Alex Hormozi: "What Business Should I Start in 2021?" [Perfect Business Model]

Last updated: Jun 14, 2023

The video discusses the perfect business model, which includes being unique, expensive, sticky, and providing air (something that costs a penny but sells for a dollar and is habit-forming).

This video by Alex Hormozi was published on Mar 4, 2021.
Video length: 16:18.

In this video, Alex Hormozi talks about the perfect business model and shares insights he gained from reading about Berkshire Hathaway's shareholder events.

He breaks down the ideal business into five characteristics: unique, expensive, sticky, air, and habit-forming. He explains each characteristic and gives examples of businesses that embody them.

He emphasizes the importance of finding a business that has a competitive advantage and a long lifetime value.

  • Alex Hormozi discusses the perfect business model in this video.
  • The perfect business model includes being unique, expensive, sticky, and providing air.
  • Berkshire Hathaway's management model is a good example for entrepreneurs to learn from.
  • Entrepreneurs should look for businesses that cost a penny but sell for a dollar and are habit-forming.
  • The richest people in the world are risk-averse.
  • Thinking in a long-term horizon is crucial for success.
  • People with unimpeachable character are not trying to get rich quick.
  • Reputation over time becomes a competitive advantage.
  • Being risk-averse is more important than winning.

"What Business Should I Start in 2021?" [Perfect Business Model] - YouTube

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Introduction

  • Alex Hormozi is an entrepreneur, investor, and CEO of Acquisition.com.
  • He talks about the perfect business model in this video.
  • The perfect business model includes being unique, expensive, sticky, and providing air.
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The Perfect Business Model

  • The perfect business model is unique, expensive, sticky, and provides air.
  • Unique means something that no one else can sell, has a brand behind it that no one can copy, and has share of mind.
  • Expensive means something that costs a penny but sells for a dollar.
  • Sticky means something that is habit-forming and people keep coming back to buy it again and again.
  • Air means something that costs almost nothing to make, but people keep buying it because they need it.
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Berkshire Hathaway University

  • Alex recently finished Berkshire Hathaway University, which is a consolidated 30 years of shareholder events.
  • Warren Buffett and Charlie Munger, the co-founders of Berkshire Hathaway, have been investing for 50 plus years and have built a trillion-dollar empire.
  • Their return on capital was 2 million percent.
  • They look for businesses that cost a penny but sell for a dollar and are habit-forming.
  • They like big competitive boats and businesses that are unique, expensive, sticky, and provide air.
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"What Business Should I Start in 2021?" [Perfect Business Model] - YouTube

Unique, Expensive, Sticky, Air

  • Unique means something that no one else can sell, has a brand behind it that no one can copy, and has share of mind.
  • Expensive means something that costs a penny but sells for a dollar.
  • Sticky means something that is habit-forming and people keep coming back to buy it again and again.
  • Air means something that costs almost nothing to make, but people keep buying it because they need it.
  • The perfect business model is unique, expensive, sticky, and provides air.
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Gross Margins

  • Charge what the market will give you.
  • Look for a 100 to 1 ratio, where it costs a penny and sells for a dollar.
  • 99% gross margins are ideal.
  • Increasing gross margins by 5% can double the profitability of a business.
  • It's important to understand the true value of margins.
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Perfect Business Model

  • Unique, expensive, sticky, and provides air.
  • Unique: something that no one else can buy.
  • Expensive: costs a lot of money.
  • Sticky: habit-forming, keeps people buying over and over again.
  • Provides air: something that costs a penny but sells for a dollar.
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Characteristics of Operators

  • Risk-averse: someone who is cautious and avoids taking unnecessary risks.
  • Integrity: someone who is honest and trustworthy.
  • Competence: someone who is skilled and knowledgeable in their field.
  • Delegates responsibility: someone who is good at advocating and delegating responsibility to others.
  • These characteristics can be embodied by entrepreneurs.
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Berkshire Hathaway's Management Model

  • Berkshire Hathaway has a brilliant model of managing.
  • They have only 19 employees but made 88 billion in profits last year.
  • They are good at delegating responsibility to the businesses they bought.
  • Warren Buffet looks for risk-averse, competent, and trustworthy operators.
  • Entrepreneurs can learn from Berkshire Hathaway's management model.
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Matchmaker is Risk-Averse

  • It's more important to not lose than it is to win.
  • The richest people in the world are risk-averse.
  • Poor people think the opposite and go for the lottery.
  • Buffett says if you bet poorly small, you'll bet poorly big.
  • Downside risk mitigation is crucial.
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Long-Term Thinking

  • Family-owned businesses think about generations.
  • They think about long-term investment and competitive strategy.
  • They don't cut corners and think about quality.
  • Thinking in a long-term horizon is crucial for success.
  • The longer the time horizon, the wealthier and more successful people are.
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Unimpeachable Character

  • People with unimpeachable character are not trying to get rich quick.
  • They're trying to build something of value that's enduring and long-term.
  • They have honest and impeccable character.
  • Reputation over time becomes a competitive advantage.
  • It's a unique, sustainable, and compounding competitive advantage.
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Conclusion

  • The perfect business model includes being unique, expensive, sticky, and providing air.
  • Matchmaker is risk-averse, thinks long-term, and has unimpeachable character.
  • Thinking in a long-term horizon is crucial for success.
  • Reputation over time becomes a competitive advantage.
  • Being risk-averse is more important than winning.
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The Perfect Business Model

  • The perfect business model is unique, expensive, and sticky.
  • The business should be managed by someone who is risk-averse and has long-term thinking.
  • The person managing the business should have unimpeachable character.
  • The business should provide something that costs a penny but sells for a dollar and is habit-forming.
  • The business should be built for the long-term and not be obsessed with short-term volatility.
  • The business should be built in such a way that people will think everything that the person has done has been fairly earned and wisely used.

Watch the video on YouTube:
"What Business Should I Start in 2021?" [Perfect Business Model] - YouTube

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