The Game with Alex Hormozi - Game Theory - Infinite vs Finite Games and how it can massively TRANSFORM your business... 🔥👨🏻 THIS IS REALLY COOL! | Ep 60

Episode Date: June 12, 2018

“The game is to outlast. The game is to keep playing the game."Today, Alex (@AlexHormozi) discusses how game theory can fundamentally change how we see and approach business, shifting from a finite game mentality to an infinite game mentality, with the objective being to keep playing. He provides examples of finite and infinite games and how understanding the difference can affect decision-making and long-term success in business.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:(1:09) - Finite games: known players, fixed rules, winning objective.(2:36) - Infinite games: known/unknown players, changeable rules, continuous play.(5:00) - Business: infinite game, goal is to keep playing.(6:08) - Winning in business: stay in the game, not arbitrary achievements.(6:59) - Building lasting business: strategic, long-term decisions.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Hey, what's going on, everyone. Happy Monday. Hope you guys had an amazing weekend, or a weekend that was hopefully as good as mine was. We just finished our Gym Lord's Summit last week, and so that's an event that we have. We had 400 or 450 gyms from our highest level group. That's actually after gym launch, our Gym Lourdes group. Fly out to Austin to come spend two days basically going over new trends in the industry. improvements to the business model,

all that kind of fun stuff. And so it was really, really awesome. And so I wanted to make a video that's totally unrelated to that about game theory, because after I had like a huge event or something like that, I want to like go and binge like binge learn. So that's what I had this weekend. I did like a total binge learning weekend.

I read like a book and a half and I went through like half of Jordan Belford's closing course. And anyways, I went through a lot of stuff so my mind's a little bit racing. But I had a, There's one great video that I watched by Simon Seneck about game theory and how it relates to business. And I thought, for me, I'm like geeking out about it.

And it's, and it really, really, really has, I would say has fundamentally changed, which is a really strong statement. Fundamentally changed how I see our business, how I see competitors and how I kind of see the landscape. And hopefully allow me to share it with you. So within the context of game theory, there are two types of games. There's infinite games and finite games. Finite games are defined as games where you have known players, fixed rules, and the objective is agreed upon. So an example, that would be like baseball.

So with baseball, you have known players, you've got two teams. The rules are fixed. They're not changing. The rules of baseball are the same. And the objective is to, you know, when the game finishes, have more runs the other person, right? Like, that's how it works. And the objective of finite games is to win.

Okay. Now, the inverse of that is an infinite game. And infinite games are, I'm like so fascinated by this. Anyways, so the players are both known and unknown. The rules are changeable and the outcome is to keep the game going. Okay, that's the outcome. That's the objective, is to continue to play the game. All right? So one of them, players are known, rules are fixed, and the outcome is agreed upon. The other one, players are known and unknown. The rules are changeable. And the outcome, and the goal is to keep the game going.

Now, here's an example of the infinite game. So the U.S., when they were fighting Vietnam, was we went in to go and win, right? The Vietnamese were playing to stay alive, to keep the game going, right? And so what happens, is that when you have a finite player versus a finite player, like baseball, the outcome is stable. It's a stable system. If you have an infinite player against an infinite player like the US with Russia in the Cold War, so here's an example there, you have two players.

What happens is the only reason people stop playing in an intimate game is if they run out of resources or they run out of the will to keep playing. Okay, and so in this case, Russia ran out of the resources to continue to play, and then the game finished. We didn't necessarily beat Russa. They stopped playing. There's a difference, right?

And so if you have two infinite game players or two finite game players, the game is stable. Now, here's where it's really interesting, or at least for me, I think it's interesting. Is that when you pit a finite player versus an infinite player, the game is unstable. And so that's exactly what happened, for example, with the U.S. invading Vietnam, right? So we came in to win. The Vietnamese came to stay alive. And so what happened there is that they're a much smaller player, right?

But because they were playing a different game, we ran out of the resources through the will to continue, right? Same thing happened with Russia when they invaded Afghanistan, right? When they went in to take out the Mujahideen. They came in. They tried to win. The Mujahideen just wanted to keep fighting as long as they could. And then eventually, Russia came out of the world where the resources to continue.

Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads. I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you

or however you found out about this podcast that you do the exact same thing. So if it was a review, if it was a post, if you do that, it would mean the world to me and you'll throw some good karma out there for another entrepreneur. Now, why I think this is so awesome. And so interesting is that when you look at business, all right, from the context of finite versus Indian games, a lot of us, myself included, sometimes we fall into the finite game mentality. And that's mostly because that's what we were raised on, right? We're raised on a finite game system, which is like get an egg, score more goals, whatever, right? And so a lot of times we will measure ourselves with revenue or whatever.

And like we'll try and say, myself included. So I'm correcting myself here. I was like, we want to be number one, right? But the reality is, under what? Like, there's no agreed upon objective. Like, I can say we're number one in what, revenue, or do you want to talk about profit, or do you want to talk about how many employees you have or in terms of how much square footage you have under management, whatever, right?

There's so many different contexts that it's just arbitrary, right? It's just like you're picking something out of thin air, which means like the whole number one thing is really just for ourselves. And at the end of the day, who really cares? Because even if you were number one under your own context, that you arbitrarily created for how long, right? And so the game of business is not a finite game, despite the fact that a lot of us and a lot of players in the space

play the finite game, that's actually an infinite game. And the objective is to be playing, right? And so if you can shift your perspective, and this is why it's like, it's totally taken on my entire weekend of thought, I'm like, oh, my God, this is awesome. But what it does is fundamentally shifts how you do business. Because if the goal is to keep to stay in the game, it really shifts from like outplaying to outlasting right and why I think it's it's like a fundamental

switch is that for me I'm super super competitive and what this this kind of game construct did for me is that it redefined what winning was right and because I like you know just like a lot of people who are watching this right now like you probably like to win right I mean you're competitive your business owners whatever like you like to win and so for me realizing that I would never win but that the goal is to keep playing has given me this like really amazing amount of peace about how to run the business and then really how to forecast decisions

and talk about like where we're going what we're going to do and not like not at all think about the short term because like if we have to do let's say we have to go buy a huge warehouse and fill it up with supplements or something right like and that's a huge cost investment for us you can look in the six month or 12 month window and be like oh wow you know this is going to cost us a lot

but if you're looking at a 50 year window right the game changes right because if you think it's going to position you well to succeed it also changes how you do personal service it changes how you manage your reputation because if the goal and like it also what it does is it takes the rush out of the game and really just forces you to put one piece in play and then the next piece and then the next piece and then the next piece and then the next piece and build on it slowly because if you're building it to last rather than just trying to say like I'm trying to outsource my gym as fast as possible right I get it but it's also not necessarily the the wisest game to play right and like and for me

I'm super like, let's do it, let's go in, probably like a lot of you. But like, if you can reframe that, it just totally takes off this self-unclosed pressure of like, I have to do this tomorrow. And the question is, why? And what happens is a lot of times what we do is we make decisions and we go too fast and the team can't catch up. And then we end up blowing up a whole bunch of stuff and then suffering as a result. And the business suffers, the customer suffered, et cetera. And it's because we're operating under a finite construct instead of an infinite construct.

And so I hope you guys found that as interesting. as I do. I think it's really, really fascinating. I'll probably be doing more talks like in relation to this because I think the concept is like so applicable because the same thing works with fitness, right? You want to have it if like people go in because they're trying to like lose a certain amount of where they're coming because they're trying to like achieve a certain body. But the real question is like then what, right? So there are always finite games within an infinite game. But if the reality is that like the goal of fitness would be to keep playing, right, staying game, then you probably train a little bit differently.

You probably train like, okay, I just really don't want to get hurt, try not to get injured. You know what I mean? Have a long term. Do I really enjoy this? This is sustainable, right? From a diet's perspective, from an exercise perspective, you think differently about it when the goal is to outlast, right? And so another place that this totally exists is like love, right? So marriage, it's not like, no one's like, wow, that's an achievement.

Like, you fell in love. I fell in love. I fell in love. Like no one cares, right? It's like, okay, well, great, you fall in love. The point is whether you can stay in love, right? The game is to outlast, right? The game is to keep playing the game.

That's the goal. And so I think it's super fascinating to me. I hope you guys found it interesting, as interesting as I do. And if not, either way, I hope you have an amazing motivational Monday. And for all my gym lords, lots of love, keeping awesome. And for those of you who are new this group, welcome to the group. and we're a gym owner. I'm sure there's a link somewhere that

can show you how to apply to work with us if you're interested in that something. Otherwise, just enjoy it. But anyways, have an awesome day, guys, and lots of love. I'll talk to you guys.