Starting From Zero Ep 453

Alex Hormozi reflects on his entrepreneurial journey, emphasizing the importance of skills and learning from failures. He shares his experiences of starting various businesses, including gyms, a sales company, and Acquisition.com, often without initial capital but rather leveraging skills and knowledge gained from previous ventures. Alex discusses his backup plans, such as stripping and driving Uber, and how he navigated financial setbacks by innovating and adapting his business models. He stresses the value of asking better questions to solve problems creatively and highlights the significance of lessons learned over income earned. Alex's approach to business is rooted in starting cash-flow positive from day one, and he advocates for skill development as a means to resilience and success, even when starting with nothing.

• Speaker A emphasizes starting from scratch with each new business venture, implying the importance of resilience and adaptability.
• Learning from past mistakes is highlighted as a crucial aspect of entrepreneurship.
• The speaker's journey to building acquisition.com into a billion-dollar portfolio serves as a practical framework for business growth.

"So I started at zero when I started my first gyms with new knowledge, I started my turnkey sales company with." "I started the licensing business at zero once again, each time learning from the mistakes of my past."

These quotes indicate the speaker's experience in beginning multiple businesses from the ground up and the value of learning from previous errors to achieve success.

• Speaker A challenges the idea that having a Plan B implies a lack of commitment to Plan A, instead advocating for contingency planning.
• The speaker's personal Plan B involved unconventional methods like stripping and driving Uber to ensure financial stability.
• This approach reflects a pragmatic and open-minded attitude toward career and financial planning.

"Arnold Schwarzenegger talks about not having a plan b, because if you have a plan b, then it means you're not committed to plan a. I don't agree with that." "My actual plan b, because I had no skills, was that I would strip at night and I would drive Uber during the day."

These quotes reveal the speaker's disagreement with the notion that a Plan B signifies a lack of dedication and outline the speaker's own backup plans that were designed to provide financial security.

• Speaker A discusses the mental struggle of deviating from a traditional career path and the expectations of family.
• The speaker acknowledges the discomfort of not having parental approval but prioritizes personal goals and aspirations.
• The concept of societal norms and their subjectivity is touched upon, especially in relation to personal choices and career paths.

"Now, obviously I had to make peace. The fact that my dad didn't approve, my mom didn't approve of what I was currently doing." "So the next thing was, candidly, if you look at the thongs a lot of the girls wear today, compared to what they thought was porn, like, 40 years ago, it is porn."

The first quote illustrates the emotional challenge of pursuing a path not endorsed by one's parents, while the second quote comments on the changing perceptions of societal norms over time.

• Learning to sell is identified as a critical skill for business success, with Speaker A sharing personal experiences of selling gym memberships.
• Speaker A believes that high-repetition sales roles provide the best learning experience due to immediate feedback and the necessity of quick decision-making.
• The speaker's backup plan involved leveraging newly acquired sales skills in different industries if necessary.

"So plan B next, right, was that I started learning how to sell at my gym." "I learned how to talk through things. And so I knew that I had that skill."

These quotes emphasize the importance of acquiring and honing sales skills as a fundamental tool for business success and as a fallback option in case the primary business does not succeed.

• Speaker A shares a personal experience of financial loss, demonstrating resilience and the ability to rebuild.
• The speaker details the specific steps taken after losing almost everything, providing a real-world example of recovery and strategic thinking.
• The narrative highlights the practical application of skills and experiences gained through previous ventures.

"So people ask me the question, Alex, if you lost it all, what would you do? Again, I've lost it all twice." "So I lost it all. And I had $1,000 left in my bank account because I'd done $100,000 launch of a gym."

These quotes convey the speaker's familiarity with significant financial setbacks and the concrete actions taken to recuperate from such situations, underscoring the importance of resilience and resourcefulness in entrepreneurship.

• Speaker A had a credit card with a spending limit, which was intended to be used for advertising and hiring sales personnel.
• The system Speaker A developed was based on their skills and was meant to be a starting point for a new business venture.

"So I had a credit card with a limit that I knew that I could spend. And I was going to spend it on advertising and sales guys going out in the field and using my system that I had developed because I had skills to start over again."

This quote indicates Speaker A's initial strategy for starting a business, which involved investing in advertising and a sales team to leverage a system they had created.

• Within 30 days, Speaker A's business generated $100,000, but this was offset by an equal amount of credit card debt.
• Growth continued the following month, doubling to $200,000 due to payment plans and new sales.
• Speaker A faced challenges when gyms began refunding clients, which disrupted the cash flow and exposed the business to financial risk.

"Right? From that, I also had $100,000 credit card bill. But I broke even."

This quote reflects Speaker A's initial financial balancing act, where revenue was negated by equivalent debt.

"And then for those who know the story, gyms started refunding people at the end of their programs."

This quote highlights a turning point where the business model faced challenges due to gyms refunding customers.

• Speaker A experienced a significant loss, with $150,000 in debt and no prior experience in generating that amount in profit.
• The situation led Speaker A to innovate by selling their sales system to gym owners and taking a percentage of the profits.
• The sales system proved successful, leading to word-of-mouth marketing and further business.

"And so that's where desperation, a lot of times, leads to innovation."

This quote signifies the role of a challenging situation in driving Speaker A to innovate and create a new business strategy.

• Speaker A learned the importance of leverage and reducing operational costs by licensing their system instead of incurring travel and commission expenses.
• The new model allowed gym owners to generate significant profits with less risk, changing the dynamic from resentment to appreciation.

"And so I have lost everything twice. The first time I switched to just doing marketing and sales and plugging in everyone else's network, but then I added in workers to do it."

This quote reflects Speaker A's evolution in business strategy, moving from hands-on involvement to a more scalable approach.

• Speaker A emphasizes the importance of skills over capital, as skills are something that cannot be taken away.
• The realization that skills and experience are the true assets carried through adversity is a cornerstone of Speaker A's philosophy.

"And the biggest realization of my life was that I didn't lose everything. Not only did I not lose everything, I lost a fraction of what I thought I had lost, because I still kept on to the thing that no one could ever take from me, which is the skills and the experiences and the lessons that I had learned through the path that I had walked."

This quote encapsulates Speaker A's perspective on the enduring value of skills and experience over material losses.

• Starting from zero is a common theme in entrepreneurship, as many successful entrepreneurs begin with limited resources.
• The value of experiences and lessons learned through hardship is emphasized.
• The speaker highlights the importance of applying knowledge gained from previous ventures to new situations.
• Each new business venture is seen as an opportunity to start from scratch and apply new knowledge.

"And so the most valuable thing that I had are lessons that I had paid to learn blood, sweat, tears and money to learn so that I could apply them to a new reality."

This quote underscores the importance of hard-earned lessons in business. The speaker values the experiences gained through challenges as they can be applied to future endeavors.

"When I started my first gyms with new KnOwledge, I started my turnkey sales."

Here, the speaker reflects on the importance of applying new knowledge when starting a business, illustrating the iterative process of learning and applying in entrepreneurship.

• The speaker discusses the concept of "zero" in business, indicating a starting point without external capital injection.
• The speaker's approach to business has evolved over time, focusing on equity value rather than immediate cash extraction.
• There is a willingness to take higher risks by investing in people and infrastructure for long-term growth.
• The speaker's lack of fear around money allows for a different strategic approach to business.

"The only reason this wouldn't be zero is if I had taken a lot of money to inject into the business, which I haven't."

This quote clarifies the speaker's starting point for their latest venture, emphasizing the lack of significant financial input and the concept of starting from "zero."

"Rather than try and just rip as much money out of the business as I can, because this is my fourth go round and I don't need the cash and what I want is the equity value, I will reinvest into the people that will build this thing into the behemoth that I want it to become."

The speaker highlights their strategic shift from seeking immediate profits to reinvesting in the business for future equity value, indicating a long-term vision for growth.

• Emphasis is placed on the value of learning over immediate income in the entrepreneurial journey.
• The speaker advocates for taking action and working hard, viewing challenges as opportunities to learn.
• Persistence and dedication are highlighted as essential for achieving long-term goals.

"You start working, you start taking action, you take doing steps and realizing that the thing that you were earning above everything else is the learning, not the income, because that is the thing that you will take with you."

This quote emphasizes the importance of taking action and values the learning gained from experiences over immediate financial gain.

"It's the ignorance tax and the debt of not knowing that you are paying down with the actions you take."

The concept of an "ignorance tax" is introduced, suggesting that the cost of not knowing is reduced through experience and action.

• The speaker reflects on their initial lack of capital and the need to trade time for money.
• Different forms of capital injection are discussed, including personal effort ("sweat") and financial investment.
• The speaker shares their experience with different business ventures and the varying costs and returns associated with each.

"So when I started gym launch, I put no money into the business because I had no money. The money that I had in my bank account was like food."

This quote illustrates the speaker's humble beginnings and the necessity to start a business without financial capital, relying instead on personal effort.

"The acquisition.com business, if you call it that, the Holdco of Acquisition.com didn't cost money to start because I had already had acquired 20% to 30% of three different businesses before I really started acquisition.com."

Here, the speaker explains that their current venture did not require an initial capital investment due to previous acquisitions, highlighting a strategic approach to business growth.

• The speaker has transitioned from being a majority partner to a minority partner in business ventures.
• The challenge of influencing others without exerting control is discussed.
• The speaker tested their ability to work with other entrepreneurs before fully committing to new partnerships.

"And so it's a different position for me now. But I tested that theory out for a year while I still had gym, lunch, prestige Labs and Allen before selling them."

The speaker shares their experience of testing the waters in a new role as a minority partner, indicating a cautious and deliberate approach to business partnerships.

• The speaker discusses a past financial achievement and their strategy to avoid a taxable event.
• Emphasizes the importance of cash flow positive businesses from day one.
• Acquisition.com was built off cash flow from businesses within its holding company.
• The speaker prefers to start businesses without investing capital upfront, believing it encourages creativity and problem-solving.

12 million in top line trailing twelve months. Before we sold it. So that's all I can really tell you. So the return on that was also good, but just in a different format because I didn't want the taxable event. So it worked out fine.

The quotes indicate a successful financial outcome from a business venture, where the speaker managed to avoid a taxable event, suggesting a strategic financial decision.

• The speaker believes that using one's own capital can lead to entrepreneurial laziness.
• They stress the importance of the questions entrepreneurs ask themselves, which can dictate the scale of their success.
• The speaker shares a story of a highly successful entrepreneur who sought advice on increasing profits without additional work.

You will always solve the problems that you ask for yourself. You will answer the questions that you ask, which is why I think can tell so much more about how someone's thinking about the questions they're asking than even the questions they answer.

The quote highlights the speaker's belief in the power of questions to shape entrepreneurial problem-solving and success.

• The speaker recounts a story of a friend who wanted to increase their business's profit by $5 million without additional work.
• The speaker helped identify a solution within 90 minutes, demonstrating the effectiveness of asking the right questions.

How do I make $5 million more and do no more work in my business? I want no time for me, and I want to make $5 million profit extra. And she did that, and she made $5 million extra in her business.

The quotes illustrate the potential for substantial business growth when focusing on specific, targeted questions.

• Acquisition.com is presented as the embodiment of starting a business with no capital upfront.
• The speaker outlines their strategy for building a strong brand and creating value through association.
• They express a belief that true creativity can lead to starting any venture without initial capital.

Acquisition.com is the answer to that question, by the way, if you're curious. Create tremendous goodwill in the marketplace, build an incredibly strong brand.

These quotes describe the strategic approach behind Acquisition.com, emphasizing brand strength and market goodwill as key factors in its success.

• The speaker references Phil Knight's creative solution during a financial crisis at Nike.
• They advocate for the necessity and desperation as drivers for inventive solutions.
• The speaker shares a personal anecdote about overcoming a significant monthly financial deficit.

Necessity is the mother of invention. Another way of saying that is desperation is the mother of invention. How do I make $150,000 in profit in 30 days with nothing?

The quotes convey the idea that challenging circumstances can lead to innovative problem-solving and that asking bold questions can lead to exceptional outcomes.

• The speaker believes that the scale of one's questions influences the scale of their business goals.
• They suggest that aiming for modest financial goals limits the scope of potential solutions and strategies.
• Conversely, setting ambitious goals encourages thinking on a grander scale, leading to more significant achievements.

If you improve the quality of your question, of how you want to do the thing, you will answer it much better than you probably currently are when you set your goal for $100,000 a year. How do I get to 100 million? You think differently.

The quotes emphasize the concept that the nature of the goals entrepreneurs set for themselves has a direct impact on the strategies they develop and the success they achieve.