The podcast discusses lessons learned from investing in 22 companies including investment criteria, deal structures, and providing value. They emphasize the role of leadership, cash flow, and focused founders. Mistakes in hiring and finance management are also discussed. The importance of de-risking a business and taking risks for growth is explored along with the benefits of outside investors.
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Quick takeaways
Cash flow is king and businesses with low capital expenses and high cash flow are attractive investments.
Growth can be achieved through increasing customer base, making customers worth more, and de-risking the business.
Focused founders who can identify their target market and problem are crucial for success and should be willing to make strategic sacrifices for long-term growth.
Deep dives
Three Key Beliefs for Investing and Growing Companies
The speaker shares three key beliefs that guide their investment and growth strategies. The first belief is that cash is king, and businesses with low capital expenses and high cash flow are attractive investments. The second belief is that growth can be achieved through increasing customer base, making customers worth more, and de-risking the business. The third belief is the importance of focused founders who are able to identify their target audience and problem and say no to ideas that don't align with their vision.
Lessons from Investing in 22 Companies
The speaker shares lessons and insights they have gained from investing in 22 companies. They emphasize the value of cash flow and reinvesting it into growth strategies. They also highlight the power of focused founders who can identify their target market and problem. Additionally, they discuss the importance of de-risking the business to increase its long-term value. The speaker also mentions the significance of leadership skills in growing a successful company.
Taking Steps Backward to Move Forward
The speaker recounts two examples where founders had to take steps back in order to achieve significant growth. In one case, a PR company had to shift their target customer segment, resulting in a higher customer lifetime value and better business performance. In the other example, a founder had to cut their personal income by two-thirds and invest in a more challenging aspect of their business model. These examples illustrate the importance of taking strategic risks and making sacrifices to achieve long-term success.
The Value of External Perspective
The speaker highlights the value of having an external investor or partner who can provide a fresh perspective. This outside perspective can help entrepreneurs see the bigger picture, make better decisions, and overcome emotional attachments to their business. The speaker refers to the Solomon paradox, which suggests that people give better advice to others than they follow themselves. Having an objective view can lead to higher correlations with better decision-making and ultimately drive the growth of the business.
Redefining Progress in Business
The speaker emphasizes the need for entrepreneurs to redefine their concept of progress. Instead of focusing solely on monthly cash flow, they should expand their time horizon and prioritize long-term growth and profitability. This may involve taking steps back or making strategic investments that align with the larger vision and goals of the business.
“We take something old and something new and there's a lot of magic between the two of those things." Today, Alex (@AlexHormozi) discusses his experience investing in 22 companies over the past three years, sharing lessons learned and mistakes made. He provides insights on his investment criteria, deal structures, and the process of providing value to portfolio companies.
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:
(2:37) - Our criteria for investing
(10:36) - What we look for in companies
(15:21) - Process of providing value (who-what-how framework)
(28:33) - The role of leadership when investing
(32:26) - Cash flow is king and helps reinvest in growth
(39:32) - Focused founders are the key
(44:58) - Two steps back to take ten steps forward