What’s up, everybody? This is Courtland Allen from IndieHackers.com and you’re listening to the Indie Hackers Podcast. On this show I talk to the founders behind profitable internet businesses and I try to get a sense of how they got to where they are today, how do they make decision both in their personal lives and at their businesses, and what exactly makes their businesses tick. The goal here is so that the rest of us can learn from their examples, their successes, and their failures, and go on to build our own successful businesses.
Now, this show is just one part of an online community full of aspiring entrepreneurs and founders you can find at IndieHackers.com. There are also full transcripts of every podcast episode, including this one, at IndieHackers.com/podcast.
Today my guest is none other than Josh Kaufman. Josh is the author of The Personal MBA. It’s one of my two favorite business books of all time. It’s kind of a bedrock of all of the business knowledge that you need to get started. And I find myself referring back to it regularly and also recommending it to other people, especially people from an engineering background who are excited to start a company but may not have had any real business experience in the past.
Rather than just going piecemeal through his book in this interview, we instead talk about Josh’s past history, how he learned the things that he learned, what went into writing the book, and how you can apply the principles from his book to starting a modern-day tech startup.
Josh is a smart guy, he’s very kind, and I think you’ll enjoy a lot of what he has to say. So without further ado, Josh Kaufman.
Josh, welcome to the show. How are you doing?
I’m great, Courtland. Thanks for having me.
Thanks a ton for coming on the show. You have worked in the past as a marketing lead at Procter & Gamble, you’ve worked as a consultant and I’m sure as a mentor to many people to help them grow their businesses, you’re extremely popular blogger and essayist, and you’re the best-selling author of several great books, including one of my all-time favorite business books, The Personal MBA, which I tell just about everybody who’s getting started with entrepreneurship that they should read.
So I guess what I want to start with is: Who do you think you are, and where do you get off doing all this great stuff? What’s sort of the origin story of Josh Kaufman?
Oh, wow, what an intro. Thank you for that. (Laughter.) So let’s see. The story starts when I was in college, specifically my last year of college. I went to a school called the University of Cincinnati in Cincinnati, Ohio. And one of the best things about that particular job is you’re not just sitting in a classroom all the time. You spend about half of your time actually working in a business. So I spent about half of my year in the classroom and about half of my year working for Procter & Gamble, which is a huge consumer-goods company.
My background before that was actually in technology. So I started school as a computer engineer, got involved with business information technology, learned a little programming. And so I started working at this big company in the IT department. At the time the company was just starting to use websites for promotional reasons. And so I got involved in some of the company’s early efforts to do (inaudible).
Procter & Gamble is a massive global company that makes hundreds of brands, so Tide, Crest, all sorts of – usually things around the home. So Tide, very large laundry detergent; a lot of personal-care stuff; a lot of beauty stuff.
So I was in the company’s household-care division, so things like laundry detergent and dish soap. The first five brands that I worked on were Mr. Clean, Swiffer, Dawn, Cascade, and Febreze. Those early marketing websites I had a hand in, all of the company’s – what they were doing to start experimenting with promoting these brands online.
And when was this exactly, early 2000s or ’90s or --
Yeah. So it would have been – let me do the math – probably 2002, 2003.
And so it was early enough that the company was spending hundreds of thousands of dollars to hire an agency to put up an HTML and CSS website. (Laughter.) It was ridiculous.
And part of the reason I got the job was that the company wanted to run an experiment with a new website in a new country. And because they were hiring agencies, they just didn’t have the budget for it. I had taught myself HTML and CSS and looked at what was required and said, “I could do that.” And spent a couple weeks and got it up and got a job from it.
At that point in time, did the thought cross your mind that, “Hey, maybe they should be paying me hundreds of thousands of dollars to set up their landing pages”?
I would have really appreciated that. (Laughter.) That would have been great. So I started with the company doing technology-based stuff. But you don’t live very long within Procter & Gamble without realizing that marketing is the hub around which the entire company revolves.
And so my first full-time job out of college – that was what I was doing while I was – as an intern, as a co-op in college. My first job out of college was as an assistant brand manager, which is – think project management. It was just centralized in the marketing department. So I was doing consumer research and launching new products and talking with scientists and talking with factories and trying to build new products from scratch, which was fascinating. I loved every minute of that.
What was it about Procter & Gamble that gave marketing such outsized importance? Is it because their products are risk commoditization or was it just like a cultural quirk of the company to just put such a high value on marketing to the exclusion of other parts?
It’s kind of a cultural quirk. So the term “branding” was literally invented by Procter & Gamble. So the company started, if I get my history right, started around the period of the Civil War making soap and making candles. They were one of the first major manufacturers to really treat marketing as a centrally important function of the company, and spent an enormous amount of time doing things like packaging and negotiating large retail placements. And when television and radio became large cultural forces, they were one of the first major advertisers.
So the company spends billions of dollars every year advertising in all media; primarily TV still, but they tend to experiment with new forms of advertising relatively quickly.
That’s nuts. When you work at a company that’s been around for 150, 200 years, can you feel the history of the company? Does it sort of still impinge on the decisions that are made today --
-- or has it been completely remade into something new?
Oh, no. So everybody has an impulse to try to put their mark on something, but there’s also very much the feeling of: You’ve inherited this 100-year-old brand. Don’t screw it up.
That sounds like a lot of pressure.
Yeah, it was fun in a way though. One of my first projects – the first brand I was assigned to was Mr. Clean, which was actually very ironic. If you haven’t seen my picture, I’m completely bald. (Laughter.)
Were you bald at the time?
No. Well, not when I – so I shaved my head about two weeks before I found out what my first assignment was going to be.
Oh, wow. It was meant to be.
So nobody at the company had ever seen me bald, and I just roll in on my first day and I have a shaved head working on Mr. Clean. Everybody’s like, “Oh, that’s interesting.” (Laughter.)
“I’m just really excited, everybody.”
So you mentioned that there’s a lot of pressure not to screw it up and that you’re inheriting this almost ancient brand. Did you ever screw anything up while you were at Procter & Gamble?
Oh, I screwed up all the time. It was like half the job. A lot of it – so I was working on new-product development. And the fascinating thing about that is a lot of the job is going and watching people do whatever it is that you’re trying to study. So in my case, I was literally going to people’s homes and watching them mop the floor and seeing what they do and what they don’t do.
There’s a super-famous story actually from Tide where a researcher went into (inaudible) and was watching them do their laundry. And this was back in the time of the big box of powdered laundry detergent. So the researcher saw the person take a scoop of this laundry detergent, turn on the washer, and then kind of swish their hand around in the water. And they asked why that person was doing that. And they said, “Well, if I don’t swish it around, then the laundry detergent doesn’t dissolve in the water.”
And so the researcher made a note and went back. Using that little tidbit of information, the company decided to launch the first liquid laundry detergent to provide some reassurance that, yes, indeed this soap is going to dissolve in the water like you know it’s supposed to. And that’s a trillion – so over the lifetime of that category, trillions of dollars that came from just that one little observation.
That’s nuts. How do they make sense of thousands of observations of, I guess, seemingly similar importance when they go out into the field and have to collect all this information?
There’s a lot of report writing. That was a big feature of my first job. So we would go out and do this research, and then you’d also have meetings with the scientists. So the scientist would say, “We figured out how to do A, B, C new things, which may be interesting and useful or may not be. We don’t know.” And then the marketers go out into the field with consumer-research experts and do surveys and all of the good qualitative and quantitative ways that you figure out what people want and need. And then the job was to basically marry those things up.
And so you have a meeting or you do research, and then a lot of the job is synthesis. So you’re seeing a lot, you’re hearing a lot, and then it’s: What is your impression of the three to five most important or interesting things that came out of this particular interaction? If you do that well, and doing that well in the company was a combination of writing well and persuasively and also presenting what you found in large, high-stakes meetings with people.
For example, if you’re trying to get a vice president to give you $10 million to launch a new product, you better have a lot of information and data at your disposal about why that’s a great decision.
And so it was really, for a first job out of college, very much a trial-by-fire kind of situation. Just learning how to notice and observe and synthesize and write and present in a persuasive way.
It’s funny that you mention this challenge of having to take what the scientists are able to develop and take the feedback that you’re seeing from customers and the behavior you’re seeing there and try to marry these two things. You’re attacking this problem from both ends.
And it’s so similar what you guys were doing at this humongous company – it’s the same thing as what I see entrepreneurs doing, especially if they don’t necessarily do too much planning in advance and they build this product.
And like, “Okay, well, I’ve got this product. Now I’ve heard that I’m supposed to be talking to my customers. Whoops. I didn’t do that earlier. How do I figure out how to sort of change my product and make it fit what people want and will actually need and use?”
So it sounds eerily similar.
Yes. Time spent talking to actual or potential customers is never wasted time. You can learn a lot that way that you can’t learn any other way.
So would you say that working at Procter & Gamble is kind of where you first learned some of the business fundamentals that you would go on to write about? And is it also the place where you first became interested in what makes a business tick, or were you interested in that stuff beforehand?
I was interested in that stuff beforehand. So I had a little – extremely little – web design business in high school that I continued into college. I had worked at a number of small businesses, and in the back of my mind I was always interested in starting my own thing. It just didn’t seem like that was the kind of thing I was supposed to be doing at that point in my life, which is weird now that I say it looking back on that, but that’s how I felt. The general progression was, “Okay, you go to school, you get an internship, you get a job, you work at that job. And then once you’re a little bit more stable, then you start something.”
And so, yeah, very much a double-edged sword. The best thing about it, looking back on it, is that having the experience of working at, literally, one of the largest companies in the world and doing my own entrepreneurial things over the years gave me a really good sense for what was actually universal about business.
So you would see the same concepts and the same ideas and the same practices and the same behaviors be really important and valuable in the largest of the large and the smallest of the small business environments.
When I was doing the research and writing for The Personal MBA, that was very much a guide. Could I look at a concept in the book and say, “Yes, this applies to the largest businesses in the world, and does this apply to somebody who is starting from nothing and has no structure, no customers, no funding, no anything”? If it fit both environments, that was a really good indication that there was something there.
It’s challenging for a lot of people that, as an employee of a big company, it’s totally possible to not get the perspective that you had. For example, you can work on a marketing team every day of your life and still not really understand what marketing really is to the businesses as a whole because you’re too far abstracted away from its overall effect on the business or because you’re only working on a very specific part of marketing. Maybe you’re a copywriter or maybe you’re a programmer and all you worry about is the product.
Is there any particular strategy you would advise people who are working in a bigger company to use to try to get a bigger perspective on what’s going on and to try to come away from maybe a very specific job with broad business knowledge, or do you think it just needs to be something that you do on your own outside of working at a company?
Yeah. I think the best thing that you can do – and this is general career advice regardless of where you work – if you work for somebody else, try to get as close to the core business as you possibly can. Usually, the core of the business is either the part that creates value, marketing, sales, the part that delivers value, or finance. I talk about that in The Personal MBA. I call it the five parts of every business. Those are the things that allow the business to make money and to continue to operate as an ongoing concern.
So usually, the closer you are to one or more of those things, the more valuable you are to the business and the options you have to either progress in the business or move onto something else that is advantageous to you.
First is if you’re in a peripheral part of the business, try to move yourself closer to what the core of the business actually is. The thing that really worked for me in retrospect is that the position that I went to after I left IT really was that center of all concerns, so you got to see all the parts of the business come together.
I think if I – so the thing that I did after doing product development was I worked on the polar-opposite end of the business, which was actually selling the product into large customers like the Walmarts, Targets, Costcos, Krogers of the world.
And so to see the very beginning like, “Here’s what we can do and here’s what people want. What can we create that solves a need” all the way to the very end of, “Let’s negotiate with a buyer at Walmart to have this on shelves nationwide, potentially worldwide,” that was a really good opportunity to see every single part of the business. And if you can maneuver yourself into a position where you get to see the entire process end to end, that’s extraordinarily valuable.
To a certain extent, you can even do this for businesses that you don’t work in. So pull up any company that you’re interested in, public or private, and try to reconstruct for yourself what those five parts of the business are for that particular entity or any particular product line.
So for example, companies like Procter & Gamble or General Electric or large finance companies – they have multiple lines of business. And so just pick one and try to deconstruct it into those five parts in as much detail as you possibly can.
It’s also a good strategy if you’re an entrepreneur. So a lot of people get very excited about an idea without having that idea fully fleshed out in many ways. And so those five parts of a business become a really great checklist of making sure you’re visualizing how this business is going to operate in as much detail as you possibly can.
And if you can’t figure out what one of those parts of the business looks like in practice, you know exactly where you need to spend your time and attention to flesh that out. Because if you don’t figure it out, the business is not going to work.
It’s fascinating to see how you’re able to sort of move laterally within Procter & Gamble from IT to marketing to sales and pick up all these different skills and these perspectives on how the business functions from within.
How did you go from doing all of that to becoming a business blogger and to eventually writing The Personal MBA? What’s the story there?
So the story of The Personal MBA actually started a couple months before I graduated from college. So I had just received word that I had a full-time job after school and I was going to be working for a brand. I didn’t know which one at that point.
I realized that all of the people that I was going to be working with had just graduated from a top-15 MBA program. And I’m coming straight out of undergrad with a business information technology degree. And at the time, I was very intimidated. So I thought that all of these people had knowledge and experience that I did not have, and I wanted to make sure that I did a good job in this first job out of school.
And so I started reading and researching. So I spent months in my last year of school and I spent the entire summer after school – instead of going on vacation and relaxing before work started, I went to the library and I went to every Barnes & Noble in the greater Cincinnati area looking for good business books. And so by the time I started full time at P&G, I was feeling really good about what I knew and why I knew it.
That’s a very ambitious approach.
Yeah. Well, it (inaudible) from the perspective of – I already had a really good job. And I did not want to quit that job and borrow a lot of money and take a couple years to go back to school. That was not a smart approach for me.
I just wanted the knowledge and I needed the skills. And so the most direct path to getting those skills was just to sit down and study and take notes and figure out what I was doing.
And some of that was my undergrad was in business, but a lot of the materials that are used, textbooks, they’re not very clear or not very concise about things that I think are both really simple and fundamental.
So for example, you can go through an entire business program at the undergraduate or the graduate level and not come away with a clear definition of what a business is and what it does, which just blows my mind.
Yeah. I just had Austen Allred – he has a company called Lambda School – on the podcast. And he was talking about how his company teaches people how to code. And he was just contrasting his business, which is very focused on delivering an actual promise to his customers, which are his students, which is: If you graduate and you don’t get a job making $50,000 a year, you don’t have to pay us anything. And so it aligns their interest.
And he was contrasting that with sort of traditional education and how schools don’t really have any obligation to ensure that you succeed in the workplace or not because they get paid their same tuition regardless.
So it’s not surprising that they don’t necessarily do the best job teaching you these fundamentals, because what incentive do they even have to measure to see if the stuff that they teach you helps you out in the real world?
Totally. In a lot of ways, that was the genesis of The Personal MBA as well. I figured when I started this, I figured there was a 50-year-old business textbook written by a professor somewhere that spelled out all of these fundamentals, and I just hadn’t found it yet.
And so I read and researched and tried to find the best things that I could. And as far as I could tell, that didn’t exist. So it’s like, “Well, this is important. This is something very useful, that can be very useful to a lot of people.”
And so The Personal MBA as a website started essentially out of my research notes like, “Here’s what I’m reading, here’s what’s useful, here are the things that I’m figuring out as I’m doing this kind of weird, crazy project.” And what I didn’t expect was the traction that the idea got. It became clear reasonably quickly that there were a lot of other people in the world who were interested in this too. So that provided a lot of motivation to continue with the research and make Personal MBA larger than just something that I’m doing for myself. It’s something that could be interesting and valuable to a lot of other people.
So what did that early traction look like? Because I run Indie Hackers and it’s somewhat similar. It’s a website that’s dedicated to helping people learn more about business and starting their own companies. And so I’m very curious. I mean, I could tell you all about the early days of Indie Hackers. What, for you when you first started The Personal MBA, was kind of the key moment where you realized, “This is something people really care about”? And how did you know that that was the case?
-- so that you could actually see – yeah, the Stone Ages. And so the two biggest things was I was looking at traffic stats from Google Analytics and some other tools saying, “Wow, I am not the only one who is reading this. There are people all over the world that are somehow finding this thing and linking to this thing and commenting on things that I write.”
And that response was an order of magnitude larger than I expected it to be. I figured this would just be – a couple hundred people would find this cool and I’m doing it for myself, it’s valuable enough to keep doing just for myself. But once I saw thousands, tens of thousands of people engaging with this and raising their hands and saying, “Yes, keep doing this. This is really helpful to me,” that was a huge encouragement at that point.
So let’s talk about The Personal MBA the book. The book, as you’ve talked about, it’s about teaching people the fundamentals, sort of sound business practices, and explaining a lot of the overall concepts and ideas that aren’t really concisely stated elsewhere. And you ended up writing this and starting your blog after you spent months of your life pouring through other business books.
How did you decide that you were someone who could write a book this big and this ambitious? And I mean that from a psychological perspective. At what point did you tell yourself, “I can do this”? Where did that confidence come from?
It came from a couple places, I think. The first one is that at this point, I think I was five years into reading – and I was reading roughly full time. So I would work and then I would spend hours and hours and hours after the fact reading and researching. At one point, I was going through multiple books a day.
So I’d been doing it for long enough that when you read that volume of business literature, you start to see the same ideas come up over and over and over again. And that was another clear signal that those are the important things that you really need to pay attention to if you’re going to make this work.
And so I had this running list of all of the things that I kept seeing coming up over and over and over again. And the list got to be pretty sizeable. And so I started organizing it and trying to figure out, “Okay, what are the common themes?” That was the point where, for example, the five parts of every business came from. I didn’t find it in a book. That was just a synthesis of things that I had read. And that was the categorization that made the most sense.
So I was keeping track of things like that. How the book actually came about was I was at an even in New York City with one of my friends, Todd Sattersten, who at the time was I think the marketing director for a large business book retailer called 1800-CEO-READ. And they specialize in essentially bulk sales of business books to the corporate market.
And so I was at this event with Todd, and he introduced me to somebody who happened to be there, who was Adrian Zackheim, the head publisher of Portfolio, which is Penguin’s largest business imprint. And Todd said, “You should talk to Adrian.”
And so we struck up a conversation and Adrian said, “Well, this sounds interesting. Have you ever considered writing a book about it?” And at that point, I was like, “No, I haven’t actually, but I’m willing to consider it.” So that night I went back to my apartment and wrote a very long email to Adrian saying, “Thanks for the conversation. This could be really cool. Here’s what that might look like.” The next day he wrote back and said, “This sounds great. Let me introduce you to David Moldawer. He’s (inaudible) for business books, and you should have a conversation.”
So that’s how I met David. David edited the book and that’s how The Personal MBA came to be.
So in a lot of ways, it was like you were building up confidence by doing your own research and acquiring all this knowledge, but at the same time having this other person, who’s sort of a professional in the book business just putting the idea into your head that, “Hey, you’ve done enough to actually write a book.” It can’t be understated in how important it is to have someone put that idea into your mind and to have the confidence in you as well.
Yeah, and that’s the weird thing. And I think it applies to starting businesses or doing business-type things in general. A lot of times, you are prepared to start something and you don’t really fully realize or get that. And so having an external, outside perspective to say, “Yeah, there’s something valuable here, there’s something worth pursuing, there’s something that you can do with this that you’re not quite seeing yet,” those opportunities and those people are very valuable.
It’s funny what pushes people over the edge eventually, who’ve kind of thought about starting a business or maybe doubted that they could.
I had another guy on the podcast, Spenser Skates, CEO of Amplitude, who graduated from college and he was trying to figure out what to do. And then he saw all of his friends just starting companies and he was like, “What? Why do they think they can do that?” And then he looked at people who he thought maybe weren’t as smart as he was and weren’t as successful and thought, “If they can do it, I can do it.”
And I’ve had so many different other stories of other people who’ve maybe read an interview from a very particular person who inspired them to do something they wouldn’t have done or listened to a podcast. It’s just interesting to see what it is that gets you over that last little edge to make you do something that you otherwise would never have tried.
Yeah. I think my favorite example in that regard is our mutual friend, Patrick McKenzie, who, I think, if I’m remembering the story right, he read a forum post about a guy selling skeet-shooting software. He was like, “You can write software and sell it to people for money, and that’s not illegal?” And of course, it’s not. But for people who have no experience doing this, a lot of the things that seem like they should be commonsense or you wouldn’t have to say, it really helps to hear from somebody that, “Yes, this is possible. Yes, I’m doing it right now. And yes, it’s working, so look into it.”
Yeah. And I’ve been kind of obsessed with this. I read this book Sapiens last year, and I’ve been obsessed with this idea of every society tells stories to people, and all of us tell stories to ourselves. And we’re extremely gullible. We tend to believe whatever stories society is telling us and the stories we tell ourselves, even if they’re not necessarily real.
And so this persistent story of, “I’m not good enough to start a business” or “I don’t know how to start a business” or “I could never achieve this thing” is something that everyone has to get over at some point in time, even if you just get over it on accident, like falling into a business or a situation where you’re in over your head and you have to deal with it, kind of like you did when you started at your company and everyone else was an MBA and you were coming from a place of no real business knowledge whatsoever.
Yeah. Sapiens is such a great book.
I love it.
I’m glad you read that.
Yeah, it’s a really good one.
Yeah, I think in that he calls it a “shared fiction.” One of my favorite parts of that book is he was actually using businesses, corporations, as an example of a shared fiction. There’s no one thing in the world that you can point to and say, “This is the business.” It’s an interconnection of relationships and systems and processes that exists in a very real way, but exists primarily in the minds of people in the world.” It’s a fascinating way of looking at it.
Exactly. And everyone comes together to sort of believe in this shared myth, and people can end up doing some great things together.
But let’s get back to the topic of you writing The Personal MBA.
Because I’ve asked you from a psychological perspective, “How do you think you can do this?” But from a practical perspective, I don’t even know where you would even start with writing a book this ambitious.
For example, you ended up saying there are five core parts to every business. And those are: value creation, discovering what people need or want and then creating it; marketing, attracting attention and building demand for what you’ve created; sales, turning prospective customers into paying customers; value delivery, giving your customers what you’ve promised and ensuring that they’re satisfied; and finance, bringing in enough money to keep going and make your efforts worthwhile.
So those are the five parts of every business. Was there ever a time when you thought there might be six or seven parts to every business and you just weren’t sure how to boil it down?
What were some of the toughest calls you had to make to write this book?
Oh, my gosh. So a lot of it was: Where are the boundaries of these concepts? What am I going to call one isolated unit of concept that people need to know? So that list – I think it ended up being 240, 250 discrete items that I chose. And that was down from a list of somewhere between 3- and 400.
It’s been a while so I don’t remember, but it was a big list that I had to pare down. Part of it was based on how I was writing about it.
So all of these ideas in The Personal MBA are very short. It’s usually just a couple hundred words. But because I had so many of them – I didn’t know this before I started writing, but commercial publishers tend to have ranges of word count, where if a book is too big, it either becomes very difficult or uneconomical to print.
And so Personal MBA ended up being – I think it was 450 pages, somewhere around there. And that was really bumping up against the limit of, “Any more and we need to cut from a logistics standpoint.”
The actual drafting process was extremely difficult for Personal MBA. And I think part of that was the topic and how I was approaching it. And the other part – well, yeah. So the topic and how I was approaching it. I had never written a book before, so this was all new territory and I was figuring out as I went along.
But I didn’t know what form the book needed to be in order to do what I wanted it to do. And so I went through – I think it was 9 or 10 drafts of Personal MBA before I hit on the format that ended up working. And these were substantial like, “Let’s throw it away and start all over again” kinds of drafts.
And how long did this take to go from your first draft to finally you’ve got it in the form that you want?
Yeah, the entire drafting process was two years of full-time work.
That’s just – that’s a lot of work.
Yeah. And I can’t tell – part of it was definitely the topic. But part of it is, I think, how my mind tends to write these sorts of things in general. So I went through the same process on my second book, and I’m writing my third book right now and I’m going through the same process.
So there’s just a certain amount of you know what you want to say and why, but you don’t know how to say it in a way that’s going to make sense to someone who is not you. And so for me, trying to get there involves a lot of, “Let’s draft it, see if it works, show it to other people, get some notes, refine, refine, refine.” And then the first couple attempts are probably not going to work, and that’s okay. You just kind of build that into the expectation of what the process is going to look like and try not to get too discouraged when it doesn’t work.
I’ve talked to a few guests in the past about the efficacy of advice itself; namely, that there are things you can tell people over and over again until you’re blue in the face, and they still won’t listen to you or really understand what you’re saying until they go out and discover what you mean the hard way by making their own mistakes.
How much do you think that’s true versus: Do you think really any idea can be communicated and then taught to somebody purely through words if you just find the right way to say it?
I think you can explain to people in a way that they will understand it, and it might short cut it a little bit. And I think most of that is in avoiding common mistakes. So for example, if you’re building a software company, there is an entire list of mistakes that you can make in doing that. And knowing what some of those pitfalls are in advance is extremely valuable. It helps you remove potentially years of wasted effort and frustration.
But I think the key is: No matter how much material or advice or mentorship you have, nothing can remove 100% of the uncertainty and the ambiguity and the variability that is inherent in the process of making something new. You just can’t get rid of it. If somebody could, that would basically be a magic money machine and that would be awesome.
Yeah, of course.
I would love that. But the uncertainty and ambiguity is inherent in the process of creating something. And so no matter how much advice you remember or pay attention to or take, there’s always going to be that remaining 90% of things that you just have to figure out for yourself.
So in your book, you spend a lot of time defining certain very core terms, and kind of describing how they work in a general way that’s applicable to pretty much any business. For example, with marketing you talk about there being two parts to marketing: getting people to know that your offer exists, and getting those same people interested in actually purchasing your offer.
That’s such a sensible way to define it. And yet every other business book that I’ve read has either neglected to define marketing at all, or they just have a very fuzzy, ill-defined kind of description of it.
Why is that? Why is it the case that before The Personal MBA, it was tough for me to find a single, accessible book that put a definition to so many of these terms?
I don’t know. It still baffles me sometimes. I think one of the things that doesn’t really work out in favor of clarity and simplicity when it comes to these types of materials is actually who writes them in the first place.
So a lot of business books are either written by very successful businesspeople who have made their name and their fortune doing some very specific thing: being the CEO of a large company or starting a startup that’s valued at a billion dollars. Pick your achievement. Those folks tend to write about what they know and what worked for them in their case. And in a lot of instances, they claim universality where that universality may not exist. So that’s one big drawback.
The other is a lot of business books are written by academics, so people who spend more time doing research in an academic setting or teaching students, but not necessarily applying what they’re writing about to practical situations.
And I think in both instances, there is a desire to sound smart. The complexity of thought is a way to signal the complexity of their sophistication as a businessperson or as an academic. And I think both of those trends – very natural human impulses, both of them. But I think that lends itself to business books being way more complicated and obtuse than they really need to be.
So I think if I had any advantage in writing, it was that I was willing to go back to the absolute bare essentials of the topic. So let’s not take anything for granted. Let’s define everything we’re talking about from the ground up. But also not – how do I put it? Not being too concerned about sounding smart.
So yeah, let’s talk about business in its most elemental form. Let’s talk about marketing (inaudible) essentials of what you need to do and not get really caught up in fancy, complicated terms that sound interesting but don’t really convey a lot of information.
That sounds like something that a lot of people might have to try very hard to do, and that I think I would have to try very hard to do if I were in your shoes writing a book, especially if you’re writing something that you think a lot of smart people are going to read and you want to come off your best because people are going to be judging you for your writing.
There are all sorts of psychological issues with: What can I do that’s self-serving and that helps me look good; and what can I do that might ultimately be self-serving because I will have written a good book, but in the short term might not make me look as smart as I would like to?
And I found that not only do people want to give advice that sounds particularly smart, but also I think people tend to err on the side of giving advice that’s new, that’s novel, or interesting rather than advice that’s useful because people tend to, for whatever reason, just ignore useful advice that seems a little bit boring.
Absolutely. (Laughter.) It’s funny you mention that. One of the books that I am working on slowly in the background is actually a book that is provisionally titled Boring Advice, and it’s about all of those things that are extremely useful and we know they work, but nobody pays attention to because they sound really boring.
So yeah, there’s definitely an impulse to, “Let’s talk about and pay attention to the new, sexy thing that sounds awesome” while ignoring all the fundamentals that account for 90-plus percent of your efficacy in an area.
How do you plan to get over the hump of people not wanting to read your book on boring advice because it’s boring? (Laughter.)
I haven’t figured that out yet. I’ll let you know.
But yeah, the whole, “Let’s optimize for interestingness and sophistication,” that’s where all of these buzzwords come from. It’s a way of signaling, “I’m a smart, sophisticated operator in this particular area” and also that you’re a member of an in group. “I am part of the collection of people that know a specific area.”
And it’s such a part of human communication that it’s very, very difficult to take a step back and say, “Okay, let’s intentionally not do this here. Let’s optimize for being – writing or saying something that is true, that is useful, and that is clear, and that’s it.”
So you read a tremendous number of books to prepare yourself for your job and also to do research for writing The Personal MBA and your blog as well. And you mentioned earlier reading books where people would write about, for example, their experience being the CEO of some company or other and assuming that their experience was generalizable and useful to everyone else, or there would be an academic writing about theory and they would maybe falsely assume that that theory would be useful in practice.
Were there any books in particular that were sort of highly praised by people in the business community or startup land that you found to be tremendously overrated, or the opposite; books that you came across that no one was really talking about but that were extremely well-written and useful?
Oh, my gosh, yes. So actually, if folks are curious, I have a list of (inaudible) if you want to dig deep into a particular topic. At PersonalMBA.com there’s a recommended reading list that’s the current – if you’re going to read a couple books about a topic, here’s the place to start.
In terms of things that really – I didn’t find value, and I’ll speak more in terms of category than specific individuals. But usually, memoirish books by CEOs I would just skip entirely. There might be an idea or two that are interesting, but it’s not the kind of useful that you can’t get from another more topic-specific book.
I think the books that for people who are interested in business, the categories of books that tend to be overlooked in a way that’s not respective of how useful they are is – so cognitive psychology and systems and engineering books. You can learn a lot about value creation, marketing, and sales by reading psychology books. So something like Influence by Robert Cialdini.
One of my favorites.
Oh, it’s such a great book.
Just that whole idea of cognitive heuristics and biases, which is a relatively recent development, academically speaking, you can anticipate so many things about how to market, how to sell, how to manage people, how to negotiate by reading something that’s not a business book. It’s a psychology book.
Same thing with books like How To Win Friends and Influence People, which most people blow off because they think it sounds really corny and cheesy and manipulative. No, there’s a lot of good psychology in there.
Same thing with books like Crucial Conversations by – was it Kerry Patterson and a group of – I think it’s four authors there. Just how to talk with people in a way that’s effective instead of having to have a difficult conversation and then walls and barriers being put up all around because you’re not being very skillful in how you’re communicating information.
The same thing goes for systems books. So I think one of the big advantages that programmers and engineers have in businesses or in business in general is that we’ve been trained to think about systems as a primary concern instead of something that you add to the business after you’re already having major issues that need to be addressed.
All sorts of things become easier when you’re thinking in terms of process from the beginning and you can build the necessary process into the business without having to blow everything up and start again.
And so some general systems theory books like Thinking in Systems by Donella Meadows, they’re just fantastic.
Yeah, I like that you mentioned systems and engineering. I was just watching kind of a conversation the other day between Mark Endreason (ph) and, I think, Chris Dickson. And they were talking about this dichotomy between teaching people with business skills in Silicon Valley how to code versus teaching people with programming abilities how to start a business.
And they were both on the side of the latter is much better. You can take someone who’s got these complex engineering skills and teach them how to start a business, at least the fundamentals, in a pretty short amount of time. I’m pretty confident that I could give somebody a copy of The Personal MBA, and they could know nothing about business and read the book that you wrote and come way knowing 99% of the things that they need to learn before starting. And the rest they could just learn on the job.
As a programmer yourself, how do you feel about your chances at starting a successful online business in the modern era as somebody who has programming abilities versus somebody who doesn’t?
I think it’s way better to start with some type of hardcore skill, whether that’s design, programming, engineering, law, some type of topic-specific thing and then add business knowledge on top of it, than to start with business knowledge and try to add a hard skill on top of it.
It’s way easier when you already have something valuable that you can deliver or provide to people.
Yeah, totally agree.
I think it’s the kind of thing where – and programming is such a versatile skill. And being able to look at the business as a system is a thing that you can learn how to do in a very short period of time. I think even folks who don’t necessarily have programming background but are able to learn how to think on a systems level (inaudible) funny story.
I have a longstanding advisee. He actually started as a playwright, so comes from a very creative background, and found himself in a marketing job. Had all of the classic systems and processes and all the stuff that sounds boring, it sounds not very creative, it feels very constraining, “I don’t know if I want to do that” kind of visceral response to, “Let’s add some order to what you’re doing.”
I worked with him for a while and he read The Personal MBA and really got serious about implementing all of the systems and process stuff. So basically, the back third of the book is all systems-process concepts.
And so he was working in marketing at what was essentially a financial firm, and had always wanted to start something on the side. But he decided that, “Okay, if I’m going to work this job, I am going to do it as efficiently as I possibly can.”
The outcome of that investment was he figured out how to do all his work in about half the time and negotiated with his manager to keep paying him his same salary but only have to come in half the time because he was delivering the results that they were looking for. And he had half of his week back to go do all of the creative stuff that he wanted to do without worrying about the financial aspects of doing it.
It was all like, “How can I be very efficient with my time, and how can I make what I’m doing – how can I transfer that from just a one-off process where I have to redefine what I’m doing every time I’m doing it to, “Okay, what are the parameters, what’s the procedure, here’s how I’m going to go about doing this, this is what the end result looks like. Bam, bam, bam, bam, bam, done.”
You mentioned also that a big part of business is psychology and that people underrate the importance of these cognitive-psychology books and the learnings that we’ve picked up over the past few decades in that area.
And I think that rings very true. If you think about business, a lot of it is just understanding and applying human psychology at scale, understanding how we discover new things as people in the modern age, what causes us to adopt some new things and not others, what messages resonate with large numbers of people, et cetera.
And you discover very cool things like people are primarily driven by their needs to do things like, say, solve a problem.
And so what’s cool about that is human psychology is human psychology everywhere all the time, meaning the lessons that you learn in business are applicable everywhere else.
Are there any fundamental truths that you’ve learned about in business that you’ve applied to other parts of your life?
In what way?
So a good example might be – we were talking before the episode started that you are doing Aikido, and you traveled to San Francisco to attend an Aikido conference.
Is there any way in which the things that you’re learning in business help you become better at Aikido, or are they totally separate areas that are unrelated?
Oh, no. So it actually goes both ways. So you can apply business things to other topics, and you can apply what you learn from other topics to business. Aikido was interesting because one of the reasons that I started doing it was I’m not the most naturally coordinated person you’re ever going to meet in your life. And Aikido is very technical, and small changes in balance have really huge effects.
Being able to – the first time you’re trying to do Aikido and you’re watching somebody really good, trying to figure out what it is they’re doing, the first time you watch somebody, it just looks like magic. They step this way, and they put their hands up, and the other person falls to the ground. And that’s really cool, but you have no idea how to do that.
And so being able to look at a – so we’re almost doing the systems and process thing, but in reverse. So looking at a complex set of steps and being able to break it down and compartmentalize it and figure out, “Okay, here’s how it starts, and then goes into this part, and then it goes into this part, and this is what the end looks like,” that’s a very useful, fundamental skill that applies to pretty much everything.
So much so that that’s actually the topic my second book, The First 20 Hours, which is a book about how to learn new skills. The same type of thing that you would use to analyze a business – here’s how it works, here’s how it creates value, here’s how you market, here’s how you sell, here’s how you deliver it, here’s how you manage your finances. You can use that same type of breakdown to learn pretty much anything and learn it in a very short period of time.
Now, the individual skills can actually teach you a lot about business too. So for example, one of the lessons that I’ve been learning is when things tend to get difficult, the human response is to tighten up. So your breathing is shallower, your muscles get tense, you are spending a lot of time thinking about what it is you’re supposed to be doing, and you spend a lot less time actually doing it.
And so Aikido for me has been very valuable primarily in terms of learning how to relax under pressure, to notice when the stress level is getting a little high, and all of the natural, physiological responses to that stress are starting to trigger, and to be able to notice it in the moment and take steps to prevent it from happening or release it to get back to that point where you are flexible and adaptable and able to handle changes as they come in.
What about to your career as an author? So you essentially make a living by writing at this point. And a lot of people don’t consider writing to be a business pursuit, but it’s the same fundamental situation as starting any other business. You’ve got a product that provides value to customers, you need to deliver it to them, et cetera, et cetera.
How have you applied some of the things that you write about and some of the things that you’ve read about to your career as an author?
Oh, yeah. So publishing is absolutely a business. And it really helps – it’s actually kind of funny, because most people who go about publishing a book don’t approach it as a business.
Not at all.
It’s a creative project. Unfortunately, that results in a lot of, particularly first-time authors, not being very sophisticated about how they negotiate and sell the thing that they have spent months, sometimes years creating. They tend to make very bad deals, and it’s because they don’t treat it as a business. They treat it as a creative endeavor, or there’s an incredible impulse to say, “Well, I want the validation of an external party,” namely a publisher, “to say, ‘Yes, this is good enough to be published.’”
If that’s something that you’re trying to get (inaudible) deal. Part of how you get that is sometimes accepting very poor terms from a business perspective.
So even just going into The Personal MBA and the other book projects that I’ve worked on, it really helps to come into this saying, “This is not a creative endeavor. This is a business. And so if I’m going to spend my time building this line of business, certain things need to be true in order for that decision to be worthwhile.”
So it’s a little different from software in that you can’t calculate something like an MRR or ACV, but you can say, “Okay, if I want the monthly revenue from this book to equal x, then it needs to sell y copies in all of these different formats in order to make it worth it. How am I going to do that? What are the various profit margins between print and ebooks and audio books and online courses and all of the other forms that this book might take?”
The way that I think about publishing in general – are you familiar with, from insurance, the concept of an annuity?
No, why don’t you explain it?
Okay. So essentially, think you’re trying to make an investment that’s going to pay you at minimum a certain amount of money every single month until you die. I try to think of books like I’m building myself an annuity. So I’m going to spend a couple of years upfront hopefully making something really good, I’m going to market that in a way that results in both, hopefully, a large burst of sales upfront, but I also want to have a significant number of sales over a very, very long period of time, preferably until I die and hopefully after.
And so thinking about it in those terms makes it much easier to make good, long-term publishing decisions. So a lot of the negotiating part of publishing is: What are you giving up in terms of rights to a publisher in exchange for some upfront value in terms of a contract or an advance? Or on the flipside, if you do it yourself, what are you giving up in terms of sure-thing, short-term money in exchange for, potentially, a very long-term series of cash flows?
And at that point, it starts – with some differences, it looks a lot more like a SaaS business. And so just thinking through all of these things, like what do you want the publishing business to look like, it informs what you write, it informs the types of contracts you accept or decline, it influences the forms that the book can take or not take, it affects pretty much everything.
Approaching publishing as a business has really helped both of my books financially do much better than they otherwise would.
And I think it’s so hard for a lot of people to make that approach, because like you said, a lot of people come at book writing as sort of a creative endeavor. And the idea for them of injecting financial business decision into that process is anathema, and yet the publishing houses they’re dealing with are themselves businesses and they have their own concerns and their own incentives. And so it’s something that I wish more authors were aware of and didn’t find so --
Oh, my gosh. Me too.
Because it just comes back to bite them. It’s a reality that you can’t really change, unless you sort of eschew the publishers altogether and self-publish. But even then, you still need business knowledge, perhaps even more so than you do when you’re negotiating with publishers.
Yeah. I think the biggest change, which I’m actually really excited about – when I was doing the research for The Personal MBA, I would find all of these really great books that I could not in good conscience recommend because they were out of print, and by all likelihood people would not be able to get their hands on one if they wanted it.
And so publishing is changing in a way that I think is really great in the sense of it’s becoming more and more possible for a book to, once it goes into print in some form, to stay in print for the foreseeable future. There are a lot of authors who, for example, have signed a publishing contract which usually – this is getting a little bit of inside baseball. But when you sign a publishing contract with a large publisher, you are granting the exclusive publication rights to that work, including yourself. You can’t publish it yourself if you sign this kind of contract. You’re granting rights to the publisher for your entire lifetime plus 80 years in the U.S. That’s a really long time.
And what I’ve seen happen to a lot of authors is that the book does okay in the sense of maybe the publisher is happy that they published it, it did a good first run, but there’s not a lot of long-term – or there’s not enough long-term interest for the publisher to make the financial decision to keep the book in print. And then the book, you might be able to find used copies. And now there’s more likely to be an electronic version available. But for the previous several hundred years of publishing, if it was popular enough to do a reprint, then the book would just disappear. And writing a book is a lot of work. That’s terrible.
Yeah, that’s just tragic, the idea of somebody owning the rights to a book and then just refusing to publish it. And I think anytime you see a gatekeeper trafficking in prestige – “Publish through us, we’re prestigious, we’re the only way to get your book on the market,” or “Go to our university, we’re prestigious, we’re the gatekeeper between you and the professional world.” Prestige seems like a poor substitution for providing actual value, but I’ll digress here.
Let’s talk a little bit about tech startups, because most of the audience are people who are either working on or aspire to work on some sort of tech-related business themselves. And earlier I mentioned this sort of interesting situation where you can be an employee of a bigger company and work in a department like marketing or sales your entire life, but not really understand how it plays into the entirety of the business.
And I think from the other perspective, you can be a startup founder in Silicon Valley who’s raised a bunch of money from venture capitalists and do that for 10 years, and come out still not really understanding anything about business fundamentals because you’re serving only very specific types of businesses that didn’t necessarily need to generate revenue or create something that people found valuable enough to pay for.
So I think it’s not a problem that only plagues employees, but also people in the startup world as well. So my question to you would be: What are some of the biggest mistakes that you see the founders of tech startups making, and how can they apply some of the principles that you named and talked about in The Personal MBA to do a better job starting companies?
Yeah. I think the first thing is definitely to educate yourself about everything about business. Get that broad, universal perspective first. It doesn’t take very long, and you’ll find it useful at every part of your career. So in terms of value per hour invested learning something, if you have any interest in startups or entrepreneurship or business in general, it’s one of the highest-value uses of your time, period.
I think the wonderful thing about tech startups in particular is that they tend to be – in the grand scheme of business, they tend to be smaller than a lot of other kinds of businesses. And part of the reason for that is tech businesses have the ability to automate a lot more than traditional businesses have been able to. Essentially, programming is a science of system and process. How can we do something, and essentially, program our own little robot army to do it for us instead of hiring people?
Tech startups tend to be much smaller in terms of headcount, which also is a huge opportunity if you want to learn everything you can about business. The smaller the operation is, typically, the more exposure and possibility of exposure you have to all of the different parts of the business.
So if you’re interested in getting really good really quick, figure out what all those fundamental parts of the business are, and try to make sure that you have exposure to every single one of them. Sometimes that is volunteering for a project, sometimes that’s a lateral move within a company. A lot of companies, including tech (inaudible) that get to a certain size will do – it’s usually called a broadening assignment. It’s, “Let me go work on our customer-support team for a couple weeks. Let me go sit with our sales people and see what that looks like.” Any type of assignment or project where you get exposure to another aspect of the business is hugely valuable.
The other thing that I’ll say is side project are a wonderful way to make 100% sure you get exposure and experience with every single aspect of a business, because there’s nobody else to do it. You’re responsible for everything. Even just a little bit of experience trying to do marketing, trying to do sales, putting together your profit and loss statement, doing your accounting, doing your bookkeeping – all of those experiences, even if they’re small – and with a side project the stakes can be really low – but experience doing those things gives you both an understanding and appreciation for all of the things that are necessary to make a successful business work.
The vast majority of people in this world do not have that knowledge and do not have that experience. And so figuring out how to give that experience to yourself gives you a competitive advantage that is valuable, regardless of whether you work for somebody else or you intend to take venture capital and start a startup or bootstrap your own business from the ground and run it for cash flow. It doesn’t matter. All of those experiences are the best possible thing that you can do for yourself.
I love every part of what you just said. Broaden your knowledge and start a side project where you get experience wearing every hat. And while you’re at it, like you said, keep the stakes low. It’s actually really fun to work on something where you don’t have the pressure on yourself to necessarily succeed and make a billion dollars. So just go into it thinking that it’s learning experience and try to do every job as good as you can.
Anyway, thank you so much, Josh, for coming on the show. I really wish I could have you on for another hour because I only got into about half of the questions that I wanted to ask you, but it was very much my pleasure having you here.
Thanks, Courtland. I appreciate it.
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