Stop Using Industry Standards If You Want to Win | Ep 948

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast, you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth. Wanna scale your business? ⁠⁠Click here.⁠⁠ Follow Alex Hormozi’s Socials: ⁠⁠LinkedIn ⁠⁠ | ⁠⁠Instagram⁠⁠ | ⁠⁠Facebook⁠⁠ | ⁠⁠YouTube ⁠⁠ | ⁠⁠Twitter⁠⁠ | ⁠⁠Acquisition ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Alex Hormozi?

  I want to show you how I became number one in different fields, industries, and even broke a world record and how you can apply the same process to winning or getting whatever it is that you want. My name is Dr. Muzi. I own a portfolio of companies at acquisition.com that generates $250 million per year in aggregate revenue. I did a book launch about 12 weeks ago that did $106 million in a weekend and broke the Guinness World Record for the fastest selling nonfiction book of all time. And so there's my kind of proof behind that. So in this video, I'm going to explain a core shift in my understanding of getting what I wanted and specifically in business.

• 0:33Alex Hormozi?

  So I talk to business owners for a living every single day, like literally every week and I have for, you know, decade plus. And one of the things that drives me absolutely nuts is the idea of industry standards. So you've probably heard this, people like, oh, this is industry standard or that's industry standard. And I'll tell you a real conversation that might shift this for you. So there was a company that I recently met with, that was about a $500 million company. So I have a billion dollar company, right? And, you know, they were efficient, but it was an old school model. And so a big money business. So I met with the chiefs of that business and I met with the leaders, right? And the entrepreneur who runs the business wanted me to look at certain components of how they do things in terms of acquisition and things like that. And when I walked them through their acquisition process, I was like, hey, these are some things that need to change.

• 1:16Alex Hormozi?

  And there was a lady who was there who was in charge or probably maybe half of it. And as I would, you know, point out things that were bad or like needed improvement, she kept repeating the same thing, which is like, well, you know, we're industry standard. And I was, and she'd be like, we're meeting industry standards. And she would get really kind of flustered and she kind of, I would say maybe to a degree got offended because I was saying, well, you know, this sucks and this sucks and these numbers aren't good. And they kept repeating, we're meeting industry standards. And so I paused and I was like, do you wake up in the morning and just say, I want to be an average company, right? We are average. Half the people are better than us and half are worse. We are average. Who gives a shit, right?

• 2:01Alex Hormozi?

  I don't know about you, but like I didn't get in the game, whatever game you're playing to be average. Like the average business is average. The average American is overweight, they're in debt, they're divorced, they're depressed. And so the average business makes almost no money. Why would I use industry standards, industry averages, anything like that at all? And I say this because I have people who will push back on some of the things that I talk about with regards to margin. When I think things I talk about in terms of timeline, when I talk in terms of pricing, right? And they'll say something like, well, you know, in HVAC, it's different. Or, you know, in SEO, it's a little bit different. Or, you know, we've got XYZ issue in trucking and it's different. It's logistics, it's different. No, it's not. You get what you tolerate. You get what you accept and deem good enough.

• 2:44Alex Hormozi?

  You are the standard setter. It is the highest and most important job in the company. And it is why some companies prevail and some companies fail. It's the reason that jobs was so important for Apple. Elon was so important for Tesla and XAI and all the other things that he does. And like, at a certain point, you cannot actually do anything in the company. Except for hold the fucking line. And the person who should run every department or every division should be the person with the highest standards. Right? And this applies to everything, right? Sales rates, closing percentages, profit margins, cash flow, the people you date, the body fat percentage you hold. How fast you expect something to get done? Literally everything.

• 3:28Alex Hormozi?

  So let me tell you a story about a billionaire mentor of mine. Again, had a conversation many years ago. Um, and he said this thing to me that I'll never forget. He said, profit is unnatural. And I was like, what does he really mean by that? He said, it's common and normal for people when money is in a bank account to spend it. And that's why most people don't have money. He said, so if you have a company and it makes money and it actually starts to succeed, that success has this constant pressure of normalcy that fights against it. And so there has to be someone who holds the line and is like, no, we will not spend more, but we will keep making more. We will get more customers and we will not hire more people. We will find a way to service these customers better than we did our last customers without adding headcount.

• 4:13Alex Hormozi?

  And we're going to do it even better, even faster. With less. Let me tell you another example of something that just happened in one of our profile companies. So they needed to add 15 sales reps to hit their Q1 goals, right? And so the leader was saying how his plan was to hire five reps a month, right? Every single month. And doing it this way, he said, would, you know, stretch the team, but it would still kind of like, you know, ensure quality, make sure the culture wasn't, you know, too stressed, et cetera. And honestly, it was a fair plan, right? But for this business, the extra sales guys were going to add about $4 million in profit that quarter. That's how much extra it was going to add, just that quarter. So I pushed back and I said, why can't we do it in a month? He had a lot of different reasons of, and he kept, you know, like it'll be cultural issue. I think we'll stretch the team. We might lose other sales in other places.

• 4:58Alex Hormozi?

  And I kept pushing and pushing, but he had some reasons to come back. And thankfully, he's a stud. And then after the meeting, he messaged me back and said, two of our guys have been with who are more senior. They can assist the new manager and onboard three to five guys each. If we do that, we can actually do it in a month. And boom, $4 million more potential next year in Q1 because of one thing, a higher standard. Just saying like, why does it need to take that long? Why can't we like, if we were, if we were doing a billion in sales in this business, we probably wouldn't say we need to hire five guys a month. No way, right? We'd be like, we need to start with 50 and maybe add 50 every other week, right? The, the, it's just this minimum standard of, of something that you decide is enough or acceptable.

• 5:43Alex Hormozi?

  And the crazy part about it is like, we're the ones who decide this. And then we're upset that we don't get, or that we're upset that we got the fruit of our very low standards. And so the way that you can kind of know kind of what your standards are, that what the standard of somebody else on your team is, is how many attack vectors you use to approach or solve a problem, right? So it's not about doing the same thing a hundred times. That's not smart, right? It's about trying to accomplish the same goal with a hundred different iterations and angles until one finally gets through, till you pass the goalie, till you, till you chop down the tree, right? It's like, well, I'm hitting it this way and I'm getting, I'm getting rock. It's like, okay, well then let's try from another angle. Let's try underneath. Let's see if we can poison the tree, like whatever we need to do. Like, can we reach out to our network and give $100,000 or

• 6:26Alex Hormozi?

  For another SDR. Is there a company with a large SDR team that doesn't make as much as us? We can buy. Can we, can we hire five recruiters to speed up the process? Can we fly all of the SDRs in person to get them trained up faster? Uh, so we don't lose cultural issues and we can get them on ramped in, in three days rather than in thirty days. Right. Can the top two, you know, most experienced guys who have some blank space, have them sub in? Bingo. Right. All of these have costs, obviously, but of the costs, they're still worth it. So you're not getting what you want because you're not attacking the problems you have enough times in enough ways. So you're trying one or two things and then saying like, I tried that and it didn't work. I tried Facebook ads, you know, I tried making content. I tried hiring a salesman and it didn't work.

• 7:09Alex Hormozi?

  It's like, no, it's not that it didn't work. It's that you weren't skilled enough to make it work. Very big difference. And so you're going to tell me that no one on earth has ever had the same problem that you have right now? And of those many people on earth who've had it, no one solved it. You have somehow come across the Gordian knot of problems. No one has hired more than five SDRs in this period of time for a company of this size. Of course they have, and that's why those people won. And they didn't just accept that it wasn't possible within this timeline. And so the rules that I would encourage you to live by is that unless the laws of physics prevent it, consider it mental handicaps that your competition gets to live by and measure themselves by. And to be clear, not a suggestion, a recommendation, and certainly not a fucking law.

• 7:54Alex Hormozi?

  Right. Industry standards are a handicap that you let your competitors use and think they're doing well. That is the gift that we get as soon as you get out of this belief. Because if you want to be average, use industry averages and most industry average businesses suck. Right. Why would we look at them to judge ourselves by like, oh, this guy's completely broke and distracted. Has no idea what he's doing. I should look at what his numbers are and say, oh, we're about the same. Is that an accomplishment? Should we be looking forward to something like that happen? Like, if you want to be the best, use physics and math and then work backwards. Ambitious owners will push back, trying to sell their own handicap. So what I mean, it's like, why are you trying to convince me that you can't close at a higher rate? Why are you trying to convince me that you can't raise?

• 8:36Alex Hormozi?

  Prices, why are you trying to convince me that that you can't hire more, you know, HVAC techs? No, no, no. The issue is not that you can't, it's just that it's difficult. And if it's a difficult problem, guess what that means? It's an opportunity that your competitors will probably shrivel away from because they will try two things and then say it doesn't work. When the people who win just try so many more times and so many more ways to hold the fucking line and say, these are our standards, we will find a way or we will make a way. So this is what Jeff Bezos uh uh had in one of his share letters. I thought it was really good. Differentiation is survival and the universe wants you to be typical. This is my last annual shareholder letter as CEO of Amazon, and I have one last thing of utmost importance. I feel compelled to teach.

• 9:22Alex Hormozi?

  I hope all Amazonians take it to heart. So here's a passage from Richard Dawkins extraordinary book, The Blind Watchmaker. It's about the basic fact of biology. Staving off death is a thing that you have to work at. Left to itself, and that is what it is when it dies. The body tends to revert to the state of equilibrium within its environment. If you measure some quantities such as temperature, the acidity, the water content or the electrical potential in the living body, you'll typically find that it's markedly different from the corresponding measure in the surroundings. Our bodies, for instance, are usually hotter than the surroundings. And in cold climates, they have to work hard to maintain that differential. When we die, the work stops. The temperature differential starts to dissipate.

• 10:07Alex Hormozi?

  And we end up the same temperature as our surroundings. Not all animals work so hard to avoid coming into equilibrium with their surrounding temperature. But all animals do some comparable work. For instance, in a dry country, animals and plants work to maintain the fluid content of their cells, work against a natural tendency for water to flow from them into the dry outside world. If they fail, they die. More generally, if living things didn't work actively to prevent it, they would eventually merge into their surroundings and cease to exist as autonomous beings. This is what happens when they die. So this is Bezos. While the passage is not intended as a metaphor, it's nevertheless a fantastic one and very relevant to Amazon.

• 10:51Alex Hormozi?

  I would argue it's relevant to all companies and all institutions into each of our individual lives, too. In what ways does the world pull at you in an attempt to make you normal? How much work does it take to maintain your distinctiveness to keep alive the thing or things that make you special? I know a happily married couple who have a running joke in their relationship. Not infrequently, the husband looks at his wife with faux distress and says to her, can't you just be normal? They both smile and laugh, and of course, the deep truth is that her distinctiveness is something that he loves about her. But at the same time, it's also true that things would be often easier, take less energy if they were a little more normal. Right? This phenomenon happens at scale at all levels. Democracies are not normal. Tyranny is this historical norm.

• 11:32Alex Hormozi?

  If we stop doing all of the continuous work that is needed to maintain our distinctiveness in that regard, we would quickly come into equilibrium with tyranny. We all know that distinctiveness, originality, is valuable. We're all taught to be yourself. What I'm really asking you to, but what I'm really asking you, Jesus, what I'm really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical in a thousand ways it pulls at you. Don't let it happen. You have to pay a price for your distinctiveness, and it's worth it. The fairy tale version of be yourself is that all your pain stops as soon as you allow distinctiveness to shine. That version is misleading. Being yourself is worth it, but don't expect to be easy or free. You'll have to put energy into it continuously.

• 12:16Alex Hormozi?

  The world will always try to make Amazon more typical to bring us into equilibrium with our environment. It will take continuous effort, but we can and we must be better than that. You have to hold the fucking line. Like, this is the last letter that Jeff Bezos wrote. And can you think about like all the things that he wanted to say? The thing that he chose to leave on was the line was this is the standard. This is what makes us different. And of course, it's going to take work. Of course, it's going to take more ways to solve the problem. It might cost millions more in order to do the better solution than the easy solution. But like I, I, if I could just transfer this one thing, like you can tell how good someone will be as an entrepreneur by the standards they keep for themselves.

• 12:59Alex Hormozi?

  They continue to push back and say like, why can't it be faster? Why can't it be easier? And there's famous, you know, stories of, you know, Steve Jobs putting the phone book on the desk and saying it has to fit in there. And as people be saying like, it's never been done before, right? And you've got Elon Musk going on, you know, on the manufacturing line saying this. Could have two bolts and like, there's no way no one's done it before. He's like, why? Break it down to physics. Why can't we do this? Right? And so when someone pushes back on you and says like, you know, we can't hire that fast. It's like, why? What physical law is preventing us from hiring that fast? If another company who's 20 times the size can hire 100 people a day, why is it taking us a year to do it? Right? What choice are we choosing or what cost are we not choosing to bear that we could bear to make the investment to pull our future forward?

• 13:38Alex Hormozi?

  And I think it's like that push, that relentless energy, the drive to, to choose to be different. Right? To choose to, to, to hold a value, the perfect value that you have as the ideal, and then to strive continuously and though imperfectly to try and live that out. And I think of that as like the reason you win or you don't win. And again, I'm not talking table stakes. If you want to be average, then just look at industry averages, right? Look at industry norms, industry standards. But most businesses, if you looked at the, the, the average business in the US, they break even. The median business owner almost makes no money. Right? And so it's like, why would we measure ourselves by that? It's like, we have to, we have to by very definition reject the vast majority of what other people do

• 14:23Alex Hormozi?

  in order to achieve what other, other people can't. I would encourage you to be less reasonable. And I would say that it has been a skill that has served me well. I mean, you can imagine having saying, hey, we, I want to break the world record that every other person who has had a book has had massive media empires. They've had big deals. They had national media behind them for presidents and monarchs who released books. And I'm saying, I'm just some guy in America saying like, let's see if we can do more than all of them. And we did, we fucking did. Right? We outsold Prince Harry Obama combined within 24 hours. And to be fair, please don't kill me for, you know, having some point of disrespect for whatever secret nations exist, right?

• 15:06Alex Hormozi?

  But I'm only saying this to, to make the point, which is like, when I, when I set that goal originally, can you imagine the amount of people who were like, I don't know if that's realistic, man. Like, hey, that's a really big number. Like, have you really thought, I mean, like, but what if it doesn't happen? I had someone ask me that. They said, well, what if we don't hit the goal? And I said, we dare greatly, motherfucker. That's the point. Like, so what if we don't hit the goal? It doesn't mean we don't, we, we give ourselves an excuse to not try, but like try in earnest, not say like, oh, we're going to do this and we hope this happens. It's like, no, we want to have five different versions of this thing going wrong and it's still hitting the goal. And so I say this because like the goals that I have and probably the goals that you have never apologize for them. They're, they're, it's normal for them to be unreasonable.

• 15:48Alex Hormozi?

  But you don't need to be reasonable. The world wants you to be reasonable. It's like you need to be unreasonable. You need to stick your, your feet in the mud and there's a certain amount of stubbornness that's required. And I think part of the reason that Peter Thiel and some of these great investors talk about phenomenal entrepreneurs is that they have, sometimes they don't have super high agreeableness is that they don't need consensus. They don't need everyone else to like them because they, they believe what they believe, right? And the thing is, is that in order to have an outsized return at anything, you have to bet against conventional wisdom, right? And conventional wisdom can be right. And so that means that fundamentally, either you're an idiot or you're right and you're early. And that's where you get rewarded. And so you have to think like, at least the process I come down to is always like, what physical law of reality prevents us from selling this many books? And that's why it came down to like, all right, we'll have multiple generators.

• 16:31Alex Hormozi?

  Like if we don't have power, we can't sell books. We have to make sure that we have backups for internet. If we don't have internet, we can't sell books. Okay. Do we have enough books to sell? We gotta print them. Okay. Great. We have to have logistics that we have hundreds and hundreds of people ready to actually ship those books out. Okay. If we have each of these things, then all that it really takes is enough people to see it and an offer enough that is compelling, that makes sense for a big enough audience to say yes. That's it. And so you have these problems in your business. You're not cash flowing enough. You're, you're not hiring fast enough. You're not, your, your, your price isn't what you want it to be. If you believe and you can reason it to say like, what prevents us from doing this? I think that that's where you can get these special outsized returns. I think that's where you can have the unreasonable accomplishments. But it comes first from having unreasonable conviction that you will hold the line,

• 17:15Alex Hormozi?

  that this will be the standard that you have. And the fact that no one else has ever done it before means absolutely nothing to you because there's no reason that they couldn't have done it. And good on you for ignoring the fact of their mediocrity.