The Money Expert: Become A Millionaire Without Hard Work! THIS Is The Biggest Career Mistake!
15 Jul 2024 (2 months ago)
Intro
- Every business has five fundamental parts: value creation, marketing, systems, people, and narrative.
- Understanding these parts is crucial for creating a successful business or excelling in your career.
Why Did You Write The Personal MBA
- Josh Kaufman wrote the Personal MBA because he couldn't find a single book that provided a comprehensive understanding of business fundamentals.
- He spent months reading and researching various business topics and realized there was a need for a book that synthesized the critical aspects of business.
- The Personal MBA was born out of Kaufman's curiosity, persistence, and desire to solve his own problem of understanding business.
What Is An MBA?
- Individuals can develop a strong understanding of business through self-study and practical application, rather than relying solely on traditional academic degrees like MBAs.
- The book "The Personal MBA" provides a comprehensive understanding of business concepts and processes, enabling readers to analyze and improve existing businesses or create their own.
- Understanding how businesses create value, attract customers, deliver value, and manage finances is crucial for aspiring entrepreneurs and those seeking career advancement.
- The ability to hire people effectively is essential for creating opportunities and achieving financial success, making it a fundamental skill for everyone to increase their chances of success.
Should You Do A MBA?
- Most people believe that doing an MBA is a good investment due to increased demand for business courses.
- Business schools market the promise of a better career and higher earnings.
- Approximately two-thirds of business school graduates go into management consulting or investment banking, while the rest work for large companies.
- An MBA can provide access to interviews at top companies, but the cost of these programs can be very high, ranging from $240,000 to $250,000 for a two-year program.
- Most MBA programs are financed with debt, which can be a burden regardless of career success or economic conditions.
- There is no correlation between getting an MBA and long-term career success.
- A study by Jeffrey Pfeffer and Christina Fong at Stanford University found that having an MBA makes no difference in career success.
- The authors argue that successful individuals in business have skills, abilities, curiosity, and drive, which are not necessarily acquired through an MBA.
How Difficult Is Starting And Running A Business?
- Many people with business ideas are held back by the belief that business is complicated.
- Business is complex due to interrelated moving parts but not necessarily complicated.
- Key business ideas and principles are often common sense and simple arithmetic.
- Businesses are created to provide value to others, so understanding human psychology and system processes is crucial.
- Starting a business involves answering fundamental questions about creating value that others want or need.
First Steps To Setting Up A Business
- The first step in designing a business is identifying the value creation component.
- Understanding what customers want and need when purchasing a product is essential.
- Value creation often involves making trade-offs between competing priorities.
- Successful businesses focus on one or two key customer preferences and excel in those areas.
Loads Of Business Are Finding Problems To Solve
- To achieve success, it's crucial to understand consumer behavior and preferences rather than solely relying on hard work.
- Observing how people use products can reveal opportunities for innovation and the creation of products that meet their needs.
- Seeking early pre-orders or letters of intent can indicate genuine interest and demand for a product or service.
- Both verbal and nonverbal cues should be considered during market research, as people's actions often reveal more about their preferences than their words.
- Psychological needs, such as the desire for reassurance, can drive consumer behavior and product development, as exemplified by the invention of liquid laundry detergent.
- Scent research is essential in developing cleaning products, as the smell of a product can vary depending on its usage.
- Candle purchasers pay attention to both the burning and non-burning scents of candles, with some even making purchasing decisions based on the "cold throw" of a candle.
- By recognizing subtle cues and addressing unmet needs, businesses can create products and offers that resonate with consumers and drive sales.
How To Give Value To The End Consumer
- Entrepreneurs identify problems in their daily lives and seek innovative solutions to address them.
- Amazon Prime's success is attributed to its ability to enhance the convenience and enjoyment of online shopping.
- Entrepreneurship involves prototyping, gathering feedback from potential customers, and evaluating the viability of business ideas.
- Assumptions made during the early stages of entrepreneurship, such as problem-solving and business viability, should be tested and validated.
- Constraints, like the type of microphone used, can influence the solution to a problem.
How Do You Find Out If Your Idea Is Good?
- The process of finding out if an idea is good involves experimentation and failure.
- Key factors to consider include the size of the problem, its urgency, and the number of people affected.
- Identifying a large enough market is crucial, and talking to people with similar problems can provide valuable insights.
- Asking for pre-orders helps determine if people are willing to pay to solve the problem.
- A successful pre-order campaign indicates a viable market and justifies further investment.
- Starting with a short production run mitigates risk and allows for customer feedback.
This Is The Wrong Approach When Starting A Business
- Building a company for two to three years and relying on a big launch day is the wrong approach.
- Many aspiring entrepreneurs focus on the signaling parts of business like logos and business cards instead of creating value.
- The actual doing of the business, such as marketing, sales, value delivery, and finance, is what matters most.
- It's important to skip the early stuff and get to the core of what will make the business succeed or fail as quickly as possible.
- Raising millions of dollars in venture capital and building a product that no one buys is the worst possible way to go about starting a business.
Why Should You Start With Value?
- Providing value to others is the foundation of a successful business.
- A venture that doesn't deliver value is a scam.
- Business is a generative act of finding a problem, creating a solution, and bringing it to the attention of those who care.
- A well-running business system solves people's problems, rewards the business owner, and allows for continuous problem-solving, making it a great way to live.
- Starting with the question of what valuable thing to deliver to people is crucial for the success of the business.
How To Market
- Marketing is the process of attracting the attention of people who might be interested in the value being created.
- Marketing and sales are distinct processes.
- Marketing involves understanding who might be interested in the product, where they hang out, and what they're curious about.
- Effective marketing takes advantage of existing interests and attracts attention at the right time, making people aware of the potential benefits of the product.
Psychology & Marketing
- Understanding the underlying psychological motivations of humans is crucial in marketing.
- Humans have five fundamental drives:
- Drive to acquire
- Drive to bond
- Drive to learn
- Drive to defend
- Drive to feel (proposed by the speaker)
- Entertainment is primarily driven by the need to feel.
- Successful market offers tap into multiple core human drives.
- Social media's popularity stems from its ability to engage at least four out of five of these drives.
Creating A Drive In The Marketing Strategy
- Nike's marketing strategy:
- Drive to acquire: shoes as a necessity and a status symbol.
- Drive to bond: ingroup-outgroup dynamics and forming relationships through shared interests.
- Drive to feel: emotional connection to the brand and its products.
- Apple's marketing strategy:
- Drive to acquire: status-enhancing products.
- Drive to bond: connecting people through technology.
- Drive to learn: emphasizing the educational capabilities of devices.
- Drive to defend: highlighting security and privacy features.
- Drive to feel: emotional storytelling and evoking personal connections.
Think Different
- Advertisements should focus on emotional appeal rather than logical benefits.
- People are more likely to buy products that make them feel a certain way rather than products with superior features.
- Candles are a great example of a product that is sold almost entirely on emotion.
- Liquid Death is another example of a product that has been successful by appealing to consumers' emotions.
- The biggest career mistake people make is focusing on hard work instead of smart work.
- Hard work is not always rewarded, and it can actually lead to burnout.
- Smart work is about working efficiently and effectively, and it is more likely to lead to success.
- Some examples of smart work include:
- Automating tasks
- Delegating tasks
- Taking breaks
- Setting priorities
- Focusing on your strengths
Be Brave To Do Something Completely Different
- Liquid Death's success in the water market is due to its unique packaging, affiliation, and storytelling, which appeal to a specific customer segment that values self-expression and group affiliation.
- To succeed in saturated markets, new entrants should clearly position themselves as the antithesis of incumbents, creating a distinct identity and signaling clear differentiation to consumers.
- Perfect Ted, an energy drink brand, aims to create a strong brand identity by positioning itself as the opposite of mainstream energy drinks, allowing consumers to identify with a specific group or lifestyle.
- Brewdog, a UK craft beer brand, gained attention by positioning itself as the antithesis of mainstream beers, using unconventional marketing tactics to differentiate themselves and attract a loyal customer base.
- Social signaling and counter-signaling play a significant role in fashion and consumer behavior, with individuals using fashion choices to signal group affiliation and distinguish themselves from others.
- Apple's success can be attributed to its counter-signaling strategy, positioning itself as the opposite of the prevailing trend in the tech industry and creating a strong emotional connection with consumers.
- Controversy can be a powerful marketing tactic when used responsibly to attract attention and create a distinctive brand identity.
- A successful brand doesn't need everyone to like it; it should aim to evoke strong feelings and resonate with a specific target audience.
- Marketers should focus on attracting "hyper responders" who care deeply about the product and are likely to become loyal customers, while ignoring those who are apathetic or unlikely to convert.
- The primary skill of marketing is grabbing and keeping people's attention.
- Most people are busy and overwhelmed with information, so marketers need to find ways to cut through the noise and highlight what's most important, interesting, and valuable.
- The tactics and strategies of marketing depend on the market and scale of operation, but the fundamental skill is understanding that people are busy and starved for time and attention.
- The biggest career mistake people make is not taking risks and stepping outside of their comfort zones.
- Many people stay in jobs they don't like or that don't challenge them because they're afraid of change or failure.
- To be successful, it's important to be willing to take risks and try new things, even if they're scary.
- Don't be afraid to fail, because failure is just a learning opportunity.
- The worst thing you can do is stay in a job you hate because you're afraid of change.
The Sales Piece In Any Business
- Sales is the part of a business where money comes in, making it particularly important.
- Early decisions in sales include how to ask for the sale, the sales process, and who the customer is.
- To be exceptional at selling, consider how to make the product appealing to customers and ensure they are happy and satisfied with their purchase.
- Repeat customers are the best customers as they already know the business and its products.
- The lifetime value of a customer is the sum total of all sales of that customer with the business.
- A customer who makes repeat purchases over a long period of time has a higher lifetime value compared to a customer who makes only a few purchases.
Customer Service Matters
- Happy repeat customers are high lifetime value customers who keep spending money and are a primary source of marketing through Word of Mouth.
- Post-sale support and customer reactivation are effective marketing techniques.
- The cost of reactivation promotions is potentially small since the business already knows the customer and their purchase history.
- Effective marketing and sales campaigns require a good customer experience with the product or service.
The Sales Framework
- Focus on the benefits of a product rather than its features when marketing or selling it, as benefits motivate people to purchase.
- Storytelling is an effective marketing and sales technique because it allows people to imagine how their lives would improve with the product.
- Hire curious, engaged, and excellent communicators who align with the company's mission and vision to ensure its success.
- The five essential components of every business are people, product, process, profit, and purpose.
- A business should be optimally sized to serve its customers sustainably in the long term.
- Minimize management and allow employees to focus on skilled work that generates the most value by maintaining an appropriate level of internal organization.
- Build a successful team by hiring for attitude and training for skills.
How Important Is Hiring?
- The importance of hiring varies depending on the nature of the business.
- For a small business selling candles online, the hiring team may be relatively small.
- For a larger business with distribution and manufacturing, the hiring needs will be different.
- It's important to understand the specific needs of the business and match hiring accordingly.
What Role Does Competition Play?
- Competition validates the existence of a market and the need for a product.
- Markets that don't exist yet are risky because there's no guarantee people will buy the product.
- Completely new inventions can be a warning sign as there might not be a demand for them.
- It's better to enter a market with existing competition and find a unique way to stand out.
- Learn from competitors by buying and using their products.
- Conduct market research by analyzing their labeling, packaging, price points, and marketing strategies.
- Use this research, combined with your own customer interactions and ideas, to develop a unique take on your product.
Let's Talk Money
- Financial analysis involves decision-making and resource allocation in product development, manufacturing, and customer service.
- Financial decision-making includes allocating limited resources to various business processes such as product creation, packaging, shipping, marketing, and sales.
- Despite misconceptions, business finances primarily involve basic arithmetic operations like addition, subtraction, multiplication, and division.
- Profit is calculated by subtracting the costs of making, marketing, and delivering a product from its selling price.
- Understanding financial concepts like amortization aids in budgeting and planning expenses.
- The book "Personal MBA" aims to simplify complex business concepts for easy understanding.
- The speaker in the video discusses achieving millionaire status without excessive effort.
- The speaker highlights the common career mistake of neglecting self-investment and emphasizes the significance of investing in education and personal development to boost earning potential and attain financial success.
What Numbers Should I Pay Attention To?
- Focus on numbers that indicate the sustainability of your business.
- Key metrics include monthly fixed overhead expenses and monthly sales.
- Calculate net profit by subtracting total monthly expenses from monthly sales.
- Assess if the net profit is sufficient to sustain your desired lifestyle.
- Make difficult decisions if the business is technically profitable but not sustainable.
- Determine a personal financial goal that makes the business venture long-term sustainable.
Experimenting
- Experimentation accelerates success in a rapidly changing environment by reducing the pressure to know every step.
- The explore-exploit trade-off involves balancing trying new things (exploration) with focusing on the best-performing actions (exploitation) while continuously exploring.
- Early entrepreneurship involves experimentation and collecting information about what works.
- Accurate feedback collection is crucial for success, as failure without feedback is meaningless.
- Conduct quantitative and qualitative research studies, analyze sales data, and contact customers directly to gather feedback.
- Use sensory deprivation rooms or blind testing to eliminate biases in product testing.
- Experiment broadly, collect data, and let the information guide future decisions.
Every Complex System Starts In A Simple Way
- Start with a simple system and build it up from there.
- Complexity should serve a purpose and justify its costs.
- Avoid unnecessary complexity, as it can be a status signal rather than a value-add.
- Adding features can change the frame and create new expectations.
- Start with a simple product or service and scale up based on customer feedback.
- Shopify is an exceptionally simple web platform for anyone with an idea who wants to transact on a global scale.
- Shopify's checkout system converts 36% better compared to other platforms.
- You can try Shopify for $1 a month by going to shopify.com/Bartlet.
Mastering A Job
- The book "The First 20 Hours" by Josh Kaufman discusses how to learn new skills effectively and efficiently.
- The first few hours of learning a new skill are the most effective and efficient.
- The book is based on research that shows that people can go from knowing nothing about a subject to being reasonably good in much less time than expected, with focused deliberate practice.
- The key is to practice for about 40 minutes a day for a month, rather than the commonly believed 10,000 hours.
- The 10,000-hour rule is based on studies of mastery of very competitive performance-oriented activities, such as becoming a concert violinist.
- For most people, the most common type of skill acquisition is learning how to do something new for the first time.
Ten Major Principles To Learn Anything
- To rapidly acquire a skill, set a specific, concrete, and achievable goal.
- Break the skill into manageable subskills and identify the most important ones to focus on first.
- Seek guidance from a good teacher to help deconstruct the skill and identify key subskills.
- Research and learn about the most important subskills.
- Practice and combine the subskills to develop the overall skill.
- Focus on inflection points where small improvements can significantly boost skill level.
- Avoid getting stuck in research and move quickly into focused, deliberate practice.
- Discomfort and fear of incompetence are common barriers to learning as adults.
- Avoid comparing yourself to experts or peers early on, as it can be discouraging.
- Commit to spending at least 20 hours learning a new skill, regardless of initial discomfort or potential dislike, to give it a fair chance and determine its suitability and benefits.
Removing Any Friction In The Process
- Choose a meaningful project that you are passionate about and willing to make sacrifices for.
- Focus on developing one skill at a time and clearly define your performance goals.
- Break down the skill into smaller, manageable sub-skills and gather the necessary resources for practice.
- Remove barriers to practice by making the process easy and accessible.
- Emphasize quantity and speed in the early stages of learning, exploring diverse experiences to build a strong foundation.
- Allocate time for exploration and experimentation to discover surprising connections and insights.
- Create a list of things you want to experience or learn in life without self-editing, and use the "first 20 hours" approach to make pursuing these interests feel more achievable.
Last Guest Question
- There is no such thing as a waste of time.
- Inspiration can come from unexpected places.
- Steve Jobs' calligraphy class led to valuable insights for Apple's design.
- The last guest leaves a question for the next guest.
- The question for the next guest is about regrets in life.
- The guest has more regrets of commission (things done) than omission (things not done).
- The guest tries to avoid doing things they might regret.
- Many regrets revolve around decisions that didn't work out, relationships, and raising kids.
- The guest uses scenario planning to make decisions.
- They consider options, potential outcomes, and trade-offs.
- They try to play out likely scenarios and choose the best option.
- The guest believes more people should understand business, even if they work in corporate environments.
- Understanding business empowers individuals with more options and choices.
- Businesses run society, and understanding them benefits everyone.
- The guest's book, Personal MBA, deconstructs businesses and helps readers understand the world around them.
- It provides an important understanding of business for those who can't afford expensive business education.