8 Lessons Charlie Munger Taught Me To Build $112M Business
Summary
- Invert problem-solving by tackling issues in reverse, which can offer a new perspective and solutions.
- Avoid using chemicals to alter your mental state, as they can ultimately lead to a poorer, less successful life.
- Manage envy by acknowledging that someone will always be doing better than you and that comparing yourself to others can cause unnecessary suffering.
- Release resentment against others, as people typically face the consequences of their actions without your intervention.
- Strive to be reliable in all aspects of life; being dependable is key to personal and professional success.
- Maintain financial well-being by not overspending. Wealth is a ratio of income to expenses, and living below your means can provide freedom and security.
- Learn from the mistakes and successes of others rather than solely your own, which can fast-track personal growth and development.
- Network with and learn from people at your level or above in your field, and consider advisors or mentors for more tailored guidance.
- Persist through failures, as quitting early on your journey due to setbacks only guarantees long-term misery.
- Handle pressure well, and don't let self-imposed expectations weigh you down. Utilize negative visualization, expect challenges to be the default, and embrace the idea that nothing is permanent, which can offer a freeing perspective.
These principles, inspired by Charlie Munger, have been crucial in my journey to success in business and life, and I believe they can greatly benefit those striving for personal and professional growth.
Video
How To Take Action
I would suggest tackling problems from the end and working backwards. This can help you see challenges in a new way and find different solutions. If you feel stuck, just flip your thinking. Ask yourself, "What's the worst that could happen?" and then plan to avoid that.
It's really important to manage your mind and body without relying on chemicals. Drinking or taking drugs might seem to help at first, but they can make things worse in the long run. Try to find healthier ways to cope when things get tough.
Don't waste time being envious of others. There's always going to be someone who seems to have more success, more money, or a cooler job. Instead, focus on your own goals and celebrate your own wins, no matter how small they might be.
Holding on to grudges can weigh you down. If someone did something wrong, remember that often life takes care of it. Let go of that heavy feeling, and you'll feel lighter and happier.
Try to be someone others can count on. Whether it's showing up on time or doing what you said you'd do, being reliable makes you someone people want to be around and work with.
To keep money worries away, spend less than what you earn. Building up savings gives you freedom and peace of mind. Cut back on things you don't really need and save up for the future.
Learn from other people's mistakes. You don't always have to mess up yourself to get smarter. Talk to friends, find mentors, or read books. Their experiences can teach you a lot and help you grow faster.
When things get super hard, and you feel like giving up, remember that everyone fails sometimes. The important thing is to keep trying. Every time you get back up, you're one step closer to success.
Lastly, handle pressure like a champ. Remember that challenges are normal, and don't let the tough stuff throw you off your game. Think about how everything, good or bad, is temporary. This can help you keep calm and stay focused.
Quotes by Alex Hormozi
"Invert, always invert"
– Alex Hormozi
"Every single year someone is doing better than us"
– Alex Hormozi
"Wealth is a ratio between income and expenses"
– Alex Hormozi
"Learn only from your own mistakes"
– Alex Hormozi
"Our brains are simply meaning making machines"
– Alex Hormozi
Full Transcript
what's going on everyone my name is alex ramose i'm the ceo and founder of allen prestige labs gym lunch and we own a portfolio of other companies who've done 120 plus million in the last four years in this video what i want to do is show you the eight principles charlie monger taught me to succeed in business and life and uh by no means am i saying that i have completely executed all these things in my life these are just aspirational things that i think benefit most humans those of you who know me i'm a huge a huge fan i've consumed a lot of his materials and so i wanted to consolidate his speeches and his his work into these principles for anyone who's kind of new to charlie munger and so i'm not going to do these in order i'm going to do these in the order that i think it makes the most sense to present them the first one is invert always invert and so he references johnny carson in one of his speeches to always try and solve problems in reverse and this has been something that's been immensely powerful i think because for us using thinking frameworks in order to make decisions in order to solve problems as both you know entrepreneurs business people and then just just in daily life so many times we try and solve it logically going forward towards it and it gives you this entirely fresh perspective to start at what you don't want and then try and solve from that direction and that'll kind of lead way into the other eight excuse me the other seven of the lessons and at the very end i'll give you the one the one thing that i if just from the the things that we've done that i would add uh to the list that has been really helpful for us or rather things to avoid so his first thing that you hear him talk about all the time is just don't ingest chemicals to alter your state right he's like i've never heard of someone like if i wanted to be really poor or really unsuccessful in life what would i do he's like well i would definitely get addicted to chemicals right and so this sounds so logical like obvious to us but instead so many of us uh still use that stuff on a regular basis to alter our mood because we can't cope with some of the issues that are coming up in our lives he's like i can't imagine anyone who's thought to themselves man my life is so much better now that because i because i do drugs and because i i drink and i'm not saying that you know that's a judgment in any way it's just one of the principles that he's found to be a successful trait for himself and others number three envy so one of the things that's been a gift for warren buffett and charlie monger together is this statement that they made both of them being you know super billionaires and they said every single year someone is doing better than us and for me that was so like like uh gut wrenching is the wrong word but like that hit me because i think i am so i am innately so competitive that i suffer from comparison all the time i was actually texting a friend this morning who's also a you know multiplayer deck of billionaire and he was saying he's like i feel like the more money i make the poorer i feel and it's totally true because what ends up happening is that your your measuring stick changes i remember you know when i when i was really really young my measuring stick for money was chipotle burritos it was just how many triple-a burritos does this amount of money equate to and so i actually think that we have like a stick or a unit that becomes our base unit when we're measuring wealth for ourselves and that's why when i think i had a hundred thousand dollars in my bank account that was probably the wealthiest i have ever felt because i had proportional to what my measuring stick was which at that time was still meals a hundred thousand dollars was so much so much money so many of those units at this point in my life a million dollars is kind of my measuring unit that i use as a base unit for how many how many of these do i have in this how many how many you know how many sticks do i have in you know real estate how many sticks i have in in in my portfolio how much do i have in equity in these companies etc and so that stick changes but someone is always doing better but i think it's so much more about not thinking about them because the way that they roll the dice and play the game has no effect on us and so simply it's an imaginary way to make yourself suffer so if you want to suffer definitely be envious of people the fourth one was definitely resent people like really hold on to resentment if you want to be miserable and so one of the stories that charlie tells us of a king who committing trying to not be resentful of people what he would do is every time he'd want to resent someone he'd write their name down and he'd put it on a slip of paper in a drawer and periodically he'd go to that drawer open it up and read the names and realize how life had dealt with those people without him having to do anything and so i think it's one of those long-term mindedness that like most people live in karmic balance independent of whether or not you believe in you know that kind of woo stuff but simply like people who do bad things eventually that catches up to them and it is worse for them and so you like someone who exists in that state is already dealing with the suffering of being who they are and so you know if you want to be miserable definitely resent people the next one is uh be unreliable right like if you want to definitely be miserable like be unreliable say you're going to do something and don't do it say you're going to be somewhere and and be late be flaky make commitments that you don't keep and this one is one of those ones that he references a lot of times as he's like if you just get this one right and you are reliable it's very difficult to be miserable it's very difficult to be unsuccessful and there was a guy that i was that i knew in high school and this is when i had a you know a bigger ego than i have now and i was such a so i was such a dick i honestly i was just there's no other way to say it i just was and this kid was just like he stayed he went to all the extra credit for for teachers he worked so hard and he had nothing going for him like he wasn't like the best looking kid he wasn't athletic like he didn't have like this natural processing power he wasn't quick like that but i remember and i was such a mean guy to this kid and i remember one time he we got in some sort of spat and i was like in what world will you ever be better than me at anything and i remember saying that you can you can feel it's so dripped in ego and it's just kind of disgusting but anyways i said this to him and he ended up getting into a better college than me i ended up going to vanderbilt he ended up going to duke and i just remembered that moment because it was such a deep lesson for me that like he was more reliable than i was he was more long-suffering than i was he was more consistent than i was he showed up to every teacher's thing he showed ups he did all the extra credit he did all the homework he he like he did all those things and he just showed up and that was a huge lesson for me that i was like if i can just show up like that guy does like man things will open up for me but if you want to fail definitely be unreliable the next one is overspend your income you know definitely if you want to get if you want to if you want to put yourself in a horrible situation on a regular basis and consistently have stress definitely spend more than you make which you know america is doing right now with their own gdp but we won't even get into that but definitely overspend what you make like don't save you know spend more than what you have always have bigger aspirations than you have the ability to fulfill on and definitely always live in debt and the wrong kind of debt the bad debt and so if you've any followed any of my stuff my my i'm a huge proponent of living broke all the time and it's because i believe wealth is a ratio between income and expenses it's not a number right if you can live on one percent of what you make as a hypothetical example then you are in you are infinitely wealthy because you already have a hundred times more your income is a hundred times more than your expenses which means you could live veritably for a hundred years and so just on one year's income so that's an extreme example just to illustrate the point but if you like for me i feel less and less anxiety the the greater the percentages of excess i have in my expenditures versus how i live and so there's two ways to get there one is you can increase how much you make the other ways you can decrease how much you spend but the thing is is no matter where you are right now the one that you can immediately change is how much you spend over time you can use those that those extra funds invest in yourself grow the top line so that you can even make that discrepancy crazier so that your wealth can increase that ratio being your wealth can increase and so for me i try and live on ten percent that that hundred thousand dollar story that i gave you earlier once i was i had a million dollars in my bank account i still lived on thirty thousand dollars a year and so i was you know i was living on three percent um at that point of my wealth but my income was was already surpassing a million dollars a year at that point and so i was living on three percent of what i was taking home and honestly i felt so free because i just knew that i had way more money than i would ever need that's very freeing so but if you want to fail definitely overspend your income the next one is learn only from your own mistakes right don't learn from the mistakes of others don't learn from other people's successes and what i want to add as a wrinkle to this is that depending on where you're at in your journey this is something that i've observed is um you in the very very beginning you have no value to offer i get messages frequently of people being like hey uh let's start a business together i'll give you half and i'm like well you're providing no value i'm the one who would know how to run this business so this is not a good trade for me you know return on my time is not very good another one is i'll work with you you know i'll work for you for free you know if you teach me everything and i was like yeah that's so i'm getting someone who has no skills and no value and exchange you're getting an education from someone you know like that's not a fair that's not a good exchange for me right and so what you have to do is find ways where even that you can trade your base level which is time for someone who has a need for that level of skill who's ahead of you and that's where like small businesses like if someone's making a hundred thousand a year or two hundred thousand dollars a year in a business that's not a very big business but if you if you say i will work for free for you then someone like that can still use for lack of a better term just hands right someone who can just help and just be there as a body and i know that may sound diminutive towards you but if you have no base skills that is that is your base skill that you have is you have your time in your hands right and so you use that and then you can learn some more skills and then from that point you develop the next level which is where you can start affording coaches right from the level above that when i say learning only from your own mistakes first is you learn from people for free by exchanging your time then you learn from coaches then you can learn from mastermind such as people where you are now at this point equal with other people in the room who are good and what i will tell you is this if you're at eight figures i'm switching gears in terms of who i'm talking to but as you go up this journey how you network and learn from others changes it evolves and you know i i went the coach route for the first you know three four years of my entrepreneurial journey and then it was much more towards the mastermind route later on but the thing is is once we passed eight figures for us in terms of yearly revenue and yearly income it's shifted to being much more about networking and advisors so that's kind of two different things networking is like other people who are at that level that you just network with and you meet at things and you donate to same charities that kind of thing and the other aspect is like well if you want someone ahead of you at that point a lot of times a you can still get it from the network sometimes but if you really want to get a lot from someone you need to make sure that there's some sort of exchange that's fair and that's where kind of advisory relationships work really well and so i have an advisor and that means that you know they get a minority percentage and something that you guys are working on and so they have an incentive to teach you some of these elements and you at this point you're already proven as an effective person you have the character traits of being reliable you know not being envious having long suffering having the abilities to execute so they know that they can just drop the information in and then it will be incorporated and then they can succeed with you and then the final aspect is what i would say the highest level is heroes because a lot of people we don't have access to you know what i mean even this video right now like i don't know charlie munger i have not met charlie munger but charlie munger is a hero of mine and so i feel like i've been directly mentored by charlie despite the fact that i've never met the man and so i'm eternally grateful for man because he's you know significantly changed my life for the better which will naturally lead me to the his last point and then i'll give you the one that i would add um just from my own experience in my life so his last point would be quit when you have your third or fourth big failure in life he said so if you want to if you want to fail and you want to be miserable you should definitely quit soon quit early right he's like because no matter who you are you're going to fail not just once or twice or three times or four times but you will fail many times and if you if you quit early then you can guarantee that you will be you know miserable for a very long time uh after that because then you have given up hope and you'll have nothing to strive towards you'll have no purpose and so if you want to be miserable definitely quit early right and even count count the amount of times you failed because because for some reason that means something right it doesn't mean anything and so to wrap this up i'll give you alex's one that's been tremendously helpful for me which is this is kind of started from a speech i heard one of the presidents say um from the past but was the the way to be successful is to be able to handle pressure right so if you want to if you want to if you want to fail definitely crack under pressure like no matter what happens just crack under pressure crack when people need you and so um my my candid solution for this are the things that have helped me is understanding a what it is which is most of us just create arbitrary expectations and then crumble under pressures that we put on ourselves that don't actually exist in the world we literally create things to weigh ourselves down which i feel like the further along you get into the entrepreneurial game it becomes headier and headier because you realize it's so much just about the limits that you imply you place on yourself and so here's three strategies that i have used that are mentally have that have mentally made me much more resilient the first and i got this from from trevor who got it from epictetus which is ancient philosopher is negative visualization and so let me give you a tactical example of that this is a simple example so i just spent a couple hundred dollars on a shirt and i really like the shirt and i don't really spend money a lot on on clothing um and after i washed the shirt it was like messed up i'll just put it simply right this is a simple example to illustrate and and then he had just taught me about this negative visualization the day before and he said take something that happens negative and then imagine it happening a thousand more times in a row how would you feel in the thousandth time and i thought to myself if every time i washed a shirt you know it shrunk like this or something or it became rougher around the edges and i got it because it was soft i probably wouldn't care that much it would just be like oh that's just how these things are and so it means is that my expectations would change in my mind to what they to match reality and then at that point my misery would disappear and so that's literally what i did in the moment and i felt myself just stopped caring about this thing that actually bugged me a little bit because i was like man that's annoying but you can use that same concept with any of the things that occur in your life when it's like man my my my wife said this thing well what if she said that thing a thousand times in a row you'd be like well i guess that's just kind of how how she is or that's just kind of how things are and then all of a sudden you would acclimate it but you can rapidly force the acclimation to stress by visualizing it happening thousands of times and then skipping to the end because if you can feel that way after a thousand times then you might as well feel that way after the first time and that has been so powerful for me because we have so many stressors that come in our lives and we set expectations that we're even not aware that we're setting and then get underperformed on the second thing that's been really helpful for me is that if i want to start a new behavior or i'm trying to do something that is difficult then what i want to do is go into it and expect the worst and let me give you a real that sounds obvious but let me give you a realistic reasoning for this so let's say that you want to start working out mentally prepare yourself for the fact that every time i work out i'm going to be tired every time i work out i'm going to not be motivated and that's just going to be my base reality if i happen to be motivated or i happen to not be exhausted or i happen to not have a lot of work to do then then that's just a bonus it's serendipitous it's just a happy coincidence but i expect that every time i work out i will be tired i'll have more things to do and i will not you know be motivated to do so and if i come in with that expectation and i set that as my baseline then i am not surprised when i go to work out and i feel that way because then it is in alignment with the expectations that i have in my mind the third of the sub subtext of uh you know creating false expectations and crumbling under pressures that we create for ourselves um is one that is will probably be controversial for some of you but this is a belief that i hold and it has been immensely powerful for me in terms of increasing my joy in life which is elon musk i heard him talk a while back about how he said eventually the universe will expand infinitely until everything becomes a fine mist everything just becomes a fine mist if you extend the time horizon long enough and for me that means that everything that we create on earth and as humanity will eventually disappear so the skyscrapers the books that i write the people that we help people who remember us the legacy that we are trying to have after we die even that will eventually turn into a fine mist and not matter and for me that is so immensely powerful because it means that nothing matters and at the same time it means that we get to choose what things we we create meaning with and so i believe our brains are simply meaning making machines and i love that term so i'm giving it to you is that just i have this meaning making machine in my mind which everything has no meaning and then i can choose to highlight aspects that i i will create meaning for and so understanding that the millions that i have maybe the billions that i'll make in my lifetime and the wealth that i accumulate the reputation the books that impact all of that stuff will eventually disappear truly it will eventually be gone there will be a day where no one knows that i existed or anything like that in some ways it frees me in the present knowing that everything that i do will eventually mean nothing and so all of us are essentially in my mind you know there's the nazi concentration camps uh people would dig holes and then they'd fill holes back up again and it was it was basically meaningless work but it was only meaningless because they believed that it was meaningless right but essentially all of us in my own mind and my understanding of reality are simply just digging holes every day that will eventually when the time horizon is long enough get filled back with dirt and so what that means is imagine i was in that same concentration camp for example which might be an analogy for life and instead of being given a shovel to dig holes they said you can do whatever you want but at the end of your life you have to undo it all right well then i could probably ha i could probably engineer a fairly joyful experience for myself because i would do things that are stimulating for me that i find enjoyable right and so by doing that it just removed all of the expectations and a lot of the envy that i have for other people because i know that all of us in the end there's no box that we take with us right and so that's just been just wildly impactful for me as a human being and in terms of decreasing pressure in my life in business there's just nothing that's that big of a deal right because eventually all of it's going to disappear anyway so if someone's upset with you it's like well you know we're all going to become a fine mist in the future eventually you know like ah you know we've got this competitor who's who's talk stealing our stuff you know we're all going to disappear into a fine mist eventually and that has been so calming for me and has relieved so much pressure for me mentally that may be depressing for some people for me it's wildly freeing and so um i guess if it's depressing for you then don't think about it but if if that resonates with you then then maybe you can use that as a weapon in your arsenal to defend against the pressures that we inevitably put on ourselves that we can deconstruct and deflate and so anyways those are the lessons that i have learned from charlie munger as my hero and mentor uh from consuming so much of his content i hope you found value in that if you are you know if you're a business owner i make a lot of more tactical things about how to make money and all that stuff on this channel if you like this stuff uh click and subscribe otherwise hope you enjoyed and i'll catch you on the next video