The Game with Alex Hormozi - The Test I Put Lawyers Through Before Hiring Them | Ep 324

Episode Date: August 24, 2021

The right people stay for a lifetime. Today, Alex (@AlexHormozi) talks about selecting the right people you need as you progress in your business, the 2 traits you should be looking at, and how to test these potential people!Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(1:18) - Difficult to trust others. Look for integrity & efficacy.(3:33) - Test integrity by interviewing many people. Align incentives.(7:30) - Test skillset by reading books. More interviews, more insights.(10:02) - Evaluate potential people with integrity and skillset in mind.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Selecting the right people can make or break your life in the trajectory of your business. 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 than the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. As you build your wealth, there are people who you will need to help you and have in your arsenal. And that means lawyers, accountants, investment professionals, people who you invest with. So those are different things. things, people you deal do deals with, people you do business with, people you might get mentorship from. And selecting the right people can make or break your life and the trajectory of your business. I can tell you that firsthand, I would not be where I am today if I didn't have the mentors and

advisors and counsel that I've received over the years. And over time, one of the hardest things is trying to figure out who you're going to trust and what's the process that you have to go through in order to find those people. And so having done this for a while, and we've moved a lot of money in our businesses, and for those you don't know me, my name is Alex Hermosey. I know portfolio of companies that does about $85 million a year.

And the whole goal for this channel is to document our journey from 85 million a year to a billion dollars a year in revenue in our portfolio and just share the lessons that we've learned along the way. And so I've boiled this down to two things, two traits that you can look for. So I've tried to make this as simple as possible. And I don't just do this for you. I do it for me because I think, you know, we're kind of in this together in this.

crazy thing we call life. Anyhow. So the two things that I look for and then I'll show you the test that I think through for each of them. So the first is integrity. And I know that might sound silly, but when you think about it, you need someone who you can trust. Like if you're giving someone your money, like, or you're trying to take someone's advice or counsel, you need to trust their intentions. All right. And so it's not just whether they have integrity. It's whether they have your best interest in mind. All right. So I'm going to get to how I solve for that in a second. but that is the first character trait of you need that you need of a council of somebody of any kind of counsel really whether it's investment law etc the second um is efficacy or their skill set right so let's think of both let's think of

different scenarios here so let's say you might trust your mom implicitly but she doesn't have the skill of knowing much about you know how to structure insurance policies or trusts or you know investments in tech startups right she might not have that skill but you might trust her intention right for you specifically On the reverse of that, you might see that there's this person who's got lots of skill is prodigious in this, but it also means that they know exactly how to screw you if they want to, right, which is one of the double-sided things of being really good at something, right? You know, all the details you know how to write the agreement, structure the deals in order to make sure that you, you know, get the best outcome, right? And so the idea is to find someone who has both your best interest at heart and has the ability to deliver on what you want, right? And so it's both of these things.

And so you're like, well, yeah, maybe that seems obvious. For me, just even boiling it down to that was very helpful for me. Because when I look and I look through advisors, look for people I want to get counsel from, I have to look at these two things. All right. So here's how I test for the integrity piece. And here's how you can kind of like, you can control for risk here, right? One is I always try and interview as many advisors as humanly possible, all right?

And I do that because I'm going to get as much information from each of the council during this process that will give me perspective from which to make a judgment. One of the biggest problems with this, like you think about Julie, who's trying to lose weight, right? She goes to the gym and then she talks to this 10 personal trainers. One personal trainer says, it's all about high fat, low carb. Another guy says, hey, don't worry about that keto stuff. It's all about high carb, low fat. And then another guy says, no, you really just need a balanced thing.

And another guy says, it's only about calories. It's only about counting your macros. And so you get this huge perspective so that hopefully you can make a judgment call. Otherwise, when you talk to the first guy and he says, it's all about keto, then you're like, well, I guess this is it. Right? I guess these guys all have opinions when in reality, there is a truth. you just don't have the perspective in which to make a judgment yet. And so the first step in this is that I interview as many as I possibly can from reputable sources.

So this is where I reach out to my network. I make posts, et cetera, to try and get as many referrals as I can. All right? So that's step one. Step two for the integrity piece is that I try and have aligned incentives. Now, a lot of times they're incentive systems that appear aligned but are not in reality. So let me give you an example. So in the real estate market, if you're a realtor, for example, you may think, oh, this realtor has my best interest at heart, right?

Because they have an incentive to sell the house. And so that is why they're going to get compensated. So they want to sell it for as much as possible. Ah, but they aren't incentivized to sell it for as much as possible. They're incentivized to sell it as fast as possible and get the deal closed. All right? And so think about this. For you, selling a house for $500,000, that's worth $500,000 is a normal, you know,

that's normal. That's the market price, right? But for you to make an extra, let's say, $25,000 or $50,000 would be really material. That would be a huge extra outcome for you. You would probably push a lot harder to get the extra $25,000 or $50,000. Now, let's say that you could probably sell it in a day at $450,000 because it's below the market value of the house, right? Now, here's what's crazy is that if a selling realtor, you know, like total it might be 7%, 2% goes to the buyer and 5% goes to the seller, if 5% is going to your realtor, right? 5% of $500,000, right, is 25 grand.

Okay? And so for them, the $50,000 decrease to drop you from $500 to $450 to $450,000? means that they're going to give up $2,500. So they're going to make $22,500. So let me ask you a question. Now, in the reverse, if they sell for $525, they're going to get $27,500, right? And so it's a $5,000 swing off of a, you know, $25,000 nut for them. And one of them might take them three months and one of them might take them a day.

So what is their incentive? Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the words so we can out more entrepreneurs, make more money. feed their families, make better products, and have better experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I has to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb.

It would mean the absolute world to me. And more importantly, it may change the world with someone else. Their incentive is to make as much money as possible per unit of time. And so they're incentivized to sell as fast as possible. And so this is one of those things where you have to put your thinking cap on and say, are our incentives truly aligned? And so when we're looking at this, when I say there's two aspects that I look for counsel or somebody who's going to help me do something financially, legally, insurance-wise, whatever it is.

So first is that integrity piece and are there incentives aligned? The incentives being aligned and you could restructure that deal and say, hey, you know what? You're going to get zero percent on anything below $400,000. I'll give you, you know, I'll give you 3% on anything between 400 and 450. And then from 450 and up, I'll give you 20%, right? Or 15%. or whatever, right? And so now they're highly incentivized to push, and now your incentives are aligned because each increment for you is worth almost as much it is to them. And that is

how you would align incentives. All right. Now, how do you test for the second thing, which is their skill set? This one's hard, all right? Especially if you don't have the perspective from which to make a judgment, which when I enter new things, when I'm trying to learn about trust and I'm trying to learn about investment things in different vehicles, I'm learning about storage units, when I'm about multi, like, you're like, man, there's so much stuff and there's so much nuance that you have to have, right? And so the first thing is I like to usually read two to three books on the topic. All right? And I read two to three books just so I don't appear like an idiot. And so I can at least understand what they're saying. And they're going

to respect you to, they will, it's kind of like defense. If you bring your, if you bring at least some level of knowledge, they don't feel like they're going to take advantage of you. So this is, this is a first thing that I do. And this is because I don't like feeling exposed in these types of conversations. The second thing you can do is if you have someone that you can trust, you can bring them in alongside you. And the third thing that you can do, which is probably the most and highest recommended is repeating the same action. said in the first hand, which is try and talk as to as many of them as possible, and then you will gather the insights and you'll see the people who demonstrate the most expertise.

And what you can do is take what one person says and say, well, what about this? And see what they reply with, right? And as you gain more and more knowledge, and this is how you, so in the consulting world, this is qualitative research, right? This is where you're literally doing interviews, essentially, to gather information so that you can make an informed decision, right? And so when you do these interviews, and this is what, this is the lazy part. This is what most people don't do is they won't do this work.

work, right? They won't take the time to interview 20 people or 10 people when in reality, these one decisions, the guy who you decide to, you know, invest in their fund, or if you decide to buy this building or invest in a fund that buys X, Y, and Z, right? Or you have somebody who manages your portfolio, whatever it is, right? That one decision can be one of the most, if not, the biggest influence on your total net worth over a long period of time. And people take more time to figure out where they want to, where they want to go on vacation, then where they're going to put their money, right? And so my ask to you is that if you put these, put these lenses on, think about both of these lenses. Lens one, do I think this person is integris? Do I think this person

has my best interest at heart? And then two, do they have the skill to deliver on that promise? Because I don't want my mom doing my investments. I know she has my best at heart, but she has no idea what she's doing. And then I don't want somebody who absolutely knows what they're doing and does not have my best interest at heart, right? Which honestly, unfortunately, is a lot more, a lot more of the cases that you'll come up with. And candidly, you know, a lot of times they're literally incentivized against you. You know, in the insurance industry, they're kind of incentivized to rip you off. It's pretty terrible.

And there's a lot of industries like that. Mortgage brokers are incentivized to rip you off. And so you really have to look at it from both lenses. And these types of decisions can make the biggest impact on your net worth and your financial future simply based on who you decide to work with. And so that is the framework that I think through when I'm looking at looking for council looking for trusted advisors. And as an interesting final note that I'll leave you with, I was watching a video of Warren Buffett. And he talked about how his life and most people's life

is more or less the same. He's like, I eat at the same fast food restaurants. I get the same desserts at Dairy Queen. I wear the same suits as you do, except, you know, he's like, or at least they look cheap on me. He said, but one thing that he realized that was different about him is that he defines a successful life based on the number of people who truly love you when you die. And He gave a definition of that that I thought was really powerful. And so one of his friends, I can't remember the name he said, survived Auschwitz. And he said that her judge of character of who was a true friend and who truly loved her was, would this person hide me if the Nazis were coming?

And that's been such a powerful frame for me to think through, which is it's not just, you know, will this person try to help me? Lots of people try and help other people. But how many people help other people when their own lives are at risk just for helping because it's doing the right thing? So I think when I think about that type of frame, the number of people I have in my life that meet that characteristic are far and few between. And I think that if you can trust the people that you do business with to that degree,

you will be best served. And if I have to choose between the two, I would rather have somebody who I trust their intention. And I have an eight out of ten on the efficacy than somebody whose intentions I am unsure of, and they have a 10 on 10 of the efficacy. So anyways, lots of love. Hope you enjoyed this. Click subscribe if you did. And I'll see you guys the next video.

being awesome. Bye.