Intro
In this episode of Impact Theory with Tom Bilyeu, Tom interviews Alex Hormozi, an expert in identifying destructive habits and turning success into a repeatable process. They discuss the importance of controlling emotions, training beliefs and behaviors as skills, and the power of soft skills in building a successful company. Alex also shares insights on marketing, identifying constraints for growth, and the value of building a strong brand.
Main Takeaways
Success Mindset
- Life has a set of physics, there are things that work and things that don’t work
- Alex Hormozi has a proven system for identifying destructive habits and turning success into a repeatable process
- Frame of reference can refer to beliefs and values or behaviors and traits
- Values are skills that can be trained and adhered to
- Emotions are an echo of beliefs and values, and controlling them is key to controlling behaviors
- Our lives are controlled by our frame of reference, which distorts the way we see the world.
- Most people are not consciously aware of their frame of reference and mistake it for objective truth.
- By shaping our lenses based on action outcomes, we can predict the outcome of our behaviors.
- Emotions are not the correct response to a stimulus if they do not lead us towards our goals.
- The only thing that matters is whether we do the thing that will yield the outcome we want.
Training Beliefs and Behaviors
- Beliefs and behaviors can be trained as skills
- Soft skills, such as leadership and communication, are important in building a successful company
- McKinsey study found that businesses with strong soft skills have a higher success rate for strategic initiatives
- Observing and replicating successful behaviors can lead to improved skills
- Simplifying complex problems can make them easier to navigate
- Progress can be made even if all variables are not present
- Learning and breaking down constituent parts can lead to progress
- Reconceptualizing and getting more intelligent can lead to improvement
- Putting in more time and effort into a project can lead to better results
- The first page of a book is crucial as it is read by everyone
Marketing and Business Growth
- Having an exceptionally high bar for what you want to do can lead to better results
- Being rewarded for a task can lead to putting in more time and effort for future tasks
- Start with a clear goal to guide your actions in both business and life
- Trust your trained feeling when something feels off, and use it to identify the problem
- Finding the fact and identifying the problem is a skill that takes practice and repetition
- Contingency-based reinforcement (environmental correction) and feedback from others can help improve this skill
- Feedback loops are more powerful when given immediately after a task is completed.
- Training should occur in the environment where the behavior will take place for better retention.
- Pattern recognition is key in identifying what works and what doesn’t.
- Successive approximation allows for generalization of learning across different tasks.
- Focus on identifying what needs to change to make a task successful, rather than dwelling on why it didn’t work.
- To be successful in marketing, it’s important to understand the psychology of buying behavior.
- Measuring success in marketing is possible through impression display and engagement.
- In order to contact potential customers, they must provide their contact information.
- There are four ways to make something known: one-on-one to people who know you, one-on-one to people who don’t know you, one-to-many to people who know you, and one-to-many to people who don’t know you.
Building a Strong Brand
- Building a strong brand can attract top talent to a company
- Leverage is the difference between what you put in and what you get out
- There are degrees of leverage: collaboration, capital, code, and content
- The Core 4 in the leads book are one on one, one to many, trainers, and friends
- Lead getters have more leverage because they let other people know on your behalf
- There are four ways to get customers: telling them directly, word of mouth, posting content, and doing code outreach.
- Getting lead getters is important because they let other people know on your behalf.
- Selling to affiliates can be more profitable than selling directly to customers because of leverage.
- Structuring a business as a licensing model can lead to more success than just offering a course.
- Providing assistance and services can be beneficial in helping others run ads and attract customers.
- The average gym lord adds $100,000 a year in profit.
- The company charges a percentage of the increased net profit that they help generate.
- The license model allows gym owners to save money on testing ads and increase their profits.
- The company’s structure is closer and more supportive than a franchise model.
Identifying Profitable Business Models
- The process of breaking down a business opportunity involves looking at number of potential units sold, gross profit per unit, and competitive dynamics
- Competitive dynamics include factors like the cost of adding another unit and how sticky the product or service is
- Lifetime gross profit is more important than recurring versus non-recurring revenue
- Accounting or bookkeeping services can be a high gross profit business with automation and offshore workers
- Lifetime gross profit is important to consider when evaluating a business
- Recurring revenue is preferred by investors and can lead to a premium when selling a company
- Value can be added to a business by leveraging expertise in a specific industry or area
- Quick decision-making requires filters and key metrics, such as LTV to CAC ratio
- Identifying a profitable business model is crucial and involves analyzing the total addressable market and customer lifetime value compared to acquisition cost.
- Picking the avatar, which is the customer that you want to go after, and then picking the problem that you want to solve for them is important.
- Businesses can be categorized into selling products, services, code, and content.
- The easiest type of business to start is a service business because it only requires your time and you to learn a skill that other people can also learn, but some people just might not want to do it.
- Start with something that people already buy so you can easily find a market.
- To find a market, start with something that people already buy
- Reach out to people one-on-one, make content about the problem, and run ads to let people know about your product or service
- The core four ways to market your product or service are: reaching out to people one-on-one, making content about the problem, running ads, and setting up email or voice mail auto responders
Entrepreneurship and Success
- Focus is a skill that can be trained, and entrepreneurs should focus on one thing and stick with it instead of constantly jumping to new opportunities
- Entrepreneurs go through five stages: uninformed optimism, informed pessimism, the value of despair, informed optimism, and achievement. They often cycle through the first three stages until they learn to stick with one thing and push through uncertainty.
- The uncertainty of entrepreneurship is what creates opportunity for success.
- Tolerance for risk is necessary to pay down the tax of ignorance and test and iterate ideas.
- Failure is not a negative outcome, but progress towards success.
- Operationalizing value is key to making a product more valuable in the perception of the customer.
- Advertising is about getting strangers to want to buy your product, not just convincing them to buy it.
- The book is about advertising and getting leads
- The author used all eight methods from the book for the book launch
- The methods used for the book launch included reaching out to people for podcasts, running ads, affiliates, customer referrals, agencies, and employees
- The success of the book launch was due to years of building brand, awareness, and generating goodwill
- The book provides concepts for warm outreach, cold outreach, and making content
- Brand is about associating something people know with something they don’t know
- A brand directs someone’s behavior and is a physical sign
- Brands have two continuums: strength and positive/negative inclination
- Brands are the most valuable things that you can build because they influence behavior at scale
- Making many positive associations for a specific audience is key to building a valuable brand
- Having a huge brand does not necessarily mean having the ability to direct or change behavior
- A strong brand for a narrow audience can be more effective than a million-person account that cannot drive sales
- Making promises and keeping them can build goodwill and increase the likelihood of people subscribing to you
- Referrals can create a viral effect and help acquire customers without paying a cost
- Creating a viral effect through referrals can help acquire customers without paying a cost
- The speaker wanted people to remember his pitch, so he took a roller coaster approach to subvert the audience and sell them on the value of his product
- Memory is driven by emotion, and the speaker wanted to sell the value of his product before giving it away for free
- The speaker is a ruthless capitalist who is here to make money, but measures how he makes his money over a longer time horizon
- It is important to keep promises and meet expectations to build trust with an audience
- Associations matter in business, and can affect future opportunities
- Course creation world has a lot of charlatans and broken promises
- Good education businesses exist, but are hard to distinguish from bad ones
- Brands can change over time, but it’s important to make sure the tradeoff is positive
- Calculated tradeoffs can help achieve long-term goals
- Businesses can solve many problems in the world.
- Capitalism is about efficiently allocating resources, but there are trade-offs.
- Private sector is more efficient than the government in allocating capital.
- Entrepreneurship is the way to solve problems.
- Innovation and a first principles approach can help solve any problem.
- Everyone has a unique life and is uniquely positioned to tackle opportunities.
- Equipping entrepreneurs to solve problems can be a life purpose.
- One of zero means being beyond definition and writing your own path.
- Show and say only what you can do that others can’t do.
Health and Nutrition
- Your diet is critical to your performance, and it’s not just about the macros. You also have to think about micronutrients.
- You should be eating whole foods whenever possible, but supplementation can be helpful to get all the necessary nutrition.
- Athletic Greens is a company that turns whole foods into a powder for convenient supplementation.
- AG1 is packed with 75 premium vitamins, minerals, and whole food sourced ingredients that elevate your immune system, uplift your mood, and promote restful sleep.
- Athletic Greens is offering a great deal for our listeners. Go to athleticgreens.com/impact and get a free one-year supply of vitamin D and five free travel packs with your first purchase.
Summary
Success Mindset
Alex Hormozi emphasizes the importance of understanding the physics of life and identifying destructive habits. He explains that our frame of reference, which includes our beliefs and values, distorts the way we see the world. By training our values and controlling our emotions, we can shape our lenses to predict the outcome of our behaviors. The key is to focus on doing the things that will yield the desired outcomes, regardless of our emotions. Beliefs and behaviors can be trained as skills, and soft skills like leadership and communication are crucial in building a successful company.
Marketing and Business Growth
Alex shares insights into marketing and business growth, emphasizing the importance of identifying the most meaningful next step and focusing on how well a task works rather than just whether it works. He highlights the value of understanding the psychology of buying behavior and measuring success through impression display and engagement. Alex also discusses the power of building a strong brand, leveraging different forms of leverage, and utilizing lead getters to expand reach. He suggests structuring a business as a licensing model and providing assistance and services to help others attract customers.
Identifying Profitable Business Models
Alex provides guidance on identifying profitable business models, emphasizing the importance of analyzing the total addressable market, customer lifetime value, and acquisition cost. He suggests starting with something that people already buy to easily find a market and categorizes businesses into selling products, services, code, and content. Alex also discusses the benefits of recurring revenue, the value of expertise in a specific industry, and the role of quick decision-making in achieving success.
Entrepreneurship and Success
Alex delves into the mindset and journey of entrepreneurship, highlighting the importance of focus, tolerance for risk, and embracing failure as progress towards success. He emphasizes the need to operationalize value, understand the psychology of advertising, and build a strong brand that influences behavior at scale. Alex shares his insights on the book launch process, the power of associations, and the challenges of the course creation world. He also discusses the role of businesses in solving problems and the unique potential of every individual to tackle opportunities.
Health and Nutrition
Alex briefly touches on the importance of diet and nutrition in performance. He recommends eating whole foods whenever possible and highlights the convenience and benefits of supplementation. He introduces Athletic Greens, a company that turns whole foods into a powder for easy supplementation, and shares a special offer for listeners to try their products.
Conclusion
In this episode, Alex Hormozi shares valuable insights on success mindset, marketing and business growth, identifying profitable business models, entrepreneurship, and health and nutrition. By understanding the physics of life, training beliefs and behaviors, and focusing on meaningful actions, individuals can achieve success in various aspects of life. Alex’s expertise in marketing and business growth provides valuable strategies for building a strong brand and expanding reach. His insights on identifying profitable business models and navigating the journey of entrepreneurship offer guidance for aspiring entrepreneurs. Lastly, he highlights the importance of maintaining a healthy diet and introduces Athletic Greens as a convenient solution for optimal nutrition.
