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How To Make More Money Than You Deserve (My 2027 Framework) — Transcript

by Alex Hormozi · 4,060 words · 579 segments · language en · Watch on YouTube

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0:00If you want to make more money than you
0:01deserve, it's not about how smart you
0:02are, how hard you work, but more so what
0:04type of business opportunity you pick.
0:05And I've seen this play out time and
0:06again with over 10,000 businesses that
0:08walk through our headquarters in Vegas,
0:10from service businesses to software
0:11companies to penis pump sellers to screw
0:13manufacturers, which I guess is more or
0:14less the same thing. And after looking
0:15at so many different types of
0:16businesses, I've grouped every common
0:18business into five categories and put
0:19them on a chart based on how hard they
0:21are to operate versus how much money
0:23they can realistically make. And I call
0:24this the idiot index because you can
0:26have people who aren't that smart or
0:28aren't that hardworking but can still
0:29make a ton of money, sometimes more than
0:31they deserve. Right now, before I go
0:32through every type of business that I
0:34would avoid and which ones I would
0:35consider in 2027, you need to understand
0:36one of Warren Buffett's most iconic
0:38stories to frame the whole thing. Your
0:39business vehicle matters more than your
0:41effort. So Warren Buffett once spoke
0:42about a man that he once went to
0:44business school with. And that guy, you
0:46know, they were good friends. He said
0:47that guy was smarter and worked harder
0:48than him. And you know, they parted ways
0:50when they graduated. The other man went
0:51into the steel business and Warren went
0:53into investing obviously. But the end
0:55result despite the other guy being
0:56smarter and harder working was that he
0:58made way less money. And he said,
1:00Warren, the main reason was the boat he
1:02was in, the opportunity vehicle. And so
1:04let's start with the first and worst of
1:07the different five vehicles on the idiot
1:10index. Obviously, this is the place to
1:11avoid. So labor heavy commodities,
1:15right? So these are businesses that have
1:17a low barrier to entry, which means
1:18anyone can get into them. And so the
1:21result of that is you have very fierce
1:22competition. You have limited
1:23scalability and by extension upside and
1:26lots of operational drag meaning it
1:28takes a lot of people to manage it to
1:29get incremental improvements in the
1:31business. So, for example, uh a
1:32traditional kind of middle class sit
1:35down restaurant, uh service-based gyms,
1:38um like an SMB agency, um uh retail,
1:42it's like selling physical products in
1:44person, uh event planning, right? My
1:46argument here is that even if you see
1:48somebody who's super successful, because
1:49there's always an exception, right, in a
1:51low vehicle, if they were in a high
1:53vehicle or higher vehicle, they would
1:55likely be more successful with the main
1:57skill set. And so, for example, I ran
1:59gym launch, which was basically targeted
2:01at service-based uh gym owners. And I
2:03used to get asked a lot by some of the
2:04most successful gym owners there. They
2:06would ask me this like, "So, what do I
2:07do, you know, to scale from here?" And
2:08the honest truth was, and I would tell
2:10them this, I said, "If you actually
2:11applied all the skills that you have now
2:13learned managing, you know, 10 locations
2:15to a different vehicle, you would make
2:17significantly more." And that's very
2:19hard from somebody who like pretty much
2:21tells most people to just stick with the
2:22thing for the very long time. But the
2:25extreme example that I look at this is
2:26like how many service-based gym owners
2:29do you know that are worth a billion
2:30dollars?
2:34None. Like there's actually none. Like I
2:36I was in that space and I'm I'm curious
2:38if you if you find one. Now you might
2:39find a franchiseor but that's a
2:41different business right or you might
2:43find somebody who owns you know a 100
2:45planet fitnesses different business. And
2:47so taking the natural extreme you should
2:48always look like okay well what does
2:49this look like when it's maxed out? If
2:51no one has maxed it out, of course you
2:53can be the special snowflake. But the
2:55the point that I make here is that maybe
2:57you are the special snowflake that does
2:58this and this is your, you know, life's
3:00calling, in which case fine. But if
3:01you're just like, I just need to find a
3:03way to have a business that I can apply
3:04effort to and make money and feed my
3:06family and all that kind of stuff. Um,
3:08then there are better vehicles, which
3:10brings us to easy and low money. So
3:13these are great starter businesses,
3:15right? So they typically have more scale
3:17and less complexity. Usually one person
3:20with the right skill set can scale this
3:21to basically a top 1% income in the
3:23United States. So like not bad, but
3:25usually they don't become much bigger
3:26than that. And so some examples would be
3:28like drop shipping. Like you can make a
3:30million dollar a year, $2 million a year
3:31drop shipping. Uh you know light home
3:33services. So think about like uh you
3:35know power washing, deck staining, very
3:38like very many kind of home services
3:39that are the capital light to start like
3:41it doesn't you know you could even
3:43consider like lawnmowing a degree of
3:44that. um vending machines and ATMs, uh
3:48wholesaling real estate, uh Airbnb
3:51arbitrage, affiliate content, so
3:53basically you post content and drive to
3:54other people's products. Um and the
3:57again the the the frame I use is okay,
3:59what scaled version of these businesses
4:02exist? Do I know any billionaires from
4:03Airbnb arbitrage? Do any billionaires
4:05from powerwashing? Not really, right?
4:08And so it's okay. Um and if you find an
4:13example, by all means, let me know. I
4:14always like like to see them, but
4:15there's not enough examples that I would
4:17say, oh, this is a really good long-term
4:19big vehicle. But again, it depends on
4:20your goal. If you're just like, hey, I
4:22would like to make money and I have work
4:24ethic and I can acquire skills, great
4:26starter cash businesses, right? And so,
4:28an easy business, to be clear, is not
4:30automatically a bad business. An easy
4:31business might just be the right vehicle
4:32for your goal if it's to create cash
4:34flow, learn skills, and build capital.
4:36If your goal is to create a
4:38billion-dollar company, the requirements
4:39are going to change. And so let's get
4:40into businesses that have higher dollar
4:42potential which is number three. Let's
4:44call this the mediummedian business. So
4:46medium hard and medium money an expert
4:50dependent business. So these are
4:51businesses that you can become wealthy
4:53with. So typically uh the downside of
4:55this particular business is very hard to
4:57sell but you can become wealthy with
4:59income but not necessarily with
5:00enterprise value. So an example would be
5:01like online coaching, right? Uh AI
5:04implementation, construction, there's
5:06some notable examples in construction
5:08but still very very hard. uh detox and
5:10rehab, uh surgeons, uh enterprise level
5:13agencies, uh business opportunities,
5:15influencers, uh these are examples that
5:19um again or personality driven brands
5:21where you saw ad sponsorships on your
5:23podcast, things like that. Like you can
5:24absolutely make a lot of business. I
5:25mean, of course, there's there's Joe
5:27Rogan, right? And he's, you know, he's
5:29got his hundred billion dollar deal with
5:30with Spotify or whatever it was. And so,
5:32like, there are going to be examples,
5:33but I also look at like the survivorship
5:35bias, which is like how many podcasts
5:37are there? How many Joe Rogan are there?
5:39It's kind of like saying, you know,
5:40music, it's like, yeah, I mean, you can
5:42make money in music. Um, it's really
5:45hard. Um, but with any business that is
5:48expert driven, you can typically sell
5:50services at very high margins. And if
5:53you have a small team, you can operate
5:54it. Basically, you with like an iron man
5:56suit on that creates leverage, which is
5:57what media is, or coaching is. There are
5:59these kind of like slightly levered
6:00versions of the business that can give
6:02you very substantial income. Now, the
6:04non-obvious truth is that a business
6:06that generates substantial income
6:07without becoming valuable or a
6:08transferable asset, that's what this
6:10business is. And so, if the business
6:12depends heavily on the founder, it might
6:13be a great kind of job or like, you
6:15know, enhanced job, but it's not
6:17necessarily a great company or asset.
6:19So, speaking of incredibly valuable
6:21assets, how do you build one?
6:25Well, the first way to build one is to
6:27know exactly what the next step is on
6:28scaling your business. And so whether
6:30you're doing a starter cash business,
6:31labor heavy business, expert dependent
6:32business, the steps of scaling are
6:34actually straightforward. Now, some of
6:35them be harder depending on the vehicle
6:36that you choose, but we've actually
6:38broken down all the steps that we took
6:39because we broke it, we gotten three
6:40companies to $100 million plus in in
6:42annual revenue. And so I also talked to
6:44a bunch of the friends that I have that
6:45have also big companies and I validated
6:47each of the cells in here. And so this
6:49will give you a call it a 90-minute
6:50crash course on your exact position of
6:52the 10th stage of scaling, what problems
6:54you're probably seeing, and most
6:56importantly, how we figured out solving
6:57them. that was also vetted with some of
6:59our friends, right? And so this is one
7:01of the most valuable things I can give.
7:02This is the thing that I I wish I had
7:04been given, you know, the day I started
7:05so I could just have the cheat codes
7:07ready instead of having to learn through
7:08trial and error. And this is my gift to
7:09you. You can just pop in your
7:10information. You'll get it in under 10
7:11seconds. Enjoy.
7:14It's free. So
7:16number four, asset value, enterprise
7:20value, hard but high money. The moat
7:23built enterprises. So these are
7:25businesses that typically have moes and
7:26barriers. And this is important because
7:28barriers to entry limit competition. You
7:31can make billions here. It's just very
7:32hard. And so it typically requires a
7:34deep skill set or have some sort of
7:36structural limitations uh like a
7:38marketplace, right? They take a very
7:40long time because compounding takes
7:41time. And sometimes they might require
7:43government approval which creates a
7:44regulatory mode. Um or they require lots
7:46of money which in some ways is a capital
7:48moat. Uh or they might require some sort
7:49of combination of all of those things.
7:51So just some examples, true AI, not just
7:54like rappers. uh those require skill and
7:57money. Uh if you were to start a
7:58pharmaceuticals or a drug company that
8:00requires government approval, money,
8:02time and skill. Uh specialty
8:04manufacturing like aerospace or you know
8:06chips like Nvidia, right? Skill, money,
8:08government approval and sometimes time.
8:10Uh cannabis, right? That was a that was
8:13an emerging one and now it's been
8:14cracked down a little bit more. But
8:14government approval and it costs money
8:16to start. Uh franchising. So this takes
8:18skill, government approval, you get
8:20regulated. Uh there's you have to have
8:22strong core unit economics of the
8:24individual uh kind of unit that you're
8:26selling the business model and a model
8:28that is not talent dependent which is
8:29also rare. Uh roll-ups uh where you
8:32basically take you go from one you know
8:34uh plumber to 20 plumbers plump put them
8:36into one business very easy to say much
8:39harder to do a lot of skill typically a
8:41lot of money in order to do it. uh
8:43marketplaces like school nearly
8:45impossible tons of capital very deep
8:47skill set but if you succeed you can
8:49create a network effect and billions and
8:51billions in value uh SAS so software as
8:53a service uh typically deep skill set uh
8:56this is getting easier with AI but that
8:57also means that there's more competition
8:58so this one's this mode is beginning to
9:00erode a little bit uh CPG so this is a
9:03consumer packaged goods think like
9:05energy drinks uh you know chewable
9:07gummies you know shampoo any anything
9:10you would just buy at the supermarket
9:11when you're like you know picking stuff
9:12up for yourself that you might have in
9:13your bathroom or your kitchen, right? Um
9:15what's required there is brand supply
9:17chain and money, right? Um let's go
9:20finance, day trading, and hedge funds.
9:22Uh money and a very very very good skill
9:24set. So, lots of money and very good
9:26skills. Um if you really want to play,
9:28uh not just like, by the way, I know
9:30there's a lot of day trading, you know,
9:31courses and whatnot that that are around
9:33there. Um
9:36I won't comment on it, but they should
9:38be able to answer the obvious question,
9:39which is if you're so good at day
9:40trading, why should you just day trade?
9:41I'll just leave it alone. Banks, uh,
9:44regulation, right? Like you could start
9:45a bank. Uh, there's a lot of regulation.
9:47It cries a shitload of money. Um, and to
9:49be clear, I'm not talking like, you
9:50know, janky crypto banks that like could
9:52go down and you lose all your money, but
9:54legitimate FDIC insured backed by the US
9:56government banks, right? Like those
9:58businesses tend to make money. Uh, but
10:00very hard to get into. Uh, energy, data
10:03centers, telecom, right? Regulation,
10:06capital, and skill. And the non-obvious
10:08truth is that the difficulty can be a
10:11competitive advantage. And so said
10:13differently, if everyone can do it,
10:14everyone will do it. And so very few
10:17people can do it, the people who succeed
10:18may have much more room to win. My
10:20perspective on this has shifted over
10:21time, which is when I was younger, I
10:22used to just obviously just want fast
10:24money because I was broke. And I get it.
10:25That's why we started with some of the
10:26easier businesses. But I have now
10:28shifted my perspective to like I want as
10:30many hurdles to have to go through
10:32because it means that everyone else is
10:34going to have to go through them and I'm
10:35going to have to compete with like
10:36orders of magnitude fewer people. So I
10:39would rather compete with 20 people or
10:4150 people than 5 million people. And as
10:44much as you know you could say like I'm
10:45going to be the champion, it's like I
10:46would certainly like to be the champion
10:48but I also like having good odds. And so
10:50these businesses because they have more
10:53barriers to entry sometimes
10:55counterintuitively actually can give you
10:57better odds of success. It just requires
10:59more skill in order to get into because
11:00you have to have the skill of raising
11:01money, the skill of hiring great team,
11:03the skill of understanding, you know,
11:04government regulation and compliance and
11:06all these other things. But once you get
11:08it, it's like in some ways you kind of
11:09get a license to print money like quite
11:10literally from the government. Casinos
11:13is another example literally.
11:16Um, which brings us to, drum roll number
11:19five, easy high money. Is this even
11:23possible? As Lindsay Lohim said, the
11:26limit does not exist. And so this is the
11:29promised land. All right, these are
11:31demand supply arbitrage businesses or
11:33demand tailwind or supply constraint
11:35businesses. But these are typically not
11:38always created by supply and demand
11:40economics or recent regulatory changes
11:42and which then create a shift in supply
11:44and demand. And so these are typically
11:46windows of time where a lot of money can
11:48be made um very quickly. And I'll kind
11:51of give you kind of the reasoning behind
11:53a handful of the examples. So one that
11:54I've talked about publicly a lot which
11:55is like med spas. Reason for this is
11:58that the supply demand of med spas is
11:59mostly because the supply demand of old
12:02folks that don't want to get old who
12:04have money and people who supply age you
12:07know longevity related stuff both in
12:09terms of health internally or aesthetics
12:11externally um all the money is in old
12:14people and so they got the money they
12:17got the time they want to spend it and
12:19so if you have a business that caters to
12:20them by and large I like with a broad
12:23brushstroke you're probably if you take
12:24a normal business and just shift it to
12:26old you'll probably be able to two to 3x
12:28the business. Like not a joke. Um, but
12:31that's the supply demand economics for
12:32that business. Next, wealth advisors
12:35also an aging population. And where does
12:37this come from, by the way? This comes
12:38from because I I've seen so many
12:40business owners that walk through our
12:41front doors and I'm like, okay, and I
12:43see some guys that are incredibly
12:44talented, working their asses off, and
12:46they're just, you know, they're making
12:47some money, but I'm like, dude, if you
12:49just did a different business, you would
12:50be making so much more money. And on the
12:51flip side, I see some real numbnuts,
12:53right, who own businesses and they're
12:55crushing it. And I'm just thinking to
12:57myself like, man, and I pay attention to
12:59those because that is what gave birth to
13:01the idiot index. This guy has a business
13:02that's high on the idiot index, right?
13:04And so, wealth advisory is one of them.
13:06All the guys that I see who are in that
13:07business are bored out of their minds.
13:09They're making a lot of money and they
13:10don't really have anything to do.
13:11They're just like, "Ah, you know,
13:12getting more customers would be nice,
13:13but the thing is it's sticky as hell."
13:14And it literally compounds. People don't
13:16normally change and they keep getting
13:18wealthier. Literally the money compounds
13:19and they get a fee on the money. So if
13:21you keep all the same customers and you
13:22wait 10 years, your business probably
13:23double or triples anyways. That assumes
13:25zero new customers. Let's do let's do a
13:28different example. Regulatory change.
13:30What does that effect? Recently we came
13:32out of the kind of the cannabis boom.
13:33We're kind of we kind of went through
13:34the cannabis trough, but that was like a
13:36whole cycle you got to see from
13:37regulatory. A different one that we're
13:38on the peak right now is JLP1s. One that
13:41was before that uh before cannabis was
13:43Botox. there. I don't know if some of
13:44you guys might remember maybe 20-ish
13:45years ago, it was like there were Botox
13:47parties and dentists were doing Botox
13:48and it was like it was nuts like because
13:51you could charge way more because
13:52there's supply demand. All of a sudden
13:53it's legal. They they find out that it,
13:55you know, cures wrinkles or whatever or,
13:57you know, stops wrinkles for a while and
13:58so people are like, "Oh, I want that."
14:00Right? Elder care, another example. Uh
14:02care, you know, assisted living. Um
14:05again, supply and demand there. Just way
14:06more old people than there are old care,
14:08you know, old people homes. Uh debt
14:10collection. Um, if you can sell and you
14:12know how to market, you can make a lot
14:13of money in debt collection. Uh, this is
14:15also I would say any business that has
14:17like a little bit of u like a little bit
14:20of dirt on it, like moral dirt or like
14:22not necessarily moral dirt, but like it
14:24doesn't sound good at a cocktail party,
14:25right? Like no one wants to say they're
14:26in waste management. Uh, people don't
14:28want to say I mean I don't really care,
14:29but like some people don't want to say
14:30it. Uh, it sounds way cooler to say
14:32you're a musician than you're a debt
14:33collector, right? And so there's kind of
14:36like a a discount that I would apply uh
14:39to businesses that sound cool because
14:41everyone wants it, which means everyone
14:42does it. If the ones that don't sound
14:44cool are the ones that not as many
14:45people do, which means there's way more
14:46opportunity. Again, the supply and
14:47demand economics are in your favor. Uh
14:49let's do different ones. So, uh real
14:51estate syndication. Um what's very
14:54interesting in kind of fun dynamics is
14:55that the fund almost always wins because
14:57of how they're structured. And this is
14:58just it's just kind of the nature of it.
15:00Like if you if you raise a lot of money,
15:02you just get a tremendous amount of
15:03leverage. And so like let's say you put
15:04a million dollars into a fund. Typically
15:06the requirement for a fund is uh you
15:08should put about 5% in. That's kind of
15:10like I'll call it industry average.
15:11Which means that you raise $ 19 million.
15:13So with a $20 million fund if you're in
15:16real estate that means you can probably
15:17lever that three times which means you
15:19can buy $60 million of real estate. And
15:21you as the person who's doing the work
15:22gets 20% of the economics. And so it's
15:25like you're getting 20% but like your $1
15:28million turned into $60 million of
15:30buying power. just unbelievable leverage
15:33that gets employed there. Um, and so a
15:35good vehicle. Uh, I see a lot of people
15:37who are in that business who aren't that
15:38good and make a lot of money. So, like
15:40what do you need to do there? You
15:41honestly just need to learn how to find
15:42deals, work deals, and raise money. If
15:44you can just do those three things, you
15:45can make a lot of money. Uh, commercial
15:47cleaning. This is a little bit more of a
15:50like call it home services commercial
15:52version, right? Very sticky. Um, and you
15:55can serve zillions of businesses. Um,
15:57and typically these businesses trade at
15:59very good multiples. Uh, and so like
16:00literally the only hard problem in this
16:02business is like just learning to get
16:03customers. But if you know how to get
16:05customers in any business, you might as
16:06well get one that's really sticky. Um,
16:08and has some modes for AI. Not bad.
16:10Elevator maintenance. Oh my god. I've
16:12like a racket. And if you're in that
16:14business, congratulations. Like it just
16:16you just can make a lot of money. It's
16:17not that like there's only a handful of
16:19manufacturers. You like, you know,
16:21finding text is not as complicated.
16:22Obviously, there's always, of course,
16:24all these businesses have some things
16:25that are hard. All businesses have some
16:27hard parts. But the question is, how
16:28much hard part is there compared to how
16:30many people are also trying to overcome
16:31it? And this is just a laundry list of
16:34ones that I've seen walk through the
16:36door multiple times where I'm like, man,
16:37this guy's crushing it. And I didn't
16:38think their business acumen was as high.
16:40And there are so many more. But the
16:42non-obvious truth here is that these
16:44businesses are often attractive because
16:46they combine strong demand with
16:48relatively limited competition. And so
16:50it kind of gives you the benefit of all
16:53worlds. So the question is not simply
16:56what business should I start or switch
16:58into. The question is instead what
17:00business vehicle gives me the best
17:01chance of reaching the outcome I want.
17:03If you want high income, you can choose
17:05one of those types of businesses, right?
17:07Uh if you want cash flow, you can choose
17:08a different one. If you want enterprise
17:09value, uh you need something more
17:11scalable and more transferable,
17:12something that's defensible. If you want
17:14to create billions, you need a business
17:15with a massive market in a remote. Uh no
17:17matter what, you can work hard in any
17:19business, but you can't make every
17:20business equally valuable. It's going to
17:22take you the same amount of time to work
17:2460 hours a week to start a restaurant as
17:2660 hours a week to start a software
17:27company. But only one of those can
17:28become a billion dollar company. And so,
17:30choose the opportunity vehicle, choose
17:31the boat that you're going to get in,
17:32and then row as hard as you possibly can
17:34and do so much work that it'll be
17:35unreasonable that you're not successful.

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Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to choose a caption track available on the video.

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YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, caption language selection, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.