How To Identify What Business You're REALLY In | Ep 876
In this episode of The Game, Alex Hormozi explores how entrepreneurs often misunderstand the true nature of their businesses. Drawing from his experience in fitness and supplements, he illustrates how success often hinges on unexpected factors: while he initially focused on fitness science in his gym, he discovered that sales and marketing skills were equally crucial for growth.
Hormozi examines how business owners can identify and overcome their real constraints, rather than solving problems that no longer matter. He tackles the common belief that switching to a new business will solve existing problems, explaining that most challenges require persistence and systematic solutions. Through examples like a plumber's staffing issues, he demonstrates how reframing problems can lead to more effective solutions and increased business value.
This is a preview of the Shortform summary of the Apr 30, 2025 episode of the The Game w/ Alex Hormozi
Sign up for Shortform to access the whole episode summary along with additional materials like counterarguments and context.
1-Page Summary
Perceived Vs Actual Business Focus
Alex Hormozi shares his insights about how entrepreneurs often misunderstand the true nature of their businesses. Drawing from his own experience, he explains how he initially focused solely on fitness science in his gym business, only to realize that success depended equally on sales and marketing skills. Similarly, in his supplement business, he discovered that branding and distribution were more crucial than product efficacy.
Identifying and Solving Core Problems In Your Business
Hormozi emphasizes the importance of stepping back to identify what's truly constraining business growth. He notes that entrepreneurs frequently solve problems that are no longer relevant to their current growth stage. For instance, he shares an example of a plumber who thought marketing was his main challenge when the real constraint was insufficient staff.
To overcome these constraints, Hormozi suggests that entrepreneurs must be willing to acquire new skills and competencies. He advocates for reframing complaints into questions that lead to proactive solutions, such as turning staffing problems into opportunities to develop recruitment systems. These improvements, he explains, can dramatically increase both top-line revenue and enterprise value.
The Importance Of Persisting Through Difficulties Instead Of Switching Businesses
When facing challenges, Hormozi observes that entrepreneurs often believe switching to a new business will be easier. He illustrates this with the example of a plumber considering a switch to HVAC to solve staffing issues, when the real problem was his hiring approach. Instead, Hormozi advocates for persistence through what he calls "good hard" problems—challenges that yield results through iteration and perseverance. However, he acknowledges that pivoting might be necessary when fundamental business assumptions prove incorrect.
1-Page Summary
Additional Materials
Counterarguments
- While focusing on a combination of skills is important, some businesses may indeed thrive primarily due to a superior core product or service, especially if it's highly innovative or disruptive.
- Identifying core problems is crucial, but the process of identification can be complex and multifaceted, and sometimes external factors such as market conditions or competition play a larger role than internal constraints.
- Acquiring new skills and competencies is essential, but it's also important to recognize when to delegate or outsource tasks to individuals or teams who are already experts in those areas.
- Reframing complaints into questions is a positive approach, but it's also important to validate the emotions and experiences behind complaints, as they can provide valuable insights into the morale and culture of the organization.
- Improvements in addressing constraints can increase revenue and enterprise value, but they can also lead to increased complexity and risk that need to be managed carefully.
- Persistence through difficulties is important, but there is also value in recognizing when a business model is no longer viable and when to cut losses to prevent further damage.
- The concept of "good hard" problems is valuable, but what constitutes a "good hard" problem can be subjective and may not always be clear in the moment.
- Pivoting may be necessary when fundamental assumptions are incorrect, but the decision to pivot should be made with careful consideration of the potential costs and benefits, as pivoting too frequently can lead to a lack of focus and wasted resources.
Actionables
- You can map your business model on a canvas to visualize areas that need skill enhancement. Draw a simple chart with sections for different aspects of your business, like marketing, operations, and finance. Regularly update it with skills you need to improve or acquire, and use online resources or local workshops to start learning.
- Turn customer feedback into a growth checklist by categorizing comments into actionable items. Create a spreadsheet where you list complaints and suggestions from customers, then convert each into a question that begins with "How can I...?" This reframes the issue into a problem-solving exercise, helping you to focus on solutions rather than problems.
- Establish a monthly 'pivot or persevere' meeting with your team or a trusted advisor. During this session, review your business's core assumptions and the current market conditions. Decide whether to stay the course or make strategic adjustments, ensuring that your business remains agile and responsive to change.
Get access to the context and additional materials
Perceived Vs Actual Business Focus
Entrepreneurs can frequently misjudge the nature of their businesses, focusing on one aspect at the expense of others or misunderstanding where their attention is most needed for growth and success. Here we explore how entrepreneurs can confront these challenges.
Entrepreneurs Often Misjudge Their Business Nature
Entrepreneur Alex Hormozi shares insights into the common misconception among entrepreneurs, where they prioritize their product over other essential aspects such as sales, marketing, and talent management.
Entrepreneurs Often Prioritize Product Over Sales, Marketing, and Talent Management
Hormozi relates his own experience with his fitness business, initially believing that the science of fitness would be the main driver of his company. However, he soon understood that the real challenge was not the product itself but getting people through the door. He recognized he was in the sales and marketing business just as much as the fitness industry.
When he started a gym, he quickly had to learn about sales and marketing due to his initial lack of knowledge in how to generate revenue. This led to an essential realization—that it wasn’t just about gym memberships and fitness but also about employing effective marketing and sales strategies to attract and retain customers.
Additionally, when Hormozi ventured into the supplement business, his original focus was on product efficacy and sales, but he later came to realize it was actually about branding and distribution. When moving into software, Hormozi again found himself in unfamiliar territory, this time the product business, and he faced the fundamental issue that the product wasn't good enough to meet its promises due to his lack of knowledge and skills in product development.
Entrepreneurs Identify Business Constraints and Challenges
To improve his businesses, Hormozi looked at industry leaders to understand key success drivers and confronted the big problems that were limiting his business growth.
They Look To Industry Leaders to Understand Key Success Drivers
Hormozi points out that in the supplement industry, the brand and customer perception held greater importance than the product's actual efficacy, contrary to his initial focus on the latter. He faced the challenge of ...
Here’s what you’ll find in our full summary
Perceived Vs Actual Business Focus
Additional Materials
Counterarguments
- While focusing on sales and marketing is important, it should not come at the expense of product quality, as a superior product can also drive sales through word-of-mouth and customer satisfaction.
- Branding and distribution are crucial, but they must be backed by a product that delivers on its promises to sustain long-term success.
- Learning from industry leaders is valuable, but entrepreneurs should also be wary of blindly following trends without considering their unique business context and customer needs.
- While confronting big problems is necessary, entrepreneurs should also pay attention to the smaller, incremental improvements that can lead to significant gains over time.
- Assessing a business's focal points is im ...
Actionables
- You can conduct a weekly 'customer journey audit' to identify gaps in your sales and marketing approach. Start by mapping out the entire customer journey from discovery to purchase and post-purchase support. Then, role-play as a customer and walk through each step, noting any friction points or areas where the experience could be improved. For example, if you find that customers are dropping off at the checkout stage, consider simplifying the process or offering more payment options.
- Create a 'branding feedback loop' with your current customers to enhance your brand perception. Reach out to customers via surveys, social media, or in-person conversations to gather insights on how they perceive your brand and what values they associate with it. Use this feedback to refine your branding messages and visuals. For instance, if customers feel your brand is not eco-friendly, you might explore sustainable practices and communicate these changes through your marketing channels.
- Develop a 'resource reallocation plan' to address ...
Get access to the context and additional materials
Identifying and Solving Core Problems In Your Business
Alex Hormozi stresses the importance of identifying and solving core problems to ensure sustainable growth in your business.
Identify the Core Problem By Stepping Back For a High-Level Business View
Hormozi illustrates the necessity of stepping back for a high-level view of your business to pinpoint the core problem you should be solving.
Entrepreneurs Often Solve Problems That No Longer Constrain Growth
Entrepreneurs may become fixated on solving issues that once mattered but are no longer growth constraints. Hormozi explains that strategies that took a business from one revenue level to another may not apply to the next level. He acknowledged that in the supplement business, he had to redirect his focus from product efficacy to branding and distribution, which were the actual constraints on his business's growth. Similarly, a plumber Hormozi spoke to realized that his limitation was not marketing, as initially thought, but the lack of staff, as he was turning away customers due to limited delivery capacity. Hormozi stresses that companies should be measured by their potential for growth rather than their current size, and that the real constraint often isn't what it appears to be at first glance.
Solving the Problem Requires New Skills and Competencies
To solve core problems and achieve growth, entrepreneurs must be willing to acquire new skills and competencies.
Entrepreneurs Invest In Acquiring Essential Skills, Despite Challenges
Hormozi emphasizes the necessity for entrepreneurs to develop new strategies and skills, vastly different from those they used when starting up. When Hormozi realized his gym business needed a robust customer base, he learned how to conduct sales conversations and persuade people to sign up, thus developing a system to generate new clientele. Confronted with the challenge in the supplement industry, he recognized his need to learn about branding to advance his business.
Hormozi advises reframing complaints into questions to trigger proactive solution-seeking. He gives an example of lacking a recruitment system in a service industry, suggesting that the entrepreneur might need to enhance their skills in human resource management. Such an investment in skills is essential for taking on the "big hairy problems" that are pivotal for business growth.
Solving the Core Problem Boosts Growth and Enterprise Value
Hormozi discusses how solving core problems can dramatically increase a business's top-line revenue and profit, and consequently, its enterprise value. He stresses the importance of ...
Here’s what you’ll find in our full summary
Identifying and Solving Core Problems In Your Business
Additional Materials
Clarifications
- In a business context, "core problems" typically refer to fundamental issues or obstacles that directly impact a company's growth and success. Identifying and addressing these core problems is crucial for sustainable development and overcoming challenges that hinder progress. These problems are often strategic in nature and may require a shift in focus, resources, or skills to effectively resolve. By tackling core problems, businesses can unlock opportunities for growth, enhance performance, and increase their overall value.
- Alex Hormozi provides examples and strategies to illustrate the importance of identifying and solving core problems in a business. He mentions how he shifted focus from product efficacy to branding and distribution in his supplement business to address growth constraints. Additionally, he highlights the need for entrepreneurs to acquire new skills, such as learning about branding, to overcome challenges and drive business growth. Furthermore, Hormozi emphasizes the impact of solving core problems on boosting revenue and enterprise value, suggesting investing in mastering new acquisition channels like TikTok ads for substantial returns.
- To solve core business problems effectively, entrepreneurs often need to acquire new skills and competencies. This means learning and developing abilities that may be different from what they initially used when starting their business. Acquiring these new skills can help entrepreneurs address challenges, adapt to changing market conditions, and drive sustainable growth in their ventures. By investing in personal and professional growth, entrepreneurs can better position themselves to tackle complex issues and propel their businesses forward.
- Enterprise value is a measure of a company's total value, often used in assessing its worth for potential investors or buyers. Creating additional acquisition channels means establishing new ways to attract customers or generate revenue streams, which can enhance a company's value and reduce risk. By ...
Counterarguments
- While stepping back for a high-level view can be beneficial, it's also important to maintain a close connection to the day-to-day operations, as they can provide valuable insights into immediate problems and potential solutions.
- Focusing on new growth constraints doesn't mean that previous issues can be entirely ignored; they may still require attention to prevent regression.
- Acquiring new skills and competencies is important, but it's also crucial to leverage existing strengths and to consider when it might be more efficient to outsource or hire for certain skills.
- Reframing complaints into questions is a positive approach, but it's also important to validate the emotions and experiences behind complaints, as they can be indicative of deeper issues within the company culture or operations.
- While solving core problems can increase revenue and profit, it's also important to consider the impact on other aspects of the business, such as employee well-being, customer satisfaction, and long-term sustainability.
- Creating additional acquisition channels can mitigate risk, but it can also spread resources thin and lead to a ...
Get access to the context and additional materials
The Importance Of Persisting Through Difficulties Instead Of Switching Businesses
Alex Hormozi’s insights tackle the common entrepreneurial challenge of whether to persist through difficulties in a current business or switch to a new venture when facing hardships.
Entrepreneurs Start New Businesses After Difficulties in Current Ones
Entrepreneurs sometimes think that starting a new business will be easier or more scalable than their current one because they encounter problems they haven't learned how to solve and perceive another business as easier. They struggle with the level of uncertainty or dissatisfaction with themselves, which prompts them to switch. Hormozi experienced this in his own transition from a supplement business to a software company, realizing that similar challenges arise in any venture.
Mistaken Belief: "the Grass Is Greener"
Hormozi speaks about the entrepreneur's "grass is greener" mentality. He illustrates this with a plumber who considered moving from plumbing to HVAC hoping it would solve his staffing problem. Hormozi pointed out that the plumber's core issue was his hiring approach, not the industry. This belief leads to avoiding existing challenges rather than solving them, and they are likely to hit the same plateau in any business if they don't confront these difficulties.
Entrepreneurial Success Requires Persisting Through "Good" and "Bad" Hard Problems
Success in business often comes down to whether an entrepreneur can persist through hard problems that require iteration and perseverance to solve. Hormozi underscores that the payoff in business is generally proportional to the size of the problem solved, indicating the value of persisting through challenging issues rather than avoiding them.
"Hard" Problems Solved Through Iteration and Perseverance
Hormozi explains that solving hard problems is a matter of iteration and perseverance. He differentiates between "good hard," where pushing through with the right assumptions yields results, and "bad hard," where a pivot may be necessary when fundamental assumptions are proven wrong. This emphasizes the relentless pursuit of solutions without abandoning the core business.
"Hard Problems Need Pivoting When Assumptions Fail"
While Hormozi values perseverance, he also acknowledges the need to pivot when assumptions fa ...
Here’s what you’ll find in our full summary
The Importance Of Persisting Through Difficulties Instead Of Switching Businesses
Additional Materials
Clarifications
- The distinction between "good hard" and "bad hard" problems in entrepreneurship relates to the nature of challenges faced. "Good hard" problems are those that, when tackled with the right assumptions and strategies, can be overcome through persistence and iteration. In contrast, "bad hard" problems arise when fundamental assumptions are flawed, requiring a pivot or change in direction to find a viable solution. Understanding this distinction helps entrepreneurs navigate difficulties effectively by knowing when to persist and when to adapt their approach.
- Entrepreneurial persistence involves facing and overcoming challenges without giving up easily. It requires continuous effort, problem-solving, and adaptability to navigate through obstacles in a bu ...
Counterarguments
- While persistence is important, there can be a point where it becomes counterproductive, known as the "sunk cost fallacy," where entrepreneurs continue to invest in a failing venture due to the resources already spent.
- The concept of "failing fast" in entrepreneurship suggests that recognizing when a business model isn't working and quickly moving on can be more efficient than persisting with a problematic model.
- The "grass is greener" mentality might sometimes be a valid intuition that an entrepreneur's skills and resources are better suited to a different industry or opportunity.
- Diversification of ventures can be a strategic approach to entrepreneurship, spreading risk across different businesses rather than relying on the success of a single one.
- The idea that entrepreneurs should not seek new opportunities may limit innovation and the ability to adapt to changing market conditions, which are crucial for long-term success.
- The assumption that all hard problems can be solved through iteration and perseverance might not account for external factors beyond an entrepr ...
Get access to the context and additional materials
Create Summaries for anything on the web
Download the Shortform Chrome extension for your browser
