A BILLIONAIRE told me how to make BILLION DOLLARS...here's my plan...

so i've been looking to having this conversation for a couple months and it was just sitting on the schedule and i kept looking forward to it and i found myself you know a couple minutes into the phone call and i said hey just out of curiosity how much are your companies doing a year in revenue right now he said well i think we're doing over a billion dollars a year now and that's when i was like man i have a lot to learn from this guy so hi my name is alex romosi i'm the owner of and ceo of allen gym launch prestige labs and five other portfolio companies and i have absolutely nothing to sell you you know there's a lot of people out there who struggle to make money and are struggling to you know grow their net worth and i made this channel to make sure that you are not one of them what i want to share with you is some of the kind of excerpts or the private conversations that i had with a man doing a billion dollars here in revenue that's privately held so his company or companies are privately held he owns um 50 of them and uh he's probably in his mid 70s for the security of that individual i'm not going to reveal his identity but what i will do is give you all the lessons that i wrote down as a result of this conversation all right the first thing that i think before i even get into it that i'm going to get asked from this video is like well how do you get access to guys like that and um further along this video i'll explain how he went from 100 million dollars to a billion dollars a year in revenue his process around that i also talked about how he organized his personnel and did his incentive programs uh where he was allocating his capital that he felt he got the best returns from so jam-packed lots of good stuff for you from a man who has done it and lived it and so the first one is about how do you get access to something like this and so one of the things that i think i hear on like the entrepreneur channels and things that i cruise around and snoop around down is i hear these big mass market people say like just go buy a millionaire a lunch or just say you'll go work with a millionaire for free um i don't think that's realistic because you have nothing to offer that person and so i think the first step is self-awareness of understanding that like you only have x amount of value now your intention should be to increase that value you have in the achievements that you have so that you can gain access to higher level people so now i've gotten to the point of my career where you know he knows that we're doing just under 100 million a year and so i had real questions that i wanted to ask him and the person who made the introduction was like hey this guy's legit you know he he loves all your all your content and all your books and things like that could you would you know would you mind helping him out or taking a call and so he agreed which was crazy for me and i was really really thrilled about it but you know if doesn't matter where you're at you can probably just add you know a zero or multiply whatever you're doing by five and that's probably around where somebody where your cutoff might be so if you're making a hundred thousand dollars a year then you know gaining access to somebody making a million dollars a year is probably around where the cutoff is going to be for what your you know achievements will give you access to and that's kind of the the reason that i think a lot of these coaching programs and masterminds and things like that exist is because people can't gain access to that level of person uh without some sort of you know prior achievement and if you haven't achieved it then you have to compensate that that person with money in some way right we got on the phone call and this was layla and i am playlist my wife she runs these companies with me she's co-ceo she actually just started a youtube channel if you want to check that out but the the first thing that i asked him was i said hey ben uh i had been stuck at you know mid 30 million dollars a year uh between 30 and 40 for three years and you know i just from listening to some of the stuff that you had really understood the breakthrough of how to get to 100 and right now we're pacing probably about 85 but i think that that breakthrough was was key which was understanding to focus on people now you might be like well duh i have heard that everywhere alex why are you so dumb great question i think that what i did not understand was that as the entrepreneur we believe that we are source of everything and at a certain point there's only so much influence that you can have and maybe i'm just not influential enough that's that's possible right but your ability to influence people one level two level three level four levels of management below where you're at you know dilutes over time like you are potent but you become disseminated as levels of manage and get introduced which is natural when you whenever you grow an organization right the first thing that he said that i thought was really powerful was understanding what levels of talent exist and so he said there's really just stars and superstars and one of the things that he said completely shifted my perspective about how to view those things and i'll tell you what that was in a second but the key point that he said is that every business that is going to grow and be self-sustaining must have three superstars and i was like huh that's really interesting and where he divided the superstars out was actually exactly where i would have divided them out as well which was you need to have somebody who's in charge of acquisition you have someone who's in charge of delivery and someone who's in charge of operations and shared shared services right that means one person gets new clients one person delivers on promises and the third person keeps the first two out of jail by making sure that bills are paid and and payroll happens and legal and i.t and all the lovely things that come with running a business that no one ever thinks about he was like if you have three superstars then that business can grow on its own the second thing um was layering on the incentive packages appropriately and this is something that you know charlie munger warren buffett you know and this guy i feel like i see this common theme around the guys who make the most money in the world is that they are not afraid to give up a little bit of the pie to make more people wealthy so that the pie itself can grow it's easy to say it's hard to do and i think one of the biggest mistakes that i made for the vast majority of my early business career was not understanding how to align incentives and you know i think charlie munger says like show me the incentives and i'll show you the outcomes and so when i started out in my career i thought that i just had to partner with everyone and that wasn't the right call for me at the time because i ended up partnering with people who had the same skill sets as me because they seemed cool and we like the same things but the reality is that i should have been partnering with people if i was going to partner uh with people who had different skill sets so i might have been the acquisition guy because that's probably i would say my my skill set but i should have partnered with somebody who was really good at delivery service product etc and had somebody who really owned the operational you know portion of the business and so that's what i should have thought of now mind you i had a mentor early on in that time in my life who said listen you might need an accountant it doesn't mean that you have to give them equity in your company right you just pay them as a vendor and that was again something that i did not understand when i was earlier on and so just if you're starting out your career you know you don't need to give away equity in your company to get things done you can just pay for them and that's okay in fact it's encouraged because the most expensive equity you typically give away is in the beginning and so being mindful of that and leveling up your skill sets so that you don't have to i think a lot of times can yield disproportionate returns and in the companies that i have grown to you know eight figures multiple figures and now knocking on nine have come from companies that i that i own right and have very small percentage of equity that i allocate to people who are star performers which leads me to one of the things that he talked about that i referenced earlier which is understanding the difference between superstars and stars and so um he said something that really stuck with me and after this i'll tell you what he said about how he allocates his money and whatnot because i think that was really cool but how he identifies superstars he said listen you we all want superstars right and we know him when we see him but what i have noticed is that i've never not thought someone was a superstar and then later realized they were he said now i've had people who came in and i thought they were superstars and then they they it turned out they weren't superstars but i've never had the reverse happen where someone comes in i don't think they're a star or a superstar and then they become one and so i took that as a key learning for myself which is once we're bringing in high level talent we're bringing in leaders we're bringing in drivers that if we don't immediately think that they're a superstar then it means that they're probably not a fit for that role and that can be hard because one of the biggest things that gets in the way of excellent is good enough i can tell you as somebody who's hired so many good enough people and i think later now hired true superstars the difference is is is uncanny it's night and day that they're able to solve problems bring solutions to the table and implement them without your input oftentimes what you know you have to end up doing which is why the gap between 30 to 100 million is about giving up the next level of control which is kind of the control around high level decisions right you have to give people the autonomy and the power because a superstar wants that kind of power right they want that kind of authority they want that responsibility and they want they want the responsibility because they want the credit for the outcome right and so this was something that took me a long time to understand and the way that he incentivized those people that he shared with me and i will share with you right now so you guys don't have to get a billion dollar a year you know entrepreneur on the phone is he said he would set up profit shares for those ceos and he only did it for the ceos of his companies he had so many beliefs i'll share one of them with you right now he said i don't believe that businesses should make a profit and so this man is clearly a philosopher at this point in his career just fyi the guy's mid-70s peaceful as can be salt of the earth and i was like i don't even know what that means he said i said can you clarify that he said i believe that profits are unnatural he said i don't think that they're naturally occurring i think that a business if left on its you know lift to its own devices will pretty much break even and i thought about that and i thought and i thought more and i thought more about it i was like i guess that's true he's like it's unnatural to create profits and it takes willpower to create profits because you have to create outsized returns compared to the marketplace because everyone else most of the time is the same resources as you do or you know they have the same 24 hours they've many times the same access to skill and talent that you do and so if you have the same access skill and talent you know and you have the same resources or similar resources then then how is it that you're going to out-compete them it takes something unnatural it takes something above and beyond and so for him he believed that creating profits is a natural and is the sole responsibility of the ceo which i thought was interesting i'm not sorry 100 agree it might not i just might not be at that level yet i don't know um but he said he shared five percent of profits with those uh entrepreneurs and he also gave them the opportunity to buy in truly buy-in not just like giving equity but buy in bigger and bigger chunks of the company he said i think one of his biggest companies that he has the ceo owns like 30 something percent of that company now and started at 5 or 10. and so the reason i'm sharing this is that like at a certain point the company becomes a conglomeration of companies of of drivers who are driving growth across channels right across individual profit centers that all roll into one larger conglomerate and so just just fundamentally shifting my understanding of like what business will become instead of like oh i'm going to sell you know a hundred doors now i'm gonna sell a thousand dollars and i'm gonna sell ten thousand dollars right and i say door it could be pens or ball caps or it doesn't really matter but the point is is that we're selling a widget of some sort right instead it's it's you might have a business that sells a hundred you know doorknobs and a hundred doors and a hundred door frames and door insurance and all that type of stuff around and each one of those things becomes a profit center for the overarching conglomerate and has a driver who has specialization within that industry and has done it before and so i think when he shared this to me like it reinforced one of my core beliefs which is advanced people are advanced because they never don't do the basics like so many people you know myself included i would see people on stage and they would say what they were doing and i was like there's no way it's that simple but i think the reality is it is that simple it's just not easy finding good people is hard it's the number one issue all businesses have it's like because if fundamentally every single person who's listening to this right now is three amazing hires away from all the growth you've ever wanted like think about that like we're all three hours away from all the growth we've ever wanted and our time back and i feel like i'm just beginning to really experience this as an entrepreneur and i'll tell you it's trippy it's weird not being needed and i would encourage it and i think that there were multiple times throughout my career where i thought that i was not needed and i stepped away and then things crashed and then i had to jump back in and so maybe you've had that experience too but when that happens sure there's process issues etc but most times it's because there's a lack of talent and i'll share one conclusion that i made from this thing and i'll tell you what his investment advice was but one of the conclusions that i have is that the size of the corporation is directly proportional to the amount of superstars that are present and so when you think i'm like superstars i'm not talking stars stars are great you need a players right but who are who are the people of that x factor that it fact that something different that can really drive right and as a company gets bigger he even shared this too he said you know you need fewer drivers and you need superstar tenders you need people who are not hunters but but farmers who can just tend to the company overall and make the incremental improvements because a lot of times companies grow in a stepwise fashion so it's huge growth plateau huge growth plateau huge growth plateau and then we as entrepreneurs think we're you know breaking something when in reality that's just oftentimes is how growth occurs because there are bottlenecks there are constraints that are on the business and then you de-bottleneck them and then you experience the next level of growth and usually you de-bottleneck them with a person who has experience or who has talent in that specific area who can solve the problem for you and has done it before as promised what i'm going to do is i'm going to wrap this puppy up with his advice on investing and so he said so i'm just giving you straight from the horse's mouth this is what he told me so he said you know we've done really well in real estate we have a couple hundred million dollars in real estate and we've done it all through the company and so he and his partner um share share the equity in the deals that they do and they buy all multi-family real estate so big buildings with lots of apartments he said when i buy he said i'm more concerned on return of capital than return on capital so i'll say that again he said i'm more concerned when i invest with return of capital than return on capital and i thought that was it just consistently reinforces what i keep finding with the people who are worth so much more who are worth 500 million worth of billion dollars is that the high risk stuff everybody who's poor wants to buy the lottery ticket but everyone who's rich just wants to own the lottery game and make 10 a year on it right and so he said that for him he just wants to invest in things because he realized that he's like no matter what he's like the tenants are paying for the mortgage for me he said sure you know some of them we did better some of them we did worse he's like but overall as long as i thought all the fundamentals were sound um then i was going to just have a great store for my wealth and he's like and sure we lucked out a few times uh but for me this is him saying this he's like but for me that has been a really uh great vehicle and i was like okay well jiminy rules of thumb you know just off the top of mind of of uh of how you pick those spots and he says you know in general i never i never passed a a cap rate of eight he said so if it was below eight i wouldn't do it um and that's that's how he picked his deals and i thought that was really interesting and so you know layla and i have looked at that in terms of rules of thumb for the purchases that we're looking at and whatnot he would rather have slightly higher value buildings that he thought there was less risk in that he felt more guaranteed that his capital would come back to him than trying to you know maximize his internal rate of return and i think to a certain degree that goes with the leverage that he might employ like how much debt is he going to take on to buy this facility because if you get more debt then you're going to get better returns but you also increase your risk and so coming from a man who obviously doesn't need anything else in life i thought that was also valuable because i think as you as you grow as an entrepreneur it becomes so much more about downside mitigation because you know adding you know doubling your net worth doesn't really change anything about your life but cutting your net worth in half does and so it's really about like what are we what problem are we solving what are we trying to accomplish here and making sure that the way that we make decisions is aligned with that these were uh some of the notes that i had let me make sure oh and i'll tell you the one last thing they told me i said all right so we followed your advice of getting you know from 30 million to 100 million this is this is really good you're going to want to listen to this one um i said okay well then how did you get from 100 million to a billion and this is stuff that you will never find anywhere all right you will not find this anywhere written down because there are so few billionaires and there's so few people who are doing a billion dollars here in revenue who can actually share this with with truth and his answer will crack you up or at least it cracked me up and so he said he said well i'll be honest with you man he said you know when we were we did 100 million a year for for four or five years and he said and honestly we got so burnt out because we kept wanting to go you know wanting to grow we just couldn't grow it anymore so we couldn't get past 100 million he said so we pretty much just gave up and we we took the company we broke it into 100 little pieces and we gave um you know profit sharing and small equity pieces phantom equity to our our best superstars and our drivers and he said me and my partner pretty much kind of checked out he said and here's what's crazy five years later we were at 500 million and five years after that he said we were at a billion and i was like wow and i was like so so i mean what would you what would you say like so how do you how do you go to a billion and he was like i think the way you get to a billion is not trying to get to a billion and i was like man like that's like it was it was that i felt that i was like really he said i think it was luck it's like i think there was a lot of things that happened and that that you know things were aligned a it showed the humility that the man had but also that you know he's like there's a couple key decisions that were super important uh for our development within those companies um and he said and i oppose them but it was it was decisions that were made by the leaders of the company and they did it anyways he's like and they were right i was wrong and so i think it just underlined a huge humility but the reality that for most of us entrepreneurs like we don't have all the answers like we have a lot of answers but we don't have them all and i think that seeing how he did that going from 100 million to a billion dollars a year and that he was like it's luck and it was basically incentivizing a lot of people and he was growing the pie it was making other people wealthy and allowing you to participate in their creation of their own wealth i think that makes a lot of sense because the drive uh i will say personally as an entrepreneur to make more money after a certain point at least for me in my current chapter has has diminished significantly and my desire has has shifted far more to making things like this and helping other people out because i think i think the world needs it so anywho i think that the reason that his company was able to grow and this is just from my perspective is that all these other people were getting their kind of first nut for lack of better term and he was able to capitalize on them getting their you know grow driving so hard uh because he was able to give them that incentive uh to do so and so hearing him say that was really cool for me um and i think that for me as an entrepreneur hearing that it was much more like well the way to go forward is really finding the superstars putting them in the right places giving them incentive not being greedy and being humble enough to to accept that we don't have all the answers and so anyways i hope this private conversation with a billion dollar year revenue uh this was revenue right what cash collected per year uh entrepreneur had to share about his investments about how he saw business in general about how he thought profits were unnatural i hope you found value in this because i um i definitely did and i hope you did the same so if you like this hit subscribe and i'll see you next vid bye

Channel: Alex Hormozi

Views: 159,954

Rating: 4.8739343 out of 5

Keywords: Alex Hormozi, Alex Hormozi Business Tips, Alex Hormozi Gym Launch Secrets, Hormozi, Business guides, Business tips, Skillsets, Skill Stacking, The Game Podcast, how to be a billionaire, billionaire motivation, how to be a billionaire in real life

Id: _x6n-CmZqjo

Length: 19min 7sec (1147 seconds)

Published: Wed Jul 07 2021