The Game with Alex Hormozi - Volume Negates Luck | Ep 266

Episode Date: January 12, 2021

People who don’t understand probability don’t know the word “Luck”. Today, Alex (@AlexHormozi) shares a quick lesson he learned while he was talking to his 18-year-old neighbor about probability, luck, why volume negates both those factors, and tries to paint a different frame of seeing success & the work required to get there.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:(0:57) - Probability outcome: gamble on marketing, assess return on investment.(2:02) - Volume negates luck and probability in business.(2:58) - Realizing desired outcome, unwilling to continue, not for me.(5:49) - Skill is the only thing that separates you.(8:15) - Alex's question to neighbor, already twice as wealthy.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

One of the key differences that I see with people who are successful and do grow and do scale is that they have a firm understanding of probability. 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. What's going on, everyone? I want to share a quick lesson that I had yesterday with my 18-year-old neighbor who's going through his entrepreneurial journey. And this is a lot of fun for me because he's at ground zero. so I'm hearing, you know, the anxieties and the worries and the false beliefs kind of come up as they go and I get to, you know, confront them and kind of ask you questions. And so kind of the lesson or the theme of yesterday was around volume and luck, right?

And so one of the key differences that I see with people who are successful and do grow and do scale is that they have a firm understanding of probability. All right. And what that means is chance. what's the percentage likelihood that something happens, right? If you want to be an investor, right, then you have to calculate the risk associated with an investment. That's a probability outcome. If you are a business owner, right, you have to gamble on marketing and assess the probability

that you'll get a return on that investment, right? And what's interesting is that volume negates luck, all right? So if you can put that in your brain, volume negates luck. luck. And so luck is a word that people who don't understand probability use as a space filler. But if I were to say, hey, for every 100,000 emails I send, I get 1,000 back. And from 1,000 that I get back, I know that I'm going to close 500 of those people on a deal. That's not realistic math. I would probably close a lot more than that. But the point is, but if I explain that math to you, I'd be like, is that luck that I closed 500 deals? You'd probably be like,

No. That's just probability. That's just, I know that if I reach this many people, the probability that there is one person who's interested in the services that I have is high, right? And the thing is that if you do enough volume, you can negate luck, all right? You can also negate skill, which is a byproduct of the volume. All right? So let me, let me dive into that. Let me unpack that for a second. So let's say you suck, right?

because you're brand new, and of course you would suck, because why would you be good? Because you've never done this before, whatever it is. Right? And so this is like the conversation I'm having with my neighbor. You can imagine me as like coaching an 18-year-old kid. I'm like, of course you suck. You're supposed to suck.

You're not supposed to be good, right? And the thing is, is like because of social media, because of Instagram, because of all these things, everyone, especially, you know, the guys who are younger right now, and maybe it's the same for guys who are in their 30th, whatever, is that they just immediately assume they should be a millionaire the first year. It's just like, I should be a million. Why am I not a millionaire?

Right? And so that's what stops 99% of people from being successful because they're unwilling to suck, right? And it hurts their ego too much to be bad. And so then they say, ah, this isn't for me, right? And so, anyways, back to the point of the volume versus, you know, negating the luck and the skill component, is that let's say the normal numbers. Let's say I was coaching him on cold calling, right? Because that's what he's doing right now.

And I said, listen, it's going to take, you know, it should. take you about a thousand cold calls to get, you know, one deal, right? And let's say he comes to me and he says, well, I've done 5,000, right? I'm like, okay, and, it's like, well, I don't have a deal. I'm like, and you suck. Of course you don't have a deal. You've never done this before. Do another 5,000.

Because the thing is, eventually, it will be unreasonable for you to suck anymore. Right? it would be unreasonable for you to not have found one person. If you do this for a straight year, and I'm trying to paint this longer picture for him a year. And I know when you're 18, a year sounds like forever, but like a year, if you did this for five years, if you did nothing but cold call for five years,

do you think you would be good at cold calling? And he was like, yeah, probably. I was like, do you feel like you're much better now than you were one month ago when you started this? And he was like, oh, I'm like, night and day better. Like I can get past, you know, I can open now. I can have conversation. I was getting hung up on.

And I was like, right. And so you have this binary measure of progress, which is I either closed a sale or I didn't close the sale, when in reality there's tons of bricks on the bridge on the way to getting the first dollar over. And the first deal, the first dollar, independent of whatever you're doing, is always the hardest one. And it's because you have to learn a lot of little skills before you get the big payoff. Right. And most people learn one skill or don't learn a skill and then think, oh, this isn't for me. Mosy Nation, real quick, if you are a business owner that has a big old business and wants to get to a much bigger business, going to $50, $100 million plus, we would love to talk to you. And if you like that, we would like to hear more about it, go to acquisition.com.

You can apply anywhere on the page and talk to one of our team and see if we can help you get there. Right. And so I told him that the only way that I would give him my blessing for him to quit is if he could convince me that the entire industry of wholesaling real estate had disappeared. If you can convince me that the entire industry of wholesaling real estate has disappeared, you will have my blessing to quit. And obviously, that's not going to happen because people have been making money in wholesaling real estate for a long time. There's always going to be inefficiencies and marketplaces between buyers and sellers, right, unless some magical technology comes through, which it might in 10 years.

Who knows? But for right now, it exists. And so I said the only thing that separates you from what you want is skill. And the only way to acquire that skill is volume. Right. And the thing is, is when you have enough skill, you get luckier, right? You don't need to do 10,000 calls to get that one deal. Because honestly, maybe in the beginning, that is the biggest laydown person you'll ever have, but then it gives you conviction that it can happen. Right. And so, the more volume you do, the better you get, and therefore, the luckier you become. But the big picture is that people who invest, people who do business at larger scale, just understand probability. Right. They understand. that there is a percentage. Now, what's the worst thing that can happen is, let's say his, this is a fun scenario to think about, is let's say his first day, he gets on the phone, and he somehow closes the deal, right? And that one deal may have been that one deal out of 10,000,

that if he had started at the other end of the call list, it might have taken him a month to get there. But he just happens to do it first. How much do you think that messes him up? A ton. Maybe, maybe, or probably even more than working really hard to get there. And so I don't know about you, but I feel like I've definitely had occasions where I've lucked out. And then I start questioning my saying, what am I doing different? What am I doing different? They might not be doing anything different. You might have just hit the gold nugget way too early in the cycle. And now you've got to sift through a lot more nose to get to your next one. You might have to sift through twice as many nose as normal because you got to account for the nose from the first one that you never actually hit. Right.

And so anyways, as I'm walking him through this, right, it just reminded me of how when people are out, they don't understand the concept of large numbers, right? If you want to become lucky, if you want to have probability on your side, you simply increase N, increase the number, increase the volume, and eventually you will strike gold. And the thing is that most people just literally don't go long enough. He honestly was doing the little system that he's, that he's purchased the wrong way up until like a week ago. And so I was like, cool, well, your first three weeks are wasted, that you weren't doing it the right way, right? You've now officially been doing this for seven days, right? Do you feel like it's unreasonable? Like, do you feel like it'd be reasonable for

you to have a top 1% income in the United States after one month of learning a new skill? And he was like, no. And I was like, then stop believing you should. I was like, if you do this for four years, because he's not, right now, he's pushing off college to do this? I was like, if you do this for four straight years, I was like, do you think it would be reasonable that you'd be able to close one deal a month by the end of that? And he was like, yeah. And I was like, cool, then you're already twice as wealthy as the average college person who would be leaving, right? Except you have to have. have four more years of experience than they do. And so I'm trying to like paint these,

just give him a different frame of seeing success and seeing the work that's required to get there. And I was like, and what happens if, what happens if in six years, when you're 24? What happens if in six years are 24

and you're not a millionaire yet? What happens that? He was like, I mean, I'd be, you know, I was like, what, you'd be disappointed? You're not a millionaire at 24? Come on, man. The thing is, is he might actually be, right? If he actually sticks with it

for six straight years. but most people end up hopping and always doing these half-built bridges where they learn two, three, four of the skills, but there's 10 that they have to learn and they say, this isn't for me. And they jump to another one, they start building a new bridge, right? When the reality is you just have to keep laying the bricks, keep laying the bricks, keep laying the bricks all the way across the bridge from where you are to where you want to be, and then the first dollar walks across. And it takes a lot of time to put those bricks in place and to figure out which brick you're missing. And the only way to do it is more. And that is how you'll get better at the skill that gets the dollar across the bridge. Anyways, more sagas of my 18 year old workout afternoon lessons.

I hope you enjoy this. If you do, you know, subscribe, like, comment, all that kind of good stuff. And I'll see you in the next video. Bye.