The Importance of Mindset and Dedication in Entrepreneurship (with Ali Abdaal) Pt.1 Oct. ‘22 Ep 534

Alex Hormozi, the host of the podcast and owner of acquisition.com, delves into the entrepreneurial mindset, emphasizing the importance of starting small, learning the business game, and not being paralyzed by the notion of a perfect, lifelong career choice. He underscores the value of taking initial steps to illuminate the path ahead and shares his own journey from online fitness coaching to running a gym, highlighting the learning curve and the transition from earning to learning. Hormozi stresses the significance of investing in one's ability to generate income over traditional investments like the S&P 500, advocating for service-based businesses as low-risk starting points. He also touches on the concept of "ignorance debt," suggesting that knowledge acquisition accelerates entrepreneurial success. Hormozi's entrepreneurial philosophy is grounded in his experiences and the practical steps he took to scale his businesses, ultimately aiming to assist others in reaching and surpassing the $3 million revenue mark.

• The traditional employee mindset mistakenly assumes that one's career choice is a lifelong commitment.
• In reality, the focus should be on finding something one is sufficiently skilled at to learn the game of business.
• Progression becomes clearer with each step taken; action illuminates the path forward.

"And so the idea is you start not with the intent of saying, this is going to be the one thing I'm doing for the rest of my life, which is the fallacy that employees have, that whatever they pick is going to be the thing they're going to do for the rest of their lives, when in reality it's, I just have to do a thing that I'm good enough at, that I can learn the game."

This quote emphasizes the importance of flexibility and adaptability in one's career, challenging the misconception that one's initial career choice is permanent.

• The podcast focuses on customer acquisition, increasing customer value, and retention.
• The host shares lessons from failures and successes in business.

"Welcome to the game, where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way."

The quote provides an overview of the podcast's themes, which revolve around comprehensive business growth strategies and learning from past experiences.

• The book "100 Million Dollar Offers" was priced at $0.99 to maximize distribution rather than profit.
• The long-term strategy involves building relationships with businesses that will eventually seek partnership with acquisition.com.
• Pricing was also a strategic decision to leverage Amazon's platform for wider distribution.

"And so giving it away for free, I actually don't think would have gotten as many hands because I wanted to use, because if Amazon makes money, Amazon will push it right at gets two thirds of the revenue from the thing."

This quote explains the rationale behind the book's pricing, highlighting the importance of aligning interests with distribution platforms like Amazon for broader reach.

• Alex Hormozi's marketing approach includes being upfront about not having anything to sell, which resonated with the audience.
• The explicit statement of having nothing to sell was a response to skepticism about his motives.
• Hormozi's income from the book is insignificant compared to his overall earnings, reinforcing the message that his goal is not to profit from the book.

"It only seems masterful in retrospect, more than it was intelligent design. I got frustrated because a lot of people were like, he's just trying to sell a course."

This quote reveals that the effective marketing phrase "I have nothing to sell you" originated from a genuine expression of frustration, which inadvertently became a powerful marketing message.

• Zero to six figures in revenue involves selling a product to a specific audience with a single channel.
• Moving to seven figures requires consistency in customer acquisition.
• The jump from one to three million in revenue typically involves scaling the main business activity and building a core team.
• Three to ten million in revenue indicates product-market fit, a reliable acquisition channel, and a foundational team structure.
• Alex Hormozi's company, acquisition.com, engages with businesses that have reached a minimum threshold of three million in revenue.

"Getting to six figures is literally just like, sell something to someone. That's it... And then when you want to get to seven figures, then you just do that and then add the word consistently."

The quote breaks down the initial stages of revenue growth into simple, actionable steps, emphasizing the importance of consistent action in scaling a business.

• Employees transitioning to entrepreneurship must understand that owning a business initially means being its sole employee.
• The key to making money in business is selling products or services.
• A successful transition involves taking on the responsibilities previously managed by an employer.

"You have to go get money. You have to go make money. And the way you do that is you sell stuff, right?"

This quote underscores the fundamental business principle that generating revenue is essential and is achieved through sales.

• To generate interest in a product, it must be made known through advertising.
• There are five methods of advertising to choose from.
• Consistent advertising brings in customers to sell a product to.
• The book "$100 million offers" provides guidance on what products to sell.

"You have to have people who show interest in the thing, which means you have to make your products known. And we do that through advertising."

This quote emphasizes the importance of generating interest in a product through advertising, which is the initial step in attracting customers.

• Once advertising brings people in, the focus shifts to what to sell them.
• After selling, delivery of the product or service is the next step.
• Delivery should be broken into specialized tasks rather than one person doing everything.
• Selling is a high leverage activity that can support hiring others to assist with delivery.

"Then you can start getting people to help you on the level of delivery you have, which comes down to breaking the delivery into chunks rather than holistically and saying, how can I specialize the labor?"

This quote discusses the importance of breaking down the delivery process into specialized tasks to improve efficiency and allow for scaling up by hiring additional help.

• Everyone has knowledge or skills in certain areas due to their experiences.
• Past jobs, parents' professions, and personal interests can inform what you can offer.
• The goal is to sell something valuable, either by solving a problem or providing a desired skill or service.
• Value can be determined by how much money you can make for someone (B2B) or how much people perceive the problem to be worth (B2C).

"Everybody knows something... And so the idea is, what do you like? Everyone has unique depth of knowledge in certain areas because you've been alive and your eyes and ears have taken inputs, period."

This quote reflects the concept that everyone has some form of valuable knowledge or skill that can be monetized based on their life experiences.

• Entrepreneurs often have many failed ventures before finding success.
• Starting a business should not be seen as a lifelong commitment but as a learning experience.
• Taking the first step is crucial, as planning too far ahead is not practical due to unpredictable changes.
• Service businesses are recommended for beginners due to low risk and the opportunity to learn.

"The idea is you start not with the intent of saying this is going to be the one thing I'm to going do for the rest of my life, which is the fallacy that employees have, that whatever they pick is going to be the thing they're going to do for the rest of their lives."

This quote challenges the notion that one's first business must be perfect or lifelong, promoting a mindset of learning and adaptability instead.

• Service businesses are a good starting point for new entrepreneurs.
• It's not necessary to have a novel idea; improving on existing services can be effective.
• One should identify problems they can solve based on personal experiences or skills.
• The initial focus should be on learning and paying down "ignorance debt" rather than earning.

"Service businesses, meaning do stuff for money, like mowing the lawn or cleaning windows."

This quote defines service businesses as those where services are exchanged for money, highlighting them as a practical entry point for new entrepreneurs.

• Employees focus on activities, while entrepreneurs focus on solving specific problems.
• Freelancing or creating a service business can illuminate entrepreneurial opportunities.
• Service businesses may not be glamorous but can be successful and provide valuable learning experiences.
• The failure rate in tech startups is high, and they often require capital, unlike service businesses.

"They don't see the 100 failed startups. Like, the failure rate on tech startups is just as high as everything else, except it usually takes capital and it doesn't take capital to start a service business."

This quote points out the high risk and capital requirements of tech startups, contrasting them with service businesses that are less capital-intensive and can serve as a learning platform.

• Alex Hormozi started with a fitness interest and transitioned from consulting to personal training.
• He initiated the "free training project" where clients donated to charity in exchange for his services.
• This project built up testimonials and goodwill, leading to a transition to paid services.
• Hormozi's approach demonstrates leveraging personal interests and incremental steps towards full-time entrepreneurship.

"And so after a year of doing that, I had probably twelve really good testimonial... And that was actually how I transitioned from not for profit or donating everything."

This quote describes Hormozi's strategic move from a charitable project to a profitable personal training business, using testimonials and experience gained during the project.

• Alex Hormozi emphasizes the simplicity of starting a business, requiring only a bank account and payment processing.
• The ease of finding how to set up these basic needs through Google is highlighted, suggesting that if one can't figure it out, entrepreneurship might not be suitable for them.
• The fact that 30 million businesses in the United States have been established indicates that it is an achievable goal for new entrepreneurs.

"You literally just need a bank account and a way to process money. That is it."

This quote by Alex Hormozi underlines the fundamental requirements for starting a business, suggesting that the barriers to entry are minimal.

• Alex Hormozi suggests starting by offering services for free or as a charitable act to avoid awkwardness in selling and to gain insights into the value of the service provided.
• Transitioning from free to paid services can help identify whether the business or the clients need improvement.
• Hormozi shares his personal experience of using referrals and social media to grow his initial client base.
• He talks about his transition to announcing his business publicly with a website and testimonials, which helped him attract more clients.

"Make the first ten free, or some sort of charitable thing so that people don't feel weird or you don't feel weird about selling."

This quote explains Hormozi's strategy for gaining initial customers and testing the market without the pressure of immediate sales.

• Alex Hormozi describes the operational aspect of his business where he updated training programs and nutrition plans for clients.
• He highlights the simplicity of his business model, which only required a few hours of work each week.
• Despite the business's success, he shares his dislike for repetitive tasks, which led him to pursue owning a gym.

"It was just one on one online, and it only took me 4 hours on Saturday morning."

This quote details the efficiency of Hormozi's business model, where he managed to fulfill his clients' needs in a short amount of time each week.

• Alex Hormozi considered three different business ideas: test prep, a yogurt business, and fitness.
• He discusses the financial barriers and personal experiences that influenced his decision to choose fitness over other options.
• Hormozi's story includes a partnership gone wrong, which steered him away from the test prep business.

"I was deciding between a test prep company, because I was really good at standardized testing, and I had a process for how I did it."

This quote reflects Hormozi's thought process in evaluating his skills and interests when deciding on a business venture.

• Hormozi shares his proactive approach to learning by reaching out to gym owners for an apprenticeship opportunity.
• He discusses the financial investment in a mastermind group, which allowed him to learn from others' mistakes before starting his gym.
• The conversation touches on the notion of working for free and the associated privilege, with Hormozi providing his perspective on the matter.

"I hit up 40 gym owners to see if I could just basically apprentice for them and just work for free."

This quote demonstrates Hormozi's willingness to learn through hands-on experience, even without immediate financial gain.

• Alex Hormozi introduces the concept of "ignorance debt," suggesting that lacking knowledge can be costly.
• He emphasizes the importance of investing in one's ability to make money over traditional investments like the stock market.
• Hormozi believes that acquiring knowledge can lead to rapid financial growth once understood.

"You want to pay that ignorance down as fast as you can because as soon as you have that knowledge, you'll be able to skyrocket straight to 20, 5100, 500,000 a month very quickly because you know how to do it."

This quote captures Hormozi's philosophy on the importance of education and knowledge in achieving financial success.

• Alex Hormozi argues that college is overpriced and alternative educational investments can yield better returns.
• He suggests using money that would have been spent on college to join mentorship programs or invest in income-generating assets.
• Hormozi provides an example of a PhD student who acquired 20 homes and a significant monthly income using student loans.

"You could take that $200,000, you could buy a fucking rental property that makes you $4,000 a month, and then you would literally exit the system before you even got into it with the money that they're giving you to become a worker, which is just fat, and you wouldn't even have to pay down the debt service for the real estate."

This quote demonstrates Hormozi's point that traditional college funding could be redirected towards investments like real estate to create immediate income, challenging the conventional path of education leading to employment.

• Hormozi criticizes the common advice given to low-income individuals to invest in stocks or index funds, highlighting the inadequacy of such investments due to inflation and the low returns for someone with limited capital.
• He emphasizes the importance of increasing one's earning capacity rather than focusing on small returns from investments.
• Hormozi uses the example of a bowling alley worker who could increase her income significantly by investing in a certification to become a phlebotomist.

"You're poor. You're not going to make breathtaking. And here's the thing is, when you do the dollar cost average thing, because everyone likes to put it in the Excel sheet and everyone gets Excel rich, the thing is that by the time you retire with $4 million on that Excel sheet, $4 million will be a million dollars today, which is not a lot of money."

Hormozi points out that for someone with a low income, the typical investment strategy will not lead to significant wealth due to inflation and the low base amount being invested.

• Hormozi discusses his personal strategy for increasing his baseline income through acquiring new skills in sales and marketing.
• He shares his contingency plans, which included driving Uber and stripping, to mitigate risk and ensure income.
• As Hormozi developed his skills, his income potential increased, leading him to create a successful business model without employees.

"Now, once I got the first level of skills since I learned how to sell, I realized that my base level opportunity rose because then I was like, I could just sell cars and make 400,000 a year and keep my clothes on, right?"

This quote illustrates how Hormozi's skill set in sales opened up new, higher-earning opportunities, allowing him to continually raise his financial baseline.

• Hormozi values the experience gained from working in small businesses because it provides a holistic view of business operations, unlike specialized roles in large corporations.
• He recounts his own experience learning about sales and marketing by observing and participating in the day-to-day operations of a gym.
• Hormozi's hands-on learning led him to take a significant risk by opening his own gym with a costly lease, relying on his newly acquired knowledge and skills.

"So twelve weeks later, I would do it every weekend. I would go out and look for locations. When I found location that I liked, I still had my 50 grand saved up. And so then that's what I spent. I spent, I think, most of that to outfit the facility."

This quote shows how Hormozi applied the practical business knowledge he gained to take action and start his own venture, despite the financial risks involved.