From: myfirstmillionpod
Entrepreneurial Stories and Lessons from High-Profile Figures
This article explores the entrepreneurial journeys and lessons learned from various high-profile figures, with a particular focus on Alex Hormozi’s experiences in building and acquiring businesses. It delves into the motivations behind wealth accumulation, the evolving nature of business missions, and the personal aspects of public recognition.
Alex Hormozi’s Entrepreneurial Journey
Alex Hormozi shares his path from owning a chain of gyms to founding acquisition.com, a portfolio of companies.
The Genesis of Acquisition.com
Hormozi initially owned a chain of gyms, then licensed his intellectual property to 5,000 locations, started a supplement company, and a software company [00:11:29]. He exited all three of these companies in 2021, taking about 46.2 million [00:11:40]. The software company was sold separately in a strategic deal that was all stock [00:11:44].
Acquisition.com was started the day after his previous companies were sold, on Christmas Eve 2021 [00:12:15]. The idea had been “cooking” during COVID-19, as his gym business took a major hit [00:12:50]. To divert his mind, he took calls for his software company, which led to a serendipitous meeting with a photography studio owner [00:13:24].
The photography studio owner had applied Hormozi’s “Gym Launch Secrets” book to his photography business, growing it significantly [00:14:23]. He also had an agency helping other photographers do the same [00:14:29]. When Hormozi learned the agency was helping studios add $400,000 a year to their top line while selling for “pennies,” he realized the potential to “own them all” [00:14:41].
The photography owner, trusting Hormozi, shut down his agency that was making 30 million a year [00:15:27]. This led to Hormozi’s interest in taking minority investments [00:12:23].
The Acquisition.com Model
Acquisition.com is described as a merger of a family office and a conglomerate [00:24:45]. It operates using “family money” with no outside investors [00:24:51]. The long-term goal is to compound investments rather than exit them, unless a founder specifically needs to sell [00:24:57].
Currently, Acquisition.com has 11 portfolio companies [00:18:00]. Hormozi uses his personal brand to bring in proprietary deal flow, with companies seeking to work specifically with them to scale [00:06:10]. They are not public about their acquisitions for two main reasons:
- Brand Endorsement: Hormozi’s endorsement could 5-10x a company overnight, but he negotiates deals without brand endorsement included, especially for minority investments, as he wouldn’t risk his face on something he can’t control [00:16:55].
- Exit Strategy: If they were to exit a business where he had given an endorsement in a minority position, he would effectively be tied to the deal, limiting their ability to build value in the business so it is sellable and more valuable independently [00:17:28].
Challenges and Learnings in Acquisition
Hormozi admits that the most difficult part of minority positions is dealing with “half-listened to advice” from founders [00:18:50]. For example, a founder might hire a new operator as advised but fail to fire the old one, hindering progress [00:19:03]. He transparently states that he enjoys the business where they have “complete control” the most due to faster speed to action [00:19:38].
Deal structures vary; some involve capital infusion, especially for businesses requiring it for expansion (e.g., opening more brick-and-mortar locations) [00:21:44]. For national service businesses with no significant capital expenditure, they might focus on growth and recruiting [00:22:09]. The goal is not for founders to buy mansions with the money, but for both parties to grow the business [00:22:27].
Hormozi notes that the deal structure has become “less cute and less clever” over time, now being more straightforward: they become equity holders who will grow the business [00:22:51]. His holding company invests about $500,000 a year in labor into the businesses [00:23:06].
The “Make Space” Principle
Hormozi, and hosts Sam and Sean, emphasize the importance of “making space” for new opportunities, even without a clear next step [00:33:50]. Hormozi sold Gym Launch despite its valuation, because he was “emotionally done with the business” [00:30:52]. He realized the sale was required for his personal entrepreneurial journey to transition to Acquisition.com [00:32:42].
“To have what you want sometimes you just need to make space” [00:33:50]. This applies to relationships, where one might end a current situation without a better option lined up, trusting that new opportunities will appear [00:34:24]. Similarly, selling a company that isn’t going to be “massive” can clear the path for something truly impactful [00:34:39].
From Tactics to Strategy
Hormozi reflects on his growth from being a tactician (focused on how to grow a business day-to-day) to understanding macro-level business strategy, particularly regarding debt and financial engineering [00:37:08]. He initially dismissed finance concepts but realized their importance for high-level business success, such as leveraging a company’s books without personal guarantees [00:37:23].
“Where you get really dangerous is when you know both play both games” [00:39:10]. This means combining organic growth (tactics) with inorganic growth and financial engineering (strategy) to create “breathtaking home runs” [00:39:37].
The Evolving Mission of Entrepreneurship
Hormozi discusses the evolution of his business’s mission. His initial mission for Gym Launch was simply “to not be broke” [00:52:09]. Once that was achieved and he saw lives transformed, the mission had to expand to “take the gym industry from its knees to its feet” [00:52:21].
For Acquisition.com, the initial mission was “to make real business knowledge accessible to everyone” [00:42:27]. However, he realized this didn’t resonate with his holdco team (consultants, recruiters, etc.) [00:42:34].
The new, more organic mission for Acquisition.com is to “build a company off of praise and not punishment” [00:43:42]. This means creating cultures that foster high performance through reward rather than constantly raising the bar to avoid punishment, which leads to burnout [00:44:09]. Hormozi aims to prove that this “praise-driven” model can generate better bottom lines and working environments, potentially building a multi-billion dollar company that changes how people view work [00:44:51].
He draws inspiration from Elon Musk’s ability to tie every company’s mission to “saving the world” or grand human endeavors, like Twitter’s mission for free speech [00:43:06]. This reframing can align with humanity and serve as a powerful narrative, even if the underlying initial motivation might be personal gain [00:47:46].
The “Game” of Wealth and Enjoyment
Hormozi articulates that for successful individuals, the motivation shifts beyond personal needs (like flying private or staying in luxury hotels, which are already satisfied) to acquiring larger assets like skyscrapers or huge companies [00:00:14]. This creates a “new deficit” for wealth, assuming one “likes the game” of business and wealth accumulation [00:00:29].
“The funny thing is that what you actually like is just playing the game and if you just said well I’m rich enough then you’d have to stop playing the game you really love” [00:50:53]. To keep playing, entrepreneurs “construct these silly like dreams” that may not even be what they truly want, but they serve to keep the “score” meaningful [00:41:01].
Influential Figures and Their Philosophies
Hormozi admires several figures for their unique contributions to entrepreneurial success stories and business philosophy:
- Andrew and Peggy Cherng (Panda Express): Admired for building a 2,600-location, $3.7 billion empire privately, without outside money, and focusing on employee development and elevating hourly wage workers [00:57:15]. This is an example of an unexpected business ventures and case studies of success.
- Warren Buffett: Respected for his “long-term mentality,” belief in compounding and patience, and rational decision-making [00:57:36]. His approach embodies unique investment philosophies.
- Elon Musk: Praised for his ability to envision and connect every venture to a larger mission, consistently defying what seems normal or possible [00:58:07].
- Mr. Beast: Acknowledged for his personal branding prowess, thinking big, and tremendous work ethic [00:59:00].
Financial and Lifestyle Insights of Successful Entrepreneurs
Public Recognition and its Impact
Hormozi notes that while public recognition has pros (like attracting top talent and deal flow), it also has cons, such as loss of privacy, needing security, and inability to enjoy public events due to constant requests for advice, signatures, or photos [00:04:23]. The frequency of being recognized has increased significantly over time [00:05:27].
Investment Portfolio
Hormozi’s personal investment portfolio is “pretty simple” [01:18:19]:
- Half in Treasuries: Despite inflation, he values having cash liquidity for potential “10x” deals, viewing the cost of missing such opportunities as higher than inflation [01:18:07].
- A quarter in Indexes: Standard diversified public market exposure [01:18:13].
- A quarter in Private Companies: Directly invested in his acquisition.com portfolio [01:18:20].
Personal Optimization and “Darwinian” Approach
Hormozi applies an intense level of optimization to his personal life, similar to his business approach. This includes:
- Uniformity in Clothing: He wears the same type of clothing daily (shorts, specific t-shirts, flannels) that he has rigorously tested and selected for versatility across environments (gym, pool, restaurant, varying temperatures) [01:06:00]. This is driven by a desire to avoid decision fatigue and ensure optimal comfort and utility [01:08:53].
- Optimized Gear: He tests numerous products, from shoes to gym bags and backpacks, to find the absolute “best for the job” and often modifies them to suit his specific needs, like adding pockets for an iPhone or iPad pencil [01:11:00].
- “Never Skip Dessert”: A dieting philosophy focused on strategic indulgence after meeting protein targets, emphasizing consistency over strict deprivation [01:00:39].
Travel Habits
Hormozi values JSX Air, a semi-private flying service, for short regional trips (under 2 hours) [01:15:50]. It offers private flying benefits (convenience, safety) at a fraction of the cost of full private charters, providing the “highest marginal benefit” for shorter distances where traditional airport hassle significantly inflates travel time [01:17:09].