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[@TheDiaryOfACEO] Money Making Experts: 3 Part Formula That Makes $20k Passive! Alex Hormozi, Codie Sanchez

· 11 min read
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@TheDiaryOfACEO - "Money Making Experts: 3 Part Formula That Makes $20k Passive! Alex Hormozi, Codie Sanchez"

Link: https://youtu.be/hVlAOIUA71Y

Short Summary​

Most Important Takeaway:

Prioritize building brand and distribution (audience ownership and influence) as these are consistently undervalued assets for long-term success in entrepreneurship.

Executive Summary:

This video features a discussion on how to build a successful and scalable business. It emphasizes practical frameworks, financial engineering, relationship selling, and the importance of content.

Key Quotes​

Here are 3 quotes from the transcript that I found particularly valuable or insightful:

  1. Cody Sanchez: "You can be an entrepreneur if you're willing to tolerate pain. I think being an entrepreneur is largely a byproduct of three things. One being how much pain can you tolerate? Two being how consistently and three being can you take the consistent pain that you have and find a way to decrease it which just means can you learn from the things that you've gone through as an entrepreneur." This quote highlights the importance of resilience and learning in the entrepreneurial journey, framing "pain" not as something to avoid but as a necessary component of growth.

  2. Alex Hormozi: "It's either 1% achievement or 1% effort, but this one you can do. And even if you have zero outcome, there's still stuff that you'll learn. And then that will people find interesting that you can build an audience around. And if you do that enough times, eventually you do achieve something that is interesting. And then that kind of becomes permanent. But at the end of the day, like proof always beats promise."** This emphasizes the accessibility of content creation and building an audience, even without immediate expertise, simply through consistent effort and sharing the journey of learning.

  3. Daniel Priestley: "If you can't constrain the supply and create excess demand, you won't get a profit...So you need to constrain the supply of something and you need to manufacture excess demand."** This quote concisely explains a core principle of business success: controlling the scarcity and desirability of your product or service to drive profitability.

Detailed Summary​

Here is a detailed summary of the YouTube video transcript, focusing on key topics, arguments, and information discussed:

  • Introduction:

    • Three successful entrepreneurs, Daniel Priestley, Cody Sanchez, and Alex Hormozi are introduced as the "Avengers of entrepreneurship."
    • They discuss how to build scalable businesses and make millions.

  • Paths to Making Money Quickly (Without Capital):

    • Work for the best entrepreneur: Learn as much as possible. (Example: Kim Kardashian learning from Paris Hilton.)
    • Entrepreneurship : Higher risk, highest reward: Start something yourself. The first business will teach you the game of business.
    • Important tactics: waiting 8 seconds after you ask someone to buy will close 30% more sales.

  • Content and Influence:

    • Many content creators focus on views but lack influence. (Tiktokers with many followers have failed launched due to lack of influence)
    • To create influence you need Status, Power, Credibility and Likeness

  • Frameworks:

    • Mention of frameworks for:
      • Raising money
      • Pitching
      • Increasing sales by 20-40%
    • Moat Strategy is used to determine the potential of a business.

  • What It Takes To Be An Entrepreneur (Psychology and Mindset):

    • Alex: Entrepreneurship exists at the most basic level (e.g., a kid mowing lawns). It's a lifelong journey of applying leverage to all business functions. Anyone who can get a job, can be a self-employed entrepreneur.
    • Cody: Entrepreneurship requires the willingness to tolerate pain. It's a hard path with constant feedback. Success is measured by growing profits and revenue. Pain should be expected and learned from. Learning means decreasing the pain you experience,
    • Meaningful pain is worth tolerating: Pain that is in alignment with your origin story, mission, and vision.
    • Daniel: The human brain has levels: survival, status quo, and visionary. The visionary part is tied to entrepreneurship. Getting around entrepreneurs and their energy can be contagious.

  • Push vs. Pivot:

    • Alex: Pivot when the underlying assumption of your original business idea has been disproven.
    • Push when the underlying thesis is still true, but you haven't figured everything out yet.
    • The third door to entrepreneurship is opportunity cost: You develop skills and learn, and you start to understand the returns of different opportunities.

  • Evaluating Ideas: Is It Worth Pursuing?

    • Cody (MOAT Strategy):
      • Margin: A business that actually makes money. Aim for at least 15% net margin.
      • Operations: Can the business scale, or is it just a job?
      • Advantage: Does the business have an unfair advantage (e.g., distribution, experience)?
      • TAM (Total Addressable Market): Is there a large enough market to build a substantial business?
    • Rate each of these from 1-10. more than 30 across all four - Fund, 20-30 - Fix, less than 20 - Flee.
    • Daniel:
      • Focus on the entrepreneur: Do they have a relevant case study, knowledge, network, resources, reputation?
      • Does the idea address someone's pain (measurable)?
      • Do the target customers have money to spend (top 10% of earners)?
      • Are you willing to suffer (delayed gratification) for this idea?
    • Alex: Focus on pain, passion, or profession. Starting with something you already do (profession) is often the easiest self-employment path.

  • Selling to the Rich:

    • Focus on people who will yield the most returns from your skills.
    • It is easier to sell to a few rich people than to a lot of average customers, and they will pay much better.
    • People with money often see themselves in young, hard-working entrepreneurs.

  • Pricing:

    • You are usually priced appropriately when seven out of ten people say no.
    • You can triple your prices, and still be alright if one-third of your customer leaves.
    • Consider value metrics: Charge based on usage, users, and value derived. This maximizes earnings with different client segments.
    • Adult Marshmallow Test to see if you're willing to suffer.

  • Customer Segmentation Pyramid

    • 1% of the budget has 15%, 9% of the budget has 45%, and the rest have 40%. The 9% is the affluent niche.

  • Building Confidence:

    • Confidence comes from repetition (courage leads to confidence).
    • Confidence can come from an abundance of options (with or without you energy)
    • Mental masturbation is a quantity of advice: It is better to do work on five, than apply to 15,000.

  • Breaking Through The Noise and How To Reach Out Effectively:

    • Focus on channels that aren't saturated.
    • Use "proof stories" (I did something special with X, we got Y result, here's how step by step).
    • You can also post advice in the public domain, and then have other's engage/comment.
    • Focus on rich, rather than just famous.
    • Show that you care by providing work and solutions.

  • Passive Income vs. Active Income:

    • Alex:
      • It's a continuum, not binary.
      • Discard passive income ideas when starting out as you want to focus on active.
      • Consider passive when you have enough money from reinvesting higher returns.
      • Focus on how to get leverage on your active income.
    • Daniel: Focus on asset income versus passive income. You need an asset to generate income.
      • Focus on performance assets (intellectual property, media, code, or data), which you can build.
    • Cody: Passive income is a tax code. It's become idealized so the wealthy can manage your money. Investing in yourself yields the best ROI.

  • Investing In Yourself

    • Alex:
      • Learn to advertise (promote).
      • Sell to people who have existing businesses.
      • Keep the spread, with zero delivery costs.
    • Cody:
      • The amount of resources you have access to is a factor of knowledge, network, and reputation. So you're at all times you're trying to build your knowledge.
      • Go towards partnerships to get to fewer, bigger, faster.
      • Negotiate with existing company and equity in a new deal.
      • You will know that knowledge through a mentor.

  • Undervalued Skill: Content Creation

    • Content helps you think better, communicate better, and sell better.
    • You must decide if you are an entertainer or educator.
    • It is hard for someone not famous to reach famous people, better to approach people with a smaller audience.

  • AI and Future of Content

    • Daniel: Does everyone have a story?
      • With AI generated content, just not going to drown out that noise.
    • Alex
      • AI avatar cannot say I sold my company for free.
      • If you want education content, talk about the epic shit you have done.

  • Entertainer vs Educator

  • Educators have smaller audiences that can generate more money than entertainer.

  • Important: SPCL:

    • Status: controls scarce resources.
    • Power: Follow these steps, and a good thing will happen.
    • Credibility: Do you have proof?
    • Likeness: Do you look like me? Are they similar to my same values.

  • Where Should I Start Today (2025): Content Creation?

    • Shift towards interest media rather than social media.
    • Connect views, likes, subscribes, and monetize on top of these.

  • The Next Big Platform/Opportunity (With AI)?

    • Daniel: It's about depth not rawness like in an era in which we cannot trust what we see anymore because of AI. Streamers, create relationships through deep conversations. Also, offline experiences (skit trips, island trips, sailing) builds real life friendships.
    • Alex: Authenticity is the continuum that is built up to each of them (SPCL). A lot of what we see in social media is what you get. To measure how authentic someone is, is the discrepancy between when there is no risk of punishment to how you act alone, and to how you present yourself normally.
    • Cody: you go out on the internet and you say something that you know other people are not going to like but you believe strongly in.

  • The Art Of Pitching

    • Daniel's Framework For Pitching
      • The journey of a thousand pitches: Social Pitching and Sales Pitching.
    • Social Pitching
      • Name, Same, Fame, Pain, Aim, Game.
    • Scheduled Pitching
      • Clarity, Authority, Problem, Solution, Traction, Opportunity, Next steps, Emotional ending.
    • Alex's Strategy
      • Easiest one is Profit.
      • If not, Growth.
      • If you don't, you've got history and you've done this before.
      • If not, you need a good story to bring people in.
    • Cody's Strategy: CLOSR
      • C-Clarify
      • L-Label
      • O-Overview
      • S-Sell Vacation
      • E-Explain with there concern
      • R-Reinforce
    • 8 seconds is the sweet spot to wait on someone.

  • Body Language & Selling

    • Speed of talking, cadence and annunciation helps persuade
    • Pauses to draw attention and to get another response
    • Present yourself as a high status, key person of influence level
    • Makeup and suits. Study showed women with makeup can make 20 to 40% more money.
    • Show don't tell. Need visual aid. Show that you're solving some thing and that you've done it before.

  • Pitch The Assessment

    • Don't know can help you: If you take the 40 questions, it will tell you if I can help you.

  • Game Round: If You Have $1k, $10K, $100k Today

  • Alex:

    • If you had $1k, spend it on AI integration and youtube video about email activation.
    • Find a small business and pay them a percentage of sales they got from it.

  • Cody:

    • Find someone who would buy what you were selling. This means likely going to a private equity firm that purchases companies all the time.
    • Source companies, by playing doorknocking, as a potential business sale.

  • Daniel:

    • $100k is a dangerous amount because you can kid yourself into thinking you've got money.
    • "Lend" out the money to an already existing business.

  • Most Undervalued Thing About Entrepreneurship/Wealth Creation?

    • Alex: Brand and Distribution, financial engineering: Learn where your money is coming from.
    • Cody: The best business school is being in business
    • Daniel: Bananas. If you can't constrain the supply and create excess demand, you won't get a profit.
    • Stephen: It's exceptional people. Bind them with culture and a solid strategy.