The Game with Alex Hormozi - The Power of Brand: From Millions to Billions Pt.1 (on The Matt Gray Show) | Ep 666

Episode Date: March 15, 2024

"Privacy is the cost of fame. For some people, that cost is always too much.” Today, join Alex (@AlexHormozi) as he guests on The Matt Gray Show to share the importance of understanding the concept of private equity, leveraging personal brand, and utilizing smart business strategies to grow companies rapidly. He breaks down the costs and benefits of building a personal brand, which comprises talent attraction, trust building, quick problem solving, audience testing, and community connection. The discussion sheds light on different aspects of entrepreneurship, such as decision-making, understanding market dynamics, identifying key business opportunities, and scaling businesses to achieve financial success. This is part 1 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.Follow The Matt Gray Show on:➤ Instagram | Spotify | Apple | LinkedIn➤ Check out full episode on YouTube!Timestamps:(2:20) - The billion dollar goal(4:02) - The journey of entrepreneurship(6:38) - The art of opportunity selection(15:04) - The power of media and building an audience(19:35) - Attracting talent and building trust(21:11) - The pros and cons of fame(24:39) - The strategy behind keeping portfolio companies private(27:12) - The ideal founder and company characteristics for investment(29:34) - The impact of personal branding on business valuation(34:14) - The investment in content creation(37:36) - The importance of branding over growth hacksFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

That is the type of brand that we strive to build. And so you need somebody who really understands that. And most people don't because branding is a harder thing for most people and understand. But just to put it in a really succinct way, I think, like, one of the most underrated scale. And the difference between Alex at, you know, $100 million net worth versus a billion dollar net worth is going to be the brand. My understanding of brand, I think will be the pivotal thing that will take us from $100 to a billion. 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. Alex, thanks for having you here, man. Thank you for having me. I'm excited to be here. Awesome. Great to have you. What's story behind this Nicorette? You're about to pop one here.

What's going on? It's my highest sign of respect. I appreciate that. That means a lot, yeah. It's like, this is how I get engaged. I get ready to go up. I've been chewing nicotine forever, honestly. When I was in high school, I did a little bit of dipping when I was a wrestler.

and then I went to college and I found chewing tobacco and dip and I was like this stuff's awesome. But I never like got like addicted to it or anything like that. I just chewed it like at parties or around or hanging out but never like on a consistent basis. But I was like, man, I do like nicotine. And so I just started chewing the gum in college. And so I was like 19, 20 years old when I started chewing Nicorette because I figured I could get the buzz without the rest of the stuff. And then nowadays I think it's considered a newtropic and there's all these benefits and things like that. but I think there's fairly convincing evidence,

and I'm not a science, bro, but against Alzheimer's. Yep. And I have Alzheimer's and dementia on both sides of my family. Yeah, same here. So I chew Nicorette. Yeah, you get on that kick. You know, it's preventative.

It's medicine now. Yeah, exactly. Because the thing is, the carcinogens are in the delivery mechanism, and the tobacco and the other things that they have in there rather than nicotine. It's like if we found out that coffee was bad for people, it doesn't necessarily mean that.

caffeine is bad for you. And so it would be like just taking the pill form versus the drinking coffee itself. Same idea. I did the chewing thing for a little while when I was super young and then I just overdid it at one point puked at a party and I think that was about it. Just got to get back into it.

Yeah, exactly. But that was the time, you know, not the time. Slow, get into it. Slow, smooth and smooth as fast. So maybe I just said, you know, find the right delivery mechanism. So you're on this journey to build the portfolio of companies doing over a billion

and be worth over a billion. You're documented in that journey. I just want to say, first off, I'm super thankful and grateful for all the content you've made, you're incredibly generous, sharing all the kind of inside baseball, if you will. Starting off like, why a billion? Why does this matter to you? I don't think it actually does matter to me. I think it's more like it's just a, it's an easy target to shoot four. And then once one, it'll be one, it'll be 10. You know what I mean? When it'll be, you know, 10, it'll be 30 or 50 or

whatever after that. I think it's more that, you know, PBD said something that I thought was pretty interesting and insightful. After he sold his company, and I don't know the exact number, but I'm guessing it was between two and 300 million. He sold his insurance. Patrick and Patrick and David. And he made this statement that one of his mentors was like, man, something's changed about you. Like you seem more confident, you see more certain or whatever it was.

And he said, yeah, it was just this feeling that what I was saying all this time, that I was right all along. And I think that that felt kind of profound to me. And I think that, you know, we have a certain level of success that we've achieved up to this point. in the entrepreneur game. And I know that I could say the exact same thing at a billion in net worth

and probably have a significantly wider, broader audience because I'll have proof or evidence that what I am saying is true. And so I'm trying to build this publicly so that I think it'll be cooler to call the shot and then hit it. Yeah, well, no, I think it's a cool journey. I mean, I really resonate with the vibe

of kind of documented the journey because, yeah, we definitely do guys like us wish that, you know, someone like a Warren Buffett had kind of documented it right from the early days beyond just the annual shareholder letters, which legendary as there are. There's a lot of like in between there. There's messes. There's mistakes. Yeah, just a lot. Like I'm curious on your journey, you know, I think, you know, on social media on these videos, you know, everything can seem all rosy. You can seem kind of easygoing. And you talk about a lot of the challenges. I'm curious

kind of over the last six months of your journey. You know, what's been some of these messy situations that have come up and how do you kind of diagnose them and get around them and keep on overcoming these? I mean, there's all sorts of them. You know what I mean? There's, There's vendors for companies making promises that they can't deliver on and it costing us, you know, 10 plus million on one deal in hard cost. There's deals that take, you know, four months to negotiate and then fall through. There's, you know, unfortunately, based on the nature of just like when stakes get really high, you know, you make an agreement day one and then the company goes from, you know, a few million dollars a year to, you know, a few million dollars a week. And, you know, people's eyes change, you know, in terms of how they, they see the contribution and whatnot. And so there's just, it's just, you know, it's interesting because I think the actual messes are the same. It's just that the zeros are bigger. Like, you're still playing poker, whether you're playing with dollar chips or playing with million dollar chips.

It's the game's more or less the same. It's just the stakes are higher. And when you think about the goal of a billion, like, is there a date you've got in mind that you're like, this is when it's happening? And do you feel like you're on track to that? I do think we're on track to that, which is cool. there's definitely like room for luck which is cool and we've definitely had a few I'll call them lucky breaks but you know to what I think somebody wrote a great article on like four levels of luck I feel like you would have been exposed to something like this

but you know you can increase your luck surface area and I think a lot of what we're trying to do with the content and whatnot has been to deliberately create more luck you know for ourselves and so that that has worked I think that if we were just take the actual money and just put it in the S&P and just if it compounded it at whatever 9.9.7% for the next 40 years or 30 years, we'd hit it kind of regardless, but I'm hoping to, I'm hoping to beat that. And so, you know, if we can do it in, in five to seven, that would be, that would be pretty cool. And so that's, that's kind of, like, if my honest answer to, like, what are you really shooting for is probably five years. Five years. And, you know, I love that

Peter Thiel kind of frame. I'm sure you've played it through your head a lot, you know, the idea of, like, what's your five, 10 year goal? How would you go and accomplish that in one year? You know, either dialing up, like, better people, better system. You know, better opportunities, you know, like when you think about ways to accelerate that vision, like what comes to mind? I think it's all about opportunities. It's opportunities. Because if you think about like, because I mean, I talk a lot about leverage. So a difference between what you put into what you get out. And there are a few things that give greater leverage than the opportunity vehicle that you're pursuing. And so like if you run a local business or a restaurant, for example, you may work 80 hours a week to make that restaurant successful. If you run a platform that, you run a platform that, you know, creates aggregated buying power for all restaurants to buy together and then you make some sort of spread on that, then you still probably work 80 hours a week, but you probably have a significantly larger opportunity. And so it's just like making sure that we pick, you know,

the right boat to use Warren Buffett's analogies to be in the right boat. And I think that's where like strategy and having people were ahead of you, because the biggest thing when I was starting I was that I just didn't know, I didn't understand any of this stuff. And just like how much leverage you can get an opportunity. And so it's like if you have one successful gym, you're like you were never going to make $100 million on one gym. It's just not going to happen. And so just like just stating that fact outright really does shift your behavior

into like what opportunity could I put the same five years into and it could result in $100 million or a billion dollars or $10 billion. And then just being ruthlessly selective about those things. And I think that from an entrepreneurship perspective, what really happens. Like the rich get richer, sure, because they get smarter, but I think a lot of it is because what they choose to not pursue. And so, like, when I was starting out,

I would be really excited about $10,000 a month opportunity. And then, you know, you make $100,000 a month. And then basically you can say no to everything that's below that. But then all of a sudden, other $100,000 month opportunities seem like a double. You're like, oh, my God, this could be huge. And this is where the shiny object syndrome gets really dangerous. But I don't think the shiny object syndrome really disappears ever.

I think it's just the opportunities just look better. And so you can easily, you've leveled up to the point where I can say no to a 10,000 with opportunity now or 100,000 or even a million a month opportunity. But like, it's still hard to turn down a 10 million a month opportunity. Yeah. Right. And so that's where I think some of the discipline and one of the hardest parts of entrepreneurship is like knowing when to push and knowing when to pivot. It reminds you that Naval Ravakant quote around finding your kind of ideal hourly rate and making it super ambitious. You know, I think there's a lot of people that undercut themselves

early on thinking that their hourly rates, $20,000. an hour, $100, maybe a $1,000 opportunity and trying to get that to like, say, naming a $5,000 an hour or $10,000 an hour. Now you start to look at everything a lot different, where you're spending your time, who you're hiring, the kind of task you delegate. And, you know, I think a lot of entrepreneurs struggle with that kind of self-limiting belief that their time's not worth that much. So just do that extra thing or do that themselves when really, you know, it's something that they should either pass on, say no to or delegate. Yeah. Yeah, it's a really interesting frame. And just for back of napkin for everybody here, like just multiple.

probably whatever your hourly rate is by 2000, and that's what you make per year. You know, there's a lot of like work smart or not harder, especially in like the Twitter sphere, which I think is where we first, you know, connected. It's easy to say work smarter or not harder. But the problem is in order to get smarter, you have to work hard. So it's like, you have to work hard to get smart or not harder. So like you really can't avoid the hard work part. You get there one way or another. Yeah, you can't just name that hourly rate, then just sit back and just wait for a tap. Yeah, this is it. I only work for $5,000 an hour. And everyone's like, okay, no, because you don't have that skill. And then that like, okay,

Now where do we go? So I think you kind of earn the right. And so there's, you know, it's just like reality's gray. You know, it's not black and white. It's like you go into it. Like you level up your skill. And then I think, I think Peter Thiel actually, it was a, you know, value created in the marketplace, multiplied by your ability to negotiate to capture that value.

The third piece that I would add to that is the amount of supply demand around the scale. So it's like there's this much skill that comes from a salesperson. this is how well, you know, the salesperson can negotiate their comp and how many other people can do the job. And so it's like, ideally, you want to be able to create tremendous value, have very good skills at negotiating, and have no one else who can do it. And then at that point, when you put those three things together, you can pretty much name your own price. Yeah. And how do you think you go about like, you know, between, you know, over your career, it seems like you've had like a lot of amazing mentors around you. You know, I know Russell early on, um, was someone that was kind of

key in terms of a board of advisor around you. Um, I'm curious. over your side, like we're both big on leverage, building audiences, building a mode around your business. Is there a specific point, like early in your career that was like a pivotal moment that maybe changed the trajectory based on like building leverage where that was like people, capital, media? Early on, not really. I think that the, I mean, the, the most valuable thing for me was to get around people who were making more money than me. And that's just, and that, that hasn't really changed. I've always tried to get around people who make more money than me just to see what they're, what they're thinking with, what opportunities are they pursuing? What things did they say no to?

And I think that's been probably the most valuable thing that I've done in terms of changing my thinking and like what frameworks I use. And what were some of the patterns that you feel like you picked up from them? Just the games they were playing. You know what I mean? Like I learned about the private equity game. I was like, oh, wow. Like the largest percentage of billionaires come from private equity. Weird.

Okay. Noted. You know, on the flip side, you know, real estate has made more millionaires than anyone. But real estate is a far more efficient marketplace overall. And so you don't have like 100 X's, not really. you know, in real estate, but you can do that absolutely, you know, in the business space in a much shorter period of time. But it's definitely a higher risk, higher reward. Like the building's still there, there's still a roof. People might still rent it. But like a business can go to zero. Buildings

don't really go to zero. Yeah. And what was it the, what was that epiphany that you had around the private equity space? Like, why is it that so many billionaires from that? I think it's just more observation. So it's more like, okay, is there something that's weird here. Okay, well, let's learn about that. If this is the highest concentration of, of mega wealthy people, then there's probably some sort of arbitrage to this game. And there's multiple levels of arbitrage within private equity. And when you combine them together,

that's when you can create these 100x outcomes. It's like, well, you can buy things for a significant less than their worth, far more so at a discount than, like real estate, for example. And then you can still lever using debt from, you know,

third-party financing. And then on top of that, you can have even more leverage by raising money to do it. So it's like somebody who has $1 million can put a million dollars in, raise $100 or raise $99 to get to $100 million. And then buy, you know, five businesses that are $100 million each because they put

$20 million down and then they, you know, okay, let's be realistic. Let's say they buy three just for, you know, arguments take. They put a third down on each of them. So $300 million businesses and they get banked at for the other, you know, 70 on each of those businesses. It's like, so one guy with $1 million just bought three businesses in total for $300 million. And if those businesses just grow at like, let's say, a 20, you know, 20% rate over the next, you know, five years, those businesses go from $100 million businesses to $200 million businesses. So he goes from, you know, whatever it was, 300 to 600, right? But he probably also bought those at a discount. So maybe they inherently were worth more than that. And all of a sudden, it's like, wow,

now we're at $900 million. And so then he just, you know, gives his, he has his hurdle rate to his partners. He has to pay his debt back. And then after that, you just have this massive nut left over. You can take that 100 or 200 million left over for the managing partner and then just play the game again. And there's very few ways that you can do something like that within a five to seven year span than anything else with so little capital. Now people are going to only trust, you know, somebody who might have a level of experience or saying, okay, well, I worked at a private equity fund for 10 years. You know, I did two funds and I feel pretty confident. I can do it. It's like, okay, well, then you can do it when you're 35 because you start when

you're 20 and you get 15 years in or whatever, you know, two seven year funds and you start your own. And so, yeah, like, I see those types of games, and I'm like, that makes sense. Like, where is the huge lever opportunities that exist? Like, software is obviously a big one. Like, how many things can you go from zero to a billion dollar valuation in three years? Like, you can't do that with the chain of dry cleaning stores. This is not going to happen. Yeah.

And so it's just like, okay, what is, what are the nature of those things? Well, most products that have zero cost of replication tend to have more leverage. So, like, media is an example, or software stuff as an example, even licensing stuff. all of those are zero cost to replicate. And so they're just more leverage baked into the business model. And you work just as hard to build the restaurant or the dry cleaning business as you do to build the software company. You just need different knowledge. And so I think finding people who have expertise in those things helps you move faster.

It seems like another form of leverage that we both have in common over the last decade is the importance of media. You know, you talk a lot in $100 million leads and kind of doubling down on organic content and leveraging that. I know early on the cannabis industry with herb, you know, we built that. that 10 years ago with the goal of kind of, you know, building a more tasteful, authentic platform to help connect kind of our brands with the best community out there in the space when it was really kind of sketchy, not a lot of good stuff out there. We talked a little bit about that a year ago. You know, I'm curious on your side with, you know, you got quite the Mozy Media empire going

on here. Amazing team. I know a number of them. You know, bring us back to kind of your epiphany when you realize like, damn, we got to start building more of an audience here. move off of sort of the paid ad side and build this business different. What was the kind of thinking pattern there?

I mean, I just, I had reality kind of slapped me in the face a bunch of times in a row in a very short period. So like I was, just for the audience to like understand the gravity of this 180 degree flip for me is that like I think episode seven

of my podcast is called stop branding. Yes. And I do, I mean, I leave it up there because I want people to see the, you know, the progression over time.

I respect that too. Yeah, no, I appreciate it. And so I was just like cold outreach, run ads, don't talk to me. You know what it is.

Like that's what it is. Like that's you're going to get customers. And obviously referrals and affiliates and things like that. I just, the idea of just organic content didn't really make sense to me. And to be fair, I was also a local business owner and was speaking to local business owners. And I kind of, I think that there's actually some truth to that.

Because the thing is, is like if you actually build an exceptionally large, you know, personal brand, it doesn't make sense to monetize through a local business. And so what does make sense for a local business? Well, they probably should have, have strong referrals from their existing customers, create affiliate relations with other local businesses.

They should run as, they should do outreach. Like that is probably the-local SEO, yeah. Yeah, that is the approach they should be making. But I saw Kylie Jenner become a billionaire when she was 20, and I was 27, and I thought I was, you know, hot shit. And I was like, she is way richer than I am. And so it means that she's doing something different than I am by an order of magnitude that I don't understand.

And she had a personal brand. But I was like, you know what, Chris Jander's been building her brand since she was five. Like, okay, I'll write that off as a fluke. But then, you know, Huda Beauty, you know, sold a chunk of her thing at 600. Now I think it's worth over a billion. And, you know, Connor McGregor had proper 12. And George Clooney had Casamigos, right? And then the Rock has Taramana.

And each of those billion dollar, billion, a multi-billion-billion-dollar things, like seemingly overnight. Now you've got Logan Paul with prime. And so, but in that short period, all of, it was like 12 months. all of these plays started coming out. And I was like, I'm playing this wrong. And so I still wasn't convinced because I didn't want to be famous. And I have another clip of me being like,

I never want anybody to know who I am from a few years ago. And I was sat across the table from a friend of mine who's famous who would recognize him. And I said, like, don't you get bothered by having weirdos show up at your house like three times a week and letters to your kids? And like, isn't that?

Like, that doesn't seem worth it to me. And he said, if the, that's the price I have to pay for the impact I want to have. I'd pay that price twice a day and seven days a week. And you just kind of looked at me. And I just felt very called out just like for being a pansy. And so I was like, all right, well, that's what I'll do. And so that was like the last straw that broke the camel's back. And I started making content that week. Yeah, I see that self-limiting belief a lot with people where, you know, they're like, oh, personal brand. You know, I don't want to be famous. And I think we live in a totally different day and age now. And there's a whole other kind

game being played. I'm curious on your side with, you know, your personal brand. There's a lot of people out there that just can't see the ROI to this. Like, why am I doing this? I don't lose all my privacy. I lose all this. And like, what for? How do you look at the ROI of what you've built? Yeah. And, you know, I think you guys are spending like millions of dollars now on the whole content operation. We love a little bit of the inside baseball and how that kind of all delivers results for you. So right off the bet, I don't, I will say up front, I don't think everyone should be famous. I don't think everyone should build a personal brand. I don't think everyone should anything. You can do whatever you want. And I have billionaire friends who want to stay

anonymous and they're pretty smart dudes, you know, and so they've made that decision and I respect that. I do think that from a money-making perspective, it is a time warp. You can just go way faster. And that is because you can attract talent at such a higher rate than you could otherwise. You can bring people on who already know your values, know what you're about, have already consumed more content than most people's employees currently know about them and their way of doing business. You can basically pre-train your entire team before they come on board because of the amount of stuff that you put out. And those are just unbelievably valuable things. And not to mention, you know, if you're on the deal side, you know, like for us, like investing in companies, we have so much more trust at the table. And I think Charlie Munger said trust is the ultimate lubricant for deals. It's like there's just what you're both trying to make the deal happen rather than being competitive. And I think that just it's it's so much better as a process having been on in both types of deals, very competitive deals like white knuckle deals and really friendly deals. Way more fun to do friendly deals. And so those are, you know, those are kind of the pluses. And obviously you have an audience. You can.

test things quickly. You can find solutions. Like I remember, uh, even this week, I had, uh, one of our companies, um, does three or four million dollars a month in just loan volume, um, as a percentage of their revenue, uh, for consumer, consumer spending. And, uh, we were, we were switching processors and we were kind of linked to a different, uh, loan engine. And I wanted to make sure that we'd be able to transfer it to the new processor. And so I needed to get in contact with somebody high up, uh, at that loan processing company. And it was like, hey, if anybody knows anyone, let me know. And I got like seven people who message me and they were like, I know the co-founder. Let me introduce you. And like just you don't have that right

without that kind of brand. So that's the pros. Yeah. The cons and there are cons is that privacy is the cost of fame. Like that's what you give up. And for some people, that cost is always too much. For me, I'm not really that different in private than I am publicly. So it didn't seem like too big of a deal. I mean, that's the thought about it. Second is it's irreversible. You like once everyone knows what you look like that's it. Like you can't stop. Like it's irreversible. And that's why you shave the beer. Yeah, right. I think yeah, I think I'd still probably get recognized. And there's like small social costs. Like, you know, if I walk outside of the house, I'll, I'll get recognized four or five times every time I walk outside.

And that's fine. Or if I go to dinner with Layla, I'll probably have to stop three or four times during the dinner to take pictures. And that can be, you know, disrupting and the hard part is is that you always have to be in the best mood ever because this is the one time that this person will ever see you and they will make 100% of their lifelong judgment until every person they ever meet how you are based on the 30 seconds of how you interact with them and then 10 minutes later you do it again and so basically being able to manage that is a skill I think and I've worked really hard at that just because it doesn't matter like no one will ever empathize

so it doesn't really matter like boohoo must you know must be tough you did choose that And that's the thing is like, I did choose this. And so I can't lament that. I just see that as part of the price. And so giving up privacy is the TLDR big umbrella cost of getting the fame wheel going. But there are, in my opinion, pros and cons. But there are more pros than there are cons. Yeah.

I also don't talk about super racy subjects. And so I don't have, at least to my knowledge, you know, a huge hater base. I'm not political. For the most part, all my stuff that's out there is like to try and help people, you know, make more. And I also lean really far away from shoulds. So I just, you know, up front, like, do whatever you want. Like, this is just the stuff that work for me. And if it works for you, awesome.

If it doesn't work for you, I'm sorry, try someone else. You know what I mean? That's just what's worked. Hey, Mosin, nation, quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right. So send me a connection request and note letting me know that you listen to the show and I will accept it. There's anyone you think that we should be connected with, tag them in one of my or layless posts. And I will give you all the love in the world.

All right. So let's get back to the show. You know, I completely agree. The benefit's definitely far away. The cost, you know, just your service area for like luck, community connections, cash flows, more deals, more opportunities. You know, I think at the end of day, too, like personal brands kind of just get a bad rap. It's one of those things too. It's just building your digital reputation.

Everyone's online. They're going to check your LinkedIn before meeting with you or diligence in your company or doing a deal. you know, just making sure that you're putting your best face forward, your best foot forward in those deals. And hopefully having a reputation that persuades you, you walk in the door, you know, the deal's almost already closed. They're just trying to meet you, talk to you, chop it up and hopefully get it across the line. Yeah. I think it feels really obvious to people, you know, whether it's, you know, the Rock with Taramanna or Logan Paul with Prime that these kind of consumer products, like, of course that makes sense with those products is everyone's your market. Yeah.

But when you're talking about the private equity space, I think that's where sometimes people are like, no, no, no, no, no, this is different. this is different. You know, how do you kind of give me some of the details. I'm curious, like, how this has actually helped you, you know, close a deal or, you know, and really change the trajectory because you guys are doing $200 million revenue now. Yeah. Well, my quote, fame or audience size in no way directly helps any of the portfolio of the company. I say me be ancillarily.

But like I purposely try to not, I'm not public about the companies that we own almost at all. And I have to get into that because I'm curious. Yeah, no, I mean, that was by design. Well, I'll explain now. The reason I don't talk about them is because I don't want to be included in whatever the exit is. And so if I bought it without me, I want to sell it without me because I don't want to now have a five-year non-compete on the back of another deal in three years because I promoted it. And so if I'm going to use money and expertise with our team to grow a business, then that is what the deal is about. if I'm trying to approach something as a brand deal, which I, you know, have done almost never,

you can probably tell I haven't really promoted anything. It would have to be for a really good opportunity that would make a lot of sense for everyone in my audience. And so, yeah, for that reason, I have kept it private because I want also to a small degree. Because I think the founders that we work with, that we've invested their companies, a lot of them want the credit for the success. think that as soon as, you know, the world here is like Alex was involved in the deal, I will probably get a disproportionate amount of the credit. And I, as an entrepreneur too, I don't want that because I might not have done, you know, a disproportionate amount of the work. I'm just curious on that, right? Just to double click into it. Like, you know, Warren Buffett,

who is something that we obviously both, like, follow a lot of his stuff on, you know, at the end of the day, you know, with Berkshire Hathaway, you know, all those companies, most in the portfolio are kind of, hey, we're a Berkshire company. That company's bought, Warren Buffett doesn't necessarily come with the company. You know, what do you think either he's missing or what's the difference and what am I missing maybe? No, no, you're good. He is a decentralized management model. And so he buys outright and he usually doesn't buy to sell.

And so selling is not usually part of his playbook unless absolutely necessary. And so at that point, his reputation provides a lot of value, but he's not necessarily trying to, like, he's not trying to have another acquirer in the future. For us, we are trying to have another acquireer in the future for most of the companies. that we buy. And that has shifted. In the beginning, we were just planning on buying and holding. But I would say that we have now learned that it's very tough, especially if you keep the founder in place,

which is usually how we do our deals. Because usually the business will be limited by the founder. And so at that point, it's like, okay, it's clear that this founder is not competent past this level. And so we should sell. When you're going and analyzing different founders, companies to buy, what's like the dream founder kind of characteristics? And then what are the dream sort of company

characteristics that you specifically are looking after? you're like, okay, this is a grand slam. Yeah. We can start with founder. So founder, it all comes down to character and experience. So if a founder has a huge amount of experience, specifically with the problem that they're trying to solve, so we're talking five to 10 years of dealing with whatever the issue is.

And a lot of times if they made the solution to help themselves, that helps because they usually tend to be a little more product-focused. So a product-driven entrepreneur who has lived with the issue for a long period of time is incredibly coachable but balances that with a lot of confidence, willingness to take risk

and ambition. Because one of the issues that we've actually had more than once is that we have a company, we invest in them and then we triple the company in like a year.

And then the founder is making more money than they ever thought possible and then they just go golfing every day. And that's frustrating for me. And so, and things is like,

this is where, you know, if you're at the deal table, everyone will, you know, make promises and be like, oh, I want to go to the moon. I want to go to a billion. I want to go to $250 million. But all of a sudden, you actually find out that $500,000 a month in personal income. That's it. That's actually their number, you know.

And so, and a lot of times also the flip, so one of the cons of the fame is that people also know what I say I want before they come in. And so they will say those things. Yeah, they'll say those things. And so unfortunately, I have to, to be like, cool, that is the right thing to say. And we will find out if that's true, you know,

to the greatest degree possible. And so from a character perspective, those are probably the traits that I look for. So, um, and absolutely unimpeachable. So like our personal values are at least sincere candor, unimpeachable character and competitive greatness. Now within that, the micro is context around the problem, product driven overall.

Um, super open to feedback while maintaining confidence and ambitious. Like for a different reason than money. Like, um, all, good with money being a primary motivator in the beginning. But at some point, if you satisfy all your personal needs with money, you will stop if that is the only reason that you're doing it. It's like the Bezos quote, like missionaries over mercenaries. Yeah, I love that. Yes. The, the, the, from a business perspective, um, I just look at it in terms of, uh, incremental revenue, uh, to enterprise value. Like, that's really just it is okay. So if I add, so like,

if I add one million dollars to 10 different businesses in top line revenue, In one business, I might add $50 million in enterprise value. Let's call it on the extreme level of leverage, like a social platform, right, or a marketplace of some sort. That is going to be the highest leverage, highest multiple earning business possible. On the other extreme, you've got like a personal brand that, you know, cash flows off of one-time transaction courses. That would probably have the lowest increment in terms of enterprise value that is attributed

to a $1 million increase. It might be literally just a $1 million increase in enterprise value for $1 million increase in sales. And so when I look at that, then you think about the leverage, it's like, okay, well, if we think that we can triple a business or we think we can triple businesses of this type, well, then I'd rather get $150 million if I add $3 million to a business in terms of enterprise value versus three. And so that's where picking the right opportunity.

Now, usually that comes with increased risk because, you know, a platform, the number of platforms that have been successful, you can probably, you know, name on two hands. So there is a risk-adjusted return kind of factor in there. And so, you know, one degree closer to that would just be like a SaaS tool. So just like some sort of tool or software as a service that you could either be enterprise level or consumer level that would probably maybe trade at, you know, five to ten times top line. Still cool, not the same as a marketplace or platform, but still a really valuable company. You know, next to that, you probably have e-commerce companies, just physical products. They might trade at, you know, one to five times

top line, depending on how strong the brand was, and how recurring the customers were, how sticky they were, et cetera, gross margins, profitability, growth. And then, you know, you've got probably brick and mortar chains as a, or service, actually probably a services business would be the next one over, and then probably a chain of brick and mortar, and then probably some sort of solar operator with non-transactional business, or very transactional business. And so that's kind of like the range that you're looking at from most valuable to least valuable. And there are different competitive that. dynamics though. Because like if we look at like we have two chains right now that are both

relatively large, so 30 plus locations that we own 100% like we own all of the locations are not franchised. One of them we have four franchisees. Sorry, 28 and then four. But those ones are the interesting part is that the people you're competing against are also not usually not well capitalized, usually not very sophisticated. And so there is like a little bit of a landscape versus like a platform. You're going to have super well-funded competitors. is from very sharp people, lots of stakes. I mean, it's the high stakes game. And so I think there is definitely like play there.

And we kind of look at all those components when looking at a deal, which is like, okay, is this a super hot space right now or is this kind of a quiet space? Okay, so we can just like quietly accumulate and keep opening one or two or three locations every month. And the nice thing that I like about brick and mortar specifically is, and this isn't the only part.

There's just two of our company in the portfolio. But the returns on capital are really, really predictable. And so it's like if it costs you $100,000, open a location, each location makes $500,000 a year in net free cash. I mean, really good. You know, and so you can actually just really, really print money. And that's also one where it's very sellable. You know, if you go to an acquire and say,

we have 100 dry cleaning locations, they're not really worried about Alex being involved at all, right? It's just like, I'm not cleaning the clothes and I'm not in the ads. So I'm just an owner here. And so it makes it easy to sell on the back end. And so anyways, all of those are different dynamics. to kind of feed into like what opportunity is a grand slam. And are you generally moving up the chain then?

So to more like SaaS and platforms is done to the default and kind of going down from there. Makes sense. Now we still look at deals. You know what I mean? If there's a screaming deal that we really like the, you know, like if anyone has a pseudometical stuff. So if you're looking, you know, if you have hair treatments or med spa or laser stuff, I'm really interested in that space right now overall for brick and mortar because some of the margins some of these business are phenomenal.

The operators are horrendous. And people are making money who have no idea what they're doing. And so, yeah, if you're in those spaces, let me know if you've got like five locations. Is there ideal spaces to compete in? Yeah, those are exactly. You know, like really good returns on capital, inept operators and not a lot of like super well-capitalized competition. So speaking of platforms, I've been following your meteoric rise on YouTube here in the last, you know, a couple years. From my understanding, I was watching you with Eric Sue.

Shout out Eric. You know, you're spending about $3 million a year. on content. That's a lot of money for a lot of people. And, um, you know, I know though that there's probably, uh, you know, good, good allocation of this, obviously, um, based on, uh, you know, your goals. Um, and I'm curious, like when you look at that three million, like, what, what is that going to, you know, is that going to your editors, you know, where, where's this money going? It's all team. I mean, it's all payroll. Um, so it's all, it's all labor. So it's, you know, creative director, brand director,

you know, manager who actually manages like when all the posts go out across all the platforms, you know, when you're making, I don't know, I think we do 350 posts a week. So, you know, it's 50 posts a day that happen across all platforms. So like somebody has to manage that. It's two, it's two an hour.

Just like making sure the, you know, eyes are dotted, teaser crossed, making sure that the captions are what I would want them to say. Which can be, we've solved that pretty well. so I'm really proud of how we solve that. And then a lot of it's just editors, just people who, because there's being able to, so there's like,

and you know, my team will correct me, probably crucify for simplifying it this way. But like, one is you have to have somebody who can recognize moments that are valuable. The next skill is kind of reordering it in a way that would make it a more viral or more rewarding piece of content for the audience. the next piece is understanding

does this build the brand or does this just get views? Because they could probably snip some ridiculous things that I say at some point and probably get a ton of views but it wouldn't build the brand the way that I would want. And so you need somebody who has

who has the incentive aligned to really take care of the brand understands what moments are valuable and understands how to package it and then probably also make it contextual to the platform that's being distributed on. And so that's a lot of kind of different skills.

that pretty much all editors have to have. Yeah. And that's where having like a really good culture within that team. And, you know, Caleb does an amazing job. Yeah, shout up Caleb. Legend. Yeah, he is. He's awesome. He does an amazing job running that team and giving the guys, creatives and gal's creative space

to both experiment on things, but also still do the 80-20 of like, okay, this is still the blocking and tackling. And so he balances a really good job of like allowing people there personal freedom while also making sure that we paint within the lines. Yeah. And so when you kind of break down that three-mill, Where do you think, like, where does it go back in Afghanistan?

You're obviously going to simplify it. Your team's going to kill you for this. Oh, no, I mean, it's literally what I just outlined. I mean, it's, you've got, you've got the creative directors, we've got managers, and then we've got by platform, and then we've got editors in general. And so by platform, you have, like, one person managing just that, wow. For the most part. And then sometimes there's multiple editors underneath, depending on how much stuff we put out there.

Yeah. And so then rewinding to when you started, because I think this is useful to people that are looking to start an audience from scratch, looking to get going. You know, I talk a lot about, you know, in Founder West, getting people like a core team to start with. you're looking to build your personal brand. You maybe need a chief of staff to start getting some of the operational stuff off your plate, getting a social manager, you know, getting a writer because a lot of this stuff, you know,

takes a lot of writing oftentimes. How do you kind of see, you know, the core team when you started out and how's that kind of scaled up? Like, was there, you know, I've seen a lot of your content you've talked about, you know, going from the top down. So like, I know you brought on Caleb pretty early you had experience with media and doing that side. Like, how would you advise someone to architect a squad?

So this is a really tough. question because it really depends on the means that you have so for me I can I can bring on you know multi six-figure people right off the bat knowing I'm not gonna get any ROI for two years I can do that let's say you're doing a hundred-k profit because there's a lot of guys so you know then yeah I would then I would hire somebody like that who has experience building a personal brand to a large degree and what I would what I would actually refrain away from is the guys who only talk about like views and algorithm stuff and like

are what I call hacky. Because like, it's like the people who have the biggest brands on every platform do none of the things that the quote growth experts talk about. They just have great brands because they provide value to their audience. And so you need someone who sees the big picture and is not like, hey, we need to do,

let's do a listicle. It's just like, okay, you know, sure, is that really going to, is that going to like really build the brand? Yeah, I don't know. That got BuzzFeed. What? Yeah, right. I mean, actually BuzzFeed is a perfect example.

of like optimizing the crap out of all of the hack stuff but like missing in my opinion like the main point and so I mean I look at I look at brands like the rock like a brand's like I mean I think the Kardashians I look at a lot just from a branding perspective I look at Taylor Swift and you just look at like what the moves they made are like Taylor Swift's not hacking anything you know what I mean and she has one of the most influential broad bases like ever and that is the type of brand that we strive to build. And so you need somebody who really understands that.

And most people don't because branding is a harder thing for most people understand. Like that'll probably be one of the next books that I write will be around branding. And that'll partially be for my own team so that we can be really, really clear. Now, they've heard many of my rants on branding overall, but just to put it in a really succinct way for the masses.

Because I think like one of the most underrated, I mean the most underrated scale, And the difference between Alex at, you know, $100 million net worth versus a billion dollar net worth is going to be the brand. 100%. My understanding of brand, I think, will be the pivotal thing that will take us from $100 to a billion.