The Game with Alex Hormozi - A Billionaire Taught Me How To Think Like A Billionaire | Ep 553

Episode Date: June 22, 2023

It’s all about changing the way you think. Today, Alex (@AlexHormozi) shares his thinking frameworks for problem-solving in business. He emphasizes the importance of distinguishing between problems to be solved and dichotomies to be managed, and of thinking in continuums rather than binaries, to achieve more accurate decision-making.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:(1:49) - Dichotomy not problem: middle ground between managing/delegating(3:20) - Misprioritize problems, improve consistent business practices(5:49) - Binary oversimplification: reality exists on continuums, not yes/no(9:38) - Dichotomy to be managed vs. problem to be solvedFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition(This episode is a re-run. Original airdate was September 2, 2021)

That's fair. This is equal. Both are ideals. And yet, somehow, they're not the same thing. And yet both are right. And so because of that, we will always have this conflict. It's the same thing between justice and mercy. Both of them are ideals. Both of them are right. And yet, somehow, they're conflicting. The wealthiest people in the world see business as a game. This podcast, The Game, is my attempt at documenting the lessons I've learned on my way to building Acquisition.com into a billion dollar portfolio. My hope is that you use the lessons to grow your business and maybe someday soon, partner with us to get to a podcast. hundred million dollars and beyond. I hope you share and enjoy. When I was in the beginning of my entrepreneurial career, I would read a book on delegation, right? And as soon as I read the book, I was like, okay, this is how you delegate. And then I would come back to the team and be like, all right, delegate, delegate, delegate, delegate, right? And I'd be like, all right, y'all are good. And then I would dip out. And then, you know, we all kind of know how the story is probably going to go. Um, me being super excited about business and thinking that things are

going to, you know, all the things are going to run themselves. Right now that I've delegated everything, I'm a big boss man. And then, of course, I would check in a few weeks later and then things weren't done the way I wanted to. And then, of course, you know, I read super, you know, a bunch of books on management, et cetera. And then I dive super far and start micromanaging. Everyone trying to control everything. And then yet again, the problem would arise where people were not doing what I wanted them to do, but for different reasons because they felt completely stifled. They wouldn't take initiative because they felt like they needed my sign off and everything.

And then I'm basically a huge bottleneck in the business yet again, but in a different way. And so I say that to illustrate one of the thinking frameworks that has served me well, and I'm actually really excited to talk about this because when I talk to people, I think a lot of people think that I'm told that sometimes I communicate some idea as well. And so what I wanted to do was provide you the frameworks for thinking through thoughts. And I know that sounds crazy, but I'm going to give you four different frameworks that work really well for me. And I'll try to give you examples of each one of them.

So the example I just started with that little story, right, is an example of something where most people try and solve how much management versus, you know, should I delegate or should I manage, right? And instead of thinking of it as a problem to be solved, it is instead a dichotomy to be managed, as in micromanaging is not good on this extreme. And, you know, complete delegation on this side is not good either way, right, abdication. And so there's a middle ground. And so what's interesting about this is that there are a lot of different things that come up in the business world where I will see people conflate or mistake what thing they are solving, right?

And most times when I'm talking to a newer entrepreneur or even a more established entrepreneur and they reach out for help or guidance or whatever, right? Or it's one of our portfolio companies. Most times they'll start talking, right, really fast about all this stuff to try and provide context and I'll just usually pause them and be like, what problem are we solving? It usually gets them to stop, right? And I would highly advise you if you're dealing with, if you have subordinates or you have direct reports who roll into you and they have a whole bunch of decisions. A lot of times you can get caught

and sometimes ourselves too, we can get caught in the day-to-day, the minutia and just simply pause and say, what problem are we solving? There's so many pieces of this that I want to impact that I think are going to be really interesting for you. But the first one is when you define what problems you are solving, you might even have to ask the question, is there a problem? When some people are like, well, hey, we're getting, you know, customer service complaints. It's like, okay, understood. is this something that we believe that we can reasonably eliminate? Is this something that is catastrophic to the business, or is this something that we can kind of try and improve over time,

you know, through systems and process, right? And so a lot of times people misprioritized problems because they perceive them as threats to existence when in reality they are a course of doing business and things that we can constantly improve, right? Especially if you're newer. You're starting out, of course your product's not going to be perfect yet, right? You're just getting going.

But you improve these things rather than thinking, I have to stop everything to fix this problem, right? And so the first frame shift is that most people think in terms of like, I have a problem to solve rather than a dichotomy to be managed, as in these are two things that will always exist. All right, I'll give you a different example of this. Actually, this will be a fun one. The reason we will probably never have people who are all happy about a tax code is because you cannot have both fairness and equality. Equality means everyone pays 10%. Fairness means the rich people pay more than the poor people. That's fair. This is equal. Both are ideals. And yet, somehow, they're not the same thing. And yet both are right. And so because of that, we will always have this conflict. It's the same thing between justice and mercy. Both of them are ideals. Both of them are right. And yet, somehow, they're conflicting. And so we see these situations. And this is why I'm trying to hopefully give this to you. Because the more I started to recognize these patterns, the more quickly I could recognize them and then identify them and then either dismiss them or say, oh, it's another one of those. Right. It's a pattern recognition. It's like, oh, you guys are spending all this effort trying to solve a problem that is unsolvable. This is a dichotomy that must be managed and will never be eliminated. And so I think my goal with this is if I can help you get out of these little mental hamster wheels,

it's been incredibly valuable for me. All right. So that's the dichotomy. That's like one of the things that people will mistake. They'll mistake a dichotomy for a problem that needs to be solved. All right. Hey, Mosin, a quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right, so send me a connection request and note letting me know that you listen to the show and I will accept it.

There's anyone you think that we should be connected with, tag them in one of my or layless posts and I will give you all the love in the world. All right, so let's get back to the show. Another framework that I find immensely valuable is the concept of a continuum versus a binary. This is probably one of the biggest mental errors that people make when they're trying to identify things. And this is what I mean by that. So, for example, I might say, I'll use a weight loss example. So people will say something like, I am off my diet or I'm on my diet, right? It's a very simple thing.

And that's because psychologically, we like to be binary. We like to label things as yes or no. But biology and reality exists on continuums, as in to what extent did you go off of your diet, right? Did you go 200 calories over? Did you go 500 calories over? And even though it is, quote, more difficult to think in this way, it is, also more accurate. And so our brain uses binaries as placeholders for decision making to store data,

right? When in reality, when you start storing all these binary decisions, they start adding up and you start getting more and more inaccurate, that's a word, on your decision making process because you're actually basing your decisions, not on facts, but based on binary shorthand that your brain saves. And so that is one of the biggest mistakes that I see all the time in thinking in entrepreneurs and really in anything in general, because we like to have that shorthand. it is easier, right? It's easier to say, I fell off my diet or I am diabetic when the reality is, it's not whether you are diabetic. It's how diabetic are you, right? Kind of interesting. I stole that from Dr. Cashy, but I just love that. Who's my close to phrynees of biochemist and we talk about this

stuff all the time. Point being, if you can think about this within, I'll give you, I'll give you a business example. So if we have a binary where people are saying yes or no, which is, let's say, Facebook doesn't work. Marketing doesn't work. I hear these statements all the time and you may laugh at this, right? But I get DMs like this all the time. Facebook doesn't work for me. Marketing doesn't work for me. Like, you can't sell this way in my business, right? And so people want to shorten a problem into yes, it works, no, it doesn't work, when so much of business and problem solving is understanding the nuance between where we're starting and where we're going. And it's to what extent has Facebook not worked, right? Where is the fall off? Right. It is not that

it doesn't work. It is just, we only got it to work this percent. Right? Now, we need to get all the way over the hump to get there, but it's to what extent? And I think that when I, when, if you, if you can ask the right questions, if you can see the problems as they truly are, they become far more solvable. And so this has been probably, I just gave you two of my, my best frames that I think with all the time. All right. So I'll say these again. So the first, uh, mental lapse I'll say that I see all the time is mistaking a dichotomy that needs to be managed for a problem that needs to be solved. People do this in their marriages as well, right? So you look at your wife, right?

You look at your wife and you're like, I need more variety, right? But later, you're like, I need more consistency. And you're like, we have to figure this out. We need variety. We need consistency. It's like, yes, you need both. Right? And so it's not a problem to be solved.

It's the dichotomy to be managed. So that's framework number one. The second framework between two things that I see as a problem that most people make is that they use a psychological binary to make a judgment and say, yes, this works. no, this doesn't work, or yes, this is this way or no, this not this way, so that I can apply this arbitrary label that was made up, when instead it is to what extent, right? It is a continuum. I did not go off my diet or stay on my diet. It is how far off did I go? And a lot of times when we do that, we also can stop the mental judgment of being terrible people because we can actually

approach reality, which is, ah, I was 10% over yesterday. So I can go 10% under today and be fine and be on track with my goal rather than, oh, I was off. I might have. as well eat 19 pizzas because I'm off because that's the psychological shorthand, the psychological binary of yes or no. And so those two understandings have underpinned a lot of the breakthroughs in terms of how I think through things that have served me well. And also when talking to entrepreneurs and they're trying to figure out what is wrong, quote, wrong with their business when in reality, even naming it as a problem might

actually not be the case when it is actually a dichotomy that needs to be managed or there labeling a binary when it really is a continuum. All right. And so if you look at the problems that come up in your life, whether they're personal, whether they're physical, whether they're, business-wise, if you look at just with those two lenses first, and me sharing this, like, these are the things that, like Charlie Munger talks about having a lattice work of mental models. Like, how are the, you know, any checks through decisions with mental models. And so I want to share as many of those as I possibly can with you guys, because I think, if we can think, if we can be precise with our language, we can prove precise with our thinking. If we can ask the right

we will get the right answers. If you ask stupid questions, you get stupid answers. If you play stupid games, you win stupid prizes. And so my goal for everyone here in Mosy Nation is that we do not play stupid games and not win stupid prizes, but instead get exactly what we desire so that we can then ask the bigger questions of life.