What I Learned Investing in 24 Companies in 24 Months
Dec 11, 2024
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The host shares insights from investing in 24 companies over 24 months, emphasizing the importance of selecting quality talent. A pivotal shift in resource allocation significantly boosted returns by focusing on promising investments. The discussion also highlights a philosophy of balancing effort in investments and the necessity of partnering with skilled teams. The evolving understanding of talent's role in business strategy underscores the value of 'A players' and building robust networks to navigate the complexities of entrepreneurship.
Focusing on acquiring top-tier talent enhances business performance, as individual capabilities trump sheer team size in effective operations.
Investment strategies should prioritize revenue retention metrics and growth potential to ensure long-term stability and profitability.
Deep dives
The Need for Quality Over Quantity in Teams
The focus should be on acquiring better talent rather than simply increasing the number of team members. Effective businesses thrive on the capabilities of their individuals rather than sheer numbers; this is likened to a skilled surgeon preferring to operate alone rather than with a crowd of less experienced helpers. This philosophy emphasizes the importance of recruiting intelligent, hardworking, and ethical people who are aligned with the organization's goals. By concentrating on attracting top-tier talent, companies can streamline operations and significantly enhance overall performance.
Strategic Decision-Making in Investment
Investment strategies should prioritize businesses with high revenue retention and evident paths for growth, as consistent revenue is a sign of stability and potential. Basing decisions on a company’s ability to maintain existing customers while acquiring new ones is crucial for long-term success. An example discussed is comparing two companies: one that struggles to retain customers, leading to inconsistent growth, versus another that effectively retains and grows its customer base through strong existing relationships. The latter offers a more stable and profitable investment opportunity, underscoring the importance of revenue retention metrics in selecting investments.
Adapting Investment Strategies Over Time
The evolution of investment strategies highlights the necessity of adapting to experiences and learning from past decisions. Initially, a focus on doing more deals led to a realization that quality trumps the number of investments; fewer, larger investments in promising businesses are now prioritized. The experience of divesting from underperforming companies has reinforced this shift towards concentrating resources on higher-performing ventures with potential for greater returns. By recognizing the characteristics of successful investments, the approach can be refined to ensure better outcomes in future endeavors.
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 and will learn on his path from $100M to $1B in net worth.