Sales-Led Growth

[00:00:00] Aadil Razvi: All right. Over the last six years, she has started and scaled four 8figure businesses, most known in this room are Gym Launch and acquisition.com. She and her husband have done over 130+ million in direct sales before the age of 30, and now have divested their interest in those companies to focus full time on their investment company acquisition.com, which currently exceeds 140M in revenue across the companies.

Please give a warm welcome to Leila Hormozi .

[00:00:28] Leila Hormozi: Thank you so much. I appreciate it. I was like, What am I walking in on?

[00:00:33] Aadil Razvi: Let's go. All right. And then we've got, he has grown a gym licensing business, an e-commerce company, an agency SaaS business. The company's made a lot of money. He then sold the companies to private equity funds for more money.

People were very impressed. He now invests in internet businesses making at minimum $3M+ dollars per year. He helps them make a lot more money than they were before. He also wrote a book called a $100M Offers. People say it was good. I say it was great. People say nice and impressive things about our final speaker.

Alex Hormozi, Welcome to the Growth Summit 2022, Sir.

[00:01:13] Alex Hormozi: Best intro.

[00:01:15] Aadil Razvi: Oh, thank you. Thank you. Made my day. Definitely repurposed it from a certain someone. I just wanna say that this was a session that we've actually gotten messages, you all, we've actually gotten messages that if Alex and Leila don't show

I will burn Demand Curve to the ground. That is a real message that we have gotten about this session. So thank you. From the bottom of my heart.

[00:01:39] Alex Hormozi: I'm cutting out. I'm cutting out.

[00:01:46] Aadil Razvi: Oh, wow. All this is gonna be fun. So we're gonna start off high level. We're gonna be talking about sales-led growth, the state of things. We're gonna go tactical after that little bit further along. And then we're gonna get some audience questions as well. So if you've got those, go ahead and drop that in the Q&A feature of the chat.

Now. It's been a crazy year. Economies been going crazy. Fundraising is down. What is the state of sales-led growth 2022? Leila, why don't you start us off.

[00:02:20] Leila Hormozi: Yeah. I would say that it's not binary, right? It's just exists based on the industry that you're in. And we're seeing it in our portfolio.

Certain niches are having a harder time, certain industries are having a harder time, whereas some are unaffected still. And something that we try not to do is to speak absolutes onto people. Oh, the economy is bad. It's really hard for sales-led founder. I don't speak any of that. And even, I'll give you the closest comparison we have, which is when we were leading Gym Launch through Covid.

People are like, How was that? And I'm like, How do you think you know, freaking mortar gyms during Covid? Not great. And that was the closest thing that we could mimic to a recession. And though we would obviously observe the clear macro factors that were affecting the business. That's not what we focused on a day to day basis.

Right? And so for us, even within our portfolio, there's founders that, it's very obvious that despite their efforts, it's really hard right now. And they have to put in two times, three times the effort and they're gonna get half the output. But that's the reality of what it looks like right now for certain industries.

And so the kind of the approach that we've taken with that is just acknowledge that it is there, but there's nothing that we can really do about it in many of these industries. And knowing that, there are of course certain people that are set up and they maybe have businesses where it makes sense to pivot and capitalize on the opportunity, but more often than not, there's people that just need to weather it.

And so I think it's understanding where you're at in that place. Are you a market that's affected or not? And then is this something we're going to weather or are you set up to pivot? And so that's how we look at it with companies. And in terms of like our selection criteria. When we're taking on companies, that sign that we've taken into consideration over the last 18 months in terms of companies that we select are ones that are resilient in a down economy.

Ones that can weather it and ones that will come out stronger and honestly, more often than not, has more to do with the founder than anything, because I can tell you this, which is we have a few companies in one industry. And one of them is up and the rest are down. Most of the industry is down. But that founder is just somebody who is absolutely resilient and adaptable and he's like through and through a true leader.

And so more often than not, like with the gyms, for example, going through Covid, the people that were able to be there once Covid was done were the people that had fantastic leadership and high retention and so those are the things that we focused on during the time of Covid. And I tell people that are, weathering it out right now in industries that are down, that's where you have to focus.

Like you have to be. You can't just have employees. You have to have loyal followers. You can't just have clients. You have to have loyal followers and you have to be a person worth that loyalty. What are you doing to prove to them that you even have earned their loyalty and trust during this time?

Because they could just go do something else. There's plenty of times now you could just start a side gig. You do contract work. That's gonna become more popular as things go down even further is contract work side work cause companies are gonna lay people off and they're gonna take on contractors.

And so I think it's during this time, just being able to focus on what you can do rather than what you can't do. And ultimately at the end of the day, I think the people that continue to ruminate over what's going on in the economy are the ones that are going to lose.

[00:05:28] Aadil Razvi: Go ahead Alex.

[00:05:29] Alex Hormozi: I was like, how do I follow that

I think Leila had a great answer. I'll just give you three points just quick ones. Number one is more better, less new. And so during this period where you have increased risks, increased volatility, decreased demand, we're not gonna try new things because even if new within like new acquisition channels, maybe new product suite or something.

Unless it's a clear, use your brain. If it's a clear and obvious need because something's wrong with what you're currently doing, then do that. But not like the new opportunistic stuff. And so we focus on more better within the portfolio companies right now, number one. Number two is that, it's resetting expectations around around goals.

So if you are able to maintain or grow at a slightly lower rate than you did before during a kind of recessionary period, then you actually grew disproportionate to market share, right? And so that's where one of those things where if we stayed the same for this year and everyone else went down 20%, then we actually grew 20% relative to the market.

And so I think sometimes it's more, you don't need to send us, like if this is for the founders who are here. If you're thinking that way, it can just help you sleep better at night rather than feel terrible, which is most of where the emotional radicism comes from. It's self-inflicted , self imposed pressure by founders onto themselves.

And so that's number two. The third one was, shoot, I had a, it was three points. I was trying to remember them all while Leila was talking.

[00:07:11] Aadil Razvi: More, better, less new. Reset expectations around goals and the third one?

[00:07:16] Alex Hormozi: Yeah, I'm trying to remember what the third one was, but marketing, What was that?

[00:07:20] Leila Hormozi: I was gonna say was that we talked about this today actually, marketing switch.

[00:07:24] Alex Hormozi: In terms of wording. Okay. Yeah. So that wasn't gonna be the third one, but that is a great third one. So I'll talk about it. Yeah. So some of the language starts to shift in the marketing messaging. So it goes from less around thriving, more around surviving.

And so you'll start, if you split test core messaging around headlines and ads, this is a little bit tactical drilled in, I would highly recommend grabbing grab like going towards security, safety, reliability that type of look and feel in terms of the messaging rather than kill it, new future, etc.

Because it's like the believability factor is down. And so people are gonna grasp for what's known and what feels safe. And also that kind of will affect our selling methods and the scripting around the sales for the sales teams too. You'll start to notice that prospects will gravitate more towards the reliable we'll notice that if we have any kind of like income generating things for B2B or cost saving things, cost saving does better, during these periods of time, but also smaller dollar amounts can seem more realistic, and so sometimes they'll even convert higher.

And so it's the opposite of the thrive periods where you can shoot, you can put that big number out, annualize, how much revenue they're make. Maybe it's just put it down to what they're gonna make a day or per week more with the B2B solution or whatever it is. And sometimes they'll actually get much higher conversions during these types of period.

So those are big three more better. If you stay the same, it's a win. And then three is switching messaging or shifting slightly towards survive versus thrive overall.

[00:09:06] Aadil Razvi: Yeah, like the sentiment market is leaning more towards play it safe, pull back, be conservative. And so speaking to the things that matter, when that sort of fear is there, like security, safety, reliability is gonna resonate more than hey, step outside of your comfort zone and really try on this new solution that isn't necessarily, the way that you're used to doing.

[00:09:32] Alex Hormozi: If I can piggyback ,the one quick piggyback is that for everyone is in the audience who's a winner. This is about to be the good times, right? Because up until this point, people who had jack shit had no idea what they were doing were winning because it was very easy to win. And so it was hard to differentiate who were the real players and who were the people who were just riding the wave.

And the best investors in the world get excited for when things go on sale, right? And to the same degree, market share is about to be on sale. And we gave the very like tactical. And to be fair, that'll prob what we said earlier will affect most of the audience. But for the winners who are listening right now, This is when you can get greedy as fuck, and this is when you can lean in and take everyone else's lunch because at the end of this thing you get denser, you get harder, the business gets stronger, you're more efficient in all channels that you're doing.

You dial in everything and then you just eat everyone else's lunch because that market share that everyone else is loses the demand is there long term. And so it's just gonna be a reshuffling. And the people who do double down and decide to be winners are the ones who can come out not just a little bit ahead, but way ahead.

[00:10:42] Aadil Razvi: Leila you were adding something to that?

[00:10:45] Leila Hormozi: Yeah, I was just gonna say, though, we're switching the marketing messaging to conservative safety, security. Piggybacking on what Alex said, I was like, but that doesn't mean you should do that. And I think that in order to even just, hit the expectation that Alex was talking about of maintaining, during Covid, like we were redlining our team, we were redlining ourselves, and we were just barely maintaining everything that we had built.

And so in order to grow, you can imagine how much that takes, and that takes somebody taking advantage of the situation. And It's just going into really what Alex said, which is though you're marketing in that way, that doesn't mean that you act that way internally. I think that the worst thing that people can do at this time is get rid of revenue generating activities.

Yeah. Like a lot of people, they conserve their marketing. They look at like leaning out their sales team don't do that. It's also almost just like the signal that sends your organization when you start shrinking, when the market is looking, dark, that's when you really like inflict instability into your business.

And you also just plant seeds of doubt in people. And then they have seeds of doubt in you because they're like, Oh, they don't even know if they can weather this. And so I would just put that out there as just because you're changing your marketing doesn't mean you change your strategy that you don't get any less aggressive.

You should get more aggressive with the growth.

[00:11:54] Alex Hormozi: And to that end, I remember the third point I was gonna make finally which is, if it's twice the effort to get the same output. Then that becomes the new benchmark for the team. And so when we, and Covid is just a very, I would rather have, from a hard hardship standpoint, Covid affects brick and mortar gyms is definitely significantly harder than a recession.

For context, 30% of micro gyms went out of business in 12 months. So we're talking big reduction in like literal market size. But despite that, Leila and I gave a state of the union to the company and we said, Here's the new expectation. You work nights, you work weekends.

Because if you want this company to be here, you want these jobs to be here. We owe it to our customers because they are working every hour of every day. They are working weekends, and so we should hold ourselves to at least the standard that they are holding themselves to, to keep themselves afloat. And so who is with me in that?

I'm not saying it's forever, but it will be for now and so it's setting a new standard that we should expect that we're gonna get half the output from our work. Cool. So we can either expect the reduction of 50% or we double our inputs. And so setting that bar also, again, it's the winning mentality. We'll give you the anecdotal stuff that's the black and white, the beginning, but what do you do with that?

Fuck all that and try and win either way. Let your team know that's where you stand on.

[00:13:29] Aadil Razvi: Yeah, you all seem to complete each other's sentences a lot. You should certainly hang out. One of the things Leilan you had brought up early on, and you've touched on it, both of you have touched on it quite a bit. It's more founder than industry at a certain point. And I think that's something that is worth, fully unpacking here.

What are those shared characteristics of those founders that are able to kill it in these industries that maybe be going the other way?

[00:14:00] Leila Hormozi: If you go to acquisition.com, they're on the website. Competitive greatness, unimpeachable character, sincere candor.

There's a reason that we chose those values, which is because one, those are the values that we uphold ourselves to. The second is that those are the values that we uphold the team to. And the third is that's the selection criteria for CEOs that we are willing to work with.

[00:14:22] Aadil Razvi: And sorry, Leila, what are those three again? You said competitive greatness.

[00:14:26] Leila Hormozi: Competitive greatness, Sincere candor, unimpeachable, character. And the reason that we chose those, I'll explain each one a little bit and then let Alex as well, cause we each have our different take. One of the main reasons is we understand, we see businesses all the time that come to us and they have great revenue, they have great profit, they have great everything, right?

But the founders just awful. We're like, This is gonna end at some point because nobody's gonna be loyal to you. Your customers are gonna tell you just want money and you're greedy. Or people are gonna see that you're lazy and nobody's ever gonna work any harder than you. So we're screwed here because you're the limit

and so we see it all the time where that is the limiting factor for, it is tough to verbalize what we've seen because talking to 50 founders a week, seeing their stories like bringing, like reading about their companies and then seeing like the limiting factors, always them. It's frustrating at times cause I swear, if you could just be a better person, this would all work out for you.

But, competitive greatness is the one that I think right now is most pertinent because competitive greatness is the love of a hard challenge. It's people who seek out hard challenges, not for the outcome, but for the person that they become along the way. And that's what we look for in founders.

We don't want people, when I say, What's your goal with your company? And someone says, Ugh, if I could sell for 20 million, I'm like, Oh God. Like vomit. Because the thing is, when you hit 20 million, what next? That's all you want. That's it. That's not competitive greatness. Competitive greatness is there's no ending to it, right?

They're like, I wanna take this thing all the way. We're like, What's all the way? They're like billions. Like people think, Oh, that's delusional. They'll never, The people that reach that are a little delusional, like they have so much belief in themselves and they want that challenge, and so that's one of the first things we look for.

The second thing that we look for is sincere candor. The reason that they need sincere candor is because, again, one of the limiting factors that these founders have is that they can't have those hard conversations. They can't have them with us, and if they give us, I say shit in, shit out. You give us shit information because you're trying to be fluffy and nice.

We give you shit advice, right? You give your team shit feedback. They give you shit work, right? It's like you give your customer shit work, they give you shit reviews, and so founders that don't have sincere candor, they can't have those hard conversations. They're constantly sugarcoating everything or not confronting or avoiding because maybe they just don't like people.

They're not people, they don't know how to manage all things that are learnable skills. These are not things people are born with. They're very difficult to work with because if you are giving someone a plan, you're helping them with strategy, and then you're even getting in there and hands on doing a lot for them, but they're not giving you proper feedback and they're not being candorous with you, then there's only so much you can help with because they're not being transparent.

And that's a limiting factor for us. And that's why it's so important for us and also because we tend to see that teams are loyal to people who are honest and our founders who are the most honest with their teams, everyone's gonna mess up. They all mess up the same amount. They all make the same amount of mistakes.

We all do. But how you handle those mistakes is another thing. And those people who can be transparent with us and their teams are the ones who go the farthest. And then the last piece of that is really unimpeachable character, which is, are you someone who acquisition.com would wanna publicly associate with?

Are you someone who your employees would want to publicly say they work with? Are you someone who your customers would like to publicly say they work with? Are you someone who, when push comes to shove, you know you are in line with your values, right? So even if your values are competitive greatness, sincere candor, unimpeachable character, do you actually align with those?

Or do you just say that you do. And those are what we really look for in the founders, because we just see that when push comes to sub, people with high integrity, with high, I think, Alex, you talked about this in one of your videos. It was like what you think, what you say and what you do are aligned. We look for that and that's what we look for within those values.

[00:18:17] Alex Hormozi: The opposite, which is what a loser looks like. So we have red flags on our side. Number one is that they are emotionally reactive and volatile. And so we see founders a lot and oftentimes entrepreneurs can be, actually I'll take that back. Human beings in general can be emotionally reactive, but when you are in a business, it amplifies your emotional activity.

And so when you, at least when I observe the biggest, wealthiest people who run the biggest companies, they seem so stable, almost like robotic, mechanistic, like eerily robotic. But that's because you're, it's a like the stimulus that created that. You know what I mean? There was something that made that happen and that was the natural reaction to that stimulus.

And so if I'm looking ahead, it's like I have to become more like that in order to be able to manage more and more chaos. Because every day you can look at a hundred things and feel terrible about yourself. You can look at a hundred things and feel awesome or you can just accept that there's always gonna be good and bad at all times in your business.

You know what I mean? And so the big red flag around this though is that when someone is emotionally reactive, and this is this is me speaking to every one of these founder led companies, if you feel bad because of whatever, and then you want to then change something in your business to make yourself feel better.

That is where you fuck up your business. And that is where employees get thrown left and right center that you said one thing last week, you say something different this week and it's because you felt different. It's not because reality has changed, it's only because your perception of reality has changed.

And so when we see that, it's a huge red flag because it was very difficult to have compounding efforts work directionally the same way. So number one that we don't look for is emotional activity. Number two is that it can't stay focus.

[00:19:59] Aadil Razvi: Sorry. How do you find that out? Like within.

[00:20:04] Alex Hormozi: We have a relatively in depth process for when we're like sussing out.

[00:20:08] Aadil Razvi: Alright. We don't have time to get into that .

[00:20:10] Alex Hormozi: Yeah.

[00:20:10] Leila Hormozi: An example is we have feedback mechanisms that we send to their teams so we can find out what their teams think of them.

[00:20:15] Aadil Razvi: Ah, okay. Got it.

[00:20:16] Alex Hormozi: Yeah. And that's a big part of it. The second one is that they can't stay focused. They're shiny object seekers and so it's like somebody gets on and they're like, Hey, this is my company, but there's this other thing I'm also starting to do and I'm thinking about this other thing.

And we're like, Dude, You can do one thing and get to a billion. You just have to keep doing that one thing without convincing yourself you're smarter than you are. Like what happens is people get to a limit of their knowledge. And then think, Oh, I could do what I just did again with something else to get to the same point, and that would double my business.

But the reality is, most of the time what happens is the thing that you were focused on goes down. This comes up and you end up with the exact same amount of revenue, but twice the headache. And so it's better to just think, Okay, the reason I'm looking for something else is because there's a challenge that I'm not confronting.

What is that challenge? Because most businesses, no matter how small still have very large upsides that can be achieved, it's just you have to confront what is the real obstacle right now. And if you don't know what it is, that's what you have to attack rather than thinking, Oh, this is so interesting.

It's very much a character trait to stay focused on the same thing for a longer period of time. And it's not easy because we were reinforced to quit and start our job, quit our jobs and start the business. And so we had a positive reinforcement for the skipping nature. But the thing is you only have to learn it once, and then you have to unlearn that behavior because

doing it again will fuck you up. So that's the second thing. So number one is the most reactivity. Number two is that they can't stay focused. They're shiny object people. Number three is that they are arrogant, egotistical, and as a result, cannot take feedback. And so this is easy for us to tell.

We're like, Hey what do you think about this? We'll, point out a weakness or a weakness here. And then they just rise to the defensive, rather than saying, Yeah, you know what, we've seen that we're working on it. That's one of our things that we're for our next two quarters whatever is that people will, they, if people cannot admit deficits, there is no place to improve

and so there had been enough times where we've been on calls and we're like, and I'll say three or four things, then each time law of a defense. And I'll be like, Oh, so it sounds like your business is perfect then. And then all of a sudden they realize that they've just been talking out to their assets whole time.

So it's like, why are you here? I wanna grow. Cool. So you have no deficits. Okay, then what are we talking about? And it's very hard for people to do that because, And I get it. You have to be the biggest optimist and you have to believe because no one else will in the beginning, but you have to

balance that with a heavy dose of reality of I have to be optimistic long term, but I have to be pessimistic short term. Like I believe that we will get there and I will continue to forge this way and it's unreasonable, but that these assumptions are wrong on a long enough time horizon. But I realize that we have significant deficits in order to get there and I'm equipped and willing face them.

So that's number three. Number four is that, the last two are not the red flags. The first three are red flags. The last two are a little bit more perspectives. So a lot of times people want to have an amazing story, right? They wanna have an amazing story of an amazing exit of building an amazing company.

Like what stories do we value the most? The ones where there were hardships. The ones where there were hard times. And so we wish for these character traits like patience, right? And then when the test that forges patience comes, right? We wish to be hard people, but when hard times come to, which is what creates hard people, we shirk away from it.

And so I think that if we reframe. The hard time that some people are perceiving themselves going through as the thing that will build them into the person they want to be, build their character and ultimately give them the story worth telling. Then I think it gives you a lot more fire to get through the harder times cause you're like, this is a story I will tell.

It's like when you have three people quit the same day, your ad account gets shut down, your head sales guy starts a compete, competitive product tries to, you're like, I'm gonna fucking tell this story because I'm gonna get through it because long term I'm optimistic, but short term I'm gonna fight.

And the last one is, and this is me just piggybacking on Leila cause I think it's worth repeating, which is an infinite time horizon, is that you can almost you can tell how successful someone is by how they talk about time and how they talk about money. And so you can also use that as a leading indicator.

How successful they will be when people are setting their goals and they're saying, I can't wait to make a million dollars a year. And they're talking about how they wanna do that in the next six months. I can tell you they're gonna stay poor because they're not thinking about it. They're not thinking, how do I solve for 10 billion?

Like how do I solve for that? What would it look like? And then if I were actually solving for 10 billion, I wouldn't think I could do it in two years. I would probably assume it would take me a decade and if you have a decade, it becomes actually pretty easy to hit really big goals. But everyone is always thinking about their next quarter, the next week, the next month, right?

And so in so doing, they can never actually think big enough to set a plan in place that would be unreasonable for it not to work. But because we have these ridiculous timelines, we do ridiculous plans that are basically stupid as fuck because there's no way they're going to work because the timeline that they set them on was wrong.

And so a lot of times compounding things take time to work. And so if we have a goal that's 10 years out, that is an actual goal. And some people talk that talk, but it's like it has to be in here. If it really is I can think of me at 40, I can think of me at 50, I can think of me at 60. And what would have to happen in order to get there?

You get really patient for these little hiccups, and that decreases your emotional reactivity. It decreases the ego and arrogance that you have. It increases how coachable you are and it stops you from focusing on shit that doesn't matter. The shiny object syndrome SOS right, is if you have this long term perspective and you're willing to wait for a long time to get there, then these little things that come up, you're like, That's not the mission.

It's just short cash. It's just me getting excited about new shit. Silly Alex, right? And so I'll give you one tactic for all the founders who have this add that wanna start new products all the time and launch new things. Even though the first thing that you launch isn't even ready, isn't even done. And you have a list of a hundred things that you probably should be doing that you aren't doing the first thing, but you think you should do the second thing anyways, right?

This is, go ahead for you. Make a list. Every time you have a really good idea, I have a list. It's literally on my phone. It's Alex's big ideas. And so I scratch my itch by putting it in the list, making a pitch deck for it, and then I fucking put it away. And sometimes I show it to Leila and she's we can't do that.

I'm like, I know, but I just wanted to show to somebody. Cause I think it's a really good idea. And as long as that's your agreement. I know this sounds ridiculous, but this has been very helpful for me because I wanna start a hundred things. But I also know that big things take time. And so for me, that's been the approach that I've taken.

So those are the three negatives, the two perspective shifts and how they all tie together.

[00:27:30] Aadil Razvi: That's, Yeah. There was a lot to unpack there. Yeah. Something that stood out to me was just having an infinite time horizon all of a sudden allows you to set much bigger hairier goals. It patients becomes available because you're not trying to plan for the next week, the next quarter.

Something else that really stood out to me is that neither of you listed off a list of to-dos. These aren't like skills to go and build, It's like you, Oh, you gotta, you didn't say, Oh, you gotta be great at fundraising. You said you listed off a list of to beats. These are like ways of actually being and acting that then the to-dos come from.

Is that like a fair way to think about it?

[00:28:11] Alex Hormozi: A hundred percent. We can find a founder who's a badass. Like we can wrap the business around him. That's gonna make him or her go all the way. But like when you have a shit founder, there's just not a lot you can do.

[00:28:25] Aadil Razvi: So what is actually the right time? Of course early on, founder led sales that's the way that all startups effectively start. When should a startup actually realize, Hey, this is the right time for me to transition from a founder led sales organization to actually growing a sales team?

[00:28:45] Alex Hormozi: You want this Leila?

[00:28:48] Leila Hormozi: Yeah, we probably have different answers, I look at it in two ways, which is the first one is just be math, which is, like for Alex and I in every business that we started, we're not gonna hand off sales until economically

it's going to make sense to hand it off and know that it's going to slip by probably 30 or 40 percent. So if you can build a model in which you can bring someone in and they can sell the same thing and you know that it's not going to be as good as you, and it can still sustain the economics of the model, then it makes sense to bring someone else in.

Now, I would argue that you should get it to a point where you're in and it's exceeding your expectations while you're selling because you're the founder. And that's just usually what happens. But that you know that when you bring in the sales team or the sales leader that it's gonna drop and then you can sustain it from there.

And that you also know that you could make up that revenue by going and doing other revenue generating activities with your time that you now have. Which is what a lot of people then lose is they're like, Oh, now I don't know. We're not making as much money. I'm like yes, that's normal. If you leave any role in your company, whether if I leave HR, if I leave customer success, if I leave sales, it's gonna go down because I'm the founder and I'm gonna dedicate my whole life to it.

And so the point is that I've relieved myself enough to go do bigger revenue generating activities so I can make up for that in the business. And so if you can do that math on that, which you can literally do. And figure out, yeah, I can actually do that because maybe I can go do this new marketing campaign.

I can start at this new product line. I can do this thing to our customer, our backend and I can create a new product and then we can gain, I don't know, 3000 more dollars of lifetime value. Like those are the things that you should be thinking about. And so I would say that founders, when they do it too soon, it's usually because they do it out of an emotion of trying to get out of pain.

I'm tired of doing it. I'm sick of doing it. I'm just so tired. Okay, fucking, everybody's tired of sales. We all get tired. That's an emotion. It doesn't mean that you should stop. There was a time when in one of our businesses that we sold our top end product. We were doing 2 million a month, we're taking home like 1.5 million a month in profit.

And I remember being outside of our ginormous man ticket sales call because the guy was underperforming. And I was like, Fuck it, I'll do it. Like I'll get in there. And so I think you just always have to be willing to do that. And I think what most people do is they make the mistake of they just wanna get out of pain.

And that's the first thing is they wanna get out of the pain. They're tired, they're selling all the time. I'm not even convicted. It's like boo who, like these are first world problems. That's what I tell myself. I'm like, Who feels bad for you? Nobody. This, white girl over there making all this money, like nobody cares.

The second thing is they don't replace the activity with selling else that's gonna generate revenue. And so they go and then they're like, I'm not making as much money, and they don't put their time into something else. And so if you don't know where that should go, I would say look at the areas where you can generate more revenue in your business.

It's probably marketing. It's probably the back end, increasing lifetime value, and it's probably also pushing your team. Because most people, once they delegate something, they don't know what to do with their time. They're like what would I do if I delegated that? I'm like, Oh my God, there's so many things, but they're not thinking that way.

They're not thinking, How else could I generate revenue? So I think those are probably the two reasons why people mess that part up. I would say the third is the person that they replace themselves with. They're not, they don't hold them accountable once they bring them in. So they bring the person in and then they don't train them properly.

They think, Oh, they should understand it as well as I do, which is if we as a founder, right? Like we're the one who created the company. We don't need training. We need to create training though for those who come after us. And we need to get people in and we need to properly onboard them, set expectations, and then measure their KPIs so that they know if they're winning or losing.

And a lot of people, especially when they're replacing themselves in sales for the first time, they huge mess. They never do that. And then a month later they come to me, they're like, Oh my God, Laila, the guy's not working out. I'm like what happened this week? And they're like, No, the last four weeks he hasn't sold anything.

And I'm like, What did you do to train? I gave him a day of onboarding. I'm like, Oh God. So I think those three things are where people go wrong. But if you can do the first step, which is understanding that person's never gonna be as good as you, most likely, sometimes we get lucky and they are but most likely not.

And then you can go and pursue things that are gonna generate revenue and then avoid those three mistakes. I think that you can do it right.

[00:32:59] Alex Hormozi: I don't have a lot to add. I'll just add one piece, which is me actually taking, stealing something from Leila's. But the output of management is the difference between what everybody in the organization would do to just keep their jobs and what they would do if their life depended on it.

And so the delta between those two levels of output from the team that Delta is achievable through management and leadership. So what someone does, the bare minimum to keep their job versus what they would do in order to keep their life . That the difference between those two things is where management and leadership come in.

And so when people see management and leadership as overhead, it is overhead. If it adds nothing to output, because it means that you have a bunch of people who are doing the minimum amount to not get fired, and then you add another person, and then that everyone else's output stays the same, But a good manager or leader, we'll get output on the entire organization, every single role in the organization because of who they are and how they lead and how they hold people accountable.

And so to everything that Leila just said, a hundred percent, and in a way that is the highest generat revenue generating activity if done well,

[00:34:17] Aadil Razvi: Alex, let's switch gears a little bit. Let's get tactical here. Let's talk about what do you see are the underpriced sales growth opportunities. Just to give you a little context, we've got a ton of tech focused founders in the audience, like grown up on the internet, have never answered a phone call before.

Definitely talk to us about, what are they missing? What are these underpriced sales growth opportunities that most of the tech focused founders in the audience are overlooking?

[00:34:47] Alex Hormozi: I, So we think of things in ratios, right? So it's like LTV to CAC is what we're always gonna be looking at and specifically if, especially if you're not fundraising.

So if you don't have outside capital and it's all self-funded then we look at 30 day cash to CAC. So how much net free cash flow does a customer produce us in the first 30 days relative to the amount that it costs us to acquire them? If we can get that number to be zero or less, then we no longer have

acquisition is the bottleneck in our business, which is what we strive to do with every one of the companies we have is remove acquisition as a bottleneck and then shift it down the pipe to customer success, fulfillment, etc. etc.. And so if you think about the different ways to get customers just big picture, right?

You can reach out to friends and family that you know in the beginning, then you can reach out to strangers again, one on one. These are both private communication mechanisms. Now, you can use phone calls, you can use text, you can use email, you can use whatever phone, whatever any one on one mechanism, voicemails underneath of that,

you've got content creation, one to many to people you know and then you've got one to many to people you don't know, which is paid ads. So there's the four activities that we do to generate demand, right? Now, from that, we get an output of people, right? If we do 101, we get leads. If we do cold reach outs, cold dms, we get leads.

If we do content, we get leads. We do paid ads, we get leads, right? Now, those leads themselves can be four different types of leads. You can have employee leads, people who are gonna do the work for you. You can have agency leads, so people are gonna also do the work for you, but exist outside the company.

You can have customers who are going to get you referrals by posting content and doing those reach outs to their network on your behalf. And you can get affiliates who can do those same things, all four of those again. And so the biggest issue I see with a lot of the founders that we're dealing with is that they don't even see the options that are available to them, and they're pulling like one half of one lever.

And so if you were to draw that on a matrix and say, All right, what are my inputs in this system? The only inputs you have are the first four. I can reach out to people I know, I can reach out to people I don't know. I can post shit online and I can run ads. Those are the only four things you can do. And so you got to do more of that stuff.

Now in terms of where is it underpriced, it's all gonna be relative to your 30 day cash and or lifetime value. So if you have a high enough lifetime value, all channels become accessible. And so we usually try and solve this problem in reverse, which is how can we increase LTV such that it doesn't really matter

where we go to get customers, it works everywhere. Now, from a cheapness standpoint, the cheapest way to get customers is referrals for sure. The second cheapest way to get customers is to do affiliates, right? I can reach out one on one to get affiliates, and then we have a two step model that we use, which is launch and integrate.

So you wanna have some big onboarding process for an affiliate. I can go to you all with us..

[00:37:38] Aadil Razvi: So let's do it.

[00:37:40] Alex Hormozi: A big onboarding process for the affiliate. So you get a big emotional win early. And then long term, how do we fully integrate into their product stack? When they onboard customers, how do we get their customers to be our customers?

What's the offer we have to give them? How can we add in a loss leader that's very high value their customers that will allow them to sell their thing for more money so they make money. And then in so doing, send us even more customers because now they make more money in the acquisition than they did before.

right? There's different ways to combine those things. I won't go into it, but fundamentally, an affiliate model is one. We built two of our businesses off affiliates. Super high leverage, right? The flip side, if you're really good at paid ads, there's a hundred fucking platforms you can run paid ads like literally you can run TikTok ads.

They're super cheap right now. You get YouTube's gonna be coming out with short ads for shorts. I think in Q1. There's always under price attention. I think the issue is though, that people have LTVs that are too small, so they're not, they're solving the wrong problem. They're always looking for cheaper attention rather than figuring out how to make their customer more valuable.

And so that's the short term, long term. The short term fix is finding cheap eyeballs. The long term fix is making the customer worth more. And so if you don't wanna keep hopping from thing to thing, the new hack TikTok is going viral right now, I'm gonna post content there. Or what ads there are cheaper, which they are for now until eventually they're not.

And then what are you gonna do? Try and find the next thing, which is fine, but long, long term. Cause if you have a 10 year perspective on this, you're like I should fix the root cause here, which is maybe our product isn't that good, maybe we should find a better monetization mechanism, or we should add in some sort of onboarding fee in the first 30 days to offset our cost of acquisition.

And then when we do those types of things, all channels become profitable for us, and we can hire leaders to come in and drive those channels specifically.

[00:39:19] Aadil Razvi: You went deep on affiliates. Alex, would you mind doing the same for for referrals?

[00:39:25] Alex Hormozi: We're gonna be all day though.

[00:39:26] Aadil Razvi: Yeah. Yeah. Let's..

[00:39:27] Alex Hormozi: So like with an agency for example, this is a simple one for a lot of founders. Agencies suck in general, just FYI. So the thing is that you need to have a different approach with agencies. So the way that you can approach an agency, say, Hey, I wanna work with you for six months, but I want you to teach me what you're gonna do.

And that's, I'm setting that expectation up front, which means maybe you charge me what you're gonna charge me, plus a little bit of consulting. That's okay. But now we're aligned. You're gonna have me first months and I'm going to try and learn this and or bring someone in house to learn from you.

Which means yes, you're gonna pay double for a short period of time, but the moment you're in-house guy who's focused fully on your thing is doing the same tactics as somebody who's fractional from the agency. You're very quickly beat them. And then that is how, It's a fast way of learning a new channel.

Go find an agency who's really good, probably more expensive. Tell them that you wanna learn what they're doing because you know you're gonna turn out, I'm gonna turn out from you eventually. You already know that. Let's just be upfront about it and tell you what my real intention is, which I wanna build in house team to do what you're doing.

You'll make a little bit more profit cause you're gonna help me consult and I'll tell you that I'm gonna commit to six months. So it's another way that you can use agencies to do any of those platforms.

To the same degree. If you're running ads, I could get running ads, but there's a hundred platforms, like big picture. You got to give away something that's really valuable for free, that's what it is. And so if people aren't clicking on your..

[00:40:41] Aadil Razvi: Or 99 cents...

[00:40:44] Alex Hormozi: that's not even, I don't run pays for that. But if I was running paid ads, I'd have to give away something that's valuable for no money.

And I have to factor in the cost of fulfilling that very valuable thing into my total cost of acquisition. For example, if I were to market my direct offer, which is what most people do, right? They'll just say, Hey, I've got this great thing. Hop on a demo call. Not very valuable. Who wants to opt in for a pitch?

A certain percentage of the population, 3%, whatever, right? But the vast majority won't wanna do that. And so you want to give something else. And so you can either give them a tool, you can give them resources, you can give them service, or you can give them some sort of physical product. Now, those are the only four things that you can really give away on the front end to another business.

From there, we want to be able to make sure that one of those four things does one of three things, which is either it analyzes a problem for them so they can self diagnose and say, Oh, this is a problem. And we say, What do you know? Your page load time is low? Cause I gave you this tool. I happen to have the solution for that.

But we gave them this tool that was valuable to them upfront. We can give them a trial of the thing that we have, and that's when you have the same recurring fulfillment over and over against. You slice the front end of off, give it away. A lot of people are familiar with that. The third version of this is where you give one of a multi-step process away for free.

So for example, if I was, given away garage coatings for garages, whatever. We got to paint the paint the thing I would say, listen, there's four coats. This one's gonna stop termites. The next one that I gotta put on is gonna stop the sun. The one after that's gonna stop water. But I'm gonna give you the termite one.

But what are you gonna want? You're gonna want the other ones too. But I'll happily give you this free thing. Cause I know that one outta three people are gonna want the rest of them. And I bake that in because this is real math. A lot of times if you nail the giveaway, you can get not just like two times more, but 10 or 20 times more lead flow for the same advertising cost, and then your total cost of acquisition can drop by half, two thirds a 10th just by getting the front end thing and a lot of people are afraid of giving away something very valuable on the front end

because they're afraid of what if somebody takes advantage of me, they will. They're not taking advantage of you because you can do math, which means that you know that two out of the three aren't gonna do it and they're gonna take advantage of you. And the other one is, but because you can do math in your head, you say, I beg both of those in with the third one is a cost of acquisition, and it's less than me just going straight for the jugular and telling everyone to buy.

Too much to recap there. Leila, take it from here.

[00:43:24] Leila Hormozi: I was literally gonna ask you to clarify the question..

[00:43:27] Alex Hormozi: What's the underpriced opportunity like the underpriced opportunity is don't look for underpriced opportunities. Figure out how to make your LTV much longer. So you don't think like this?

Like I think where the question comes from is the wrong thinking process. That's the fundamental issue with the question. Big picture, small picture, give away something really valuable and keep making it more valuable until everyone fucking wants it and then sell them something.

[00:43:56] Aadil Razvi: Makes a lot of sense. Yeah. Leila yeah..

No. Let's we'll wrap up here. Now would love to know from each of you, if there was one thing that you wanna kinda leave the folks at home with. Be it the founders there that maybe thinking about things in terms of, Oh, the economy is a certain way, or they're feeling stuck.

What's one thing you wanna leave the folks at home with?

[00:44:33] Leila Hormozi: I think one thing that I wanted to point out was just like when Alex is talking about emotional reactivity, it's not that people that are not emotionally reactive don't have emotions. And I think that's one of the common misconceptions is people see people like me or Alex and Oh, they must be much less stressed, must more calm.

They must not get anxiety. They must not get nervous. They must be very patient. And I'm like, Dude, I feel all of those things. The same as anybody else. Emotional reactivity means you don't react to the emotion that you feel. And so going through times like this where things are uncertain, I think that a lot of people tend to go more into that state and they tend to do really weird shit within their companies to seek certainty.

Right, if you can be okay and willing to confront the uncertainty of what is and to not need reassurance, and to not act out upon that in your business, then I think that you'll be better off than everybody else because most people aren't willing to feel stressed. They're not willing to feel frustrated.

They're not willing to feel upset. The people that survive these times are willing and run towards those emotions. And I know that sounds ridiculous cause this is like a business thing, but we just see it all the time and it's just that the founders who fail are the ones who literally act upon those negative emotions and they act them out in their business and then they typically ruin their businesses in one way or another.

Especially during times like this. The amount of people during Covid that went out of business because they just couldn't take the stress anymore. I'm like, what do you mean the stress one? Like it ruined your life because you felt stress. And so I think people have to take a really hard look in the mirror because it's not about the opportunity.

It's not about the niche and it's not about the industry. It's about who you are as a person. And I think that why I love it so much is because Covid was a time where I would, was really able to prove to myself who I was, and then the parts of myself that I didn't like that showed up, I was able to improve upon those because they were exposed.

And it was that for everyone else, our team is so much stronger since that experience. I think that people aren't recognizing this is a time to capitalize on this. If you feel scared right now and stressed and like you wanna run and hide or start a new business or change something or ruin your current business or completely change things, cool.

That's a chance to improve. Let's look at why you feel that way and let's just change. We can change things now. And so I think people have to change their mindset around looking at this and it's not a detriment. It's like it's such an opportunity for people to become the kind of person that they wanna become, to become the kind of founder they need to become in order to maybe hit that hundred million or billion dollar goal.

And maybe you have to eat shit for two years and realize that you weren't there yet and that you weren't as resilient as you thought. You weren't as creative as you thought. You couldn't handle stress as well as you thought. But if you can be reflective, pain plus reflection is progress. Yeah. And so it's how can I capitalize on the pain or on the stress or on the times right now that we're going through and actually come out stronger the other side.

If I can do that myself, then my business certainly will too.

[00:47:27] Aadil Razvi: Yeah. Stop trying to look for the hacks. Start becoming the person that you need to be to make the difference that you're committed to making. I think that is just a beautiful way of closing out our summit that's been very like, growth and strategic heavy.

[00:47:42] Leila Hormozi: It's funny cause we've, I think Alex and I both have been like, ah, I never wanna talk about mindset and becoming a person, all this stuff. I used to think that way because I was like, I just wanna give the tactics. But it's talk as many founders as we do, I'm like, Dude, it's not about the tactics.

The smartest, most talented people fail every fucking day because they can't handle this one thing. It's crazy.

[00:48:07] Aadil Razvi: That resonates. Yeah. Alex?

[00:48:10] Alex Hormozi: Two points. One is just an added caveat to Leila's which is behavior is what dictates your character, not your feelings. So if you feel impatient, you can still exhibit the character trait of patients by choosing to ignore the impatient feeling. You can be courageous despite being fearful by ignoring the fear and doing it anyway.

You can be loyal despite having a wandering eye as long as your behavior matches that of a loyal person. And so it's not that emotions are the enemy, it's acting on the emotions. That's the enemy. And so I just wanted to clearly delineate that, that like growth is uncomfortable by its very nature, you are stretching your yourself and pushing your own envelope.

Did we expect it to be comfortable? No. Did we expect, it's why they call it growing pains. Did we expect it to be a walk in the park? Of course not. But the pain shouldn't change the behavior, and that's why I think a lot of founders should go a really long way. Just become very emotionally still in terms of their behavior, let alone, independent from how they're feeling today.

I remember there was a time a mentor of ours got on stage and just absolutely murdered it for four straight hours and got off like, Dude, you killed it. He was like, Oh, I was throwing up literally the moment before. Cause that mercury poisoning. I was like, Oh, it's just a different level of excellence, and

I'll give my second point, which is, this is, if anyone's seen Last Dance, which is highly recommended, it's a Michael Jordan, like mini series. There was this point in the series that really stuck out to me, and he talked about how he chose to perform every game, like it was his best and only game he could play because there was a kid with his dad in the audience

who had, scrounged up the money to see MJ play at the Bulls this one time in their life. He's in everything they have is to just this one game. And for me I try and challenge myself with that cause I'm like, man, MJ was the goat, he was the best of all time. And what would that look like within the context of business?

It means like every meeting, every sales call, every departmental huddle that you go through, every new client meeting, like all of these things that we have to do, it's just so easy to phone it in. But that little extra bit of fire over and over and over again, it develops you more I love this quote, which is, Your work works on you more than you work on it.

And so it's a lot more about who you become through doing the work than the work itself. Leila and I are big believers in that. And I'll just, I'll leave off with a final quote, which is, Champions never quit, be a champion.

[00:50:48] Aadil Razvi: Champions never quit, be a champion. You heard it here at the Growth Summit 2022. Thank you so much for spending your time with us today, Alex and Leila.

You all are rock stars and it's such a privilege to be able to sit out with y'all today. Let the people know what you've got going on in your life and how they can get in touch.

[00:51:07] Alex Hormozi: All right. We talked about offers briefly. There's a book. People said it was good. It's got like gazillion reviews on Amazon.

It's 99 cents for ebook. If you're fundraising, you gotta watch your budget. It's 99 cents. The sequel to this Hundred Million Dollar Leads. I touched a little bit of that. I talked about eight different things that you could do, how you structure lead magnets, things like that, the different forces that will get people to take you up on those things.

All of those are in the next book, which a Hundred Million Dollar Leads. And if you're interested in that, you go to acquisition.com/leads. So acquisi.com/leads and you can get on the early bird list. Last time the book sold out in eight seconds, and then it was like eight weeks before the next print run.

If you wanna get on the early bird list, you can do it. It's free. And the book will also be 99 cents. Hopefully it will make you more then than the 99 cents that you spent on it.

[00:51:55] Aadil Razvi: Quick shout out on the book. The book is good. It's something that we have read internally at Demand Curve quite a bit.

Yeah, it's people didn't just say it was good. They said oh my God, how is he giving us this much stuff for just 99 cents? It's like that kind of an emotional reaction that you get when you read this thing. So do yourself a favor. Go check that out. Leila. Take us away.

[00:52:18] Leila Hormozi: Oh yeah. No, that's it.

[00:52:24] Aadil Razvi: Beautiful. Yeah. Thank you both. This was so much fun. You can go ahead and click the leave stage button and I'll just catch you back to stage in about 30 seconds.

[00:52:33] Leila Hormozi: Thank you so much.

[00:52:34] Aadil Razvi: Thank you all.