The Game with Alex Hormozi - Skill Stacking- The Reason you aren't Breaking Through" | Ep 157

Episode Date: October 16, 2019

"Information is the single best investment that you can have because information is the only thing that buys you time." Today, Alex (@AlexHormozi) discusses the concept of talent stacking, which involves acquiring multiple skills and stacking them on top of each other to create exponential returns. He emphasizes the importance of investing in information and acquiring skills to become more valuable, and encourages listeners to prioritize learning and skill acquisition.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:(2:09) - Information is the best investment for buying time.(7:07) - Spend money to acquire skills until you can't.(10:38) - Take responsibility for income level and become more valuable.(17:37) - Learn from those with talent stacks that surpass you.(24:05) - Need less, not more, things to make more money.(26:59) - Use talent stack to grow and sell business.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

First off, I just want to say I'm extremely humbled to be here. Honestly, just hearing the few conversations I was able to have with the people we were here, honestly, didn't think anyone really knew who we were. That's not necessarily a bad thing. We keep very much to ourselves. I probably don't leave the house for like four or five days at a time. So it's a little bit different than I think maybe most people's entrepreneurial journey. But Nolan, am I good to rock?

Can't see him. I'm good to rock. Okay. So, kind of what David was saying, I like to understand who I'm talking to so I can try and cater this a little bit more to your desires. Is that cool? Okay. So first thing, well, without it, pretend this is anonymous and no one else knows you here.

Who here is still working a full-time job? Can you raise your hand? And for like the one moment of the night, I'd ask you to just not do the like, hey, I'm going to be too cool to raise my hand because then it's to your detriment. So the second thing, who here is a full-time entrepreneur who's doing $100,000 or less per year? Okay, cool. Who's doing between $100 and a million a year? Okay.

Who's doing a million plus? Okay, cool. A nice smathering. Fantastic. All right. well, on the rare occasions that I go out in public, is, you know, how do I make more money? How did you get started?

What should I be investing in? And I think that it's really important to understand that if someone's able to achieve something faster than you, they're using the same resources that you have from a time standpoint. And so it just means that they're allocating their attention in places that they're getting disproportionate returns on it, right? And so the objective is how can we find

the biggest ROI buckets that we can put our time into so that we can extract as much value as humanly possible as fast as possible. And so my belief in this is that information is the single best investment that you can have because information is the only thing that buys you time. Does that make sense? A lot of people want to go faster, but then they don't want to spend money on learning how to go faster. And that is the only thing that gets you from point A to point B in a shorter period of time. And so where it gets really interesting is how do you acquire those skills? And so I'll give you, can I give you two like habits that I think have done really well for me in terms of acquiring skills? So the first thing is, so like I was up today at three o'clock

in the morning. I'm usually in bed right now. So this is my amped voice. But I say that because I also know some, I have a few billionaire friends who are, who are night owls. And so I don't think it's a morning thing specifically. I think it's more important that you can always have four to five hours a day of uninterrupted time to yourself. The biggest breakthrough that I was able to have in my own life from a business standpoint came when I was able to move the big pieces forward every single day because I started my day that way. And for me, that's what I'm the most creative is in the morning, and so that's where I invest all of my time in getting and acquiring skills. Just so I have an idea.

Is anyone like an early bird here? Early birds? Okay? What is early? Before six? Before five? Before four? Okay.

Well, it's really big in our community because like, so does anyone know what Jim Launch does? Okay. A couple people. All right. Can I give you a 60 second pitch on what we do? Okay. So we own a company called Gym Launch.

We help small business owners that are specifically gym owners. So CrossFit Boot Camp, semi-private facilities, MMA, BJJ-type facilities that are service-based facilities. On average, increase their top-line revenue by $240,000 a year. They decreased their turn from 10.4% to 6.8% month over month, which is awesome. They triple their profit on average. And that's in their first 11 months working with us. Every nine days, we create another million-dollar facility. so we're pretty good at it.

And that has been the focus of pretty much my entire adult life. It started when I had my chain of gyms in Teller, California. I was able to open up a new facility every six months as a 23-year-old off of cash flow. So I pre-sold every facility so that I could open them at full capacity on the first day. I thought everyone was doing that. I didn't know that that was something that was different. And so I had my six. I sold them when I was 26.

And then I started flying out with my lovely wife. who was my girlfriend that I met on Bumble at the time, that I got to quit her job and join me. Her parents were very stoked that she left her job for some Bumble dude on the internet to go launch gyms. And so we would actually fly out to these gyms and do basically like bar rescue, we'd do gym rescue. And I did that for six months,

and then we had an eight-man team, and then we did that for another six months. So every month we'd go out to eight gyms and launch them, and we'd go from zero to full capacity in 21 days. And we'd do that over and over and over and over again. That short period of time that I was referencing in the beginning when I had my own six facilities, during that period of time, I looked back at our CRM

and I had done over 4,000 101 sales in that three-year period. And so I had my, and that was actually closes because I couldn't count consultations who said no. So I did a lot of sales. And I'm telling you this because a lot of people ask, like, how did you get here without knowing how to replicate what happened? And so despite the fact that Jim Launch in March of 2017 is when we transition to the model that we have now, which is an information-based model. We consult and we help them implement the systems to acquire customers, ascend them, increase the value of their services, and then keep them longer. but it's understanding the things that got you there

because for us we were able to go from zero to a $50 million a year run rate within 20 months. And so a lot of people think that that comes from nothing, but it's the eating shit period. Hopefully the profanity is okay. And so when I had my conversation with David and my sales guys come up to me and they're like, dude, I got 25 grand, you know, I'm feeling pretty good. So I'm just like curious, you know, what kind of investments should I be getting into? You know, like crypto's looking pretty good right now.

And it drives me nuts because I'm pretty sure I didn't have any money in my bank account at any time until I had a million dollars in my bank account within a couple months. And the reason for that was because my belief is that you should spend all of the money that you have to acquire skills until you can't spend money on acquiring skills anymore. And you can pretty much always spend money to acquire skills. It just do it differently. And so, like, the higher up you go, now I have to make donations to charities

in hundreds and millions of dollars in order to get access to the boards of these charities who are other dudes who can donate hundreds of thousands and millions of dollars to those charities so that I can then see what they know so that I can learn faster. And so I'm going to give you an example of what this whole concept of talent stacking is.

So let's say you're good at math, right? So that's where you're starting. You're like, I'm good at math. Cool. That's a skill. Not very monetizable, but it's a skill. And then you're like, okay, well, I could kind of do credits and debits, keep someone's books.

Great. That's a level one skill. You've now put two skills together, and now you have something that is actually monetizable. And then you're like, you know what? I'm going to learn accounting. So I'm going to get my degree in accounting. So I'm going to become a CPA.

All right. Now this is something that is becoming more valuable. And then you learn about tax strategies, right? And then all of a sudden you're able to work with a business and save them hundreds of thousands or millions of dollars a year because of your understanding of the tax code. And then you learn how to decrease liability with insurance because you continue down this path of stacking your skills. And then if you're following along and like the next round it would be like,

and then I understood how to talk to bankers and financiers and raise funding and do do exits and equity deals, etc. Same person stacks one talent on top of the other, and each talent becomes disproportionately more valuable than the talents all before them. Does that make sense? And so it's a hockey stick, right? And so in the beginning, you don't make anything

for a very long time. And so if you're in the crowd right now, and you have not been able to increase your income for an extended period of time, which I would define as probably a year, if your income has not had a significant increase in that period of time, it's because you've chosen to not look or understand what the next skill that you need to stack on top of your prior skill is.

In the entrepreneur world, usually, who would consider themselves pretty decent at sales? Most entrepreneurs, right? We're more promoter-type people. And so I hear this stuff all the time. There's no good salespeople. I can't get anyone to sell like I can sell. What's the skill that that person lacks?

They lack the ability to hire, find, recruit, train, and manage a salesperson. That's lots of skills. But that's the essence of what they're missing. Then they have one or two salespeople or three salespeople. And they're like, man, we have good months and then we have bad months and then we have good months. I can't keep it solid. Like, why isn't it? It's always variable, right?

What's the skill they lack? they don't know how to manage a sales team. And so the biggest piece of advice that I can say is that it's a frame shift that everything is 100% your fault. And at the same time, there are self-made millionaires and self-made billionaires, but they're also self-made $50,000 a dollar a year errs. They just don't claim it because they don't want to be responsible, right? And so you're 100% responsible for the income level that you have, and if you're dissatisfied with it, it's because you're just not that valuable.

And so you have to learn how to become more valuable. and the first way to do that is to admit that you have a deficit. And so if you have an ego about it, you'll be incapable of becoming better than you are. Does that make sense? The people who you see who are really talented and then cap is because they can't admit that they're not good or they could be better.

I want to give you a different example of the talent stacking because I want to show that the math one's pretty simple because everyone understands it. So let's say Jay-Z. When he started his career, he had a rhythm, right? He was naturally pretty good with beats. Okay, got it.

Then all of a sudden he learned how to perform. Another skill. So he took his sensitivity to music, et cetera, and then he learned how to perform. Okay, great. Once he learned how to perform, then he learned how to sell and market his own materials.

Another big skill. Then after that, he learned how to create a label, a more leverage skill. Then he learned how to attract and find other skilled performers and bring them into his label and promote them. All he did was stack one talent on top of the other, and for every additional talent he had,

he got exponential returns on the stack that was underneath of it. Does everyone here understand what the next skill that you lack is? Is there any reason why you're not aggressively pursuing it if you claim to not have what you want? If you don't wake up at 3 o'clock or 4 o'clock in the morning and you're dissatisfied, I don't get you. Because for me, dissatisfaction is so soul-crushing that I will do anything to not feel that way. And so it might not be in the morning.

It might be after you put your kids to bed. But there has to be that time where you can invest in learning those skills so that you can stack the next thing. So one of the issues with being newer in the entrepreneur space is that you see a course that's marketed. You're like copywriting, right? If I buy this copywriting course, it says I'm going to make money, right? If I buy this traffic course, it says that I'm going to make money. If I buy this funnel course, money, sales course, money, right? The reality is that it's all yeses and all knows.

It just depends which is the weak link in the bridge that's going to get you from the bank to your first dollar going over. Once the first dollar comes over, the second dollar comes immediately, right? But the thing is that you're like, I need to learn how to market. What does that mean? Okay. I need to learn how to write copy. I need to learn how to write headlines. I need to learn how to create creative that attracts attention.

I need to learn how to place advertisements on media platforms. I need to be able to analyze the data to know how it's actually doing and know how to adjust it based on the performance. I need to know how to create landing pages that convert traffic. Once I have a lead, holy shit, I have a lead. Once I have a lead, I have to know how to get that person nurtured in such a way that they will eventually convert. and whether that's a phone sale or that's going towards a nurture sequence, those are two different paths, those are different conversion mechanisms, but the point is you see how each of these is a skill that you have to acquire, right?

And so whenever you see these courses, don't get butt hurt, that you didn't make a million dollars after buying one course. You're not supposed to. And so the goal is to get as many of them as you possibly can. the key is having the discernment to know which is the one that you're missing right now. Right? And so, like, the only thing that I'm not sure how to teach is discernment because it's the only thing that allows you to prioritize.

And so if you see people who, like I said earlier, are moving faster than other people, it just means that given the resources that they have that we all have are equal, which is time, they're able to, with discernment, allocate that to the highest skill that would be next in the stack of skills that they need to learn. So, my opinion is that if you have $25,000, if you have $50,000, if you have a quarter million, if you have $500,000 in your bank account, I genuinely believe that there is no point to trying to save money if your income is less than $2,000, $500,000 a year. I don't think there's a point, and I mean that genuinely, and that's not a diminutive way.

It's just that saving, not going to Starbucks to become a millionaire, Congrats. You made 40 years and you enjoyed nothing in life. Like now you have a million dollars. I feel like that's not the, I mean, is that a life that anyone wanted? Right. Fuck that. So, hey, if you're a return listener and you have not rated or reviewed the show, I want you to know that you should feel absolutely terrible about yourself and everything else in the world. I'm kidding. But it would mean the absolute word to me if you guys would go ahead and do that. You don't even have to pause the show. You can keep listening and you can just do it with your thumb right now. It'll take you less than 60 seconds. And like I said, the only way that podcast, through word of mouth and this is you joining hands with me and helping as many entrepreneurs as we possibly can because no one is coming to save us it's just us all right so please go do that now and let's get back to the show thank you I'll be here

all night until 915 when I go to bed I'm kidding um sorry entrepreneur ADD totally where was I yeah yeah so so exactly so my objective for when you you should actually consider looking at investments is when you have so much money coming in that even when you're aggressively searching to find a way to allocate the money to acquire the next skill, there's still an excess and abundance that is coming on top of it. That is the state that you need to get to when, in my opinion, you have like the Alex stamp of approval, not that I'm some whatever, but I'm just saying like that, in my opinion, is where it actually starts to make sense. The next piece of it is that once you have that abundant flow of money

that's coming towards you, you also probably have a lot of skills. And so then looking at investment vehicles of like Bitcoin, the stock market, real estate, you have to also understand because all the things that got you to where you are, like I'm petrified of going into real estate. Because I know that there's guys like me willing to crush me the moment I go in there because they know the game and I don't know the rules yet. And so there's a person in every one of your spaces who has a talent stack that far surpasses you. And what you need to figure out is deconstruct, look at their path so you can figure out what

talents they're able to stack together so that they can, so they're able to continue to crush you so that eventually you can get strong enough to crush them, right? And so it takes so long to get good at the game and the amount of effort, oh, this is really, Okay, I'm trying. I wish. Okay, first of, I did not know that we could have presentation PowerPoints. I'm a big visuals person, so I apologize. But the amount of effort, the amount of return that you get from learning a new skill goes down with time, right? Your first 20 hours of reading about sales, your first 20 hours of sales in general, your first 20 sales consults, you will learn more from zero to then than you ever will in the rest of the career of sales. But, Despite the fact that you have marginal returns, the absolute incremental return at the end goes up. So, an example of that would be an Olympic runner. In the beginning, you get much faster, much faster, right? And then as they get better and more advanced and more advanced, they're trying to shave off quarter seconds from their time.

And so they put months and years to save a half a second on their 100 meter, right? right here, right at the very end. But what's the difference between first and second and third? So the absolute return you get on the very small incremental return you get at the very end is where all the juice is. When you're just this much better than everyone else at marketing, when you're just this much better than everyone else at sales, when you're just this much better at messaging and strategy, then that's when you go like this.

And so that's why they have these overnight successes, and it's usually because they stacked 20 skills, and it was on the 21st skill that the bridge was finally completed, and then it popped up. Has anyone heard the story of the bamboo tree? Okay, one person. Fantastic. So you all be punished for not responding. So I'm pretty sure this is a Chinese proverb. Hopefully I'm not butchering it. But essentially, a bamboo, so if you plant a bandiuch, so if you plant a band. bamboo tree and you keep it underground and you look and you wait a whole season and it doesn't seem like it's growing, the stubborn farmer will go and dig it up and try and plant it again. Be like, I must have been a bad seed, right? And the stubborn farmer goes back a year later. Ah, must have been a bad seed. Changes the area. Changes the sunlight. Changes the watering. Changes all of these things constantly. Right? But the wise farmer knows that he plants it and it takes five years for the sapling to break the ground. And then within the first three months, it's like six. 50 feet tall because it's spending the whole time digging down rather than digging up so that it can have the root system to support the growth. And talent stacking works the exact same way.

So I want to make sure that I, is there a direction that you'd want me to take this at all? Or is that good? Or is there a, is there like, hey, I'd like to know more about selling shit? Or like, hey, yes. Perfect. Yep. Love it. Love it.

Yep. I will. So he asked an awesome question. Thank you. He said, could you give revenue guidelines for what skills you need to acquire at different revenue levels? That's a great question. I wish I had a graph and I could have pondered it more. But if you're under $100,000 a year in your business, I'm assuming you're self-employed. You probably don't have anyone else who's working for you. It's probably just you. At that point, everything is going to be about promotion. You're going to have to know how to market and know how to sell. I highly, highly, highly, highly recommend never outsourcing anything for as long as you possibly can so that you can, like, I still think I'm probably the best

marketer in my business, even though I have a whole department. And I know how to make adjustments on what they're doing, and I also know who's trying to bullshit me, right? I know what ad costs are supposed to be. And the only way that you know that is having done it. The same thing with sales. Don't try and hire a sales guy because you're like, well, I'm not good at sales. Well, then that's always going to be a weak link for you. And you're going to be a weak link for you. And you're you're never going to have a good sales team because you don't have the confidence to people look back at them in the eye and say like, this is wrong, you're not doing it right. They're going to be like, well, how do you know? And you're not going to be able to

have the confidence to look back and have an answer. And so in the beginning, it's all about, okay, I'm going to pause that. Does anyone want to have like the $100 million blueprint? Okay, great. So if you want to get to a $100 million valuation type company, in my opinion, the way that you have to do it is get really fucking good at one thing. And this is what David was talking about earlier, so I wanted to make sure I brought it up. And I mean so good that people start coming to you because of how good you are, because of how people talk about you. If you don't have that happen, that is the quota for not being good enough. It means you need to keep doing that thing until you have passed the incremental return where it starts going like this.

And in some businesses, that means referrals. and that's usually what it starts with. Until you are so good at that thing, you do nothing else. And it's counter to your entrepreneurial character to stay disciplined enough on this one track because you want to be scatterbrained and chase the next opportunity and dig up your seed and start another one.

And dig up your seed and start another one. I'm going to do fitness for a while. Actually, I want to be a marketing agency. Actually, I want to sell a course. Actually, I want to do a webinar. You know, affiliate marketing sounds cool. Sound familiar? Anyone?

Right. If you get so fucking good at any of those things, any one of them, you can get to $100 million. I had a friend who called me, and I'm going to complete that, I had a friend who called me from high school, and he's got a roofing company. He was like, yeah, you know, we buy these homes, and then we fix them, and we flip them. And I was like, that's awesome, man. He's like, we also do windows. I was like, okay. He's like, we also do roofs, though, and that's like really our bread and butter.

And I was like, okay. He's like, so, like, you know, so this is what I'm thinking. We got out there. And I was like, great. So pick one. He's like, what do you mean? I was like, pick one. Like any one of them can be a $100 million business.

The biggest fallacy that you have as an entrepreneur is that you need more things to make more money. When it's the opposite, you need less things to make more money. And it's the only way you'll make more money is when you do less so that you can get better and dig deeper. Because that's how you're going to be better than everyone else. Because the other guys you're competing. against are also scatterbrained as fuck, right? And so you can out-discipline them by knowing that you're going to dig deep and deep and deep and deep. I can say with a lot of confidence that there aren't too

many people who know how to make a gym as profitable as me. It's been really boring for me for a very long time. I really understand how to make gyms profitable. But we stay here and we still keep innovating and figuring out new things because we try and put blinders on so that I don't look at the other opportunities so that we can keep getting better and better. and better. Once you have your one skill, so I'm coming back, once you have your one skill, you can then monetize teaching that skill. Now you have a high margin business that has high value because you really are good at that thing. Now remember, it takes years to become good enough that people talk about how good you are before you enter the room. Then when you leave,

people are like, dude, that guy's fucking legit. That's what you want. If you don't have that, you're not good enough, in my opinion. Everyone wants to start preemptively, but their product isn't strong enough, and then they fizzle because they can't hit the next level because their actual product isn't strong enough. So, thanks, man. Appreciate it.

I thought it was the music. I was like, oh, shit. Okay. Thanks, man. So you have your first skill. So you've got your years, right? We're talking about what revenue levels? If you're doing your revenue level,

it's awesome that you're making money, but you have to just keep doing that thing until you get so good at it that you're stock full. Like you can't take any more clients and then you raise your prices and then you do it again and then you raise your prices

and then you do it again and then you raise your prices and you do it again and you keep doing that until you're the most sought after. At that point you can then sell that skill that you have acquired whether you're a videographer

whether you're a graphic designer whether you're a salesperson whether you're a marketer any of those skills are skills that other people value and you can teach people how to do it in a very high-margin environment. Now, when you have your high-margin environment business, it is not a business that has enterprise value

because it's you. You've just productized your skill. Does that make sense? Which means that after you've taken out the profits from that business and that should 100% be your objective in that first phase. First is skill acquisition. Second is monetization of that skill. Third is reinvesting the profits from that high-margined business.

into a business that does have enterprise value that does not require you. So that could be software, that could be product, that could be anything. Once you have that, you use the talent stack that you've acquired up to this point to grow that business to the point that you can then flip it and sell it. Does that make sense? That's the $100 million plan. Or a billion, depends how big you play. But that's exactly how you do it.

If you have no money, which is how I did it. Well, hold on. Not that I did it. What I'm saying is like that's who here has funding like from an outside vendor? Okay, three people. So for everybody else who's bootstrapping, that was for you. If you have outside money, you can start in different ways. And I think that there's some disadvantages to that as well because then there's some talent stacks that you skip over that then you don't know you got this jetpack and then you don't know what the missing link is when you get there. So if you hit a plateau, who here has been at a plateau for over a year? Okay, awesome. Great. This is for you.

Right now, you're not good enough. You're not good enough. And if you can accept that and internalize it, then you can create actions around the thing that you need to do and do over and over and over again. The actions that you need to take has to be in terms of number of volume. And so what I mean by that is if you're like, I'm just not that good at sales. cool. How many consultations can you get into per day? I'm not that good at marketing. One of the best things I was ever given was from Ezra Firestone, if you've ever heard of him. He was at a small event, a private event with me and some other guys, and he said, I take a percentage, a fixed percentage every month of my marketing spend, and I spend it on crazy ideas that I have with zero intention of making an ROI. And he did that because there was no, point in him trying to learn from other marketers at that point because he was above most of the marketers's courses that were out there. And so the only way that he could learn was by learning in

the real world. And so each of the skills that you're lacking has a way to do that. It can be taking more sales. It can be saying, I'm going to always create, so where's my videographer? Where's Nolan somewhere? If I'm Nolan, I'm going to think every single day, I'm going to make two commercials. Every day, I'm going to make two commercials. And every day, We're going to run them and I'm going to see which ones did better. And I'm going to deconstruct the ones that did well. And then I'm going to try and do more of those until I get so fucking good at it that every single video that I make is a winner. And I'm going to keep doing that.

And it doesn't take a week or a month. It usually takes years, right? That's how it works. I was on a podcast not that long ago and the host has a slightly younger male audience. And he was like, you know, man, I know you always talk about doing the boring work and just like eating shit. like waking up at, you know, midnight. He's like, and, you know, you totally suffered and we love that. That's great.

But so for anybody who like wants that success and wants to just shortcut that, like, what's your advice to them? And I was like, you're not going to. Like, you're not going to because you're not going to be good enough. Because the guy who did do that and took 4,000 101 sales is going to be better. And one question that Lail and I got at this event a while back was a lady in the audience said, how are you guys so certain? Like when you guys talk about your gyms or when you talk about your business, how are you so certain?

And I think that level of certainty just comes from being like, I did it 4,000 fucking times. Like it's not a degree. It's not like, I wake up, I say my affirmations like, I'm a gym guru. I'm a gym guru. I'm amazing. I'm an expert. I mean, I'm an expert. Like, I just, it kills me.

Because it gets to a point where you've done it so many times that it's not amazing, it's not fantastic, you're just stating observations of history. And when you get to that point, that's when you've probably acquired the level of mastery that is required to be able to monetize that skill. Does that make sense? Okay, cool. So, I think I went. probably way over. So anyways, thank you guys. I'm very honored to be here. I appreciate you. Thank you.