The Game with Alex Hormozi - Private Equity's Next Billionaire? (on the 10X Capital Podcast) | Ep 778

Episode Date: November 29, 2024

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Wanna scale your business? Click here.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

You've made and lost your money twice. You have to make big bets in order to win big. You have to be willing to go to zero. How'd you get here? It's this healthy appreciation for risk that's completely contrasted with the utter comfort with losing it all. Not all bets are going to be good ones. What you've done is incredibly rare and impressive. You've gone from a couple thousand dollars to now worth $150 million.

You've more than 100 X. What's the next step? Are you starting a fun? Alex Hermosley, welcome to the 10X capital podcast. Thank you for having me. I'm honored to be here. It's great to have you. So you have one of these stories where you've made and lost your money twice.

You went from Hero to Zero and now back to $150 million net worth. How'd you get here? Jeez. I'll give you the shortest version possible. So I was a management consultant right out of college, did well in school, did two years of that. I went to go apply to, you know, all the big Ivy Leagues to get an MBA. And one of the questions on the test was, how will, you know, a Harvard MBA help your short and long-term goals? And I sat there for like four days trying to answer the question.

And then I just came to the conclusion that it wasn't going to help my short, long-term goals, which is probably why they asked those questions on the application. I was like, I guess I'm going to do fitness. Basically, what I would do is I would sign a lease and then start running ads before I even had anything built out. And the model that I had was not very difficult to get the equipment for. I would generate enough pre-sales from the launch to cover the entire opening of the gym. From there, started doing gym turnarounds.

It was during that process that I lost my money twice. Once was with a partner at the very beginning who was like, I filled his gym up. And he said, hey, I'll come behind you and I'll just operate all the gyms. Then you don't have to give anything away. You'll just own them all. And then promptly took the money out of the business that I had saved up from selling the six gyms that I had. And so that sucked. But I learned a valuable lesson, which is in general, if you have the option between getting to business with someone who's already been indicted for fraud.

All things being equal. Yeah. If you have no option to everybody that you know has been indicted for fraud, then, you know, you have to just choose the best one. But for me, that was a big lesson number one. Honestly, it was like four, five, six months later. it happened again. So I called the next gyms that were supposed to launch and told them, hey, we're getting out of the business. We're going to do something else. One of the guys says, hey, launched my buddy's gym. And so I picked the highest number I could think of because I wanted

to get him off the phone and he already said he was broke. And so I said $6,000. And he said, six grand, done. And I remember just like looking at the phone being like, holy crap, like what just happened. I had seven more calls that day. And next call, same thing, how much, eight grand. Next call, same thing, how much, 10 grand. End up doing $60,000 in sales in a day. I could finally breathe again. I was officially just broke again. but no debt. And then from that, the next month, I think we did 220, then 380, then 480, then 780, then a million, then 1-2, then 1-2, then 1-5, then I think it was like 1-8, 2, 2, 2, 2, 2, 2, and it went all the way up to $4.4 million a month within 20 months.

We ended up packaging those companies and selling them to American Pacific Group. I sold 2 thirds at a 46.2 million valuation in an all-cash-deal. That was your first big exit. That was the first big exit. And during the five years, we took out 42 million in distributions. So that was like still a very cashful, positive business. But I just didn't want to be in, I'd been in gyms for like a decade at that point. I was ready to just not be the gym guy anymore.

And on Christmas Day, I officially started Acquisition.com. The thesis I had was everybody wants proprietary deal flow and everybody wants people who trust them when they get into a deal process. I wonder if somebody has merged like a influencer social media brand with the traditional private equity model. Tell me about the social media ramp up, year zero, year one, year two.

How quick are that ramp? I had the Jim Secrets podcast. Was that an interview style? No, just me. Just talking ahead. So I lost all my money the second time. April of 2017. And my first podcast episode is July of 17. You can follow the whole thing from zero back again 90 days after I was at zero. We both know many people that make a lot of money

than lose it. And oftentimes make even more on the come up. Why is losing all your money a prerequisite for success? I hope it doesn't have to be a third time's the charm for me. Probably 50% of the people I know worth hundreds of millions or billions of dollars have gone through this arc. There's something there. What is it? That makes me feel better. I think I would say there's two completely dichotomous things that come out of it. On one hand, you earn a very healthy respect for risk. Not everything is going to work out. On the other hand, you know that you've lost everything, and yet you are still here. And so it's this healthy appreciation for risk that's completely contrasted with the utter comfort with losing it all anyways, because you got there and, you know, I joke about

this, but Layla and I were happy when we were poor, we're just about as happy now. Makes you anti-fragile. Yeah, that's perfect, exactly. And how does that practically help? With the healthy appreciation for risk, we are willing to take fewer but more strategic big swings. You have to make big bets. So you have to be willing to go to zero. But at the same time, knowing that not all bets are going to be good ones. I feel like that is fundamentally the basis of good investing. There's some huge power laws when it comes to venture capital, one of the investments.

And because of that, you don't have to make huge investments. You can make small checks. Jason Calacanis invested $25,000, made $100 million for Sequoia. Is that the same thing in your private equity business? Are you able to make small bets and make huge returns? Or do you really have to have more of a concentrated portfolio? The concentration for us right now is because we're super operationally involved. And so this is something that we're to be very candid, like we're actively looking at.

Is there a way that we can maybe do less? And so, you know, on one hand, we've considered opening up a venture arm, which is something that we're strongly considering right now. On the more traditional private equity route, we have made small bets relative to the amount of money that we've made. So we've had monster returns from a percentage basis. but the amount of work that has gone into those companies. The company that was at $2 million that went to $110,

we've done a lot of work. To be fair, the founders have done an amazing job. They're awesome people. The credit should go to them, but we've done a lot of work too. And the same thing with the brick and mortar change that we have. We have tended to go towards operationally complex businesses that just require lots of people. And I think it's just because Layla and I are very comfortable in those types of environments. We both came from a service-based background.

But one of the big kind of like arbitragees we were talking right before we started the show, 40% of our portfolio is software. And we don't talk about it as much. And part of the reason I don't talk about it in my content as much is because I think 78% of all businesses are service businesses. It applies to such a small slice of the demographic that I'd rather just talk about the thing that applies to most people. But we take a lot of the best practices that we've learned from traditional service businesses and then apply them to software as a service businesses because a lot of the same things work is just a lot of it's automated. And that's where you get, you know, huge returns on it. I want to double click on something. So I read your book, 100 million offers. Incredible book. Basically, it's a book on how. to create value. You talk about how you would go to a company and they would give you 30% of the company with almost no investment and you've done this over and over dozens of times or so. You've never really explicitly talked about how you construct that value proposition for the business owner. So tell me how you get somebody to give you 30% of your business with no money down. We do a combination. To be fair, the deal is evolved over time. And I wrote the book, I want to say

three or four years ago, between 20 and 24 deals in similar is structures. So we had an element of cash flow, which is either a profit share or a revenue share, depending on how volatile the business was. And then we had a profits interest based on some agreed upon basis that we had or above a basis that we mutually agreed on. And usually that number was very low because the companies didn't really have a ton of intrinsic value. And so that was more or less the combination of what it was. It's like, okay, your business is worth $2 million. We get 30% of everything above that. And for the work that we do in the meantime, we need cash flow because we have a huge team helping you put all these things together. And so that's pretty much how the deals

work. Over time, I started writing checks into companies because I noticed it changed the dynamic a little bit favorably for us. And it was less like we're consultants for hire. Now we only do cash in deals. That's probably more traditional. We look for a lot of majority covenants, even if we're not in a majority position, just because we want to have a good amount of operating control on the business. Honestly, in some ways, it's just keeping the emotionality of it from the founder from making like a really poor decision. Everyone of the covenants that we're going to ask for are not, like, when we explain them, they're like, okay, I get that. The biggest companies we have are, you know, four, four plus years that we've had with us. And some of those we're looking for,

you know, liquidity events right now. And I think we're kind of at a point of like, okay, where to from here? That's kind of, I would say the position that Layla and I are in right now with our holdings and kind of like, okay, what went well from this last round? What are we going to do differently next time? And I would say the big, the big one is that we're just going to buy fewer bigger businesses at the onset, because we've learned that a lot of times, the bigger the business, the more we can help. Because when it's a smaller business, it's like we have to build so much infrastructure. A lot of times there's no CRM. So it's a, you know, it's all, it's all Google sheets and things like that. So we have to implement a full CRM so we can get data pushed to us.

We even know what's going on in the business. Finances are typically a mess. It's just, you know, his mom's bookkeeper that's been doing it, you know, across the kitchen table. That's been, that's been doing the finances. There's typically no leadership team in place. It's usually a founder and like maybe a first follower, somebody who's really loyal and kind of like an integrator for them. but oftentimes they don't even have that. And so when we've looked at the more and more mature businesses, it's like they have a lot of these pieces in place and so then we can get straight to value creation.

There's no leaking bucket. Yeah, or less. Just to double click, you're really good at deconstructing processes. So you go to a founder and you say, okay, your company's worth $5 million. I'm going to go and invest and then I want 20% of the upside or 30% of the upside. How do you insure to the founder that you're not just freeloading on the upside? And do you create milestones?

you what construct do you use to align yourself not milestones it's been pretty much straight up we get 30 percent of the upside just trust yeah and that's i mean and that's been the whole point of building the brand and building the the presence that we have has been to have that trust um and i would say that it's definitely lubricated the deal process overall um we don't need to do nearly as much diligence you know as a as a traditional p so we can we can move a lot faster on deals and we've generated a lot of cash anyways in the meantime so that now if we do want to write bigger checks we can do that i can't write the check sizes that I would like to write. But at this moment, you can stroke a 10 or a 15 or 20 million check if we really like something. I can't write multiple of those 100 million dollars checks for a

company. When we got introduced a month ago, we started talking about this crossroads that you're at. You've engineered this model that works where you're owning large percentage of slightly smaller businesses. And you're thinking, should we continue building this kind of Berkshire holding company or should we go to the private equity route? What are the pros and cons in your opinion? If anyone who's listening is like, he doesn't sound decided, I'm aware. You know, on one hand, We could raise, you know, outside funds. Transparently, I'm just so afraid of losing someone else's money. I've made mistakes in the past for me.

And it's like, okay, that's an Alex mistake. I'll own that. And it was all my money. Losing someone else's money, it makes me feel sick to think about. Because I just know how hard it is to make money and to just lose it for somebody else, just like, it kills me. It's definitely an irrational fear of mine. But that's road one.

Road two is that we continue to still write our own checks and we still to go after bigger companies, but we just take smaller chunks. So we actually go back to the minority thing that we started with, but just with much bigger companies. And I think we'd be able to get pretty good valuations on this companies if we're coming in as a minority position with value at. The third buck is we just continue to do what we have been doing and just continue to level up slowly over time, the size companies that we have with not necessarily the desire to sell them. But some of the companies are really, really cash flow positive and I don't need to sell them. Like some of the software ones,

we're absolutely looking to have liquidity event from an exit because we just plow all the money back into the business, which it should do. So there's kind of like the three doors that we have in front of us for like where to from here. I've been honestly split because I'm also continuing to run what we're currently doing. I would say that the likelihood that Layla and I raise the fund is high. I just don't have a timeline. You're rationally being very slow in your decision making because institutional capital and outside capital is in for penny and for a pound. You take that dollar, you're basically beholden to those LPs for a decade. What's coming through your pipeline? Are you getting billion dollar deals? Because I think that should really factor in. Our deal flow is

absurd. How do you even process it? So we get about 3,000 companies. companies about 100 a day that come inbound that are trying that specifically apply for like we want to be a portfolio company. We have many more than that that just like want help and one information and things like that. But a hundred a day come in that fill out a full many question application. And then those go to my deal team. So we have automated sifting that kind of just in the background based on the application questions that automatically, you know, remove 95%. We don't do any deals outside of the US. So that takes off half because 55% of my audience is international.

So we have 45% left. From there, it's like we don't want other investors on the cap table. That takes another half out. From there, we've got it just, we just kind of whittle our way down to what are the kind of investable deals. We probably get two to three deals a day that are legitimate businesses that are of size, that are US based. They're all over the place because the content I have helps a lot of different businesses. So we'll get, you know, a florist with a commercial cleaning company with a, you know, SaaS company. And then tomorrow it'll be a logistics broker with like, it's, like, it's a florist. It just, it's all over the place. What's the revenue split on that? So 50% are zero to a million. 25% are one to five million and top line. And then 25% are five million plus. And obviously there's, you know, a lot above five million plus in terms of, I mean, it's 25%. But I want to say it's somewhere in the neighborhood of like five percent of deals are doing over 20. So that's where that taking 100, woodedling down to like two-ish, two to three deals a day, those are usually companies that are doing over 10 million and have all these other kind of things that are interesting about them. But sometimes we just hop on the phone with the founder and then we're like, this guy's

crazy. A lot of times on the first call, we disqualify like 90% of companies because they're like, this is hairy or this feels weird or I don't really like the business or whatever else. A lot of times it's businesses that don't have any like compounding vehicle. And so that's what we look a lot for is I have this theory that a business can only compound if you have a product that people never stop buying or you have a network of people that never stop selling. And so it's like if you have a real estate brokerage, right, you have a network of people that never stopped selling for you. You have some reoccurring that comes from, you know, if somebody sells a house and four years later to come back to you. But for the most part, it's one Zee Tuesdays. On the customer side,

you have a SaaS software that's super sticky. You know, you sell IT services and people don't really churn out. Those are the types of services that we focus a lot more on now. In our first round of companies, we basically had to take companies that were really profitable. They had something that we really liked about them, but almost none of them had really good revenue retention. And so we spend a lot of time building that in so that we can get that compounding. But we just want to see that people keep buying and that there are good gross margins as they continue to buy. And so then those are the businesses that we can just knock out of the park because we're,

We know how to build acquisition out really well. We know how to build delivery out really well. The things that Layla and I are probably not the best at is like we're not the best at like super techy stuff. Like even though we have 40% of our portfolio is software based. We heavily rely on the recruiting side of who we bring in who is good at that stuff so that we can then just do all the business fundamentals to that model. And you're a big believer in demand constrained business is not supply constrained. If I want to put my brand behind something, I want something that's demand constrained. If we're going to work on something, then I prefer the opposite.

Yes, is the answer to the question. Sorry, on both those situations, we like demand-contrain. So either we can generate it or if it's something that I have a huge amount of my audience that I can push towards, then that's something that'd be interesting. So you're a big student of compounding. Yeah. You talk a lot about it. What skills have you compounded over your career?

And talk to me about why compounding is so important. So I came from the gym business and probably one of the simplest reoccurring models that people understand. A lot of people don't know about the gym business, especially in the service-based gym. So like personal training, semi-private training, large group, which is where I came from. was my bread and butter is that people cancel all the time. Whereas like a $10 a month membership, it's lower and it tends to be more like a facility usage business than it is actually like a service business. I remember the first time I looked at churn and saw that. I was like, okay, 10% churn, that's the industry average. And then I just did it for a year. And I was like,

oh, I lose 70% of my customers every year. That means that basically every month I have to like go hunt and I never get credit for what I did three months ago. And so I wanted to have businesses where I could get credit for the work that I did five years ago to ladder up to the first question you asked, which was, you know, what has been compounding in my life. Skills has been the biggest investment I've made in my entire life. And so, you know, when I first started, I got pretty good at sales. I mean, I didn't know anything about it, but I got pretty good at it just from taking 4,000 one to one consults in person.

I learned enough about the other stuff to have that just not be the limiter. So I learned how to run Facebook ads in 2013. I went to a workshop and somebody taught me how to do it. And that ended up completely changing my life. And that's how I was able to fill all these gyms up later. But then I didn't know how to do like more advanced stuff. So then I paid somebody else to teach me the more advanced stuff. And so what I have noticed is that with each kind of new set of skills that I acquire over time,

it just makes the former skills that I learned way more valuable. I like telling the story of Jay-Z as a simple example. It's like, okay, so he had a natural proclivity towards like beats and rhythm. Okay. Then he learns how to rap. Okay, well, he's got some skill there. But then he learned how to promote. So now that made his rapping skill more valuable.

And then he learned how to sign other people on or create a label. and then you learn how to sign other people on and then promote them. And so all of a sudden, he just gets more and more leverage on the original skill set. He still needs to be able to recognize good music from his original days. But learning how to promote on top of that just gave him huge leverage and then doing it with other people more so. So just to deconstruct that, let's use Jay-Z. So he's good at beats. Let's say you want to acquire the skill of rapping.

How would you go about that? How do you, A, identify the skills needed and B, acquire those skills? Well, I'll walk you through something that we like to think about. Everything we do is off the theory of constraints. We say, how do we do more what's working? And we continue to do more of what's working until something else gets in the way of us doing more of what's working. And then we ask the question, why can't we do it? And the answer to that question is typically the constraint.

And then all of our resources will get deployed towards relieving that constraint. And then we go back to doing as much of that thing that made us money as possible. And if you don't know how to relieve that constraint, that's your lack of skill. And then you gain that skill. Let's say you have to gain that skill. Let's say you have to become a promoter. How would you go about? I'll do a microcosm of this.

So the ads thing I was saying earlier, I didn't know how to run. national ad campaigns. So I knew how to run them locally. But then when we wanted to scale gym launch, I was like, I got to learn how to do this nationally. I have no idea. How do you target gym owners? And so I got on the phone with agency owners. And I didn't have a ton of money at the time. And so I just said, hey, can you run my ads, but also show me what you're doing? And they all said, no. And so finally, I was on the sixth call, the guy said no. And I was like, dude, it's America. Like, just name or pride. Like, what would it take? And this is one of my favorite question. Yeah, I was like, what would it take?

I use that line all the time. Like, what would it take to get a deal done? What would it take for us to do five YouTube videos a week that are 10 out of 10 quality? And then we can just decide the tradeoff if it's worth it. That particular agency owner said, I don't sell my time, but I would do it for $7.15 an hour. And I was like, okay. And so I bought eight hours for him for $6,000. And I showed up to every call with like notes and recordings.

And I needed to learn how to do this. We go document, demonstrate, duplicate. So I have to figure out the checklist of all the things they do. what are the behaviors? And then you do it in front of me and then I do it in front of you. And then as long as I can duplicate, then I have the skill now. I learned this from Layla was when we want to learn a new skill, we also interview people for the skill.

Because usually it's a company that has a void. We'll get on the phone with 10 or 20 people with the intention, obviously, of hiring, you know, somebody who's really good. But if you talk to 10 or 20 people that are all like senior director of, you know, customer success, he say, hey, walk me through some of the metrics that, you track for this. And then how do you move these metrics? So what activities do you do to change them? My belief is that you can tell someone's skill by the quantity and quality of metrics they track. Easier thing is sales because most people who are listening get what that is. If I talk to a sales

director and I say, first off, how do you make this company more money? Now, if they say something like, well, I'm going to increase sales, it's like, no, but you're not going to be on the phone. So how do you increase sales? And so then it's like you start to put a little bit of pressure. And then because if they can't tie the activities that they do to revenue generation on the interview, then for sure they're not going to do it and work for you. And some guys like, oh, you know, I'm just going to, I'm going to roll up the team and I'm going to, you know, get them excited. We're going to do some training. That's not going to be a good sales manager, right?

If someone says, well, I'm going to look at, you know, the offer percentage that we have. I'm going to look at our scheduling rates. I'm going to look at our rates are low. I'm going to do this. If off rates are low, we're going to look at marketing, make sure the messaging is right. If we're struggling with whatever, a specific obstacle, then what I'm going to do is, I'm just going to isolate that obstacle. And then we're going to drill it. I'm going to look at that particular reps, closing percentage and make sure that it gets up to

if he starts breaking down all of these pieces, then I'm like, okay, not only is he tracking the metrics, but he knows how to affect them. And so then also, when I talk to four other guys, and I get onto the fourth call, that first guy might have said something that I didn't know about, but when I go on the fourth call, I'm like, so what do you think about this? And then how they respond. Right. I get better and better at it. And so then I start to know what to look for. And then if I still have no idea, then that's when I'll pay somebody. I mean, I'm still the biggest fan of one-on-one tutoring. It's like out of vogue now, but I'll pay anybody to learn something. I offered someone $350,000 for dinner. He said, no, I offered $2.50. And then we offered $3.50.

And he's like, fine. He didn't even take the money. He's like, I'll just meet you for dinner. Because you're so desperate. But I wanted to understand branding. Because it was this thing that I realized that I didn't understand. So in gym launch, it was very much an arbitrage business, like a media arbitrage business. And so everything was quant-based. And that was kind of like how it was all I cared about. It was just like, what are CTRs? What are CPMs? What's our cost per lead? You know, what's schedule? What's show? What's close rate? And that's all I cared about. I was just blowing as much money through that funnel as possible. The moment that changed my life around this,

and this is ultimately the beginning of my path down to building a personal brand, was this is going to sound embarrassing. It's very embarrassing. I saw Kylie Jenner on the cover of Forbes, and I think she was 19 or 20, and I think I was 27 at the time. And I thought I was hot shit because I was like, I'm taking a million and a half a month, like personally.

And it said she was a billionaire. And I was like, she's a girl. She's seven years younger than me. Because at the time, I was still young. Now I'm just a white dude. But like before this, I was at least a young white too. And so when I saw that, I have this fundamental belief that if someone makes more money than you, then they know something about business that you don't know.

And then they're better than you in some way. And so you have to figure out what it is. And so I looked at everything. I was like, I got to figure out this brand stuff. Like it's it's the brand. I don't have a brand. And so then I went through this long part of like, do I want to be known publicly? Fame has pros and cons. And at this point in my life, it has more pros than cons. The thing is is that the pros of fame, there were some pros that I didn't expect. The biggest one is recruiting. Our ability to attract talent now is unparalleled. And that has probably driven more alpha from the investment. than anything. The companies we started investing in, there was no way that some of the top talent that we put in those companies would have even taken a call with those companies, but we recruit from Holdco. They see a private equity firm slash family office. They can look at a whole bunch of our content, be like, these people seem okay. They don't want to work out a $10 million revenue business, but if it's part of a family office where you could grow and grow your skill set, that's yeah. And if you prove yourself, we can move you over. And if you want to be in a different industry,

we've got different industries. And if you crush it, then you can come up to Holdcoe and then basically act as an advisor for all of those roles across the portfolio. And so like our director of CS directs all the directors of CS in all the portfolio companies. Our director of sales directs and recruits the sales directors for all the portfolio companies. Now what what this does is it gives us a huge amount of leverage and kind of like inside man for all the companies. And so because we recruit some of the leaders, they have a good relationship with us. So we're not like this the board. You know what I mean? They're like, oh no, it's Alex and Leila. And they're the they're the ones who brought me in. My first three interviews were with Acquisition.com.

and then they put me into this business as my last two interviews. And so that's more or less the process that that we run in order to place talent. So that's been a huge, that's been probably the biggest unforeseen benefit from fame has been our ability to recruit talent. Obviously the deal flow stuff is, I mean, that's the obvious benefit. Those are probably the two biggest ones. Access to people. To be candid with you, I don't reach out so many people. Why?

Take this the way I mean it to everyone who's listening. I'm pretty sure I know what I need to do. What activities I need to do in order to hit the goals that we have in the next 12 to 24 months. It is straightforward. And so the only thing that separates me from that is doing it. And so I basically try to eliminate all meetings. There's a concept of efficiency versus effectiveness. Yeah.

And you're clearly very efficient. How do you know that you're effective? How do you have such certainty around that? The outcomes that we've generated so far, you know, in December of 2016, out a thousand bucks. We have a lot more than a thousand bucks now. How much of your success is based on thousands of hours of hard work versus high IQ? You deconstruct everything on a skill set basis, but isn't there a minimum IQ that you need

to be successful in business? I think it depends on the business. And it depends on the timeline. I've seen all manners of business owners walk through our doors here at Acquisition.com. I've seen some guys with janitorial businesses doing $40, 50 million a year. And I wouldn't say that they were super high IQ. They just stuck with it for 20 years. I think the narrower the field of focus, the lower the IQ requirement.

Because fundamentally, if you have a sound original model and you continue to try on a long enough time horizon, eventually you try something and it does work. And then that gives you the next peg up on the ladder. And you just keep doing that. I think where a lot of entrepreneurs get in trouble is that they try too many things. So you just don't get enough failures in a narrow enough scope so that you can move forward. I've been really thinking about this paradigm of transactional versus relational businesses. I'm very much a straight shooter.

And sometimes people are put off by that by the transactional nature. But it's meant to be an honest trade. And sometimes historically I would feel bad about that. And then I noticed an interesting thing that anytime that somebody pushes back on that and says, I'm like relationship, I'm not transaction. They have never executed. Not a single time. Somebody that pushes back.

on this construct on this kind of like explicit exchange have they actually executed so it makes me feel a little bit more confident in that i think that great relationships are built on great transactions what do you think about this so i'm glad that this is where we went because that's wholeheartedly agree i mean leila and i have an explicit agreement of our exchange we we visit that agreement if we feel like one of us is out of exchange with the other we're not meeting the other person's needs but i genuinely believe everything is transactional and there's just people who realize it or admit it and people who don't fundamentally if you are not rewarded for a relationship on a long enough time horizon you will leave it i think there's two aspects there. One is the transactional aspect is only highlighted when it's really out

of sync. So for example, if we have a relationship, you know, I make you $100 million, you make me $200 million. I don't think that's a problem. Yeah. I think we're going to be best friends. Yeah. I think, but over enough of a time, if it's so lopsided, then people naturally kind of go to like, hey, there needs to be more transactionalizing for me or more benefit for me. That's where it really gets off sync with these extremes. And you look at partnerships too. You look at co-founders or 50-50. I don't think if somebody's doing 55, 45, 45, I don't think there's, I've never seen a problem. It's when it becomes like 90-10. The other person tries to kind of guilt the other person saying like, well, I thought we were co-founders. I thought we started this together. But I think you need a pretty

wide disparity before it becomes an issue. Something I learned from Leila that helped me out a lot in the earlier years is she said, never count anybody else's money. That's proven so profitable for me to just say, what do I have available to me? And does this deal make sense for me? If this guy makes 20 billion on this deal, but the economics based on my side work, fine. And comparing those economics to the similar amount of activities or effort that I have to put in all the other vehicles that I could consider, if I get the best return on this thing, then I'm good with it. And so I've, I've had this construct for value creation, which has been, well, rather value capturing, which is there's the value that you add, which is thing one, your ability to negotiate that

against that value, how much of that can you capture? Third vector is how many other people can do it, that thing. And then fourth is, what's the risk you take on? And I think that with those four elements, you can usually look at most deals and kind of know the major levers that are at play. So walk me through one of your private equity deals using that framework. If I bring brand to a deal, then that's going to be a huge amount of value. The ability that I to negotiate to capture as much of that value is possible is predicated on the idea that I have many other deals that I could do as well that are lined up behind this other person. And your negotiation skill set. I still believe that all negotiation has before you sit down at the table. The big stuff. It's fundamentally supply demand.

I just have always seen it that way. So it's like if I want to have crazy terms to get into a relationship with a girl, for example, if I have no demand for me, it's going to be very hard for me to get my terms. If I have a line out the door, I can ask 100 people and one of them will say yes to my terms, right? So one is, what's the value that I bring? Two is what are my skills of negotiating, capturing as much of that value is possible? Three, and this also hints out supply demand, which is how many other people are available who can do that same thing. This is like a common one with like a sales guy, right? So it's like, okay, well, I brought in $3 million this year for the business. It's like, okay, well, your ability to negotiate the value, fine, you might be good at

sales and be able to, you know, go back and forth. But I've got 10 other guys who can do the exact same thing as you. You were just signing Candidea baby. You were selling something very, very attractive. Right. And then finally, it's what's the risk that's taken on? And that's actually the most recent one which sounds silly on an investor podcast to bring that up. But we were talking to a high level employee that we wanted to bring in. And he was like, hey, I would like shares the business kind of upfront because I'm going to be, you know, foregoing this other stuff. Basically, the TLDR was you want to be compensated as a business owner without taking on the risk of a business owner, unless you're willing to put the same amount of skin in the game as I am or a business owner would in your

position. When you started. Yeah, exactly. Seven years ago. Right. Well, yeah, then that's, that's not appropriate. So from your perspective, it should be about their opportunity costs, one of your competitors. And you don't have to offer much more just because they're, I want people to be happy to be very clear. Like, what would it take? I still is always one of my, one of my favorite questions. If I have somebody who's one of one who can create a ton of value, then the supply demand shifts in their favor. You've taught me, by the way, about A players, not like giving them what they want at the margins.

Don't be cheap with A players. Yeah. They negotiate hard. I've learned so much from Lela about business. She was really the one who's pushed me to be like, let's pay above market. And I was like, why pay above market? Let's pay market. Why pay above the market?

Because you get so much more. So on one level, you'll be able to attract the A player's if you're paying above market. But I think that once the person comes in the door, all of their behavior is going to be predicated on the reinforcement loops that you have within the business. And so I think that it's the ticket of entry. Like the comp is the ticket of entry, but all their performance is going to be based on how well they are managed and led and their opportunities for growth. And honestly, just like how much they sync within the culture of the business based on how

we do things. And if they're rewarded frequently for doing things the way we want them to be done that make us the most money, then they're going to be, they're going to really like working here. And then that will ultimately, like the big vagus headlights for eight plus talent is unlocking discretionary effort. I want someone's shower time. And I'm open about that. If someone works based on threat of punishment, which is that you lose your job, right?

Then you will get as much effort as required to not lose your job. For the most skilled people, that requires the least effort for them to do as little is required to keep their job. And those are the people that you lose the most alpha on in terms of how much they could add if they really tried. I mean, if you wanted to zoom all the way out, like Layla and I's purpose of all of this stuff is to show that having a way of running a company that is off of praise, not punishment is a more profitable way to run a business. And people don't hate you. But no one's going to believe us until we have multiple billions and then people then ask.

But that is our entire thesis. Daniel's here. He'll vouch for it. And the unlocking discretionary effort is that only captured through equity? Could that be captured through salary? Oh, yeah. Yeah. No, it doesn't have to be equity at all.

I think it's just how you treat people. Whether they're rewarded for going above them. Yeah. And I think reward cycles are way too latent in most people's businesses. An arbitrary. Yeah, well, latent in terms of like delayed. Someone does something, we want to reward in minutes. A paycheck is so hard to attribute a behavior that you did.

My closest friend, Dr. Cashie is like a behavioral scientist, you know, genius guy. He showed me this chart and it like, it changed the way I saw everything. He said, this is a chart of how to train a dog, how to sit. On one vector it had, yeah, a number of attempts to, until they learn the trick and how delayed the trainer was before they gave them a treat when they sat. And so if you gave the dog the treat immediately, it took a couple of times and they learned how to sit because we reward them immediately after they did.

So they could tie the two together. If you waited five seconds, it would be like 20 tries. If you waited 45 seconds, it was a gazillion tries. After a minute, the dog was untrainable. It would never learn how to sit. Now, where it gets like the 201 version of this is, but that you still continue to give them a treat, which means you were training them.

You were just training them to do something else. And so I think about this a lot within the context of compensation systems, but comp with, you know, paychecks is such a delay that it's a very effective way of getting someone to join your company and a very terrible way of getting them to work as hard as they can. Without us sounding like psychopaths. Do you believe in operant conditioning? Yes, 100%. So somebody does something, you give them a bonus on Friday?

100%. And do you think there's any exceptions to operant condition? I don't even believe in free will. Tell me more. Well, we behave in ways that we have been rewarded for in the past. If you can control all the variables, you can control someone's behavior. Now, that sounds like psychopath stuff, but I don't see it that way. I just see it as more of a statement of fact.

If I wanted everyone in here to take all of their clothes off, I could guarantee you that I could do it. I would just raise the temperature at this room into a point, and we just stay in here and lock the doors and erase the temperature. And then eventually all of us would take our clothes off. And so if I can change the conditions to get a behavior, then did that person have free will? And so BF Skinner is one of the forefathers of this behavioral. He has this quote that I just love and it'll be at the beginning of one of my books. But everyone says that you can lead a horse to water, but you can't make it drink.

He said false. He said, if I salted the horse's mouth and I dehydrated the horse for weeks and then I put its mouth right in front of water, I can veritably guarantee that it will drink. When I think about like sales processes for that reason is that there is a perfect sales process. There is a way that we can get it so that we can control all of the variables and every single person would buy. Now, it may not be worth the return of investment, which is a separate question to create

that. And then you have the tradeoffs they have within a business. But the same things exist when you're when you're hiring someone. So like if I know we're getting into a little bit of the opposite of business, it's hard for me to stay away. But there's this whole concept of, you know, hire for attitude and train for aptitude. And you've heard plenty of these things, right? You hire for the smallest skill deficiency, period. It's just that attitude has bundled terms in terms of language. And so if I say, I want someone who has charisma. Charisma, if I say be charismatic to a child, even if they understand what

the word means, they can't be charismatic. They have to then translate that into smile when you walk into a room, nod your head when someone's listening, speak louder. When someone says something, say it back to that. It's a bundled term for 30 sets of behaviors. And then those behaviors are trainable. Now, I believe in the concept of hire for attitude, not aptitude, because to teach someone to be kind, maybe 50 different micro skill sets that I would have to teach. And that's probably not worth the return on investment.

Now, in a higher level role, it might be easier to teach someone to be kind than to teach them 20 years of finance or just find someone else. right we believe at acquisition.com that everything is trainable but everything is not worth training what about coachability deconstruct that what makes somebody more trainable someone who is coachable i would use at least our internal definition around this was just just intelligence intelligence is rate of learning if we define learning as same condition new behavior then if i say hey enter this phone and say the script and the phone rings and then you don't say the script and i say now read this script phone rings again same condition and then they read the script new behavior they have learned if i can do that in one

repetition with somebody and it takes somebody else five repetitions. The first person is more intelligent. Some people say more coachable than the other person. And so I think you aptly pointed out that one of the number one things that we look for now is just general intelligence. Basically, our return on investment for what we put in to train someone, we can get down one fifth if the person has higher general intelligence. And so this is where sometimes you have people who come in with lots of experience. And so they have a lot of skills, but they're actually not very intelligent. And so what you see is pretty much all you're going to get because the amount of effort it takes them to teach one or two more skills, you could probably teach a younger, junior, hungrier, more intelligent person in,

you know, the same period of time. But then once I've matched that person or once that candidate has matched the more experienced one, they blow past them. Then a subset of intelligence is ego and the ability to take feedback. Sure. But you don't believe in trauma. No, I do believe in trauma. I believe in defining it, which is a permanent, I'll say this way, I don't believe trauma is bad. It's a permanent change of behavior based on an immersive stimulus. So if I was a kid and I touched the stove and I burned my hand, that is something that taught me something. Now, if I never touch a stove again from that, then the stove traumatized me. The follow question is, was that bad? Fundamentally, you can imagine me with like a room of holistic healers who are like doing bell things and like,

I think you're storing your trauma and your back. I'm like, how do you know that? Where? Point to the anatomy. Please tell me where I'm storing trauma. What does it even mean? And so by seeing this world, the world this way, at least, as we do it, and I'm not saying everyone should, this is just, it's helped me see the world more clearly. I think it's taken a lot of the gobbledy gook out of the many things that are on social media and the internet. And it's also, I think, helped a lot of our team in some of these things. I had an interview with a candidate that we ended up hiring. And he's like, you know, I just have a lot of demons. And I was like, what does that mean? And he was like, you know, sometimes like I can sabotage my success because I'm like afraid of being successful.

I was like, you are underskilled. You don't know how to behave in conditions. That's all this is. So when this new condition occurs, we're going to do a different behavior than you've done in the past. If you can do that, we're fine. And he was like, I can do that. I was like, okay. Both could actually be true that you could have this fear, but you desensitized the fear through

repetition in that condition. Totally. Abituation? Absolutely. So you talk about the one meta skill that's overshadows all of them. Meta skills. What is that metastole? I mean, I think the ability to learn is the meta-scale. And, you know, intelligence is like your rate of learning. I think that's the big thing. From a business perspective, I think the big meta-skill is being able to get other people to do stuff.

Because fundamentally, if you only had that skill, you get everyone else to do everything else you need, at least in the small business world, which is where I live. So, you know, sub-200 employees, whatever. The vast majority of business owners conflate CEO and business owner. They see them as one in the same. Yeah. And so fundamentally, an owner, a good owner, rather, can bring bring all of the people who can run the business. Like right now, if I own a share of Apple, then that business functions without me. If I can get other people to do every,

basically a business doesn't require some leverage. Yeah. Some form of leverage. Exactly. It's 100% that. What are the different forms of leverage? So I think I'd be stealing from Naval here. But I mean, he has, I remember with C, so it's like code, content,

collaboration, which is what I say. So getting other people to do things in capital, right? Those are the four that he brings up. But I think there's, I mean, fundamentally leverage is just getting more for what you put in. And so in any situation we get more for what you put in, then you have leverage. You have several dozen companies.

Does basically managing hard or micromanaging ever work? Or is it about aligning incentives? Really good question. I want to say yes. I think aligning incentives is people can't have incentives that are against the benefit of everyone else. So that feels like number one, we don't want to have something that gets in our way. But like micromanagement and abdication so don't equal opposite sides of, and I think it's more of a dichotomy to be managed rather than a problem to be solved. If you tell someone to do every single thing, like at some point, you've lost all of your leverage.

why bother? On the other hand, if you delegate something and stats go down, you abdicated it. You did not delegate it. If you delegate it and stats remain the same or go up, then you have probably delegated. And so that gives us a very easy litmus test for when people move up in the business and they replace themselves in a role that helps us do that. From the micromanagement perspective, this is probably like recency bias, but I just read, have you seen the whole founder mode? Yeah. I think there's some truth to it. I think it's less about micromanaging and more about what are the behaviors that a founder is doing that are not duplicated when they leave. I'll give you a really micro example of this.

Caleb, who directs all of our media, he was the first person we hired when we wanted to get into this content game. He was so good to film with. He moved up and he replaced himself. I was like, I hate filming. This is not good. I don't want to do this anymore. And so then we're like, okay, what is it that?

Because really, he just has such a great vibe. I was like, a vibe is not a thing. So what are the behaviors that he does during a shoot that other people are not replicating? And so it turned out, one is when we were talking, he would be nodding his head behind the camera. And when we'd make a good point, he'd be like, he would throw his thumb up like, that was awesome. And immediately after the podcast or whatever the recording session was over, he would give us a fist bump. And then he would have notes on his phone that he'd be like, hey, follow up question. Hey, follow up question.

Hey, follow up question. And so I was like, this is so enjoyable. So he had some basic business context so that he could ask good questions. he was being reinforcing very low latency while I'm actually doing the recording in multiple ways, both visually, from how he's nodding and raising his thumb up. And then at the end, I basically had another reward cycle where he gave me a bump saying, like, awesome job. You crushed it. Once we took that checklist, that became the videographer training checklist. Has even fist bumping. Oh, every time. We then duplicated all of those activities with other videographers that before this we did not enjoy filming with.

All of a sudden, we enjoyed filming with them as well. And all of a sudden, they all had great vibes. And so I say that as a microcosm of the founder mode question that we began with, which is I think that soft skills are hard to quantify, but they are still skills. And so it just means that there are more subskills underneath of them that we have to learn and observe so that we can duplicate it. You're deconstructing skill sets. Some people think you're crazy. Other people probably love it. Like how did people adapt to the style of management? I wish my team was here because I think they would answer the question even better.

But I would say that this is our view of the world. If this is a view that you don't agree with, that's totally okay. You just won't do well here. One of the benefits doing a callback to the fame thing is that almost everybody who comes in the company has consumed a lot of my stuff. And so they kind of know how we operate. And so we have such a speed up on the cultural kind of assimilation and or rejection. So if someone doesn't fit in, like we had somebody who just started three days ago.

And it's their day. He was like, I don't think this is for me. And we're like, cool. Do you push out Tony Zappos famously from Vegas, how he would give people, a bonus to quit, I think after the last first month. I think it's a brilliant idea. I think that the skills, that everything is a skilled efficiency perspective is incredibly refreshing for the vast majority of the team because that is how we manage. And so instead of being like, you suck or you are this way, insert label, which then feels out of their control,

he's saying, hey, you're a dick. Very hard to teach someone to not be a dick. But if you say, hey, these are five things that you do that people complain about. And we, under these conditions, we need you to change your behavior. And then all of a sudden, they're like, oh, thank you for the clarity. And so the difficulty in managing this way is that it takes more work. We have to be more precise with our language and we be more precise with the deficiencies that someone is exhibiting. This whole everything focused on behavior permeates through the entire business. And so I'll give you an example of the team thing and then I'll example of the one-on-one thing. From the team perspective, most business owners or teams are accustomed to reporting data on performance. And then when

they get into that loop, they start providing more and more and more and more and more data. I had to do a breakdown for the team and say, hey, if this goes up, what do we do? If this goes down, what do we do? If we don't do anything based on if this data moves, we do not need it. And so all of a sudden it took these massive sheets and then just simplified them to three or four pieces of data that we look at. It's like, great, because these affect our behavior. Now we can have a productive meeting. And so from a large perspective, then we say, this is the data that's off.

These are the behaviors that we're going to do to fix that. And that's what we're going to start doing tomorrow with the team doing XYZ. From a 101 perspective, it's addressing the skill to sufficiency they have. They may have 10 things that are off that they're working on. Who determines that? manager or the leader, whoever the leader is. So it's not meant to be like, here, I think you should be more charismatic. It's based on outputs.

On the metrics that you're responsible for. And we would never say be more charismatic. We say, you need to smile more. Is there a speed of feedback? Is there like a natural speed? Like I try to, it goes back to negotiation. There's a negotiator. Chris Vossi says, if you need to let the air out of a balloon do it slowly, even with

a hostage negotiation, if you have three hours, do it like 10 minutes at a time. Do you believe that? I think giving one piece of feedback at a time is incredibly important. But I'll give you an example. We started running workshops here at our headquarters. And a lot of our team, although subject matter experts, are not good at presenting. That wasn't a skill set that they had. We had to teach the whole team how to present in a way that other people liked and would

continue to watch and learn from. And so the way that we did that was, you know, someone would get on stage and they would, you know, begin their presentation. And they'd be 30 seconds in. We'd be, stop, say it this way, change your tone. Do it again. Stop. Go back to the beginning. One more time like this.

Go back to conditioning them at the behavior, not like 30 minutes later. Oh, it's useless. It's completely useless. I genuinely believe that 95% of businesses have no idea how to train. They mostly survive on luck. They plow 20 people in. They see that five people work because those five people came in with a small enough skill deficiency at baseline that they could be successful in the role.

The other 15 fall off. And that's how they run their business. A lot of people are on Zoom calls and they want to give feedback to somebody. Do you just record that and go over it? We slack them in real time. It's way faster that way. So it'd be like, hey, bring this up. Hey, your tone's off.

Try this. Do you self-select for employees that want to develop themselves? It's actually the number one thing that people come to acquisition.com for. The number one thing that people say they're coming here for is growth. People follow my stuff. They know that I'm a big skills guy. Yeah. And so they usually want more of them.

And we do our very best to provide them. You're obviously highly skilled. I mentioned you're worth hundreds of millions of dollars. What skills are you working on right now? Let's break this into two buckets. Knowing about and knowing how to is basically the two big buckets. And we're the biggest blind spots that have had in my career are me not knowing about. I didn't know private equity existed.

I didn't know that was a thing, right? So that was like I couldn't get good at private equity until I learned about private equity. Knowing about private equity and how it works is very different from knowing how to run a private equity fund, raise funds, deal with LPs, negotiate deals, a due deal, source deals, all of the micro things that occur underneath of that. I'd say that for me right now, from the learning about side, I'm still learning more on the fund stuff. I'm still very, very green there.

And then the how to is really going to come from, that would be like, my second kind of order of skills that I'll have to break down. The thing that we have right now is we have tons of deal flow and we know how to create value. So there's the two things we have. The things that we've been lacking have been the funds to execute honestly the amount of deals that we could do at the size that we want. What's the largest deals that you get from a deal from a deal from a deal from a standpoint? I mean, we've got companies doing 300 million a year coming to us. And what are they looking for? Honestly, most people come to us for expertise. They watch some of our deep stuff on, you know, scaling a sales team from zero to 40 guys in 90 days. And they're like, how did you do that? Can you do that for me? And we're

like, yeah, but not for 5%. And so then that's really where the negotiation, you know, kind of gets in. It's like, okay, well, if we do do this, then we're going to 5x the value of the company. People come to us because they have some constraint. They either have identified or haven't. Do you have a vesting schedule where you grow at five times and you're like, okay, my job is done? Do you continue to stay with the business? So my CFO gave me this.

And I've been trying to stick with it, which is one of his friends was a very successful VC. and what they figured out was that when they doubled down on the ones that they did really well on, they did even better. And so, you know, I would say if you'd ask me five years ago, feed the winner, starve, star, yeah, exactly. But I mean, again. It's harsh, but it's the venture. Yes, it's kind of the same thing.

I mean, we absolutely pay more attention to the companies that are the biggest ones in the portfolio. And in terms of us kind of like letting off the gas pedal once we have a five X, it's like kind of the opposite of that. The better they do, the more we push. So I don't often do this, but what questions do you have for me? If you were in my position, what would you do? So I think there's a general situation where it's the ultimate grass is greener. Every private equity person that you talk to will say, do your own thing. And every person that says do your own thing will say private equity.

I think there's a couple ways. First of all, Medicom and I would say is I think you're very right to take your time on this decision. I had a friend. He went around. He's actually my co-host, Eric Tornberg. And he spent 18 months, I would see him ask the same questions to people. I'm like, this guy, he's just not executing. Like, what is he doing?

Just do something and like figure it out. And then he built this incredible business and you had this huge launch and it was very successful. I was just blown away by like how somebody could consciously gather information. So I commend the thoughtfulness because it's a very big decision and it's irreversible. Yeah. It's one of those things to quote Jeff Bezos. It's a door. It's a non-revolving door.

Yeah. So first of all, it is a very big decision. Second of all, I would think about one of my mentors, Eric Anderson, who's on the podcast. He's developed more drugs than anybody else in history. He started his last company at Allo Therapeutics. What is the last business that I want to start? What company do I want to work with in the next 20, 30 years? So I think there's a founder product fit question, which is, what is Alex Hermose

wants to do over the next 30 years? Because you're so good at operationalizing, you look at everything from a number standpoint, but you're also a human being. And I think the question is, especially after you gain a certain amount of wealth, is your lifestyle. What do you want to be doing day to day? And you can make those decisions not only from the perspective of private equity or non-private equity, but also which LPs do you want?

One of the other things, which I didn't mention is barely Door 4, which has been a strong consideration. I don't know why I didn't mention it, has just been raising around at our holdco level and just doing a minority round there. That would allow us to get the funding to then just do all the stuff that we're currently doing, the way we do it, the way we already know works, and just do it on bigger deals. That would then capture all of the brand growth that I have. So those LPs would be like, oh, wow.

I guess it wouldn't be an LP structure. I guess they would just be owners of, you know, my holdco. And that's something that's actually been very interesting to me because it's the original point. Like I've structured my day for the most part to do exactly what I want to do and what I think I'm good at. And what does that look like? I have a pretty empty schedule. I work all the time, but I have no commitments. In my way of saying it is I end up working on that which matters most every day.

And so sometimes that which matters most is something that's going to come to refurition in a year. But I have one day a week on Mondays that I have all my meetings. And then I have basically media stuff. So content, me writing books, things like that. Basically, the rest of my week is predominantly deep work. And that has worked really well for Layla and I. And the only way that I can live that lifestyle is because of Layla. Layla's schedule is the inverse of mine.

She has one day a week of deep work and then four days a week where she has 20 plus meetings a day. She has many indirect reports that she's soft touching, you know, two levels down, three levels down to continue to develop good talent, bring up rising stars, get good feedback on their leaders so that she can give them feedback directly. like she will never get the credit that she deserves because she's a woman and because I'm so vocal in public. But she's absolutely the reason that we have what we have. Like I had only made up to three million dollars a year before I met Layla. Well, it was constraint blocking tackling. I ruled through fear,

to be honest. That's what it was. I know a lot better now. But when I met Lela, she told me on one of our first date, she said, I just want to build a place that people love to work. And I was like, well, I just want to make a lot of money. And she said she wanted to do that. But she was very like anti-money when we met. She was like bleeding heart. I just want to help everybody. And I was like, well, you won't be able to help anyone if you're poor. And so what if we can merge kind of these two thought processes? And that's been kind of like the journey of our working relationship is that she has been, and I don't want to say the soft side because I think that does a disservice to the fact that she's made of iron. It's really impressive. No one has ever left any company that we've had and been like

Layla is unfair. She's a matriarch in terms of how everything is run within all of our portfolio companies. I'd say all the founders have tremendous respect for Layla. And they know that she's the one you go to when you have to have the hard conversation with someone. And she'll be like, is how you do. You have such a high performing culture and not everybody fits with it and they leave. What do they say when they leave? We have very low turnover. Is that because of a good screening processor? Our ability to create culture and operationalized culture has just improved so much between businesses because it's still on such a short timeline if you think about it from a business. I mean, I started my first business when I was 22 and that was 13 years ago. You know, in the investor time

line, it's like I've had one funds worth of time, right? 10 plus plus one. Yeah, right, exactly. And so it's been a very short timeline. And so like, you know, how I built my gyms was very different than how we built gym launch, which is very different from how we've built acquisition.com. And this, I mean, this has been my favorite business to run. And I feel like it's Layla and I are both in our stride. We are doing what we are both very good at. We've given each other the protection or space to just do what we do best. So Layla basically runs everything. And I'm in charge of rainmaking. That's been always the best. division of labor. You told Layla, I just want to make more money. Is that really what drives you?

Or is that kind of more mark? I always like saying that because I never want to be one of those people who like says they're trying to do. Yeah. That's my reputation insurance. Like, yep, I'm here to make money. And I say that in all my content. Like not here to be a good guy, here to make money. So I'll give you a longer answer than you probably asked for. When we sold Jim launch, we'd taken 42 million in distributions and then we got a $31 million check for the two thirds at 46, right? And I'd invested a little bit. And so the 42 had grown or whatever. At that point, though, we had zero responsibilities. And the year during the sale, I wasn't, you know, typically you don't like change anything while you're in the middle of a deal process. And so

the whole company pretty much just ran and we just got checks every month, basically, and that was it. And it was the saddest year of my life because I couldn't start something new because I didn't know if the deal was going to happen. You know, like things can fall through or whatever. But I also couldn't work on the business. I basically just had to sit idly for a year. And I had a lot of time to just think. And the conclusion that I came for me was that hard work is the goal. For very long time, it was hard work so that I can, and then it was just insert whatever thing. But when I looked back on my favorite days of my life, it was when I left nothing on the field when I was completely used up at the end of the day. And the first boss that I had, the management consulting

firm that I had right out of college, she said this thing to me, they had like a good weekend. Then I came in on Monday, like, in a good mood or something. She asked me why. And I said, I just, you know, I had a great weekend. And she said, I'm pretty sure the secret to life is living as many days in a row like that as you can. I always remembered that. And so in, in, trying to structure my life. I actually use the same process that we used to improve everything in everything we do. So whether it's media, whether it's ads, it's sales teams, it's CS, whatever. We just look at what did we do in the past? What were the top 10% days or outcomes? What did those look like? And we were the bottom 10%? And then the bottom 10% tell us what not to do. And the top 10%

we do more of that. And so when I look at my life, my top 10% days had the same two or three things that were involved. I ate food with people I liked. I worked out. art and I worked and accomplished something meaningful for the day. And I usually have nothing left at the end. And so I pretty much just try and do that every single day. That's my, that's my goal. And the things that I enjoy working hard on is business. I love business. It's almost like a romantic love of mine. I love it. I draw pictures about it. I write books about it. I make videos about it. I do business every day. It's the thing that I love. I could talk to you for 10 more hours about business stuff. I interviewed Steve McLaughlin. He's considered the world's just a

banker and he spends 80% of his time dealing with clients and how do people like you and Steve say no to other things that you may not want to do but that quote unquote need to be done. I get emails like how do you operationalize four days of deep work? I have no direct reports. Zero. Like if you look at the org chart, it's me and then dotted line to Lela and then Lela has the whole company. What about bills? There's a long tail of things that just hit your email. REAs check my email and they route things. and make decisions based on just like decision frameworks. Yeah, exactly.

How long did it take for you to create that system? We have three EA's. Senior A year just became director of ops, but it's been seven, eight years that we've had that team. And so what were the biggest fails in that system? I have had 10 EAs personally and have failed all of them. And so then we realized after the 10th trial, it's me, not them.

Layla paired us for a quarterly to give feedback to one another. And she said, I feel like when I message you, I'm bothering you. I'm assuming with the hope that I would say, oh, no, it's fine. Message me. And instead I said, you are. I'm working. And then when you take away from that work, you make us less money. And so I do see it pretty much always as a punishing event for me to basically have to stop doing something that I'm enjoying doing to do something that I enjoy less doing. And so over time, the EA's now, they'll come in when I eat lunch because it's the same 15 minutes

every day. And they'll just like, they'll be like, I have six things for you, this thing, this thing and it's while I'm not working anyways self-manage but honestly my lifestyle is only I'm only able to do this because Layla's lifestyle is the inverse of mine together we are one good CEO she is a work funnel like she just swallows work and then she brings people in and trains them brings people in and trains them and her her rate of operating is just unbelievable and so she allows me to think really big and have the space to do it it's all because of her what are your special skills I think it's actually just education like I love teaching which sounds terrible like things that you love teaching is kind of lame. But I see sales as an education process. You educate a prospect and if they educate

enough and if you have a product that really is good, if they believe what you believe, then they will buy. I see marketing and sales is the same continuum. Like you just need a certain amount of information for someone to make a purchasing decision. And so I see them as one thing. That's what I spend a lot of time doing. And so if we define education as changing someone's behavior, then that is what has been the passion of my life. Hopefully everybody who's listening to this, who's an LP, I hope I didn't bore you to absolute death, not talking about too much investing and just talking way more about business. If you were to do a fund, like tell me about what you would want an LP partners. I'd probably want one of two types.

I either want completely passive LP who would just let me do what I think we're good at or somebody who had some strategic benefit that they could bring to the table. Probably wouldn't be deal flow, but it would probably be relationships around whatever the investment thesis that we were going to build it off. As you've evolved your private equity business, have you narrowed down? Do you have a very specific kind of hit lane on these are the types of deals I want to do? do or are you more opportunistic? I would say Layla and I both like service and software businesses. Those are the two. And we've looked at all the deals that we've done.

Those are the ones that we do the best with. And especially ones that are demand constraint. Those are the ones that we just can absolutely murder it for. Someone has really good user retention and they have good ascension processes. The best guys are the ones who are just obsessed with product. Like the reason that I did the school deal was when I saw the metrics of the business, I was like, this thing's a monster. Like it's just early.

They just need demand. And I think all product Cs shift distribution. and all distribution seeks good product. And so I see myself as distribution. And so that was just like such a no-brainer because it was perfect. It was school, it's education. It worked with the 70% of my audience that want to start a business. So only 30% of my audience have a business.

Now, if I talk about business, then everybody wants to start a business is still going to listen, right? And so I can't, I don't try and, you know, kick them out or anything. But it took me three or four years of looking at a zillion different businesses. I was like, okay, what's the easiest thing someone can start who's just going to go zero to one? Build their confidence. Yeah, exactly. Yeah. Just about basic skills of business.

And so that was a perfect vehicle for me to help. And so that type of business are those are the ones that I love. People that want to learn more about you. What's the best on ramp to learning more about Alex from Hussey? That's probably YouTube. Or actually, if you're a podcaster, then I have a podcast. What is it called? You can just search my name and it'll come up.

Excellent. Well, Alex, this has been a master class. I've been following your work for a year. I learned a lot. You have an incredible way to deconstruct concepts and teach millions of people. You're making a big difference in the world. Appreciate you jumping on podcasts. Thank you for having me.

I appreciate it.