The Game with Alex Hormozi
The Entrepreneurial Life Cycle That Will Make You Poor Or Rich (on DOAC Pt 2) | Ep 866
Tue, 08 Apr 2025
Wanna scale your business? Click here.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.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode:Get the $100M Roadmap Course Free here: www.acquisition.com/training
Chapter 1: What is the entrepreneurial life cycle?
Welcome back to the game. This is part two of the guest spot on Diary of a CEO with Stephen Bartlett. This is a ton of fun. This second half, we talk about the entrepreneurial life cycle. It has six stages. You will be stuck in it forever until you break free. I was stuck in it for years. And I will say this, it does rear its nasty head multiple times. I have to fight it actively.
This, I mean, this year I was talking about it last night. It's one of those pervasive things that I don't think you solve. It's something that you manage. On top of that, we talk about experimentation in the form of how you beat competitors and how to do that in a way that makes it harder for them to keep up with you.
And so the last thing we talk about, we actually zoom all the way out and we talk about work, life, balance, happiness, fulfillment. And I think it's one of the more clear moments I've had on a podcast in a while. I've got a lot of feedback from people from the last 20 minutes of this particular podcast, and it's, you know, three hour plus podcast.
And so the fact that people got there, and then that was the part they were talking about, I think is good. But if you ever get criticized for how you work, how you approach life, you might enjoy it. So enjoy.
Well, I want to go through the four R's, but I also, I think that what comes before the four R's is knowing how to get customers in the first place, which was a tricky one. And actually, maybe even the thing that comes before that is being psychologically prepared for the toll and the rollercoaster that business is. I found this graph of yours.
Oh, God. Yeah.
And I think for any founder starting a business, it's important for them to understand this cycle. I think you call it like the crash-burn cycle or something. Because if you're not aware of this cycle, when you hit certain parts of it, you're probably going to think that there's something wrong with you. Yeah. But there's a certain inevitability to this crash cycle.
I'll put it on the screen for anyone to see.
Yeah. This is the entrepreneur life cycle until you learn how to break free from it. And so there are six stages here. You have stage one, which is uninformed optimism. This is where you see your friend or you see something online and it looks like they're making money or it looks like there's some opportunity and you think, oh my God, that sounds amazing.
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Chapter 2: How do you manage the crash-burn cycle?
Chapter 3: What are the four R's in entrepreneurship?
Whereas successful entrepreneurs that I've met, especially second time founders, realize that their hypothesis is almost certainly wrong from the jump. And that the process of starting is to correct and to find a new hypothesis. I think about Mark Zuckerberg in his room with FaceSwap or whatever, was rating people's attractiveness. And now Meta is this virtual reality AI company.
But understanding that your hypothesis is wrong from the jump, and that this is a process of finding a new hypothesis, I think will give you a little bit more patience as well through these cycles of... the crisis of meaning and so on.
So two things. So one is, I had this tweet that went like super viral, but it was like, first time founder, hey, I need you to sign an NDA before I tell you my business idea. I know you've gotten it. I know you have. Third time founder. Here's everything I have. Here's all the documents. Here's all the projections. It's probably all wrong and this probably won't work.
But I have a couple smart people and I think we'll be able to figure it out. It'll probably cost longer and take longer, cost more and take longer than we think. But we think it's worth a shot. Because everyone who's been on both sides of that understand, like the entrepreneurs got it because they're like, oh my God, I was that guy.
And all the investors get it because they're like, oh my God, I deal with this guy all the time. But actually what you just said with the many, many iterations that from your original idea until what actually happens is... Yet again, one of those demonstrations of the difference between a beginner and expert. A beginner has binary thinking. So they think this worked or it didn't work.
And if it didn't work, then I need a new idea. Rather than having the nuanced thinking of a master or an expert or advanced person who says, What about this if I click into it? I break it into its component parts. What about this didn't work? Okay, it's not that meta ads don't work or advertising doesn't work.
It's that we didn't nail the hook in our ad or that we didn't make our offer clear enough on the landing page or it was not congruent with the advertisement or, you know— the offer itself wasn't very compelling or it didn't have, it didn't like, it was just this, everyone's coming in and saying, yeah, I kind of want that, but this is actually my issue. We're not solving the core problem.
So it's, it's always in the, in the details. It's always in the sifting through the many small things that you find the kernel that ends up fixing the business. I mean, I know that Facebook was trying to fix their virality issue, and they were locked in a room for days trying to figure out how they could get more users to retain on the platform, right?
People would sign up, but then they wouldn't do anything, and then they'd drop out. And so finally, Zuck just said, okay. we have some belief that if people have more friends, that they will engage. And so they didn't, and here's the thing, like with the uncertainty, they couldn't prove it. He just was like, I feel like that's better than them not having friends.
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