The Game with Alex Hormozi - Don't Kill Your Business | Ep 768

Episode Date: November 6, 2024

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 and will learn on his path from $100M to $1B in net worth.Wanna scale your business? Click here.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Hey guys, welcome back to the game. Today, I want to talk about the way that you get the most out of what you do. And so right now, the people who make more money than you, I find the stat very interesting, and I'll bring it up later, but like billionaires and millionaires, the vast majority in the United States are self-made. So despite what social media and what's sight, despite what mainstream media will say, we, for the most part, are cut from the same cloth. We all started with the same amount of time, the same amount of money, and the people who make

it the furthest, simply traded that time and money for better returns. And so I want to walk you through a process that's been very top of mind for me because I've been kind of like diving back in to one of the departments in Acquisition.com. And I want to make this super real for you. So this is going to be super tactical and enjoy it. And I think that you could probably have your team listen to this and be like, this is what we're doing right now by the end of this podcast. And I think it'll give you a little bit of permission to make some drastic moves. And if you are listening to this as an employee, drastic doesn't mean bad. You know, we talk about this a lot at Acquisition not com because we believe in the theory of constraints, which is that there is always one constraint

in a business and that a business will, or any system will grow until it's, until it hits a constraint, and then it will grow no further. You actually grow by solving problems oftentimes more than anything else. You have this flow that you have to push through the pipeline. And no matter how much flow you push through, if there's a bottleneck at one point, you will not grow past that bottleneck. You will not be able to move the water faster than what that bottleneck can handle. A different prompt for this that I to encourage you, and I think this is a really good team exercise. This is especially going out for the guys who are stuck. Right now, instead of trying to grow your business, think about all the things that would kill your business. Like, what would kill my business most swiftly? And once you write down all the

things that would kill your business, prioritize them in order of the thing that would kill your business fastest. Which of these things would bring about my doom the fastest possible? And you probably have a lot of things on this list and that's okay. Once you have ordered that list by thing that will kill your business fastest, you can probably look at the top three and those are going to be, one, the thing that you should spend 85% of your time on and delegate the rest to other people in your team. But there's a peace of mind that I want to bring up about this, which I think is really interesting. If you figure out everything that could kill you and then you avoid it, like the plague, then you, by very definition, will create a business that endures.

And enduring businesses tend to, over time, keep growing. You just avoid all the stuff that kills you. And then you, by default, continue to make money, which I think is really cool. And also allows you to sleep really well at night, knowing that you have something that will continue and to persist. Interestingly, these priorities, these things that could kill your business fastest, oftentimes are hairy. They're usually harder problems to solve.

The problem is, us as entrepreneurs, especially our teams, is that people will consistently choose to do the thing that is easiest, not the thing that is most important. And so there are probably problems on that list that could kill your business in years, maybe, but it's very easy to solve it. And so your team will choose to or default to solving those things first. one of the jobs of the manager or the leader, the guy in charge, is to prioritize resources against priorities.

Okay. And so if we think about strategy as the prioritization of resources to achieve the highest return, right? That's strategy, good strategy, get more out of resources than other strategies. You can think about the richest people in the world as not having more resources because almost the majority of people who are on the billionaire list are self-made. Believe it or not, they're self-made. are self-made. So, you know, don't believe what the media tells you. Most millionaires and billionaires

got their money by making it themselves. They had the same resources that you have because they were self-made. And so they had the same amount of time and they probably didn't have a lot of money because they were self-made. And so they simply chose to prioritize what they invested those things in better than you. Part of this is not just knowing what the priority is. It's actually investing in it. I was talking to one of my directors earlier this. morning, which is what kind of precipitated this, this whole theme. I said, hey, when you ask your team, hey, you know, when can you get this done by? They give you a date and then you just say, okay. But there's a big problem with that. Because if you look at the best CEOs, the best entrepreneurs,

they don't take that and accept it. They say, okay, well, you said you would get this to me by next Monday because that's conveniently when our next meeting is. But how long will this take you and why can't you get this done by the end of today? Sometimes, and here's the crazy thing, two out of three people say, oh, I could do it today. And I'm like, well, then let's get it done today. Now, in the one out of three times where someone says, well, I have this other thing, you have this really nice opportunity to not look like an overbearing boss and say, I'm asking because I want to clear the path for you. I want to remove these obstacles from your path so that you can get this done. So I recently, I made a podcast earlier about this, but I took over a smaller department

in the company. When I asked this very question, the teammate said, and it was actually the first time we'd had a fast feedback loop. So this was a weekly meeting department that I said, cool, we'll meet again in four hours. And so it was a very different, you know, very big change and status quo. And so four hours later, I met with them. And I was like, hey, where are we out with this? And he was like, oh, well, I was, I had all these other things that I was doing. And I was like, oh, I wasn't clear. This is the only thing that you're going to do. And all of this stuff is not priority, which means you're not going to work on it until the priority is done. And so all of a sudden, he has this huge relief because he doesn't have all this other stuff he has to worry about.

But you as the entrepreneur, we have to prioritize our resources. And again, people will tend to, and I don't think this is out of malice. I don't think it's anything like that. I think it's human nature. We will go to solve the easiest problems because we want the fast feedback back loop. People like fast stuff. They want the fast win. And if you look at your do-do list, probably you're like, you know what, I'm going to knock this one out first. I'm going to knock this one out first because it's like it's quick easy win, right? It's quick easy win. The thing is that you spend many days in row, which turned into weeks, which turned into months, where you just never actually get to that top thing on your list because you keep doing all these easy wins rather than the priority,

the thing that if you only got this done, it would move the business furthest. One of the ways that I approach trying to implement this within any department, there's five steps. And Elon Musk talks about this, and I like them a lot, which is number one, question the requirements. Why do we even do this to begin with? Okay, cool. What's the lay of the land? What's everyone doing? Got it. Then you basically just ask why. I know that we color grade our videos. Why? Well, it makes for better videos. No, no, no, but, but why? You know, we get more views on them. How do you know that? Oh, I don't. Okay. Now, how many resources are going into color grading? The videos. Oh, a third of your time is going into color grading. Do you think a third of the success

of this video is based on color grading? Well, no. Because, If you had to kill this video, would the first thing or the second thing on the list be like, I would mess up the color grading? No. Well, then it's probably not the thing that we should be putting our resources towards. Right? Right. Okay.

You can use this process for anything, right? Like if you're, how would I kill a sales call? How would I kill a video? How would I kill a bit? Like you can chunk it up or chunk it down however you want. But the first step is that you question the requirements. Why are we doing all this? The second step is that you delete everything that is not a priority.

You delete everything. And if you're not sure, delete it. Because you can always add things back. And that's the thing that people miss out. Like, we have such a fear of loss. And this is the, this is the most common answer you'll get if you actually implement this in a department.

I do that because I was told to. Yeah. Well, the person who told you didn't know either because they weren't thinking either. Because they were just trying to keep you busy because they didn't know what to tell you what to do because you were being mismanaged. And I'm sorry about that.

But we're going to fix it right now. So number one, we question the requirements. Number two, we delete. Number three, now we optimize. Now we look at, okay, now we've deleted all the stuff that doesn't matter. We've questioned the requirements. We have our resources and we have our priorities. Now we optimize the mix.

So if we know that we've got a 20-person media team, for example, and we know that 80% of our views and our portfolio companies, our future portfolio companies, come from these two sources, then maybe we should allocate 80% of our effort towards where we get the highest return. Because we're getting 80% with a even, sliced mix. I'm just saying this hypothetically, guys, just to be clear. If we have an even mix across all platforms, but we're getting 80% of our returns from two, well, then wouldn't it follow that we should put more into those? Because we're getting so much more for what we put in.

So then we optimize. Fourth step is that you pull up timelines. When you pull up timelines, this is where you go from once a week meetings to two times a day meetings. And you set the priorities between those communication cycles. Those become the deadlines. And so all of a sudden, people are meeting 20 deadlines in a week rather than one. And can you imagine how much faster a team or a company moves?

And this is what people fail to understand. They're like, how's my competitor, you know, like we grew by 20% this year. They 5xed. How's that possible? Just to put that in context, a 5x versus a 20% growth would be a 25 times faster growth rate.

And people then think, oh, it's luck. but you absolutely can out-execute somebody else in your in your marketplace 25 times faster. All you do is you make the deadlines for the stuff that were every seven days every four or five hours. And it's these frequent check-ins. Now, some people would think, oh, I don't think a team, I don't think a team's going to like that. Any team where you have people who have skills want to use those skills in ways they find meaningful and where they can see impact, you are not micromanaging. you're actually connecting what they do to what occurs.

People get burned out because they get bored, or they feel like their work doesn't amount to anything. So either they feel bored, they get disengaged because they have too much time and they don't know what's important. And so, and they stop doing stuff and no one says anything. And so they just stopped doing it. And rightfully so, no one said anything.

Or they're working really hard. They put their heart and soul into something that just doesn't get used at all. Or makes the only impact whatsoever. Both of those are terrible scenarios. and you can avoid both of them by simply clearly defining shorter priorities. So what happens is a lot of managers will not do the work of translating priorities into actions. They assume that the person on their team has the skill to break that down and they might not.

And that's fundamentally one of the roles of a leader is to teach if you pull up a deadline, for example. So you say, hey, it's going to take. How long is it going to take? They say seven days. You say, okay, cool. Why can't we get it done by the end of today? Now, at that point, someone might say, well, I can't. And so then we have to follow up.

Is it because you don't know how? Requests feel unreasonable when someone lacks skill. So if I've made a whole training on that is the management diamond, right? Someone doesn't know what you want them to do. They don't know how to do it. You solve through training, what you solve through communication. They don't know when to do it by you solve through actually having deadlines. They're not motivated to do it or they have something blocking them, right?

And so those are the five reasons that somebody will not do something when we're asking them to do it. By following this, we can get to the heart of the matter much faster. So if they have something blocking them, we can remove it because that's our job. If they have a skill deficiency, then it's like, hey, is there anyone else on the team that can get this done by the end of the day rather than in a week? And if the answer is yes, great, Tom, teach Bill. And this actually creates opportunities for everyone in the team to up lever the skills that much faster. And then imagine, because you pulled up timelines on people who couldn't have delivered, all of a sudden it actually forces this teaching cycle so that now all of a sudden, your 10 editors go from having one guy who can do it in a day and everybody else who takes a week

to having all of them being able to do things in a week or sorry in a day and then after that then it's like hey who could do this in four hours because what we're doing now is we pull to the next step which is five in this process which is automated so we question the requirements why are we doing this to begin with okay then we delete all the stuff that doesn't matter then we look at what are the things that are the most important and then we allocate all of our resources that get us the most bang for the buck then we say cool now that we have all of our resources going to the right place let's pull the future forward. How do we do this in a day? How do we do this in an hour? I'm telling you, if you actually run through this process, you will be amazed by the amount of times people who are

like, oh, yeah, yeah, I can do that. I can do that by the end of the day. I just didn't know you wanted it by then. Well, yeah, because if we just shift from end of week to end of day, we seven X the speed of execution for this team. My God. Think about this way. Most people, when they want to grow a company, they think they need to add headcount. So they think, oh, if we want to do more, we have to add more people. And oftentimes, that's not the truth. Not only do you, when you add people, because when you add people, you absolutely guarantee a cost. You guarantee the cost of communication efficiency. You have to incur a cost of added loops of communication, added layers of hierarchy within a business. And those costs are both real in terms of operations, but also real in terms of hard costs.

People will belabor for months about a $5,000 a month software subscription that they're like not sure about, but we'll hire a $60,000 a person without even thinking, without even considering, is there any other way we could solve this problem? Is there any other way we could make this happen faster? Is there any other way we can give you the output on this team? First, why are we doing this? And if you've been for, this is a little bit more for the bigger business owners, but if you've been far away from an apartment, you will be amazed the amount of tasks and work that people will generate for themselves because they don't know any better. And they will waste money. Now, to them is not waste because they're just getting money for themselves and whatever. But to the business, it's absolutely waste. And I think that, I think I speak for the,

for the people who are getting paid, I think that they would rather work on stuff that they know will actually make a change and actually improve the business and improve their skills. There's a lot of hesitation with first, you know, front line and new managers. Well, I don't want to seem, I don't seem overbearing. You're only overbearing if you don't clear the way. You're only overbearing if you don't help someone get the skills to meet your demands. But the people who have worked for Steve Jobs, the people who work for Elon Musk, the people who work for Bezos, they say, man, those guys are demanding, but I did my best work there. At least for me, I would rather be that season of someone's life where they're like, I did my best work under Alish. I did my best

work at Acquisition.com because they had standards. There were so much higher than everyone else says, but they gave me the resources to meet them. I learned more there and I grew more there than I did anywhere else. I think this is this is a wildly misunderstood concept and I know I'm getting out of my purview. I'm talking about management leadership stuff so this this more belongs to Leila. But this just felt so pertinent because it's been it's been obviously top of mind for me because I'm doing this stuff right now. I felt obligated to share it with you because I think that many of you could not just double or triple but you could five X the growth that you have in the next year not by hiring more people but by getting the people that you have to work that much better and that much

more aligned and not give them five things, expect them to prioritize it, and expect them to break it down. They're not going to do that. So you have to say, these are the things. The thing is that you also have an information advantage. A lot of the people who are two layers down don't know what the business priorities are or they know them just from one slide deck that was at a monthly or quarterly. But you do have full and complete context with the business and you're like, no, dude, this is super important. And sometimes even letting someone know, no, dude, your job is super important. Here's why. Oh, I had no idea. It's like, yeah, dude, this is important. It's like, oh, shit. I would have prioritized it. Yes, and that's what I'm asking you do. And this happens as you scale.

This is just one of the things that occurs. It's the pruning of a tree, right? Like, tree grows off, branches grow off all over the place. You got to prune the tree. You prune the tree so it actually gets healthier. You prune tasks. You prune projects. You prune processes. Because a lot of times process will just naturally emerge. It's like a weed. A lot of people think process improve things. A lot of times process makes things worse. We want to weed the processes out. We want to weed the garden of all these tasks because maybe there's a whole third of your department dedicated to something that absolutely drives the value. And to put this as an extreme example, Elon came in and cut 80% of Twitter and nothing happened. It has grown more and faster since then. The very

obvious answer is that they were actually doing nothing that contributed to growth. Now, to be clear, that doesn't mean they weren't doing anything. It just means that they were doing nothing that contributed to growth. Let's say using that color grading example, color grading is something that that absolutely, quote, improves videos. But for the outcome of the business or the outcome of the media, do we demonstrate that our return on color grading if we took the same resources in time and put it into, what's the big idea of this video? What's the hook for this video? What props can we do to visually demonstrate the concept of the idea? That we would not get higher returns on doing that than the color grading. Well, then if you did that, then it would be a wise reallocation of

resources, rather than making a new investment, which is what most people think, oh, I'll just take more money out of my pocket and bring someone else in, well, you probably are spending money out of your pocket right now on shit that doesn't matter. That's my efficiency messages of the day. Question the requirements. Delete, which doesn't matter. Reallocate or optimize against the things that drive the most throughput. Speed up feedback loops, pull forward deadlines, and then finally, automate at the end when you can actually have this down into the most chunk down because you've pulled up the timeline so fast that people were forced to create many templates and processes for themselves that you can get the thing to completely automate it and then it runs.