In this episode of the Bigger Pockets podcast, hosts Alex and Leila Hormozi share insights on business growth and the importance of focusing on one's strengths. Alex emphasizes the leverage of doing what one enjoys and clearing other tasks to maximize this leverage. The conversation also delves into the challenges of hiring and the significance of leadership and culture in scaling businesses. Leila, CEO of acquisition.com, explains their approach to creating a positive work environment that fosters growth for employees, partners, and the business as a whole. They also discuss the strategy behind their family office, acquisition.com, which involves buying and scaling businesses, and the operational structure that supports this. The Hormozis highlight the crucial role of hiring the right people and the shared responsibility between internal and external company missions.
"Unless the goal is to exit the company. If you enjoy doing the thing, then it's like, okay, well, then how can we get the most of you doing the thing? Because that is the highest leverage time for you. And then it's like, how do we clear everything else off of your calendar so that you can do the most of that?"
This quote highlights the strategy of focusing on the most enjoyable and impactful aspects of running a business, which can lead to greater success and satisfaction.
"Interestingly, most of our businesses have come out of personal need. [...] And so it just continued to work out that way."
Alex Hormozi explains how his businesses developed naturally from his personal journey and interests, leading to a chain of business opportunities.
"And so we had, I think at the time, about 4000 people had gone through our licensing program and we had the same amount of people who were selling our supplements to that same distribution base."
This quote provides context on the scale of their previous businesses and the experience they had in growing a customer and distributor base.
"Covid happened. And so that obviously impacted and the software was actually how to get, it was a martech solution. So how to get leads in the door for brick and mortar businesses of any kind."
The pandemic forced the Hormozis to adapt and look for new ways to grow their businesses, leading to the creation of acquisition.com.
"And so then it was like, oh, that went well. Maybe we should do this again. And so we did another deal."
This quote reflects on the positive outcome of their first investment and how it motivated them to pursue more deals.
"But Leila and I committed a few years earlier that we would sell the business if we felt like we no longer loved the business anymore."
This quote explains the personal philosophy behind the decision to sell their business, emphasizing the importance of passion in their work.
"I want to build a place where we don't just build companies, we also build people, because, really, behind the philosophy of acquisition.com, there's strategy."
Leila Hormozi outlines her vision for a workplace that values personal growth and development, which is central to the company's philosophy.
"And you don't have to be mean to people and pay people exorbitant amounts of money because it's such a terrible job. You can engineer an environment where people like, the business wins, the people win, and our partners win."
This quote highlights the belief that a successful business does not need to rely on negative tactics or excessive compensation to compensate for poor job quality. Instead, an engineered environment can lead to mutual benefits for all parties involved.
"So I think what we want to create is a place where people actually like working. And I think we're doing it."
Leila Hormozi's quote emphasizes the goal of creating a workplace that employees enjoy, which is a core aspect of the company's values and operational strategy.
"And then we have what we call like pods. And so there's one portfolio operator with a team of what we call subject matter experts say, managing director of people, managing director of customer success, managing director of sales, managing director of marketing."
Leila Hormozi describes the organizational structure of Acquisition.com, highlighting the use of pods that include experts in different fields to service portfolio businesses effectively.
"So that way we can create the most enterprise value at the Portco, at the portfolio company level, not at the holdco level."
Alex Hormozi explains the strategy of improving departments within portfolio companies to create value, with the holding company absorbing the costs of high-skilled labor to maintain profitability at the portfolio level.
"I think what's harder is when businesses get bigger and they have systems in place that promote a bad culture."
Leila Hormozi highlights the difficulty in changing an established negative culture within larger companies, as opposed to instilling a positive culture in smaller companies with no previous systems.
"They hold the standard of what good looks like in each function."
Leila Hormozi explains that subject matter experts set the standard for excellence within their functions, contributing to the overall culture of the company.
"That is what I've tried. I just picked the wrong person."
David Green shares his experience with succession planning, highlighting the challenges he faced due to choosing the wrong individual to take over leadership roles.
"I have not done well bouncing between those two roles. A lot of the people that will find come to me from the podcast, and now I'm like crushing their soul when I'm like, you have to step it up."
This quote highlights Alex's struggle to reconcile his authoritative background with the expectations of his podcast audience. He feels conflicted when he has to enforce standards that may seem harsh to his listeners.
"Leila is absolutely internal facing. I am external facing."
This quote clarifies the division of labor between Alex and Leila, with Leila managing internal affairs and Alex handling external relations and content creation.
"What is the biggest constraint right now? Not saying it feels bad to me... what's the biggest constraint on the business?"
Leila advises focusing on the most significant constraints in the business rather than personal discomfort to determine where new hires could be most beneficial.
"Hiring is a skill in itself... I think that if somebody's not good at hiring, sometimes it is best that you defer to a recruiting firm and watch what they do learn from them."
Leila points out that hiring is a complex skill and suggests that those not skilled in hiring should consider learning from professionals, such as recruiting firms, to improve their hiring processes.
"And so that's why talent acquisition doesn't exist in most businesses. And most people say, well, my business is too small for that. And I'm like, well, how do you think your business gets big by having that?"
This quote emphasizes the misconception that talent acquisition is unnecessary for small businesses, highlighting that growth is facilitated by effective hiring practices.
"But I think it's starting to become more relevant. Even when I started making content, I think two and a half years ago, I felt like I was like speaking something that nobody talked about."
The speaker indicates that the importance of talent acquisition is becoming more recognized, contrasting with the past when it was a less-discussed topic.
"Two thirds of strategies fail, not because the strategy is wrong, but due to execution."
This quote points out that the failure of company strategies is often due to the inability to execute rather than flawed strategies themselves.
"What makes up the delta is what people, and I guess McKinsey defines this as the soft stuff, which is talent acquisition, culture and people."
This quote identifies the key factors that distinguish companies successful in executing strategies from those that are not, emphasizing the role of talent acquisition and company culture.
"It's all some form of risk allocation. Like, how do we know where this is going to work?"
This quote draws a parallel between hiring and other forms of risk assessment, suggesting that hiring should be approached with the same analytical rigor.
"A lot of entrepreneurs have had like 30 interviews that they've actually tried to make a judgment and be like, man, I suck at this. It's like, well, it's reasonable that you suck at it. You've only done it 30 times."
This quote acknowledges the learning curve associated with hiring and suggests that entrepreneurs should not be discouraged by initial difficulties.
"When we're looking at operators, we're like, is this a leader? Does this person inspire me? Do I admire them? Will other people in the team admire them?"
This quote underscores the importance of leadership qualities in potential hires, especially those who will take on significant operational roles.
"So it's like, if I said, hey, what's your time to fill? A lot of people would be like, what's your average time to fill? And they're like, I have no idea."
This quote highlights the lack of awareness among some entrepreneurs regarding key hiring metrics, implying a need for more attention to these details.
"The entire customer lifecycle is actually mirror images. We use different words for it. Yes, but if we don't have patterns, the same. Because it's people."
The speaker draws an analogy between the customer lifecycle and the employee lifecycle, suggesting a structured approach to hiring and retention.
"But then of the salespeople, how many of them actually make it to the tier, like you're saying, of being able to fill, who could actually replace me?"
This quote addresses the difficulty of finding individuals capable of stepping into an entrepreneur's role, emphasizing the rarity of such talent.
"That whole podcast called find your layla to entrepreneurs. Find your layla. That's it."
The speaker concludes by suggesting that finding a business partner with complementary skills and leadership ability is crucial for entrepreneurial success, encapsulated in the phrase "Find your Layla."