Mein größter Fehler im Business

0:00Looking back, reflecting on your career and your inputs and your outputs, Yeah. do you find that if you would have spent more time on the things that did really well, they would have done even better well, or would you have more diversified your time and effort into different projects? Man, that's a really interesting question. So, like the the biggest mistake like the biggest financial mistake I've made was I so I had Gym Launch um and I started uh this company called Allen, which was a software company that did did lead nurture before all the AI stuff. And so, it was just like decision trees on response responses and things.

0:36If I had not done that and simply made a CRM for gyms rather than a lead nurture software for gyms, that company would have sold for half a billion dollars instead of $450 million. dollars. And 46 to be exact. Um I that was the biggest mistake that I made. Um but when it comes to like would I have, you know, gone deeper on one thing versus spread out, it's tough because I can't play out the other the other side, right? Like if I had never diversified, maybe I'd have 500 gyms right now. If I never got out of the first thing that I did. It's possible, right? And like maybe with 500 gyms, depending on how profitable the gyms were, maybe I'd be richer than I am now.

1:17Um I don't know. Actually, 500 would be test. Maybe 2,000 gyms by now or like some some some monstrous number. Um So, I think the difficulty is like we can't play out the other the other the other way. Um what's been unique about the path that I had because it's been so defined by my ADD, which is why I'm so focused why why I talk about focus so much. Um is that like I've had a B2C business like direct you know, I've had a service business that was brick and mortar. I've had an online service business. The first business I had was an online online fitness business that I then turned into in-person. I have had a physical products business was which was B2 B2C. So, I had to manage both direct to consumer uh you know, media buying and ads and also have kind of a just a wholesale distribution to brick and mortar uh gyms. I have had, you know, B2B SaaS um with Allen. I've had um B2C SaaS or prosumer with School, right? Um I have, you know, the the investing side. And then from the exit side, it's like I've sold to a competitor. I've sold to a customer. I've sold to a partner. I've sold to private equity. I've sold to um uh I've sold to friends. Like I've had I've had I've I've done seller finance deals. I've done cash deals. I've done uh you know, leverage buyouts. I've done like so this this very weird it's kind of like calligraphy for Steve Jobs. Like That became, you know, key to the Macintosh and kind of their whole vibe.

2:41Um but for me, all of those experiences have made me exceptionally good at what I do now, which is I talk about business. And so, me being able to talk with like good depth on each of these things cuz I founded and started and scaled almost all of them not School, but like um those companies and deeply involved in them, I have a I have a very good understanding of how these businesses work. And so, that like maybe if I hadn't done any of those, the Alex Hormozi brand wouldn't be what it is today. And so, that's why I have a tough time with like was it was it the right call? What's like I don't maybe maybe I wouldn't be doing what I'm doing now. And what I'm doing now has worked really well. So, like I don't know. You know, Peter Thiel says this is number one regret Hm. in his investing life. What?

3:24>> It's actually not doing Facebook Series A. He did the seed round. He was on the inside track. He didn't do Series A. So, sometimes really doubling down doubling doubling down on your on your successes could could have really big returns. I think Munger talks about that, too. Um and I mean, yeah, I think just like what's what's tough about um and I'm sure you've seen this, too, um is that like the best companies are really expensive.

3:52Yeah. [laughter] Feel expensive. >> feel exactly great great Yeah, great correction. Yeah, like best companies feel expensive and still yield higher returns [laughter] often times. Um and I I I have to be reminded of that sometimes cuz like the you know, I think a lot of in this is me, you know, I know you'll have a lot to say about this, but like I think a lot of investors who start investing their own money, you know, um they almost have to re re reinvent the wheel. It's like Warren Buffett talks about the cigar butt businesses where you just take your last few puffs and and they're, you know, wonderful prices and fair businesses and then eventually you just get you you're like, you know, this is not worth it. Like we can get even better returns and less headache if we just buy these, you know, wonderful companies at fair prices or even what feel expensive, right?

4:41>> Yeah. Um and so, I've had I mean, I feel like I'm still I'm the game's long. So, I'm not saying I'm I'm I'm developed there, but um I've had to I've had to learn that the hard way with just some of the cigar butts fall in your lap and you're like, "Ow, that hurts." It's still like >> [laughter] >> Google Ventures, this was like a decade ago. Google's venture arm did the study on what drives returns. One of the biggest signals that they had was when a round company was priced at a much higher round than the last round because it felt so expensive and yet there was a new person. And even when the insiders were the ones leading that round. So, the insiders had this like there's this friction of increasing the price and yet if it still got to that price, it was still probably underpriced.

5:22>> Right. Because and um I think Thiel talked about this, but it's like typically if a company does have this material change, let's say in like 6 months, I think PayPal had like a 3x or a 5x or something in terms of a change in valuation. He's like, "Well, it's because they like materially changed the risk profile." Like there was some big thing that they were able to solve. And so, if you have this, "Okay, I think this is a 10% likelihood outcome of getting to a billion dollar company." And then the big thing that takes away 40 percentage points there is that there's a network effect that hasn't really caught on where people are sharing, you know, with each other or you figure out that you know, your viral coefficient in terms of virality. It's like, "Well, if you get that right, then it's like well, boom, we go to 50." Then it makes sense that even though the time duration has been small, the problem was still solved, which is the thing that created the discount uh for risk that it's just like it's just, you know, we all are like, "It's not fair that 6 months ago I could have bought this for [laughter] But actually, it is fair. If it was much more risky, [clears throat] yeah.

6:23If it was much more risky, it's actually extremely fair. >> Yeah. No, exa- exactly. It's exac- it's totally fair. It's just the amount of risk There's regret. Yeah, yeah, and then you like don't want to cuz you're like, "If I buy it now, then I'm If I buy it now, I'm an idiot for not having bought it." >> Yeah, you have technology or mistake. >> Yeah, exactly. [laughter] So, now you just hope this thing dies so that you so that the first thing for when Now you hope it dies because you missing out when it was 1/10 the price doesn't feel like as big of a mistake.

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