Reset the Bar Ep 339



Alex Hormozi, owner of an $85 million portfolio of companies, shares transformative insights on business management and culture. He recounts two pivotal stories: one of a gym partnership that taught him about setting performance standards, and another from his first job, where a manager named Vince undermined the owner's expectations, highlighting the destructive impact of poor leadership. Hormozi emphasizes the importance of 'hearts' over 'smarts' in business, advocating for strong soft skills, consistent execution of basics, and fostering a championship team mentality. He urges entrepreneurs to focus on culture and character traits, ensuring their teams uphold excellence to outperform competitors with similar strategies.

Summary Notes

Key Theme: Shift in Business Perspective

  • Alex Hormozi experienced a significant change in how he views business operations.
  • This shift has had a profound impact on his approach and the performance of his portfolio of companies.
  • Hormozi's business portfolio generates $85 million a year in revenue.

I've had a massive shift in how I view business, and it has fundamentally transformed everything that I'm doing.

The quote emphasizes the depth of Hormozi's change in business philosophy, suggesting a transformative effect on his actions and strategies within his companies.

Key Theme: Learning from Partnership Experiences

  • Hormozi entered into a partnership with a gym owner during the early stages of his gym launch business.
  • The partnership was ultimately unsuccessful, but it provided Hormozi with valuable lessons.
  • The gym owner had a successful gym generating $4.2 million a year and proposed a partnership where Hormozi would focus on customer acquisition and the gym owner would handle operations.

So when I was just starting out in my gym launch business, I had a gym owner who said, hey, let's partner on this. Like, you keep filling these gyms up at full capacity, why don't you just fill them, and I'll come behind you and operate them?

This quote details the initial proposition for partnership that Hormozi encountered, highlighting the division of responsibilities between customer acquisition and operational management.

Key Theme: Setting Expectations and Standards

  • Hormozi learned about the importance of setting clear expectations and standards through an incident involving the gym owner partner.
  • A critical meeting was called to address issues with a lackadaisical staff at a new gym location.
  • The gym owner demonstrated a strict approach to punctuality by firing staff members who arrived late to the meeting.

And so he tells his assistant, he says, go outside and tell him they're all fired. And he says this before he starts the meeting. And so I'm sitting there, right? And everyone in the room is like, oh, shit, right? He just set the tone, all right? And he reset the bar.

The quote captures the decisive moment where the gym owner enforces a high standard for punctuality by terminating late employees, illustrating a method of setting expectations and the importance of adherence to established standards within a business.

Key Theme: Importance of Discipline in Business Culture

  • The gym owner's actions during the meeting were a demonstration of discipline within the business culture.
  • By firing latecomers before the meeting began, the gym owner reinforced the value of punctuality and commitment to the team.
  • This event was a significant learning experience for Hormozi, showing him the impact of strong leadership on team behavior and performance.

And he reset the bar. And I remember witnessing this and being like, wow. So what he did was, he reset the bar of, this is how we perform when we say we're going to be somewhere. We're going to be somewhere at that time.

The quote reflects Hormozi's realization of the power of setting and enforcing high standards. It underscores the lesson learned about the necessity of discipline and the expectations of performance within a business.

Importance of Consistency and Accountability in Business Practices

  • Alex Hormozi emphasizes the necessity of following through on commitments, such as following up with leads.
  • He shares a personal anecdote from his first job to illustrate the disconnect between what is taught and what is practiced within a business.
  • The story highlights the impact of a manager on setting workplace norms that may differ from the owner's expectations.

"If we say we're going to follow up with leads, we follow up with leads."

This quote stresses the significance of keeping promises in business operations, which is fundamental to maintaining credibility and trust with clients.

The Impact of Managerial Actions on Company Culture

  • Hormozi introduces a character named Vince, a manager who contradicts the owner's instructions and sets a new norm for employees.
  • The experience with Vince leads Hormozi to question whether businesses have individuals who undermine the company's values and practices.
  • The contrast between the owner's training and Vince's guidance serves as a lesson in the importance of consistent leadership.

"The manager was telling me that I didn't need to do that stuff."

This quote demonstrates how a manager's behavior can directly influence the actions of employees and potentially create a negative company culture.

Comparison of Management Styles and Their Effectiveness

  • Hormozi compares two different management styles without explicitly detailing the first style, but clearly disapproves of the second style as demonstrated by Vince.
  • The comparison serves as a segue into a broader discussion on the importance of balancing different aspects of business management.

"So think about the difference between both of those styles of management."

The quote invites listeners to reflect on how different management approaches can shape the effectiveness and morale within a business.

The 'Smarts' and 'Hearts' of Business

  • Hormozi introduces the concept of 'smarts' and 'hearts' as two essential components of a successful business.
  • He acknowledges his past focus on strategy and monetization but now recognizes the equal importance of fostering a positive company culture and employee-customer relations.
  • The 'hearts' aspect refers to the human element of business, which includes employee satisfaction and customer experiences.

"You've got the smarts and you've got the hearts, and you have to have both."

This quote encapsulates the dual focus that Hormozi believes is critical for a business to thrive, combining strategic acumen with compassionate leadership.

Call to Action for Listeners

  • Hormozi makes a personal appeal to his audience, asking for their support in spreading the message of the podcast.
  • He emphasizes that the podcast operates without ads and does not sell anything, relying solely on the audience to share and promote the content.
  • The request for ratings, reviews, and shares is framed as a way to help more entrepreneurs improve their businesses and create better experiences for all stakeholders.

"The only ask that I can ever have of you guys is that you help me spread the word."

This quote is a direct request from Hormozi to his listeners, asking them to take action to support the podcast and its mission to aid entrepreneurs.

Importance of Heart over Smarts in Business

  • Alex Hormozi emphasizes the value of soft skills and cultural aspects in business over mere intelligence.
  • A simple business strategy involves selling a desirable product at a profit and scaling it.
  • The real challenge lies in execution and managing people, not the strategy itself.
  • Hormozi suggests that entrepreneurs should focus on developing their employees' soft skills.
  • He challenges the belief that employees cannot match the capabilities of the entrepreneur.
  • The key is to address behavioral dynamics and the reasons employees are not performing as desired.

"And I think that most people overestimate the importance of smarts, myself included. And I think that there's a lot to do with the hearts, because business strategy, overarchingly is not that complex."

This quote highlights Alex Hormozi's realization that emotional intelligence and passion (heart) are more critical to business success than just being smart (smarts).

"The problem is the heart. Right? The people are not doing what you want them to do because they don't understand why they need to do it and why it's important, right? And that's the soft stuff."

Hormozi points out that the root of many business issues is a lack of understanding and motivation among employees, which is a matter of soft skills and company culture rather than business strategy.

Impact of Soft Skills and Leadership on Business Success

  • The success of a business is largely dependent on the entrepreneur's ability to coach and develop leaders within the company.
  • Addressing the behavioral dynamics that limit employees is more impactful than constant tinkering with the business model.
  • Hormozi reflects on how much time entrepreneurs waste on tweaking minor details instead of focusing on the core issues related to people and culture.

"It's so much more about coaching and developing the leaders of the company. It's so much more about addressing behavioral dynamics of someone that are limiting them more so than it is about tinkering."

This quote emphasizes the importance of nurturing leadership and addressing personal growth within the team rather than obsessing over small changes in the business process.

Championship Mentality vs. Loser Mentality

  • Hormozi contrasts a championship mentality with a loser mentality in the context of business performance.
  • He likens business teams to sports teams, where a winning team exhibits effort, consistency, and alignment, regardless of individual talent.
  • The analogy suggests that a cohesive and aligned team is more likely to succeed than a team of talented individuals who do not work well together.

"And those two stories should illustrate the difference between having a championship mentality and having a loser mentality and what might be going on in your business."

The quote illustrates the idea that business success is not solely dependent on strategies or individual skills, but also on the collective mindset and culture within the organization.

"It was the effort and the consistency and the alignment of the team that accomplished the goal."

Hormozi points out that the key to success lies in the team's collective effort and unity, rather than just the actions of a few talented individuals.

Reflection on Team Dynamics in Sports and Business

  • Hormozi draws parallels between sports teams and business teams, suggesting that the dynamics that lead to success or failure are similar in both arenas.
  • He emphasizes that alignment, concerted effort, and a shared vision are crucial for any team to achieve its goals.
  • The comparison to sports teams serves to illustrate the importance of teamwork and culture in achieving success.

"If you've ever played in a sports arena or whatever, and you've been on a winning team and you've been on a losing team, right, and you've probably been on a losing team that had a lot of good players, but you guys were not connected, you weren't concerted, you weren't aligned, right?"

This quote draws on personal experience in sports to make a point about the importance of team dynamics in business, indicating that a lack of connection and alignment can hinder even the most talented teams.

Importance of Execution in Business

  • The competitive business landscape means that strategies are often visible and shared among competitors.
  • Success hinges on the ability to execute and get others to execute on your behalf.
  • CEOs should become like championship team coaches, focusing on fundamentals and execution.
  • Advanced individuals consistently adhere to the basics, which is a key differentiator in business success.

"Then the difference between the two is going to be your ability to execute and have people execute on your behalf."

This quote underlines that the primary distinction between similar businesses is the effectiveness of their execution strategies.

"Advanced people never don't do the basics."

The quote emphasizes the importance of always sticking to fundamental principles, even for those who are at an advanced level in their field.

The Role of a CEO as a Coach

  • CEOs should emulate coaches like John Wooden by emphasizing fundamentals and setting a high standard for execution.
  • Reinforcing a culture of excellence ensures consistent execution across the company.
  • A culture intolerant of anything but excellence can lead to disproportionate returns and positive company metrics.

"And so their job is to be intolerant of anything but excellence and to reinforce that in the culture so that it's consistently executed across the company."

This quote explains the CEO's role in fostering a culture that demands high standards and consistent excellence.

The Value of Soft Skills and Character Traits

  • Soft skills, interpersonal dynamics, and self-awareness are becoming increasingly valuable in business leadership.
  • CEOs are looking for character traits that ensure the basics are consistently performed.
  • A culture that upholds basic standards is considered advanced.

"I'm looking way more for character traits now."

Alex Hormozi indicates a shift in focus towards the importance of character traits over specific skill sets in business roles.

Self-Reflection and Consistency in Basics

  • Self-reflection is vital to ensure that a business is consistently adhering to basic principles.
  • Maintaining the basics is a sign of advancement in business practice.
  • A strong culture is one that reinforces the importance of executing the basics.

"Because if we always do the basics we will be advanced because that is what advanced people do is they never don't do them and they have a culture that reinforces that standard."

The quote suggests that consistently performing basic tasks is what distinguishes advanced individuals and businesses, and reinforces the importance of culture in maintaining this standard.

Alex Hormozi's Business Credentials

  • Alex Hormozi owns a portfolio of companies with significant revenue.
  • He emphasizes that he has nothing to sell, positioning himself as an advisor rather than a salesperson.
  • Encourages viewers to not be among the "broke people" and to subscribe for more insights.

"I own a portfolio companies like I said earlier that does 85 million in revenue. I have absolutely nothing to sell you."

This quote serves to establish Alex Hormozi's credibility and success in business, while also assuring the audience of his intent to provide advice without any sales motive.

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