The Game with Alex Hormozi - How Do You Build a Brand? (on Behind the Brand with Bryan Elliot) Pt. 2 - March '22 | Ep 494

Episode Date: February 4, 2023

“I see brand as reputation, and I see reputation as what people say about you when you're not there.” Today, join Alex (@AlexHormozi) as he guests on Behind the Brand with Bryan Elliot and share his criteria on what makes a brand, what he thinks of fast tracking to financial freedom, and the beliefs he longer follows. 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.Check out the episode on Behind the Brand’s YouTube Channel!Timestamps:(0:50) - What is a deep belief you had that you no longer believe in? (8:57) - The criteria Alex uses when he hires people (16:24) - How do you create a competitive advantage? (25:49) - Is there a fast route to financial freedom?(35:49) - Definition of a brand & how do you build one?(38:34) - Final parting words of advice from Alex & about his booksFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Looking at Uncle Warren, right? He's got $150 billion in cash sitting right now. He's not worried about it. I'm like, hmm, he's seen more cycles than I have. So he's got 25% of his entire company value sitting in cash. He's waiting. 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. I want to get granular on some of this advice because, you know, again, when I started this show, It was, I was sailing right into the perfect storm of the recession. I got my ass handed to me and then had to, you know, climb back out of the pit that I've jumped into, basically. And I wanted this to be the solution for me. And it turned out to be exactly what I needed, but also for a lot of other people.

What's a deeply held belief that you had maybe three to five years ago? And it can be business or personal, but like something you really held. to be true that you no longer believe. Do you still trust people the way that you did? Sounds like I know nothing about psychology except through my own research and therapy and all that. It sounds like you had a very codependent relationship, especially with father figure in your life, right?

So naturally you had this very trusting character. Did that change over time? Do you still have that strong trust? So I think that a lot of the revelations, I think, came in retrospect more than were active decisions. I'd say the vast majority of the things where I made mistakes and stumbled into the right way and then tried to think like what was different than last time. And I think one of them that you touched on is trust, but a different version of that is like the gift taken relationships. And I think I am naturally, like if there's a on a scale

from one to ten, like one being a taker and ten being a giver, I'm naturally a ten. And tens get run all over. Ones don't get opportunities because they're always just trying to take. and people just get tired of them. The vast majority of people are tit for tatters. So you give, I give, which is like the fives, which is the vast majority of the population. It's transactional. And I think that what happened over my career

is that I shifted from a 10 to like an 8. And they've actually done a lot of game theory research on this and found that 8 out of 10 is the proper amount of give take for optimal outcome. Really? Okay. So to be clear, you're saying you used to be a giver, 10 out of 10. And now you've ratcheted that down to 8 out of 10.

And that's about the right range, you think. Yeah. You just have to know when it is your turn to take. Right. And also I would guess, because I can speak from that same experience, very relatable. I'm sort of right there with you. And I was going to ask this just for personal selfish reasons, too. Sometimes I feel like I'm always the one giving.

But then I remember that, you know, if you're truly giving without the expectation of return, then I shouldn't have those feelings, right? Because, you know, you give it. And then if it's without expectations and it's not transactional, then you shouldn't care. You know, it's interesting because, like, I spent a lot of time defining words. And so I think it's worth looking into, like, what the word give means. Because, you know, what is the difference between giving and donating? One has no expectation of return, I would imagine with donation.

Giving might not necessarily have no expectation. I don't know. Like, these are the things that I jam on. You know what I mean? So I don't know. I would normally pull my phone up, but like, let's go look the word up. Well, I love riffing on this because I think it depends on the person, and it's also, it's all about intention. It's the same reason, you know, some people give to a certain charity and they want to be known for status. Sure.

Or conscience. Or maybe it's like brownie points in the life after. Or maybe it's to feel good right now because, you know, maybe your life is trash and it's like, if I do a little bit of good, it'll offset my feeling. There's lots of different motivations, right? That's very interesting. So you think that you've changed the most in the giving category. You've ratcheted it only down to an eighth, though. That's still pretty high. Oh, I mean, yeah, I mean, you've consumed some of my stuff.

Like, it's still very, very, very much give centric. Yeah, the thing you say in every video is, I have nothing saying. So it's like, you know, the book's 99 cents, the courses are free. Like, you know, at this point I just, I would like, and, you know, is there selfishness in the giving? Sure, I feel good. You know what I mean? It makes me feel better. I do gain status from doing it.

Like, there's plenty. Like, there's always ways I can pull back to being, you know, selfish. And I probably would define it rather than, like, giving and taking is I think that from a strategic perspective, I have now noticed that it's give, give, give, give, get rather than give, give, give, give, give, or give, ask is probably. I think Gary's is give, give, give, give, give. I do prefer give, give, give, get because I think that that has happened, and that might seem contrary to what I just said about 10 at 10 givers. I think the 10 at 10 giving is giving without understanding boundaries. It's like not holding your own space. Yeah. It's like you can, like, I will give this and I will give that because I have agreed that for me, this is something that I'm willing to give and I will give it, you know, relentlessly. But it's when you are allowing other people to take from you, things that you were not planning on giving and then you choose to rationalize why it's okay. Right. Or like your partnerships, you know, totally screwed you and then, you know, you went back for more. Yeah. And I just qualifying like, I own those. Like those were my mistakes. I did not know how to structure partnerships. I did not have.

know what to look for. Yeah. You know, and they were all lessons for me. So I'm, you know, I'm grateful for them. Well, but also in your defense, it seems like you have high moral character. You have a big heart and you want to give people a second chance, maybe, or the benefit of the doubt at least. Tell that story about the deal you did with someone who you lent money and then you

invoice them or something. And it ended up being the wrong calculation. Tell that story. Yeah. So I am in wholesaling, you try and get a building under contract, right? And so someone had found a really dilapidated building that they could buy from the bank, I think, for $3 million. And so they called me up because they're like, we need $3 million, but we need it tomorrow.

Yeah, the Bank of Alex. Right, Bank of Alex. And I tend to always have a lot of cash already. So I was like, sure. And they were going to pay a really good interest rate, which is $100,000 a month as long as they carried the money, which is like 48% a year. So I was like, cool, I'm in. And, you know, from a security standpoint, it was security against the building, which had already been valued at 5.6.

they already had an offer with earnest money on the tables. They'd already lined up both sides. Had you done business with this person before? Okay. So that's why that was so important. First brush. Right. So they both personally guaranteed it. I was first lean on the, like, this is stuff you learned over time, right? I was first lean on the property and they had earnest money down from a new buyer. So like all my sides were more or less covered. Took all the risk out of it for you. Right. No brain. So I wrote the check. So my real estate lawyer, which was actually a new lawyer I was trying out, sent the invoice over once they said, hey, we've got received the funds, like, we'll send it to you with the interest,

whatever. And he had miscalculated the amount of interest that had accrued. Because they did very well on the sale. Yeah, they did. Yeah, they did. I mean, it was a great job for them, right? Yeah. You know, they borrowed three for, you know, they think carried it for three months-ish.

It was like three and a half months. So they paid 330 or $350,000 in interest. They sold it for $5,6 on someone else's money. So they made $2.6 minus the $300. So they made $2.2.3 for 90 days work. It's not a bad deal. So anyways, they sent us the money on the invoice. and they were like, hey, thought this didn't make sense because the agreement we had was this.

And so we're actually just going to send you the correct amount, which is higher than what you invoiced us. Calculation was off. Yeah. So they was like, I think they invoced 280 and it was 330. I think it was the actual numbers. And so it was down by 50 grand. And I obviously, you know, communicated to my lawyer that I was disappointed that he had not thought through it. But I probably should have looked better too.

I just didn't think about it. And his lawyer, the guy that sent the money, had advised him to not. send the extra 50 grand. He said, listen, that was his invoice, send him the money, and you'll, you know, hey, you'll make 50 grand extra. He said, you know what? Like, I want to do deals with Alex in the future. And this feels like a very short-sighted move. And so he sent the money. And he did end up getting more goodwill for me from that move. And so, you know, he was the one who ended up saying something to me when he flew out to like, we did like a celebratory dinner. He said, you know, my dad always told me that you only get one name.

So invest in it accordingly. And I always thought about that. I thought it was a really good line. Just like, you only get one name. Like, you can change your companies. You can go bankrupt, but like your name stays with you. And so that can either be an asset or can be a liability. Yeah.

And why not have it be a huge brand, have brand power into itself? Yeah. Yeah. What's that line like, integrity is what you do when no one's looking. Yeah. Right? And who knows? You could have been sending him up.

I could have. Right? And then what happened to that lawyer that you hired? Oh, yeah. He's gone. And how about his lawyer? He's also good. So, I mean, that's a super good lesson about, you talk a lot about in your videos, how you hire people.

Yeah. Not based on skill per se, first. It's all about moral character. Yeah. Refresh us on what those are. So we look at, I mean, for us, the values that we have at Acquisition.com. And I think it changes by the type of company that you are. For us, it's unimpeachable character, sincere candor, and competitive greatness.

And so there's the only three things. And we look for them pretty much in that order. And most people flunked the first one. So we don't have to really look for the other two. But when you think about an unimpedic character, for me, I like the Navy SEALs test that I was told. This may not be true, but I like the test either way, which was not only like, in their world, it's like, will this guy give me give his life for me? That's not what I'm expecting my teammates to do. But bear with me.

He said, but that's the ticket to entry to be Navy SEAL. He's like, but Team 6, it's, do I trust this guy with my wife? when I'm not there for a long period of time. If I give this guy a huge amount of money and just say, I'll be back for it. I don't know when, but I'll be back for it. Will it be there 10 years later? And so if you ask those types of questions, like harder questions, and the favorite one that I have from Warren Buffett that he got from a Holocaust survivor

was during the Holocaust, like, would this person let me in? And so I think that those are hard questions, right? And I'm not saying that I'm expecting a teammate, but they give you frames on how deep someone's character can go. We assume that there will be hardship in business because it is a hard game. And so that is guaranteed. And so it's just a question of when, not if. And so we try and run out the risk on teammates and portfolio companies by asking ourselves the hard questions before they are in urgent need. Would the Alex now hire 20-something Alex under the same scrutiny? From, I would probably just ask me a lot of

questions. So I probably would have found that it was not, I would have noticed that he probably saw me as a father figure and was like, this is probably not healthy for this kid at this point. And given the level of ambition that I think he has, I think he will outgrow the role in a very short period of time. I would either have to tie him into some sort of, you know, I don't know, I would have to figure something out or I would say, listen, man, I think, like, why don't we do it one to your internship or something like that and just like going your own? or I would probably, you know, it would just really depend on what the little Alex wanted. But, I mean, it would just be asking questions, honestly.

I mean, it sounds like you're saying no, that you wouldn't hire him. It's because I know him. And so, I mean, I think that, you know, some people need to be number one. And, you know, we look for that. And if that's a need, then I would probably pass. Right. Have you ever been wrong about someone's character? Yeah.

I mean, like now, now that you're more. 100%. You know who's unbelievable? Layla, girl does not miss. Like, I am still more trusting. I am still more like, you know what, he was having a bad day? Or like, you know what? Like, maybe, like, I still will try. Because I think I empathize a lot with people who are in difficult situations because I have been in them and I understand the difficulty. Layla just doesn't give a fuck. Layla just sees through people. It's crazy. Like, I mean, even when we like check in with our portfolio companies, like this just happened. We had a portfolio company recently. We check in regularly and whatnot, obviously. And the CEO is on. We're like, anything to report? What's new? He gave us normal stuff. And we got off the call and she was like,

he's not telling us something. I was like, what? Like, you know, like, I mean, it's fine to me, right? And then lo and behold, we, like, we find out that there was some, there was a big problem that they hadn't told us about. And it's just like, she just like doesn't miss. And so I do lean on her a lot with that stuff. So our single rule of marriage that's helped tremendously has just been, if we both don't agree, we don't do it, whatever it is. Whether it's an investment, it's a hire, it's a strategic decision. I have overridden her one time. And it was when I was starting Allen, the software company, which is our third company after just. We had gym launch, prestigious labs, which our supplement company. And we had Allen, the software company. And I really wanted to pursue

this opportunity. And she didn't think it was smart, given the resources and the team we had at the time. She thought they were stretched too thin, et cetera. And I, and I, I kind of bulldozed and was like, we're doing this. And it blew up. I mean, we were at $1.7 million a month within like six months in that business. So I felt very validated that I had made the right call. But on the longer term, time horizon, she had seen that there were some flaws in the model

and some things that I hadn't foreseen. That ended up, you know, biting us in the ass. And so I go back to what I said originally, which is if we both don't agree, it goes the other way too. It's just I tend to be the us guy. Yeah, that's healthy. I actually got the same advice when I got married, because, you know, you either succeed together or you fail together,

and either one can actually be great. Yeah, it's together. You're never divided. Can I ask a personal question? So do you guys have joint bank accounts? I gave her my bank accounts two weeks and dating her. Okay. So they're completely joined.

Yes. And she takes care of the money because she's good at that. Yeah, okay. So you don't have separate accounts and you don't. I don't even have a login. I don't even know how much money we have. I really don't. I get one email from her, from her e-exam.

EA every week that just has our balance totals between all of our assets. And that's it. And I just scroll on the bottom. I look at the number and I'm like, cool. She could make it up for all I know. I have no idea. I could be poor. I could be broke.

And I could just somehow, somehow I just live and my credit card always goes through. So I have no idea. I don't think that's true. You're like the optimist and she's the realist? Like you're out there, you know, seeing the vision, what's possible. And she's like bringing you back down to earth like, hey, you know, let's get real with this. Yeah. Depends on the circumstance.

It depends on what we were talking about. So I think the subject matter matters, whether it's people, whether it's friends, whether it's a business decision. I think some of those matter. Like we tend to, but I would say maybe in general, I think like with a very broad brushstroke with exceptions. She tends to be more conservative, I would say. And we always joke like if it were only Layla, we would never have any businesses. And if it were only Alex, we'd have too many. Yeah.

Well, that seems like complementary skills, the yin the yang. And I'm guessing also that she doesn't like. surprises or uncertainty. No. And I think we, I will say this, though, I think we now over-indexed to both of those polls more because we know the other person exists. So like if Layla somehow we're hit by a bus tomorrow and I were taking over all of our affairs, I know that I would correct towards the middle. I'd be like, I want to do this. She probably, like, I have a pretty good gut feel for what she would say yes to, but I'll still, I'll still push it just again. And sometimes I'm surprised, I'm like, oh, you are, you do, you do think this is good? I'm like, all right,

let's do it. Sometimes I just throw them out there as softballs for her to swat down so that when I when I really want one, you know what I mean? I'm like, you did say no to all these other ones. I was like, so I feel like it's time. You know, I love that. I don't see like a little dialogue bubble. Like what would Lela do? You know, it's like that runs through your calculation. Her pickers, unbelievable. Like I think we have a very like, Warren Buffett, Charlie Munger, obviously, you know, we're married. But like, Charlie always says no, Warren wants to pursue it. It's just like, I think that's, it's very natural to have somebody who's going to try and pursue opportunities and somebody else just like, is it core? Does it align with where we're

trying to go? Yeah. No, I love that story of, you know, you basically got married for business first and then figured out how to navigate the rest. That's super cool. Yep. We were living together five weeks after we met in motels, in one room. Okay, Alex, here's the one for you. You talk about competitive advantage. How do you create competitive advantage? The easiest is just information, like just know more than the other person. And how do you do that? I mean, aside from... It's usually doing more and doing more research.

It's both things. And a lot of times doing more is the research. So like, if you think about every business that exists, and that's a very broad statement, but I think I can back it up. They all exist based on information arbitrage. One party knows more than the other party. So even if you're like, I remember I said this

and there's a bunch of comments. And they were like, well, I own a cattle ranch. How is that information arbitrage? I'm like, you know how to farm, you know how to raise steer, and you sell it to people who do not know how to do that as profitably as you do. Yeah, you know how to run that business and you know how to do it profitably and you sell it to people who don't know how to do that. Because if they did have all the knowledge you had, then they would just do what you're doing and do what they're doing, and then they would swallow up the supply chain. And that's what vertical integration fundamentally is, is you eat up all the other aspects of the supply chain for within your vertical. Well, and information arbitraises an interesting and spot on, but also it makes me think sometimes making it more efficient,

time saving is a key. Maybe, you know, all the information is, I know how to get six-pack abs. Okay. I just haven't done it yet. Yeah. Right. So I know probably as much as you do about how to get six-pack app or how to, you know, you know, get the guns. Yeah. But maybe you've got a shortcut or you've got... Which would mean I would know more. Yes. Yeah. You're right. But I say that in terms of information arbitrage between a buyer and a seller. In terms of how to create value, that's a different question. You know what I mean? Like, how do I communicate value to a prospect? That's, you know, the entirety of persuasion and all that other stuff. In terms of like, how do we pursue opportunities, which is the subject that I'm going to write a whole book about, but like opportunity

itself, which is just like this big word that people like to throw around, like, what is opportunity? How do you have a good opportunity versus bad opportunity? The number one YouTube that I have a video I have on my channel is I touch on the topic. But I see it as three variables. So you have the total number of potential units to sell. which some people will call TAM, right, total judgment, but how many units of this widget could I potentially sell, number one? Number two is what is the value to cost discrepancy? So how much profit can I potentially make solving this particular problem? And then number three is what are the competitive dynamics within that marketplace?

So an example that has two of the three would be like, what if I wanted to sell cell phone service? Lots of people need it. How much it cost me to add an additional customer is very, very low. So very high gross margins. but what are the competitive dynamics? Well, there's a lot of really entrenched players. It's very hard to get into that, right? And so when I'm looking at an opportunity, I want to see all three.

Now, the difficulty with using those three is that that equation can evolve over time. And so if you're starting a business right now, you might not have, you know, sell something that everyone in the world can buy, right? Actually, there's probably not many things that everyone in the world can buy. I was talking to a, they sold Cangan Water. It's like an alkaline water. And, you know, I was talking about their tam and they're like, everybody, everybody drinks water. I was like, yeah, but no one's buying a $2,000 water machine. So the tam isn't everybody. It's people who are foo-foo enough to buy $2,000 water machines,

which is a much smaller of the 7 billion people on Earth where 80% of them don't have internet. I don't think your tam is as big as you think it is, right? But as you get into business, you learn more, and then you realize that you can expand your market in one way or another, and I could get into the different ways you can expand your market. Yeah, give us a little taste. The one thing I remember from maybe one of the things that you taught me was to think about the scalability of those. Yeah. 100%.

And the scalability comes, there's the entrepreneur component, which is like, you know, skills, traits, beliefs, which we can hit in that if you want. But then there's the scalability of the deliverable, which is like how do I create a deliverable that is more scalable? If you think about my trajectory, I first, and I had a job, right? And then I started selling fitness services

because I was a skill that I learned. And then I got other people to do fitness services for me. So this is all levels of leverage. So like opportunity is just a fancy word for leverage. And then after that, I sold licensing, which was with media, right? So my incremental costs were basically zero, right? Every new customer was very low for me to, to, didn't cost me much to add them, right, compared to how much money I can make from them. And so with, you know, the different iterations of fundamentally the same skill set, I knew how to get people in shape. That was the skill set. Right. I added in learning how to market, learning how to sell. And those were things that added

value, right? And that was when we get into the, the entrepreneur, skill, straight's beliefs, like that was from that side, but that is why I was able to climb the opportunity ladder and gain more leverage on the opportunity that I was pursuing. And with regards to how do you increase your total adjustable market? So there's four ways to increase it. There's five ways to adjust it. So the first four are the same. Don't worry. The fifth one's just the last one. So you can go upmarket, which means you're selling to bigger versions of the same thing. So let's say I was helping hair salon owners. I could help people who have chains of hair salons. I could help franchisors or licenseors of hair salons. It'd be a much smaller demo, but they'd be much bigger clients. It'd be enterprise, right? I could go down market,

which would be selling smaller versions, which would be like, I could sell hairstylists. Right? If I want to go down market from there, people who aspire to be hairstylists, right? So it's like a pyramid. So you go up market, you can go down market. You can go adjacent market, which is what's similar to hairstylists that probably has similar wants and needs. So probably be like lash salon or... Yeah, salon. Yeah, yeah, exactly. So that would be an adjacent market. Or I could go broader. So broader is where you take all adjacent markets under one umbrella, which would be beauty. Right. So it would be like, I help all beauty, tight brick and mortar businesses, right?

That would be going broader. And so there's the four ways you can increase the total trustable market of whatever thing that you're serving. The fifth is you can go narrower. So I say that you can increase it four ways. The fifth is you go narrow where you get more, more specific about the constraints that you apply to the requisites to become a customer.

The reason that most times with businesses that I take on in the portfolio, it's actually the first step we do is we actually narrow it most times. And it's because they don't even know who they serve. And they don't know who they serve best. And so when you're starting out, one of the best practices you can do is the fancy word is a common factor analysis. But basically, what are all the best clients we have have in common? So if we take 100 clients and we look at the top 20%, because there's Pareto, they're probably responsible for 80% of the revenue anyways. We look at that 20%.

We say, what do they all have in common? And then what if we only sold that amount of people and we sold now the same hundred, but they were all of that 20%. Well, we would 5x our revenue. Same operational drag because it's the same size company. But we're selling better customers. And I get on with entrepreneurs all the time And they're like, I think I've saturated my market And I'm like, all right, what's your, what's your revenue?

They're like, two million bucks a year. I'm like, okay. Well, the market you're serving is a $60 billion industry and you are making $2 million a year. Little room to grow. Do you feel? Yeah, I was like, do you feel like you might be premature? Or you just don't know how to get more customers.

They're like, well, I guess I don't know how to get more customers. Like, that's a problem that's solvable. So let's solve that. Right. And so then we can break down. There's a million ways to get customers. So I can break that down too. Yeah. Is there a certain type of business or industry that you gravitate to for the acquisition?

Yeah. So we work with business services, consumer services. Ideally, businesses that are e-learning, course, like I love licensing models. So I love low overhead. Yeah, high cash. Yeah, yeah, exactly. Yep. And the problems that those companies typically have, and we take them on usually between three and ten million is when we, like in top line sales is when we start working with them. The problems that they usually have is that it's two-family. under let. It's two personality brand driven. They don't have enough customer lifetime value, as in they sell something one time and they can't get people to keep buying. They can't get people to stick. They have high churn. But they typically have high cash flow, but it's very dependent on usually one or maybe two channels of acquisition. And so we will kind of lay out our

five-year plan to getting them from basically a company that has almost no value to getting to like 30 to 50, maybe $100 million in enterprise value. And a company that has multiple acquisition streams, has an extended LTV. The LTV allows us to have all these different acquisition channels, but it depends on the order. The order which we solved them depends on the business. Would you have to pay for the domain, Acquisition.com? Was that expensive? Yeah, it was $400,000.

Oh, yeah, not that bad, actually. Yeah, no. I looked at marketing.com. It was $5.6 million. Okay. I thought about that. I told Layla, I sent her a proposal. I never email.

I don't email. I don't check email. If anyone ever emails, I don't, I won't read it. So, just let you know. And I literally said a proposal, I was like, so, I was thinking. So I price anchored with marketing.com. And then I was like, we could also get, Acquisition.com, which is 400 grand.

She was like, well, that seems much more reasonable because I anchored 5.6, but marketing.com, I still sometimes think about because I do like that. I like that domain. But the thing is, is the reason I ended up doing acquisition wasn't even for the money is because the type of people and portfolio companies that I am looking for use the word acquisition. People who don't know business, not don't know, but like everyone knows what the word marketing means or thinks they know what the word marketing.

Right. It's a little bit more general. Right. People who are trying to scale their companies, talk about cost of acquisition. And so it also had the double entendre of we, you know, acquire minority, you know, stakes in the companies in addition to helping with acquisition. So I kind of like that component, too. Yeah, 400 grand. I mean, it seems like a steal because I think I was like five or six years ago Zuckerberg bought FB.com for like $8 million or something like that. Just like probably also a great

deal. Yeah. In retrospect, yeah. Interesting. All right. I got a couple more zings. I'm telling you, I could sit for hours. I think a lot of people want to know this. The answer to this next. question, which is, what is the fastest road to financial freedom? You talk about everything you're doing on YouTube. I have nothing to sell. I'm doing it to help people who you know are broke. You've got assuming $10 plus million sitting in the bank today. Maybe thanks to Lela, closer to 15, I'm guessing. Oh, I went more than that. In cash. Way more than that. Okay. And talk about that too. Like why cash is. I think everything's really fluffy right now. So, I mean, I sold three companies last year and a house and two cars.

So I sold everything last year. Okay. Yeah. So you're you're looking at what's happening, predicting. There's inflated pricings. I mean, a lot of people are really afraid of inflation, and I think that's super warranted. I don't know. I think it's just like, that's a purely like, this is like looking at Uncle Warren, right? He's got 150 billion in cash sitting right now. He's not worried about it. I'm like, hmm, he's seen more cycles than I have. So he's got 25% of his entire company value sitting in cash. He's waiting. And that means, I mean, to be clear, it's not working for you. It's not earning, I mean, it's earning a tiny amount of interest compared to what you could have in stocks or investment properties. So a little inflation is not

going to kill me. But like when you look at the NASDAQ during the crash in whatever 01 or whatever the year was, it dropped by 78%. Right. So that would be significant. It would be significant. And so I think just given the timing, I'm willing to wait a little bit and see what's going on. And I also am very close to a transaction. So I'm not going to like immediately allocate all the money. That sounds like a bad idea. And so that is why I have more cash than I probably would normally. Yeah.

Do you see yourself coming? Like, do you see yourself, they talk about this scarcity mindset? Do you think that's rooted maybe in your family story, which is, you know, your dad basically had to reinvent himself as the doctor coming over from a different country? I don't think he has scarcity, your mindset. I don't think so. Wasn't that the reason he was worried about you choosing this path? I don't know if it was scarcity. I think it was fear. I don't think they're necessarily the same thing. Fear of losing anything, right? Like fear of not being able to provide or... Of not being successful. I mean, I think my dad was afraid of what me being a failure would reflect on him.

I don't think it had anything to do with scarcity. I think it's just like he was afraid that it would look bad on him. 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. So then back to the quickest road to financial freedom. I mean, the first answer that can't, like the bullet, like the quick answer was knowing

thyself, right? Which is a lot of people, because right now entrepreneurship's cool, they won't be cool in a few years when everyone loses everything. And so that'll probably calibrate a little bit. And so I think it's just, it's just the one thing that you go. always protect yourself with that, and this is something that I have learned from my, you know, Iranian family is, you know, when the revolution happened in Iran, we talk about legacy, lands, buildings, houses, bank accounts, everyone just says those are ours now. That's it. There's your

legacy. Go on. That's why I'm like, and people are like, I want to build a legacy. I'm like, the U.S. might not even be the superpower in 500 years. Your kids might be in Bangladesh. Yes, who knows? India might be the hot spot in 500. No one knows, right? And so that was a touch on legacy. But skills are the only thing that will always appreciate in time and work in compound in concert. So when they work together, if you know how to do math, then you can learn how to do accounting. If you learn how to do accounting, you can learn how to do tax work. You can fare how to insurance works. If you're insurance works, then you all of a sudden you're a CFO and you can prepare companies for sale. Like the skills stack on top of each other. Specialized skills are valuable. Independent. of the currency or the economic climate. And so if you are good, you will always have a place to provide value because people want good stuff. Prices may vary. Currencies may vary, but people will want the things you have if you are good. And the only way to get good is to work. And so I think that a lot of people spend a lot of their time in paralysis trying to figure out what the, quote, ideal opportunity would be when you won't know what the ideal opportunity is because you don't

have a baseline. And I believe that research is done through doing. And you learn a lot of more by doing stuff in action and then you will gain the insights of where the opportunities lie, which is why accommodator comes up again, what they look for in past founders, one of their criteria for a successful business is past experience in the industry. And that can be, I just wrote a tiny blurb about this in the book that I'm writing, that can be tangential. Like if your dad owned a mechanic shop or was a mechanic, you probably know a lot more about cars than you, than like, to you, it seems obvious. But like, I don't know anything about cars. Nothing. Nor do I really have the interest. But like if you wanted to get in the space, you probably have some level

of knowledge. Some people look at just the whole world and they're like, I don't know anything, but this is maybe a good like, but I think it's better to have some level, because usually we have learned stuff in our lives, whether we like it or not. And starting in the, in every industry that your parents, your cousins, you worked in, there was massive opportunity. It just depends on how you structure it. Right. So like, let's say my first job was I was a blender tender at Smoothie King. It's the first time I got. Blender tending, not a very good opportunity. Right?

I'm probably not going to scale that. Managing there, probably not either. Owning the location, a little bit more leverage, because now I've leverage on labor, right? Owning the franchise, much more. Right? And so like all industries, if you go high enough up, and this is the rule of thumb for anyone,

if you want to see where opportunity exists, look at the businesses that have been here the longest because they make tons of money. The only reason they would exist is because they can exist during downturns. The only way you can exist during downturn is you make tons of profits all the time so that you can weather it. J.P. Morgan's been here for longer than anybody's been alive, right? Some of the big insurance companies. Why is insurance so profitable? Because you pay them for nothing. Right. Like pay hundreds of, I mean, it depends on what it. Like you pay thousands and

thousands and thousands of years for something that may never happen. And they just know how to appropriately value risk, assess risk. Excuse me. And so wonderful business, right? Insurance. The point is, It's like I've now learned to see this as like when I see big businesses, the bigger the business, the more I realize that there's probably a very high gross margin opportunity. So you look at the biggest companies on the stock market, look at what they're doing. The base unit that they're selling typically has tremendous. Like the biggest company in the world right now in terms of profit is like Exxon. That's the number one in terms of nefrey cash flow that's created.

Isn't that crazy? Like people are like Facebook. No, it's excellent. Why? Because they drill water out of the ground and they sell it for however many $100 per. Right? It's not water. It's oil.

but it works the same way, right? And so, and that's a massive overgeneralization, but like, you get the idea. And so Facebook sells eyeballs, which costs them basically nothing. Google sells eyeballs that costs them basically nothing. And so all of these types of businesses, and this is where people get into the ethics around capitalism and whatnot, but like you sell for what the market values it at, period. And your goal as a business is to drive your cost down as much as you can, right? As long as, you're still long term greedy, which is if you drive them too low or you don't pay people well enough, you introduce new levels of risk, which then long term, you actually lose money. So that's when you get into the long-term short-term like CEO ship of publicly trading

companies and stuff, which we don't need to get into. But like if you, if you were to only own the company and you could not ever exit and you made your decisions with long-term greed in mind, then you usually make the right calls. And I'll say one last thing about the how to how to get freedom. Biggest mistake that I see young people or people who are young in the game making is that they want to become millionaires in 90 days. And when most times you could guarantee that you could become a millionaire in a decade. But you have to be willing to not be a millionaire for nine of those 10 years. And if I had everyone signed a contract that said that when they were 20, they could all be millionaires from their 30. But no one's willing to do that. And so what happens is for the rest of their

lives, they keep chasing the shiny object over and over again and keep battling the same boss and losing. So you're talking about taking a thousand dollar paycheck and taking 300 of it and putting it into savings and living on less, living under your means for nine years and that compounds and that, you know. I mean, there's the investment side. And I'm not, despite having a high net worth, I'm not an Uber investor. I've made my money with businesses. I haven't made my money investing.

And so for people who are starting out, the know-thyself pieces, am I going to be somebody who has entrepreneurial tendencies and could potentially own a business? Business ownership is the best way to create wealth. It's also the best way to lose wealth. which I hopefully illustrated at the beginning of this. And so it's high risk, it's high reward. And so, yes, it is the way to, it is the way to the most wealth. It may not necessarily be the way to the fastest wealth.

So, like, if you're, like, I think most, most guys who have entrepreneurial tendencies could make 200,000 a year, 300,000 a year becoming excellent at sales. Like, if you just learn that skill, and that skill translates to all aspects of life. Most people who are in business know how to sell at some level. They know how to sell investors. They know how to sell their teams. They know how to sell someone to recruit, to bring on the, like, you have to sell. And so I think for most people gaining that, I think those initial jobs are undervalued for your ability to learn.

And so a lot of guys are just looking for the perfect job when the perfect job is the assembly of maybe three or four jobs that you have to gain skill sets in different areas. And I think Warren Buffett said at best, that's probably a good wrap up, which is whenever you're working, you should either be learning or earning. So either you're working for the paycheck because it's material. to you or you're working because the incremental increase in knowledge is material to you. But it should check one of those two boxes. So this show is called Behind the Brand. What do you think the definition of a brand is? And how do you build a brand?

So I see brand as reputation and I see reputation as what people say about you when you're not there. So that is your brand. I think a lot of people take a lot of time to try and build their brand. But I think you build your brand inside out. So what is the Alex Formosie brand? Well, I mean, I would say it's aligned with the values that we have. You know, it's unimpeachable character, sincere candor. I try and be honest with as much as I possibly can.

I try and do the right thing as much as I possibly can. And competitive greatness. Like, within the rules, like, we will play and we'll play to win. And I don't need to know your current net worth. I'm sure you shared it. Yeah, we're about 100. Yeah. And so.

So are you going to say that. Well, so do you have your sights on a, particular goal? Are you trying to get to a billion? Yeah, so I have two goals on the horizon. The first goal is to get Leila on the Forbes 100 for self-made richest women. So we only have to have 250 million to get her there. So that's like the immediate goal. Okay. How far away is that? Is that 150? I mean, like, is it a year away? Is it? No, I think, I think realistically, I think we'll get there in like 36 months. Yeah, I think we'll get there in 36 months. You know, the next goal would be, would be billion. And that's just because, like, if you look at how the high, this is actually kind of funny for

anyone who's curious, the way net worth is broken up is you have high net worth. So high net worth is one to five million in assets, investable assets. Very high net worth is five to 30 million in investable assets. And then 30 to a billion, big range, is ultra high net worth. And then above a billion is a billionaire. Those are the four, those are the four net worth categories that exist, right? So that for me, it's like we're all trying to earn worth. now. And so, you know, getting to the billion, I guess, is the next thing. But all the while, we realize that we're doing it for no real reason other than for the love of the game. And because the mission of the company, and so like if you talk about brand, I told you about our values,

but the mission is to document and share the best practices of building world class companies. And so that's why we make the books. That's why we make the YouTube. That's why we make the courses. That's why education will be a core to everything we do. Because what we're doing also, that matters most to us. Let me ask you a follow-up question, which is, why is that Forbes 100 list important to you for her? Or is it her goal? I think it's more, it's definitely my goal.

Why is that important to you? I think it's cool. I think, like, for really no other, like, I think it's cool. Yeah, and it's a vanity metric. Sure. Yeah. I think it's a trophy, yeah. Why not be awesome?

Like, that'd be cool. Yeah. And I think that's a good enough reason, because it'd be cool. Okay. Final parting words of advice? Dan Sullivan said something that I really like. He said, wanting something is reason enough. A lot of people trying to ask you to justify why. Why do you want that? Why do you want to date that girl? Why do you want to start that business? Because I want it. Like, that is the reason. I want to.

Yeah. Or maybe because you can. Yeah. What was the last question? You said? Final parting words of advice. Oh, part of words of advice. You're writing this new book. Maybe let's ramp into it that way. So the last book, you sort of left off where some of your last videos are, give us a preview into what the next chapter is, what the next book is about. So the next book tentatively is titled $100 million leads because most people had to fix their offers, which is the title of, which is $100 million offers was the first book, which is what are you actually going to present to a customer in order to get them to give you money? The second thing that happens after people have that and people start giving them money

is they want more. And so they want more people to present to. And so they need more leads. And so the subject of that, the title of the book is leads. the subject of the book is advertising, which by the definition is to make known. So how to make known. So you've made a shift recently, which is, you know, you used to basically buy leads or buy advertising.

You know, advertising by definition is to spend money to make known, right? By definition, it's to make no, not to spend money, just because it's a, it's an important point. That's fair. My interpretation is there's two paths. There's direct marketing or direct response, advertising, and then there's branding. And I think I've heard you say, if you were 80, 20 advertising or direct marketing before, you are now flipped the script and you're more into branding.

Why did you do that? And why do you think that's better now? It's because you're more established. You have the money in the bank. You've done the business. I think that having the money to make enables more branding. Right. And so I actually think that branding is a higher return on advertising over a longer time horizon.

Me too. And so it just takes longer to come to fruition. if you are patient and have money, it's by far the superior strategy. Right. But when you don't have money, you need to make money today to pay for your advertising in general, whatever those efforts are to make known, then having a direct response. So I think people do end up shifting over time. Like Seth Godin is famous for being a hardcore direct response marketer.

And then being all about branding now, Gary Vee was, you know, more direct response. Built on, built the Wine Library on PPC from Google is more about branding. And I feel like I've made a similar transition. But I think you have to like, it's almost like, you. You have to discover it yourself rather than be told it. It has to become real for you. And then it has to click. And so for me, I feel like branding has clicked in terms of my understanding of its value

overall. It is more difficult to measure, but it is absolutely, like when you look at Louis Vuitton and Bernard Arnau, who's the owner, right, he's worth $150 billion or whatever it is now. He's the only one who's not a tech guy who's all at the top of that list. And it's because he's built a brand. He's able to sell a purse that cost him $100 for $8,000. Right. simply because of a brand.

And that's like, so what is his return on on advertising, probably higher than people who are at the hardcore direct response, you know, funnel, you know, upsell, down, so blah, blah, blah, like, just, you know, buy two purses for one off, like that's direct response. Whereas it could just, you know, branding could just be a picture of LeBron with a Louis Vuitton handbag or whatever. Yeah. I mean, so your opinion, you're right aligned with what I've heard from everyone else. And I had this conversation with Seth many times. Yeah. Yeah, yeah. And, well, I said that direct response is sort of like the tortoise and the hair. So it's the hair's race is the advertising or the direct response. And you're right.

Sometimes you need to fill the funnel because you've got to keep the lights on her or you're, you know, you're bleeding out $3,000 a day. And you've got to get those leads that convert to sales. And then if you can do branding, it's like the tortoises race, slow and steady, but it ends up winning the race. And he said, if you want to know whether or not you have a brand or not, you know, you know, People will pay extra a premium for a brand. And he said, if you go into most hotels and you, you know, don't look at the marquees, look at the carpet around the walls, if you don't know where you are, you can't smell it, you can't see it, you can't taste it, then you don't have a brand. You have a logo.

And a brand is, you know, he used the example of Nike in this story. He goes, you know, if Nike built a hotel, you could kind of imagine what that might look like or smell like or feel like. And, you know, the same goes for our personal. brands.