From: alexhormozi
To achieve sustainable business growth, prioritizing quality over mere size is crucial [03:28:00]. The philosophy “if you want to get bigger, get better; better leads to growth; bigger leads to bloat” encapsulates this truth [03:28:00].
Starting with a Premium Focus
Initially, businesses should focus on serving a niche market of wealthy individuals [01:52:00]. Rich customers are willing to pay more in absolute terms for a lower relative value [02:26:00]. This allows for higher profit margins, enabling businesses to over-deliver and invest in quality without needing extensive infrastructure [02:30:00].
Tesla, for example, began by selling expensive Roadster models exclusively to affluent customers before expanding to more affordable mass-market vehicles like the Model 3 [00:33:00]. This tiered approach allowed them to build a foundation of quality and demand before scaling [00:53:00].
The speaker’s own businesses demonstrate this principle:
- Acquisition.com serves a premium market of wealthy individuals, focusing on high-value, low-volume deals [05:54:00].
- School, a mass-market product, required years of development and millions in investment, operating at a loss to create “absurd value” for its lower price point [06:22:00]. This investment was only possible after generating significant capital from premium ventures [07:09:00].
In contrast, businesses aiming for mass-market appeal from day one, like Walmart or Amazon, must build vast infrastructure and win on extreme efficiency [01:06:00].
Quality as a Growth Driver
The concept of “better leading to bigger” is exemplified by Chick-fil-A [03:41:00]. Their relentless pursuit of being better meant customers demanded more locations, driving natural expansion [03:49:00]. Boston Market, on the other hand, expanded rapidly by prioritizing size and valuations, diluting their talent and eventually leading to bankruptcy [03:57:00]. This demonstrates the pitfalls of unchecked growth for growth’s sake.
“The missionaries always win in the long term.” [03:59:00]
For a new product or service to enter a market, it needs to be “an order of magnitude better” than existing solutions [03:37:00]. Elon Musk’s ventures, like SpaceX and Tesla, achieve this by offering groundbreaking improvements, not just incremental ones [04:16:00].
Tactical Steps for Improvement
To get “better,” businesses should:
- Prioritize specific improvements: Identify one key area in each business function (e.g., sales, marketing) for improvement over a set period [04:15:00].
- Build checklists of quality: Document the processes that lead to exceptional results. These checklists become a “100 golden BBs” approach, creating cumulative advantage rather than relying on a single “silver bullet” [04:53:00]. This aligns with effective business frameworks for growth.
- Address the root cause: Growth is a lagging indicator of quality and consistent effort [04:41:00]. Many businesses seek “cheaper leads” when the real problem is often a product that isn’t good enough or is mispriced [04:27:00].
“Most business owners lie to themselves about how good they are at the things that they do because confronting the fact that they’re just insufficient, they’re not good enough, they’re inexperienced, they haven’t put enough work in to be good frightens them.” [02:04:00]
The Role of Talent in Quality
The quality of a business is directly tied to the quality of its people [02:51:00].
- Raise the bar: Every new hire should elevate the average talent level of the team they join [02:08:00]. Without this rule, talent tends to dilute over time [02:27:00].
- Invest in expertise: Hiring experienced individuals who have “learned all those lessons on someone else’s dollar” allows a business to start at a higher level of maturity (e.g., Year 10 of customer success instead of Year 1) [02:52:00].
- Cost vs. Return: While top talent costs more, their output can be 5-10x that of average performers, making them a significant arbitrage opportunity in knowledge work [03:47:00]. High-level hires can bring in millions in revenue or savings [01:24:00].
- Addressing bottlenecks: Businesses grow to the constraint of the founder or the weakest link [03:39:00]. Often, the bottleneck is in an area the founder dislikes or is inexperienced in (e.g., recruiting, management) [04:44:00]. Overcoming this requires facing uncomfortable conversations or investing in external expertise [02:54:00]. This links to prioritizing tasks.
The Power of Brand
Building a strong brand takes time but yields immense value. A brand is an association people make between something they know and something new (your business) [05:25:00]. It allows for:
- Insane Returns on Advertising: A strong brand magnifies the effectiveness of advertising [05:27:00].
- Premium Pricing: Brands can charge significantly higher prices than commoditized alternatives (e.g., Nike vs. generic apparel) [05:50:00].
- Customer Loyalty: Once customers buy and have a positive experience, they are less likely to switch to competitors, creating a competitive moat [05:54:00].
Brand is built through:
- What you say/show: Controlled messaging through advertising and content [05:15:00].
- What others say: Word-of-mouth and reviews, heavily influenced by customer experience [05:31:00].
- What customers experience: The actual product or service quality is the strongest driver of brand perception [05:46:00].
“The experience is always going to be the heaviest weighted thing that people have.” [05:11:00]
Avoiding “Hacks” and Focusing on Core Principles
Avoid chasing short-term trends or “hacks” that offer temporary arbitrages [01:10:21]. Instead, focus on the fundamental objectives of platforms (e.g., YouTube wants people to click and watch) and create genuinely high-quality content or products [01:10:56]. A single exceptional product is more impactful than many mediocre ones [01:11:58].
Quality often lies in the “details that you only realize with lots of exposure” [01:14:30]. This means iterating, refining, and applying “coats of paint” to every aspect of the business, just as a book is edited in multiple passes or a video is polished for lighting, sound, and content [01:14:41]. The real value is created in the “edit” and “distillation,” not just the initial creation [01:16:12].
Ultimately, businesses that focus on quality will attract talent, build strong brands, and experience sustained growth driven by customer demand. This aligns with key business strategies for growth and strategies for business growth and improvement.