$100M CEO: How I know who to trust…

Summary

• I'm Alex Hormozi, a business investor owning acquisition.com which generates about $85 million a year.
• My expertise comes from my own struggles and learning, which I share to hopefully save others from similar pain.
• Businesses need a blend of the quantifiable brain side and the less tangible heart side; the heart is often more critical for outperforming competitors.
• Leadership can transform a team not by changing strategies but by inspiring belief in the team's purpose.
• Important business questions include "Why do we exist?" and "How do we behave?" but I'm focusing on the latter—our actions and behavior define us.
• Core company values must be non-negotiable, truthful to your nature, used for hiring and firing, and should repel the wrong people.
• Values that don't polarize aren't values—they're platitudes—and should be phrased as you naturally speak.
• Ideally, a company should have only a few core values, with three being optimal for making consistent decisions company-wide.
• Apply business values in all life aspects: don't tolerate short-term engagements with those who don't meet your values for long-term.
• Acquisition.com’s values are:
  • Unimpeachable character: engage only with people who can be fully trusted, even in tempting situations.
  • Sincere candor: the ability to give and receive feedback honestly and constructively is essential for progress.
  • Competitive greatness: strive to be at your best when it matters most, relishing hard challenges.
• These values stack up to define the vibe of the company and should act as strict filters for whom you work with internally and externally.
• A successful business often means making fewer mistakes and avoiding harmful choices, aligning with your core values.
• To establish strong company values, distinguish the non-negotiable traits you stand for and ensure they're integral to everyone in the organization.

Video

How To Take Action

I would suggest starting with clarifying your core values. Pick three non-negotiable traits that really matter to you. They should be truthful and specific to your nature and what you stand for. Use your own words for these values, make sure they sound like you, and avoid any generic statements that don't create a clear line in the sand.

You need to use these values to guide every decision, like who you hire or work with. If someone doesn’t match all your values, it’s better to pass. It will save you trouble in the long run. Remember, your values should help repel the wrong people.

For hiring, make sure candidates align with your values. Ask them questions to see their true character, not just if they can do the job. When it’s time to give or receive feedback, be honest and kind. This helps everyone grow.

When things get tough, you want to be sure you and your team can face challenges with grit and integrity. That's why competitive greatness is important. You want people who are at their best when it matters most. It’s not just about working hard, it’s about thriving in hard times.

Applying these values in all life aspects is a big deal. Don't settle for short-term relationships that don't fit your long-term values. If you wouldn’t work with someone for ten years, don’t even start. This mindset keeps your business healthy.

To sum it up, here's what you can do right away:

1. Define Your Core Values: Pick three that are true to you.
2. Use Values as a Filter: Make decisions on hiring and partnerships based on values.
3. Value-Based Action: Implement your values in daily operations and long-term plans.
4. Feedback with Candor: Practice open and sincere communication.
5. Competitive Greatness: Cultivate a team that rises to challenges.

Quotes by Alex Hormozi

"If you wouldn't deal with this employee for a decade, don't deal with them for a day"

– Alex Hormozi

"The extent to which you hold your line of intolerance around these truly non-negotiables will dictate the health of the organization"

– Alex Hormozi

"If your values do not repel people then they are not values, they are platitudes"

– Alex Hormozi

"The three values should give you a vibe for the company overall"

– Alex Hormozi

"A lot of times success in business is just making fewer mistakes"

– Alex Hormozi

Full Transcript

in this video i'm going to walk you through the true competitive edge that our companies have had in outperforming other companies and if you don't know who i am i'm a business investor i own acquisition.com which is a portfolio of companies that does about 85 million a year all right so my name is alex mozy we recently actually just sold a 66 stake in two of our portfolio companies at a 46.2 million dollar valuation so i don't sony any courses any masterminds and coaching cards with any mentorships i make these videos because i had a lot of pain coming up in learning these things and i hope that my pain is not in vain and uh i like it because it rhymes too what i want to show you is probably one of the most important questions that you have to answer that will ultimately inform your ability to compete within the marketplace there are kind of two schools of thought around business right you've got the kind of brain brain side there's my brain and then you've got kind of the heart side of business and the hard side is typically ignored because this one is very quantifiable and this one is not but the thing is is that i would make the argument and leyland i would both make the argument that this side even though it may sound touchy feely is actually the more important side and i'll give you a couple of examples before i give you some tactics around this so when you've seen like remember the titans or when you see a new coach come into a football team the actual strategy of the football game hasn't fundamentally changed the rules of the game are the same and typically the strategy of the team doesn't overarchingly change either they just actually do it better and so the doing it better and the higher output from each person a lot of times is not like 20 more a lot of times you can get two times four times eight times more out of the same people because they believe in what they are doing and so the thing is is that they makes that might sound like one of these motivational videos of like you have to watch remember the titans together and then everyone's kumbaya but there's actually the real conversations that have to occur in order to make the business grow and so there's there's lots of core questions that inform the the heart decisions of the company and so i want to focus today on just one of them right and so i'll give you an example of some of them so it's like why do we exist that is a very important question that you have to answer and it has to be answered well how do we behave what are our values is an example of a question that matters a lot who is in charge right during what decisions who does what those are all important questions but the one i want to focus on is the second one that i mentioned which is how do we behave the reason that this is so important is that it's one thing to know where you're going but it's another thing to know how you're going to get there and so this is just as true in business partnerships and marriage in terms of what you want uh to have happen and how you want to get there um as it is in business okay and so what i want to do is actually just walk you through the three values that we have at acquisition.com and why we believe them and so from an overarching perspective the way to come to values um is to look at what are the non-negotiables okay and so what i mean by that is and every company is different because the core thing about values is that they have to be things that are true and innate to you right like for example at southwest uh have fun is one of their core values and if someone does not want to have fun or does not believe in the processes that they do to have a good time then that is a non-negotiable for them that person cannot work at that company it is a fireable offense and so these are not aspirational these are not things that you would like to have these are things that are core to who you are as a person and as a team all right and so when you decide on these non-negotiables they are by their very nature non-negotiable which means that you hire based on these you fire based on these and these are the core spirit of the team and some of the mistakes that i see when people make values is that one they don't draw the line in the sand and so one of the core things about a value is that it has to you have to be able to say this is not this right you have to be able to say okay between justice and mercy we lean towards justice or we lean towards mercy which means you have to repel people with your values all right and so if your values do not repel people then they are not values they are platitudes okay and so it's very important the next thing is that when you're making your values the values themselves need to be ideally said in words that you would normally say so if you have little sayings inside of your community then then a lot of times those can become some of the values you have so for example jim launch one of our first portfolio companies uh speed is king do the boring work these were different ways i mean we could just say work ethic but that's not the way we would have said it we could have say be fast or fast turnaround times but speed is king was the way we would have said it okay and so some of the things that i've learned with this is also you cannot have too many values as in i'll say it differently you can't have too many values you have to be very selective at the the true core values of the company all right and so if you're you know between two a lot of times you just have to chunk up uh and kind of get a broader value but they become the core and i think that what we have found is that three is the sweet spot and that number has continued to distill down over time but i think three is the amount that your human brain can comprehend as lenses to make a decision right and the reason these values are so important is that when you scale the company you have to scale decision making which means you have to scale the frame with which you duplicate the decision making process which is should i hire this person even though alex is not involved in this do they align with the core values and the more strengthened the values the easier it is to have a black and white example of i think this person means two out of the three or one out of three but we only accept three out of three and i will tell you this as an additional point if you have core values in the business i would relay them to all aspects of your life if you would not do business with someone for a decade do not do business with them for a day it's one of the novalisms that i like a lot and so if you wouldn't if you don't want to deal with this client for a decade don't deal with them for a day if you wouldn't deal with this employee for a decade don't deal with them for a day you have to and and the extent to which you hold your line of intolerance around these truly non-negotiables will dictate the health of the organization and if you make these non-negotiables and realize that there are people in your organization in your client base that do not ascribe to these then you must make the changes to fix it and that is the pruning of the tree that will ultimately grow the tree all right these are the short-term pains for the long-term gains all right so what i want to do for the rest of this video is walk you through the three that we have that we look for the entrepreneurs of the companies uh that that own the portfolio companies that we invest in uh that we look for internally in terms of the employees that we hire and grow onto our team so this is both internal and external for us and then finally what we hold ourselves to all right and so these are the three for acquisition.com number one is unimpeachable character and as we were coming up with these over time we had like loyalty was something that was really important to us like absolute integrity was something that was really important to us like long-term minded was something that was really important to us and we were like we had all these words on the board and whatnot it was like what's the what's the what's the through line on this what's the thread that kind of weaves all these things together and for us it was we just want to deal with people who have unimpeachable character if someone has a wisp or an edge that just feels a little bit off these are things that earlier in my career i would i would rationalize and be like but they have all these other things and the the more seasoned i've gotten this the more i just don't negotiate on it it's like if i don't feel like this person is unimpeachable character i want to do business with them it's because if i wouldn't do it and a great frame of this is like would i do this with this person for a decade no then i don't want to do business with them for a day and so here's three frames that you can look at that i like a lot right and this is uh this is a little story that i got from a friend of mine who was talking to somebody who's on seal team six and they were explaining the difference between people who were seals versus people who were on steel team sex right he said listen at this level every single naval sea navy seal would lay down their life for another guy he's like that's kind of the ticket of entry to just be a seal right he's like but the people who are on team six he's like we have other things that we have to look at right you know if someone has an ego they're going to become he's like the hard problem somebody who's who has an ego but is a really high performer because they become cancers on the team right and a lot of us have these people or have had these people in our companies and i can tell you they are such a cancer like you don't know the damage they are doing to your culture which is ultimately affecting the overall company performance all right but the first the first through line here for us and the easiest one is like if we see someone who has an ego then then then we already know that they're not going to be they're not going to be receptive to feedback they're going to point fingers they're going to always think their idea is best uh and they're going to think they're better and ultimately we just don't want to do it that type of person right but here's two two questions that they asked uh in team sex that i really liked a lot he says not only can i trust this person with my life he said can i trust this person with my wife can i go and leave and leave my wife with this guy for a month and expect nothing to happen can i expect no passing comments can i expect no no moves no flirts no no no str stray looks because they have unimpeachable character the the second one was can i trust this person with my money if i were to give this person way more money than they have ever had and say i'm gonna leave i need you to hold on to this i don't know when i'm gonna be back but i will be back for it can i wait a month can i wait a year can i wait a decade and expect for that money to be sitting in the same corner that i left it and these are just questions that i ask when i'm looking at someone and thinking like does this person have unimpeachable character under what conditions do i think i could put what hot water could i put this tea bag in and see what's on the inside come out when you're asking questions and and for us when we're asking questions on interviews for uh candidates for the company but also when we're asking questions to the entrepreneurs what we're looking for is not even their answer but how they answer them to give us insight into their character and so for us unimpeachable character is the absolute foundation upon which everything we have is built the second one is sincere candor and the reason that this is so important is that we believe that you cannot make progress without feedback and if you can't give feedback then you cannot identify the deficits that exist in order to improve them and so for us having sincere candor is two aspects one of them is having the self-awareness to accurately identify situation and deliver the feedback that is good but also to be on the other side of this and have the humility to receive feedback not take it personally and to improve as a result right and so we look at this on the portfolio company side the entrepreneurs that we invest in and then also on the team side of the candidates that we choose to bring in do we think that this person can take feedback do you think this person has the intellectual wherewithal the emotional awareness to to give feedback in a way that is that is useful and constructive those are the types of things that really matter in an organization because when you have these unspoken things and these these these these wounds or these resentments what happens is this space starts to fill up between people and then their communication becomes less effective and fundamentally like running a company is based on how well you can communicate it's clarity of communication and so that is why this is so important for us as an investment company and also um in terms of the companies that we look looking to to help grow and so the third piece here is competitive greatness and i think and we borrowed this from john wooden because layla and i are both huge fans of his which is are you at your best when your best is needed the enjoyment of a hard challenge that is how he defines it but if you're thinking about this and this is how the value should stack up when you're looking at your own values which is how do we behave with this account within your company the three values should give you a vibe for the company overall like if you read these three things you should think to yourself okay people with unimpeachable character who have sincere candor and competitive greatness this should give you a vibe of the type of place that this might be if you're if i were to list off do the boring work speed is king have humility now there might be some similarities there between these ones and and uh and our gym launched one though don't sugarcoat it right which is kind of a different version of sincere kinder different flavor same concept right is that you should be able to read those values and say like i think i get the vibe for this place and you should also be able to say i don't think this person will fit in and so imagine you're interviewing someone and you're like okay i think this person can both give and receive feedback okay and they can do that effectively you know like i think they're very solid people i think they have undefeatable character when i think about the different um different things and stressors i would expose them to i think that they would hold strong but it's like oh i don't know if they're like really driving i don't know if they're ambitious i don't know if they really want to like take the hill and do big [ __ ] right well then but they have two out of the three i think they could still maybe fit for the it's like no if these are non-negotiables then they are non-negotiables and you have to continue to massage these until you get exactly the true core that gives you that triangle the three lenses to look through if you have 10 values it's impossible to make a decision it's it's it's also almost impossible to think through candidates there's too many lenses and so that is why we found three to be the sweet spot for us and so and look at a different one let's say you've got somebody who's competitively great super ambitious super hard charging right can accept and give feedback but you don't think they're characters there like you think if if things got hard they would revert to something different then that's somebody that you don't want on the team because things are going to be hard in the future that's a virtual guarantee that within business things will get hard and so you're just predicting what's going to happen in the future and just avoiding the landmine and so what i've also learned is a tangible side note is that a lot of times success in business is just making fewer mistakes is trying to avoid the dumb decisions trying to avoid the people that are going to become cancers in your company more than it's making very smart moves a lot of times uh the level of activity continues to decrease as we've weathered and scaled our our portfolio but i think the the skill with which we execute the things has improved because we were just more deliberate and we try we still make plenty of mistakes but we try to make fewer of the dumb ones over time this video is for making the values within your business what are the things that you stand for what are the non-negotiables with the company what are the things that you want all of your clients to adhere to what are the things that you want all of your team to adhere to and what are the lenses that we can use to truly draw a line in the sand and say this person does not fit in and if most people don't fit to the non-negotiables that you have good most people shouldn't be in your company all right so lots of love mosey nation if you're new welcome i make these videos because i went through a lot of pain and suffering to try and figure this stuff out and i hope that that pain is not in vain lots of people are broke don't want you to be one of them enjoy the next video bye