Alex Hormozi: Biggest mistake that stopped me from getting past $30M

The video discusses the biggest mistake that stops businesses from getting past $30 million and how to combat it by understanding the sequence and using warm word of mouth to decrease the cost of acquisition and increase gross profits.

This video by Alex Hormozi was published on Jun 30, 2022.
Video length: 11:33.

In this video, Alex Hormozi discusses the biggest mistake that stops businesses from getting past $30 million in revenue.

He explains that businesses often plateau because they rely on a single reliable acquisition channel and fail to combat the eventualities of rising costs, decreasing conversion rates, and higher fixed costs as they scale. Hormozi suggests that businesses combat this by focusing on warm word of mouth to decrease acquisition costs and increase gross profits.

He emphasizes the importance of understanding sequence and having an equally strong force working in the opposite direction to combat the eventualities of scaling.

• Many people sell things that people do not want.
• Most mass market businesses plateau.
• Understanding the mistake that stops businesses from getting past $30 million is crucial.
• CPMs go up over time, conversion rates go down, and business costs of infrastructure go up.
• Warm word of mouth is the invisible hand that can decrease the cost of acquisition and increase gross profits.
• Pausing and doing something different is important when a business reaches $1-5 million in revenue.
• Improving the customer experience and increasing integrity about the products being sold can help combat negative word of mouth.

Biggest mistake that stopped me from getting past $30M - YouTube

Introduction

• A lot of people sell things that people do not want.
• Most mass market businesses plateau.
• Understanding the mistake that stops businesses from getting past $30 million is crucial.
• CPMs go up over time, conversion rates go down, and business costs of infrastructure go up.
• Warm word of mouth is the invisible hand that can decrease the cost of acquisition and increase gross profits.

Zero to Six Figures

• In order to get to 100k, you have to sell something to someone.
• Acquisition is usually unreliable and from different channels.

100k to 1 Million

• You create a reliable and usually a single reliable acquisition channel.
• You pick one channel, one product, and one avatar.
• You sell that thing that's all you do.
• If you do it reliably, you can get to seven figures.

Biggest mistake that stopped me from getting past $30M - YouTube

The Mistake Most People Make

• Most people think that if they do more of what they do, they will grow their business.
• CPMs go up over time, conversion rates go down, and business costs of infrastructure go up.
• These three things are eventualities that happen as you scale.

Understanding Sequence

• Understanding sequence is crucial to combat the three eventualities that happen as you scale.
• Warm word of mouth is the invisible hand that can decrease the cost of acquisition and increase gross profits.
• Warm word of mouth is the equally strong thing that is going in the other direction.
• Warm word of mouth is the key to combat the three eventualities that happen as you scale.

The Importance of Pausing

• When a business reaches $1-5 million in revenue, they need to pause and do something different.
• Continuing down the same path will eventually lead to a point where there is lots of revenue but no margin.
• This can lead to a mistake or hiccup that blows the business off course.
• Improving the customer experience and creating a customer success team can help combat this.
• Increasing integrity about the products being sold can also help.

The Power of Word of Mouth

• Word of mouth is quadratic in nature, meaning one person tells two, two people tell four, and so on.
• Improving the customer experience can lead to positive word of mouth, which can decrease the cost of acquisition over time.
• Negative word of mouth is when the cost of acquisition increases at a faster rate than the cost per impression increases.
• Neutral or negative word of mouth can lead to eventualities that eat away at a business's margins.
• Increasing the discrepancy between expectations and delivery can help combat negative word of mouth.

The Inevitability of Three Things

• There are three eventualities that will happen to a business no matter what: cost impressions will go up, marketing will reach colder audiences, and the cost of infrastructure will increase.
• Pausing and improving the customer experience can combat these eventualities.
• Increasing integrity about the products being sold can also help.
• Modest expectations can be set and then exceeded to create a positive word of mouth.
• Short-term thinking can lead to negative expectations and delivery gaps, which can drive negative word of mouth.

The Importance of Going Slow to Go Fast

• Pausing and doing something different can feel like doing something out of sequence, but it is the right way to do things.
• Building an enduring brand that can continue to scale requires an invisible hand on your team.
• Slowing down to figure out what clients really want and how to surprise and delight them can help create a positive word of mouth.
• Increasing the discrepancy between expectations and delivery can also help.
• Modest expectations can be set and then exceeded to create a positive word of mouth.

The Importance of Building a Brand for Business Growth

• Setting modest expectations and over-delivering can create positive word-of-mouth for a business.
• A brand is what people say about a product behind its back, and it is built by improving the quality of products and keeping promises.
• A strong brand can achieve scale and premium pricing power, leading to increased profits.
• Media arbitrage without a brand can lead to the three evils of decreased margins, increased costs, and decreased demand.
• Building a brand may require going slow to go fast and creating something worth building.
• Engaging with the audience through likes and comments can help businesses understand their customers' needs and improve their products and services.

Watch the video on YouTube:
Biggest mistake that stopped me from getting past $30M - YouTube