Tubegraph

Level seven entrepreneurship

10 min read

From: alexhormozi

Level seven entrepreneurship is defined as rising above individual businesses and viewing them as products that enhance personal net worth [01:02:00]. This perspective encourages assessing and appraising opportunity itself [01:12:00]. A “level seven zillion entrepreneur” is someone who contemplates the meaning of life because they no longer have a need for money [09:27:00].

Speaker’s Journey and Perspective

The speaker, Alex Hormozi, identifies as a “level seven entrepreneur” [01:42:00], although he humbly states he feels like he’s just taken “a couple steps forward and one toe after the other” [02:01:00]. He owns acquisition.com, a portfolio of companies generating approximately 1.2 million per month in dividends for nearly half a decade [02:41:00].

Having exited two companies and sold his house and car this year, he is in a season of “consolidation” and “distilling down artifacts” (frameworks) to prepare for his next chapter [03:01:00].

Observations at Level Seven:

  • Most people want you to do well, but not better than them; no one truly wants you to be rich except yourself [04:06:00]. If you’re not fighting for yourself, no one else is [04:16:00].
  • Money only solves money problems, leaving you with problems money cannot solve [04:19:00].
  • You don’t “arrive”; you simply enter a new club as the smallest member [04:25:00].
  • Having exited the traditional organizational chart and still making significant income, the speaker found it “wildly boring and almost depressing” [05:06:00]. This suggests that passive income can be overrated, and the real desire is for options and engaging activities [05:24:00]. The goal should be to engage in meaningful work rather than idleness [05:59:00].

The “Boat” Metaphor: Strategic Decisions over Effort

Warren Buffett shared a story about a smart, hard-working, ethical friend from Columbia Business School who chose the steel business, earning a modest living, while Buffett started his private partnership that became Berkshire Hathaway [00:00:00]. Buffett concluded: “It’s not as important how hard you row, but what boat you are in” [00:43:00]. This highlights that different outcomes can arise from a single, pivotal decision [00:16:00].

Time Allocation as the Only Resource

Material success is primarily a function of time allocation [09:51:00]. Money is considered the “denomination of time” [11:36:00]; wealth is measured by how little of one’s life must be traded for desired goods [11:43:00]. Money acts as an IOU from society for future goods and services, essentially “other people’s time” for the value provided [11:48:00].

Speed in Entrepreneurship

True speed in entrepreneurship isn’t about constant activity, which is a fallacy many entrepreneurs believe [10:22:00]. Instead, it’s about making the right strategic decisions and making fewer mistakes [10:27:00]. Many entrepreneurs exhibit “micro fast, macro slow” behavior, moving quickly but often changing directions [10:33:00]. The key is “micro slow, macro fast,” where consistent forward movement over a long period leads to significant progress by avoiding detours [10:49:00].

Consistently Doing the Obvious

Ninety percent of success comes from “consistently doing the obvious thing for an uncommonly long period of time” without believing you are smarter than you are [11:04:00]. Naval Ravikant’s quote, “I only believe that one percent of decisions matter; the rest of them are irrelevant. The difficulty is understanding which of the one percent of the 99% of the ones that matter,” emphasizes the importance of these critical strategic choices [11:16:00].

Frameworks for Material Success

The speaker introduces four frameworks for applying leverage to achieve material success, which are used when investing in portfolio companies and scaling one’s own businesses [13:52:00]. These are:

  1. Scale the entrepreneur [14:10:00]
  2. Scale the market [14:13:00]
  3. Scale the deliverable [14:16:00]
  4. Scale the business [14:20:00]

The equation for fortune building is: Level 10 Entrepreneur x Level 10 Opportunity (Market x Scalability of Deliverable) x Business Acumen [14:27:00].

1. Scale the Entrepreneur

Entrepreneurs often do not achieve desired financial outcomes because they are not as skilled as they believe [15:01:00]. If a competitor is outperforming, it’s due to their superior play; acknowledging deficiencies and learning from competitors’ strengths is crucial [15:09:00].

Bottlenecks: Every business is bottlenecked by the entrepreneur in one of three ways [15:37:00]:

  1. Lack a skill [15:44:00]
  2. Lack a character trait [15:47:00]
  3. Lack a belief [15:50:00]

Like a ladder, if any side (traits, beliefs, skills) is missing, growth is limited to the lowest rung [15:54:00].

Case Studies of Deficiencies:

  • Niche Slapping Fallacy: The speaker initially had 10 businesses but no money [16:23:00]. His wife advised him to pick one [16:45:00]. The problem was the fallacy that pursuing many ventures would lead to success; in reality, pursuing all means none will work out [17:19:00]. This was identified as a trait deficiency: lack of focus [18:05:00].
  • Level 10 Skill, Level 2 Opportunity: A mentor told the speaker he had a “level 10 skill set in a level 2 opportunity” while running gyms [18:55:00]. The mentor suggested teaching others his gym model instead of running gyms himself [19:00:00]. This was a belief deficiency; he didn’t know a higher leverage opportunity was possible [19:54:00].
  • Sales Team Inconsistency: The common complaint “no good sales people exist” or “my sales team is inconsistent” [20:10:00] is a skill deficiency [20:27:00]. It indicates a lack of skills in recruiting, interviewing, training, and managing a high-performance sales team [20:30:00].

Learning and Improvement:

  • To improve, rephrase a bottleneck or complaint into a solvable question (e.g., “How do I learn to create consistency in sales?“) [21:14:00].
  • Skills are developed through repetition and feedback, or “volume” [21:27:00]. The speaker closed 4,000 one-on-one sales over 3.5 years, building his certainty and skill [21:53:00].
  • Work changes the individual more than they change the work; it builds character and increases capacity [22:20:00]. This aligns with “do the boring work” and “outwork yourself doubt” [22:45:00]. Conviction comes from repeated action, not affirmations [22:49:00].
  • A major deficiency is unrealistic expectations. People aim to be millionaires in 90 days instead of committing to a five-year plan [23:29:00]. “I’d rather get rich for sure than get rich quick” [23:57:00].
  • Skills, traits, and beliefs all compound, leading to “crazy outside returns seemingly overnight” [24:03:00]. This is known as skill stacking, where combining different proficiencies (e.g., math, bookkeeping, accounting, tax strategy, insurance, deal negotiation, capital markets) creates asymmetrical value [25:31:00].

2. Scale the Market

When the speaker was earning $35-40 million, he realized peers making more money had simply “picked better markets” [28:16:00], often mass markets selling expensive products globally [28:39:00].

How to Pick Your Market:

  • The best avatar to pursue is the one you can help the most [29:12:00].
  • Pick an avatar that allows you to productize your service and deliver value with low operational drag [29:24:00].

The “Starving Crowd” Analogy: A marketing professor’s story illustrates that having a starving crowd (high demand) is the ultimate competitive advantage, even if the product or location is suboptimal [30:11:00].

Four Attributes of a Desirable Market:

  1. Pain: They must not just want, but desperately need, what is being sold [30:43:00].
  2. Affordability: The target audience must be able to afford the product or service [30:49:00].
  3. Targetability: They must be easy to tactically reach [31:05:00].
  4. Growing: The market should be expanding, not shrinking. Choosing a market with a “tailwind” makes growth easier [31:22:00].

Revisiting the “what boat you are in” metaphor, a great entrepreneur in a poor market will likely lose to a great market [32:54:00].

Five Ways to Scale Your Market:

  1. Up Market: Target multi-location owners, chains, or franchises [34:02:00].
  2. Down Market: Target individuals who will eventually become your ideal avatar (e.g., hair stylists for salon owners) [34:09:00].
  3. Adjacent Market: Target similar niches with core desires [34:15:00].
  4. Broader: Expand to wider related sectors [34:25:00].
  5. Deeper (Favorite Strategy): Focus on existing market by acquiring competitors, exploring new platforms, or increasing ad budget [34:36:00]. Doing “more of the thing that you’re already doing” often works best [34:57:00].

3. Scale the Deliverable

This framework is an “opportunity lens” to assess ventures [35:11:00].

The Four Cs to Leverage:

  1. Labor: Traditional leverage, requiring permission (e.g., employees) [35:44:00].
  2. Capital: Using other people’s money, also requiring permission [36:09:00].
  3. Code: Permissionless leverage, replicable at no cost (e.g., software) [36:32:00].
  4. Content/Media: Permissionless leverage, zero cost of replication (e.g., podcasts, books) [36:50:00].

The “new fortunes” are built on code and content/media due to their permissionless nature [37:06:00]. The most successful entrepreneurs (e.g., Bezos, Zuckerberg) utilize all four forms of leverage [37:21:00].

Speaker’s Leverage Trajectory:

  • Employee (Management Consultant): Leveraging others’ labor, earning four figures/month [37:56:00].
  • Trainer (Self-Employed): Leveraging own labor, earning five figures/month [38:03:00].
  • Gym Owner: Leveraging labor, earning six figures/month [38:13:00].
  • Licensor: Leveraging labor and media, earning millions/month [38:28:00].
  • Acquisition Business: Adding capital leverage, aiming for eight figures/month [38:49:00].
  • Full Stack: Aiming for nine figures/month by utilizing all four leverages [39:04:00].

The Delivery Cube Framework: This framework provides six dimensions to consider when scaling a deliverable for increased profit margins:

  1. Setting: One-on-one, small group, or one-to-many (and adjusting price accordingly) [40:01:00].
  2. Solution Type: Do-it-yourself (DIY), done-with-you (DWY), or done-for-you (DFY) [40:11:00].
  3. Support Level: Tech, chat, email, phone, or Zoom call support [40:20:00].
  4. Consumption: Written, live, audio-only, or video [40:41:00].
  5. Speed & Convenience: 24/7, 9-to-5, immediate response, or two-day response [40:52:00].
  6. Value-Price Matrix:
    • What would you deliver if your price was 10x higher? [41:22:00]
    • What would you need to build (at no replication cost) to deliver more value at 1/10th the price? [41:50:00]
    • If new customer acquisition through marketing was impossible, and the only way to get customers was through existing ones, how would the client experience change? [42:10:00] (Emphasizes word-of-mouth and customer experience [42:41:00]).

Types of Things to Sell: All marketable offerings can be broken down into six base components:

  1. Products: Physical (e.g., dog bones) or Digital (e.g., courses) [43:27:00].
  2. Services: Physical (e.g., massage) or Digital (e.g., marketing) [43:55:00].
  3. Access: Physical (e.g., event entry) or Digital (e.g., virtual recording) [44:03:00].
  4. Media: Physical (e.g., billboard) or Digital [44:17:00].
  5. Risk: Physical (e.g., building insurance) or Digital (e.g., cyberattack insurance) [44:23:00].
  6. Money: Physical or Digital (e.g., cryptocurrency) [44:29:00].

An “experience” is a combination of products, services, and access. A “business” is all these chunks combined [44:52:00]. The challenge is to add components to an existing offer stack without excessive operational drag, while providing value [45:10:00].

4. Scale the Business

This framework outlines focus areas at different revenue levels for scaling businesses [46:25:00].

  • Zero to One Million:

    • Focus: One product, one avatar, one channel [47:12:00].
    • Problem: Lack of clarity on operations; trying to do too much. More businesses don’t automatically mean more money [47:17:00].
    • Objective: Consistently sell something people actually want [47:41:00].

  • One to Ten Million:

    • Focus: Increase lifetime gross profit per customer [47:53:00].
    • Problem: Not enough take-home profit to scale [48:06:00].
    • Objective: Add higher leverage deliverables [48:15:00].

  • Ten to Fifty Million:

    • Focus: Professionalize the business and improve consistency of delivery [48:26:00].
    • Problem: Inconsistent delivery, poor tracking, CRM issues, financial disorganization [48:37:00].
    • Solution: Hire high-level, experienced professionals [48:43:00].

  • Fifty Million Plus (Framework X): Attract Talent

    • Problem: Innovation dies at this level because one entrepreneur can only do so much [49:23:00]. The business becomes a conglomeration of many smaller businesses [49:36:00].
    • Solution: Attract new talent incentivized to drive growth [49:58:00].

Internal Business Functions vs. External Marketing Metrics: Entrepreneurs often focus on external metrics (lead generation, nurture, sales, customer success, ascension, resell) [50:13:00]. However, scaling requires understanding and optimizing internal functions that mirror these external ones, such as:

Often, the bottleneck for growth lies in these internal talent acquisition and development processes, rather than external marketing [52:18:00]. One amazing hire can unlock significant growth [52:38:00].

These frameworks provide actionable insights for entrepreneurs at any stage, aiming to accelerate their path to material success by making smarter, more leveraged strategic decisions.

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