Alex Hormozi: A Hard Learned Lesson

Last updated: Jun 14, 2023

The video is about the hard learned lesson of saying no to opportunities that may seem attractive but have a higher risk of downside, and the importance of considering the upside and downside before making a decision.

This video by Alex Hormozi was published on Nov 24, 2020.
Video length: 11:28.

In this video, Alex Hormozi shares a hard-learned lesson about saying no to opportunities as an entrepreneur.

He explains that as you level up, the opportunities become sexier and more attractive, but it's important to consider the upside and downside of each opportunity and whether you can live with the downside.

He also recommends the book "The Road Less Stupid" for entrepreneurs who are prone to getting excited about new ideas and constantly wanting to innovate.

  • Alex Hormozi shares his hard-learned lesson of saying no to high-risk opportunities.
  • Considering the upside and downside before making a decision is crucial.
  • As opportunities become sexier, entrepreneurs have to relearn the same concept at a different level.
  • The book 'The Road Less Stupid' is recommended for entrepreneurs who get excited about new ideas constantly.
  • The three questions that have helped Alex say no are: what's my upside, what's my downside, and can I live assuming that the downside's gonna happen.
  • The best bettors bet the least frequently but bet big on "no brainers" that have virtually no chance of not succeeding.
  • Assuming the cost of the downside is important when making decisions, as companies can incur an enormous cost of change without any real upside.

A Hard Learned Lesson (ALEX HORMOZI) - YouTube

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Introduction

  • Alex Hormozi is an entrepreneur, investor, and CEO of Acquisition.com.
  • He shares his hard-learned lesson of saying no to opportunities that may seem attractive but have a higher risk of downside.
  • He emphasizes the importance of considering the upside and downside before making a decision.
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The Hardest Learned Lesson

  • Alex talks about his hardest learned lesson of saying yes to opportunities that were now at a larger size than what he used to learn to say no to.
  • He references the opportunities that come to us as the woman in the red dress.
  • As you level up, the opportunities become sexier, and you have to relearn the same concept but at a different level.
  • At one point, you say yes to a 10 million opportunity or one million dollar opportunity, but at another level, you have to learn to say no to that if you were above that at that certain time.
  • Alex admits to making that mistake multiple times at different levels.
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The Road Less Stupid

  • Alex recommends the book 'The Road Less Stupid' for entrepreneurs who are prone to getting excited about new ideas constantly.
  • He talks about the cost of experimentation and how big people who bet big win big but bear the cost of experimentation.
  • He adds a realistic paradigm for what most entrepreneurs go into because they have a constrained amount of capital money and a constraint amount of time and resources and bandwidth for their team.
  • Adapting that extra sentence on there of just understanding that there's a cost to making that bet.
  • He gives a context that has really been useful for him lately in making decisions about opportunities.
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A Hard Learned Lesson (ALEX HORMOZI) - YouTube

The Three Questions

  • Alex talks about the three questions that have helped him so much in saying no.
  • The three questions are what's my upside, what's my downside, and can I live assuming that the downside's gonna happen.
  • Phrasing the three questions that way has helped him so much in saying no.
  • He gives an example of saying no to a new follow-up sequence to get more leads.
  • He asks what's my upside, maybe I get a 10 boost, what's my downside, I lose 50 because the new sequence doesn't work, and can I live assuming that the downside's gonna happen.
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The Three Question Framework

  • When presented with an opportunity, ask yourself three questions: What's the upside? What's the downside? Can I live with the downside assuming it happens?
  • If the downside is too high, say no to the opportunity.
  • Applying this framework has been a game changer and has given attention back to making better bets.
  • Business is ultimately just betting, and entrepreneurs love gambling in a controlled setting.
  • Business decisions involve choosing between two different opportunities.
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The Best Bettors Bet the Least Frequently

  • The best gamblers bet the fewest amount of times but bet big.
  • They bet on "no brainers" that have virtually no chance of not succeeding.
  • Over 40 years, the best bettors have only had 15 winning bets out of all the bets they've made.
  • In business, it's a lot like that.
  • Charlie Munger talks about this concept.
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The Cost of Change

  • Many business owners are cash constrained and trying to pivot fast, making fast decisions on incomplete information.
  • Internal optimism can become an entrepreneur's Achilles heel.
  • Optimism can lead to underestimating the cost of taking a bet.
  • Companies can incur an enormous cost of change without any real upside.
  • Assuming the cost of the downside is important when making decisions.
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An Anecdote to Wrap It Up

  • Many business owners get excited about a new concept or idea and start testing it out.
  • After a month or two, they realize that their stats are pretty much the same or even a little bit less.
  • They didn't get a definitive answer on the test they ran and didn't get the result they were hoping for.
  • The company incurred an enormous cost of change without any real upside.
  • Assuming the cost of the downside is important when making decisions.
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The Importance of Saying No to Opportunities with High Risk of Downside

  • Entrepreneurs only have a limited number of bets to make, so they should use them wisely.
  • Saying no to distractions and focusing on executing the fundamentals pays dividends in the long run.
  • Small tweaks and variations can distract the team and prevent long-term compounding improvement.
  • Studying the decision-making process of successful people can help entrepreneurs make better decisions.
  • Learning to say no to opportunities with high risk of downside can be a hard but valuable lesson.
  • By focusing on getting one percent better every day, entrepreneurs can achieve long-term success.

Watch the video on YouTube:
A Hard Learned Lesson (ALEX HORMOZI) - YouTube

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