The Game with Alex Hormozi - Don't keep starting from scratch | Ep 328

Episode Date: September 7, 2021

Match the market, not beat it… then you become rich. Today, Alex (@AlexHormozi) talks about why we shouldn’t keep starting from scratch in business, why growth doesn’t always mean “new”, and how creating constraints can make it even more interesting.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: (1:23) - Entrepreneurs desire novelty. Redefine growth as creating something new.(4:40) - Create challenges without destroying the business: new systems, understanding constraints.(6:44) - Time constraints make business flow more interesting.(9:28) - Sacrifice time to get time back. Stay ahead in the game.(12:04) - Sacrifice first now to learn how to not sacrifice later.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

We desire novelty, we desire challenges, we want growth, right? But the thing is that we think growth means new. 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. This video is for all my friends who are doing, you know, $1 million, $3 million, $5 million a year and who come to me and are always like, man, I want to challenge. This is so boring.

I want to do something new and exciting. And so let me tell you a story about my neighbor. And so my neighbor had a trash business, all right, trash collection business, about as boring as it gets. And he sold his business a few years back for a lot of money. I'll just put it that way. And I was walking one day and he was like watering his lawn. And I was like, hey, man, you know, what's going on? And he said, I just got out of my non-compete.

And I was like, oh, that's awesome. So, you know, what are you planning on doing? He was like, well, I plan on doing the exact same thing again. And I was like, wait, what do you mean? He was like, well, I plan on starting another trash business and selling it right back to the guys who bought my last one. And I was like, what? And like, he could tell that I was kind of like confused by this. And he was like, why would I learn something new?

He's like, I already know everything about the trash business. He's like, I'll just do it again. And it just really hit me because I was like, so many entrepreneurs, myself included, right? And I made this mistake so many times earlier on in my career. We desire novelty. We desire challenges. We want growth, right? But the thing is that we think growth means new

when I think that a lot of times we could redefine growth as meaning we develop the character traits to be able to persist and continue to do the same things over and over again, right? You don't see these real estate moguls, for example, being like, man, I've built, you know, $20 million in real estate. I kind of just need a challenge. I'm going to start a restaurant, right?

They don't do that. I mean, think about how stupid that would sound to you. You're like, dude, you're so good at real estate. Just keep doing real estate, right? But I see this, especially in the marketing community more than anything, is this need for constant change and growth and challenge, right? But I think you need to redefine the challenges. This is becoming hard for you because you're getting bored. So the challenge is learning to, A, be comfortable with boredom or B, not need it.

Because the business doesn't exist to satisfy our internal deficiencies, right? That's usually where most of us build it. We're insecure. We need connection. We want status. right these are all the things that we build our business to solve but our business doesn't actually need to solve any of those things it just needs to provide value of the customer and then we try and extrapolate our or project our own needs on the business and in so doing break our

businesses and make the wrong decision and so let me tell you a different story so i've had one two three different guys tell me uh in the in the internet marketing space who i say one's doing 15 to 20 million another's doing about 10 million another's doing about 10 million a year um probably in the the neighborhood of like three-ish million in profit per year around there three to five and so each of them on their own reached out to me and said hey man I think I'm going to start a software company because I'm not I'm not challenged enough doing this anymore right and I thought about that and I just thought how kind of hilarious it was it's like I've risen to the top of my game I'm bored doing what I'm doing and so I'm going to stop doing this and then I'm going to enter a new arena where everyone else has been doing

that for 10 years and there are other kingpins in that arena and I'm going to try and relearned everything from ground zero and then try and beat them. Now here's what's interesting, right? Here's what's crazy. If you were to, let's say, make $100,000 a year in your business and you decide that you're going to be a true entrepreneur and it means you're never going to quit and it means that you're going to continue to do business for, you know, 40 years or whatever, right? If you were to gain at the same pace as the marketplace, which, by the way, when you're smaller, is really easy, right? It's 10% a year. If you were to grow by 10% a year, by the end of the 40 years, you would have a gazillion dollars, right?

But most people are always trying to beat the market when in reality, if you just match to the market, you would become extraordinarily crazy wealthy at the end of this game. But because we are so frenetic and we have these insecurities that we project on our business and then force our business

to solve our own personal issues, we end up breaking the thing that is actually working just fine because we have these interpersonal needs that we're trying to satisfy. And this was very hard for me to learn. I'm saying this because for me, this was a mistake that I made over and over again,

probably for the first four years of business for me, I tried to make my business solve my personal problems when it really just needed to solve my client's problems and I needed to do with my own personal stuff, right? And so one of the things that I wanted to give you was the ways that I create challenges for myself within the business without destroying the business. So let me give you two different things that have been complete lifesavers for me. So I have desires for innovation. I have desires for new things, right? And so where to channel that is not to create new businesses. Where to channel that is to create new friend ends or new backends.

So meaning like, how can I change the hooks? How can I change the creative? How can I change the ad ideas, the marketing, the front ends that bring people in because the more variety I have there, the more different types of avatars I'm going to attract and ultimately grow the business. So you can use that entrepreneurial ADD, but use it in a way that's going to serve you, right? And serve the business without rather than breaking the business, right? Whereas if you start creating more businesses to satisfy your ADD, then what ends up happening is, well, you know, you have lots of businesses and you don't have any money.

And so that's the first thing. The second thing that I do that I will walk you through is understanding constraints. All right. And so I, one of the lessons that I've learned over the last 12 months is multiple metrics for success. And so I'll dive more to that in another video. But basically, for a very long time of my life, the only metric for success that I had was how much profit and how much profit and how. how much increase in net worth I had at the end of the year. That was it. It's all I cared about. And I think that as we've gotten to the point where like an increase in net worth, the marginal

utility of more money, meaning like the amount of extra good that I can purchase or that more money can purchase me is very, very little, right? There's nothing that an extra $10 million or an extra $50 million is going to purchase me that the first, you know, 50 isn't by me, right? There's nothing, right? That it can, there's nothing that I can't already get, right? And so when you think about things like that, right? You, what it forces you to do is create different ways to win, right? Because it's a game, right? If you're entrepreneurial, then you should, especially if you become more successful,

you'll see it as a game, right? And so you have this game that we're playing and we have these metrics for success that originally are just increasing net worth, right? But then you can say, can I increase my net worth and have a good marriage? Can I increase my net worth and be in shape, right? And so one of the constraints, that I'd like to offer you as a challenge to give to yourself so that you don't get bored in the business that you have

is a constraint around time, right? And so that was one of the things that I did over the last 12 months was like, okay, I want to build something that does a billion dollars a year in revenue, which is the goal for the portfolio. And transparently, we're not there. You know, we're at about $85 million a year across our portfolio.

So we're still a little short. But it's a good thing to focus on. Hey, Mosin, a quick break, just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right, so send me a connection request and note letting me know that you listen to the show and I will accept it. There's anyone you think that we should be connected with, tag them in one of my or layless

posts and I will give you all the love in the world. All right, so let's get back to the show. Now, the thing is, is that I don't want to make, and the way that I have to make that is I can't, I'm not going to outwork to get to a billion, right? You have to make good decisions and you have to let compounding work in your favor, right? Because if we have the 85 million and we grow by 10, percent a year in, you know, 20 years will probably be there, right? And so, well, let's see, a doubling would happen every seven years. So 21 years would be double, double, double. So that

would be two, four, eight. So eight times 85, no, we'd still be. So we'd have to be like 28 years from now, we could be it. If we just grow at the market rate, which is pretty encouraging, I think, because I think we can beat the market rate. But anyways, the point is, adding constraints makes the goals far more interesting. Because I think the first level of achieving any goal is, is learning how to sacrifice everything to achieve the goal, which I think candidly, I don't know many people who are super successful who haven't done that.

You have to be able to put everything you have on the altar of success and sacrifice it for what you want. Some people may not like that idea, and that's fine. I just don't know people who are ultra successful who have done that. And the reason they are willing to sacrifice everything is because the deficiency they have in their soul

is so great that the pain they're suffering from is like for not having the thing is so great that they put everything else on the altar for their success. And I know that I did that firsthand. And so I remember even when I was growing, growing into this entrepreneurial role that I didn't tell myself, I'm going to outwork everyone, because I didn't even think that was realistic. I said, I will out sacrifice everyone. So my competitors are going out to dinner. One of my competitors are hanging out with their kids.

My competitors are hanging out with their wives or being good husbands. I was like, I will get ahead. That was what I told myself. And it worked. But at a certain point, and this is why multiple metrics of success are important, the new goals that I'm setting have constraints on it. Because anyone can just sacrifice everything to get what they want. But the question is, can I build a billion dollar a year revenue portfolio working two or three days a week? Right. And can I do that also while being in competitive, you know, competitive shape physically, right, and working out one to two hours a day because I like it? Can I do all of those things? And so this is kind of the new levels of challenge I'm doing rather than trying to break what I have and going, doing 10 other new things.

it's like can I add constraints the existing game to make the game more fun for me without breaking the machine because ultimately like the machine doesn't serve to it doesn't exist to serve me it exists to serve the customer and making sure that I don't conflate those two things has been a very valuable lesson and so you know one in the very beginning for me I'll tell you this story when I when I started the first time where I really saw success was when I learned how to sacrifice so I was saying sacrifice earlier So I'll tell you how I actually learned how to do this. So when I was in college, I ended up pledging a fraternity, and it was a very hard

pledging process, hard being like time-consuming, right? And I think we had to basically every hour of the day minus three hours and minus class time. So we had three hours of study hall, and we had whatever our class time was, all the rest of the time we had, during the day, we had to be at the house and doing chores and stuff. And so that was pretty miserable, and that wasn't like, you know, a ton of fun. But what ended up happening was I end up getting really good grades that semester. in college. And it was because they forced me to do three hours a day every single day of homework. And if you do three hours a day of work every day, and this is what I realized in college,

there's the days that you don't have work to do. If you still work three hours, you get ahead on a future work. And so I realized that for only three hours a day, if I just did that, I would, I think that that semester I got like a 383 or something like that. And so what I did after I finished pledging was I realized that all these extra hours of the day were mine. And so what I did was I was like, well, if I can just study all the rest of the the hours, then I should do really, really well. And that ended up being a really good, a really good methodology was I just sacrificed all of my day. So I basically went to the gym, went to the library, and went to class. And that was it. And I, that was it. I never worked past 9 p.m. and I went out

almost the nights of the week. But by always doing it that way and not wasting my time, I ended up doing really well. And it was the first time I ever learned how to sacrifice everything, which was everything else. I just didn't do anything besides work, workout. and go to class. Like that was it, throw on day. And so when I started applying that same kind of concept to business, it was actually fairly easy for me because I was so used to sacrificing everything. I just switched over what I was sacrificing for.

And I think that you have to learn how to sacrifice first in order to learn how not to sacrifice later. Right? Because a lot of people were like, well, I want to achieve the success you have or whatever, but I don't want to sacrifice X, Y, and Z. I just, I think you can say that. I just don't know anyone who's done it. It's kind of like saying, I want to get over the hold that money has on my life,

except I haven't made any money. I think you have to achieve something before you can give it up. I mean, Buddha, who gave up his worldly riches, he walked the middle path because he had been extremely wealthy and a prince and then given it all up and lived as a poor person and then walked the middle path. And so I think that in order for us to walk the middle path in life, we have to have achieved the thing in order. We have to achieve mastery over the thing before we can truly master it.

and give it away, right? And that's how we can eliminate the desire for the thing because we truly know what it's like to have it, right? And then that means we can truly know why we don't need it. And so I think that's, I know it didn't mean to get 100% business philosopher on you, but that's kind of where I think this goes full circle. So big picture here, multiple metrics of success. Don't change your business just to challenge yourself.

Find new ways to either create front ends or new product lines or things like that within your business that can satisfy your ADD. And if neither of those things are what you want to do, then just use constraints to create challenges in your own business that improve your life in other ways. Right. And you can always go back to my neighbor, the guy who sold his business for his trash business for a lot of money,

and just say, he's like, why would I learn another business when I'm already really good at this one? He's like, I'd have to learn everything from ground one. He's like, that just sounds hard and stupid. And I couldn't really argue with the wisdom of that. advice because he doesn't use his business to satisfy his interpersonal desires he uses business to create wealth which was the whole point so anyways I hope you found value in this video click subscribe if you did more videos like this to help you make

more money Mosey nation keep being awesome and I'll teach you guys on flip-side bye