The Business Formula Acquiring Customers Profitably, Goalhitting Offers, & More…(with Tanner Chidester) Pt.2 Aug '21 Ep 443

In a candid conversation with Tanner Chittister, Alex Hormozi shares his business acumen, focusing on customer acquisition without relying heavily on paid advertising. Hormozi emphasizes the importance of having a unique, high-margin, sticky product managed by a person of integrity with a long-term mindset. He advocates for creating products that naturally generate word-of-mouth referrals, thus achieving a compounding return on investment. Despite the challenges, including a pandemic hit to his gym-focused business, Hormozi stresses the importance of growth and innovation in entrepreneurship. He also discusses the personal journey of overcoming parental expectations and the significance of a product's market fit, which is validated by customers' continued engagement and advocacy, rather than initial sales alone. Hormozi is currently focusing on his book promotion and managing his portfolio of education and training companies through acquisition.com, with plans to continue expanding and refining his business model.

• Mosey Nation discusses strategies for acquiring customers profitably, emphasizing the importance of a specific formula and mindset.
• He mentions the significance of focusing on the opinion of one important person rather than the faceless opinions of many.
• The podcast aims to cover customer acquisition, increasing customer value, and customer retention, along with sharing failures and lessons learned.

"On this podcast, we'll talk about how to acquire customers profitably and the formula and mindset and models that I use to do that in every business that I have encountered to date."

This quote outlines the main focus of the podcast, which is to discuss the strategies Mosey Nation uses for customer acquisition and profitability across different businesses.

• Tanner Chittister expresses admiration for Mosey Nation's business scale and minimal advertising.
• Mosey Nation confirms that one of his companies runs a lot of ads, but overall, his businesses do not rely heavily on advertising.
• Tanner reflects on his own profit margins in comparison to Mosey Nation's and considers the impact of advertising costs.

"Your business is the thing that impresses me the most, is the fact of how much scale you've had with. Essentially, and I may be wrong, but in your portfolio, I still believe you don't run hardly any. That's accurate, right?"

Tanner Chittister is impressed by Mosey Nation's ability to scale his businesses with little to no advertising, and Mosey confirms this is mostly accurate.

• Mosey Nation has a five-point checklist for evaluating businesses: Unique, Expensive, Sticky, Air, and Managed with Integrity.
• "Unique" refers to having a unique aspect or story that differentiates the business.
• "Expensive" relates to high gross profits rather than absolute pricing.
• "Sticky" is about creating recurring revenue and habit-forming products.
• "Air" signifies selling products with almost no marginal cost to achieve high gross margins.
• The final point emphasizes the importance of management with integrity and a long-term mindset.

"So it's my little moniker. It's unique, expensive, sticky air, and managed with a person of integrity who has a long term mindset."

Mosey Nation shares his personal checklist for evaluating businesses, which focuses on uniqueness, profitability, customer retention, cost efficiency, and ethical management.

• Mosey Nation discusses the concept of one-time inputs with compounding returns, contrasting it with the linear returns of advertising.
• He describes the process of creating a product, such as a book, that generates its own growth through word-of-mouth.
• Mosey Nation's book serves as a test case for this concept, achieving high sales with no advertising.

"Having spoken with all the guys I know who are worth 250,000,000 and up, what was interesting to me is that the vast majority of them want to do one time inputs with compounding returns."

This quote highlights the preference of highly successful individuals for strategies that offer compounding returns over traditional, linear advertising methods.

• Mosey Nation lists six methods of customer acquisition: paid ads, earned media, owned media, manual outbound, affiliates, and word of mouth/referrals.
• He emphasizes that referrals are the only quadratic growth method, where success multiplies as customers refer others.
• The other methods are linear, with a direct correlation between input and output.

"Now, if I were to ask the audience which of those is quadratic compared to which of those is linear, which of the six is which? They might think for a second, because we're only talking and I can't see the comments, I will answer the question. Right? Referrals. Word of mouth is the only one that's quadratic."

Mosey Nation explains that among the six customer acquisition methods, referrals are unique in their potential for exponential growth, making them a key focus for businesses seeking scalability.

• Achieving product market fit is a critical and often misunderstood concept.
• Product market fit is not simply about initial sales, but about customers staying, continuing to pay, and desiring to purchase more.
• The focus should be on refining the product until it sells itself, creating a virtuous cycle.
• Efforts should be concentrated on product development until it yields outsized returns on promotion efforts.
• Once the product is compelling enough, advertising profitability becomes almost inevitable.

"Product market fit is actually determined based on the fact that these customers stay and continue to pay and want to buy more."

This quote emphasizes that true product market fit is measured by customer retention and their willingness to make repeat purchases, not just initial sales.

• The marketplace is constantly growing, and companies must grow at least at the same rate to avoid decline.
• The term "grow or die" is used to stress the importance of continual growth and innovation.
• Companies that fail to adapt and innovate will be outpaced by the market and eventually disappear.

"If you look at the marketplace in general, the marketplace is growing at 10% a year, right? And so if you are not growing by 10% a year relative to the market, you are shrinking."

This quote highlights the necessity for businesses to grow in alignment with the market rate to maintain their market position and avoid becoming obsolete.

• Businesses must be willing to change and adapt in response to market conditions to continue growing.
• The COVID-19 pandemic presented significant challenges to businesses, especially those serving industries like gyms.
• Continuous innovation and adaptation are essential to avoid stagnation and decline.

"Well, yeah, I got kicked in the nuts during COVID because I served gyms."

This quote illustrates how external events, such as the COVID-19 pandemic, can severely impact businesses, especially those serving industries that were hit hard by the crisis.

• Entrepreneurs often face skepticism and lack of support from family and friends when starting a business.
• The decision to leave a secure job or path can be particularly challenging.
• Dealing with the fear of failure and judgment is a common struggle for entrepreneurs.
• Personal experiences, such as facing one's mortality, can be a powerful motivator to pursue entrepreneurship.

"I was faced with the fact that I was like, if I'm driving tomorrow, I was like, I could just accidentally go in the other lane and it would be all right."

This quote reflects the speaker's personal crisis that led to a life-changing decision to start a business, highlighting the profound personal challenges that can accompany entrepreneurial decisions.

• Mosey Nation wrote a book with over 1,000 hours of effort as a gift to the community.
• The book has over 800 5-star reviews and is available on Kindle for $0.99.
• The promotion is part of a long-term strategy to build relationships and potential business partnerships.

"I put over 1000 hours into writing that book, and it's my biggest gift to our community."

This quote highlights Mosey Nation's dedication to providing value to his community through his book, which represents a significant investment of time.

• Tanner Chittister relates to the struggle of finding one's path after a significant life event, like ending a football career.
• He had a realization that his current path in engineering was not fulfilling, prompting a shift in his life's direction.

"I just want to play in the league. I was in engineering class, had a year left, and I was like, this just is not going to work."

Tanner Chittister expresses his disillusionment with his former career path and the pivotal moment of change in his life.

• Mosey Nation advises focusing on the few opinions that truly matter, often just one or two people, rather than the faceless crowd.
• He questions whether one's perception of themselves should be more important than others' opinions.

"But if you really narrow it down, there's only, like, two or three people whose opinions you actually care about, and maybe it's just one."

This quote emphasizes the importance of identifying whose opinions genuinely impact us and to not be overwhelmed by the broader public's views.

• Mosey Nation shares a personal story about his father apologizing after his business success.
• He expresses that his father's opinion ceased to matter to him long ago, which allowed him to pursue his path without seeking approval.

"My dad called me, and this is after we had probably taken home 20 million at this point... He was like, 'I'm sorry. First time he's ever apologized.'"

Mosey Nation recounts a significant personal moment with his father, illustrating a turning point in their relationship and his own independence.

• Both speakers agree that not quitting is essential to avoid failure in entrepreneurship.
• Tanner Chittister emphasizes the importance of learning from mistakes and persisting toward success.

"If you never quit, then you won't fail. And that's the prerequisite of entrepreneurship."

Mosey Nation's quote encapsulates the entrepreneurial mindset of perseverance as the key to avoiding failure.

• Mosey Nation had entrepreneurial success before meeting Layla, but her involvement significantly amplified their business.
• Layla brought essential skills in product, operations, and fulfillment, complementing Mosey Nation's strengths in marketing and sales.

"Everything blew up when I met Layla, and that's because I always had half the equation, right?"

This quote highlights the transformative effect Layla had on Mosey Nation's business ventures, completing the skillset needed for greater success.

• Mosey Nation learned the importance of product quality and customer retention over just marketing and sales.
• He now focuses on a balanced business approach, ensuring all aspects like front end, backend, and shared ops are covered.

"It's so much more profitable to make the products exceptional and then get people to buy over and over and over again."

Mosey Nation reflects on the lessons learned in business, particularly the value of product quality and repeat customers.

• Mosey Nation's current daily activities include reading, writing, and minimal scheduled meetings with CEOs of acquisition.com companies.
• He has shifted his focus to promoting his book and has structured his schedule to avoid stress, following advice from a successful mentor.

"The only things that are set on my schedule is that I meet with the ceos of the acquisition.com companies."

This quote describes Mosey Nation's current professional focus and the structured yet flexible nature of his work schedule.

• Mosey Nation doesn't work Monday mornings and begins his first meeting at noon.
• This schedule reduces false urgency and stress levels.
• Mosey feels like he is "cheating" because he's not stressed when others typically are.
• The altered schedule allows for a more relaxed start to the week, with Monday afternoons spent in meetings.

"It's so weird. I just don't work Monday mornings and my first meetings at, like, noon... I feel like I'm cheating. I'm not stressed right now. And so all of a sudden, no one else is stressed either."

Mosey Nation describes his unconventional work schedule and its effect on his stress levels, suggesting it has a positive impact on his mental state.

• Mosey Nation expresses that money has limited utility beyond solving financial problems.
• He has updated his will and plans to donate his wealth as he has no children.
• Mosey believes the concept of legacy is insignificant in the long term.
• He emphasizes the importance of designing an ideal day and building a company around it.

"I really have no more marginal utility for money. So money only solves money problems... And all the stuff that I have, I'm going to be donating anyway when I die."

Mosey Nation shares his philosophy on wealth, indicating that he sees no further personal benefit in accumulating money and plans to donate his estate.

• Mosey Nation is focused on acquiring minority positions in education or training-based companies.
• He targets companies with revenues of $5 million and above.
• Mosey's experience allows him to help companies grow their revenues significantly.
• Decision.com is the business idea he feels most strongly about and believes it has the potential for long-term success.

"We're acquiring minority positions in education or training based companies that are really 5 million plus... helping someone get to 30 million or 50 million or whatever, we understand how to do it."

Mosey Nation outlines his business strategy, focusing on investing in and scaling education and training companies with substantial revenue.

• Mosey Nation writes his books entirely by himself, without external help.
• He believes that writing a good book requires simplicity and digestibility.
• Mosey iteratively edits his work, looking for parts that lose interest or feel chunky.
• He values the process of writing for improving his ability to explain concepts clearly.

"I do everything... A good book is even harder. It has to be so simple and so digestible... I get better at explaining the concept."

Mosey Nation discusses his hands-on approach to writing and the challenges of creating a book that is both simple and engaging, emphasizing the improvement in his explanatory skills as a result of the writing process.

• Mosey Nation critiques the vague use of the term "value" in business.
• He emphasizes the importance of understanding basic concepts deeply.
• Mosey believes that a scalable enterprise is created by having an offer that is easy to sell.

"People use the term value, right? For how long have you heard people say value? And no one had a fucking equation for it?"

Mosey Nation challenges the common but often undefined notion of "value" in business, suggesting that many discussions about value lack concrete meaning or formula.

• Effective sales teams and training are important, but having an easy-to-sell offer is more impactful.
• A compelling offer can reduce costs and ramp-up time for new salespeople.
• Mosey Nation argues that a better offer leads to more conviction from salespeople who believe in what they're selling.

"What really scales sales more easily rather than having absolutely savage salespeople... is just giving an offer that would be so easy to sell and then all of a sudden you don't have to take nearly as much time to ramp up."

Mosey Nation explains that a strong sales strategy is not just about having skilled salespeople but also about having an offer that naturally appeals to customers, simplifying the sales process.

• Mosey Nation is working on multiple books, with the next one releasing when he feels it's impactful enough.
• He has rewritten his second book multiple times and anticipates further rewrites.
• Mosey has a vision for writing ten books in total.

"The next book will drop when I think it's good enough that when people read it, they'll tell their friends... I've rewritten the second one three times now."

Mosey Nation shares his commitment to quality in his writing projects, indicating that he will only release his next book when it meets his high standards, despite the extensive rewriting process.