I Lost $100 Million… Here’s What I Learned

Summary

• Investing in cryptocurrency was a gamble for me, not a strategic financial decision. It's important to only bet money you can afford to lose and to stick to areas where you have a strong understanding and competence.
• Venturing into real estate without sufficient due diligence led to losses and headaches. Always verify property conditions and the seller's track record. A small test investment is wise before going big.
• Partnerships need to have individuals with complementary skills and a clear understanding of each person's contribution to avoid diluting your stake unnecessarily.
• Avoid getting fancy with business expenditures or strategies. Stick to the basics that work, like providing excellent service, as they often lead to better returns on investment.
• Software ventures require a technical co-founder who understands the development process and can hold teams accountable, avoiding reliance on external entities that can erode your profits.
• Know where the bodies are buried in your business; being too detached from certain departments can lead to costly errors, as seen with my HR and legal fee oversights.
• If a business model, like food services, offers low margins and high headaches, it may not be worth pursuing even if it appears profitable at first glance.
• Always seek references that match your situation when choosing vendors, and ensure any warning signs are heeded to avoid significant financial loss.
• Drastic pricing changes, even reductions, can lead to customer complaints and financial damage. A proactive approach focused on customer needs is better than reacting to competitors.
• Losses can be educational and prevent future mistakes. It's crucial to learn and move forward, focusing on the core of your business expertise.

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How To Take Action

I would suggest focusing on your core competencies first. Don't chase after investments like cryptocurrency or real estate just because they're hot topics. Stick to what you understand deeply. Small test investments in new areas are smart, but large bets can lead to costly mistakes.

Before diving into partnerships, make sure the roles are crystal clear and that each person has complementary skills. You don't want to give a big share of your business to someone who brings the same things to the table as you do.

Keep your business expenses simple and avoid flashy strategies. The basics, like good customer service, often bring in the best returns. Don't get too fancy; focus on what's proven to work.

For any software ventures, bring on a technical co-founder who knows the development process. This will save you from overly depending on external teams that can lessen your profits.

Be careful not to detach too much from parts of your business, especially if you don't fully understand them. It's essential to know what's happening in each department, including HR and legal, to avoid costly errors.

Be cautious with business models that offer low margins, like food services. They might not be worthy of your time and effort, even if they seem profitable initially.

Always ask for references that match your situation when choosing vendors, and pay close attention to any red flags to avoid financial loss.

Be proactive rather than reactive. Instead of changing your prices or business strategies in response to competitors, focus on understanding and addressing your customers' needs.

Remember, losses teach valuable lessons. Use them to avoid repeating mistakes, and keep centered on your expertise in the business.

Quotes

"Whenever you feel that FOMO, I've now learned, pause"

– Alex Hormozi

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"If you know how to create wealth, just create wealth, don't f*ck with investing"

– Alex Hormozi

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"The closer I am to the core of what I'm good at, the more money I make"

– Alex Hormozi

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"If you're the one who's in the business, you should get paid as an employee as well"

– Alex Hormozi

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"Every business problem can be solved by talking to your customers"

– Alex Hormozi