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Blueprint for becoming a millionaire

14 min read

From: alexhormozi

This article outlines a blueprint for making your first million dollars, even if you are starting from scratch. [00:00:01] The blueprint consists of three levels. [00:00:10]

Level One: Fundamentals [00:00:12]

This foundational level focuses on “who you are,” as you are the basis of everything you wish to achieve. [00:00:14] The building blocks of your identity in this context are:

Knowledge

To become a millionaire, it is essential to first understand the definition: having over $1 million in investable, liquid assets, excluding your primary residence. [00:00:39] Approximately one out of nine Americans is a millionaire. [00:00:57] What distinguishes millionaires is their awareness of existing opportunities. [00:01:05]

[!INFO] Speaker’s Background The speaker, Alex Hormozi, owns Acquisition.com, a portfolio of companies generating over 10 million per year, with three companies valued at over $100 million. [00:01:11]

Individuals from wealthier backgrounds often have an advantage because their parents inform them about opportunities that yield better returns on their time. [00:01:26] For instance, if you don’t know about private equity or investment banking, you won’t pursue them. [00:01:39] The purpose of sharing this knowledge is to expose you to possibilities you might not encounter in your immediate surroundings. [00:01:52]

Skills

The second component of “who you are” involves the skills you possess. [00:02:39] What people often perceive as traits (e.g., confidence, charisma) are actually bundles of specific skills. [00:02:46]

  • Sales: This is a foundational skill. Sub-skills include active listening, repeating back what someone says, maintaining eye contact, a firm handshake, projecting your voice, and reasoned argumentation. [00:03:03] Mastering sales can be sufficient to become a millionaire. [00:03:33]
  • Marketing: This is sales conducted “one to many.” [00:03:42] Sub-skills include understanding media (where communication happens), headlines (first line of communication), web pages, and conversion. [00:03:55]
  • Acquisition: Knowing both sales and marketing means you can acquire customers. [00:04:17]

These skills stack, making each progressively more valuable. [00:04:25] Learning sales, for example, takes similar effort to learning how to pack boxes, but yields significantly higher returns. [00:04:46] Knowledge guides where to focus your effort for the highest returns on learned skills. [00:04:59]

Motivation

Motivation is fundamentally derived from deprivation—what you lack creates the urgency to act. [00:05:11] If you are motivated to become a millionaire, it is because you currently lack a million dollars. [00:05:26]

One effective way to increase financial motivation is to surround yourself with people who earn significantly more money. [00:05:31] If you don’t know millionaires personally, you can create a “reference group” to compare yourself against. [00:05:42] At some point, high agency or self-belief must outweigh external opinions. [00:06:19]

Environment

Your environment acts as either friction or lubricant for your goals. [00:06:30] To change behavior, change the environment. [00:06:37]

[!TIP] Create an Environment for Success Make it as easy as possible to work hard, and eliminate distractions. [00:07:09] Apply a filter: “Does this increase or decrease the likelihood of hitting my goals?” Cut out everything that decreases it. [00:07:35] This might mean saying no to people, software, alcohol, social gatherings, or entertainment. [00:07:29] [00:08:05]

The speaker, for example, gave up fantasy football, drinking with friends, and most social gatherings. [00:08:20] His schedule involved working from 5 AM to 9 AM, then his day job from 9 AM to 5 PM, and then working on his personal goals from 5 PM to 9 PM. [00:08:31] This intense focus meant removing everything not contributing to his goals. [00:08:56] Expect to be “odd” if you desire “outlier results.” [00:09:05]

Who to Sell To

To make a million dollars, it’s often easier to sell a high-ticket item to fewer people than a low-cost item to many. For example, selling something for 100 to 10,000 people. [00:09:22] This 2,500 annually or about 200/month means finding approximately two customers per week. [00:10:06]

You can focus on three basic customer circles:

  1. Pain: Help someone overcome a problem you’ve personally overcome, operationalizing your solution for others. [00:10:37]
  2. Passion: Help others get into something you are very passionate about. [00:10:50]
  3. Profession: Leverage a professional skill learned in the marketplace (e.g., accounting, property management) to help others. [00:10:59]

It’s advisable to start with fewer people who pay you more, as this makes the business easier to run, especially without much capital or resources. [00:11:28] This strategy positions you at the top of the marketplace, similar to Tesla starting with the expensive Roadster before moving to mass-market models. [00:11:43] You should pick the smallest, most specific version of the market where you can help the most. [00:12:38]

[!TIP] Maximize Value If split between two options, choose to help the person to whom you can provide the most value. Helping a rich person gain 10. [00:12:52]

When selecting a “who” (niche), run them through these filters:

  • Problem: They must have the problem you aim to solve. [00:13:21]
  • Money: They must have the money to spend on your solution. [00:13:41]
  • Urgency: They must have an urgent desire to solve the problem now, not “it would be nice.” [00:13:54]
  • Authority: They should be the principal decision-maker with authority to spend. [00:14:10]

Ultimately, serve the person to whom you can provide the most value. [00:14:28] Investors like a16z and Y Combinator prioritize founders with significant experience (5+ years) intimately understanding the problem they solve, as this suggests intimate understanding of the prospect. [00:14:40]

[!WARNING] Market Selection Ensure you enter a market that is at least flat or growing, not shrinking. [00:16:58] For example, retirement homes are a growing market, but selling print newspapers is not. [00:17:06]

What to Sell

Every product you sell should ideally have four elements:

  1. Unique: No one else can sell it. [00:17:40]
  2. Expensive: Higher profit per unit. [00:17:49]
  3. Sticky: Customers keep buying it repeatedly. [00:17:55]
  4. Air: Costs very little to deliver. [00:18:01]

These factors define your gross profit. [00:18:10] Coca-Cola is an example of a product that fits all four criteria. [00:18:21]

These elements are critical for making your first million. [00:18:59] For a service business with 25 clients, you can provide time, service, and skill set yourself, making it unique, expensive (your time is the cost), and sticky if you’re good. [00:19:09]

Scalability

The challenge with service businesses is scale. [00:19:33] Scalability refers to the incremental cost of adding a customer. [00:20:03] The most scalable businesses have almost zero additional cost per customer (e.g., cell phone carriers, Facebook, software platforms). [00:20:14] These businesses are often “demand constrained,” meaning it’s harder to get people to buy. [00:20:41]

Less scalable businesses (e.g., accounting, law firms) are service-heavy and depend on expertise, making it hard to find and retain quality talent. [00:20:51]

Level Two: Get Them to Buy [00:21:34]

This level involves two main steps:

  1. Getting people to find out about what you sell. [00:21:41]
  2. Getting them to buy. [00:21:53]

Finding Out

There are eight ways to let people know about your offerings:

The Core Four (You do):

  1. Warm Outreach: Letting people who know you know about your stuff. [00:22:28]
  2. Cold Outreach: Letting people who don’t know you know about your stuff. [00:22:32]
  3. Content: Letting people who know you (one to many) know about your stuff. [00:22:36]
  4. Paid Ads: Letting people who don’t know you (one to many) know about your stuff. [00:22:42]

The Four Lead Getters (Others do on your behalf):

  • Customers: They can use the core four (e.g., reviews, referrals, being featured in ads). [00:23:05]
  • Employees: They perform the core four on your behalf. [00:23:28]
  • Affiliates: Businesses that already have your target customers. [00:23:43]
  • Agencies: Other businesses specializing in one of the core four (e.g., content agencies, paid ads agencies). [00:24:11]

For beginners aiming for 25 customers, the easiest methods are warm outreach and content. [00:24:34] A simple warm outreach offer is to help for free for a few hours, then present a paid offer. [00:24:54]

Getting Them to Buy (Sales)

The “CLOSER” framework for sales: [00:27:28]

  • C - Clarify Why: Clarify why the person is there and why they reached out. [00:27:42]
  • L - Label the Problem: State their current situation, their desired situation, and the obstacle or “monster” in between. Position your solution as the “sword” to kill the monster. [00:28:24]
  • O - Overview Past Pain: Discuss past experiences. Pain motivates action. This expands the gap between their current and desired state, increasing motivation. [00:29:35]
  • S - Sell the Vacation: Present your solution in terms of the desired outcome and benefits (the “Maui” or “Hawaii”), not the technical details of the product (the “TSA” or “bad plane food”). Use three pillars, each with one or two statements followed by an analogy or metaphor. [00:30:42]
  • E - Explain Away Concerns: Address common objections like “no time,” “no money,” “someone else has authority,” “not a good fit,” “bad past experiences,” or “avoidance/stalling.” [00:32:46]
  • R - Reinforce the Decision: After a sale, reinforce that the customer made a good decision. This begins the onboarding process. Make and keep many small promises in the first 24-48 hours. [00:34:27] Use “BAMFAM” (Book A Meeting From A Meeting) to ensure no one falls through the cracks. Pass on notes from previous calls so customers don’t have to repeat themselves. [00:35:14]

Getting Them to Buy More Times (Increasing Customer Value)

There are eight ways to increase a customer’s lifetime value (how much they spend with you): [00:37:05]

  1. Increase the Price: Charge more for the same product. [00:37:10]
  2. Decrease Costs: Lower your cost to produce or deliver the product. [00:37:24]
  3. Buy More Times: Get them on a subscription or encourage repeat purchases. [00:37:41]
  4. Buy Something Else (New/Different): Offer complementary products or services (e.g., fries with a burger). [00:37:53]
  5. Buy More Quantity: Encourage bulk purchases. [00:38:20]
  6. Increase Quality: Sell a better, more premium version of the product (e.g., sirloin burger instead of mystery meat). [00:38:41]
  7. Decrease Quantity (Downsell): Offer a smaller, less expensive version to turn a “no” into a “small yes,” which can later be up-sold. [00:39:33]
  8. Decrease Quality (Economy Version): Offer a discount or basic version of your product/service. [00:40:02]

[!TIP] Beginner Focus For beginners, the easiest ways to increase customer value are:

  • Charging more: Use the “five to five to five” model (sell five, bump price by 20%). [00:41:03]
  • Getting people to buy more stuff.
  • Getting people to buy more quantity. [00:42:01]

This understanding of increasing customer value helps fix the “leaky bucket” of your business, leading to compounding revenue and customer retention. [00:43:42]

Getting Help (Scaling with Employees)

The size of a company is limited by the cumulative knowledge within it. [00:45:31] As an entrepreneur, you must continuously learn to expand your business’s potential. [00:45:48] However, you can also bring in others with specialized knowledge (e.g., finance, HR) to exponentially increase the business’s potential. [00:46:01] The most valuable skill for a business owner is the ability to get others to do things for you. [00:46:37]

The Management Diamond

This framework helps understand why an employee might not do what you want them to do: [00:47:09]

  1. Didn’t Know What: They didn’t know you wanted them to do it (lack of clear communication). [00:47:19]
  2. Didn’t Know How: They didn’t know how to do it. Solve with the “3 Ds”: [00:48:08]
    • Document: Create a step-by-step checklist of the process. [00:48:10]
    • Demonstrate: Perform the task in front of them using the document. [00:48:50]
    • Duplicate: Have them perform the task in front of you using the document. [00:49:09]
  3. Didn’t Know When: They didn’t know the deadline. [00:47:35] Include time durations and ask them for their estimated completion time. [00:48:04]
  4. Didn’t Know Why: They lacked motivation. Explain how their task contributes to the overall mission and success of the business. [00:47:46]
  5. Something Blocking Them: External factors preventing them from doing the job (e.g., lack of tools, slow internet). This is often the most common issue. [00:50:52]

Three Pillars of Business

Businesses stand on three core pillars: [00:52:51]

  1. Acquisition: Marketing and sales—getting people to know about your stuff and exchange money for it. [00:52:55]
  2. Fulfillment/Delivery: Creating and delivering the product or service, including design, distribution, customer success, and onboarding. [00:53:04]
  3. Operations: Everything else that supports acquisition and delivery (e.g., legal, finance, payroll, HR, recruiting, IT). This is often where entrepreneurs are weakest and outside help can provide significant leverage. [00:53:30]

When considering a business partner, they should possess skills, time, or capital that you lack, ideally filling one of the other legs of the business stool to ensure balance. [00:55:18]

Level Three: Keeping Your Advantage [00:55:53]

Once things are working and you’re making sales, the goal is to expand the gap between you and competitors. [00:56:44]

Leverage

Leverage is defined as how much you get for what you put in. [00:56:57] High leverage means getting a lot for little effort, while low leverage means getting little for much effort. [00:57:32]

Forms of leverage in business:

  • Brand/Reputation: A strong brand leads to higher click-through rates, higher conversion rates, and the ability to charge higher prices for the same product. [00:57:51]
  • People: Leveraging others’ lives and experiences to propel your business forward. [00:58:27]
  • Code/Products: Writing code once and having millions use it (e.g., software), or writing a book once that sells continuously. [00:59:22]
  • Skill: As you get better at something, you become more efficient, getting more per unit of effort. [00:59:59]

Work = Volume x Leverage. [01:00:10] Output = Work. [01:00:26] It’s not just about working hard, but about getting more for the work you do. [01:00:30] In the beginning, when leverage is low, you must compensate with high volume. [01:00:44] Volume leads to skill, and skill is leverage. [01:00:45] The more you do, the better you get, creating a virtuous cycle. [01:01:10]

Sticking With It

Charlie Munger famously said, “Compounding is the eighth wonder of the world,” and the objective is to never interrupt it. [01:02:00] This principle applies to business focus. [01:02:29]

  • Focus: Defined by the quality and quantity of things you say no to. [01:02:52] Highly successful entrepreneurs are known for ruthlessly focusing. [01:02:34]
  • The Woman in the Red Dress Analogy (from The Matrix): Shiny new opportunities can be “agents in disguise,” meant to distract and destroy your progress. [01:03:35]

Entrepreneurs often go through five stages: [01:04:29]

  1. Uninformed Optimism: Excitement without knowing the true challenges. [01:04:38]
  2. Informed Pessimism: Realizing the difficulty after starting. [01:04:47]
  3. Valley of Despair: Where most people give up. [01:05:02]
  4. Informed Optimism: Understanding what it takes to win and seeing a path forward. [01:05:17]
  5. Achieve the Goal: Reaching your initial objective. [01:05:30]

Many entrepreneurs restart at stage one (uninformed optimism) by chasing new “quick and easy” opportunities, disrupting compounding. [01:05:41] This perpetuates the myth that millionaires have multiple income streams before achieving significant success. [01:06:21] In reality, most high-earners focus all their energy into one basket first, then diversify after achieving success, often with diminishing returns from diversification. [01:06:50]

Stick with one opportunity, double down on it, and say no to distractions to achieve overflowing opportunity. [01:08:05]

Getting Better and Keeping Getting Better

A key skill is the ability to learn, especially through volume and data. [01:09:47] Perform a “common factors analysis” on your results (e.g., content pieces, sales calls): compare your top 10% performing items with your bottom 10% to identify discrepancies and golden nuggets for improvement. [01:10:04]

The initial pain and low leverage force you to seek better methods, driving improvement. [01:10:53] This continuous loop of action, feedback, and improvement creates skills and leverage. [01:12:04]

Relationship with Goals

Your relationship with your goals is measured by what you are willing to sacrifice to keep them. [01:12:54] For exceptional outcomes, you must be willing to be the exception and make outsized sacrifices. [01:14:38]

[!NOTE] Infinite Games The best players in life play infinite games. The objective isn’t to “win” but to “stay in business” (or “stay married,” “stay healthy”). [01:16:34] Adopt a continuous learning mentality; there is no end to growth. [01:17:19] To stop getting better means to stop becoming. [01:17:30]

This blueprint guides your journey to your first million, from foundational skills and knowledge to scaling and sustaining growth. The ultimate goal is not just the money, but the person you become through the process. [01:15:44] [01:16:16] [01:16:26]

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