
• Understanding a business's needs and placing the right people in the right roles is crucial for success.
• Entrepreneurs often face the dilemma of whether to develop talent internally or hire experienced professionals.
• The objective assessment of a candidate's past work and performance is more reliable than subjective biases.

"And so the reason that things are not happening is because the people are not doing the things." This quote underscores the importance of having the right people in place to execute business functions effectively.

"Everyone thinks they're a good judge of character until they get judged by the people they hire." Alex quotes his wife to emphasize the challenges of hiring and the consequences of poor judgment in this area.

"So anyways, I could talk about that longer, but fundamentally, that's how you scale." Alex concludes the discussion on hiring by summarizing its fundamental role in business scaling.

• The speaker reflects on their own tendency to hire based on attitude and potential rather than proven expertise.
• Training new hires can be costly in terms of both money and time, potentially hindering business growth.
• The realization that this approach may not be sustainable or efficient prompts a reconsideration of hiring strategies.

"And I'm just stuck in sort of this treadmill that I can't get out of right now." The speaker expresses the frustration of being caught in a cycle of hiring and training without seeing the desired results in business scaling.