Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 826

Wanna scale your business? Click here. 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. 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.

• 0:00Alex Hormozi?

  Hey guys, welcome back to the game. This is a guest spot on Impact Theory with Tom Bilyeu. I had a blast doing this particular episode. We're breaking this into two parts. We go deep on a ton of topics. It's me, so it's going to be business related. I don't get to go this deep on stuff often, and so it was enjoyable.

• 0:20Speaker 01

  Alex Hormozi, welcome back to the show.

• 0:22Alex Hormozi?

  Thank you so much for having me. Very excited.

• 0:23Speaker 01

  Truly a pleasure.

• 0:25Alex Hormozi?

  It's true.

• 0:26Speaker 01

  Let me ask, why do smart people stay poor?

• 0:30Alex Hormozi?

  They don't do the things that makes people rich.

• 0:34Alex Hormozi?

  And I think they probably convince themselves that they're smarter than they are. And so if you were smart, then you would be rich.

• 0:42Alex Hormozi?

  And so then it follows that there's probably a series of traits of behavior that you don't do, either because you think you're above them, or you don't know about them. So either it's a declarative knowledge deficit, meaning you don't know about the thing, which has nothing to do with the intelligence. Like if somebody eats an apple, sorry, banana, and they're from a different country, and they just eat it through the skin, it doesn't mean that they're stupid. It means they're ignorant, which is very different. That's a declarative deficit. And there's procedural deficits, which is knowing how to. And I think one of the big difficulties with smart people is they have tremendous amounts of declarative knowledge and very little procedural knowledge. And so it's like saying you read a book on how to do a private equity deal, and you know everything that has to happen, but you've never done a private equity deal. It's probably unlikely that you know how to do a private equity deal.

• 1:26Alex Hormozi?

  And so delineating those things has been helpful for me. And since the procedural knowledge has significantly more utility on a daily basis from a money-making perspective, I have reduced, or at least this is me transitioning to me, but like I've reduced the amount of time that I spend on declarative knowledge. And I try to get to the procedural part of it as fast as I possibly can, because I know that I'll learn significantly more by failing and doing it than, you know, reading 100 books on sales versus doing 100 phone calls. Like you'll learn a lot more in the first one.

• 1:54Speaker 01

  Yeah, it's interesting. This to me is I'm always trying to get entrepreneurs to one thing from first principles, which most people don't even know what that means. So you start by defining it, but this feels like that. Getting to understand the essence of what it is so that you understand it the way that somebody understands a combustion engine. So you can get in and be like, well, I know what has to happen for this car to go. And if I know what has to happen, you can break it, can pull it apart and I'll be able to put it back together because I actually understand how this works. So how does wealth creation work?

• 2:30Alex Hormozi?

  You have to have a mechanism for letting people know about your stuff. And so that can happen on a variety of channels. That typically happens either one-on-one or one-to-many. And so one-on-one would be you knock on doors, you reach out to people via DM, you send emails, you send direct mail, you you make phone calls, you send text messages. Any of those are one-on-one. Outreach is one way of letting people know. You could do one-to-many

• 2:53Alex Hormozi?

  to people who already know who you are, which is basically today's equivalent of a billboard, which is social media. You make posts, you make content. The third way would be that you run paid advertisements. So on those same platforms, you just pay to get the exposure rather than doing it by earning it through quality content. And then the kind of like the door, door four would be using those three methods to then get someone who already has the type of person that you want to advertise to and doing structuring some sort of deal with them. But you'd still need to reach out to them one-on-one. You'd have to make content to attract them or you'd have to run an ad to get to that person. So these are the core things that someone must do to promote whatever they have. Because if we think about it from what must occur in order for a transaction to happen, well, people have to know that you exist or that your product exists. No one can buy something without knowing it exists. And so we have to start with promotion.

• 3:39Alex Hormozi?

  The second component is that they have some sort of voluntary exchange. And so that means you have goods and services that are exchanged for money. And so I think the idea of like money being created really only happens with the government, but for everybody else, we exchange for it. And so there are people all around us, like one of my really fun exercises is looking at whatever room you're in and knowing that everything that was there, there's a business behind it. So like the walls you have, there's, there's the person who manufactured the raw materials, there's a person who sourced them. Materials that the labor that went to installing it, there was an architect who designed it. And then you look at this mic and you're like, okay, well, there's, there's this foam thing, which he probably got from a third party. Then there's the, the, the mechanism is inside, which is another business. There's the distributor that you bought this from. Like there's all these pieces when people are like, man, I just, I don't know what opportunities there are. I'm like, you can literally open your eyes and everything that you see has a business

• 4:24Alex Hormozi?

  behind it. And so from the, the value component, um, for people who are, I'll just tie this into people who are starting out. I recommend most people start with services because it requires no capital and you require time. And when you start out, you use what you have. And so if you have no money and you only have time, then you trade the time for money. And so either you're going to do something that other people don't want to do, that they know how to do. So like taking someone's trash out, doing lawn care, washing things like cleaning. Those are all things that people know how to do, but don't want. Then the second level of that is doing things that people don't want to do or know how to do. And obviously that's knowledge work, which you get your, the amount that you can get paid is predicated on the value that whatever that skill deficiency is to the other person. And so, um, I think about it like that.

• 5:09Alex Hormozi?

  The person has to know you exist. So you have to do one of those advertising activities I referenced. And then the, the thing that you give them is you're going to give them some, some, some amount of time back, either the time to learn the skill or the time to do the skill. And then once that exchange is made, uh, then both people say, thank you because they didn't want to do the work and you wanted the money. And so everyone wins and then around and around we go.

• 5:30Speaker 01

  Okay. So the around and around we go. You and I both know that even though you just laid out a lot of things that are very, very true. Do you think about the gap as to why the vast majority of humanity will not be able to translate that into actual money?

• 5:47Alex Hormozi?

  I think a lot of people spend a lot of time on everything that isn't revenue generating. And so everything that's not, well, we just outlined, like if you're not reaching out to people, you're not posting content or you're not running ads or getting in touch with someone who already has an audience of the people you want to reach. If you're not doing that right now, then nothing else you do matters. It doesn't matter. You have to have something to sell, which, like I said, you can start with your time. Very easy. And my recommendation is to go and get money from a stranger. Doesn't matter what you sell. Just get a dollar from a stranger to actually walk through the process. That's the procedural knowledge. Like, it's one thing, okay, oh, shoot. How do I take a credit card? Oh, that's a whole nother thing. Oh, I have to get a payment process.

• 6:31Alex Hormozi?

  Oh, to get a payment process, I need a bank account. Oh, to get a bank account, I need an LC. Right? And so like you walked in like, oh, here we go. Now, now I can get my first dollar across. Once you get the first dollar across, the second one comes very fast. And so, um, why don't people, uh, why don't people do the stuff that it takes to make money? Because they're doing everything else that doesn't make money.

• 6:51Speaker 01

  I've got, so I am now teaching a business scaling course.

• 6:56Alex Hormozi?

  Oh, cool.

• 6:56Speaker 01

  So, yes, it actually is a lot of fun. Uh, where can people find it?

• 7:00Alex Hormozi?

  Oh, sure.

• 7:01Speaker 01

  It's so funny because the answer, of course, is school, your company. But I promise we did not talk about that, set that up. Uh, but yeah, on school. And the, it's got me asking a lot, like, okay, I really want these people to be successful for no other reason than to be a glowing testimonial. And so what's going to be the place that they fall down? There is a concept in sailing that I am beginning to think, other than intellect, which unfortunately matters, I'm beginning to think is like the thing. It's called velocity made good, VMG.

• 7:34Alex Hormozi?

  Okay.

• 7:35Speaker 01

  And the whole idea is that you can have a lot of wind, but if your sails aren't angled in the right direction, you could be moving fast, but not going in the direction that you want to go. You could be not moving at all because your sails just aren't able to capture it. Or you could actually be moving fast in the direction that you want to go. And that, to me, like, pulling that apart as to what are the things that people don't understand? What are, like, if we were gonna make angling the sails not a metaphor, but like a reality? What is it, like, as somebody who's now scaled a business tremendously,

• 8:15Speaker 01

  what is it in all of those things that allows you to capture the potency of your intellect? To understand that making, just making content doesn't do it. The content has to be aimed in a direction. It has to have a goal in mind. How would you teach entrepreneurs how to quote unquote angle the sails?

• 8:34Alex Hormozi?

  So the process that I follow is common factors analysis for basically a retroactive look back window. Now, that sounds like a whole bunch of fancy words, but basically, I look back at stuff I did and see what worked better than other stuff. And then I say, okay, well, the top 10%, what things did they have in common? And then the bottom 10% or the bottom half, what things did those lack compared to the top 10%? Then I try and do a next batch of activities, whether it's phone calls, whether it's content, whether it's product iterations, that then do more of the thing that worked. And so that process has been, I think, the fastest feedback loop that I've had. So rather than trying to find like a

• 9:16Alex Hormozi?

  specific course around something super niche, which gets really difficult, the more niche it is, I rely on the universe for feedback, which is like, we have to try 100 repetitions of whatever the thing is, look at the top 10 or 20%, look at the common factors, and then do a whole next batch of 100 with those common factors. If performance goes up, then the variables that we isolated were the correct ones. And then within that next batch, there will be another top 10 or 20% that by variation of repetition, which will always happen, there will be other mutations like in DNA that occurred in that subset that I can then replicate again. And that process is how I got good at sales. It's how I started

• 9:58Alex Hormozi?

  making content. But I think the first piece that people stop, that they prevent themselves from doing, is doing the 100 repetitions, because they think that they're, it's the fallacy of the perfect pick. Like, they're going to get it all right so that they don't have to fail the first time. But like my favorite, one of my favorite scenes in The Matrix is when Neo tries to jump across both buildings and then he falls and Cypher, everyone's like, what does it mean? And he's like, everybody falls the first time. So even the one falls the first time, obviously wasn't the one then, whatever, we can get into that. But I just like that as a failure as an assumption, rather than something to avoid. Like Elon was able to get the rockets up because he failed five times faster than people were

• 10:40Alex Hormozi?

  able to do one. So he got five failed rockets out before he got a sixth. And everybody was looking at the five failures, but he's like, well, look at how much further we got with each one. And I think that most So one of the difficulties with skill is that masters have more milestones along the way. And so they're able to mark progress with more nuance. A beginner only sees kind of a binary outcome between it worked or it didn't work. But for me, if I'm going to go into a new advertising channel, for example, if I want to say, I want to start doing cold outbound. Well, I actually have a great story about this. When we started doing cold outbound for gym launch, my executive team, so you know, not like experienced people about three or four months in, basically did like an intervention with me. And they

• 11:25Alex Hormozi?

  said, you're putting all of your time and attention to this. We think this is a shiny object, using my words against me, right? This is a woman in the red dress. And we think you should stop and let's double down on what works, which for us at the time was paid ads and some content. And the thing is, is that they were too far away to know the progress we were making. And so they just saw that we basically hadn't made any sales. We made one sale in like three months. But I knew that the first problem we had is we didn't know where to get the data from. Where do we get these lists from? So then we finally got the list and they're like, okay, but no one's picking up. We have to enrich the data. Okay, then we reached the data. Then no one was still picking up. So then we're like, oh, well, we have to find out how to get people to pick up. So we have to do local call wrapping on our phones. So that increases the pickup frequency. So then people start picking up, but then no one wanted to book a call because our script was off. So we fixed the hook and then people would listen to us, but they didn't like

• 12:10Alex Hormozi?

  the offers. And we fixed the offer. Then people came to the second call, but then they weren't showing up to the second call. And then we were like, okay, we have to create a follow up sequence. Now, at this point, they're like, hey, you need to get, you need to stop. But it was just, we have 100 steps that we have to take and we're 33% of the way there. But if you're a beginner, you don't know you're 33% of the way there. And so I think it's one of the difficult things as a beginner is that there is, there is a leap of faith. Like when you do your first week at the gym, you're not going to get results. But it doesn't mean that working out is wrong. It just means you're measuring on the wrong time horizon. And I think one of the things that has thrown a ton of beginners off is the understanding of volatility and volume. So basically, when you, when you have a new business or a new endeavor, what appears inconsistent or volatile is typically

• 12:52Alex Hormozi?

  a function of doing too little volume. And so it's like, if I, it's like, yeah, you know, one sale comes in every, you know, a couple of weeks, it's, I'm still, you know, but if we look at the activities that generate that sale, it's like, you might have done 100 reach outs over Thirty days and then one of them becomes a sale. So it appears volatile, but really it's just you got 1% and you're doing far too little. And so if we did 100 a day, then all of a sudden we might make one sale a day. And all of a sudden it seemed very consistent. And so the volatility is only a function of insufficient volume. And so I think that that misconception is why many people who start out fail quickly or choose not to start because they are measuring their feedback loop on too short of a time horizon.

• 13:37Speaker 01

  All right, so if 90% of businesses fail outright, 96% fail to break a million and only 4% go over that. What is it that those have in common? The ones that make it, do they share something in common? And if so, what?

• 13:56Alex Hormozi?

  Well, I think to cross a million, you need a consistent acquisition process. I think that's about it.

• 14:00Speaker 01

  Customer acquisition.

• 14:01Alex Hormozi?

  Yeah, sorry. Yeah, customer acquisition process. Like in the beginning, you have to do something, period. Zero to one, you have to do something and then you have to make your first dollar. And then your advertising is inconsistent because you're inconsistent. Once you become consistent, then your sales become inconsistent because you don't have a process. So then you have to dial in the sales process. So basically advertising and sales have to become a consistent process with predictive metrics. We know that if we do 100 primary actions, whether that's 100 posts, $100 in ad spend, 100 reach outs, that that will generate this many leads, which generates this many calls, which generates this many sales. And it could be on e-commerce or it could be in a service or environment like I'm describing with calls. But fundamentally, you just have to get to that equation. And once you get there, then it's just inputs and outputs.

• 14:46Alex Hormozi?

  And then you're just pouring as much in and then figure out what the constraints are from you putting more in. At least that's how I think about it.

• 14:51Speaker 01

  Do you force yourself to predict the outcome of initiative before you do it?

• 14:57Alex Hormozi?

  Not as much as I used to, to be really honest with you. This is actually a huge change for me in terms of how we grow our portfolio now. I'm actually really curious what you think on this.

• 15:08Alex Hormozi?

  But I heard Jensen Huang say it, and so I feel like a little bit better. But basically, they did away with all long-term planning. And I always felt like long-term planning, because when I got a year later, I was like, half these things that we were talking about a year ago, the variables of the environment, talent, many of the major movers have changed what the priorities are in the business. And so I focus almost exclusively now on what are we going to do in the next 12 weeks? Now, we obviously have long-term objectives, but I don't want to plan out forecasts and, and basically obsess and get everything down to the decimal when I can't even estimate the big forces that are going to be at play. Now, if I say, I think if we build the brand this year, that is a good thing, and that's our number one priority,

• 15:49Alex Hormozi?

  then great, then I can reverse that. But I'm reversing it only into the present for the next 12 weeks, because things will change.

• 15:55Speaker 01

  Very interesting. So I'm thinking a slightly different angle. So here's what I always tell entrepreneurs to do. So you described a very similar thing to the way that I try to go about scaling, which I call the physics of progress. So to me, progress has a nature. There's just a way that it works. So you try a thing, and it either works or it doesn't. But to know if it worked, you had to say, this is where I'm trying to end up. This is what I think is my obstacle. This is the thing I think I need to do to overcome my obstacle. Now I'm going to do that. But what I find is entrepreneurs will lie to themselves when they get the result. And they'll be like, yeah, that's roughly what I expected. Now, the problem is that that will break their ability to do things as a thought exercise. And so now they have to actually test everything, not realizing they don't know how to predict the outcome.

• 16:40Speaker 01

  So what I tell them to do is, look, and this is what I do myself, I'm going to do this thing, whether it's build a piece of content and put it out, whatever. And I think this is going to get a million views, 1.5, whatever. So when it does 75,000 views, I'm like, whoa, there is something I did not understand. And so when it comes to content, I'll even predict at the idea level, and I, okay, this is what I think it's going to get. Then we'll execute, and I'll say, actually, now's the excuse, I don't think it's quite as good. And so now I think it's going to be this, and then you put it out. And that way, if you can really come to understand why something works or doesn't work, now you've got a better shot. But because I know I'm prone to lie to myself, yeah, that's roughly what I was expecting, because people want to look cool.

• 17:25Speaker 01

  But you're saying in that scenario, you guys just sort of art by the pound.

• 17:29Alex Hormozi?

  Yeah.

• 17:30Speaker 01

  Get a lot more things out. Are you looking to build intuition or?

• 17:34Alex Hormozi?

  Yeah, I mean, I think I'm so aligned with what you said. You know, what are the causal factors? And I mean, the whole common factors analysis concept is basically trying to do that. Like, how can we identify? Like, we're going to do everything with these variables in addition to the last time. And if those variables don't meaningfully change, then they're not the correct variables. But it's so funny you said that because I thought you were going to go in a different direction. So I've been putting together this $100 million scaling roadmap. It's probably the biggest project that I've done in a long time. It actually releases on Black Friday. It's free. It's free for everybody.

• 18:06Speaker 01

  I'm so shocked, Alex Hormozi, with the free stuff.

• 18:10Alex Hormozi?

  But the I had first thing I spent a long time on was like, is there a micro framework that fits into this larger framework? Which is like, how does anything scale? And then I tried to make an acronym out of it, and I think I think I have a decent one. So S is start. You got to start. You have to do something. C is compound. You have to do more. So first you start, then you do more. A is augment, so then you do better. So it's like, okay, I've done a lot. That's the common factors part. So I'm going to try and do something better. L is leverage. So how can I get it to be consistent? How can I do? How can I automate it? Both sides of that. And then E is expand. You do it again. So that's the loop. So that scaling loop exists on content at all levels, organizational structure. Because that that one, first we start, then we do more, then we do better.

• 18:55Alex Hormozi?

  Then we try and make it consistent and automate it. And then we expanded the next thing. That works for markets. It works all the way across. So that fundamental unit became how I thought through scaling all eight departments, which is what I divide everything into. So it was customer service, product, sales, marketing, IT, HR, recruiting, and finance. I don't put legal in there because I didn't think it was. Most people outsourced to legal anyways for a while. And so those are the eight functions that I had of the business going from zero to 500 people headcount. I did zero to 100 million because no one would know what zero to 500 people would be. But most businesses at 500 headcount are, you know, are usually over 100 million. And it was easier to draw parallels on organizational structure rather than by revenue. Because like a software company like School can do $100 million with 25 people.

• 19:39Alex Hormozi?

  Whereas a restaurant might do $1 million to 25 people. And so doing it by revenue felt too, it wouldn't be, it wouldn't be valid or useful. And so instead. I went by headcount, which had far more similarities. And so in thinking about that scaling, I broke it into first, there was functions like what must occur in order for us to move to the next level. And then you have the people who do those functions. And then the third element is the operations that connects the people to the functions. And so that would be like training, meeting cadence, communication structures. That's all the operation side. And then the people is what is the hierarchical? How does the hierarchy look? Who do you need to hire at what point typically?

• 20:20Alex Hormozi?

  And so that's basically the three sides of the of the pyramid in terms of thinking about scale. The scaling roadmap that I have that I came out as just the functions part because it was already a monster. Basically, it's like an hour plus long video going through each of the functions of each of the departments at each level. And then I vetted it with a few of my friends who have multi-billion dollar companies. And they were like, dude, this is so accurate. It's freaky. And so I was like, I felt really good about that. And they helped me with a couple of them like, I would raise it like this and maybe this is, you know, move this instead of here. But that micro framework of you have to start, then we have to do more, we have to do better, then we have to automate it or create some sort of leverage around it. And then we expanded the next thing was the micro concept that I then applied across

• 21:02Alex Hormozi?

  all departments to tease out the functions that happen at each at each level.

• 21:09Speaker 01

  Makes a lot of sense now. So again, I'm always trying to figure out where are people going to fall down?

• 21:14Alex Hormozi?

  Yeah.

• 21:14Speaker 01

  You can give this stuff to people and they're still going to struggle. So you said something earlier that that is profoundly insightful that I want to know how if you have a method for that or if you just have a brain for it. But you said, we need to get local call wrapping as people are more likely to pick up a local number. So you're sitting in a room.

• 21:32Alex Hormozi?

  Yeah.

• 21:32Speaker 01

  You're not getting the results that you want. And you start thinking to yourself, what is stopping this from happening?

• 21:38Alex Hormozi?

  Yeah.

• 21:39Speaker 01

  Does it just bubble up into your conscious mind or do you have a method?

• 21:43Alex Hormozi?

  So I would think, so if I were to have to solve this problem out loud in front of everyone, I would think, okay, what we're doing is not working. What is it that increases the likelihood that I pick up my phone when a phone number calls? Okay, if I know the person and like them, that would be the highest likelihood person that I would pick up. Okay, so Leila, that's the highest likelihood pick up. The second highest likely would be somebody that I know, so their their number is saved. Okay, got it. Now, what numbers that I don't know, would I be more likely to pick up the numbers, other numbers that I don't know? Well, a local number, that would either be local from my hometown, or local to my regional area. Those would be the two categories that I would probably pick. Now, the call wrapping feature that we were able to do could only do one of those, because it didn't know where they were, but it didn't know what what area code they had, so we could call from that.

• 22:26Alex Hormozi?

  But if there was another software, for example, that could do both, and that would have been even cooler. But that's how I would reason through it. And then, obviously, the the lowest probability would be like a four-digit number that's calling from, you know, Zimbabwe, or a private call, or something like that, I probably wouldn't pick up. And so I just walk through it from from that perspective, then I probably also ask other people. What are the calls that you'd be most likely to pick up? What are the call, you know, then and walk through it, and then I would try and tease it out that way if I had to solve a problem.

• 22:49Speaker 01

  So that is, one of my favorite things to do is to go to a conference, stand up on stage with a microphone and say, okay, ask me your hardest question. I have nowhere to go, there's nowhere for me to hide. What is that biggest problem that you have in your business? I've had people ask me stuff like, uh, I am a farmer in South America, and I'm going up against the cartel. What do I do? I mean, like, really crazy stuff. But if you can do what you just did in a formal fashion, which I'll round to thinking from first principles. Like, if you just start, so I I'll tell entrepreneurs, you need to start at literal physics. Like, what do we know about physics? Start from there. So this was the thing at Quest, where we go to make the bar, everyone says the bar can't be made, and we're like, hold on, this does not violate the laws of physics.

• 23:31Speaker 01

  You then realize the thing that's actually stopping us is that for the last 70 years, corn has been subsidized by the government, so everybody uses high-fructose corn syrup. So all the equipment that's being engineered is being engineered, thinking you're going to use high-fructose corn syrup, which has a certain viscosity. And so now you go, oh, wait a second, so all we have to do is engineer our own equipment. Got it. Now, maybe we're not willing to do it, but at least now I know what that sequence, going back to a combustion engine. If you understand how the engine works, you can walk through and be like, it's broken right there. And now you can go. Okay, how would I fix that? What is the the level of physics that's going to carry across? Now, what you did, which is the shortcut that most people take is, look, I'm trying to sell a thing to a guy. And so now I'm just leaping leaping to the physics of the human mind.

• 24:14Speaker 01

  So what do I know to be true about people? And the way that you just walked through that's so brilliant. How do you get people to do that? Like, do you have magic words? Do you have a training thing that you do for people that come on?

• 24:28Alex Hormozi?

  So first off, I think it's a practice that I think it's a skill. I think you practice doing it over and over and over again, and you get better at doing it.

• 24:38Alex Hormozi?

  But I would say the thing that I try to practice by modeling that other people can model is thinking about things only in the observable universe. And so eliminating a lot of the fanfare of like motivation, energy, frequency, you know, manifestation, like all of these things. I see all of those as noises that we make with our faces that may or may not increase the likelihood that we take certain actions. And those actions have either higher low correlate or higher are higher low correlates for the outcome that we want. And so in trying to break apart a system or an apartment that's not working, I I think about a lot in terms of approximations.

• 25:23Alex Hormozi?

  What increases or decreases the likelihood that what we want to have happen, happens? And that creates a really easy razor, black and white. Does this increase the likely? Okay, so if our team is incentivized on performance, of a higher likelihood that they do the stuff that performs. If they're incentivized on hierarchy, then increases the likelihood that they will perform in terms of hierarchy in politics. So it's like, okay, well, then I can bet, then I should do that. Then we have to get into the execution of it, but just from from an ideological perspective, getting those what would make it more likely to occur has been a really has been like my first razor for this. And then in terms of the creative problem solving, which I love that you just went through with the bar thing,

• 26:03Alex Hormozi?

  is there was like an implied question that you asked, which is probably my the two most frequently asked questions are the one I just said, which is what does this increase or decrease the likelihood? And the second is, what would it take? And I love that question because it it it presumes or it assumes success or it assumes reality that we can make a bar that would do that. Okay, then what would it take for that to happen? Well, I guess we'd have to like have our own facilities. Okay, well, we'd have to have our own machine, like we'd have to have a different supplier that was okay. Okay, great. Now that we know what that is, do we have the resources today? Or do we need to use resourcefulness? It's one of the two. Either we have the resources or we have to go get them. And is the trade off for the for the outcome worth assembling those resources?

• 26:46Alex Hormozi?

  And what I found, and this is really fun stuff. This is like probably the most fun thing that I do in my life, which is asking the question of like, okay, what would it take? What else would have to be true for impact theory to get 10 times the views in 12 months? It's not physically impossible. There's no reason for it to be like somebody else's. There's another YouTuber right now who's going to do it this year. So what would it take for us to get that? Now, that might mean we'd have to, we'd have to get the smartest people. Okay, well, what does it take to get the smartest people? Well, probably more money or maybe some chunk of the upside. And maybe I have like, and I might not get that guy, but there's probably 10 of those guys or 20 of those guys. And if I go to all of them, is it reasonable to believe that all 20 will turn me down? Probably not.

• 27:31Alex Hormozi?

  Okay, what offer would I need to give them to make it worth it for them? And then is what I give them worth less than what I get on the larger umbrella? And if the answer is no, then we make the trade. But I think a lot of people think in terms of I'm here. How do I, how do I do more of what I'm doing? Rather than what would have to be true for this to be 10 times bigger? And are the resources required to have that happen?

• 27:56Alex Hormozi?

  Within my control? And oftentimes they are, but it's a move that's off the board. It's not in the, in the immediate do more. And I'm all about do more, do better, like to be clear. But every once in a while, the order of magnitude changes to the business happen when you do something different. And it's usually, and to me, that is strategy is that you've limited resources against unlimited potential moves. There's a million things you can do, but you only have this much time, this much money, this many people. And so the best strategists, in my opinion, Have the most visibility into the most potential moves and allocate the asset or the resources to the thing that gets the highest return. And I think the thought process of thinking, what would it take for this reality to be true? And then working backwards has been one of the most fruitful and productive thought processes that I go through from a strategic perspective.

• 28:39Speaker 01

  Dude, violent agreement. So Lisa and I call it no bullshit. What would it take?

• 28:43Alex Hormozi?

  Okay.

• 28:43Speaker 01

  So of everything you're trying to do in your business, no bullshit, what would it take? Again, you might not be willing to do it.

• 28:49Alex Hormozi?

  Totally.

• 28:49Speaker 01

  But you shift out of problem mindset into solution oriented mindset. This is one of the things that I find the hardest to instill in people, especially if just by nature they're a problem finder where they can tell you all the reasons why something isn't going to work. But Peter Thiel has a really cool way to frame this, which is to ask, how do I make my 10 year plan happen in six months? Because he said, everybody gets locked into this incrementalism. Like, how do I make this 10% better, 30% better? And he's like, you have to throw everything that you know away when you have to make something 10x or 100 times better. Now, all of a sudden, you're going to be reaching for what I call a frame of reference that is so radically different than the way that you look at the world now. And I'm always trying to get entrepreneurs to

• 29:34Speaker 01

  understand you are trapped inside of a frame of reference right now and you don't even realize it. It's shit that your parents said to you when you were a kid. It's the girl that you asked out and it didn't go well. It's the first sales calls you did and they failed. It's that business that went under. It's a thing a VC said to you one time in a meeting that just kicked you in the nuts. And once you understand, okay, wait a second, I have to get out. This is the box that people are telling me to think outside of, and I have to find a way out of this. And that Peter Thiel angle of I have to make something that I thought would take me 10 years. I have to make it happen in six months. And I refuse to let myself believe that it's impossible. So now it's like, like you said, what would have to be true?

• 30:13Alex Hormozi?

  Yeah, I love that. And the for the for the beginner who's at zero. So we went, we went sky, now we're going to go back down to dirt.

• 30:22Alex Hormozi?

  You'd frame that as what would I have to do that would make it unreasonable that I didn't get a sale? Like, how much action would you be like, there's no way, there's no possible way that if I ask a thousand people to buy something, one doesn't buy it. There's just, there's no way. And so then you take that and he's like, okay, well, just in case I'll multiply by 10. If I asked 10,000 people, and the thing is, is that 10,000 is not that hard to do. Like, you hear that, you're like, 10,000. But like, right now, if you think about that, you're like, well, I mean, yeah, obviously, if I asked 10,000 people, okay. 100 people a day, 100 days. It's a quarter. And if right now you've been stuck in years of not making that first dollar, of years of wanting to start a business,

• 31:03Alex Hormozi?

  then a quarter's nothing. And so, again, we have this, well, it'd be unreasonable that if you make, you know, 10,000 asks of different people, and the thing is, is that you'll also have a feedback loop, which is that you'll look at the first 100. Well, which ones got closer to saying yes? Because you didn't get a yes yet, maybe. Maybe you do get a yes on the first one. It happens a lot.

• 31:24Alex Hormozi?

  People are like, they commit mentally to doing 10,000, and then by day four, they're like, oh, my God, I got a sale. But the idea, and maybe this is, maybe I should teach this differently, because maybe I should just say, do 100 today, but I want people to stick with it. But when, when, when people do that,

• 31:39Alex Hormozi?

  the feedback loop of which ones went well, which ones didn't go well, what did I do in the beginning? This one's I made a joke at the beginning. Okay, I'm gonna make a joke on all of them next time. Great. Now I made a joke. Okay, I got further in the sale with these guys. This guy even asked me about price. Okay, what happened in that one? Okay, this one, I asked him about what he was struggling with earlier on. Okay, I'm gonna start asking that question too. So I'm gonna make my joke, and I'm asking what he's struggling with. And I'm gonna do that 100 times. And so that's the, that's the process of iteration that, that can get you to that first, that first W. And then you just do it as many times as you can.

• 32:08Speaker 01

  Yeah, iteration, iteration. It's funny, people are so terrified of failure that they don't even stop to think that, oh, if I could just not worry about embarrassing myself, then I could get in the game, throw the punches, look foolish, and I will get better and better. I've often joked, it's definitely not a joke, but I've often said that part of what is my superpower is that I can be embarrassed longer than the next person. And also, let me know what you think about this. I think you have whatever 8.4 billion chances to make a first impression. Probably more than that because most people are going to forget that they ever encountered you in the first place. And so getting out, ultimately, I think what people care about is can you, they have a screaming problem that you make go away.

• 32:51Speaker 01

  And they'll forgive everything that they've encountered up to that point if you can. And anybody, somebody that they respect told them, no, for real.

• 32:59Alex Hormozi?

  Yeah.

• 33:00Speaker 01

  This works.

• 33:01Alex Hormozi?

  I think you bother, you have a hundred percent chance of bothering somebody on earth by existing. And so if every action you take has somebody who will hate it, then it kind of cancels everything out and you might as well just do whatever you're gonna do anyways.

• 33:15Speaker 01

  Very fair. Speaking of somebody that clearly winds people up, you mentioned Elon earlier.

• 33:21Alex Hormozi?

  Yeah.

• 33:22Speaker 01

  What is it that makes him special?

• 33:24Alex Hormozi?

  I, I'm, I, so many things, you know. I mean, how many guys have six billion dollar companies and run all of them? And have time to go all in on political campaigns in the meantime, notwithstanding what side or any of that, but just, just the shit. Like, the big question that I feel like is the unspoken one right now, at least my, in the zeitgeist of the entrepreneur world is, how does he do it? And I love the impossible nature of the feats that he takes on, literally pushing the realm of physics, obviously with SpaceX. But he reinvented the car industry. He's creating brain, you know, brain chips. He's aggressively attacking AI. I'm sure you saw the Jensen Huang interview where he's like,

• 34:06Alex Hormozi?

  he did in 19 days what everyone else takes three years to do. And so we're talking multiple orders of magnitude in terms of improvement compared to the basics. Because he starts at physics and works his way, but he truly does it because he's also like a physicist. He really knows it. Like, I get to pretend to sound, you know, intellectually, you know, whatever. He really does. And so I, that's his, his material achievements, but I think the thing that I admire the most is the balls. The man is not a coward. And I think that in thinking about him, I think about what are the things that he does? What are the things that I do? He is more successful than me.

• 34:50Alex Hormozi?

  How can I do more of those actions that he does in order to approximate his success? And so I think modeling is one of the most effective ways for people to learn. It's how children learn, it's how monkeys learn, it's cross-species. And I think that he functions as a model for many people. Now, again, he only became political in the last three years. So if you all of a sudden now hate him, like maybe question that if you didn't hate him three years ago. But you cannot question that he is the best, like right now, people say he's the best entrepreneur of our generation. I think he's the best entrepreneur of all time.

• 35:19Speaker 01

  It seems like it to me.

• 35:20Alex Hormozi?

  It's, it's not even, to me, it's not even, like, he is, yeah, I mean, I could, I could get on a, on an Elon parade, but he has forced me to think significantly bigger about the problems that I want to take on and who I want to become and what to do with the small platform that I have that best serves humanity. And so that's what, and I, I think, at least from my point of view, that he really genuinely wants to do the best thing for humanity. Some people disagree with that. I don't, I don't agree with them. I think if there was ever somebody who would have, you know, with great power comes great responsibility, he's probably the guy you'd want.

• 35:59Speaker 01

  Agreed. Why balls? Why is that the thing that catches your eye?

• 36:04Alex Hormozi?

  He had the most to lose, like literally financially, he had the most to lose. So I'm quite, like, he had the most to lose and went the most polar on the bets that he took. And I think that, again, there's a really great, like, masterclass in winning here that he did with this whole election thing. Because if you think about how Elon tried to solve the election, he absolutely treated it like any business problem. And so he looked at the whole map, and then it was whoever wins Pennsylvania wins the election. And then zooming into Pennsylvania, it's, there are 28 counties or whatever the amount of counties that we have to win. And so then he flies to Pennsylvania himself and then since three weeks campaigning, gives a million dollars away a day just to get people to register to vote.

• 36:48Alex Hormozi?

  Town halls every day. So it's like he finds the greatest point of leverage and then just bombs the hell out of it with unbelievable amounts of action in at that one crucial spot. And I see that as that that's how he violently solves problems. It's like, how do I like, how do you build a, how do you build a super, supercomputer for AI in 19 days? Like, he looked at the whole supply chain and he found the point of greatest leverage and was like, we're going to dump as much into this as we possibly can.

• 37:19Speaker 01

  There are two options before people in life. So option one is lay your balls out on the table like Elon did and you give people a chance to smash them with a big fucking hammer. Or you can hide and you can go a long way hiding. Why do you admire people that slap them up on the table?

• 37:34Alex Hormozi?

  I think courage is the quintessential trait that leads to everything else. Like, you have to first have courage. You have to have courage to quit your job. You have to have courage to get rejected. You have to have courage to ask the girl out, to shoot the shot, to run the ad. And if you don't first have courage, nothing else follows. And so I see it as, again, it's not, are you courageous or not? It's how courageous are you? It's not a binary. And so I just like, I think that based on my history, I have courage because I have done things that have required it. But I think Elon has more courage than I do. And so I see that as how can I, how can I move

• 38:14Alex Hormozi?

  more in that direction if this is a trait that leads me into the better version of myself?

• 38:22Speaker 01

  How do you model yourself after somebody from afar? So we live in the age of the internet where, you know, people want to get to know somebody. I'm old enough to look at the internet and be like, you do not understand what a glorious time this is to be alive. I mean, it's unimaginably cool. So people will look at you and say, well, you can get access to anybody. But somebody like Elon, who you say is worthy of modeling, how would you run something that all of them now can do?

• 38:51Alex Hormozi?

  Yeah. So this actually comes down to, and I wasn't sure if you were going to press me on this, but like courage, for example.

• 38:59Alex Hormozi?

  I try to, the single most effective decision that I've made about how to run my life across all functions has been only thinking about behavior and erasing everything else. Because it's the only thing you can observe. And I'll tell you a little micro story about this. So there was a guy on my team who, we were getting complaints that he was acting like a dick. And so he had talked to three of the leaders in my company who had had one on ones with them and said, hey, man, stop being a dick. He continued to be a dick. And so they said, Alex, can you talk to him? And I said, sure. And so when I sat down with him, I said, hey, to be clear, I don't really care what you do. I care about the fact that

• 39:43Alex Hormozi?

  you have now taken my time. And so this is now the most costly thing that you could have done for me personally. And getting complaints from other people detracts on their ability to get things done within the company, which now also costs me. And so my goal here is to decrease the likelihood that people complain about you. And so they keep saying that you're acting like a dick. And so he's like, I know, I'm working on it. I was like, no, it's fine. I don't care about whether, I was like internally, you can be a dick as much as you want. I don't care. I don't care about intention. What are the actions that you take that increase the likelihood they call you a dick? And so number one is that you interrupt them on meetings. Number two is that you say that you know their department better than them. And number, whatever, I had, I have my list

• 40:28Alex Hormozi?

  of things. And I was like, so don't do those four things and do this instead. So when this circumstance occurs, do this action instead of this action. And in the next week, everyone's like, oh, my God, it was like night and day. And the thing is, is that we give each other feedback all the time. And this happens in marriages and whatever. It's like, hey, don't be a dick. That doesn't help people. You have to tell them granularly what to do instead, and focusing on the observable. And so this is my weaved in answer to how does someone model Elon? Well, it's not like I need to get Elon's mindset. It's like, no, look at what he does, just with your eyes. What does he do? Because it's the only thing that you can, you can measure. It was funny, because when you said earlier about

• 41:12Alex Hormozi?

  what I want to have happen, what am I going to do that I think is going to Have that happen. And so your planning process is identical to ours because it's the scientific method. Like mankind has figured this one out. Like, we know how to make a guess of like, this is what we want to have happen. This is our hypothesis. We're going to test the hypothesis. We say, did we do the thing or not? And then, and did what we think was going to happen, happen. Four steps, scientific method. And so don't try and reinvent that one. Like, that one works.

• 41:40Alex Hormozi?

  The same can be true, but it has to be observable for the scientific method to occur. It has to be something that you can see. Saying like, I need to be more motivated. Well, if you want to be anything, and this is, this one trips, I think, a lot of people out. But have you ever heard like be do have?

• 41:55Speaker 01

  Yes.

• 41:56Alex Hormozi?

  Okay, I think it's a complete crock of shit. Mainly because if we want to have something, we must do it. I think if people are, you have to do stuff to get stuff. Okay, we're good with that. But if we just have to do stuff and the having occurs, then we don't need to talk about have. So now we just have be do, all right? Then how do we describe how someone is?

• 42:19Alex Hormozi?

  We describe them by what they do. I mean, even in the olden days, people used to be carpenter, John Carpenter, John Butler, John Taylor, right? We literally described people's beingness, who they were by what they did. And so if you want to be a certain way, then you need to act in accordance with the behaviors that people describe as that trait. And so then, I, this is how I make sense of the world because the world doesn't make a lot of sense to me in a lot of ways. And so this is the only way that I've been able to navigate. And this has given me so much peace because I actually think everyone's wrong. And it, and it drove me nuts for a long time because I didn't know how to do what I wanted to do. I was like, I want, I want to be, I want people to think I'm smart.

• 43:01Alex Hormozi?

  I want people to, to think I'm hardworking. That doesn't mean anything. Be charismatic. It means nothing. You can't look at someone and say, don't be a dick. Be charismatic. No, how do I do that? So they give you beings rather than doings. And so if you break it into the, the corresponding chunks, which may be 20 or 30, skillsets which are into Under this condition, you act in this way. Then all of a sudden, when you do all 20 or 30 of those things, then people describe you as charismatic. And I find this interesting because we talk about culture or values in a business.

• 43:37Alex Hormozi?

  These values that we choose are bundled terms that are meant to approximate many behaviors. Because there's no, like, when you get into a business or a company, you have to, like, figure out the culture. But the culture is just the rules that govern reinforcement in a business. Which is, what are the things that are rewarded? What are the things that are extinguished? And what are the things that are punished? That's it. And so the culture is just, what are those rules? And so people have to basically either watch other people get punished, rewarded, or extinguished for the actions they take, or they have it themselves. But either way, it's just a series of if this, then that, if this, then that. And it's a monster list. And so to speed up the process, we create a couple of phrases that are meant to approximate the largest percentage of those list of rules as we can.

• 44:20Alex Hormozi?

  And so in thinking about my, if you were to microcosm into a person, what are the traits we want? Then we just have to get really granular. And I think that this is how we solve problems in a business. Which is, it's convenient for communication to use these amorphous terms. Confidence, you know, loyalty, like, these things. But no one can be more loyal. We have many activities that, under conditions, people describe in retrospect that this person has loyalty. Loyalty has occurred. And so that single framework of thinking through the world has been the most valuable thing that has finally made the world make sense to me. And so that's fundamentally how I model people.

• 45:02Alex Hormozi?

  Or if I want to be more like this person, be more like this person. I try and do more of what they do.

• 45:09Speaker 01

  What are the behaviors that Elon does that you think are worthy for somebody of your level of already absurd success?

• 45:16Alex Hormozi?

  Sorry, I appreciate it.

• 45:19Alex Hormozi?

  Well, one is he makes big concentrated bets. And so that's a behavior. He does that. I can observe that. I've seen him make big bets. He's willing to give up equity in companies for lots of capital in order to make things happen faster. That's something that he does. He ties every company he has to saving humanity. That's something that he does. He, this is me just parroting what he has said, but his approach to solving systems is one that I have adopted, which is question all requirements of the system, delete everything that doesn't, that doesn't matter. Optimize the rest, pull up feedback loops and timelines, and then automate.

• 46:01Alex Hormozi?

  And that process I've applied to sales, I've applied to marketing, content, whatever. And those are things that he does. And so there's, I mean, a lot of things that Elon does, but those are just some of the ones off the top of my head that I think are the greatest impact, at least the ones that I'm specifically trying to model.

• 46:19Speaker 01

  There's one that really had a big impact on me, which is the idea. So I had Marc Andreessen on the show. Shout out to my boy Marc Andreessen. Yeah, love that guy. Love that guy.

• 46:28Alex Hormozi?

  I'm such a fan. Marc, if you hear this.

• 46:31Speaker 01

  He is amazing. And I asked him, what is it that you think makes Elon so efficient?

• 46:40Alex Hormozi?

  Yeah.

• 46:41Speaker 01

  And he said, making a long story short, he goes down to the level of engineering.

• 46:47Alex Hormozi?

  Yeah.

• 46:48Speaker 01

  And he understands the engineering. And so he figures out what the bottleneck is and talks directly to the engineer that can make that problem go away and just makes that problem go away and eliminates the bureaucracy and all the BS of it all. And I was like, that is utterly brilliant. And even though, except on the gaming side of Impact Theory, we're not an engineering company, there still is that same concept.

• 47:11Alex Hormozi?

  Totally.

• 47:11Speaker 01

  Like if you've got a problem, let's say with a piece of content, hey, our retention at 60 seconds is not where we want it to be. Okay, well, who are the engineers that can solve that problem? Whether it's the editor or me myself, you go and you solve the problem at that level. I think so many people get so. Into the vortex of, well, this is their boss and I need to go talk to them and oh God.

• 47:33Alex Hormozi?

  I want to get around the chain of command.

• 47:34Speaker 01

  Yeah. Oh yeah. We try to encourage people to kick through.

• 47:38Alex Hormozi?

  Yeah.

• 47:39Speaker 01

  Any chain of command. Go over, go under, go around, build coalitions. I tell people literally, if you don't like an answer I give you, by all means, build a coalition and come back and try to convince me. I know that I am blind to some answers. What was that?

• 47:50Alex Hormozi?

  I said, but you'll be wrong.

• 47:51Speaker 01

  Yeah, exactly. Save you some time, guys. Yeah, no, I'm so paranoid that there's something I don't see.

• 47:58Alex Hormozi?

  Oh.

• 47:58Speaker 01

  And my, my primary analogy of what life is, truth exists inside of a black bag. And we're all wearing mittens. We get to reach inside the black bag and be like, ah, I think it's like this. And then if I can get other smart friends to reach in and grope around and tell me what they think. So yeah, I, I'm on a campaign to get people to distrust themselves. People that drive me the most fucking crazy are people that are utterly convinced they're right. And, uh, yeah, that, that really drives me nuts because one, if you're right and you're already right, it's a pretty short detour to be like, hey, anybody see a problem that I don't see? Uh, and the number of times that someone will give you like an oblique angle to look at something like, oh my God, that is incredibly useful.

• 48:44Alex Hormozi?

  I first off so wholeheartedly agree with the jumping into the dirt of like, how do I get as close to the problem as humanly possible? The biggest mistakes I've made in my entrepreneurial career is, um, and I heard this from mentor, I like this isn't, but you have to know where the bodies are buried. So it's like if I, and it's, it's been a great Lemos test for me to understand when I'm getting too far away from a department. When if I don't know what's going wrong in a department, because there's always things going wrong. If you don't know what's going wrong, you're too far away.

• 49:06Speaker 01

  Interesting.

• 49:07Alex Hormozi?

  And so that's been a really good, like just a easy black or white test for me. Oh, I need to get a little closer to this because they say, oh, marketing is great. I'm like, there's no way. There's, there's always things like, there's gotta be things that are wrong or missed opportunities.

• 49:21Alex Hormozi?

  The, that's actually a totally separate entrepreneur thing that I think you might dig a lot. Leila taught me this, this year, and it's, it's been a huge entrepreneurial unlock for me. And it was a huge source of anxiety for me for my life, which was I did not differentiate the difference between missed opportunities and problems. And so basically, if we were not capitalizing on an opportunity, I treated it as though it was a problem with the same level of urgency and moving things out of the way. But I would say that where I'm at right now, and maybe I'll, you know, maybe it'll be different in the future, but right now, the thing that has been rewarding me again and again, which has been counter to my nature, is looking at the problems in front of me

• 50:03Alex Hormozi?

  as the opportunities, which is like fundamentally, like if we made these things exceptional, then maybe the opportunity set that I'd have as a result of that would be fundamentally bigger, different than the one that I'm having today. And whenever I, in the past, allocated resources away from solving problems towards missed opportunities, I ended up just scaling my problems. And so allowing the bigger by better path and really leaning into that and doing fewer things at a higher, a higher level has been, I think, the reason that in the last, you know, two years, acquisition.com has done exceptionally well from a returns perspective on all of our portfolio, and then obviously, you know, what we do on the content side and things like that.

• 50:47Speaker 01

  That's interesting. It makes a lot of sense to me. The two years ago, I had to put a policy, no new things. Because I am a, I'm king red dress. So that has been really advantageous. And if I'm completely honest, we still do too many things. And so, yeah, narrowing your focus, knowing that you have a finite amount of time and energy, especially now where so many companies have a face. It's like every department or every company, depending on how you think about it, wants to use me, my face. And so it just becomes a real time drain if I'm not careful. And so, yeah, really narrowing scope, I think, is super important.

• 51:32Alex Hormozi?

  Yeah, where it gets really wild is, like, I think, I heard this, someone say this offhand remark, and it's like, it like, it hit me. He was like, Zuckerberg didn't have a side hustle. And it's like, I, it's so true. And, and you think about your face, right? It's, there's, there's, there's one of the three, you know, divisions that you have underneath the impact theory that has a higher return on your face than the other two. Now, it might be on different timelines or towards whatever mission you have, but one of them has a higher return. And the thing that makes me sick is thinking like, do I need to kill my other children? Because if this, if I believe what I say I believe, then I should act in accordance with that belief.

• 52:08Speaker 01

  I think about this every day.

• 52:11Alex Hormozi?

  No, and that kills me. And I think it's, I, I had a mentor tell me, he was like, so I was like, this is what we're gonna do this year. And I was like, these are the, you know, the priorities. And this is the, the biggest, the missed opportunities versus problems has been a massive improvement for me as an entrepreneur. The other one was a deeper understanding of focus. And a lot, part of that was from Elon. And people are like, well, how does he run six companies? I'm like, he's an alien, but for everyone else, like, we need to run one. Honestly. But basically, if you don't know what the number one priority is, then how can you expect everyone on your team to know it? And for years, I came in with five annual objectives, and I think then it went down to three.

• 52:54Alex Hormozi?

  And now I'm just trying to say if we just did one of these things and it made the biggest difference. Yeah, I mean, we've, I've done away with a lot of the long-term planning components because of the, the dynamic nature of the environment. And the other one is, if, if we're not sure that this one thing is the one thing, then there's another one thing that exists that will be clear. And if I can't do it, then I'm not doing my job. Because if, if I'm chief strategist, which I define as prior prioritization, right? You prioritize limited against unlimited, limited resources and limited options. If I can't clearly articulate that, then I am not doing my job. I'm not allocating the resources in the best way possible. And I say that everyone in the company is a strategist, it's just that the resources

• 53:37Alex Hormozi?

  that you have dominion over is smaller or narrower in scope. And so it's like, I have the entire portfolio of all the companies, of the different places that I could allocate whatever resources I have. And then if you're the CEO of one of those companies, then you have everything in that company. If you're the head of marketing, then you have the 10 people that are in marketing. But every, every person has to ask the question, these are the resources I have, this is the objective I have, what is the best mix of this to get that thing? And is there one thing that I can do that would give me an outsized return compared to all of the other things?

• 54:09Alex Hormozi?

  I mean, I think one of the better decisions that I made in 2020, 2020, I think, was when we started getting into this investing thing, I was like, I don't think I'm going to beat Warren Buffett at picking. And I don't know if I'd beat him at negotiating. I was like, so how do you win in a world where everyone's better than you at most of that stuff? And I was like, well, I'm pretty good at marketing. And I was like, but how do you tie that to like private equity? And so then it was like, well, if I had more companies walking towards me than anyone else, then I could be pretty terrible at picking and still do like, I could, I could hit the broadside of a barn. You know, like I could, I could, I could get the really easy ones right. And if I'm negotiating, but I'm negotiating only with people who want to do a deal with me, then I don't have to be the best negotiator.

• 54:54Alex Hormozi?

  And if the companies are good and I'm okay at negotiating, but they're good companies, then it's not going to matter whether I got 29% or 54%. Because if the thing becomes 100 times bigger, who cares? And so that one big thing was you need to build a big business brand. And so if I just do that one thing, none of these other things matter. And so originally you'd think, okay, I have to get a broker network. You know what I mean? I might have to raise capital, like these, the normal activities that most people would do. But that was one of those kind of like high order of magnitude changes of like, what would have to be true for me to be able to outcompete people who are significantly smarter and better capitalized?

• 55:32Speaker 01

  Yeah. The ability to see the problem from a different angle, man, is so clutch. That is definitely, you're so good at systems, you're so good at taking a view as you. This is why I really encourage people, anybody, if you can hear the sound of my voice right now, I'm telling you, and I'll, I'll take the conversation somewhere political for a second, feel free to dodge as much as you need to, but my thing is the center is the destination. And what I mean by that is I want the friction between the left and the right to help me find an actually intelligent path forward. I want people to help me see the problem from different angles. I don't want to get a hard on from hearing somebody say what I already believe, which is like the big temptation.

• 56:15Speaker 01

  And I get it dude, it juices me up as much as it does anybody. But I'm just like that, that is not going to help me see the problem from a more clear perspective. So I think of myself as I'm a terrible debater. Let me be very clear. I'm a deep thinker, but a slow thinker. So debate is never going to be my thing. But I want to know as if I were going to have to debate this. I want to know the best arguments from both sides. Because if I really understand the smartest people who think that my angle is just idiotic. If I can say, okay, I'm going to steal men's argument. I know their argument as well as they do. And then here's why I believe, which my whole thing is predictive engine to getting you where you want to go. Right? So I know my goal. And then what has the most predictive validity? Cool. So I want the collision of those ideas.

• 56:57Speaker 01

  But there is something in the human brain, just the very architecture where people are so hungry to be told what they already think. That that one makes me sad for them. Because if you can do what you just did, which is go, okay, I have a problem, but I need to see this from a totally different angle. And then I need to formalize what I see. If you can do that, and then you're willing to iterate, iterate, iterate and go, actually, I need to update this. This breakdown that I have. And while I haven't seen you do it, I absolutely will bet my entire net worth that if you found a better system, you would update your thinking, you'd tell the world, yeah, I'm doing something differently now. Which I think is incredibly powerful.

• 57:41Alex Hormozi?

  Oh, thanks. Well, I think, um, I think Zuckerberg said that he's a, well, he said he's a truth teller. But I think before you can be a truth teller, you have to be a truth seeker. And Basis also talks about this, which is that their goal is truth. So when we're making decisions, he said, the goal shouldn't be to compromise. Like if you say it's 10 feet tall for the ceiling and I say it's 11 feet tall, we shouldn't meet in the middle. We should find a way to know who's right. We should get a tape measure out and we should measure it.

• 58:04Speaker 01

  Yes.

• 58:05Alex Hormozi?

  And so, um, from that, from that truth seeking perspective, I probably like you, I just want to win. And winning doesn't care whether it was your idea or not, or whether it was your original idea. It just cares whether you did it.

• 58:22Alex Hormozi?

  And like we recently, because we talked about this before the, the, the show started. But like, um, a quarter or two ago, we had a hypothesis. Which was, hey, we're going to make wider content because if, you know, Mr. Beast, because my theory was, okay, taking the natural extreme. Mr. Beast, everybody knows who Mr. Beast is, or many people do. And so he has by default, all business owners in his audience, or many business owners. And so then I will go the, how do I go wider and general fame? And we then ran that pretty hard for about 16 weeks. And when I saw the data that came back, which was all of the vanity metrics, the views, the subscribers, things like that were all way up.

• 59:03Alex Hormozi?

  But the, the metrics that I cared about, which was how many people were going acquisition.com, how many people were applying to be portfolio companies? How many people were buying books? All of those metrics were down and I thought that was so, it was counter to my hypothesis. But at that point, I had to look at the team and be like, yeah. So that experiment was wrong and that's on me.

• 59:24Alex Hormozi?

  But we're going to go what we call it back to business. And so everything is going to be business related, which means that we all need to accept now that all of our views are going to be lower. Our subscribers are going to be lower, but we're going to attract business owners. And I had one anecdotal experience that really like cemented this. I had a guy who came out who's a business owner, does probably 10 million bucks a year. And he was like, yeah, I listened to your podcast for years and I, you know, I just, I guess I'm not really in your audience. I'm not your core audience anymore. And so I stopped listening to it probably the last six months. And I was like, you are 100% my core audience. And that was like this kick to my stomach. But I mean, like you, probably being right has zero value. Like why, I just want, I want to win.

• 1:00:07Alex Hormozi?

  And so that's, I mean, my, my, uh, my little ism for my team is just win. And that's, that's, that's all I care about, like just win. And if, if it's your idea, it's my idea, it's the janitor's idea.

• 1:00:22Alex Hormozi?

  Test it. See if it works. And so that's been, that's been really, really big for me.

• 1:00:27Speaker 01

  How do you get people to buy into that? I find the, I run into

• 1:00:32Speaker 01

  frames of reference, natural ego, evolutionarily placed algorithms. Like by default, most people just really want to be right.

• 1:00:39Alex Hormozi?

  Yeah.

• 1:00:43Alex Hormozi?

  I don't tolerate that much. I, um, I, we let the data talk. We let the data decide. Data is king. And so, I mean, sure, we can try your way. Do your way. We'll do it my way and we'll see which one works. And if yours works, I'm all in. And so I think that's like, there's no arbiter of truth that's arbitrary.

• 1:01:08Alex Hormozi?

  That just, just, just says you are now right. It's we can, we can know this. Now, I think where it gets difficult is on the ones that you don't know, or let's say you have limited shots on goal. Which shot do we take? That's where it gets harder. And then we try and do, we try and assemble as much, you know, as much data to support an argument. But I think fundamentally, at the base level of entrepreneurship is you make approximated bets. Like you, by the time you have complete information to make a decision, the opportunity is gone.

• 1:01:32Speaker 01

  Yeah, for sure.

• 1:01:33Alex Hormozi?

  And so we have to, and this also goes for beginners, because I think this actually especially for beginners, is there's this fallacy that you're going to know everything before you can begin and you simply cannot. And so you have to get over the discomfort of the unknown and you have to get comfortable making bets of saying, okay, is this reversible? Yes. And to what degree is it reversible? Okay. If you lose all your money, is money replenishable? Yes. Okay. Now, how long will that take given my skill set? Like, and that, that'll, that'll give you a degree of how big of a bet this is. Now, is there a way that I can make an approximated bet? Can I get a directional bet on this that would, you know, give me a much better clue as to whether this bigger bet that I'm gonna make afterwards is correct.

• 1:02:15Alex Hormozi?

  And so I'll try and make smaller bets that give me a little bit more information that are a little bit more reversible before making a big one. But like, that was a big bet that we made with all the resources that I had and all my time for 16 weeks, making all that. Now, you could make the argument, okay, we gained audience that's not really core and then that might hurt my later videos. And I've got, you know, 50 more years. So, okay, we lost a quarter. Big deal.

• 1:02:39Speaker 01

  Yeah. Now, the willingness to try things, I think is incredibly important.