The Game with Alex Hormozi - The Entrepreneurial Mindset: Thriving in Uncertainty (with Erika Kullberg) Pt.2 - Apr. ‘23 | Ep 569

Episode Date: July 29, 2023

"I will either win or I'll die." Today, join Alex (@AlexHormozi) as he guests on Erika Taught Me to talk about his journey from not believing in social media to using it as a tool to attract more companies for investment. He also shares his need-to-believe strategy and the potential threat of brand damage in the age of cancel culture. This is part 2 of the interview.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.Check out the episode on Erika Kullberg's YouTube Channel!Timestamps:(2:44) - Be open to learning and adapting.(5:12) - Building a brand through media.(8:08) - Embrace fame, make money, give back.(12:30) - Building a portfolio of profitable businesses.(16:58) - Document your journey for others.(22:13) - Endure discomfort for long-term achievement.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

A lot of people were like the goat and they wouldn't be the greatest all time. And I think that if you're the greatest all time, then you failed, because especially if you want to be a teacher of some kind, which is a relatively loaded word, but if you want to pass on lessons to other people, if you were the greatest while time, then you failed. So the only way to be the greatest while time is to not be. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe.

Now you're creating content. How do you want people to consume your content so that they can actually just, go and do things with it versus just feeling like they're consuming 15 Alex Formosie videos and like they feel like they can check it off their list, but they really haven't progressed at all. Use and do. Like watch, do. Watch, do.

I think our videos are more tactical than many of the videos that are out there. And that's by design. And so my vision for the content was I want to make stuff that people would otherwise charge lots of money for and then just give it away for free. And at least from the response in the comments, the community, like that seems to be how what's received more or less. And so that was the goal. But the absolute by and large, what I want everybody in Mosin Nation to do is consume, execute and keep executing until you realize you hit another point where you need to consume more and consume the next thing. And then you can

search for specifics. So it's like, if churn's high, go to my channel and search churn stuff. And then just try and watch the videos that are around churn. If you're like, I need sales stuff because I'm just getting on the phone with people and I can't close, watch the sales stuff. And keep like, there's a, there's a concept of like drilling. Like you can watch like, there's like, immersing yourself in something. So it's like for like sales guys, I want them to consume an hour a day of sales content because I want their subconscious, I want their discretionary time to be thinking about sales, but still the majority of their day is selling, which is that a system will grow until it is constrained and then it will grow no longer until that constraint is fixed.

And so we just like and when we look at the portfolio companies, usually like our expertise comes down to can we identify accurately with the true constraint of the businesses and can we fix it. And if we can do those two things, then those are those are companies that we want to take on immediately because we know what the first can train is and then we can anticipate what the next one's going to be. And then we know we can fix that too. And so a lot of times entrepreneurs get stuck or even employees get stuck because they don't realize the constraint of their system output is a skill deficiency, a trait deficiency or belief something's possible that is. Or rather said differently, they believe something to be true that isn't. And that's what's holding them back. I want to take a little step back. So my first. friend, you were on his podcast three years ago. And it was so funny to me when I listened to the intro, because in the intro, it was like, Alex Hermosie does not believe in social media. He does not have any social media. So what changed? Kylie Jenner. Kylie Jenner, changed my life. I saw her on the cover of Forbes and I was like, she's younger than I am and she's a billionaire.

And I feel like I know more about business. And I need to learn from that. And so I will study everyone. the good, the bad, the ugly, people that everyone hates, I will study, people that everyone love, I'll study. Anyone who's making more money than me, I'll study. And so when I saw that, it was such a, it was such a paradigm shift for me. I was like, how is this possible? And I mean, at the time, for context, I was, I was taking home, I think, do you know what you're, I was taking between 13 and 17 million a year personally at that time. And I thought I was doing pretty well. And then I saw that and I just felt horrible about myself. It like ruined like a week of my life. Well, what came from that was then all of a sudden, like, to be honest with you,

I didn't change anything after that. I was like, it's a fluke. Her mom's Christianer. She organized her whole life. Okay. But then after that, the beauty came out. And then boom, she was at 600. And then after that, Connor McGregor, boom, he was at 600 with the proper 12. And then the rock came out to Tremont. And he's at two to four billion, depending on who you're looking at. And it just happened again and again and again. And I was like, I'm missing something. Like my, I believe something that was true that wasn't. I believe that the only thing that you would need to grow a business was paid ads and outbound. If you do those things, it doesn't matter about anything else. It doesn't matter your brand. It doesn't matter about your content. You can go and sell shit and you can't.

That's the thing. It's like there are beliefs that will get you to a certain degree and you absolutely can make money. You can be a decommillion. I mean, I was obviously a decadionaire at that point, arguably almost a cent a million if you put the equities in, right? But for me to be a billionaire, I didn't understand brand. And it was my big deficiency. And when I saw each of those, I was like, oh, I have to get into this. But I still didn't do it. The last, soldier on this little thing was I went to a thing with Dean Graciosi who's Tony Robbins like right hand man. All right. They're together. It doesn't matter. And we went to his house and he had had like three people that week who like weird stalker, you know,

weird stuff. And I was like, dude, how are you willing to put up with this? Like I just, I never want to be that famous. I want no one to know me, want to be rich as hell. And that's it. And I was very committed to that. He said, if that's the price I have to pay to make the impact I want to have. I'll do it every day of the week. And he just looked at me and I just like, I just remember just feeling it in my chest. I have to do this. And so that was when I decided and I started making YouTube videos shortly thereafter. And that, that was kind of the beginning of me starting to post stuff with the intention of actually building brand. And what was the, what did you have to assemble or get ready in order to do that? Did you hire a social media team? Yeah, I didn't. Well, I had,

I had infrastructure with Jim Launch. So I just had the video guy post it at the time. So I just did that because it was low lift for me. But I've definitely learned a lot about the content game in general. And what's funny is that the principles that I learned from outbound and paid ads 100% mapped to content. And I still had to learn it as though I didn't know. And so, like, volume is still king. Like, the more you spend on ads, the more money you make. The more cold calls, the more cold emails, the more cold reachouts you do, the more sales you make.

The more content you put out, the more impressions you get, the more. Like, everything grows that way. And so because, like, quantity is the only forcing metric for quality. Like, the only way you get better at something is by doing it more. And so I had to do a shitload of it. And that's basically what we built over the last 18 months is I started just posting three times a week, just videos from a computer,

which have been relatively notorious for being terrible quality. And then slowly, I added an editor. And then I was like, okay, well, maybe I should do a guy approached me. He was like, I could do shorts for you. And I said, okay, I don't want to do shorts. And he said, I will take, you have to do nothing. I will just take all of the stuff that's already out there. And I will do all the work.

And I will post it for you. So you literally do nothing. I was like, okay. Sold. And he did it and he did a good job. And so we started growing and I was like, oh, the short stuff's interesting. Okay. So like this is starting to work.

And so once I saw that, that actually became kind of the blueprint for how we approached new platforms, et cetera. So we go, we find the person, the best person we can. We pay whatever it is that they ask for. And we do that with the action. We say it up front. We say, I'm going to steal everything you have. That's what I'm going to try and do.

So I just want to be upfront. And I think it's going to take us probably between three and six months to do that. So you factor in what your LTV is for it to make sense for you. And if they're cool with it, then we're good. And our entire goal is not to just have them do it, but for us to study every aspect of what they're doing and why they're doing it so that we can bring it in-house. And so we pretty much, I went, as soon as things started, that one vendor worked out, I basically did that with every platform very quickly. And then one by one, we started peeling them back in-house. And so right now we're probably two-thirds in-house, one-third vendor.

and probably by six months will be 100% in us. And I think now I saw them think media that you've hit one million followers in six months. Yeah, yeah. Yeah, and we've done even more, yeah. It's cool because media is compounding. And so I always look for compounding vehicles in general. And so it was, again, like Dodo Bird Alex,

like it took me a while to figure out that media in and of itself grows in a compounding way. And I was like, oh, wow. So this is not something that, like I always saw content where you post something. and then it disappears. It was a waste. When I was coming into it,

I was like, why would I post something and then no one's ever going to see it again? What I didn't realize was the asset was the audience, not the content. And that was my missing link. And so once I understood that,

that's when I went all in on building the brand and doing the media stuff. So you don't want the fame from the social media. What do you want? I'm okay with the fame now. There are cons to it,

but I would say there are more pros than cons, at least at the level that I'm out right now. So I'm okay with it. I am still here to make money. And I always want to be clear because I don't want to be put into a corner in the future where people are like, he's trying to make, I'm always here to make money. That's what I'm trying to do.

But I also, because from the brand and the vision stuff that I've learned as an entrepreneur, like telling employees like, hey, our whole goal is to make money. Not very motivating, right? And so the big reason that we do all the stuff we do, so we donated a few million dollars to kids charities for education because I'm a big education guy. And so the big vision is like to document and share the best practice of building world-class company. And so for me to have the credibility to be able to say that that is my mission, I've got to be able to back that up. And so the portfolio that becomes worth a billion and then $10 billion and then whatever it will become after that is just to answer the question, why should I listen to you? Because it's at least my view that the number one question that everyone asks when they see anything, even if it's good, is why should I listen to this person?

Because you have the teacher who's saying dollar cost average in the S&P and then you've got Warren Buffett, they're going to listen to Warren Buffett. even if the content's worse, just because they don't have to make the extra decision of should I trust this. And so it's actually less emotional effort to, because you actually don't have to put a decision filter. You can just take it as truth, which is, it's easier for people. And so I want to make it easy for people to learn. And so I have to have the credibility to do that. Now, some people might say, you had a $50 million when you're 32. You'd already taken, you know, almost $50 million in dividends before that point.

Like, you have the credibility, but, like, I don't have the credibility from me. Because I want, like, the fact that we don't have a vlog from Jeff Bezos from 1997, until now crushes my soul. The fact that Elon only does the occasional weird interview, which is awesome, but like nothing else, I long term, am willing to sacrifice growth for our companies to make the content that we're making because I think it means more than I do. So a few years ago, when you were saying that no social media, you were at 17 million or so for personal income. Can you talk about how that's grown over the years? So it hasn't grown because COVID was not good for gyms, unfortunately.

You would have thought that gyms would have been totally benefited from COVID and not being allowed to do business. But I think in 2018, we did 26 million top line, 17 million take home. And I also didn't understand the concept of like reinvesting the business or M&A at that point. So I was just like, cool. So 17 million to profit, I'll leave a million in the business. And then I will just scoop 16 million in my bank. Yeah, that's what I did.

And then the next year, we reinvested more money into supplements and start. And so we still grew though. We would 37 million top line. And then we did, I think 13 million is what I took out that year. And then 2020 was COVID, which was, you know, three months in. And we actually had planned to sell. We went to market the month before COVID started. And so that sucked because it was based on 17 and, you know, 13 as the, as the, as the end with a growth rate going into it. But anyways, over the next that year, I think we ended up taking home personally like nine or 10 somewhere in there. And then the next year we probably would have paced the same thing. is the way COVID hit gyms, at least for us, was like it was a smiley face and with January being the middle of the smiley. So it's like kind of like half fucked two years. But because we were on upper trajectory coming out of like January and they loosened some of the COVID stuff, we just pretty much started going straight up to the right. And so we closed that deal in December of 21. And that was 46 plus whatever we took on that year, which is probably around 10. And then yeah. And now it's 22. And so we went super aggressive.

seven acquisitions because that year in 2021, the reason I actually decided to go through the sale, I actually almost backed out of the sale twice, was because I had done three deals that year, that year, and all three were going really well. And so I realized I was like, I really like this a lot. And for me, like, my big thing is, it's almost like if you wake up the morning and you're not thinking about your wife and you think about somebody else, like, you need to fix that one way or the other. Like, you got to fix that problem. And so, like, I was thinking about my wife being gym lunch anymore. I was thinking about these companies. I was thinking about growing them.

And I was starting to get excited about all that stuff. And this just wasn't as exciting for me. And I just saw a bigger vision for where I wanted to do. And so we did those three acquisitions. And then over the last nine months, we've done another eight. So we have 11 now. And so we do minority stakes. And so the portfolio right now does just under 200 million top line.

We generally are between 20 and 30 percent owners of those companies. And they are usually bootstrapped, profitable, growing. cash flow positive because we run most they're usually yeah they're very they're profitable businesses so I'd say around between 35 and 40 percent net margins on those businesses and so that's what we do now hey guys real quick if you're new to the podcast I have a book on amazon it's called 100 million offers that over 8,000 five-star reviews and it has almost a perfect score you can get it for 99 cents on Kindle the reason I bring it up is that I put over a thousand hours into writing that book and it's my biggest gift to our community. So it's my very shameless way of trying to get you to like me more

and ultimately make more dollars to that later on in your business career. I can touch the partner with you. So that's my give. Go check it out. Amazon and back to the show. Is the hope that the social media will help you to attract more companies that may want to take on more investment. Yeah, 100%. I just figure Warren Buffett had a great model. Let's do the same thing except add media. Like I'm a big believer in like simple things. So, We have a strategy deck that's like, what are the need to believe for this to be true? So one is that Alex can gain a social media following. I didn't know that.

So like, it sounds silly, but like I had a big list of like, well, if it doesn't work, then that's going to, you know, that's going to affect my thesis, right? So that was number one. Number two was that me making content will turn into deal flow for us. And so I didn't know if that was going to be true. I didn't know if I was just going to make content. And people were just like, cool, thanks so much. This is awesome.

But it did translate in deal flow. And then from there, the next need to believe was that I would be more popular in the future than I am today. And so if that's true, then we will get an increasing amount of deal flow in both quality and quantity in the future than we do now. The fourth need to believe was that we would be able to add material or outsized returns or value through our own experience by taking on companies that fit our, we call it the VAM, but it's like our value acceleration method. So it's like if it's in the sweet spot of the VAM, then we should be able to deliver on that. And so right now, like the average portfolio company triples profit in the first 12 months. We average 4.7x profit in the first 24 months.

So we've delivered, you know, we feel pretty good about it. That was a need to believe. You know, you come in, obviously, hoping and believing that you're going to do that, but especially because in a minority position, I don't have complete control. And so that was a little bit of something that I had to learn how to do and influence the right way to get the founder on board for changes, et cetera, which, to be fair, for the most part, because of how people are coming in, it's not that hard, but it's still a difference of do this versus I was thinking this might be something you'd consider, what do you think?

Right. And so it's just a little bit different dynamic. And so those were the need to believes to get to where we are now, and I have more need to believes in the future, but I'll share those later. What do you think is the biggest threat to your success? Me saying something and getting canceled for some reason. Like, that's, I mean, that's what I think. I mean, threats-wise, yes.

Do I think I would adapt? Yes. But, like, in terms of, like, because I will either win or I will die. And so if that's my base operating system, like, I will adapt and I'll figure something out. It's just, like, I can already, I was already thinking. I was like, what would I do? I was like, okay, well, I'd have a different figurehead. I'd have multiple personalities. We'd pump them the same way that we did with me.

Like, we'd work it out. But that would be a dent. It is scary, especially people with cancel culture now, they just love to pile on about everything. Yeah. So I think in a single word, it's like irreparable brand damage. Yeah. Is, you know, obviously I try not to do anything that, you know,

that I think would do that. But that's, you know, that would be the single bigger thing. But again, it's not even irreparable. I would just have to work around it. I read somewhere that your goal is to become the most jacked billionaire. So why is that your goal and how do we get there? I thought it was funny mostly. But I figured it was just become a billionaire.

And at that point, I will probably be the most jacked guy in the room. And so that was kind of like default. Like I'll probably just, I can just be me and then be a billionaire and by default will be the most jacked billionaire. Do you think Jeff Bezos is jacked? Yeah, he's not more jacked than I am. Okay. He's way wealthier than I am.

He's more financially, Jack, than I am. But he's, no, not physically. Not yet. Why is the billionaire thing your goal? I think it's really just a milestone. It's way less about, like, the actual billion dollars. But I do think to the point earlier about, like, having the credibility to, like, there still has, I could be unaware, but I haven't seen any, like, mega billionaires really try and build education for everyone of how to get all the way up. Not just like your first 10K, first 100K, first million, first 10 million, first 100 million.

Like, I want to go all the way. And, I mean, it's really the document don't create. It's like, I want to go all the way and show every single step of the process, how I did it so other people could do it. And I think the reality is my hope is that we'll pave the way for people to be much bigger than I am. You know what I mean? Like, we've talked about this a lot, but like, you know, Gary, Gary didn't have Gary, right? Gary just paved the way for people likes to go to do what we're doing. And we learn from their mistakes and their best practices and we don't have to wait 10 years to learn it.

He did because he had to figure it out. And then we just start today. You know what I mean? And the fact that there's like 23-year-old multimillionaires and decommillionaires right now off social media, it's just testing the fact that the entrepreneurs who came before them laid the path. And so I have a tremendous amount of gratitude for those people. I also don't have the illusion that a lot of people are like the goat and they wouldn't be the greatest all time. And I think that if you're the greatest all time, then you failed.

Because especially if you want to be a teacher of some kind, which is a relatively loaded word, but if you want to pass on lessons to other people, if you were the greatest ball time, then you failed. So the only way to be the greatest fall time is to not be. And to have set the stage for people who are younger who I don't know to beat me. And I got to be okay with that. And I am. But that was a mindset shift that I had to do. So this is just like, I'm going to do this thing. I think it's really cool because this is just what I happen to be really into. Like I draw pictures about business. I write books about business. I make videos about business. I do business. I do business all day. Like, it's what I like.

And so that's what I do. And I'm very fortunate. in that the thing that I happen to like also happens to be very financial rewarding. I don't know what I would do if I just left painting and I didn't like business. It could probably be harder for me, but maybe it wouldn't be. I don't know. But this is just something that I love. And so I just want to document it. And I also partially document it for me because if I feel like I don't understand something, it bothers the hell out of me.

And so that's where all the frameworks and things happen is so that I don't have to remember it. It's like I have to make a framework for this. It's like we're we haven't sent emails, which is ridiculous because we have a bunch of people who give us their email every day and I say someday I'll email you. But right now, I was like, oh, I'm going to have to write an email regularly. I have to have a framework for this. It's like, I have to do this all the time. And so, but that as soon as I have it, I'll just pass it to everybody else.

And then they won't have to confront the thing and learn and fail for however many months. And they'll just be able to take the template and use it. And then immediately be that much further ahead than I was at their age. Yeah. That's cool. What would you say to the 20-year-old who's looking up to you and saying, I want to become a millionaire one day? What are the three things that they have to do to get there? You have to start.

you have to do the same amount of effort that the person who you think you want to emulate has done. So if you do the volume of work that that person did, and if you're like, well, that person's been doing it for 10 years, then do it for 10 years. And you don't switch gears and you stay on the path that you're on because otherwise you have to restart over and over again. Because a lot of the trench knowledge comes from depth of knowledge, right? It comes from having deep roots, you know what I mean, in a subject or a sector. And I know that that counteracts the whole idea of like sampling lots of things. And I get that that's a struggle for people. It also is not false that somebody who started at 20 and worked for 10 years in the same industry

versus somebody who started at 20 and jumped to 30 different things. The guy who did one thing for 10 years will be further along. The question is, what's the longevity? So if they did the one thing for the decade, was it because they enjoyed, the thing, which then if they hated it, then they do switch, but now they switch way later. And so then they do pay that cost. So the thing that makes this even harder is that you usually don't like stuff that you suck at. Usually suck at everything when you start. And so I do believe that like if something interests you, like, you don't need to, like, I'm not even a big believer

in like being good at it. If it, if you just don't have to put effort into wanting to consume the thing, whether it's like, I really like video stuff or like, I really like, I really like sales stuff, early marketing stuff, or whatever it is that you find yourself reading, for me, I always liked persuasion. So like when I would like be in college, I like watch TED talks on persuasion. It was just interesting to me. And so it's not surprising to me that I ended up finding myself in kind of acquisition and whatnot, customer acquisition, you know, on a tactical level in the beginning. And so if you find interest, then it's like you'd have to strap in and accept the fact that you're going to suck for a very long time, comma, and that's okay. And it should be to be

expected. And so I think if somebody's 20 years old, they need to expect that it's going to take a decade, number one. Number two, they have to start on a path and not convince themselves to stop. And then number three, see items one and two. The podcast is called Erica taught me, but really today is all about Alex Hermosie taught me. So what do you want people to be able to walk away from this saying, Alex Hermosey taught me this? Alex taught me that the feelings that I have are independent of the character traits that I want to espouse. And so if I want to be more courageous, it doesn't mean that I don't feel fear. It means that I act despite it. If I want to be more patient, it doesn't mean that I don't want to stop doing the thing that I'm doing. It means that

I feel that feeling, I accept it, and then I continue on the path that I said I was going to do. And so I think a lot of it, we said it very briefly in the beginning, but it's enduring short-term discomfort for a long-term achievement. So if there's one thing that everyone who is listening to this does, it's that you start on the path and you do not allow yourself to stop.