From Vision to Reality Building a Successful Business (with Ryan Pineda) Pt.2 June ‘22 Ep 531

In a dynamic discussion on entrepreneurship and business growth, Alex Hormozi and Leila Hormozi from acquisition.com, along with host Ryan, delve into strategies for customer retention and business scaling. They emphasize the significance of offering value through customer experience, personalized services, and community building. Alex shares insights on creating irresistible offers and the importance of writing impactful books, while Leila highlights the role of top-tier talent recruitment in business expansion. They also discuss the resilience of e-learning businesses in economic downturns and the potential for growth by teaching income-producing skills. The conversation touches on the challenges and rewards of working as a couple in business, with the Hormozis sharing their personal and professional synergy. They conclude by exploring the strategic benefits of acquisition.com in providing not just capital but also expertise and networking opportunities to the companies they invest in.

• Economic downturns do not reduce the demand for income-generating skills.
• People's need for money remains high or increases during financial crises.

"Most people in an economic downturn, like the demand, again for income reducing skills, does not go away when there is no money. The demand for money is just as high, if not higher."

This quote emphasizes that despite economic downturns, the need for skills that can produce income remains constant or even grows due to the persistent need for financial resources.

• Community, network, and camaraderie are key factors in retaining customers.
• Offering discounts for continued service increases customer retention.
• Personalized experiences and clear expectations enhance customer satisfaction.

"But then we realized, man, people stay for the community. Like you said, the network, the accountability, the camaraderie of just coming to an event every quarter, and they love it. And to make it even sweeter, I did exactly what you said was I cut the second year price in half, and I just said, hey, it's half the price, and it'll be that price as long as you want to stay. And our retention skyrocketed just from doing all of those things."

This quote discusses the realization that beyond the initial learning, customers value the sense of community and ongoing engagement, which, when combined with a discount for continued service, significantly boosts retention rates.

• Successful customer experiences combine results and engagement.
• Customer support and proactive communication are crucial.
• Building relationships and providing a positive feeling can outweigh the educational content itself.

"And I think that's the intangible stuff, that people don't want to leave because they have relationships. And so I think the relationships and the feeling that you give those people is longer lasting than the education."

Layla points out that the relationships and emotions customers develop through their experiences with a service are more enduring and potentially more valuable than the educational aspect, leading to greater loyalty.

• Understanding individual customer needs allows for personalized service experiences.
• Leveraging network effects and group purchasing power can provide additional value to customers.
• Creating offers that are perceived as overwhelmingly beneficial encourages customer retention.

"And so it's like, okay, how can I give you the shortest path to getting the value that you want the way you want to receive it?"

Speaker A highlights the importance of tailoring the customer experience to provide the most direct and personalized path to value, which can dramatically increase the perceived benefit of a program.

• Self-publishing on platforms like Amazon Kindle allows for direct control over the publishing process.
• Writing and publishing a book can be a personal endeavor, not necessarily aimed at public release.
• A product that provides exceptional value can become self-promoting through word-of-mouth.

"And so that's what I spent a lot of time trying to make it really good. And I think there's a big difference between publishing a book and publishing a great book."

Speaker A explains the dedication required to write a great book, which goes beyond the effort of simply publishing. A great book provides value that compels readers to recommend it to others.

• Offering a book for a minimal price can increase its virality.
• A book is a form of content, similar to free content like YouTube videos, and pricing it low removes barriers to access.

"And I think the thing you did that was genius was you made it a dollar. The virality of that, you haven't seen many people do that, right?"

Speaker B acknowledges the strategic pricing decision to sell the book for a dollar, which helped to maximize its reach and uptake due to the minimal cost barrier, comparing it to the free nature of other content forms.

• The book's viral success is attributed to its shareability and the low risk associated with its purchase due to low pricing.
• The number of reviews on the book has grown significantly, indicating its popularity and reach.
• The speaker reflects on the potential long-term impact of the book, imagining a substantial increase in reviews over the years.

"Because I read it when it maybe had a couple of hundred reviews, and then I was looking at it before a pocket. I was like, this thing's got like 5000 reviews now. What's going on here? It's crazy."

The quote highlights the speaker's surprise at the rapid increase in the number of reviews for the book, suggesting its wide acceptance and popularity.

• The book was priced low to encourage sharing and consumption rather than maximizing profit.
• The speaker clarifies that the objective of the book is to be widely shared, not to generate a significant monthly income.
• Amazon's cut from the book's sales is mentioned, indicating a smaller profit margin for the author.

"The objective of the book is that it gets shared and that many people consume it. The objective is not, like, for me to make an extra $20,000 a month on a book."

This quote explains the author's intention behind the book's pricing strategy, emphasizing the goal of distribution and readership over financial gain.

• The brand's philosophy is to provide educational content for free, avoiding selling information products.
• The business model focuses on helping as many people as possible without expecting a financial return from the majority.
• The speaker expresses a preference for working with a few dedicated partners over a larger number of one-time transactions.

"We really do do this stuff, and why don't we just help as many people as humanly possible, knowing that 99.9% will never work with us and never give us a dollar, and that's fine."

The quote underlines the brand's commitment to widespread education and support, regardless of direct financial benefit, aligning with their broader mission to empower entrepreneurs.

• The speakers discuss the possibility of creating a community or event for networking without charging for it.
• Discord is mentioned as a platform for constant communication and community engagement, contrasting with the more static nature of Facebook groups.
• The objective of any community-building effort is to share best practices for building world-class companies.

"I think we've thought about doing, like an event, like a Mosy nation event or doing a community on discord or something like that. So we're trying to think of different ways."

This quote indicates the speakers' consideration of various methods for community engagement, with a focus on providing value and fostering connections among entrepreneurs.

• The speakers discuss the dynamics of working together as a couple, emphasizing complementary skill sets and a shared approach to work.
• They highlight the importance of coachability, ownership, and alignment in their successful working relationship.
• The speakers reject rigid boundaries between business and personal life, preferring a fluid integration that aligns with their values and lifestyle.

"We met and we had complimentary skill sets, and it was the right timing, and we started doing it from day one. And we're both really coachable, and we both take ownership over our shit and don't blame each other."

This quote reflects on the factors contributing to the couple's successful partnership in business, including complementary skills, timing, and a mutual commitment to personal growth and accountability.

• The speakers differentiate their personal interactions from their professional demeanor in front of their team.
• They maintain a playful and humorous relationship in private but adopt a more formal, unified front in professional settings.
• Sensitivity to team dynamics and the potential concerns of employees working for a couple is acknowledged.

"I don't want to show husband and wife Alex and Leila in front of our team because I don't want them to that to detract or distract from business."

The quote captures the speakers' conscious decision to maintain a certain level of professionalism in front of their team to avoid distractions and ensure a focus on business objectives.

• The intermediate team, including Caleb (video specialist), works closely and witnesses the team's synergy in their own environment.
• The executive assistants (EAs) also have a clear understanding of the team's dynamics.

"our intermediate team, which is know Caleb, who does video, he's going to see us together in our own element. And same with our eas."

This quote emphasizes the importance of team members understanding the dynamics and strengths of their colleagues, which is crucial for a cohesive work environment.

• The e-learning market is targeted due to its projected growth, which is 2.5 times in the next five years.
• The disruption of formal education leads to increased demand for alternative education sources.
• In an inflationary environment, businesses with low capital expenses and high cash flow are more resilient.
• The businesses in focus are adaptable and can pivot during economic downturns, as demonstrated during COVID.

"So the marketplace that we're going after is elearning, which as a category is set to two and a half x over the next five years."

This quote highlights the strategic choice of targeting a growing market sector (e-learning) due to its potential for expansion and demand.

"businesses that have low capital expenses and high cash flow tend to be businesses that fare better because there's easier pricing power and because you don't have to put capital back into the business to expand it."

The quote explains the advantage of investing in businesses with low capital expenses and high cash flow, especially in an inflationary economy, due to their flexibility and pricing power.

• Market leaders are targeted for investment because they are more likely to survive economic downturns.
• Niche income-producing skills are always in demand, making them a focus for business investment.
• The goal is to pick entrepreneurs and companies capable of thriving in economic downturns.

"Second to that is we do try to pick people that we believe are market leaders or could be market leaders."

This quote underscores the investment strategy of choosing businesses that are or have the potential to become market leaders, which is crucial for longevity and success.

• A long-term plan (3-5 years) is in place to reduce founder dependency, allowing for potential business exit strategies.
• The process involves diversifying the skill sets and public personas within the company.
• Subject matter experts and leadership team members are elevated to be more forward-facing, reducing reliance on the founder.

"So it's, how are we going to basically diversify our risk of the founder? Because at some point, if they want to exit, I think most of them want the freedom to choose."

This quote reveals the strategic planning involved in reducing the risk associated with founder dependency, aiming to provide founders with the freedom to exit if they choose.

"It's just the ten people that fill those skill set gaps and then the ten people that can essentially act as characters to fill in for one face."

The quote explains the approach of using multiple people to fill the roles and responsibilities typically held by the founder, ensuring business continuity and the possibility of a future exit.

• Content production for the community is leveraged to diversify the brand and reduce founder visibility.
• Best students and coaches are utilized to create new channels and podcasts, with the post-production team ensuring consistency.
• Edifying and associating with new faces before they branch out on their own is a key strategy.

"Why don't we just produce it for other people in the community? Right? And so we took our best students, who I thought were great on camera."

This quote discusses the strategy of leveraging the community to create content, thus diversifying the brand and reducing dependency on any single individual.

"I think the, the more that you edify those people, so it's like the more that one, you associate with them, like, you're seen with them before they're on their own, and then you edify them when they are on their own, and you consistently do that over and over and over again."

The quote suggests that building up and endorsing new personalities within the business before they become independent is a key to successful brand diversification and continuity.

• Discusses the importance of diversifying sales channels and acquisition methods to ensure business stability.
• Highlights the success of a gym's outbound team in generating over 50% of total sales.
• Emphasizes the peace of mind that comes from having a diversified and functioning business system in place.
• Notes the attractiveness of such businesses to private equity firms due to their operational stability and diversified acquisition methods.

"And by building an employee team, we can build customer teams, we can build affiliate networks. All of those things we can do that are not founder facing at all."

This quote underlines the strategy of building various teams within a business to ensure that operations can continue smoothly without the constant involvement of the founder.

"And I can tell you that when gym launched, the sales past 50% of total sales came from the outbound team."

This quote highlights the effectiveness of the gym's outbound team, demonstrating that a well-structured sales team can significantly contribute to a business's revenue.

"And that's why a private equity or whatever feels comfortable coming in to purchase a business like that, because they're like, oh, they're not only diversified across channels, but they're diversified across methods of acquisition."

This quote explains why private equity firms find such diversified businesses appealing, as they present less risk due to their multiple channels and acquisition methods.

• Discusses the challenge of replacing a founder and the need for recruiting top-tier talent.
• Emphasizes the importance of leveraging networks and using recruiters to attract high-quality candidates.
• Describes the process of establishing credibility and legitimacy to attract better talent over time.
• Highlights the role of acquisition.com in aiding portfolio companies with recruitment, especially in leadership roles.

"What are you guys doing to recruit top tier talent for ourselves in general for you and helping the founders hire better?"

This question addresses the crucial task of recruiting top-tier talent, which is essential for replacing a founder's role within a company and ensuring ongoing success.

"Top tier talent is an investment."

This statement underscores the idea that attracting the best candidates requires a significant investment, whether it be through financial means or time and effort.

"So you start to look more legit. So it starts to legitimize your company. And so then you do attract talent more naturally, whereas in the beginning, you just don't have that advantage."

This quote explains how having top-tier talent on board can enhance a company's reputation, making it more attractive to potential candidates and easing the recruitment process.

"So it's recruiting their leadership."

This quote reveals that acquisition.com's most hands-on role with businesses is in recruiting leadership, which is a critical component for the growth and success of these companies.

"And so everyone's one hire away from the business of their dreams."

This quote encapsulates the transformative potential of a single key hire, suggesting that the right person can significantly impact a company's trajectory.

• Acquisition.com is portrayed not just as an investment firm but also as a powerful recruiting partner for its portfolio companies.
• The firm leverages its brand and network to attract and place high-quality candidates, particularly in leadership roles.
• Discusses the dual benefits of acquisition.com's involvement: financial investment and access to a vast network of talent.

"Because also, to her point about the legitimacy, if they're like, oh, your portfolio is doing 150,000,000 a year, they're like, okay, I feel much better that you guys are all on board in this, and you guys are an investment firm that really sees something here, too."

This quote highlights how acquisition.com's successful track record and portfolio performance can reassure and attract talent, confirming the firm's credibility in the eyes of potential candidates.

"So then they feel way more at ease. And so we'll screen and vet some of the final candidates, especially like leadership and up."

This quote explains that acquisition.com not only helps attract candidates but also participates in the vetting process, particularly for higher-level positions, adding an extra layer of quality control in recruitment.

"Yeah, that's super cool. Well, I could talk all day to you guys because there's just so much you guys have going on and your knowledge and everything."

This quote reflects the host's appreciation for the insights shared by the guests regarding business strategies and recruitment practices, acknowledging the value of the discussion for the audience.