How to Think Like the Top 1% | Ep 996

**Alex Hormozi** (0:00)
You're making mistakes in entrepreneurship because of patterns you have yet to recognize. And those happen because the solutions to your sticking point are counterintuitive. And don't confuse that with psychological versus logical solutions, which is like, for example, if I wanted to get my neighbor to stop having their dog shit on my lawn, you can't hurt the dog because then you'd get arrested. You can't steal the dog, you'd also get arrested. And you could ask the neighbor nicely, but they might not give a shit. So what do you do in that situation? It's actually really tough. You could try and go to court, but it still probably wouldn't stick because there's really no ramifications. And even then, it would just be a ticket that the other person would pay and the dog could still shit on your lawn. So it's like a real predicament. So what would you do? Now you could say, okay, I could try and build a fence, and that's a potential solution. But I'll tell you the cheapest one that you could do, which is just get a motion-activated sprinkler installed on your property, and then whenever anything comes onto the grass, it squirts them, and then the dog would not do it anymore. And so that is an example of a psychological versus logical solution. The types of solutions I'm talking about are intuitive versus counterintuitive. And so an intuitive solution would be what you would naturally think would be the thing to do. And what I have noticed that as an entrepreneurship, is that we get stuck at the counterintuitive solutions, because we almost always start with the intuitive one, right? You do the one that you think would make the most sense.
But, and to be very clear, the intuitive solution usually is the correct solution in the majority of situations, because you have a problem, you have an intuitive solution, you do the intuitive solution, the problem goes away, and you don't get stuck. You move on with life, and you solve problems every day. But some larger problems in business have counterintuitive solutions, and I thought I would note down, call it the top 10, that I have seen get entrepreneurs stuck, and this is at every level. So this is at 1 million, 10 million, 30 million, 100 million. And so let's start with number one, which is that if your labor costs you too much, it's probably because you're paying them too little. Counterintuitive. So what does that mean? If you pay above market rates, you will get above market talent, and the value of above market talent is in excess of above market rates.
So Henry Ford figured this out years ago. He had, he paid people above his competition, and as a result, he was able to suck up the best talent in the marketplace, and then his people did two, three times the output that call it B players would. And so an A player might be priced at 25 to 50 percent above what a B player might be, but one A player is worth three to five B players. And so it's counterintuitive to think, wait, in order for me to save on my labor costs, I should increase how much I'm paying. And to be clear, if you tomorrow just increase how much you're paying all your people, you're not going to all of a sudden get a talent. The point of increasing how much you pay so that you can attract a talent because a certain level of compensation that they're going to expect in order for them to even consider your kind of job opportunity. To be clear, this is horizontally, as in plumbers versus plumbers, or accountants versus accountants, not a C-level versus a front-line employee. Competition is horizontal, not vertical. So that's number one. Here's the second kind of counterintuitive problem that people have.
They think that in order to make more money, and this is super common for people who have an existing audience, but is that they need to sell more products to make more money. When the counterintuitive solution is that you need to sell fewer products to make more money. So how does that even happen? Well, the reality is, if you have fewer products to sell, then you will be able to make those products better. You'll be able to be clearer about the avatars that you're trying to serve. You'll be clearer on the messaging that you can put out in your advertising. And so you think that, oh, I'm going to sell more stuff so that I can sell more stuff, but you end up selling less stuff and having more things to maintain. And that applies to both services and products.