The Game with Alex Hormozi - It Took Me 14 Years to Realize What I’ll Tell You in 70 Minutes | Ep 916

Episode Date: December 4, 2025

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 ⁠

Recently, I sat down with 100 business owners where I shared tactical advice that I've learned from the past decade of business. So everything from sales to marketing to hiring to productivity and even mindset. It's I'm going to compress a decade of business knowledge that I've learned in the lessons that you can use right now. Starting with number one, you're not disciplined if you like the thing you're doing. So I'll give an example. So I used to work in the fitness industry and I had lots of fitness business owners who'd say like, I'm so disciplined because they're like, I work out at 5 a.m. every day. I never skip my meals or my workouts or whatever. But the reality was, I would then ask that same business owner, hey, have you been doing with working your leads? You know, I haven't worked in them as hard as I should, blah, blah, blah, blah. And so I would then look at them and say, you're not disciplined

because you only are consistent with the things you like. Discipline is about being able to be consistent with things you don't like. So here's me going into more depth explaining that exact concept. Do you consider yourself disciplined? What things I like. Right, so that's not discipline. Right. And so I bring this up because I obviously have talked to trainers and engine motors for a long time,

so I know how to. Yeah. I say this because. I just have a lot of people in the community that I ran be like, you know, I'd see them posting everything like, God, I'd have discipline up at 5am, like blah, blah, blah, blah. And I'd be like, you never work your fucking leads, bro. Like, what are you talking about?

You like lifting. You like boxing. That is not hard. It's like I, it takes no discipline for me to hang out with Layla. Zero, right? And so because some people don't like hanging out with their wives, doesn't mean I have discipline because I do like hanging out with my wife. It just means that they have a shitter life, right?

And so for you, it's like, you have to, this might be a muscle that you haven't used. Like you happen to like boxing and so you did more of it and people said, can you help me? And you said, sure. If you want to get to where you want to go, your frustration tolerance, meaning your ability to do things that you don't want to do without an immediate reward for an extended period of time is going to have to get stronger. And the good news is that that's a skill. It's not a trait. You can learn it. Which means you do 10 outreaches tomorrow and you're like, this sucked.

nothing happened. And you say, great, tomorrow I will do 20. And then you do 30, and then you do 50, and then you do 100, and you keep going. But I promise you, if you do the rule of 100, which is in that book, you do a rule of 100, and you do that for 100 straight days, your business will grow.

Yeah, for sure. And what's crazy is that people actually fully commit to it, and then way before day 100, they're like, holy cow, my whole business has changed. But like, you have to commit to it. You have to go all in on it. And I say, it's four hours a day. This leads me to business lesson number two.

Most already know what to do, but simply don't do it. And the main question is why? Well, number one, because of an inability to delay gratification. Number two, because they don't fully know how to do something. This is the most common reason in more successful business owners. And a business owner asks me this exact question, when all the information is available, why are entrepreneurs still stuck?

And so this is what I told him. I'd say at the most basic level, it's because of an inability to delay gratification. And so if we're just thinking about, like, why do humans do things in general? It's because they've been rewarded more for doing what they're currently doing rather than changing what they're doing. And I think that makes sense from an evolutionary perspective

that more of what you're currently doing is safe. And so people, once they find another point of equilibrium, it's very difficult for them to break out of that. Even if they're, quote, like, mentally, like, I really wish I could scale. They want to want to scale. But what they really want is to do what they're currently doing,

which is why they're doing it. And so I think being able to clearly articulate also, like, the action. So how is just like such a simple word? It's a short word, but has a lot of, like, depth to it, which is if I were to talk to a toddler and say, I want you to scale a business, they would just look at you like,

what? If you were to tell me, hey, can you scale this business? I'd probably say, yeah, I can. And so the specificity of a request is inversely correlated with the skill of the recipient, meaning if you have somebody who has very low skills, I have to say like, okay, here's how you turn on a computer. Once you turn on a computer,

then you're going to open. up Safari. What's Safari? It's an internet browser. What's the internet? Okay. Let's explain what the internet is, right? And then eventually you're like, okay, we're going to go to Google. What's a Google? We'll get there. Don't worry. We go to Google. Okay, finally, we're going to sign up here. You're going to get an email. Let's have an email. I don't know how to type. Great. Let me teach how to type. And so the lower the skill level of the individual, the more aggregate skills they have to learn in order to chunk up. And so sometimes people hear the word, oh, you just need to do outreach. But that is a bundled term that has a hundred things underneath

of it, which is like, how do I warm up a domain? How do I set, you know, what's an opener? How do I integrate my, you know, clavio with my, whatever, right? Like, how do I integrate these tools? And so, there's a hundred hows underneath of it. And they'll usually get stuck on one of the house and being unwilling to try because it's so frustrating of like, I think, I think what makes entrepreneurship feel slow is that you can try to learn something for a day and not have an outcome and then have to come back to it tomorrow. And figuring things out is by nature, a wandering activity, which means that if you knew how to figure it out, then you wouldn't have to figure it out because you'd already know it. And so people deal really poorly with

uncertainty. And so entrepreneurship, a lot of it is just the ability to tolerate uncertainty, which feels very painful the entire time you're in the uncertain period, which is what I honestly think a lot of the pain of entrepreneurship is wondering whether the investment you're currently making today, the thing you know you're going to lose, the money, the time, the effort, the sweat is going to actually pay off to the thing that you hope is going to happen. and you don't know when it's going to happen. And so it's almost like if you run a marathon, you know it ends at 26 miles or 0.2, I don't know, for you runners.

But like for entrepreneurship, it's just someone saying run. And like, I'll tell you when to stop. And even if you, like, just that idea almost sounds torturous of like just run. It's like, well, how long? It's like, run. It's like, but what if my lungs start hurting? Run. Keep running.

And I think that's what makes a lot of entrepreneurship painful. And then the idea of, even me saying this, some of you guys probably had your heart risk. Right. Even the idea of not knowing when something is going to end, or in other words, when you're going to figure it out, a lot of people just don't want to start that race. And so they know what they're currently doing.

And they get more rewarded for talking about scaling, for talking about their goals than they do for pursuing them, which involves a lot of uncertainty, pain and frustration. So this leaves me to the next lesson where I want to talk about one of the most important mindset slash skills that you need to train yourself on if you want to grow as a person and your business. And at least that's what's helped for me. And that's actually self-awareness.

So I go deep on it right now. The hardest thing for people is judgment, which is like, how do I know to listen to this guy versus that guy? Right? That's the hard part because you will see conflicting advice. And if you were to ask two people who are both wealthy, what someone should do. If you were to ask the Indian question,

which someone focused on, English might not be the first answer from Richard Branson. I don't know. Maybe it is. It also doesn't mean that his advice is wrong if it were different than mine, right? Maybe his advice is more right, no idea. But I think understanding what is right for you,

given your existing resources and skills, is probably the most valuable thing, which is self-awareness. And so I think I've always had a decent amount of self-awareness, which has allowed me to make sure that I'm picking the product, services, information that I'm consuming the most of around whatever I believe the constraint to be. And then I would say that I'm relatively maniacal

in the focus that I have around whatever the thing that's limiting me is. And so when I got into, when I was like, okay, we're going to start this family office. I think I read 15 books in like two weeks on, you know, different family office structures, different investment pieces, books by people who ran big hold coes just so I could get some better idea of this stuff. And I would say 15 books is not like a huge amount of information, but it was like just to give an idea of like I did nothing else besides read. And so if I thought that sales was the issue, I think people try to solve a problem one way. I tend to approach a problem with like, I don't care which one works.

I will do all of them violently. And one of, I will, I will this thing through. And so if like I needed to learn sales, I wouldn't be like, oh, I'll read a sales book.

It's like, I'm going to read many sales books. I'm going to consume all videos on sales. I'll hire somebody who's good at sales to teach me and review my stuff in real time. And I will keep doing this until sales is no longer my problem. And then I'll be like, more,

what's my next issue? And then I'll just bomb the, hell out of that thing. And I think people do take too little action around what the contrain is. So either they haven't properly identified the contrain of their business or they take insufficient action to solve it or both. And I see commitment and focus as very similar, like kind of sister twins, which is just the elimination of alternatives. And so I think most people are not that committed. And so I think it's really, it really comes down to that. Like, it's one of the, one of the things is really difficult to explain. And like there are a few lessons.

like from human nature perspective or from a skill-based perspective that are very difficult to see unless you're there. And consistency is one of them. So is volume. And they tend to be the two things that are most required in order to get to where you want to go. And so like you can't witness consistency unless you are also consistent in order to witness it.

So like you can't see me come to the gym every day at 4 a.m. unless you were there every day at 4 a.m. And you can't see me work all day unless you were also here working all day. And I can say it and it takes two seconds, but when you witness it and you see every single day, it has a different impact. And I think that's what a lot of people miss out on. And I talk about volume a lot and I repeat it so many times. And I talk about focus so much because like those are the things that really separate the people who end up winning. And the amount of volume that it takes is just so much more than you're prepared for.

And I think if people really knew how much volume and repetition it took, they wouldn't begin. And so I don't even think it's a bad thing that people don't understand. because like if you really saw how far away the goalpost was, you'd be like, I'm not, I can't do it. Because you can't do it. You couldn't even comprehend that because you're so far away from that type of person or that level of entrepreneur. He'd be able to do it that it seems unfathomable. But you think it's a couple steps ahead of where you are. And then you get a little bit better and then you realize it's actually this much further. But then you get a little bit better. And then you realize it's this much further. And then eventually you start to realize like when you look back at how much you did in order to get there. And you're like, oh, that's why. Now let's expand on the topic of distractions a bit more

because if you were to boil down most of the business wisdom that's out there, it's probably just two things, which is focus and patience. So I want to share some tactical advice on how I personally stopped getting distracted by all the shiny objects and new ideas that I have because every entrepreneur has enough new ideas to kill their business. So I want to provide some examples to drive that home

and give you my thoughts and how I approached new ideas. I'll tell you, I was talking to a friend of mine. He just inherited a billion dollars. His father's in private equity. He now manages their family. office. And so I was talking to him about Aguizen.com and school and some of the other things. And he was like, yeah, man, he said, sometimes the most profitable thing you can do is wait. And so I think that that might be the most profitable thing you can do. Like doing nothing is

something. It's an action. I mean, shit. I mean, how much willpower does it take to not start any things? A lot. A lot. Right. And so I think you should give yourself credit for like, I, you're baking goodwill with the business. Jeff Baisus had a speech recently that he did in Italy. some of you guys, I shared a story of it for those you follow me on Instagram, but he talked about his rate of releasing the work. And so basically he said, if I had 30 minutes, I could write 100 ideas on the whiteboard that would destroy my company. And so you have, you absolutely have enough ideas to kill your business. So what we want to do just prevent that from happening. And so this is super tactical, but for everybody because this is like really, really, really, really

dramatically changed my trajectory as an entrepreneur. I have a lot of ideas, which is like I kind of scratch my itch of ideas because I get to idea about other people's businesses, and then I go home and then I was like, you want dinner? I'm like, yeah, but I forgot that we have a business too. So I wasn't allowed. I didn't, I didn't have a way to mess that one up, right? And so, and so what I do is I honestly have a document that's called Alex's Big List of

Ideas. And every time I have an idea, I totally flush it out. I put, you know, I put a link on the dock to another doc that has a big memo that has like, this is how it would work, this is what we'd make, this is how blah, blah, blah, blah, blah. and then I keep living my life. And then when I finally see the team looks like they have smiles on their faces, like they're well-rested, they've a glint in their eye,

then I pull back out my big list of ideas. And what's interesting is that like some of the ideas that I'm like, this is going to be huge. I'm like, that's a good idea. Because you get so emotionally charged and sold on the idea while you're in the process of the idea, in the throes of the idea. But when you get a little bit of space,

you're like, oh my God, this is how other people would hear this idea. And I agree with them. I think it's a terrible idea. But every once in a while, I'll give you an analogy from the Sandra Bullock movie with the offensive lineman. Remember that one? Blindside. So she said that I actually think about this a lot with ideas.

She said, if you like a shirt, she's like, you know, don't buy it. If you go home and you're still thinking about it, you know, a week or two later, like, you should probably go back and grab the shirt or whatever, right? And so I think about that with ideas. Like, if I'm able to, like, I have this fear. What if I forget the idea? If I forget the idea, it wasn't that good of an idea. But the ones that, like, keep you up at night, that keep gnawing at you, those are the ones that, like, I'll flesh out more and more and more,

but I still have to release the work at a rate that the business can handle. And so then it gives you respect for the output capacity of the business. And then what ends up happening, which you realize as you scale up, is that manpower is almost always the limiter, is talent. Which is why you see the billionaires on stage, and they're like, guys, you've got to get a good team, you know, find good people and get out of their way. But the issue is that good people don't want to work for you, not you, entrepreneurs in general. And so that's why, like, we have to go through this kind of bootstrap phase sometimes where we have to prove that we can earn the right to get true A-level talent.

Because if you had the best AI person in the entire world, you could have a multi-billion dollar company within the next six months. The problem is that guy doesn't want to work for you. And so it's like, who do I need to become and what do I need to build in order to get that level of talent to come with me? We actually, like, a lot of, in my opinion, a lot of the entrepreneurial journey is creating the proof that then allows you to attract the talent that's required to build the next thing. Like the level of talent we were able to attract after we sold gym launch versus while we were scaling. Jim launch night and day, not even close. And so I see that as the director. And what also ends up happening is that you end up becoming a collector of talent.

And so the, like, and if you do write by people throughout the entire process, what happens is the stars stay around. and they come with you from thing to thing. And so all of a sudden, the bench of stars just keeps getting bigger. And they don't want to work with other people because they're like, we have a great team, we have a great culture, we know how we do things here.

And so in the beginning of career, you have no stars. You're the only star. And then, and maybe you're a half star. But eventually you'll get one other star and you're like, oh my God. But the reality is like, if you don't have thought like, man,

if I only had 10 of these people, I could be 20 times bigger. You will get there. It's just it takes way more not stars that you thought were stars. that you then have to fire and replace with another person that's also not a star to get another person to then replace with another person that's not a star. And I fundamentally believe that the reason that you can scale so much fast

the second time or third time around, who here has been, who here is this is not their first business? Can you get raised your hand real quick? Okay, cool. Keep your hands raised. If you, if this is not your first business and this business, you scale faster than the businesses you did before, keep your hand raised. Right?

And like, why is that? It's not like the physics of business changed. It's just because your pattern. improves. And in order to get the pattern recognition, it's like you have to just get pushed in the face a bunch of times the shitty people. And so like, for me, like, I know a vertical stack of what a sales driven orb looks like up to a few hundred sales guys. Like, I know what that stack looks like. I know what an SDR looks like. I know what an SDR looks like. I know what a closer looks like. I know what a closer manager looks like. I know what a director of sales looks like.

I know what a VP of sales look like. And they have different archetypes and they have different skills and they have different behaviors. But if you've never done it, then you hire a VP of sales and he sucks. And you hire another VP of sales and he sucks. You hire another VP of sales and she sucks. And then all of a sudden, one comes in and you're like, you don't suck. This is amazing. And then from that point going forward, either that person comes with you or you know exactly how to pattern match. And so you find the person really fast. And fundamentally, every level of the business, it's kind of like bricks, right? You keep putting these level of bricks as you scale. The problem is that only one of those bricks prevents you and sometimes for years because you are lacking

this hole and you don't know what it looks like when it's right and that's one of the big issues and so the goal is like how can I how can I be willing to have a hard conversation which means that I might like this person as a person but they're not doing their job and how quickly can I can I can close that gap so that I can replace them with somebody who's good the hard part is that we don't like having hard conversations and so it's like I mean I do like the quote like the distance where you are and where you want to be is the number of hard conversations you're willing to endure that a lot of people just aren't. So to answer the original question of like,

why don't people do what they want to do? A lot of them just can't have a hard conversation. Real quick, check this out. So if you aren't sure what strategic competitive advantage you should be doubling down on, I'd love to invite you out to one of our scaling workshops that we have here in Vegas at our headquarters and my team can actually work with you on it.

But before you do that, you can download our free $100 million scaling roadmap where you can plug into information and it will give you basically your step where you're at in the scaling process and ultimately give you the things that you can help get to the next level. But like I said, if you want help from my team, you can book a call after you download this. It's free. And we'd love to see if we can help you out.

This leads me to the next lesson. The person with the longest time horizon wins. Fundamentally, there's so much competition. Some of the only alpha that's left over, meaning arbitrage of value, exist for people who are simply willing to wait and endure longer. So let's expand on that. So I think the person with the longest time horizon wins, as long as that time rise isn't, is reversed engineered to some level of reality.

So I think Elon is the richest man in the world right now because he has wanted to build rockets, wanted to build cars and wanted to go to space since he was like seven. And so he has wanted to do this one thing his whole life and he said it in his, I don't know if you guys seen this, like his zip two, like when he was like hadn't even sold his first company,

he was like, I think cars are really cool, like electric cars. Can you imagine? And like he's talking about this, that like this has been what he's wanted to do his whole life. I'd say for me, I would say that my time horizon is not as long as Elon's, which is probably why I'm not as rich as Elon.

But for me, it's like, I can probably see, like, call it three to five from now. And I plan for that. And beyond that, I'm like, I don't know, I'm going to be in a different person, different life, who knows? But that's kind of as far away as I can see. It's very difficult to have vision when you have bills to pay. And so you have to get that situated first, in my opinion. You have to get your, like, personal stuff figured out. And then you'll buy yourself breathing room to think further.

Yeah. So in that case, then am I thinking three to five years? No, I think you figure out how to like go to a million dollars a year and like, don't worry about anything else. Say it again, I'm sorry. I think you think, how do I go from 100K to a million? That's my whole focus. And you can do that in the year. Yeah.

And like when you do that, because the thing is, is when you do that first level of going to like, you know, 100 to a million or 100 to 300, whatever the number is, right, you will have more resources and more skills. And so what happens is your vision of the board will change. You'll see the way the game's played differently. And so I see the people who are like the best of the game as the people who see reality the most clearly. And so if you've been doing something for a long time in your business and it hasn't been getting you what you want, it's usually because you don't see reality as clearly as you think you do. You see distortions. And so I think as people go up and wealth, it's because they actually are better at predicting what's going to happen, which is why they make more money than other people. And so that's why I see entrepreneurship is one of the best sources of personal development because you get slapped really quickly to find out what.

whether you were right or wrong. So I want to quickly talk about AI. It's a hot topic. Some people are very excited. Some people are very scared. And some people think it's going to replace everyone and everything. And so I'm going to share my views on AI as the next portion of this. TLDR, AI is not going to change the fundamentals that make business business.

But it will change the tools available to the players. And sometimes in the future, even the players themselves. There's opportunity more now than ever before because the leverage of the opportunity has increased. And so if we define leverage as the difference, what you put in and what you put out, if you can get more out for what you put in, then you have higher leverage. And so with AI, this is where there'll be the first, you know, one person billion dollar companies, 10 person billion dollar companies, et cetera. And so people who have more and a more AI enhanced business, which the business that you're in does have

more of those levers, then yeah, they will get more for what they put in. Eventually, if they're like, well, no one will do it because AI can do everything. Well, if you take AI to the natural extreme on an AI can do anything that a human can do, then you can say that about literally everything. And so I don't think it's super productive. And so I reverse it to what will this knowledge change about my behavior? And so my perspective, where I take the position that since the dawn of time, it has been man plus tools against man plus tools. And right now we just have man plus better tools. And so nothing has really changed. Until the day it is man against machine and the machine wins. And so until we get to the day where we're going head to head against machines, it's still,

the same game it's always been. Just more fierce. So I want to shift gears here a bit and talk about one of the most important components, which is sales and pricing. So there are a few concepts that I want to cover. The first concept is how I go about pricing a product. The fundamental principle I follow is either sell extremely expensive to a select few or something super cheap to everyone. The middle is where people die. And so fundamentally big picture, if you will sell something that is not scalable, then you want to sell with the absolute highest gross margins to the people who can afford that ticket, which makes sense to sell to people who have lots of money to get the money from them. On the other hand, there's tons and boatloads of people who have very little to no money.

And so if you're going to serve those people, whatever price you charge, if it's even moderate, it's going to be a huge percentage of their income or their savings, which makes them very needy, very hard to serve. And so the only way to serve that customer is develop a product that is truly scalable, truly unlimited scale, and that is when you serve the people who have small ticket things. let me give you more context on the thinking process. I prefer, I think it's a higher, you maximize it's likely to you making more money. If you are a service provider to go upmarket and sell to people who have more money,

and then eventually you can create a business that can retain customers that has almost zero incremental cost of adding additional customer. And then in that instance, you absolutely can sell to the masses. Amazon sells to the masses, right? There's not one saying Amazon is a bad business. It's exceptional business, right? but they also had to raise $680 billion of capital in order to build it. And so what happens is entrepreneurs who are undercapitalized and underskilled think,

okay, I'll just serve the masses with this thing, but I don't have the capital and I don't have the skill in order to actually scale it. That's the issue. And so for the vast majority of quote unscalable businesses or less scalable businesses that require humans, that's where I prefer to say, okay, well, if you're going to do the same work, you might as well can pay 10 times as much. Great, because there is an audience of people that would pay you 10 times more because they just don't know you exist.

the reason that it's so tough to service the bottom end of the market is that for them, the small amount of money is a huge percentage of their income or their savings. And so they will have the expectations of someone who gives you their life savings. And so there's almost nothing that can satisfy. And so you will drain your reputation and you will drain the morale of your team because there will never be something that is enough. And also, those tend to be the types of people who want you to promise everything in order to get your $10. right and I prefer not to live my life that way.

I prefer to say you will get, I would prefer to set my expectations at zero and then you'd have to be pleasantly surprised rather than promise the world and never be able to fall. Now the next sales concept I want to talk about is one of the most common mistakes I see entrepreneurs make. So fundamentally, they don't have an issue with how they're selling it or what they're selling, but actually it's when they're selling it. Because the right offer at the wrong time is still the wrong offer.

And so this is why sales timing is so important. So let me explain on this a bit more. You want to make sure that we sell at the point of greatest deprivation, not the point of greatest value. And so this is one of the big mistakes that people make when they're trying to sell stuff is they actually sell it the wrong time. And so I'll give you an example. So if we go to a restaurant, you order steak, you've an amazing steak. And I say, awesome. How was it?

You say it was great. I say, awesome. Would you like another steak? And you're like, no, I'm good. And I'm like, why? Wasn't the steak good? And you're like, yeah, it was great. And like, then why don't you want another steak?

And you're like, because I'm good. I'm like, so you didn't like the steak. And you're like, no, I love the fucking steak, dude. It's like back on. Right. Right. And so, and that's because, like, the offer is right. The timing's wrong.

And so if I wanted to sell two stakes, what I would do is say, hey, sir, how's it going? You say, great. I'm like, how hungry are you? You're like, dude, I'm fucking starving. And I'm like, a guy like you, you're going to need two stakes. That's when you sell two stakes. Yeah. Before you've had your first bite before you're full.

When you're at point of greatest deprivation. What people keep confused is they're like, hey, people got a lot of value. That's when I want to sell. The point of greatest deprivation and the point of greatest value, only sometimes intersect when once you've created the value, you create deprivation around the next thing. And so the motivation for any person to take action on anything is the amount of lack they have. Deprivation, you're incredibly motivated to sleep when you're exhausted. You're incredibly motivated to eat when you're starving. Incredible to end to fuck when you're having. Right. And so the idea is we want to extend,

and that's why in a pitch, it's all about the pain. It's like, how can we agitate the pain? How can we extend where they are to where they want to be and make this gap bigger and bigger and bigger? For us, in a monetary world, which is what you sell in, the gap isn't physiological, it's perceived. And so we have to build up the perception of deprivation. And if any of this is like, that's too complex to stop me. But basically, when you get around people way richer than you, you feel poor. And then when you feel poor, you get motivated to get richer. If you're the richest person in all the people that you know, you have no motivation because you're the richest men in the, not Babylon, but the poor part of Babylon, the, the

of Babylon. Do you what I mean there? Yeah. The next sales concept I want to talk about is how do you sell without giving away all your secrets, right? A lot of people are afraid when they make content, well, what if I give away all the secrets? Like, no one will have anything to buy for me, which is the exact opposite, because 99% people are never going to buy from you, but they will judge you based on the quality of your free content. And so the idea is like, give away all the information and then sell the implementation. So many of you guys sell information, education, media-related stuff, where people make mistakes where they're like, how much do I teach versus how much do I pitch, right? The issue is not understanding what kind of information

you should teach at each stage. And so there's two types of education. There's declarative knowledge and there's procedural knowledge. This is I didn't invent this. It's just education system in less a hundred years, but people have still talked about it. So declarative knowledge is knowledge about something. This is what you use to sell. Procedural knowledge is about how to do something. This is what you sell. If you use this to try and sell stuff, people will walk away with a shitload of to-dos and they're like, I'm good.

What you want to talk about is all the things about how it works, about the outcomes, about what is possible, teach how it works conceptually not. So if I say, I'll give me an example. Hey, you have a business. You're doing $2 million a year. If you go from $2 million to $5 million, you cross over the institutional threshold at that point.

Your multiple goes from three to seven. and so you go from having something that might be worth $4 million to something might be worth $35 million just by adding another $3 million in revenue. And here's why that is, because institutional buyers, blah, blah, blah, blah, blah. Me explaining that for like, whoa, that is really interesting. I didn't know how all that worked. I didn't teach how to do it. I teach about how it works.

That still is incredibly valuable because what's really nice about declarative knowledge is that everyone gets value from it because you just have to be there to get the value. When you teach tactics, you have to do the tactics to get the value, which means they can't do it with you. They have to go and then do it, and then they would extract the value, right? So it's at a delay, which means they don't want to buy right now. And so whatever you're teaching, you want to be predominantly declarative in nature. Let me teach you about this stuff that you aren't aware of. This is where breaking beliefs around specific, I think, like, this is the old model. This is the new model. I'm not teaching you, here's how you set up a domain. Here's how you warm it up. And so right, here's how you have an AI agent. And here's how you personalize the first.

Like we're not teaching that. We're saying, did you know that if you go from not personalized to personalized, this is the increase? Whoa. I'm not going to, I'm going to show you. That's how it works. And then I will sell you how to do it. That's what you separate.

Again, secrets implementation. The next sales concept is about training your sales team. So this happens a lot where you've got maybe three, four, five guys, let's say, and you've got one guy who's a star and he sells half the volume, where she sells half the volume and the rest of the team sells the other half. Oftentimes that one star suppresses the rest of the team, number one. Number two, doesn't follow the script or process. And so scaling that team becomes very difficult because there's no consistency across reps.

And so one of the things that a lot of business owners want to do is like, man, if I only had six Sarahs or six shons, I'd be good to go. But there is a way to get six shons or six saras. And it's by breaking down what they do into significantly more detail than you probably have. and then training far more frequently with far faster reinforcement cycles to actually get that to be duplicated. Now, that might have sounded like a lot of big words, so let's dive into what that means. And the big thing with sales training that I think the vast majority of businesses underestimate is just how much training is required to make a truly world-class team. I think so everybody who has the sales handbook can kind of get, you guys have my schedule for how we onboard and how we train. And I think for many people, that's a big belief breaker.

It's hard for people to comprehend exactly how much return and acquisition.com. it's a shitload. And so to give context on that, our sales team trains every single day, every day. And they all role play every single day. And every week, they have a one-on-one with game tape,

with their manager, of what they specifically need to work on. And, like, that muscle, and, like, do you know how to train, like, do you know how to train a salesperson? I would say no. Okay. So you train salespeople through,

like, role-playing until your eyes bleed. Because fundamentally, it's the fastest feedback, that you can give someone in terms of training anything. So they say something, and so the way that we train is, number one, is you have to memorize a script. And so the way you memorize a script is you put the script in front of someone, they print out a second script, and then they read the script out loud,

and then they black out one of the words, and they read it again. And they black out another word, and they read it again. And by the time you blacked out every single word, you've said the script for as many times as there are words in the script, and you tend to fucking know it. And so then you're staring at an entirely blacked-out page saying the entire script. That's how you memorize a script.

Once you can breathe the script, which is what we call it, once you can breathe the script, then we practice the role-playing component, which is us going back and forth. And so when you're reading the script with someone, we have a hand up with heads nodding. And the first time someone's going to go through a strip where we say, hey, just to be clear,

we're going to interrupt you probably like 50 or 60 times by the time you get to the end of it. That's okay. The worst way that people do role-playing is that someone, they go through a whole role-play, or someone just says the script, that's the worst way. The second worst way is that you go through it

and we quote roleplay, the guy says, all right, so, you know, at the beginning, you could have done this a little bit different, and, you know, kind of said this a little bit bad at the end. You probably should have offered it like this. No one's going to remember that. It doesn't matter. It's way too late. The reason that superstition happens is because you change something and then you immediately get feedback. And so once someone does it, we call it locking it in. So it's like they mess something up. We say, hey, stop, try it like this, do it again. If they get it right, we say, great, lock it in. That means do it again, do it again, do it again, keep going. And so that's how we trill the script so that every person delivers

the script the same way. The vast majority of sales teams have a script. It's loose. No one really pays attention to it. And the way that they recruit salespeople is that they just hire a bunch, see who sticks, and then let the rest go. Except which I consider us to be can take anyone to be a savage. It's just a question of how much effort we're willing to put into somebody. As long as you know how to train the skill of sales, which sales is so, trainable as a skill, that's the feedback loop that has to get created. So the first step for you is we have to observe the salesman and then we have to document the words they say and what they do. Once we have that, that becomes the basis for the memorization and then the role playing becomes making sure

they execute that. And I always want adherence of everything. So we are like the New England Patriots in terms of how we run the sales team, which is the process is above everyone. No one's but in the process. And the way we position that is like thousands of sales calls, thousands of hours have gone into like men died and gave their lives to give us this script. You were not better than the script. And so you say the script because you know these words close people, period. And that's the approach that we have and that's the deference that we give to the process. And so if you have a star salesperson, one of the difficult parts is that that person tends to be a cowboy, right, does whatever he wants as long as long as you close deals. That is a cultural issue. It will be a cancer long term if he's a

pre-Madonna. And so most of the time, I would rather have a team of all eights closing on a 10 out of 10 process and that team will always outperform a team that has one star and no process. Okay. Now, in this next section, I want to talk about influence and branding. And the reason this is so important is that fundamentally branding is building a history of positive reinforcement with a large audience that ideally has a high likelihood of purchasing from you in the future. And so think about branding as pre-programming sets of behaviors.

And so if I have a cold audience and then you have a branded audience or people who have an association between you and the thing that is good, right, then. And these people are going to be far more likely to take a desired action. Right. So branding is the action that we do as businesses to make those associations to increase the likely they comply with our requests, aka they do what we ask them to do when we ask them to do it, which is like, hey, go check this thing out. Or, hey, go buy my thing.

Or, hey, go schedule a call. Or, hey, check out my next video. Or, hey, read this email. Whatever it is, you have to build up history of reinforcement that shows that the last time they did something good, something good happened for them, which makes it more likely that happens in the future. So I'm going to break down a four-part framework in thinking about this so that you can gain influence, not just reach and views for you and your business as an entrepreneur. So there are there are four components of influence, right?

You have SPCL specials, the easy way to remember it. You have status, which is the number of reinforcers that you control. Stuff that people want, you control that. The second is power, which is say due correspondence, which is when I tell someone to do something, if they follow those instructions, a good thing occurs. you gain more influence. The third is credibility. So is there a third party world that proofed that what I'm saying is true? And then fourth is likeness.

How similar are they to me? Now, in this audience, it's mostly men around my age. Not all, obviously, but I have a preponderance of dudes around my age. And so that's because likeness is a strong influence on that. Leila talks about many of the same things that I do and her audience is 54% female. is it like and if I were to talk about her stuff I'd probably still have more men right and so okay you're like all right I understand that and so how do we reverse and you're I'm going to talk about each of these in a little bit more detail and we'll talk about how to apply

the video so from the the status perspective each of these operate independently but can also be combined when you have a four it's significantly more influential and so a kid who has a trust fund and a kid who doesn't have a trust fund somebody who's rich inherently didn't earn it but just is rich has more influence than somebody who does it. Now, do they have the most influence? No. But if that person was a trust fund kid, or sorry, rather, somebody who had a lot of money and gave you 10 stock tips,

and out of the 10 stock tips, all 10 worked, and you made money on all of them, on the 11th stock tip, the likelihood that you would follow their request is high. If they had credibility, it's, okay, do I have proof that these things occurred outside, right? Now, some of these boxes can check multiple things. And so if he gave you stock tips

and they worked, and then he gave you, and then he give you another stock tip. He has credibility, he has power, and he has status. If he said, here's another investment that's not stock-related, here's a real estate investment. He no longer has credibility, but he does have power still because other things you generally have listened to have worked, not specific to the thing that he's talking about. And then finally, if he looks like you and he talks like you and he's your twin brother, much more likely that they're going to listen. And so at any of these situations, if there's just a dude who looks like just like me, I'm more likely to listen to him than an old lady. I'm just more likely to. If somebody has credibility around the thing, oh, I scaled a sales team, I'll give you a

example. If I scaled a company to a billion dollars and I had zero equity in it, but I was the CEO, I would have credibility. If I was also the founder and had all the money, I would also have status. Now, if I've never given you any advice in the past, I have no power over you. If I then gave you advice and it worked, then I have three of the four. And if you look like me, I have all four, right? And so the idea is that if we want to gain influence, we want to have as many of those loops demonstrated as often as possible in the content that we have. The reason I start every video with my name's Alex Formosi, I have an exosion.com, it's portfolio the last year to $250 million a year. And the reason I make these videos is I can help you do X, Y, and C, so we can

eventually what, blah, blah, all right? I do that because I'm trying to demonstrate these things as fast as I can. I try to demonstrate status. Credibility, the power occurs from how good the advice that I give is. And that is, if I had to pick one of the four to have, it's that one. It's how well can you give people directions in order to get something good to happen. So, some of you guys have heard of Martha Stewart, hopefully. Martha Stewart's a goat. I have a tremendous amount of respect for her. She was the original influencer, one of the first ever, and everyone was amazed that she became the first self-made female billionaire. No one talks about this.

First self-made female billionaire. Why? She literally gave women instructions for years on how to do stuff. And then they followed those instructions and then good things happened. They made the cake, exactly. And then everyone said, oh, you're amazing, mom. And they do that over and over again. So when she says, buy my book, they're like, of course I'll buy your book.

Every other thing that you've told me to do has worked for me. Now, one of the best ways to have strong influences by building a strong brand, which I covered earlier. And so fundamentally, let's go more tactically into how to build one. So what is brand, right? Brand is the association we make between two things through an outcome, right? That's what brand is. So the thing you don't know, thing you do know, you put thing you don't know next to the thing

you do know. If you have positive associations, these positive associations transfer until eventually you don't need to have this thing anymore, positive associations maintain. That's what branding is. Fundamentally, it's teaching at scale. So, like, if I brand the, you know, the, so this is a tree, right? And if I say tree to a kid over and over again,

they will associate the sound with that thing. And so then eventually they will say, oh, that is a tree. And so branding will have occurred, right? It's teaching. And so what happens is you have your existing brand, right? And then you have the new association that you want. And we have some people that may get left behind and say, I don't like this new association.

And then you will have some people that you will gain as a result of the new association. This would be an even trade. The ideal branding move would be like this. We lose this, we gain this. And so whenever you change a brand from anything, you will always lose some and net others because any change will get some people to say no

and other people to say yes. And the goal of good branding is that we net more than we lose. And so for me, if we think about the elements of brand, we have reach. So how many people, you know, see it. we have influence, which is the percentage likely they comply with their request, will they do what we ask them to do? And there was direction, which is like you can have influence and then it's against you, right? Like Trump has super high influence and polar, just both sides, right?

Like people are like, but he changes people's behavior. So if they see it, they're either I hate him or I love him, but either way, their behavior changes, which means he has influence, right? And if a lot of people have that, then it's even bigger brand. your parents have super high influence, very small reach. So all of our parents here, or most of your parents, if you didn't have parents, sorry. But let me tell you how parents work. So for most people, parents have super strong brand for you for very tiny reach. So in other words, you'll have a strong brand when you have large reach, high influence and in the right direction.

So let me explain what happens when you build a strong enough brand. And so, but like, but that's exactly the point. This is like, once the brand gets high enough, then you can just make the offer with no promises and say, hey, every other thing that you've bought for me has been good. You'll like this too. Trust me. And then people will buy it. As long as I keep that promise, the next time I have a thing, hopefully you'll still want to get it. And then that cycle continues to reinforce.

And so that is the brand loop. It's like what you say about you, what other people say about you. And then finally, with the customer thinks about you after delivering the product. At that point is the final point. So, like, said differently, if you're going to go see a movie, you see the advertisements of the movie first. And then you're like, huh, that looks interesting. And then a friend of yours sees the movie, and they're like,

you're like, was it good or bad? And they're like, oh, it was good. And you're like, oh, okay, now, way more likely to see it. But then when you go to the movie, you don't really care what your friend said. You're going to make your own call on whether you like the movie or not. And so that is the reinforcing loop that occurs with brand. It's just that most people, where's my, where's my home, where's my, where's my team guy?

Where are you at? Yes. So the reason that you keep doing more offers is because you, you say it's great. You get a handful of testimonials because if you sell a thousand people, you can get 10 people to get a good result no matter what because they're 10 out of a thousand are going to have something good happen. So you get your 10 results and then you convince people and then they buy and then all of a sudden those people say this sucks. And so then you have to start all over again saying this new thing is amazing and great. And then get your 10 testimonials

from your beta group because you can take 100 people and 10 of them are going to get a result. You talk about the 10 results that are good. This is obviously lying in advertising, by the way. And then you go to sell the product and it sucks. And then you just do this. that loop forever, and that is what most internet marketers are doomed to do. The next principle is arguably one of the most important, if not the most important, to scaling your business. It's figuring out how to solve your main constraint. You can think about a constraint from a quantitative perspective as the area in the business where you will get the highest returns on effort or improvement. If you think about it from a manufacturing perspective, it's going to be the bottleneck. So if I've got a

four-lane highway that goes into a one-lane and then to four-lane, what's the limit of the business or the rate of cars going? It will be a one-lane. It will be a one-lane. It's going. It will be a one-lane. highway. So I could make four lanes into five lanes. It's still not going to change the total throughput in the system. And so the idea is we have to focus on that bottleneck. And the thing is, and the reason the theory of constraints is so powerful is that every business has just one constraint. But the reality is that most business owners are not working on that constraint. They're working with something they believe to be the constraint or even more commonly. They're just working all day long, not even thinking about the constraint is hoping the business will grow. So I'm going to share a six-part

framework for thinking about constraints to help you identify any constraint that you have in your business. This is a newer framework that has only come from doing like 10,000 Q&As, was thinking through like, what is the actual decision tree that I go through in order to do this? And it turns out there is one. And I'll walk you through it. But basically, this is the decontraining meta framework that we use as a company that you can apply to your business over and over and over again. And I walk through this for me. So if I'm like, what should I do next? I'll just go through this. So the fundamental question that we always have to answer is,

why can't we do more, right? And the answer to that question or like the, if I say, okay, who here would like to grow their business? Everyone probably raised their hands. And then I'd say, great. So why don't you do more of the thing that you're currently doing? Now, 10, 20% of the time, they're like, oh, I just didn't really think about that. And I'm like, great, we'll do that first.

And the reason more is almost always the best action to take is because it's the highest risk adjust to return move, because it already is working. And so the likelihood that more of the thing that already works will also work is super, super likely. Whereas if you think about how many times you tried before you actually got this thing to work, whatever your thing is,

how many failures you've had, it's like there's an unlimited amount of ways that something doesn't work. There's a finite amount of ways that it does. And so you taking experimentation is a very high likelihood path of things not working. Like new almost never works. It's something worth like new almost never works. And so that is why more is a significantly better return on assets if you look at risk adjusted. Now there's going to be reasons that someone says, well, I can't do more because.

And then there's going to be five reasons that someone just like can't do more. And so the first common one is I can't do more. I can't do more because of my market. I can't, I'll write them all in a minute. We'll go through them. I can't do more because of my market. I can't do more because of metrics. I can't do more because of my model.

They're all, we call these the Mozy 6 because they're all M's. There we go. I can't do more because of money and I can't do more because of manpower. So I can't do more because I'm in a, you know, assume you guys might have seen that clip where the guy was like, hey, I want to make my lounge, make more money.

And I'm like, okay, well, where's your lounge? And he said in the middle of the Sahara Desert. And I was like, okay, well, that's probably not a good idea. And he's like, so I should advertise more? It's like, no, that's just a terrible idea in general. But I have, like, so I shouldn't be in the Sahara Desert. I was like, dear God. Okay.

I'm kidding. He was a champ about it. But this is a real constraint, rarely. Like if you actually live in Bumfuck, Kentucky and 100% of the customer's your service are in Bumfuck Kentucky, then yes, you will be limited by Bumfuck. It will absolutely limit you. But you could also like do more of that in another market, right? So it's like sometimes it just takes to one degree of thinking of like, okay, well, I could just duplicate this somewhere else, right? This is a, you'll see how cool this model is in a second.

But we're just talking about from the customer's perspective. So it's likely that you are not contrain. I service chiropractors and we're B2B. Okay, great. How many customers do you have? 100. Okay, well, there's 50,000 chiropractors. Do you feel like you're really limited by your market?

Do you really feel like you've saturated the market of chiropractors? No, just no one knows you exist, right? And so we need to advertise more. And then we go back to that, right? The next issue is I can't do more because I don't even know what more is because I don't have any metrics. Okay, so we have a data constraint. So we have to figure out what you're currently doing before we can do more of it. So that should be kind of some common.

sense. So let's get data. But then that becomes the constraint. Okay, great. Once as soon as we have data, then we can go do more. The next issue that'll come up of like, why can't I do more? It's like, well, I'm just not sure my current model is really what I want to be doing long term or like if this is the best opportunity vehicle for the skills that I have. And there's a lot of like this like, what do I do with my life? That, right? And the model issue really comes down to like one of the most common things that I'll end up responding with is features versus bugs is that like so Suzanne Schifflett who was my CFO at Jim Launch phenomenal lady phenomenal CFO um she used to say Alex I've been doing this 38 years and all businesses have shit she was from deep south

she was awesome and the point was that like every business has something that's hard about it And so we often want to switch opportunities because the thing that's hard about this business, another business doesn't have that thing that's hard. It just has another thing that right now you didn't realize is easy for you because that's not a component of the business. So said taken differently, like at one extreme, if you do, if you're in the cleaning business, cleaning homes, finding people to clean houses for is really not hard. People are very happy to not clean and pay someone else to do it.

On the other hand, finding talent who want. to clean houses and are competent and show up on time and don't steal and speak English and are honest and blah, blah, blah, blah, blah, right? Really hard. Now, flip that the other way. Finding people who want to talk about fitness and what to, Eva, you're talking about this morning, right? Who want to talk about fitness, who want to talk about helping people.

Tons of people will do it and they'll do it for free. The problem is no one wants to sign up for fitness services because no one wants to wake their ass up in the morning and go to the gym, right? And so, like, all businesses have components of the business that are difficult. There's going to be some businesses that are more supply constraints, some that are more demand constraint, but they're all going to have constraints. Otherwise, if there were businesses that had truly no constraints, then every business would just, of that industry would all just be a gazillion dollar businesses. But they're not, because sometimes for short periods, that is true. And then what happens?

Lots of competition emerge. And then you have a constraint. Now, we have pricing pressure, et cetera. And so the idea that, like, you're going to find the perfect business and it's just, like, one degree separated from your current one is probably not true. It's just that the hard problem that you have in front of you is the thing that you get compensated for solving. Like, that's the game. And so the way that I frame this is like,

if I solve this problem, if I have my cleaning business, and I figure out how to have a recruiting engine and a training engine that can take somebody who's low-scale talent and get them to be proficient in a way that's more efficient than my competitors than I have an extra $10 or $20 or $50 million of enterprise value that gets added to my business. All of a sudden, that's a little bit of a sudden, that feels like a much more desirable problem to solve

if I know I have a $50 million pot of gold on the other side. And so rather than just saying like, oh, this sucks, it's like, well, for $50 million, I'd be willing to solve it. And so for the reason, that just tends to perk me up a little bit. Okay. But fundamentally, all businesses have shit. All businesses suck to a degree. And almost all businesses, if you stick in them for a long period of time,

you can become exceptionally wealthy. Like the guy who owns the building that I live in, he's my neighbor. He owns Panda Express. if he were in this room and he says hey he got up and said hey i um i own a fast casual chinese restaurant we sell kong pa chicken and general salas chicken and spicy pine you know sweet sweet you know that new one the one that came out with like five six years ago anyways um and uh you know chicken deriaki and you know we've got five locations and you know each location does three million dollars to your top line um we run 27 percent now margins some people in this room would give that

guy advice, you should teach other people how to how to sell chicken. And that would be terrible advice for him. Because what he should do is keep doing it for 45 years and they do 3.7 billion a year in chicken sales with 27% net margins and take them a billion a year in cash every year and do a tax-free because he owns all the dirt and the real estate. It just took him 45 years. And so I say this because like most of the goals that you have are probably attainable, just not on the timeline that you gave yourself. And so like even something like think about how shitty vote shitty, right, of a business model that is. Who wants to scale brick and mortar, fast, casual, low skilled labor business?

Most people are like, I don't want to do that. Right. Raising Keynes. Deca billionaire. Owns them all. So like, is it a super? I don't think you can scale that. Yeah, you can with work and skill and time.

And so I think that's the piece that, like everyone is so concerned about getting really rich in the 36 months that almost all vehicles can get you super rich in the next 36 years and many orders of wealth along the way we just don't think in those time horizons and I think that is maybe one of the bigger things that I can give you around model so why can't you do more I don't know if my chicken shop is you know the best opportunity vehicle well if you keep doing it for 10 years you'll probably better than most people who do chicken shops and if you should keep leveling up in the game of business the people who compete against so if you in a low opportunity vehicle market, here's the advantage. Your competitors, typically not that

sophisticated. If you want to go after AI, whatever, then you're competing against the best capitalized, smartest human beings on the fucking earth. Depends where you want to play. Right? All businesses have shit. Okay. The next one is like, why can't I do more? I can't afford to. Now, this is where it gets a little bit hairier, hairier in that there's more splinters underneath. So you can't do more because leads cost you much. You can't. do more because you sell too few, you can't do more, because your LTV's too low, right? LTVs too low, sales is too low, it leads is too low. Now, this is where it takes more question-answering and kind of pattern recognition to figure

out which of the problems is because all you know right now is I can't afford it, but you might not be able to afford it because you don't make enough for customer rather than it being inherently some marketing problem. This happens common, where you have a business that has a front end but no back-end and they're like, man, I'm making sales, but I have no, they don't know that they don't have a back end. They just know that they're not profitable as a business. But it's like, oh, dude, you have a, you have a break even or slightly break even acquisition process. Now sell the thing to all those people.

Oh, and now this is amazing business. It's just like yours missing a piece of it. That's an LTV issue. Or maybe it's a churn problem. It's like, hey, we're car customers. I think it costs us too much you get customers. It's like, no, dude, you churn out in three months. It doesn't matter what the cost of acquisition is.

Like, you need to fix churn, which then has lots of, pair on is it a messaging issue to avatar issues and onboarding issue like there's things underneath of that if it's um i can't afford to to advertise more to get more people um because my leads are too expensive it's like well are they too expensive now there are instances where like we have good like let's see you're in insurance right and so it's like okay our altcvs are already almost given to us by the insurance companies uh we close 30% of people we get on the phone with it's just like our leads just cost too much okay in that instance like their leads cost too much so then there it's like all right we have to increase quality of creative,

increase quantity of creative. We have to look at CRO within the funnel. All of these that we have to see if we can have a better lead magnets from an offer perspective to generate the lead. It's like, okay, all of a sudden, all of a sudden, this business prints. And then you have the middle of the sandwich there.

The lead costs are fine. We're making enough per customer. We just can't close a barn door if it had a handle on it, right? And so then we have to look at messaging. We have to look at scripting. We have to look at price points if we have to. We have to look at the follow process.

we have to look at the training process, we have to the onboarding compensation for the sales guys, or if it's a webinar, whatever it is, right? What's the messaging that we're telling to get someone to take their wallet out and give us money? But each of these things, so if we say, okay, if I solve all of those things, so let's say you're like, I can't do more,

not because I have enough people in my market, I have the metrics to know that, like, what I'm doing is working. I'm fine being a plumber. I have, like, the lead costs are fine, we close the amount that we're supposed to, or LTV is good. I just don't have enough technicians to go and do the HVAC.

services or do the plumbing or I don't have enough coaches to do my back end or I don't have enough whatever's right then you have a manpower constraint here's the cool part about this model and by the way I did the order wrong be like this metric should be first then market it's a cycle it goes back to the top so I don't have enough manpower great what do you do to get manpower okay why don't you do more of that well I can't do more of that because I don't have metrics around how I recruit talent great so let's say we solve the metrics all right well there's not enough talent in my specific market for hvac whatever's okay fine but maybe there is okay well um i'm not sure if the offer that i have for the guys is compelling enough okay i can't afford to okay well how much do you make per hvac rep

or per coach or per whatever why make this okay well then do we have an issue that we need to change in terms of the business to fix our acquisition of talent, or the acquisition of talent's fine because the business works. Okay, great. And so this whole thing, you just repeat it again on the other side. So this is just how you deconstrain anything, whether it's supply or demand. So I want to dive a bit deeper into the last M that I talked about,

which is manpower. Making the right hires and be able to train them is one of the highest leverage things that you can do as a business owner. Now, one of the most common pushbacks I'll get is, well, they can't do what I can do. So if you want someone to do something and they're not doing it, I want to share a framework that might help. And I call this the management diamond.

Now, I'll give you the little management diamond that I do for employees, which is a really good framework for having hard conversations. But if you want someone to do something and they're not doing it, you have like four or five reasons that they're not doing it, right? The first is they just didn't know that you wanted them to do it. Most comments. Hey, did you do that thing? They're like, what thing?

You're like, damn it. I didn't write it down, did I? Okay, so we have to write it down. We have to put a deadline on it. Fantastic. So now I say, why didn't you do that thing? They say, well, I didn't know how to do it. Okay.

Well, fine. So they didn't know how to do it. Now let's say we train them. So I told you that you needed to do it. You know how to do it. But you didn't know when. I was going to do it by. Oh, I need to do that tomorrow.

Okay. So I need that. You need to do it. You need when to do it. The next is you have something. that's blocking you. So I knew that, I knew how, I knew you wanted to do it tomorrow, but you also told me to do three other things.

Which one did you want me to do? And then finally, you get into this, which is that I didn't want to do it, which, in my experience, is the first place that we go to as entrepreneurs and typically the last one that's reality. Most people I have found when they have a job prefer to keep it. And I've also found that most people prefer to feel like they're doing a good job at their job. And so it's usually one of these other issues. And so this provides a really good

framework for having those conversations. Now, the reason I bring this up is because we can also have these conversations with ourselves. I know I need to do more. Why am I not doing more? Did I not know that I needed to do more? Well, now I do. Okay, do I not know how to do more. Oh, I don't know how to do more. great, well, now I have something to attack. That becomes my to do do. If I don't know how to do it, I know what to do, which is to figure out how to do it, right? Is it not urgent enough? Right? Or is there something blocking me? I would go recruit more people for my H-track company, but right now, 80% of my time is dealt with these customer service issues that are coming up onesie-to-to-s all day. Okay, great. How much does it cost to replace the one-sie-to-to-one-tusy thing?

Costs me $60,000 a year? I have $400,000 in profit. Am I willing to go from $400,000 to $3,000,000,000, in profit in order to get 80% of my time back? Yes, but that means I'm going to make less money. Yes, today, but then I'm going to 80% of my time back so that I can then focus on how to figure out how to do more. And so it's just, it's taking second and third order consequences down to their natural end and then ultimately being like, okay, this is what I need to do. I literally went through this process. So post launch for me, I was like, okay, I have this bandwidth back. What's the next thing train of the business? And for me, it was six questions down for me to be like that's what the issue is and that's what I'm focused on. And so right now, 80% of my time

is in with that constraint, which is I'm heavily recruiting executives right now. That's what I'm doing with my time. Yesterday I have four executive meetings and I have follow up notes and connections afterwards that I have to do. That's what my time's right now, because that's the constraint of the business. And then once that finishes, because those people get onboarded and they do a good job, I'll go through this again. Now, one of the most common limiting beliefs entrepreneurs have is that no one can do it as good as they can. But this eventually creates something called keyman risk. And this is the next business principle that I use. And so fundamentally, every business, if it's relying on any person, whether it's the entrepreneur or otherwise,

if that person is going to be keyman. Now, this is a double-ed short because the better you get at something, the more keyman you are. And so the more you've invested in yourself and in some ways, you become a liability for the business as much as you are in asset. But this applies across the board. And so the only real way to pay this down, I'll explain in this little clip. So one of the big issues that especially like when you're coming up the problem is that everyone here we had to learn all these different things right we'd learn marketing we'd learn sales we learned product we learned hiring we'd learn all this different stuff right and then we we want to hire one person who's lived our entire lives and then expect them to work for us for a fraction of what we pay ourselves and are

barely even willing to keep doing what we're doing right yeah so we have to break it into parts and so I give the analogy of the unicorn right so like you're a unicorn in your business you looking for unicorns is probably not a productive activity. But if you wanted to create something that was an approximation of a unicorn, it's like, okay, well, I need the horn, so I can go find a rhinoceros, and I'll get the horn part. And then, but that body's not going to work. So I've got to go get a horse.

It's going to be a white horse. It's not going to have a horn. Well, fine, I can get the horse. But then what about the magic pixie dust, right? So then I've got to get my fireflies, and I can add those on. And so I just bolt on the horn of the rhinoceros on to the horse and get some fireflies. Is it as good as you? No.

but it'll be pretty good. And so if the business requires somebody who's as good as you to run, then the model doesn't work. If the business can work with somebody who's half as good as you, then you're always going to sacrifice some margin in order to scale.

And so I'll say this differently. One of the terms I use is scale zero. And so the goal is like, how can I get? So let's say that, let's say, hypothetical math. If I do something, I make $20 million a year and it's 50% margins and I'm heavily involved

in a whole bunch of shit. right if I hire truly all the people that I need maybe my margin goes from 10 million to four let's just it would just be an extreme here but I do nothing though but now that company can then go from 20 to 40 and I can make 8 on 40 and it requires zero of me and so again it's this a lot of times we have our ego tied because you said it you're like I got to this and you're like then as soon as I'm there there's the CEO like and so it's because you have this tie for whatever reason that like if it's not this number you suck or whatever that is for you. And so we need to be able to give up some of that profit in order to break the activities that you currently do into component parts.

The activity of doing that is we do time studies. So you look at what you do in a current week and then you start parsing out, okay, you can take the entire time study, plug it into GPT, and just say, hey, what roles, if I were to replace 100% of these activities, what is the smallest amount of roles that could replace all of them and give me the job description and names for those. And it's like, okay, well, actually, you do things, you do some HR shit and you do some marketing stuff and then you do some sales shit. Okay, great. So you need one of these, one of these and one of these. And it's like, cool, how much is I can eat in my margin? I'm going to cut half my margin away. Okay. Am I willing to do that so I can actually have something that works? And the first

time you hire them, two out of the three will suck because you don't have pattern recognition. And then one of them will be okay. And then you'll hire again. And it'll take you six months to figure that out. And like, but that thing is, is that once you get there, though, you will finally be able to get to 500 or a million a month or wherever the next stopping point is. And then you'll be like, fuck, I don't know how to hire this next person. And then you'll fail for a while and then you'll get it. You just can't stop. You can't stop trying. Just look at what you do. Like, what do you spend your time actually do it. What you think about, all that stuff doesn't really matter. All that matters is like, I communicate these people in these ways. I make these

decisions. So fundamentally, you're most of the time, you're going to be making decisions or you're going to be doing some sort of individual contributor activity. Those are going to be the core elements of what you do, right? If you want ideating, then maybe that's going to come here and then we'll make a decision about it, right? But most small businesses don't need more ideas. They need more execution. And so we just have to break what you do day to day to day to the buckets, the constituent parts of what they are, and just take all the mysticism out of it of like visionary and the energy and whatever. It's just like, you do this stuff. This stuff makes money. We need other people to do that stuff. So I want to move on and talk about culture. So a lot of

entrepreneurs throw this word around and they don't even know what it means and so that they want to improve something they can't define which makes it very hard to improve and so I will walk you through how I define culture in this clip and more importantly how to improve it so and I bring that up because many times we as entrepreneurs will say I really want to fix this thing and then we say cool then what's that it's like very hard to fix if we don't know what it is true so I define culture as the rules spoken and unspoken that govern reinforcement in an organization so what are the rules if And then what is a rule? A rule is a conditional statement of if this, then that. So if you do this, then you will get rewarded. If you do this, then nothing will happen. If you do this,

then you'll get punished. So culture is a series of rules that govern what happens, good stuff, bad stuff when you do things. And so the reason that culture, I think, is so difficult for people to transpose from one to the next is that there are so many rules that govern behavior within an organization that people are like, you just got to be around there and like soak in the culture, which really just means you need to observe many rules and conditions of reinforcement occurring over an extended period of time to understand how the rules work here. Yeah. Right.

And so as a result, people just don't codify the 100 plus rules of behavior. And so there's kind of like, I would say two paths that you can do. I would say my preference and then what's probably the easier, faster one. So my preference is actually codified all and say like, what are all the things that make us, us? And of course, you're going to have your values and whatnot. but I see values as chunked up rules. So if I were to say I have 200 rules of behavior that I want to say these are the things

that are rewarded, these are the things that are punished, okay, how can I chunk these into three statements or three bulleted words that when unpacked would mean that if I believe this to be true, this is the set of behaviors that will go along with it. That is how I would approach this type of thing. If you want to do the fast and dirty way, you have the three values and then you just try to describe them the best way you can. and that's how value should be created. But I do prefer the like, let's do more of that work and say like, how are all like, how do we like, and think about what you're thinking about these rules, think about the conditions where behavior exists.

And it'll be much easier for you to think about the rules of behavior. So it's like within a meeting, what are all the rules of a meeting, right? So maybe at at requisition.com, if you're not talking, you're muted, that's a rule. And if you talk while you're in a meeting and you're not talking, like you're not talking to everyone else. that's like close to grounds for termination. Just because it means you're not paying attention, why are you here? Then like, you know, what are we doing? Sure.

So it's like one of the things. So it's like, what are all the conditions in which we interact? What are the rules of engagement around those interactions? And then that codifies up to three, you know, three statements that should chunk up what culture means to you. And then when you have that as the Limus test, when you go and transpose that to new location, one, you want to make sure that the leader does actually adhere to those sets of rules and behaviors. And my way of doing this would be to take the biggest culture champion here and move them there, provided that culture can still reinforce itself without that leader. Death creates clarity.

A business owner asks me about what I meant by. Death creates clarity. And I want to leave you with this message. Death creates clarity. Yes. What are you clearer on today? I think it creates a forcing function around prioritization. And I think that, like, I mean, it's the ultimate.

ultimate razor of like, will this matter? And I think that writing, I think writing my mother's eulogy was really valuable for me. Because if anyone here has written a eulogy or an obituary or anything like that, you get to see what's included and what's not included. And a hilarious amount of the things that we stress about in life are not included. Also, a hilarious amount of the things that we strive to achieve are also not included. And so when I think about, and I think Charlie Munger is the first, like, he's the first person that I know said. I'm sure plenty of people have said it before him. But I love the concept of the reverse obituary or the reverse eulogy of like, what would

Alex's eulogy be? It's only going to be 500 words to 1,000. That's how long eulogies are, which by the way, you're like, wow, that's not that long. Because people are there. They're busy. It's, you know, it's rush hour. They got places to be. And you're not trying to take too much time.

And so you have to. to write it out. And so usually, like, the accomplishments we have, like, if I really think about, like, what the, you know, the Alex funeral is going to be, no one's going to give a shit about how much money I made or anything like that. No, like, imagine Titan of Industry, right? Like, some people want to be cover of Forbes or whatever it is. It's like, when you go to that guy's funeral, you know, they don't start with, like, he was a Titan of Industry. Okay, fine, that was one sentence, and that was, that covers 40 years. Great. But then they're going to transition to two things, which is what I saw as the common theme, which is service and character.

And so in thinking about like what are the things or what are the causes that I do meaningful enough to serve, and then what traits do I need to exhibit in order to become the person capable of serving them at the highest level? I think everything that we do between now and then, or at least for me, is in service of that eulogy or that obituary. And I think that's the, I think that's the reason that, you know, death creates clarity, at least for me. When you have those nice moments, it's like, how can I benefit from this?