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
Full Episode
Welcome back to the show. Today, I'm going to talk about the four paths to mega money. And so in the year that I took off after the sale, I studied this intently because I wanted to figure out the best opportunity vehicle for me. And it turns out there are four and all four can make you mega rich and they all have pros and cons. And let's start with the first one.
So in the first path, you have other people's money being invested into your business. Now let's look at some of the business titans that followed this path. So here you can see three pie charts with 17%, 10%, and 4%. If I were to show you this and say, do you think the people who own these pies are very rich? You might think, well, no, they own so little of the pie.
But if I then said, this is Tesla, this is Amazon, and this is Nvidia, would you all of a sudden then think, oh wait, this is Jensen Huang, Elon, and Bezos, some of the richest people in the world, who are all centibillionaires, and now at this point, multi-centibillionaires. And so these incredibly successful people understood the first path of getting ultra-wealthy, which is,
the combination of other people's money into your business. Now, the way that it works is that you raise funds by selling a percentage of your company. So what this does is that it actually dilutes you as a founder, meaning you no longer own 100% of your company, but now you might own 80% of a company that now has an extra $20 million, for example, that you can then use to grow.
Now, there are some businesses that this is the only strategy to successfully, realistically accomplish the goal, and then there are some businesses that this would be a terrible idea to pursue. One thing that I think took me way too long to understand as an entrepreneur is that every single business incurs debt the moment you start it.
the question is what type of debt you're going to incur and so for example if you bootstrap a business as in you take no outside capital when you start it you just fund it yourself and you own it you grow it organically then the debt that you take on is going to be that you're not going to have enough money to get the best talent in the door and so you're going to have talent debt you're probably not going to have enough money to get the right technological infrastructure in place to to run the entire business so you'll take on technological debt
And you can go down the line and start thinking about all the other ancillary non-financial versions of debt. Now, businesses that choose to take on financial debt choose to take on that debt instead of the other types of debt because of the nature of the competitive dynamics of the market they're in.
And so those types of businesses typically are in businesses that take a tremendous amount of capital to start up and scale, or they are in winner take all markets where speed is the primary objective of the business so that they can capture the opportunity and then fundamentally become monopolies of a new type. So Facebook, for example, became a monopoly of attention to a large degree.
Now, because there are other social media platforms, they get away with that, but they have created a big moat around all of the attention that exists in media. And so for them, there's only one real big social network that was going to exist. And so they then captured it. Of course, LinkedIn was like, well, is there a version of that we can do for business professionals?
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