Modern WisdomThe Key Principles Of Running Any Business | Josh Kaufman | Modern Wisdom Podcast 215
EVERY SPOKEN WORD
100 min read · 20,481 words- 0:00 – 15:00
Every business has five…
- JKJosh Kaufman
Every business has five parts, and only five parts. Every business creates something of value, they attract the attention of people who might be interested in that thing, which is marketing, they sell that offer to people who want to buy it, which is sales, they deliver what they've promised to their paying customers, which is value delivery, and then there's finance. You look at all the money flowing out, you look at all the money flowing in, and you answer two very important questions: A, is more money flowing in than flowing out? If not, you have a problem. And B, is it enough? Is it enough to make all of this time and effort and stress and frustration worth it?
- CWChris Williamson
(wind blowing) I, um, this, I need to put a disclaimer out before we get started. Usually, the camera is not right up to my face. If you are watching on YouTube, you will be able to see this. This is the first horizontal cast that I've done since, uh, my Achilles repair recovery, um, so my foot is currently all the way over there in the air, uh, and, and I'm back here. But we're making it work. We're anti-fragile, and, uh, today we are celebrating the 10-year anniversary of The Personal MBA. Man, how does that feel?
- JKJosh Kaufman
It feels great. It feels surreal. Like, uh, I remember writing the first draft of the book, and it doesn't feel like 10 years ago. Uh, but it's, it's been really gratifying to see, uh, how much people all over the world have enjoyed it and found it useful. And, uh, it's always an interesting experience going back and editing things that you wrote 10 years ago. Um, so, so the past, uh, year and a half, two years that I've been working on this project has, has been very interesting from, from a personal time capsule, uh, standpoint. Uh, my, my, my writing has changed. My, my thoughts, uh, ab- about s- uh, a lot of things have changed. So it was, it was great to be able to, to revisit this particular work and, and really update it for 2020 and beyond.
- CWChris Williamson
Have you, when you go back through things, have you found that much about your thinking has, has changed? Have you got, are you sort of curling your toes at a couple of little bits here and there, and you think, "Oh my God, why did Josh 10 years ago think that?"
- JKJosh Kaufman
(laughs) The, the thinking overall, I'm, I'm happy to say, is still really solid. Uh, I used a lot of adverbs 10 years ago.
- CWChris Williamson
(laughs)
- JKJosh Kaufman
And I, I don't know why. I will have to go back into my Word document and figure out how many adverbs I deleted, and it is, it is in the, the probably mid-thousands.
- CWChris Williamson
Wow.
- JKJosh Kaufman
Um, so, so just like, you know, I- I think as a beginning writer... This is something that I think beginning writers do a lot. You want to emphasize the things that you're emphasizing in your head as you write, and the way to add that emphasis is, you know, adverbs or italics or, you know, exclamation points, getting really excited. And, and so for me, it was like being able to take a step back and say, "Okay, you can get, uh, get this point across far more effectively by being clear and simple and concise in your language, and let the construction of the sentences do the work instead of trying to underline and bullet point everything in the manuscript." So...
- CWChris Williamson
Uh, I think, I think that's a really good principle, man. Uh, I think part of it's probably to do with maybe confidence of getting a little bit older, you know?
- JKJosh Kaufman
Yeah.
- CWChris Williamson
Like having the, the, um, belief and the hope that the audience is, is there for what you're writing, as opposed to needing to give it the bells and whistles and, and embellish it. And I think, as well, as part of getting older, you just realize people have... You know, y- you have a, a finite number of books that you can read. Even if you're like 16, you have a finite-
- JKJosh Kaufman
Right.
- CWChris Williamson
...number of books that you read, and as you get older, you need to be more and more selective. So therefore, if you can get the point across in fewer words, then I think you've, uh, you, you've definitely done a good, a good second pass there. So my main question upon reading the intro to The Personal MBA, um, you have some strong thoughts about business school and, uh, sort of business degrees in general. Did I need to spend five years at university and get two degrees to be able to run my business?
- JKJosh Kaufman
Probably not, no. Um, I, I think-
- CWChris Williamson
I knew it.
- JKJosh Kaufman
...there, there are many things to be said about, about universities and degrees in general. Um, I th- I think the, the fairest universal thing to say is that the vast majority of people in the world can benefit by learning a lot more about business, and in order to do that, you don't necessarily have to quit your job, go back to school, borrow a bunch of money, spend a lot of time. The essentials of business are very clear and very straightforward and relatively few in the grand scheme of things. And so spending some dedicated time learning what those fundamental principles are, how they work, why they're important, that's a great use of time for pretty much everybody. Um, the, the set of people who are well served by existing business schools is relatively small, and I think if, if your primary goal is to start a business, work independently, um, be in control of your destiny, you're far better by starting your business on your own and skipping the debt part and investing all of that into the actual business-
- CWChris Williamson
(laughs)
- JKJosh Kaufman
...uh, than, than going to school and, and having both the time investment but then also the financial investment. Having to recover that over the course of your career, um, ends up being a pretty big weight for a lot of people.
- CWChris Williamson
Yeah. Well, I mean, (clears throat) me and my business partner sat next to each other in our first ever seminar, so I started-
- JKJosh Kaufman
Mm-hmm.
- CWChris Williamson
...operating my business from essentially the, the, the exact same time. It was like the startup pistol was fired on university and on becoming an entrepreneur on the same day. And, um, man, I did a three-year bachelor degree with one year in industry and then a master's in international marketing, and, uh-
- JKJosh Kaufman
Huh?
- CWChris Williamson
I just, all I saw was this massive bifurcation between what I was learning in class and what I was experiencing in practice, and the particular industry that I went into go- saw me- it ga- gave me a broad cross-section: HR, marketing, accounting, B2B, B2C, like cus- everything, everything. And I was like, "I am sit- what do I need to know Henry Ford's scientific model of management for?" Like, "Why do I need to understand about Kaizen and laissez-faire, like, autocratic management styles and stuff like this?"
- JKJosh Kaufman
Sure.
- CWChris Williamson
It felt so archaic. And maybe it's been updated a little bit. Like there wasn't even a, a module on social media when I was there, um, so it might have caught up a little bit, but something, something tells me that it hasn't. So what do you learn, typical formal MBA, what do you learn?
- JKJosh Kaufman
So the, a lot of the formal MBA is about i- i- MBAs make some assumptions about what you're going to do when you get out, right? You're, you're, you're going to be the CEO of a, uh, retail or manufacturing operation.
- CWChris Williamson
(laughs) Okay.
- JKJosh Kaufman
You're going to go into corporate finance, or you might go on to be a CFA or a CPA, um, in certain circumstances. I mean, it, it, or now it's hedge fund manager is, is the, the, the big kind of newer entry sin- since I went through, um, which doesn't capture what a lot of business people hope for their careers right now. Um, there's, there's much more of a focus on entrepreneurship and independence, starting your own thing, running your business on your own terms, um, that, that some of the classic things that are taught in business school, like, for example, uh, Michael Porter's Five Forces, very useful from a corporate large, you know, Fortune 50 corporate strategy standpoint. If you're starting a new business from scratch, you don't have to think very much about Porter's Five Forces. There are 5,000 other things that will be more useful for you to start with. So, and, and I don't know about you, but the, the thing that struck me 'cause I, I did a business undergrad as well, um, it was a five-year program that had, uh, an extended internship component, which, which I thought was the most useful part of the whole thing. Operating an industry teaches you a lot. Um, but the thing that struck me on the academic side of things was that there was never an attempt to define what businesses are or how they work in, like the, the grand, when we say we're doing business, what is it exactly that we're trying to do here? Like, having some organizing theory around what this is, how it works, why it's important, how to do it better, would be very useful. And, and business academia is still extremely siloed. So the finance professors teach the finance stuff, the operations folks teach the operations stuff, and there's very little attempt to try to bring that all together into a cohesive understanding of what it is we're trying to do here, and what does it look like when we're doing it well.
- CWChris Williamson
Man, I, uh, I, I felt that very, very harshly that the, the synthesizing of all of these different points of view were just totally, totally, totally absent. Uh, what are the fundamental principles that underpin being an effective business operator?
- 15:00 – 30:00
I think, sadly, business…
- JKJosh Kaufman
um, like this impenetrable thing that experts know how to do and, uh, people who don't have experience don't know how to do. Um, if you reduce that to reputation, and you do things that will likely result in you increasing or earning a good reputation, and you stop doing things that will probably decrease that reputation, you are 98% of the way there to branding. The rest of it is graphic design. Um, so it, it's just like... I, I think there's this, this tendency with people, like, they just want to seem smart and special. And I think all of us, as businesspeople, you know, whether we're on the corporate side or whether we're, we're starting o- our own things, there's a lot of value to be gained in simplicity and straightforwardness of thinking. Um, not dressing up the ideas, making them sound, um, sound more complex than they actually are. Um, I think that's, that's really, that's a hallmark of sophistication and intelligence, when you can look at a situation and find the simplicity in it, and ignore all of the things that are mostly distractions and don't add a lot of value.
- CWChris Williamson
I think, sadly, business is not the only industry which is cursed with this particular proclivity-
- JKJosh Kaufman
Yeah.
- CWChris Williamson
... of, of people, right? It is the mark of a charlatan to explain a simple thing in a complex way. It is the mark of a genius to explain a complex thing in a simple way. And it's pervasive across absolutely everything. You know what it just got me thinking there while you were talking. I can't remember. Tyron Woodley, come to me, UFC champion, ex-UFC, uh, I want to say middleweight champion, and he had this philosophy about his fighting which was-
- JKJosh Kaufman
Mm-hmm.
- CWChris Williamson
... if you win, nothing else matters. Like, his argument is that if you are successful at the end result of the thing that you are supposed to do, everything that came before doesn't mean shit. He wasn't big into sort of smack talking, and he kind of, he's all right with the press, but he just sort of cracks on. And maybe his fighting style isn't, like, the most exciting, but he was, he just dominated people. And it's the same with this. It's like, it doesn't need the bells and the whistles, and you're adding friction into your own system, which is giving all of your competitors an advantage. You don't decide to do that by using the crazy terms or by having 20 meetings a month about, about the, the graphic design and the branding and stuff like that. Here's a story for you-
- JKJosh Kaufman
Yep.
- CWChris Williamson
Here's a story for you, man. So, um, Bruce Duckworth, the co-founder of Turner Duckworth, the graphic design company, they were the people-
- JKJosh Kaufman
Okay.
- CWChris Williamson
... they were the people that made the Amazon smile logo.
- JKJosh Kaufman
Oh, nice.
- CWChris Williamson
Um, so late 1990s, Amazon's just breaking out of making, uh, of selling books, they're starting to do all other stuff, and then they go to Bruce and his, his partners, and he sat down with Jeff Bezos, who, at the time, he's not richest man on the planet, but he's like still, you know, he's still pretty big time. Anyway, they put across to him the A to Z, the smile with the little arrow, and there's like loads of clever stuff going on when you actually... I didn't realize it was A to Z, the arrow goes from A to Z, and that was in bits and pieces. And, uh...... Jeff s- sat down and he's, says, "Oh, I love it. Bruce, brilliant. Fantastic." And he's got his, Jeff's got his cronies with him and they say, "Right, brilliant. Should we start? We'll start split testing. We'll focus group it." And Jeff's like, "No, no, no, no. Uh, we don't, we don't need to do that. Like, it's fine." And they're like, "Uh!"
- JKJosh Kaufman
Yeah.
- CWChris Williamson
"Jeff, it's, it's ... We're quite a big company. This is a, this is a large decision for you to make off the back of a whim. Like, we really ..." Uh, and they sorta push back against him, and Jeff turned around apparently in the meeting and said, "Anyone who doesn't like that logo doesn't like puppies."
- JKJosh Kaufman
(laughs)
- CWChris Williamson
And that was it.
- JKJosh Kaufman
Yeah.
- CWChris Williamson
That's the level of non-bullshittery that you want to get your business to.
- JKJosh Kaufman
Yeah, and it- and when you think about it, an- another, you know, corporate branding, uh, graphic design sort of thing, you know, FedEx is very famous for the arrow that's in, in the shape, which, which is cool if you notice it, but if you had to gauge on, on a scale of zero to one hundred, is the success of FedEx because they have a little hidden arrow in their logo or because they can get a package from point A to point B overnight wherever it is in the world, what do you choose? Like, they could just spell their name and it would be fine. Um, so yeah. It's, it, there's, there's an enormous amount of value and power in being able to look at a business or a business situation and identify very quickly what are the things that are going to be most important, what is going to determine success or failure in this instance, and what are all of the things that you can just afford to ignore or not pay attention to.
- CWChris Williamson
How much of success in business is that elimination?
- JKJosh Kaufman
Um, quite a bit. And I, I would say that, um, in conjunction with something else that's really important, um, which is experimentation. Um, so you see businesses that tend to succeed over a long period of time, um, have a process of continually trying new things, gathering data about what works and what doesn't, and they keep doing the things that work and they stop doing the things that don't. Um, so I think Amazon is a great example of this in, in terms of the large company culture. Um, and, and smaller businesses do this all the time. If, if you are responsible for putting food on your table and you are doing a bunch of things that aren't, uh, attracting attention or closing sales to get revenue in the bank account so you can pay your own paycheck, that's a problem. And, and so you see particularly early stage businesses that do really well, they avoid making dumb mistakes, so betting the, the farm on something that is in reality an experiment, um, but they just don't have good data yet. And so, uh, avoiding, avoiding mistakes or decisions, betting everything on something that's not tested, but you also see them testing a lot of different things and then gathering data about what works and what doesn't and then shifting resources towards the things that do indeed work.
- CWChris Williamson
I suppose that's a massive advantage. We, we often hear about diseconomies of scale, you know, the increased friction in having to communicate between 45 different area managers-
- JKJosh Kaufman
Yeah.
- CWChris Williamson
... and flights and, uh, you know, all the, uh, the endless emails. Um, but that's a perfect example of real economy-
- JKJosh Kaufman
Mm-hmm.
- CWChris Williamson
... of scale, the fact that you just have so many resources, endless computer space, you know, like bottomless pits of money that you can continue just, everyone wants to work for you because y- the, your, your ability to talent recruit is super high. So yeah, I, um, I think it's, it's nice to see the diseconomies of scale kind of being battled back. I got k- I, I was quite fatalistic about, um, scaling up businesses for a little while, and then thankfully, companies like Google and, and, uh, Facebook and, and Amazon that have a flexible approach to a large-sized business I think have really, really changed that. So in your experience, what are the most common errors that you see people making, either new businessmen or established ones?
- JKJosh Kaufman
Um, okay. Uh, one of them is related to what you just said, um, which is a concept in the book, um, in The People Section. So the, the book is structured three, uh, three primary parts: business, people, and systems. And so when you think about it, businesses are created by people to serve other people for the benefit of people, so understanding human psychology and how people work, that's, that's a really important thing to know. And so in, um, in The Working With People chapter, there's a concept called communication overhead. And you can think of it in, in terms of for every person that you need to communicate with on a day-to-day basis to do your job, the larger that group becomes, the higher and higher and higher percentage of your time and energy is spent communicating, sharing information among the group of people that you're working with, not necessarily working on value creation, marketing, sales, value delivery, and finance. And so that's a very real cost. Um, I don't, I don't know if you've ever worked in a, a large corporate environment. Um, I worked, I worked for a, a, a Fortune 50 company, huge CPG company, uh, global, uh, Procter & Gamble, for seven years. And, uh, a good dramatic example of this is that, uh, I was responsible for, uh, measuring the effectiveness of online advertising for P&G's brands online, um, with, with all the, the advertising that they were doing on the internet.This was new, so, so I was trying to figure out, all right, you know, we're s- we're spending X million dollars a year in, in banner advertisements on the homepage of msn.com. Uh, does, does that work? And in that role, I was responsible for talking with probably 30 or 40 people who had a stake in what this looked like when it was done. And when the project was done, I went back and looked at my schedule. I spent three solid months just talking to people, trying to get them on the same page, to create a proposal of what this might look like after we do a pilot run. And so there's, there's a certain amount of like, yeah, in a big company, you have all of these resources, you have potentially millions of dollars, you have very smart people to work with, and yet when the group becomes so big, people spend most of their time communicating with each other and not necessarily pushing the work forward in a way that actually creates value. And so one of the advantages that small companies have, and one of the reasons that I chose to leave the corporate world and do my own thing, is your communication overhead goes way, way down. If it's just you or a team of two or three, uh, the research says that up to about eight, in terms of a team who is, uh, that is dedicated to do a specific thing, is ideal because every additional team member adds capacity, but the group never becomes so large that you're spending more time and energy on communication and coordination versus actually doing the work the team is ostensibly responsible for completing. (laughs) Does that make sense?
- CWChris Williamson
That's, that's the, uh, business equivalent of Dunbar's number.
- JKJosh Kaufman
Absolutely. Yep.
- CWChris Williamson
So it's-
- 30:00 – 45:00
That's- …
- JKJosh Kaufman
you are a massive company who is very comfortable selling the products that you've always sold. Um, it's critical if you're just starting something new and you're not sure of all of the things that you could offer to customers which would have the highest uptake or, or have the highest profitability.... um, I think most people don't think about experimentation enough as both a learning strategy but also a how to maintain your competitive edge over a long period of time strategy. It's the same fundamental process and it gets you both of those rewards, so that makes it really important.
- CWChris Williamson
That's-
- JKJosh Kaufman
Um-
- CWChris Williamson
The, the interesting thing there from a game theoretical perspective is it's not just you playing the slot machines. There's actually a bunch of competitors who are all in, uh, m- maybe not playing your slot machines, but they've got like, um, the floor above and the floor below and all of the slot machines are all like linked in together somehow and they might stumble ac- across the slot machine which actually pays out jackpot.
- JKJosh Kaufman
It's, it's like you're writing my book, like on this conversation. Um, there's (laughs) there's another concept in the book called The Hidden Benefits of Competition, which is exactly that. Um, most people view competition as a bad thing, and this i- this is particularly a beginning entrepreneur's classic mistake of you have this brilliant idea for a business that's going to be awesome, and then you go to Google and you type it in and you're like, "Oh man, someone's doing this already. I can't do it now. This is terrible." Um, s- so having competition is a wonderful thing from multiple perspectives. The first is that it's kinda, i- in the explore/exploit framework, it's like you get to watch other people play this game and you get to notice what does well and what doesn't without spending your own time and energy and resources playing the game. It's a much faster way of collecting information from observing the world around you and gathering knowledge and data from that. The other thing, um, which is really important particularly for beginning entrepreneurs to understand, if people aren't interested in spending money on what you have to offer, there is absolutely no possible way that your business will work. Uh, (laughs) this is an i- idea called the iron law of the market. If there is not a market of people who are willing to pull out their wallet, checkbook or credit card and say, "Yes please, I'll take one," you're screwed. Like there's, there's nothing you can do. And so the nice thing about having competition is it is a 100% guarantee that you're on the right side of the iron law of the market. You know people are spending money. You're watching them do it. And so if you're looking at all of these different options and you have a choice between, uh, an offer where there is a clear established group of people who are spending money or a completely green field that you think is new to the world, uh, bet on the one where people are spending money. That's probably a higher percentage bet for you.
- CWChris Williamson
(laughs) I think the, the cliché quote is, "Idea is the constant, execution is the multiplier." And there's that-
- JKJosh Kaufman
Yes.
- CWChris Williamson
... that, that Peter Thiel quote which is, "Any idiot can learn by experience. I prefer to learn by the experience of others."
- JKJosh Kaufman
Yes, absolutely. Yeah, I think the, the, uh, multiplier thing came from, uh, Derek Sivers, right? It's like, yeah, a d- uh, a, uh, awesome idea with mediocre, uh, or nonexistent execution is maybe worth $10, but an awesome idea with awesome execution with an awesome market can be worth billions. Um, so yeah, it, it, it, and i- it really help... This, this is where particularly for people who are new to business, it helps to have a solid understanding of what it is you're trying to do and how it works. Um, because the, the number of people who will, um, start a business without thinking once about the market or doing any sort of market research is astounding. Uh, the number of people who will put together an offer and not do math about if this offer is financially sustainable is huge. And, and so just having, um, the, the, the, the term of art for this sort of thing is, is a, a mental model, a mental representation of what a business is, what its parts are, how it works, how they interact with people. Um, in the same way that people have a mental model of how it is you drive a car and what's supposed to happen when you step on the gas pedal and what's not supposed to happen when you step on, on the, the brake, you get a sense very quickly of like something unexpected happens, this is bad for me, I should do something right away. Uh, we're just trying to do the same thing for business. Like understand what it is, understand what you should be seeing or noticing about, um, about what it is you're trying to do, and that allows you to make very quick and very accurate valuable decisions in the moment about what you should either start doing or stop doing.
- CWChris Williamson
Here's something that me and every friend I know that is an entrepreneur, young entrepreneur has come up against. I want to hear your thoughts on this, whether your experience has been similar. We had for the first five to 10 years of running our business an absolutely irrational fear of raising the price. I was-
- JKJosh Kaufman
Mm-hmm.
- CWChris Williamson
... terrified of raising the price. So I would say as another little heuristic people to watch out that is new to business, you can probably raise the price more frequently than you think, especially if you've got demand.
- JKJosh Kaufman
Yeah. I'm, I'm curious to hear from, from your perspective, um, looking back on it why your price was low in the first place and what caused you to raise it. What, what was-
- CWChris Williamson
S-
- JKJosh Kaufman
... that experience for you?
- CWChris Williamson
So I run club nights and we had a particular discounted entry before 11:00 on a Saturday, and we were...... rammed beyond belief. Like, so crazy busy. We'd totally cornered the market, but me and my business partner felt that our success was on such a knife edge. It's a particular quirk of our industry that it is very fickle, very fast moving. Um, it, uh, o- occurs on a weekly cadence as well, so you've got, like, week after week after week, uh, which is kind of performance, and you're always obsessing over this week versus last week numbers, revenue, top line, bottom line, stuff like that. Very unique sort of, um, industry to be in. And, um, we had this ru- stupidly low price, but that was what we thought had got a success. And I remember-
- JKJosh Kaufman
Yeah.
- CWChris Williamson
... we were, we were talking about putting it up from £2.50 to £3.00 to get into, like, the big- biggest, best club night in the city, and I remember the night before, sleepless night, because I was adamant that that was going to be the beginning of the avalanche that would snowball to topple the company. Like-
- JKJosh Kaufman
Right, yeah.
- CWChris Williamson
... uh, that 50 pence, man, that, that, f- that, f- that fifth, that's it. You know, we're gonna, we're gonna do it, and I'm, like, absolutely crapping my pants, whereas now me and my business partner having sort of swallowed the very, very large red pill we needed to, to understand that, we're more than happy when we see the demand... Like basic economics. What do you do when demand outstrips supply? Like, uh, the fundamentals and, uh, yeah. I, I've got two, uh, co-hosts on the show, Johnny and Yusuf, that all of the listeners will be familiar with, and they were doing diet and training plans, personalized diet and training plans for, like, £35, and it would take them hours.
- JKJosh Kaufman
Yeah.
- CWChris Williamson
Hours and hours and hours.
- JKJosh Kaufman
Yep.
- CWChris Williamson
And they were terrified. And I'd gone through this situation and I was saying, "Boys, that i- that plan's worth, like, £100 or £200." "Oh, no." And they had to swallow the fear as well. Is this something you see elsewhere?
- JKJosh Kaufman
Uh-huh.
- CWChris Williamson
Or is it just a quirk of the north of England?
- JKJosh Kaufman
Abs- No. This is, this is an absolute universal thing. Every entrepreneur experiences it, and a lot of it- a lot of the time, it comes from, from feelings of insecurity, right? You don't know if people are gonna like what you're offering. Um, rejection feels really big and scary, and most of us, given the option, would prefer to avoid it, and so we think that the best way to get people to like what we're offering and take us up on the deal is to make sure that the price is so low that it would be objectionable to no one.
- CWChris Williamson
(laughs)
- JKJosh Kaufman
And so I th- the, the rule of thumb, um, I've, I've done, uh, consulting and advising for many years, and the rule of thumb for beginning entrepreneurs is take the price that feels like the gut, obvious, this is where I should start, triple it, and you're almost in the ballpark-
- CWChris Williamson
No way.
- 45:00 – 1:00:00
There's a quote from…
- JKJosh Kaufman
amount of time and energy, because you can kind of defuse the things of like, "Yeah, I don't need to be spending time working on this stuff right now. I'm gonna pay attention to the things that actually matter."
- CWChris Williamson
There's a quote from a Daniel Schmactenberger episode who I did with a little while ago, and he says, "The more I reflect on the biological predispositions that arise, the less I am controlled by them."
- JKJosh Kaufman
Yes. Yeah.
- CWChris Williamson
And, oh, my God, if that isn't true. You... Dude, like, I, like I say, I've run nightclubs for 14 years now. The popping bottles, let's spend a grand on vodka that the five people sat around the table can drink like a quarter of, uh, the glass is more expensive than the liquid inside of it. Uh, I actually had-
- JKJosh Kaufman
Yep.
- CWChris Williamson
... a sociologist lady called Ashley Mears on. You might like her book. It's called, uh, uh, VIP. She did, uh, ethnographic research.
- JKJosh Kaufman
Oh. Very good.
- CWChris Williamson
She does so... I'll, I'll send you the, I'll send you everything over once we're done. Um-
- JKJosh Kaufman
Please do.
- CWChris Williamson
She, uh, she became a party girl and followed the biggest promoters around LA and Miami for six months as part of her like ethnographic research for this into status signaling. Uh, and, and, um, what's it called? High or waste, call that waste signaling or something like that. Basically, you buy something where you- people can see that you couldn't even drink that much, you couldn't even eat that much. Like, you don't even... It's the-
- JKJosh Kaufman
Yeah.
- CWChris Williamson
... 75-car garage that people know you can't even drive those cars once per week, but yet, like that's, that's what... Here's something, so the, the person element of business is really, really what fascinates me. The question I had for you was whether you think someone's performance in business is a projection of their personality, and whether there's a point where business development is limited by a lack of self-development?
- JKJosh Kaufman
I think that, yes, that is broadly true, that I think the more you develop yourself and your skills and your abilities in the areas, ca- call it the economically valuable areas of business, value creation, marketing sales, value delivery, finance, the better you are at those things or some sub- subset, right? So the nice part about larger companies is you can have specialists in those areas instead of having to do all five of them yourself. So I think it's true that the, the more skilled you are in those five things, the more successful you're going to be. I think successful is important to qualify, because successful is doing something that you enjoy in a way that pays the bills for you, um, that is not entirely draining, and allows you to live whatever the definition of a good life is for you. Um, so a, a, a tangible example here. Um, I have quite a few friends in industry, um, very successful at building companies. Um, their revenue is between 10 or 100X mine. Um, they, they are in the, you know, 50 to multiple hundreds of employees category. And I've had a real good up-close look at the inside of their business and what their life looks like running the business. And if I tried to do what they're doing, I would be miserable every minute of every day for the rest of my life or, or however long I ran this business. It is not for me. And so I think...... there's a, there's a very underrated part. The personal side of business is deciding what kind of life you want to live, what kind of work is rewarding to you, how do you want to spend your time, who do you want to spend it with. And for me, success in business is getting closer and closer to that ideal of you're doing what you like, with people you like, on projects that are interesting, and, and on the other side of things, eliminating stress, or eliminating worries, or eliminating lower value, less ... things you care less about, in favor of the things that you care intensely about. And so, you know, I, I, I think business in particular because there is a numerical figure attached to it, right? How much did your business bring in this year? How many employees do you have? How many millions of dollars of venture capital did, did you raise in your A round? You know, there's ... and getting back into the status consideration, there's, there's the gamesmanship that goes on in terms of, you know, "Well ..." You know, it's not, it's not enough to have a, a company that got, uh, earned a hundred million dollars in profit this year if the company over there got 101 million dollars in profit. That way of thinking, in the absolute, is absolutely nuts. Um, so I, I think it's really important, and the best thing that you can do for yourself, is be very, very clear in defining what it is you're trying to do and why, what's important to you and what's not. And then just ... it, it gets back to the experimentation bit. Notice what's happening around you as you make decisions in your business or in your career, and notice when you're getting closer to that ideal or, or when you make decisions that gets you further away from what you want.
- CWChris Williamson
I think, especially if you are someone who's sort of classically working class-
- JKJosh Kaufman
Mm-hmm.
- CWChris Williamson
... who's grown up perhaps in a household which is work is a labor, work is something that you have to do, not get to do, um-
- JKJosh Kaufman
Right.
- CWChris Williamson
... you can carry that Puritan work ethic over quite easily into operating a business. I certainly found myself doing that. I wonder whether or not you, you see that quite typically?
- JKJosh Kaufman
Oh, absolutely. Um, um, I've seen it in my own life. So, so good example is, um, I remember the day when I told my father that I was going to quit my job at Big Company to start my own thing. And, uh, so for background, uh, Dad was a elementary, uh, school teacher, and then a, uh, a principal of small farm town, uh, school, northern Ohio in the United States. And straight out of college, I made as much, maybe a little bit more, in my big company job than he had made in his, you know, 25, 30 year career at that point. So from his perspective, "What are you doing? Like, you have this amazing job. Um, it's, it's only upside from here. Why would you throw away the secure thing in order to chase something that may not be as good?" And the answer to that, for me, was that the environment that I wanted to work in, the types of projects I wanted to do, and the latitude that I wanted to have over my own day-to-day life and decisions was not compatible with the large company job. And so even if it paid less in the short term, I was willing to trade the sure thing for a chance at maybe getting closer to something that would be more ideal for me. And, in retrospect, it was the best decision I ever made, because had I not done that thing, um, I would not have been able to experiment my way into something that worked in, in a really wonderful fashion. I think a lot of people, particularly people who, like me ... I didn't have a business background growing up. I grew in a s- grew up in a small town. Um, my conception of business was that they were places where people went to draw a paycheck. Like, I knew d- I, I didn't understand anything about it. And I think if you don't, if you come from a working class background, um, or, there are a lot of folks who grew up in rural en- rural environments, and don't have the day-to-day exposure of what this kind of life looks like, um, it can be really challenging to break away from those conceptions of what you're supposed to do or how things are supposed to work, in favor of an uncertain experiment that feels like it may turn out well or it may turn out not so well. The nice part about it is that, in terms of building a business that gathers enough income to support yourself in a comfortable fashion, that is way, way, way more accessible than most people assume it is if you don't come from a background where people do this on a, on a, on a common basis.
- CWChris Williamson
There's a strategy in pickup artistry called You Are the Prize.
- JKJosh Kaufman
Mm-hmm.
- CWChris Williamson
And it basically, uh, suggests that as you step into the frame with the person that you're trying to speak to, that you should come from a place of abundance, not a place of scarcity. And-
- JKJosh Kaufman
Yes.
- CWChris Williamson
... that as a strategy for business-... is so, so useful because it stops the neuroticism of what ifs. What if I make this jump to something that I, I know love but might not succeed, and I lose the secure thing that's behind me? Well, you already got the secure thing that's behind you. You'll probably just get it again. Or maybe even the thing you wanted won't happen, but you'll get a better secure thing around the corner, or whatever it might be. I think far too, far too many people have such pervasive imposter syndrome that it, it-
- JKJosh Kaufman
Mm.
- CWChris Williamson
... sort of secures them. It glues them to the spot. And remembering that imposter syndrome really can only m- smash itself up against the success of your reality so many times before it's not s- imposter syndrome anymore. It's more like an addiction. It's more like a thought addiction-
- JKJosh Kaufman
Yep.
- CWChris Williamson
... that you've got on your side where you're just not prepared to give yourself the credit that you're due. It's like, look, go for it, man. Like go and do the thing. Go and do the thing, and if it doesn't work, you will make something else work. You've got this far. You've got the talents, the skills that you've got, the passions that you've got, whatever it might be. And if anyone's got any reservations about that, realize how scary it is for you to think about doing that, and realize that not only are you competing with everyone with your potentially superior skillset but that by making the decision, that is the separating factor. By deciding that you do the thing, you are in the top 1% regardless of skill, regardless of experience, regardless of background, all of that stuff. You're in the top 1% by making the leap. And the reason that you can tell that that's the truth is how terrif- viscerally, like, ass-bendingly terrifying-
- JKJosh Kaufman
Absolutely.
- CWChris Williamson
... it feels to you right now.
- 1:00:00 – 1:01:18
Josh, we might have…
- JKJosh Kaufman
so the Personal MBA website, personalmba.com, um, you can find a list of all the key terms in the book. You can find, uh, a recommended reading list, so all of the business books I recommend if you wanna go deeper in any of these topics, they're all cited referenced on there. Um, and then, uh, trying to take my own advice, I am constantly doing, uh, research and experimentation in all sorts of different topics. And so, if you're interested in more of the R&D side of me, uh, joshkaufman.net is, is my website. You can find a lot more about, uh, my other research in learning and skill acquisition, uh, research into uncertainty and change, and some of the more philosophical, um, practical side of ambition, is probably a good way to, to put it. Um, you can find all of my other books at joshkaufman.net.
- CWChris Williamson
Josh, we might have to get you back on for that one. I might have to have the, uh, Batman alter ego. I've had Bruce Wayne, and now-
- JKJosh Kaufman
Dang.
- CWChris Williamson
... we can get Batman on and we can do, we can do another one.
- JKJosh Kaufman
I am happy to hang out anytime.
- CWChris Williamson
Brother, awesome. Thank you so much for your time. All fans. Yeah, oh, yeah, all fans.
Episode duration: 1:01:18
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