The Game with Alex Hormozi - Picking Your Niche | Ep 641

Episode Date: January 18, 2024

You will never make it by taking shortcuts. Today, Alex (@AlexHormozi) highlights the success in improving existing business models rather than pursuing new ones, cautioning against diving into unfamiliar niches. The episode underscores the significance of perseverance, hard work, and mastering various skills for long-term success in entrepreneurship.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:(1:20) - The value of doing better, not necessarily new(4:17) - Reality of building a successful business(6:45) - Dangers of rushing success(8:33) - Misconceptions of quick entrepreneurial success(10:55) - The importance of practical experience over theoryFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition(This episode is a re-run. Original airdate was on March 15, 2022)

Everyone's trying to take a shortcut to get there when they realize, like when I'm telling you right now, you're never going to get there because you're not good enough. Like you're never going to get there because you're not good enough. You have to do the Rocky Cutscene. You have to eat the shit for a period of time so that you can get the reps in so you can put your time under the bar in so that you can actually get good. The wealthiest people in the world see business as a game. This podcast, The Game, is my attempt at documenting the lessons I've learned on my way to building Acquisition.com into a billion dollar portfolio. My hope is that you use the lessons to grow your business and maybe someday soon, partner with us to get to $100 million and beyond. I hope you share and enjoy. I'm going to walk you through the best way, in my opinion, to pick the niche that you're going to focus on to start your business.

So picking the niche, I think this is something that's wildly misunderstood. And I'll tell you where most people get wrong is that they pick a niche and they have no idea about the niche. All right. And so Y Combinator, which is a venture, it's like an incubator type thing in Silicon Valley. They have their things that they look for when they're investing businesses and they're accepting them into YC. And one of the ones that was really interesting to me is that they look for past experience within the space.

And because I think a big part of that is that a lot of times new businesses are not actually really new. There's slight iterations on things that are old, right? And candidly, within my own business experience, I don't even do anything now. I just try and do stuff better, which people somehow put poo on. It's like you can go into dry cleaning and do it better than everybody else and still win. Like you can go into lawn care and do it better than everyone else and still win. And I think that's wildly underrated because you will 100% make money if you just try hard and know how to do business.

You don't need anything new, right? And so, like, I think that is a wildly underestimated component of having strategy and business is just like, how do I use the value equation in the book? Like, how I provide more value to my customers than anyone else can? But, like, the actual industry itself that you're serving doesn't need to be new or different, right? So that being said, like, servers with a smile, wildly underrated. But the piece that I want to hit on here is that, like, I'll tell you this story. I think it really drives this point home.

So in Allen, our software company that we recently sold a majority stake in, one of the agency owners, you know, for nine months was just like never making progress, right? Like, it was always hopping on, was always having issues. And it was like, his clients were getting results. And he was like, how do I get around that? And I was like, you don't. You need to fix that. And it got to the point where I just said, listen, man, like, you don't know what you're doing,

which is why your clients are getting results, period. He's like, well, I've got this one guy who does, you know, makes all this money using our, you know, using the leads that we get him. And I was like, okay, well, why is he getting making money the other ones aren't? He's like, well, I don't know. And I was like, right. So that's not because of you. That's because of him.

And so what I told him to do, which was wild at the time, I said, I need you. I think that you should close your agency. I was like, I don't think you know anything about real estate. I said, I think that if you know how to get real estate leads, then you should go get your real estate license, go generate your own leads and go build a real estate business and learn it. And then once you have succeeded in doing that, then if you want to then go make the agency and show other people how to do it because you've

actually done it and so there's a tweet by leila my wife she said like stop listening to people on the sidelines about like sorry stop listening to people about how to play the game who've never been anywhere but the sidelines right and the problem is too many of the people right now y'all are on the sidelines and have always been on the sidelines and are trying to pick a niche to get into to sell how to do the niche well that's dumb you've never done it. it. So a lot of times people are trying to skip to a higher leverage opportunity without having done the requisite work of understanding the niche, which is why the Y Combinator people look for, like, if you want to make a software in the payment space, we'd love to see that you have experience

in the payment space because there's so much stuff that you don't know that you know when you actually spend three, five, you know, years doing something in an industry. You understand the lingo. You understand the avatar. You understand the problems. And you can see opportunities if you have an entrepreneurial hat on. There's always problems in every industry, which means there's there's always opportunity. And fundamentally, business is just solving problems that exist and making sure the math makes sense. Like, that's literally it.

It's like, where is there a problem? How much do they think this is a problem? And is there a way that I can solve it and charge for it? That's it. Like, that's really all the business is, right? And so, and really how well you solve the problem is going to dictate how much virality your business has, because if you solve it really well, people will tell people and you will and your business will grow out, right?

I think the problem that a lot of people have is they didn't know how to make an offer, right is the fundamental thing that is the beginning of building a business is you got to know what you're selling right and so that was a problem for a lot of people and then people got that problem solved and then they told their friends and books sold 100,000 copies in six months with no promotion right and so I'm only I'm sharing this because I couldn't write a book on offers without having made a ton of offers and I feel like there's too often people who are trying to focus on a niche who've never actually done the thing in the niche and this is really really rampant in the internet space because everyone's trying to take a shortcut to get there when they realize like when I'm telling you right now,

you're never going to get there because you're not good enough. Like you're never going to get there because you're not good enough. You have to do the Rocky Cutsee and you have to eat the shit for a period of time so that you can get the reps in so you can put your time under the bar in so that you can actually get good. And before you are good, you will suck. And you have to accept long period of sucking and you do enough volume that eventually you'll suck so little that you'll actually be good. And then at that point, then you'll actually have a real decision to make, which is I'm actually really good at this thing now that I've learned. Do I want to teach it to other people or just want to do more of the thing that I'm doing, right?

Because like a realtor can then just grow a team of 100 realtors and own the entire thing, which is what I'd recommend this guy do, right, rather than have an agency. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words, we can out more entrepreneurs, make more money, feed their families, make better products, and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I asked you do is you can just leave a review.

It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world with someone else. That doesn't, right? And so this is kind of where I think the problem is that, like, I had another question that was sent to me on Instagram, which is like, hey, how do I soft turn? Because a lot of my clients are getting results. And I'm like, well, duh. He said, he said, how do I sell from 10,000, 100,000 a month when I don't have a lot of testimonials?

I was like, you're not good at the thing that you're supposed to be good at which is why I don't have testimonials is why you're not going to $100,000 a month. Like, he's making the goal $100,000 a month rather than being good. I have no words. I have no words. I don't get it. You know what I mean? Like everyone's in such a fucking rush that you will never get there.

It is the slowest path to getting there is to fool yourself and the thinking that you're good is something that you're not. You have to go and pull the thread and say which and the thing is just like, well, do what you're passionate about, whatever. You're not going to be passionate about stuff that you suck at. What you have to do is, like, which of these opportunities seem like they potentially have high leverage, right? And I'm going to learn from the bottom, right? It's like one of the best ways to learn stuff is starting at the bottom, not because it's the only option, but because if you understand the entire pathway of a client journey or of an industry journey, then you will have more trench knowledge, more depth of experience that you will be then able to

apply, right? Like, people see my, you know, videos on personal finance, people see videos of mine on sale, people see videos on mine recruiting, people see videos of mine of marketing. And it's like, how did you acquire all these skills? It's because like, it's not only because I tried to jump to the spot that I'm at and then like, you can't skip. You can't skip. Like, there's a sequence. Buildings are built with foundations and your career is a pyramid and the peak of that pyramid is based on the depth of the foundation that you build. And so like, I've said this before and I'll say it again, but your work works on you more than you work on it. And so even though you might not be getting paid in the period that you're at, just because you're struggling doesn't

mean you're failing, right? And it means, and the thing is, as long as you're getting better, you're making progress and the progress is the success, is that you are getting better. And like, you will turn the quarter. Like, that's an inevitability if you put enough time in, period. I promise you that. If you don't stop doing something for 10 years, it'd be really good at it, period. And if you're really good at it, you'll like doing it. Ah, right? And if you like doing it, then at that point, you won't wonder why your business isn't making money because you'll actually be good. And then you won't have these questions. But the questions that I get, I'd say a third of them come from a very short time.

It's like, why am I not a millionaire? It's been 90 days, Alex. What the hell? It's like, well, you didn't put the five years in. So if you're trying to figure out what niche you're going to pick, the point is to just pick and then accept that you're not going to be overwhelmingly successful for like five years. Like, every entrepreneur that I know of puts five years. in before anything really happens. And you're like, fuck, five years, probably shouldn't tell new

entrepreneurs that, yes, you're going to be very successful very quickly. You should put your job into it. It takes a long time to learn because there's a lot of stuff you got to know. You got to know how to generate leads. You got to know how to work leads. You got to know how to set appointments. You got to learn how to close. You got to learn how to set up bank accounts. You got to learn how to transact. You got to learn how to do billing. You got to learn how to do payroll. You got to like, you got to learn how to actually fulfill a product. You know how to learn how to create a customer journey. You got to learn how to ascend people. You got to learn how to, learn how to decrease turn. You got to like, there's a lot of stuff. You got to learn how to hire.

You got to like, there's a lot of stuff that you got to learn. And so to think that it's somehow going to take 90 days. It's like, why do you think that you can get a chemistry degree in four years and think you can somehow be able to become a master's at entrepreneurship in 90 days? It doesn't give respect to the game. Like, you have to respect the game. Like, a lot of people been playing this for 40 years. The one's getting their master's degree for 40 years. Well, some PhDs are, right? And they're probably pretty good at whatever their thing is. Right. And so it's like to think that you're going to beat guys who've been playing the same game for 40 years and your first try in 90 days doesn't respect the game. And so like I was fortunate that I started young. I started when I was 23.

I mean, the only thing I could have done before that, without doing that is just start instead of going to college. Right. But you have to, you have to put your time under the bar. Like your legs aren't going to grow until you, like you can't do four squat workouts and expect your legs to grow. You'll get better at squatting. And that getting better at squatting is a requisite for having bigger legs. you still got up with the volume in. There's a depth of understanding that happens with volume that people cannot appreciate. Like Napoleon said, quantity has a quality all of its own, right? You got to do the boring work, and you got to love the boring work. And if you can do that, you won't lose. Because the only person who's injecting this artificial timeline on you is you.

And so, anyways, it was like one of the number of questions that I was getting in my comments and stuff, it's like, how do you pick the niche? How do you know where to start? You don't know where to start. You just start and then you start accumulating knowledge and then you will learn. It's like reading books on sales before you've actually had a sales call. I'm actually very against it. I think you should start selling and then read books on sales because then the books will actually make sense to you. Right.

Like trying to read 100 books on entrepreneurship before you've actually had a business is silly. Start a business. How do you start a business? You get a bank account, get an LLC and you figure out what you're going to sell. Like that's what you do. That's how you start a business. So it's going to start with promotion and selling because you can't even have the rest of the stuff until you learn how to do that. And if you don't know what you're selling,

it's because you probably aren't going to the thing yet. So you've got to go, like, get some industry experience, right? That's why banks, by the way, they don't loan to people who don't have industry experience. So if you're like, hey, I want to get a loan to, you know, loan to, this was actually a story I heard from, from a gym owner. I ended up working with us for a period of time was in Jim launch, was he wanted to start a gym and get a loan from the bank. And he went to like 10 banks and they all said, and he said, and he said the reason was because he did not experience. So what he did was he went to Bally's. and worked at Bally's for like three or four years and worked his way up to become the personal

training manager. And then at that point, started his gym. And he didn't even need the bank loan at that point because he'd saved some money and he learned how the business worked. And lo and behold, he was like, that was some of the best advice I ever had. So sometimes you just got to get the industry experience. People just want to skip to the last step when like there are prerequisites to getting there, which is probably prerequisites exist. So this is hopefully the real answer to how to pick your niche, which is like, you just need to do something that is at least not, you're not, you know, repelled from that you see people making money in and then stick with it for an inordinate amount of time without convincing yourself that you're smarter than you are, which is a

loose paraphrasing of a Twitter quote that I can't remember who wrote it.