Alex Hormozi shares the #1 lesson he’s learned from the wealthy

0:00Is there a specific point like early in your career that was like a pivotal moment that maybe changed the trajectory based on like building leverage whether that was like people, capital, media? >> Early on, not really. I think that the I mean the the the most valuable thing for me was to get around people who are making more money than me. And that's just and that that hasn't really changed. I've always tried to get around people who make more money than me just to see what they're what they're thinking with, what opportunities are they pursuing, what things did they say no to.

0:23Um and I think that's been probably the most valuable thing that I've done in terms of changing my thinking and like what kind of frameworks I use. >> And what were some of the patterns that you feel like you picked up from them? >> Just the games they were playing. You know what I mean? Like I I learned about the private equity game. I was like, "Oh, wow. Like the largest percentage of billionaires come from private equity. Weird. Okay, noted." You know, on the flip side, you know, real estate has made more millionaires than anyone. But real estate is a far more efficient marketplace overall. And so you don't have like 100x's, not really, you know, in real estate. But you can you can do that absolutely, you know, in the business space in a much shorter period of time. But it's definitely a higher risk, higher reward. Like the building's still there. They're still a roof.

1:02People might still run it. But like a business can go to zero. Buildings don't really go to zero. >> Yeah. And what was it the what was that epiphany that you had around the private equity space? Like why is it that so many billionaires from that? >> I think it's just more observation. Um so it's more like, "Okay, is there something that's weird here? Okay, well, let's learn about that. If this is the you know, highest concentration of of mega wealthy people, then there's probably some sort of arbitrage to this game." And there's multiple levels of arbitrage within private equity. And when you combine them together, that's when you can create these 100x outcomes.

1:30It's like, "Well, you can buy things for a significant less than they're worth, far more so at a discount than um like real estate, for example. And then you can still lever using debt from, you know, third-party financing. And then on top of that, you can have even more leverage by raising money to do it. So it's like somebody who has $1 million can put a million dollars in, raise 100 or raise 99 to get to $100 million. And then buy, you you five businesses that are $100 million each because they put 20 million down and then they, you know, okay, let's be realistic. Let's say they buy three just for, you know, arguments sake, they put a third down on each of them. So, three $100 businesses and they get bank debt for the other, you know, 70 on each of those businesses. It's like, so one guy with $1 million just bought three businesses in total for 300 million. And if those businesses just grow at like, let's say a 20, you know, 20% rate um over the next, you know, five years, those businesses go from uh $100 businesses to $200 businesses. So, he goes from, you know, whatever it was, uh 300 to 600, right? But he probably also bought those at a discount. So, maybe they inherently were worth more than that. And all of a sudden it's like, wow, now we're at 900 million. Um and so then he just, you know, gives his he has his hurdle rate to his, you know, his partners. He has to pay his debt back and then after that you just have this massive nut left over. You can take that 100 or 200 million left over for the managing partner and then just play the game again. And there's very few ways that you can do something like that within a five to seven-year span than anything else with so so little capital.

2:59Now, people are going to only trust, you know, um somebody who might have a level of experience or saying, "Okay, well, I worked at a private equity fund for 10 years. You know, I did two funds and I feel pretty confident I can do it." It's like, okay, well, then you can do it when you're 35 cuz you start when you're 20 and you get 15 years in or whatever, uh you know, two seven-year funds. And you start your own. And so, uh yeah. Like I see those types of games and I'm like, that makes sense. Like, where where is the where is the huge lever opportunities that exist? Like, software is obviously a big one. Like, how many things can you go from zero to a billion-dollar valuation in three years?

3:30Like, you can't do that with a chain of dry cleaning stores. This is not going to happen. >> Yeah. >> Um and so it's just like, okay, well, what is what are the nature of those things? Well, most products that have zero cost of replication uh tend to have more leverage. So, like media is an example or software stuff is an example, even licensing stuff. Um all of those are zero cost to replicate and so they're just more leverage baked into the business model, and you you work just as hard to build the restaurant or the dry cleaning business as you do to build the software company.

3:57You just need different knowledge. And so, I think finding people who have expertise in those things um helps you move faster. If you like this video and you're business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out.

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