From: alexhormozi
The speaker shares a profound personal achievement: earning more in a year as a twenty-something than the combined CEOs of McDonald’s, Ikea, Ford, Motorola, and Yahoo for over half a decade, resulting in 100 million by age 33 [00:00:04]. This success, which surprised even himself, is attributed to a specific approach to work and business growth, emphasizing focus and long-term commitment.
Redefining Work: Outputs and Leverage
Traditional definitions of work (force x distance or time spent) are deemed unhelpful for knowledge workers [00:02:34]. The speaker proposes a more effective definition:
Work equals outputs [00:04:07].
Outputs, in turn, are defined as volume multiplied by leverage [00:04:12].
- Volume: The number of times you do something [00:04:17].
- Leverage: How much you get out of each time you do it [00:04:19].
While doing more (volume) is capped by time and physical ability, how much you get (leverage) is uncapped [00:06:37]. To make more money, entrepreneurs should focus on out-leveraging their competition rather than simply outworking them in terms of hours [00:07:16]. This is illustrated by examples like a skilled salesperson, an automated dialer, a better lead list, optimal timing, a superior offer, or leveraging a team [00:07:28]. Money earned is essentially “dollars per hour,” but the goal is to increase the dollars received for the time spent, which is achieved through leverage [00:09:49].
Why “New Stuff” Makes You Poor: The Danger of Distraction
The speaker identifies five key ways entrepreneurs fail to gain leverage:
1. Uninformed Optimism and the Crisis of Meaning
This refers to the “stages of change” or “stages of transition” model [00:11:56].
- Uninformed Optimism: Hearing about someone else’s success and feeling motivated to jump into their venture without understanding the full reality [00:12:28].
- Informed Pessimism: Discovering the hidden difficulties and challenges after starting the new venture [00:13:03].
- Crisis of Meaning (Valley of Despair): When time and effort have been invested with little to no return, leading to questioning the purpose of the endeavor [00:13:32].
Many entrepreneurs get stuck in a cycle of repeatedly returning to uninformed optimism after hitting the crisis of meaning, jumping from one new idea to another [00:14:17]. Unlike video games where you restart quickly, in entrepreneurship, restarting can mean losing years of progress [00:14:35]. The “boss” to beat in this game is the ability to stick with it [00:14:55].
2. The Construction Buddy Story: Avoiding Diversification
A friend with a roofing business struggled to scale because he also did general contracting and house flipping, believing he shouldn’t “leave money on the table” [00:17:18]. This contrasts sharply with Diane Hendricks, the wealthiest self-made woman, who built her $15 billion fortune by focusing solely on a roofing supply business (ABC Supply) [00:18:28].
This highlights:
- Doing many different things.
- Doing them for short periods.
- Not getting help.
- Making mistakes repeatedly.
- Not challenging existing beliefs. These are ways not to make money [00:19:36].
3. The “Magic Wand” Story: Hard Conversations
Many entrepreneurs have multiple “businesses” that are just logos and websites, waiting to see which one “takes off” [00:21:50]. The speaker posits that any of these ventures could take off, but you can’t have them all [00:22:25]. The crucial step is to pick one, and the growth comes from the ability to say “no” to other opportunities, not necessarily from the specific venture chosen [00:22:45]. The path to riches often lies on the other side of a few hard conversations (e.g., shutting down side projects, laying off staff) [00:24:41].
4. The Woman in the Red Dress: Shiny Object Syndrome
Inspired by The Matrix, this analogy represents attractive new opportunities that distract entrepreneurs [00:25:07]. The challenge of saying “no” to these opportunities grows as success increases, as the distractions become more seductive and lucrative [00:25:37]. Starting a new company when an existing one is thriving can be a strategic mistake that splits focus and dilutes efforts [00:26:04].
New distractions kill leverage and keep you poor. Focus multiplies it [00:29:44].
Why “Better” is Leverage: The Power of Refinement
The third key principle is that “better is leverage” [00:30:00]. Improving existing processes and offerings yields more output from the same input, increasing leverage [00:30:18].
Better comes from boring [00:31:29].
Many entrepreneurs are driven by an emotional need to quit discomfort, leading them to constantly seek new, exciting ventures [00:30:47]. However, the real work lies in the unsexy, repetitive improvements within an existing business:
- Split testing landing pages weekly [00:40:43].
- Split testing emails weekly [00:40:51].
- Creating new ads and creative before they are desperately needed [00:40:53].
- Daily role-playing with sales and customer success teams [00:40:59].
- Conducting more interviews to find the best talent [00:41:23].
- Taking more time to refine lead magnets and offers [00:41:43].
These boring activities are the secret to success, leading to significant financial gains [00:41:53]. Ignoring these fundamental improvements leads to negative word-of-mouth and increased customer acquisition costs [00:39:14].
Becoming the Focused Entrepreneur
To embody focus, one must behave like a focused person, even when it feels uncomfortable [00:27:47]. Patience is not the absence of impatience, but the act of not jumping on opportunities despite feeling the desire to [00:28:37].
A powerful mental model is to ask: “If I were coaching me, what would I tell myself to do?” [00:34:41]. Often, the answer is to do the “unsexy” work already known to be necessary [00:35:04].
The speaker shares his own journey:
- Period 1: Distraction (Poor): Owning nine companies (6 gyms, gym launch, dental agency, chiropractor agency), all while being broke [00:36:04].
- Period 2: Focus (Wealthy): After being advised by his wife, he sold five gyms, shut one down, and closed both agencies within 90 days [00:36:51]. Twelve months later, his single venture (Gym Launch) was doing 4.5 million a month [00:37:05].
By focusing on one thing, it becomes unreasonable to fail or suck [00:37:22]. Success is achieved by doing one thing for an extended period of time and becoming the best at it through sheer volume and consistent effort [00:37:40].
Anything can become big with time when you line all actions to a single outcome and you keep working at it. Your success will look effortless and obvious from the outside, but you will know that it came from years of saying no to everything except that which mattered most [00:51:00].
This commitment to activity over immediate outcomes, even when results fluctuate, is crucial for character and business growth [00:43:02]. The difference between a good and a great outcome (e.g., a 7/10 product vs. a 9.5/10 product) might be 20 times the work, but it yields a thousand times the sales, demonstrating exponential leverage [00:43:32].
In summary:
- Making money comes down to leverage (outputs = volume x leverage) [00:44:12].
- Constantly chasing “new stuff” makes you poor; therefore, focus on one venture is essential [00:44:16].
- “Better” is leverage: Improving existing processes and offers yields disproportionate results [00:44:23].