Everyone’s rushing to build “AI businesses” but Alex Hormozi says that’s a big mistake… 😳
Alex Hormozi argues that entrepreneurs are misusing AI by building AI-focused businesses instead of strategically integrating AI to improve existing business operations. He emphasizes that the critical metric is whether AI adoption actually increases revenue, and warns against automating non-critical processes that don't constrain business growth.
Summary
Alex Hormozi critiques the current trend of AI adoption among founders and entrepreneurs, arguing that people are fundamentally approaching AI incorrectly. Rather than starting AI businesses or marketing themselves as AI companies, businesses should use AI as a tool to enhance normal business functions—making them faster and better. Hormozi observes that many founders are using AI to automate low-value tasks quickly rather than focusing on high-impact improvements.
Hormozi illustrates this problem with a concrete case study: a business spent $350,000 to build an AI system to replace 11 virtual assistants performing data cleaning work that cost approximately $11,000 monthly. This represents over three years of labor costs spent on automation for a process that wasn't actually limiting the company's growth. The real constraint was insufficient customer demand, not operational efficiency. This example demonstrates a critical error in AI deployment strategy—automating processes that don't represent bottlenecks to business growth.
Hormozi emphasizes that the fundamental value proposition to customers hasn't changed with AI. Marketing should focus on the outcome and solution customers care about, not the technology powering it. He also notes that many customers actually fear AI rather than embrace it, making it a poor marketing angle. The core question entrepreneurs should ask themselves is simple: "Are you making more money?" If AI adoption doesn't improve profitability, it's a misallocation of resources regardless of the technology's sophistication.
Key Insights
- Hormozi argues that entrepreneurs are using AI to do many unimportant tasks very quickly, and are trying to build companies that AI models will render obsolete almost immediately anyway
- A business spent $350,000 to create an AI system replacing 11 virtual assistants costing $11,000 monthly, which represented over three years of costs for automating a non-constraining process
- The company's real limitation was insufficient customer demand, not operational efficiency—data cleaning automation was not the thing limiting their growth
- Hormozi claims that customers should be marketed on the solution and outcome, not the AI technology itself, because many people are actually afraid of AI rather than excited by it
- The fundamental metric for AI adoption should be whether it makes more money—if the answer is no, it's not making a positive impact regardless of technical capabilities
Topics
Transcript
[0:00] People are using AI in the wrong places. [music] They're trying to start AI businesses when they shouldn't start AI businesses. They should use AI in their business and they're trying to advertise as AI businesses when you should just advertise the thing that your customer cares about, which is >> [music] >> How can we use AI to do the things that are the normal functions of the business way better, way faster? [music] What I'm seeing a lot, especially with founders or people who are starting out, is they're using AI to do a lot of dumb things really fast and they're trying to build companies that the models are going to swallow [music] up pretty much…
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