The #1 Reason Young People Stay Poor
Alex Hormozi argues that young people stay poor because they prioritize earning over learning early in their careers. Through contrasting anecdotes (a video editor who chose immediate higher pay vs. exposure to mentors, a salesperson who doubled required activity to learn, Kobe Bryant’s extra practice), Hormozi urges choosing learning seasons—including unpaid/low-paid roles—to compound skills and long-term earnings.
Questions this video answers
52%
A $60,000 offer (he asked for $3,000 more).
Quota: 100 calls per day; he did 200 calls per day.
17 years old.
Columbia Business School.
Chapters
20 year olds stay poor because they start trying to earn rather than trying to learn. They did a survey of high school seniors. 52% believe that they will be a millionaire by 25. It's delusion. You can try and roll the dice and have a one in a thousand shot of being a millionaire in 90 days or I can guarantee that you'll be a millionaire in a decade. Which would you prefer? So I want to give you a quick example of two guys about the same age that took two very different directions in life. One of them went to another guy who was a little bit older, tried to learn the basics of editing video, use the buddy to get a job interview, and he'd learned enough that he could get a job offer. This particular company had a huge suite of other people who significantly more advanced creative director who's done multiple big brands that he had the ability to learn from. He gets a $60,000 offer which is solid amount of money for editing with basically no experience, who then rather than accept the job, he asked for $3,000 more. Because what he thought he had was earn rather than learn. The business is obviously not going to do that. What this guy does is he starts trying to negotiate back and forth, wheels and deals and then eventually gets a job to be the lead head honcho of video editing at some small business that has no other mentors. There's no other people ahead of him. He took the right hook in his career 12 weeks after getting into it and now they are the ones who are trying to extract as much from him. Rather than coming into a business where he's the small man on the totem pole and he can learn from everyone else, which would maximize for his long term net worth. When you're early on, you learn this much and you think you know everything. And it's something called the Dunning Kruger effect. The more you learn in a specific skill, the more you realize you don't know other guy, same idea, wanted to make money but had zero skills because he's 17 years old, of course he would have no skills. He decided because he talked to a mentor who was older than him and said, hey, I think you have a proclivity for sales I think you'd be good at. He said, whatever the minimum quota is that they tell you to do an activity, double it. This was a sales role. And so he was required to do 100 calls a day. He did 200 calls a day. Why? Because he's not as skilled so he has to do twice the work in order to get the same output as somebody who's more experienced. The mentor also said, go and spend as much time as you possibly can with the number one guy. Listen to everything he does and watch what he does. So that's what he did. And then he proved himself as number one on that bottom team. Then he got promoted. Youngest guy there, worked his way up. What he realized was that no one was going to give him respect based on his age. He stacked his way up, stacked his way up, then became one of the top closers in the company where many people were experts at sales. He was able to learn from them because he was hungry and he did extra hours. Now at this point in his career, he could right now probably start a million dollar a year business or he could reinvest. And so he got another opportunity to work at a much more prestigious company where he'll get even bigger and better experience. And guess what? He's going to get paid less than he was making in his current job. Why would he do it? Because he's smart, not thinking short. If you go for the earning early, you stop the learning. And the moment you stop the learning is when you decide and you tell the universe that I have made enough. This is enough for me. Start at the bottom and learn every skill along the way. Kobe Bryant was famous for doing this, where he would do two practices a day.
My name is Kobe Bryant, 17 years old. Fridays and Saturdays, I would go in my rec room with my basketball and basically dribble myself to sleep. I think that that was the best thing that could have ever happened to me. Because during those lonely hours in the rec room, I discovered the hunger, the motivation, and the desire to be the best possible basketball player that I could be.
And he thought, if everybody else does one practice today, if I do two a day, I will get better faster. And in the beginning, the difference is not that noticeable. But after five years, and then 10 years, he becomes unbeatable. Whether you're trying to get into law or you're trying to get into accounting, or you're trying to get into sales, or you're trying to get into marketing, whatever the core activity that you do, making videos, making ads, writing sales pages, actually doing sales calls, whatever it is, if you do two times or four times the volume, you will get better faster and pay down your ignorance debt at a faster rate. That compounds. He has compounded the number of hours in the trenches learning the thing. Respect is always earned. And the younger you are, the more you have to earn it. And you can either resent the world for not giving you respect that you do not deserve. Or you can go get it. Hustle across age, gender, culture is always respected. It's one of the universal currencies, respect. But the problem is that people want the respect before they do the hustle. What the killers look like in their 20s who become the killers in their 30s don't look like the kid with the Lambo on the watch. What they look like is hungry as to learn and work. If you can humble yourself and you realize the Dunning Kruger effect exists, that you think you know more than you do when you start because you don't know anything. That's why Socrates said, the more I know, the more I realize I know nothing. One of the smartest, wisest people in the world says he knew nothing. I'm gonna flip to my employer hat for a second. If someone comes in, if they're in the earnings season, I will work you because I know that this is the only exchange. If you come in and I know you're in a learning season, then we will be so generous with how much we can give and reinvest in you. The exchange when you're coming in and I have to pay you above to get you to come here means that I have to extract more value from you than I pay you. That's the fundamental of business. But if you come in with a learning hat on, then that business owner understands that maybe in five years you're not going to be there. They could be like, cool. How can I assist you in your career? What skill sets do you feel like you lack? I can pair you with people in the company who are further ahead than you and help you get mentorship within our company and you learn for free. And not only that, I'm going to pay you to learn. So the most important thing you have to realize when you're in your 20s is what season you are in. You have to stop comparing yourself to people who are earning more than you because it means that what they're doing is often shortchanging their long term earning for short term earning. There is a time for the earnings, but the moment that you decide to make that red hook, it's going to be hard to come back because you're going to earn more. And you decide that from here on out, you can't really learn much from people ahead of you because they're not going to give to you the same way you would if you were in their business. Your ability to provide value will compound with time, especially as you start Pairing skills. If you think about Jay Z in the beginning of his career, the first thing he did was he learned how to rap. Jay Z's embarrassing your time. After they get a rhyme, after they got a last Jay Z rhyme, so you can say, I'm Super Phelan. Peace. And then he started learning how to promote another skill, significantly more money. And then after that figured out how to do a record label and distribute even more money. And then after that, he figured out how to recruit other artists and get them sound on his label. Even more money. And so what happens is that he still needs these early skill sets. Even though he didn't monetize them hard there, he monetized them big later. Skills will compound. If you have one plus one plus one, it doesn't equal three when it comes to skills. If you are good at math, cool. If you learn bookkeeping a little bit more. If you learn how to become an accountant, even more. If you start understanding taxes and insurance, all of a sudden you're a cfo. Now, if you start understanding M and A and mergers, entity structures, all of a sudden you're not only a cfo, you're a rainmaker. You're somebody who can bring in deals, execute deals, etc. The earning potential difference between somebody who's an accountant and a rainmaker is tens of millions of dollars per year. So one of my heroes, Warren Buffett, he finished top of his class at Columbia Business School. Somebody finishes top of their class at Columbia can get a job paying very well in most places. But guess what he did. He asked Ben Graham to let him work at his investment firm for free. Ben Graham was one of the goats of investing at the time, when Warren Buffett was just a kid coming out of college. The chance to study under him, it shaped my professional life. And guess what Ben Graham said to him when he asked him to work for him. He said, you're overpriced. Ben Graham knew, just as Warren Buffett knew, that even though he was working for free, it was going to cost Ben Graham more than to deliver all of the skills and all of the things that he would need to be successful than the monetary compensation. But because Warren Buffett is smart, he realized that he was in a season of learning and not earning. Yet he was willing to invest as one of the greatest investors of all time in the thing that was most important and valuable to him at the time, himself. And he did it for free. I'm going to flip this real quick and tell you a little bit on my own. Story people know this. I finished magna cum laude in three years at Vanderbilt. I could earn decent amount of money at most places graduating like that. I then took a consulting job that was paid less than most of my other people were, but because I could work directly with the CEO and so I was going to learn more, I then gave up on the consulting career to do fitness. The first move I made is I asked 40 different gym owners if I could work for them for free. Mind you, I was a magna cum laude graduate, vice president of the powerlifting team. I was president of the fraternity. Came from a consulting background. Like I had a lot of skills. But I realized that I was going to be getting more out of the exchange than the person who I was working, working for. And so I asked to work freight. He started to employ me and he eventually started paying me minimum wage. I would have to swallow my pride in order to take that job, but it was one of the best investments I ever made. And rather than compare myself to the people who are earning more than me, and I'm gonna be real with you, I did and it hurt. But if you learn from one of the best in the industry, if anything, you should be paying them. And the fact that they will accept you at any price is worth it every time. It would be like me going to Elon Musk and saying, I'll be your assistant. He offers me $100,000 a year. Alex, I would offer you $100,000 per year to be my assistant. And me being like, I'll come for 200. Actually, you're stupid. Never mind. Think about how stupid that is. That's the decision 20 year olds make every day. I'm hoping that mosey nation you aren't like that. You're willing to make the long term trade. Because when you have this track record, this stack of undeniable proof that you are who you say you are, you have done what you say you've done. You don't need to pretend, you don't need to front because you have the experience. And then people will respect you because of what you have done, not what you say.
