Make up to $75,000hr with These 10 Lessons! Ep 398

Alex Hormozi, owner of acquisition.com, shares his insights on business growth and success in his podcast. He emphasizes the importance of focusing on a few key areas that matter, leveraging branding for pricing power and profits, and the significance of sharing equity to attract top talent and drive growth. Hormozi stresses the value of patience, simplicity in business models, and emotional control for long-term success. He also highlights the crucial role of customer-centric decision-making, the power of compounding improvements over time, and the importance of risk management. Hormozi concludes by outlining his formula for business success: making and keeping promises, building brand, using profits for growth, sharing equity, and giving time its due.

• Brands grant the ability to set higher prices, which directly impacts profitability.
• A strong brand is pivotal in the competitive business landscape.

So what the brand does is give you pricing power. And that pricing power translates directly to bottom line profits.

This quote emphasizes the importance of branding in gaining the ability to set premium prices, which in turn increases profit margins.

• Alex Hormozi introduces himself and his business, acquisition.com.
• He shares lessons from a decade of observing his portfolio of companies.
• The portfolio generates $75,000 per working hour.

Welcome to the game, where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. Our portfolio of companies does $75,000 per working hour, 40 hours per week.

Alex Hormozi sets the stage for sharing business insights and lessons, while also providing context on the success of his portfolio of companies.

• Focus on a few critical aspects that matter significantly for success.
• Ruthlessly eliminate less important tasks or distractions.
• This approach allows for mistakes in other areas without jeopardizing overall success.

Number one is that most things don't matter, and a few things matter a lot. And you can achieve outsized returns by only focusing on those few.

This quote highlights the strategy of concentrating on key drivers of success and disregarding less impactful activities to achieve greater returns.

• Observations from a private equity managing partner's approach to business.
• Emphasis on technology integration and value-added mergers and acquisitions (M&A).
• Recognizing what will drive substantial growth and focusing attention there.

The second was accretive, which means basically value additive M A. So, looking at companies that are similar in the space that they could roll in to the overall conglomerate, because in his mind, he knew that the only way to sell those two particular companies for over 250,000,000 or more, which is the goal, would probably come from those two main things.

The quote explains the importance of strategic initiatives like technology and M&A in driving significant business growth and achieving high valuation goals.

• The proportion of ownership is less important than the value of your share.
• Sharing ownership with others can lead to larger overall growth and personal wealth.
• This concept is exemplified by some of the world's wealthiest individuals who do not own the majority of their companies.

And so the thing is that in order to do that, it means you have to give up slice of the pie, because it takes more people to build big things, right?

The quote conveys the idea that relinquishing a portion of ownership and involving more stakeholders can result in building larger, more valuable enterprises.

• Significant achievements and business growth take considerable time.
• Patience and long-term vision are crucial in entrepreneurship.
• The example of Andrew Cherng, owner of Panda Express, illustrates the value of time in business success.

Big things take time, right? It took him 45 years and he still continues to grow to this day.

This quote underscores the lesson that substantial business accomplishments require a long-term commitment and that the most significant growth often occurs after years of persistent effort.

• Alex Hormozi emphasizes the importance of long-term commitment to achieve significant outcomes.
• The focus should be on actions that can be sustained over a long period.
• Big achievements require time and motivation to stay the course, avoiding distractions.
• Long-term thinking leads to better company growth, higher quality personnel, and decision-making.
• It is crucial to concentrate on what will be important in ten years and disregard the rest.

"se compounding results that happen over a long period of time. And so I think rather than making this a patience platitude, thinking of this as what could I do for a very, very long period of time? Because the only things that will be very big will take a long time."

This quote highlights the necessity of patience and long-term focus for achieving significant results, suggesting that major successes are a product of sustained effort.

• Branding is critical for business success and takes time to build.
• A brand is built by making and exceeding promises, enhancing reputation in the market.
• Positive brand reputation increases return on advertising and customer acquisition.
• Negative word of mouth can suppress growth and increase acquisition costs.
• A strong brand allows for premium pricing and higher profits, providing a competitive edge and resilience against market fluctuations.

"Number four, brand matters a lot. All right? And so this was something that took me, again, a very long time to understand."

Alex Hormozi acknowledges the significant time investment required to understand and build a strong brand, which is vital for a business's market reputation and success.

• The largest companies in the portfolio have the simplest business models.
• Complexity naturally arises with scale, so fundamental units should be as simple as possible.
• Simplifying the offer suite, customer journey, and target audience improves understanding and efficiency.
• Avoiding unnecessary complexity is essential for growth and maintaining focus on the core business.
• Entrepreneurs must resist the temptation to complicate their business model and instead strive for simplicity.

"Number five, simple scales. Fancy fails."

This quote encapsulates the principle that simplicity is key to scaling a business, while complexity can hinder growth and success.

• Successful founders are characterized by rational decision-making and long-term thinking.
• Emotional reactivity can distort perceptions of potential gains and threats.
• It's important to maintain conservative estimates and avoid emotional responses to unexpected events.
• Remaining calm and rational leads to better decision-making and business outcomes.

"Number six. Emotions are the enemy."

Alex Hormozi identifies emotional reactions as a barrier to effective entrepreneurship, suggesting that success is linked to rational and long-term thinking.

• Alex Hormozi emphasizes the importance of reducing emotional reactivity in decision-making.
• He suggests that our minds can exaggerate negative situations, leading to poor decisions.
• Decreasing emotional reactivity is a character trait that must be developed over time.

"And so a lot of times we think things are much worse than they are and we make bad decisions because we think we're up against a wall."

This quote highlights the tendency of individuals to overestimate the severity of their challenges, which can result in hasty and ill-advised decisions. It underscores the need for emotional regulation in business and personal contexts.

• Alex Hormozi requests listeners to support the podcast without running ads or selling products.
• He asks for ratings, reviews, and shares to help more entrepreneurs.
• The support from listeners is intended to create a positive impact on the entrepreneurial community.

"The only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers."

This quote is a direct appeal for listener support to broaden the podcast's reach and influence. Hormozi believes that listener engagement can significantly benefit the entrepreneurial ecosystem.

• Alex Hormozi discusses the concept of "level ten talent" as essential for building substantial ventures.
• He cites Steven Schwartzman, founder of Blackstone, on the need for top talent to pursue big dreams.
• The size and scope of a business must be expansive enough to attract high-caliber individuals.

"Level ten talent is only attracted to level ten opportunities."

This quote reflects the idea that exceptional talent seeks out equally exceptional opportunities. It implies that ambitious individuals are drawn to projects with the potential for significant impact and growth.

• Alex Hormozi talks about the power of compounding in business, coupled with time.
• He observes that successful people control their impulses and are patient for long-term rewards.
• Incremental improvements, rather than rapid doubling, can lead to substantial growth over time.

"Compounding in business creates breathtaking results. When you add the one ingredient that people hate the most, time."

This quote encapsulates the essence of compounding's impact on business growth. It highlights the common aversion to waiting and the importance of patience in achieving significant outcomes.

• Hormozi advises on setting achievable goals to avoid unrealistic expectations.
• He suggests aiming for steady, incremental growth rather than unattainable leaps.
• Conservative goal-setting can lead to overachievement and sustained success.

"If you just hit singles and you do that consistently, you, a, set goals that are far more achievable, b, that people will actually believe they can do, and c, gives you room to overachieve those things."

This quote encourages a steady and methodical approach to growth, emphasizing the value of setting and meeting realistic targets, which can ultimately lead to surpassing expectations.

• Alex Hormozi stresses the importance of respecting risks in business.
• He indicates that the most successful companies take actions with minimal downside.
• Company-sized risks should only be taken when inaction poses a greater threat.

"Any number, no matter how big, multiplied by zero, is still zero, all right? And so risks are to be respected."

This quote serves as a reminder that regardless of a company's size or success, a single poor risk management decision can result in total loss. It underscores the critical nature of cautious and calculated risk-taking in business sustainability.

• Alex Hormozi emphasizes the importance of cautious risk-taking in business, especially for companies with revenues in the range of 3 to 5 million dollars.
• He advises against taking company-sized risks based on emotional decisions, suggesting that such risks should only be taken if inaction would lead to failure.
• Hormozi points out that many businesses have been ruined by founders who acted on irrational fears or excitement for non-core opportunities.
• The key is to have strong evidence before taking significant risks and to understand that the demand for core products or services is often stable.

"You only take a company size risk when you really know that if you do not do, if inaction or continuing to do what you were doing will create a failure."

This quote highlights the principle of taking calculated risks only when necessary to avoid failure, rather than acting on emotions or unfounded optimism.

• Hormozi stresses the importance of repeating successful actions and improving the core product or service once product-market fit has been established.
• He argues that business growth often comes from doing the "boring work" rather than taking big risks.
• Hormozi shares the story of Dragon Dictation, which released a new version that improved accuracy without adding new features, to illustrate the value of improving existing products.

"Most of the growth comes from not putting the company on the line, but doing the things that no one wants to do, which is simply improving, simply getting better at fulfilling the promise."

This quote underlines the idea that business growth is often driven by continuous improvement and refinement of what the company already does well, rather than by taking large risks.

• Hormozi advises selling what the customer wants, not what the business wants to build, highlighting the importance of data over ego.
• He shares an example from his portfolio where a company wanted to introduce a high-ticket upsell that the founder thought would provide value, but customer data showed a preference for more of the existing product.
• Hormozi concludes that listening to customers and being customer-centric is crucial for business success, even if it means focusing on what may seem boring to the founder.

"Sell what the customer wants, not what you want to build, all right? And this was a big one, all right? Because our egos want to matter, but the thing is that we don't matter."

This quote encapsulates the concept that customer preferences should guide product development, rather than the founder's personal interests or excitement for new ideas.

• Hormozi summarizes his recipe for business success in a series of steps: make promises, keep promises, build brand, use brand to increase pricing power, reinvest extra profits into growth, share equity to align interests, and give time to the process.
• He positions himself as an expert in scaling businesses from 3 million to 30 million dollars and beyond, through his company Acquisition.com.
• Hormozi closes by expressing appreciation for his audience and inviting newcomers to the channel.

"Make promises, keep promises, build brand, use brand to increase pricing power above the market. Use extra profits that were supported by the brand to spur growth through hiring better people and adding new acquisition channels."

This quote distills Hormozi's view on the fundamental steps to achieve business success, focusing on brand building and strategic reinvestment of profits for growth.