Jay Shetty & Alex Hormozi ON How to Make Your First Million

Are you chasing passive income while sacrificing real success?

In this On Purpose episode, Jay Shetty sat down with Alex Hormozi, entrepreneur, investor, and philanthropist. Known for his frameworks and ability to distill complex business concepts into actionable steps, Hormozi shared with Jay Shetty the actions required to achieve financial success. As the founder of acquisition.com, he aims to equip people with the necessary skills to trade up the value of their time throughout their careers.

Clear Steps Forward

Hormozi's core offering is to provide clarity on the steps needed to achieve your goals. He told Jay Shetty that there is a lot of confusion around creating an income or starting a business, which holds many people back. Hormozi explained that he mainly focuses on actionable steps. To build a successful business, he believes you need to take three simple steps:

• Informing people about what you have (promotion).
• Having something to sell.
• Ensuring that the cost of delivery is less than the price you charge.

He explained to Jay Shetty that he decided to focus on actions after reading multiple self-help books that left him more confused than answered.

The Danger of Chasing Passive Bets

One misconception Hormozi hears regarding wealth accumulation is the confusion about the order of actions. He told Jay Shetty that people are often unsure of the steps they need to take and mistakenly think they should start by investing.

Alex Hormozi clarifies that investments come last. The first step in accumulating wealth is to have an active source of income, a steady cash flow. If you run after one-time deals, you may end up losing instead of winning.

Hormozi discussed the "all-or-nothing" fallacy, a desire to get rich quickly and easily. The entrepreneur warns that the more an opportunity feels like luck, the higher the red flags. He added that you are 100% gambling if the variables are completely out of your control. Usually, you will find out too late that it was a mistake, when you have already lost what you invested.

Money Per Unit of Time

Alex Hormozi told Jay Shetty that he disagreed with the binary way of viewing income as either active or passive. Instead, he proposes a per-unit-time metric: since money is collected over time, the goal is to increase how much you earn per unit of time. If you don't want to sell your time, the entrepreneur explained that your calculation should depend on how much your time is worth.

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According to Hormozi, nothing is truly passive; even investing in something that feels passive requires extensive analysis before a decision is made. So, you will always trade your time for money, in one form or another. He told Jay Shetty that people should focus on exchanging time for money in ways that yield a higher return than the current rate. His aim is to equip people with the skills to get more value from the time they invest, allowing them to trade up throughout their careers.

The Five Stages of Growth

According to Hormozi, there are five stages of growth; everyone aiming for a higher income will likely go through the following journey:  

1. Uninformed Optimism: The concept appears incredible based on a friend's achievements.  
2. Informed Pessimism: As one engages in the venture, they face losses or challenges, leading to the realization that the business isn't great.  
3. The Valley of Despair: A low point where considerable time or money has been wasted, resulting in confusion. This stage offers a critical crossroads: either entering a new cycle of uninformed optimism or achieving a breakthrough.  
4. Informed Optimism: Grasping the rules of the game and the factors involved, recognizing that success is possible.  
5. Achievement: Attaining the fifth stage through acquired knowledge and proficiency.  

Alex Hormozi told Jay Shetty that you must endure the discomfort in order to master the necessary skills and understand the factors at play. You will likely also pay an ignorance tax, he added.

Finding Your Business Idea: The Three Ps

Hormozi told Jay Shetty that people often try boiling the ocean when deciding what business to start. The entrepreneur shared a framework that focuses on simple, immediate problems, following the 3 Ps structure:

1. Passion: Something you are inherently interested in.
2. Profession: Your current job or what you are paid to do, which represents existing value exchange.
3. Pain: A deep pain point or solution developed from personal struggle (e.g., a mother creating non-allergenic food).

For most entrepreneurs, the easiest starting point is offering services, trading time for money. It's low risk, and you can monetize your existing skills. Hormozi told Jay Shetty that 78% of businesses in the US are service-based.

Don't Follow Your Passion

Another common myth that Hormozi intended to debunk was the advice to follow your passion. He told Jay Shetty that it's one of the most common pieces of advice given in commencement speeches by successful people, because it is socially acceptable. Yet, it's inaccurate because your passions may change over time. The entrepreneur believes that success comes from focusing on a narrow field.

Another reason Hormozi doesn't believe you should follow your passion is that the market may not value it, making it very difficult to generate income that way. Moreover, tying passion to business creates an emotional hurdle, and it would very likely prompt you to quit when work stops feeling good.

Instead, the entrepreneur suggests viewing the tasks you dislike as the cost of becoming the person you want to be. Doing it will make you more resilient and more patient.

Execution Over Idea

Alex Hormozi discussed with Jay Shetty another common misconception: placing excessive faith in ideas while underestimating the value of execution. You don't need to create something big. Instead, the entrepreneur suggests following the following steps:

1. Get an LLC.
2. Get a bank account.
3. Connect that account to a payment processor.
4. Ask a stranger to exchange money for a service.

Your first customers don't have to be total strangers - offer your services to contacts from your social media. Hormozi suggests sending them a personalized text or video, asking them to introduce the service to people they know who might be interested.

To increase credibility in the early stages, you must commit to doing work for free. The entrepreneur advises being honest about the reason why you offer free services - to gather testimonials, reviews, and the necessary experience. If you don't want to give too much, Hormozi's advice is to give 10 people 10 hours of work for free and focus on one-on-one interactions to gain immediate feedback.

Useful Frameworks

Alex Hormozi shared with Jay Shetty his strategies and frameworks for increasing your income. The first one is the Core Four Promotions method; it involves organizing your audience into warm and cold, depending on your level of acquaintance with them. The second criterion is scalability - is it one-on-one or one-to-many? So, the four categories are:

1. Warm Outreach (1-on-1 with known people).
2. Cold Outreach (1-on-1 with strangers).
3. Paid Ads (1-to-many promotion).
4. Posting Content (1-to-many organic promotion).

Then, once you get a response and the contact becomes an engaged lead, you can move on to the next step. Hormozi told Jay Shetty that he calls this the CLOSER framework:

• Clarify: Determine why the lead responded.
• Label: Articulate the problem they are trying to solve.
• Overview Past Experiences: Ask what they have tried to expand the perceived deprivation and increase motivation.
• Sell the Vacation: Focus on the outcomes and results, rather than the processes. The pitch should be concise (under 320 words) and structured around three core points.
• Explain Concerns: Address the five fallacies in decision-making:
  
  • Timing,
  • Money,
  • Decision-maker,
  • Stall,
  • Preferences.

After addressing each, ask for the sale again.

• Reinforce the Decision: This happens after the sale (ideally within 24 hours) to prevent regret and set a positive tone for the relationship.

Don’t Let Fear Stop You

Alex Hormozi told Jay Shetty that most people are ok with sucking, but not with being judged for it. He explained that success needs to be redefined as trying. Fear often lives in the vague, not the specific. One way to overcome it is to name the critic and identify whose specific voice or opinion is fueling your fear. When you externalize it, it loses its power over you. According to the entrepreneur, criticism is a fixed cost of doing business.

Yet, when it comes to business volatility, Hormozi introduced the Rule of 100. He told Jay Shetty that it involves performing 100 units of effort daily, such as 100 minutes of content posting, spending 100$ on ads, or doing 100 outbound reach-outs. 
He emphasized that small businesses often underestimate the necessary volume required. To improve your business, Hormozi explains that you must execute at a tremendous volume, observe the top 10% of results, analyze what worked, and repeat that specific action in the next iteration.

A Set of Advice to Become More Successful

According to Alex Hormozi, your ultimate goal should be who you become as a person rather than the number of achievements. He told Jay Shetty that people tend to feel more fulfilled when they change their mindset from the achievement to the process of becoming.

Secondly, the entrepreneur believes that you will never make the perfect decision; he challenges the idea that an opportunity exists with only benefits and no costs. You must identify early on what you have to give up to create space for a new endeavor.

Hormozi told Jay Shetty that he disagrees with the notion that "comparison is the thief of joy." In his opinion, it's a powerful feedback tool; it's a choice between envy and study. You can choose to feel intimidated by others' success or learn from it and become better.

A productivity hack the entrepreneur shared with Jay Shetty is to do nothing except the task you set out to achieve. You can only become productive when you start eliminating unnecessary distractions, not by adding other tasks.

Lastly, Hormozi believes that achieving a perfect work-life balance over an extended period of time is utopic. Instead, he suggests splitting your life into seasons: sometimes you need to focus almost exclusively on one area (work or family).

The Money Model

Alex Hormozi shared with Jay Shetty that his upcoming work focuses on the core economic unit of a business. An effective money model is a deliberate sequence of offers designed to achieve one outcome: collecting enough cash from one customer in the first 30 days to acquire and service two additional customers.

This framework is based on four key objectives:

1. Attraction;
2. Increased Spend;
3. Speed (pulling cash flow forward);
4. Repetition (recurring or reoccurring revenue).

Hormozi told Jay Shetty that a superior money model provides such a cushion that a business can afford to underperform in other areas while still growing. He is convinced that this framework, which took six years to develop, will have the largest impact on business owners of anything he has created.

More From Jay Shetty

Listen to the entire On Purpose with Jay Shetty podcast episode “Alex Hormozi: This Is EXACTLY How to Make Your First MILLION (Follow THIS 4-Step Framework to Turn Your Ideas into REAL Money FAST!)” now in the iTunes store or on Spotify. For more inspirational stories and messages like this, check out Jay’s website at jayshetty.me.