The Game with Alex Hormozi - How I Would Invest $1000 If I Were In My 20's | Ep 429

Episode Date: September 1, 2022

You have to duplicate before you replicate. Today, Alex (@AlexHormozi) shares with us a very simple but effective mindset shift when it comes to where you should be investing your money, what you should look for when getting mentors, and the long-term benefits of skill stacking.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:(1:44) - Investment decision crystallizes income growth belief.(3:08) - Making money: Provide value, solve problems for others.(7:31) - Investing steps: Save, invest surplus, enhance earning capacity gradually.(10:29) - Learn from experienced, credible individuals. Duplicate before replicating.(13:59) - Measure progress in skills before dollars. Build skills foundation.(17:42) - Learning skills exponentially grows, leading to increased compensation.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Whether you are a business owner or you're an employee, you are the owner of you and you have customers. If you're an employee, your customer is your boss and the business. And to be fair, if you're a business owner, you have two customers. You have the customers who pay you and the customers you pay. The wealthiest people in the world see business as a game. This podcast, the game, is my attempt at documenting the lessons I've learned on my way to building acquisition.com into a billion dollar portfolio. My hope is that you use the lessons to grow your business and maybe someday soon partner with us to get to $100 million and beyond. I hope you share and enjoy.

I was at Brooks house and she had like seven, 20 to 23 year olds at her house. All right. And so they were working like kind of interns for the summer, like making social media for her. And so they asked me one morning, one of the guys was up early and he had a, he had a job at like some financial thing. So he was doing like private wealth management calls trying to like build his book of business. And he was like, so, you know, I've got my 401K and I've got, you know, whatever stuff. And it was cute.

And the thing is, is like, I'm guessing he's making 60 to 80,000 to 80,000. a year. That's my, that's my guess. And he was like, hey, you know, right now I've got a thousand extra dollars. Like, where do you think I should invest it? And it was so interesting to me because, like, the perspective from which he was asking, he was looking for an investment vehicle that was going to yield him a return. And I want to be very clear about this. If you invest in the S&P 500, you invest in, you know, real estate, things like that for, you know, when you start really early and you do it for a long period of time, you absolutely will make money. And it, it's, you invest in, is a very safe way to live life. But it's my belief that the moment you start investing in kind of

the asset side of stuff, which is like the S&P or stocks in general, and you're not day trading or doing that stuff because that's, but you're actually doing it because you want to have a long-term investment. The moment you do that is actually the moment in my belief that you're actually ceasing to want to make more income. Okay. Hear me out. So I'll tell you a different example and then I'll relate it back to my man. So if you're 18 years old and you graduate high school tomorrow and you are now eligible on the marketplace because you have no skills besides your high school diploma, you did no jobs, you fucked off the whole time and you don't watch YouTube to learn stuff, which is not you, but just imagine. In two days, you could go and become certified as a phlebotomist

and go from making 750 or whatever the minimum wage is to what phlebotomists make at $25 an hour. And if you had to save up $500 working minimum wage over two months in order to afford the $500 certification in two days, you would triple your earning capacity after two days in spending $500. Now, if you can triple your income from having a weekend for the rest of your life, do you think it's worth the investment? Probably. And so the problem is that people think about the biggest investment as the stuff that they take their money and they put it into. And I'm going to be over, I'm going to be trite right now, but I'm going to be really real. And I'm trying to give examples here to really bring this home.

Your ability to earn money to provide value to the marketplace and solve problems for other people is how you will be able to make money. So there's the value of the problem that you solve and what you charge for it. The bigger that number is, the more you can charge. Because that, that gap between their old problem and the solution, that value is the percentage that you can take and put in your pocket as something that you have now created in this. And it could be a service, it could be products, it could be whatever. The end of the day, your earning capacity is going to be the thing that generates you wealth.

Okay. Now, do you want to be smart with your money and save it? Absolutely, because that gives you way more that you can play with. But when you're 20, even when you're 30, and in my belief, whatever age you are, I believe that you should take all of the excess money. And this is me being really aggressive. and I'm comfortable defending my position on this. Live as cheap as you can.

Take 100% of that excess money and invest it in education that increases your earning capacity. Because what happens is when you take that money, like that phlebotomy course, right? And you take 500 bucks and a weekend, you triple for minimum wage to $25 an hour. Okay, $25 an hour times $2,000 a year. You're now at a $50,000 all year income. Okay. Cool. Now we're at $50,000 a year.

If I can live on 20 because I'm 20 years old and I can live with buddies and we can eat ramen soup and whatever and I got 30 left over after taxes 25 whatever. I got $25,000 left over. 25 grand can buy you a lot of education. All right. So hear me out. I would rather you or I would rather me or somebody who's 20 or somebody who's 30 take $2,000 a month because that's what $25 grand is, $2,000 a month and invest it in courses and, you're going to. coaching and mentorships and workshops and seminars. And you just say every month, I'm putting that 2K. Now, you could put 2K into one opportunity because you're like, dude, I think real estate's cool.

Cool. We're not doing real estate as my passive income. We're doing real estate is I'm going to get into the real estate game and I'm going to make it my active income. And by the way, everybody who builds their wealth in real estate is in real estate. And they are actively spending their time in real estate. Don't believe what they're saying. Because they're like, dude, I did this deal and I made X amount of money. It's like, yeah, but how many, what was the process of finding deals? How many deals did you look at? How many conversations did you have? How many buildings did you walk?

How many different general contractors did you talk to to negotiate each of your fix? Oh, wait. Oh, yeah, we had to market to get tenants. How did you like, oh, wait, there isn't. And there's other stuff that has to happen, right? Point is that just because people build wealth in that thing doesn't mean that the people who are building the most wealth aren't active in the game. Now, back to the point.

Let's say that you take that $2,000 a month and you do that for four years. Okay? And you spend $2,000 every month and you do it on spending on education that you think will make you money. And I'm not saying do the four-year degree. I think that is a play if you want to. I don't necessarily agree with it anymore in the marketplace that currently exists if you want to be an entrepreneur.

And so if you took $2,000 a month for four years and you measured yourself the same way colleges asked you to measure yourself, which is that you spend $2,000 a month for four years, which is what they ask you to do for a college degree. And four years later, I fucking guarantee you that you will be making more than people who have four-year degrees do. Honestly, you'll probably start making money. by the end of the first year, right? If you do, I'm telling you, the amount of like copywriting

courses and books and programs and mentorships and even one-on-one coaching. Like, I think one-on-one coaching is a phenomenal way to learn a new skill. If you're like, hey, I need to know how to buy media. I need to know how to run an ad on Facebook or on YouTube. Go pay someone who runs ads or teaches people how to run ads. The difference is when you make that payment, you're seeing it as one class in your entrepreneurial degree, rather than this one $12,000 investment has to make me rich. If you can make that shift as like, this is my course. Like when you get your degree in college, you're not like, oh, I'm going to take one class in Spanish,

and then I'm going to be able to graduate and get whatever job I want. No one thinks that way. But for some reason, to think about that when it comes to entrepreneurial stuff, which is ridiculous. And I'll tell you why they think that. the people who were selling it feel like they have to promise that in order to get someone to buy. And I get it. I understand both sides of it. But if I'm talking to the students, I'm talking to the entrepreneurs who are trying to increase their wealth, the first step is save as much money as you can. The second

step is that you take the access between what you earn and what you need to live on and you invest that at increasing your earning capacity. And you do that over an extended time horizon. And if you do that, what will happen is all of a sudden, let's say after a year of spending $25,000 on like tutoring and coaching around specific things. Now you're making $80,000 a year. Well, now we've got $4,000 a month that we can spend on coaching and mentorships and learnings and courses and whatnot. And guess what happens? The more money you spend on it, the faster it's going to happen for you. Because it makes complete sense to borrow money from your future self, to acquire skills today. Like for example, that I gave earlier for the person who's working in McDonald's and then goes to do the full body thing,

it makes sense that she borrows $500 from her parents that day and doesn't wait two months to save the 500 bucks because here's what happens. She takes the loan for 500. She buys the new skill set in two days. And then she has two months minus two days to go earn $500 with her new three times higher income capacity. And she can pay the 500 off in a week. And then now she netted seven weeks of life. at higher income. And that trade is fundamentally what you need to do as an entrepreneur. And so one is you have to make that decision that you're not going to spend all your money on stupid stuff. The second is that you are going to spend your money not on the S&P, but on the S&Me. What? Nail it. Clip that shit.

Is that you're going to spend it on you, right? Because that thing is going to compound a hell of a lot faster than 10% a year. You can stack skills that's so much faster. And the thing is that you can double triple 10x your earning capacity. The people who are the richest people in the world don't make 2x, 4x. They make a thousand times more. And it's hard to comprehend when you're like, what is a thousand times more? Jeff Bezos made $40 million an hour last year.

It's a lot. And it's because he's playing a different game. He's playing with leverage. And so we have to take the excess cash we have that we're trading our time for, buy time with it by buying the skills so that we can compress the time rise and getting to where we want to go. Right. And so instead of going for the S&P, go for the S&Me. If you do that, I promise you'll beat the stock market every time. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words so we can out more entrepreneurs, make more money, feed their families, make better products, and have better experiences for their employees and customers.

And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you do is you can just leave a review. If it takes 10 seconds or one type of the thumb, it would mean the absolute world to me. And more importantly, it may change the world with someone else. So if you're trying to figure out who is the trustworthy source of information, like who should I go to who I can listen to and learn from how things can be credible. One is, easiest thing to do is look at the people who've been there the longest who have the most reviews. And honestly, are the biggest.

And that may sound crazy because, like, a lot of times really, big companies have older stuff, but they had fundamentals that are there. And so I would say the safest bet is to go for the thing that's been there the longest because they have still universally shown that they provide value. Right. Now, will it be the most cutting edge or the most amazing thing? Maybe not, but from a risk-adjusted basis, the likelihood that it sucks is low. Right. Now, some new hot kid might be coming out and have 10 people and want to help you out or something like that. He might be really, really good. But there's also a really high chance that he's not really good. Right. And so it's on a risk-adjusted basis, I'd rather say, like, there's a 70%

that this is a good thing. And so I'd rather take a seven, you know, then have the risk of getting a zero or a 10, right? And so one is I go to the Establish, go to the Coca-Cola. Go to the Coca-Cola classic. Keep watching videos like this for people who have nothing to sell you,

things like that. The next one is that you have to shift your expectations around it. And this is the biggest piece here, is that you're not paying someone to think that they're going to be your savior. They're not going to save you from your life. They're not going to do everything for you. And you have something to learn from everyone.

The worst courses that I have taken, I have learned what not to do. I have learned how to do things better by seeing a negative example. And so it's just like people who have parents who fight all the time and you're like, I fucking don't want that. You can still learn from that. It's still lessons. And so a lot of people, you know, want to put their little, you know, sissy hat on and be like, man, you know, like, that wasn't the value that I thought I was.

It's like, just don't get in that headspace. Now, if you're the business owner, by all means, fix your shit. But if you were the person who's going through it, you can always think, like my belief for myself, when I go through courses, mentorship, masterminds, whatever it is, I always think to myself, like, I'm going to be the number one student here, always. And the way that I'll do that is by out-execute it. I'll just do whatever they say, and then I'll see what happens. And I'll do whatever they say, I'll see what happens.

And so one of the key points here is that you want to replicate before you iterate. All right? And so when someone teaches you, hey, I've got this thing for buying YouTube ads. I got this way to build landing pages. I got this way to do sales calls, whatever it is, right? Something that they're teaching you. Try and copy what they're doing first, duplicate, replicate what they're doing before you iterate. Before you say, I'm going to put my Alex sauce on.

I'm going to put my Caleb sauce on it. Before you do that, just make sure that you can duplicate what they're doing because then you earn the right to make the iterations. If you can't get zero to one yet, you shouldn't be trying to get sexy because you don't even know how to make it work. So just copy it. Even if it's not perfectly your style, copy it first, duplicate, replicate, replicate before you make the iterations. And if you can make that switch it mentally and think, I will learn from everyone. I will be everyone's best student. And I will copy what they're doing before I make it my own.

Then you will be on the right path to being a good student of the person that we just picked for where you're going to get your source of information. The next piece is also like, don't expect, like I said, anyone to be your savior. No, no one person is going to teach you everything, right? I'll do my best on this channel and teach the stuff I know. But if you come in with the expectation that this person is going to teach me everything I know, I don't think that's wise. I think you say like this, if you see it as a bridge that has many bricks on it, you have to lay all the bricks. And here's the bad part is that let's say you've got 30 bricks on this bridge to make your first dollar. The first dollar has to walk across the bridge. When you're 28 bricks in, you might not have made the brick the first dollar yet. But you're 90% of the way there. And so you have to start measuring progress in terms of skills before you can measure it in terms of dollars. And so that's where a lot of people get disheartened is that they will start building new bridge.

and get two, three bricks, and then they'll start building a new bridge, two, three bricks, and they have lots of half-built bridges, and they never make it all the way across. And so if you can shift your perspective in terms of like, I'm going to acquire these skills which is going to build the bridge to get me from where I am to where I want to go, then when you learn a new skill like copywriting, you can say, okay, well, now I know how to do this part. And if you can think about your education in terms of a sequence or a pipeline, which is what I would encourage you to do, you have to think from the top down, which is like, if you want to make money, you've got to sell stuff, right? Which means you've got to find people to sell too. And before that, you got to have something to sell. So it's like, all right, the first thing I'm going to do, have an offer. That's why we have the book, $100 million offers. Figure out the thing you want to sell. After you figure out the thing you're going to sell, then you figure out how to get people to find out about it. You advertise it. Make it known to the public.

Lots of ways to do that. And if you don't know how, then that's what you have to solve for. Once you make you know to the public, you're going to have people raise their hand and say, hey, I'm kind of interested. And at that point, you're going to have to figure out a way to sell them. And so then that's where you'd start going through sales courses and things like that. And then after you sell them, you're like, oh, crap, I don't know how to fulfill. And then you go through things that go towards product and customer service, customer success, et cetera.

And so when you do this, think about it like a pipeline. The first thing you have to do is know what you're going to sell. The second thing you have to do is get people to know about it. And so if you don't know how to get people to know about it, then that's where you focus. And so if you're on that bridge, you look at the brick. And the speed with which people are able to traverse or cross that bridge is how well they identify which brick is missing and where they put their attention. Because this is what happens a lot of times. Someone likes copywriting.

they start writing copy and then they buy more copywriting stuff. There's nothing wrong with that. If you want to be a copyrighted, that's cool. But if you want to be a business owner, you kind of need to be a jack of all trades, master of none. And so you want to be good enough to get yourself across the bridge and to recognize what's good and what's bad. You don't necessarily need to be a 10 out of 10 on all of them.

But you need to be good enough to get it to work. So whether you are a business owner or you're an employee, you are the owner of you and you have customers. If you're an employee, your customer is your boss and the business. And to be fair, if you're a business owner, you have two customers. You have the customers who pay you and the customers you pay. So you have the customers you got to treat. And it's the same thing.

You have to have acquisition channels for recruiting talent, just like you have acquisition channels for recruiting customers. Right. And the process is the same. Application generation, lead generation. Application nurtured, lead nurture. Sales versus interviews. Onboarding for both.

Ascension and retention for both. Right. It's the same thing. It's just parallel things. So you have two customers. And so to the same degree, if you were an employee, your customer is going to be your boss in the company overall. And so the only difference will be that your sphere of problems that you're solving will be more narrow.

But what will allow you to do is you can go deeper. And so you can get, let's say you're a videographer or you like video stuff. Well, you got to learn how to, I would say, like you want to learn all the ancillary stuff around it. Because what do you think happens when you move up in an organization? You actually get broader. So think about this. When you're an employee, what happens is a business is going to limit the amount of stuff you have to focus on so that you can focus on that one piece. And companies are comprised of individual contributors who then get managed by people who are a little bit broader and more general, managed by people who are a little bit broader and more general.

And typically those people have multiple very deep understandings of those things. And so let's say you're that videographer. So now you're shooting video. Well, the next thing is that you probably want to understand editing. Okay, cool. Well, that's an adjacent skill, and it's skill stacks. And you become far more valuable if you can do both things than one individually. So think about this. Skills stack exponentially. And so imagine this human being. You got a video skill. Now you got an editing skill. Now you understand social media. Now you understand messaging and copywriting and branding. Wait, now we understand management and operations and leadership. See how to understand. that person starts to expand, you can imagine how their pay and their compensation is going to dramatically increase because now you're a CMO, right? And on top of that, we got to say, like, do you understand how to buy media? Do you understand how to optimize and convert traffic?

And so what started with a videographer ends up becoming a marketer. And then from there, that person says, huh, I wonder if I can start learning about this product stuff. I wonder if I can start learning about customer success. Oh, you know what? There's a lot of parallels between that and marketing, right? And you start broadening your horizon and going deep in these other silos, and then all of a sudden, you're an entrepreneur. And so, like, the end of the day is like, you start narrow, you go deep, and then you start stacking the skills on top of each other, and then that's where you'll get the disproportionate return because each of the skills multiply the others, some is greater than the whole. And just like Elon, the reason he's got so many big

companies is because he's an expert at so many different things that he can draw cross-departmentally into his head to create new ideas and new innovations. And you can also flip this advice if you're the person who's selling education and things like that, is that you want to go to the person who's providing the most value for free. And so it's the easiest way for you to decrease your risk of purchase. So think about this. If you follow someone's Instagram, you follow their YouTube, you follow there, whatever, right? And you see the stuff they put out and you're like, dude, this is really good. Like, this is a lot of new information that I didn't know. And it's like very tactical. And I understand, like, and I see what they're doing and how this works and how I can apply it.

then A, you already know that you like the person. B, you already know that you're getting value from the person from the content they have. And so the likelihood that the thing that they have that's paid is going to be worse than that is low. You know what I mean? They're probably going to have more attention on that. But even if they didn't, just making the financial investment, I guarantee you will make you consume all their free content and probably still benefit you. And so the easiest thing to do is follow lots of people in a particular space, follow their content, see the one that you jive with the most, you like their teaching style, and you think the stuff that they're, you think the stuff that they're they have is valuable. And the cool thing is, and this is also flipping the table if you're the guy

who's like, oh, there's all these competitors. People have different values. They have different vibes. They have different psychographics they appeal to. And so you might appeal, even if you're in real estate, right, you might appeal to a different demo or your style of real estate. Like, you might like wholesaling versus doing like multi-tenant apartment buildings. Or you might like, you know, the Airbnb side of it versus the, you know, whatever, rental arbitrage. It doesn't matter. The point is, is that like there's different flavors in all of these spaces and find the flavor that you like the most, the easiest thing to do is consume the content. But I would, if it were me, I would say, give yourself seven days. Like, you don't need to follow this stuff for forever to

belabor the decision because you know what's really even cooler than buying one person's, buy them all. And then you'll know what everyone knows. And then guess what happens? You become just as good or better.