Turning Setbacks into Success (on Diary Of A CEO) Pt.1 Apr. ‘23 Ep 546

In this candid conversation, Alex Hormozi, a successful entrepreneur, shares his journey from struggling with self-doubt and seeking his father's approval to becoming a multimillionaire business owner. Raised by a single immigrant father after his parents split, Alex grappled with a lack of self-worth and a desire to escape a life that left him hoping not to wake up each day. His turning point came when he realized he had to let his father's dream for him die to pursue his own path, leading him to risk it all and start a gym business. Despite numerous setbacks, including financial losses and betrayals, Alex's relentless determination and strategic thinking—seeing the world through a lens of input/output equations—propelled him to massive success. He sold his gym licensing business, Gym Launch, and supplement company, Prestige Labs, for $46.2 million and now runs acquisition.com, investing in other companies. Alex credits his wife, Layla, for her unwavering belief in him, which played a pivotal role in his turnaround. Throughout the discussion, Alex emphasizes the importance of using negative emotions as fuel, the value of high-volume transactional sales experience, and the belief that consistent hard work leads to success. He challenges listeners to either harness their dissatisfaction to change their lives or find contentment in their current circumstances.

• Speaker A acknowledges a fundamental difficulty in understanding the world, which resonates with the audience.
• The content aims to clarify everyday terms to solve business problems more effectively.
• Speaker A introduces the podcast's focus: acquiring customers, increasing revenue per customer, and retaining them, along with sharing failures and lessons.

"I feel like I fundamentally, a lot of times, don't understand the world. And so I think the reason that some people have found the content and things like that good or useful is because they feel like they can understand it."

"Welcome to the game, where we talk about how to get more customers, how to make more per customer, and how keep them longer, and the many failures and lessons we have learned along the way."

Speaker A expresses a personal struggle with understanding the world, which drives the creation of content that simplifies complex ideas for the audience. The podcast is designed to help listeners grow their businesses by discussing strategies for customer acquisition, revenue increase, and customer retention, along with sharing personal experiences and lessons learned.

• The mission is to make business accessible to everyone by providing free content.
• Content includes courses, books, and learnings from portfolio companies to stay relevant and cutting-edge.
• The strategy of giving value upfront has attracted companies and proved successful.

"To make business accessible for everyone, that was the mission of the company."

"And our goal is always to hopefully provide more value to a company before they've ever spoken to us."

Speaker A's mission is to democratize business knowledge by offering free resources, ensuring that the content remains current and practical. The philosophy of delivering value before any formal interaction has been a key to success and has attracted other companies to their offerings.

• The content caters to entrepreneurs at all stages, from beginners to those in large corporations.
• The strategy involves creating content that is both wide and deep, appealing to a diverse audience.
• The challenge is to be relevant to someone starting out and to someone expanding within a large company.

"Entrepreneurs at all stages, we've surveyed the audience. 25% of the audience has a business. 75% does not have a business, but wants to start a business."

"And so we try and one of the things that we talk about is, like, going wide and deep is like, how can we figure something that is relevant to somebody who's launching their first product and also make it accessible or interesting to somebody who's launching a new product line within a division of their conglomerate."

Speaker A describes the wide-ranging audience of their content, which includes both current and aspiring entrepreneurs. The content strategy aims to be inclusive and valuable to individuals at various stages of their business journey, which presents a unique challenge but is also rewarding.

• Speaker A's parents are immigrants, and after their separation, Speaker A was raised by their father.
• The drive for academic and career success was initially to gain their father's approval.
• A turning point was the realization of unhappiness in their chosen career path, leading to starting a business.

"Both parents are immigrants to the US."

"The hardest decision was taking the leap for me."

Speaker A shares a personal history of being raised by an immigrant single father, which influenced their pursuit of success for parental approval. The decision to leave a stable career and start a business was extremely challenging but necessary for personal fulfillment.

• Speaker A had to confront and disappoint their father to pursue personal dreams.
• The decision to start a business led to a strained relationship with their father.
• Speaker A's father eventually apologized for not supporting their entrepreneurial path.

"I think that the one line summary for me was that I felt like I had to let my dad's dream die for mine to live."

"I knew that I would die in his eyes, and I did."

Speaker A reflects on the difficult choice to diverge from their father's expectations to follow their own dreams. This choice resulted in a metaphorical death in the father's eyes but was necessary for personal growth and the pursuit of happiness.

• Speaker A has moved past anger and now understands their father's perspective.
• The experience with their father has hardened Speaker A, which has been beneficial in business.
• Empathy and understanding are highlighted as important in overcoming resentment.

"I think I can still feel the emotions, but I feel like I have thought about it enough to say that. I can logically say I think he absolutely did the best he could with what he had."

"You cannot both hate and understand someone at the same time."

Speaker A has processed the past resentment towards their father and reached a point of understanding and empathy, recognizing that their father did the best he could. The discussion emphasizes that true understanding of another's circumstances precludes hate, as it replaces the unknown with empathy.

• Speaker A's leadership style has evolved from fear-driven to more understanding and friendly.
• The team confirms this positive change, and older videos show a contrast in demeanor.
• The journey reflects personal growth in influence and leadership.

"My team tells me that that's true. And if you look at, like, because I do have some older videos that I made from years ago, and there's definitely a different vibe. I'm significantly friendlier now than I was then."

Speaker A acknowledges a shift in their approach to leadership and interaction with others, moving away from a fear-based approach to one that is more friendly and influential. This evolution is recognized by their team and is evident in the change in Speaker A's demeanor over time.

• Speaker A initially believed that instilling fear in people would ensure immediate compliance.
• This approach was considered effective for short durations but not sustainable in the long run.
• Speaker A acknowledged a lack of better strategies at the time.

"as like, if people are afraid of me, then they will immediately comply. And it's effective for short durations, but not for long durations."

The quote reveals Speaker A's early misconception about leadership and compliance, highlighting the temporary effectiveness of fear as a management tool.

• Speaker A credits his wife with significantly changing his life.
• His wife took over running the businesses, was well-liked by others, and inspired Speaker A to adopt her approach.
• Speaker A emphasizes the importance of belief and support in a relationship, particularly from a partner.

"And then she just changed my life, and she started running all the businesses, and I'd see her and everyone loved her, and I was like, man, she'll do more of that stuff and less of my stuff."

This quote illustrates the profound influence Speaker A's wife had on both his personal life and business approach.

• Speaker A had multiple gym locations and was involved in business turnarounds.
• He experienced a significant betrayal by a business partner who was indicted for fraud.
• The betrayal led to financial loss and a shift back to focusing on turnarounds.

"I took all the money and put it into this gym that one of the guys I was doing a turnaround with was like, dude, you just crushed this."

The quote describes the initial success and trust Speaker A had in a business partnership that ultimately resulted in a financial setback.

• Speaker A faced a dire financial situation, with bank account issues and a processing hold that threatened his business operations.
• He had to personally guarantee commissions and was left with only $1,000.
• His wife's support was unwavering, even suggesting she would stay with him under any circumstances.

"I would sleep with you under a bridge if it came to that."

This quote underscores the depth of Speaker A's wife's support during a critical financial crisis, reinforcing the strength of their relationship.

• Speaker A continued to launch gyms but faced obstacles with processing payments.
• He encountered high processing fees and limits due to being categorized as high risk.
• Despite these hurdles, Speaker A managed to turn a profit and began to recover financially.

"Finally, I get, like, a high risk processor that does, like, porn and casinos and stuff to give me, and they're like, yeah, so it's going to be, like, 8% processing, and we're going to hold 10% as, like, safeguard."

This quote highlights the difficulties Speaker A faced in finding a payment processor due to previous issues, resulting in unfavorable terms.

• Speaker A's business model led to a significant number of refunds, causing further financial strain.
• He had to sell more to cover refunds, leading to a vicious cycle of increasing sales and refunds.
• Speaker A's wife's stable income from her weight loss business provided some financial security during this time.

"And so we had $150,000 in refunds that I had to cover, and I had no way of doing it, mind you."

The quote reveals the extent of the financial challenge Speaker A faced due to refunds, emphasizing the flawed nature of his business model.

• Speaker A decided to pivot to a weight loss business, leveraging his wife's existing online program.
• The new direction showed promise with immediate sales success.
• Speaker A began to sell licensing packages for his gym turnaround strategies, creating a new revenue stream.

"So I called the eight guys that were supposed to launch the next month, the gyms. So I get on the phone with the first guy and I was like, hey, we're going another direction. We're going to be a weight loss company."

This quote indicates Speaker A's strategic decision to shift business focus in response to the challenges he faced with the gym model.

• Speaker A successfully sold licensing packages for his gym turnaround methods.
• The licensing deals provided a significant cash infusion that helped stabilize his financial situation.
• Over time, the licensing model evolved into a recurring revenue stream.

"And then end of the day, I sold $60,000 in licensing packages for all of the stuff that we did to do the turnarounds."

The quote captures the moment Speaker A realized the potential of selling his expertise in gym turnarounds, marking a turning point in his business recovery.

• Speaker A emphasizes the importance of supporting the podcast without running ads or selling products.
• The call to action is to rate, review, and share the podcast to help more entrepreneurs.

"Real quick, guys. You guys already know that I don't run any ads on this, and I don't sell anything. And so 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 from Speaker A to the audience to support the podcast, emphasizing the altruistic goal of helping entrepreneurs without the influence of ads or product sales.

• The entrepreneur experienced rapid growth in their gym business after adopting a new strategy.
• They generated significant revenue and profit, with gyms increasing their cash flow using the new system.
• The business scaled quickly, achieving $26 million in top line and $17 million in EBITDA in the first full twelve months.
• The entrepreneur's partner, Layla, played a supportive role, reinforcing the importance of having a believer behind you.

"And then all those gyms that we sold the average gym, did $30,000 in extra cash collected in their first month using our system."

This quote exemplifies the success of the new business strategy, highlighting the financial impact on the gyms involved.

"Our first full twelve months of January to January. We did 26 million top line, 17 million in EBITDA."

This quote summarizes the financial achievements of the entrepreneur's business over a one-year period, indicating substantial growth and profitability.

• The entrepreneur expanded into supplements with Prestige Labs, leveraging their existing gym owner network.
• They also started a software company to assist gyms in acquiring leads.
• In 2021, the entrepreneur sold their companies for a significant sum, with the supplement and licensing company going for $46.2 million to a private equity firm.
• The software company was sold in an all-stock deal to a strategic buyer.
• The entrepreneur then established acquisition.com, a family office for investments, focusing on buying minority stakes in companies.

"The supplement and the licensing company we sold to American Pacific Group, which is a private equity firm out of San Francisco, for 46.2 million."

This quote provides details on the sale of the entrepreneur's companies, indicating a major financial transaction and a shift in their business focus.

"So that became kind of our family office. And so we started our first investments."

This quote explains the transition from running businesses to investing in them through a family office structure.

• The entrepreneur is recognized for simplifying complex issues into actionable solutions.
• They emphasize the importance of defining commonly used but vague terms in business.
• Asking fundamental questions and breaking down concepts is seen as a key to innovation and understanding.

"I just make an attempt to define the terms that a lot of us use every day, and then it makes a lot easier to solve for those things in business."

This quote illustrates the entrepreneur's approach to clarity in business concepts, which aids in problem-solving and strategy development.

"To the point, to Elon, it's like, I don't understand why we can't just explain to me why we can't, so that I can not think about this."

This quote shows the entrepreneur's inquisitive nature, similar to innovators like Elon Musk, who question the status quo to drive innovation.

• Influential leadership and the ability to move people are critical for entrepreneurial success.
• Entrepreneurs need a strong motivator, whether it's a mission or a fear.
• Impulse control and the ability to focus on the right inputs for desired outputs are essential.
• The entrepreneur also highlights the value of high-volume transactional sales experience for skill development and understanding human psychology.

"I think that fundamentally is a skill that people have to have if they're going to be successful at entrepreneurship."

This quote emphasizes the importance of influence and leadership in entrepreneurship.

"And I think they have to be able to boil down the success of their business into inputs and outputs."

This quote highlights the analytical aspect of entrepreneurship, focusing on understanding the cause and effect within business operations.

• Developing skills requires patience and the willingness to face rejection.
• The entrepreneur believes that enduring difficult experiences is necessary to build desirable traits.
• They suggest that viewing challenges as the price paid for acquiring valuable traits can provide motivation.

"But in order to have those traits, I know I have to go through these things."

This quote reflects the entrepreneur's acceptance of the hardships required to develop personal and professional qualities.

"Each of the traits has a price tag attached to it."

This quote metaphorically relates the development of traits to a transaction, where one must invest time and effort to acquire them.

• Self-belief is crucial for taking on challenges and persevering through difficult times.
• The entrepreneur acknowledges that having nothing to lose can be a powerful motivator.
• They recognize that self-belief can be influenced by one's circumstances and the absence of alternatives.

"So I don't know how much self belief is applicable, but regardless, to keep gracing those h"

This incomplete quote suggests a discussion on the relevance of self-belief in the entrepreneur's journey, considering they may have been motivated by necessity as much as confidence.

• Conviction is necessary to overcome challenges and make significant changes.
• People either need to believe in the potential of a change or be dissatisfied with their current situation to initiate change.
• Knowing that one's life is unsatisfactory can be a powerful motivator for pursuing something different.

"And so I think some people don't hate their current existence enough. And so I don't think you either have to really believe that this thing's going to happen, or you have to know that your life sucks."

This quote highlights the idea that a strong dislike for one's current situation can be as much of a driving force for change as a belief in a potential positive outcome.

• Pain and pleasure are fundamental motivators for change.
• Negative emotions like anger and sadness can be harnessed as motivation.
• It's not necessary to get things right on the first attempt; being "directionally correct" is often enough.

"It's either we're going away from pain or going towards pleasure."

This quote encapsulates the concept that people are motivated to move either away from discomfort or towards something enjoyable.

• Self-belief can be based on evidence from past achievements rather than just confidence.
• It's important to recognize the role of previous experiences in shaping expectations for future success.

"I think that I have a high likelihood of repeating activities that I've done in the past, and up to this point, I have lots of evidence that would suggest that I will continue."

This quote suggests that self-belief is grounded in the speaker's historical success, which indicates a probability of future success.

• Fear and anger, potentially stemming from self-doubt, were significant early motivators.
• Commitment to not stopping despite uncertainty can be crucial for progress.
• Having control over one's actions is a powerful motivator.

"But I mean, fear was my biggest fear. And anger, hand in hand, were my big motivators in the beginning."

This quote reflects on the speaker's personal experience with fear and anger as motivators, which may be rooted in self-doubt.

• Success can be approached as a function of inputs leading to desired outputs.
• Repetition and volume of work can lead to proficiency and mastery.
• This approach was applied to various aspects of life, including sales, content creation, and standardized test preparation.

"If I collect 5000 no's, I'll be a very good salesman."

The speaker illustrates the input-output concept by equating a large number of sales rejections (input) with becoming a skilled salesman (output).

• Comfort can inhibit the desire for change.
• Agitating pain or dissatisfaction with one's current state can prompt action.
• Considering the inevitability of death can be a motivator to pursue change.

"You have to stoke the pain."

This quote suggests that amplifying one's dissatisfaction can serve as a catalyst for change when comfort makes it hard to take action.

• The decision to quit a stable job and pursue a dream can be incredibly difficult.
• Concerns about others' opinions can be major obstacles.
• The speaker emphasizes the importance of letting go of others' expectations to pursue one's own path.

"Sometimes you have to let other people's dreams for your life die for yours to live."

This quote encapsulates the idea that personal fulfillment may require disregarding the expectations and dreams others have for you.

• The speaker's motivation was not primarily financial but rather personal, such as proving oneself to a family member.
• The desire to avoid being controlled by others' expectations can be a strong motivator.

"But for me, it was beating my dad. You know what I mean? I didn't want him to be right."

This quote reveals a personal motivator for the speaker, which was to succeed on their own terms rather than conforming to a parent's expectations.

• Not everyone is motivated by passion; practicality and satisfaction with life can be valid reasons not to pursue a dream.
• There is honor in all work, regardless of its nature.
• Finding joy in work comes from the decision to perform it well.

"Maybe some people just need to stop dreaming. Maybe they need to accept their current reality and actually enjoy it."

This quote suggests that it might be healthier for some individuals to find contentment in their current situation rather than chasing an elusive dream.