The Game with Alex Hormozi - Time Horizons | Ep 373

Episode Date: March 10, 2022

Your time matters. Today, Alex (@AlexHormozi) talks about the different thoughts and frameworks that worked for him in his entrepreneurial journey, how these lessons can be applied to marketing, employees, relationships, and health, and how continuous improvement is the name of the game.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:(0:52) - Rich people hold for long-term goals, while rich people focus on short-term goals.(4:10) - Marketing: get people to buy, improve product continuously, not just sell.(10:13) - Be patient with hiring, find skilled contributors, not just "good enough".(14:25) - Choose fruitful relationships for the long-run, not just convenient ones.(17:40) - Commit to a diet/lifestyle for 10+ years, not temporary choices.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

The idea that you might have heard on my Grant Cardone interview was rich people sell, wealthy people, hold. 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. In today's video, I want to talk to you about why the rich get richer and the real reason behind it is probably not what you think. And this was a video that was requested by my Instagram following it. didn't ask me anything in my YouTube producer was like, hey man, I think one of the biggest things that's shifted since I've been working with you is just like your concepts on time horizon.

And so what I wanted to do is kind of share some of the thoughts and frameworks that have worked well for me and apply them in three or four different kind of scenarios. And so right off the bat, I think from a money perspective, the idea that you might have heard on my Grant Cardone interview is rich people sell, wealthy people hold. and more specifically wealthy people buy and build. And the difference is that when you sell, you inherently shrink or you're kind of switching through an inefficient vehicle because you get taxed on a sale, right? And so you have to switch your equity for another version of something, right, that you can make money on.

Whereas when you buy and build, you can consistently expand. And so most of the people who I know who are wealthier just continue to accumulate net worth, equity, et cetera, rather than selling. Now, like I said, I mean, the only time that you really want to sell is if you think the party is over or you no longer have interest in the thing. And that's kind of a separate thing. But purely from a financial perspective, it makes more sense to consistently buy and build. And so I wanted to hit a couple of quick quotes before I dive in that have been meaningful for me in terms of framing this perspective. First off is in terms of games.

So I prefer to play games where if I wait, I win. And so I think it's a useful perspective in thinking about what. things we pursue and how we pursue them. And so there are two types of games. They're infinite and finite games. And the games that are worth playing in life, in my opinion, like health, wealth, relationships, marriage, etc., are all infinite games. And so this is the basic difference. And where people get in trouble is when they start playing infinite games with a finite perspective. And so finite games are games where you have known players agreed upon rules and outcomes where you have a clear winner and loser, right? And so the point of the game, and this is important of a finite game, is to win. And so if you have a

baseball team, you have nine players on both sides. There's rules that are agreed upon. And if, you know, at the end of the game, the person with the most runs wins, right? And so that is a finite game. An infinite game is a game where you have known and unknown players, no agreed upon rules. And the point of the game is to keep the game going, all right, which means that the point is to continue to play. And so I think when a lot of people lose, and this also applies to warfare, right? So a classic example Simon Sennett gave was how when the U.S. went to Vietnam, we were playing a finite game where we were trying to win the war, whereas the Vietnamese were simply trying to survive and continue to play. And the infinite perspective will always beat out a finite perspective because it's a subset.

And so in general, and this is a third quote, is he who has the longest time horizon wins. And so the nice thing is that we can adopt this perspective in business and essentially, I don't want to say guarantee victory, but guarantee not losing, which in many cases by default becomes a win. And so I think that for myself adopting this perspective, I don't think I'm going to sell another company again, like in terms of big picture, I didn't start some of my earlier companies with the same perspectives as I have now. And I think that that's part of leveling up in the game.

And so my hope is that I can share some of those perspectives with you so that you don't necessarily have to make the same mistakes. And if you don't know who I am, My name is Alex Ramose, I ownacquisition.com. Our portfolio of companies does about $85 million a year and I have nothing to sell you. And so the first kind of place I want to apply this concept of the infinite versus the finite is the strategy of business. And so I wrote down a couple points here that have been kind of conclusions that I've made that I think will be meaningful for you. So the first is that the point of marketing, if you have a more infinite perspective, is to get people to buy so that we can figure out how to make the product amazing.

right if people aren't buying again and again or telling friends about us or our products then we will literally have to market our way through brute force and expand again through brute force of selling selling but the moment we stop that process our business will tank and so if we have a infinite perspective of like the point of the game is to keep the game going then we are willing to trade off the short-term growth for ego and status in order to learn how to improve the products and services that we have such that we get them to a point from a little bit of marketing and selling so that we can make a sale to get a customer rather than making a customer to get a sale. All right, I'll say that again. The point in the beginning especially is to make a sale to get a customer, which is a long-term relationship of somebody who buys again and again, rather than getting a customer to make a sale, which would happen like one time.

Right. And so it's a flip and perspective in terms of how we approach the game of business overall. And if we have an infinite perspective of like, we're going to keep playing this game over and over again, then we no longer have this rush. And one of my other favorite sayings is mistakes make a rush, mistakes love a rush decision. And people make tons of mistakes in business purely because they arbitrarily cut their time horizon. I have to hit this monthly goal. I have to hit this weekly goal.

I have to hit this quarterly goal rather than if I just did this one thing right over the next year or two, then it would make it virtually impossible for me to fail or that this business would not grow. because businesses in general continue to grow in both income and value over time, with the exception of the times where they don't, in which case they usually drop to zero or close to it. And so it's better to take the time to get it right and not be in a rush and then have all the wind behind you because you've taken that time. And here's the beautiful thing is that most people will never do this,

which gives you this massive strategic advantage because most people think in finite terms. And so I'll give you a different example from a, a marketing perspective. So when you're selling a customer, right, the short term finite thing is like, I need to get them to say yes because I need this money, right? Versus what am I saying yes to by selling them, right? It's just a different way to frame the conversation in terms of like, is this really what I want? And then from an audience perspective, in the short term, you see lots of guys build tiny little

bits of audience and then immediately try and liquidate, you know, or monetize their audience rather than thinking like, what will happen if I just continue to provide good for 10 years. And one of the perspectives that I've learned about goodwill is that, one, goodwill compounds faster than revenue or money because you fundamentally fix the value equation in your favor because your price is zero. And so everything that you deliver from a value perspective is above and beyond that. Now, I would say there's no monetary price, but the price of content or consumption of content is time and attention. And so provided you are a better source of value for their time and attention, they will continue.

you to buy with their time and attention from you again and again, and that will actually compound faster. People will recommend your stuff. People will tell other people about you, and then your influence will grow faster. Now, if they feel like you're withdrawing from that goodwill bucket where you're depositing value too quickly, then their return goes down on their time and they'll be less likely to spend. You become less viral from an audience building perspective. And so one of the pieces that I like about this perspective is that it means that you give, give, give, give, give, comma, give, give, comma, get. And so it's a little bit different from the way I kind of earlier understood it,

which was like always having a cadence between giving and asking, which I think is a transactional way of seeing it, which is not necessarily bad. But in terms of a longer term perspective, I think you shortchange yourself. Because if you can, if you can assume, let's say, that when you give, give, give ask, you get, let's say, you know, 10% of the people from your audience to buy something. that's cool, but then the growth kind of slows down, right? And then you have to rebuild it again and then ask again, right? Because you have withdrawn from your goodwill bucket.

But imagine this. Let's say that every time you give, you grow by whatever, 10%, right? Give, give, give, give, and ask versus give, give, give, and now you're getting 10% on this bigger nut. Give, give, give, and then my hand continues to grow beyond the screen. And let's say 1% of people just give you back. You just get. You don't even have to ask.

you just get in response. And like, imagine what it looks like to be the rock or what it looks like to be Connor McGregor or what it looks like to have massive amounts of influence. At a certain point, there's so much influence and there's so much of an audience that is behind you that things just start getting thrown at you and you don't need to ask at all.

And so at least this has been a perspective that I've shifted in terms of like how to think about marketing overall. It's also, by the way, why I think most of the biggest brands out there, brand rather than doing direct response And I think that that's a shift that happens with a lot of direct response. Marketers over time is we think short in the beginning.

Everything's direct response. And then over time, we continue to extend our time horizon between giving and getting. And the longer we can separate how long we give before we get, the bigger the advantage comes to us compared to our competition. All right. And so that's just a couple of perspectives that I think about from a business perspective and strategy is like, I want to set a strategy where if I wait, I win. And what happens is if you can extend your time rise and you can decrease your downside risk to virtually zero, because you know that if you do this thing long enough, you will eventually win. And so those are games that, like, you can never lose money from an investment perspective in terms of shifting simply how you see your time,

which is also why Warren Buffett and Charlie Munger say, you know, if you just thought I was only going to buy 20 companies for the rest of my life, you would think about it differently. And that's fundamentally the big shift that happens, I think, between the rich and the wealthy. And so what I want to do is apply the same concept towards employees now. So in the beginning, you know, you think about I just need to have or put a butt in a seat, right? I have this fire. I need to put it out versus thinking a little bit longer time horizon, which is, man, this is going to take a lot of time to train this person. I'm going to have to onboard them.

And if I think that they're not going to be a long-term fit, then they might leave. Now, I don't want to take this out of context. There are times in a business's growth where you're going to have people who are better suited for that season. That's not necessarily what I'm saying. It's much more so along the values that this person is going to bring and live through in the company. Is that going to reinforce our culture or is going to detract from it? 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.

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 asked you do is you can just leave a review, but 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. And so this is kind of the long-term perspective is I'm willing to wait a longer period of time in discomfort in order to interview 25 people rather than five to get the right person. And this is one of the frames that's helped me with hiring talent, which is,

I have to have this person. And if I don't feel like I have that feeling with someone, I don't hire them anymore. I used to say like, I think this person's good enough. Like, I think they can maybe do the job. Whereas now it's like, I recognize that. I'm like, if I don't know, I know. And that's been very, very fruitful for me in terms of finding talent and

and leveling up the people within the business. And so this is a different one that I will share with you that has been just unbelievably valuable, which is most business owners, especially in that three to five million dollar range. And if you're below that, this would probably apply to you. Is that the business that you have or all businesses in general are a subset of the amount of accumulated knowledge in the entire employee base. And you being an owner or operator, you're still an employee of the business, right?

And so that means that everything that is done in the business is a subset of one brain. If you know how to do everyone else's job better than them or you trained every person in the positions that you have. And if you're like, shoot, that's me, that's okay. There's a transition that ends up happening, which is what I'm sharing with you. All right. So because you taught everyone and you know how to do everyone's job better, it actually still means that only one brain is responsible for all this growth.

And at some point, depending on the size of the brain and the skill of the brain, you're going to get capped. Right. And this isn't an ego thing. It's more like you will eventually get capped. Remember, long-term time horizon. And so if I know that, then I know that the only way to truly scale the business is to have more brains contributing to the overall potential of the business.

business, right? And so that means that I truly have to bring in people who are a smarter than me and be better than me at certain things. Like if you can actually do everyone's job better than them, you should be frightened, right? And on some level, people are like, well, if I don't know how to do the job, then it means that I am exposed. And the answer is, yes, you are. But every level of entrepreneurship is a new way of learning how to give up control. Because you cannot have, you cannot want both freedom and control. Think about it. If you control everything, then it means everything requires you, which means you are not free.

Interesting, right? And so if you want to have a business that, quote, runs without you, then it means it does not need you, which means that it needs other people, which means that you have relinquished control to those people. So just a different thought in terms of like how to frame employees and why it's so important to be more patient in the interviewing process, think longer in terms of this is, do I want to continue to deal with this person for the next decade rather than the next day? right and and the business will always grow to the cumulative knowledge of everyone else in the business and if it's just you who knows how to do everything then it's only limited by one brain right and so the final shift i want to make here in this little conversation is actually there's two more one is relationships and this and the last one i'll do is health but i want to talk about relationships briefly so if we're thinking about mates right like the actual uh you know people that we want to

I think that what served me well during the dating period that I had, and I see a lot of guys and girls, make the mistake of settling with someone as good enough for now. And the analogy that I like to bring this to is like you move into a new house and you're like, oh, I got to get furniture. You know what? Let's just go grab a $50 couch off Craigslist. We'll put it in. We'll put it in and we'll get a nice one later. And then five years later, you still have the same damn couch, right? And so a lot of times there are these couches, which are people in our lives, really.

like they're good enough for now and then you realize you built your life with this person that you don't even, you never even thought was that good to begin with and you simply rationalize their existence as like they're there for now when they end up being there for a very long time because it's much more difficult to remove something than it is to add it. So we need to be usually much slower on the adding and much faster on the removal, which is the concept of, you know, higher fast, sorry, higher, higher, slow, fire fast, right? And so from a dating perspective, am I dating this person's out of convenience because I am unwilling to be lonely in the short term or because I think I'm going to marry them. And I will tell you that it was very useful for me is that when I was in my

dating, you know, phase of life, I went on a lot of first dates. And I just was very quickly like, am I going to marry this person? Do I think I could marry this person? And I would really only go on as many dates as was necessary to rule out the person as, no, I don't think I would marry them. Which also gives kind of birth to some of the ideas around like sleeping around and things like that, which is like, well, you know, if I don't think I'm going to marry this person, then what am I gaining from this? And is it fruitful for me in the long term? And so a lot of times we're making the same trades between four things. And so I like this little illustration. I made it a tweet that got a lot of shares. And so fear is short-term pain. Regret is long-term pain.

Comfort is short-term gain. Fulflement is long-term gain. And so, so that's the And so the idea is we want to trade fear for fulfillment. We want to trade the short-term pain for the long-term gain rather than trading, you know, comfort, right? Trading to get comfort, right? And so as I think through that perspective, I think it applies to business, it applies to relationships, it applies to a lot of things. And I think if you can make that simple shift in terms of the relationships you have with friends

and, and mates, it will serve you in the long run. Like, how many friends do you have in your life that are like, like, you can. there. They don't really add anything. And what scares me is that if I extrapolate that relationship for the next 10 years, I ask myself, who am I going to be with this constant influence of my life? Will I be better or worse? And so a lot of times I think in order to prune the tree, sorry, in order for the tree to grow, we have to prune it, which means we have to cut off the branches. And I think the longer I play the game, the less tolerant I become of things that detract and are not really aligned with the long term. And the more willing I am to suffer in the short term for the long term.

game, right? And so the last thing that I want to quickly hit on is health, because obviously I was in the space for a long time, and I get a lot of questions about it. And so I think my perspective has shifted a lot over time around this because, well, I've done it for almost 20 years now. But if you can't eat this way for a decade, there's no point in doing it for a day. And so if you can just approach diets and workout with that same perspective. like you will get the greatest returns from compounding inconsistency over time. And so it's much more like what is the 5% that I can do every day that will that I can do forever and simply sticking to that.

If you have to cut out dessert, for example, or if you, you know, like drinking, whatever. I don't necessarily condone that, but I'm just saying like if you're like, I love this, then cool. Like if you're not going to do something forever that's not going to, basically if you have to cut the things out that make, that make, that make. make you enjoy life, then it's by definition not a sustainable strategy for you. And so there's no point in even starting it because you will set yourself up to fail. Right.

And so an interesting perspective on this that, you know, has developed over time for me is that like, if you work out, you know, 90 minutes, five days a week, you will end up giving up like 15, 20 percent of your actual living hours in terms of like waking hours or production. hours, probably a little less than that actually, but you get the idea, right? If you're awake 16 hours a day, then that would be whatever. So whatever, whatever, the 10% of your life, right? Am I going to get a life extension of that same amount? Not necessarily from that amount of time. You might even just break even on it. And so if you're doing it for life extension, there are better ways to do it, which would be walking 10,000 steps, taking your baby aspirin

and not smoking. Like if you do those three things, you'll get all of the benefits. of life extension. But it's just a question of like, why am I doing this to begin with? Is it because I want to look a certain way, which is fine and totally okay. But simply having the perspective of I'm doing this because I can do this forever. And I think that it will allow you to cut out a lot of these short term BS because like think about this. And I used to use this in selling conversations when I was selling weight loss back in the day, which was if you look back on your life and you were in shape for six months, three times and you're in, you're entire life, who cares, right? And so the goal is to have a strategy that will allow you to

continue to do it for good. And if the strategy in the short term is something that you can barely sustain, then there's really no point in doing it in the long term. And I will also share something with you, which is like, the people who look the best, if that is your goal, like doing it. And if you don't like doing it, it's far better to just find something you do enjoy doing, even if it's not ideal for body composition. So it's like if you just like doing cardio, cool. It's not ideal for body composition. But if you like doing it, it's better than doing nothing.

And that goes for, you know, if you like climbing better than weightlifting, cool. You know what I mean? Like, keep doing that. Can you do it forever? Probably not. But like, you can do it for a very, very long season. And so I think if you just reframe the perspective on all of these things back to the original statements I have, which is like, if I can't do it for a decade, there's really not a point of doing it for a day.

if I don't think I would see this person in my life in a decade, there's really not a point to seeing them for a day. And if I'm thinking about this from a business strategy perspective, will I, if I do these actions, will it increase or expands me in a decade, or will it cut me down? And so I think that if you can approach those things, and that was the reason that the YouTube producer brought this up,

he's like, dude, the first thing you said was, all right, well, let's see if we can, you know, grow this thing over the next five or ten years. And he's like literally no one has ever said that. And I find that interesting and silly because like it takes a long time to get good at something. And so why would I put such a short arbitrary timeline of like I have to grow in 90 days or I'm out? It's like it's just not realistic. And I'd rather play games where if I wait, I win.

And so that was just a perspective shift for me that has served me very well. I wanted to apply that in a handful of scenarios for you to hopefully provide value. And like I said, if you don't know I am, my name is Oxromozy, on Acquisition.com. and hopefully enjoy the next video. Bye.