The Game with Alex Hormozi - How I've Changed The Way I Hire People | Ep 755

Episode Date: October 11, 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. This is a different style of podcast than I have been doing. This is audio first. You may or may not have realized that a lot of the audios that I have have been taken from other platforms. And they are heavily produced and very heavily prepared beforehand. And so there is not a lot of space. There's not a lot of gaps in there. It's very tight, a lot of hard-hitting nuggets, tactics, action items. And Layla, My loving beautiful wife is a huge podcaster and listens to a ton of podcasts. And she said, hey, you know, I think you might be overwhelming your audience. And I think that if you did what you did in the beginning that grew the podcast a lot,

brilliant, right? Sounds like a Hermosian, you know, growth strategy. Hey, do more of that thing that work instead of stopping doing that thing that worked. Because obviously, just so you guys know, I started using the YouTube stock concept because we prepared it so much. So I was like, it's growing everywhere else and it makes sense to use that. also because it's a time commitment. So it's both sides. I thought it would be better. And also, I prepared a lot. This is an experiment that I'm running right now. I would love your feedback.

If you prefer the style of content, obviously you haven't heard the podcast yet. But if you prefer the style of content, if you can tag me on Instagram, it would mean the world to me. And if you share it, again, less so that I'm like, oh, I really need to grow the podcast audience. My audience has been fairly, I've maintained it about a million downloads a month for almost 14 months. And so it has been good enough to retain people, but not good enough to grow. And it was growing for a very long period of time. And the difference is I was making audio first content. And so despite the fact that I feel like I'm barely sleeping right now, I am going to try and prioritize doing this because I actually really do enjoy the documentation style of like what's top of mind for me, but I haven't been

doing it as much. Instead, just trying to teach stuff that has worked for me in the past rather than what's working for me right now. That being said, the first major topic that's top of mind for me is on hiring. And I have had, I don't want to say a revolution in my thinking, but I've had a second layer filter, which has been equally powerful that I never really thought about until now that I am now applying going forward and I think is going to be already is showing a key to tremendous growth for us at acquisition.com. And so just for context, we've tripled our team in the last year, which is a lot of growth. And I think we'll probably triple again by this time next year. And so having really good frameworks around how we see and appraise, the value of talent has been really, really valuable for me.

And so I'm going to talk about intelligence, work ethic, and experience, how you value them, and which one to look for when you're growing the company. Hey, what's going, everyone? I have a number of topics that I want to cover in the next few podcasts that I'll just be making podcasts. and they are more strategic business stuff that is kind of like what's top of mind for me right now. And I kind of want to share those lessons with you, just kind of real stories that have happened in the background that you may find helpful.

And so if you do like that stuff, then please tell me. Otherwise, I will do more of the other way. All right. So with that being said, let's dive in. Big picture, I have changed my tune on how, I think about hiring and I think this is pretty material. When I started out I hired anyone with a pulse and then over time I was able to hire people who cost more

and realize that people who cost more oftentimes are better not always and that the price that you are willing to pay someone is just a way of shortening how long it takes you to find them more than it means that you help find a better person. So let me explain that really quickly. So if I say that I want to pay, you know, $40,000 a year for a particular role. I may be able to find someone who's absolutely perfect for that role. I just have to find someone who's perfect for that role who's willing to work for that amount of money. And that may mean I might have a hundred times the interviews. And so in order to decrease the amount of interviews I have to take, I would increase

the compensation, which decreases the work. But if you are starting out, then it means that you usually have to overcompensate by looking at more people so that you can afford the talent. But you don't want to lower your bar, you just basically means you have to work more to find them. So that was kind of like the early trajectory of my life and thinking around skills and talent. Now, over time, I was able to pay people more and more. I had my first $100,000 dollar, then $250, then $500, then a million, then multiple millions, whatever. And so I've seen what money can buy. Now, the thing is, is that once you can afford all talent, it doesn't mean that you necessarily should. And so let me break that down. So I used to say, hey, you know, at some point you want to hire for, you know,

been there, done that. You want to hire for more experience. And I think there's elements of truth to it, but there's also another big thing that's kind of dramatically shifted how I see talent overall. Big picture, if we think about, you know, attitude, aptitude, all of these are just skills, right? So if someone's, you know, very kind, and that's a bucketed term for many smaller behaviors, they smile, they nod, they call you by name, the things that you would then describe someone as kind when they do these things. And so it just takes less effort to teach someone a skill like how to work leads than it does to teach someone to be kind. And so you're always essentially hiring for the smallest skill deficit. And so if you use skills as the only litmus test,

then that first theory pretty much range true, in my opinion. The hypothetical extreme on the other side of that example would be, let's say you want to have somebody who's got 10 years of development experience like coding. Well, if they have 10 years of experience, then you might have to just, it would be more difficult to take somebody who's got a good attitude and then spend 10 years getting them to have the experience than it would be to teach them to be kind. And so again, we still hire for the smallest skill discrepancy. It's just that the skill discrepancy might be what we determine as, quote, soft skills rather than hard skills. All right. And so for lower level roles, it makes more sense to hire for having the soft skills and then training the hard skills,

because there's less hard skills for that or fewer hard skills for them to learn. And then as you get more senior, then you hire for more hard skills and then you train up soft skills. And so this is kind of a, it's a dichotomy to be managed more than a problem to be solved.

But that's layer one. That's more, I mean, hey, it's gotten me here, so I don't see it necessarily as a bad thing. But I want to add another layer on top of that, which has really kind of gotten me, struck me to my core, which is when I look at the largest companies in the world, you look at the Facebooks,

you look at the Google, you look at Tesla, I look at SpaceX, whatever. They have this tremendous ability to recruit raw talent, is what they call it. So people who have raw intelligence and horsepower. And so if we think about skills as the output of intelligence, then it means that intelligence is your rate of learning. It is your rate of skill acquisition.

And the skills that you have acquired is the output of you using that intelligence. When you hire somebody who has tremendous work ethic and tremendous intelligence, that it means you have more potential for skill acquisition in a smaller period of time, which means that you as a business owner get a higher return on your invested dollars into that person than you would for somebody who has lower intelligence. And so let's say that there's 10 skills that I need someone to learn. And we've got, you know, person one has five skills and they need to learn five. But they have a rate of learning, intelligence, right?

is call it one new skill per quarter. Okay, fine. That means that after I hire them, it'll take them five quarters, so a year-end change, to get to proficiency, right? Now let's say I've get this other person who has zero out of ten of the skills, but has tremendous work ethic and raw intelligence. And with that raw intelligence, their ability to acquire skills is one skill per month. So that would be three times the rate of learning. That would mean that within 12 months, they would have 12 skills. So in 10 months, they would be as proficient as the other guy would be at his 15th month in business. Now, here's where it gets really interesting. The day you hire the person with the experience who has five, but lower intelligence, that person will do

better. But within a period of, let's see, once that person has one quarter under their belt, they'll have six, which means that they would be three months in. So second quarter, they have seven. So that means they're six months in. Basically, at quarter two, the raw intelligence person would have six skills. The other guy would have seven. They'd be about neck and neck. And so by your sixth or seventh month of hiring the more intelligent person every month after that, you would get an actual better return on what you put in. And then that doesn't even take into account that after that person acquired the 10th skill required for the job, they would be able to move up in the business because they would be able to rapidly acquire the skills ahead of

them and self-promote, which is the thing that Layla and I are a huge advocate of, which is if you want to move up in the company, just start doing the job ahead of you until eventually the promotion becomes more of a, well, we kind of have to just change his title because he's already doing all this stuff, rather than asking for a promotion and then trying to prove it. Just prove it before you ask for it. I have changed my tune to a large degree. And I'll read you this tweet that obviously because it was about scaling and real business stuff, it underperformed and motivational, whatever. But I want to read this too because I think it will kind of explain more pithily how I see this. Experience is good, but intelligence is better. We hire for experience

because we assume what worked last time will work this time. But if they had the intelligence to figure it out last time, then they'll have the intelligence to figure out this time too. And if they didn't have the intelligence to figure it out last time, but just got the experience, then the experience won't matter this time either, because this time's different. And so we have this assumption that somebody who has experience is going to be able to take whatever work there and be able to do it here with us. It's just that if they don't have the intelligence

to be able to accommodate or change or adapt that strategy or those tactics to your particular context, then it will nullify the experience to begin with. And so then the hard part becomes, well, how do you measure intelligence when you're screening people on the front end? More difficult.

And so I want to give a different, perspective, which is experience we often conflate with tenure, meaning how long have you had this title of the job, rather than what accomplishments do you have that we can clearly and prove that you are the one who is responsible for them? And so someone can have lots of accomplishments in a short period of time and, in my opinion, have experience rather than having lots of tenure. And so some people would say that I have a lot of experience despite not being super old. Now talk to my Gen Ziers and I am now an old man, but you know everything's relative. But for example, it's like I know how to scale a software company.

We've done it before. I know how to scale physical products. We've done it before. We know how to scale brick and mortar. We've done it before. We know how to scale service business to national levels. And so we have acquired all these experiences, these accomplishments that we can prove we were the ones who did it. They can attribute them to us.

When I am looking for people now, I'm looking for people now, I have to do. people now, I care far more about their ability to learn because now I have an asset that, one, you can get below market because other people aren't smart enough to hire for this, except for obviously they're really big companies who do that. And I'm a big fan of modeling the people who are making way more money than me. But it means that they're willing to pay people who have no experience, more money to start because they're intelligent. And I think that's really just been my big shift. And I'm doubling down on this. And so I wanted to make this kind of podcast to highlight, this is a shift in my behavior.

I'm acting differently going forward because of the returns that I have seen with more able, more intelligent, less technically experienced people. And, you know, it's crazy. It's like you look at a 40 or 50-year-old leader in a business. They're married, they've got kids, they've got, you know, whatever else going on. And they're like, this is a career move for me, right? And then you look at somebody who's like 25 and will practice 100 times before they do something and will go crazy above and beyond because they're all in and they're trying to learn.

And I think part of that's ego. I think part of that's personal standards. You know, I don't know what it is. But I can tell you that that 20-year-old is going to beat the 50-year-old. They will. And the extension of time horizon typically isn't as long as you'd think. because most skills that I've found professionally don't take that long to learn. There's just many of them more than any one of them is particularly difficult.

And so it's like if I want to learn how to edit video, I can become proficient pretty quickly. If I want to learn how to cold call leads, you can become proficient in like three days. It doesn't take a long time to learn this stuff. But if you learn how to do that and then you learn how to qualify and then you learn how to close and maybe you can do that in a few months, again, to become proficient, then I would rather take somebody and then teach them the way I want them to do it, rather than have them try and copy and paste things that worked somewhere else under a different context without the intelligence to be able to adapt it to the current situation. And so I think this is where a lot of,

I would call it mid-aged founders, myself included, ran into trouble, were I would hire people who had the supposed experience. They would try and copy-paste what worked before into my business. And then, you know, within a year or two, I was like, this is just not right for us. If you had to solve from zero and build it from the ground up, you wouldn't have built it this way. Eric Schmidt recently, it was the CEO of Google from like, you know, very small to very, very big. I think he's worth like 10 or 12 billion now from the stocks he had. So he did pretty well. He talks about this. And he said that one of the things that Google famously did that they got a lot of heat for was that they hired for zero experience. As in they wanted people just with, I think he said,

just wrote intelligence or raw intelligence, whatever he said. He's like, we want it just freaks. They wanted people who were incredibly smart that they knew could figure things out. And I think that when we're thinking about talent, not often enough, I have not considered the ability to learn itself as one of the biggest assets. And I continue to put more and more into that.

And seeing Facebook pull people right out of the Ivy Leagues, you don't know anything about social media. They just know they're smart and they'll work hard. And if you can find somebody who didn't graduate from Harvard and is also still incredibly intelligent and works hard, then you'll probably be able to get a deal on that person and teach them a ton. And they'll be happy to do it because people who are intelligent in general, in my experience, tend to like learning and getting better. And so that is something that we are shifting about how we are thinking through talent and acquisition

and even promotions within the business. I care zero about tenure. I care about experience insofar as it relates to speed of us getting. what we want out of the role or out of the function of the department that the person is in charge of. So if you're looking at hiring people, if you have an HR director, if you find this valuable, it would mean the world to me if you shared it with them. And if you like this style of podcast, please, like, please tell me because I will do more of it. If you prefer the more structured, more notes, denser podcast, then I can do that too. But I have, Layla said, listen,

A lot of people are driving and they're working out and a lot of your stuff is so dense that they have to like stop to write notes and it becomes really painful because they're like, shoot, I have to like do this in front of a computer. Otherwise, I'm going to miss out. And so if simply having changes and perspectives which affect your decisions kind of explain this way and a little bit more of a narrative style is valuable to you, it would help me a lot if you told me and tagged me in it. So anyways, keeping amazing rock and roll.

And I'll make another one right now for you because I got a whole big list of notes that I I want to share with you guys over the last couple months.