The Game with Alex Hormozi - Becoming One of Zero (w/ Tom Bilyeu) Pt. 2 - Sept. '23 | Ep 624

Episode Date: December 9, 2023

“It's really about being beyond definition, writing your own path, you know, keeping promises in a world that breaks them.” Today, join Alex (@AlexHormozi) as he guests on Tom Bilyeu’s Podcast Impact Theory to discuss various facets of entrepreneurship, business strategies, and brand building. They talk about concepts such as the critical importance of keeping promises in business, the necessity of experiencing failures before tasting success, and the value of associating a brand with long-term goodwill. The conversation also highlights how entrepreneurs can make their businesses unique and extraordinary (one of zero) by keeping promises, giving first, earning approval, and creating their own paths. This is part 2 of the interview.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.Follow Tom Bilyeu on:➤ Instagram | Spotify | Apple | LinkedIn | X / Twitter | Impact Theory➤ Check out full episode on YouTube!Timestamps:(0:35) - Understanding frame of reference(3:12) - Importance of defining things(6:41) - Impact of beliefs and values on behavior(9:55) - The power of feedback and learning(18:06) - Importance of setting goals(25:41) - Breaking down the sales process(29:12) - Intricacies of cause and effect(39:12) - Importance of leverage in business(42:33) - Identifying business opportunities and competitive dynamics(51:30) - Understanding the nature of business(01:00:45) - Journey of entrepreneurship: stages and challenges(01:07:57) - The impact of a strong brand on business success(01:24:50) - The role of business in solving problemsFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

That, in essence, is what entrepreneurship feels like, is uncertainty of whether or not all of the time that you've put in is actually going to work out. And you have to get really comfortable with that is that you won't know. Because if you were to be guaranteed the outcome that you were going to get what you want, you wouldn't want to do it to begin with. Because everyone would already be doing it because it's already guaranteed, which means the opportunity is gone. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe.

So interesting. So the way that I have always approached this is I am trying to get people to change their frame of reference. Frame of reference, speaking of things that need to be defined, frame of reference to me are your beliefs and values. Okay. See, I didn't even think that's what you meant. I totally thought you meant something different.

So that's why we define it. Yes, exactly. This is why you define things. Okay. So, and I will say all of this in what I just heard you say is that where I'm coming at things is from beliefs and values where you're coming at things is from behaviors and traits. It's very interesting, very interesting. Like, I am going to think about this so much moving forward as to one is it is beliefs and values just particular to me and that is I try to help people

make change in their life. I'm wasting all my fucking time because this is just the thing that resonates with me. Or is there something I'm getting to the thing that's underneath your behaviors and traits and that if people don't address this, I'll never get to that. Or I'm just wasting my time. You were going to say something. I think it's... Well, value. So if we were to, like, when it's like, I have these values, a value is just a behavioral short code. When this happens, I do this. Someone who is loyal when he's out and his wife isn't there, hot girl comes up and says, hey, want to get a drink. Value, it means a set of behaviors, I say no. Or I say, I'm married or no thank you, whatever. And so values are skills because you can train them.

It's interesting. Values are skills. I would say the adherence to a value is a skill that you can train, but if you have the wrong value that you adhere to, you're going to be in trouble. Here's why I start with beliefs and values. I think so much of the human animal is invisible to the person and that if they'll never be able to control their behaviors if they don't control the emotions that drive the behaviors.

And I think emotions are an echo of your beliefs and values. And I can change somebody's emotion, like their cognitive, the way that they frame something cognitively will drive their biological response to that moment, which is insane. So the quote, nothing is either good or bad, but thinking makes it so. The death of your mother is not good or bad. Totally. Thinking it's bad, makes it bad. Now, that is, you and I think come at that from very different angles. Totally.

And so that is. Not a bad way. I think it's great. No, no, no. Dude, this is so intriguing to me. One, because all I care about is, are you getting the outcome that you want yes or no? And if you are amazing. And so you're giving me new tools, new ways to think about this.

Okay, so just a quick breakdown of frame of reference. So my hypothesis is that everybody's life is entirely controlled by their frame of reference. Okay. The frame of reference, the best analogy would be to say that your frame of reference is a pair of glasses that you put on, that distort the living shit out of the world, that none of us have the option of taking the glasses off. Taking the glasses off would be to exist outside of your biology. Nobody's going to be able to do that.

So you see the world in a hyper distorted way. Now, all of us over a lifetime of reward, punishment, oh, God, what'd you call it, approval? Like, there's all kinds of things that happen to you. Attention, affection, approval. Okay. So all of us are getting that constantly from the time that we are born until now. And we choose who to value that from.

And you've talked about your parents and all that. So anyway, you can choose. But most people never become consciously aware of what's happening. And so the distortion of their lens happens slowly over time in ways that they simply recognize mistakenly as objective truth. So they think they see the world as it is, not through the world. lenses of their frame of reference. Now once you realize that you can change the way the lenses warp the world, now you can start to shape your lenses based on action outcome.

I did a thing and it had this outcome. And so it all becomes about your ability to predict the outcome of your actions, which is and we will get into sort of the physics of making money. But to me, that's all about the ability to predict like what tests to run and how to interpret the tests and all that. So it ultimately boils down to your frame of reference. And if you don't get your frame of reference right, the world will be so warped. You will not be able to predict the outcome of your behaviors.

Most people end up in the mistaken loop of my emotions are the correct, which one needs to define, and they don't. My emotions are the correct response to this stimulus, even though it does not lead me towards my goals. And they spend their whole life spiraling in emotion. And that's why they're never able to get out of it and begin to polish the lens in a way that actually gives them something. useful. And what you're saying is none of that fucking matters. All that matters is whether they do the thing that's going to yield the outcome or not. I think it just, I think it just saves a lot of time and a lot of, because when we try to name these emotions, like, you know, what am I feeling? I'm kind of, it's like this whole conversation, not this, but like that self-conversation, it's like,

what does that accomplish? Until you then decide to do something in the world world, like nothing matters from a, from an outcome perspective. But I'll just share something with the audience because I have But my first really big viral video was me just talking about like what how you scale companies. And the first thing I talk about is scaling the entrepreneur. I have four frames that I go through in the video. And I used to believe that entrepreneurs get limited by skills. This is this is what I used to believe, which is skills, character traits, and beliefs. That's what I used to say.

I now believe that character traits are another way of saying when this happens, they do this. which is trainable, which makes it a skill. And then beliefs are, when they are presented with this information, they then make this decision, which is yet again another thing that can be trained. Because if you can learn it, and it's a skill. Which means it just comes down. As I see the world, it just comes down to skills. And just because it's harder to define charisma,

because it might be 20 things because we have a term that buckets 50 behaviors or whatever it is, just because it's harder to describe doesn't make it. it not a skill. And that's why like the soft stuff in business, like we probably agree that the soft stuff matters a ton in building a big company, the culture. McKinsey did a big study on this. Layla sites it a lot more than I do because she's on the people side. But in a normal business, two out of three strategies fail, like new initiatives fail. In businesses where they have the soft stuff down, one out of three strategies fail. So two out of three succeed. So you get twice the percentage likely to success on big strategic initiatives.

Did I guess why? Why is beyond me. That was just, that was the, yeah, I don't get into because. Yeah, I don't get into because. Yeah, I don't get into because this is that. Yeah, Dr. Cashy's my, my closest friend like a brother. He jokes about, he, he, he, he obsesses about why things work. I just care that it works.

And so, anyways, to circle back on this is that people consider, like, leadership to be like a foo-foo or like communication skills is like soft stuff, right? Sales, metric. You know, like we have all these metric-driven things. versus this. And it's just because it's harder to measure doesn't make it less important. And that was a big realization for me is that it was just because it was harder for me to measure, but it doesn't make it less important. And so these skills that we're talking about, we try to find ways to measure them by saying when I'm, when somebody walks, like, I'll give you an example with our video team. We realize that we have much better direct camera

work for our content. If, because we were like, man, we have this one guy on our team. He's so good to film with. And some of the other guys are just like, as good. I'm not like as amped about it. Like, why is that? So we could control the things that we're going to walk into the into the video session with like, okay, did I sleep well? Did I, you know, all that stuff? If that's controlled and I still change, then I mean there's something in the environment. And so we then observed, actually, to be fair, we asked the superstar to observe, what are the things you're doing? And so we noticed that while he's, while he's filming, he's like, yeah, he's like, yes, this is awesome. And so we said, write that down. And then what else do you do? It's like,

I write down questions while you're talking while I'm, so he had to be able to multitask. So he had to bobbed his head while we're talking and write down follow-up questions for what we were saying. And so then all of a sudden it became this continuous flow of consciousness with literally constant reinforcement while we were filming, visually. And so then we gave that SOP to the other people on the team and all of a sudden filming with them was way better. And so people would be like, he's just got a great vibe. it just means that we don't know how to describe all the little behaviors that that person does and say when I start talking nod your head real right and when when there's something that you don't understand write it down and ask me because I mean somebody else doesn't understand it too

and it makes for great content oh right and so we had this big list and then now we operationalized what it's like or what what you what behaviors you have to do to become somebody who's good behind the camera which means it's a skill that can be learned. like charisma, like patience, like confidence, like whatever. And so, um, boiling it down that way has just demystified the world for me and just made it a lot easier to navigate because I don't have to spend 90% of my time trying to figure out why I'm doing whatever I'm doing. All I care about is whether I do what I need to do to get the outcome. And if I do the thing and I don't get the outcome, that means there's another variable that I haven't controlled or I don't understand.

And if, you know, in the words of BF Skinner, um, if many variables are present, many variables must be studied. So sometimes we want to oversimplify it, but there might be 10 cues in the environment that create a banger session. But if we have nine, is it better than the last one? That had three, probably. And so then we just make progress in that way.

Okay, so this is your superpower. This is the thing that, dude, I just look at you in awe. It's really, really incredible what you do. And I am so grateful to live on the timeline where the internet exists and someone like you with this insane ability comes out and just creates,

it's all this content. You know, I am as obsessed with learning as you are. And so, yeah, it's just incredible. And to never stop learning is the great gift of being a human. Okay. So the thing that I think that you're just unreasonably good at is taking a very complex problem that maybe I'm spending too much time and the why is this happening. And you're just skipping past that and you're going, okay, I'm going to break it down.

And do these, do this. When this happens to do this, when that happens to do that. I'm going to try to get to the physics of business through a weird question. But keep in mind for anybody watching that doesn't know my story, I've been in the world of entrepreneurship for over 20 years. I've had some pretty incredible success. So this is a well-educated question. I've been in this for a long time.

So it's going to seem like a weird angle to attack it. This is for the audience more than you. Hang with me because if we really can dissect this, I think it will help people. understand the magic thing that you do. You rewrote your book completely four times. Something happened when you read it the first time, the first time that you realize I have to start over completely. That thing, whatever that was, I promise you, I have the chills just thinking about it. That is the thing that makes you good at business. And so I need to understand what abstract, use the book as an example, but I want people to understand this is an abstracted

version of something very important, which is you were able, you did a thing. I'm guessing you had to do the thing in order to find the part that wasn't right. But you were able to then identify that part, reconceptualize, get more intelligent as you did it again. It's what I call the physics of progress. But like what your ability to learn and break into constituent parts is the thing, certainly I want to learn from. So when you reread what you.

what you first wrote, what clicked, do you remember? Well, I got feedback. So I sent the first, which was really, the first draft I ended up sending to people was V9 of the book. Had you rewritten it all over? How many times have you rewritten about that? So that was like I had gone through, I mean, I started back at the top, I readdit everything again, start back at the top.

Without feedback. Correct. That's the one I want to know about. Okay. The first time you read through the book, you know, I have to, I have to. reconceive of the whole approach. Yeah. What happened in that moment?

It wasn't clear or wasn't simple enough. That's it. And I like to use this example because it might make sense for a lot of the audience. If I were to say, edit a six, assume you know how to edit videos just for the simplicity. If I said, go edit this video. Someone might edit it. And I say, you know, edit this video in 30 minutes. And they edit the short clip and they give it back to me.

And I say, okay, if I give you two hours, what else would you do? And they're like, oh, I might do this. I might do this. I might do this. I'm like, okay, go do that and come back. And they come back. And I'm like, okay, if I give you two weeks for this 30 second clip, what else would you do? Like, I might reimagine the entire thing and actually lay it out in this way.

It would take way more time, but like, I think it would actually still be better. It's like, cool, do that. And they come back. And then when there's no more loose where I'm like, like, what else could you do to make this better? At that point, to me, the work is done. I have exhausted my level of skill and understanding. Like, I can't make the leads book better at current. Now, I'll bet you in a year. I'll think of some things that I could have used to make it better. But at present moment, there's nothing that I can think that I would either cut or add in or

break down or add a visual for or lower the reading level on to make sure that everyone would understand it. And so whenever I have those like, it's like a hangnail. You know what I mean? It's like this little splinter where I'm like, this could be better. Does it start with a feeling or with a fact? It's a good question. I don't know. I think I read something and I think that wasn't as clear as it was in my, it's not as clear reading it as it is in my head. So what's the discrepancy? Like this term is confusing or this phrase doesn't make sense or I need to break this into a paragraph or whatever it is. And honestly, it's just doing that.

Like, it took me, it's funny. I had this cover letter that I was going to include in every book. And it was one page. And I think I put 25 hours into the one page. And it's interesting because people hear that. They're like, that's crazy. I'm like, to me, 25 hours doesn't count as one unit of work yet. Think in hundreds.

Dude, you got it. Yeah, 100%. And so I ended up actually not using the cover letter, which is even more ironic. But when my team saw how many iterations went through it, I was like, every single person will read this part. Now, the last chapter in the book, maybe it's 20%, or maybe it's 13% or whatever it is, we'll get to the last chapter. But the first page, every single person who reads the entire book will read that page. Every person who reads half the book will read that page.

Every person who reads only the first chapter will read that page. And so it's like, if anything, I should put more time into that. But I approached just about every page of the book that way. It was just that my team was able to see it on one page publicly. And so that's, we wrote my editor, not Dr. Cashie, wrote the book because we wanted it to be around in 100 years. And so that was the frame. It was like, it has to be, it has to work now. And the easiest way to know if it's going to work in 100 years is, does it work 100 years ago?

Could someone 100 years ago read this book and it still helped them advertise better? Could someone read this book 100 years ago and help them make an offer that more people say yes to? if the answer is yes, then we pass that limit test. And that's actually really hard. It's a very simple sentence to say very hard to do, especially when you're talking about media, content, platforms, like all of these different things. And so I think it's having an exceptionally high bar for what you want to do. And having been rewarded in the past, like if this had been my first book, it wouldn't have been as good. But offers was my first book. And I wrote offers in one fifth at the time as it took me to write leads.

Because you didn't hold yourself to as high of a standard, because you knew what better looked like. I'd never been rewarded for writing a book before. And so once I was rewarded, the amount of time I'm willing to put towards something to get rewarded again extends. So it's like intermittent reinforcement from a behavior's person. Like that's how you get addicted to the slot machine, whatever. It's like you reward the first time immediately.

The next time you reward in 30 seconds. The next time humans have a longer attribution than dogs do, just for context. but you can continue to extend reinforcement until eventually you can eliminate it and the behavioral process, which is kind of cool. Which is very cool. Yeah.

Okay. I want to, I don't know what you're apologizing for. Okay, so we're at the beginning of what will hopefully be a magically delicious breakdown of how Alex Hermoziaizes things. Okay, so what I took away from that is that step one is going to be start with the goal.

So when I think about business, you need to understand what your goal is because you're and this this goes for life as well boys and girls if you do not have your north star if you don't know what is guiding everything then you're going to be a drift and so when you think about you and okay this is definitely me putting my language on you here's how I experienced that first moment I read something and something feels off so for me it always starts with a feeling but I know that feeling translates into a fact and so I'm going to try to find the fact yeah and so you were saying this isn't as clear as it could be And so now you have this North Star.

I'm trying to write a book that's going to be around in 100 years. Again, I'm maybe connecting dots that don't line up. And so you'll correct me anywhere I go wrong. We've got the idea of the guy with the one goat who's sleeping with this under his pillow, which dude, you cannot imagine how much, A, that makes me like you even more than I already did. And B, that's so important for people to have like a person that they're thinking about that will make all the fight worth it.

Okay, so be around in 100 years. The guy with the goat needs to really understand this. I read it. And because I know what my goal is, I have a feeling, a trained feeling that something is off. That's my, again, this is me. I understand. You're different. This is my feeling is my subconscious speaking to me.

It's already picked up on the problem. I can feel it. And now I'm going to translate that into something. What I really need people to understand is you're going to take all of Alex's advice and you're still going to fail. And the reason you're going to fail is because you're not yet good at the thing that you're good at, which is finding the fact and saying, oh, this is the very thing that's broken.

Now, as you have said, so I'll just channel you for a second. You're going to suck at this for a while, but don't worry, just keep doing it. And you will get better at identifying the fact. Okay, given how much you're nodding, going to assume so far I'm on the right track here. So how do you, yeah, exactly, right? How do you identify that fact?

So what is, is it just repetition? You've just done it a thousand times. So you can either have, basically, it's called contingency-based reinforcement, which is the environment corrects you, right? You put the thing on the market, no one buys it, no one watches it, whatever it is, right? The other is that you get feedback from somebody who has more knowledge than you. And so you can either have a person give you direct feedback on, you know, listen to your sales call and says, hey, you know, try this next time.

And ideally, that's where the feedback loop is like, if I'd have a one-on-one with somebody and I give them that feedback a week later, it's much more powerful. to be there an hour after the call, like the moment the call's over and even more powerful if you're sitting there with them and you can be like, say like this. And then you get the feedback loops way faster because they'll remember it because it'll be in the moment of trying to learn. Like so if we're trying to teach sales, I'm going to come back. But if we're trying to teach sales because we've got three brick and mortar chains in our portfolio, teaching frontline sales, like very transactional like front desk, walks in, go here, whatever, if you train them offsite,

which is what most companies do, then they will remember it better. off-site than on-site. So you want to train them in the environment that they have to do the behavior because they'll have environmental cues while they're learning. Just like if you, if you study for a test, if you can study in the actual chair that you're going to take the test in, you'll remember more of your answers. What? Oh, for sure. What? Yeah. Have you ever been on the phone and like had some conversation and then you walk the same path a week later? And then as you see a tree, you're like, oh yeah, I was thinking about because it's because you learn and you have to. The mind palace idea. geography that's interesting actually now that you say that makes a lot of sense I wonder if it's

different for guys I don't want to derail us yeah all good guys have spatial memory yeah uh interesting all right step one we'll start with the goal we went through that identify the fact yeah okay how we get contingency versus versus individual so either either your environment uh gives you that feedback because it didn't work or somebody who knows more and has done it before multiple times can recognize the pattern for you so when you say like find the fact I would have just the only thing I would have maybe tweaked on the earlier preface was the feeling is because of pattern recognition. I know this isn't right because it hasn't been right. It looks like something that has been right again in the past. And we always have something called successive approximation.

So like success of. Successive approximation, right? Like, uh, girls named Tiffany are crazy, right? And I meet a second girl named Tiffany. Tiffany's blowing up the feed right now. Right. Second girl named Tiffany, uh, also crazy, but looks different. But I'm like, wait a second. I know Tiffany's. You're all crazy. Right. Like, so you have a successor product. Like you learn. It's a silly example, but that is like, that's how we can generalize learning. And the bigger, the more depth you have in terms of the principles around any skill, the more you can generalize learnings from one thing to another. Okay.

That makes a lot of sense. Pattern recognition, huge. Getting people to help you short, circuit that, huge. Okay, so getting into the reinforcement. Yeah. What I want to understand is how. I'm going to ask it and then we'll see if I think I know the answer. But the real thing you're trying to figure out when you're doing the testing is what would

need to change in order for this to work. The reason I say it like that is because the language I would have naturally used is why didn't this work? But you don't care about why. You just want to know what would I have to change in order to get this to work? How do you, we'd use experts if they're available. if we're just testing, let's say we have to brute force this, how do you go through that? You, I've heard you say, the number of tests that I thought we're going to crush and they just

absolutely tank. So you thought you had it. And all you get is an answer to says no. So all you have is no. Yeah. How do you turn that no into a new action item? Yeah. So I think it's breaking down didn't work from binary to a continuum.

So it's not it didn't work. It didn't work well enough. And so that's a huge one when it comes to like running ads, making cold calls, whatever it is to get customers, whatever you want to do. It's not yes or no. It's how well. Right. And that just says it's an easier frame. And so then you have to go, at least from my perspective, you break you down to first principles of, okay, what has to happen for someone to buy?

It's like, well. So that's just a whole lump of psychology right there. Behaviors. They have to see it. They don't see it or hear it. They will not buy it because they won't know you exist. Okay. that so and that luckily like within the marketing world because that's what the book is about is measurable like did the impression get displayed did the email get delivered that is you can see that on any any platform the next one is like did they engage with it so that's a behavior they engaged which would be they opened the email or they opened the email and click the link inside of my email they clicked the ad to then get to you know the landing page whatever it is so they engaged to a degree um

the next, you know, the next thing is that they're going to, like, in order for me to contact them in the future, then I need to have some way to contact them. So they have to give that to me. If I don't already have, like, an outbound thing, you'd already have their contact information. You want to reply. If you're running an ad, then they need to give you the contact information so that you can reach out to them. But it's really breaking down, forget what they think, forget what they feel. Like, I wholeheartedly reject the, like, there are seven stages of awareness. It's like, how the fuck do you know? Like, well, they have to have a desire. And then it's like, how many people have bought things without desire? Tons. All we know is that when they see this thing, they take their wallet out and they purchase, period. And the same thing with like a sales script. Like, I truly believe that

if you knew every single variable that it took for somebody to buy, you get 100% of people to buy. Now, the problem is that we don't have every variable every time for every person. And so we do the best approximation we can to hit as many of those piano keys to get them to purchase, right?

And so that is how I, that's how I approach all of them, whether it's, you know, what do I figure out with the sell, which is the offers book, who do I sell it to, which is the leads book. And then, you know, future books will answer one singular question. And the leads book was fundamental, like, and the reason it's called leads instead of advertising is because I test advertising versus leads and leads beat advertising, even though the book is fundamentally about advertising and the divine advertising. It's the process of making known. And so did I make it known? Great, I advertised. Like she advertised that she was with that guy all. last night. You're like, oh, she let it be known, right? She made people aware. And so there's only four ways you can do that, right? You can do one-on-one, and you can do one-on-one, and you can do one-to-many. Like, I can tell you one-on-one in an environment where no one else can see me, or I can put it on a bulletin board. Worked a thousand years ago, works today. And then I can do that in public, or I can do that in private. So you've got, sorry, I just repeated the same. You can do that to people who know you and people who don't know you, and people who don't know you, which is cold reachouts. You've got one to many to people who know you, which is making content to your

audience. And then you've got one to one to many to people who don't know you, which is paid ads. You rent other people's audiences and you display your thing. You let them know about your stuff. And so break it down that way. Like there's no other way that someone will buy unless they find out about it. Period. Fight me. No one, like no one can fight that. And that's basically what the process of writing these books comes down to is I want to make a series of statements that are, that are beyond reproach so that no one can argue with them. Like, you cannot get someone to buy unless they have given you a way to contact them. So, like, you walk down that logic tree and then you figure out which of these didn't happen.

So I ran an ad and I didn't make money. Well, there's like a hundred things that have to happen between them seeing it and them giving you money. So we just look at, and we start at the front. because if you don't get to the third step, there's no point in trying to fix the third step because you haven't gotten people to even click. And so the first thing we'll talk about is like, how do we create a hook?

How do we create a headline that will capture someone's attention? That's it. And then from there, it's like if you master that part or get good enough at that part, then you move to the second part. And this has worked very well for me because then it demystifies the concept of success and I stop judging myself as being a good or bad.

It's just like, how likely is the thing that I did here get them to move to the next step? Okay, how likely is that if I show this thing, they get to move to the next step? And you just keep going until eventually you're like, oh, wait, I made money. And then you have all the pieces together

and then you do as many times as you can. All right. Actually, first let me address something. So to say things that are beyond reproach, that's what you said. I want to make sure that I'm saying things that are beyond reproach. To me, it's like another way of saying

it's got to all be first principles. 100%. Cool. make sense. So you're trying to boil things down to this is true. Does not matter what people say, think, think, believe, ah, it just is true. Okay. That, I think, is critically important for anybody that wants to scale a business. You believe that we live in a deterministic universe. Okay. I actually don't even know what that means. Okay. So cause and effect, pure and simple. Billiard balls bouncing around a table. That behaviors are, the, the cause of a behavior is

knowable. Uh, I wouldn't. I'd say there is a cause of the behavior. I don't know if we can know it necessarily. We can try and control as many of the environmental factors, but I don't know if we can say this is why. Well, I'm trying to avoid this is why and get to if the cause and a, God, is that a pure why? Okay, for Alex, I'm going to disagree with you violently based on your own principles. Cool. That none of what you do would work if it couldn't be known what you needed to do to elicit a given

response. Otherwise, everything would be entirely random. And so what I think you know and what makes you so good at overcoming sales objections is that you know if I can get them, God, I don't know how you would explain it. So it's the difference between knowing why and knowing that. So this is cool. I just care about that. And so this conversation. I know that if I say these 12 questions when this person walks in the door, the likelihood that they will buy is 38%. Do I know why they buy? No. I know that if I do these things, this will happen. Perfect. Deterministic.

Okay. So that helps me to understand how you go about doing this. So it seems to me what you are doing is you were trying to map behavioral cause and effect, which is why at the beginning of the episode, you even said, like, I'm really into behavioral. Psychology is the, I think. Behavioral psychology. Perfect. A personal obsession of mine, because I also believe that we live in a deterministic universe.

which calls into question. Free will, we're going to set that aside for now. Yeah. Do you think that free will exist? less and less by the day. Yeah. I think eventually we all get to the point where it's like it can't. to get into very interesting questions about morality. Yes. Right, which we won't get into it. Correct. At least not now, maybe at the end. It's okay, it's okay, it's okay. It's okay, it's okay, That means that there was environmental conditions that made this person act in this way that they wouldn't otherwise do.

But it's like, were there not environmental conditions that created the person that trained these behaviors that then created the murder? Correct. I'll just. But now, as marketers, if we can understand. Making money. Right. Right. Right.

If we can understand what triggers behaviors. Now you can truly predict and execute. Because ultimately, that's what this game is. and the feedback loop that I think people either know about you or intuitive about you is that you're really good at this process. I did a thing. It did not yield the results that I wanted. And I was very shrewd about the next thing that I tried. And getting people shrewd about, because there's going to be 10,000, it's really 10,000,

there's going to be a lot of things you could do when the first thing comes back and you only got 38% of what you were looking for and you want to get as close to 100 as you can. So being able to do the next most logical thing, logic as defined as I have a goal, and this is the thing most likely to get me closest to it. The ability to do that rapidly, I will, I don't know if you'll agree with this, but I'll add bolt on to your definition of intelligence. Okay. That if you're, you said the rate of which you change your behavior is the definition of intelligence, I will say the rate at which you can identify the most meaningful next step

or the most likely to be successful next step is also intelligence. Not that that really matters, but this is the game people are playing. I would say it chunks up. What does that mean? So learning is defined by similar condition new behavior, right? And so if I have a fast rate of learning means that I have a new behavior that I do in that condition, the only way it can have that new behaviors have some sort of knowledge. So I think it chunks up to the same.

Got it, got it, got it. Okay, I see what you're saying. Pre-requisite. Right. So if these two are the same idea manifesting in slightly different ways as you come back down, that I think is what people are learning from you and why you're so effective. So the question becomes, do you have a methodology for identifying the next most useful test to run? or is it true, this is all just going to come back to the same answer, experts and repetition?

It is. And then I did try to create an operationalized version of that from a funnel perspective because I realize that some people don't have the money or whatever to test more times than you do succeed faster. And so I operate off the theory of constraints, meaning that every system is constrained in some way. And then if you simply identify what the constraint is and decontrain it, it will grow until its next natural constraint. Can you give me a concrete example? Let's say you've got a Shopify store that sells coffee mugs. And you spend $1,000 a month and you make $3,000 back on the mugs. So the constraint of the system at some point will either be I run out of mugs.

That could be the constraint. It could be that I just need to spend more money because that might be the constraint today. And then I spend enough that I run out of mugs or I spend enough that my my cost per impression exceeds my profit because I go to colder and colder audiences. So then the constraint there might be like I need to build a brand or I need to get trusted sources to increase the likelihood. Increase the awareness, let more people know about my stuff. So that when they do see my ad, they're more likely to make the purchase. And so it's really being able to accurately identify what the constraint is.

And so for me, when I walk this through the book, I said usually the constraint that I will focus on in a funnel is usually the one that has the largest incremental has the largest throughput difference with the smallest incremental change. And so it's like if I have, you know, 50% of people who are scheduling, 30% of people who are showing, or let's say 25% of people are showing, and then, you know, 30% of people are closing. It's like, okay, if I'm looking at these things, which one am I going to attack? Well, I'll probably attack the 25% show rate,

because if I get a 10% or 25% increase just for math sake, I would double the throughput. If I increase my schedule rate from 50 to 75, which is a 25% increase from an absolute perspective, I would only have a relative difference of 50%. So I would get more bang for my buck by focusing on the constraint, which is the one that the smallest incremental improvement increases the throughput the most. And that you can use math to find out. Yeah.

This is business for people listening. So my obsession is helping people understand how to solve. novel problems. Not problems you've never heard of before. Problems no one has ever heard of before. And this is where you have to get down to first principles thinking. Anything that can be turned into math should be, something that we talk a lot about here. Oh, cool. Yeah. So, because then you're pulling it out of the realm of emotions. I know I've been talking a lot about emotions, but I'm only trying to identify that as a, as a predictive mechanism for the next thing, which may be just where you and I don't see the world the same.

So for me, to understand what the next smartest thing is, you think, you think, behavior, what's the behavior I need to do? That may be more useful, and I will really be thinking about this after this discussion. The way that I've always thought about it is if I can understand the psychology in that moment, I'll be able to predict the behavior. So maybe waste of time or maybe necessary, maybe you intuit it. I don't know. Time will tell on that.

But it's very, very interesting. Okay, so people are, they need a rubric by which they figure out what the next thing that they need to test is. You've just offered one, which is to understand the limiting factor. When you understand the limiting factor, then you're able to think mathematically and remove said limiting factor or at least know where to approach that problem. I think that's incredibly helpful. So when you're explaining all this, your business model, at Acquisition.com is a pure understanding of even though you're able to, even though you're willing to give all of your secrets away, there's still going to be a gap in execution.

Why? Why are you better at this than most people? I've done it more times. That's it. You really believe that? Yeah. I've done it a lot of times. I think that's a big part of it.

And then I think that there are elements that we have that are kind of competitive modes, which we purposefully set up. Like, we're building this brand so that we can attract the best talent. So like if you have, let's say, a chain of nail salons, right, which is a company I'm looking to investing in right now. So if you're listening to this, you're great. Love your company. And so you have a chain of nail salons, and you will probably struggle to get A plus talent

to go to that. I will not struggle to get A plus talent to place for you because they will want to work in an acquisition.com company because they know there's a huge backing behind it. They know that we're going to be shooting big. We're going to try and do big stuff. and they might think the founder might be a first-time founder of getting to a business at that size, but we are not. And so they have a higher likelihood,

they have a higher confidence that we will help the business grow to a much higher degree, meaning that their career can grow, they have more opportunities, it'll build their resume, all that kind of stuff. And so from a competitive moat perspective, we're able to get better people. And if we get better people, we build better companies. And then that becomes a flywheel,

because the more companies we take on, the more we grow, the more successories we have, the more talent wants to come, and it just continues to feed itself. and that's something that continues to compound in time, and that's purposely built as a long-term competitive advantage. Okay, talk to me about leverage. I think that's an important part of this puzzle.

So there's a couple moments in your story around leverage. One is the guy that told you, hey, you shouldn't be in the gym business. You should be teaching people how to do this. And then the other moment, at least for me on the outside, was when you realized, I'm not going to help these guys launch their businesses, so I'm going to sell them the course that I put together. What is leverage? Why does it matter?

And how do people get some? Okay. So first off, just for the audience, it was much closer to a franchise than a course. So it was a licensing model. So we had it was more, it was closer to licensing plus services than it was a course just because we don't even sell courses. So like I think that that's because there's a lot of people in that space that follow my stuff.

And so they make that assumption, which is fine. and I only set the record straight for for clarities. Beyond that. Leverage, as we define it, is the difference between what you put in and what you get out. And so if I, and it's volume times leverage equals output. So it's how many times you do something times how much you get for each time you do it equals output. So if I do 100 sales calls and I have no skill, then I will get fewer sales than somebody who does the same 100, sales calls and has much higher skill. So skills create leverage. You get more for what you put in

at a simple, at a basic level. But it works with anything. So if you're trying to invest, it's like if I can invest a smaller amount of money and get a bigger return than I have more leverage, right? The reason debt is considered leverage is because you can put 20% of the cash in and get 80% as a loan. You buy a building five times bigger than you normally could. So you get more for what you put in. And so there are degrees of leverage, and this is wholeheartedly taken from Navaul. I'll probably have to think more about it because I haven't written the book on leverage yet, so I'm borrowing. But I remember it as the four Cs.

He has different words for it. But you've got collaboration, capital, code, and content. Those are the four Cs of leverage. Like we make this video. Right now, we make this podcast, and we put X amount of effort in, but we get unlimited upside on it. Millions of people can see it or one person can see it. But we get more for what we put in, the better and better we get at this. Code, you can write an app one time, and then unlimited amount of people can use.

the code or use the app. Collaboration is I say, okay, I will now teach 20 guys to sell, and I will get 10 times the output that I had if I were selling. And so I might not take any sales calls, but make more sales than anybody else does because I have more leverage. And so a big, you know, through line of the leads book is there's the core four, which is the first four things that I explained to you, one-on-one, one-to-many, strangers and friends or people who know you, people who don't.

And then the other four, which are the four lead-getters, people who let other people know on your behalf, which by their very nature have more leverage because you don't have to do it. So if you can get your customers to tell other customers about your stuff using the core four because they also have to use that. Like a customer can only tell a customer by telling somebody through warm outreach, posting content about it, running an ad unlikely, and doing cold outreach, also unlikely. But they could do one of those four things. And that's complete, that completes the advertising cycle. So you do something to get a lead getter who then does the core four and around and around you go. So I could also make ads to get affiliates who then run ads to get customers

for me. But if I go and let's say I spend all my time and I get 10 sales a month of customers, right? And let's say each customer is worth $1,000 to me. Great. I'm in a cap at $10,000 a month. If I use the same effort of marketing and sales and I sell 10 affiliates, so still same number of conversations, same number of humans, but I sell 10 affiliates per month. And then those affiliates each month after that get me one customer each. Well, then the first month I'll get $10,000 because each one of those guys got me a customer. But then I'm still going to work and get another 10 affiliates next month. So then next month I'm going to have last month's 10 plus this month's 10. So now I'll have 20 new customers. And I do it again. I have 30 new customers.

And so I am using the same amount of work to get more customers than I directly went through it. And so that is a basic example of how leverage works. within the context of advertising to get customers in a business. So what is the way that you think about constructing a business or the way that you're going to structure something? So when I first asked that question about leverage, you said something really interesting, which was, hey, I just want to point out to everybody that that was a licensing model. It meant something to you to make a distinction there, which I have a feeling there's a little bit of Hormozzi sauce in there that we would all benefit from understanding. What drove that decision?

Why does that matter to you? You mean saying that? Structuring the business to be. So this is exactly what went through my head when you said that was, oh shit, like he actually had a more keen moment of understanding than has come across, at least to me. and I've heard you tell that story multiple times. And I've heard you say, oh, it was a licensing thing, but it never, I don't know, it never landed for me. But this time I realized it really meant something to you.

So there was a keen insight there. What was the keen insight? Why do it as a licensed model instead of just saying, oh, this is the course, go use it. Hey, Mosin, Nation, 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. If we added assistance and services where we would maybe run the ads for them, and we would train their sales teams, which we do, and we would give them the ads to run for their local area, and we would help them build the landing pages to attract customers, and we would give them

the white label, meal plans, grocery lists for food preparation, you know, instructions for their clients. If we do all of those things, then we would increase the likelihood that they would succeed and make more money. And I can charge based on a fraction of the value that I can produce for the majority of my customers. And so if the average, so right now Jim launched the total company still continues to grow, the average Jim Lord, which is what we call the community. Jim Lord? Lord. Yeah, looting. The average Jim Lord adds $200,000. Shoot. I have to know the metric. A lot.

Yeah. This is it. There we go. Adds $200,000 a year to their business and $100,000 that's profit. There. That's what the math is. So the average, Jim Lord adds $100,000 a year in profit. I think it's a little bit more like $1.18, whatever.

And we can charge a percentage of the increased net profit that we are able to help them generate on average. And now we have to usually charge a significant discount on that because half the people are going to be below the average. So for the people who are for for half of them, it's an even crazier deal. You know, they pay for the license model. They don't have to spend money to test ads. We would say, we already spent 50 grand in 20 markets. These are the winning ads this month. And they could just run them through the system and then just collect the money on the other side. And so they get the speed and they don't have to have, they don't have to taste the test, you know, the failed ad test because we would incur that cost, but we're able

distribute that cost at scale. So no individual gym owner could spend $50,000 to test ads in all these different markets. We could and then give it to a thousand gyms. And so, and again, from a media perspective, leverage, we could do that one time and a thousand gyms can do it at no incremental cost to us. And so it was a very profitable business. It still is a very profitable business. All right. When you had that moment, and I'm sure people know this part of your story, you had the moment where you're fucking desperate, you've lost everything twice, you're scrambling, willing to make money and you tell the guy, I'm just going to give him a number that's high so that he doesn't bother me with it. Six grand. He's like, yes. Had you already thought of it as a license model,

or you do those first like whatever 150 grand that you made with the seven people or something. I forget the exact details of the story. There was like seven people that you'd promise to do their gym and instead you sell them this model. Had you already thought of it in that moment as a licensed play? I had. I just, I think honestly, a lot of a lot of, a lot of the words around like what we did came from outside sources because people saw how quickly we grew and we were in a world that was direct response marketing. And so many people in that world sell courses so they use the words that they know how to describe something. But it was much closer and arguably like significantly more support than what a franchise does for a franchisee.

And that's how we structured. I wanted to be, I wanted to provide more service, make them more money for a lower fee than a franchise would. And potentially this is smarter. And I'm really my goal in this part of the interview is to help people map the models that you have running in your head that allow you to do the things that you do. Because even from my perspective, it's very unique. It's very rare. You just have a real ability to break things down to what I'll call the essence of the thing. The anybody listening, I will tell you right now, the biggest mistake you're going to make is what I'll call a category error. People fail to understand what the true essence of the thing is, which I am as guilty of as anybody. So I don't put myself out.

outside of this, but have spent a lot of time trying to understand my own failings and shortcomings. So as I'm hearing you tell the story, I'm thinking, okay, one, to identify the license thing is very shrewd. And so trying to map how you conceptualize the thing feels tied to me to the same idea of understanding that an individual gym cannot afford to do the market testing that you can afford to do. And therefore, if you do it, you now have a moat, you have leverage, you have a service that you can sell, that is understanding the true nature of the beast. Do you ever stop and model the nature of this thing is and then you break into constituent parts? Yeah. What does that process look like? And is it universal or is it nail salon nature of?

Jim, nature of. Yeah. I boil it down to something probably hilariously simple, which is a number of potential units sold times gross price. profit. And then the tertiary piece is what upfront are capital investments required to be able to enable that. If I had if I had to go buy a machine that could manufacture widgets that have phenomenal margins because the value that people get from it is, you know, $10 and I can make them for 10 cents, then that's a, you know, great business. But if I can only sell it to, you know, one town in Alaska because it's a really unique fishing tool that only works in their environment, there's elements of that that would make it an attractive business, but there's

elements that won't. So it's like it'd probably be a very small, very profitable business that could not scale. Nothing wrong with that. There's definitely huge place in the economy for things like that. But when I'm looking at opportunities, that's what I would, that is the simplest way of looking at it for me is number of potential units sold, gross profit per unit, and then what I'll call competitive dynamics as the third part, which is like if you look at, you know, cell phones, it's like, what does it cost them to add another cell phone to this massive network? Probably not a lot. Is it really sticky? Yes. Do people stay in pay for a long time. Yeah, so there's probably a lot of gross profit to be made there.

And how many people need, you know, cell phone service a lot, right? It's like, okay, so that might be really attractive. But the competitive dynamics is that I would have to have, I don't know, a billion dollars, or I'd have to partner with somebody that would allow me to white label. So this is when you get into the competitive dynamics of like, okay, well, is there value in creating a brand and wrapping on top of an existing solution and say, hey, I might be better at marketing and sales than you. And you already have the infrastructure to deliver cell phone services to people nationwide or maybe just in this region. And I will do what I'm good at. And you deliver on the back end, we structure some sort of deal where, you know, the more

volume I get, the more of the economics I get to, you know, participate in. So those are kind of the the big three variables that I look at if I'm just trying to analyze a business in terms of opportunity. And the big piece that I think a lot of folks will miss out on is when I say gross profit. I'm talking lifetime gross profit. And so that's where like I have less care. about recurring versus not recurring. You know, if from a, and this gets into the push and pool of selling a business or not selling a business, but, you know, if a company has something that's super recurring, let's say it's a service like accounting or bookkeeping, and let's say there's really high, you know,

gross profits on that because we've automated a ton and we've got some offshore workers doing, you know, the remainder of it. We have really amazing margins and it's really sticky. That could be a super high gross profit business, but at the same time, if you're Elon Musk and you sell everyone a Tesla, and even if everyone buys one Tesla, that might be still more gross profit than, you know, the bookkeeping services, just as a completely contrasting example. And so I just look at what is the lifetime gross profit. And some of that might be better structured for recurring and some of it might be better

structured for a one-time transaction. And then I know I'm going into like stuff that we're probably bore the audience. But if you're looking at the business as a product, then it also becomes you have two customers. You have the customer that you're selling a product to and then you have the customer that you're going to sell a company to. And most customers who are invest investors who are buying companies feel better, buying something that is recurring in nature, because then they feel that the likelihood that it will continue to make money in the future is higher. Even if the TAM's huge, all that stuff, they still feel, they sleep better on it, and so you get a premium for the company. And so that's kind of big picture how we think through what companies

we want to invest in, or at least the opportunities that we could look at. And then from a personal investing perspective is how much value can we add to that specifically. Like I probably wouldn't take on a wireless cell phone company likely. But if there's a, you know, a brick and mortar chain of services that's like med spas or beauty or, you know, health and fit, like that's my wheelhouse. Like we know how to crush those. And so it decreases my risk because I know that even from a value ad perspective, if I can five X the company because I know how to build those marketing and sales processes at scale at the unit level, then the likelihood that I don't get a tremendous this return is really low.

Okay, there's two things there. One, sorry, that's soliloquy. No, no, no, this is amazing. And I hope people are taking this as it's intended. So in fact, let me give people a frame of reference. This is the way that you should be thinking about what we're talking about right now, which is all of these things abstract

so that you can think through novel problems. And big data sets with a few filters so you can make quick decisions on massive amounts of data. What do you mean by that in terms of what we're talking about right now? So if I, so if I, So if I get every day on my phone, I'll have a list of all the companies that have applied at Acquisition.com and they'll be ranked in terms of like this one looks the most interesting. These ones are less interesting and here's why we didn't think they were interesting from my team.

And so I will basically go pass, pass, pass, pass, pass, pass, pass, pass, second call and ask these things. And then they'll go and do that. For me to be able to quickly make the decision because otherwise I would be inundated with the amount of data that I have to take. take in, I have to have filters that are faster, just LTV to KAC ratio. Like, I feel like you can boil down most businesses to what does it cost you to get a customer? What do you make from that customer over the lifetime? Period. That's it. Now, Tam is, you know, how many of those customers can you sell short?

But like, if I just had, if I could only look at one metric in a business, that's what I would look at. Okay. So most of the entrepreneurs that are listening to this or people that want to be an entrepreneur, no, I think they'll get that. But that's not where they're going to be at in their journey. That's certainly a more advanced thing. So the part that I want to bring you back to is they're going to they're they're

going to be thinking through how do I start a business sure what business do I start how do I identify the opportunity and so there's a couple things that you were just going through that I think are really relevant one of them is how you identify the business model so looking at a total addressable market lifetime value of the customer versus what it cost you to get them all a hundred they will have to figure that out or they're going to end up doing something. dumb, chasing a small opportunity, whatever. But all of those metrics will change based on the decision that they make around what

business model to pursue. So just by way of what a business model is, selling courses, that's one business model. Licensing a business is another business model. So people you're saying, even when they try to retell your story, they are confusing the two. But very different when it comes to execution. There's no recurring course model. Those just wildly different. So how do you process through if you were starting?

So not as when you're looking to acquire. How do you process through what is the right business model to pursue? So this is pulled from my $100 million offers book, which goes the point of that book was to answer the question, what do I sell? And I think that a lot of people, especially when you're starting out, you're like, I need a business plan. I don't think any business I've had is had a business plan as an aside. it's just what are we going to sell and how we're going to get customers and then from there we build everything around it. And so isn't that a business plan? I have two things on my plan. I mean, I've seen like 16 page business plans. I'm like, okay, all these numbers are made up. It doesn't matter. Like,

do you know how to get customers? And so picking the avatar, which is the customer that you want to go after and then picking the problem that you want to solve for them. And problem you want to solve is I feel like kind of a trite term in the, in an entrepreneur space. But you usually want to make their lives easier in some way. It's usually going to track down to status or it's going to track down to time. Like those are, those are two huge buckets that can cover a lot of stuff. And, you know, different people say there's health, wealth and relationships. There's, you know, there's a million bigger buckets that you can try and chunk this stuff into. But if you are starting out, so let me just get you really tactical. So we were just really clouds for a second. Let me just get you tactical.

number one you can go and set up all of your autos of incorporation your LLC and all that stuff online with a few clicks of a button under 30 minutes so you do that as step one step two you take those papers to a bank and you get a bank account step three you hook up a payment processor to that bank account which is again a series of clicks that nowadays are almost automated once you have those three things you get a stranger to give you money in exchange for doing something for them And so I would categorize businesses as I see them, usually as you either sell products, you sell services, so physical products, something like a mug, right? You sell services.

You do something that they would otherwise have to do for them. You write software that does something that a human would do for them, but because you have automation with code, you can get them to do it, or you create things that entertain people that they want to have access to. And so those basically function into media. Again, you've got people, products, code, and, and content. So it actually breaks out to those four types of businesses.

And I think that most people, if you have no, like, let's say you aren't a software developer, right? And you want to start a business. The easiest ones to start are either, the easiest one to start is a service business because it only requires your time and you to learn a skill that other people can also learn, but some people just might not want to do it. And that is all you need to solve. And I remember like when I was in college and I spoke.

some universities for entrepreneurship. And everyone there is always like, here's my business idea, right? And it's always like weird widgets and gizmos and like these never-before-seen businesses. And most of those will fail. Whereas like if you want to make your first business and the big fallacy is that the first

is going to be the forever business, which it won't. Most entrepreneurs have many businesses over their career. And each business you learn elements that help you build a bigger and better business the next time. And so you start with something that people already buy. So it's like you can look, what do people already buy?

They already buy lawn care services. They could mow their lawn. They just choose not to. They could optimize their website for SEO. They just choose not to. They could run their own ads. They just choose not to. They could edit their own videos.

They just choose not to. You could set up email, you know, auto responders for people, but they choose not to. You could set up voicemails for businesses and transcribe it and send it to them because for those people, it saves them time. And so you can pick any problem you want that someone already does or already purchases, look at the solutions, and you can literally just do it the same way and have a way to get customers. That's it. Like, that's, that's it.

You just reach out to people that you know one-on-one. You reach out to strangers one-on-one. You make content about the problem, and you run ads. There's the only four things that you can do to let other people know about your stuff. So once you decide what you have to sell, you then use the core for, one of them, pick. And then you let people know about it until eventually someone says, yeah, I'd be interested and you solving that problem for me. And that's how you make your first off.

All right. Focus becomes a problem. People end up getting really scattered. They want to try a bunch of different things and see what sticks. How do you make focus work for you and not against you? I feel like focus can only work for you. I guess lack of focus. The nightmare scenario.

Most people spend their time. Yeah. I think it's so I love showing this visual. And maybe we can grab it post. for this, but if you imagine a curve, right, where you go, you start here, a little bit above the line at uninformed optimism, is that you see your buddy's doing drop shipping and he's making money. And so you're like, wow, this must be amazing. I will do that too.

So then you leave your current opportunity to do, or maybe you start doing that. Then you move to stage two. So you go over the hump of excitement and then you go to informed pessimism. Now you're below the line. Then you're like, wow, okay, there's a lot of other stuff that's really competitive. I don't have a brand. it's hard to differentiate. You know, the cost of goods is actually continuing to rise, and so are ad costs, and you start realizing the other things that you didn't know before. So you have a slightly more realistic view of the opportunity. Then you go to stage three, which is the value of despair, where you're like, nothing's working, I don't know what I'm doing. And this point is where everyone then jumps to uninformed optimism and the next opportunity. And they repeat, repeat, one, two, three, one, two, three, until they're eventually able to learn that they just need to stomach because every single business shit. And when the grass is green on the other side, it's because there's lots of manure there,

right? Same as yours. And then you go up to informed optimism. And then you hit achievement. And so those are the five stages that I see most entrepreneurs going through. And they continue to cycle the first three over and over again until they learn the lesson. So this is a skill. Focus is a skill. I can train someone to do it. If you're in the same environment and you're at this point where you're not sure what to do, but other people have succeeded at this thing, and then you think something else is easier that you find out about, that is a stimulus. That we can then say, here's the red flash card. Are you going to duck or are you going to get slapped? And realistically, most people just need to keep getting slapped until eventually they realize that nothing is going

to be easy and they have to go through the period of not knowing what they're doing. Because that's, like, that in essence is what entrepreneurship feels like. Is uncertainty of whether or not all of the time that you've put in is actually going to work out. And you have to get really comfortable with that. Is that you won't know. Because if you were to be guaranteed, the outcome that you're going to get what you want, you wouldn't want to do it to begin with, because everyone would already be doing it because it's already guaranteed, which means the opportunity is gone. So the opportunity is in the uncertainty. And so as long as you can embrace that, which is why you have to have some tolerance for risk as an entrepreneur, because you have to pay down

your tax of ignorance, which we all have to pay down every single day for not knowing the things we should know. And the only way you do, you pay down that tax is that you test and you iterate. And so you just want to get as many knows out of the way, as many failures out of the way, because you're not actually failing. You made progress. It wasn't, yes or no, did it work or not, it's how well did it work? And I think if you can make even that frame shift, you're like, okay, well, I'm reaching out to people, they're responding, but I'm not getting them on the phone. Okay, well, then you have a scripting issue. Okay, then you get them on the phone. Okay, well, they're not buying. Okay, well, then it might be an offer issue. It's still

might be a sales issue. Depends on why they're not buying. If they're saying, you know, it's price, it's like you might be misprice, but you also might just be really terrible at explaining the value. And so you just continue to work your way down until eventually someone's like, yeah, that sounds good. And they read you their credit card or the phone and you're like, Holy shit. This is actually happening. And you make your first dollar. And I promise you have to make your first dollar.

The second one comes 100 times faster than the first one did. If there are many variables present, many variables must be tested. Must be studied. Yes. Must be studied. Yeah. That is certainly marketing summed up. Yeah.

There are no doubt that people are going to have a hard time figuring that out. I want to better understand you just did a book launch for your most recent. recent book and it, I mean, you set records. It was unreal. I mean, really like blew people's minds, set a standard in the world of online marketing. What was it about that, or what did you demonstrate in the way that you did that that other people don't understand? So with each book, I wanted to demonstrate the concept of the book with the book itself.

And so offers when I released it was $1.99. now since made it free. But it was $1.99 on Kindle. It had a course that went with it that many people charged $5,000 or $10,000 for. And it was the subheadline of the book and offer so good people feel stupid saying no. And so I actually launched that book with a single post on I had 10,000 followers on Instagram. That's it. And every month, after the first month, it continued to sell more and more copies into this day. It continues to sell more copies every month. And that is based on the offer being exceptional and people sharing it because they got tremendous value relative to what they paid. That is the entire concept of the book. The core framework of that book is called the value

equation, which I won't get into, but that is basically people say the word value, but how do you operationalize value? Right. And so that book is about operationalizing value, making the thing that you currently sell more valuable in the perception of the customer, so they're willing to trade more of their money for it. The Leeds book had an entirely different core concept, which was the core four and the four lead getters. And that is the advertising cycle. And so it's how do you let other people know about your stuff? And so the subheadline of that book was how to get strangers to want to buy your stuff. Now, to be fair, it's not how to get strangers to buy your stuff because that's sales, but how to get them to want to buy your stuff is advertising.

And so this book sits literally just between they don't know who you are and they show interest. And that's where the book ends. You get lots of leads saying, I'm interested. I'd like to find out more about your stuff. And that's all I could fit in one book to make it actually effective and operational for most people. And so since the concept of the book was to advertise and to get lots of leads, then I thought it would be appropriate to advertise and get lots of leads. And I used every method in the book, all eight for the book launch, even though I could just have made a post on my, you know, across all my social media and probably sold plenty of books just doing that. But I wanted to show that this stuff works today and it will work in 100 years and it worked 100 years ago.

And so I went through, I had some people that I reached out to one-on-one purposely just to check the box. I reached out to some cold people so I could do podcasts. I ran ads for it, even though I didn't need to run ads. We still got 137,000 people from ads. We had affiliates. We got 104,000 people there from affiliates. We had 27,000 affiliates promote the book. We had customer referrals.

People sent their friends there. So I had an incentive that if you just get 10 people to come, you'll get two bonus chapters. that aren't released with the book. Affiliates, which is the, another lead getter, right? I mentioned it earlier, but affiliates, we got them to promote the book. We got agencies who actually were the ones who ran the ads for us because we don't run ads

at Holdco because we don't transact. And then employees, which is the fourth type of lead getter, which is they do the core four on your behalf for you. So we had Mozy Media, which is our internal content team, made all the content and the ads, for that matter, for the event and the book itself and so I actually only did 17 long 17 short form pieces of content and six long four pieces of content and then that got cut into 143 posts that we did over six weeks

on top of the 2200 posts that we were making anyways over that same period of time and so I used all the methods in the book to demonstrate to give proof that the book works and so you know the next book I'll try and continue that meta theme of I have concepts in this book and I will show you that they work because I will use them to mark and promote the book. The thing that I really want to make sure that people understand, and if you think I'm crazy, definitely let me know, but I doubt you will. The reason that all of that worked so well isn't what you did at the time. It's what you did for the years leading up to that moment, building brand, building awareness, generating massive amounts of goodwill. Is that, like what a

amount of magnification did the whatever four-ish years leading up to the launch of that book play in the the launches success? It was everything. I mean, it was everything. Now, that being said, you could still absolutely use, like, you can still use warm outreach. You can still use cold outreach. You can still, like, and one of the concepts in the book is making content. And I talk about how I structure content, how we pick topics, how we pick headlines, how we format it, how we do all those things so that people can use that and make content for themselves. But usually the longer you can wait before making any ask and to be fair, I gave the book for free. And if you wanted to buy a physical copy, you could.

That was the whole, that was, let's spoil the surprise of the launch was that I gave everything away for free and said, if they want to buy a physical copy, you could. I can't wait to write the book on brand because I have a lot of thoughts on it. And I can't wait to have really clearly crystallized, like, beyond reproach ideas about brand. but I'll give you a working teaser for how it works. But brand is basically teaching.

It's associating something people know with something they don't know. And we associate these things enough that eventually I can remove this and then you'll associate water with my hand. And so if I do that enough times and I have, you know, water and, you know, coffee and whatever, then you might generalize and say the hand is a beverage thing, right? And I like thinking about it that way because what? do I want people to associate me with? I want people to associate me with tremendous value. I want people to associate me with long-term goodwill. I want them to associate me with money,

right? So every book's $100 million something, offers, $100 million leads. And so I want them to associate me with investing, which is what a lot of the stories that I talk about are companies that we've invested in and that we owned and scaled or exited. And so I, we do those things so that when you have a brand, a brand is put on something to direct someone's behavior. It is a physical sign. So if you look at the, you know, original, the origins of the word brand was a brand, you put it on a cow, right? And so if you have a cow that doesn't have a brand and a cow that does have a brand, you will behave differently with a cow that has a brand on it. You're not going to go capture it. You're not going to go kill it. You might return it to its neighbor or whatever.

Like the brand changes your behavior. And so brands have, at least as far as I'm concerned, like these, you know, I haven't written the book yet, but have kind of two, two continuums. You have the strength of the brand and then you have the positive or negative inclination towards it. So away or towards. So like Nazis, for example, have a very strong brand away for most people.

Now, to be fair, there's also a subset of people who are super strong as brand. There is a subset of people who feel some kind of way. Right. It changes their behavior. Yes, it does. And then the inclination says towards or away to some degree. You know, Donald Trump has a strong brand.

Right? For many people, it's for a percentage of the population, it's negative. And for a percentage of the population, it's positive, right? And so when we think about brands that way, it's been helpful for me because you really answer the question, who and what do I want to associate myself with? And then by doing that, eventually your logo and your identity will then have a set of things that people associate with, which then will change their behavior, which is why I think brands are the

most valuable things that you can build, because it really becomes a way to influence the behavior of the masses at scale. And so if every single person recognizes the Nike swoosh, and I can take a water bottle and then put a Nike swoosh on it and triple how much I can charge for it and still get more people to buy it, then you can measure the strength of the brand by the difference in price between the commoditized version of it and the branded version of it. And that translates into tremendous profits from a capitalistic perspective. And so if we're trying to build something really valuable, then you make many associations that, that are positive for specific audience.

Because I think Black Rifle Coffee, right? They're kind of like politically charged-ish, right? So Black Rifle Coffee is going to be really positive for people who are probably right-leaning in terms of their associations with that brand. It'll probably be kind of negative for the people who are more left-leaning. And that's okay because they're like,

we can sell to half the population, whatever. And so I'm kind of agnostic to the direction of it and obviously Nazi's negative on that. But like for most of these things, I'm just looking at, What is the percentage likelihood that people will adhere or comply with the requests that the brand makes of them? Buy my thing. Go to this thing.

Whatever. And so that's why you can have somebody who has a huge brand in terms of the amount of people who are aware of it, but have very low ability to direct or change behavior. And so you probably, I'm sure you know this better than anyone. With Quest, you guys were one of the first ones getting in the influencer space, like way back when the term influencer was a new term. And you probably saw some people with million person accounts and they couldn't drive any sales. And then you saw somebody with 15,000 and crushed it because they had a stronger brand for a narrower audience. Even if it was just like a girl cop who has an audience of all girl cops, they might have lots of positive associations with that person and then be more likely to comply with whatever request they have. And so I know this is a branding discussion.

but the reason that I think many people wanted to come to the event is because they were rewarded in the past for consuming content, for reading my last book. And so they felt like the likelihood that I was going to reward them again at this event would be high. And I try to, like I'll tell you a secret, I try to make many promises and keep all of them. And the more times you can make promises and keep promises, the higher the likelihood people will ascribe to you for being somebody who is predictable in a good way. If he said this will happen, this is what's going to happen. If he said it's going to be worth it, it's going to be worth it. And so that was woven in for the 24 months from the time I released offers to the time we did leads was trying to actively build up the goodwill

so that we could set records and do something really cool and demonstrate the concepts in the book in the real world so that people could know that it would work for them too. Now, man, it's incredible. It's breathtaking what you guys were able to do. What was a record that you broke? the Guinness Book World Records for a business virtual conference live was 21,000 for a business conference. So you absolutely demolished that, which is really cool. That's awesome. I will say this as an aside. I think the fanfare about the launch will decrease soonish.

And I think that the actual contents of the book is going to be the thing that can, that people, that is, that machine will start spitting. Because inside of the book, referrals is always the one that I always try and drive the most in any business I have because it's the lowest cost to acquire customers. Not that it's a customer acquisition thing for me. But, or sorry, not a money-making thing for me. Books are not the best way to make money. Just throw that out there. But it can create a viral effect so that you can get more customers every month

without paying a cost to acquire. And so the mission of Acquisition.com is to make real business education accessible for everyone. And so in order to do that, I can't do it alone. And so that is why I have to have other people help me. Yeah. You're only going to scale as much as you can get high-quality people to help you. That's for sure.

there was something fascinating that happened during your launch, which I would love to hear from a guy who did not in the beginning consider himself a salesperson, somebody that has gotten very good at sales. And as I was saying in our first interview, which the funny thing is I ended up taking you on a side tangent before you answered it, but I said, the world does not think you're creepy. Why aren't you creepy when it comes to sales? But there was a moment, which you did on purpose, but I want to know what you're going to say it doesn't matter, it's all about behavior, but I want to understand what you think about this.

So you intentionally took people on an emotional roller coaster ride where you start, I'm going to give you this for free, and I'm going to give you this. Sorry, I'm going to give you this, normally goes for this much and this normally goes for this much, but you're crossing it out. Classic thing where you then ask for money. Now, you could see the comments coming through at the time and people turned on you. And I'm assuming they were saying something akin to, I knew it, this guy is just after money, whatever. If there's nothing wrong with sales, Why did they turn on you? Actually, so I don't know why they turned on me.

I can make a guess, but at the end of the day, like, I'm never going to know what the main reason was. You knew they were going to. You did that on purpose. I had a, I had a, I don't know why. I knew that. So when people see this thing, there is an immersive reaction to it in a certain percentage of the population.

That being said, I got a zillion messages to people with me like, dude, I was ready to give you my credit card at 5K. And so, sure, like we could have taken $50 million at the event. But what I wanted was, you know, $500 million of value to many people that later will come through companies that get started and scaled using the stuff and then they want to partner with this. But the reason that I did it was, or at least this was my hope for doing it, was that I wanted people to remember it. And so memory is driven by emotion. And so I took this roller coaster approach because I also wanted to subvert the audience. If I just said, hey, it's all free, it's all amazing.

Here it is. I don't think nearly as many people would have talked about the thing. I also don't think they would have perceived the value as high. So I wanted to sell them on the value of this thing and then give it to them rather than just saying, if I got on and say, hey, guys, there's a free course with eight different things in there that are, you know, I spent a lot of time on, go enjoy them. I mean, it would have been fine. People would be like, you're amazing.

But doing it this way, it becomes a, like, I think a lot about this. It's like, what is that person going to tell the next person? Like, what words are they going to say? they're probably going to be like, dude, he did this like fake pitch. And he like, everybody was going left. And then all of a sudden he made it all free. He was unreal. Like the place went nuts like that.

They will remember. And that was what I was going for. I figured there was a higher likelihood that they would remember it if I did that way. Yeah. I think you are very correct about that. Talk to me more about your mission. Mm-hmm. So, and I like to put this big disclaimer out up front.

I am a ruthless capitalist. I am absolutely here to make money. I am not a saint. I have no, like, many nice things were said about me after the event. And I also remember that the same people also threw stones at me 30 seconds earlier. So like that doesn't sway me a ton, but I'm letting everybody know I'm here to make money. I'm just measuring how I make my money over a longer time horizon. That's all it is.

And so I could have taken $50 million, you know, from the event. I think that's a really realistic number. But if I do one deal from somebody of the now probably million something people who have just even just seen the event recording or were they're live, I will probably make more than $50 million and also get a brand that continues to compound at a faster rate. And so to be clear, I don't think there's anything wrong with monetizing an audience. I don't think there's anything wrong. It really comes down to keeping promises. So like, for example, like I will probably be launching some product at some point in the future. Whatever could that be?

Yeah. And I don't think that I will have any negative response to it. And so it really just comes down to like, what have you promised or what expectations have you set? And then are you meeting those expectations? And so I think my view on this has shifted a little bit over time is I used to think like you have to exceed expectations. But now I think that it's really just like, can you perfectly meet the expectations the person has. Now, somebody might have really high expectations, but you try and set them and meet them, and you do that cycle as many times as you can so that their predictive measure of trust with you,

if you want to operationalize that, is that you are trustworthy because you keep your promises. And so I think that's a lot where, like, the other reason is that within the, unfortunately, within the course creation world, this is one man's two cents. All right, and I want to be really clear about this because people get their pennies in a bunch. You can choose to feed your family whatever way you need to. I have zero judgment on it. What I do acknowledge is that people make associations. And so I could find the most ethical porn business in the entire world. As soon as I stand on stage and talk about our porn company, I will forever be associated with porn. Is there anything wrong with that? Yes or no? I don't know. For me, I think that there are other businesses that I would like to do,

that I would like to do a deal with that might view that negatively. And so it might prevent me from doing a much bigger deal in the future by having that. And so I won't do it not out of principle, but out of pure dollars and cents materialism, if you want to call it that. And so the course world to that point has a lot of charlatans and a lot of people who make promises and break promises. And a lot of people who set bad expectations or unrealistic expectations, and then people get really frustrated and upset over what they get. And so for me, even if I had the best course in the world, I wouldn't want to sell the information because it would associate me with that group. And so I've taken a lot of time to disassociate myself with that category.

And it was because, I mean, I was a brick and water owner. But like I learned a lot of direct response marketing in that world. So I made a lot of friends in that world who then made commentary and then put me on stages. And so I had really strong associations early on with that community. again, nothing wrong with that community. I'm saying, but the associations that I would prefer to have with my brand are the ones that I said earlier, which might seem in direct conflict with that,

which is like long-term oriented, enterprise value, being patient, giving first, like these are all things that many people in that community, not all, but many people. And in that instance, especially with branding, in my opinion, the good apples do get thrown out with the bad. So I do absolutely think that there are amazing education businesses that exist.

Absolutely. Like, bar none, period, end of statement. There are just so many that aren't that it's very difficult to make the association. And so that's why I think of it if I had, let's say, a no strip that I was going to come out with, or I had a dessert company that I was going to come out with. I don't think anyone would have any issue supporting that or me saying like, hey, I want to build this with you guys, I'll build this in public. I think these are all things that people would be totally fine with.

But why? It's because of the expectations that I said at the beginning. And so acting in accordance with that over a long period of time. And to one subnote on that is that I do believe that brands can change over time. And so the concept we're talking about earlier with like successive approximation, we're like, if you are one shade to the right, one shade to the right, one shade to the right, you can slowly move a brand. Now, whenever you make that move, you will lose some people who liked the thing that you had before,

and you will gain some people that like the new thing. And the idea of repositioning or, you know, directing a brand is making sure that that tradeoff is positive. It's like the local band that has that local vibe, whatever, and then they go a little bit more mainstream. And then all their early fans are like, they sold out. But what they really did was they trade a small group of people for a much larger group of people. And more people like this brand than the old brand, because if they like the older brand, they would have already been big. And so it's really just a calculated trade on what you're willing to associate with that more people will have a positive, strong association with to make it increasingly likely. that they will do what you would like them to do

that helps you with your long-term goal. So zooming in on the mission of your company, which is to make entrepreneurship accessible or business accessible to everyone. You have a quote, which I think is really, really interesting. Businesses solve problems. Businesses make the world better. There are too many problems for any one person to solve.

I want to help create as many businesses as possible so we can solve as many problems as we can. What are some of the problems that you think business can solve? I mean, I would probably have a shorter list of problems that businesses can't solve. Interesting. Yeah. In a world where entrepreneurship is not always celebrated and capitalism is often vilified. Is that just a contrarian stance? Or do you think that people are a little crazy to not see the value of business? So if we're to zoom all the way out and just think about the economy as a whole is allocation of resources, just time, energy, money, et cetera.

capitalism in and of itself is a system about efficiently allocating capital. Now, there are tradeoffs with that because if you have a pure capitalist society, then there are a lot of other things that we say are important to us, like we believe people should have health care, we believe people should have a place to live, we believe people should have education and services for their kids when they're younger, whatever it is, right? We have these beliefs, and so we make trades based on that pure idea of capitalism

because capitalism can absolutely be pure, But most, actually, I don't know of an economy right now that's a true pure capitalist because most humans say that that market is too ruthless. And so we're willing to make some trades and that's for a legislation where we actually artificially move the incentives of the market to incentivize certain behaviors. The problem with governments as an allocation vehicle for capital is that they are one-tenth as efficient as private because it's not their money and they never earned it. And so you get really good at capitalism by allocating resources well and getting a return on your resources. You don't get you, it's very hard to get fired in the government and you manage billions and billions of dollars. And the requirements to get in are not as high as they are to spend even a modicum of that kind of money in the private sector. And so you just have to be more efficient with what you have because you have to survive every day rather than having a guaranteed stipend from the whole country that gets taken off the top before everyone sees their paycheck.

And so if government can solve it, private sector can solve it, better, faster, cheaper. The only real issues come into how much regulation do we put on top to prevent bad actors. I mean, that's the whole concept around, I mean, you know this. I'm just saying for the audience, around like why we try and break up monopolies, which now we've just given up on because they're bigger than governments. But we do that because we want to protect, you know, we want the capital society, competition in general is good for society, tough for the country. competitors. But if you have 10 dry cleaning stores, the best dry cleaning store will win,

and then everyone gets better dry cleaning. So it's good for society. It's bad for the nine guys who fail. And so I do think that entrepreneurship is the way that we solve problems. And I think that there's usually an innovative way to solve any problem if we have enough knowledge to do so. I mean, and Elon's proving that with kind of first principles approach to like, can I launch rockets at a tenth of price? Well, where do we get our metal from? Right. Like, what is required for a rocket. It's like, we have to get this from here to here. Let's build from there, right? Rather than like, well, we have to go for this guy who's our contractor for space navigation. Well, why can't we make space navigation? Well, you know, like, and then they get into the, and then the prices

expand. And so that is my TLDR is that I can't learn everything. Everyone has a unique life. They are uniquely positioned to tackle opportunities that I only have one lifetime to live. and I might be able to solve two or three big problems in my lifetime, maybe. But if everybody has these skills, then I think when I die, I will be proud of the meta-contribution, even if I don't capture all of the economics because I'm going to then die and then someone else will have it and it doesn't even matter anyways. And so there's an element of that that just makes me feel good about it

that drives me forward like the 17-year-old who's going to sleep with the book under his pillow to serve, you know, provide for his family with the one good, what they have. I think that if I can equip that guy, that he can do whatever, like, he can solve problems that I never could. And so I don't think it's my life purpose to build the next rocket or cure cancer. I just don't think that's in my skills. It's also not in my interests, but I think I can help equip the entrepreneurs who will. I love that man. I hope more people hear that message about business. I think that to your point about serving people in a more efficient way, in a way that they prefer, is so powerful. And to watch it slowly get villainized,

as I've gotten older has really been sad and I think will lead us down a super dark path. Tell me, for those that are just listening and aren't watching across the bridge of your nose on a nose strip, it says the one of zero, B1 of zero, excuse me. What does that mean? So one of our kind of big themes

in our content creation at Moise Media is one of one content, or it was one of one content. Meaning I don't want to do a breakdown of Coca-Cola's business model because literally anyone could do that. That's a book report. A college could do that.

Anybody could do that. And so I only want to make content that I can make. And so one of my big rules of advertising is show what only you can show and say what only you can say. And so if you're the only triple black belt something in your local area, then say that and then also show what you can do that other people can't do. And if you don't have that reality, you either need to niche down and make it a much narrow thing that only you can do or you get better and can beat more people. and you expand it. But that's fundamentally, anyone can become a category of one if you go narrow enough, and then you just continue to expand over time. So the one of one content was the concept that we've adhered to. Now, as the team started to see what was going to happen for the event and how much we

were putting into it and all the free stuff we were going to give away and how much money we were choosing actively to not make, they were like, dude, no one would do this. They're like, this is even one of one. They're like, this is one of zero. And it was like, that's it. For 18 months, I've been looking for like a saying or an ism that was short and could encapsulate many of the values, skills that can be learned, that I believe are important. And that one of zero concept, which I love, because also from a math perspective, one of zero, you know, one divided by zero is defined. And so it's really about being beyond definition, writing your own path, you know, keeping promises in a world that breaks them,

delaying expectations, giving first and giving over and over again until they ask, or even if they never ask, and trying to live your life in a way that you earn your own approval by the end of it. And I think that's what one of zero is all about. And so for me, be one of zero. And that's a, that is a brand that I really want to stand behind because that's what I believe.