The Game with Alex Hormozi - CEO to Investor | Ep 271

Episode Date: January 26, 2021

The clock is ticking… or is it? Today, Alex (@AlexHormozi) talks about his major change in perspective and insights when it comes to his 5-year time horizon shifting from CEO to shareholder, to board member, etc. and how thinking of your own time horizons can lift a lot of your stresses in life.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(1:57) - Day-to-day goals can make you forget long-term investments.(3:46) - Time as an inevitable force: working for or against?(6:27) - Use compound growth to your advantage, not as hindrance.(7:40) - Develop consistency discipline for disproportionate returns.(12:43) - Leading growth indicator: number of interested inquiries.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

You get so caught in the monthly goals and weekly goals that you forget to make the long-term investments that are important and not urgent. 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. What's going on, everyone? Happy Sunday. This is coming from downtown Austin. Wanted to talk to you about one of the most profound belief and perspective shifts that I've had over the last few years. And I think 2020 was that year for me where I made one of the most profound internal shifts. And the shift has yielded me unbelievable amounts of decreases in anxiety for me. And honestly, just increases my level of certainty.

And I can understand why so many people fail to a much higher degree. And I think one of the biggest curses that I had earlier on in my career is that, you know, within months I went from it's just everything kind of aligned for me, mind you, after five years of eating shit. But nonetheless, things did align for me and very rapidly went to from making not a lot of money to millions of dollars a year in profit to my second year doing almost $20 million in profit. And that fundamentally, I think, ruined me in a lot of ways earlier on because I saw that that as my benchmark. You know what I mean? I saw that as like if a business is not doing this, then it's failing, we're doing something wrong. And I think that it was a really poisonous viewpoint

for me, or toxic viewpoint. And I want to share with you what I've shifted to and what has been such a dramatic improvement in my life and I think my business. So when I look at investors and people who make a lot more money than me and people have much bigger businesses than me, I see this common thread of looking at it from an investor's time horizon. And so I feel like in entrepreneurship, everything is about tomorrow, everything's about this week, everything's about this month and making payroll and all that, you know, you have all the day-to-day things. But you get so caught in the monthly goals and weekly goals that you forget to make the long-term

investments that are important and not urgent. And when I look at the billionaires of the world and all of them are trying to build, you know, escape paths to Mars, to me, I see that, I'm sure there's the cool factor, but the fact that they're all kind of thinking about the stuff just leads me to think that they're thinking on such a larger time horizon than the rest of humanity, which is probably one of the reasons that they're more successful. And one of the things to think about this is kind of fast versus inevitable. And I have tried to shift my perspective to wanting to do tasks and actions on a repeated basis that I know that if I repeat them over a long enough time horizon will lead me to inevitably accomplishing my goal.

And so what it does by shifting that way is I look at tasks, I look at projects, I look at initiatives in a very different light. I also am, I mean, I wasn't super affected by competition in general mentally because of other things, but I think this has been probably the last nail on the coffin for me in terms of like, well, so-and-so is making more or whatever, right? the things that we do to compare ourselves. If you remove the time horizon and think of not next year, but maybe next decade, right? I've been using five years because that is a timeline that I feel like I can wrap my head around and is real for me.

I had a mentor reach out to me and he was like, and, you know, this guy sold his thing for $3.4 billion. And he's like, bro, you need a hundred year timeline. And I took that in. I accept that. But it's not real for me yet. And so five years are something that is real for me. me that I can believe in. And so what that does is if you think about time as an inevitable force

that's going to move forward one way or another, think about for a second how, and this is for me, do I see time as a threat? Do I see time as a liability? Something that I'm always saying is working against me? Or is time an asset that is working for me? And I think this has been the single greatest shift in perspective for me is now seeing, if I extend my time horizon, then time stops being a liability and a threat and becomes an asset. And how things compound over time now works to assist me rather than hinder me. And so I'll give you a simple example. So I have never believed in SEO, right, or really even inbound marketing. And I have had a major shift in perspective on this, probably in the last 12 months.

And the reason for that is because, you know, if your first 12 months of doing, you know, SEO, and I'm saying that as a general, as a catch-all-term, really just any inbound marketing, and that is not paid advertising that results in people because that's technically kind of still outbound, right? You're putting ads out there and then getting people to respond rather than basically pool-based marketing where you're putting,

you're creating a waterhole for people to come towards, right? And so I've never really invested. invested much thought into inbound stuff at all. I mean, the only example of that is really this kind of vlog slash podcast, which I never did for really any business purposes. It's just more for me to document my journey. But nonetheless, thinking about this in terms of that perspective of, and I've been talking to people who were like, oh yeah, we have this, you know, it's taken us five years to build this asset, but now this asset creates 3,000 applications a month for our for our software or for our whatever, right?

And I think to myself, I'm like, man, just building a machine that just consistently, month over month, creates more and more and more inbound interest is just wildly compelling to me. And so I think to myself, okay, sure, we're going to have our outbound things, both outbound in terms of manual outbound with people, call, call, call, email, et cetera, you know, cold DM,

but also we have our outbound with paid advertising across platforms. But the kind of the third piece of this is, what can we, quote, invest in that if I did it over five years, I believe it would be unreasonable for me to not have built another channel that is reliable and sustainable and enduring. And so you'll probably see some more things for me in the next 12 months along that line because I think it's really awesome. And I want to use compound growth to my advantage rather than as a hindrance, rather than as something that I compare myself to and feel always inadequate. And so what I think that the shift from the CEO to investor mindset has helped me with is the stress that I put on myself for like quarterly goals and looking at someone

else who might have started at the same time as me and is doing better than me. Because then I get to think to myself, okay, but we're not comparing ourselves now. We're comparing ourselves to what's going to happen in 20 years, right? Will their company still be here? And I'm trying to build something that endures, that lasts, that maybe even can be passed on to a future generation. And I don't think those were ever thoughts of mine when I was starting my entrepreneurial career,

and I wish they had been. And so I don't know where you're at right now, but maybe if you can take that perspective and think to yourself, what could I create that, and what tasks did I do? What projects could I invest in that? Even if they don't pay off this quarter or next quarter, or even the next 12 months, I think that it would be inevitable that I would have a disproportionate payoff five years from now. And obviously that begets the single greatest constraint that most

people have, which is they can't do anything consistently. But I believe I can do things consistently. And I think that many of the people listening to this can do things consistently. And so if you have that character trait already, you've developed that discipline. I feel like using that discipline to invest in things that are going to create disproportionate returns is a good use of time, right, for us. And so I'll give you a real example around this. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words. We can out more entrepreneurs, make more money, feed their families, make better products and have better experiences for

their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask to do is you can just leave a review. They'll take you 10 segments or one type of the thumb, it would mean the absolute world to me. And more importantly, it may change the world or someone else. We're looking at doing an initiative on the gym launch in our gym launch company related to just generating more inbound applications and whatnot. And I was talking to our GM about it. And I was saying, listen, let's not think about that for like this quarter. I mean, we can start now, but let's not measure the ROI until, you know, next year. And I don't think I would ever have said something like that.

a year or two ago. I don't even think it would even be a thought. But it's it's been wildly freeing because there's so much less pressure around initiatives and I think it actually improves the quality of the initiative and the execution of the team because they're not immediately being like, oh, it's been a week and it's not working so we're failing, right? And so let me give you another really good nugget that I've had recently around this, which is rather than looking at week over week, month over month, sales growth, instead I asked myself the question, what one thing, if I tripled it in our company, what non-sales related, you know, what non-revenue related thing, that if I were to triple it, it would be unreasonable to believe that my company

would not triple as well. And for me, that was inbound qualified, or I'm saying inbound, but just number of qualified applications generated. That was a metric that I was like, okay, sometimes when you're increasing the number of applications that are coming in, you have a new salesperson or new sales team, and their close rate is low. It happens, right? It's part of scaling a business. But over a long enough time horizon, it would be unreasonable for me to believe that if I were to triple my number of applications, I would not see a proportional increase in sales. And so what's interesting to me is that if I can, I've never actually thought about a leading indicator, because I have, leading indicators on churn, which is like customer activation. And I talk about that and other stuff. But I've never actually had a leading indicator on growth, which is fascinating to me that I've never had this, which is like hilarious. But actually measuring the number of sales accepted leads, and so that's defined as a lead that

the sales team accepts because they showed and are qualified, right? They are the type of person who we can serve, you know, they have the size business that we work with, you know, and they showed up and they have interest. right. So that would be a sales qualified lead. And so trying to say, I want to increase sales by 5% a month is a fine goal. The thing is that there are so many other variables that can affect it in a short time horizon like that. Whereas saying, I want to increase our number of inbound applications by 5% per month is far more consistent and reasonable to do. And so if you thought about like a line, right, if I increase, I know that I can increase through consistent activity,

the number of inbound applications, either through adding more people to outreach, creating more channels for content. And then, you know, obviously there's the paid side, which is you can add another platform, et cetera, right? And so if I draw that line, that is something I can consistently do. And so when I'm thinking about growing my business

and hitting a goal like tripling it, right, in the next five years, and I think, okay, well then let's take our sales qualph, sales qualified leads, right? And let's draw that as our line. And that's going to be our baseline, right? That's what we're going to focus all our attention on. The day-to-day activities around that, those are going to be like the stock market, right?

They're going to be up and down, up and down, up and down. And I think most of us are looking at such small time horizons. It looks crazy. But if you look at it from an investor's perspective in terms of years or decades, then you can really see the truth. And the reason that a stock will go up over a decade is simply because of the true economic value that a company is providing, right? And so for me, a leading indicator of growth would be the number of interested inquiries that we get.

And so that is actually going to be my primary predictive metric that I will be driving because I know that, of course, we're going to change processes. Sure, we might change CRMs. You know, we might change our funnel or our sales. Like all these things are small things. But if I can simply increase the number of qualified applications of people who want to, for example, grow their gym, by 3x in the next five years, then I can reasonably believe that I would be able to achieve it.

And thinking that way, it's just been amazing. And so that is what I'm dedicated to doing. And some of these smaller projects, which for me were like, well, this thing isn't going to double our lead gen, so I don't want to do it. I've really shifted my perspective on that. And so I'm now looking at reliable inflows.

It's like, okay, well, I think this one thing can generate us 20 new clients a month. that's not huge for us, but it's, it's noticeable. And so, okay, well, then how much does this take to invest in that? How long do we, you know, and let's start it. Let's start the, let's start the snowball, right? And so that's one of the, that's what I was talking to my GM about. And so we're actually going to do this initiative that I think will result in about

20 new clients a month. And it's going to take us time to get there, but I, but I think it's going to be really, really valuable for us, right? Over the long haul, especially. And so let me just take a quick look at my, notes real quick because I wanted to make sure I'm not missing anything for you. Do to do. Yeah.

I think that's, I think that's my biggest thing, right? That's pretty much my message for what my biggest perspective shift has been is thinking about a five-year time horizon, shifting from CEO to shareholder, shifting from CEO to board member or advisor, and thinking about it over those time horizons. And I feel like if you can just make that change, I wish I could explain to you how much less stress I have. Because if, you know, the company goes up by a little bit or down by a little bit one month over another month, it just doesn't affect me. Like it doesn't affect my life in any way. And I feel like I had my ego so, and this is actually the last point that I had in my notes, which is my ego is just so much less impacted by the fluctuations of the business that it's just phenomenally increased my standard of living.

I'm just really not that stressed about things. I just can't even express it to you. And so, anyways, this has been probably the biggest lesson of 2020 for me. And obviously, 2020 for us was a, our profit was cut in half. We did, I think, 13.4 in profit last year, and we did, I think, six this year. We're getting a final book. But around that this year in profit, which was technically my lowest year of profit in a while. And, but I can truthfully tell you, it really doesn't affect me because I know,

with some momentary business disruption because of a pandemic that disproportionately affected my clients than many other industries. And I don't think it would be unreasonable for me to believe that over the next three years, that we would not only recover but grow past where we were before.

And so in thinking about that, anyways, it's been, it's just viewing time as an ally and not an ally or an asset, not a threat or a liability. And once you can, when I can hitch my car, to something that is inevitable, like the passing of time,

then I feel like you're aligned with forces that will grow you without your permission. And so anyways, I'll leave you with that. I hope you have an amazing day and keep being awesome. Catch you on the flip side. Bye!