Welcome to The Game w/ Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Wanna scale your business? Click here.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode:Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap
Chapter 1: How do the top 0.1% of the world actually make more money?
Welcome back to the game. So how do the top 0.1% of the world actually make more money than everyone else? Well, there's three layers and I'm going to start at the top, which is global. So let's dive in. How do the top 0.1% in the world actually make more money than everyone else? There's three layers. Let's start with layer one, global.
Chapter 2: What factors contribute to a country's GDP?
So if you zoom all the way out, the top 1% of countries in the world do things differently than the rest of them. And we can measure the productivity of a country by something called GDP, which is gross domestic product per capita. Now, the per capita part just means how much total production the economy does. So just think revenue, think sales, and then per capita is per person.
And so this allows us to normalize different countries that are big countries versus small countries and see how much the individual is making. Now, the reason this is so important and why we start at layer one global is because if you even out everything, you will be able to see the strongest levers on wealth creation because they're just done in aggregate.
And to be clear, within each country, of course, there are some people that get way more of that slice of the pie than others. But even at the global level, there are some countries that get more of the slice of the pie than other countries. And so, for example, the United States has the largest GDP in the world and Tuvalu has the smallest. Now, per capita, it shifts around.
Luxembourg is actually the country in the world that has the highest GDP per person, so 151,000. Now, I'll give you an example of number two, which is Singapore. They have the second highest GDP per capita and is also the home of Michael, who's our media director. And the reason they were able to do that is because they invest these countries in two major categories.
Number one is education, and number two is technology. And so if we think about this at a global level, which I think is important, is what are the inputs that every country has that's even? The inputs are time and bodies. And so at the very basic level, Anybody at all these countries at level zero can do menial labor, which is basically things that have required no skill to do.
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Chapter 3: What are the key inputs for wealth creation?
So if I had a conveyor belt of switchboards and I had to plug two things in, another one comes in, I plug two things in, it's typically something that you can train someone to do in about five minutes. And then you're just basically having them trade their time and doing this very simple task repetitively.
Now, that is typically not valued nearly as highly as other skills, which is why countries will invest in technology and education. The education so that they have more skills, the technology to do three things. Technology does, number one, it allows you to do more of what you currently do.
So that switchboard person, if there wasn't a conveyor belt in front of them, wouldn't be able to do nearly as many of those things as someone who did. The second thing is that technology allows you to do what you can already do even better. And so think of both of those in terms of units of time, because remember, this is one of the key inputs that everybody has that's even.
Whether you're in the richest country in the world or the poorest country in the world, every single person has the same 24 hours. And yet some countries massively outcompete other ones, just like some individuals in every individual economy massively outcompete people within them, which we'll peel back in layer two. And so imagine you have two different sets of people.
You've got 100 people on one side and 100 people on the other. And the 100 people on one side have electricity, Wi-Fi, internet, computers, like just that, versus the others don't. Well, which one's going to produce more economic value? Obviously, the one on the left. Not because... These people are inherently better than the others. They just have technology on their side, right?
And so we have to think about ourselves from the country all the way down using the same tools. So at the first layer, the wealthiest people in the world, the 0.1%, invest in gaining skills, buying technology, or learning skills to use that technology. Now, if you're hearing this, you might think, like I would, well, cool, that's great for them, but what about me? So that enters into layer two.
So let's zoom in on that. What are the skills that actually create the production at the individual level? So instead of global, now let's talk about that per capita, that person, just like you, just like me. Now, how do the 0.1% actually create that gross domestic product, that gross production, that revenue that then gets categorized for the entire country?
Well, there are three skills that I'll call BSL, and then they're multiplied by something that I'll use as R. And you're like, what do these all stand for? Well, the first thing, category of skills, is around building. You make stuff. You either build bridges, you build software, sometimes building is putting together things so that you can do services, but you build stuff.
The second is you sell stuff. The third is you lead people. And these also chunk up, if you want the fancier terms here, to mechanical, verbal, and social skills. So these are the three overarching categories that skill development, as it relates to GDP, can get bubbled up to. Now, to be clear, each of these skills are not binary.
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Chapter 4: What skills do the wealthiest individuals possess?
Because in the beginning, who are you going to be leading besides yourself, right? Not many people. And this skill naturally will develop in time, but it gives you more leverage on the other two. So let's get tactical on build. So in this book, 100 Million Dollar Offers, I talk about the concept of trimming and stacking.
So it starts with looking at all the different problems that a customer presents with, and then thinking, okay, how many different ways can I solve them? And so I use something called the delivery cube to say, okay, if we have this one problem, how can I solve this by thinking about what level of personal attention I want to provide? What level of effort would be expected from them?
If doing something like, what kind of environment or medium do I want to solve this problem in? How do I want these people to consume my solution? How quickly do I want them to get a response or get their problem solved using my services or product? And then if I were to create a product that was 10 times as expensive, what would that look like?
And if I had to create a product that was 1 tenth as expensive but still had to produce the same outcome, how would I build that instead? And so this is a wonderful framework that I like to think through and also wondering, is there a way that we can psychologically solve a problem rather than simply logically solve a problem?
And Rory Sutherland talks about this when he explains that some people used to complain about having slow elevators. You could either replace the entire elevator system, put a bigger motor in and try and get people there faster, or You can just put mirrors in the elevators and then people stare at themselves and don't notice the time pass.
And so that would be a psychological rather than logical solution because customers are by and large illogical. And so we want to make sure that the solution that we have solves the problem. And sometimes it's not even in the way that you'd logically expect.
Now the way that this problem-solution cycle actually works, which I talk about in the Leeds book, is that you're going to have one problem they present with and then you're going to solve it. And then what happens is that creates yet another problem. Because let's say that you solve someone's hunger problem with a salty pretzel.
Well, what solution comes up naturally or what problem comes up naturally? Well, now they're thirsty. So then you solve that with a glass of water or a soda. And so this cycle continues and continues and continues. Now, once you've solved those two problems, what's the next problem? Well, now their dessert stomach is empty. So we have to present them with a cookie, right?
And so there's always, if you properly solve a problem for a customer, there's almost always another problem that gets presented as a result of the solution. And the main reason for that is because people are never satisfied. And so over the span of many years, a good builder will develop an ecosystem of products that solves many customer issues at once.
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