Alex Hormozi: Why fear, not tactics, traps people at zero

1. 0:00 – 2:19

   Intro

   1. AHAlex Hormozi0:00

      If you want to make more money, you might wanna consider doing this. So number one is- (instrumental music)

   2. SBSteven Bartlett0:04

      Hold that thought for just a second, because the thing that comes before that is in this graph of yours.

   3. AHAlex Hormozi0:09

      Oh, God. This is the entrepreneur lifecycle, and there are six stages. Now, the vast majority of people get stuck on stage three. I've made some of the biggest career mistakes at this point. And you end up living in the same six months for 20 straight years, suffering, until you learn how to break free from it.

   4. SBSteven Bartlett0:23

      I wanna go through the whole thing.

   5. AHAlex Hormozi0:25

      This is gonna be (beep) awesome.

   6. NANarrator0:26

      Alex Hormozi is the master of business strategy.

   7. SBSteven Bartlett0:29

      An artist in scaling companies into the millions. And a leading voice in how to craft your way to success.

   8. NANarrator0:34

      He's an entrepreneurial powerhouse.

   9. AHAlex Hormozi0:36

      Whether you're starting out or wanna go from one million to 10 million, there are certain behaviors and actions that will increase the likelihood of success that we're going to go through. But here's the really hard truth that a lot of people don't like talking about. Entrepreneurs must be willing to make impossible choices, have the courage to be willing to be wrong, have shame by failing at things in front of people whose opinions they care about. And that fear keeps people stuck in a job and a life they don't want for years. And that was my path. I had a white-collar job, a condo overlooking the city. Everything was according to plan. And I remember thinking, like, I didn't want to be alive 'cause I was so afraid. But once you get over the fear, it unleashes this whole new realm of possibility of being able to do what you want. And that is when you can learn the real game of entrepreneurship, such as knowing that business ideas typically come from one of three Ps. And you only need one of those three. And then there's the four Rs for customer success. How to learn new skills quickly, how to stand out in a competitive market, the winning strategy for 2025, and so much more.

   10. SBSteven Bartlett1:28

       So where should I start? I have been forced into a bet with my team. We're about to hit 10 million subscribers on YouTube, which is our biggest milestone ever, thanks to all of you. And we wanna have a massive party for the people that have worked on this show for years behind the scenes. So, they said to me, "Steve, for every new subscriber we get in the next 30 days, can $1 be given to our celebration fund (coin dropping) for the entire team?" And I've agreed to the bet. So if you want to say thank you to the team behind the scenes at Diary of a CEO, all you've gotta do is hit the subscribe button. So actually, this is the first time I'm gonna tell you not to subscribe (laughs) 'cause it might end up costing me an awful... (laughs)

   11. NANarrator2:07

       (Paper crumpling) (crowd cheering)

2. 2:19 – 3:23

   What Would You Say to the Millions of Entrepreneurs That Follow You?

   1. SBSteven Bartlett2:19

      Alex, if someone's just clicked on this conversation and they're considering listening for the next couple of hours, based on everything that you do for the millions of entrepreneurs that follow you, that read your books, can you tell me exactly why you believe they should stay and listen, and who should stay and listen?

   2. AHAlex Hormozi2:37

      At Acquisition.com, we scale businesses. The content that I generate, that we put out, conversations like this, helps people who are going from zero to one, just getting off the ground, to helping people go from one million to 10 million, um, to helping the entrepreneurs going from 10 to 100, either get there or exit along the way. And there are frameworks that cross all three of those that I consider both deep and wide, um, that help any business navigate whatever strategic decision is in front of them to get the highest potential return for their time. And so, if you're listening or watching, then if one of those frameworks applies immediately to your business and allows you to s- pull five years forward in your career, I would say that's a pretty good return on time.

3. 3:23 – 12:09

   What Entrepreneurs Really Need

   1. AHAlex Hormozi3:23

   2. SBSteven Bartlett3:23

      For the people that are at zero...

   3. AHAlex Hormozi3:25

      Yeah.

   4. SBSteven Bartlett3:26

      ... what is it that they're typically coming to you to help them with?

   5. AHAlex Hormozi3:30

      Mm-hmm.

   6. SBSteven Bartlett3:30

      So, if you were one of them-

   7. AHAlex Hormozi3:31

      Yeah.

   8. SBSteven Bartlett3:32

      ... what is it that they want from Alex Hormozi?

   9. AHAlex Hormozi3:34

      I think it's, um... There's what they think they want and what they actually need, um, which are two different things. And so, I think what they think they want is, uh, some tactic that's going to immediately help them start a business. Um, what they typically actually need is, um, the courage to be willing to be wrong and to be willing to have shame by failing at things in front of people whose opinions they care about. And I think that's... Like, going, if I re- rewind the clock for me, it was probably one of the hardest things that I had to get over. And so, I think that's why maybe my message resonates with a lot of people is because it was so hard for me, um, to get over. And what's interesting is, basically anybody who's listening, the harder it is for you to break free of whatever kind of mental prison you've made for yourself, whether that's real or just in, in your head, the more compelling your story will be when you break through it. Um, because it will resonate with even more people. Uh, for the people that it was easy, that, their story doesn't have a (laughs) , doesn't have a lot of like, "I was immediately an entrepreneur." Like, I wasn't like that. I had a job when I was in high school. I had a job immediately out of college. Some people are like, "I was selling lemonade out of the back of my, you know, thing when I was 13." I didn't do any of that. (laughs) Like, I... School failed me. I actually was pretty good at school. Uh, like (laughs) -

   10. SBSteven Bartlett4:55

       (laughs)

   11. AHAlex Hormozi4:55

       ... I didn't have any of those issues. You know what I mean? And so, I had a c- a pretty clear career path. And so, I had what many would consider, like, I had a real opportunity cost. So, I had a white-collar job, and I had a, a GMAT score above Harvard's mid score. And so, I had a, a really clear path of what my life wou- could look like in the next 20, 30 years. And it was fairly well-defined. Like, I'll go to Harvard or Stanford or one of the top business schools, and then I will either go back into management consulting or I'll go into investment banking and then eventually end up in private equity. Um, and that would be the path, right? And then all the flowers would be set at my feet. And, you know, everyone would say, "We approve of you. You're an excellent (laughs) person." But when I saw the people who were 20 years ahead of me, I really didn't want their life. And then it started making me look at my life, and I was like, "I don't even know if I really want my life." Um, and so the, the big decisions that I've made in my life, unfortunately, um, have almost always come at the, at the, the doorstep of apparent death. Um, and I think maybe in some ways that makes me a coward, uh, for having needed death to make decisions. And so operationalizing that has been something that has helped me move faster to make decisions that I know I need to make but don't. And so, like, the first big kind of, like-... what felt like a death decision was, um, I was a consultant, 22-ish years old. I had a paid for, you know, condo that I bought, uh, overlooking the city. And I remember thinking, like, "I really hope I don't wake up tomorrow." And that, and it... I don't mean that to be melodramatic, it just, I just, for a period of time, I just always just, like, hoped every night, I was like, "I just really hope I don't wake up tomorrow. Like, I just don't want to do this." And what was difficult about that was that, at that time, was when my father was most proud of me, uh, because I was doing everything that was according to plan. You know, he could talk about, like, his son who graduated in three years from Vanderbilt, had the, had the good job. Like, everything was... We're following the plan. Um, and it was upon realizing that my ultimate expression of living out his dream was me feeling like I didn't want to be alive. And so in... And it took me time to get to that point to even articulate that, 'cause obviously you never want to kind of, like, admit failure of, like, "I have really messed something up here." Um, but I was living my life to win someone else's game. And when I realized that, I realized that one of our dreams had to die, either his or mine. And when I realized that his dream must die in order for mine to live was a, a statement that I kind of, uh, crystallized when I was at that point in my life. Like, I had to keep repeating that, like, "His dream has to die in order for mine to live." And so to put this in perspective of, like, how afraid of my father's judgment I was, I left the state and drove across the country halfway through before calling him to tell him that I was gone. And so I- I bring this up because I don't try- I'm not trying to be dramatic here, but I'm saying that if you feel a lot of pressure, I get it. Like, I tried to leave the job that I was at to pursue just literally anything that wasn't that. Just, I wanted to start a business at some point. I didn't know how I was going to do it. I just knew that what I was doing was not the path I wanted to be on, and everybody around me wanted me to be on that path. And so I went to go be like, "Hey, I'm thinking about doing something else," and, you know, it would always be that, "Ah," you know, "Don't... Later, later. Like, everything's good. Later." You know? And, um, I remember when I called my dad, and I told him that. He said, "Understand, why don't you come ho- like, come home. We'll, uh..." Well, I didn't tell him that I was, I was gone yet. Like, I said, "Hey, I wa- I, you know, I want to go pursue this fitness thing." Um, he said, "Cool, come over for lunch. We'll talk about it." You know, and, and he... And I was like, "I'm, I'm already gone," and then obviously his tone changed a lot. (laughs) Um, and, um, and, you know, our relationship struggled for, you know, years after that. And I- I also bring that up because sometimes there's this illusion that, like, you know, you get on the, on the Oscar stage or whatever it is, and you're like, "Hey, I just want to thank, you know, my mom, my dad, my friends for always supporting me." And, um, I can't say that, and I wish I could, and you might not be able to say that either. And I also don't think that's a reason not to do it. And so, um, we did struggle for years after that to kind of like... 'Cause I was basically living as what was once his prodigal son, uh, goes and takes a minimum wage job as a personal trainer at a gym, uh, like, (laughs) you know, cleaning floors and stuff to learn, just to learn the gym business. Um, but that was ultimately, like, how I broke free, literally f- you know, physically, uh, leaving the area, and, you know, mentally. But I think that I had to accept that there was a, there was a timeline where my father would never talk to me again, and I had to be okay with that, um, to pursue what I wanted. And I think that when you asked the original question, "What are the people from Zero To One really looking for?" I read tons of business books at that time. But I couldn't use any of them 'cause I was so afraid. And what's crazy is that, like, I think about it now in, in retrospect, and it's like, it's crazy how large the perceived monsters can appear. And Leila has this quote that I love, but it's, um, "Fear is a mile wide and an inch deep." And so you look at it, and it looks like this ocean, and then you take the first step, and you realize you don't drown 'cause it's like, "Oh, there's ground underneath of this," right? There's other people who are more on my path. And the friends you lose, you gain new friends, right? And so, um, that fear was the hardest decision that I've had to overcome in my entrepreneurial career, and I think of all the, of all the, the split paths in my life, that was the one that if I had many timelines or many universes that existed, that was probably the one that is the most likely that I would not have parted from. So I think in, like, 90% of universes that Alex Hormozi exists, I'm just a consultant somewhere. And so, um, I would encourage you, if you do feel that, you're not gonna die. Like, you won't die, and you might just live.

   12. SBSteven Bartlett10:48

       It's so interesting because I think everything you've said is just absolutely spot on. But you're right in the way you say that if you'd asked an audience member listening now-

   13. AHAlex Hormozi10:56

       Yeah.

   14. SBSteven Bartlett10:56

       ... why they haven't started yet, they wouldn't say fear.

   15. AHAlex Hormozi11:00

       (laughs) Yeah.

   16. SBSteven Bartlett11:00

       They would say, "I haven't got the X."

   17. AHAlex Hormozi11:02

       Yeah.

   18. SBSteven Bartlett11:02

       "I haven't got the Y," but actually, it is such an emotional thing. And we don't talk about that enough because uncertainty is... Uh, humans seem to be allergic to uncertainty, and they'd rather the certain misery of their current situation typically than uncertainty.

   19. AHAlex Hormozi11:15

       And I think, um... And I, and I used what I consider a very non-palatable word of coward purposefully because no one wants to say they're afraid, because if you say you're afraid, then it means you're a coward. And I think that it only means you're a coward if you don't... If you allow that fear to change your behavior in an aversive way, as in it, not towards what you want.

   20. SBSteven Bartlett11:39

       Mm-hmm.

   21. AHAlex Hormozi11:39

       And so, you know, the inverse of that, many people have heard it, courage is not acting, um, without fear, but despite fear. Um, and I think that, um, when you act... When you allow fear to change your behavior the wrong way, that is when you can give yourself that title of coward. And I think that that is a title that I have feared my whole life. And that label is almost... I'm more afraid of that label- (laughs)

   22. SBSteven Bartlett12:04

       Mm-hmm.

   23. AHAlex Hormozi12:04

       ... than the label of failure. I'd rather be a failure than a coward.

4. 12:09 – 16:10

   Is There a Framework for Knowing When to Quit?

   1. SBSteven Bartlett12:09

      Is there a framework for knowing when to quit?

   2. AHAlex Hormozi12:13

      So I think there's the, there's like the math behind it. And the math I think is pretty straightforward. So like when do you quit your business? I like, you've saved up three to six months of personal savings, number one. Number two is that you have started something, because nowadays in the digital age you can begin a business on the side that can generate income. And that income, um, in the small amount of time that you're not working, uh, replaces or at least matches the existing income you have from your, your current job. And you've been able to do that or demonstrate that income for like three to six months. If you do that, that's a very like math way of approaching it. That also is basically never the reason that people are quitting (laughs) their job. Right? Like that's a really s- like I have, I have, I have backlog, I've matched my current income with my part-time work, and if I just put my full-time work, I would probably make more. Very reasonable, but never actually the reason that people don't do it.

   3. SBSteven Bartlett13:04

      I was, I was thinking about the two sort of reasons why someone might quit something or feel like they wanna quit. And one of them is clearly because it's hard.

   4. AHAlex Hormozi13:12

      Yeah. (laughs)

   5. SBSteven Bartlett13:12

      And that's obviously not reason enough to quit. And then there's another one which you were speaking to there which is, it's not moving me towards a meaningful goal.

   6. AHAlex Hormozi13:19

      Yeah.

   7. SBSteven Bartlett13:19

      Irrespective of how hard it is. Like a marathon-

   8. AHAlex Hormozi13:21

      Yeah.

   9. SBSteven Bartlett13:21

      ...you're raising money for a charity you care about, it's hard-

   10. AHAlex Hormozi13:23

       Yeah.

   11. SBSteven Bartlett13:24

       ...but you don't quit.

   12. AHAlex Hormozi13:24

       Yeah.

   13. SBSteven Bartlett13:25

       And then there's, maybe if you're running a marathon for no apparent reason-

   14. AHAlex Hormozi13:28

       (laughs)

   15. SBSteven Bartlett13:29

       ...you know, there was no charity, there was no one watching, there was no like fitness benefit, then that's a, a good, I guess, moment to consider quitting. Um, my story m- mimics yours in a way that I didn't realize.

   16. AHAlex Hormozi13:39

       Mm-hmm.

   17. SBSteven Bartlett13:40

       I didn't realize you went through a similar thing in terms of cau- the, the parents disownership.

   18. AHAlex Hormozi13:44

       Yeah.

   19. SBSteven Bartlett13:44

       Um, no real great option to-

   20. AHAlex Hormozi13:47

       Yeah.

   21. SBSteven Bartlett13:47

       ...to flee to, but feeling like the current path that would've led me to be, I don't know, a business management student was significantly worse on balance than taking the risk. But f- I think maybe a point of distinction is it didn't f- I was so naive that it didn't feel like a risk.

   22. AHAlex Hormozi14:02

       Yeah. So what's really interesting about that is, um, the guarantee. And so a lot of times we don't, we don't look at what I call the don't, which is like the, the alternate path. And so if I had played out my existing path, I had a guarantee of outcome I didn't want, it was just at a delay. Whereas here, there's a chance that I can make it. And so one of the final kind of frameworks for making the decision was: guarantee bad, chance at good. And I was like, "Well, I might as well take a chance." And I, I strongly, um, encourage thinking about, uh, playing it out. And so what I mean by that is, like I think fear exists in the vague, not in the specific. And so when you say, "I'm gonna quit my job, and then what if this doesn't work, I'm gonna failure," tons of fear. If I say, "I'm gonna quit my job and then I'm gonna try and start a business, and if the business doesn't work, I'll probably have a compelling story that I could tell for business school if I wanted to, to show that I had some entrepreneurial slant. In the meantime, I could use that experience plus my job experience to probably get another or maybe even better job in the meantime and match or s- or supersede my existing income. And the actual loss would be maybe the savings that I had saved up. But if I'm younger or I haven't made as much money as I want, then that's never been the amount of money that would be material anyways on the grand scheme of what I would like to make. Um, and in terms of living situation, I will, worst case, go back to my parents' house with my tail between my legs or sleep at a friend's couch because I have enough people that would be willing to put me up in a garage if I had to." And so it's like, okay, so my actual worst case scenario is just like, I have a cool story and maybe some shame that I, is self-inflicted, 'cause it's not, like no one else cares really. But it's self-inflicted shame and maybe a detour or a different story that I have to tell later on in my career. Not as much fear there, right? But like the first one, like I'll fail, everyone will hate me, and

5. 16:10 – 19:13

   Fear vs. Logic: How to Think Rationally

   1. AHAlex Hormozi16:10

      I'll die. (laughs)

   2. SBSteven Bartlett16:11

      The first one sounded like it was written by your, like, amygdala-

   3. AHAlex Hormozi16:14

      Yeah. (laughs)

   4. SBSteven Bartlett16:14

      ...like the fear center. And the second one was pure, like, prefrontal cortex, it was all logic.

   5. AHAlex Hormozi16:18

      Yeah.

   6. SBSteven Bartlett16:18

      And I'm wondering, you know, as you're going into that decision, obviously fear is gonna lead it.

   7. AHAlex Hormozi16:21

      Yeah.

   8. SBSteven Bartlett16:21

      So of course, you're gonna go for option one-

   9. AHAlex Hormozi16:23

      Yeah.

   10. SBSteven Bartlett16:23

       ...where you just think about the downside.

   11. AHAlex Hormozi16:24

       Yeah.

   12. SBSteven Bartlett16:25

       Maybe there's a, a practice that allows you to get into your prefrontal cortex, into logic.

   13. AHAlex Hormozi16:29

       And I think that's, I actually, so I think you nailed it and m- said it way better (laughs) than I did. But I think that's a, I think going from vague to specific basically disengages your amygdala because e- it, it can't reason the logic chain of causation and causality of what's going to happen next in a chain of events.

   14. SBSteven Bartlett16:46

       Mm-hmm.

   15. AHAlex Hormozi16:46

       And so when you get into the specific of it, all of a sudden you're like, "Okay, I'm not gonna be homeless and then shamed and die."

   16. SBSteven Bartlett16:54

       (laughs)

   17. AHAlex Hormozi16:54

       Um, I might live in inferior living conditions for a short period, which, by the way, when you're later on in your life, you'll look back and think of as the good old days, 'cause I can't believe I was couch surfing, I was pursuing my dreams, right? It's, it's only like in the moment that it feels bad. When you look back, like even, I, I find this hilarious, like, like how long after you do something embarrassing is it funny?

   18. SBSteven Bartlett17:15

       (laughs)

   19. AHAlex Hormozi17:15

       Right? Like at s- at some point for almost all of us, with enough time, the shameful experience becomes funny. And so if it is going to become funny eventually, it might as well become funny now. (laughs)

   20. SBSteven Bartlett17:25

       Yeah.

   21. AHAlex Hormozi17:26

       And so it's just like pulling the time horizon up. But all of that's prefrontal cortex-

   22. SBSteven Bartlett17:29

       Yeah. (laughs)

   23. AHAlex Hormozi17:30

       ...decision making. And so, um, no, but I think that's exact, like I think that, that nailed it. Because when I thought about this, this decision, obviously I had my very, you know, emotional statement around m- like, his dream has to die for mine to live. Yes. Also, logic downside risk here. I'll have a story, and I can always get my job back.

   24. SBSteven Bartlett17:47

       Mm-hmm.

   25. AHAlex Hormozi17:48

       Okay. And if I can't get that job back, I'll have other ones that will be available. Fine. And if I have a downgrading and some people think that I'm not as successful then, okay. I'll not stop though.

   26. SBSteven Bartlett17:58

       Mm-hmm.

   27. AHAlex Hormozi17:58

       And so I think that that, that demystifies a lot of the fears. And I think that applies not just for entrepreneurial fears, I think it applies for any fear. Like, I'm gonna tell, like I can't tell this person this bad news. All right, let's play it out. I say something and then they're going to kill me? Probably not. So what's gonna happen? I'll say these words and then they're, they'll, they'll, they'll flip the table, they'll, they'll flick me off, they'll maybe just feel hurt and maybe they'll cry, maybe they'll shout. Okay.Okay, if they shouted at me, what do I do? Like, and you just kind of play it out, and you're like, "Okay, I think I have, like, most of these conditions prepared for."

   28. SBSteven Bartlett18:29

       Mm-hmm.

   29. AHAlex Hormozi18:29

       And then all of a sudden, you can, like, have those things.

   30. SBSteven Bartlett18:32

       What you also said is that in the face of guaranteed misery, any option is better.
6. 19:13 – 23:41

   Your Decisions Are Driven by Self-Awareness

   1. AHAlex Hormozi19:13

      be.

   2. SBSteven Bartlett19:13

      Amen. When you're thinking about what to pursue, so say you've left the job-

   3. AHAlex Hormozi19:18

      Yeah.

   4. SBSteven Bartlett19:18

      ... you've quit the thing. When you're thinking about what to pursue, how much of that is a decision derived from self-awareness?

   5. AHAlex Hormozi19:27

      Mm-hmm.

   6. SBSteven Bartlett19:27

      Because, you know, they'll, someone will look at you now and be like, "Oh, no, Alex did this, so I'm gonna start a acquisition.com."

   7. AHAlex Hormozi19:33

      Yeah.

   8. SBSteven Bartlett19:33

      You know, or they'll say, um, "I wanna s- I saw Steve Jobs did that thing with the computers. I'm gonna start Apple."

   9. AHAlex Hormozi19:39

      Yeah, right.

   10. SBSteven Bartlett19:40

       Or, "Elon, I'm gonna do the spaceships."

   11. AHAlex Hormozi19:42

       Mm-hmm.

   12. SBSteven Bartlett19:42

       How much do you have to know thyself to know what to pursue?

   13. AHAlex Hormozi19:45

       I mean, that's a really good question. So, um, there's a tweet that I love by Andrew Wilkinson, which is, um, "Every entrepreneur ever: Here's the winning number for my lottery ticket." And so it's like every entrepreneur will say, "Here's the winning lottery ticket," but it's like that game already, that drawing already happened.

   14. SBSteven Bartlett20:05

       Ah, okay, yeah.

   15. AHAlex Hormozi20:06

       Right? And so, like, you can't cash that ticket in. It's already done. And so people say the word first principles. No one really knows what it means. Uh, (laughs) I mean, some people do, but the va- I think far more people say it than know what it means. And so basically there are foundational truths of business that, that exist and the conditions of the environment will change. And so you have to apply those truths to whatever the current condition is. And so that's what I try and tease out with the books and the stuff that I, that I put out in content. But at the end of the day, you have an input of time, like zooming all the way out, if the goal... Assuming that your goal is to make money, okay, like, and this is just a purely economic business goal, then you have time, which is the primary currency that you trade it, and you make dollars over a period of time. And so I tend to reject the idea of, like, never, you know, never trade time for dollars or anything like that, because everyone trades time for dollars. It's just some of us are more efficient at it than others. But even exchanges that occur that just are not denominated in time still occur over time. And so, uh, you have this foundational unit of time, which you're going to give in. What we're seeking is the highest return on that time. And so there, you know, within a business context, there's kind of three levels of, uh, things that have to occur in a business. You have to, you know, attract attention, you have to convert attention, and then you have to deliver something, uh, for that attention. And in each of those things, you want as much leverage as possible, so you want as little time as possible required to get the most output. And so I have built acquisition.com on basically two primary theses, uh, which are in the logo, which is, this is a fulcrum for leverage.

   16. SBSteven Bartlett21:40

       For people that can't see, it's like-

   17. AHAlex Hormozi21:41

       Oh.

   18. SBSteven Bartlett21:41

       ... a triangle.

   19. AHAlex Hormozi21:42

       Yeah, so it's like a triangle or the Illuminati, 'cause that always gets brought up.

   20. SBSteven Bartlett21:45

       (laughs) Yeah, Freemasons.

   21. AHAlex Hormozi21:46

       Um, yeah, right? So we've got a, a, the fulcrum for leverage, and then inside of it you have supply and demand. And I see those as the two foundational principles of business. And so which is you need supply and demand to have a business and then leverage to get as much out of it as you possibly can. And so, um, when you're looking at the assets that you have, assets can also be skills, resources, what you have available to you. Now, if you have nothing, then all you have is your brain, your hands, and the time that you have that you can put towards learning something, which is why I'm a big fan of skill acquisition as one of the, the primary things that you can do is educating yourself. And not formally educating, but informally or, or alternatively educating yourself on super tactical things. Uh, once you get over the fear, then you start asking, "Okay, how do I let people know about my stuff? And what do I let them know?" (laughs)

   22. SBSteven Bartlett22:32

       Mm-hmm.

   23. AHAlex Hormozi22:32

       Right? And so you have to have something to sell, which is the offer. And ideally you want the offer to have as much leverage as possible. Like, so if you sold software or you sold media, those are things that you can, uh, cut once, sell, sell 1,000 times. Um, if you have a conversion mechanism, it's like you can't have it be automated like a checkout page or some sort of video sales letter or something like that where people just buy without a, a phone salesperson. If you add a phone salesperson, there's less leverage, not to say that's wrong, but you want to s- you wanna have the highest leverage opportunity. And then from a, um, from the deliverability expec- uh, uh, perspective, um, I kind of talked about deliverability first, but, uh, from the advertising perspective, uh, if you reach out to people one-on-one, that's lower leverage than being able to make one piece of content that a million people see, right? And so over time you go from low leverage to high leverage, uh, where you have the same inputs, but you just get significantly more for your output. And that fundamentally is like if we're reasoning up from first principles, how do I get... The, said differently, the question someone I think is really asking is, how do I get the most for what I put in? And you have to reason within your current context of your skills and your resources and your assets in order to derive that solution for you.

7. 23:41 – 24:47

   What to Do When You Quit Your Job: The 4 P's

   1. AHAlex Hormozi23:41

   2. SBSteven Bartlett23:41

      So if someone walks up to you in the street, and they say, "Alex, what idea should I pursue? I've just quit my job." (laughs)

   3. AHAlex Hormozi23:44

      Yeah, right. (laughs)

   4. SBSteven Bartlett23:46

      (laughs)

   5. AHAlex Hormozi23:46

      So I would say, um, business ideas typically, uh, come from one of three Ps. So it comes from a pain that you're currently experiencing, a past profession, so the thing that you just quit or some of the jobs that you just quit, or a passion.

   6. SBSteven Bartlett23:58

      Mm-hmm.

   7. AHAlex Hormozi23:59

      So it's something that you're inherently interested in that you would spend your time doing anyways. Uh, some skill that you learned while you were in the workforce, which by the way is one of the most proven ways of making money because the economy has already showed you that people are willing to exchange money for that s- for that specific job. And so, uh, in the world of gig economies and solopreneurs, every business can be dismantled into just jobs being done, and all of those jobs can be fractionalized.So anybody, like, let, we look at any business, you've got sales, you've got, you've got marketing, you've got d- customer success, you've got, you've got customer support if you want to differentiate there, you've got product, you've got design, you've got web pages. There's, you know, there's so many different components to a business, you just need to learn one of them.

   8. SBSteven Bartlett24:37

      Mm-hmm.

   9. AHAlex Hormozi24:37

      And then it's like, boom, you have a skill that you can trade for money that you don't have anybody else to report to. Um, and then pain is usually, I think, um, in some ways,

8. 24:47 – 27:35

   Pain as a Driver

   1. AHAlex Hormozi24:47

      um, sometimes the, one of the biggest drivers is like you had an eating allergy, and you couldn't find pancakes that dealt with your specific eating allergy, and you bet that there's a decent amount of other people with that allergy that also like pancakes. And so then you make pancakes that, that are delicious and amazing that also cater to people with that food allergy. And then all of a sudden, like, you have a business based on pain.

   2. SBSteven Bartlett25:10

      And why, why does that matter?

   3. AHAlex Hormozi25:12

      What part?

   4. SBSteven Bartlett25:12

      The pain part.

   5. AHAlex Hormozi25:13

      Um, I think that-

   6. SBSteven Bartlett25:14

      What, what, what leverage and advantage does it give you for the next five years?

   7. AHAlex Hormozi25:17

      I think that deep knowledge of the prospect is paramount or very important for creating exceptional products. And you can either do that by doing a ton, a ton of research or by being the prospect. And there's a certain amount of, like, visceral feel that you'll know. Like if someone wants to make a nose product for breathing, I have tried every product since I was in eighth grade, so it's been 20+ years, 30, whatever, a lot of years, um, that, since then, and I've tried everything, and so I know the pros and cons of every product that exists on the market. And I can tell, like it's, and I've done, it's not like, "Oh, I tried it for a day." It's like, "I'll try things for a month at a time." And so I have so much time exposure to this problem that I have a lot of nuance in my opinion on what's wrong with the solutions, so I can formulate a way better hypothesis on how to fix it.

   8. SBSteven Bartlett26:05

      And that hypothesis would, will be, for an investor, so much more compelling because you lead with a story as opposed to logic.

   9. AHAlex Hormozi26:12

      I met the guy who, uh, invested in Regal Cinemas, which is the, like probably the biggest chain in the US. Um, and it was when it was, there was a guy had just one theater, and it became the, now obviously COVID has disrupted that business, but, you know, for 20, you know, years or whatever, they, they crushed. And he said it was so weird to say that, "Oh, cinemas are gonna make a comeback," 'cause they'd kind of been on a downturn or something like that during the time that he was making the investment, and he said, "The reason I decided to invest in it was because this guy knew everything about the business down to how much the cost of a kernel of popcorn was." And he just knew it so, like the back of his hand that he was like, "This guy can't fail. Like he just knows too much about this business to not have it work." And so he went investing and, you know, made a gazillion dollars. And so, but I think that that s- deep understanding, and if you look at all of these, the passion things you'll have deep understanding because you're spending all of your discretionary time pursuing this passion. The pain, you have a deep understanding of the, of the problem and the prospects going through it because you've experienced it probably for years. Now the professional one I would say is a bit of a shortcut, um, because if you're quitting the job because you don't like it-

   10. SBSteven Bartlett27:15

       Mm-hmm.

   11. AHAlex Hormozi27:15

       ... and then you say, "I'm now going to do this for myself," well, you're okay.

   12. SBSteven Bartlett27:21

       (laughs)

   13. AHAlex Hormozi27:21

       (laughs) Like, um, I mean, well, the, the, the one, the one proven point about that is that that one is proven to work from an economic perspective. You will be able to make money doing that because you already have made money doing it. These other two are less proven, but sometimes have significantly more upside.

9. 27:35 – 32:36

   Mercenaries and Missionaries in Business

   1. AHAlex Hormozi27:35

   2. SBSteven Bartlett27:35

      There's, y- when you were talking about the breathing example with your nose, it's funny 'cause if you had sat down and said to me, "Steve, I've made these, like, breathing nose strips-"

   3. AHAlex Hormozi27:41

      Yeah.

   4. SBSteven Bartlett27:41

      ... "um, they are better, they're 20% more durable, they-"

   5. AHAlex Hormozi27:44

      Yeah.

   6. SBSteven Bartlett27:44

      "... expand your nostrils by 20%," it is multiples less compelling than you telling me that story you just said about being a kid, having breathing problems, trying to solve this problem for yourself.

   7. AHAlex Hormozi27:55

      Yeah.

   8. SBSteven Bartlett27:55

      And it's funny 'cause that, that story you told versus the sort of rational logical approach or the benefits approach-

   9. AHAlex Hormozi28:01

      Yeah.

   10. SBSteven Bartlett28:01

       ... is your marketing campaign for the next five years on TikTok and Instagram. It's, "I had a problem. I solved it f- I w- tried everything and solved it for myself."

   11. AHAlex Hormozi28:09

       Yeah.

   12. SBSteven Bartlett28:09

       There's almost, like, nothing more compelling and believable.

   13. AHAlex Hormozi28:11

       No.

   14. SBSteven Bartlett28:12

       We see that in Dragon's Den. We'll just be sat there listening to these pitches all day.

   15. AHAlex Hormozi28:15

       Yeah.

   16. SBSteven Bartlett28:15

       Then someone will come in and say, "I had ADHD-"

   17. AHAlex Hormozi28:18

       Yeah.

   18. SBSteven Bartlett28:18

       "... I tried energy products, they all made me crash, so I went out and solved this problem for myself." And we're on edge 'cause-

   19. AHAlex Hormozi28:24

       Yeah.

   20. SBSteven Bartlett28:24

       ... we almost can't argue with it-

   21. AHAlex Hormozi28:25

       Yeah.

   22. SBSteven Bartlett28:26

       ... at that point, you know?

   23. AHAlex Hormozi28:27

       Yeah. So Bezos has this great framework where he talks about missionaries and mercenaries. And so it's kind of like you have the guy who says, "Okay, I looked at market trends, and this is a growing category, and, you know, I surveyed people, and this was the, you know, the, the result that came back. And so I believe that if we time this product right, uh, at this point in the market, we'll achieve huge, you know, uh, mass adoption," blah, blah, blah, blah, and it's like logic-ing your way through. And to be fair, some people do, you know, do make it work, but the missionaries are the ones that end up making the most money because, like, they do it f- f- sure for the money 'cause the business has to have some economic engine behind it, but really because they viscerally experience this problem and don't want anyone else to solv- to deal with that problem either. And so, like, if I were to tell that story like you were saying, like when I was in eighth grade was the first year that I, I ha- started really noticing I couldn't breathe at night, and so I learned how to fall asleep with my hand on my face like this so that my nostril would, so that I could fall asleep and my hand would st- 'cause you, there's no actually other, 'cause you can't hold your, 'cause you fall asleep, right? And so if I fall asleep with my hand like this, right, like I, like I'm on the couch, and I fall asleep like that, it keeps my nostril open, and I can fall asleep and it doesn't move. And so that's how I learned how to sleep for years, uh, before founding, like, just like simple nasal strips and things like that. But there's tons of problems with, with those solutions that exist right now that I won't get into, but, um, maybe someday I'll make a nasal product. (laughs)

   24. SBSteven Bartlett29:48

       (laughs) I think that may be-

   25. AHAlex Hormozi29:49

       I'm sure-

   26. SBSteven Bartlett29:50

       (laughs) He literally just delivered-

   27. AHAlex Hormozi29:51

       Yeah.

   28. SBSteven Bartlett29:51

       (laughs)

   29. AHAlex Hormozi29:51

       He pitches, pitches. I could tell you-

   30. SBSteven Bartlett29:53

       But probably-
10. 32:36 – 35:53

    Just One P Will Make You Succeed!

    1. SBSteven Bartlett32:36

       So interesting, because as we spoke there about the reason why the story was so much more-

    2. AHAlex Hormozi32:42

       Yeah.

    3. SBSteven Bartlett32:42

       ... compelling, it was back to the amygdala.

    4. AHAlex Hormozi32:44

       Yeah.

    5. SBSteven Bartlett32:44

       It was back to emotion.

    6. AHAlex Hormozi32:45

       Right.

    7. SBSteven Bartlett32:46

       And it's funny, because we, we said a second ago that when someone's thinking about quitting a job, they're like, so in their amygdala. Humans run mostly-

    8. AHAlex Hormozi32:51

       Yeah.

    9. SBSteven Bartlett32:51

       ... on their amygdala. So when we think about pitching, we should really be aiming at the same part of the brain, which is what you did when you showed me that you were sleeping as a kid with your hand-

    10. AHAlex Hormozi33:00

        Yeah.

    11. SBSteven Bartlett33:00

        ... stretching across your face. I immediately felt sorry for you.

    12. AHAlex Hormozi33:03

        Yeah.

    13. SBSteven Bartlett33:03

        Felt sympathy, and I immediately believed that if anyone's gonna solve this problem, it is this fucking guy who's been through-

    14. AHAlex Hormozi33:07

        Yeah.

    15. SBSteven Bartlett33:07

        ... that pain.

    16. AHAlex Hormozi33:08

        I've had two surgeries. Both of them didn't really work. Like, I mean, like, I've, I've, I've got the story. (laughs)

    17. SBSteven Bartlett33:12

        My girlfriend's the same.

    18. AHAlex Hormozi33:13

        What? Oh, really? Yeah.

    19. SBSteven Bartlett33:14

        She's the same. Two surgeries, which she's coming up to her third one now.

    20. AHAlex Hormozi33:16

        Yeah.

    21. SBSteven Bartlett33:17

        We've tried all the nose strips. I saw you wearing one. I bought that one for her.

    22. AHAlex Hormozi33:19

        Yeah.

    23. SBSteven Bartlett33:20

        Um, and so there's a lot of people watching right now, and there's something going on with these bloody fucking, like, noses.

    24. AHAlex Hormozi33:25

        Yeah.

    25. SBSteven Bartlett33:26

        People shouldn't, like ...

    26. AHAlex Hormozi33:27

        Yeah.

    27. SBSteven Bartlett33:28

        We're doing something, I think.

    28. AHAlex Hormozi33:28

        I feel like I may have popularized some of the nose strip stuff. (laughs)

    29. SBSteven Bartlett33:31

        Yeah. Good.

    30. AHAlex Hormozi33:32

        Um, but yeah.
11. 35:53 – 39:39

    What's the Cheat Code to Win at the Game of Attention?

    1. AHAlex Hormozi35:53

    2. SBSteven Bartlett35:53

       Well, what do you think the cheat code is then? So I've got my idea. What do you think the cheat code is in 2025 to win at the game of attention?

    3. AHAlex Hormozi36:01

       Mm-hmm.

    4. SBSteven Bartlett36:02

       Like there's got to be some new rules here, because we've got AI. We've got new platforms. We've got new media. You know, I'm ... I'll give you a hypothetical business idea. I'm gonna be a personal trainer.

    5. AHAlex Hormozi36:12

       Okay.

    6. SBSteven Bartlett36:13

       And I picked that because everyone can do it, and it's-

    7. AHAlex Hormozi36:14

       Right.

    8. SBSteven Bartlett36:14

       ... it's a saturated industry. If I'm, if I'm a personal trainer in the, 2025, how should I be thinking about building attention?

    9. AHAlex Hormozi36:22

       Mm-hmm. So I'll tell you what I wouldn't do first, which is, I don't think I'd try and out-science the science people, uh, because like, unless you have some PhD, there is a PhD guy who's already jacked who's making content. And so he's more knowledgeable and more jacked than you. So you're not gonna win there. And so I think in the game of attention, it's trying to find what is unique, right? And so how do you, how do you, quote, "stand out" when everyone's loud? And this is gonna sound trite, but ...Your fingerprint is unique, literally from a biological perspective, but so is your life and your experiences. And so there's, there's real alpha or, or benefit to be had above normal level of effort by leaning into you. And so what makes every person unique is what makes their content unique. And so trying to be like, "Oh, I want to make content like Alex," is probably not the best way to do it, 'cause you're not going to beat me at being me, but you'll beat me at being you. And so it's basically your flavor of media. So like for me, it's like, you know, what is, you know, my brand to, to, to model this? It's like, well, I have elements of philosophy that are in my brand. Well, do I need that? No, but that's like kind of me. Um, I obviously talk a ton about business, marketing and sales promotion, conversion. Those are all things that I spend a lot of time thinking about. And so a lot of my content's about that. Um, fitness is a component of my life. And so there's light sprinkling of fitness, uh, in my content. Also, I come from a background of fitness, um, with the, the... with Gym Launch and, and the companies that I owned before that. And so that would make sense that... And I've... my wife, Layla. And so that's sprinkled in. And so, like those are basically the components of my life. Um, and so that's what kind of shines through in my content. I consume a ton of comedy. And so sometimes you'll see some dry humor and dark humor that, that shines through. Um, but that's me. Now you have all of those little buckets of you. And not only are those buckets unique, but also the proportions of those buckets will be different. And so maybe your philosophy is way bigger, or maybe fitness part is way bigger. But I think what makes the truly unique personal trainer fitness brand is leaning into people being interested in you for being you, and then being like, "By the way, I have fitness stuff if you want to buy it from me." And I think the key part is, the vast majority of products and services are commoditized. There... You're not... You're probably not gonna be significantly better than other trainers, just being real. You probably aren't. But you will be different than them. And we want to lean on, "I, I want to buy fitness from somebody, and so I might as well buy it from her," or, "I might as well buy it from him." So you're taking basically this audience that would buy from anyone, but your brand premium gets them to want to buy it from you. We think about Prime, for example, with the drink, the drink company. Like it's a, it's a drink that there's other products that already exist in the marketplace that satisfy the same thing as Prime. But if you are agnostic to that brand and you have brand affinity with that pro- pro- you know, that creator, then you're like, "Well then, if I have two things that are basically equal and I just like this guy better, I'm just gonna... As long as the prices are comparable, I'll just vote with my dollars here." And so I think that if you're a personal trainer in 2025, um, it's gonna be... Long term, it's gonna be building the content. Short term, it's gonna be outreach to people that you know and making a compelling offer to get people to try to work with you.

12. 39:39 – 49:13

    The Winning Strategy for 2025

    1. AHAlex Hormozi39:39

    2. SBSteven Bartlett39:39

       This overarching point you said there about being yourself, as I was thinking about it, I was thinking, "Gosh, do you know what? The thing that all of my favorite creators and the really successful creators have in common is they all have," and I use these words intentionally, "the courage to be themselves."

    3. AHAlex Hormozi39:54

       Yeah.

    4. SBSteven Bartlett39:55

       Because I'll tell you what, when I was starting out as a content creator, and I looked back, I was showing one of my team members the other day the things I used to post, it was like everything happens for a reason. (laughs)

    5. AHAlex Hormozi40:03

       Cringe.

    6. SBSteven Bartlett40:03

       It was cringe.

    7. AHAlex Hormozi40:04

       Oh, yeah, so true.

    8. SBSteven Bartlett40:05

       Cliche fluff. And it took me several years to almost relax into just realizing that the game here was to get to the point where I could be myself on the internet. And actually that was the most high value because of, you know, of what you said, it's the uniquest part of me. But the courage to be yourself.

    9. AHAlex Hormozi40:21

       And it's, it's... it is the winning strategy for 2025. And it's, I think, um, it's leaning into it. And the thing is, is that everything in you wants to not do that. I'm not really sure why. Um, but I was having a conversation with Layla, I want to say, two nights ago or three nights ago. Um, I got a bunch of flak for, uh, some X post that I made, and she just looked at me and she was like, "Never dilute yourself." Because I was like, "Maybe..." I was like, "Maybe I shouldn't talk about this stuff." Like, "Maybe I should just like, you know, I'll just lean off." And she was like, "Never dilute yourself." Like, "There are so many more people who need that message than people who are hating that message." And she was like, "And if you're actually gonna make a difference in a lot of people's lives, there's going to be an equal and opposing force of people who want to reject that." And she's like, "This just comes with the territory of, like, how big of an impact you want to have." It was just such a great, you know, wife talking to husband, you know, conversation, um, that I guess for me, at the end of the day, I'm like, "As long as she thinks I'm cool, like-" (laughs)

    10. SBSteven Bartlett41:23

        Mm-hmm, yeah.

    11. AHAlex Hormozi41:24

        ... "you know, I'll, I'll, I'll, I'll keep doing it." But, um, but yeah, it's just, uh... Because the diluted down version all- all of a sudden becomes everyone else's stuff.

    12. SBSteven Bartlett41:34

        Well, you said a second ago, you're not sure why that is, but by very definition of it being unique, that, that means that there is no blueprint.

    13. AHAlex Hormozi41:43

        Yeah.

    14. SBSteven Bartlett41:43

        There is no person that's come before you and proven that it works. So the courage of being yourself, there's only one Steven Bartlett, so if I'm truly myself, it's never been done before. That means that the risks are unknown. The upside's also unknown.

    15. AHAlex Hormozi41:55

        Yeah.

    16. SBSteven Bartlett41:56

        But, so again, going back to our, our hate of uncertainty, it makes much more sense for me to try and copy you, because I can see a blueprint there, than to run the risk of being yourself. And you are someone, I have to say, who is running the risk of being yourself. And actually, as someone who's observing you-

    17. AHAlex Hormozi42:12

        Mm-hmm.

    18. SBSteven Bartlett42:12

        ... now I know who you are, and I now know who you're not.

    19. AHAlex Hormozi42:15

        Mm-hmm.

    20. SBSteven Bartlett42:16

        And it's important for me as someone that follows your work-

    21. AHAlex Hormozi42:18

        Yeah.

    22. SBSteven Bartlett42:18

        ... that actually I see consistency, because I've established Alex Hormozi's values.

    23. AHAlex Hormozi42:23

        Yeah.

    24. SBSteven Bartlett42:24

        And anything that diverts from that is actually less valuable, because as you say, it's more like everyone else and the things I've had before. But it's also, it wouldn't feel true anymore.

    25. AHAlex Hormozi42:31

        Yeah.

    26. SBSteven Bartlett42:32

        And, um... And this is something that even as a creator myself, I, I have to fall back on is, my audience know who I am now, for better or for worse.

    27. AHAlex Hormozi42:41

        Yeah, for better or for w- (laughs)

    28. SBSteven Bartlett42:41

        They don't go... They're not gonna learn anything new. (laughs)

    29. AHAlex Hormozi42:44

        Yeah.

    30. SBSteven Bartlett42:44

        You know?
13. 49:13 – 56:52

    How Important Are People in the Business Journey?

    1. AHAlex Hormozi49:13

    2. SBSteven Bartlett49:13

       Yeah. And they were willing to say that for the first time ever.

    3. AHAlex Hormozi49:15

       Right.

    4. SBSteven Bartlett49:16

       I posted it on my LinkedIn and it was 50/50.

    5. AHAlex Hormozi49:19

       Yeah. (laughs)

    6. SBSteven Bartlett49:19

       I'd say it was actually more like 80% of people were either neutral or pissed off, and 20%-

    7. AHAlex Hormozi49:24

       Really?

    8. SBSteven Bartlett49:24

       Yeah. And 20% of people were like, "That is me."

    9. AHAlex Hormozi49:27

       Mm-hmm.

    10. SBSteven Bartlett49:28

        "I am a Nike person." And for me, when I saw that, I thought, "I want to buy some Nike shorts."

    11. AHAlex Hormozi49:31

        Yeah, it was, I mean, it was the first time I actually felt like I had positive brand affinity towards the brand in a long time.

    12. SBSteven Bartlett49:36

        How important in this game of building and starting is people?

    13. AHAlex Hormozi49:40

        Uh, (laughs) very. Uh- (laughs)

    14. SBSteven Bartlett49:43

        H-h-hiring question.

    15. AHAlex Hormozi49:44

        Yeah, yeah, yeah, yeah. Yeah.

    16. SBSteven Bartlett49:44

        And I, I'll tell you why I ask this question, because when I look at my portfolio-

    17. AHAlex Hormozi49:47

        Yeah.

    18. SBSteven Bartlett49:47

        ... early stage first founders never seem to understand the importance of hiring in people.

    19. AHAlex Hormozi49:53

        Yeah.

    20. SBSteven Bartlett49:53

        And I bang my head against a wall trying to convince them that actually the game they're playing is-

    21. AHAlex Hormozi49:57

        It's a recruiting game.

    22. SBSteven Bartlett49:57

        ... in the word company-

    23. AHAlex Hormozi49:58

        Yeah.

    24. SBSteven Bartlett49:58

        ... group of people.

    25. AHAlex Hormozi50:00

        Yeah. So I, I would, I'll start with one thing, and then I'll answer the question. So I was talking to, um, a mentor of mine, and he said, "When I was in my 20s, it was all about the destination." He said, "When I got to my 30s, I realized it was all about the journey." He said, "When I was in my 40s, I realized it was about the company." And I was like, "I can't wait till you're in your 50s." (laughs)

    26. SBSteven Bartlett50:17

        (laughs)

    27. AHAlex Hormozi50:18

        It's like, "What's the next one," right? But I thought that was such a gr- like, such a profound shift in terms of how he thought about his business success, because he was like, "I don't need to be a, a g- you know, a deca-billionaire." He's like, "I'm, I'm cool where I'm at. Um, and now I just want to do it with people that I like." And so to the question about, um, people overall, I believe that the potential of an organization is directly correlated with the aggregate intellectual horsepower of everyone contained within it. And so if you are the smartest person in the business, then, and you can do everyone's job better than everyone in your company, then it means that the limit of the business is purely based on one person's horsepower and one person's life experiences, and that will be the cap. And basically, it doesn't matter how smart you are, you can't live 100 lifetimes. Like, you can learn quickly, sure. There's some people who can learn faster than others. But you're not going to be able to live 1,000 lifetimes. And so as a business grows, more expertise is required. And I think the easiest litmus test for this is, if you look at the richest people in the world, almost none of them own 100% of their business, so number one. Most of them o- don't even own 50. Like, most of them are small percentages. Jensen Huang is at 4% for NVIDIA, Bezos is at s- seven or 9% for, for Amazon. Uh, I think Elon's at 20 for Tesla. Like, small percentages. And it's because it takes a lot of horses to take a chariot to the moon, right? (laughs)

    28. SBSteven Bartlett51:47

        Mm-hmm.

    29. AHAlex Hormozi51:48

        And so basically, as you put in more intellectual horsepower, the potential peak of the business goes so much f- so much higher, so much faster. Keith Ravois from, um, he was one of the original PayPal mafia guys, has a really good analogy for this, and he talks about it in terms of barrels and ammunition. And he says, "So as soon as you get some product market fit, the business starts to grow, and you say, 'Okay, we need to start shipping things faster.'" And this works the same with a services business, a physical products business, software business. The concept's the same. And he said, "So what happens is you then hire a lot of people and you assume that your throughput is going to increase proportionally. So we have 10 people, we hire 50, we should 5X our output. And then you quickly realize that that is not the case. And so what happens is, uh, there are people who are rate limiters for organi- or an organization, and those are the barrels." So think about, like, a Civil War barrel, you know, old cannon.

    30. SBSteven Bartlett52:38

        Yeah.
14. 56:52 – 59:14

    First-Time Founders Need to Know This About Recruiting

    1. SBSteven Bartlett56:52

       I think the reason why first-time founders feel like they have to learn this lesson themselves is because everything you've just said is an unknown unknown. Like, they don't even know that they don't know it, so they stumble... They hire the sales guy because they were their friend from-

    2. AHAlex Hormozi57:03

       (laughs)

    3. SBSteven Bartlett57:03

       ... high school and then fucking...

    4. AHAlex Hormozi57:05

       (laughs)

    5. SBSteven Bartlett57:05

       And then they go through the pain. And the-

    6. AHAlex Hormozi57:07

       Yeah.

    7. SBSteven Bartlett57:07

       I say this because I'm so unbelievably passionate about it. I went through the same BS. I hired my friend who worked at Prada to be our account... I hired a guy I met at a rap battle to be my, uh, marketing director who had... He was literally playing video games for a living, at 30 years old. Um, and I went through this whole thing and then, uh, maybe three or four years into my first business, I accidentally hired someone great. (laughs)

    8. AHAlex Hormozi57:27

       (laughs) Yeah.

    9. SBSteven Bartlett57:28

       Like through no intention-

    10. AHAlex Hormozi57:29

        Yeah.

    11. SBSteven Bartlett57:29

        ... of myself. Accidentally.

    12. AHAlex Hormozi57:30

        Yeah.

    13. SBSteven Bartlett57:31

        I saw the net impact they had and I thought, "Oh my God." Over the coming years, I learned that the game, the fundamental game here, was as you said, assembling the best group of people. How-

    14. AHAlex Hormozi57:40

        Yeah.

    15. SBSteven Bartlett57:40

        ... if I'm a first time founder, can I put a system in place to e- to make sure that even though I don't know what a good salesperson looks like-

    16. AHAlex Hormozi57:49

        Yeah.

    17. SBSteven Bartlett57:50

        ... even though I don't know what an ex good person looks like, I still attract them to my company?

    18. AHAlex Hormozi57:57

        The simplest way of doing it... So the simplest way of attracting somebody to your business when you don't know how to do the job or know who to look for is to unfortunately do the job yourself. And then once you can break down the job, we follow three Ds, which is, um, document, demonstrate, duplicate. That's how we train anybody. So first, you have to document everything that you do to successfully do the job, and that's step-by-step into a checklist. Then you demonstrate. So you do this checklist in front of the person that you're trying to bring on. Then they duplicate. They do the checklist in front of you. What's interesting about that three-step process is that you'll often find, when you try to demonstrate following the checklist, you don't follow your checklist. (laughs)

    19. SBSteven Bartlett58:39

        (laughs)

    20. AHAlex Hormozi58:39

        And so then you have to adjust the checklist until you actually follow the checklist. And then when you can consistently follow that checklist and get the output, then you can have them do that checklist. And so I think this is why bootstrap founders, uh, I think oftentimes we'll find they- they tend to know more about more things because they had to learn them in order to teach them. Now what's really interesting about what you said about accidentally finding that- that star at three or four years in is that I think that happens to almost everyone. Well, hopefully it ha- the- the people who end up making it, it happens to almost everyone. Um, because then you realize, oh my God, like if I had four of these people-

    21. SBSteven Bartlett59:13

        (laughs)

    22. AHAlex Hormozi59:13

        ... like, we could

15. 59:14 – 1:01:46

    A-Players Hire A-Players

    1. AHAlex Hormozi59:14

       change the world, right?

    2. SBSteven Bartlett59:14

       Can I say something as well?

    3. AHAlex Hormozi59:15

       Yeah.

    4. SBSteven Bartlett59:15

       The other epiphany revelation I had was the star hired stars.

    5. AHAlex Hormozi59:21

       Yeah. (laughs)

    6. SBSteven Bartlett59:22

       And so I think of, her name's Katie Leeson, of the 10 people she then hired, nine of them became the best people in my company. And also, I'm not going to say his name, but someone else in my business, a C player-

    7. AHAlex Hormozi59:32

       Yeah.

    8. SBSteven Bartlett59:32

       ... of the 10 people he hired-

    9. AHAlex Hormozi59:34

       Yeah.

    10. SBSteven Bartlett59:34

        ... he and everyone he hired was fired.

    11. AHAlex Hormozi59:37

        So one of the... It's... So as you go up in the organization with hires, the risk and reward goes up. And so that's something that a lot of people don't like talking about, uh, but I will. Um, which is, if you hire somebody and let's say that they're not a cultural fit, maybe they have the skills, uh, or they are a cultural fit and they don't have the skill fit and they're a leader, what you find often and it sucks is that everyone... It's almost like, it's like a tree that has an entirely rotten branch. It's like you end up having to scoop out three quarters of what was underneath because you realize that they were ineffective or they just were against the actual mission of the business. And it's- it's harrowing and it's horrible. But I try to give this analogy, um, to my team because we've had to do it in every business. We... Like, it happens. It's just part of business, is if somebody goes to the bar and you're at the club and somebody racks up, you know, just ordering shots for everybody, shots, shots, shots, shots, shots, shots, and then that guy dips, that guy leaves, we all have to pay the bill. In the moment when we pay the bill, when we scoop out the deadwood, when we scoop out the rot from the organization, it feels horrible. But that pain isn't because the scooping out the rot is bad. It's because we planted it on bad ground or because that guy ordered all these shots but couldn't afford it. And I have a different analogy because I really want to drive this home because I think it's important, is that in the- in the relationship world, if one spouse tells the other spouse, "Hey, I cheated on you. I had an affair." That moment is incredibly painful for both parties. And so what it makes you think is, oh, this was wrong to tell the truth. But it's not wrong to tell the truth. What's wrong was cheating. When you tell the truth is when you make it right. And so the pain that you often have to encounter in an organization feels wrong-... but is right because that was, you're, you're righting a wrong and that's where the pain occurs. And that's why so many businesses stay stuck, is because they have this affair, they have this person and they're unwilling to have that hard conversation or multiple in order to make it right and they stay stuck for years.

16. 1:01:46 – 1:09:36

    The Ability to Have Hard Conversations Sooner

    1. SBSteven Bartlett1:01:46

       This is another quality of really successful founders that I've noticed, which is what you've just said, is the ability to have the hard conversations sooner. And in my first, um, in my portfolio where there's first time founders, they're coming to me and in our like, uh, monthly meeting saying, "God, there's this guy who's running the e-com division and he's so bad and I'm having to do the job for him."

    2. AHAlex Hormozi1:02:07

       (laughs)

    3. SBSteven Bartlett1:02:07

       "What do I do about it, Steve?" (laughs) I'm like-

    4. AHAlex Hormozi1:02:09

       What do you think? (laughs)

    5. SBSteven Bartlett1:02:11

       What do you mean? Yeah. But then they come back to me two weeks later and they're like, "He's still there." (laughs)

    6. AHAlex Hormozi1:02:14

       Yeah, right. A year later and you're like, "It's still John." You know, you're like, "What are we talking about here?"

    7. SBSteven Bartlett1:02:18

       I remember asking him one such meeting, uh, "Does John know that you're unhappy with him?"

    8. AHAlex Hormozi1:02:22

       Oh, yeah.

    9. SBSteven Bartlett1:02:23

       "No."

    10. AHAlex Hormozi1:02:23

        (laughs)

    11. SBSteven Bartlett1:02:24

        So there's this quiet dissatisfaction-

    12. AHAlex Hormozi1:02:27

        Totally.

    13. SBSteven Bartlett1:02:27

        ... which I think is a virus, right?

    14. AHAlex Hormozi1:02:29

        Right. And what, what no one wants to discuss is the fact that everyone else knows John sucks.

    15. SBSteven Bartlett1:02:33

        Amen.

    16. AHAlex Hormozi1:02:33

        And that, that becomes the minimum standard for what is acceptable for excellence in the organization. And so I think like, so if brand is what your reputation is externally, I think culture is kind of what reputation is internally. And so I define culture operationalize, 'cause I think culture's a very fluffy word. What does that mean?

    17. SBSteven Bartlett1:02:50

        Mm-hmm.

    18. AHAlex Hormozi1:02:50

        Right? It's the rules that govern reinforcement within an organization. What do we reward? What do we punish? And so the thing is just that there's realistically, there's h- like people have values because they're bundled terms that ladder up many behaviors. If I said Rolls-Royce probably would have some value that's quality over speed, probably. Right? And so they would have that, but somebody would have to say like, "Well, what does that mean?" Right? Well, we hope that we use this as a decision-making filter for how it affects behaviors on every situation so that when you are in the, "Should I go fast or should I make it right," you make it right. And there are other organizations kind of like the speed, uh, justice and mercy, speed and quality. Both of them are important and sometimes they sit diametrically opposed. And so it's like we have to say, where do we sit in the gray so that we can duplicate decision-making across the organization so that we can maintain the culture? And so culture, uh, you know, Layla says this a lot, but culture, I think this is a Drucker quote actually, uh, "Culture trumps strategy like twice a week and every day on Sunday."

    19. SBSteven Bartlett1:03:50

        Mm-hmm.

    20. AHAlex Hormozi1:03:51

        If you have a mediocre strategy but an unbelievable culture, you will crush somebody who has a great strategy and a terrible culture.

    21. SBSteven Bartlett1:03:56

        Facts.

    22. AHAlex Hormozi1:03:56

        Because culture ladders up to performance and execution, and almost every business is limited by execution, not strategy. Most business strategy isn't that complicated. Like, let's do a really good job, so good that people tell their friends about us. And as long as we have enough gross margin, we'll make money. It's not that hard, right? It's just that the doing it is the hard part. (laughs)

    23. SBSteven Bartlett1:04:11

        Yeah, yeah, yeah, yeah.

    24. AHAlex Hormozi1:04:12

        And so, so when we have these, uh, they are the spoken and unspoken rules, mostly unspoken. If someone shows up three minutes late to a meeting and there's 10 people in the meeting and it's supposed to be a marketing meeting and I'm there, if I don't say anything, I have now said, "We have an unspoken rule that if someone shows up three minutes late to a meeting, it's okay." I've, I've reinforced that rule. Now, if I, I've reinforced it by not punishing the behavior or at least calling it out. Um, on the flip side, if someone comes in and I berate them, that's also a way of changing behavior. Maybe not the right way to do it. Um, but I could then like, what do you do in that situation? Someone shows up three minutes late. Um, first off, you would probably sideline with that person and be like, "Hey, I don't know if you no- realize that you were three minutes late. What happened?" And they're like, "I was on a client call. Um, it went late. I'm really sorry." Or, "I was on a sales call." For me and my organization, clients and sales like will take priority. So if you have a meeting and you're on a sale and you're about to close it, close the sale. (laughs)

    25. SBSteven Bartlett1:05:14

        (laughs)

    26. AHAlex Hormozi1:05:14

        Right? But if you were just doing nothing (laughs) and-

    27. SBSteven Bartlett1:05:17

        Yeah, yeah, yeah.

    28. AHAlex Hormozi1:05:17

        ... we have this meeting, then this is the priority. And so the next time we hop on, I'll be like, "Hey guys, I just want to address something. John was late. He was late because of a sales call." Or when I DMed him right as he got on late, I would say, "Hey, make sure you say that." And he'd be like, "Hey guys, sorry I was late. I was on a sales call." And then I would say, "That's fine. You're good to go. Always go make money."

    29. SBSteven Bartlett1:05:36

        Yeah, yeah, yeah, yeah.

    30. AHAlex Hormozi1:05:37

        And then I'm reinforcing the right thing.

Episode duration: 3:13:56