My biggest mistake when building a 9 figure business...
In this YouTube talk, Leila Hormozi, co‑CEO of Acquisition.com, shares the single biggest mistake she made while scaling her first company: promoting roughly 80% of her leadership team despite their inexperience. She recounts the chaotic year when the business hit $37 million in revenue and a $4.5 million month, yet she felt exhausted, stressed, and unable to enjoy the success. Leila explains how she ignored warning signs, delayed firing and demotions, and ultimately spent a year removing most of the leadership team. From that painful experience she distills four core lessons: (1) accept the reality that fast growth requires experienced hires and that a minority of “been‑there‑done‑that” staff (≈20 %) is essential; (2) design a transparent compensation, promotion, and demotion framework before hiring; (3) understand that mass firings damage culture and require clear, honest communication and a long recovery period; and (4) avoid self‑destruction after a mistake—use the error as fuel for future success rather than self‑hatred. She closes by urging founders to act decisively on hiring and firing decisions, noting that scaling to $1 M, $10 M, or $100 M inevitably involves making progressively larger mistakes.
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What is up? Welcome to my YouTube channel. My name is Leila Hormozi. I'm co-CEO of Acquisition.com, which is a portfolio of businesses that does about $85 million per year in revenue. And my goal with this channel is to help you get from where you are to between $3 to $10 million in revenue for free. And so that being said, what I want to talk about today is a question I got asked multiple times last week, which was, what is the biggest mistake you've made in business? And I'm sure that this is appealing because anyone who's, uh, I think as you're building a business, it's encouraging to hear how many mistakes other people make, and a lot of people don't want to talk about it. And so I wanted to kind of extrapolate out and tell the story of what I believe the biggest mistake I ever made in my business career was. And it's probably why I'm so passionate about helping people figure out how to hire the right team, how to properly fire people or put them on performance plans. It's probably why I'm so HR-focused, um, because I would say that I'm like a really HR, customer success-focused CEO. Those are the two areas that I really pay the most attention to, probably because I think that they're the most important. But that being said, I want to talk about what my biggest mistake was. And so that mistake is over-promoting about 80% of my leadership team in the beginning of our first company gym launch. And I had, you know, at that point in time, I was really inexperienced. I literally— listen, guys, I'd never run a company before. I'd never managed people before. I'd never done anything before. And I was so stressed all the time. I was so nervous, like, every step of the way. Even it was super successful, people are like, oh my God, congratulations. I was like, what do you mean? It feels terrible. You know, like, I didn't even understand. And I would read all these books that said when your company is growing really quickly, it's really normal to to turn people over all the time. But I honestly, it was like having that business was like the first— I want to say the first thing in my life that gave me like such an immense sense of purpose. Like, it really did. And I do believe you get to choose what gives you purpose. That was the— it was like I'd finally found something big enough to really like dig my teeth into, right? To like sink myself into. And I was really emotionally wrapped up in it. And because of that, you know, I'd read all these books that said, you know, be careful about over-promoting people, be careful about, you know, promoting people too soon, how you pay people. And I kind of just told myself, oh, our team's different, you know, this is different, we're the exception, and I kind of ignored it. And so we ended up the year that we did, I think it was like $37 million. It felt terrible. And it was like the year up to that just felt like absolute chaos all the time. And the reason that there was absolute chaos is because of this: Alex and I were first-time founders of any sizable company, and then we promoted all these people who had no experience either. And so the entire company was being run off people who had no fucking idea what they were doing.. And it started with us. It's like, I had no idea that these people were that incapable. And it's not their fault, it was mine. Basically what happened was, you know, I think that it was about a year that I ignored it. I kept trying to rationalize, I kept trying to train, I kept trying to— like, I overextended myself to do part of everybody's job. For one, I felt like I was literally doing 10 to 20% of every person's job. And then also just kind of like having this in the back of my mind, like, I've read all these books that say you have to, you know, demote people, and the people that start aren't the people that finish. And I was just like freaked out about it, and I just kind of ignored it until one day, um, it just kind of piled up, which— it was actually the month that we did the most money. We made like $4.5 million, which is the most we've made at that point in time in a month. That's not like from launches and shit, that's recurring revenue. And we hit it. And I remember thinking, God, we were broke as shit 3 years ago. This is insane. And the next thought that came into my mind was like, and I'm like not even enjoying it, right? Like I'm like so stressed and so overextended that I can't even enjoy this. Partially because I'm out of integrity with myself because I know what I need to do and I'm not doing it. And partially because I'm so overextended that I'm fucking exhausted all the time. Like, I could barely keep my eyes open by 7 o'clock every day. And that was mostly from the mental shit going on in my head because I was so stressed because I knew I needed to do something and I wasn't doing it. And so that being said, you know, I had like a hard look in the mirror and, you know, I told Alex, I was like, God, I just want to end it all. Like, I don't know what to do. Like, it just feels terrible. And he was like, Leila, it's like this business. And I was like, okay, I said it in like a moment of heat. Like, I don't actually want to end it all. I need to fix this. And I talked to a couple of friends and a couple of mentors and they were like, dude, you know what you need to do. And I was like, fuck. Like, I knew what I needed to do, and I was like, I don't want to do this. I prided myself so much on being a great company, being a place for people to work, and like that— like, our Glassdoor rating was like how I measured my own self-worth as a CEO, almost. Because we were at like, I think we had 4.9. I think it had been 5. It was like 4.9 at that time. And I was like, I'm so fucked. Like, I know what I need to do, and I need to turn over 10 directors. And the thing is, is that everyone's like, oh, you know, if they're not the right fit, I'll just demote them. And I'm like, good fucking luck. I have one person that I demoted that they actually stuck because he's a, you know, a fantastic human and really humble. But most people never want to take a demotion and they won't. It's like, I fucked up, so now you get to get paid less and you get to get less of a title. Not many people take that well. You know, the biggest mistake I really made was just not taking action sooner. And so over the course of that year in 2018, I fired everybody and it was one at a time and it was me doing it. And I was like, it's my fault, but I own the company, so I don't get to fire myself. But I promise you, I feel like shit. And that was pretty much how it went. And I did it over the course of a year. I could sit here and tell you how terrible it was because it sucked. It really did suck really bad. And I felt really shitty that entire year. But I would rather tell you what I learned from that and why I'm so passionate about what I've learned and why I'm so— I treat business so differently now because of that experience. The first thing I learned is that you have to accept the reality of your business. A lot of people want to grow very quickly and they want to scale their business to numbers that are unheard of, right? They want to do what hasn't been done before, and they want to achieve their dreams. And the price of doing so is also experiencing more pain than most other people will. And the reason for that is because as much as you can try and as hard as you can try, it is very hard to take everyone with you. You can tell them that it's unlikely that they're all going to be with you. You can train them as much as you can. There are some people, it's just like once they hit that level of competence or incompetence, it's just like banging your head against the wall. And I think that I thought that because I have a background in studying a lot of human behavior and psychology and, you know, helping people transform their lives through weight loss, plus then understanding business, I was like, I'm going to be able to be the one that can help everyone change. And that just wasn't the case. You know, I remember listening to Reid Hoffman talk about how, you know, most people have a tenure in a fast-growing company. It's like, it's only 1 to 2 years because then they need to get somebody who's ready for years 3 to 4 and can scale a business to $50 million. And the person who takes it to $10 million isn't the same person.. And I remember listening to it and thinking like, I'll beat those odds. I'll, you know, I'll get my team to, to get on the same page with me. And, you know, unfortunately, because I had that belief, I waited too long to make changes and I overpromoted people and I made mistakes that if I had accepted that reality, I could have just told them and been upfront and been like, hey, you're just not the person for this job. I'm gonna find somebody else. Rather than wishing and hoping and betting on their potential and then disappointing them in any way in the long run. And so that was the first thing is like, you have to admit the realities. If you want to grow fast and if you want to scale fast, you have to do things that fucking suck. You have to fire people. You have to tell people they're not good enough. You have to bring in people who are experienced. You can't all not know what the fuck you're doing. And that's why I'm so passionate about that. Like, with our portfolio companies, one of the main things I see is that they have 100% people on their teams that have never done it before. Never been there, never done that. And I'm like, we have to get at least 20% of people in here who have been there, done that. Because what most people do in the beginning, like me, is you like— I call it like taking in stray dogs. It's like someone's like, I got a friend who quit their job and wants to work here. You're like, sure, take them. Come on, come join, join the party, right? We don't need experience here. Like, if you have the culture and the values, like, screw it, whatever. And it becomes this like hodgepodge of people who all are really excited about the opportunity and excited about the company, and they have no skills and nobody to teach them the skills. And so if you want the fast growth, you have to balance it with people who have been there, done that. And that's the first lesson I learned. Now, the second lesson I learned is that it is so much better to build a company— just like you have a strategy for how you're going to acquire customers, you should have a strategy for how you pay and promote and demote people in your company.. And you shouldn't start it after you start hiring people. You need to start it before. And so I can tell you now, you know, we started acquisition.com. I have all that done ahead of time. Like I have my pay philosophy, I have how we're gonna promote, I have all those things already ironed out and I can upfront tell people when they apply for the job. I didn't have that when we started our first company. And so when people are like, well, I want a raise, I'm like, oh, should I give them a raise? Should I not give them a raise? I don't know. And then when these people were like, I would like to be promoted to do this next job that you say is needed, I'm like, uh, do they deserve the promotion? Yeah, I think maybe they should have the promotion. Okay, I'll give them a try. Right. And if they suck, I'll demote them. And yeah, that's not as easy said as done. And so there was just no system around it. And so that was the second thing I took away is like, you have to have a strategy that is transparent that you can tell people about. Like, here's how we promote, here's how we demote, here's how we give raises, here's how we pay. And so if they don't like that, they can just not take the job at your company. But at least if you tell people from the forefront, then when they come in, they know what to expect. And so it's really understanding and developing a strategy around how you pay people, how you promote people, how you hold the standards. And that is something now that, you know, again, every time we take on a company or start working with one, that's one of the things that I'm quick to try and get in place and push on them because I just know how important it is. Because what happened to me was like, I had no strategy. And so, you know, there's— say there's two roles. There would be a head of sales and then there'd be a head of finance. And, you know, typically, you know, say the head of finance is paid $130 grand a year and typically the head of sales is paid, say, base, you know, $120 grand per year because he's more variable. But because there was no strategies, the finance person ends up at, you know, $150,000 and the sales guy's at $70,000 with huge variable. And then them looking at each other, they're like, why is he paid that? Why is she paid that? And they don't understand their peers' pay. And so one thing that I like to say and that I learned from my experience is like, pay everyone like you knew everyone else knew everyone's pay. They should all understand the system. And if you can't be transparent about what you pay somebody, it's probably because you don't have a methodology behind it to support why you paid the person asking. And so that was the second thing I learned is having those systems, as boring as they are, they're really simple to put in place. And to decide upon. It'll only take you probably a week to figure it out. And so having a pay philosophy and having those standards set and sharing them with the team ahead of time. And then the third thing is that firing a lot of staff really fucks with your company culture. And again, I— how I've always chose to handle firing people has been as transparent as possible. So, you know, one thing that I did during that time was like when I flipped that many directors, um, and dug into their teams and flipped people on their teams, I tried to batch it all in like once. Like, it was like cut once, cut deep. It just sucked. And so I tried to do it all in one day and then tell everyone after and explain why and explain that, you know, the mistakes that I made that led us to that point. But I have to say, even if you can be super transparent and even if you tell the absolute truth, if you fucked up that bad like I did and you've like— there's that many people that, you know, you were behind on firing— like, I had to basically let go of most of all leadership aside from 2 people. You know, the team's in fear. And so I don't think that I realized how long that was gonna last. I want to say, you know, me and Alex were talking about the other day, I think it lasted like 18 months. It was like 18 months where it was like, am I on the chopping block? It's like, oh, I'm one of the survivors. And I was like, oh my God, this is terrible. And I felt like every time I was talking to the team, I felt like they were scared of me more than anything. And I was like, fuck, I'm not a scary person. I was like, but I did something fucking stupid. So it's like, I'm not scary. I am unpredictable because they didn't understand, right? And I tried to educate the team through the process. I was like, guys, I fucked up, you know, like we just didn't know. But it was really hard to recover from. And like I said, I think it took a solid 18 months. I can say now the culture is fantastic, but it took 18 months to get there from recovering. And I wish that I had just bitten the bullets as they came rather than let it all build up to like this big thing that seems like that's so contrary to what we've been doing. And it's like, no, I just have been putting this off. And so that was the third thing I learned. And then here's the last thing I learned from making that huge mistake is I let that mistake beat me down for months and for months. I didn't want to show up in front of the team. I did, but I wasn't confident. I didn't want to impose change on the team because I felt terrible and I felt bad about how much change had occurred. I didn't want to show up in content or anywhere public because I felt like I was out of alignment with what I believed was right. And I let it take a huge toll on my self-worth because I had tied so much of that self-worth with being somebody who doesn't fire people, with being someone who isn't that naive, with being someone who doesn't make such bad decisions. And after about 6 to 8 months of just beating the shit out of myself mentally, I was talking to my friend one day and she was like, how's that working for you? I was like, what do you mean? She's like, you just keep beating yourself up for this. I was like, yeah, because it's a huge fucking mistake and I shouldn't have made it. Like, I knew better. And she was like, yeah, but that's super unproductive. And I remember just the moment she said it, I realized she's totally right. That's so fucking selfish. I've been spending all this time telling myself that I suck, I'm a terrible CEO, I'm this, I'm that, rather than thinking like, what can I do to prevent that for next time? How can I educate other people not to do this? How could I tell my team so that they don't make mistakes like this? And I could have been using all that negative energy to productively create a better future, but instead I just indulged in my own self-hatred. And so I think a lot of times, like, if you're watching this video because you're thinking about the mistakes that you've made, indulging in that mistake is why you're not able to move forward. Indulging that mistake, hating yourself, beating yourself up is what makes it so fucking painful. It's not the event itself. The event is whatever you tell yourself it is. It's you beating yourself up every day, day after day, and telling yourself you're not all these things you thought you were. And so I think that's the number one thing is like you can either use that mistake to fuel your future success or you can use it the reason to not have any future success. I think that's just the difference between like a winner and a loser. Like winners use that mistake as fuel to be better for the future, whereas losers use that mistake as a reason not to succeed. And that's my biggest takeaway is that after, you know, I think being in a funk for that amount of time, I just realized I don't want to be that kind of person. And that's not a good example for my team. And I know that you could ask my team and they would say, Layla showed up great every day, but it was how I felt inside. Like I felt like an imposter. I felt like I didn't deserve to have this team. I felt like I wasn't the right person to run the company. And I was never any of those things. It was just me telling myself that I wasn't. Because here's the reality of running and scaling a business. If you want to make $1 million, you've got to be willing to lose $100 grand and to make a $100,000 mistake. If you want to make $10 million, you've got to be willing to make a million-dollar mistake. And if you want to be willing to make $100 million, you've got to be willing to make a $10 million mistake. And that is the reality of business. And so that is the biggest mistake that I have ever made. I hope that one, that can help you if you're growing your business right now and you're thinking, I have people I know I need to fire, or like, you're right, I have nobody experienced on my team. Like, I freaking beg of you to get people who know what the fuck is going on. It's not going to help your business not to keep them or not to have those people that you know you need. And if you're going to do it one day, you might as well do it today. And I wish I had someone tell me that and tell me how much more painful it would be if I waited, because it absolutely was. And so that being said, I hope you have a great rest of your week, day, month, bike ride, bath, shower, whatever it may be. And I hope this was of use to you. I'll see you on the next one.
