Young and Profiting with Hala Taha - Alex Hormozi: The Value Equation, How To Make Offers So Good People Feel Stupid Saying No | Entrepreneurship | E199

Episode Date: December 5, 2022

Alex Hormozi teaches people how to make every offer valuable. Through his company Acquisition.com, he shares his best practices for building world-class business ventures. Hormozi’s goal is to teach the younger generations how to successfully navigate this path.  In Part 2 of this interview, Hala and Alex will do a deep dive into how to generate “100M offers.” Alex will also provide us with some practical sales and marketing tips including how to provide high-value to customers, the benefits of increasing your pricing, and choosing an ideal market. Topics Include:  - Providing the highest value without lowering your price - Alex’s Value equation  - The 4 primary drivers of value - People won’t buy something they don’t perceive as beneficial - What makes a good market? - Unlocking the scale of your business - Focusing on the vehicle that will give you the most return - Pursuing high-leverage opportunities - Eliminating your side hustles - If it’s worth doing, it’s worth doing right - Learning to get customers - And other topics…   Alex Hormozi is a first-generation Iranian-American entrepreneur, investor, and philanthropist. In 2013, he started his first brick & mortar business. Within three years, he successfully scaled his business to six locations. He then sold his locations to transition to the turnaround business. From there he spent two years turning 32+ brick & mortar businesses around using the same model that made his privately owned locations successful. Alex owns a portfolio of companies under his umbrella company Acquisition.com. As of 2021 Acquisition.com companies generate upwards of $85,000,000 per year in cumulative sales across four different industries (software, service, e-commerce, and brick & mortar). He’s widely considered an acquisition and monetization expert. He is also the bestselling author of $100M Offers: How To Make Offers So Good People Feel Stupid Saying No. Resources Mentioned: Alex’s Website: https://www.acquisition.com/bio-alex Alex’s LinkedIn: https://www.linkedin.com/in/alexanderhormozi/ Alex’s Twitter: https://twitter.com/AlexHormozi Alex’s Instagram: https://www.instagram.com/hormozi/ Alex’s Facebook: https://www.facebook.com/HormoziAlex/ Alex’s book 100M Offers: https://www.amazon.com/100M-Offers-People-Stupid-Saying/dp/1737475715/ref=sr_1_2?cri[%E2%80%A6]FzcCI6IjEuOTUifQ%3D%3D&sprefix=100m+offers%2Caps%2C137&sr=8-2 Sponsored By: More About Young and Profiting Download Transcripts - youngandprofiting.com   Get Sponsorship Deals - youngandprofiting.com/sponsorships Leave a Review - ratethispodcast.com/yap Watch Videos - youtube.com/c/YoungandProfiting Follow Hala Taha LinkedIn - linkedin.com/in/htaha/ Instagram - instagram.com/yapwithhala/ TikTok - tiktok.com/@yapwithhala Twitter - twitter.com/yapwithhala Learn more about YAP Media Agency Services - yapmedia.io/ Join Hala's LinkedIn Masterclass - yapmedia.io/course

Everyone wants a bargain, but it doesn't mean cheap. So if I said, hey, here are the keys to my brand new Ferrari, and you can have it for 50 grand, a lot of people would find a way to come up with 50 grand like that if they knew the car was worth 600. And so the idea is how can we make our service very clearly worth 600 and charge 50, rather than try and sell a crappy Honda for a little above market. If you can't give away your services for free, it's because your price is not the most expensive thing that they are over-grateful. coming. If all of a sudden, as a result of this purchase, you have to meet with me three times a week, you have to start recording creative and make ads, that's a lot of effort and sacrifice that I

didn't have to do before. Businesses that can minimize the effort and sacrifice that their customers go through and deliver something that they actually want becomes tremendously valuable. What is up Young and Profiters? You're listening to Yap Young and Profiting Podcasts where we interview the brightest minds in the world and unpack their wisdom into actionable advice that you can use in your daily life. I'm your host, Halitaha. Thanks for tuning in and get ready to listen, learn, and profit. What an epic interview so far. We're going to move into part two. We've got a foundation of your life story, your life philosophy is, and now we're going to talk about $100 million offers and get into some real practical, tactical sales and marketing tips.

I do want my young and profiteers to go get his book. It's only 99 cents on Amazon. I often only read the books of the people who come on my show because I have like two interviews a week, but I did read Alex's earlier this year on my own accord, so I highly recommend it. And we're using it as a blueprint to launch our LinkedIn course. Let's talk about pricing. Can you talk to us about why it's not ideal to start off with a low price and why we need to not have that kind of a mindset when we're going into price our offers? So there's really two pricing strategies.

And this is a gross simplification, but like you can be the lowest price leader or you can be the high value leader. Like those are really the positions in the marketplace. Now you can make an argument for a third which would be luxury, but in like business services that doesn't really exist as much. And so either your entire strategy is built around being able to provide the same value as the rest of the marketplace, which is commoditize, and do it for less. That is a strategy. But there's only one guy who can have that spot. And most people don't start with that strategy. They're like, they look around, they see whatever else is charging.

They take the average and they say, I'm going to do the same thing they're doing and do a little bit better. I'm going to do a little bit more for a little bit less. And then the thing is, is that everybody, because of the marketplace, tries to do a little bit more for a little bit less until eventually you can't do any more for any less. And so you end up being a nonprofit, which is what most small businesses are. Most small businesses are not making any money.

And it's because of that kind of mindset. And so it's solving for a different outcome, which is how do I provide the absolute most value to a very specific type of customer? because if you talk to that specific customer and you can really help them accomplish their dreams, they'll pay you as much as you want. But the thing is about stacking the other side rather than trying to cut the price, it's just trying to increase the value. And then by extension, with the increase in value, you get a corresponding increase in price

that you are able to charge. And by doing that, you enter a virtuous cycle of price rather than a vicious cycle of price. The vicious cycle is you keep cutting your prices, your margin drops. You can't spend as much to fulfill each customer, your service drops even lower, your salesmen aren't convicted because they see all the complaints. You have really low reviews. You can't pay people well. You have to lower your price. You have less profit. And it just goes around and around. It's a very terrible existence and I've been there. The flip side is like you charge more. And so the people that are buying are more convicted that you can actually help them. They're more

invested because they paid more. And if you have any kind of business where somebody has to do something in order to be successful, which basically many service businesses, the client has to do some stuff. the more invested the client is, in a very real way, the more valuable your product. Because if you get somebody who's super invested and does the stuff, then you deliver a better outcome. The next thing is that people actually perceive the value higher. So they've done a study with this where they had three bottles of wine, low, middle, and expensive wines. And they had people taste them and they had them rate them. And unsurprisingly, people rated the low wine, the lowest, the middle wine, the middle, and then the expensive wine the best. What they didn't

know is that all three wines were the same. And so in a very real way, the relationship we value in price is bidirectional. People ascribe value to something based on the fact or partially based on the price that is there. So if you charge more money, people will also perceive your thing as more valuable. But with that excess profit, you can also fulfill in that purpose. So now you have, you can hire the best people. You can spend more in marketing to acquire customers. You can treat them with the little do-dudads that you probably wouldn't be able to do if you were trying to be a low-cost leader. And so you enter a virtuous cycle where people get more value. They tell their friends, they stay longer, they pay more, you can market more, and then around, and then it spins the other way.

It's the scariest thing for entrepreneurs, because we've done this with portfolio companies. We had one portfolio company, we did a ton of research, to look at the marketplace, et cetera. And after all the research, the very first thing we did, which is not common for us, is we made a price change. We said, we're going to do nothing different. We're just raising the price 50%. I had to get on nine calls with the CEO to convince him to do it. Nine. Be like, it's going to be okay.

If it doesn't work, we'll switch it back. You know what I mean? You made the change, we tripled the profit of the business. And this is a big business. Tripled. And here's what's crazy. Most times when you increase the price, you sell fewer units. It's common.

But it's okay because it's a curve. Like if you charge 10 times as much and you sell one third fewer customers, you make way more money. And so in this particular instance, we actually sold more people because people perceived it. This was a medical professional, et cetera. And I was like, I think you're mispriced. Like people expect it to be higher than it currently is because,

of your medical background. And so we made the price change and then, you know, tripled, tripled the profit of the business in three months. So all that to say, most people are competing as commodities. There's two people in the marketplace. People can't tell the difference. They pick the cheaper one. The idea is how can we make our price so much more expensive than everyone is in the marketplace that people have to pause and think, huh, there's something different happening here. I should think more about this. And then you stack that with all of the other value that you're going to provide them that ultimately makes them choose you, even though you're not the cheapest person. Yeah. Like you said, there's benefits to actually increasing your pricing. The client can actually

get a better result because they're more invested. And also, they think it's worth it because they're like, oh, it's priced higher. This must be really good, right? So what are the other things that make people feel like they're getting a good deal? So, I mean, one of my favorite things from Warren Buffett is, is price is what you pay value is what you get. And so the ideal is that we still want to always give people a bargain, right? Everyone wants a bargain, but it doesn't mean cheap. And so that's the big difference, right? Like, you can have something that's very expensive. So if I said, hey, here are the keys to my brand, and you can have it for 50 grand. A lot of people would find a way to come with 50 grand like that if they knew the car was worth 600. And so the idea is how can we make our

service very clearly worth 600 and charge 50 rather than try and sell a crappy Honda for a little above market. That's where everybody messes up. They take a shitty product, they raise the price, and then they get more upset customers. So it's like, if I spend $100 in cost to deliver $10,000 of value and charge $1,000, then I have 90% margins. They get 10 times the value and everyone wins, and that is a wonderful business. And that's what we try to create, is we look at how much value, like when we're looking at companies we want to take on, is we look at the core product, How much value are they really able to provide a customer? And then we can reorient the monetization and the productization of the business and the services

in such a way that we can maximize how much money we make. And then ultimately spend more to acquire customers, hire better talent, et cetera, et cetera. And that's how we can scale it. Okay. So let's talk about your value equation that you have in your book. You say there are four primary drivers of value. Can you break that down for us? Yeah.

How is it that liposuction is $50,000? Because that promises weight loss. And then an ebook on weight loss is five bucks. it promises the same thing. And so if you think about this like a fraction, the four, like so just draw a line mentally. The first one is the dream outcome. The higher and the cooler of the dream outcome, the more valuable the thing you sell is, number one. Number two is the perceived likelihood of achievement. Now, this is the last one I ended up coming up with when I was writing the book. I was like something's off here. And I'll give you a clear example. So we'll use that liposuction thing.

So imagine you've got a doctor who finishes medical school. And the day after they finished medical school, they put up their shingle and they say, I'm doing liposuction. You've got another guy who's done 10,000 surgery of this particular surgery. Who are you willing to pay more for the same surgery? The guy who's done 10,000. And I was like, what is that? That's perceived likelihood of achievement. It's risk factor. It's that when I pay this money, it's the likelihood that I'm actually going to get what I want. And even though, and this is a good one for everyone who's a service provider, the guy who's newer probably will take longer. So he's spending more time with his patients than the experienced guy, but it doesn't matter because it's about the outcome and the perceived likelihood they achieve that.

And that's why testimonials, having guarantees, things like that, can increase the perceived likelihood of achievement. And if you add a guarantee, you can, in a very real way, increase your price because people, you have decreased their risk. So you maximize the first two, which is going to be the dream outcome is something they really, really want, and that you increase the perceived likelihood that they're actually going to achieve it. Now, the second half of the equation is the bottom side of the fraction. The goal here is to minimize these things.

And the first half of my career, I spent all my time on the top side, making bigger, bigger promises, lots and lots of testimonials. That was all I did. And I think that's kind of a telltale sign of a newer market or newer entrepreneur. The businesses that are worth a fortune, they spend all of their time on the bottom side. Because the bottom side is usually the competitive mode. Anyone can make promises and anyone can show testimonials and things like that. But what people can't do is the bottom, which are these two things.

Number one is time. And the second one is effort and sacrifice. So time delay is the distance between when you buy and when you get. So if I were to swipe my credit card for a gym membership, it's going to take a long time for me to get the body that I probably would. want. Why does liposuction cost more? Because it happens way faster. You can get someone to lose 50 pounds in basically them going to sleep and waking up. Now, sure, there's pain, there's recovery, but it's still, they don't have to go to the gym, they don't have to change their diet, they don't

have to sweat, they don't have to change their schedule, they can still drink margarita, like you can do everything. And then in a day later, they're gone. And the market plays values that in a very real way. You have to arm wrestle someone to get them to sign up for a $29 a month gym membership, but people will fork over $40,000 for liposuction all day long. And so it's because of the time delay. And in a B2B example, to give a different one for your audience, if I were an agency and I had marketing services, two agencies have identical marketing services in terms of outcome.

But one of them, the moment you sign the contract, your phone rings and it's a prospect, how much more valuable is that compared to the guy who's going to take 60 days to ramp up? Significantly more valuable. And so one of the easiest business strategies in the world is do what everyone else is doing it and do it in half the time. Just easy way to provide value and win.

The fourth one is effort and sacrifice. So they're two sides of the same coin. Effort is things that you have to start doing that you don't want to do that you weren't doing before you signed up for the thing. And then sacrifice to things that you have to stop doing that you do that you can't do it as a result of buying the thing. So effort would be, I have to show up to the gym. The sacrifices I can't sleep in.

And these are valuable because it helps you with the copy in terms of explaining it to somebody. Like the effort is that I have to eat chicken and broccoli. The sacrifices I don't get Taco Tuesdays. And so you have to give up, you have to make trades that people don't want to make as a result of the purchase. And so oftentimes, especially newer entrepreneurs, if you can't give away your services for free, like people won't say yes to you, which by the way, I recommend everybody, get your first 10 clients by servicing for free. But if people are not willing to work with you for free, it's because your price is not the most expensive thing that they are overcoming, the money,

because there's additional costs. And many of them are time, effort, and sacrifice. And so with the agency example, if all of a sudden, as a result of this purchase, you have to meet with me three times a week, you have to start recording creative and make ads and write copy and checking on campaigns with me, that's a lot of effort and sacrifice that I didn't have to do before. Versus, hey, pay us, and your phone's going to start ringing. We'll handle everything else. Significantly more valuable. And so in a real way, businesses that can minimize the effort and sacrifice that their customers go through and deliver the promise faster and do it in a way. that the person feels like there's almost no risk, that they're definitely going to achieve it.

And it's something that they actually want, becomes tremendously valuable. And so, like, the ultimate version of this is all those things maxed out, which is the most amazing dream thing that I know without a doubt I'm going to get that happens instantly with no effort. And I think the moment we can click a button and then a six-pack appears on our stomach, it would be an infinitely valuable thing. And so I think a lot of entrepreneurship is just going towards that ideal.

And then that is really, it shows us that we always have more that we can improve on. And if you look at Amazon, What have they done? They incorporate all those things. They have the dream outcome, so they'll show you, like the best Amazon sellers have little videos that will demonstrate how to use the thing. So they show you what the dream outcome looks like of what your experience is going to be. You have the perceived likelihood because you have all the reviews, right, that are there

that you can see. You've got the time delay, which they've minimized with prime. It shows up the same day. And then effort and sacrifice, you click a button. You don't have to type in any stuff, et cetera, et cetera, right? It just, it's delivered. And so it's like all of the best businesses, Netflix, like they deliver. the same experience as Blockbuster.

That's the dream outcome as watching the movie. The perceived likelihood that you can get what you want, suggested by Netflix. They make it even easier. The time delay is instant. You don't have to go anywhere. And the effort and sacrifice, you click a button from your couch.

And so the businesses that focus on the bottom side of the equation create a competitive mode that make it very difficult for new entrants. And so that's where the enterprise value comes. And I would say the latter half of my career has been focusing on the bottom half rather than the top of it. Let's hold that thought and take a quick break with our sponsors. At Yap, we have a super unique company culture. We're all about obsessive excellence.

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slash profiting. Just go to Indeed.com slash profiting right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash profiting. Terms and conditions apply. Hiring, Indeed is all you need. Very great breakdown. I want to double click on a couple of those things.

So when you're talking about dream outcome, a lot of entrepreneurs make the mistake of talking about features. And in this whole value occasion, you did not say anything about features or value proposition of your product. So why is it important to not sell the plane ticket, but sell the vacation? So this is actually really interesting because I've gone even deeper in this. So to advanced people, it's actually a thing of language. So if I were to talk to an advanced business owner, I can explain features and they will already translate them into benefits for themselves because they are experienced. Beginners, if you were selling to beginners or intermediates,

you have to translate the feature into what it will do for them and what their experience will look like after they've used or the feature has been consumed. And so using the value equation will inform how you talk about your products. So it's like here's the dream outcome, which you can describe to them. Here's why you should feel like it's very low risk to make this purchase. Here's what you can expect from a time perspective. And then this is the effort and sacrifice that goes into it.

If we can explain the benefits of what we're selling using those four buckets, which I would highly encourage everyone to look through with those four checkmarks. If it's not doing one of those four things, you can probably cut it. When you do it that way and then you dumb it down to a third grade reading level, because half of America doesn't even read above a seventh grade reading level, you will get more people to buy. Yeah. So another question that I have is that you use the word perceived,

and I was curious about that. So why is it perceived likelihood of achievement, perceived time, delay, perceived effort? Because if you don't communicate it, it doesn't matter. They will not perceive the benefit. because all that matters is their perception. Because everybody's reality is, you know, whatever, I'm not even getting into that. But like, the point is, like, they will not buy something they do not perceive as a benefit. And so the point of underlining their perception is that if we do not communicate it,

they will not perceive it and they will not value it, which means you don't get paid for it. So if you do not communicate it, you ain't getting money for it. And so that's why each of those four has to be communicated in such a way that they perceive the dream outcome, the way they want it to be. So I'll give you a quick example of this perception thing. So in the gym world, we would sell memberships. What's interesting is that we found out that if somebody said no, and we said, you know what, we just want to give you nutrition consultation for free, we want to have goodwill in the community,

et cetera, people would say, okay, fine, they'd come to the nutrition orientation. And people who said they could not afford the gym membership would buy 50% more supplements. And this is to a no, this is to a non-close, would buy 50% more supplements than the people who bought. And it was because they wanted the dream outcome, but they wanted it their way. They wanted a different vehicle. So we want to solve the problem, A, but we want to solve it the way they want it to be solved.

Yeah. And so for each of these things, we have to communicate that thing, otherwise they're not going to perceive the benefit or pass. Amazing. Okay, so I'm going to skip over a few parts because there's some really important things that I want to talk about. I'd love to understand what makes a good market for your offer.

In the book, I break down four factors. So you've got, the first thing is you want to make sure that the people actually want what you have. So typically, I express that as pain. They're in some sort of pain. they're suffering some problem that they want to solve. And the bigger the problem that you solve, the more money you make for it. So number one is that they're in pain.

Number two is you want the marketplace to be growing rather than shrinking, right? Because if you're going to do the same work, you might as well have something pushing behind you. The third one is you want them to have the spending power because the worst thing in the world is like, you've got a market that's growing. There's a painful problem that you want to solve and that you have the ability to solve. But then they ain't got on money. A friend of mine had a resume business, right? He wanted to help coach people on their resumes and whatnot.

And he called me up one day. He's like, this is brilliant. I'm going to make all this money. And it turned out, he was like, dude, they're all broke. They're all on unemployment. Now, you could make the argument that helping people with a resume inherently is not bad, but he had picked the wrong market to serve. If he had helped corporate executives get raises,

he probably would have made a lot more money. But he was picking unemployed people to help them get a job rather than helping people get a better job. Yeah. Tiny difference. The lever on how much money you can make, serving different audiences is the name of the game. The reason many of the Fortune 500 companies are enterprise, like Salesforce, like their enterprise,

well, they've gone down market now, but like they built their value on the fact that they served very expensive customers, $1 million, $2 million, $10 million your contracts. It's because you get to charge based on the value of their business, not yours. And that's one of the beautiful things about this. Let's say you have a CRO agency, so conversion rate optimization agency. And you go to an e-commerce store and you say, I can optimize your site and get a you 10% more conversions. Okay, cool. So if I'm making a million dollars years the commerce store owner, CRO happens, I make 1.1. Fantastic. If I go to the same type of business, e-commerce,

and they're doing 100 million a year, and I do 10%, they make 10 million a year. Same work. And I make them $10 million versus $100,000. Which one do you think I can charge more? The $100 million. I could probably ask for $2.5 million of the 10 that I make them. Probably. Yeah. I could probably negotiate that in if it was only on the gain. And so, Many times, the amount of money we make is partially due to the value that we provide, but a big part of it is the market. And the market I actually put before I put the value of the offer itself because I think it's actually an even bigger determinant.

So a different example would be like COVID with toilet paper. If you were selling toilet paper during COVID, it didn't matter what your offer was. The supply demand curve was so strongly in your favor that you could sell for whatever you wanted. You're going to sell out. And so the idea is to try and align those four things. You want a market that is actually in pain. We're not trying to sell ice to Eskimos, not actually. You want them to be growing.

A friend of mine was in the newspaper business. And so he had an amazing offer. He would actually do a rev share based on only revenue that he would bring newspapers. And he was eating up market share. The problem is the market was shrinking at a compounding rate of 25% a year. So from year one to year eight, it had already gone to like 5% of the original market size it really was. Even though he was, quote, gaining market share, he couldn't grow the business. And he kept looking at all these things.

I was like, too, just saw the newspapers. Like literally. I couldn't make this up. You were selling to newspapers, so you couldn't grow. And many of us are, it's an extreme example, but many of us are pursuing newspaper-type businesses. We're selling to people that the marketplace is closing down. And so those are the variables that we look at within the marketplace.

And so the famous example is the marketing professor who's talking to his class and says, okay, if you have one strategic advantage for your hot dog stand, what would you have? And everybody in this, you know, it's like, better hot dogs, better sauces, lower prices, better location, whatever it is. And so after it all dies down, he's like, a starving crowd. If you're out right in front of the bar at 2 a.m., you're going to sell out of hot dogs. If you're out in front of the stadium

and you're the only hot dog stand there because everybody else is in their brick and war locations and you can wheel your cart up front, you're going to sell out. It doesn't matter how shit your hot dogs are. My point is not to say that you should make shit hot dogs. You'll sell even more because if the next time the game gets out and your hot dog was good, they'll come back.

That's the piece that people miss, is that anybody can sell one thing once. But the things that build the compounding businesses are the fact that the product is so good that, A, they tell their friends, and B, they come back. And that's the unlocking that most people miss out on, because in the beginning, I'm going to go on this tangent because I think it's important. It is. When you are a new business owner, you have to learn how to promote.

You got to learn how to market, learn how to sell. And the reason is not so that you can make money. The reason is so that you can get customers. You get customers so that you can learn how to fulfill on the product. What happens is you get a positive reinforces. It's just like quitting the business. You get a positive reinforcements from learning how to market and sell. And so then you think, mistakenly, in my opinion, oh, I should do more of this.

But the thing is, if you don't have a big percentage of your business that's referral, your product is still not good enough yet. And so what happens is you will get to a point where you cannot outsell your turn. And so the path from going to zero to like 10 million really fast is not the same as going from zero to 100 million really fast. Because you build the business differently, because you build it knowing that you have to have a compounding vehicle. And for many people, the compounding vehicle is that the product you sell gets other people on their own to come back and bringing more customers. because as you expand, so here's some facts about business. Number one, advertising will become more expensive over time. Media always goes up in cost, number one.

Number two, as you scale, infrastructure costs will increase. So how do you continue to scale? You have to have a compounding force that is viral in the other direction. So as you go to colder and colder markets that you have to reach to advertise to, that cost more and more money and you have higher and higher fixed costs of infrastructure, the only way you can continue to scale is that the customers that are buying in that cold market, tell five other customers. What happens is your revenue scales up, your profit decreases, and then eventually you have a break-even point. And that's where many businesses go, because

they're trying to build their ego by showing their top line rather than building a business that has an amazing product. And so it's a race to show and brag to their friends about their revenue, rather than think on a, remember, 10-year or 20-year time horizon, if you're looking like that, there is no rush to spending a year or 18 months getting the product right. One of my good buddies is a software designer, and he spent an entire year just trying to get his user experience right so that he could get the return customer to come back on their own without him having to do any reminders. His company, his software company, is growing at 25% a month with no marketing. But like most people would have the first product, learn how to market and sell, and then try

and sell more and more and more and more of that, shove it in the front door, but the churn at some point gets too high that you just have to sell more people to break even. And then you have too much overhead because you had to hire all these people to sustain it, and then you're fucked. And that's what happens to a lot of businesses. And they can't take the ego step back and say, you know what? We're going to cut down our marketing. We're going to cut down our advertising. We're going to cut down our sales team.

We're going to spend this year fixing the product. And then after that, what's crazy is when you do fix the product, the business will grow back on its own. And then you have the contribution margin from each new customer that you can go into colder markets, can spend more money on acquisition in different channels because you make so much money. per customer. That is how you unlock the scale, not being like a crazy, like there's a role for marketing. Don't be wrong. Obviously, that's what I teach. You have to get sequence right. People sell first and then don't stop and think, I'm only selling so that I can learn how to fix my product and make it amazing. You have to get some people to buy, for sure. But after that point, that's not the point you hit the gas. That's where you actually pump the break. Keep marketing and sales on a

slow burner. Fix this. And if you fix this right, you will keep growing. And then at, At that point, you double down and you gas it. We'll be right back after a quick break from our sponsors. What's up, young and profitors? I remember when I first started Yap, I used to dread missing important calls. I remember I lost a huge potential partnership because the follow-up thread got completely lost in my messy communication system. Well, this year, I'm focused on not missing any opportunities.

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It's actually your natural wiring. And here's the thing. When it comes to burnout, it's really about the type of work that you're doing. Some work gives you energy and some work simply drains you. So it's key to understand your six types of working genius. The working genius assessment or the six types of working genius framework was created by Patrick Lensione, and he is a business influencer and author. And the Working Genius Framework helps you identify what you're actually built for and the work

that you're not. Now, let me tell you a story. Before I uncovered my working genius, which is galvanizing and invention, so I like to rally people and I like to invent new things, I used to be really shameful and had a lot of guilt around the fact that I didn't like enablement, which is one of my working frustrations. So I actually don't like to support people one-on-one. I don't like it when people slow me down. I don't like handholding.

I like to move fast, invent, rally people, inspire. But what I do need to do is ensure that somebody else can fill that enablement role, which I do have K on my team. So working genius helps you uncover these genius gaps, helps you work better with your team, helps you reduce friction, helps you collaborate better, understand why people are the way that they are. It's helped me restructure my team, put people in the spots that they're going to really excel, and it's also helped me in hiring.

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Can you talk to us about why it's important to minimize headspace and focus on the vehicle that gives us the most return? So if you think about progress in anything, you have volume of activity times leverage equals output in any system. So how many times you do something times how much you do something times how much you you get for each time you do it equals what you get overall. And so the first thing that people need to do is maximize their activity. So if you're lazy, you procrastinate, et cetera, you have to get over that first. You've got to do something. Once you start doing stuff, you very quickly maximize your time.

Like you start working 16 hours a day. Basically, you sleep and you work, right? But then how is it that some people can work 16 hours a day and other people can work 16 hours a day? And the person two makes 1,000 times more than person one. Well, it's because of the second piece, which is leverage. And so a lot of times people think they need to do more things rather than doing more of the one thing. And you get your outsized returns by getting better, not by necessarily even doing more. And so what I mean by that is like, so leverage is defined by the difference between inputs and outputs in a system. And so that means that if I put one input and I get more output, I have high leverage. If I put a lot of input and little output, then I have low leverage.

And so a high leverage activity gives you more for what you put in. The thing is that activity is limited with time, right? Time, focus, energy, et cetera. but leverage is not. And so the idea is if we can pursue higher leverage opportunities, things that get us more for our time, then we will make significantly more and very quickly outpaced the activity,

which is why someone like, I probably work less now in absolute time. I probably still work 10, 12 hours a day, but I'm not working 16, and I still make significantly more because the leverage multiplier is so high, and I work this much because I enjoy it. I could work less.

I just like working. What else would I do? And so from a focus standpoint, you're competing against people who are focused. And so I think it's very prideful to think that you split between your quote four businesses so you can have four businesses on your LinkedIn. Like when I see somebody who's CEO of four businesses, I just assume that they don't make any money. Because Zuckerberg didn't have side hustles.

Yeah. And so a lot of times people, like, there's a fallacy for newer entrepreneurs, which is that like, I'm going to try four things and see which one hits. But the reality is that all four of them could hit. But none of them will hit if you try to do all four. Yeah. And so I think most times you have to reconcile the fact that like you just need to focus on one thing. And most times people will just not confront the hard thing because like there is a reason your one business is not working.

Solve that problem. I'm a big advocate of the theory of constraints, which is a business will grow into the constraint of the system and then no longer. And so anything you do to a business that is not deb bottlenecking the constraint adds potential to the system but not throughput. And so it's like reinforcing a bridge that has one loose brick and reinforcing the backside because you add potential to it. You add all these bells and whistles and all this other stuff, but you're not confronting the one loose brick, which is limiting your throughput. And so our whole theory at Acquisition.com is it's like, find the constraint, fix the constraint, let it grow. And then until it gets constrained, we don't change it. And then it will get constrained again.

We will identify the constraint. A lot of it comes down to properly identifying the constraint. Because some people think they have a leads problem when the reality is that their product sucks. And that's especially with newer entrepreneurs, like, my stuff's so good. If people just knew about it, well, do you have customers? They're like, well, yeah, I have customers. It's like, well, people do know about it. They don't tell their friends.

So why don't we solve that problem? Yeah, it's really interesting because I feel like a lot of people, they don't spend enough time on their goals. To your point, they're going from shiny object to shiny object to shiny object. And then they never get really good at something to be exceptional and become super, super successful. I'd love to understand how that focus enabled you to believe in yourself more. So I'm not a big believer in affirmations and things like that.

I think a lot of people are like, so you make it and that kind of thing. And I think that there's a lot of like chest beating to try and posture. I personally, that doesn't work for me because what that makes me feel like is a liar. And I have no power when I feel like I am, when my foundation is sand.

And so if I am not confident about something is my belief that it is because I do not have evidence that I should be good. And so it's like if I want to say that I am good at sales, well, I could claim to be good at sales, but wouldn't it be so much better to just have a thousand closed deals and say, I think it would be reasonable to say that I'm good at sales. I just have evidence. And then that way I don't need to have it. I don't need to have bravado.

I just have fact. And then it makes it much less postury. It's like this is just what it is. And so like when our portfolio is $200 million a year, that's just what it is. And so some people would say that if we just look by percentages, like we do more than the vast majority of people. Are we the best? Absolutely not. But we're pretty good. And so we have evidence. And it just makes it For me, much more black and white, and it also gives me something to focus on, which I think is the real benefit of this is that people are trying to trick their mindset when really they just need to change their circumstances. They need to give themselves evidence to why they are good.

That is a workable equation. You just do more and you get better. And all the best returns in life come from the diminishing returns at the end. So I'll give you a quick example for everyone who's listening. So like, if you sprint a lot, right? if you're a sprinter and you go to the Olympics, the difference between the first place Olympics and the fourth place Olympics is like a tenth of a second or whatever it is. But the real difference in real life outcome between gold and not on the pedestal is everything. And so what happens

is that when people spread themselves thing, they never give themselves the opportunity to get the outsized returns that happened at the end. Being the best salesman in the world compared to being a top 10% salesman in the world, the difference in income between those two things is probably 50 million a year. Yeah. Just that last bit. And so it's like that the difference between 1,000 reps and 10,000 reps, diminishing marginal returns, you get less for the next 9,000 than you did for the first 1,000 in actual ability.

But the real world difference between your 10,000th rep and your 1,000th rep is such a degree of expertise that your value in the marketplace skyrockets. And that's the thing that people don't allow themselves to unlock. They keep pursuing new rather than pursuing better. And when you're a new entrepreneur, here's the human behavior behind this. You get reinforced for changing path. You were in corporate, you go to a job, you get positive reinforcement. You get some freedom.

You might make more money, whatever it is. You get positive reinforcement. And so you learn a lesson that's the wrong lesson. You learn that changing is the key to entrepreneurship, but you only have to change once, which is you have to quit the thing to start the next thing. And then after that, you have to unlearn the character trait that got you there and learn a new trait, which is discipline and focus, and then keep doing this new path for an extended period of time,

so much so that it would be unreasonable that you would suck. And at that point, people ask you how you did it. So good. I would advise everybody to rewind that part of this show back. So the last way that we end this show, what is one actionable thing that our young and profitors can do today to become more profiting tomorrow? Cut all the side things and focus on one.

Okay. And what is your secret to profiting in life, Alex? focus. So one of my favorite sayings is if it's worth doing, it's worth doing right. And I think it's a very deep saying because most people focus on the doing right part, but I think more people need to focus on if it's worth doing. And many people do many things that are not worth doing. And so they do many things that are not worth doing. And in so doing, do them poorly because they do too many things. I just don't think many people can, you can't do a lot of stuff. Like strategy is how you allocate limited resources against unlimited opportunities. And so it's literally a process of saying

no. Because compared to the options of life, resources we have in time and money are so limited comparatively that we just have to say no 99% of the time, 99.99% of the time, but that's a muscle you have to learn. And so like if you just did one thing, and I'll just tell this quick story that I think we'll bring it home, I was talking to a business owner the other day who had like four or five things. And I said, how easy would it be for you to grow? I was like, which one's your best one? like, this is the one that takes me the least amount of effort that makes me the most money. I was like, okay, if you cut out all the other ones, how easy would it be to grow that business? He was like, oh my God, I could grow out in my sleep.

I was like, then why aren't you doing that? He said he didn't sleep for like three days thinking about it. And then he shut down all the other businesses. And then he did it. A lot of the progress we have is on the other side of very hard decisions or very hard conversations that we've been putting off. And so I think if you can confront those things, you can cut down and narrow your focus and then make it unreasonable that you would lose on a long enough time horizon.

If you do this one thing more than anyone else has done it, you will be better than anyone else has been at it. Amazing. Thank you so much for your time, Alex. I absolutely enjoyed the conversation. Appreciate you. Thank you so much for having me. Very honored to be here. Thank you again. I'm so thankful that I get to interview top experts like Alex from Mosey, and I get to pick their brain and get you all actionable advice to live out your most young and profiting lives. And as a marketer and entrepreneur, I study Alex's work on the daily. And so it was pretty cool to get them on the show. And believe it or not, I didn't get to talk to Alex about everything I wanted to. the past two hours. He's got so much material and I let him go off on the tangents he wanted to go on because everything that guy says is gold. For today's outro, I want to focus on the concept of value

because to be young and profiting, we need to actually profit from whatever we're selling. You need to have a big discrepancy between what something costs you and what you charge for it. Those who understand value are the ones who are going to be able to charge the most money for their services. That being said, anybody can just raise their prices, but only a select few can charge these high rates and get people to say yes. In order for people to agree, we need to understand the drivers of value and make a conscious effort to alter the perception of value in our offering. Alex has a formula to measure value, and he calls this the value equation. The value equation is dream outcome plus perceived likelihood of achievement, divided by time delay plus effort and sacrifice.

The goal is to increase the top of the equation and decrease the bottom of the equation. So you want to increase the dream outcome, which is the promise or the results of your offer. You then want to increase the perceived likelihood of achieving success, meaning that the purchase is going to work to achieve the result the prospect is looking for. People want certainty of success, and this includes things like your reputation, testimonial, social proof, and any guarantees that you have. You then move to the bottom of the equation and you want to decrease time delay or how long it will take the customer to achieve the dream outcome, as well as decrease effort and sacrifice

or the other costs aside from the monetary cost that the client is going to accrue. So for example, the work it takes to get what they want. This is why done for you services are always more expensive than do it yourself. So many major global corporations in the world follow this equation. think Amazon, Netflix, Dominoes, you name it. When given options to purchase something, we all unconsciously are leaning into this equation. Knowing this, we can start to design

and communicate our offers in a way that gets people to click the buy button. I think a lot of us who are entrepreneurs or who have side hustles are used to selling the dream, right? We talk about the values and the benefits all the time, but it's the bottom of the equation that I think we forget about. So always remember, YAP, fam, when you're creating an offer, try to create one that provides the quickest and most reliable solution to your client's biggest

problems while also requiring the least amount of effort from the client themselves. Thanks for listening to my interview with Alex Formosie on Young and Profiting Podcast. And if you listen learned and profited from this episode, share it with your friends and family and drop us a five-star review on your favorite podcast platform. These are the best ways to support me and my team at Yap Media. You guys can also find all of our episodes on YouTube and you can Always reach out to me on Instagram and TikTok at Yap with Hala or find me on LinkedIn by searching my name. It's Hala Taha.

Shout out to my amazing YAP team. You guys are incredible. I'm so lucky to have you all. This is your podcast, Princess, Halataha, signing off.