This YouTube interview excerpt (Capitalism.com, Aug 14, 2021) records Alex Hormozi discussing entrepreneurial priority (discernment of a single ‘rock’ to move), the importance of onboarding and reducing customer friction to drive word-of-mouth, and specific business metrics showing strong unit economics. Hormozi describes offering free trials yet getting 45% of clients to prepay within 30 days, claiming a ~36:1 lifetime return on advertising (nearly $40 back per $1 spent) sustained over his career. He also details product pricing (lowest-tier ~$16,000; highest-tier $42,000) and a ~60% take rate for the high-tier upsell.
Questions this video answers
45%
36:1 (approximately $40 returned per $1 spent)
$16,000
$42,000
60%
Chapters
I just, I think. I think most people, at least when I. When I talk to a lot of entrepreneurs, I think one of the biggest skills that's important is learning how to discern priority. Like, what is important. Like, there's so much information, right? So it's like all the stuff's coming at us, like, what is most important. And we have such limit, like, we have such limited resources, like, as entrepreneurs, such limited resources, capital, and the biggest one just being attention. Right? We have such limited attention for ourselves, but just as importantly, or more importantly, our teams. And so it's like, I might only be able to move one or two rocks forward this year. You know what I mean? Like, really, like big important things, and you kind of have to commit to whatever that rock is. And if you can't pick the rock, then you move zero rocks forward, right? And so people are like, why can't I move nine things forward? It's like, yeah, but you didn't actually get any of them done correctly. So it's like you have to really. And I think developing the software companies taught me a lot about this, but it's like you only have. And we have to commit that this is the one thing that we're going to do and we're actually going to do it well. And. And I think picking that is one of the hardest things. But if you pick well, then a lot of other things kind of take care of themselves. And so, like, coming from the marketer world, the reason a lot of people cap out is because they have zero word of mouth. If anything, they have negative word of mouth. Like, literally word of mouth works against them. And so I think, like, I mean.
We even talk about, like, in the marketing world just like fighting refunds. You know, you're just like, you do all the market, like, all the sales on the front end, you're, like, hoping people don't refund. And you're.
And.
And you're saying, I mean, like, or if you're just really good to your customers, you get a ton of word of mouth and no one refunds anyway.
Yeah, and I mean, we do a lot of stuff that's kind of unheard of. You know, we do, we run free trials. Like, anybody can sign up for our program for free. Like, you don't have to sign. Like, you don't have to pay today. And yet we still get 45% of our clients prepay the entire thing within the first 30 days. They choose. They don't have to. And so it's like you have somebody who can try something, they can choose not to buy it. And not only that, they choose to prepay the entire thing within the first month when they had the option not to. And I think that just speaks to like, how can we onboard customers the right way? How can we activate them? What are the leading indicators we know that are going to create a successful customer? And how can we reverse engineer that and how do we know that what that looks at at day 30, what does it look like? Day 60, what does it look like day 90? And then when we focus on those things, we can drive up our lifetime gross profit per customer so far beyond what anyone else in our space can do. It makes the marketing as ugly as mine is still wildly profitable. And so, I mean, one of the claims in the book that you heard is that we have a 36 to 1 lifetime return on advertising. And right now it's actually a little higher than that. And so for every dollar we spend, we get almost $40 back. And that's been over my entire career. So that's not like this one campaign that we talk about because I sent a DM to someone and I made a $4,000 sale. That's every dollar that we spent. And so I think it's because we focus on the back end and really seeing how can we deliver this thing faster, how can we make it more convenient for them, how can we deliver it in the channel or medium that they want to consume it in, how can we do this so that we can decrease the effort and sacrifice on their behalf? So the stress that they have to go through, what are the hoops that they normally would have to jump through, how many of those hoops can we jump through ourselves?
And so, and by kind of reversing those, you know, how can we increase their perception of, of likelihood of achievement? Because if we can get somebody who's more convicted that what we're going to do is going to work, then they're actually in a very real way going to receive more value.
That's right. Alex's client makes 36,000. His lowest price product costs 16 grand. And you just heard him say that after they join, they voluntarily pay it off early. Why? Because the entire product is focused on getting wins and results for the customer. And what, what's your highest tier program, Alex?
It's 42,000.
42,000, yeah. And you have quite the take rate if I remember correctly.
Yeah, I think we have, I think we're at 60%. 60%, yeah.
And these people are strong armed and wrestled into upgrading or they choose voluntarily.
They choose voluntarily, and we let them try it out before they can choose to pay for it.
Okay, you guys seeing this?
The entire structure of how Alex thinks is how do we remove all of the barriers for the client, for the customer to get the result that they want. And if we do that really well, by removing as much friction as possible, then they will voluntarily line up to give us money. It's kind of how business works. And that's why Alex can spend money on advertising, to put people into his pipeline and win and beat everybody else.
