Was Alex Hormozi von Elon Musk gelernt hat

0:00We're both big Elon fans. I sent you some clips on Elon specific specific portions. I've been going down this rabbit hole of how he manages his companies. How do you explain how a human being can manage seven companies now also run Doge and all other things he's doing? Or can't. You know, I mean I think he gets he gets tremendous like he obviously gets tremendous return on his time and he operates with huge operational leverage.

0:31There's you know, the thing is I have I have very little insight besides the clips that I see, you know, on on Instagram is like what is reality? Yeah. So I mean decision-making is probably some of the highest leverage thing that you can do and so it's like it's probably just what is the minimum amount of context that is required to make an accurate decision and then he just is a decision-making machine and is able to spot problems, pattern recognize and quickly correct course on the most important things across that many companies. I mean, it's obvious that he has some I mean he I think he said it was like some sort of genetic mutation, some likely thing that his brain works better, faster, stronger than most people's.

1:14But from what I understand, he just basically works until he's exhausted then plays Diablo for, you know, a bunch of hours and then like that's what gets him to unplug and then he like starts again. He obviously has a bunch of lieutenants in each of those companies that he has absolute trust with and they know kind of like the Elon way. And so I'd say probably a large degree is his ability to reinforce behaviors within the company that are conducive to value creation. And so that has to happen from the top down in terms of like what culture exists at SpaceX or Tesla or the Boring Company where they operate with this, you know, in his words, a maniacal sense of urgency at all times. And I think a big part of that is you know, one of the things that I think Elon has been exceptional at, which is something that I'm I'm it's actually a a deficiency of mine, something I'm working on, is like he's very good at painting a very clear vision for the future.

2:10Um which is typically like a big amorphous word for you know, for someone like me to say, but um you know, we are trying to make human life multi-planetary. Okay, that's a gigantic goal. And in order for that to occur, we need to have solar power. In order for that to occur, we would need to have cars that work on electricity. In order for that to occur, we need batteries. In order for that to occur, we would need uh you know, tunnels, tunnel tunnel technology. In order for that to occur, we would need to have that freedom of speech. And so he has he has somehow, because of this massive thing that he wants, linked every one of his companies to we're saving the world.

2:47Mhm. And I think that people will bend over backwards and work 100 times harder to save the world than they will for just about anything else. And they will also sustain and endure significantly more pain. So there's this this study was done, I wish I could remember what it what the name was, but basically, your ability to endure pain on behalf of somebody else is like five times greater than your ability to endure pain on your own. So like, if Jessica's in the other room and she it was like, you take a shock or she takes a shock, your ability to sustain higher and higher levels of shock is is like supernaturally higher if you know you're saving her from the shock.

3:25If it's just you, you tap out way sooner. And so I think that that can be generalized to like I'm I mean, people stormed the beach of Normandy to save the the world functionally at the time, right? Um and so I think that he has he has created that environment where everyone feels as though they're saving the world and acts in accordance with that. And so if we think about a vision and culture or values as very large bundled direction sets that included within them have hundreds of behavior sets underneath of them that orient behavior, then they are some of the highest leverage things that you can do in a company as the leader of the business.

4:09Um it's just difficult. There's not It's rare. It's not common that like our bank is saving the world like we're going to have to have banking in space. Like you you know like how do you tie that? Um you know like my fund is going to get a good like how do you really get everyone uh that level of motivated? Um and I think that to me is like obviously he's got the deep technical expertise. Obviously he's he's a he's a maniac with his time and all that stuff, but I think that he's able to get that level of behavior change across hundreds of I don't know how many employees he has.

4:38Lots. Because of how how that how everyone's oriented towards that goal. Do you want me to take a stab at this one? Please. >> I'm I'm like uh I'm like the one-eyed man in the in the land of the blind. I've had probably dozens of conversations. So I've seen a couple aspects. >> Yeah. One is he fundamentally redefines what I'm the CEO title. Mhm. >> He even had this whole tweet how CEOs are made up titles. So when you when you uh apply for a Delaware C-corp, there is no CEO title. So it is fundamentally made up. Yeah. So he doesn't he doesn't do things like operations and things like that. He there's probably for everything that he does, he doesn't do a hundred different things.

5:15So first of all, he fundamentally focuses on a couple things. What he focuses on is really his brand. Mhm. >> His brand allows him to recruit the very top engineers in the world. I interviewed Jamie Gall um who previously worked at SpaceX and one of the things I said that there was a lot of people at SpaceX that were lifers because they couldn't find a bigger mission. Yeah. You know, they they believed and I think appropriately so that human beings going to Mars was important for for the for the species to survive.

5:46So so one aspect is he uses brand and recruiting. The other thing, the most interesting tactical thing which was popularized by Marc Andreessen, is he goes into his companies and he deals out with one issue a week. And he sits down with people five to 15-minute meetings and he says, "What is your number one issue?" And he helps them solve that. Which has two effects. One is they're constantly getting rid of their constraints. They're constantly removing their bottleneck at speed.

6:14And and four, and this kind of bleeds into the fourth aspect, is he is a player coach. Yeah. He is in the cockpit. He is working 100-hour weeks. He's not telling people, "This is This is my mission. Now you go and I'll be on a yacht." >> Sure. He is in in the arena battling battling the bulls with everybody and I think that really has huge effect on the culture, huge effect on recruiting. I think the more interesting question is how did he start SpaceX before he was Elon? Kind of like how did

6:45>> you start with a $100 million offer? >> Um you know, I I have theories on that, but today he just keeps on leveraging his existing which is recruiting and brand and those are interlinked. When you go when you go to these highly technical problems, there's actually the most finite resource actually not money. It's actually engineering the top top engineers in the world. The 10x or the 100x engineers and he has a large market share of that. Sometimes they even transfer companies. That's what I've been able to gather so far.

7:15>> Love that. And so I took so two things then one add-on. So, the doing you know, helping them solve in these five or 15-minute meetings, whatever the one problem is, also force functions them to prioritize. So, if you're going to bring one >> know what their one problem is. >> Yeah, exactly. It's like just that that alone probably generates huge huge alpha for for the business. Um the the plus one piece as you've heard of Elon's algorithm.

7:39I don't think so. Oh gosh. It's like I probably use this all the time. Like I it's like the most useful thing that I've gotten from Elon of all the things that I've consumed. So, it's the five-step process that they apply at SpaceX, but they apply to everything. And he now just refers to it as the algorithm, which is question the requirements, delete all the unnecessary or dumb rules or requirements, um optimize, then pull up timelines, then automate.

8:08And so it's like if you're trying to fix a media department, you come in and you're like, "Why do we do this that way?" Okay, well, we don't need to do these 28 things that you guys are currently doing cuz it's dumb. All right, so how do we get the best guys to do the thing that that makes us the most money or gets us the most views? Optimization. So, we're reallocating resources towards the highest return. Okay, great. Now that we're doing that, how can we do it faster? Great. Now, how can we automate it? And walking through that process has been like it's been the back of my mind for when I'm fixing something because it's just like really good.

8:40And especially the question the requirements which was one of the hardest ones because it forces unconstrained thinking, which is you have to be like, "Well, why do we do that?" And a lot of people don't know why they do what they do because it's how we've always done it. Um and most it's so funny how how humans are so easy to add things kind of like we referenced at the very beginning. Like we add things so easily and we're and we're so afraid to remove things. We're remove steps, remove processes.

9:04Um and we almost develop this mythology around around process. We've always We don't do it that way. I think that's just survival brain, right? Um well, it has it has worked. We haven't died doing it this way, so we should just keep doing it this way and wear pink socks, right? It's like, "But why?" Right, totally. >> You know what the greatest thinkers in the world and 7-year-olds have in common? What? They always ask why. And if you just listen to 7-year-old, they'll just say why. And then they'll say something and then they'll say, "Why Why do you do that?"

9:31>> Yeah. And you lead to some really good questions. I ask even on the podcast, I ask some very fundamental like, are you diversified? >> Yeah. And if it's a very high-level thinker, they'll actually like think really deeply on it. And because it's like, how do you know you're diversified? By what vectors? It's like >> Yeah. How do you find out? >> These like dumb questions could end up being quite quite interesting answers. One of my uh well, no, what my my closest friend who's basically a brother to me, um he has a saying which is uh the shorter the question, the longer the answer.

9:59>> [laughter] >> He's like, "What's the meaning of life?" Like, well. What is it that uh I I wrote a uh I didn't have much time, so I wrote a very long letter. >> exactly. Yeah, yeah. 100%. I think it was a I think it was Pascal um who said that. But, yeah. >> Another concept uh SpaceX has specifically is responsible engineer, which you mentioned this high agency, which is the engineer in charge of the part, they are fully responsible for everything with that part. Yeah. And the exa- example they give in internally is if supplier hasn't delivered any of the parts, why aren't you on the plane going to that supplier?

10:32>> Right, it's your fault. And and a lot of the employees burn out after 6 months cuz they can't deal with this level of agency. Agency has a cost. Yeah. There's a reason why everybody isn't high agency. It takes a lot of >> Yeah. mental and physical power and emotional. And powerful. >> Yeah, it's so funny the the question the requirements like, I won't even get cuz I could tell poorer stories of the times where I've like walked in and been like, "Why do we do this?" And it's like, "Oh, that cost us 500 grand a year for this one department and we don't even need it." Like, I'll I'll tell you what. So, we bought for media, right? We bought um a bunch of really expensive cameras that looked really nice cuz, you know, the team was like, "All right, we're going to build the studio or whatever."

11:12And so then, I was like, "Why So, the it started with I was told we were going to put build the studio so that it would be faster for me to record so that I could just like literally walk across the hall and then just record, right? But then I I realized months after the studio was built because we'd always done that way, um that I would have to say, "Hey, I want to go record." and then they'd be like, "All right, we'll be ready in 2 hours."

11:36And I was like, "Why why is this taking so long?" And This is your new studio? Yeah, yeah. It and and so, um, they said, "Well, we have to set up the the lights or whatever." And I was like, "I'm always in the same spot. Why are we Why do we have to reset up the lights?" And they're like, "Well, we use the same lights in your office as we do in Leila's studio." And I was like, "Well, how much do lights cost?" And they were like, "Ah, it's like two grand."

12:04And I was like, "So, I spent $500,000 on this studio and we didn't think to spend $2,000 on the lights which confers the main benefit of having the studio which is we don't need to set it up and break it down. I started with the idea that the the the expensive cameras, right? Here was another one. After the the the videos were happening, I was like, "Why can't I like tell me what stops us from posting it within 24 hours?" Cuz I had like a two-week lead time to my videos. I was like, "This is absurd. Like, why is this taking so long?"

12:33And they're like, "Well, you know, it actually there's a big part of it is like uploading and download the files. It's actually this big pain in the butt." And I was like, "Okay. Why are do Why do we need big files?" And they're like, "Well, because we have these nice cameras." And I was like, "Why do we have nice cameras?" And there was no real answer because I have tons of videos. >> the not nice cameras. >> Right, right. And well, because because all the people who who are buying are people who are, you know, media dorks and love love cameras and audio, right?

13:03But, the reality was I can have an iPhone and save the same video and it'll crush because the only thing that really matters, at least in the education space, is the quality of the information, not >> change. >> Yeah, it it doesn't matter. It almost matters zero. Um, the effects and the the lighting and the like none of that matters in terms of video performance. And so, when when when I when I brought that up, it was like, "Okay, so we have these massive 16 I don't know, some massive very expensive cameras." And I just said like, "We're not going to use them."

13:33Put the I was like, "Put iPhones up." And so, I got so upset about this that I went on a plane and I was like, "We're doing this whole thing with an iPhone and you're going to post it in 24 hours." And we did that. I saw that on the jet way in. >> Yeah, that's exactly what [laughter] it was. And yeah, and that video got almost 2 million views. And so, it was to prove the point. I'm like, "Guys, this is not what matters." And so, I had to like I had to go through each of these elements of like and and and so so, walking through this, it's finding the constraint within a process. And I think that's what the algorithm is so effective at is like is And so, we ask this also with companies. Like, one of my favorite questions is, "Okay, so what stops us from 10Xing the current our current deal for Let's say it's demand constraint." So, like let's What stops us from from doing 10 times more than we're currently doing?

14:15Um and they say, "Well, we couldn't do that because" and then insert reason. And if that reason's solvable, then it's like, "Well, why haven't we done it?" Now, if there if that reason is obviously solvable, then well, then why we haven't we solved it? And then they'll bring up this other reason. And so, you keep asking why and eventually you get to like, "Oh, HR just hasn't put out the wreck for that person yet." And I'm like, "Why?" Because we have these other three roles that don't matter nearly as much, but this is the one constraint of the business.

14:43So, this happens all the time in businesses and I think part of it is because it's so rare to have people who actually do, I call it like pulling the thread. It's like just keep pulling the thread. Like, what happens next? What why is this preventing us from from doing ultimately the thing that has the greatest leverage on the growth of the business? And a lot of people just don't know. And I think part of that is because they don't have enough business acumen or business context to see like, "No, when like this is the tip of the spear." Like, if we if we need three times the sales guys to triple the business and let's say that's aligned with the business objective, then us not have like, "Why haven't we just hired 10 recruiters, vendors to just go place all these roles immediately?"

15:22Well, you know, we have one recruiter. I'm like, "Yeah, but it'll take us two quarters at our current rate." I was like, "When we could fill it in 7 days." And so, the cost, and this is what I had to outline, like, "The cost is what 3x sales is over two quarters. So, if we tripled revenue because we tripled the sales team by, you know, because let's say we have sufficient demand, I was like, "The cost, let's say it's a million-dollar a month company for simple math." It's like, "Okay, so it would cost us $12 million of lost gains because you didn't want to pay a recruiter 20k times whatever the number of sales guys is that we need to triple revenue.

15:59Do you feel like that's a good decision? Like, we don't want to pay 200 to make 12 million. That seems seems dumb. We should not do that." But people don't boil it like people don't pull the thread. Do you solve that on an individual level or do you find ways to operate or be a high higher agency? >> [sighs] >> So, what I'm going to say is probably going to be a little controversial, but I do think I do think a a big part of it is actually just like mental horsepower.

16:26Um I think some people don't have it. They can't cope with that. Multiple variables. Yeah, multiple variables, actually being able to sustain like multiple thoughts in your hot mind at the same time, and play out scenarios, I think is really tough for a lot of people. Yeah. Um and and that's where >> that they don't they want to be inefficient. >> Yeah, no, I don't think anyone wants to be inefficient and efficient. I That's where That's where it gets into competence. And so, like, is that trainable? Maybe.

16:53Uh I don't think horsepower is trainable. I do think that skills are trainable. To what degree is that a skill? I don't know. I probably should think more about it. Um but skill is almost an reallocation of horsepower. >> Yeah, yeah, that's where it's like, "What behavior change?" Yeah, I can have someone follow a process, but like, if it Yeah, anyways. Um but that that piece though, um I I I a lot about. And I would say the I would say the one common theme that's occurred in my business career has been that the quality of talent that I bring in has literally only gone up.

17:25That's like one constant in terms of like my income has been directly correlated with the quality of the people that I bring around bring in and what I'm willing to pay them. Because I mean every every person has the it's almost like this limiting belief of like what you can pay somebody. I mean shoot, they just paid you know John Ive um 6.5 billion Yeah, 6.5 billion so like there's a price, right? There's a price to get the best in the world of whatever it is. >> open AI stock. >> Yeah. No, I mean >> Not cash. Good on that. Yeah, I know. I mean that's a big commitment on both sides, right?

17:53>> Um but I mean if they do go through the hardware thing they're >> rational deal. It's a it's a completely rational deal because if he actually unlocks the hardware then they combine Apple with their I mean they they just murder. And I think they will. Real quick, if you are a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly where they got stuck and how they got past it. And so we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so no matter what you're struggling with, someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free. You go to acquisitions.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page you can just book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas and we'll do this in person live.