The Game with Alex Hormozi - How Much Ignorance Tax Are You Paying... | Ep 126

Episode Date: May 2, 2019

Ignorance is an expensive cost. Today, Alex (@AlexHormozi) talks about the concept of ignorance tax, emphasizing the importance of gaining knowledge to avoid paying the high cost of ignorance. He also discusses the value of acquiring adjacent skills to increase one's value and reach goals faster.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:(1:41) - Paying down the ignorance tax(7:11) - How to acquire adjacent skills to increase your value(10:13) - Investing in knowledge: how to reach your goals faster(11:38) - Investing in learning and networkingFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Oh my god, I just spent 18 minutes rocking this piece of content and for some reason my microphone was on mute. So I'm going to do my best to actually do this again because I'm still in state for this. And so I am calling this, how much ignorance tax are you paid? And so one of the biggest costs of life is ignorance tax. And so I got this concept from Myron Golden, who when I first heard this, he was finishing up a couple days presentation, and he was closing, right? And he wrote, he asked somebody in the audience, and he was like, how much, how much do you make, sir? And he was like, I make 50 grand. He's like, okay, cool.

He's like, did you know that you have paid life $950,000 every single year of your life? Because you do not know how to make a million dollars. You do not possess that skill. And so that was like, and that was one of the closes that he had for the audience, right? Oh yeah, I'm doing it again, Terry. I'm going all in. Like, yes, my mic did not work. And I'm just going to rip and roar because that's what life is about.

So anyways, so Myron Golden, he pitches this and he says, you paid life $950,000 for every year that you did not know how to make a million dollars, right? And that hit me so hard because I think there's so many deeper roots to that concept. And so this piece of content has been coagulating in my mind. for a long time and it's just like it culminates to say it's perfect because like my freaking microphone didn't work for the first 18 minutes of this rant and I'm just going to start back in the top and do it again but one of the things that drives me absolutely bonkers right is is when I see like in our group in our legacy group our highest our highest little gym owners I see someone reading a book right it's like I'm reading how to never lose a customer

again right it drives me nuts because I can almost guarantee that that person has not consumed the content about our retention system, right? Which every single gym that has ever implemented has cut their churn from whatever it's at to under 4% within a 12-week period, right? And so we're trying to reinvent the wheel here when the wheel has already been made, right? And so when I see like how much ignorance hacks are you paying, it's one of those things that like, like if you have the information in front of you not learning is just is choosing not to learn with the information that's in front of you is the same as being unable to learn right as being learning disabled right and so like ignorance is the most expensive cost that you have in your life

like right now i'm i do everything in my power to desperately pay down the ignorance tax right and so part of this is also come from the space of like i get people all the time especially you want to ask me like, what should I do with my money? They're like, what should I be investing in? And like, it's been something that I've struggled a long time with because I'm like, I don't know what I would be investing in because like for us right now and like the answer that I'm using is not something that's relevant to everyone else because like I take 100% of the money after we got what we needed to be good after I took that out.

All the money that I have goes right back into the business because the business is growing at 400% per year. So why would I why would I not just invest in that? Like what stock is going to give me that return? Nothing. And I understand this market. rather than taking profit out and putting into a market I don't understand and getting 10% per year, maybe, right? Maybe over a 20 year.

I don't want to play that game, right? I started thinking about it a lot and a lot. I was like, what I would be investing in is knowledge, right? It's the skill set that you don't have because like 100% of the knowledge that I have now has been acquired by going out and buying stuff. And so specifically people ask me like, Alex, then, what books are you reading? And I thought more about them. Like, I don't read that many books. I really don't.

I buy courses. And I go through that. Like, that's what I spend my money on it. I go through courses and I go through them and I acquire a skill. Right. And like, for me, like, reading a book about the one thing, let me summarize it for you. It's about doing one thing, right? Like, let me save you two hours of your life.

Right. And so, like, I see some entrepreneurs getting this trap of, like, wanting to feel like they're growing, wanting to feel like they're making progress. But then they read brain candy, mental masturbation books that they can find in the airport. If you can find it Barnes & Noble, it's probably too general to actually get you an ROI on your life. Because what has to happen in order for you to make money and actually start paying down your ignorance tax is you have to take the information. I'm assuming you finish it. Well, let's just say that.

Your ADD just kick in. So let's say you consume the book, the one thing, right? And then you're going to take that one thing book and you're going to make a concept of how you think you should apply it in your business. So you're going to have a little bit of transposition here. You're going to take a general concept and apply it to something specific. then you have to consistently apply that thing to the business that is not necessarily related to the book, and you have to do that over a consistent basis, and then see if you had a measurable increase that has happened in an untested execution of a concept, right? And the reality is that that's probably not going to happen,

right? And if you actually did step all those steps and then consistently apply for 12 weeks, right, it could still not work because it might not, like you consistently tried a theory, right? And so if you, for some reason, have all of the information that is in front of you and you have not applied it and executed and gone through it, shame on you. There's no point. And so this is me, that was me just speaking to my legacy gyms, right? Like, if you're trying to read a book on retention and you have not done the retention system, then, like, what are you doing? You know what I mean? Like, stop.

Like, just do that. Like, just do that. And then do it for 12 weeks. And then, and only then, can you, like, do you have my permission to go and pick up another book? like for for your you know for increasing retention whatnot and so like Rob group was over here and he was uh he's one of our top gyms he uh he sold a hundred thousand dollars uh in in just physical product in the last quarter just at his gym right just bolting on to his existing process and um he was like yeah man i eat like three arctic zeros a day

i promise was a point to this and i was like dang dude i was like that's expensive and he was like hey man food is a non-negotiable he's like for me i've got four food and knowledge. And I just like, and that hit me because I was like, man, that's like exactly how I lived for a long period of time. And I don't see that from most people. And that's why Rob is one of our top gyms. And he will probably always be successful in life because he seeks knowledge, right? And so the answer to like, what do you do to pay down your ignorance tax, right?

Like you should take almost all the money that you have, right? After you have your base level of security, you know, don't be stupid, right? But after you have your base level of security, you take that money and you should buy the adjacent skill set to what you have. And so this video goes with the talent stacking video. This is the second half. Right. Like, talent stacking video is probably the favorite video that I've made in a really long time about how to become more valuable. Right.

Like you have one talent and then you have a second talent. And when you have two talents that put together, both become more valuable. You're good at math, kind of useful. Okay. Now you learn bookkeeping. Makes math more useful, right? Bookkeeping is better with math. Math is better with bookkeeping.

Now you have more value. Then you become an accountant. Third, third skill. Okay, now that's even more valuable. Then you learn tax law. Ooh, now you're somebody who can actually provide massive amounts of value to a business. You become more valuable. So what do you do to pay down your ignorance tax?

You learn adjacent skills, which means you take the money that you have and you pay down your ignorance tax by learning what you don't know. Hey, Mosin, A minute, 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 laylist posts, and I will give you all the love in the world.

All right. So let's get back to the show. Right. And so like right now, the big breakthrough that I've had in our business, and this happened very recently was I was like, and I, and I, I, I grovel trying to figure out what's the next skill that I need to learn, right? And a lot of times as you get, as you get higher up, and this is just something I'm sharing with you. Like, a lot of times it's not a skill that you need to acquire, but it's learning how to transfer a skill that you have. have, which is a skill in of itself. It's teaching a skill, right?

And so, like, I know how to teach sales. I know how to sell. I know how to teach sales. Right? I'm going to teach how to manage sales team. Like, I know all those things because I did it, right? But I have never ran a marketing department. I've never done that.

And so I've realized now that the big deficit that I have is that I have not taught how to market. I've taught I've given copy paste stuff, like do this, then this, then this. But I have not taught how to think. through that process so that you could innovate how to market without me. And that's been the deficit that I identified. And this is like very recently. And so all of my attention for building up our team is that.

And so gym owners just heads up all our legacy guys. Like all the I'm going to be basically sharing with you everything that I know an absolute theoretical level so that you can execute this stuff on your own. So you guys can innovate this stuff. Not necessarily have to model ours. But like understand the thought process behind each of these things. and like how like why do we choose these two images right like why do we choose these two headlines why do we choose what's the subhook like what are we looking for there like what are the components that we're actually always trying to weave in like why do we structure the funnels this way what colors are we using right like all of those things like do we compress the image files to increase the load times yes we do little trips right these are all these things that i know how to do that i haven't told anyone about because i haven't thought to do that right and so that's been my ignorance tax and so just as a just as a just as a a thought experiment for you, if you were to lose everything you have right now, right? Everything

you have. How quickly would you be able to get back to where you're at right now? Pretty fast, right? You'd be able to get there pretty fast. Okay. So imagine if you lost everything and you could get to a level 100 times or 10 times as high as you're at right now, pretty fast. What's the difference? You just have more skills, right? That's it. It's the only difference. Elon Musk lost everything. Boom, back to billionaire, like three years later, because he has the skill set to do that. Right. And so like, I, this may be a flaw. So maybe I'll look back on this 20 years from now and be like, that was a dumb video. But like, for me, at this current juncture in life, I would, I spend every dollar I possibly

can on acquiring information, every dollar I can. And what happens is if you only, only, only reinvest in that way, it eventually will start cash line to a point where you actually, You can't. You can't spend money on information because the amount of money that is coming in is greater than your amount of time to consume the information that you could potentially buy, if that makes sense, right? Like if you're like, well, I've got about $1,000 a month I can spend on information. Cool. At $1,000 a month, like, you can buy a course every month and consume it. But, like, if you start executing the thing with that course, and then you start making, like, an extra $5,000 a month a month or $10,000 a month a month, that's just for your information.

All of a sudden, that starts to get harder, right? Start making $100,000 a month extra. Then you're like, man, how many, like, I don't know, I don't have a $1,000. I could consume all the courses. And like that, in my opinion, is how you invest. Right? You invest to pay down your ignorance tax. You invest to become a billionaire.

And the way to become a billionaire is to learn all the things that you need to know to be a billionaire, which is removing all the limiting skills that you don't have to get there. And so like that's how we live, right? Like I didn't have a ton of savings my whole life. Made tons of revenue, but I invested everything back into learning, joining more groups. And like, if I wouldn't, if I'm, I'm going to think back in time, I think the two most valuable things that I've done in terms

of spending money on information, I don't think I got a lot from events personally. I got a lot from networking specifically, which I think is just as valuable in like mastermind type. I think that's like I think those types of groups where you have people who are similar to you, similar level and above is where I got the highest ROI. the other really high ROI is when I bought courses. So courses on how to acquire a certain skill. And one of the things is that you should go into that because if you buy a course on traffic,

hopefully you've gone through the talent second video. If you haven't, after this one watched the talent second video. But like, if you buy just a traffic course, you won't necessarily make more money unless that was literally the last link in the chain for you. Right? It just might be one more link that gets you closer to connecting the thing that's going to be able to allow you to pool money forward.

right but unless that's the missing link it's just going to be one more chain thing one more skill that you stack adjacent until eventually you'll get the last one or two and then everything takes off right and so like that is what i would spend my money on because that is what i got the highest ROI on if you want to pay down your ignorance tax the the millions and billions of dollars that all of us are paying life right now for not knowing how to make millions and billions of dollars that is where i would put my That is where we continue to put our money. I don't even know if I said in this video or the first one where I didn't have my freaking audio on.

But I think I spent upwards of $700,000. I was adding it up before on just extra stuff. All right. Anyways, so the $700,000 that I spent, like, that's a ton of money. Some people might say, you know what, man, if you had invested that in the marketplace, but like, maybe, but now we have way more than that because we took that money and got a huge ROI on it based on what we were. able to now make from right and now we can you know use that to make whatever we want and so that's that's that's

that's my that's my that's my that's my two cents that's my that's my thing that's been on my mind up to this point is like don't try and reinvent the wheel if you have information that's in front of you that's relevant to your business do that first don't try and read brand candy from barns and nobles about like the one thing or like I don't know the last Dan are lelli book on like positive psychology like whatever like it predictably irrational cool you know what i mean like great that's great fun mind candy right but like just use the stuff that's relevant to your business once you have executed everything that you have in that space then maybe start going out but i would still then go and acquire skills not fun like brain candy books okay pay down the ignorance tax just focus on food and knowledge um and you'll

be much better off for it so lots of love this is not as good as my first 18 minute ramp, but hopefully I brought the points on in this one with my mute not on. So lots of love guys, and I'll catch you guys on the flip side. All right, bye.