The Game with Alex Hormozi - 3 Paths of an Entrepreneur | Ep 516

Episode Date: March 28, 2023

Which path are you taking? Today, Alex (@AlexHormozi) discusses the three paths of entrepreneurship: the pure artist, the pure entrepreneur, and the hybrid path. He explains each path and emphasizes the importance of identifying which path works best for the individual entrepreneur's interests and goals.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(0:26) - 3 paths for entrepreneurs: artist, entrepreneur, hybrid(2:48) - Artist: doing what you love, not necessarily scaling(4:14) - Hybrid: combine artist and entrepreneur paths, build around passion(6:26) - Entrepreneur: business itself is art, build multiple enterprises(7:53) - Which of the 3 paths are you? (Note: it's okay if it changes)(9:50) - Most valuable skill: product development, then marketing and salesFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

The most valuable skill that you can have in order is product first, then marketing, then sales. And so right now, if you know how to sell, it's because you don't know how to market, you know how to build product. Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with Acquisition.com. I always wished Bezos, Musk, and Buffett had documented their journey. So I'm doing it for the rest of us. Please share and enjoy. There are three paths that every entrepreneur eventually has to take.

You have the path of the pure artist, the path of the pure entrepreneur, and then a hybrid path. And I'll explain each one of them at high levels. So the path of the artist is the person who loves doing the thing. So you have an art form. Now, your art form might be plumbing. Your art form might be carton. Your art form might be coding software. It might be making content.

It might be making media. It might be making wallets. It doesn't really matter what it is. You have something that you enjoy doing and you do it well. The second path on the extreme, so the all the way other side of it, is that you love business. business is your art form, and it doesn't really matter what business you're in. You just enjoy built. Your art is how you build a business around monetizing the thing.

I would say that for me now, that is my path. That's what I enjoy the most. Like I love working with different portfolio companies, whether it's solar sales, mortgage sales, physical products, software, service businesses, brick and mortar chains. Like, we have all of those in our portfolio, and I love growing them all. And that's because the art for me is the actual business itself. The third path is a hybrid path. And each of these paths can go all the way to the max limit here.

So an example is Tobias Lutka, who is the founder and not CEO of Shopify. And so he loves building Shopify pages. And he loves the coding and he loves the product. And so what he did was he found somebody else to actually be the art where whose art was entrepreneurship and building businesses and have them build the business around him while he stayed focused on the main thing that he loved the most. And so the key here is that there is no right path. It's more about the path that works best for you during the season you're in. Because guess what? You can also change paths later.

If you start in the artist path, you might transition to the hybrid path or you might start on the artist path and go all the way to the entrepreneur path. When I started, I really loved fitness. I was obsessed with fitness. I had spent years. I had competed in fitness. And so all I read all day, besides a little bit of personal development was like macro counting, different ways to exercise, different programming stuff, like exercise execution,

different ways to layer workouts, program, all that kind of stuff. And I was obsessed with it, so much so that the people that I worked with are like, dude, if you don't start a gym, I'll pay for the gym so that you stop talking about this stuff. Because I was obsessed with it. The thing is, is that as soon as I actually started a gym, I realized that I enjoyed business even more than I enjoyed fitness. And so you may be surprised as what you start, because when I started, I thought, I'm just going to do the thing I love for the rest of my life. I started as an artist of fitness, and I became an entrepreneur.

But let me play out all three paths to their natural extremes. All right. So the artist at its extreme is somebody who continues to not scale an enterprise around them and continues to do the thing at extraordinarily high levels. And so this ultimately goes from a commoditized price point to a premium price point to a luxury price point. All right. So a commoditized price point is like if you're a plumber, you do the same plumbing work everyone else does, right? And you do it.

Now, if you start doing it really well, word of mouth starts to build and you can start raising your prices because you are now a premium provider. You do better work. You do it faster. people come to you because they trust your work, right? Now, at the highest level, it becomes luxury. You become so advanced in plumbing, you can do it for a massive building, or you can do it for luxury homes and you make it look or neat and awesome and cool and whatever, right? And so in that instance, what happens is demand continues to increase for your services or your product. And so rather

than increase the number of units you sell, you just increase the price. And so you still make significantly more money and a lot more profit in that business model, but it still keeps you doing the core thing, which is that you like plumbing. You like making wallets. You like being a carpenter, whatever. If you take that to an actual extreme, you can have incredible artists who sell their paintings for millions of dollars a piece, and they don't have a massive organization around them. Because their main thing that they focus on every day is the art. Now, there's obviously elements of entrepreneurship there because they make money. They transact. So by the definition, they are entrepreneurs. But their focus, their typograph, I would say, is that they are an artist

first. The hybrid version is Tobias Lutka. It's somebody who started as a shop, you know, a developer who built the little website because he wanted to make something for, I think it was a surfing company or something like that. He had some sort of physical products business that he didn't like the tools that are out there and he started making it. But then other people, because the product was so good, started asking for it. Now, he could have just continued to raise the price of the thing. But at a certain point, especially with software, it made more sense to make himself chief product officer, rather than CEO, he was chief of product, and then hired a CEO and hired an executive team to build everything else around him. Now, on the org chart, because he's a big shareholder, he has a lot of sway. But on the actual chart itself, he might be over here, not necessarily at the top because he doesn't want that life. And so you could go transition from the pure artist to the Tobias Luka model, where you still do your art every day, but then you find the people. Now, that does require skill because you need to have the perspective from which to make a judgment on who is good enough to be able to lead your company. Now, that's where having outside advisors and things like that to help you find those people who you do trust, who already have that skill, who don't have a

interest in your business so they can give you the cleanest purest advice. And the way that I layer that advice, at least weigh it so that you can think about this for yourself, is that the highest level of advice is someone who has been there, done that themselves, and taken other people just like me to where I'm trying to go multiple times. A level below that is someone who has taken multiple people like me to where I'm trying to go. They haven't done it themselves. The level below that is someone who's only done it themselves and helps no one else. The level below that is someone who saw someone go all the way themselves or saw multiple other people go there themselves. Below that is only seeing one person.

And below that is your mama, uncle, and your neighbor are telling you their two cents about how you should do business when they've never run a business and have no right to have an opinion. And so I rank my advice and how much weight I give it based on that scale. And ideally, I want to really only look at the top one or two for my sources of information. And the big caveat here, they either have to have aligned interest with me, or no incentive at all. You just want to make sure that they aren't incentivized to tell you something else. That's the main key.

Now, if you can look through that, you can leverage their experience to find the right people to fit inside of your business to build the business around you. Mosy Nation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to $50 million plus.

We would love to talk to you. And if you like that, we would like to hear more about it. Go to acquisition.com. You can play anywhere on the page and talk to one of our team. and see if we can help you get there. The third path is that of the entrepreneur.

That's the person whose art form is the businesses. And so rather than thinking about making wallets and making more wallets, the business itself is the painting. And so they will have multiple paintings in their career that as they develop as an artist, so too does their expression of their art. And so the types of businesses they build get bigger, more complex, more innate, or simpler, right? It just depends on what type of entrepreneur they are.

And so for me, I'll tell you right now, the amount of businesses that I started. I started a non-profit online training business. I switched to a for-profit training business. And then I switched to a brick and mortar gym. Then I had a chain of gyms. Then I had a gym turnaround business. I had a chiropractor agency. I had a dental agency. I had a corporate wellness contract thing that I did. I've had an e-commerce business that sold physical products. I've had a software business, software as a service B2B, and now I have private equity firm. So there's the businesses that I directly have founded, and I'm 33. And so as you develop as an entrepreneur, your art will change and it will be continually a changing

expression of who you are. So the biggest question is, which of the three are you? If you love the actual doing of the business, the thing you do, the product or service you deliver, that is your art, then I would say start with the path of the artist. And if you're good, because if you really do love it, you should be able to beat other people who don't love it. And so you should naturally, through word of mouth, be able to get more demand than you have supply of time. At that point, you'll have to start making the decision. Am I going to go hybrid,

or are I going to go all the way entrepreneur? If you're starting out right now and you just love entrepreneurship in general and you don't really care what you sell, you just want to make money, then you probably are more the entrepreneur path. You just want to hustle, you want to figure out needs in the marketplace, figure out stuff that people are buying, connect the two dots, build the organization around it, put an operator in charge and then let it run and make cash flow. That's the entrepreneur path. The middle path, the hybrid path, is usually, someone who starts as an artist and then becomes that because they still want to build the big enterprise, but they don't want to sacrifice the thing they love the most, which is

actually building the product. And so this little product thing, as a side note, could also be marketing. It could also be finance. It could also be like if you like a certain component of the business, you can own that component of the business and have someone build it around you. And so I use the Tobias like an example because it's probably the most natural for many people to understand, but you could love a different function of the business. You could just be the guy who loves fundraising. And you just love raising funds. And that's how you build your business and you get everybody else around you to run it. Or you love marketing. Steve Jobs was a mostly marketing. Well, Steve Jobs was a goat. You could do everything. But like, bad example. But it was a marketing genius,

nonetheless. And so the idea is that you will still leave your thumbprint on different aspects and be more heavily involved in different departments, the ones that you love the most. But at this point, you do it by choice rather than do it by obligation. And so identifying which one you are is, do I love the thing, or do I love the business of doing the thing and then walking that path down? And the best news is you can always change your mind later. The most valuable skill that you can have in order is product first, then marketing, then sales. And so right now if you know how to sell, it's because you don't know how to market, you know how to build product. If you know how to market, then you can sell lots of stuff, but you're only going to sell it once because the product's usually not that good.

If you know how to sell product, you will get more promotion from your customers than anything else, and that is ultimately what scales the enterprise. Marketing can scale. anything to a point, and then what happens is the marginal cost of getting the next customer continues to get oh up and up. And if you don't get word of mouth referrals from customers who use your product, then eventually it becomes untenable and your company will plateau. And so the key to building a very, very big thing that lasts for a very long time is having an exceptional product. This stuff is stuff that I used to hear all the time when I was a entrepreneur. And I get that you're like, sure, but how do I make money? And you know what?

If you just sell shit, you can make money. If you market shit well, you can make even more money. But if you learn product and what happens for most entrepreneurs that they actually go in that direction, they just learn how to sell shit because that's the easiest skill to learn. You can learn it in a couple weeks. Learn how to market takes a little longer. You learn how to write copy. It's really just translating the persuasion of sales into different types of media and selling to many people at once. Product, if done properly, gets people to promote on your behalf. And there's way more of them than there are of you. And so the highest leverage thing you can do is make an exceptional product that other people want to promote for you. And so my first real big experience with this was the book. So $100

million offers is a book. It's 99 cents you can get on Amazon. That book continues to, like right now, it sells 25,000 copies a month with no paid ads. It just sells 25,000 copies a month. And the reason for that, and a lot of people who knew me from high school or knew me from college are like, dude, it's so crazy. Some guy I know from work is like, dude, you got to read this book. And it was your book. And the thing is just like, that is how those book sales happen. And so if you can get your product to be that way or your service to be that way that amazing, then you never need to spend another dollar on marketing ever again because people will do it for you. And that ultimately drives the most margin and allows you to scale the enterprise in a compounding fashion. Because if you

don't scale it that way, then all you have to do is consistently spend more money on ads, hire more outbound people, get more affiliates. But if you get it from the product-driven perspective first, where you have more people who send you business than people who leave, just based on how good your product is, that continues to compound to the end of time. And that's the business you want to build. But to be clear, you can make money doing any of them, but you make the biggest money doing that one.