The podcast discusses the importance of being founder-friendly in investment decisions and prioritizing the qualities of the founder over the business. It also explores private equity models, disruptive AI technology, and the need for hard conversations in unlocking business growth.
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Quick takeaways
Being founder-friendly is crucial in investment decisions and can be a predictor of future behavior.
Acquisition.com recognizes the importance of both valuing the business and prioritizing the qualities of the founder.
The theory of constraints is essential in identifying and relieving the key bottlenecks that limit business growth.
Deep dives
Founder-Friendly Approach
Acquisition.com values being founder-friendly and aims to create a different investment experience. Unlike traditional models that often remove founders entirely, Acquisition.com seeks to marry the idea of buying at a discount while allowing founders to retain a significant stake in the future growth of the business. By involving founders and prioritizing their slice of the pie, Acquisition.com believes that more people aligned with the company's ultimate goal leads to greater overall success.
The Importance of Founders
Acquisition.com stresses the significance of founders in making successful investments. While private equity often focuses solely on valuing the business, and venture capitalists prioritize founders over the business model, Acquisition.com recognizes the importance of both. By having a blend of experienced founding teams and business opportunities, Acquisition.com believes in the value of founders who have a track record of growth, strong beliefs, and the ability to manage change and ego. They understand that founders willing to have difficult conversations are the ones who unlock hard-to-reach growth.
Theory of Constraint and Gray Hair on the Team
Acquisition.com embraces the theory of constraint, aiming to identify and relieve the key constraints that limit business growth. They prioritize allocating limited resources against unlimited options, focusing on the most impactful priorities for maximum return. Additionally, Acquisition.com believes in having experienced individuals, or 'gray hair,' on the team. These individuals bring valuable expertise and mentorship, enhance stability, attract talent, and provide a level of guidance and stability that younger founders may not have yet.
Achieving Higher Growth Rates through Laser Focusing on Constraints
The podcast highlights the importance of identifying the biggest constraint to a business's growth and laser focusing on resolving it. By quarterly evaluating and prioritizing the constraint, companies can achieve higher growth rates and alleviate stress for founders. The theory of constraints approach emphasizes the significance of efficient resource allocation and strategic prioritization to drive business growth. By addressing the most significant bottleneck, businesses can experience exponential growth and leverage their resources effectively.
Unlocking Huge Value by Identifying and Addressing the Constraint
The podcast uses the example of a deadlifter with a limited grip to illustrate theory constraints in business. Rather than focusing on improving various aspects of the business simultaneously, it is more effective to identify the bottleneck and allocate resources to address it. By deconstraining the business and fully leveraging the constraint, companies can experience significant growth. The podcast emphasizes the importance of focusing on activities that will provide the highest return, rather than getting distracted by new and exciting opportunities. By understanding the constraint and actively addressing it, businesses can unlock considerable value and accelerate their growth.
“The way you act during the deal process is a great predictor for us or a great measuring stick for us to see how you're gonna act afterwards.” Today, Alex (@AlexHormozi) discusses the importance of being founder-friendly in investment decisions and prioritizing the qualities of the founder over the business. He also shares his views on private equity models and the need for hard conversations in unlocking business growth.
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 on his path from $100M to $1B in net worth.
Timestamps:
(0:40) Founder-friendly approach during deal process.
(10:02) Prioritize founder over the business.
(18:53) Theory of constraints in investment decisions.
(29:13) Disruptability by AI and bigger companies.
(34:36) Business doesn't require perfection or compounding vehicle.
(40:22) A "gray hair" on the team is needed.
(44:43) Checklist for selection as a portfolio company.