Alex Hormozi on Fatherhood, Leadership & The Cost of Success

26:32Show me the text that we're sending for this very particular campaign and then I can scoot back out and then go somewhere else. So I would say that from the maniacal control, I think Elon's been an example of like, he kind of has, he's delegated everything and also nothing. But I think his perspective is, he's always attacking the rate limiter. That's the verb that he uses. I use constraint, but whatever. It's the same idea. Like there's a bottleneck somewhere. There always is one. And I think your ability to identify where the bottleneck is, is in some way predicated on your ability to recognize patterns and your skills as an entrepreneur.

27:01But if we think about entrepreneurship in general as our, we are allocators of resources. And so we have limited resource, extremely limited when you compare to the resources of the world. Time, money, energy, the limited attention of the team. We have this tiny little reservoir of resources. And all we have to do is we have to just continue to get higher returns than everyone else does on this tiny bit of resources, just for the most part, why the second thing on my wall is focused subtraction. It's how do I subtract? What can I cut away? What can I prune from this tree in order to keep it growing?

27:33Because left unchecked, everything becomes weeds. Everything becomes cancerous. Everything overgrows because people want to take on more stuff. And I think that success of entrepreneurship has three traits that are completely anti-human. It's something I've been thinking a lot about recently, which is one, we like new shit. Sorry, you don't cuss here. We like new stuff. Number two, we like stuff now. And number three, we want things easy and low energy. And it is the exact opposite of what it takes to be successful as an entrepreneur because instead of wanting new stuff, you have to be willing to do the old stuff for a long time.

28:09Over and over and over. So it's basically focus, one thing, patience for a long time, and then frustration tolerance, which is that if at first you don't succeed, you try again. And if at first you don't succeed a hundred times, you try again, which is why I love the one more mantra. And so if you have those three things together, if I were to say, I have this entrepreneur in front of me, he's actually a dum-dum. But once he starts a task, he has a really hard time abandoning it. And he has an unlimited time horizon in terms of how he's thinking about doing this. And he wants to do this for the rest of his life.

28:41He's keeping all of his assets in there. He's never going to sell it. And we knew that to be true. And motherfucker cannot not fail because every time he does, he just gets better. Yeah. It's hard to beat that guy. Those are the guys I bet on, the people I bet on. And what's interesting, and you've seen this too, is that almost all of those things have to do with behavior patterns and very little to do with intelligence. Yes. And so when I think about that, your business isn't scaling up for lack of information, but for lack of character. And I think when you think about it that way, it's like, wow, when I'm presented in these conditions, I make the wrong decisions because I've been reinforced for doing new things too much.

29:19And so when I try to adapt that for my own, to loop back to the original question of the maniacal control, I think a lot of the control is actually in trying to get the team to do less and do fewer, rather. And I think that's where a lot of my exertion, they should feel better when I come in because I can tell them what not to do. Right, I know exactly what you mean. I think that's a terrible idea. We should not do that. Yeah. Do you think this idea that you said, you said it twice, and it's what I do when I coach people. So I'm wondering what you, I want you to elaborate on it. I think great entrepreneurs have pattern recognition.

29:58Even people we've already discussed here today, they're mutual friends of ours, they're really good at seeing patterns. I'm pretty good at seeing human behavioral patterns, right? But just step away from that. how important do you think if you were coaching an entrepreneur is it to to to get them to see both patterns in the business world patterns in the economy trends that's a pattern recognition to me and also human behavioral patterns at the same time if i did if i had to have them pick one i would rather have them be amazing at human behavior patterns because if you can do that you can pretty i think i think humans are how you unlock everything despite the world of ai and all the things that we talk about um because humans unlock everything like so you might find this i think you might actually i was i was really excited to talk to you about this specific so this is perfect um i i'm gonna guess and i don't want to go out on a limb here but i'm gonna guess you're not spending 12 hours a day vibe coding i'm not and what's really interesting is that you probably made more money than the vast majority of people by a very large margin last year just to put it out there.

30:59And so when I was thinking, I was thinking about you specifically, and I was like, how do I reconcile this apparent contradiction with we're so cooked, AI is, et cetera, with the fact that a lot of the people that I know that are extremely wealthy are not necessarily AI maxing themselves. And so it got me thinking around the concept of leverage, which is one of my two favorite topics in the world, supply and demand and leverage. Okay. What the logo is built on. and so I think one of the big misconceptions that entrepreneurs are having right now is that AI is somehow the only form of leverage but it does not erase the other forms of leverage that are also multiplicative so for example if I make a decision that we say we're not going to do this gigantic initiative the amount of time that I get back from my company is larger than us trying to AI max that initiative that was incorrect what a good point if we think about it from a boiling down to brass tax perspective there's so many entrepreneurs right now that are using AI to do dumb things very fast.

31:58Because they have more capacity, they are choosing to take on more and as a result are less focused than they were before. And if we look at the output of their business, they are not making more money. They're only spending more money on tokens. And so - Very good, Alex. Very good. And so when we think about the different types of leverage, it's like, this is leverage. We can record this one conversation, billions of people can watch it. Obviously, software has different types of leverage, But picking one good person has tremendous leverage. So the idea of like, okay, well, Ed's not AI maxing, but do we think that Ed can find somebody who can AI max?

32:34Correct. Probably. And do we think that Ed has leverage in other ways that would attract or incentivize that person to want to do their special gift within this larger business because it was designed well earlier on? Yes. And so these technologies come, but the game has remained unchanged. There's just another tool of leverage that exists. Now, to be clear, it's an amazing tool, and we use the hell out of it at ACQ, but it's understanding where it fits in the toy box, because we still have to make the right call. And as of right now, AI still sucks at making decisions, at least from the ones that I look at, because you can pretty much make it say yes or no based on how you prompt it.

33:13And so that is something that I've given a lot of people. That's a really good point. Maybe one of the best points I've heard on a podcast in probably 10 years. It's a really good point because that's exactly what's happening. It's actually become almost burdensome for people that are doing nominal tasks, adding more to their plate. It's really, really good. In fact, that's one of the clips I'm going to use from this show. So you know those pieces in your closet that you find yourself wearing like on repeat all the time? That sweater that kind of just goes with everything or these perfect pair of pants?

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35:30I don't hear you talk a lot. And maybe I've just missed it. But, you know, I'm a huge fan and follower and friend. I don't hear you talk about in terms of yourself as a leader. In other words, I almost feel like sometimes you look at business as an operator. And correct me if I'm wrong, okay? But what are you like as a leader of a company? Like that's not a lot of the content that I've seen you discuss. So how do you view like leadership? Because it's an overcooked concept and topic, right? But you're very technical, very strategic, very tactical. but if I worked for you or with you and someone asked me his philosophies on leadership or what type of a leader he is would he even does he see himself as a quote-unquote leader and what is what does that mean to you um so a couple things so one Layla had just finished her book on leadership and you know I got to edit and you know and help out um and so I have a ton of concepts from that book but I think I've deferred to Layla for most things and you know Layla well and Layla will never get the credit that she deserves for the she's unbelievable able to build but Layla is the internal leader of the business and I would say that I am the external leader of the business and that is more or less how we've managed our working relationship I have one direct report which is my father-in-law so virtually I have no direct reports in the business which allows me to have the schedule that I do and we've just found that that has worked really well for us.

36:56I would say, if there are 12 core activities of leadership, the first one, which the others are all predicated on, is that we have to define what good looks like in behavioral and observable terms. And so the second step of leadership, and I won't go through all of them, I'll let Layla do her thing, but the second one is that we have to model what good looks like and so there's a famous story of gandhi where um a mother comes to him and says hey can you get my kid to stop eating sugar and he says uh yes but come back in 30 days and so she comes back in 30 days um she brings the kid to him and he says stop eating sugar she's like why did that take 30 days and he was like well i was eating sugar when you asked me the first time and so he had to quit sugar for the 30 days to make it and so it's a great little a great little story but i think that's like leadership is caught not taught right and it is of course taught but it's taught through modeling and it's taught through role playing right and so um where i fit in this leadership paradigm is that i believe that i number one i hold the standard yeah um one of the things that i get feedback from from the team because i see the surveys that people who at least work in my vicinity more so than work directly for me is that they're like you know i've watched the content i've been you know i've been seeing everything for all these years but like it was only when i came when i came to the office and realized that alex was literally always here at 430 in the morning every single day six days a week um that i was basically it's very difficult to witness consistency unless you are also consistent jeez yeah like you cannot witness consistency right it's good and so um i would say that that i'd say holding defining the standard and then modeling the standard is where where the majority of my my work from a leadership perspective is i think the rest of leaders in the company do a lot of the other stuff and then I'd say that I am more of a strategic decision maker than true true operators I think it would it would it would take away credit from the people who are actually doing the stuff is there a void of any type of emotional leadership in your businesses no that's okay she provides it and I think and this is something that I would say like what is what's taking up my time right now is managing the transition of her becoming a mother and completely stepping away from the business, which is our intention.

39:18Um, okay. Yeah. So she's, she's completely gonna, gonna check out, um, for an extended period. And so, um, I'm reoriented because the business works with the, the dichotomy between the yin and the yin. Yes. Yes. And when she's not there, I'm softer. And when I'm not there, she's a little tougher. And we've had this dance that's worked really well, and I'm going to have to relearn that, and I'm going to probably crack some shells and mess up a little bit, I'm sure. But that's something that I'm really paying attention to. I'm really watching you. You know how much I've always appreciated you and admired you.

39:53You've grown a lot the last few years. We talk on the phone, but we haven't done this. And you're at a different level. You're at a different level. And one of the reasons is you're willing to take on more and more risks still. and I want you to talk about this. I've never heard this before. Only you. And I'm like, gosh, darn it, he's right. I wish he wasn't right, but it's just sort of like the law of the universe. People look at me or you, but I'll just speak from my own perspective and I'll let you comment on yours. And they do sort of go like, we're recording this now in the middle of, I've been giving speeches and doing business meetings here today.

40:24And I've got another one tomorrow, which is a Saturday and you're cranking, you'll be in here and I'm blah, blah, blah. And they're like the old when's enough's enough and all that other stuff. And I'm like, I really don't feel like I'm working, but having said that, my capacity has expanded over the years to the extent where I feel like I have to take on more almost in order to remain challenged, but also to live up to the blessings and honor the perspective, nuances, wisdom, and skills I've developed theoretically, right? So this thing you discussed lately about risk and capacity and ability and the correlation between the two, do you know what I'm talking about?

41:01Okay, I heard you say something recently where you said my ability to take on risk is almost connected to the fact that I'm better and better and in order to continue to grow and expand I have to take on more risk so I never even heard this before so well what so I've I don't read it so I don't want to pretend like I read all day or something like that but there are moments where I do punctuated reading and I think my favorite type of reading is autobiographies of ultra rich people because usually especially at the end of their career they don't care at all about being politically correct and actually tell you what it was.

41:34They finally tell you. Yeah, they finally tell you what it was. And so it was really interesting that I found between Paul Getty, who was the richest man in the world for like 30 years, Rockefeller, and Elon Musk. And just take these guys objectively. Whether you like their whatever. You can appreciate that they are wealthy. Right. What I found is this very recurring theme is that they had multiple moments of call it like local maximums, where they then looked around and said, I'm pushing all my chips back into the middle of the table again. Yeah. And so I kind of see it like, and in some ways as much, like it is necessary for the, to take a bigger swing, to get a bigger payoff, but it's almost more necessary to keep the game interesting.

42:18Yes. And so like if, and we're in Vegas, so I'll just make it a Vegas theme. If you're playing$10 hands, and let's say at some point you get good enough that you have this gigantic stack of chips, at some point you have to up the ante. Otherwise, you just don't care anymore. And so a billionaire playing$10 hands, it's like he literally loses money playing a$10 hand. Oh, so good. And so one of the things that I think is a little bit of a mindset shift, which I don't like using the term, but like we behave differently in a different scenario, is that your risk tolerance has to concurrently increase with the size of opportunity that you want to pursue.

42:54And it's, of course, in the beginning, you don't need to take a time. there's lots of risk and also no risk because you don't need to put money down you can start a business for almost nothing but if you want to start spacex you need to put money in on the table you know like there's something like there and the thing is this capital in some ways becomes a gigantic moat because other people are not willing to risk it and so you start to develop more sophisticated frameworks for understanding risk and reward which is that like not only will i take my expertise and my track record in my network but i will also take a hundred million dollars and put that on the line because that's how I can get to 10 billion.

43:26Okay. I want to just jump in here. I don't even think you know how big this could be a book you do. Okay. Even though I know it's not the time, but how big this is. And by the way, listening to you on this, how many people do you and I meet that have gone from zero to a little bit and then they're stuck and they're so frustrated. Like I just, I can't get past 400 grand a year. I'm at a million a year or whatever it is. and what's interesting is what happens when you have nothing and then you get a little bit, you become very risk adverse and you don't know that potentially the key for you to become unstuck is actually to take on more risk and that's the stimulus to go to the next level.

44:06Do you know how big of a deal this is what you're talking about? Because it's the thing. Most people stall at 100 or 250, you're in goosies, right? When they stall, it's because you're still in the same risk tolerance category you were before and you've mastered your domain to some extent. Okay so I've given a huge amount of thought to this. So there's this bullies because we see entrepreneurs every single week they come through there's a bullies of entrepreneurs between one and three million dollars and for whatever reason there's this swamp there I think there's a couple of factors so number one is that usually between one and three million dollars of revenue you've actually made enough money to satisfy personal needs you can pretty much go to every dinner go to every hotel take the vacations and like you're good to go and to be fair nothing wrong with that however if you want more Right, if you do.

44:44Then you have to change the way you play. And so what's very interesting is that we call this the swamp at acquisition.com. It's one to three, maybe one to five million. It's right there. And the reason it's the swamp is that it takes more risk to get out of the swamp than to get into it. Oh, boy. So true. And so you take some risk to quit the job to whatever. But when you start, your first zero to a million for most business, especially service, which is 80 % of the U.S., it's you and maybe some helpers, but it's almost all margin because it's just you working really hard. in that one to three maybe one to five range you have to make some decisions of like okay i can't service any more customers my time is becoming my biggest constraint and then there's the question of am i going to bring help on am i going to am i going to get a vendor that's going to be a legit vendor that's going to cost real money and i think there's one there's the emotions of like well i'm already comfortable so we're sacrificing something that i know i i need to achieve all my personal goals to get money that i don't need in the future which is a big it's a big like it doesn't necessarily mean it's rational to do this to be really clear like it isn't rational right but if you decide yes i want to do this here's the math behind the second layer of difficulty which is let's say it's a two million dollar business 20 20 margins if you have 20 margins in the business at this point you have four hundred thousand dollars to play with all right now you're going to leave maybe a hundred grand in the account because you want to like have some safety so maybe 300 grand if you let's say need somebody who's going to run client success or be a let's say a your first real leader in the business, a director level, not just a manager, you're probably looking at high ones, maybe mid twos, you know, as a small business owner.

46:15So that means that on this one hire, or maybe a vendor, you're going to risk half or more of your profit on one bet. And because most people are unwilling to do this, and arguably logically, they stay stuck. And so there's these points where you have to increase your bet size. You have to be able to go from spending$1 ,000 a day on ads to$10 ,000 a day on ads. If you're willing to spend, go from like, I'm only going to spend a thousand dollars on indeed to recruit these people to say i'm going to pay a head hundred thirty five thousand dollars because i think i really need this role and it's specialized but if i have it it unlocks this huge amount of capacity and so one of the so i'll give you a couple tactical things for the audience there's a couple tricks to um getting a business through that without using as much to get them into that like five to ten range million a year so that then they have more cash flow so they feel more comfortable in the best so i can only resolve one of the two risks but it's still there which is that you have to increase the leverage on one or multiple of the three elements of the business.

47:08So we have to increase leverage of demand. So it's like, how can we create some sort of content wheel within the business so that when customers come in, they make us content that we can then use to get more customers. And you service customers every single day. And then boom, we have more leverage demand. The second kind of wheel of this is the leverage conversion. And so whether you're selling, like basically there's three ways to scale the sales. Either you have a big, big sales team, you sell one to many, or what I prefer, which is you create order takers. And so my combination of solution is how do I sell one to many and preload the customers with as much information as you can be possible so that my salespeople only have to make six-inch putts rather than drive and chip and then wedge and then go all the way.

47:46And so by doing that, it's much easier to recruit somebody and just say, I just need you to drop the ball six inches from the hole and make this. You can train that person up in a week. Whereas if they have to be a coach, a therapist, a product expert, a teacher to a customer and then also a relationship manager, It's like, it's so hard to find them. And if they already do come preloaded with other skills, they're way too expensive. Right. And so we have to have leveraged conversion, right? And then the third process is leveraged delivery. Now, I think one of the big misconceptions on delivery for service businesses is that whatever way you started that got you to one or three million in terms of your service delivery, you say, well, this has worked so far.

48:24And I am a big advocate of doing more of a work. Don't get me wrong. But there are some tweaks that you can make in your agreements of what you plan to deliver to a customer that dramatically expand the leverage that you have in the business to deliver without in any way really changing how likely they are to buy. And so, for example, if we said, you know, we have support that is via phone call at any time, you could say, we're going to do email, we're going to do chat. And all of a sudden, that increases leverage on the supply side. We could say, hey, instead of having scheduled calls, we're going to do it asynchronously.

48:54And then that allows you to batch all the work together. You can review all of the accounts, let's say your marketing agency, So you can do them all at once and you can do them in 11 minutes rather than having a 30 minute call and wasting it. So it's like, great, that might triple the leverage. We can change whether components of the service are done live or done recorded. We can change whether it's in person or it's done remotely. We can change the delivery ratio so that it's instead of one on one, it's one on small group or one on one to many. And so there's a number of these levers that we can do on the delivery side that if we at each of these points, if we expand a little bit of leverage on the demand, expand a little bit of leverage on the conversion.

49:28So we give people a couple videos with some proof before they talk to a salesperson. All of a sudden, the sales take less time and there's fewer of them. And so all of a sudden, my utilization per sales rep doubles or triples. And so I don't need to hire the extra rep. I can still double or triple the business if that's the constraint. And so in each of those situations, usually one, two, or all three of those things, depending on where you're at, is where you need to employ. Notice none of them were AI. Because you can still make good decisions and increase leverage of the business, not necessarily using AI.

49:53And to be fair, I'm a big AI advocate, but I'm also an even more common sense advocate. Alex, it's so good. When I coach, and even when I've watched your content, it is funny though. Because by the way, those of you that feel stuck or know someone that's stuck, sent them the podcast today because this is probably why you're stuck. It's the risk aversion. You're looking at all these other mechanisms. It's the risk aversion. But what's really funny about it is I'll even watch it on your stuff. And when I coach too, I'm like, well, no, you're going to have to hire that$250 person. Or you're going to have to triple your ad spend.

50:21And you watch their face when you say it. And they're immediately going, uh-huh. And they're immediately in their mind trying to process, is there any other way I can get out of doing this? Now, you've given a couple great hooks here that mitigate some of that risk. But you watch. The reason this is so important is the tendency at this stage, even when given the counsel, is to try to find a way out of that room and not have to take it. And if you're going to get to that next level, you're going to feel unstuck. And here I am, an older guy, 55 years old. and it is, I think, the key as to why I'm still pretty fresh and in the hunt and going and excited and not stuck is I've, and by the way, I think you would agree, it's a muscle you also build over time.

51:01Your first risk you take to start a business does not require the muscle because you're moving from nothing. It requires a muscle over time to continue to throw, like you said Musk earlier, whatever you think of the guy. Are you kidding me? The amount of risk this dude's willing to take on over and over and over again. That's why he's been compensated more than anyone. That's right. He's adequately compensated for the risk he's willing to take. What about, we don't have much more time, but it's so good. We need to agree we're going to do this at least once a year. And I need to expand the format of the show when you're on to like two hours.

51:29We can roll late and then we can do a second half. That would be really good. It would be really good. There's a lot holding someone back. Second half and I'll revisit it on my channel if you want. Okay, I love that. Whatever you want. There's a lot holding someone back from this risk aversion at any stage. And I don't know that I've been very good at getting somebody to sort of deal with it. Now, what I used to say, and then I want to have your version of it, because yours is, frankly, I think better. I used to go, you know this, like, boogeyman? When I was a little kid, I thought there was a boogeyman.

51:59And my dad, when he would come back from his drinking binges, I'd be up. But I created this boogeyman. And my dad would literally have to come in my room when I was a little boy and open the closet and go, Eddie, look in here. There's no boogeyman in the closet. But I had this great food. But if he would open it and show me, all of a sudden, a lot of my fear was reduced. And as an entrepreneur, a lot of these fears you have, they're real things. But even if you lost that investment you made, even if the business crumbled, the boogeyman's probably not quite as bad as you think it is. You can come back, right?

52:29You teach people that have fears to actually put it down, right? Can you talk about this? Because I think this is a great tactic to get above or be self-aware of your fears or their limitations. So it's my position that emotions exist in the big, not the specific. meaning fear exists in the vague. Because basically we abstract things to death because we're evolutionary beings and we don't want to die. But we think if this does not work, I will fail, I will go bankrupt, my wife will leave me, and I will die. I'll have no friends. I'll die, right? But when you actually define out, no, no, let's sit in it because we're so afraid to look at what would happen that even the fear of looking gets people to not crystallize it.

53:11And it's like, listen, the first thing you can do is prepare for failure at least. but in preparing for failure you decrease the likelihood that it happens because you actually know what's what what happens next and so i remember when i when i started the gym i had to write down my plan b which for me was um well i didn't have any real skills i was in shape uh and i had time and so i said i'll drive uber and i'll strip um and if that way if i fail i'll drive uber 12 hours a day and i'll strip at night and i'll be able to like in a year probably make 250 000 and i'll and i'll do it again you know like i'll start back but the goal was to get back into it again and so one is like when you really play out your failure story maybe you're sleeping on a fun like you will only lose status in the eyes of people around you who are not taking the risk that you're taking right and so true and you don't want their lives so why would I care about their opinions and we just have to expand the time horizon because like not to set sound trite here but like failure and success are on the exact same road it's just the failure is an earlier exit.

54:11And so one is a requisite for the other. But the thing is that thinking about success leads you to failure. Failure leads you to success. And so failure is closer to success than thinking about success is. Wow. Which is ironic. Very ironic. And so the idea is like one of my favorite things to tell sales guys, especially in the cold calling outbound side, is like, let's get some no's today. Right? If we can make the failure a success, a mile mark, how many no's we collect today? Right. It stops having this emotional charge because we're saying, wait, we're not making no mean something. We're saying we're making no mean something good.

54:46And so if we know that the failure that we're going to have is going to teach us something like the two hundred fifty thousand dollar pet that we're talking about with this operator. We need this person who's incredibly in fear. How do we get them out of that? Out of that fear is that if you don't see another way and maybe that maybe you pulled all the levers that we just talked about and still there's no other way. you have to take the risk, then you take the risk. And you do that knowingly because what you are building is the thing that we were talking about earlier, which is pattern recognition.

55:16So let me tell you the story of how entrepreneurship really works, which is if you've ever played a video game, you play it and the first time you play the game, you get to a level, it's hard, you've got to beat the boss, you've got to figure it all out, you find out there's a sword under the stone, whatever, right? And then you get to the next level, trial and error, trial and error, you get it. Now, if you go back and play that game again, it's a straight line. How fast? Now, the character itself can't play faster because it's controlled by the same algorithm in the new game. But how does it take you a tenth of the time to get three, four, five levels deep?

55:43Because you know exactly what to do. Why? Because you recognize the patterns. And so if you've ever had multiple businesses, which a lot of people are entrepreneurs, like by the way, spoiler alert, you're going to have more than one business if you're getting into it and you have this fear that this will be the perfect one. The second business you start almost always grows faster than the first business you start. Because you blow through all the bosses you had on the first one. and then you get stuck at the same point and then you move as slow as you can, which is trial and error again. You get into the slog again.

56:10And so the failure that you're experiencing is the creation of pattern recognition. And so I remember for me, just to give an analogy that might make sense for people, the first time you hire a sales manager or even the first time you hire a salesperson, right? You go through, you hire one person and the most expensive hire is a salesperson, your first salesperson, because you're losing, that person doesn't close, you lose all the business. I mean, it's horrible, right? But you have to make the bet at some point and so you hire them and maybe that person doesn't work out okay so we hire another one maybe that person doesn't work out now eventually you will hire one and it will work out and then at that point you're like oh i know what this looks like now pattern recognition and so when the next one you're like i need to get them to look as similar to this as i possibly can and then all of a sudden your failure rate starts dropping and going down and down and down they're like i wonder if i train harder and then all of a sudden you start increasing your percentages but the same thing happens when you're like now i need a sales manager and you repeat that process and so i think a lot of what the call it the better entrepreneurs in the world versus the the non the the lower entrepreneurs is that it's just every single role in the business you have to know what good looks like and you have to fail at each one of them until eventually you find the one that works and then that forever becomes your pattern of this is and to be clear there's different ways to run sales teams but i know this way works and i know this type of person works for the way i like to run sales and so that then when you when you create the next business and this is i use different verbiage for it which is at a certain point you don't build businesses anymore you assemble them wow you're so right right you're so right i had to change my language because i was like i'm not really building this business i'm just putting the we're just assembling we're putting all the pieces i know this is going to work out and also which one of the advantages that you don't that we don't talk about as much because it only applies to a small percentage of people is that the longer you do business and if you if you do business well and you do right by people you develop this network this rolodex and if i'm going to start a new thing or ed's going to start a new thing it's like I got 10 people I can call who are like, oh, you're doing something?

57:58I'm in, man. Let's go. And failure was one of the reasons you've actually built all of these relationships, this human capital that you've actually developed. And then you can deploy that capital. And I wonder if that has more leverage. That's what you said earlier about AI and me not having to do that. I've actually got so many other resources at this stage of my life that I can deploy AI or get access to it without having to fiddle with it myself because of these relationships. You have the benefits of AI. You have the benefits of it. This is so good. I want to finish on one thought. And by the way, I'm just going to finish in the middle because there's so many things we could cover.

58:29But this idea of pattern recognition, it's not talked a lot about. And the video game analogy is perfect. So it's going to give you a little runway to answer two things at once, okay? What pattern recognition has given me, if we're giving the video game analogy and the reps that I've had in business, some of them were successes, some of them were failures. But what's happened is about this idea of assembling a business is the absolute truest thing you'll ever hear, by the way. At some point, once you kind of understand the mechanics and the mechanisms of putting these things together, it's an assemblance rather than is of a building.

58:58He's completely right. He and I have actually talked privately about doing a type of business together. And I just know that if we did it together, it would be successful because between the two of us and that human Rolodex and what we know, we would just assemble the parts. Here's the thing that pattern recognition has given me over time, that a new entrepreneur needs to give themselves some grace to develop. and that is that I now as I'm building businesses there are days where I react there certainly are they're just things that happen I spend some of my time reacting when I was a young entrepreneur I spent most of my time reacting now that I have pattern recognition human pattern recognition and also just trends I anticipate more often than I respond and react so I want you to talk about anticipation as a skill as a skill like the thing you and I have talked about with banking let's just be honest, right?

59:43Like, okay, so the anticipation aspect, and then inside the answer to that final question, what do you anticipate about the world of business the next two to five years with AI as a factor in it? So why does anticipation matter, and what do you anticipate? That's a really hard question.

1:00:06So I think anticipation matters a lot from an entrepreneur perspective, because it perverts back to the people who get the best returns on their resources. So why would anticipation even be important? Well, it means that if I allocate resources to a new thing, let's say their new platform emerges for social media and I'm one of the first people on it because I anticipate that it's going to grow because it has all the stuff that looks right. If I'm a first mover in that situation, then the minimal amount of resources that I deploy towards that, I'm going to get a way higher return. And then when people are laggards or later, they're going to have to deploy more resources to get even less out.

1:00:40And so So anticipation is another form of leverage. And if we just define leverage, I know we're late on defining it, but it's just getting more for what you put at high leverage. At least low leverage would be the opposite. And so if we're trying to deploy as much leverage as we can, getting the call right allows us to get more for what we put in. And so the anticipation, I think, is a lot of it is, call it macro pattern recognition. So I'll tell you something that I heard, I want to say 12 years ago or something, I heard a Gary Vee clip. and he said one of the biggest regrets he had was that when he was printing money on google ppc or adwords uh for the wine business that he didn't spend more talk about the risk thing at that point now he's a way better bigger entrepreneur now and he has way higher risk tolerance but at that point spending 10 000 20 000 50 000 a day whatever it was was a lot of money and i remember hearing that clip right um in the early gym launch days really and we were printing on Facebook and meta ads, and these were new-ish ads.

1:01:41And I was like, well, I don't want to make that mistake. And so we're like, how do we spend more? And so that became the question is, what would it take for us to spend more rather than... Yeah, whether you would... I'm not sure if I want to spend more. What would it take? Which is one of my favorite questions in the world to ask. It assumes the success, then you work backwards. The second thing was, what is it going to look like in an age of AI? I will give an unsexy but accurate answer of what I'm actually doing. I, like Bezos' frame, a lot on this, which is the future is very uncertain. And one thing that is true is that we are notoriously bad at predicting it.

1:02:19And so he prefers to ask himself, what things do I know will not change? And so he's made all of those gigantic bets in the business based on the few things that he knows will not change. And so he says, I believe in the future people will want cheaper prices still. I believe in the future customers prefer more selection to less selection. I believe that customers will in the future prefer things to get them faster rather than slower. And so there are bets that you can make in the business based on human behavior that we know will be true. Do I think that in the future humans will eat food? Yes.

1:02:49Do I think that they will need shelter? Yes. And so the bets that we're making in the business, I would say, and this one thing about risk, which I think is important, is entirely personal. Because I get the question a lot, and I'm sure you do too. One, when do I push and when do I pivot? Right. And the second question is, how much do I take out of the business to save for a rainy day versus double down? And both of those are unanswerable questions because they're entirely personal. Ask Elon, he'll say, put it all on the line. If you have a wife and kids and you don't want to do that, which I respect, don't do that.

1:03:16And so those are dials for you. but back to the point I'll just share what I'm doing is that I take chips off the table and put them into these places that I think are boring that will still be here so we have lots of real estate and things like that but the big investments that I make in the business on call it big swings I think have been predicated for at least me on making sure that my oxygen mask is there for me and my family people are different Elon doesn't need that maybe he does he's already so rich he knows enough friends that he's never actually going to starve. But I think that what has served me very well was that I very aggressively lived cheap when I was younger so that I could save what I believe to be a nest egg.

1:04:00And that nest egg has changed in terms of what the size of it has been. But always having one allowed me to take gigantic swings and do things like the school deal or do things like the book launch or do things like some of the other things that we're talking about and be okay because the worst case scenario is that my life doesn't change at all me too identical exact same thing this is my favorite interview we've done my favorite interview um can i do one more little bit please so one thing in terms of the specificity of risk so we talked about um like what would actually look like yeah one of the things that's been even more micro for me is what changes about my day and so this is both upside and downside so if i'm considering like hey should i take on this investment or should I do this anything?

1:04:47The question that I ask is like, what will this change about my day? Do I have to now do something that I don't want to do? Do I have to stop doing stuff that I do want to do? And most decisions don't actually affect my day, which then means that it's actually not, there's no real stakes here. It's all made up. It's literally just, it's in the air. Now, every once in a while, there are some things that when I actually run through that filter. For example, if your wife's pissed at you, that is going to change my day or week or month far more than just about any negative business consequence well.

1:05:21Honestly, just about more. And so it actually has helped me truly redefine priorities in a way that's actually much more tactically relevant to how I experience life. Wow. I'm glad you added that. That's probably best for me of the entire conversation. Because a lot of the risk that I have in my mind is made up, yet the risk I most fear is that it would alter my day and that I would have to do things I don't want to do anymore or actually stop doing the things that I do want to do. What a great formula. Turns out you're pretty smart. Turns out you're pretty smart. I'm real proud of you. You know what I mean?

1:05:56And I'm grateful that you're in my life. And I'll always be here for you. And I love Layla too. And you're really important in the world. I just want you to know. I meant what I said in the beginning. There's a lot of people that are really good at this business stuff. you're on a level that is yours. So continue to expand because your capacity is even greater than this. Proud of you. Great job today. Appreciate it. All right, everybody, I don't have to tell you to do this one. Share this episode. You know where to find Alex. He's everywhere. And max out your life. God bless you.

1:06:28This is the Ed Myron Show.

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