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Deep Dive with Ali Abdaal

Alex Hormozi: How He Built A $150 Million Empire And His Best Business Advice

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Alex HormoziguestGreat Minds Ali Abdaalhost

Oct 13, 20221h 27mWatch on YouTube

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CHAPTERS

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Chapter summaries

Why the $100M Offers book costs 99 cents
Ali introduces Alex Hormozi and his $150 million portfolio. Alex explains that the 99 cent price is about mass distribution through Amazon rather than book income, with the longer play being future deal flow for acquisition.com.
- •Ali introduces Alex, his book $100M Offers and his portfolio worth over $150 million
- •The book's purpose is to help as many businesses as possible, not to make money from it
- •At 99 cents Amazon gets two-thirds of the revenue, so it has an incentive to push the book
- •Paid versus free creates an emotional difference, described as customer versus voyeur
- •The biggest inflow of deals is expected in about five years from readers who have grown their businesses
The philosophy behind "I have nothing to sell you" and the 3 million threshold
Ali asks about Alex's standard intro. Alex says it began as an accident of annoyance at accusations that he was selling a course, and he then walks through what holds people back at each revenue stage and why 3 million is his minimum.
- •The 'nothing to sell you' line came from frustration with comments that he was selling a course
- •The book earns about 60,000 a month, which is irrelevant relative to his income
- •Zero to three million is mainly an ignorance problem; six figures means selling something to someone through one channel, one product, one avatar
- •One to three million is about getting out of delivery and building a core team
- •Three million typically means product market fit, a reliable acquisition channel and a core team
From job to first business: the employee transition and breaking down delivery
Ali asks how someone in a corporate job could get to six figures doing what they love. Alex explains that you remain an employee of your own business at first, and describes advertising, an offer, and splitting delivery into chunks.
- •Employees mistake top-line revenue for income; owners of $10M businesses may take about a million
- •Starting a business means being the employee of a business you own, wearing all the hats
- •Pick one of five advertising methods and do it consistently
- •The $100M Offers book is about figuring out what to sell
- •Break delivery into chunks so five people do 20% each, rather than finding someone to do everything you do
What to sell when you think you have no skills
Ali raises the worry of not knowing what to sell. Alex says everyone knows something, points to past jobs, parents' jobs and personal interests, and recommends starting with a service business by doing what others do a bit better, while paying down ignorance debt.
- •Three buckets of knowledge: parents' work, your past jobs and current interests
- •Y Combinator looks for past experience because of the ignorance debt in an unfamiliar industry
- •Most entrepreneurs have a graveyard of failures, so don't expect the first business to be perfect
- •Service businesses are the lowest risk because they cost only your time
- •Trade time for money to learn rather than to earn, paying down ignorance debt
Alex's backstory: the Free Training Project and the first online clients
Alex describes the half step before the gym: a free charity-based training project that built testimonials, then a paid online coaching business that he found boring to deliver. That led him to decide he needed to own a gym.
- •Things people ask you to do as favours indicate what you can charge for
- •The Free Training Project had clients donate $500-$1,000 to charity in exchange for testimonials
- •All he needed was an LLC, a bank account and a PayPal account to start
- •About 20 clients at $200 a month brought in $4,000 a month for four hours of work on Saturdays
- •He disliked repetitive delivery and chose to own a gym instead of doing more of the same
Choosing the gym and apprenticing to learn
Alex explains the three business ideas he was weighing and how the gym won. He cold-contacted gym owners, joined a mastermind and worked at the gym for low pay, treating it as learning rather than earning.
- •He weighed test prep, a froyo business and fitness; froyo cost $250K and test prep collapsed after a miscommunication with a professor
- •He contacted 40 gym owners and only one replied, with a mastermind he joined for $10,000
- •The gym owner ended up paying him roughly minimum wage after he offered to work for free
- •He lived frugally on savings of about $50K so he could focus on learning
Learning vs earning: invest in your earning power, not the S&P 500
After a Shortform sponsor read, Alex argues that ignorance is the most expensive cost and that investing in earning ability beats market investing. He uses college costs, inflation and a phlebotomy certification example, and describes how his own baseline income rose as he gained skills.
- •88% of his followers want to start a business, according to a survey on his site
- •Investing in your ability to earn gives higher returns than the S&P 500 for people with low incomes
- •He argues that a four-year degree is overpriced compared with mentorships in ads, sales or courses
- •A $500 certification could triple a minimum-wage worker's pay, far outperforming investing that $500
- •Each new skill raised his fallback income, from stripping and Uber to selling cars to running ads and sales on his own
Learning to sell and opening the first gym
Alex recounts opening his gym with a $5,000 monthly lease and no experience. He had resisted the idea of sales, but the rent forced him to learn it, and a Facebook ads workshop plus a six-week challenge offer brought in his first customers.
- •He had once thought sales was beneath him as an academic, but the lease forced it
- •A $3,000 weekend workshop taught him Facebook ads two weeks before opening
- •He signed 27 people at $300 each in the first two weeks, from about $1,000 of ad spend
- •The offer was a six-week challenge with money back if you lost 20 pounds, converted into annual memberships
- •Defined-end front-end programs can be priced three to four times higher than recurring ones, helping recover acquisition costs
Paying for speed, and the luck behind the leap
Ali asks whether paid education is still worthwhile when YouTube exists. Alex says you pay for speed and troubleshooting, citing his $750-an-hour ad coaching, and admits his gym launch was lucky and driven by ignorance.
- •Things can be learned on YouTube but you pay for speed and troubleshooting
- •He paid about $5,600 for eight one-on-one sessions to learn retargeting and how an expert thinks
- •Stacking skills like ads and sales multiplies earning power
- •He was 23 and signed the lease largely out of ignorance, saying he wouldn't advise it now
- •His mentor's Groupon strategy failed for him, so the ads workshop was what made the difference
Quitting the corporate path and facing his father
Alex describes why leaving management consulting felt risky: it was an emotional decision rather than a mathematical one. He explains the conflict with his father, how he chose to accept himself over approval, and Ali shares a similar story about leaving medicine.
- •The online income felt inconsistent, but the real difficulty was leaving the path he'd been building toward
- •His father strongly disapproved and they didn't speak for a while
- •He decided he'd rather be rejected by his father than reject himself
- •He drove halfway across the country before telling his father
- •Ali relates leaving medicine and being talked into it on Lewis Howes' podcast
Scaling from one gym to licensing and the gym business
Alex summarizes how the gym grew, then moved to a turnkey sales model and then a licensing model that took off in 2017. He also says whether owning a gym is worth it.
- •The first gym grew by $5,000 a month for seven months and was outsourced by month nine
- •He opened locations two through five, then moved to a turnkey model that made $100K a month with no employees
- •He sold the gyms and switched to licensing, doing $7 million in the first year and $26 million the next
- •Gyms are a great vehicle for learning sales and operations but are a limited opportunity vehicle
- •In the turnkey model, he ran marketing and sales and took 100% of the cash collected
Levels of wealth, spending and reinvestment
Ali asks about levels of wealth. Alex describes three levels, explains that he spends mostly on information, and says he keeps cash and plans bigger bets such as media and majority acquisitions.
- •Three levels: basic needs covered, discretionary spending covered, and luxury wealth, with the savings rate as the multiplier
- •He and Layla live on well under 10% of their income
- •He mostly spends on information and access, once for a $350K hour of learning
- •He stacks cash for liquidity and would otherwise use a dividend ETF
- •He plans major media investments and majority purchases of companies within his portfolio
Goal of 10 billion and the mission of business education
Ali asks what drives him. Alex says the goal is 10 billion but the mission is making real business knowledge available to everyone, because that education set him free, and he describes how he approaches giving talks.
- •The goal is 10 billion, but the mission is real business education for everyone
- •He wants to document the path as the portfolio grows, since Bezos, Musk and Buffett haven't made courses
- •Business knowledge gave him optionality and freedom
- •He says he's the only business talking head who came up through paid and alternative education
- •He brings his best to every presentation, inspired by Michael Jordan in The Last Dance
Daily routine and how the content engine works
Alex outlines his day, then explains how his content began with a basic setup and grew into a team of in-house staff and vendors costing about $100K a month. He also covers phases ahead and how he thinks about audience breadth.
- •He works on his own projects from 5 AM to 1 PM, holds meetings in the afternoon, then goes to the gym
- •The content started with him clicking record and a team uploading it, then moved to a better production setup
- •Content costs about $100K a month against roughly $42K a month channel income plus book revenue
- •His playbook is to hire the best vendor, build an in-house person and fire the vendor once the in-house person beats them
- •He wants content that is both wide and deep, and would have started five years earlier
Six-pack abs, accountability and the price of what you want
Ali asks about getting six-pack abs. Alex says the issue is motivation, not knowledge, and that people won't endure short-term discomfort for long-term gain. He says to decide whether you're willing to pay the price, and that maintaining a physique is comparatively easy.
- •Six-pack is a matter of body fat percentage, achieved by training and a calorie deficit over a long period
- •The real gap is accountability: people won't endure short-term discomfort for long-term achievement
- •Behavior changes through reinforcement or punishment, and the current behaviour must be doing something for you
- •Decide what you want and its price, or accept that you don't want it enough
- •Maintenance is easy with minimal stimulation and enough protein

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