Why you should NEVER listen to your parents at any age Ep 323

Summary Notes


Alex Ramosi, an entrepreneur with a portfolio of companies generating $85 million annually, advises against heeding parental or external advice if it doesn't align with one's wealth aspirations. He emphasizes the importance of taking calculated risks and learning from failures, as most businesses don't succeed initially. Ramosi highlights the necessity of making a few pivotal decisions correctly, rather than many inconsequential ones, and encourages embracing micro risks for macro success. He also differentiates between earning from work and returns from ownership, advocating for building assets that yield long-term returns, thus ensuring financial freedom.

Summary Notes

Introduction to Alex Hormozi's Philosophy

  • Alex Hormozi introduces himself and explains the purpose of his channel.
  • The channel focuses on customer acquisition, increasing customer value, retention, and learning from failures.
  • Hormozi emphasizes that his advice stems from his desire to prevent others from being "broken."

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

This quote outlines the main topics Alex Hormozi's channel covers, indicating the kind of content viewers can expect, which is centered around business growth and learning from past mistakes.

The Argument Against Listening to Parents

  • Alex Hormozi argues that people should not listen to their parents regarding financial and business advice unless they are exceptionally wealthy and have achieved what one aspires to.
  • Hormozi's rule is not to listen to someone who is poorer than you or poorer than you want to be.
  • He notes that advice from parents and others often errs on the side of being less risky.

I don't think you should listen to your parents. And so one of my first rules of life is never to listen to someone who's poorer than you or poorer than you want to be.

Hormozi suggests that financial success is a criterion for whether one should take advice from others, including parents, implying that wealthier individuals may provide more relevant guidance for those seeking financial success.

Risk Aversion in Advice

  • Hormozi claims that parents and others typically advise against taking risks.
  • He compares naysaying in relationships to business, where cautionary advice is often correct due to high failure rates, except in the critical instance where it is not.

And the thing is that they always will, and other people, too, will always side on the side of being less risky.

This quote highlights Hormozi's observation that advice from others, including parents, tends to be conservative, prioritizing safety over potential high-reward opportunities.

The Dating Analogy

  • Hormozi uses dating as an analogy for business decisions.
  • He points out that since most relationships do not end in marriage, naysayers will often be right by default.
  • The analogy extends to business, where the high failure rate of startups means cautionary advice will often seem accurate.

But if you date, then fundamentally, every single person that you date, except for the one that you marry, is going to be somebody who you're not going to be with. And if someone says, I don't think this person's good, I don't think this person's good, then they will be right literally 99% of the time, except for the one time that matters.

This quote draws a parallel between the common outcome of dating (most relationships not lasting) and business ventures (most failing), illustrating why advice against taking risks may appear correct most of the time.

Business Failure Statistics

  • Hormozi cites a statistic to back up his claim about the risk-averse nature of advice.
  • He states that 95% of businesses fail within five years, reinforcing his point about the likelihood of failure being high.

95% of businesses fail within five years, right

This quote provides a statistical basis for Hormozi's earlier points, justifying why most advice tends to be risk-averse due to the high rate of business failures.

Misconceptions of Smart People and Risk

  • Smart people often believe they are always correct due to frequent success.
  • They fail to recognize their mistakes in crucial situations that significantly impact life.
  • The notion that not taking risks is the only guaranteed path to success is flawed.
  • Avoiding risk is actually a guaranteed way to not achieve success.

And so most times they are correct. And so it's very easy for them to self reinforce that they are so smart and they're always right.

This quote highlights the tendency of smart individuals to become overconfident due to their frequent correctness, leading to self-reinforcement of their perceived infallibility.

But the reality is that they are wrong in the 1% of times that it matters, right, in your life.

The quote emphasizes the critical point that smart people can be wrong when it matters most, which can have significant consequences in life.

Personal Realization and Career Choices

  • Alex Hormozi realized he was not satisfied with his earning level.
  • He identified investment banking as the only job meeting his financial aspirations but recognized the sacrifices it entailed.
  • Hormozi concluded that the traditional job path would not lead to his desired outcome.
  • He decided against a career that would require sacrificing his life and family time.

And I remember when I was quitting my job, that was the biggest conclusion that I came to, was that I was not happy at my current earning level and that the only job, because there was one position, one job that made enough money that I wanted, which was being an investment banker.

This quote reveals Hormozi's dissatisfaction with his earnings and his consideration of investment banking as a potential solution, which he ultimately decided against.

And so the path that I was on was guaranteed to not get me to where I wanted to go.

The quote reflects Hormozi's realization that his current career trajectory would not lead to his desired financial and lifestyle goals.

Risk and Success

  • Taking calculated risks is essential for achieving success.
  • Hormozi believes that not taking risks is the biggest risk of all.
  • He advocates for "microspeed" and "macropatience" as a strategy for wealth building.
  • Understanding the difference between earning through work and earning through ownership is crucial.

And so even though it was micro risky, it was macro the only way I could do it, right?

This quote explains Hormozi's perspective that while taking risks may seem dangerous in the short term, it is necessary for long-term success.

Money loves speed, wealth loves time.

The quote summarizes Hormozi's philosophy on the different approaches to earning money quickly versus building wealth over time.

Wealth Building and Ownership

  • Building wealth requires patience and the accumulation of assets.
  • People are paid for their work but earn returns on what they own.
  • Ownership is key to generating wealth over time.

You get paid for what you do, you get returns on what you own.

This quote distinguishes between earning money from active work and earning returns from ownership, highlighting the importance of asset accumulation for wealth building.

Ignoring Others' Advice on Risk

  • People often have an inaccurate understanding of risk.
  • Advice from others may not align with one's own risk tolerance and goals.
  • It's important to assess risks based on personal circumstances rather than external opinions.

Back to the reason why you shouldn't listen to other people is that they don't have an accurate understanding of risk, right?

This quote advises against heeding others' opinions on risk, as they may not accurately understand or appreciate one's personal risk assessment and goals.

Importance of Key Decisions

  • Alex Hormozi emphasizes the impact of a few significant decisions in a person's life.
  • He reflects on Warren Buffett's statement that most people only need to make four or five really good decisions.
  • Hormozi points out that these pivotal decisions are often not given the necessary thought and consideration they deserve.
  • He illustrates the importance of contemplating major life choices such as career paths, where to live, whom to marry, and business partnerships.
  • Hormozi contrasts this with the common tendency to focus on trivial choices, like what to watch on Netflix.

"Warren Buffett said, and I like this, he said, most people only need to make four or five really good decisions in their life."

This quote highlights Warren Buffett's perspective on the limited number of truly significant decisions that can alter the course of a person's life, which Alex Hormozi agrees with.

"And most people don't take enough time to think about those decisions that are the massive forks in the road."

Hormozi is stressing the point that critical decisions, which he refers to as "massive forks in the road," often do not receive the level of consideration they warrant.

Business Growth and Decision Making

  • Hormozi addresses business owners who aim to expand their businesses significantly.
  • He invites owners of large businesses interested in growth to contact his team for assistance.
  • Hormozi underscores the danger of rushed decisions in business, which often lead to mistakes.

"If you are a business owner that has a big old business and wants to get to a much bigger business, going to 5100 million dollars plus, we would love to talk to you."

This quote is a direct invitation from Alex Hormozi to business owners seeking growth, offering his team's services to help them achieve their goals.

"Mistakes love a rushed decision, right? So micro speed, macro patience."

Hormozi is cautioning against making hasty decisions and advocating for a balance between quick action in the short term (micro speed) and a long-term outlook (macro patience).

Risk and Opposition

  • Hormozi discusses the concept that most people will oppose innovative or risky decisions because it is safer for them.
  • He explains that while opposition is often correct, it is the rare instances when it is not that can lead to extraordinary outcomes.
  • Hormozi uses the example of Warren Buffett's investment in See's Candies to illustrate a decision that was likely opposed but turned out to be highly successful.

"Most people will oppose you at all times, and that is because it is safer for them to do so because they will be right most of the times."

This quote conveys Hormozi's view that people tend to oppose decisions due to a conservative approach that favors safety and is often correct, except in rare but crucial instances.

"But on the 1% of times that they are wrong, it's that 1% decision saying that you're going to buy seized candies for $25 million and ends up generating a billion dollars, right, in revenue."

Hormozi uses Warren Buffett's decision to purchase See's Candies as an example of a rare but impactful decision that most would oppose, yet it led to a significant payoff, thereby illustrating the importance of sometimes going against the grain.

Overcoming Doubt and Embracing Failure

  • Alex Hormozi emphasizes the importance of not letting others' doubts deter you from pursuing your goals.
  • He reflects on his own experience of leaving a stable job to start a business, which did not immediately succeed.
  • Hormozi highlights that success often comes after several attempts and failures.
  • He stresses the importance of learning from each business venture to eventually achieve success.

"I had so many people who told me that everything I was doing was stupid. I was giving up a really good consulting job to open a gym, right? I took all my savings and sunk it into a business. And you know what? That business wasn't the one that set me free. It was four or five businesses from there."

This quote illustrates Hormozi's personal experience with overcoming doubt and the non-linear path to success. It underscores the reality that initial business ventures may not lead to immediate success but can be stepping stones to future achievements.

Understanding Macro Risk vs. Micro Risk

  • Hormozi introduces the concept of macro risk versus micro risk in the context of entrepreneurship.
  • Micro risk involves the potential to fail at individual ventures, which is a natural part of the entrepreneurial process.
  • Macro risk is the overarching risk of never achieving success if one doesn't take any risks at all.
  • He likens the process of finding success in business to dating; one must go through several experiences to find the right match.

"And it's just understanding macro risk versus micro risk. Micro risk, yes, you will fail, but failure is part of the game, right? But the macro risk is that you'll never actually succeed. And that's the real game."

Hormozi's quote delineates the difference between short-term failures and the long-term risk of not achieving success. It conveys the message that embracing smaller failures is essential to avoid the larger failure of not trying at all.

The Entrepreneurial Journey and Market Fit

  • Hormozi discusses the commonality of entrepreneurs having multiple business ventures before finding success.
  • He notes that it's not uncommon to iterate several times within a main business to discover what one is good at and what the market needs.
  • The journey to success is often characterized by learning and adapting to find the right market fit.

"I don't know any entrepreneur who hasn't had a lot of businesses who eventually yielded success, right? Or even a lot of businesses within their main business. They it a lot of times until they figured out what they were good at and what the market needed."

This quote emphasizes the iterative nature of entrepreneurship and the importance of finding a synergy between one's skills and market demand. It suggests that persistence and adaptability are key traits for successful entrepreneurs.

Building Assets and Long-term Success

  • Hormozi encourages the development of assets that can provide returns over time.
  • He warns against the risk of having to work indefinitely by not learning how to build assets that generate income.
  • The goal is to create something valuable that continues to pay dividends, contributing to long-term financial freedom.

"And what we're trying to build here is an asset that can pay us over time. Because if we cannot learn how to build that asset, we will work until the day we die."

The quote highlights the ultimate objective of entrepreneurship, which is to build assets that ensure financial stability and freedom. It underscores the importance of focusing on long-term gains rather than just immediate returns.

Encouragement and Support for Aspiring Entrepreneurs

  • Hormozi expresses support for younger individuals reaching out to him for advice.
  • He encourages persistence, risk-taking, and patience in the entrepreneurial journey.
  • Hormozi uses the phrases "Microspeed, macro patience" to encapsulate the mindset of quick action but long-term vision.
  • He signs off with a message of encouragement and an invitation to subscribe to his content for those who find it valuable.

"I'm rooting for you. I'm your biggest fan. Keep being awesome, keep taking risks. Microspeed, macro patience. And you get paid for what you do. You get returns on what you own."

This quote serves as a motivational statement, endorsing the entrepreneurial spirit and the importance of balancing swift action with patience for growth. It also touches on the principle that active work and ownership are both essential for financial success.

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