Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 826
episodePreviously titled “Why Do Smart People Stay Poor (on Impact Theory with Tom Bilyeu Pt 1) | Ep 849” — renamed by the publisher on Aug 2, 2026
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Why do smart people stay poor?
Alex Hormozy, welcome back to the show. Thank you so much for having me. Truly a pleasure. Let me ask, why do smart people stay poor?
They don't do the things that makes people rich. And I think they probably convince themselves that they're smarter than they are. And so if you were smart, then you would be rich. And so then it follows that there's probably a series of traits of behavior that you don't do either because you think you're above them or you don't know about them. So either it's a declarative knowledge deficit, meaning you don't know about the thing, which has nothing to do with the intelligence. Like if somebody eats an apple, sorry, banana, and they're from a different country and they just eat it through the skin, it doesn't mean that they're stupid. It means they're ignorant, which is very different. That's a declarative deficit.
Then there's procedural deficits, which is knowing how to. And I think one of the big difficulties with smart people is they have tremendous amounts of declarative knowledge and very little procedural knowledge. And so it's like saying you read a book on how to do a private equity deal and you know everything that has to happen, but you've never done a private equity deal. It's probably unlikely that you know how to do a private equity deal. And so delineating those things has been helpful for me. And since the procedural knowledge has significantly more utility on a daily basis from a moneymaking perspective. I have reduced, or at least this is me, you know, transitioning to me, but like I've reduced the amount of time that I spent on declarative knowledge.
And I try to get to the procedural part of it as fast as I possibly can, because I know that I'll learn significantly more by failing and doing it than, you know, reading 100 books on sales versus doing 100 phone calls. Like you'll learn a lot more in the first 100 calls.
It's interesting. This to me is I'm always trying to get entrepreneurs to one thing from first principles, which most people don't even know what that means. So you start by defining it. But this feels like that getting to understand the essence of what it is so that you understand it the way that somebody understands a combustion engine. So you can get in and be like, well, I know what has to happen for this car to go. And if I know what has to happen, you can break it, you can pull it apart and I'll be able to put it back together because I actually understand how this works. So how does wealth creation work?
You have to have a mechanism for letting people know about your stuff. And so that can happen on a variety of channels that typically happens either one on one or one to many. And so one on one would be you knock on doors, you reach out to people via DM, you send emails, you send direct mail, you you make phone calls, you send text messages. Any of those are one on one. Outreach is one way of letting people know you could do one to many. to people who already know who you are, which is basically today's equivalent of a billboard, which is social media. You make posts, you make content. The third way would be that you run paid advertisements. So on those same platforms, you just pay to get the exposure rather than doing it by earning it through quality content.
And then kind of like the door four would be using those three methods to then get someone who already has the type of person that you want to advertise to and doing structuring some sort of deal with them. But you'd still need to reach out to them one-on-one. You'd have to make content to attract them or you'd have to run an ad to get to that person. So these are the core things that someone must do to promote whatever they have. Because if we think about it from what must occur in order for a transaction to happen, well, people have to know that you exist or that your product exists. No one can buy something without knowing it exists. And so we have to start with promotion.
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