Million Dollar Equations

Want to SCALE your business? Go here: www.acquisitio...
Want to START a business? Go here: skool.com/games
If you’re new to my channel, my name is Alex Hormozi. I’m the founder and managing partner of Acquisition.com. It’s a family office, which is just a formal way of saying we invest our own money into companies. Our 10 portfolio companies bring in over $200,000,000+ per year. Our ownership stake varies between 20% and 100% of them. Given this is a YT channel, and anyone can claim anything, I’ll give you some stuff you can google to verify below.
How I got here…
21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: "Gym Launch" does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
31 yrs old: Started our family office Acquisition.com. We invest and scale companies using the $42M in distributions we had taken + the cash from the $46.2M exit.
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.
34 yrs old: I became co-owner of Skool.com to help the many people who want to start a business online do so.
Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money - not youtube videos).
To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.
You either get an epic outcome or an epic story. Both mean you win.
Keep crushing. May your desires be greater than your obstacles.
Never quit,
Alex
FULL DISCLOSURE
I make content to make money - just - on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

[@LesterDiaz]

This is a masterclass in business in a free KZbin video that universities charged $100k to learn from a professor who has never started a business.

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@GetNotableDotAI]

00:00 - LTGP:CAC 00:53 - LTGP (Life Time Gross Profit) 06:42 - CAC (Customer Acquisition Cost) 09:00 - ROIC (Return On Invested Captial) 13:10 - Payback 16:05 - Sales Velocity x LTGP 18:45 - Sales Velocity / Churn

[@MikkiMaseWisdom]

👽

[@ididathink5295]

your a hero

[@rodneyrex1000]

S​@@ididathink5295

[@strikingitrich7630]

thanks

[@Brandon-gw4ed]

My man!

[@beybladeknights1223]

This type of content is unique on KZbin. Incredibly valuable, it doesn’t get more practical than this. Thanks Alex!

[@DadThinkBigger]

Agreed I’m trying to get my videos this visually pleasing lol soon soon

[@WesternSorrows]

@@DadThinkBiggeryour videos are good, just work on your audio.

[@DadThinkBigger]

@@WesternSorrows thank you for the tip !

[@diegovillarreal933]

That is correct.

[@dp8031]

Lmao ok you plant

[@antfungames]

Alex, I don't like the background noise

[@flameynoob]

Bro u getting this for free...

[@antfungames]

@@flameynoob trying to give honest feedback so he can improve

[@yashrawat1232]

Okay then you can focus on his words with caption

[@skinniboistrength]

Agreed

[@lucianator205]

@@antfungames don't mind these people lmao don't let them dictate what you should focus on LOL

[@MattTheMortgageGuy]

I was watching Hormozi videos on KZbin a few years back and I had more subs than him. Obviously he’s doing it better 😂😂😂

[@trekgreenwood6743]

I probably learn more from Alex in one video than I would a four year business degree.

[@m3g4ninja]

The hard part is retaining that information

[@lucface]

@@m3g4ninjatrue. But that’s great me and obs also for Alex cause I keep watching them over and over

[@vinhle03]

@@m3g4ninja just watch it again and again till you can use it anywhere like formula in maths. The only different that these are interesting and clear useage

[@vilej]

Not really, this is mostly just financial accounting ratios which you'd learn in literally BUS100

[@jenninemorel7693]

​@vilej Not "Business 101": Managerial Accounting.

[@adrianortega8857]

I have the utmost appreciation for you and Leila’s dedication and commitment to good systems and processes 🙏Happy Holidays 🎉🙏

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@Kafufflez]

Where would you track things like LTGP: CAC / Sales velocity, etc? I understand all the concepts but I’m not sure the best approach to track and monitor.

[@marksorens]

Not sure what others are doing, but after watching this video, I use a Google Sheet to track everything on a monthly basis and then connect that to a LookerStudio report I made to visualize each metric by month, quarter, or year. These are the 8 metrics I enter into the sheet each month and the rest are formulas that calculate everything else: Total Monthly Revenue, Active Client Count (beginning of month), Total Cancelled Clients, New Clients, Fulfillment Employee Headcount, COGS, Sales Rep Headcount, and Total Acquisition Cost. I'm sure there are other great ways to track, but this is what has been working for me and it's free if you already use Google tools. Hope that's helpful!

[@BriskBrain]

Great content Alex, amazing editing Mozi Team ⚡️

[@dudedavebassett996]

I don’t know why anyone would spend 4 years studying at university learning from people who don’t have experience in this, when they could watch every video Alex and Leila have put out. The teaching is so simple to understand and thorough! You guys are so appreciated!!

[@jenninemorel7693]

Is the goal to become a business owner/entrepreneur or work for one? You don't need a degree to start a business, but the education is super helpful.

[@jenninemorel7693]

@TheSkyFallTronic most people will not put the work that's required in to be successful in business

[@cupofmozzarella]

@@TheSkyFallTronic well of course no one automatically becomes rich. But if you'd study their content (vids, books etc) for a while and applied them you'd be way better off. I have been consuming stuff like this for a while and Alex his stuff is simply way better, even if I was already familiar with some of the concepts. The alternative is is going to school for 4 years while not growing anything and going massively into debt you can't get out from under. Good luck paying back that 60k+ loan

[@domagojpetrovic5242]

@@cupofmozzarella before i watched alex entrepenuership seemed like rocket science but now it seems easy or at least so much easier than before. Because before this i didnt put much value on it and now i put so much value on it

[@chrisismail]

Alex still recommends studying to to upskill and make more money to get a higher hourly rate rate.

[@ExperimentalKana]

everything is maths

[@amir.rodz3]

Hey! Business 101… but understandable and from someone who actually has done it, yay! Love the fact that he has taken comedy and performance more seriously to get us to stick around.

[@InsanelyYT]

this has to be one of the greatest videos i’ve ever seen on in depth finance of running a business. just received both of your books and they’re next on my list. great stuff alex

[@VINTERIUM..EXPLORIUM.1]

Yes, 👍

[@bernardlynch5226]

It's easier said than done. The risks are high, and success stories like that are rare. It's not a practical path for most people.

[@hillarybriggs2561]

Absolutely. I've been exploring too. It seems like every strategy has its moment of glory, but finding one that consistently works is like chasing a unicorn.

[@christopherherbert2407]

Consider financial planning

[@christopherherbert2407]

Generating substantial gains at uncertain times involves experience and intricate strategies best executed by financial planners

[@buhlerfabii2784]

I can understand the wisdom behind working with a professional advisor because I’m completely aware of the psychological effects of wrong investments.

[@hillarybriggs2561]

How does one find a good finance advisor?? How do I know they are trustworthy and competent?

[@PianoLessonwithWarren]

I’m being honest, I still struggle to fully understand my numbers. I run a multi Six Figure membership that is build purely on content marketing (I don’t run ads). How would I tweak this equation find my ratios?

[@leonmauricesch.4220]

please do a video about risk. I am currently working on analyzing the market, the customer and the competition. Next step for me is to identify the problems, goals etc.. so i can create my offer. But in the past few weeks/months i was always confronted with the term risk management. Of course i can just learn it by myself, but your explanation videos are always great. They help me out a lot during my learning phase.

[@BM_100]

There are two risk management concepts he already discussed in the video

[@SkillLeapAI]

Epic Business Master Class!

[@Thewanderingsoulskool]

I’ve done so much mental M to Alex that I am noticing new content is updated old content better visuals stories more dialed in. Does this mean I graduated?

[@Ramenko1]

Wow. I have very little knowledge of business jargon. This video is EXTREMELY educational for a newbie. Appreciate you, bro.

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@DavidPintor2]

is average customer lifespan the same as customer lifetime (or the LT in LTGP)

[@m3g4ninja]

Very valuable, except for the fact that I don't have a business

[@femshlem5956]

Waiting for a Buisness fundamentals book based on videos like this from Alex. Would read that front to back everyday

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@forbes4007]

Very likely to be in $100M Money Models

[@LiamSunstrum]

Can someone do the math for me when he says LTGP will double when churn goes from 10% down to 5%? I don’t see how that would double it but I could be wrong.

[@GigaSimp]

Absolute sigma. Thanks, king 👑

[@yellowdrangon]

Bruhhh AMAZING CONTENT, Right to the point, great examples and no BS

[@adispiac]

Great video! How would you factor in a yearly increase (or decrease) in new customers? Let's say you sell to 10% more people every year, how would that affect your hypothetical max?

[@sheryaradil842]

This is by far the most technical and most informative value you've given to date in all of your videos man. Good for you. Keep this sort of thing going for the average person and you're going to change a ton of lives.

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@zunier2687]

I don't understand the point (6) and (7) very well. Are there any videos that go deeper in these two points? Thanks for all the value, I appreciate it!

[@GirlFightTalk]

Hey Alex, does commission get added into into the CAC equation, as a part of Labor?

[@johnsonsamuel7677]

Imagine having a private 6 months coaching with this man Damn!!!

[@obedwiredu5824]

That good @11:33 was very GOOD!

[@lwangacaleb2729]

How can I start a community when I’m not an expert? Full disclosure I love Alex❤

[@GermanPino-q4v]

What if customers get a one time offer normally? Like say for a moving company I own? 👀

[@masonnair]

Fucking brilliant. Alex, I really want to know what books you read that opens your mind to think like this

[@jadezade]

Alex, I don't know if you reply to comments here but here is what I was wondering. May seem like a dumb question, but is it possible to get paying customers to my business through my you tube channel? I'm not interested in vanity or large number of subscribers, etc but not opposed to it either. Thanks for all the teachings & happy new year.

[@aytothemm.1035]

this info is only useful if you already have a business with cash flow coming in. SO...if you are not one of those poeple dont waste your time and attention. better yet use that to find your first cash flowing business. then come back to this once that is down. your welcome.

[@michaelseisenberger6629]

Wasnt he uploading a video about money investing and took it down again? It showed it to me in my push notifications?

[@TheYogaHubDublin]

If our biz has moved to less committal 1 off non recurring class packs (10, 20 and 50) how do i work out the ltgp across all pricing options we sell? Especially taking into consideration peeps jump in and out of our biz over the space of years. Coming back after pregnancy/dropping out to try f45 or another option then returning/

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@mitchgallagher4487]

Hey Alex, Huge fan! If you were a real estate agent what would your offer look like that they couldn’t say no? Thank you!

[@tonystephensonii]

This type of content is 10x better than the MBA I have 🔥🔥🔥

[@mrpickle23]

why don't you do any videos on selling services/products during a recession?

[@jacstoneu]

A 5x business is very hard to find and a 5x business at scale is even harder to find!

[@camilla_kickboxing5006]

Amazing video. Exactly what I needed to learn today. When you look at a business like this it is definetly a game I like to play. It's almost as curtain as 2+2=4

[@jessicaguevarapilates]

Amazing. Thank you Alex!

[@agilecoachomar]

We also need a LTGP:CAC for high-ticket programs. which customers only pay 1 time. I tried to solve it myself and always ended up with LT = 1. But I also have employees who are paid only commission-based, I include them in the GP but then scratch my head on the CAC lol... can we have a video on that please?

[@chriss7648]

I have this issue you to, in a toursim based business where our clients are in market 1, it becomes challenging to interept the LTGP:CAC ratio etc. @Alex Hormozi thoughts?

[@hitez172]

what about LT for a product based business tho?

[@benalfredo]

I have business ideas that I am trying to execute, and start up for one has been funded. Do you think I should keep my job or liquidate my 401k and go all in?

[@_davidturner]

Be sure to have a plan before you go all in. If possible consult with a wealth planner.

[@lanceking4863]

This is what most people pay to understand and then still don't. We explained Alex.

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@unnwanted9868]

That beginning looked like that lecture meme

[@DesertArcher]

It’s fun to watch the view count go up as I’m watching this vid lol. I’ll have to watch again and take notes next time. 👍

[@kjy05]

God bless you man❤❤

[@ambersucces9867]

Loved how product based businesses got some love in this video

[@formerle]

Do you consider LTGP the same as CLTV?

[@monishmarketer]

The answer is No

[@felixandresjc]

let's show eachother our CAC's and talk about how we can improve them.

[@jayfelay]

😂

[@felixandresjc]

@@jayfelay I have a 1:20 ratio of CAC to BOLLS. Business is a bust!

[@jayfelay]

😂

[@Sm4rtS.L1nk]

Alex, you changed my life when I heard from you this quote "If you die with even a single idea unspoken, that means your life wasn't worth living"

[@kevinkurgansky4479]

He didn’t say that exactly. But you heard what you needed to hear to motivate you

[@andrewjedi]

this guy is insane... greatest fucking youtuber to ever come to youtube.

[@ntonyproduction]

Thank you so much for the valuable information.

[@stanleychidebe2287]

is there any book to read indepth about this sir?

[@Mohammed-ow5zm]

Dude it has nothing to do with the topic of the video 😂.

[@eywhatsup8044]

I appreciate the knowledge Alex Hormozi

[@lostythecreator]

We should start with tam and then go

[@happylittle_things]

invaluable video thanks man

[@zvakssshorts4307]

guys who made an excel sheet ?

[@LideraTuFuturo]

OMG, loved so much this video! After an MBA in international business and nearly 3 years with my project (currently at the phase of product building) I had no idea on how to set a price for a product. Now, after understanding and putting on an Excel LTGP : CAC ratio, I can finally look at the price I would need to set my product in order to get x in profit in a given period. And since my product will probably be 1 unit with no recurrence (due to its service educational nature) I really needed to understand these variables in order to set a good price. Thank you so much!!!

[@gassimfofana]

Interesting point ! Good luck

[@ArticulateArena]

Thanks, this is worthless meme

[@Chris.Pilone]

These formulas hit different in the closet

[@charlesknowles7936]

This is some next level shit right here

[@jam3628]

Hey sir how are you wearing shorts in this cold weather ? Thanks for the video

[@consulting-bites]

I love your energy! No wonder why you stay at the top for so long time. You inspire me a lot for my own channel. Thank you Alex!!

[@VINTERIUM..EXPLORIUM.1]

Yes👍

[@pierreroos3233]

7:11 When calculating cac, are those 5 employees specifically for marketing or do you include all employees in the business?

[@ToiIi]

@pierreroos3233 It confused me as well because Alex haven't clarified is it marketing team. It's a CAC so how much it takes to acquire a customer which means only people that are working on production of marketing and sales go into this cost. It could be salaries of designers by those that create marketing materials.

[@ToiIi]

You calculate whole team COGS [costs of goods sold] in LTGP to get GROSS PROFIT

[@Ramenko1]

People pay for this kind of content. This is incredible.

[@therealmag]

Rules for 2024: 1. BUILD A MISTAKE TRACKER: you only successfully learn in life when you don't repeat the same mistakes twice :) 2. REWARD YOURSELF FOR MISTAKES AVOIDED (if its a food reward make sure its low calorie) 3. LIKE THIS COMMENT AND COME BACK TO IT ON DECEMBER 2024 AND LET ME KNOW OF YOUR PROGRESS

[@manoharreddyyaram]

Awsm video alex

[@etofok]

7:59 Why do we add fulfillment costs to CAC, wouldn't it make more sense to subtract it from LTV to get LTGP? Anyone?

[@ChristianKerr-t2g]

Any explanation for why Alex values a greater ratio of LTGP: CAC? Consider two businesses, their LTV is the same at $7 per customer. Business 1 has a COS of $2 & CAC of $1, giving LTGP/CAC of 5. Business 2 has a COS of $1 & CAC of $2, giving LTGP/CAC of 3. Both businesses profit is the same at $4, however LTGP: CAC is vastly different, why should this matter?

[@InzoSan]

Has anyone followed all of Alex's videos and seen their business thrive even more? Genuine question

[@limitlessmarketing]

Trying to clairfy. While I'm calculation LTGP: CAC ratio. I already deducted the Client success expenses in LTPG calculation - so should I consider that expenses again while calculating CAC ? In my business CS is the largest overhead we have. For example: Churn % - is 9,5 % a month Client stays for 11 month on avarage. Income from a client is 2$K however here we have expensses on commisions, welcome gifts , photoshooting, and CS that helps the client monthly. what should I consider here? Afterwards - this month for exam we spend on ads 7K to get 6 new clients and here should I consider CS again? or just Sales & software & office ETC. Thanks

[@JaredJacobsonLaw]

LAST COMMENT 😂😂😂 - PLS do some videos on PRACTICAL tracking of annny and/or all of these figures (maybe tie up some sponsors there first 😜) 🙏🙏🙏

[@j_stuntn9269]

Interesting audio cues

[@femshlem5956]

Anyone know where I could find a book that talks about the metrics that Alex talks about in videos like this?

[@abulelenxumalo6664]

try the $100m Offers book he wrote

[@GabrielCarusetta]

Better than business school

[@pronoydatta2235]

What does LTGP:CAC show you that LTV:CAC doesn’t? Is it just a way to apply the same concept to different business models (non subscription)?

[@vasu1197]

" I'm actually spending $50 to make $10 in gross profit " I don't understand how 50 dollars are being spent to make 10 dollars in gross profit Could Alex or someone please explain?

[@lucjongen6849]

What if I pay an affiliate 20% commission on the revenue each month? Would that be 80% LTGP or does that count towards the CAC?

[@jayfelay]

This is why it’s so crucial to have a small CAC

[@xXHotaroXx]

7:47 hahahaha "Survey says..." Comedic genius ! hahahahaha, bcs according to a survey: everything is more believable if you put the words "according to a survey" before your sentences. Comedic genius !

[@TheBusinessHandyMan]

This inspires me to do the work and don't quit

[@GrandsonsGrandmother]

Thank you

[@milasquartz3842]

Should I quit investing time and money if the LTGP : CAC is less than 2:1 - or I just keep at it and consider it my “valley of despair” - informed pessimism phase ?

[@VINTERIUM..EXPLORIUM.1]

Nice video & tutorial 👍

[@victoriamorrow3387]

I love this! Thank you for sharing! Some user experience feedback, some of the captions are low contrast and hard to read.

[@PaulRichards78]

Amazing, thanks

[@daved5023]

5:57. This is why it's always made me mad to see people selling you on acos or roas idea. I'm like you need a 5x roas to break even in some cases due to cogs.. And your true profits. I know my roas needs to be 3.57 for a 2x on cogs To give me 1x roi a double. If I raise my price by 10$ This roas now can be 1 roas to break even .

[@gyffjogofl7676]

I can't believe this was free. Thank you

[@XlonerangerJX]

Thank you so much for your teachings Alex, I'm buying your books just to say thank you for teaching us.

[@OMPrograms]

can you create a masterclass of how a PE firm reviews a company that has 10 locations that hits $3m-$5m in net income per year and then discuss a strategy of an expansion plan to 20 more locations in new markets without selling franchise fees?

[@mrnobody7777]

I don’t really userstand the calculation with 10% churn and 1/10 can someone please explain? 😢

[@hopolang99]

Can never get enough of Hormozi golden nuggets

[@mik1430]

Is there a way, we can find ltv:cac in a multi product, multi channel business like d2c??

[@thewealthcreatorsclub]

I am confused about the lifetime calculation. How does 10% churn make a lifespan of a customer 10 months?