EFP 100: Lessons Learned Building Million Dollar Empires
Wow! When Joe and I got on the mic for our first podcast we never thought it would last 100 episodes. It’s amazing how quickly time flies.
We wanted to do something a bit special this week. We reached out to 11 of our previous guests who, all together, are making more than 8 figures per year. They’re each giving us their thoughts and insights on what we think are the biggest business lessons we’ve learned over the past few years.
A Round Table of High Impact Entrepreneurs
We have an amazing lineup of previous guests today including: Spencer Haws, Andrew Youderian, Dan Norris, Ian Schoen, Dan Andrews, Damian Thompson, Chris Ducker, James Schramko, Ace Chapman, Cody McKibben, and Tim Bourquin.
This is a special episode packed with valuable advice and I know you’re gonna love it!
Check Out This Week’s Episode Here:
Topics Discussed This Week Include:
- The argument for giving information away for free.
- Business transparency, building trust and opening doors.
- Scaling businesses with powerful processes.
- The integral role cash flow plays in doing your best work.
- Southeast Asia as a bootstrapper’s paradise!
- Fluctuating between shotgunning projects and narrowly focusing on just one.
- Spencer Haws @ NichePursuits.com
- Dan Norris @ WPCurve.com
- Andrew Youderian @ eCommerceFuel.com
- Losing A Lawsuit In The Philippines
- Ian and Dan @ TropicalMBA.com
- Damian Thompson @ Linchpin.net
- Chris Ducker @ ChrisDucker.com
- James Schramko @ SuperFastBusiness.com
- Ace Chapman @ AceChapman.com
- Andrew Warner @ Mixergy.com
- Cody McKibben @ ThrillingHeroics.com
- Tim Bourquin @ AfterOffers.com
- Leave an Empire Flippers Podcast iTunes Review
Spread The Love:
“When your audience has trust you can then go onto monetize that audience in a number of ways.” – Spencer Haws – Tweet This!
“If people see you show the good and ugly it builds a ton of trust, especially if you’re trying to build a platform.” – Andrew Youderian – Tweet This!
“Once you have more team members you become a process freak.” – Damian Thompson – Tweet This!
“You’re always going to be run by your business instead of running it if you have to manage everyone that’s involved.” – Chris Ducker – Tweet This!
Thanks to all of our previous guests, mentors, customers, readers, and listeners. There’s no way we could have kept this going without your support, trust, and encouragement. Now – we want to hear about YOU and your business. What are the most valuable business lessons you’ve learned over the years? Leave a message on SpeakPipe or join us in the comments below.
Speaker 1: Welcome to the Empire Flippers podcast. Are you sick and tired of gurus who have plenty of ideas but are short on substance? Worried that ebook you bought for $17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of niche profits without the bullshit straight from your hosts, Justin and Joe from Empire Flippers.
Justin Cooke: Welcome to episode 100 of the Empire Flippers podcast. I’m your host Justin Cooke and I’m here with my business partner extraordinaire, Joe “Hot Money” Magnotti. What’s going on, buddy?
Joe Magnotti: Episode number 100, I can’t believe we made it.
Justin Cooke: Yeah man, I can’t believe we have 100 episodes of a podcast. If you told us three years ago that we were going to have this podcast radio show going on with 100 episodes, we’d have thought you were crazy, we’d have laughed in your face.
Joe Magnotti: Absolutely would have laughed all the way.
Justin Cooke: I’m really excited about today’s episode. It’s going to be a bit longer and it’s going to be a bit more fireside chat-ish. The lesson is actually, well, the episode is actually Lessons Learned Building Million Dollar Empires. We’re going to share some of the lessons we’ve learned in the three plus years in business both with Empire Flippers, our outsourcing company and even before that. We’ve also invited a bunch of previous guests on with a combined annual revenue of well into the eight figures when you look at everyone that we’re including. People like Dan Andrews, Andrew Youderian, Ace Chapman, Tim Bourquin. We’ve got a ton of people on this episode. Most of these, in fact all of these are previous guests and we got them to share some of their insights as well. I think you’re really going to like it.
Before we do that though, let’s do some updates, news and info. First thing, Joe, we’re giving away twitart.com. This is a business we bought on Flippa, God, like five years ago or something for $5,000 and we ended up, it was doing really well. We were making, I don’t know, maybe $1,500 a month net or maybe $2,000 a month net. We let it dwindle down to not much.
Joe Magnotti: Before we get into that, though, I’d to talk about the due diligence that we did on Twitart. Man, when we bought that company, that property, the due diligence we did on it. Do you remember?
Justin Cooke: Oh my God, yeah.
Joe Magnotti: We deep dove so hard.
Justin Cooke: We were still working for our previous employer at the time. I’m pretty sure. It was 2009?
Joe Magnotti: Yes.
Justin Cooke: Yeah, we were working for our previous employer and so we just took the time to really dig into it. We looked at all these press mentions and it was pretty intense. I think it took longer because we didn’t really know what we were doing. We were trying to dig into it and figure it out. It was pretty exciting, though.
I remember some of our buyers, I kind of get their excitement of buying a new business and the anxiousness you feel. Like, “Is this the one that’s for me? Is this really going to work? Am I buying a dud?”
Joe Magnotti: Yeah. “Am I getting scammed?”
Justin Cooke: “Am I getting scammed? Can I really grow this thing out? Where are we going to be?”
Joe Magnotti: I think, yeah, the major issue here is that we’ve definitely let it dwindle down to almost nothing. I think the last sale was done in March.
Justin Cooke: Yeah, a couple hundred bucks worth of revenue or something total for the year.
Joe Magnotti: We did convert it to a WordPress site. There is a little small blog attached to it, but yeah, really, I think if it found the right home in the right hands, a designer or someone that has a lot of Twitter experience or a good Twitter following definitely could make it into something good. It’s not worth selling and that’s why I think it makes a good giveaway.
Justin Cooke: Basically, if you’re an aspiring designer or you’ve got someone, like a VA on your team that can do some designs, and you can design custom Twitter backgrounds for people, I think this would be a great pickup. We’re going to give it to you free, no issues, so we’ll just hand it over to you. All you have to do to do this is send a Tweet out with our hundredth episode and mentioned #twitart, that’s T-W-I-T-A-R-T, in the Tweet and we will get in touch with you and see if it’s something that you can take over and run for yourself.
The second point I want to mention is Joe and I are taking a trip, man. The Empire Flippers, they’re hitting the road. We’re doing a road trip.
Joe Magnotti: We are. I’m looking forward to it. We were thinking about going to America, we were thinking about going to Austin and doing-
Justin Cooke: There’s a podcast thing going on in July, no, in August.
Joe Magnotti: Yeah, middle August and then the end of August is going to be-
Justin Cooke: Andrew Youderian’s thing.
Joe Magnotti: eCommerceFuel.
Justin Cooke: He’s got a, yeah, that’d be pretty awesome. We started looking at it, though, and we’re like, “Look, we’ve got a Mastermind to go to in August, we’re relaunching Empire Flippers, we’ve got a ton of these going on. Let’s go ahead and skip that and let’s just go to Ho Chi Minh for our Mastermind, but while we’re in Ho Chi Minh, why don’t we put something together? Why don’t we put together a get together for people that are interested in potentially selling sites and want more information?”
Here’s the basic idea. We’re going to put on a workshop. It looks probably like August 7th, which is a Thursday, in Ho Chi Minh or Saigon. We’re going to rent out a coworking location or a room at a coworking spot and probably put on a four to five hour presentation. Basically what it’s going to be is we’re going to step you through six months out to actually completing the sale and the preparation you need to do with your financials, with all of your information including proving earnings and traffic and guide you through the process. That would be the first part.
The second part, we’re also going to do a case study or we’re going to show case studies of previous sellers and look at what did work for them and why they’re able to sell at a high multiple for relatively quickly and look at the highlights and why those are important. We’re also look at one that didn’t sell and break down exactly the reasons we think that it didn’t sell as quickly or didn’t sell at all so that you have an idea going in.
Then the third part, we’ll actually do business breakdowns or web site breakdowns for people that are looking to sell in the next few months or next six months or whatever and show them what they can start doing to prepare their site specifically for a sale.
Joe Magnotti: I’m excited about this. It will be our first real event that we threw just for us. I think people attending get a lot out of it and we could really talk about buying and selling web sites.
Justin Cooke: I think it’ll be fun. It’s really pretty small. We’ll have like 10 to 20 people together get in a room and good things happen. We’re going to be there. I’m really excited. I think we’re going to, we were talking about this, I don’t really want to charge for it but I don’t want people not showing up either. I was thinking like probably $100 and then we refund you if you actually show up.
Joe Magnotti: Yeah, I love that idea and it definitely puts some skin in the game because we don’t want to reserve a room for 40 people and then only three show up.
Justin Cooke: What I’ll end up doing probably is just taking the money from the people that don’t show and then the rest of us will go out and have dinner and drinks after. That’s really the plan. Anyway, I think it’ll be great. I’m really looking forward to it. I’m looking forward to our Mastermind with a bunch of buddies in Ho Chi Minh. I think that will be really exciting.
Joe Magnotti: Cool. The date is August 7th and the details will be to be determined and we will let you know.
Justin Cooke: Yeah, we’ll have that coming out. All right, man, enough about that. Let’s get into the heart of this week’s episode.
Speaker 1: This is the Empire Flippers podcast.
Justin Cooke: All right, Joe, so the heart of this week’s episode is all about Lessons Learned Building Million Dollar Empires. A lot of our guests on this, including ourselves, we built a million dollar company and these are some of the lessons we’ve learned. Some of them are painful lessons. Some of them are kind of aha moments as John Lee Duman would put it, but these are things that we came to realize and sometimes they were difficult lessons to learn.
Joe Magnotti: Definitely some painful lessons in here that we’ve learned over the years even before we started the podcast.
Justin Cooke: Some of them were just, they totally changed our outlook on the way we view business. The way I view business has been significantly altered due to learning these lessons. I’m not sure that just telling you about it is necessarily going to give you an aha moment. We hope that at least one or two of them will and will help shape and change the way that you view business and view the world, actually. Let’s get right into it, man.
Lesson number one, it pays to give away valuable information for free. Our idea behind this is that, and we’ve said this on many other podcasts, but information wants to be free. There’s nothing necessarily or inherently wrong with charging for information. People package it in different ways. It’s very helpful, it’s very useful and it’s worth paying for, but what happens is is that it does seem like it’s going to want to be free. There is a race to the bottom thing going on here.
Joe Magnotti: Yeah, I definitely agree with that. The future, unfortunately, is that-
Justin Cooke: Or fortunately, right?
Joe Magnotti: Yeah, depending on how you look at it, but is going to be most information will be free and so designing your systems around another way to make money than rather just charging for the information, I think it will be beneficial for you down the line.
Justin Cooke: I read something somewhere that talked about how the average person today has way more information at their fingertips than the president did 20 years ago or 25 years ago, the president of the United States.
Joe Magnotti: Yeah, I believe it.
Justin Cooke: I can look at my phone and search any bit of information that I need whereas back then, think how highly guarded some of that info was or how powerful that information would make you.
Joe Magnotti: I was watching a TV show the other day. Someone was trying to look up in an encyclopedia the origin of something and I was thinking, “I can just do that on my smartphone.” It’s getting easier and easier to do this stuff.
Justin Cooke: We weren’t always believers in this, Joe, though. Back when we had our mortgage company, even starting our outsourcing company, our thought was that if you have something that’s working, that’s working out well in your business, you don’t tell anyone about it. Not only do you not sell that information, you don’t tell anyone about it because you’re giving away your competitive advantage. I think that’s, some of the people we talk to that get the furrowed brows when we mention free information and they don’t understand where we’re coming from, I think are in the same position that, I totally respond to that. I totally get that because we were there too.
Joe Magnotti: Especially the older crowd, that they’ve owned businesses or in larger corporations, the idea of giving out their internal IP and that kind of thing, they just don’t get it. They don’t understand it at all.
Justin Cooke: I get that because we were there too and I thought that would be a horrible idea. Who was it who used to say, Joe, “Don’t change anything but your underwear?”
Joe Magnotti: Yeah, if it works.
Justin Cooke: Yeah, don’t many any changes, don’t tell anyone about it. You just keep it quiet. It’s just so funny because that was a saying of yours.
Joe Magnotti: It was.
Justin Cooke: It’s funny we’ve changed our tune so much.
Joe Magnotti: Yeah, and I think it’s just that’s the new paradigm. That’s just the way new businesses, especially online businesses, are done.
Justin Cooke: Talk about that change. I think the change came about for us because we were doing a side project that wasn’t our core so we thought we had a lot more freedom to just build or design the business the way we wanted to do it. We said, “Look, we’ll just share this information.” It wasn’t even really a business, it was just a project at the time. I think it’s a lot easier, maybe, to, if you’re going to go this free information route, is to not start with the baby that you’re so protective with, that you want to protect that intellectual property. Maybe start it with a new project instead of going through all the fear of trying to do it and something that’s your moneymaker today.
Joe Magnotti: Yeah, I think dipping your toe in the water is definitely a good way to do this kind of stuff. You don’t have to start releasing full income reports and all that kind of thing. You could just talk about your process and a little bit more about your product and then graduate to something a little bit more.
Justin Cooke: I think this also seems to work best when you have competitors in that space that are charging info or very secretive about their process, about the things that they’re doing. If you’re able to share exactly how it works, where there’s a lot of misinformation or a lack of clarity, it’s really helpful. It’s one of the reasons that I was pushing people to do the private blog networks and really go into detail about how to build out a PBN.
If you’re currently building private blog networks, they’re the rage right now. We’ll see how long that lasts, but they’re the rage right now and people want to know how to build them but it’s more like everyone wants to hide it and they want to sell links to their PBN because they want that recurring monthly for the links. Or they’re very secretive about the information and I think there’s just a wide open opportunity to just break it down step by step for everyone.
Joe Magnotti: Agreed. I think it could really be, someone could come in and own that.
Justin Cooke: That’s one example, but I think there are plenty where there are competitors that are either charging for the information or they’re really secretive. I think there’s a real opportunity there to give away information for free where others would charge for it or not give it away at all.
I think what we learn from this is that it’s ultimately about trust. Giving away free information shows that you have chops, shows that you know what you’re talking about in that business or in that particular niche. That leads to engagement. When we were building these small niche sites, we were saying, “Look, they make money, here’s our general, how much they make, what our,” business transparency which we’re going to get into in a bit.
We started just telling everyone the exact process. Step one, do this, step two, do this, and then people starting following along. They said, “Wow, they’re not selling this to me, I didn’t pay for this, so I’ll go ahead and follow along.” When they started making money or it started working for them too, they were like, “This is amazing,” and there is an amazing amount of trust built up. Those are the people that are going to share your information with others and say, “Wow, you got to check this out, these guys are giving away really cool, helpful information.”
Joe Magnotti: It’s pretty telling the way it worked for us and when we started giving away the information for free, how the sales and how the opportunities just rolled in. We didn’t have to do anything and I think that if your product and your process is good enough and you give away that information, people will be hungry to pay you to do it for them.
Justin Cooke: This works totally in sync with pole marketing, as you were just saying. People will start bringing you opportunities and deals that you wouldn’t have otherwise because they go, “Wow, they’re so free with their information, they’re so happy to share everything, those are people that I want to connect with.” There’s a ton of opportunities for connections just by giving out free information.
I think in terms of impact to our business, it’s radically changed the types of products we get involved in, the type of projects we get involved in. Anything that is generally around charging for information is not something we do today. It’s an easy delineator for us. We will go after this project or this product and we won’t go after this one. It’s that strict. We’re that strict, to that [crosstalk 00:13:45].
Joe Magnotti: Right. It’s been very good to us and that’s a rule we’re going to keep.
Justin Cooke: Today it’s just the way we do business and it’s one of the ways in which we’re able to connect with other people, whether it’s customers, it’s listeners, it’s readers, peers, mentors, they see the way that we do business and it attracts other people that appreciate it. Or people that, maybe they haven’t done it in their business but they’d like to and so they want to find out more. It opens the door to us to have a conversation with them.
Joe Magnotti: Nobody who’s selling their ebook for $19.95 has reached out to us to say, “Hey, pimp my ebook to your lists.”
Justin Cooke: Yeah, or if they do, it’s just not going to happen, so good luck. There are quite a few other people doing this and providing information for free. One of the ones we know best, I’d say, is Spencer over at Niche Pursuits who’s done a fantastic job of laying out exactly how he builds his sites, doing case studies on how much they earn. He’s really laid it out for free. What’s interesting with him, I think, is you have a guy who is just laying it on the table in terms of information but he’s making a killing on the backend. He can charge around that, so he’s able to charge for his software product, LongTailPro, and make a killing with that. He sold a couple hundred thousand dollars in a 30 day period when he did that launch. I don’t know where he’s at right now but it wouldn’t surprise me to hear that he’s mid or high five figures a month with LongTailPro.
Joe Magnotti: It’s interesting to see, his business has grown along with ours and hey, he was the first guest on the Empire Flippers podcast.
Justin Cooke: He was. He was the first guest.
Joe Magnotti: It’s interesting to see that he’s going to be our first little cordon here.
Justin Cooke: All right, man. I actually reached out to him. Let’s hear what he has to say.
Spencer: Hey everyone, this is Spencer here from NichePursuits.com. I do believe that giving away valuable information for free really can pay off, provided that you do eventually have some way to monetize your audience or that information, so there does need to be some sort of product or other information that you can sell. You can’t always just be giving away things for free and expect to get a return.
The reason that giving away information for free does pay off is because you can build tremendous trust. When your audience has trust, you can then go on and monetize that audience in a number of ways that I’m sure Justin and Joe will talk about, a lot of great ways. Certainly there is a lot of value to you and your audience by having a blog, podcast or other free information. Thanks a lot guys. We’ll see you.
Justin Cooke: I really like what Spencer had to say. I think what’s interesting about that is that he sells around the free information. He’s able to offer his readers, his listeners a ton of products and services that are around that information or that you can use in coordination or conjunction with the information he gives out.
Joe Magnotti: That’s the key for me, is you got to have something. We’ve seen these kind of things before where people have a blog and they do give the information for free and it’s awesome information.
Justin Cooke: They’re like, “I don’t understand why I’m not making money.” They’re like, “But I’m giving this all away, I’m not going to charge anything, I’m not putting advertisements on my site. Why do I not have a business?” We’re like, “Well, because you’re just giving information away for free. It’s cool, but you have to have a business behind that free information giveaway.
Joe Magnotti: I think if your information is fairly complex, the next logical step is productizing that service into one giveaway.
Justin Cooke: Yes. People are happy to pay for the information. There’s a ton of people that are going to do it themselves, the do it yourselfers. There’s a whole bunch of people out there that just can’t be bothered. They just don’t have the time, they don’t want to spend any effort, focus or any of the energy on learning SCO or picking up on what Matt Hatch is up to this week. They’d rather just pay you to do it. I think the people that are great with giving away information and charging around it have figured that out or onto it and create productized services around it.
Our second lesson actually revolves around transparency. It’s basically that business transparency builds trust and open doors. The idea is that it attracts people that appreciate the transparency in your business and it’s building trust with potential customers, actual customers, peers, mentors, competitors even, and I think it opens up connections. By having a transparent business, you’re able to connect with competitors in a way that you wouldn’t be able to otherwise. Because you’ve pulled up the kimono, so to speak. You’ve opened the doors, the back doors to your business and let some people inside. I said back door, Jeff’s looking at me funny. When you do this, it really makes people be more open with themselves and make them more likely to reach out to you.
Joe Magnotti: Well yeah, I think it makes them feel safe. They know that if you’re giving everything away and you’re being very transparent about how your business works and all that, then there’s nothing hidden about you. There’s no secret agenda, you know what I mean? All the moves are laid out.
Justin Cooke: Yeah, secret agenda, that’s the big one. I think our worry about doing this early on, we were worried people were going to steal our ideas. We were worried that people were going to copy our ideas and take it and expand it before we’re able to if we’re too transparent, that some people say, “Oh, I can do it better because of this, this and this,” and so they just build on what we did and make it more successful and they beat us.
Joe Magnotti: I still see this from people today, that have a relatively simple business and they think that if they give it away, people are just going to copy the heck out of it. Really, a lot of it is about implementation and not about the idea. Ideas are cheap.
Justin Cooke: I like Derek Sivers’s post on this, “Ideas are a multiplier.” It’s of execution and I think that’s pretty critical. You look at guys, and we’re going to hear from him in a bit, Dan Norris over at WP Curve, he was posting about it jokingly on Facebook, saying, “Oh, I got another copycat.” They’ve copied to the point where they copied his testimonials and they have his name as one of the founders. It’s ridiculous, totally copied. I think he’s pointed out someone on oDesk asking someone to create a site that was an exact copy of WP Curve.
It’s funny, I think if you’re executing at a high level and you’re actually getting shit done, if you’re getting shit done and people want to copy you, go right ahead. I think actually having people copy you pushes you harder. If you do have other people that are trying to copy you, it’s going to push you to drive your business faster, harder and make it even better.
Another thing we were worried about is that people would laugh at us. They would say, “Oh, who are these schmucks,” or we’re doing our monthly reports and they’re like, “What is this chump change?” It is. To some people it’s really impressive. They’re like, “Oh my God, they’re crushing it.” To other people with larger organizations, they’re like, “Dude, that is chump change. What are you guys talking about?”
Joe Magnotti: This was a big fear of mine for sure, was that some people would think, some people would think it was just unbelievable that you were sitting there making that kind of money and some people would be like, “Well, if you were going to lie about it, I hope you would have lied about more.”
Justin Cooke: Yeah.
Joe Magnotti: I think we’ve realized that that’s just not the case.
Justin Cooke: Other, expectations too, right? Family members, friends going, “Why aren’t you working for a serious company? Why aren’t you working for a real, a big company that’s really doing amazing revenue, it has 1,000 employees, what are you wasting your time on with this small little piddly business?” We just don’t care now. I think that changed maybe end of 2011 when we started creating a bunch of sites. We started to get some traction and people really cared about what we were doing. More than just care, though, it was effecting change in their lives. That was really impactful.
I remember some of those emails we were getting from people when we were first starting out and saying, “Oh my God, I’ve been burned so many times,” or, “I didn’t know where to start and you guys gave me direction. I’ve actually been able to quit my job because of some of the things that I’ve implemented in your podcast.” That, it’s really affected me, dude. That’s amazing.
Joe Magnotti: When you combine the free information with the transparency, it’s hard to attract negative people. You’re just being so positive about everything you’re putting out there that of course the people you attract are going to be people that are genuinely interested in getting something good out of it.
Justin Cooke: Positive in the right way. It’s not like you just are transparent about your wins, it’s about your losses too and when you suck or screw something up. I think that’s what really attracts people, attracts the right people or the people that we want to be associated with. The customer we want, the potential partners that we want to have or that we want to work with on projects, these are the type of people that we want to attract and I think that’s what amazing.
We really learned that people connect with transparency. Customers, mentors, everybody. It’s like an icebreaker. If you’re just laying it out there, you’re explaining the internal workings of your business, we get great advice because of that too. Our monthly reports, they have people that reach out to me and they’re like, “Hey, why don’t you do this or why don’t you add this because you’re tracking vanity metrics versus actual interesting metrics to your business.” I’m like, “Huh, that’s a great idea.”
Joe Magnotti: I think it makes it pretty easy for people to make recommendations because you’re so transparent about what you do and how it works and what you don’t do and what your failures are, that somebody recommending, “Hey, you should check out Empire Flippers,” it makes it easy for them to do that.
Justin Cooke: Some people are going to laugh at you and some people are going to dismiss you and dismiss your business. Other people are going to think you’re lying or you’re faking or whatever. Just don’t worry about them. It doesn’t matter because they’re not your customers, they’re not the people that you want involved in your business anyway, so they really aren’t going to matter. What will matter are the right people that you’re attracting. If you’re interested in this, they’re going to be interested in that and I think it’ll be a much easier way, a better way to do business.
I’d say in terms of impact in our business, Joe, this line of thinking, the transparency approach to what we’re doing, has put a whole new lens on how we view businesses.
Joe Magnotti: Yeah. I hate to pick the biggest one so early of the lessons learned here but this might be the biggest one.
Justin Cooke: When I hear some of the problems that people are talking about, they’re having trouble attracting the right customers, they’re having trouble, they’re very secretive and not sharing how their business works,” I think to myself, “This could be fixed. This is something you can fix.”
Joe Magnotti: I know exactly what you’re saying. When I talk to those people as well, that’s the first thing that comes to mind. “Man, if you were more transparent and open about your business, you would attract so much more.”
Justin Cooke: That want to help you. Other people that listen to your business are hearing what’s going on and they want to help you. They’re going to give you good ideas. Some of them are helpful for your business, sometimes they aren’t, but it opens the door and it makes these connections with people that you just wouldn’t have without being transparent.
I think a great example of someone who has really, I think, been pushing boundary on this, I mentioned him earlier, is Dan Norris over at WP Curve. I got a great clip from him I’m going to play for you right now.
Dan Norris: Hi Joe and Justin, Dan Norris here from WPCurve.com. Congratulations on the 100 episodes. That’s super awesome. I remember when you guys started and I think I’ve listened to probably most of them and that being really great just to see what’s going on in your business. I guess what you guys are dealing with is totally different to what we’re dealing with and what other people are going through and seeing what you’re doing and how you’re going about it and releasing all of the intimate details on your show and in the income reports is really cool.
I wanted to talk a bit about those income reports because we sort of had the same approach in our business where I started doing our monthly reports when I was making zero dolls really early on. It was kind of hard to put those reports out there and I remember when Alex joined me, we had a conversation with Hiten Shah and we told him what we were doing and talked about the reports and things. Hiten basically said he didn’t think putting the income reports out there was a good idea.
We took them down for a month or two and eventually I managed to work on Alex to convince him that it was a good idea because if it hadn’t have been for those income reports then Alex would have never known me and never met me and we never would have gotten together in the first place. He thought about that and thought, “Well, there’s not really that much downside.” The transparency that we have on our blog is something that we’ve become known for and it’s enabled me to find a co-founder, a bunch of awesome partnerships have opened up since then.
It’s pretty funny, I noticed Buffer put out a page that had their live metrics on there and in the blog post that they wrote about, one of the main reasons for doing that was that they were chatting with Hiten Shah and Hiten Shah thought it was a great idea. I thought that was pretty funny, but yeah, it’s certainly worked really well for us and we love putting real information out there. The replies I get back from people, it really means a lot to us and I can tell that it’s connecting with people because they read what real entrepreneurs are going through just like what you put out on your show and they’ve been through it themselves or they’re going to go through it and they really like that honest and that transparency.
It builds a community in trust and authority and it’s huge for our business and I know you guys take the same approach. Thank you for doing so and I look forward to catching up with you guys in DC Bangkok. See you guys.
Justin Cooke: One of the things I really loved about what Dan just said is that, well first off they were told that they probably shouldn’t do it and so they took it down and then he had to go back to convincing his partner. It’s one of those partner issues where one wants to do it and the other doesn’t.
Joe Magnotti: I can’t believe how many times we’ve heard from people, “Oh, I can’t believe you put your income online, that’s going to come back to haunt you, it’s coming back to bite you,” and it’s done nothing but wonders for us. It’s still the most popular post that we put out, is that correct?
Justin Cooke: It is, although I’d say the listings are getting a bit more views lately, which is great. The stuff that makes us money, that’s fantastic, but yes, no, the monthly reports are still really popular. It’s almost like, maybe I shouldn’t treat it this way but I view it as a bit of a confessional for me. Every month I’ll lay into what’s working, highlight our successes and then I’ll just lay out some of our failures that are frustrating or disappointing and just share those. I get wonderful feedback about it. Sometimes people will hit me up for things that I’d mentioned in previous months that we didn’t follow through on or whatever, we decided to dump, and I go, “Oh yeah, I forget about that project.” That’s pretty helpful.
I know what Dan Norris is talking about with the Buffer reports. I’d seen that and I thought that was pretty awesome for a larger startup to be sharing all those kind of intimate details behind the scenes in their business. I love the fact that WP Curve is putting all that information out. I think that’s a trend, I think that’s going to continue. There are some people in the make money online space, the Pat Flynns and people even before him that do the monthly reports, but it’s great to see, I think like SaaS companies and other businesses really start to get into that.
Joe Magnotti: That’s what’s going to distinguish them from the copycats. No one is going to, why would anyone use a copycat when they can go to the real WP Curve, the guy that’s being very transparent and open about everything.
Justin Cooke: You can fake and there are people out there that will fake information or talk about it. Not always, but you can kind of see through that because part of being transparent is being really you and really sharing about yourself. They’re telling you how awesome you are but they’re not telling you the whole picture, then you start to figure that out pretty quickly.
All right, man, I actually got another one from Andrew Youderian over at eCommerceFuel. I love the transparency he has on his blog. I’m a huge fan of him, his blog and his podcast, so let’s take a listen.
Andrew Y.: Hey guys, Andrew Youderian here. First off, congrats on 100 episodes. That’s awesome. Well done, boys.
On the transparency front, I’d have to agree 100% in terms of building an audience. Talking about generic concepts, I think, can really only get you so far. If you’re going to stand out being able to convey your own experiences, your good ones, the ones that make you look brilliant, but especially your bad ones, the ones where you really wet the bed on things I think builds a ton of credibility with people. If people are willing to see that you’re willing to show the good, bad and the ugly, I think that builds a ton of trust, especially when you’re trying to build up an audience on a platform.
Again, congratulations on episode number 100 and looking forward to hopefully seeing you guys again soon.
Justin Cooke: It’s so fun to share the big wins, Joe, the things we’re like, “Oh my God, we figured this out, we just rocked this, dude, we just crushed it.” The things that really resonate, I think the blog posts and the podcasts we’ve done, is where we just dug into something we dogged up. We’re just, “Look, here’s what we did and what we screwed up and here’s what we learned and hopefully we won’t do this again but it has been a recurring bad theme in our business,” and we just lay it out there. Those are the scary ones to do. That’s scary content to put out there and that’s some of the best content we’ve done.
Joe Magnotti: Yeah, and I think more importantly, what stuck out to me in what Andrew was saying, is when you are transparent, giving away the details makes it’s easy. You can really build out some great content if you’re going to be 100% transparent.
Justin Cooke: That’s true, and there have been times where I kind of backed off a bit or I was like, “Ooh, I really don’t think we should do that,” and then once we put it out there, for example, losing the lawsuit in the Philippines. We did that post and we hit first page of Hacker News with that, it got all this attention, but it was something that we were actually scared to say. We were scared to actually let the cat out of the bag. We didn’t while we were in the middle of the process, for other reasons aside from just not wanting to be transparent, current legal issues happening. After it was done, we still took a little bit of time because it was still kind of raw and we wanted to get through that first.
Anyway, check out Andrew Youderian’s site over at eCommerceFuel.com. He, I think, is a leader in the transparency space in terms of bloggers and in terms of podcasters. I think it’s fantastic.
Our third lesson here is that powerful processes scale businesses. What we’re finding is just the truth is you can’t scale a business without some powerful process involved and implemented inside of your business. We’re also finding that there seems to be different stages or at least at levels of growth and I’d say the processes we had in place at five figures is significantly different from what we’ve had at six figures and we’re planning to be at seven figures and what we’re having to build to move to that level.
Joe Magnotti: I think we’re going to figure more of that out as time goes on and we get bigger. We may not even know what kind of processes we need to get to the next level. We’re find that out, but we know that process is super important.
Justin Cooke: What I think is interesting about this too is like it’s the learning lesson that’s still in progress. We can talk, I think, pretty clearly between the process we put in place from the five figure, six figure range, and we’re still, I think we’re working through and discussing the process we’re putting in place to go from six figures to seven figures a year. We’re still, I’d say, in the middle of that shift.
Joe and I have always believed in process and we’ve always been big process guys, both from working at the local SCO company to running an outsourcing company. That’s what we did, is we helped people implement their processes or a pieces of their process through offshoring, but we didn’t always stick to this. Even though we believe in it, we would help other people do it, we didn’t always do it inside of our own business. We’ve had some fantastic mentors, I think, that really helped us develop our skills there. Guys like Dan Meyerson who was a big call center guy and I think helped me a lot with some of our customer service stuff and implementing process there. We got Phil Collins, I think, who really helped both you and I on the operational side in developing process for creating products basically.
Joe Magnotti: Right, and that’s not the singer, by the way. That’s the engineer.
Justin Cooke: The singer.
Joe Magnotti: I think maybe we’ve relied too much on process, that sometimes we’ve made it too machine like and we should have opened it up a little bit more and made more general guidelines to our processes. I think we’re learning that.
Justin Cooke: I think that’s a great point. We actually did a post on building human machines. We talked about how we took the most base level process, really broke it down to its most minuscule task and started creating teams around building those out. I think that’s what was needed to take us from a five figure a year to a six figure business in terms of the AdSense, Empire Flippers stuff, I think that was critical or it was crucial for getting there. Refining those, that doesn’t scale well to a seven figure business so having the base level components broken down into tasks and then having teams do it, there’s too many people involved, too many moving parts and we have to move up the value chain. We’re having to do a lot of training and I think growing out and building out our team to make that work to get us to the next level.
I think the impact of this has been that doing the base level stuff allowed us to fumble our way to mid figures. I mean allowed us to, you were laughing at me about this but we knew we kind of fumbled our way to make mid six figures because we were able to put these basic tasks and real process into our business.
Joe Magnotti: I think, maybe a good analogy here is the sports guy. He practices really hard and man, he has the fundamentals down really well, so that enables him to get by and compete with the people that have better skills than him because his fundamentals are so great and he can absolutely destroy people who are not practicing at all.
Justin Cooke: I view it like the military. I’ve got a team of 20 guys and they work for me and we need to go bust down some doors, we need to go do this or that. I want them to know the fundamentals. I want them to have that down pat, but if I’m a general in this army, the fundamentals are, they might be critical at that lower level but if I’m trying to build a seven figure business, I can’t be that concerned with those details. I have to have other processes in place that are making sure that’s being followed all the way down the chain of command. I think that’s what we’re trying to get to. That’s what we’ve working on and we’ve had some success there. We’re going to be talking a lot more about that in the second half of 2014 for sure.
I actually reached out to a couple of people about this, that we think are also great at process and they’ve proven that through their podcasts, their blogs and their businesses. The first one was Ian over at Tropical MBA. I’m a big fan of what he’s been able to implement. He, I think, is the stickler on their team for a process and so I wanted to reach out to him and see what he had to say.
Ian: Hey Joe and Justin, this is Ian from the Tropical MBA. Congratulations making it to 100 episodes. I knew that you guys would. Speaking on scaling profitable businesses, I think one of the things that’s really helped us throughout the years is creating process in our business. Three small things here that you can do to create a process in your business. First, write it down. Second, determine a value. Third, if possible, hire for it. This is one of the things that’s kept me interested and motivated working in my business throughout the years. I hate getting bored and I hate doing the same task, so if you can just do these three simple things, I think that you’ll find yourself with a repeatable process able to bring other people into your business and hopefully scale your business to the sky.
Speaking of the sky, that’s where your podcast seems to be going. Congratulations, guys. Hope to see you at 200.
Joe Magnotti: It’s nice to hear from a guy that has 250 episodes commenting on us.
Justin Cooke: He’s laughing at our, “A hundred, what are you talking about, a hundred episodes, man? I’m deep into this, baby!” Ian is a boss and I think, and we’ve mentioned this before, we use SweetProcess, SweetProcess.com. We use them for implementing our SOPs. They have helped us to, I think, really expand our SOPs. It’s funny, Joe, because even as outsourcers, even as people that help other people do things offshore, we’ve done that for years, there are still times where I just keep doing the same thing over and over again. I just put off creating a system and a process in place to do it and because you just forget. It’s like, “Oh, I’ll do that later, I’ll do that,” and two months down the road I find myself doing that again, doing the same thing again. I’m like, “What the Hell am I doing?”
Joe Magnotti: That’s why what I would key off on in Ian’s three things is determining value of a process. Write it down, determine value. If it’s a valuable process, then it’s something that’s going to be repeated a lot and it’s definitely something you should have other people doing and you should have that process written out for. If it’s not that valuable, then why are you even doing it in the first place?
Justin Cooke: That’s true. Sometimes you’ll figure out that. Like, “Should I actually create a process and put someone on this or should I just dump it entirely?” I ran into this recently when I was looking at, I’ve been putting some of our listings, I’ll put them, especially the larger listings, on other sites like BizBuySell and BizQuest, and I’ll just attract new buyers and new interested parties. It helps gets distribution for those particular listings. That’s basically the same process over and over again but I was like, “No, I just need to do this, I need to do this.”
Finally I broke down, wrote it down. I’m going to have Vince [inaudible 00:38:20] doing that in our new apprentices coming out. Mike will be taking this over so I put it in SweetProcess and I feel much better about it knowing that I can hand it off to someone and have them do it right.
We’ve got another guest on the show, Damian Thompson, who’s done a really good job of building process in his business. In fact, his business is creating process around marketing automation through things like Entrepot and Fusionsoft. I actually reached out to him. Let’s hear what he had to say.
Damian Thompson: Hey Justin and Joe, congratulations on the hundredth episode. This is Damian Thompson from Linchpin. I just want to quickly share my ideas about powerful processes and how it’s affected our business. When we were just a four figure business, we could get along, my services manager and I just winging it, but as we made a move into five digits and now the big next goal is six digits a month, want to become that six digit a month business, we’re finding that processes are the key to that scalability. Once you have more team members, once you as the owner of the business isn’t involved in every single key process in order to have that peace of mind and the faith that things are getting done to your high standards, you become a bit of a process freak. Using great tools like SweetProcess has been really great for us to get engagement from a team and ensure that everyone’s using the processes and growing the business.
Again, congratulations on your hundredth episode and baba booey.
Justin Cooke: By the way, we are not pimping SweetProcess. I mean we’re like, “That’s a sales pitch for SweetProcess.”
Joe Magnotti: Yeah, there’s no affiliate links, we don’t care.
Justin Cooke: I don’t really care what it is. I mean you can use Google Docs I think effectively too. We just happen to like the look and feel but I think Damian’s done a really good job and he’s been scaling the Hell out of his business the last year or so. I think within the next 12 months, he has a pretty good chance of getting up to six figure a month. I think that’s based on him bringing the right people into his business and having the right processes in place.
Another [inaudible 00:40:01] process, you can determine workload. You know based on who’s doing it and how long it’s taking them whether or not you need to hire. I think one of the side benefits of creating a standard operating procedures in your business is that it’s great at controlling and showing costs as you move forward.
Joe Magnotti: I think determining those SOPs early on make it much easier to grow them later so people know that you have an SOP policy, you’ve created SOPs for recurring tasks that need to be done that are critical and valuable to the organization. Then it becomes kind of second nature to do that as the company grows. If you have to migrate to that sort of system, that could become difficult if your organization is a little bit larger, so get it done early.
Justin Cooke: I’ll just put one thing in there. When we had our mortgage company, we created some, I think, goals and some SOPs inside our company and we just didn’t follow them. It was like we knew it was important to do them or to put them out there and to write it down and to go through the process, and we did that but then we didn’t follow them, we didn’t update them. A good thing to remember about SOPs is that they’re a living document. You have to work those. You have to update them when you make changes. It makes changing your business a lot more difficult or you’re a lot less maneuverable and that’s the one thing I’m finding kind of interesting.
We talked about this recently but we just changed the way that we handle depositor inquiries. It’s not like we just change it and tell a couple of people and it’s done. No, you have to go change FAQs, you have to go change the process in SweetProcess, you have to add the actual changes and steps that you’re adding to it. It makes change a bit less maneuverable but I think you can’t build larger organizations without having this in place.
Joe Magnotti: I think you just got to be very careful and only use the valuable SOPs in an organization. You don’t want to become bureaucratic and have a gazillion different SOPs for all these things that just don’t make sense.
Justin Cooke: That’s such a good point. I talked to someone a while back that had, we spent a good 30, 40 minutes talking about the SOPs in his business and he had so many. He was having trouble with his VAs that were looking into these. They just weren’t sticking, they weren’t following all of them. I said, “Look, you got, like, 200 in there. How are they going to be able to stick to that?” I think, yeah, definitely starting off a bit smaller, doing the repeatable stuff but really the important stuff because you shouldn’t be scaling shit. If it’s not valuable in your business, you don’t want to create a process for it because you’re going to be scaling inefficiency.
All right. Our fourth lesson, Joe, is that strong businesses develop strong middle management. When we started our outsourcing company, well, when we started most of our companies I’d say, is that we started our business with entry level VAs or employees and really base level tasks. I talked about this a bit earlier but we’re finding that it’s harder to grow without a more well rounded team without people with some, like they understand more of our business than they’re just not able to handle anything outside of their specific scope and that’s problematic.
Joe Magnotti: I think there’s definitely our fault, one of our faults was that we had such big middle management experience that we thought we could just it all.
Justin Cooke: Yes.
Joe Magnotti: We didn’t need middle management.
Justin Cooke: Yes, that’s right, and so we would hire base level employees or early level employees thinking we can just run that. We’re finding that we’re not really able to really grow our business wide or to a large scale without having a strong middle management team. We’re actually in the process of developing that now. Our change is happening. We started it, I’d say, this year and it will probably be, I think, I don’t know if you ever actually complete it. You’re like, “We’re good, we’re good. We can just continue from here.” I think our transition or our change will be completed by the end of the year. We’ve definitely been making big moves, I think bolder moves in our business the last three or four months and we plan to continue that.
What we’re learning is that an all hands on deck approach is needed at some level. There are certain things in terms of loving your customers, for example, really taking care of your customers that I can’t, you know, “Oh, this is so and so’s job. They do site transfers,” or, “Only Mike knows how to handle depositors.” No, that’s ridiculous. Everyone has to be able to get involved and know our message, know how we handle things and everyone has to be able to, I think, do multiple things in our business.
Joe Magnotti: Agreed, and it’s more than wearing many hats. That’s a different thing.
Justin Cooke: It’s understanding from a 40,000 foot view what our business does and our fundamentals and our core values. I think that’s not something we’ve had in our business previously. A core value kind of approach is, honestly I’d say that we used to think that’s kind of, “Eh, I don’t know, man, we don’t need that. We don’t need a core, I’m going to just have everyone that does their work and does their job and we’re fine,” right?
Joe Magnotti: I definitely think it’s a second level business concept. I think it’s something that you don’t, if you’re setting up a flower shop your first time, you don’t think about that kind of stuff. You just get the people in, these guys cut the flowers, these guys take the money, and then you work on all your little processes.
Justin Cooke: Or you’re on the other side of that fence where you’re thinking way more about culture and you’re not thinking about how you’re going to drive sales.
Joe Magnotti: Right.
Justin Cooke: Those people that do that are like, “Oh, culture, culture, culture, we don’t have any revenue yet.”
Joe Magnotti: Yeah. It has to be a balance and I think we’re learning that balance now and we’re getting better at it.
Justin Cooke: Yeah, we’re coming back toward the, okay, these core values and these kind of business culture things are important. The impact that we’re finding, though, is by bringing our team, I think, up a bit, up a couple of notches and understanding more about how we operate and why we operate. We’re starting to see things done in our business or growth in our business that we’re not directly involved in. Just like I’m not actually doing this, Vincent did this, or you’re not actually doing that, Michael and Mark took it on themselves to really build this out. I think that’s really exciting for us, is that, because there’s linear growth, I think, that can happen when founders are driving all the projects. There are some hockey stick things that happen but really, I think that takes other people in your business building out cool shit and making stuff happen.
Joe Magnotti: Yeah. No, I totally agree. I love that, waking up in the morning and finding out that someone’s …
Justin Cooke: Made something better. Because whatever it is, they made this better. This is better for our customers, this is better for our business.
Joe Magnotti: Or they’re just in the midst of it. They started a little mini project and that, it’s cool. I’m excited to see the results from that.
Justin Cooke: They’re meeting up at coffee shops so they can put together proposals so they can bring it to us so that we can do something new. That’s really sexy, that’s something that we love. Plus, it just makes our business more fun. It makes it more interesting for us. It makes it more interesting for them. I think we want to have the type of business, the type of company, organization that people want to get involved in, that attracts the right talent, it attracts people that we want to have on a team. By having a company like that, I think it’s better overall. We know some people that have companies like this and I think that have done a really good job of building a great middle management, also building culture inside of that business.
One of the guys we know for sure is Chris Ducker. We’ve looked at him, some of the things he’s done in his business and we’ve been really impressed. We’ve had multiple conversations with him. I’ve been at his house, we hung out a bit. He’s explaining to me some of the things that he went through coming up with his business. I actually reached out to him. Let’s take a listen.
Chris Ducker: Hey everybody, it’s Chris Ducker here, author of Virtual Freedom and founder of Virtual Staff Finder. Just wanted to wish Joe and Justin a fantastic and happy 100th episodes’ anniversary here on the Empire Flippers podcast. Guys, you’ve done a great job in building not only this particular part of your business up but also everything else that you’re doing as business partners and as entrepreneurs.
One of the biggest things that I found in regards to really being able to ramp up a business is the ability to develop really strong middle management. It’s helped me build my businesses up to well over 250 full time employees and still not have to be shackled to my desk and involved in those businesses day to day. I know it’s something that you guys have worked hard on as well and it’s obviously paying off for you too.
Anybody listening, don’t underestimate the power of developing really good quality middle management. It’s all very well to be the top dog and know what you’re talking about and have great people working for you, but the fact of the matter is that you’re always going to be run by your business instead of you running your business if you’re having to manage everybody that’s involved with it. Spend a bit of time developing that middle management and no doubt you’ll be doing what Joe and Justin are doing so well very, very soon.
Guys, congratulations one more time on 100th episode, buddies, and I look forward to seeing you soon. Bye bye for now.
Justin Cooke: One of the things that I really like about Chris’s story, it’s really twofold, right? The one is kind of the behind the scenes or the backstory to how he got his outsourcing company started. He was pounding the phones, he had a very small team and got that up to, over the course of a year or two, up to 150 employees. That level of growth was just fantastic. Now he’s this big organization so it’s easy to say, “Oh, well he just has agents that can do this or that, he can hire VAs for this.” No. He started off, a couple of guys in a room just making shit happen.
Joe Magnotti: The key for me there is definitely having some early on good middle management help and I think that’s something we neglected we’re fixing now, but you out there, dear listener, should not neglect middle management from the beginning either. I would say in the old E-Myth Revisited sort of thing, don’t hire a professional manager. You want to be able to promote from within. You want to be able to build a middle management team, but make sure you have one in place as you scale and grow your business.
Justin Cooke: The other thing I love about what Chris is doing is he had the concept of the virtual CEO. He built this business, 150 people or whatever, more than that maybe, but he was just dog tired. The guy was working like crazy, man, so he started blogging about his journey to replace himself. Really, I view that and I view that transition of his and his explaining it in a blog as building a middle management team, building people that can replace what he’s doing and grow his business without him. It gave him the freedom and flexibility, I think, just to take a step back, allowed him to basically write a book, which if you looked at Dan Andrews’s post recently, he’s been working on a book for a couple of years and he still hasn’t finished. It takes some time to write a book, right?
Joe Magnotti: Right.
Justin Cooke: Chris has been able to do that because he was able to build a strong middle management team in his business. Those are the two things I really like about Chris’s business book, just starting from the ground up, building a pretty awesome company and then replacing himself from that company is pretty cool.
Another guy to reach out to and I think he’s done a fantastic job at this and I really like his approach to his VAs and his team overall, is James Schramko. James Schramko has 40 plus employees in the Philippines. It’s really an interesting team. He comes out and visits them, I think he flies them out to Manila at least once a year but he meets pretty [inaudible 00:51:03] with his team. They have a very, I think a much more intimate involvement in his business than we did when we started out. I think we’re probably heading more towards that route now with our business, but I wanted to hear what he has to say. Let’s take a listen real quick.
James Schramko: Hey, James Schramko here and congratulations on your hundredth episode, guys. This is really a fantastic achievement. I’ve got a couple of comments on the staffing situation, a few tips if you like. I’ve got a fairly large team which I run and they’re remote. One of the things that has worked really well for us is being able to hire earlier than when we need someone and we do this by looking at our numbers. We can actually factor where we’re heading, what our capacity looks like and we can start the process of hiring and training before we actually need the person.
This eliminates most of the challenges that most employers have where we can actually put the time, end up putting proper tests and checklists and reference checking, and then we compare people up with someone who’s already doing the job and then they can get the hang of the job really well. Instead of having to find someone who’s already specialized, we can actually hire people with a good attitude and school them in the team. That creates loyalty. It also means we can mold that employee exactly the way we need them and from day one, they’re coming in on our culture and our values. We hire, train and even fire if we need to based on our company values.
It’s also really important to meet all the time, we meet once a week and every single team member meets daily for a little huddle, if you’re in a virtual situation. The three Ts of management are really important to remember. That’s train, transfer or terminate. They’re usually the three options you have if things aren’t working out. You can retrain or train better, you can transfer to a different area of the business or if things aren’t going to work out, free that person up to go and do whatever they’re perfect for.
I’ve found with your middle managers and with people who are quite creative and have special abilities, it’s better to tell them the results you want and then step back and just give them massive respect and responsibility. People will surprise you. They’re able to do so much more than most people would expect and I’ve found that my team and I are able to do things that I would never have anticipated just because I tell them the result that I want and then they go out and do it. Let them loose a little bit, then tighten it up occasionally and just inspect what’s happening and then let them go again. That’s worked out really well for me.
Make sure that anything that anyone in the business is doing more than once is documented with a standard operating procedure. Copy the right people into those standard operating procedures with Google Documents. Of course you can create groups with Google Docs so that you can email the right teams with the right message.
Anyway guys, I hope you’ve enjoyed this. Congratulations again on 100 episodes. James Schramko here from SuperFastBusiness.com signing off.
Justin Cooke: All right man, James is funny. You can tell he’s just used to doing five minute videos because he dropped, I don’t know, 10 value bombs in like three minutes there.
Joe Magnotti: Yeah, really. Thanks, James.
Justin Cooke: I appreciate it. Let’s discover a couple of those. One of the things that he mentioned, I think, is, I really like the fact that he hires based on values. We’ve done this too where we hired for a skillset of a particular person over what we thought might be a better fit within the organization. I think that’s not the best approach. Generally it’s not the best approach. I want the person I think is a better fit for our organization and, as James said, move them into positions that they’re best suited for even if it’s not the one you were originally hiring for. If you see a good person, take it. Jump on it.
Joe Magnotti: Absolutely. I think that’s a great lesson to be learned. Obviously you could be overboard with this and start hiring people you don’t really need but yes, I would hire more on fit and culture and attitude than on absolute skillset or background.
Justin Cooke: He also talked about hiring based on metrics and I think that falls in line with hiring based on having good processes in place. Because as you see those processes, you know about how long it takes and how many people it takes to do them, when you start to see X amount done based on your weekly or monthly reports, you know you need another person. You need to relieve some weight or burden on the team in this area.
Joe Magnotti: To take that a step further, I think really the biggest value bomb he dropped was the three Ts, train, transfer or terminate. I love that and I think that that’s pretty true for management 101. If you’re new to managing people and you’re struggling with one of the agents that you have working for you, you should look at the three Ts.
Justin Cooke: Our fifth lesson is that cashflow is critical to doing your best work. The reason I say best work instead of scaling the shit out of your business or building a seven figure business, the reason I say that is because while that’s true, it is required for that, I think it’s also required for, let’s say the creatives. The people that go, you know, the Millennials are, “I don’t need to make money, I just want to do some awesome stuff.” If you want to do awesome stuff, it’s going to require cashflow because you’re going to need the money upfront that you can reinvest and get better and hire the right people. You’re going to need that cash to do that.
Joe Magnotti: While lesson two may have been the most important out of these ones, this one’s my most favorite.
Justin Cooke: Hot Money’s salivating over here, going, “Yeah buddy, money!”
Joe Magnotti: I remember because when we had that big argument when we started building out all those asset sites, and we’re building out all these new sites and you wanted to come out of pocket and just scale the Hell out of the thing. I didn’t want to do that, and so we had to find some sort of middle ground in order to feed the machine cash in order to grow it bigger.
Justin Cooke: We needed the cash upfront to get to a level that it mattered, because it didn’t matter if we’re building 10 sites a week, it’s just not enough to really give a shit about it. For it to matter to us, for it to be worth the money, we had to do it much larger scale. To do that, if we’re going to be able to realize the money upfront and we have that heavy upfront cashflow, we can then turn that into something awesome.
We have our buddy Damian Thompson over there right now doing a very similar thing with Linchpin where he’s taking a bunch of cash and instead of sitting on it and collecting it for himself, he’s reinvesting it to the point where it gets to a level of significance. He’s just dumping money into the business until it gets significant enough to where he can pull some cash out for himself and live well, do well with it.
What really changed with us was the selling it at 20 times to grow cash rapidly. We learned that cash allows you to do your better work, your higher work. I love, Andrew Warner on Mixergy talked about this, he talked about the best thing he did from a creative perspective, the best thing he was able to do with his show is to make it profitable and start getting cash upfront because he was then able to hire people to do pre-interviews and make the show good. I love his approach to that, is that he wants to make his podcast amazing and he listens back to himself. Other people are like, “Oh, your show’s great, I love Mixergy.” He’s thinking to himself, I guarantee you, he thinks they’re bullshitting him sometimes. He’s like, “I don’t know, it’s not really that good. They’re saying that but,” because from his perspective, it’s not good enough.
Our buddy Dan Andrews right in his book, he’s like, “No, it’s just not good enough, it’s not good enough.” People want him to release it. They’d probably be happy with him putting it out today but he wants to make it really good. He wants it really quality and the best way to do that is to start bringing in the cash.
Joe Magnotti: Because when you bring in the cash, it allows you to build the war chest to take advantage of opportunities. You can really dip into that cashflow that you’ve saved up over the past couple of months to help you build your book or to make your podcast better or to do whatever you need to do.
Justin Cooke: To improve your best work, to make it better. Maybe better is scaling your business to the point of significance, to where it’s earning quite a bit, it’s earning more than you thought that it could and so you’re reinvesting either your war chest or the cashflow you’re getting every month into the business to get it to that level
The impact on our business, Joe, is that by having cashflow, by really focusing on making sure we’re bringing in the money, we’re never underwater. We’re not losing cash. We’re not in this game where we just were living on savings or doing anything like that because we’re focused on making sure that we have the cash, reinvesting a bunch of our cash into the business. We continue to do that today because we do want to hit that level of, what’s funny is I mentioned level of significance but that changes from when we started off. When we started off we were like, “Oh yeah, get this niche site stuff to $10,000 a month, we’re going to be so happy.” Now we’re like, “No, no, no, we need to get to $100,000 a month for sure,” right?
Joe Magnotti: Yeah, no, I think it’s really funny the way this is going to grow, but focusing on that positive cashflow all along is a good practice to remember, I think. Of course sometimes credit does help people, especially in cashflow crunches or in expanding your business to get from where you couldn’t get to. I understand that, but cash is still king and if you can build a business on that, that’s the better way to go.
Justin Cooke: Mark Cuban talks about this a lot and he’s a big fan of the war chest. Dan and Ian did an episode on this recently where they were talking about different investment opportunities where you can stay ahead of inflation. It just seems silly. I’d rather have the cash to where I can take advantage of opportunities as they present themselves.
Joe Magnotti: Glad I agree with Mark Cuban.
Justin Cooke: That’s a positive, for sure. One of our previous guests, Ace Chapman, is both an offline and online business mini mogul, we call him, where he’s buying businesses, offline and offline businesses, and so cash is very important to him. If he sees an opportunity that comes along that he wants to invest in, he’s going to have to have that cash to take advantage of the opportunity. He does it in really creative ways, by coming up with different financing opportunities and different ways of looking at making deals or bringing deals together.
I reached out to him to get his thoughts on cashflow.
Ace Chapman: What’s up guys, this is Ace Chapman from AceChapman.com. When it comes to cashflow, I learned that lesson early on. I bought a mortgage company after buying a few businesses and this mortgage company was losing money so I got it for pretty much nothing. I pretty quickly realized the tough thing about running a business that you’re trying to grow but it’s losing money, I had been spoiled because I bought profitable businesses and my very first business was already profitable. It’s a nightmare. It’s tough growing a business when you’ve got cashflow issues just to maintain and keep the business operating and you’ve got to invest in growing that business. It’s a lot easier to grow it when you’ve got some cash coming in to make those investments.
I quickly realized my error and returned that business to the previous owner and got back to buying profitable businesses that were cash flowing.
Justin Cooke: It’s interesting, Ace talks about buying a mortgage business first off but second that about buying, making sure that he’s buying profitable businesses. We’ve run across this before. Andrew Youderian over on eCommerce who had a business that was, it was making a bit of profit but it had a whole bunch of revenue. It was the popcorn business. Do you remember that?
Joe Magnotti: Yeah.
Justin Cooke: It was a couple of years ago, I think. It was making a whole bunch of revenue but didn’t have a ton of profit and so someone was able to snatch it up. Andrew advised them to buy the business and get in kind of a strategy. There was another guy in Andrew’s forum that was talking about buying, I think they’re doing a couple million a year. They’re not profitable. Their business was not profitable and they were looking on whether they should invest in that. I’d say, first off, obviously if a business has profit, that’s definitely attractive because you have the cashflow to reinvest. If you’re buying a business that doesn’t have profit, there are some risks.
My approach to something like that where it has a bunch of revenue but doesn’t have profit is to cut, 80 20 it. Get rid of all the skews, all the products that are smaller, that aren’t nearly as, I think, focused on the core of what you’re offering. Yeah, your revenues will go down significantly but it’s an easy way to cut costs and build that cashflow that you can take and reinvest. Otherwise, you better buy that business and have a bunch of cash in reserves to put into it and expand it. That’s a scary black hole.
Joe Magnotti: That’s the thing that I was going to say. Hey, people do it. Just look at The Profit, that TV show that we love. Marcus goes into these failing businesses and he invests his own money and he turns them around, but sometimes he gets out. If you don’t have the skills to do that or you’ve never done it before and no one has ever taught you the ropes, that’s scary because you could get involved in a lot of money not only for the upfront to buy the company but in the every month operating costs like Ace was talking about. That’s where I would just be like, “You know what, it’s probably not worth it.”
Justin Cooke: It’s good for Marcus because he can go into those with millions of dollars in his war chest and go, “Okay, well, I can fix this.” I think the hack to this approach would be to go in 80 20, cut out everything that’s not core, cut your revenue down significantly but get yourself some profit and then take that and reinvest it so you’re not coming out of pocket and dropping into this black hole that’s losing money. The worst thing you could do is double revenue on an unprofitable business because you’re doubling your losses. That’s not very promising. Thanks to Ace for giving us those bits of advice.
Our sixth lesson is actually avoiding being single source dependent. This is an interesting one. It might be a bit contradictory because we’ve said in the past, “Make sure that you’re doubling down on the thing that’s a winner. Double down on that, double down on that, don’t worry about it if you’re single source dependent.” I think our reasoning for that is, I think avoid single source dependency is really a five figure problem. Until you reach that point, it’s not going to be as big of an issue so you should really exploit your winners. That’s what we mean by doubling down, but it does become an issue at some point.
The backstory to this is we were cruising along, creating profitable sites. We were wholly reliant on organic traffic for our niche sites. Other people have other dependencies. It might be an employee or a virtual assistant that would crush your business if you lost that person. It may be a particular platform. I’m building my business around Facebook and Facebook changes the rules, they don’t allow you to do any scraping anymore or whatever it is. Single source dependency problems can come in multiple forms. Ours was traffic.
Joe Magnotti: I would say not only was it organic traffic but it was organic traffic around one particular keyword linked to exact match domains.
Justin Cooke: The change that came for us was the exact match domain update and that’s what it was called at the time. I remember a bunch of people said, “Oh my God, do exact match domains not work anymore?” No, it’s not that they don’t work, it’s that they toned down the effectiveness. I think we were getting overvalue on our exact match domains and they toned it down to be a bit more reasonable, which definitely we felt a tinge of pain. I think a bunch of our sites did ultimately get penalized and had issues because they were overoptimized. That’s what caused us to change our process.
Anyway, we realized pretty quickly that being wholly dependent on organic traffic was problematic for us. We ended up maximizing some of our stronger traffic channels. I think that’s a critical point. We’ve done that, I think, with Empire Flippers and then some of the sites that we’re selling are doing that as well. They’re either diversified in their traffic or people are building portfolios that aren’t solely dependent.
Joe Magnotti: That’s what I really love, is this idea of having portfolio sites that depends on different things. Organic traffic, paid traffic, email traffic. You’ve got different things. Not just one site is diversified, which may be difficult for smaller sites but at least in your portfolio you have a mix of sites.
Justin Cooke: Our buddy Mark for example has a larger consulting client. He does some work for them. In addition to that, he’s got quite a few AdSense sites and he has some other, I think, affiliate sites as well. He’s built up, and those are mostly reliant on organic traffic whereas consulting clients obviously isn’t. In addition to that, he’s got a Facebook campaign where he gets a whole bunch of traffic based on the Facebook Platform. Even though he’s using, in one instance he’s using Facebook Platform which should go away, he has a single consulting client which should go away, he’s got this organic traffic to his niche sites would go away. The fact that he’s now built them all, I think all three of them almost to five figure businesses on their own, puts him in a great position for his business.
I think a lot of people that are building sites or buying packages of sites or building out their online portfolios to take warning or take heed to that too. If I’m overly reliant on my portfolio on my 15 sites that I’ve either built or purchases on organic traffic, I should start looking at some sites that are scalable via paid traffic, that have already proven that they’re profitable and I can scale that up. If I’m too reliant on social media, I should look at some organic traffic sources or other sources to really look at my portfolio as a whole.
That’s the easier way to do it because what you want to do, I think, every site, you want to exploit the winner for that site. That site is best with organic traffic. I don’t want to have to try all these different traffic sources that may be losers on that site. Why don’t I just scale the organic traffic which is working, so the five figure problem again, why don’t I just take that one up as far as it can go in that channel, but I should look for my next investments to be less reliant on a particular form of traffic.
Joe Magnotti: It helps you diversify your skillset too. If you had mostly organic traffic in your portfolio and you get into the paid traffic kind of stuff and you don’t know anything about it, you’re going to figure it out because now you have sites. You might determine that one of your other organic sites that’s suffering in organic traffic might do well with paid traffic. It’s something for you to help learn.
Justin Cooke: Our seventh lesson learned here, Joe, is that Southeast Asia is a bootstrapper’s paradise. We’ve really found this to be true. We knew that there’s coconut trees, there’s lots of beautiful beaches, it’s a great place to live, but more than just personally and having some amazing things to see and do, it’s great for if you’re looking to bootstrap your business in terms of having a runway, in terms of connections. It’s fantastic.
Joe Magnotti: I’ve never tried to start a business in Europe or Africa but I tried in Brazil. We’ve tried in California and I could tell you there’s definitely huge advantages to doing it in Southeast Asia over those places.
Justin Cooke: One of our things that we want to point out, I think, is that we don’t feel our business would have survived 2010 in the US. We were based in the US and we had US employees and we had all the costs associated with our lifestyle there. We don’t think we would have survived that major client leaving. We wouldn’t have been able to do it, I think. I think being able to build up the niche sites and get that started, I don’t think we could have done that from where we were at in California.
I think that’s pretty critical. We had the runway, I think, and were able to make these changes to our organization. We had enough cash in the bank and we were able to hire people to help us to do things that we wouldn’t have been able to do in the US.
What’s changing here, I think, there’s a zeitgeist going on in the US and in the world, really, comes through things like the Four Hour Work Week, Tim Ferriss’s book. It’s things like Airbnb. It’s these ex-pat entrepreneurial communities that are popping up, specifically in Southeast Asia. One of the problems when you moved here, Joe, to the Philippines, you got here and it was a struggle. It was horrible, right? Your first time getting here, trying to find the place. I was out here with you too when we were shopping around and we went place to place trying to find the right place, the right furniture. You had no idea where to get a plumber.
Joe Magnotti: Yeah, it was miserable.
Justin Cooke: You were like, “Can’t I just go to Google Places or whatever and find a plumber?” No, you got to know someone who knows someone. It was more difficult. That was only back in 2009. Since then, Airbnb’s all over the place. You can pop around from one place to another and immediately be connected and set up and have everything running for you and that’s powerful, man. We couldn’t do that or we didn’t know how to do that in 2009. Now it’s an international thing. You can just pop into a place and be ready to go.
Joe Magnotti: Absolutely, much easier to get set up. Southeast Asia, I would say it’s one of the easiest.
Justin Cooke: It’s also communities. Dan Andrews and Ian are running the charge here with Dynamite Circle over at Tropical MBA, but they are building this amazing ex-pat entrepreneurial community in Southeast Asia where people are engaged, connected. I can pop into any major city in Southeast Asia and instantly have people to connect to, to go to a coffee shop with. Or I see people popping up all the time, they’re like, “Hey, I’m in Hong Kong for a couple of nights, who’s down to meet up,” and you get three people like, “Hey man, let’s meet over at this coffee shop, we’ll hang out.” You can do this in probably 15, 20 cities throughout Southeast Asia. Having those types of networks or communities, I think, is amazing.
There’s similar stuff going on in the US but there’s something about being an ex-pat and all being from somewhere else that makes it particularly more opening and warm and inviting. If I was in the US and I just popped into town, I may not meet up with other people, it’s just kind of a thing, you’re just there for business or whatever. Here, it’s different.
Joe Magnotti: It seems more fun and exciting, right?
Justin Cooke: Maybe, yeah, I think that’s it. Also like a little bit of home, you want to connect with other people that are where you’re from or from other places that are interesting. I think that’s pretty cool. It is just more fun and exciting. I think just the fact that you’re able to build a remote business, the fact that that’s even possible is awesome and you see these types of businesses popping up all over Southeast Asia, specifically in the productized services space. People building out a niche site, authority site approach, very profitable web sites, I think, is awesome. It’s obviously in our space which is fantastic, people to sell their businesses, their productized service business or their profitable web site business.
There was a point, though, for us where we started to realize that we’re never going to be forced to go back. I told you this before, I had a storage unit in the US and I was scared to go back. That I was going to go back with my tail between my legs and just be stuck going home. We actually viewed our move to the Philippines as just we’re picking up and we’re replanting ourselves in the Philippines. Now I’m viewing it differently.
First off, I’m seeing that I’ll never be forced to go back home or tail between my legs. That’s just never going to happen. Second, we didn’t just replant ourselves in the Philippines. We are in Southeast Asia or further abroad and we can travel and build our business remotely. That’s pretty powerful.
Joe Magnotti: It’s definitely a mind shift that’s happened since living here and actively taking part in the ex-pat community in the business community, the ex-pat business entrepreneur community. When that started happening to us in the 2010, 2011 sort of timeframe, that’s when I think the mind shift happened for me.
Justin Cooke: What I thought was interesting is before I even came to the Philippines I remember reading a guy’s blog. It was Cody McKibben over at ThrillingHeroics.com. I think he was there at the time. Anyway, I was reading and he was doing all these amazing things, traveling and making some money while he traveled and I was thinking, “Wow, that’s so cool.” At the time, I think you were already out here or you were on your way at least and we were going on to the Philippines but I still didn’t view it that way. It was interesting to see what he’s doing and see that at some point I’m going to be able to do that too.
Actually, I reached out to Cody. We’ve had him as a previous guest, we talked about slow travel versus fast travel, and I wanted to see what he had to say about Southeast Asia as a bootstrapping paradise too.
Cody McKibben: Hey guys, this is Cody McKibben from ThrillingHeroics.com. Justin and Joe asked me to share a little bit about my experience in Southeast Asia. I spent nearly five years traversing all across Southeast Asia with much of my time in Thailand, all over the place, but a significant amount of time as well in Malaysia, the Philippines, Vietnam, Cambodia, Bali, Indonesia. Had a great effin’ time. Since, I’ve spent some time in South America and I’m currently coming to you today from a little town in England we call London.
While getting my business off the ground, Southeast Asia really was the perfect place to be. I’ll give you a couple of reasons. I’m not going to go too in depth because I’m sure the guys will do that for you on this episode, but my top four reasons why I think Asia’s the place to look for anyone who’s just starting out and bootstrapping their business.
Number one is obviously, we all know, a very low cost of living. Just about anywhere you’re coming from, you’re going to pay a fraction of the price for your typical lifestyle overhead in much of Southeast Asia, maybe with the exception of Singapore. Basically that means your runway is going to extend a lot farther and you can spend more time getting your business idea off the ground, testing.
Number two, low regulation and very little red tape. Compared to what I’m used to back in the States, it is pretty easy to just walk up and get a 90 day visa on entry and once you’re there on the ground, you’ll figure out how to stay. No need to really worry too much in the early days about getting a official legal business set up if you’re just working on the internet.
Number three, the lifestyle [coalition 01:16:00] is through the roof. Accommodations for basically a fraction of what you’d pay back home, incredible food, some of the best nightlife in the world, excellent recreation, adventure travel and sports.
Number four is it’ll be great for your, quote unquote, “networking.” Just connecting with a lot of ex-pats, a lot of entrepreneurs and other digital nomads. There’s quite a bubbling up scene out there these days and you’ll find a lot of like minded people who can help you and you can help them when you live in places like Bangkok, Saigon, Chiang Mai especially.
Anyways, thanks guys. Enjoy. Take care.
Justin Cooke: Cody’s build a blog and I think a lifestyle that is envied by a ton of people. He’s got the traditional lifestyle business and I think him and others like him balance those two really well. They have a business that makes them money but maybe they’re not all that focused on scaling the Hell out of it and they’d rather be able to take four or five days off a week or take a couple of weeks off their business and go explore, have an amazing time checking out the waterfalls outside of Chiang Mai or doing whatever that interesting to them. They want to live this, I think, balanced life and I think that’s pretty awesome.
Building these, I think, businesses in Southeast Asia, there’s not just one way to do it. You don’t have to come out here and necessarily be head down and so hardcore focused and try to build this amazing business or this very large business. You can instead, I think, live an amazing lifestyle while either base lining or, some of these people are making anywhere from, let’s say, $1,500 a month in their business and they’re living in Chiang Mai on the cheap but living well, up to 15, $20,000 a month and they’re living like a boss and they don’t really want to get any bigger. They say, “I love where I’m at.”
Joe Magnotti: That was going to be my takeaway. He’s in London right now and his business is doing very well, but he did bootstrap it in Asia for the first few years and he built it up until it was a really good business. Now he’s at a level where, heck, he can travel the world, not just Southeast Asia.
Justin Cooke: I think that’s pretty awesome. Another guy that I think has been instrumental in this space is Dan Andrews, the Tropical MBA and the Dynamite Circle. He’s really, I think, focused on the ex-pat business people in the lifestyle business community which is why it really resonated with us. We’re very happy to be, I think, a part of what he has in the Dynamite Circle but also just a part of the community. He had some thoughts he wanted to share on this as well.
Dan Andrews: Hey guys, congratulations on 100 episodes. That’s an amazing accomplishment. It’s been a great show so far. I’m actually here at the scene of the crime so if you hear kids playing in the background, it’s because I’m out at the resort where we first met and I was so stunned by the rapport that you guys had and the business that you were creating, I wanted to hear more. I’m glad you did that.
I think over the last couple of years when I look back on it, I think we’ve sort of represented this lifestyle business design movement where if lifestyle designers are people that can live like rich people without being rich, I think what we’ve demonstrated by moving to Southeast Asia is that you can have the kind of enterprises that wealthy people have before you get to that wealth stage. That might mean having multiple employees or having someone to automate your life and do your laundry for you and so you can just focus on building a business. Where maybe if you weren’t in Southeast Asia, we’d have to make a lot more compromises, maybe take more outside funding in order to grow the business that’s going to ultimately generate lifestyle freedom and wealth for us.
Anyway, congratulations on the show and I’d love to hear your thoughts about Southeast Asian bootstrapping.
Justin Cooke: I like Dan’s focus on wealth building here. We’re able to build organizations and put our resources into building these organizations that create true wealth. We’re able to cashflow those to the point where you can bring in serious cash from a business, so there is a bit of lifestyle in there. It’s definitely, I think, designing the life that you want but it’s also designing the business you want with the values you want and the type of business you want to do. I think that’s pretty interesting.
Joe Magnotti: For me, my takeaway is definitely the lifestyle aspects of it. I mean hiring a full time maid and cook back home and a personal trainer would be hugely expensive. You’d have to be making way into the six figures in order to afford that kind of stuff, but here the labor is so cheap that you can get top quality talent to help you with that kind of thing. Then it goes a step further than that, like having a driver and all these kind of things that back home you would never even think of, you can do here very cheaply.
Justin Cooke: A nutritionist, hiring photographers to come out and videographers and do really cool, fun projects. Even just for fun. The boxing event we were able to put on here, that was just ridiculous, dude. I mean there’s no way we could have done that in the US. It would have been insanely expensive, but those are the types of things that you’re able to do here because you can hire the right people. It’s not terribly expensive. It’s not cheap but it’s a lot cheaper than it would be in the US.
Lesson eight really just comes down to the fact that we’re all just trying to figure this out. There are times when we said, “No, you need to double down on this,” and there are times where we go, “Hey, a shotgun approach is better.” What we’re finding is that there’s a natural flux between shotgunning projects or trying out new things and then narrowing down your focus to one. A lot of times some people will, especially when they’re just getting started, is they’ll try a bunch of different things and they’ll dabble a little bit, but I think the core is that you always want to narrow that back down to the one that’s winning.
Then you get that one up and you start building that particular project up. Let’s say it’s creating AdSense sites for us or it’s creating Amazon sites or something or membership groups. You figure that one out and you start to build that out and you start to expand. Then you might want to, let’s say it’s a membership group, you want to expand with productized services inside of that membership group and you start testing a couple of other things. If you [inaudible 01:21:48] another winner, you can continue to start rolling that out or you back down to your core or whatever it was.
I just think that listening to how other people run their business for the stage their in, it may be a different stage of our business. Like Dan was talking about, Hiten Shah and taking his advice and then all of a sudden Hiten reverses course and says, “This is the way I would do it.” That’s probably because he was in a different position or he was in a different stage of his business, so his advice changes.
Joe Magnotti: I love this one because things do change and being able to adapt, that’s just an entrepreneurial skill you have to have. I think as you naturally find your way through your journey, you’re going to find things that work and things that don’t. Don’t be afraid to fail. That’s part of the flux. It’s finding those things that fail, getting away from them, finding the ones that are just okay but finding the real winners and then doubling down on those.
Justin Cooke: I think this is kind of similar to the Entrepreneurial Roller Coaster episode that we did where we talked about the ups and downs of entrepreneurship. I think this is the widening and narrowing of focus of entrepreneurship. This has been something that we’ve found to be true and it’s, I think we bounce back and forth between which one you should do, but look at some of the projects that we’re focused on right now or that we’re looking at. We want to do the investment deal where we work with buyers and investors on some of the web sites they want to purchase. That’s expanding our scope a little bit. Will it work out? I don’t know, but we’re willing to give it a shot. We think there’s a ton of opportunity, a ton of upside and it’s close to our core.
There are other things, like we’re going to do this traveling around. We’re going to go to Ho Chi Minh and do a workshop with people. If we can prove the model and that works, I’d love to do it in Chiang Mai, I’d love to do it in Bali or Bangkok. Will it work? I don’t know. Maybe we go there and we say, “Hey, people like it but it doesn’t make sense for us, it doesn’t make business sense,” or we love it and no one else does. We get a couple of people in a group and it just doesn’t make sense. I think being willing to try these things and then dump the ones that aren’t working, other guys, Dan Andrews, they did the Tropical Workforce. They were trying to do a job board for interns and apprentices and it just didn’t work, so they ended up dropping it and focusing on their core.
When you hear some people, I think this goes across the board, though. When you hear some people say, “Hey, this is the path to follow,” it may just be where they’re coming from in their business at the time. Even if they come out with great tips or advice, it could be us, could be other podcasts or blogs you’re reading, understand where they’re at in their business and then it may not apply to you where you’re at in yours.
It’s also important to remember that there’s going to be this flux between shotgunning projects and narrowing your focus to one. I think most of us agree that the narrowed focus is exciting. I’ve looked at LeadPages, Clay Collins and crew over there, and I just, I’ve been over the last six months just going, “Wow, I love their very focused approach.” They’re doing, all their content is around that. It’s really cool and so that’s probably led to our narrowing down and dropping projects, giving away Twitart, giving away WP Rank Tracker and some other things.
Joe Magnotti: I’m excited about it. It is nerveracking a little bit to have that one single source of revenue but it is exciting at the same time. It simplifies the business. It makes it easier to have that one overriding element that we were talking about before, that one thing that we do well, that one thing that everybody’s interested in. If you have that focus, then that’s the good part. At the same time, having a shotgun approach where you have different revenue streams makes it a little more balanced and a little bit of a business that’s more dependable and probably can survive the Black Swan event kind of thing.
Justin Cooke: Remember a year ago, we were talking about our products and services we were coming out. We were so fired up about it, we were diversifying [inaudible 01:25:33] and that was, I think, great for us again at the time. I think really the impact of this in terms of our content, in terms of our approach to businesses, that we’ll be less quick to state that one is necessarily better than the other, understanding that’s a state of flux. Also, hopefully in our business we’ll be quicker to realize which state we’re in, why we should be in that state and we should really focus in on either testing new ideas and new projects and platforms or cutting projects quickly and getting down to that core more efficiently so that we can do what we need to do there.
Joe Magnotti: I think one of the advantages of dumping or selling off of divisions that are not the main focus or maybe not as profitable as they should be is that it gives you extra cycles to work on projects that may be closer to the main thing and have some upside potential.
Justin Cooke: Glucose too, because even if you’re not spending a whole bunch of time on these other projects, they take up some of your brainpower. You’re thinking about them. You’re in the shower, you’re eating lunch or whatever and you’re thinking about that side project, that little thing you have going on that’s taking away your focus from the main thing.
I hear this question come up from potential buyers of web sites. They go, “Well, if it only takes that much time to run, why are they getting rid of it?” I understand it from a seller’s perspective, is that they want to get rid of it because they’ve got a bigger opportunity. Someone sold RaveAid recently and we know the guy. I know why he was selling his off, because he has a big win on his hands in another space that he’d much rather focus on. That’s going to take him there and so he wants to get rid of RaveAid simply because he doesn’t have the mind share to focus on this.
We actually reached out to Tim over at AfterOffers.com who’s been involved in a ton of different projects and knows the fluctuating state of shotgunning approach and really narrowing down. We wanted to reach out to him and see what he had to say.
Tim Bourquin: Hey Joe and Justin, Tim Bourquin here from After Offers. Congratulations on your 100th podcast episode. Keep up the great work.
As entrepreneurs, I think we all have to battle the constant chasing of ideas and new shiny things we want to work on each day to create a moneymaking venture, but 99% of us work solo or perhaps with one or two other partners and time is the most valuable asset you have, so where you spend your time is critical. We all want to pursue the perfect business, the one that gives us the best chance to become wealthy, and in doing so, it’s easy to fall into the trap of constantly switching directions and jumping from one idea to idea to chase down the perfect one.
The truth is is that all of your ideas are probably good ones and if you just picked one and worked on it with all your effort and time, it’ll be successful. There is no perfect idea or business. The best business for you is the one you’re willing to put in the time, even when things are difficult and aren’t moving as quickly as you want them to. The dream of the great idea is never really the reality. You find out the reality of it when you get into executing it every day and you’re going to have the days when you feel like you’re just spinning your wheels. That’s the danger zone because it’s when most people jump into the next thing. Don’t do it. Don’t fall into that trap. Drive through those days and you’ll find things will improve and you will start to make money.
The way I deal with that desire to work on other things is by scheduling a few hours each week to work on something else. Every Thursday afternoon for me from 2:00 PM to 4:00 PM is what I call free time where I allow myself to just surf the internet and look at new ideas and blogs, maybe even register a domain name and work on a new site for a few hours, but at 4:00 PM, no matter how cool I think that idea is, it’s back to working on the main project until the following week. Now if one of those side projects starts to take off, well then great, I have a decision to make, but the focus is always on the main business and making that a success.
Thanks guys and we’ll see you at episode 200. Best of success.
Justin Cooke: It was interesting that Tim was talking about not getting distracted by the shiny objects. I think this particularly happens when you’re starting off. Maybe you have one winner, something that is making you money. Let’s say it’s for us, creating niche AdSense sites, and then we go, “Hey, you know what I want to do? I want to get involved in Storage Wars. I want to go start looking at storage units, see if I can make money there.” It’s so unrelated to the skillsets and the thing that I have that’s working and that’s where we’ve tried to use a rule, like 70% of similarities. It has to be associated to or around our core.
I don’t view that, if it’s 70% or more associated to the winner that you’re working on, I don’t think that’s chasing shiny objects. I think that is more of the shotgun approach or the measured shotgun approach that we’re talking about that I think can be helpful. Again, though, you have to dump the ones that aren’t working out pretty quickly.
Joe Magnotti: I also like his idea of doing that little break in the day, setting aside some hours where you can investigate, you can hunt down other things. This way, those of us who do feel like we need that can go ahead and do that.
Justin Cooke: You can explore, even if it’s outside of your core. If you’re going to check out the Storage War, take a Storage War mogul approach, then you’re doing that, yeah, for a couple hours a week, it reminds me of the Google Fridays or whatever where you have free, open, I think they got rid of that, actually.
Joe Magnotti: What a surprise.
Justin Cooke: Really? No, I liked that. I think it was pretty cool because they’re allowed to explore whatever, but they’re allowed to explore different projects inside of Google. I like the idea of, if you’re going to use the shotgun approach, make sure that it’s similar to skillsets you already have, make sure it’s supporting a very similar audience to the audience you have right now, and I think that’s the better approach to this.
All right, man, let’s get into our tips, tricks and plans for the future.
Speaker 1: You’re listening to the Empire Flippers podcast with Justin and Joe.
Justin Cooke: All right buddy, this has been such a fun episode to put together. It was so great hearing from some of our previous guests and mentors, peers, people that we really look up to, especially in the kind of work that they’re doing and the areas they’re doing it, to hear some of their advice and expertise is fantastic.
A bit of information, we’re probably going to be changing the format over the next couple of weeks to our show. We want to just update and refresh, so you may have one or two more episodes that are typical and then we’re going to try to start playing around a little bit and see what we can do to, I think, make the Empire Flippers podcast even better as we attempt to improve our craft.
Joe Magnotti: I’m looking forward to that. I think we have some good ideas in the tank. Maybe we’ll even change the bumpers a little bit and get a little artsy and do some stuff.
Justin Cooke: Artsy, we’re getting artsy over here. I don’t know, man, we’re not the artsy guys, right? Figured it out with our photo shoot the other day. The last thing I wanted to say is thank you to all of our previous guests, our mentors and peers, everyone who’s helped us out along the way and to all of our valued customers and listeners, we wouldn’t have been able to do this without you. Thank you so much for all the encouragement, your stories, your feedback and your support. It’s been fantastic.
Joe Magnotti: As Dan Andrews said, the first 40 episodes, nobody listened to him. I really appreciate that people were listening to us before episode number 40 because I don’t think I would have made it that far.
Justin Cooke: It would have been difficult, right?
Joe Magnotti: It would have been difficult. Thank you so much for feedback, for giving us, being interested, listening to the show and talking to us.
Justin Cooke: Yeah, it’s been a fantastic ride. We’re really looking forward to another hundred episodes. Hope you can stick with us and we’ll see you next week.
Joe Magnotti: Bye bye everybody.
Speaker 1: You’ve been listening to the Empire Flippers podcast with Justin and Joe. Be sure to hit up EmpireFlippers.com for more. That’s EmpireFlippers.com. Thanks for listening.