The Number That Will Scale Your Business More Than Anything Else | Ep 739

The Game with Alex Hormozi

Alex Hormozi

Entrepreneurship, Education, Business, How To

4.9 • 4.4K Ratings

🗓️ 19 July 2024

⏱️ 28 minutes

🔗️ Recording | iTunes | RSS

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Summary

"When you finally crack this, you will have license to print money for as long as you possibly can." In this episode, Alex (@AlexHormozi) breaks down the LTV:CAC ratio and why understanding it is such a fundamental aspect to your business's growth. It's one of the key numbers Acquisition.com looks into when evaluating investment opportunities because it captures the core economic engine of the business more than almost anything else.

You'll learn

Why It matters
How to improve LTV
How to improve CAC
How it will make you tons of money and scale predictably

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.

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Transcript

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0:00.0	I want to talk to you about a formula, better stated, a ratio that you need to absolutely
0:04.4	know like the back of your hand if you want to grow a big ass business.
0:08.4	And if you understand this number, you'll be able to make better decisions, you'll be able to predict how far you can
0:14.0	scale your advertising how profitable you're going to be how many customers you can
0:17.4	get and number of other factors that are all derived from this one number in
0:20.8	the business I cracked a hundred million dollars net worth at age 31. All of the huge growth in money
0:27.4	came from times when this number was maximized. The most businesses kind of putter along at a mediocre version of this
0:35.1	number but when you really knock it out of the park you can absolutely have a
0:39.1	license to print money for as long as you possibly can.
0:42.5	And at the very end, I'm going to tell you the two levers
0:44.8	you can crank to move this number into the stratosphere.
0:47.9	So what is the number?
0:48.9	Well, the number is actually a ratio between two different numbers.
0:51.4	And these numbers have multiple metrics that create those numbers so it's an incredibly densely packed number and it describes so many things that happen within the business and it will tell you how much opportunity you have which is why it's so exciting for me.
1:03.7	The first number of this ratio is LTV, so lifetime value.
1:06.8	Now in common speak, people say lifetime value, but what they really mean is lifetime
1:10.8	profit.
1:11.6	And so let me explain the difference.
1:12.8	Most people say lifetime value and they think,
1:15.4	okay, well, somebody pays me $1,000 a month for five months.
1:17.4	That means their lifetime value is $5,000.
1:19.4	No, that's not the lifetime value.
	...

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