The entrepreneurs: How to build wealth from almost nothing

Steven Bartlett 0:00 (upbeat music) I've got three boxes here. One of them contains $1,000, one of them contains $10,000, and one of them contains $100,000. And you three are the Avengers of entrepreneurship on the internet. So, you're gonna tell me what you would do with that amount of money to build a scalable business.

Alex Hormozi 0:14 So, do I get to keep the money? Is that how this works?

Steven Bartlett 0:16 (laughs) Yeah, yeah.

Alex Hormozi 0:17 (laughs) Okay, so I would...

Narrator 0:19 Three highly successful entrepreneurs with three very different perspectives. This is the ultimate masterclass in creating and scaling your businesses to make millions.

Daniel Priestley 0:28 There's two paths to making money quickly if you don't have any, and the first path is go find the best entrepreneur and go work for them. Learn as much as you can.

Codie Sanchez 0:36 Totally agree. Like, Kim Kardashian was Harris Hilton's assistant, and she learnt the playbook for being famous, and then she took it to a new level.

Daniel Priestley 0:42 And then the second way is high-risk but highest reward. Go do it yourself.

Alex Hormozi 0:46 In the first business that you start, you're gonna be learning the game of business even more than you're learning the business that you're doing. Things like if you wait eight seconds after you ask someone to buy, you close 30% more sales.

Daniel Priestley 0:56 And there are actual studies now that show that if I'm a woman, you make more money if you do one thing: you wear makeup, which is wild.

Steven Bartlett 1:03 And what about making content?

Codie Sanchez 1:05 Building a content empire that builds your business? This is brand new to a lot of people.

Daniel Priestley 1:09 And so a lot of creators online don't think about, "How do I monetize on top of this?"

Alex Hormozi 1:13 Right? And I can name some TikTokers with 50-plus million followers that have had failed launches because they have views but they have zero influence.

Codie Sanchez 1:20 Mm-hmm.

Alex Hormozi 1:20 And in order to create influence, there's four things. So, number one is...

Steven Bartlett 1:24 Okay, so let's go onto simple, actionable frameworks.

Daniel Priestley 1:26 So, I have a framework in order to raise money.

Codie Sanchez 1:28 I have a framework for pitching.

Alex Hormozi 1:30 And I have one that can increase sales by 20 to 40%.

Daniel Priestley 1:32 And then if you wanna know if your business is going to make you money or not, we use the MOTE strategy.

Alex Hormozi 1:37 And there's a lot more.

Steven Bartlett 1:37 So let's go through all of this. (upbeat music) Daniel, Cody, Alex, I feel like I have waited a long time to have this conversation with you three because in my mind, you three are the Avengers of entrepreneurship on the internet. And for very different reasons, you do very different things, you have very different perspectives, you run very different business. But for those people that are sat at home and they have an idea and they're mulling whether that is the idea worth pursuing, is there a framework for knowing if it's a good idea or a bad idea?

Daniel Priestley 2:10 What we use that comes from private equity, if you wanna know if your business is going to make you money or not, or investable or not, we use the MOTE strategy, which is basically M stands for margin. So, you want a business that actually makes you money, doesn't just generate revenue. And so a good business typically has at least 15% net margin, so that's money you put in your, your pocket,

Daniel Priestley 2:29 right?

Steven Bartlett 2:29 So, that's profit.

Daniel Priestley 2:30 Yeah.

Steven Bartlett 2:30 Yeah.

Daniel Priestley 2:30 Exactly. And then, uh, the O stands for operations. So, operations being, can this thing actually scale over time, or will I really have a job, not a business?

Steven Bartlett 2:39 And what's the difference there?

Daniel Priestley 2:40 The difference between the two is if you have a job, not a business, that might be, for instance, without AI, if my entire business was just me talking continuously to camera and I'm an actor, it's really hard to turn acting to a business, right?

Steven Bartlett 2:52 You're trading time.

Daniel Priestley 2:54 Right, you're still an employee, you're just self-employed as opposed to a business owner. And there's a real difference between a CEO and a self-employed person. And then the A stands for advantage, which is, do I have an unfair advantage in my business? I think over time, all arbitrage windows close, so if you don't have some sort of advantage, it's hard to stay in business over a long time. An advantage might be I have distribution because I have social media, so I can get more eyeballs. I can figure out how to talk to 2,000 people quickly because I can do it via video as opposed to knocking on 20 doors. Uh, or it could be logistics, or it could be, uh, 10 years of experience in an industry. And then the T stands for TAM, total addressable market, which goes back to the doggy teeth issue-

Alex Hormozi 3:33 (laughs)

Daniel Priestley 3:33 ... which is, you know, is this a real market that enough people are interested in that I can build a business that is big enough for me? And, you know, to Alex's point, I don't think everybody should try to play the trillion or billion dollar, uh, game. In fact, I think it can be quite miserable to, to strive f- for billions. And so the, the total addressable market for your local fruit stand in your community may be a perfect amount of income for you, but let's actually know what amount of income is reasonable for you. And the cool thing about entrepre- entrepreneurship in, like, today's age, the data is available everywhere.

Steven Bartlett 4:05 Mm-hmm.

Daniel Priestley 4:06 And so in private equity, you would take this model like that, so you'd go MOTE. You would, uh, I take them, and for each one, I rank them one to ten. And businesses, so margin, operations, advantage, total addressable market. Each one of them, a 10 is perfect, a one is the worst you could have. And businesses that are better than 30 across all four, well, that's a fund it. That's a fundable business model. Businesses that are less than 30 but more than 20, that's a fix it. You've got some problems in the model. And businesses that are less than 20, that's a flee it. This is probably not right for you and a hard business to do.

Codie Sanchez 4:41 I think it's not just the people who are looking for a new opportunity or people who don't currently have a business. I personally think at the moment, every single person on the planet who has a business should assume that their business is on borrowed time because AI is gonna disrupt everything. And in that disruption, everyone has the opportunity to rethink whether they want a different opportunity or wh- whether they wanna pivot. It's the perfect time. I look at simple things when I'm thinking about, is it a good opportunity? I think every good business is built upon somebody's case study. So, when I look at not just businesses as a thing on their own, I think businesses as a thing on their own have to be taken in consideration with who's the entrepreneur. So your entre-

Alex Hormozi 5:19 Agreed.

Codie Sanchez 5:19 ... like, something that's a great opportunity for Cody may be just a disaster for me.

Daniel Priestley 5:23 Mm-hmm.

Codie Sanchez 5:23 And like, and likewise. So, I'm looking at the background of the entrepreneur. Do you have a case study to leverage? Do you have knowledge? Do you have a network? Do you have resources? Have you got a reputation in something? Because those are the things that we can then leverage. And then I'm just gonna have a look at three little things. I'm gonna say this idea that you've got going forward, does this address someone's pain, right? Is there some sort of problem that this solves and that to ... that we could measure that, right? 'Cause people pay to move a metric. They love to move some sort of a number. So, is there a pain that we can measure, and can I take people out of that pain based on my story?

Daniel Priestley 5:57 Mm-hmm.

Codie Sanchez 5:58 The next thing is, does that type of person who I'm gonna solve that for, do they have money to spend? Because ultimately, 60% of all the money is in the top 10%.So the top 10% have about 60% of the available disposable income, so groups that ten- tend to have money is business owners, executives, people who've got accumulated wealth. Um, you know, so you're looking at, like, some sort of indication that you're selling to a group of people who have money. Underneath that top 10%, Amazon's already got 'em, McDonald's has already got 'em. Ev- Like, that's a saturated part of the market. You're looking for that top 10% who've got disposable income. And then the final part is passion. Like, are you passionate about this? And my definition of passion is a willingness to suffer. So it's not, do you get joy from it, not are you super happy from it? It's, are you willing to suffer for this? Are you willing to have delayed gratification? Um, would an objective third party who looks at your behavior, who looks at the way that you show up in the world, would they agree that you seem to be willing to push through difficult times in order to have this? So those are some of the conversations I'd have with anyone and not just people who are starting out, people who have already got $100 million business.

Steven Bartlett 7:06 It's like the adult marshmallow test, basically.

Codie Sanchez 7:09 (laughs)

Alex Hormozi 7:09 Yeah, I think Cody had a, had a great framework in terms of thinking about this from an investing perspective for the people who are considering starting their first business. I like the pain, passion, profession angle of, like, typically it'll be something that comes from a personal pain that you overcame, whether it's you had an eating disorder or you have kids who have allergies and you figured out how to pack lunches, or you figured out how to store stuff for twice as long because of some unique thing that s- that you retrofitted a cooler with, whatever. Some passion, which is just, like, a hobby that's, that you're deeply interested in or it's a profession, so something that you already currently do. Like, in a way, this is, I think one of the easiest self-entrepreneur, you know, self-employment path is just going from employed to self-employed doing the same thing that somebody already pays you for.

Codie Sanchez 7:47 Mm-hmm.

Alex Hormozi 7:47 So, like, you don't need to worry about, like, market risk of like, "I wonder if s- if accounting is still gonna be desired by other people."

Steven Bartlett 7:53 (laughs)

Alex Hormozi 7:54 Like, right now because everyone's so interconnected, like, remote work and being able to be fractional, like, many people can start kind of mini consulting businesses doing... You know, because a lot of businesses and entrepreneurs are very, um, bad at allocating resources and so they have a lot of "full-time employees" that are working 20% of their effort and still keep, you know, keeping their paycheck and at the end of the day, like, they do enough to keep their job, but not so much that they are nearly at their full discretionary effort. And so all of a sudden you think, "Okay, well, I could probably do the same work for half the price and the entrepreneur would be willing to pay it, but I could do that same work for half the price for five times the people and make three times as much and do it on my own time." And so that becomes, I think, a great, like, foray into entrepreneurship. Now, what do you have to learn there? It's like, well, you already have delivery down 'cause you already do the job, you just have to learn how to promote, which is just, like, how do you reach out to people and ask them if they want what you have and then get them to trade you money for it?

Codie Sanchez 8:41 Mm-hmm.

Alex Hormozi 8:41 Um, but that, like, at least takes half of it out of the equation. And almost all three of those pain, passion, profession, you already have kind of the backend. Like, you have the pain, you figured out the thing, uh, the passion, you've already spent all this time loving this thing so you've already done a lot of the w- the work and research. And so really, you just need to learn the front end, which is like, how do I promote and how would I sell, right? How to get someone to give me money for it. And then in terms of, um, how much money you make, I think Danny had a great perspective of like, you know, sell to the rich, like, they're the ones who have the money and if you, uh, sell to rich people, you get to sell at rich people prices, which is more fun. (laughs)

Codie Sanchez 9:10 (laughs)

Alex Hormozi 9:11 And so (laughs) I mean, eh, I'll give you a simple example, um, I have a CRO company that, that we do, uh, conversion rate optimization across our sites in our portfolio. And so if that company w- works with an e-commerce business and they, you know, add 10% to, you know, top line, it goes from one million to 1.1 million, they make $100,000 of value.

Codie Sanchez 9:28 Mm-hmm.

Alex Hormozi 9:28 If they work with an e-commerce business that's doing $100 million a year and they do the same exact work-

Codie Sanchez 9:32 Yeah.

Alex Hormozi 9:32 ... and they add 10%, they add $10 million a year. So it's 100, 100 times more (laughs) in terms-

Codie Sanchez 9:37 Yeah.

Alex Hormozi 9:37 ... of value that's being created and so fundamentally, you have the value to create, your ability to negotiate a slice of that pie. How unique that is as in, for example, I could have pl- plenty of sales guys who are like, "Hey Alex, I could sell millions of dollars of stuff for you." I'm like, "Yeah, but so could every other salesperson." So you have significantly less, uh, you know, negotiating power even if you have the negotiating skill just because many other people can do it, right? And then the third, the, the final component is risk and that's the one that I would multiply everything by, which is how much risk do you take on?

Steven Bartlett 10:03 People often say this idea of selling to the rich-

Alex Hormozi 10:05 Yeah.

Steven Bartlett 10:05 ... but as you explained it there, what, what it actually sounded more like is sell to the person who's gonna yield the most returns from your skill.

Alex Hormozi 10:12 Yes.

Codie Sanchez 10:12 Mm-hmm.

Steven Bartlett 10:13 And I, I reflect on this because I spent the first half of my career doing social media marketing.

Alex Hormozi 10:16 Yeah.

Codie Sanchez 10:16 And I, I think I said this when we sat down, Cody, that I used to work with fast fashion companies or fashion companies and the net return for the client- Mm-hmm.

Steven Bartlett 10:26 ... of me selling them more dresses was tens of thousands. I then left that business and spent two years working in psychedelics in the biotech industry-

Codie Sanchez 10:33 (laughs)

Steven Bartlett 10:33 ... where if... This was around the g- the meme stock thing-

Alex Hormozi 10:36 Yeah.

Steven Bartlett 10:36 ... where if they could galvanize people on social media to care about their stock, the upside, the swing-

Codie Sanchez 10:41 Mm-hmm.

Steven Bartlett 10:41 ... was billions of dollars. I was the only p- employee in this biotech firm that ended up listing on the NASDAQ

Steven Bartlett 10:48 for $3.2 billion and so their remuneration to me for the six months contract was many, many, many, many, many, many, many millions.

Codie Sanchez 10:57 Yeah.

Steven Bartlett 10:57 Because they, they made billions. (laughs)

Codie Sanchez 11:00 Yeah.

Steven Bartlett 11:00 So for me, they, they thought they were ripping me off.

Codie Sanchez 11:02 Yeah. (laughs)

Steven Bartlett 11:02 And, and I think about it, funnily enough, when you put the same company on different stock markets-

Codie Sanchez 11:07 Yeah.

Steven Bartlett 11:07 ... the, the company is worth wildly different and I think the same about our skills where think about the stock market where you're s- trading your skills-

Codie Sanchez 11:15 Of your skills.

Alex Hormozi 11:15 Yeah.

Codie Sanchez 11:15 I've got a, I've got a small example of that. Really small example. There was a guy who we worked with who was an occupational health and safety, uh, consultant and inside the workplace in a typical office, he would charge a couple of grand a day-

Steven Bartlett 11:27 Mm-hmm.

Codie Sanchez 11:27 ... uh, to go in and it was about 10 days so about $20,000 to do an occupational health and safety. And I asked him the question, "What is the most dangerous workplace you've ever worked in?" And he says, "Well, there's this type of manufacturing that has lasers, freezing stuff, boiling stuff, lava, you know, the sharks-"

Steven Bartlett 11:43 (laughs)

Codie Sanchez 11:43 "... you know, the whole thing, right? Whatever it is."

Alex Hormozi 11:45 (laughs)

Codie Sanchez 11:45 (laughs) And not actual sharks-

Alex Hormozi 11:47 Yeah.

Codie Sanchez 11:47 ... but you get the idea.

Alex Hormozi 11:48 Yeah.

Codie Sanchez 11:48 And I said, "Do you know how to solve the problems of that workplace?" And he says, "Yeah, I absolutely know how to fix those problems." I said, "Why don't you position yourself and why don't you run a campaign that you're one of the best in the world for that and that you're actually going to just run a campaign around that?" Um, within a year, his day rate had gone to $20,000 a day from $2,000 a day and a typical engagement had gone up to $400 grand.

Steven Bartlett 12:12 Mm-hmm.

Codie Sanchez 12:13 Mainly because he went from, you know, uh, the, the same skill set-

Guest 12:17 ... but he applied it to a, a much, you know, more valuable environment.

Steven Bartlett 12:21 Podcasting is somewhat similar, you know. Because if I podcast in the UK, the amount of money I get per view from YouTube is half, versus if I do the same ex- activity, the same amount of effort, the same amount of hours in the United States, the platforms pay me double for the same amount of views. And I think m- many of us like tr- trying to get a pay rise from our boss or whatever, but actually thinking about are you trading your skills on the highest return market-

Guest 12:45 Mm-hmm.

Steven Bartlett 12:46 ... is a great way. We used to hire writers at my old company, and those writers would be paid, you know, 30, 40, $50,000, whatever it was in the UK. When, when I was working in biotech and we were looking for someone that could write about biotech, it was a quarter of a million, the salary. It was five times more for the same fundamental skill of writing.

Guest 13:02 Mm-hmm.

Daniel Priestley 13:03 I think that, I think that a lot of times when you're starting out as a brand new entrepreneur, it's scarier to sell to rich people. You're like, "I don't know rich people. I'm not a rich person. I'm going to sell to my friends." That is very normal. That's the people that you have the closest proximity to. But the problem is, is that means you have to play the volume game, and the volume game is actually really hard. It's hard to get a lot of people to buy your thing, incredibly difficult. It's actually much easier to get a few rich people to buy your thing.

Steven Bartlett 13:27 Mm-hmm.

Daniel Priestley 13:27 And so, you know, we had this home inspection company, and I didn't know it at the time, but he was telling me they were having, like, major cash issues in their business. And, uh, and I could kinda tell because when an entrepreneur is under stress, like, you can sort of see it, you know?

Steven Bartlett 13:40 Mm-hmm.

Daniel Priestley 13:40 It's a, it's a visual thing too. And he was about 45 days away from, uh, running out of cash. And when I was sitting down and talking to him, I was trying to understand his business. Home inspection has been around forever. It's a normalized business. This business works, it functions, it has good margins, it's a roll-up for private equity. The business model is not the issue. So what was the issue? The issue was their clients and their pricing. So he was trying to be the home inspector for everyone at a lower price point-

Guest 14:07 Mm-hmm.

Daniel Priestley 14:07 ... and what does that mean? It means it was actually really hard for him to advertise because he wasn't niching down, he was competing with all of the major players, and he had very little margin because he was competing for people who couldn't afford very much in their home inspection costs.

Guest 14:21 Mm-hmm.

Daniel Priestley 14:21 We made one change, which is we just said in front of his business name and in all of his ads "luxury home inspections" instead of just San- you know, "San Diego home inspections" or whatever city he was in previously. And that one change increased his margins by 45%, and they saved his business. He didn't do more volume, he didn't hire more people, he didn't get smarter, he didn't get better, he just sold to rich people instead. And because that increased the surface area that he was covering, so each house was like, I don't know, thousands of dollars instead of a couple hundred bucks to inspect, his business was saved forever. And so I- I think protecting your profit is so crucial when you start a business, and nobody tells you that-

Guest 15:02 Mm-hmm.

Daniel Priestley 15:02 ... because it feels safer to sell things cheaply-

Guest 15:05 Mm-hmm.

Daniel Priestley 15:05 ... to people who don't have very much money. But there's that old adage which is, you know, try to work with a $50 client and they will say, "I need everything under the sun for this $50 I'm gonna give you." And then go to a $50,000 client and they'll say, "Wire sent." And so-

Steven Bartlett 15:18 (laughs) That is so true.

Daniel Priestley 15:19 ... in the beginning, go for the $50,000.

Steven Bartlett 15:21 Yeah.

Daniel Priestley 15:22 And the last thing I'll say on that is also when you're a young gun entrepreneur, a lot of times people who have money, they got there through business, nine times out of 10. They see themselves in you as a young-

Guest 15:31 Mm-hmm.

Daniel Priestley 15:31 ... hard worker. You can often get away with things when you are young working for somebody who is rich and sees themselves in you, especially in service businesses, that you just can't at volume when you're selling to people that really need that last dollar. And so I think that's-

Guest 15:46 Mm-hmm.

Daniel Priestley 15:46 ... why most businesses go service based business, you trade your time for money in some sort of way, then you productize the service, so now you make the service so other people can run it too. And then finally, you turn it into technology software as a service, you increase your margin in every single one or your

Daniel Priestley 16:01 profit in every single one, but they're the same business. You're just smarter. You're, you're a higher level entrepreneur when you're able to create tech around it, and- but really all tech is is process at scale. And so it sounds scary when you're just starting out, but it- it's, it's really just the difference between 10 years in entrepreneurship and learning and not.

Alex Hormozi 16:20 I think when you, um, when you're starting out you, a lot of times you sell out of your own wallet, to, to Cody's point. So it's like you have no dollars in your wallet, so you assume everyone else has no dollars in their wallets either. And you're so afraid of getting rejection that you continue to lower the price until you get hear- you hear people say yes. But just as like a benchmark for people who are starting out is that, like, usually you're appropriately priced when seven out of 10 people are saying no. Um, that's, like, about the appropriate price. So if you have, like, if I, you know, see a business and they're doing 80% close rates, as in like 80% of the people they talk to say yes, they usually have a double or triple in pricing just sitting there. If they're at, like, 60% close rates, they usually have a one and a half to 2X price increase that's sitting there. If they're at, you know, f- f- 40 to 50, they've got a 50% price raise in there, and if they're right at that, you know, 30-ish, 35%, then they're usually appropriately priced. And if they're at 20, they just need to learn how to sell better. But-

Guest 17:08 (laughs)

Alex Hormozi 17:09 (laughs) And so but fundamentally I say this because usually, you know, in the beginning of entrepreneurship, you're so afraid of hearing no, um, but the reality of it is that you need to be hearing no more than you hear yes to know that you're being appropriately priced.

Guest 17:22 Mm-hmm.

Alex Hormozi 17:22 Because, like, I- way back in the day, I had a gym, um, and I had... I can't remember how many members it was, but, uh, I- I said, "That's it," and I decided to triple my prices, which is a pretty big move, uh, when you have a recurring membership base (laughs) .

Guest 17:35 (laughs)

Alex Hormozi 17:35 And so I gave everyone a trial of the new level of service I wanted to give. I wanted to go from large group to semi-private. And, um, I tripled the price alongside that, and I lost one third of my customers, um, but I had two thirds of the people at three times the price. And so I made, um, two times the revenue and I cut my costs by two thirds.

Guest 17:53 Mm-hmm.

Alex Hormozi 17:53 And so I made a lot more money (laughs) . Um-

Guest 17:56 And it was probably better for your clients as well, 'cause of the exclusive experience.

Alex Hormozi 17:59 Yeah, it was better. 100%. And it was, like, right as I was beginning to learn how, like, pricing-

Guest 18:02 Mm-hmm.

Alex Hormozi 18:03 ... uh, worked with profit in a business. And so, e- and by doing that tripling in price, it didn't, like, triple my profit into way more than that (laughs) .

Guest 18:10 Mm-hmm.

Alex Hormozi 18:10 And so, like, when you have a 10% or 15% margin business, like Cody was saying, if you actually can pull off a double on your pricing, it'd be a 6X.

Guest 18:17 ... or 7X increase in profits. So there's a lot more sensitivity to that price number. What's interesting is that it's really just, like, you know, a lot of people are like, "How do I raise my price?" It's like, you do the exact same thing you normally do, and then right when you're about to say the number, you just add a zero.

Steven Bartlett 18:30 (laughs)

Guest 18:30 And then, and then you just act the same. Dan Kennedy had this great quote, he said, um, "Go as high as you can without cracking a smile."

Steven Bartlett 18:36 (laughs)

Guest 18:37 Uh, and I think that's usually a pretty, a pretty decent place to start.

Daniel Priestley 18:39 Yeah, and if nobody is giving you pushback on pricing, that means you're too cheap immediately. Like, I mean, value metrics, I think, are so under, it... Listen, the thing is, like, if you're a serious business person and you wanna make more money, pricing is gonna be really interesting to you. If you're not a serious person wanting to make a lot of money, pricing seems like such a boring conversation.

Guest 18:57 (laughs)

Daniel Priestley 18:57 This will never go viral on the internet except for people who actually are n- in the game of business, and they understand that pricing save bus- saves businesses. And the, the thing that I learned that I thought was, like, wrong at first, and I'd be curious if you guys were the same, I thought it was wrong to charge different people different prices. I was like, "No, no, no, everybody gets the same price. That's the right way to do business." And then I realized there's something called value metrics, which is basically your prices should be a representative of three things. Usage, so does somebody use this service a ton? Then you should charge them more. Do they have a lot of users? Do lots of people use it on their behalf? Or then finally, uh, value, how much value do they derive from it? Do they make a ton of money? Um, you know, can they have some sort of quantifiable return? And if you're charging everybody 90 bucks a month for whatever your service is, you are wasting a ton of money from a segment of your clients that would pay you way more.

Steven Bartlett 19:49 Like, Typeform's a good example. I, I started using Typeform, started using it myself. They charged me $50 a month. Then I started running tens of thousands of surveys through there, and I put my whole team on there. Now I'm paying $1,000 a month.

Daniel Priestley 20:00 Yep.

Steven Bartlett 20:00 It's the same fucking tool (laughs) .

Daniel Priestley 20:02 Yes, it is.

Steven Bartlett 20:03 But I'm using it way more, and I've got more of my team using my account as well, so they're charging me $1,000, just over $1,000 a month for something I made up.

Daniel Priestley 20:08 And they only had to acquire you.

Steven Bartlett 20:10 Yeah.

Daniel Priestley 20:10 Which is amazing. So from acquiring one person and your, like, you know, your cost of good- or their cost of goods don't escalate at the same rate at all.

Steven Bartlett 20:17 Mm-hmm.

Daniel Priestley 20:18 So that's how these SaaS companies get this 80% margins.

Guest 20:20 That's it. When you look at, uh, this, this little pyramid of customer segmentation, you get 1% of people who have 15% of the budget, 9% of people have 45% of the budget, 90% of people combine 40%, right? So when you actually break that down, you have one person willing to pay 15 grand, you have nine people willing to pay five grand each, and you have 90 people willing to pay $445 each. So you are almost always better off going... I think the best place for most small businesses to go is that 9%. And the reason is, the top 1% typically shop on pedigree. They wanna work with the best businesses out there. They wanna win- work with the ones who have won awards and the ones that have been around for a long time.

Steven Bartlett 21:01 And relationships.

Guest 21:02 And re- and through trusted relationships.

Steven Bartlett 21:04 Mm-hmm.

Guest 21:05 The 90%, they shop on price. They have a fixed price, and they only wanna shop on that price. The 9% shop on passion. They wanna follow someone who's an interesting, uh, who has an interesting new take on things, who's putting together a group, who's done some education or ed- entertainment around it. So the- this 9%, I would call that the affluent niche, and that affluent niche is really good place to start.

Steven Bartlett 21:26 And that 9% are the ones that are closest to moving into the 1%, so you can grow with a client over time-

Guest 21:31 Yeah, you could.

Steven Bartlett 21:31 ... which we saw a lot.

Guest 21:31 You could help get them up to the 1%, and then, then they'll take you and introduce you to all the others.

Steven Bartlett 21:36 This was one of the really fascinating things for me when I was running a marketing business, which is... I think you, you referenced this, Cody, which is when I started the company, I was working with founders who had a 10K budget. And the amount of times they would call me because of that 10K budget, because that was do or die for them. And then when we signed Uber and Coca-Cola and Samsung, the budgets are massive, and they, they call me less. They sign things off quicker.

Guest 22:01 And they have to spend it.

Steven Bartlett 22:01 The meetings are easier. Life is easier. And that's just one of these sort of interesting phenomenons with, um, with c- client services, I guess, and service businesses generally, is the bigger the budget, it typically... it requires the same or less units of effort to keep them happy than someone whose life is on the line because it's their five grand outta their own pocket.

Guest 22:20 I think part of that you earn too as an entrepreneur. I think... I mean, I'll speak for myself, I, uh... you start out selling way too cheap.

Daniel Priestley 22:27 Mm-hmm.

Guest 22:28 Um, because you also need the money. 'Cause as much as it's, like, a nice... it's very comfortable for me to say, like, "Yeah, you need to add a zero to your price tag," if I don't get paid for the rest of my life, it doesn't matter. And so I have (laughs) I have a lot of leverage, and people can feel that.

Steven Bartlett 22:41 That's really interesting.

Guest 22:42 Right, whereas, I mean, this is also like if you behave as if, right? If I behave as if I have a significant amount of money, then I tend to a- attract people who are going... or basically somebody else who also has a lot of money will recognize that behavior and say, "Okay, this guy's a player." And so then they'll be more willing to do business with me. Now, it's tougher when you don't have that and you present that way, right? Which is... So I think that a lot of this kind of does become earned because, like, either you're faking it, which is not my, not my recommendation, or you just do a decent amount of volume and you realize, you're like, "You know what? I can't charge $99 a month for this. It doesn't make sense for me." And then you have a different level of confidence going into this where you just look at something and you're like, "I just can't do it for that price."

Steven Bartlett 23:15 Mm-hmm. That's the word confidence, isn't it?

Guest 23:17 Yeah, well, that's how I- how I define it (laughs) . Yeah.

Steven Bartlett 23:19 And how does one build that confidence or portray that confidence when really they don't believe it themselves?

Guest 23:25 You outwork your self-doubt, right? You do s- you do so much volume that, um, you get bored of it. Like, when you can basically train out your, your affective response or your emotional response to a given activity, then at that point I would say, like, you are ready. And so whenever I hear somebody's like, "How do you get rid of nerves?" I was like, "You're just not... you haven't done it enough times."

Steven Bartlett 23:40 Mm-hmm.

Guest 23:41 Like, until you're bored and you hate it, at that point, I'm like, "Okay, now you're ready." (laughs)

Steven Bartlett 23:45 Is that what, like, self-belief is to you?

Guest 23:48 To me, yeah (laughs) . Yeah. There's, there's two, two types of confidence. There's a confidence that comes from repetition. Sure. And I think it takes courage the first 30 times, and then you get a little bit of confidence, and then it takes courage- Yeah. ... and then you get confidence. But I think it's, like, 30 block- little blocks of 30 repetitions, and then you get rewarded with a little bit of confidence upgrade. That's one type of confidence. There's another type of confidence, which is an abundance of options. So let's say you run a lead generation campaign and you wanna get 10 clients, and you're hoping to sign up 10 clients and 1,000 people respond-

Codie Sanchez 24:19 ... you end up with this with or without you energy. And the with or without you energy is, "I'm gonna be fine with or without you. I'm gonna definitely make my 10 sales. I've got a thousand leads. I've got 10 sales I can make." So therefore, it's out of balance.

Steven Bartlett 24:31 Mm-hmm.

Daniel Priestley 24:31 Hmm. I, I go back and forth on this, because the good thing about today actually is I think people do less than ever, but think that they do more than ever-

Steven Bartlett 24:40 (laughs)

Daniel Priestley 24:40 ... in entrepreneurship. And so we have a lot of mental masturbation that goes on. "I've thought about this a lot, I've really pondered it-"

Steven Bartlett 24:46 (laughs)

Daniel Priestley 24:46 "... I've wondered about this, I've worried about it," et cetera, right? "I've watched all these videos, I've consumed all this stuff, but I've actually done nothing."

Steven Bartlett 24:52 Keep watching the videos. (laughs)

Daniel Priestley 24:53 And... (laughs)

Narrator 24:54 (laughs)

Codie Sanchez 24:55 (laughs)

Daniel Priestley 24:55 Like and subscribe.

Steven Bartlett 24:58 (laughs)

Codie Sanchez 24:58 (laughs)

Daniel Priestley 24:58 But, you know, i- if, if, if, I, if you take the quantity advice, then what you do when you try to go get a job, let's say, whether it, it's a job, uh, that y- that you have in your business or you're trying to get an actual job, then you just go and you apply to 15,000 of them. I actually think you'd be much better off by applying to five and doing as much work as it would take to reach out to 15,000 to obsess on those five. And so even if you haven't done 10,000 hours of painting, uh, somebody's house, if you go and sit down, and you sit down with, uh, AI, get in front of Perplexity, and you write down, "Okay, what does the average painting job cost? What are the problems that come up with painting jobs? Uh, who are, who is the most expensive? Um, how do I upsell them?" And you put together a package that is like, "Here is everything that you think you need to know data-wise on this job that I want." Like, you will be the 1%.

Codie Sanchez 25:47 Mm.

Daniel Priestley 25:47 Nobody preps for anything anymore to the degree that you need to execute. And so I don't think you always have to do the job if you do the preparation to show that you care about the job. And just think about it, like how many times have we all had people reach out to us and they're like, "I wanna come work for you."

Codie Sanchez 26:03 Mm.

Daniel Priestley 26:03 Or, "I wanna come get this job." And they're like-

Steven Bartlett 26:06 (laughs)

Daniel Priestley 26:06 ... "Hey, can I send you a video of XYZ and if I do it, then, then you'll hire me?" Or, "Can I do a sales-"

Codie Sanchez 26:12 Mm-hmm.

Daniel Priestley 26:12 "... pitch for you?" You know what you should actually do? Make the video. Make the video, put together an entire prep document, put together a strategy document on why I should hire you, and make it so that it is almost impossible for somebody to say no to you, because it shows how obsessed you are in a world of super curious, uninterested, not that deep obsession. And I've hired, God, I probably have hired 15, 20 people solely because obsession is rare and competence is rare. And if you can show those two things, you can beat people who have been doing it for 20 years. 'Cause I know many painters. We, we own one of the bigger painting franchises in the country, and I know very many painters that have all the experience, but they don't know how to properly communicate it and show the preparation that they've already done.

Steven Bartlett 26:56 Let's talk about then, 'cause that's a, a function of really sales, I guess. That's sales, that's marketing. Um, I was mulling the other day, 'cause I've, I've just hired someone called Harry who's our new Head of Happiness in our, in Flightstory. And she, and the, she didn't just make a seven-minute video. She also sent the video via unsaturated, less noisy channels. And it made me think about this framework of the resonance of the message and the high signal-ness of the medium.

Daniel Priestley 27:23 Yeah.

Steven Bartlett 27:23 Because y- as you all know, you're getting DMs from people that say, "Any jobs going?" That's like low emotional resonance and a terrible medium. So, I think of it as, like, this full sort of, um, square quadrant where in the top right of the quadrant you have message, the seven-minute video, but then

Steven Bartlett 27:40 figuring out how to get it round back past the PAs, not into the saturated inboxes, maybe into the post. I think post is so, like, unbelievably unappreciated as a medium in a world of, like, laziness-

Daniel Priestley 27:51 Yeah.

Steven Bartlett 27:51 ... where nobody wants to, like, go to the post box. You- you're all on the receiving ends of thousands of DMs and messages a month, and sometimes some of them get through.

Daniel Priestley 28:00 Mm-hmm.

Steven Bartlett 28:00 Sometimes some of them result in someone being offered a job or you investing in their company. So if I'm listening at home and I'm thinking, "Okay, I've got four people here who get thousands of DMs," what is the secret that penetrates your, your fortresses?

Codie Sanchez 28:12 I'd be careful reaching out to people who get... who have millions of followers, because y- it's hard for you, if you've never had millions of followers, um, or even hundreds of thousands of followers, it's... it would blow most people's minds just how much traffic is moving, uh, in the background on any given day. There are plenty of people who have 10,000 followers or 20,000 followers, or they've got a very successful business. They don't get a thousand emails a day. They get maybe a thousand emails a year. So there's a... there's something that you can reach out with which is called a proof story, which you mentioned. And the format that I like to use is, "I did something special. I recently worked with a v- extremely famous, uh, YouTuber-"

Steven Bartlett 28:51 Mm-hmm.

Codie Sanchez 28:51 "... um, who has over 22 million followers, and we were able to spin out a new business-"

Steven Bartlett 28:57 Mm-hmm.

Codie Sanchez 28:57 "... um, which became very, very successful and exitable."

Steven Bartlett 29:00 Mm-hmm.

Codie Sanchez 29:01 "Um, and that business, uh, got, you know, 10 million worth of revenue in the first six months. Uh, and I project managed the whole thing, and I can explain exactly how we did that step by step." So the, the format is, "I did something special with a certain type of person. Uh, we got a great result. Here's what the result was, and here's how I can explain it step by step."

Steven Bartlett 29:19 And w- what's in that for me? Or am I making the, the link?

Codie Sanchez 29:21 So I'm reaching out to you with my proof story.

Steven Bartlett 29:23 Yeah.

Codie Sanchez 29:24 So I'm telling you, "This is, this is what I've done."

Steven Bartlett 29:26 And are you asking me for something?

Codie Sanchez 29:27 I'm saying, "Would you like to know how we did it step by step?" Now the other way we can do this that works pretty well is to do this in the public domain. So for example, you could reach out by actually posting a video or a, or a post on LinkedIn or on Instagram or, um, or on, uh, X. And what you can do is have five, six, seven, eight friends who then chump in and start commenting on it. Now for me personally, if you've tagged me in something in the public domain and people are now commenting it, so that the, the, the, the thing might be, "I've got a little bit of advice for Daniel Priestley." And I go, "Ooh, what's going on here?" Right? And then I see that there's a public video and I see several people commenting on it, and then I look at the video, and it's a proof story, and it's really complimentary, "I really like your stuff and here's what... here's going... and here's the... here's my proof story. And by the way, Daniel, I'd love to get in touch. Drop me a DM." I'm, I'm gonna check that out because it's in the public domain.

Steven Bartlett 30:20 Because...

Guest 30:21 Well, 'cause it could be negative. It could be-

Daniel Priestley 30:23 (laughs)

Steven Bartlett 30:24 (laughs)

Guest 30:25 Like, I don't-

Daniel Priestley 30:25 Put it on Reddit. (laughs)

Guest 30:27 I wanna know what the heck's, what, what's being said there, right? So.

Daniel Priestley 30:29 But I, I think the real thing is, don't confuse famous with rich. Like, y- you guys shouldn't care about us and reaching out to us. There are people that are richer than all of us, even though we all have some means, as far as I understand. There are people that are way richer than us that nobody knows, that nobody's reaching out to, that wanna give you their money. And so, I think a lot of people spend time focusing on fame as opposed to rich. And when you're young, who cares? Like-

Guest 30:55 Mm-hmm.

Daniel Priestley 30:55 ... you can't eat fame. Fame is not lasting. We will all be totally irrelevant probably sooner than we even want to.

Steven Bartlett 31:01 Just speak for yourself (laughs)

Daniel Priestley 31:04 (laughs) Like and subscribe. (laughs)

Guest 31:06 Alex will be remembered in 500 years.

Daniel Priestley 31:08 Yeah, so like, you know, for young people, I do think sometimes, uh, because we get DMs, we think that it's important. But if, if you're watching this, you should really be obsessed with just making money, and then you can be sitting at a table like this and not worry about-

Guest 31:21 Mm-hmm.

Daniel Priestley 31:21 ... you know, slipping into our DMs. I mean, the richest guy that you know probably started a sprinkler head company, lives down your street in a big house, and if you went and asked, knocked on his door and asked him how he made it, and if you could do a service for him, he would probably let you.

Guest 31:34 Yeah.

Steven Bartlett 31:35 So true.

Daniel Priestley 31:35 I wouldn't mess around with famous people.

Steven Bartlett 31:37 The people that gave me my first leg up in the world of business were no one, they didn't have followers.

Daniel Priestley 31:42 No.

Steven Bartlett 31:42 They were some guy who had built a business similar in the city and was now living out in Monaco, living an isolated life. It was someone who'd sold some kinda company and was running, uh, you know, some kinda marketing business. But, and they were, at that level, they were probably at the $50 million level in terms of net worth. And they were delighted to have an email from me tickling their ego-

Daniel Priestley 32:00 Of course, 'cause they see themselves in you.

Steven Bartlett 32:01 ... and saying that I was reading their blog, et cetera.

Guest 32:03 Yeah.

Alex Hormozi 32:03 It's very exhausting to do the very deep level of work that you do in order to get a high level client and then have no response, right? That can be, that can be really ex- you know, extinguishing from a behavior perspective. But if you do that work for, you know, Steven Bartlett, and then you make the post and you say, "Hey, this is this..." Like, "I'm a X, Y, Z, you know, whatever designer, and I've worked with these types of clients, and lemme just show you my breakdown of what I would do. I think this stuff's awesome. This is just some stuff I would do." And then I tag you. Then I'll probably... Like, thing is, is enough people will see that, that you'll get it sent to you from somebody else who you will answer the response from messenger messaging type perspective. Like, somebody whose DMs you will open and will be like, "Hey, I dunno if you saw this."

Steven Bartlett 32:41 A team member.

Alex Hormozi 32:41 Right, exactly. Um, and you do respond to them. (laughs)

Steven Bartlett 32:44 I do, yeah.

Alex Hormozi 32:45 Right? (laughs)

Steven Bartlett 32:45 Yeah, yeah.

Alex Hormozi 32:46 And so all of a sudden it's like, that's actually how you can get in. But you also get all the free exposure of the work that you're doing. And then another person who might not be you, and it might be me and saying, "Hey, I like Steven's stuff too, and I thought this was a pretty good breakdown. Um, hey, do you have services, uh, you know-"

Steven Bartlett 33:00 You can intercept, you can intercept mine.

Alex Hormozi 33:02 "... exchanged for money?"

Steven Bartlett 33:02 (laughs)

Alex Hormozi 33:02 Yeah, totally. I'm just, I'm gonna nab that shit. Um, and so, and so yeah, s- I actually, I actually really like that perspective 'cause it doubles, it allows the work that you do for your lead magnets to basically double as content.

Steven Bartlett 33:11 Mm-hmm.

Alex Hormozi 33:12 And so it doubles as promotion. And so you get, you kinda get multiple bites of the apple, which I think is really, uh, good.

Daniel Priestley 33:16 But I think if you do do it though, be sure you're good 'cause-

Steven Bartlett 33:19 (laughs)

Daniel Priestley 33:20 ... (laughs) because, you know, the truth of this happens all the time with you and I.

Alex Hormozi 33:23 Yeah, yeah.

Daniel Priestley 33:23 I mean, there, we go back and forth 'cause people will say online like, "I built everything that Alex Hormozi owns. Can I come work for you, Cody?" You know?

Alex Hormozi 33:31 Oh yeah.

Steven Bartlett 33:31 Yeah.

Guest 33:31 (laughs)

Daniel Priestley 33:32 Ugh.

Steven Bartlett 33:32 I receive those emails too. "I built Alex Hormozi, so can I..."

Daniel Priestley 33:35 Of course. You'll have this, see as the same people, you know, "I built everything Cody has."

Steven Bartlett 33:38 Yeah, yeah.

Daniel Priestley 33:39 And then, you know, kind of funnily I'll be like, "God, I don't remember that person ever working for me." Like-

Steven Bartlett 33:44 (laughs)

Daniel Priestley 33:45 ... did this, did this actually happen? And so I do think this is just a little, listen, you gotta hustle when you're young. You gotta do things you're gonna cringe about later. I am so on board for all of that. But also remember that the world is small, especially with people online.

Steven Bartlett 33:56 I just wanna pause on that 'cause I think this is an important point, is all the people that have had the biggest net impact on my success, my career, in my team, they don't, they don't seem to have time to be telling the world that they did everything.

Alex Hormozi 34:07 Mm-hmm.

Daniel Priestley 34:08 Yeah.

Steven Bartlett 34:08 I mean, Jack is a good example. Jack is, Jack was here from episode one of the podcast. But Jack, in my view, is doing the like least personal branding, milking the cow, and he's, in my view, arguably the most responsible-

Daniel Priestley 34:21 Yeah.

Steven Bartlett 34:21 ... for all of this stuff. And there's almost this inverse correlation between someone that works for you for three months and then builds a personal brand off the back of that, and is on stage claiming, you know, the success versus the people in the, in the trenches.

Guest 34:33 Inner circle, yeah.

Steven Bartlett 34:34 It's a, it's a bit of a side point. But, um, one of the things people are so fascinated by is this idea of passive income.

Daniel Priestley 34:39 Mm-hmm.

Steven Bartlett 34:39 And I think it, I think they're fascinated by it because it's a promise of big returns for no work. And that's, you talk about offers a lot, that's like the perfect offer. (laughs)

Guest 34:49 Yeah. (laughs)

Daniel Priestley 34:50 (laughs)

Steven Bartlett 34:51 What, what's your, what's your thoughts on passive income, Alex? And is it something we should be aspiring for?

Alex Hormozi 34:55 So, um, first I think it'd be helpful for everyone to even define in t- terms of how to think about passive income versus active income. So one is that people often discuss it in binary terms, passive versus active, when it's really more of a continuum of how passive is it versus how active is it. And that way it becomes way less black and white. When I think about passive versus active, um, when people are starting out, I generally

Alex Hormozi 35:17 just discard it entirely because they typically don't have sufficient capital in order to actually make meaningful passive income, and they would get significantly higher returns on increasing their active income. And virtually every extremely rich person who's self-made as my asterisk, generally has gigantic active income and only begins to look at passive when they have so much money from reinvesting in their higher return things, which is what got them this very large active income that they're like, "Where else should I put it?" And then at that point, it's really a question of diversification, which is like, "How much more do I not wanna double down on the main thing?" And that's a completely personal question, and I don't... There is no, in my opinion, there's no right answer to that-

Steven Bartlett 35:49 Mm-hmm.

Alex Hormozi 35:49 ... um, of, because that's a fundamental, like how much risk do I wanna take? Um, which I see as entirely personal. But I'll give you a, a very, a real example of like an investment I made, you know, five years ago, which was, um, we did ex- exited the business, um, and I had more time on my hands and I was like, "Okay, well, why don't I just start spending, you know, a couple million bucks a year on making content?" Now, that had basically zero return (laughs) in that time period. But if I were to look at the return on capital for that, you know, $2 million a year I did for the first few years compared to today was probably the highest return capital that I made. But is that, was that a-... passive, no, it's definitely not passive, it's 100% active in term- from an investing perspective. And so this is when people are like, "What do you mean by invest in yourself?" I mean that, right? Like, you're investing in either the skills that you're acquiring, the businesses that, that you have. And a very simple investment, a lot of times, uh, can get you, ideally, leverage on your time. And so I'd rather think, for the person who's starting out, not like, "How do I make this passive?" I'd rather say, "How do I get more leverage on my active?" And so, like, I could start by shoveling snow in the beginning, and then once I save up enough of my shekels, then I'll buy a snow blower, and all of a sudden I can go from doing, you know, one driveway an hour to doing three driveways an hour, and then boom, I tripled my income. Now, for that one week that my cash flow was down because I had to buy the equipment, I'll, I'll have made less money, but then I'll very quickly recoup it. Now, to the same degree, that's in a capital expense from an equipment perspective, but you can do the same thing from a skills perspective of, I give a classic, classic example of a phlebotomist, so somebody who draws blood. Um, in the US I think they make somewhere in the neighborhood of, like, $25 an hour or something like that. It doesn't take very long in order to become a phlebotomist, and it doesn't take a lot of money. And so, you know, a couple weeks, you do the studies, you get your cert, and then all of a sudden you take minimum wage, and as long as you're not in San Francisco, you have double or tripled your earning capacity in just a very short period of time. And so that's a very good return on capital. And so that's where I think about the best investments for people who are starting out who have, call it sub-$10,000, sub maybe $25,000. It's like, I put all my money into how I get more leverage on my active, which is either gonna be more skills or, or more actual physical equipment in order to get returns on the skills I already have.

Steven Bartlett 37:47 Interesting. More leverage on my time.

Codie Sanchez 37:51 Mm. I, I personally like the idea of asset income versus passive income. So if you actually look at what's really going on with passive income, it's that there is a, an asset, and that asset is in some way generating income. So for example, you own a house and you get rental income, or you write a book and you've got intellectual property, and that intellectual property generates a royalty income. So first there's an asset. Income follows assets. So the first thing that you need is an asset, and then you get the yield from the asset. And there's traditional assets, which are very, very good if you've already made money or you already have money and you wanna park it somewhere-

Alex Hormozi 38:24 Mm-hmm.

Daniel Priestley 38:25 Mm-hmm.

Codie Sanchez 38:25 ... and you wanna stay ahead of inflation. Traditional assets are terrible for trying to make money.

Steven Bartlett 38:29 Give me an example of a traditional asset in this definition.

Codie Sanchez 38:32 Um, I think of something like, uh, art, wine, and watches as more like a speculation, but, or, or perhaps a store of value. But then there's something else which is called a performance asset. And a performance asset is typically intellectual property, media, code, or data. And when you have these performance assets, if you can build these, these are ones you don't have to buy, you build them. So for example, you could write a book and now you've got intellectual property. You could build a system like a SaaS platform, uh, and now that SaaS platform is in some way an asset, and you can rent that out to, to more people. Uh, you could build a database of a thousand people and build a relationship with those thousand people, and then every time you write one email, it goes out to a thousand people and they get a little newsletter. So that's a performance asset. So typically when you look at, um, the people around this table, we're actually go- we're, we're very lucky to have a lot of performance assets, big followings, uh, lots of media and content, um, books that we've written. So these are kind of like the performance assets that anyone can create. It used to be, until very, very recently, that you just couldn't build assets. Like, you couldn't... it was very, very difficult. But we live in this magical moment where almost anyone with a phone and a laptop can start creating performance assets with intellectual property, media data, and code. And, uh, and then you can basically start the process of building those assets and, and then those assets produce more income.

Daniel Priestley 39:58 Here's my conspiracy theory about passive income. (laughs) And, uh, I think that passive income, it's a tax code, right? It is a real thing. It exists. You pay less money to the government if you have passive income than active income. Like, that's where the word comes from. But I think the reason that it's been so idealized is because there's an entire industry where people have told all of us for decades that they are better at managing our money than we are. That's the mutual fund industry, that's the investment industry, that's the real estate industry, that's the private equity industry. And they have said, "We are, uh, professionals, and thus we will charge you two and 20. We'll charge you, uh, an investment fee on top of your assets for you to give us, the professionals, your money to beat inflation over time." The problem is, is that, to your point, they will never make you wealthy. Investing over time in those assets are in- are great for beating inflation or making sure you have do- downside protection for your cash over time in order to allow it to grow and have diversification. But they're very bad if you wanna get rich. If you wanna get rich, you're not going to get rich in mutual funds and sitting it in somebody else's private equity fund. The people who get rich off those things, they do the active income. They're the ones who are running the private equity fund, they're the ones that are running the private equity companies, and they're the ones that are running the real estate. And so there's this fascinating world we live in, actually, where people think that it is better and more sophisticated to not teach you how to become capable of running your own business and creating active income, but that instead, uh, you're more sophisticated if you're on Wall Street. And, and so I think that passive income is actually, in a lot of ways, a way for the wealthy class to gain a lot of our assets.

Steven Bartlett 41:39 But people click it, and this is why there's a generation of younger people as well that are obsessed with trying to figure out how to make passive income. It's, it's, it's clickbait, isn't it?

Daniel Priestley 41:48 I think it's clickbait.

Steven Bartlett 41:48 Forex trading.

Daniel Priestley 41:49 But I think it's almost deeper than that. I think it is actually that, um, it sounds... You know, if Alex says this, I say it too, but, like, invest in yourself. People are like, "What does that mean? What are... Of course I'm trying to, but how do I invest in myself? That's hard. I don't know exactly how to do it. What... Are you trying to sell me courses or tell me to buy your books or whatever?" And that's the, the reaction. But the truth of the matter is, is that you will never be able to have the return on investment in somebody else's asset that you will in yourself. You just won't.

Steven Bartlett 42:18 Okay, so let's go into that then, investing in yourself. If you were starting out in your career today without the skills that you have, without the audience that you have, and you had to...... choose how to invest in yourself. What is that investment you would make in yourself today, in 2025?

Alex Hormozi 42:35 I'm gonna give two answers. So, um, so I started at zero once and then I've lost everything twice, and so I have the, uh, I have done that three times now, um, starting from zero without a reputation, um, or money. And so, um, what I did in all three times was the same thing, which was, the first thing I did was I learned how to advertise, which is how do I let people know about the stuff I have? The second thing I did was that I went to people who had an existing business and I said, "Hey, for as little, as little money

Alex Hormozi 43:02 as possible, what would you do to fulfill your existing services?" And then when someone, uh, I would then use the advertising that I had, so at the time it was Facebook ads, um, I would run ads and then I would sell those leads into that business based on the predetermined price. And so let's say it's a, a chiropractor, or for me it was a gym. So I went to a gym owner, I said, "What would you, you know, take for a member?" And they said, you know, "W- we would actually take 'em for f- if you can just bring 'em, you can keep the money. We just want the customer for free." And then so I said, "Okay, well the first six weeks of the time that they spend money with you is mine and then after that they're all yours." And they said, "That's fair." And so then I just spent money and I sold into someone else's business and I kept everything above the spread, which since the basis was zero, I kept all of the money and I had zero cost of delivery. So literally it was just cash collected minus CAC, all of that was profit. And so when I started over from zero the third time, (laughs) um, I was able to make $100,000 in the first month when I needed it.

Steven Bartlett 43:58 Because you had that skill of advertising.

Alex Hormozi 44:00 Yes. And so when we say, like, invest in yourself, it's just a, it's a, it's a very, uh, amorphous term, but fundamentally you have to learn the, the, the skills of generating money. And so you're going to have to have some level of promotion, you have to let people know about your stuff, which is either gonna be through content, through paid ads, through outreach, right, or it's gonna be through affiliates, so somebody already has an audience you negotiate some sort of thing with. Honestly, so many businesses, like you can go to a chiropractor and say, "Hey, you know, how little will you do 10 sessions for?" And you'd be amazed. If I say, "Hey, I can bring you 100 people, how little can you do 10 sessions for?" They might say, "$20 a session." Now I might sell it for 200, but that's on me.

Steven Bartlett 44:32 Mm.

Alex Hormozi 44:32 And I make my 90% spread, I don't have to do anything. I just have to promote and sell. And so that is an example of something that, like, I have done and did do each of the times when I needed to make money in the beginning when I had nothing.

Steven Bartlett 44:43 What skill that you currently have-

Alex Hormozi 44:45 Yeah.

Steven Bartlett 44:45 ... would get you back to being a $100 million entrepreneur?

Alex Hormozi 44:50 So it's a really good question. I think it's actually stacking skills. So a lot of, a lot of times, like, when this question gets asked, um, basically the assumption is that you have to stay in the same vehicle. And so, like, the fastest way to make $100,000 is not the fastest way to make $10 million. But I might make $10 million faster if I start with $100,000. And so if I have zero, then I'm gonna do something that costs zero capital and is pure skill, which is exactly what, what that was, right? Now to make, let's say to actually start running those ads, I might need $1,000. And so it's like, I might drive Uber for $1,000, get my $1,000, then spend the $1,000 on ads to make my $30,000 and during that process I can reinvest that to get the $100,000. Okay, great, now I've got the $100,000. Now with the $100,000 I can flip that into... And the key of each of those is that none of those are really businesses per se, in that like I can just walk away from them whenever. I don't have ongoing delivery or ongoing commitments. And so that gives you a lot of flexibility. And I mean, I think there are a lot of entrepreneurs, at least the ones that I know, um, have, have had these moments where they needed to generate a lot of capital in a short period of time and have a few kind of, like, fast money skills that they don't flex normally because there's, there's caps to them, right?

Daniel Priestley 45:55 What I think is cool about entrepreneurship too is we can all do it. You have to find your unfair advantage. One of your unfair advantages is you're very good at paid promotion-

Steven Bartlett 46:03 Mm-hmm.

Daniel Priestley 46:04 ... and getting to the masses, right? That was never really my unfair advantage. I think there's two different ways you could do this. One would be promotion, so are you an incredible salesperson to go direct to a ton of people? The other way is partnerships. And I think you can think of these different ways. Promotion could be B2C often, which is, like, going direct to consumer. Um, often partnerships is B2B, going to a few big people. Um, I think of partnerships as employment, which is a very fast way often to make money too. Like Jack might make way more millions with you than he does individually. And so my background, when I didn't have any cash, I didn't know how to, uh, go to people directly. I didn't know how to do paid ads. I wasn't sure how to do promotion, which is a volume game that you have to be good at, so I went towards partnerships. I said, "I can get to fewer bigger faster. I can't get to many fast." And so I think there's, like, two paths to making money quickly if you don't have any, and the, and the first path has less risk but perhaps mid-size returns, and that is go find the best entrepreneur founder business builder you can find who you can still get to on a daily basis in some way and go work for them.

Steven Bartlett 47:08 Mm-hmm.

Daniel Priestley 47:08 Learn as much as you can, earn as much as you can. As you learn more, ask for more continuously over time. This is how, I mean, Sheryl Sandberg is one of the richest people in the world and she's never had her own business, right? She's only worked for other people and she's doing just fine. So I think that's the first way, and that would be what I would call partnerships or employment. And then the second way is to go do it yourself, right, which is high risk but probably highest reward. And in that instance you have to go and figure out how to get people to buy your things continuously over, over time. But, like, when I didn't have money in the beginning, um, you know, I had just, I'd gotten out of finance. I didn't wanna work for somebody else again. I was pretty miserable. I'd worked for a billion hours for people in investment banking and asset management and, uh, I had massive golden handcuffs. Like I made a lot of money and, um, I had no brilliant idea. I didn't have a business idea. I had no idea what to do next and I'm pretty risk averse actually. I was, like, way too scared to go do, do what you guys all did, which is start businesses from scratch. And so instead I partnered up. I went to another company that needed to raise capital and get a few investments in it and I went to them and said, "I can raise money from a few of these people that I know. If I do that, can I negotiate a little bit of equity in the company? Can I negotiate upside return for the money and dollars that I bring in? And I wanna, I wanna be a partner in the company." And so you don't always have to start your own thing. If you can negotiate with partnerships, I think sometimes you can skip to the front of the line if you're not a great natural salesperson, you know, or marketer. And so you really just n- need to decide which one.

Steven Bartlett 48:36 Mm-hmm.

Daniel Priestley 48:36 And neither of them are better than any other. They're just better for you.

Steven Bartlett 48:39 Mm.

Codie Sanchez 48:40 The amount of resources you have access to is a factor of knowledge, network and reputation. So you, at all times, you're trying to build your knowledge, you're trying to build your network, you're trying to build your reputation. Now a lot of people are worried about the knowledge, but they've probably done interesting things already in their history. They're probably, if they looked over the last three, four, five years, they could say, "Actually I've done all sorts of things, but I've never told anyone about that. But I've never actually explained, I've never posted on LinkedIn, I've never posted an update telling people what I've done. So therefore I've actually got things that could build a reputation, but I've never leveraged that reputation." If you're a young person especially, network is actually ... You've got a superpower with network, and I'll tell you why. Because if you go to a private bank that normally banks people with 3 million, but you say, "I want to be an entrepreneur, I want to come to some of your entrepreneur events that you host," they'll bring you along 'cause you're, (laughs) you're an ambitious young person. If you go to a large accounting firm and say, "Do you ever host big events? Could I attend some? Can I jump on a newsletter that lets people know about the events?" They'll invite you along. And I'm talking about, like, Ernst & Young and KPMG. Every single week they've got some thing that they're doing in their offices. They've got experts, they've got rich people, they've got all that sort of stuff happening there, and they'll invite you along. So you've got this ability to build your network, you've got this ability to leverage, uh, your reputation. I actually don't think that you can make good decisions about the knowledge on your own. I think you need someone who's at the higher level to tell you, "This is the skills you should go for. These are the things you should do." So for example, at the time that Alex did ads, it was a great time for doing ads.

Alex Hormozi 50:14 Mm-hmm.

Codie Sanchez 50:15 But now fast-forward to today, it's probably better to s- uh, study AI and, and to bring that to the table. So sometimes those rep- sometimes those things change. So let's say you figure out what is your reputation, what can you talk about when you're in front of people? You go networking, you go to a few of these events, you outreach, you get yourself in front of some people and you actually ask the question, "What kind of skills do I need? What, what sort of, um ... I, I need to build my skills, I need to build my knowledge. What do you think would be a valuable thing, uh, to do?" Because people who are at that next level up, they're, they're noticing what they, what they need, uh, they're noticing what's hot, what's not, um, so they're gonna be able to teach you, uh, or t- or guide you and, and, um, to Codie's point, you know, you, you wanna have a mentor in your life. You wanna have someone who's, who's been there, done it. You wanna, you know, partner with a bigger organization and get some of those. Before Kim Kardashian was Kim Kardashian, she was Paris Hilton's, uh, assistant, and she learnt the playbook for being famous for being famous, and then she took it to a new level, took it to a new level. So she, she, uh, she did an apprenticeship and then she applied the apprenticeship.

Steven Bartlett 51:17 One of the things that all of us have in common is we make content, and it's almost a bit of an elephant in the room that no one's, no one's really doubled down on. When I asked what, what you guys think is the most sort of, like, undervalued skill or the best place to invest in yourself, I was actually expecting you all to say, "Start making content."

Alex Hormozi 51:33 Mm-hmm.

Steven Bartlett 51:33 For a variety of reasons, not just because you want to build an audience so you have more customers, but actually, and I can see it on all of you, it's helped you to think better.

Codie Sanchez 51:41 Mm-hmm.

Steven Bartlett 51:41 It's helped you to communicate better. It's helped you to sell better. When you get that chance to sit down with that investor or that rich person, you said a second ago, you said earlier that, "If I'd sat Old Alex here, one of the big differences is this one's much more focused, concise, articulate." So I, I'm wondering what you guys think of that, content as a undervalued, underappreciated skill in the world we're heading in.

Alex Hormozi 52:01 If I'm starting t- today rather than when I had, you know, zero, there's still a huge amount of attention that sits on social media, if not more, and there's even more demand for content now than there was, and so you can supply that and get compensated for it, and you'll have to do repetitions for a period of time until eventually you get good, and then you can develop an audience and then you obviously can sell things to them.

Codie Sanchez 52:21 I think, um, content, (sighs) content's a little bit of an interesting one because content works when you've got intellectual property leverage. So I remember Alex popped onto my screen the first time and he says, "I've sold my company for $40 million and I've got nothing to sell you, I'm just gonna tell you how I did it." Codie's the same. She's like, uh, you know, "I, uh, I was working at Goldman Sachs but then I left Goldman Sachs to earn more money through laundromats." I'm like, that's interesting. That's fascinating, right? So I'm gonna watch that content because there's some interesting intellectual property there. Um, my channel took off when I started talking about I've done seven startups that went zero to a million in the first 12 months. So it's that ability to have some intellectual property that people are going to want to get to.

Steven Bartlett 53:03 I can think of a bunch of examples of creators that hadn't done anything but their ideas were the value. So if you think of someone like George Mack or even James Claire or lots of other of these sort of like Jay Shetty, online writers who-

Codie Sanchez 53:18 Jay Shetty had a great one which was, uh, "I've got monk wisdom for the modern world."

Steven Bartlett 53:22 Mm-hmm.

Alex Hormozi 53:22 Mm-hmm.

Codie Sanchez 53:22 And we've got Ali Abdaal, "I left the ... uh, I quit being a doctor to be a YouTuber."

Steven Bartlett 53:28 Mm-hmm.

Codie Sanchez 53:28 So there's these little hooks that work, and-

Steven Bartlett 53:30 Does everyone have a ... You don't have to have sold a business for tens of millions or-

Codie Sanchez 53:34 No, I, I think-

Steven Bartlett 53:34 ... made millions from-

Codie Sanchez 53:35 I think there's some intellectual property that you've got, but bear in mind that there was a different time where you could just burst onto the scene and we now have AI generated content, so if you imagine like airplanes and they're at the airport and the fog rolls in and if you're on the ground it's very hard to take off, but if you're already up in the air, it's very easy to stay up in the air. And it's kind of like the AI content that's coming in is, is that fog, right? There's just gonna be thousands of AI generated content pieces just flooding onto everyone's feed, and if you don't have a really good hook, you're just not gonna drown out that noise.

Steven Bartlett 54:08 You guys must all be thinking about this.

Alex Hormozi 54:10 I have, I have so much here ... I, I ... all right, all right. So (laughs) ...

Codie Sanchez 54:14 (laughs)

Alex Hormozi 54:14 So one thing I think everyone has to decide on if they're gonna start making content is, am I an entertainer or am I an educator, right? Right off the bat. And so I think AI content for sure will have s- tremendous leverage on entertainment, more so than education, because the big underlying thing that Daniel was hitting at is that you have to have proof, right? Like, like an AI avatar cannot come in and say, "I sold my company for 46..." They can't. They didn't do anything 'cause they don't exist in the real world-

Steven Bartlett 54:34 Mm-hmm.

Alex Hormozi 54:34 Which is why, in my opinion, like the absolute foolproof method for making educational content is do epic shit and then talk about the epic shit you did.... period. And so, like, I, um, so yes- I'm in, you know, I'm in LA, 'cause yesterday, we also, um, we had the Skool Games winners come out with Skool's platform that hosts online communities, and the winner of the last Skool Game, so 90 days, he got to, like, 300 and something thousand a month from a YouTube, uh, channel that he started 16 months ago. So, he started 16 months ago making videos about AI. Now, what was his interesting thing? So, he was just always into AI, learned about the tools, and then he started helping small businesses for, like, $1,500, $2,500 a month, where he would just help them implement these automations that would save them money and time. And then people were like, "Well, how'd you do that?" And so he just basically would just explain each of the automations that he made for each of these businesses on his channel, and he made one video a day explaining one of the automations. And then he said, "If you want, I have a group that's," whatever, "$300, $400 a month that shows you how to build the-

Daniel Priestley 55:26 Mm-hmm.

Alex Hormozi 55:26 ... same automations." To your point about the education is like, you just need some proof. And it doesn't, like, you don't have to, like... The bigger the proof you have, the wider, basically the wider TAM you'll be able to reach, because more people'll be, I'll just put the words, impressed. If you just are in your 20s, and to be fair, you've just quit Goldman Sachs, it's like, that is enough of a thing that, 'cause that's, it's a 1% type deal.

Daniel Priestley 55:47 Yeah.

Alex Hormozi 55:47 Right? But you can also, you can 1% through achievement, but the other side that I think people widely underestimate is you can 1% through volume of work. So, if I said, "I read 200 books last year." (laughs)

Daniel Priestley 55:58 Mm.

Alex Hormozi 55:58 "Let me show you the 200."

Daniel Priestley 55:59 Mm-hmm.

Alex Hormozi 55:59 "They're all dog, you know, dogeared. Let me tell you what I learned." Like, I'd be like, "Well, shoot." Because I think everybody wants to bargain on time, right? Like, "I went on 100 speed dates." (laughs)

Daniel Priestley 56:08 Mm-hmm.

Alex Hormozi 56:08 "This is what I learned." It's like, well, I don't wanna go on 100 dates, but like, anyone can do that. So, it's either 1% achievement or 1% effort, but this one you can do, and even if you have zero outcome, there's still stuff that you'll learn, and then that will, people find interesting that you can build an audience around. And if you do that enough times, eventually, you do achieve something that is interesting, and then that kind of becomes permanent. But at the end of the day, like, proof always beats promise.

Daniel Priestley 56:28 I- I also- ... think anybody can go viral online with one of two things. We've talked a lot about experience. So, if you do have experience, if you built a billion dollar in assets under management business, gone to Goldman, built seven startups, that's incredible. That's not normal. That's totally fine. But that means that you could just have the everyday, other E of starting the experience. I think we- we obsess on expertise. Expertise is the way to make content online and make millions. But what about just the experience? You could say, "Actually, I've done nothing. I'm a college dropout. I've fucked around a lot. I don't have much figured out, but over the next year, I'm gonna try to make a million dollars." And you can go just as viral, if not more. I mean, a good example would be like Ryan Trahan, who, who I love, who's in Austin, Texas too. And Ryan is just like, "I'm trying

Daniel Priestley 57:12 stuff, and this might fail, and I have no idea, and you guys can come along." The proof could actually be you just trying a thing and it not working one way or the other. And so I think the- the only problem with this type, which is experience as opposed to expertise-

Alex Hormozi 57:25 Mm-hmm.

Daniel Priestley 57:25 ... is that with expertise, you have attention and intention, AKA intent to buy, whereas if you're just experiencing things, you might have attention, but what are you going to sell?

Alex Hormozi 57:34 Mm-hmm.

Daniel Priestley 57:34 Because you don't have like a value derived from it.

Alex Hormozi 57:37 Mm-hmm.

Daniel Priestley 57:37 Where's your intent? I mean, if you think about who are the biggest creators online? OnlyFans, the Kardashians. You know, what are the biggest websites online? Porn sites. That's a lot of attention, but the intent to buy is going to be low for any of those over time, uh, writ large. And so I think you have to ask yourself, "Okay, if I get a ton of attention, let's make sure I'm really thoughtful on what I get attention for. And then let's think about once I have that attention, where do I actually have some sort of expertise or value that I can trade in order for people to have intent to buy?" And I think about it like this. Rihanna, huge star, right? Big celebrity. Billionaire now because of Fenty Beauty.

Alex Hormozi 58:15 Mm-hmm.

Daniel Priestley 58:15 Drake, giant celebrity. Arguably more views, more hits than Rihanna, worth one-fifth, one-sixth, one-eighth what Rihanna is worth. Why? Because he has tons of in- att- attention, but he hasn't actually done much to get intent to buy from him. And so Rihanna is just categorically better, if we s- define better as, uh, bank account and scoreboard on, uh-

Alex Hormozi 58:37 Mm-hmm.

Daniel Priestley 58:37 ... net worth, than Drake is-

Alex Hormozi 58:39 Mm-hmm.

Daniel Priestley 58:39 ... at monetizing their intention. And so, um, I think that a lot of creators online think too much about views, likes, subscribes, and don't think very much about, "How do I monetize on top of this?"

Alex Hormozi 58:51 Mm-hmm.

Daniel Priestley 58:51 Be- because nobody stays relevant forever online.

Alex Hormozi 58:53 Yeah.

Daniel Priestley 58:53 And so I think while you're in the spotlight, you do have to think about how you're going to convert that funnel in some way.

Codie Sanchez 58:58 That's a really great point. The- a lot of the people you see blowing up online, they do have a backend that monetizes it, because to your point, it costs money, you know? I probably spend $40,000, $50,000 a month just on retainers of people who are working on that stuff and-

Alex Hormozi 59:13 Content.

Codie Sanchez 59:14 ... yeah, content-related stuff, and you know, because I have businesses that can monetize that, then it- it's wo- it's worth doing, but it's hard to compete with that if you don't have a backend. The- the other option is to work with someone who does have a- a business and they do have experience, they do have something to talk about, but they're busy and they need someone to project manage this. Because one thing that's happened is that to the traditional business owner, this personal brand thing and this building a content empire, uh, that builds your business, this is brand new to a lot of people. So, there are plenty of people who've got a $50 million a year business and they're going, "Oh, should I show up online at all? I- maybe I should." And they're just starting to tiptoe into the water, and they've got a story, they've got a backend business, they can monetize it, they can allocate budget to it. You could be the person who does that, and you'd be... If you did do that, you would be one of the very special people in their life. Um, I had a guy come to me a couple of years ago and said, "Daniel, I just cannot believe you've written five books," at the time, "you've got seven different companies, you've got all this stuff going on, and you've got a few thousand followers. And I've had a look online, you get like 10,000 views a month." And I'm like, "Yeah, but I'm busy. I'm running my businesses." And he came to me and said, "I will project manage you into the millions per month." And he just literally picked this up, a guy called Martin, right? And he just said, "I- I'm gonna do this, and I'm gonna turn up at your house, do a day of filming every month. I'm gonna edit it, I'm gonna chop it all up, I'm gonna do all this stuff, and I'll project manage the whole thing." Now, the two of us are very, uh, close now. We've got a good relationship, and he's now got an idea for an AI startup, and I'm gonna back that.

Steven Bartlett 1:00:50 Every single one of you watching this right now has something to offer, whether it's knowledge or skills or experience. And that means you have value. Stan Store, the platform I co-own, who are one of the sponsors of this podcast, turns your knowledge into a business through one single click. You can sell digital products, coaching communities, and you don't need any coding experience either, just the drive to start. This is a business I really believe in, and already $300 million has been earned by creators, coaches, and entrepreneurs just like you have the potential to be on Stan Store. These are people who didn't wait, who heard me saying things like this, and instead of procrastinating, started building, then launched something, and now they're getting paid to do it. Stan is incredibly simple and incredibly easy, and you can link it with a Shopify store that you're already

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Alex Hormozi 1:01:48 Mm-hmm.

Steven Bartlett 1:01:48 ... with AI in the picture and all of these platforms and the way things are going, I- I think I've spent, I've spent a lot of time thinking about the next big opportunity in content, and I think about the next big platform. Where would you be starting today based on who you guys are and the skills that you have and the things you're interested in, is probably a better way of saying it. Would you be on LinkedIn posting once a day? Would you be on TikTok making videos? Would you be on YouTube starting a channel? Would you start a newsletter? And with AI in the picture, I think it changes the answer, because content is gonna become very easy to make. So where does the value accrue to? Like where does the value move to in a world where every ki- kid in Mumbai could make, uh, a Reel or a quote picture

Steven Bartlett 1:02:30 now with ChatGPT? So where is the value gonna accrue and how are you gonna milk that cow? How are you gonna capitalize? Like what is the one thesis you have about the future of content that you haven't told anybody yet? Tell me. (laughs)

Alex Hormozi 1:02:43 (laughs)

Daniel Priestley 1:02:44 (laughs)

Steven Bartlett 1:02:44 I'll tell you mine. I'll tell you mine.

Daniel Priestley 1:02:45 I wanna ask a question too for everybody at the end of... Well, I'll give you my, my quick thing. One, I will say like, um... And I'd be curious if you all agree. When I first started making content, um, most people that I knew thought it was really cringe actually.

Steven Bartlett 1:02:57 (laughs)

Daniel Priestley 1:02:57 They're like, "Uh, why would you make content? If you've actually had any success that you supposed to have had, why would you be so idiotic as to be on the internet making content? It can't be true that you've done these things if you're making TikToks all day." And, um, and I think they totally miss the boat that like the 21st century concern, uh, currency is attention. And attention could be bought with ads or attention could be bought in a different way, but through organic content creation. And so you go like cringe to content to conversion, and actually I think all of us would probably agree, it was a pretty good play. But like, I'm sure... Did you guys all get laughed at when you first got on the internet?

Alex Hormozi 1:03:32 Of course.

Daniel Priestley 1:03:32 Yeah, right?

Alex Hormozi 1:03:33 Never.

Narrator 1:03:35 (laughs)

Daniel Priestley 1:03:35 Like, like-

Steven Bartlett 1:03:35 Still get laughed at now.

Daniel Priestley 1:03:36 I still get, I still get