From: alexhormozi
Alex Hormozi, who founded and sold three companies that experienced rapid growth, shares key strategies that allowed his businesses to scale significantly within their first year: Gym Launch to over 1.5 million per month [00:00:08], and OSLAN to $1.2 million per month [00:00:04]. These “growth levers” are applicable for any business seeking to achieve similar results [00:00:17].
Overcoming Obscurity: Nobody Knows You Exist
The first problem most businesses under $1 million in revenue face is that “nobody knows you exist” [00:00:23]. The initial four hours of every workday should be dedicated to moving from obscurity to awareness [00:00:32].
This can be achieved through the “Core Four” methods:
- Outreach: Cold or warm [00:00:41].
- Content Creation: Making more content [00:00:43].
- Running Ads: Paid advertising [00:00:45].
The key is to pick one method and go “all in,” dedicating the first four hours of each day to it [00:00:48].
Advertising as a “Boom”
Advertising is considered a “boom,” a term referring to a “business order of magnitude change” [01:01:03]. While other business activities like increasing close rates or conversion rates are optimizations that are capped at 100% improvement [01:17:42], advertising can “100x the amount of people who find out about your business” [01:22:15]. Many small business owners fall into an “optimization mouse trap,” focusing on marginal gains rather than massive lead generation [01:31:07].
Marketplace Misconception
Most people overestimate their market share and underestimate the actual size of their marketplace [02:06:01]. Even if competitors are present, the vast majority of potential customers still don’t know you exist [02:20:00]. For example, a gym owner needing 200 members in a city of 1 million people still only needs 0.002% of the audience, even with 100 other gyms advertising [03:00:00].
Shrinking Competition: Outgrow or Be Kind
Instead of trying to beat competitors, the goal should be to “shrink your competition” [03:22:00]. This can be achieved in two ways:
- Grow so big that no one can hear or see them: Overwhelm the marketplace with your presence [05:09:00]. This is like building the tallest building, making others appear smaller by comparison [05:19:00].
- Kill them with kindness: Respond to hate or competition with grace [03:56:00]. Acknowledge flaws and congratulate competitors on their success [08:50:00]. This disarms critics and highlights your positive approach [09:00:00].
Embrace Repetition
Many small business owners mistakenly believe repetition is bad [07:05:00]. However, people often need to be “reminded more than they need to be taught” [07:58:00]. Even after extensive advertising efforts, most people remain unaware of your brand or message [06:37:00]. Become a “master of variety” in rephrasing the same message [06:57:00].
Clear, Not Clever Communication
Effective communication is “clear not clever” [10:19:00]. Research suggests that politicians who speak at the lowest grade level tend to win elections because they lower the barrier to comprehension for a larger population [10:48:00].
Communication Rule
Aim for your communication (landing pages, ad copy, content) to be understood by a third grader [11:30:00]. Speaking simply helps experts understand more easily and beginners grasp concepts for the first time [11:43:00].
Richard Feynman’s quote: “If you can explain it to a third grader, then you understand it. If you can’t, you don’t.” [13:10:00]
Use analogies suited to your audience:
- Narrow audience: Use analogies specific to their industry (e.g., cars for mechanics, houses for realtors) [13:54:00].
- Broad audience: Use universal human experiences (e.g., food, sleep, driving) [13:58:00].
Applying this can significantly increase conversion rates; for example, simplifying email follow-ups led to a 50% increase in conversion [14:46:00].
Proof Over Promise
“Proof is your single highest priority as a business owner or marketer” [16:25:00]. A product with extensive positive reviews, even with a less flashy promise, will outperform one with a grand promise but minimal proof [16:02:00].
Prioritize Proof Generation
Before launching a new product or entering a new space, seek beta users or work for free in exchange for testimonials, reviews, and feedback [16:39:00]. This process refines the product and gathers compelling social proof [17:07:00].
The most compelling way to advertise is to “show don’t sell” [17:26:00]. The messenger’s credibility is intrinsically linked to the message [18:06:00].
The Power of the Hook
The “hook” is paramount in advertising, more important than anything else, even proof, because people won’t see the proof without a good hook [19:30:00].
The Hook Formula
The speaker’s YouTube videos have a hook formula: Proof, Promise, Plan [21:17:00]. Including these elements in content, ads, or outbound communication can significantly improve performance [21:25:00].
Obsessing over the first impression (the first frame, first few seconds) is crucial [22:03:00]. Simply trimming three seconds from a video’s beginning, starting directly with the hook, increased views from 40,000 to 780,000 (a 19x improvement) [23:11:00].
More: The Mundane Path to Scale
Business Growth and Scaling Strategies often involve doing “more” of what is already working [23:40:00]. While entrepreneurs love “new” ideas (shiny object syndrome) [23:58:00], the “boring answer is the mundane more” [24:05:00].
The Cost of Change
Changing something that works incurs the “cost of change” but does not guarantee the “benefit of change” [25:37:00]. Deviating from a high-converting control is often less effective than simply increasing volume [25:01:00].
Examples of “More”:
- Outreach: From 100 to 200 reach-outs a day [25:51:00].
- Paid Ads: From 200 a day [25:53:00].
- Content: From posting once a day to twice a day [25:55:00].
What appears as volatility in sales (e.g., one sale every few weeks) is typically a symptom of low volume [29:15:00]. Increasing daily activity to match annual successful volume can stabilize results [29:57:00]. High-performing businesses often do a thousand times more than smaller ones [30:10:00].
The Impact of Word of Mouth
While positive word-of-mouth is valuable, negative word-of-mouth is “significantly stronger and faster than positive” [30:50:00]. Disney found it takes 37 tragic moments to make up for one magic moment [30:57:00], and a bad experience is told to many more people than a good one [31:09:00].
Rising cost per lead (CPL) despite stable cost per impression (CPM) indicates fewer people are responding, suggesting negative word-of-mouth is working against the business [31:41:00]. This highlights the importance of the “proof over promise” principle, especially when starting out, to minimize negative experiences and collect positive feedback to build a valuable product [32:56:00].
”Steal” from Yourself: The 70/20/10 Rule
When something works, keep using it [33:39:00]. You will get bored of a successful message or hook far before your customers do [34:43:00].
Effort Allocation Ratio (Sergey Brin & Larry Page)
- 70% “Carbon Copy”: Dedicate 70% of your effort to replicating what already works exactly [34:58:00]. This applies across sales scripts, product development, and advertising [35:06:00].
- 20% “Adjacent”: Allocate 20% to variations that are one degree removed from the core working element (e.g., same hook with a different background or phrasing) [35:13:00].
- 10% “New”: Only 10% should be spent on entirely new, out-of-the-box ideas [35:36:00].
Most entrepreneurs invert this ratio, focusing too much on new, which is less likely to yield results [35:49:00].
Understanding Buyers: Information Requirements
Instead of “emotional vs. logical buyers,” consider a continuum of “high info buyers” (who require more information) and “low info buyers” (who require less) [37:55:00]. The pool of low-information buyers is significantly smaller, and focusing only on them caps business growth quickly [38:31:00]. To scale, you must educate a higher percentage of the audience [39:21:00].
Five Levels of Awareness (Eugene Schwarz)
Eugene Schwarz’s “Breakthrough Advertising” outlines five levels of awareness customers move through [39:31:00]:
- Unaware: No idea about anything [39:40:00] (attract with broad curiosity [40:11:00]).
- Problem Aware: Aware of a pain point (attract by describing symptoms [40:41:00]).
- Solution Aware: Knows potential solutions and needs help selecting one [41:00:00].
- Product Aware: Knows your product and needs more micro-level information [41:07:00].
- Most Aware: Typically existing customers, where direct offers are most effective [41:09:00].
70/30 Advertising Budget Split
A conversation with Chris Davis (CMO of New Balance) revealed a strategic shift: instead of 70% direct offers and 30% brand/awareness, they flipped it to 70% high-level pairings (endorsements, storytelling) and 30% direct offers [42:17:00]. This change took 18 months to show a return but led to skyrocket sales [42:44:00].
This ratio of 3.5:1 (give to ask) is corroborated by media like TV commercials and Facebook Newsfeeds [43:14:00]. Investing in “give-first” strategies, like free content and products, attracts high-information buyers and builds future demand [46:21:00].
Marketing Laws
- State the facts and tell the truth: This forces you to “change reality” by doing epic things worth talking about, rather than exaggerating underwhelming achievements [48:35:00]. It’s the best long-term strategy [49:15:00].
- Show only what you can show and say what only you can say: Every business has unique aspects if you “get narrow enough” [49:51:00]. Identify what makes your business unique, even if others do it but don’t highlight it (e.g., “It’s toasted” cigarettes from Madmen) [50:49:00]. The goal is to be “the best in a puddle,” not necessarily the best in the world [52:03:00].
The Importance of the List (Targeting)
Marketing effectiveness hinges on “targeting the correct audience” [55:00:00]. An amazing offer will fail if shown to the wrong people (e.g., winter coats in South Florida) [54:32:00].
Match Your Avatar
Ensure the person in your ad or content looks and talks like your target audience [56:37:00]. This helps algorithms display your content to the right people and increases responsiveness [57:23:00].
Masters Have More Ways to Win
Masters in any field possess a “higher quality and quantity of metrics” to measure progress [59:13:00]. Beginners often only look at binary outcomes (sold/didn’t sell, got leads/didn’t get leads) [01:00:27].
Leading vs. Lagging Indicators
Focusing on leading indicators (e.g., list acquisition, call pick-up rates, hook effectiveness, offer conversion on first call, show-up rates for second call) allows you to fix issues iteratively and achieve the ultimate outcome [01:01:34]. Lagging indicators (e.g., churn, sales down, revenue down) are results that can’t be directly acted upon [01:03:36].
“Look for directional correctness rather than binary” [01:02:25]. This nuanced understanding of progress is crucial for effective business growth and improvement.