Come back in a few days to get the full transcript of this program.

Come back in a few days to get the full transcript of this program.

Andrew: Hey, this is the part of the interview where I promote the interview by telling you what’s coming up and make you get really fired up to learn and to watch and pay attention all the way till the end. I’m not going to tell you what’s coming up this time. I’m not going to tell you what’s in this interview at all. Instead, what I’m going to tell you is what’s inside you. There are days when you’re not motivated. There are days when you are questioning every decision you’ve ever made. Questioning yourself too. So here’s what I’m going to say. After you finish this program. Save it. Save the video if you choose videos. Save the audio. Save the transcript. However you prefer to enjoy this program, save it for those days. Because it is so inspiring, so educational, and so helpful, that on those days it’s going to come through with both a pep talk and actionable ideas. Save it, and start by paying attention to it now. Here it comes.

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Hey there freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, home of the ambitious upstart. You know that I keep looking for little bits of information in interview that don’t usually stand out but I think have big impact. Well, in a couple of interviews that I did with successful entrepreneurs, I happen to notice that they said cause they sold Cutco knives early in their career, they became good sales people. So I filed it away and said, I think in a past interview, “I wonder what it is about Cutco. What are they teaching their people? I’d like to learn that.” A fan in the audience heard me say that, and they helped me land today’s guest. Hal Elrod, that you see upon your screen is a Cutco hall of fame Sales rep and manager. He’s also a motivational speaker who inspires business people and college students, with stories of what he learned in business and from recovering from a terrible car accident. He’s also the author of, let’s see if I can hold this up properly, really professional style, the number one selling book “Miracle Morning: the not so obvious secret guaranteed to transform your life.” Welcome, Hal.

Hal: Welcome, thank you, I appreciate it Andrew.

Andrew: How much money would you say you’ve sold in knives? What is the value of all the knives you sold?

Hal: I’ve sold $754,000 of Cutco.

Andrew: Wow.

Hal: If you know how expensive Cutco is, that’s five cents.

Andrew: How expensive are they?

Hal: It ranges. My average customer spent, when I was newer in my career, about $350 with my average sale. As I got more experience and understood how to better present, when I finished my career, it was double that. It was a little over $700 average sale.

Andrew: Unbelievable, not from a store, not from … you know. You’re just walking into someone’s home that you have a referral from or maybe you know directly. You tell them about the knives and you sell them. You talked to Jeremey Wise [SP], our producer, and pulled out a few tactics that you used that helped you become better at sales that I’m hoping my audience can learn from. Starting with, you say don’t just have goals, review them. One of the interesting things that you say is you advise them to review our goals and to share them with our customers. In fact, you did this with a woman named Donna, can you tell the audience what happened there?

Hal: Yeah, I was trying to set a record. No sales rep in Cutco’s 50 years history had ever posted 3 consecutive $10,000 weeks. I had posted two consecutive $10,000 weeks, which had been done just a couple of times. I was trying to hit my third. I was trying to set this record. It was Saturday morning. I can picture the house like if I’m pulling up to her house. I’m at 7,200 for the week in sales, and I’ve got till Monday morning, so basically day and half, two days, to sell another $3,000 at Cutco, which those have to be 2 good days that I’ve got to pull out somehow. I’m nervous, little scared, little stressed. And I go into her house and I was big believer in really rapport, really connecting with the customer and finding out what was important to them and then asking permission to share what was important to me. I would always, I didn’t force my goals on them. I would say ‘Hey, Donna. Do you mind if I share my goals with you real quick? I’m kind of excited about a few things I’m working on and would you be open to me sharing with you?’ And you know, 9 out of 10 times they would say ‘Yes, of course’.

So I shared my goals with Donna, you know, really passionately. I always inspired and I go through the Cutco presentation and now, when I drove up to that house sidenote, I didn’t usually see wealthy people. Like, my average customer was middle-class. I grew up in a small town, not a lot of big houses, you know?

Andrew: Even though you’re selling expensive knives, you’re not going into mansions and trying to sell them. You’re selling them to regular people, middle class.

Hal: Middle class people that put it on a [??]. And so Donna was a different story. I drive up. It’s a huge mansion, right? She’s got a BMW and a Mercedes so in my head I’m OK, I know she can afford some serious knives, right? She can afford some Cutco. So I’m like I got to do my best. I can’t lose this one. And so I go in, I do my best presentation and she basically tells me ‘Hal, I don’t cook. I already have a $1,000 set of [??] in my counter but it’s barely been used.’ So in my head I’m going ‘Oh, God. How am I going to pull this off?’ And I ask for it ‘Hey, do you want to buy our Ultimate set, you know, the biggest, the best set we have?’ And she laughed at me. She says ‘Hal, that’s the size of a microwave. What am I going to do with all those knives? I told you, I don’t cook.’ And I said ‘Donna, I know you’re not a big cook but there’s 3 reasons that I think you would be crazy not to get Cutco. You’d absolutely love it. And she goes ‘All right.’ She sits backs and folds her arms and she goes ‘These better be some good reasons, Hal. Let me hear them’. And the honest truth is I didn’t have any idea what I was going to say at point. I just threw it out there.

Andrew: You just made up a number 3.

Hal: I just made up, I’m like, 3 reasons and then I’m like ‘I’ll think of what these are’. I said something along the lines of they’re the best knives in the world, you’re going to have them forever and she goes ‘I told you, that means nothing to me. I’m going to have those [??] forever.’ I said ‘And I’ll come sharpen your knives once a year. That’s part of the guarantee, the service it’s free and you’ll see once a year.’ And she goes ‘OK. I don’t know if I’ll pay that much money for that’. And I’m searching, searching, searching and I said ‘Donna, I’m not going to be selfish but it would help me with my goal to break that all-time record, you know?’

And I just threw that out there to pull on strings. And she goes ‘Oh, I forgot you were trying to break the record. How far away did you say you were?’. I said ‘I’m about $2,800 away’. She goes ‘Let’s get you there, Hal. Put me down for the Ultimate set and show me what else you have’. And she’s going through the book and she goes ‘Oh, flatware. We need flatware for the pool house. Put me down for 12 sets’. And our flatware is expensive. And we get to the end and she says ‘Tell me about the total’. And I’m adding it on my calculator and I go, I said ‘Donna, honestly I’m really nervous to tell you how much this is going to cost’. And she said, she leans over and puts her arm on my hand and she goes ‘Hal, as long as I’m not nervous, you have nothing to worry about’. And she wrote me a check for like $3,400 that day and I set the all-time record.

So I’m a big believer in sharing your goals in a way that inspires customers to want to help you reach them.

Andrew: You might have noticed me earlier looking down. It’s because I was taking notes. I want to come back and ask you for more details on some of the things that you said and I also am just an obsessive learner and the way I learn in by taking notes. And I know that my audience does too. So let me try and experiment with you guys. If you find one thing that’s it’s useful out of this interview, one thing that you can bring back to your world, even if you’re not offline, if you’re awfully techy and you’re selling everything online. If you can find one idea that you can bring to your world and share it in the comments, we’re going to take the best one and give them a copy of Hal’s book here.

I just want to see if we can pull out some of the gems in my interviews and make them more accessible to people who aren’t for some reason ready to invest an hour of their time to listen to an interview. I want them to see the gem and maybe then they’ll know their value. So in the comment, if you see anything useful, say it there.

Just to be clear about this, you weren’t a natural born salesperson. In fact, I think the first couple you sold to was related to you. Who were they and how did that go?

Hal: Well, the first that I didn’t sell to.

Andrew: Right, right. Good point. The first that you were trying to sell to. Who were they?

Hal: My grandparents. Nana and Papa, right? And so when I was in my Cutco training, you go through a three-day training, it’s really extensive, you know? And it’s mostly college students that are getting their start or getting an internship with the company. So there’s very few sales experience. I had no sales experience. I go through this three-day training and on my second day of training I got inspired. I was like I’ve never done anything great in my life. Like, my whole life my background was mediocre. I was never an athlete. I didn’t get great grades. I wasn’t one of those students that gave my parents a lot of stuff to put on the fridge except for detention notices or something.

So I end up going on my second day and I think, I want to do something I’ve never done before. I want to break this record. It’s called the fast start record. The first 10 days there’s all these incentives and these records, and you can win some stuff. And I thought I want to go sell more than anyone has ever sold in 10 day, which the record at that time was $12,000. And so, I leave the office, I’m high fiving my manager. I’m like, I’m going to do it. I’ve got to average 1200 a day for 10 days, you know, it’s a lot.

And my first two appointments are with my grandparents was number one. Because I thought for sure they’ll buy. I’ll beg them. I’ll say Nana and Papa I’m trying to buy a record, please buy, right? I thought for sure they’d buy. And then their neighbors, who were like my second set of grandparents, they were the second appointment. So I thought, I’ve got it locked. For sure the first day will be great. I go to my grandparents. I give the best Cutco presentation, I’d been practicing it. I do all the demonstrations. I’m cutting stuff. I get to the end and I go Nana and Papa do you want to go ahead and get a set? And I’m optimistic. I’m thinking for sure they’re going to buy. And they said Hal, we’re too old to buy new knives. And I thought, well they’re guaranteed forever. And they go, the forever guarantee is only a few more years for us. Something like that. And I remember, no joke, but Papa, the guarantee is transferable so you can hand these down to me and I’ll benefit from the guarantee. And he didn’t think that was funny and they bought nothing.

I walk out of there just discouraged. I go to their neighbors and I’m thinking, all right, they’ve got to buy for sure. Same objection, same objection. We’re too old. And I’m going through my head, I’m thinking, you know they taught us in training how to handle, you know it’s too much money. You offer payment options, right? It’s too many knives, you go to a smaller set, right? But I’m thinking they didn’t teach us how to respond to we’re too old for knives, right? In fact I think they said don’t see those people. So, I’m ready to quit and I call my manager. And I didn’t want to call him because I didn’t have any good news. I went out there like I’m going to break this record and now I’ve got to call and say I’m 0-2. I call him literally ready to quit. I was like, I guess, I don’t know what I was thinking, I was excited in the moment but this is not for me. I call him and I tell him what happened. He says Hal, how are you feeling? You’re probably feeling pretty discouraged right now, yeah? I said, yeah, definitely man. I don’t know what to say. I feel terrible. He said, there’s one of two ways you can respond right now. I said OK. I really respect, his name is Jesse. I learn from him, he has a lot of integrity, he’s a great guy, so I’m listening. He said you can do what most people would do which is give into your discouragement and just quit. Just throw in the towel before you have the chance to succeed. And I’m going, in my head, yeah, that’s what I was going to do. What’s option number two. And he goes or you could do the only thing that a successful person would do. You accept the things you can’t change and you get on the phone, set more appointments, and move forward. And I knew he was right. I got on the phone that night and I scheduled 10 appointments the next day. I worked from 7:00 a.m. to midnight. Nonstop.

Andrew: You set up that many appointment?

Hal: 10 appointments.

Andrew: 10 appointments.

Hal: So it took an average of an hour and a half per appointment, so a 15 hour work day and I ended up selling 2,768 dollars that day. And the rest, as they say, was history. I had lots of ups and downs during my first 10 days. I worked really hard. I did 62 appointments more than anyone else and that’s why I sold more than anyone else. Not because I was some special salesperson. I was just willing to work harder than everybody else was.

Andrew: Right. You’re not a natural. I’ve obviously seen, we all remember the one kid from even as far back as elementary school who just seemed like a natural sales person. Everyone loved him so much and he had a sense of confidence or she was so comfortable with herself that she could sell anything to anyone. You weren’t that guy and that’s why I’m especially excited to hear from you. I want to also go through this list of tactics that you and Jeremy went over that helped you get here. That helped you sell so much. Why don’t we start with an understanding of the process. I thought that Cutco started out with or Cutco salesmen went door to door knocking on strangers doors and selling. You’re saying that’s not how it works. Why don’t you take me back to where you get your customer? What you do to get in the customers door? How do you develop that rapport that you mentioned? What do you do to show the knives? How to you close the sale? You said that you explain what is important to you and ask them what is important to them, actually the other way the around. Walk me through that whole process. We don’t have to spend too much on it but I do want to understand it. So why don’t we start with where do you get the person?

Hal: So when you go through training, on the second day of training you make a list of everyone you know, kind of like network marketing, but it’s different in that you’re not getting paid for people.

Andrew: There’s no down line.

Hal: You’re not recruiting. You’re just selling, you know?

Andrew: So second day of training, they’re telling you, start making a list of everyone you know. Already, while you’re there, they’re getting you to be aware of the people who you know who could buy knives.

Hal: Yeah. And they’re giving you thought joggers. They’re saying mom and dad is a natural, show mom and dad. Anyone that would let you in. I think part of what helped me be successful in the beginning is I got out of my comfort zone. A lot of people only made a list of 12 people. I made a list of over 100. At first it started out smaller, but I think it was because my manager wanted to break the record he goes, “Hal, you’ve got to go bigger man.” He said, “You’ve got to think of anyone that you know that knows who you are. So it could be your teachers grade Kindergarten through college. And so I just expanded that list. I contacted them. Something Cutco does it that you are paid whether or not you sell. So, that takes the pressure of. In the beginning you can literally, legitimately, and honestly tell people, I get paid just to show you the product, and I’m getting practice, so you don’t have to buy anything. And Cutco knows from experience that the knives are so good they really sell themselves and that’s why the model works.

Andrew: And the sell process is so good.

Hal: And the sell process is so good. And it’s word for word. You’re literally reading a training manual. When you’re new you go, “Hey, I’m new. So I’m going to read this so I don’t miss anything. Is that OK?” And they go sure. ,

Andrew: You know what? OK. We’re going a little out of order here but that’s important to hear. I know many people who I have talked to who do sales call have a script but they don’t acknowledge their script because you don’t want to sound like you’re faking it. You don’t want to sound like you’re inexperienced. And here you’re telling us the opposite worked for you. Why? Doesn’t showing the script someone make them feel like they’re just practice and so they’re not really paying attention and lose, doesn’t it make you lose credibility?

Hal: I found that it takes pressure off. And here’s the thing, in the beginning you’re not in a situation where it’s not a professional sales situation. It’s a much more of a personal situation. So you’re seeing people you know and rather than coming across all polished, you’re like I’m a fumbling guy with a good product that’s going to read this so I don’t mess up. I think it really, the sales wall kind of goes down, they kind of relax and go, “OK. This should be fun. This should be entertaining. You’re brand spanking new.” And then by the time your first 10 or 20 days are over, you’re getting referrals on every appointment. And not to get out of order we can kind of get back through it. Now you’re memorizing it. Now you don’t necessarily need to follow along by the time you’re seeing people you don’t know.

Andrew: OK. So one of the first things I’m learning is you make a list of the people who you could potentially sell to and go beyond your comfort zone, beyond your expectations, and think of people who know you. And most of us who are selling products are trying to sell it first to our friends or people who we know directly. This would help us think beyond our short list. All right, so you’ve got your list. Now when you call to make an appointment, what do you do? What do you say to get them to say, OK, I’ll see you?

Hal: So when it’s new, and by the way I will tell you, you mentioned something about the script. What I have found in everything from other direct sales companies to corporate America to small businesses, that is one of the major differences is they don’t script things. I can’t tell you how many sales people I coach that reach out to me from other companies and I go so do you have a phone approach? And they go no, we don’t follow a phone script. I go, do you have an approach you have memorized to get referrals. No we don’t have that. And it’s like with Cutco, everything is scripted. You memorize your phone approach. You memorize your referral approach. So you’re not just, you know I see a lot of sales companies where they just have the new guys go on appointments with the old guys, the experienced guys and just kind of take notes, or make mental notes and then go do it on their own. Where with Cutco you go through this three day extensive training and then you have to memorize all these approaches so that when you say it you can say it with confidence because you’re not trying to think of what you’re going to say. You’ve got it memorized like the back of your hand. In fact they always kind of joke, they go, you should know the referral approach so well that if we were to come in your house at two in the morning and wake you up and say tell us the referral approach, you could just spout it off.

Andrew: What’s the referral approach? That’s where you ask someone for a referral.

Hal: When you ask someone for referrals. Yeah.

Andrew: So, now, you’ve got the person on the floor. Maybe I don’t need to hear the exact script but what are you saying to them to get the person to say, all right, come on in to my house tomorrow.

Hal: So when it’s your first people to see, you let them know, hey I just started this new job and it’s part of my training. I put up some training appointments and get your opinion on something, on a product. It’s just for training so you don’t have to buy anything. If you want to, that’s fine, but you don’t have. I’ve got three openings this week. I’ve got an opening tomorrow at four and one tomorrow night at five, which one works better for you? That’s it.

Andrew: I see. So I want your opinion, not your sale. I don’t need to have a sale, I training so help me out and then…which of these days works for you. You’re assuming the clothes, you’re letting them pick when they get clothes to when they see you, but you’re assuming they will see you.

Hal: Yeah.

Andrew: Okay. So now you get the appointment, you go see them, what happens at that point?

Hal: I start by…I do what I call Two Minute Rapport, which is…my philosophy on rapport is different, like a lot of sales they’ll talk to them for 10 minutes or 15 minutes and then begin it, and ask them about all the pictures on their walls, on their plants, in their yard, and you know. My feeling was that rapport should be built through who you are and how it comes across. If you come across as a really caring, sincere, authentic person then that’s going to build rapport. And that’s done through the entire process, not frontload it in the first five minutes. So in the beginning, my way of building rapport is essentially I express gratitude, I believe that gratitude is an instant rapport builder. I just don’t know how much it means to me, because most people don’t know. If you just go in there and you’re doing a sales appointment for somebody and you don’t let them know how much their time, how much you value their time and how much it means to you, they’re not going to assume that. So I let them know how much it means to me. I usually make a joke, buy going, look Ms. Jones, I know this probably doesn’t mean very to you, in fact you’re probably hoping in and out as fast as possible, I can understand that, but I want you to know this really does mean a lot to me. I value your time, you could be doing anything in the world right now, and the fact that you’re hanging out with me and let me come over, you know, I don’t take that lightly. I really appreciate it, so I’ll do everything in my power to make sure you enjoy this time we have together and we have a good time, and that sort of thing.

Andrew: Okay. And that’s the way you build rapport…

Hal: Then I ask them, by the way, how is your day going today? I always ask that because you got to get in their frame of mind. And if they’re having a bad day and you don’t ask and find that out and connect with them on that and you just go into your presentation, well, the whole time they have something on their mind.

Andrew: What happens if there’s something on their mind? What happens if they say, hey, you know what, my kid just got into a fight with some other kid at school, they’re thinking about kicking him out I just got a call from the principal a few minutes ago. Now their minds going to be completely on that.

Hal: Sure. So I meet them where they are. If they’re feeling terrible, I go, that’s terrible, and I [??] with authenticity and sincerity and I ask them if they want to tell me more. Basically, just getting them to talk and talk it through. And then I usually, and this is why I became a coach, then a speaker, because I just like naturally always…I guess I’m a guy and we try and solve problems anyway. But I would ask, so have you thought about what you might do? And then I just ask them and try and get them to talk through it and share solutions, and that sort of thing. And go, well hey, I’m really sorry to hear that and I don’t want to step on any toes are we okay if we move on or is there anything you want to share or talk about? So just kind of make sure that they feel gotten it all off their chest. And so they’ve voiced it, you know where they are, you meet them where they are emotionally and then you can move on.

Andrew: Okay. So now you have some rapport built in there, what’s next?

Hal: So then it’s sharing goals. I go, so Ms. Jones, this might be a little bit weird, I go, people don’t…I believe in our society people don’t talk enough about what their goals are and their dreams and what’s important to them. They’re usually just talking about the news and current events, so I say, I don’t know if you mind, but I would love to know what your goals are. And if you don’t want to share that, that’s totally fine, but I would love know what your goals are and if it’s okay with you I’d love to share what a couple of my goals are. I’m kind of excited about some things I’m working on this year that are different than I’ve ever worked on before.

Andrew: So by goals what your goals are, you are asking them about…what could their goals be? I want to help my kid into college, I want to apply for a new job, that kind of thing. How can you help them with that?

Hal: I’m not going to help them necessarily.

Andrew: You just want to know it?

Hal: I just wanted to get them to share.

Andrew: I see.

Hal: But, the way I do help is I ask them, I go, hey, what are you doing to move towards that goal? And then if they say, nothing. I go, how come? What do you think, is there anything…I don’t want to step on any toes, Ms. Jones, but is there anything that you could do that would move closer? I think that’s a great, acknowledging them for their goals. Tell them it’s phenomenal, encourage that they can achieve it and see if there’s any action that they can define and start taking.

Andrew: I see. All right, then you tell them your goals. What’s the purpose of telling them your goals? You’re there to sell knives?

Hal: It goes back to the Donna story. Many salespeople, or even sales trainers, that will debate this point with me. Right? And I can debate the other side of…It shouldn’t be about you, you know what I mean? It shouldn’t be about you, so I can argue that point too, but my experience has just been… I mean, I shared my goals for, you know, six years, or however long I was with Cutco, six years I think. And I was one of the top sales reps for the company, and Donna wasn’t the only situation where a customer bought, you know… It’s kind of like, when you’re a customer, here’s an interesting point. Often people don’t feel they deserve something, right? There’s a lack of self-worth, or insecurities, or something.

Andrew: Yes.

Hal: So for me personally, I was usually seeing housewives. Sometimes husbands and wives together, but often I was seeing housewives. And, you know, there are many housewives, at least, this is my theory, that they’re nurturers. Right? They’re about their husband and their family, and they might look at something like a high-quality investment in high-quality cutlery and go, I don’t deserve this. Like, I need to put money toward my kids, you know what I mean?

Andrew: Yeah. And so, how does sharing your goals help them feel that they deserve it?

Hal: You know, it…What it does is it aligns with their value of wanting to help other people. So now it’s like they want the product, but their self-worth or insecurity might be preventing them from feeling like, I deserve it. What you’re doing is, by sharing your goal and letting them know that it would help you…Now, I always told them, Mrs. Jones…Anyway, Mrs. Jones, that’s my, whatever. So I would always say, when I would share my goal, I would follow it up. I’d share my goals and I would say, Mrs. Jones, I do not…Let me be really clear, I do not want you to buy anything today to help me out with my goals, you know? Of course if you get something, it helps me, but in no way do I want that to be your determining factor on why you would buy anything. And then, by the way, here’s a little bonus tip. I would transition into setting up referrals there. I’d go, In fact, my main goal, Mrs. Jones, and I know this sounds funny, but my main goal is just that you like me today. You know, that you like me, that you enjoy our time together, so that you feel comfortable introducing me to a few of your friends, because that’s how I get all of my appointments. I don’t cold call or go door to door. Every person I see is a personal referral of someone I’ve seen.

Andrew: And you ask that early in the process? But you don’t ask for the actual referrals, you just set them up and you say, I want you to like me enough that later on when I ask you for referrals, you’ll give them to me.

Hal: Yeah, and then I follow up by saying, Now, Mrs. Jones, don’t worry about that now. You have to make sure you like me first. Fair enough? Now I’ll tell you, that is something that was not taught to me in Cutco training, that is something that I developed over time, and the average representative gets three to five referrals from their customers. I averaged 15 to 20 referrals from my customers, which gave me an endless supply of people to call, you know? And so, and I really believe that was why, because most sales reps, if they asked for referrals at all, which that’s another thing that I coached sales reps in other companies. They don’t focus enough on that and they’re always struggling finding people to call. So for me, I would set it up basically in a positive way, right? I talked about referrals, I planted the seed, I made a joke, I was light- hearted right? So at the end, I’m not for the first time like most sales reps springing it on them, when they’re….In their mind, you know, maybe they bought something, maybe they didn’t. They’ve checked out emotionally. They’re like, alright, the presentation’s done, you know, he’s cleaning up. I’ve got to…And then they’re going through their mind, projecting into the rest of their day. I’ve got to go pick up the kids, I’ve got to make dinner. And then most people go, By the way, Ms. Jones, I need you to refer me to a bunch of people. And at that moment, you’re catching them when they’re checked out, and they’re like…They’ll think of any excuse not to do it.

Andrew: OK.

Hal: So for me, I mentioned it at the beginning, planted a seed in a positive way and then at the very end, I say, Mrs. Jones, now this is the most important part. Remember I was telling you in the beginning my number one goal was just that you like me today? You know, I think we got along, hopefully we got along. But anyway, this is where, and I pull out my notebook, and I would….I always, I’d have it numbered already. 15 to 20. And I’d have a star at 15 and a happy face at 20 in my notebook.

Andrew: And so now they have a goal of getting to 15 and to 20 with you.

Hal: Yep. And their name was already on it from earlier. Either it was already on at the top, referred by and I’d have their, underline their name, or I’d write it right there. And I’d say, Mrs. Jones, this is the important part. i just need you to jot down 15 to 20 people, not people necessarily that you think would buy, you never know who’s going to buy and who’s going to like it. Just anybody that like you is nice enough to take a look and then it will be up to them, if they want to get it, great, you know. If not, that’s totally fine.

Andrew: This is frickin’ amazing. All right, I want to continue with this. This is so, my mind is starting to go to all the different applications of this process to online sales, even. Even to automated sales. Even to the way we design our funnels online I think would be influenced by this. All right, you’ve asked them, you’ve got rapport, you’ve told them that one of your goals is to get referrals and now comes the sale. How do you sell them on $1000 knives?

Hal: The Cut-co presentation is very demonstration heavy.

Andrew: OK

Hal: Because they’re not salespeople and because it’s such a great product. So for example, we go through the features and benefits and the normal sales stuff. You go through the guarantee, and you’re asking questions along the way, How often do you cook? You’re getting an idea which set will be a good fit for them; but the biggest selling point is the first demonstration you do within the first few minutes of opening the book and showing them stuff. You pull out the super shears, and you cut a penny into a spiral, you show them how these come apart. So right there you’ve set the precedent, these aren’t like normal products.

Andrew: So wait, let me ask you this: how do you demonstrate ideas? Here you have a product that’s clearly meant to be demonstrated. What do you do now that you’re selling yourself as a speaker if you want to create an equally dramatic demonstration?

Hal: As a speaker it’s simple, it’s your video. In fact I’m working on my demo video because I feel mine does not do this well enough. It has to be the in first 30 seconds, they’re like wow that’s different or that’s hilarious.

Andrew: That’s how you demonstrate?

Hal: Yeah, and I think if you’re doing other online products, I think you demonstrate it through testimonials, that to me is a like a demonstration. The power of video is the most effective marketing method.

Andrew: All right, so you do the demonstration and it’s a lot of demonstration a lot of benefits

Hal: Grab your favorite couple of knives from the kitchen, and we actually had rope, but we would actually cut rope with theirs and then with Cut-co, and unless theirs were brand new or just sharpened they rarely cut through well and Cut-co goes through in one shot. Then we would get leather, and they would pull out their steak knife and saw through this leather, and the cut-co steak knife would just fall through.

Andrew: That’s another thing, I heard Noal Kagan, who’s an entrepreneur I’ve interviewed a few times here, say that one of the things he advises other entrepreneurs to do is to ask their customers what have you used in the past, why didn’t it work and then compare the past product to what they’re selling, and you’re doing the same thing here.

Hal: Yes. They can really feel the difference.

Andrew: You’re actually letting them feel the difference which is so powerful. All right, I understand the sales process. Let me ask about one other part of this and then I’ll go to the notes that you and Jeremy made, which is you have to ask for the sale, at some point you have to ask for it. How do you do it?

Hal: That’s an interesting question. First I’ll teach you how I was taught to do it and then I’ll teach you how I ended up doing it.

Andrew: Thanks. I like it.

Hal: I was taught to say, “So Mrs. Jones, I wouldn’t be doing my job today if I didn’t ask you, would you like to place an order for this set of Cut- co today and get your super shears for free?” There were always free bonuses, as Frank Kearns[SP] calls it stacking the cool. And I started giving away a lot more free stuff when I heard Frank Kearns talking about that concept. People don’t care about the value or the cost of the freebies, they want quantity. So I would take as many of the lower cost items, like ice cream scoops and veggie peelers, and added together it would only add up to a fraction of what a larger item might be. They would rather have all the cool freebies.

Andrew: I see so one knife that’s worth $100 is not as dramatic as 10 knives that are each worth $5.

Hal: Exactly.

Andrew: and that’s what you want.

Hal: Even 5 gadgets that are worth a combined $50 is typically going to equate more emotion for a customer than one knife worth double that, right?

Andrew: Stacking the cool and say I wouldn’t be doing my job…

Hal: And ask would you like to place your order for Cut-co today and get this for free and then you just be quiet and wait.

Andrew: And then you get objections, I’d like to but I don’t know that I have enough credit on my credit card. Or, I’d like to but I’d have to check with my wife, I’d have to check with my husband. What do you do with objections? You guys practice those?

Hal: Yeah. You practice handling objections, you know. So you go through the five pay, you can break it over payments. You say I totally understand, right? I understand what you’re saying. A lot of customers feel the same way. You know the Phil Felds phone method of selling, right? So I understand how you feel. Other people felt that what.

Andrew: What they found is it’s a good deal.

Hal: What they found is we have a five pay and you can break it over five payments with no interest so it makes it really easy. So instead of paying, you know, 800 dollars today, it’s only 182.55 or whatever. Right? And so then present the investment options.

Andrew: I see. You’re very big on goals. As we went through the sales process you shared your goals, oh actually, sorry. This is the way that Cutco did it. You changed the process? How did you change it?

Hal: So how I ask for the order? Yeah. So here’s what I do. My philosophy was when you ask someone would you like to buy today, you are pinning them in a corner where they have to give you an answer, yes or no. And most people, if they don’t have total certainty that the decision to buy your product is the right decision, which the majority of people don’t have certainty right away. It’s the fifth time the sell is asked for, that’s the popular statistic. The fifth time the sell is asked for, the average sell is made. People have to work through their issues with it. Well, if you say do you want to get this, yes or no? More than likely they’re going to say no because they don’t have total certainty that it’s the right decision. And now you’ve got to deal with the no. So I’ve changed my closing question from would you like to get it to what do you think?

Andrew: I think these knives are dramatically impressive. I like the way they cut. I can’t believe you’re able to spiral a penny.

Hal: And what it does is it doesn’t pin them in a corner. They don’t feel that pressure of oh, I’m being sold or I’m being closed on. Or I have to say yes or no.

Andrew: OK.

Hal: Right? Here’s what you get, you get this for free. Basically leading up to the point where they feel like it’s going to come with an all right, do you want it? And I would just say, so what do you think? And I would just sit back. And what that does, most people still have objections but you’ve opened up a space where they can just talk about them without telling you they don’t want to buy what you’re selling. So just a much more comfortable way. Then what I would do is I would hand the objection. We were taught to say, so, do you want to get it? But I would just handle it and go, how does that sound? It was always these open ended, so what do you think? How does that sound? Does that sound better? Is that closer to where you are?

Andrew: The problem with that is that most salespeople then can’t ever then bring themselves to ask for the sell. So, it’s how does that sound. Oh, OK. So you do like that. All right, and so I helped you overcome that objection. Terrific. But you never say, all right, should I sign you up now.

Hal: If they’re not willing to say yes. That’s a great question. A great distinction. Because most people, here’s the thing, when you say so what do you think? They will, if they’re sold and they’re ready they’re like yeah, that sound great. How do I pay for it? They’re going to ask for the order.

Andrew: I see.

Hal: However. If what you’re talking about where they’re like, I like it. If they’re not ready, if it’s not definitive I go so, will that work for you? Do you want to go ahead and try that set out?

Andrew: I see how it works for you. I could see also how it could be an issue for a new salesperson. Well, here’s my hesitation actually. Someone is listening to this and they’re going to hear, all right. This guy Hal is a good salesman, I hate asking for the sell. That’s when I put myself on the spot. That’s when they can respect me and my product, but mostly me. I’m just always going to say what do you think. Then they’ll never get the sell. How do they move from what do you think? Oh you like it? To, OK, should I put it on your credit card or do you want to pay cash?

Hal: Great question. And I think it’s important as well to be clear I did start my career for the first few years was by asking for the order. So I think that probably does factor in I did develop the ability and confidence to say, do you want to get it? So that’s a good point. For a new salesperson, maybe that’s something they would want to start with.

Andrew: OK.

Hal: It got to a point though where it was a very fluid process, you know, selling. I wasn’t following the exact script anymore. I was adjusting and customizing my whole presentation based on their answers to my questions. It became more fluid. The easier way to ask for the order is to always ask for the order it to always ask for one of two options. So, I still wouldn’t say, do you want to get it. I would say, so what do you think? And they go, yeah, it’s nice, I like it. And, go, okay would you want to go and put it on a credit card, or do you want to put it on payments or do you want to pay it in full? Do you want to do a check, or would a credit card be easier for you?

Andrew: I see, so now, what was that?

Hal: My fan, it’s getting a little hot in here.

Andrew: Alright, but I wonder if it’s going to make noise.

Hal: No.

Andrew: It seems good. Alright, so, I see what you’re saying, you’re assuming the close, and you are giving them two options, that each one is a yes. Do you want to pay credit or cash, do you want to buy this set of knives or that set of knives.

Hal: Sure, yeah.

Andrew: Alright, so what I was trying to say earlier is you’re a really big goal setter. You talked about how you did it for yourself early on, when you were starting to sell Cutco. You talked about how you shared it with your customers and you talked about it with your customers and you asked them to tell you about theirs. You also believe in setting very specific goals, why did you do that. How did setting specific goals help you become a better sales person?

Hal: I’m just a big believe in when you set a specific goal, and setting it’s not enough, it’s got to be, number one, it’s got to be specific, but it has to be in writing, right? You have to review every day. We’ll talk more about focusing on it and reviewing it. But, in terms of setting your goals and being specific, I’m a big believer that when you have a specific goal or an intention. I call this the power of intention, when you’ve got a predetermined very specific intention, what you’re trying to create, or what you’re trying to achieve. When you have an intention that is clear or a goal that is clear then the magic starts to happen because you’re thoughts, your words, or your actions all align with that intention, with that goal. So, what I started doing, is I started going from just having annual goals or monthly goals or even weekly goals to, I would decide how much I wanted to sell every single day.

And I’ll tell you an interesting story, the first time I had this revelation, I wanted to double my sales from one year to the next. And, so, I had been selling for five years, I had been one of the top sales people and I was about to leave and I decided, I’ve never fulfilled my potential, I’ve never really, really, committed at the highest level that I could have for an entire year. I had hit hall of fame, I was at this conference where I was going to leave the company. I was going to go to write a book and be a speaker, my next venture, or my dreams. And, I am sitting in the conference and I realized I’ve never fulfilled my potential, I’ve never really given everything I have. I always knew I was capable of doing double what I had ever done before in a year. My best year ever, I tied that year twice, two of the top years, I thought, I knew I could do double because I knew I hadn’t worked as hard as I could. So, I’m sitting at home one night. You know those moments where you’re laying in bed and you’re mind is racing, you’re thinking about your goals or whatever, right? And, so, because I had a specific predetermined goal, my thoughts started to align with it, I thought, okay, the only way I can achieve this goal, there’s one of two ways. I can either work twice as hard, right, and do twice as many phone calls and sales presentations as I did to have my previous best year in order to double it. Or, I can figure out how to get better. What if I could double my average sale-per-customer? And, then I started thinking, how could I do that? And, I started to reverse engineer it, where I was like, well, how do I currently, like my average per sale currently, what creates that. And, I thought, well it’s the series of words that I use, it’s how high I start when I show, you know, whatever I start with. Say, hey, this is our set, what do you think, it’s how high do I start? It’s how slowly I drop down, do I rush dropping down?

Andrew: You mean, drop down in the price?

Hal: The drop down in the price.

Andrew: I see, in stead of starting off with the cheapest product and hoping people like and maybe they want to upgrade to something better, you might start with the more expensive product and think, hey, how do I go higher, how do I slowly bring them down. Maybe not even bring them down to a lower option. And, you wrote this down and you said, I want to double my sales. After having a couple years of stagnating sales numbers, did you hit it?

Hal: Did I end up hitting it that year?

Andrew: Yeah, did you end up doubling your sales.

Hal: Yeah, I ended up more then doubling it.

Andrew: More then doubling.

Hal: Yeah.

Andrew: How do you write it down? Do you have something next to you now that you are looking at with your daily goal, you’re yearly goal that you can show us?

Hal: I think they’re all in my affirmations, in my iPod, or my iPad. Let me see, try to see what I have here, here you go, this is kind of my goals.

Andrew: Can you show, we’re barely going to be able to see it.

Hal: Well, I don’t want you to know all my goals. So, right, but so

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Hal: I don’t want you to know all my goals, but I’ve got them broken down. I’ve got my top three goals for the year and then each goal is supported with an action. The number one action I need to do on a daily or weekly basis to produce that result. Right?

Andrew: So what’s the number one action. Give me a goal and one number one action example.

Hal: OK. So, number one, grow my VIP coaching to 300 plus members. So I’ve got this group coach, and it’s a 97 dollar a month group coaching program that you know uses an online membership site and all of that. So, my goal to grow that to 300 members. Then the action is to continue doing what I’ve already been doing, right? Which is through referrals. So every time someone signs up for my coaching, I let them know. I say, for every person you refer you get ten dollars off of your coaching. So it’s 97 a month. Or for every person you refer who signs up. If you refer 10 people and all 10 of them sign up, you get your coaching for free.

Andrew: So your goal today is to get one of your customers to give you a referral?

Hal: A lot of referrals.

Andrew: A lot of referrals.

Hal: So here’s what I do. In order to create a little bit of scarcity I say, you’re going to get a survey now. They just signed up. They’re going to get an email for the membership site with their username and password. They’re also going to get a welcome survey. And there’s a link in the email that has a link to the survey and it’s got questions on, what do you want to get out of the coaching program? What are your goals? Etc., etc. And the last question is, is there anyone you know that could benefit from this coaching? And that’s the referrals. And you just put down their name and their cell phone number. What I let them know is, I say because I work within certain companies. I usually get referrals within one company and then I get referred to everyone in that company and then I move to another company. So I let her know, I say, now this is, obviously when you’re referring people, if they’ve already been referred the credit goes to whoever referred them first, naturally. And they go yeah, that makes sense. So what that means is, I wouldn’t wait on this. I would do this tonight. I’ve got more calls with other people tonight and they’re within your same company. Obviously you don’t want to wait a week and procrastinate and fill out your referrals and all of a sudden you realize that five of them got referred this week.

Andrew: Now there’s an incentive to give you a lot of names so that they can be first with them and there’s an incentive to do it quickly because otherwise someone else might give you the exact same name. I see.

Hal: And I average, um, somewhere around 10 referrals per person. And that’s how I’ve grown it. It’s all referrals. I haven’t had to do any online marketing.

Andrew: I did an interview, actually, a course with Jermaine Gregs, this guy who sales courses that teach people how to play piano by ear. And he is such a good salesman. He has on his wall, and he turned his camera and showed me, different motivational hooks that he got out of books, like the book, Influence by Robert Cialdini. And when he tells someone about his program he always tries to use at least one of those different tactics. So you’re saying scarcity. I can imagine him on his wall saying how do I use at least scarcity when I make this pitch now. It seems like you do the same thing.

Hal: I’m glad you mentioned that book because, you know, that’s why you mention starting high. The law of contrast. Scarcity. If you’re watching this and you haven’t read the book “Influence” by Robert Cialdini. You have to read that book. I mean, I’m sure you would agree.

Andrew: Such a good book. Absolutely. Go get that frickin’ book. But I imagine most people listening have already have read that book. It’s so good. I say that because I want them to feel that now if they didn’t read it they better go and read it. Everyone else has.

Hal: After they read the “Miracle Morning.”

Andrew: “The Miracle Morning” I’ve got it right here. You also want to hold yourself accountability. I know that’s one of the things you told Jeremy helps you. How do you hold yourself accountable?

Hal: Well, not hold yourself accountable. That’s the ultimate goal. But I believe that accountability is crucial to success. Right? The parallel between accountability and achievers is irrefutable. If you’re a CEO you’ve got more accountability than anyone else. You’ve got your executive staff, you’ve got the board of directors, you’ve got the share holders, you’ve got all this accountability. I think if it wasn’t for all that accountability, you’d find a lot more CEOs playing Words With Friends all day on their phone. Not that they don’t already, but the point being, accountability is crucial. I believe you’ve got to seek out systems for accountability. So that could be an accountability partner. Could be someone in your company that you work for. Right? But it’s got to be, to make accountability effective it’s got to be rigid, it’s got to be scheduled, it’s got to be consistent. As in a phone call, you know five minute call every morning at 7:00 a.m. right?

Andrew: Let me see if I understand this. We’re going to get to how you made so many phone calls despite the fact that you know, there’s a lot of failure at the other end of the phone. I’m going to ask you about that in a moment. Let’s suppose someone’s listening to us right now and they say, I need to make 10 phone calls a day, every day I wake up and something happens that keeps you from doing it, but really I know I’m just procrastinating, I’m not holding myself accountable? This guy, Hal, is saying he’s got a solution for me, how do I do it? How do I get this accountability? To get myself making phone calls, what do we say to that person?

Hal: For me, my first accountability resource was my manager. My manager Jessie, who I committed, he said if you want to break this record, Hal, you have to commit to calling in every single day, every morning when you wake up, every night before bed, and between every single appointment. He said, if you are committed to that I can support you and hold you accountable the whole way.

Andrew: Meaning he will take your phone call after you are at an appointment, and that’s how you hold yourself accountable to actually take the appointment?

Hal: That’s how I was accountable for everything. And also, so he could help manage my mindset, and having a coach is a great way to get accountability, hire a professional coach. That’s something I’ve done over the years. What I think is the most important thing with accountability is you have to understand how important it is, and why we resist it. See, most people resist accountability, we rebel against it, we resist it and I believe, and I’ve written about this in books, that is because as children it was forced upon us by the adults in our lives. Our parents held us accountable to go to bed at a decent hour, to bathe, to eat vegetables…[SS]…if it wasn’t for our parents…. What did you say?

Andrew: It starts to feel oppressive; no one wants more of that.

Hal: Yeah, we didn’t ask for that accountability, but if it wasn’t for our parents we would have been sleep deprived, dirty, malnourished little kids. Then we go to school, our teachers force accountability on us, so most people when they become adults, it’s this downward spiral into mediocrity where they resist accountability and they embrace freedom and what they don’t realize is the only reason we get results in our life typically is because of some form of accountability. And unless you are one of the one out of a thousand people that are masters at holding yourself accountable you’ve got to seek it from other people. Whether it’s a colleague, a co- worker, a superior, a mentor, a professional coach, or my favorite method of accountability, which, this is what I did the year when I doubled my sales. I reached out to probably 30 other sales reps that were [??] from my company, but that I believed they were capable for more. And I said, are you willing to do an accountability call every week, every Sunday night that I’ll host, but you have to commit to show up every week. And I ran this call for 52 weeks, I didn’t get a commission, I didn’t get paid, but here’s the thing, I was holding them accountable on the call and who do you think felt the most accountable to follow through and not look like a fool? Right, it was me, so I benefited the most. Anyone watching this, if you want to take your accountability to the highest level and do it with no investment of money, you don’t have to hire a coach. Form an accountability team, two people, three, four, five people where you hold them accountable to follow through with their actions on a weekly basis and you share what you’re committed to and there’s no way you’re not going to follow through and look foolish in front of these people that you called.

Andrew: All right. So we’ve talked about all the successes, but when you’re calling people, even if they’re referrals, there’s a lot of rejections, a lot of people who don’t want to see you, maybe say something insulting before they reject you?

Hal: Sure.

Andrew: How did you deal with that?

Hal: There was one of them one night, I was tossing and turning, thoughts were running through my head as I pictured myself in my apartment and I had this realization, I had just had a bad day that day. Actually, I had a bad night on the phone, I had made like 30 phone calls and set zero appointments. And I felt like crap, so discouraged, and I’m second guessing, should I pick another career and get a regular job where I just show up for a pay check? And that night, while I’m falling asleep, I had this realization…I just had one bad day on the phone, but over the course of this year I will have amazing days, I will have average days, and I will have horrible days, that’s just a fact, the average always goes up and down. I thought, I am so emotionally attached to my results every day and it causes me to ride this emotional roller coaster, often doubting myself, second guessing my career choice, etcetera, etcetera. Getting discouraged, feeling overall unhappy, and I thought…my results this year, my income, my goals, everything I want to achieve is based on the process of making phone cals a day for the entire year.

At the end of the year, here’s a little math equation for us. I’m going to sell X amount, right? Ten calls a day equals X amount at the end of the year. If I make 20 calls a day, that equals 2X. I will sell twice as much, almost to the T, within a few hundred dollars maybe. And, I had this epiphany, I thought, I just needed to be committed to the process of making 20 calls a day and not be emotionally attached to my results. Because, I’m not in it for a day. It’s not a one-day job. So, why would I care how a day went. Why would I care how a phone session went. And, even more so, why would I care if Mrs. Jones on the other end was rude to me, said, I’m not interested, don’t call here again and hung up on me. And, if you’re still [??] how you get that call and you get that feeling in the pit of your stomach and you’re and this internal dialog, why is she so rude? I’m a good person, I don’t deserve that, right? And, now when I define this new strategy, I thought, my goal every day is to tally 20 calls. You got to have it in righting, Andrew, right? It’s got to be in my schedule, every day, I wrote, 20 calls. 20 calls. 20 calls. And, then every day I tallied those 20 calls. And, my goal is to make those calls as fast as I could because I knew that that was all I needed to do. And, if I set 0 appointments instead of getting off the phone going, man, I can’t believe I didn’t set anything. I went, cool, I get the day off tomorrow, because I knew that the next time I would set four appointments and it would all work itself out. So, now, here’s the beauty of it, of how the strategy is. Now, when Mrs. Jones was rude to me and my prospect, don’t ever call here again, I don’t want what you’re selling, click. I’m like, sweet, that’s the fastest call I could have made.

Andrew: One less, 19 to go.

Hal: And I’m on to the next. And, I’ll tell you, here’s how that result of the big picture. That resulted in, I came out with that strategy the first week of January in 2000. So, 13 years ago. Four months later, our sales was broken into 3 campaigns, spring, summer, fall. At the end of the spring campaign, following 20 calls a day, without stressing over anything, I was the number 1 sales rep. out of 50,000 reps in the company. But, the best part was, they were all stressed out. I have the easiest job in the world, I made 20 calls a day, then I went and laid out by the pool every day.

Andrew: Do you meditate, by the way?

Hal: Meditate, yeah. I didn’t then, but I do now.

Andrew: You do now?

Hal: Yeah, that’s part of the miracle morning, Andrew, yeah.

Andrew: Why do you meditate, that’s where I got it, actually. I got the book here, I couldn’t find the note that I had, so I said, that’s an easy way to introduce it. You meditate, why do you meditate?

Hal: Why do I meditate? I think why I started meditating it because I started reading about it. In fact, when I look in the mirror in the morning I have a..

Andrew: Oh, look, I did have the sticky note on the meditation.

Hal: Nice.

Andrew: I took the sticky note that you use to write on the book when you sent it to me. To highlight the sections I want to talk about. Yeah, so sorry, why do you meditate?

Hal: So, it’s hard to answer that, I mean, it’s one of my favorite times of the day. It’s usually only five or ten minutes in the morning during my miracle morning. It’s the first part of it. But, if you haven’t meditated, and, when I first started meditating, I’m like, if anybody is ADD or my mind is all over the place, a million miles an hour. In case you couldn’t tell. But, the first time I tried to meditate, it was really hard. And, I googled it, how do you meditate. And, I’m reading the instructions and I’m like, okay, sit there and just clear your mind. And, I’m like, it’s not working, you know, I’m not very good at this. Now, practice makes perfect, I’ve gotten better at it. It’s just the only time where, to me, I get to tap into that essence of being, right? Like, there’s no problems, there’s no worries, there’s not even any, just the essence of life, you know. And it’s hard to put it into words, to me ,but I do it because it’s one of my favorite things to do and it gives me such peace. And, it’s really an escape from the day-to-day grind. And, it’s an escape from your stresses and your challenges. And, it’s a chance to just really connect with who we are at our most fundamental level.

Andrew: What’s the apps that you use that helps you meditate?

Hal: The Miracle Morning app? No, but I use, I’ve got five. I just, I’ve googled, like, five.

Andrew: What’s the Miracle Morning app?

Hal: The miracle, say that again?

Andrew: What’s the Miracle Morning app?

Hal: It’s got a journal, it’s got a lot of the practices from the Miracle Morning and every morning I manually send out a message. Like, a motivational quote or something from me.

Andrew: You created the app? Well, you didn’t hand code it, but, your guys created it for you.

Hal: Yeah, so here we go, I’m looking at my meditation apps to remember which ones are my favorite – mindfulness, and simply being. those are my two favorites if you want a male voice, mindfulness. If you want a female voice simply being.

Andrew: As you meditate.

Hal: As you meditate so those are guided meditation activities. It just varies on if I’m really tired I’ll use a guided meditation and in the morning if i didn’t wake up on the right side of the bed I’ll use a guided meditation simply because my ability to focus is not there. If I’m like the average morning where I’m just focused I’m ready to go I meditate without the guided meditation.

Andrew: Alright let me say a couple of thank yous and give people a suggestion and then I want to come back and ask you about two things.

Hal: Okay

Andrew: One is going to be a bit of a challenging question but I think it’s important to challenge you on this its a concern that the audience has and I know that they’re going to think that as soon as I mention this one word and the second is I want to hear about death since I mention it at the top of the interview and I didn’t talk about it. Something interesting happened to you that’s important for us to bring up, but first the person that introduced me to Hal is Dustin Dell’Era. I only talked to him via email so i hope I’m pronouncing his last name right. I’m looking at it here Dustin Delarrow or maybe Dustin [SP] Deyarrow. I love when someone hears me in an interview and says I can help out and that’s how this interview happened.

The two interviews that if you want to hear guys that were influenced by Cutco who were entrepreneurs but earlier on they were selling Cutco and that’s how they learned to sell. Mike Alfred, you can go to mixergy.com and find it or Dustin winter. Justin is the guy who created candles that have diamonds in the center and when you melt them all the way to the end you get this ring with a diamond on it. It could be worth five bucks, it could be worth I think hundreds of bucks. This just took off because of the reaction that you just gave a lot of people had that .If you want to listen to those interviews and hundreds of other interviews and courses go to mixergypremium.com.

The way Mixergy works is we put these interviews out for everyone to see. We encourage you to download it create a little bit of scarcity because we tell you if you don’t download it now its going to go to Mixergy Premium and so people download it very quickly. If you want to go back and listen to the archive of hundreds of entrepreneurs that tell you their stories, if you want to be inspired by them and learn the way that you see me doing right here by taking notes and by thinking how can I apply this. How can I ask my guest just not about their goal but share my goal with my guest and then drive towards it through out the interview. Anyways if you want to do what I do which is use what I have learned from all these interviews go to mixergypremium.com you’ll get those interviews and dozens of courses I mention Germain Griggs the guy who is incredible at selling. Who has automated the whole sales process that course is part of mixigypremium.com and I urge you to check that out.

All right here is the challenging part, affirmations, that’s the word if i say that is in this book many people are going to say that’s not the book for me I’ve got to go away, because what we think with affirmations is the Steward Smalley character who says I’m not good enough I’m.[??] You say to the mirror, I haven’t found a successful entrepreneur who I have interviewed who starts his day with the affirmations except for people who are coaches. They seem to start to their day with affirmations so tell me your opinion about affirmations.

Hal: I first learned about affirmations when I first read Think and Grow rich. I think that was the first book that introduced me to them. I printed off the self confidence affirmation from that book Think and Grow Rich and i started reading it everyday. I decided to you see I was skeptical too I was skeptical about affirmations and whether they would work. Here’s what I decided to do I thought what is the most deeply held limiting belief that I have? The most deeply held limiting belief that I had and what I came up with was I have a bad memory. Now most people have the belief of themselves but what’s different is because of my car accident and the brain damage that I suffered this is how bad it was. If you would come to visit me in the hospital Andrew in the first few weeks that I was there, you would come to visit me you could spend two hours with me and then you would go to lunch at the hospital cafeteria and come back and I would not know you were there for two hours. I had zero short term memory and it was like that for really six months really bad and then it got gradually over years it got better. I had built in this deep belief that I have brain damage my memory is horrible, so I thought I’m going to create an affirmation not that lies not that affirmations I disagree with a lot of the way that a lot of people teach where you have to say I am statements. I am rich, I am successful. Your brain whether subconscious or conscious goes bullshit you know they don’t buy it. I couldn’t write I have a great memory because I’d like read it and go that’s not true. I could write my brain is a miraculous organism with the ability to generate new cells and heal itself and my memory, I’m committed to my memory improving every day, a little every day, until it is amazing and I have the best memory of anyone I know. So I could buy into that, I could buy into the healing ability, right? So I start reading that every single day and whenever someone says, will you remember to call me or will you remember to do anything I always said, awe, I have brain damage dude, you’re asking the wrong guy, I can’t remember anything, right?

Andrew: Literally, that’s what you would say out loud to them?

Hal: Literally, that’s what I said out loud, I affirmed it was in my own head [??] I would say I have brain damage, I have a horrible memory, I was in a car accident, if you don’t know. And I can’t remember anything. Or I would, just write it down, but I never, ever, ever, I had zero trust for my memory, like a lot or people don’t trust within themselves to, whether it’s confidence or whatever. So I created this affirmation and I read it every single day. And it was, I don’t remember if it was one month or two months after reading it, it was within the first couple of months after reading it every single day that I remember a friend said, Hal, hey, dude would you remember to call me tomorrow or remind me, I don’t remember the exact the verbiage, will you remember to call me or remember this, and I said, no problem. And I hung up the phone and I was like, whoa, and it was just total, I was like, it worked. Like I really believe that I’m going to remember to call him tomorrow and that was nine years after my accident. Nine years of reinforcing the belief with two months of affirmation, and it was changed. So I started creating affirmation for every area of my life that I wanted to change. Goals that I wanted to accomplish, reminding me of my values, why I was doing what I was doing. And I’m a big believer, it’s known as fact, that everything is programmed into our subconscious mind. Everything we read, think, say, etcetera, especially if you do it with emotion. Right, so I talk about it in the book, I break down step by step how to create affirmations the right way and how use them and read them in a way where it’s really going to impact your subconscious mind at a deep level.

Andrew: I see it here. What Henry Ford said, and you quoted in the book is, whether you think you can or think you can’t, you’re right either way. And you have this five step process for creating the affirmations as you described. You mentioned death, what happened? Since the accident. I just said death, over and over. What happened?

HAL: So when I was 20, I had been selling Cutco for a year and a half and as one of the top reps I was always asked to give speeches so I gave a speech one night, I got my first standing ovation and I wanted to call my mom and dad and tell them how great the night was because I got a standing ovation. It was 11:30 pm so got in brand new Ford Mustang that I had just bought with my own money, Cutco money, a sense of pride, new car smell, 11:30 pm, northern California, I got on the freeway and I set my cruise control at 70 miles an hour. And my best friend, Jeremy, got stuck at the red light on the onramp, and my last memory from that night is that I saw Jeremy in the rearview getting stuck at the red light. And I thought, too bad for Jeremy, right, I got on the freeway. A couple minutes later, approximately 11:34 pm, a man I had never met before left the bar a couple miles up, only he was intoxicated off of two beers, he was what you call buzzed, but buzzed enough and tired enough that he got on the freeway going the wrong way. And he got his Chevy Truck, much larger than my little Mustang, up to 70-80 miles an hour, merged all the way over, and he thought he was in the slow lane, it was my fast lane, and at 11:35-11:36 pm his truck hit my car head one at 70 miles an hour. It sent me in the oncoming traffic and the car behind hit me in the door at 70 miles an hour, and crushed the left side of my body. In fact, not to get graphic, but this is, if you can see, this is where a metal rod is in my arm, you can see my elbow. So…

Andrew: I hope the audience can see it, I can see it.

Hal: I broke 11 bones on this side of my body, my femur broke in half and came out the side of my leg, I don’t want to get too graphic, but my femur broke in half, crushed…

Andrew: …is actually on YoPal Hal, as in like Your Pal, yopalhal.com. Your site where people can see what you looked like right after the accident.

Hal: Yeah.

Andrew: Uh-huh, sorry, go on.

Hal: And so Jeremy got to the scene first, he was only a minute behind me, he called 911 and he called my mom and dad, woke them up out of bed, letting them know it was bad. I mean, I literally…I broke the bones in my eyes, the top of my head was cut open, my ear was hanging on by half of an inch, so I was bleeding from head to toe. And when Jeremy found me I was in a coma, instantly unable to withstand the pain I was in a coma. So I’m on the side of the freeway at 11:30 pm, freezing cold, December 3rd, northern California in real cold, and my car is just smashed, in fact I don’t know if you can see, yeah there’s me and my car.

Andrew: Let me see it.

—- 15 of 16 —-

Hal: When they finally pulled me out of the car, it took them an hour to cut me out of the car and when they did I actually died. And I bled to death in the car and I was clinically dead for 6 minutes, in a coma for 6 days and came out of the coma and they said I would never walk again.

So that was kind of my experience with the accident.

Andrew: How did you get out of it? How did you recover?

Hal: I’m a big believer in positive thinking but not that it solves all your problems. I just think it allows you to stay clear headed by focusing on the solutions and focusing on what you have to be grateful for and feeling positive as opposed to focusing on the problem, dwelling on the things you can’t change, etc.

So for me, I completely accepted the fact that I couldn’t change what had happened to me so there was no point in feeling sorry for myself, for feeling bad about it and I focused on my recovery. And the doctors said I would never walk again and I remember I told my mom and dad, this was like two weeks after the accident, I said, the doctors came in and said how you may never walk again. I have a metal rod in my leg, a 14″ rod in my leg, a rod in my arm, 2 screws in my elbow, 3 metal plates in my eye. And when the doctors left, I told my mom and dad respectfully said ‘Look, the doctors are the experts in medicine but they’re not experts in me.’ My mom and dad were like trying to hold back tears. I said ‘I’m going to walk again, you guys. Don’t worry. I’m going to walk again’

And a week later, a week later, they took X-Rays again and they said, they came in and they said ‘We don’t know how to explain it but your body is healing at a miraculous rate and we’re going to let you try and take your first step today’. So it’s a miracle, call it what you want but yes, I took my first step and then I just focused on recovery. 7 weeks later I left the hospital and against doctors orders I decided I wanted to go back to work and compete in a sales competition.

Andrew: Unbelievable, actually. And how did you end up doing with the sales competition?

Hal: It’s funny. What happened was I held the record for the two week sales competition at that point. I set the record of selling $18,000 of [??] in two weeks. That was a year before. And my best friend Jeremy, the one that found me at the scene of the accident, he was visiting me one night and I said ‘Hey, what are you doing?’ and he said ‘I got to go. I got to get on the phone. Push period starts tomorrow.’ That’s the name of the sales contest. ‘Push period starts tomorrow’. And I was like ‘Aw, man. I was planning on winning this Push period, you know? I forgot’. And I said ‘Dude. How crazy would it be if I sold [??] Push period? What if someone drove me to my appointments and I sold [??]‘ . And he just kind of laughed and I laughed.

And then he left and I was by myself and I thought ‘What if I really did that?’ And I started thinking how could I do that. Like, that would be crazy. Like, I had brain damage where the doctors had already confirmed I would not have a driver’s license for at least 6 months so I couldn’t drive. I had severed a nerve in my left arm so this was the extent of the motion in my hand. I could not lift up my hand, I could not lift up my fingers so I was walking around like this all the time. And I couldn’t walk. I was just learning to walk and so I called my manager and I said ‘How much do you think it’s going to take to win a trophy at the Push period?’. He said ‘Probably $3,000-$4,000, Hal’ and then he laughed. ‘Why? Are you going to try to win a trophy?’ And I got all dramatic and I’m like ‘You’ll see me on stage. I’m going to win a trophy. I’ll see you’ And I think I hung up on him or something, right?

And I get home and any sales person knows, the picking up the phone is the hardest thing, you know? Picking up the phone, making calls, sometimes it’s challenging, specially when you haven’t done it for two months. I’m out of the loop, right? My habits have died. And I was exhausted. My body was healing. I was always tired. Long story short, I called my mentor and we need a mentor. If it wasn’t for my mentor, I would have quit. If it wasn’t for my mentor at this time, I would not have done what I was about to do which was called my mentor and said ‘Man, I have no motivation. I’m exhausted. I’m having trouble on the phone. I don’t know what to do.’ And he goes ‘Hal, why don’t you make 5 calls and then call me back. Can you make 5 calls and then call me back?’ I’m like ‘I could do 5 calls’.

And the lesson there by the way is like, chunk what your activity is, right? Break it down into small chunks. It’s easier to commit to the next step or the next 5 steps. So I make 5 calls. I set one appointment and Andrew, what happens when you schedule an appointment or get with a prospect and you get a sales call? Your energy goes up or down?

Andrew: Starts to go up.

Hal: So I call Jesse back and I’m like ‘Dude. I’m doing it. I’m doing it. I’ll call you later. I got an appointment’. And the next 4 days, there was only 4 days left of the two week competition by the way, so I didn’t have a whole 2 weeks. I had 4 days. My dad drove me to my appointments. He helped me hold the other side of the rope because I couldn’t use this hand. It was a collaborative effort, team effort and I sold $7,000 in 4, and out of 500 sales after the conference, I walked on stage with a cane – you know, limped on stage – and I took the number four trophy out of 500 sales reps. And, I was in tears and my mom – well, because I saw my mom first in the front and she was, like, crying and my dad’s crying, and other people were crying, and I start crying, and, you know, it was probably one of the most, just, I don’t know, the proudest moments of my life because it was the hardest thing I ever did.

Andrew: That is such an inspiring story. It is so inspiring to see – this whole interview, actually, has been inspiring. I want, and I hope that this works out, the audience to just pull out one thing that they got of value out of this interview and just share if with everyone else in the comments. I know that you guys who are listening to me take notes on these interviews because you’re high achievers, and because often you will email me your notes. I don’t want to be just the only one to see it. Put it in the comments, let’s try it with this interview and see if maybe this is something we can start building on. In the comments tell me one thing you got out of this interview. Say it in any way you want. And second, if you want to follow up here’s a great place to do it. The book is called “The Miracle Morning.” I didn’t even get into all the hot topics in here. I’m going to suggest one that we didn’t cover which is how to wake up early. I know a lot of you want to start your days properly and that’s a really good section of the book I’m looking forward to. Did you say you get up at 5:00 a.m. or am I just remembering that?

Hal: No I really say you can up whenever you want. I share – that was when my first day of waking up earlier than I had to – you know, most people wake because they have to and they resist waking up and they do the button and they create this energy of “I don’t want to wake up,” which to me is a really negative energy. It’s like “I don’t want to wake up and live my life and create the results that I say that I want. I’d rather lay unconscious for a few more minutes.” So anyway, that’s another conversation, but, no, so my first time was I was waking up at 6:00 am because I had to for work, and I was like, “If I want to change my life I’ve got to do something different. I’m going to start waking up at 5:00 a.m and working on myself every morning for an hour, from 5:00 to 6:00 a.m., an hour of personal development, meditation, affirmations, visualization, journaling, exercise, reading, you name it. All the practices that we’ve all been told over the years by all the experts and self-help gurus and authors: these will change your life, any one of them will change your life. I put six of them into an hour and within two months I had doubled my income and everything had turned around, so, yeah, for me it was 5:00 a.m. and it was so good, by the way, that after a week of it I wanted more. So I moved it to 4:00 a.m. and now I wake up at 3:30.

Andrew: 3:30 today is when you woke up?

Hal: Actually, it’s funny, this is counter-intuitive to the book, but I snoozed. Today was a tough day. I snoozed until 4:00.

Andrew: You lazy sack of [??]. 4:00 a.m.? Alright, I always say if you got anything of value out of these interviews, also find a way to say “thank you” to the interviewee, You’re not just looking to sit back and be entertained with Mixergy. You want to use it, and you also want to connect with the guests, and an easy, best way to do it is by just saying “thank you.” I was just thinking earlier in this interview how – I don’t know why this random thought came to me, but, how did I get Guy Kawasaki to do so many favors and help out with Mixergy so much? I thought, what did I start off with? Oh yeah, years ago I learned from his book and I built my first company with a lot of help from one of his first books. And I sent him a “thank you” email – it’s got to be in my inbox right now because I’ve kept the same inbox for years – and I just said “Hey, I got so much out of your book, thank you for putting it together and making it available to us.” And he responded, and since then he’s done a lot with Mixergy and I really appreciate it. So, all that’s to say, if you’ve got anything of value, find a way to say “thank you” to Hal, and also, if you’ve read the book just find a way to say “thank you” for the book and tell him what you’ve learned from it. I’m going to do it right now by thanking two people: you the viewer, thank you for being a part of Mixergy and helping me grow this and helping me even find guests the way that Dustin did, and also Hal. Thank you so much for doing this interview.

Hal: My pleasure, Andrew. Thank you so much man. It’s been a pleasure. I’ve been looking forward to this all week.

Andrew: Yeah. Thanks. Bye guys.

Andrew: Coming up: Have you ever had a job that sucked? Catch the incredible thing that today’s guest did with a job that other people would have complained about. You’re going to be inspired by that. That is what an entrepreneur does. Also, notice how many times today’s guest is surprised by my questions. And these are things you actually want to hear about. No one’s ever asked them before. Catch it in this interview. Finally, there is one thing towards the end of this interview that I worried today’s guest would ask me to edit out. I will not edit it out. Thankfully, he did not ask me to edit it out. And that’s a good thing because it’s important that you hear it. This is why I don’t edit the good stuff out. All that, and so much more, coming up.

Listen up. I hate to have commercials interrupt this interview, so I’m going to tell you about three sponsors, quickly now, and then we’re going to go right into the program. Starting with Walker Corporate Law. If you need a lawyer who understands the start up world and the tech community, I want you to go to WalkerCorporateLaw.com.

Next, I want to tell you about Shopify. When your friend asks you, “How can I sell something online?” I want you to send them to Shopify, and explain to them that Shopify stores are easy to set up, they increase sales, and they’ll make your friend’s products look great. Shopify.

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All right. Let’s get started.

Hey their freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. The place where literally, literally, actually using the word ‘literally’ correctly, hundreds of proven entrepreneurs have come here to tell their stories, and teach you how they built their businesses, so that you can go out there and build a successful company, yourself. In fact, most of you already have, and you’ve come back here and done your own interviews. And that’s the goal here.

In this interview I want to find out how a guy who used to sell snacks at ball games built a multimillion dollar social media business. Yes, social media business. Dave Kerpen is the co founder of Likeable Media, an award winning social media and word of mouth marketing firm. Also, he is the founder of Likeable Local, his new software company. And, piling onto this intro here, Dave, he’s also the author of Likeable Social Media: How to Delight Your Customers, Create an Irresistible Brand, and be generally amazing on FaceBook. You can hold up the book while I’m saying this. I’ll explain while you’re doing that.

Dave: This is my second book. That one’s my first book..

Andrew: And the author of, I’ve got that up here too, Likeable Business: Why Today’s Consumers Demand More, and How Leaders Can Deliver. Dave, I’m going to ask you later on why you hold up the book, because there’s a reason for it, but first let me ask you this: What was it like to earn your first million?

Dave: It was awesome. I mean, that was the real turning point for us, because we started a company without really knowing too much about business. The story behind my first company is that my wife and I were…

Andrew: Well hold on. I want to tell this. I’ve got an hour with you.

Dave: Oh, okay.

Andrew: I want to tell the story in depth.

Dave: Okay. We’ll tell that in a bit.

Andrew: You’re one of the few entrepreneurs who I’ve interviewed who remembers, and is willing to share publicly that moment when you realized that you earned your first million, so I’ve got to explore that. Where were you, and what happened?

Dave: Got it. Well first of all, there’s no hold barred, so you can ask me absolutely anything, transparency is one of my core values. Go for it. You can hit me up with things I have no idea you’re going to ask me. There’s absolutely nothing you can’t ask me.

It was awesome. When we hit our first million it was a real turning point for me. It made me feel like, “Wow! We’re actually building something substantial here. And we’re building something that’s bigger than us.” That was really the first time that I realized we were building a company that’s bigger than us.”

Andrew: Where? Do you remember? I remember actually calling up City Bank, and hearing them say the number for me. And then I called again, and again, and again, to hear it over and over. Do you remember a moment like that where you suddenly said, “Black and white, we did it.”?

Dave: [laughs] Well I can’t say that I did that over and over thing, but I’m impressed that you did that, and will admit it, also. Early on we struggled a lot with making payroll, and to sort of be at that level where we knew we weren’t going away any time soon, that was what was meaningful for us.

Andrew: Alright. And before this. Before being the guy who, as we’ll find out, was on television for being the guy who built a successful company, you were known as ‘Crunch and Munch Guy’. What did that mean?

Dave: Yeah…

Andrew: What did that mean?

Dave: So I had a job when I was in college, I went to school at BU and I was studying Education and Psychology at BU and I thought I wanted to be a teacher and I took a job working as a ballpark vendor at Fenway Park and then soon there after Boston Garden where the Bruins and Celtics play. And so it was a sales jobs and what a lot of people don’t know about ballpark vendors, or hawkers as they’re known is that they’re pain on commission and tips only so you sort of get paid commission based on what you sell. And it’s also a seniority based system. So you’ve got to work for years to sell like the beer or the hot dogs.

Andrew: How much do you make off of a hot dog, for example?

Dave: You typically get 18% so if you sell a $5 hot dog you make a buck. You sell a lot of hot dogs, commission plus tips you can do well. But it’s a seniority based system so like I said, you’ve got to work for years to sell the hot dogs. So my first day on the job I got assigned the lowest selling product in the building, a product called Crunch and Munch. I sold 8 boxes and I was paid the legal minimum they could pay me, I think it was $15. So I came back the second day thinking, OK well it’s fun being at the ballpark but I’d like to try and make a living out of this and I developed a little schtick and I started singing and dancing and juggling boxes and really making myself noticeable and of course, lo and behold I started selling more Crunch and Munch. The interesting thing is I had no talent. All I had was passion and a little ambition, and no fear. And I was able to build myself this sort of name as the Crunch and Munch guy. The real turning point was when the Boston Herald wrote the first article about me and that night at the game I did, probably the only smart thing I did throughout my years as the Crunch and Munch guy, because like I said I didn’t have any talent. But what I did was, somebody asked me for my autograph the day that the Boston Herald article came out. And what I did was, I said to the woman, do you mind if I borrow your sharpie for the whole game, I’ll give it back at the end of the game and I proceeded to unsolicited sign every box that I sold that night. And somehow, in one night, I had created a perception that in this building not only did you have to buy a box of Crunch and Munch from the Crunch and Munch guy but you also had to get his autograph. And literally the next day and for the next couple years I didn’t have to do it unsolicited because people would buy a box from me just to get their autograph. And I really maxed out what you could do as Crunch and Munch guy. I was on ESPN Sports Center I was making about $400, $500 dollars a game for three hours work. Really good money for a college student of course. And for me it was the first time I really fell in love with marketing, with promotion, with branding, and the things that I ended up pursuing in my career.

Andrew: Wow, so you start autographing stuff and people start to expect an autograph and want one? I’m trying to think of what can I give people and autograph it? No matter what, from now on if I sell it, if I offer it up, I’m autographing it.

Dave: I’m telling you it was unbelievable to watch it. I didn’t ever take a communications class or a business class but I feel like I put my psychology degree to work a lot. Just studying people and consumer perceptions. The fact that I was the same person that I was the day before and I was doing the same schtick I was the day before but somehow once other people saw me signing autographs there was this social proof and everybody wanted to get an autograph from the Crunch and Munch guy, it was crazy.

Andrew: That is fricking crazy. I’m starting to think maybe from now one before an interview I should send every interviewee an autograph photo of myself, just have it arrive the day before.

Dave: I’m telling you. Perception is reality and once people see you in a new light it really affects things.

Andrew: Way to create your reality. And, you founded Likeable with your wife, we’re going to talk about her. But before you even met her you were on something called Paradise Hotel.

Dave: Well, so I had briefly met Carrie [SP] before.

Andrew: Oh you did, OK.

Dave: That’s important to her because she doesn’t like anyone thinking that she watched the TV show. I’ll tell you the whole story because it’s a fun story and it’s a very sordid story.

Andrew: I like sordid stories. You’re willing to tell me a sordid story and later on I’ve got notes here, you’re going to tell me about how you and she were shouting and arguing over stuff. But first tell me the fun sordid story.

Dave: The sordid story. So, after Crunch and Munch guy I decided I had to get a real job and I took a job working in sales at Radio Disney in Boston. And I was the number one salesperson in the country for the year 2000 at Radio. And then this woman started working in my office. She dropped me to number two within three months, and so I knew I had to one, marry her, and two, go into business with her. But unfortunately, this is the sorted part, unfortunately there was one slight problem with that master plan: she was married at the time. And so she, we had a really close relationship, we were best friends, but, and I confessed, sort of, my feelings for her, but, you know, clearly we couldn’t really act upon those feelings and she ended up moving to New York to focus on trying to make her marriage work and I did what anyone with unrequited love would do.

I left Disney and went on a reality television show to find love. It was a real sleazy show called Paradise Hotel on Fox and so I was on 31 episodes of that [???] actually just coming up on the 10 year anniversary. It was sexy singles at a luxury resort and me. And, you know, interesting, really interesting, sort of sociological, psychological experiment. For me, the most interesting thing was being away from all media and people and, sort of, contacts for three full months. Right, so I had no connection to the internet, to books, to magazines, to any of my friends or family back home for a long, long time and it changed my reality. It made me feel like my reality was the game and the different people I was interacting with on the show. You know, I’m happy to talk about Paradise Hotel if you’d like, but just to finish up the sort of story with Carrie was after Paradise Hotel, I was living for a short time in Los Angeles and living as, what I call, a D- List celebrity, generously. And going…

Andrew: Even as a D-List celebrity, from what I read, and there are articles about this in the New York times even, that covered your dating life. You would walk down the street and women would come up to you.

Dave: Yeah, no, it was, right. I do have a weird media magnet thing going on with, you know, pretty much everything I do, somehow I’m fortunate enough to attract media and yeah, New York Times, People Magazine. I mean, I did a whole bunch of media. It was still D-List, though. I was partying with like, at the height, Paris Hilton and Nicole Richie but that’s still not really, that’s pretty, it’s D-List, I think.

Andrew: It’s not Andrew Warner and Mixergy, but [??]…

Dave: That’s what I’m saying.

Andrew: Right.

Dave: The year I had met Carrie at Disney was the first year of American Idol.

Andrew: Okay.

Dave: So, amongst other things, we would discuss American Idol every day at the office . She said Tamyra Grey was going to win, I said Kelly Clarkson was going to win. We all know how that turned out. But I was living in LA, you know, about a year, year and a half later and I hadn’t talked to Carrie in a long time. I had done the show, she had moved on to New York and I was actually at the American Music Awards and I had just walked the red carpet after Ruben Studdard and Clay Aiken of season two of American Idol, and out of nowhere I just missed Carrie and just wanted to connect and so I called her up, sort of like, trying to humble brag and said, “Hey Carrie, I’m hanging out with some of the guys from American Idol, what are you up to?” and she said, “Well, actually, I’m hanging out at home and I’m [??] going through a divorce”, and I was like, bam, you know, I actually just told her a little while lie, I usually don’t tell this story, but what happens is, she loves to tell this part of the story so I realize that I’ve got to include it. I said to her, “Oh, actually, I’m gonna be in New York in three weeks, meeting with my agent”, and so I flew to New York and we started dating and really, the rest is history.

Andrew: And part of that history is you did something that I would never have the guts to do with your wedding, which is you used your wedding to really generate some sales.

Dave: Yeah, so, not necessarily sales, but certainly to cover the costs of the wedding. I mean, Carrie and I, we started dating and we both had some pretty good contacts from our years in radio sales. Carrie, at the time, was now the station manager of a radio station on Long Island and so we had this idea to get idea to get married at a baseball game and create a promotion out of the wedding in order to fund the cost of the wedding. And so what we did was we pitched the Brooklyn Cyclones, the minor league affiliate of the Mets, the concept. They thought it was a little crazy but they said, “Okay, we’ll give you a shot, let’s see if you can sell it and make it happen.” And so we created a promotion called “Our Field of Dreams” and we took over the sponsorship inventory for the game and we resold that to our wedding vendors in exchange for goods and services for the wedding. So we called up 1800flowers.com first and they ended up sponsoring our flowers, Smirnoff sponsored our alcohol, David’s Bridal sponsored our bridesmaids gowns, Entemann’s sponsored our desserts and so on and so forth. We raised 100,000 dollars in trade for an awesome, awesome wedding. We raised $20,000 for the MS society for charity. And the event was amazing because I got married to the love of my life on a baseball field in front of 500 friends and family and 5000 strangers and, for me, it was such a dream. It’s funny because I ended up in social media, I’ve always had this really sort of public personality with the reality TV and the crunch a munch guy so for me getting married in front thousands of people was awesome. And of course getting it paid for was great. But as it turns out it was a real marketing win. We generated about 20 million dollars of earned media for our wedding vendors. 1800Flowers.com had what’s still to date the top ROY [??] PR promotion they’ve ever had, they were on something like 80 TV stations.

Andrew: Let me ask you this. I’ve got to ask about this. Why 80 TV stations covered your wedding, but first, why were these companies willing to pay for your wedding? Is it because it happened to be in a baseball stadium or is it because you are a reality TV guy?

Dave: No it was, I mean I had that sort of pseudo celebrity but it was really we created a marketing promotion where we thought it would be a win win. There were 7,000 wedding programs for everyone at the game where they got sponsorship value, they had the sponsorship value of the innings, the in between innings promotions that normally the team sells that we were able to sell. And then from a PR standpoint we certainly didn’t promise them any press but we said to them, we do expect this to generate national PR and it did. And then the PR guy-

Andrew: Just anyone getting married in a ball field in the middle of a game is enough for a news program to cover?

Dave: Correct. And the sponsorship angle. We included the fact that it was a sponsored wedding and we got a little bit of negative press for that too. The NY Times wrote an article in which they were cynical about the creating a promotion around your wedding. But that only led to more press and it ended up in most of the press. CBS Early Show, ABC World News Tonight, CNBC all did very, very positive pieces which our vendors were really happy about.

Andrew: OK. And so, that led to Likeable the business how?

Dave: Well, so after the wedding literally our vendors including 1800Flowers.com and Entenmann’s said to us, this was really a great promotion, we got so much value out of this, what are you guys going to do next? And we couldn’t get married again so we said, let’s start a company instead. And we started the company. Actually the company was not called Likeable first it was called The K Buzz which eventually became Likeable. And the concept behind our company was word of mouth marketing and helping organizations generate buzz through word of mouth marketing. But what happened very quickly was as social media continued to grow, specifically when Facebook opened up beyond students tot he general public we realized that social media or digital word of mouth marketing was a much better was to do what we were doing than baseball stadium events and mall events and sort of the early days of our company and so we pivoted pretty early on to focus on social media or digital word of mouth and that’s how things really took off.

Andrew: So your wife had a daughter from a first marriage, she didn’t want to go through life without health insurance which makes sense, it’s responsible and so you made a promise to her that you were going to get, or an agreement with her that if you guys could get three clients by the end of the summer then you’d continue with this business, right?

Dave: Yeah, exactly.

Andrew: How did you get them?

Dave: So what happened was we…so after Paradise Hotel I wanted to do something really tangible and really valuable. I had been living in LA and sort of being paid to show up at malls and nightclubs and it was a remarkably empty existence.

Andrew: You get paid to go into malls and do launches in malls? What do you get paid for something like that?

Dave: I got between 5 grand and 10 grand, it was really crazy. At the height I got 10 grand to show up at the West Edmonton mall, there were 2500 people there to meet me. I was like, am I in the Beatles or something, what is this? I was just a lowly reality TV D list celebrity. Trust me, I wasn’t saying I was anything special but I -

Andrew: Did you sleep with any Hotel Paradise groupies, honestly?

Dave: I’m so happily married now.

Andrew: But before that, did you sleep with anyone you met just because of that? I’m testing this bounds of ask me anything.

Dave: You are testing it. Actually I think you’re the first person to ever ask me that in an interview. I’m going to say there was just one, one or two instances of me meeting somebody, a groupie sort of thing.

Andrew: Why, because you’re not the kind of person who is needy like me who just says, alright if anyone’s interested I’m going for it? That’s the way I was anyway before I got married for awhile there.

Dave: Yeah, you know for me, I was always a nerd and I’m still a nerd. It was just, during the Paradise Hotel days, I was sort of like a nerd who was pseudo-famous and it was a weird existence. It wasn’t necessarily an existence I was comfortable with and it wasn’t necessarily an existence I wanted to parlay into like becoming somebody I wasn’t. Like, I was never like a big dater or a big, I don’t know. I don’t think we call men the w word that we call women. It wasn’t really that sort of person so for me, you know, even as I maybe had some opportunities, it wasn’t like I really leveraged them too much.

Andrew: I see. OK. You weren’t insecure about it the way I was. For me, I was walking around with this big insecurity. Why does nobody want to throw themselves at me but they’re throwing themselves at my friend over here, all these other guys at school? I said I got to fight hard to overcome that.

You didn’t have that?

Dave: I don’t think I had that. I mean, I was always very…

Andrew: The guy who called himself a nerd is now laughing at me. I’ve overcome it, my friend.

Dave: Where were we?

Andrew: That’s a good question. So here’s the deal. Now we’re talking about how you got your first clients and somehow getting to speak at malls got you to them. And so that’s what I’m wondering.

Dave: So I had been living this existence in the post-Paradise Hotel time where I was doing really nothing substantial. And so when I moved back to New York and began dating Carrie, I put that education degree to use for the first time and I was teaching.

I was teaching in New York City for 3 years and we got married at the baseball stadium. It generated tons of buzz. And then we essentially said ‘OK. Let me see if I can get a few clients and if we can, I will leave teaching’, which was providing benefits, which was very important to have benefits for Carrie’s daughter, my now stepdaughter. And who by the way I met here when she was 10 months old so she’s really been my daughter for all intents and purposes anyway.

So that was a fun challenge. It was sort of like OK, I have the summer off. Let me see how many clients we can get this summer. As I mentioned before, we had this relationship with 1-800-Flowers post-wedding so we were able to get them on board. We signed a mall and we signed a real estate agency that was run by a friend of mine from the past. And we had those three clients and we said ‘You know what? Let’s do this ‘. And we took the leap and ultimately, you know, that’s the hardest thing for any entrepreneur, I think. It’s that initial leap. I think the more responsibility you have, the harder it is, which is why you see sort of more 21-22 year olds doing the entrepreneur thing. I think as you get older and you have mortgage and children, it becomes harder and people are very scared. It’s very, very scary but we were able to say OK, we have a few clients here. That’s enough for us to take this risk or that’s enough for us that this risk isn’t as big as it would be if we didn’t have any clients. Let’s go for it and, you know, we were able to go for it.

Andrew: And you were going to generate buzz for them. The K buzz was the company.

What kind of buzz were you going to generate for these guys?

Dave: OK. So we had some interesting first clients. The 1-800-Flowers, our first program after the wedding for 1-800-Flowers.com is funny because Jim McKinnon has become a good friend of mine. I don’t know that I’ve ever talked about this with him.

Our first program was they sent to us OK, so we’ve got Christmas. It is a big holiday for us. It’s officially their third biggest after Valentine’s Day and Mother’s Day. So they said Christmas is a big day but what we want to do is we want to, you’re going to laugh. It is a little interesting. They said we want you to promote our non-Christian Holiday business, OK? Namely Hanukkah and Kwanzaa. So early on we did a program for 1-800-Flowers where we did this offline to online, we showed up essentially at Senior Centers in Jewish areas and African American areas and did like events in conjunction with 1-800-Flowers to promote the fact that you could now buy these awesome floral arrangements for Kwanzaa and for Hanukkah.

You know, I think we made a little bit of an impact. I can’t say that we made a tremendous impact but it was, you know, it was an interesting program. We definitely generated buzz for them. Definitely generated some sales for them. Then we actually did one of our first campaigns for one of those first few clients that I mentioned to you we actually won an award for it. It was our first word to mouth marketing award. We did a program called the Atlas Solution and it was, I could be wrong about the year, I think it was 2008. May have been 2009 I think it was likely 2008. The economy was in the crapper and there were several levels of the economy being in the crapper. But this was a pretty bad time. And they had just done this thing called the Stimulus Package. What we did for the mall, it was called Atlas Park is we did our own stimulus package. A bunch of folks did this, but we did this pretty early on where we gave away $10,000 worth of cash in the streets of New York with a call to drive them to the shops to spend the money, to stimulate the economy. Then they could win more money as well when they were at the shops at Atlas Shops.

And then what we did that was sort of fun that generated a lot of PR was that we found an economist who agreed that if every mall in America were to do exactly what we did that there would be a sizable change in consumer confidence that could in fact fix the economy. So we challenged every mall in America to do what we were doing. It ended up being a lot of fun both as a consumer promotion and really as a PR promotion in terms of, you know, who are these crazy people? It was called the “Atlas Solution.” And in addition to it being a consumer promotion, we had a solution to the economic crisis in the U.S.

Andrew: I admire your creativity. Just the ability to come up with that. And then the nerve to push it one step further, to really take it to type is something that I don’t even know how to do. But I’m just sitting here in awe of it. I wrote a note to myself to just think about the way that you did that.

Dave: Well thank you. It’s been really, really valuable. The wedding and some of the early stuff we did because for a long time it’s been very confusing to many people. They don’t understand the space, they want to learn. There’s a lot of pretenders out there. The thing is at the end of the day we can do all the amazing things on Facebook or Twitter or Linked In for all of our clients. But you still need good ideas.

Andrew: So what’s your process for coming up with a good idea for a client?

Dave: We go through a brain storming session with the team now. Now Likeable Media has 50 employees. Early on it was the Dave and Cary show. And I’m really proud of the fact that first of all it’s not the Dave show at all. Actually it has nothing to do with the Dave show.

Andrew: I saw that. Now she’s the CEO and you’re the chairman.

Dave: Exactly. But it’s not even the Cary show. I think we’ve been fortunate enough to bring in a great team of people who can do the brain storming and come up with those big ideas.

Andrew: Do you have a few tools for doing it? I remember I talked to Shedson Mobu who taught the creativity course on Mixergy. And he said there are a few tactics that he uses to come up with creative ideas. Like, for example, to look for ideas outside of his space. And then bring them back into his space. To find two different ideas and merge them together. And in the course he taught how to do it. MixergyPremium.com if you’re not a premium member. But you’re running a business based on your ability to generate creative ideas. You’re not just leaving it to chance. Do you have a few different tactics that you can use to come up with ideas like the ones that you just shared with us?

Dave: Yes, it’s a good question. I wish I could say we had a very specific process. You know, we might have a very specific process over in Likeable Media now. And I honestly just don’t know it because I’m not really involved in the day-to-day. I know that we have an awesome creative director and a vice president of strategy, a new girl sort of involved in client brain storming sessions. And I could tell you that I’m not going to tell you our secret sauce. But the truth is the only reason I’m not going to tell you our secret sauce, because I am transparent, is that I don’t know our secret sauce.

Andrew: There isn’t one, okay. I see actually by the way and one of the things that I love is that I go to Likeable Media’s website. Then I click on “How Can We Help You?” And the first thing it says is “Social media agency of record.” And underneath it it says, “For our premium clients we don’t just insure strong social media presence. We manage your entire social media strategy, and provide full service support.” So when you shift to that what’s the first thing that you do?

Dave: Well we’ve got to really get to understand the brands. If we’re acting as a social media agency record for a company, we absolutely have to be an extension of that company. Be a true partner, not an outsource vendor. We need to spend some time at the company. We need to ask a lot of key questions. We need to really understand the brand personality in a very deep way. And sometimes companies don’t understand their brand personality in a very deep way. In which case, we need to work on that with them.

Andrew: I’m thinking of a new entrepreneur, which is relatively what you are, new especially in this space. You’re hungry to get a customer. When you finally get a customer you say oh by the way I need you to also let me into your company and also tell me about your brand and also when you don’t have one, push you to come up with one. How do you do that?

Dave: I think that it’s all about setting expectations. Clearly you can’t bring that up the day after you sign the contract. I think you have to from the very start explain what the process will be and the important steps it will take. If you don’t do that up front then you end up, as you are perhaps suggesting, with a situation where the client doesn’t understand or resents what’s going on. But the bottom line is, in order to make the relationship work it has to be a true partnership and you just have to become a true extension of the brand.

Andrew: And you sell them on that after you get the OK.

Dave: No, it needs to be part of the discussion early on.

Andrew: So it sounds like what you’re saying is you make it one of the reasons to do business with you instead of saying hey I’m sorry this is part of my process and I’m going to burden you with more work. You’re saying no, part of this process is you get us to come in here.

Dave: Exactly.

Andrew: What’s the first big campaign that you did online?

Dave: The first big campaign, I mean The Atlas Solution was taken online but probably the following year our second award for the Word of Mouth Marketing Association was a campaign we did for Kumblerin Farms, Chill Zone. Now Kumberlin Farms is a, where are you based again Andrew?

Andrew: I’m in San Francisco now but I grew up in New York not too far from where you taught.

Dave: OK, cool. So Kumberlin Farms is all over the Northeast, specifically New England Massachusetts, Rhode Island, New Hampshire, New York, and now actually down in the mid-Atlantic coast in Florida. So, it’s a convenience store but they’re traditionally conservative, they were owned by Gulf. They’re a big fairly conservative company. They did have one product called the Chill Zone which is a frozen beverage product that teenagers absolutely love… Let’s just say if you’re not a teenager you’re probably not a big fan. So, we created their first social media presence was for Chill Zone, we created a Facebook page for them, we populated it with some content and we sort of found some initial influencers that liked the Chill Zone. We very quickly realized how popular it was when we got to 20,000 likes without any real advertising and support. We got to 20,000 likes and then our idea was to create a promotion where everybody would win something. We said to the 20,000 likers if you can get to 50,000, fans, because actually it was fans back then and not likers, we’re going to give you a free Chill Zone. Now it’s a 79 cent product. So, clearly by driving them into the stores to pick up their free Chill Zone we knew that we would drive incremental business. The kids got really excited and they shared the page on their own and they got really into this idea and they got to 50,000 fans and then they got to 75,000 fans and then they got to 100,000 fans within several weeks. Then we had the free Chill Zone day and it was unbelievable, unbelievable. I mean, there are pictures of just wall to wall people. They ended up having a 50% sales lift over their previous day the year prior. So unbelievable, measurable sales results from a promotion that was executed entirely on Facebook.

Andrew: Unbelievable and I can see now why you would want to play more online. Where you can grow this and also where the technology was still fairly new and people didn’t have a social media agency at record.

Dave: The whole thing about social media is so many people get confused by all the technologies and all the tools. Yes, there are a lot of technologies and there are a lot of tools and a lot of platforms and it’s our job to study all of these platforms and be on top of them. But, when it comes down to it it’s still more about word or mouth and scale, and good ideas. Any business that is worth anything understands how powerful word of mouth is and now with social media you can really create word-of-mouth marketing programs at scale.

Andrew: And there still were times, though, where you guys couldn’t make payroll and you and Carrie[SP] would fight, you told Jeremy, our producer who pre-interviewed you. What’s one thing you guys fought about?

Dave: Well, we fought about payroll and about, you know, putting our own money in.

Andrew: She wanted to put your own cash in?

Dave: I wanted to put it our own…

Andrew: And she was against it. How do you deal with that?

Dave: She was more conservative. And, you know, it was really hard. I mean, husband and wife, early on we definitely had our share of arguments. I found that we brought arguments from home to work, we brought arguments from work home and it was a real challenge. I think any guy that’s ever been in a relationship knows that the only real way to win is to eventually to give in to your wife and if she happens to be your business partner then, you know, you give into your business partner and, luckily for me, I have a wonderful business partner, happens to be my wife, and I’ve gotten better over time at compromise. And a compromise is so, so important if your business partner is your wife or not…

Andrew: So, how do you guys compromise on this? You want to put money in, she doesn’t want to put your own money in and so do you put a little money in it? No, she doesn’t want to put any.

Dave: She typically, you know, basically she wins. It’s full on compromise. I think what we ended up doing a couple times is we didn’t want to let people go. We certainly didn’t want to let people go but we said if we’re not going to put our money in, you know, they might have to skip a payroll, for instance and then get caught up when we…

Andrew: And you did skip payroll? And people stuck with you?

Dave: We did. A couple times and people stuck with us. They knew the money was coming because we had receivables. You know, we might have 200,000 in receivables but sometimes big companies just take a while to pay. They take 60 days, 90 days. Well, how do you make the company run during that time? Those were some early challenges until we could really understand the cash flow and the financial cycles of our business.

Andrew: Well, let me ask you this. I say at the top of the interviews, I call my audience freedom fighters. Partially because early interviewees, when I ask them what’s the best part of having made it they would say freedom to do whatever you want, but other entrepreneurs have said, even along the way, the freedom to be able to take your company in a direction you believe in on your own is one of the reasons they’re entrepreneurs. And here, you have that but you’re slapped down or you’re restricted. Does it make you feel like, this isn’t what I signed up for, this isn’t the life I want for myself? I’m out of here!

Dave: I mean, there some challenging times early on, but I am huge fan of the freedom you just said and the flexibility. I mean, looking back I would never work for anyone again and for us it was actually more about freedom of lifestyle. Right? Because we’ve ended up growing a really sizable business I’m really proud of and hopefully I’m going to do the same for the second business, but early on we just started the company because we wanted to have more time with our daughter and now two daughters. And so, one of the amazing things about having a business that both of us really enjoyed was we could just come home and see the kids, go visit them at school. I have a running bet with both of my children that I need to be the parent that visits their class more than any other parent, every single year and so far I’ve done it.

Andrew: And they’re good with that?

Dave: I’m sorry?

Andrew: They’re happy about having their parents come in?

Dave: Oh yea, exactly. They’re not sick of me yet. When they’re in high school forget about it but for now it still works really well and it’s a real joy for me. I mean, I’m my fourth graders class dad. It’s rare that even teacher use the word class dad because they’re so you know who’s going to be the class mom this year. Well, every year, I’d be like, “Hello, you know, class parent” and I finally got the job and it’s awesome. I love that stuff. No matter how busy I am, I’m able to make decisions about how I spend my time and you can not have that unless you are an entrepreneur.

Andrew: That is important in freedom and still at some point you taught. I don’t understand how the guy that can hawk [SP] at baseball games and get kicked out at one time because people were paying more attention to you than the ball players. How a guy like that,who has an entrepreneurial spirit in him teach in Queens and Brooklyn. Why did you become a math teacher for three years?

Dave: I have a lot of interests and I’m really passionate about education and about public service. I actually ran for office in New York and I decided to drop out but my master plan is to pull a Mike Bloomberg and one day have the wealth that I can run for office and not be beholden to any special interest. And so I can continue to serve. I mean that’s really the main reason that I taught. It was after Paradise Hotel I had had this real lack of tangible value to the world. And I wanted to really give value. I did love it. I loved my students. I loved inspiring them. I felt like I was leading a team. There are actually some interesting similarities between what I do as an entrepreneur and as a CEO and what I did as a teacher. But ultimately I was very dissatisfied with the bureaucracy which was the school system and some of the challenges that that provided. So that helped make it easier to leave. My first year of teaching I was a very rare union chapter leader. So essentially no one becomes a chapter leader until they have tenure typically because it involves fighting the principal and going up against the system. I was at a small school and really passionate about teachers. And I said, “Hey, I’ll be the chapter leader.” And that was a great experience because I learned a lot about rallying and leading. It was a real challenge to be a chapter leader in my first year for sure. But I actually gained some relationships with Randi Weingarten who was then the president of the United Federation of Teachers. And now she’s the president of the National Teachers Union. So you never know where those relationships will help you in the future. Even though it’s sort of ironic that now I’m a business guy, and I was once a union chapter leader it also helps to understand both perspectives.

Andrew: I get that. All right. Usually I ask the interviewees, but now I’m just going to say it. Your revenues in 2011 were $4.7 million. What was your revenue for 2012?

Dave: 2012 was actually a bit of a slowed growth year for Likeable Media. We did $5.1 million which is great certainly. And the year before $4.7 million was $2.6 million and the year before that was $1 million even, and the year before that was $400,000. So we’ve had very, very steady growth at Likeable Media. Part of the reason that our growth slowed in 2012 was that we focused on building our new company, the software company. So that took a lot of my time and energy away from growing Likeable Media.

Andrew: But how did Likeable Media go from hundreds of thousands to a million to now 4.7 million and 5.1? What was that big jump? There was a jump there that took you from hundreds to a million and from a million to 4.7?

Dave: And by the way under my wife’s leadership in 2013 we’re forecasting $7.5 million. So we’re right back on track to continued excellent growth. Hopefully I haven’t said this too early. We’re filming this interview in March.

Andrew: The early part of 2012.

Dave: Yes, yes. But I think there are really no huge secrets. The number one secret is doing right by your customers, and doing really good work.

Andrew: But how do you get customers? I guess you are a salesman. But you’re not a salesman that I expect which is you have your CRN and your funnel and your customers that you’re moving through the funnel. What’s your process for getting customers like Verizon and the ones you mentioned?

Dave: Well we started off and were very fortunate in being early movers in this base. We developed a great reputation, and that word of mouth help generate a ton of inbound business. I am a huge believer in what we teach and preach and what I’ve written about in terms of social media marketing. So we started really early on. We started a blog called, “Buzz Marketing Daily.” And my wife was like, and this was one of our arguments actually, she said, “Dave, you can’t have a blog called Buzz Marketing Daily because then you need to write every day.” I was like, “Exactly. We’re going to write every day. We’re going to be consistent. We’re going to deliver a lot of value. And then people are going to come to us.” And then lo and behold we built up a huge blog following, a huge email list, a huge Facebook fan base. I think we have 30,000 people that like us on Facebook which is more than almost any advertising agency in the world. And we actually followed our own beliefs and teachings in that if you could create the community and generate a lot of amazing content, then when folks are ready to buy you don’t have to sell them. They call you and they say they’re ready to buy. And there you go. We’ve been very blessed to have a really, really steady inbound stream of business, and that has really helped.

Andrew: Somewhere in my audience is someone who’s running a social media agency who says, “I love my customers, and I’m going to love them even more. My goal is to just build this up the way that Dave did. And then one day have a software company. But now I just need this to pay my payroll, pay myself, and they’re not making it. In your experience, people who are in that spot, why aren’t they breaking through and hitting the numbers that you are? What’s missing?

Dave: That’s a good question. I think a huge part of what we did, and this is arguably relatable not just to social media agency, or agency, but really any business, is building a team and making it about other people and about getting out of your own way. So often, you know, I recommend, there’s a good book by Michael Gerber called the E-Myth. So many small business entrepreneurs get really deep into their own business, and they’re not able to work on the business, and step out and work on the business. And, you know, what we did was fairly early on was we said, ‘We’re not going to build something really big and sustainable unless we’re able to step back, get great executers, get great people to execute the work, and step back and build a management team and build a management system.’ We began strategic planning sessions, quarterly retreats, one page strategic plan document that I got from my friend and mentor Verne Harnish, the founder of Entrepreneurs’ Organization.

Andrew: And a [??] interviewee.

Dave: Oh, awesome.

Andrew: One of the early ones, yeah, one of the first guys to come on here.

Dave: Great guy. Great book. Mastering the Rockefeller Habit is a great book for entrepreneurs. We developed some systems and processes in order to build something bigger than what we, than just the two of us, and that was really important.

Andrew: You know what, when it’s early on, I understand the need to systemize your business so you can hire someone and then hire more, but I felt ridiculous in the beginning, when it was just me, to systemize my business with the idea that one day I’ll hire people. Do you feel that?

Dave: Well, I didn’t, because I didn’t do it until after the fact.

Andrew: You waited to get someone, and then you systemized.

Dave: We probably should have done it earlier, but we didn’t. Frankly, I’ll tell you a secret here, and I don’t this has ever been revealed. We did not have a business plan or even, like, a P&L until like $800,000 in. Maybe close to a million in.

Andrew: No P&L? But don’t you have to pay taxes?

Dave: Yeah, I mean, we went back and sort of like did, you know, did a lot of catch up with accounting. I mean, it was a little crazy in the early-. . .

Andrew: Were you behind in your taxes, ever? I got you, [??].

Dave: That’s the second time you have challenged me with a good question that no one else has ever asked me, Andrew.

Andrew: And the answer is?

Dave: Yeah, you know, we were behind. I think we were actually audited in 2008. So, you know we-. . .

Andrew: It’s a guilty feeling, isn’t it?

Dave: Sure, sure. I mean, look. We were a couple of really good marketers, but not really good business people. And, we had to learn that. We had to educate ourselves, we had to trial and error. I joined Entrepreneurs’ Organization after we hit our first million, and it absolutely changed my life, it helped me become a much more sophisticated thinker and planner, and, you know, started to become fluid with financials, which was never my strong side. And, you know, we had to learn along the way, but if I could go back, I probably would have learned that stuff early on, you know. But we were too, you know, ignorance can be bliss, too.

[??] businesses, getting customers in, treating them well, doing those sorts of things, and then eventually we played a little catch up to say, ‘OK, well, now we’ve got a business here on our hands, so what can we actually do with this to make it a real business?’

Andrew: David, let me say this. I don’t edit my interviews, and the reason I say this, and the reason I’m saying this on camera is so that the audience can hear that I am committed to not editing my interviews, and also so that you know that if later on in the day if you feel guilty for having revealed this, there’s no backing out. But it’s for a reason. I think what you just said here, what you revealed is one of the most important things that has been said on Mixergy, which is entrepreneurs fall behind and stuff, and then we start to get in our own heads, feeling like we’re the only ones who ever did it. We then make it even worse and even worse and even worse and even worse, and the only way we can get out it is if we start to recognize that, hey this stuff happens to other entrepreneurs, that we are not alone. It doesn’t mean we’re crazy. It doesn’t mean we’re terrible people, doesn’t mean that we don’t have it. You have it, you did it. We make mistakes, and we overcome them. And that’s one of the most important things that you said here, and I really appreciate you being as open as you have been. We’re not saying goodbye yet. I just want to acknowledge that and not just let it pass as one more statement said on one more podcast or by some other guy on mine. This is important.

Dave: Well, it’s my pleasure, and honestly, I’m actually writing an article for Linked In on the competitive advantage of vulnerability, which is not something that’s really talked about a lot, but I have to tell you, you know for me it comes naturally. Transparency, authenticity, vulnerability are just you know concepts that really resonate with me but I think for many business people it doesn’t. I think for many business people, especially men were taught to be strong , were taught to be you know secretive, or taught to sort of you know to put up this front. When in the reality is you know what we’re all human beings we all make mistakes we’re all afraid, we’re all insecure about things and when we actually embrace that, embrace our own humanity. Stakeholders whether they’re customers, employees, investors, whoever they are they actually respect and appreciate that at times. I can’t tell you how many times an employee has said to me you know Dave I just really appreciate how honest and open you always are about everything. I just completely trust you because I know that you’re always going to be honest and like I’ll say when I screw up, I’ll say when I’m afraid you know. I was criticized a little bit actually by my wife and you know what she can lead the company however she wants now, but at some point in 2012, I said you know I’m really nervous about us you know hitting our goals this year and you know I want to be at a place where we’re going to hit our goals and I certainly would never want to lay anyone off but I’m nervous about it and she didn’t love that perhaps rightfully so because you know on the one hand you want to put your employees at ease, on the other hand it was just what I was just feeling and I don’t sense her.I think by and large the right people were ok with it and people that really weren’t ok probably weren’t the right fit at least at the time to be working for me.

Andrew: You know what I agree with everything that you just said and I’ve found entrepreneurs get vulnerable here and then they start to feel guilty about it or they start to have second thoughts and they ask me to edit. I tell them don’t and then what will often happen is the interview goes up and people love them even more for it. People want that, because that’s how we connect. I’m just gonna say one last thing and that’s my own statement. The perfect example, Steve Jobs, every product he created he wanted to get it so perfectly perfect there would not be rough edges, there would not be any flaws with it, but when he told his own personal life story he specifically picked an author who was going to put the rough edges in there, who was going to show the flaws of the person. Why? because we connect with products that are perfect we want them to be even more perfect for us and we get angry in our blogs when they’re not perfect enough. With people we connect with their imperfections. We want to get to know them through that and that’s how we remember and hook into them into their stories. Alright speaking of, this guy Nathan Latte introduced us. He even introduced me to all these fantastic people which makes me wonder what does he got? Why is everyone connecting with him?

Dave: He’s a good kid I really like him. Hopefully I’ve been helpful to him as a mentor. I think he’s really smart, a talented guy. I think you should look out for him, he’s got a company called Heo. I think he’s really going places.

Andrew: Incredible, but how does he get to meet people and then have them do favors for him, like introduce him to mixer g and then you do this interview with me. What is it about him? Have you figured that out? Have you spent this kind of time thinking about him?

Dave: I think I haven’t spent a ton of time thinking about him. I think he’s unafraid. I think being unafraid is really important or rather not necessarily being unafraid, being okay with your fear and moving through it. Right? You don’t necessarily have to be unafraid, we all have fear but saying okay I’m afraid this is scary but you know what, I’m going to accomplish my goals, I’ve got to go for it. I think Nathan definitely has a go forward attitude that not a lot of people have that’s going to make him successful.

Andrew: What’s a big inner fear that you had that you had to get over?

Dave: A big inner fear you said?

Andrew: Yes.

Dave: For me the biggest thing, I have a fear of failure and I have a fear of not everybody liking me which is sort of ironic I think.

Andrew: So then most people who I have met who I have talked to in the audience who said that they have a fear of failure, they don’t start their companies because they have a fear of failure. They spend endless hours perfecting their first version because they’re afraid of failure. They’re afraid of not being liked and respected. How did you get over those thoughts instead of getting tripped up by them?

Dave: I think you know, even if I’m afraid of failure… The only failure is where you don’t learn because life is full of ups and downs so….

Andrew: So when you start to get in you head I don’t want to fail, I here and fail, how do you stop yourself from getting into that endless cycle?

Dave: Because, you know, in failure, or certainly in mistakes, there will be learning and then we will iterate and get better. As a company, and as a human being, and that’s just

Andrew: Do you actively confront those negative thoughts, and say “I know I could fail, but look, if I learn something it’s going to be helpful. I know I can fail, but whatever I learn here I can take to my other business.”?

Dave: Yes, yes.

Andrew: You do?

Dave: Absolutely. Absolutely, because the failure, you know, look, I have a deep-seated fear of failure, deep-seated fear of not being liked by everyone, those are not going to go away ever. But what can go away is those fears holding me back, because what I can do is like you said, actively confront those fears, actively process and say, “I am going to succeed, in spite of how I know I feel.”

Andrew: You know I really want to keep exploring this, but I want to be fair with your time, and frankly, can anyone in the audience, in the comments, tell me if my mic is picking up my growling stomach? I worked through breakfast today, I worked through lunch today, and I’m going to keep on working. My stomach is growling, and I want to know if the mic is growling and I want to know if the mic picks it up because if it doesn’t, I don’t care and I’m not going to stop. But if it does, then maybe I’ll have a sandwich every once in a while in the morning. Let’s see, finally, first of all, let me just say this first to the audience. Very important, most important message is, if you’re not a premium member, please go out there and sign up for Mixergy Premium!

Dave: You’ve got to get Premium.

Andrew: You’ve got to get Premium! We talked about Nathan Latka [SP], he is one of the Premium teachers! I bring real entrepreneurs to teach what they do best. Nathan talked about how we did social media really well, and transferred it into business, and one of the best parts of that, if you miss it, you’re going to be upset with yourself, is the end where he shows how he takes people from social media, he puts them into a webinar, and what he says in the webinar to get them to buy Heyo [SP], this product that he has that lets anyone create a website and a mobile app and so on. The way that he shows his sales tactics, and the way that he shows his actual presentation, will teach you so much about sales. And the numbers that he looks at as he does that. Go check that out, and go check out Shetsamo [SP]. I promise you’re going to love it, and I guarantee it, or your money back. Yes, I’m like- like those infomercials, money back except here there’s no shipping and handling! You sign up, you don’t like it, we’ll take care of you. I even have a phone number from Grasshopper.com, 8774Mixergy, so you can complain on the phone and get, get real results if you’re not happy. Mixergypremium.com, go sign up now, you’ll thank me. Alright, here are the two things I want to ask you before we go. First of all, the book. We wanted to hold the book on camera because, what did you learn?

Dave: Well, so my publisher said to me early on that no matter how many interviews you do, no matter how many book reviews you get, no matter how many articles you write about the book, or talk about the book, if you don’t show the cover, it’s not going to sell. And ironically, if you do show the cover, it’s going to well. I thought that was crazy, but lo and behold! When I do book reviews and interviews and what-not, articles, when I don’t have the book cover in the article, the book doesn’t sell. When the book cover is there, it’s something about a book cover that gets people excited, it sells! So you know, it’s working very, very well. I’ve got it, the book cover’s out in articles and I’ve been very, very fortunate, my first book was a New York Times best-seller, the second book has been an Amazon #1 best-seller, and you know, I’ve just been very blessed.

Andrew: Alright, the second thing I want to ask you about has to do with my own personal selfish goals. I’m looking at the ink piece on you guys with the number of employees, you had, wow my stomach is growling, 24 employees at Likable Media, my sense is that Likable the software company. What’s the name of the software company?

Dave: Likable Local.

Andrew: Likable Local, it’s probably going to grow that fast, and you’re the kind of entrepreneur that the people in my audience should probably get to work with, if only to one day learn how to build a business and have your kind of creativity in that business. So my selfish goal is, how do my people, if they’re interested in working with an entrepreneur like you, get a job with you?

Dave: Yes, so I’m really excited to be actually just hired our CTO at Likable Local, it’s a good friend of mine, he’s a senior engineer, trip advisor, and MIT- double grad from MIT, and super super smart guy. And so he’s now building out our development and technology team, so we love, we love to meet folks who are interested in being part of our vision. And they can email me, they can tweet me, I’m very, very easy to reach online, very responsive.

Andrew: What’s an email address that they can use?

Dave: My email is dave@likable.com if you want to go old-school. I do prefer Facebook or Twitter and Linked-in for communication, but if you want to go super old-school you can email me at dave@likable.com. And like I said, you know, the agency has had very solid growth and while I continue to grow Likable Media, but Likable Local we believe, can be a game changing company. It can be the default solution for small businesses and we can go the $500 million to $1 billion company in the next 7 years.

Andrew: If you hire somebody from audience based on this conversation that we are having right now, would you have a private conversation with them after they are hired about their business idea if they have one? I don’t mean to get hired just so that they can go out and start a business, but I mean, will there be a real connection with you where they can learn from you one on one, the way that when I worked for Paul Sobaring[sp], in college, I learned much more than I learned from actually going to college.

Dave: Yes. We have a bunch of interns right now. What I say to interns and staff people is, the best reason to work for me or for any entrepreneur that’s really driven to being human and there, is the learning experience. If I hire somebody from your audience, will I listen to them? Of course. If I hire anyone, I’ll listen to them. I have an open door policy with all of the employees of Likeable Media, all of my employees. Actually, really anyone who reaches out online, I give them 10 minutes to have a conversation with me, but certain folks that work with me have an opportunity to develop their ideas. I want to have an entrepreneurial atmosphere always at Likeable. We’re always looking for people who develop to incubate ideas within our organization. I’m not the only person who have ideas. I would to have other things come out of Likeable. Look at Twitter. Twitter came out of Odeo. It wasn’t even the idea of it, but it’s just the fact that they have an entrepreneurial culture. Maybe there is somebody listening right now that has this amazing idea that can come to work at Likeable and change the game of what Likeable is even doing. I would love that.

Andrew: Alright. For me, my suggestion is, guys, the first thing you do is, say, thank you for doing this interview which is what I’m going to do right now. Forget anything of value out of anyone on the internet, my suggestion is send a thank you. That’s how I met so many of the people who I’ve interviewed here. Starts off with a thank you for what they did, build up to a relationship and hopefully something bigger, which for me, means an interview. All right. Thank you for doing this and thank you for writing Likeable business: Why today’s consumers demand more and how leaders can deliver. As you are holding the book, I’m saying the title.

Dave: Actually, what I was going to say is that the last chapter of my book is called Gratitude. Actually, I write all about the importance of saying thank you. I write 3 or 4 handwritten thank you notes every single morning as part of my routine. It’s a really important part of the way I do business, and it’s been very, very valuable for me. That was a challenge to habitualize, but I can’t say enough about how powerful a handwritten thank you is.

Andrew: I can’t say enough about how grateful I am to you for doing this interview. Man, you are a good, frigging guest. Thank you for doing this interview.

Dave: Well, thank you. It was my pleasure. I really enjoyed it. I actually have a Passover seder to run to here now, but I’m glad to have spent the last hour of my life with you, Andrew. Look forward to getting to meet you face to face and continue our relationship. Really, if any of your listeners have any questions, comments, thoughts at all, please do email me, tweet me, Facebook me, LinkedIn with me, all that fun stuff.

Andrew: All right. Bye, Dave. Thank you all for being a part of it. Bye.

Andrew: Coming up, well, actually let me tell you about two things that are coming up in this interview and then ask you for one favor. So thing number one that’s coming up, how do you know if people will really pay for what you built? We’ll find out one solution that worked for today’s guest and that might just change things for you.

Second thing that’s coming up, how do you know if the idea you have is worth pursuing or maybe just a failure and you have to accept it and move on. Hear how today’s guest learned from one of his projects.

Those are the two things that are coming up. Let me ask you for one suggestion and that is this: you’re going to see a couple of moments in this interview that I think are awkward because of my questioning. I want to ask tough questions but I don’t want to make it awkward because frankly that doesn’t yield all the right kind of answers, it doesn’t yield anything that’s helpful for you.

So here’s the piece of advice that I want from you. If you’re listening to these interviews and you catch this moment here and you got some feedback, let me know what you think I could have done differently. You can do it on the site or you can do it privately and email if you don’t want to embarrass me any further than I’ve already been embarrassed for a couple of moments in this interview.

And if you’re someone who’s a professional interviewer, please help me out. Let me know what I can do to become a better interviewer. You’ll find a couple of moments in here that you can clearly give me some good suggestions for how to improve. I want you guys to improve with your business but I also need to improve my own interviewing skills.

Almost 900 interviews at this point. You know I’m committed to doing this well. But I need some help sometimes. So give me feedback, watch the interview and I look for your comments.

Listen up. I hate to have commercials interrupt this interview so I’m going to tell you about threes sponsors quickly now and then we’ll going to go right into the program. Starting with Walker Corporate Law.

If you need a lawyer who understands the startup world and the tech community, I want you to go to WalkerCorporateLaw.com.

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All right. Let’s get started.

Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart. How does a marketing idea turn into a business?

Tom Kulzer is the founder of AWeber, email marketing software that’s used by over 115,000 businesses including Mixergy. The idea came to him when he sold hardware at a previous job earlier in his life. I invited him here to talk about how that idea turned into a business and how he got so many customers.

Hey, Tom.

Tom: Thanks for having me, Andrew.

Andrew: What were you selling? What kind of hardware?

Tom: I was selling wireless modem hardware for connecting to the internet back before he was iPhones and Androids and other things in our pockets. So connecting back when everyone had modems connecting their computer to the internet, I was selling wireless gear on the side to do that.

Andrew: And were you selling it when you were working for another company or were you an affiliate of theirs?

Tom: I was an affiliate. It was like a resale consulting kind of thing. So I was working with a bunch of other folks as well that were also selling the equipment around the US.

Andrew: I see.

Tom: So it was kind of, there was a bunch of us collaborating on how to best reach our local audience to be able to sell that equipment.

Andrew: That explains something that I saw on the early version of AWeber, which I’ll get to in a moment.

But sorry, you were saying about the group that you were collaborating with.

Tom: The other guys and girls that I was working with during that process and kind of learning with that you were saying was working somewhere else. I was actually in a college at the time. So that’s kind of where that was. It was a way for me to be able to make some money on the side.

Andrew: What was the idea that you had?

Tom: I’m sorry?

Andrew: The marketing idea. What was it?

Tom: It was for working with these other businesses.

Andrew: Sorry. There was an email marketing idea that you used to sell modems.

Tom: So a lot of the guys and myself included would get a lot of lead. Like, I would go to trade shows and then I’d get emails from people asking additional questions and such.

So we’re getting leads off of the website that we had. And it was really hard and time consuming to follow up with people. It’s like answering somebody’s questions and send them back and you don’t hear from them.

And so we follow up with them. You don’t hear from them and then you follow up with them again. And then you follow up again and then they finally email you back with more questions or like, hey I’m ready to order I just haven’t gotten around to it. I’m glad you followed up with me a bunch of times. So what I ended up doing was I automated that email process, so that once they were kind of in the pipeline, once they were an interested candidate I put them in a sequence of messages that would get sent out to them over a period of several weeks that taught them more about the service, answered common questions that I would get from other people and it worked really, really well in order to be able to drive more sales for myself and then I, I basically turned that on to something that, other guys that were selling the same product could use as well. They would just tack their own name and other information at the bottom of those messages. So that was kind of the initial idea around the Bay Weber, so when I left, when I stopped selling this hardware on the side and kind of turned back to school to focus on school. A little important. I ended up leaving and a lot of those guys were like “Hey can I still use that email thing?” and I had turned it off at that point, and I was like “Nah, I just, I don’t, I don’t have time to be able maintain it.” and they were like “Oh no I’d pay you for it.” At the time I was also busting tables at an Olive Garden. And that was kind of a dirty, nasty job that was not a whole lot of fun doing and I had a lot more fun programming so, I was like “hmm. Well maybe I should figure out how to make this something that I can actually sell to people” and kind of took it from there. And that was the initial iteration of what eventually turned into A Weber.

Tom: Why did you give your software to competitors, to people who are selling essentially the same thing?

Andrew: Because we, we were selling the same thing but we weren’t selling the same things in the same areas. So, because we kind of had our own geographic area that we were focused on it wasn’t really competition and frankly I learned a lot from them by engaging with them on what worked at their level, you know at their local level on how they got the word out about the product. That even though, yeah, there might be sales from online that I might not necessarily get, the local audiences where I was doing best with that, so, it was, it was just helpful to engage with them.

Tom: How did you get the leads that you would follow up with?

Andrew: Most of it was like local trade shows and just being out and about and talking with you know, it was a lot of word of mouth you know one person got something and they would tell other people about it. So it was kind of a variety of ways but, you know I posted various online forms, I would engage in various forms and be part of my sig files and those sort of things…

Tom: and people would come to your site and give their email address?

Andrew: Yep. Yeah exactly they would inquire more information which is kind of…

Tom: what use is a lead magnet?

Andrew: for…

Tom: to collect the email addresses?

Andrew: to collect them? It was more just like ask questions. It was really simple it was just a, just a contact inquiry form. It wasn’t like there was a give-away or anything like that. So, yeah, it was pretty straight forward. It was like marketing, you know, the very basic marketing method, methodology there. Probably could have been a lot more effective certainly know a lot more about that process now and a lot better tools available now. But, yeah, at the time it worked. So.

Tom: Alright and so how long did it take you to launch the first version of A Weber?

Andrew: Between the time that I had left and the time that we had our first paying customer I would say probably 6, 7 months. It wasn’t a really long time because what I launched with A Weber is the initial version was really, really simple was literally one sequel of 7 follow up messages so, you know you opened an account you got a sequence of 7 messages that you could put content in and that was that one list and that was it. So it was really basic, it was all plain text. It was no HTML or any of that kind of stuff around. So, it was very, very simple product to do. The most of the stuff that I spent the time on was getting a company set up, getting a tax id set up, getting a merchant account set up. In fact when I actually, when we opened the doors. I always say “we”. It was me for the first year and half. When we got our, when I got the first order, our order form on our website actually allowed to collect credit card information. I had no way of processing the credit cards at that time because our merchant accounts had not been approved yet…

Tom: oh wow.

Andrew: It wasn’t a such thing as PayPal or any of those where you could do that through a third party to, to do, so it was like you had to have a merchant account at that time. So I was accepting credit cards and not able to process them for about, it was about 2 months before I actually got it fully approved and was able to do that.

Tom: So I’m looking at the first version of your site. It says “Discover how to capture hidden profits by delivering information instantly when prospects are hot. Then use automated personalized follow up to close the sale, increase profits and save you time. And as you say here on the site it takes, oh there it is, experts have shown it takes the prospect 7 or more exposures for your ad, of your ad before they purchased from you.

And so that’s all you allowed people to do. Just seven emails and then the drip stopped.

Tom: Yes. So you get eventually like a month or two after that out of the ability to add extra follow up messages. It was $2 a piece for each extra follow up message. So the initial sequence was $19.95 for unlimited number of subscribers and then after that if you wanted to add an extra it would be $21.95 instead of $19.95 to add for an eight message series and so on and so forth.

Andrew: I see. $2 per each additional message.

How did you figure out your pricing? Why did you do $19.95 a month or $14.95 if people paid annually?

Tom: Kind of pulled some numbers out of a hat. I asked around from the guys that were doing testing for us. Said ‘Hey, what would you pay for this?’ and that always kind of kept coming back to the number they were doing.

You know, when you’re a college student in college, you know, that’s a lot of money. I could get a couple hundred customers off of that and I’d be doing really sweet. And we did and it just kept growing and growing and growing. And at the time, with very little overhead it was something that became profitable very quickly, when you didn’t have the overhead involved with that.

So I was doing most of the initial coding, I did all of our customer service.

Andrew: I see your email address at the bottom of every page.

Tom: It was literally like tom@aweber was at the bottom of our website.

Andrew: It’s the same email I used to contact you. You still have that same email address.

Tom: Yes. So I’m not hard to find if you know how to look.

Andrew: There’s one other thing that stood out about this form. You say Choose your user name, blank@aweber. So I could say andrewwarner@aweber, mixergy@aweber.

What was that about?

Tom: That was just the list name for the account. You know, it was kind of your login name to at the time. And it was just more a personalized, it was more a list name.

You could also, at that time, you could subscribe via email as well. So like if you sent an email at mixergy@aweber.com you could subscribe that way as well. So it’s just like the different subscribe methods [??].

Andrew: How did you get the early testers that you mentioned earlier?

Tom: A lot of them were guys that I had worked with with the wireless modem company. So those guys there and I was also active on a entrepreneurial mailing list where we kind of swapped advice and other information to start a business. So it was other people that were in similar areas trying to market to a specific base.

[??] Beta testers usually if you kind of pick out a few audiences that you’re trying to approach. Just approach them. Most people are willing to, if it’s a product they actually want to use, they’re willing to Beta test. But if you’re trying to find Beta testers and you can’t find anyone that allow you the time to Beta test it, [??].

Andrew: You know what? I want to get back to the narrative in a moment. But first, you mentioned this group that you’re a part of. I reached out to you because of a another group that you’re a part of. Aaron [??] happened to tell me once that he’s a member of a group that you’re part of. Seems like you’re a member of several entrepreneurship groups, right? Why?

Tom: Yes. Why?

Andrew: Yes. What do you get out of it?

Tom: It’s important to stay connected with, you know, other people, other businesses. It’s not even stay connected. It’s that everyone has a different experience and those different experiences, even though they might not have the exact same trouble that you have, they probably runned into something similar and they probably solved the problem already. Or been able to seek out expertise to help them solve their problems so those experiences become really valuable in solving the problems that you have in your business.

You know, each step for us in the growth of aweber has been a different series of problems. You never solve all the problems. You solve the problems you have today but two weeks from now there’ll be a different problem. So, you know, a good part of being entrepreneur in a successful business is effectively problem solving so those problems don’t sink the business.

Andrew: Can you talk about that this group is that you and Aaron are a part of or is it a private group?

Tom: It is a private group.

Andrew: Well, so you can’t say what it’s about?

Tom: No, not really. We’re just, you know, entrepreneurs doing interesting things online so I can’t really talk about the membership.

Andrew: [??] those groups useful? I’ve seen several entrepreneurship groups that are just, the people don’t get real in them, they’re not very useful, they’re just people that happen to share an interest who are sitting around together and there are some others where, like you apparently have, members see real results. Anyway, I’m trying to figure out what makes one work well, and you seem to have gotten a lot out of it.

Tom: I’ve been really lucky. Some of that is just having good connections, being able to network with folks and ask them what works for them, and eventually you run into those kind of groups. Being able to ask and talk to other entrepreneurs is really important. I’m a member of another group called YPO. It’s a larger international group that has thousands of members around the world, and a local chapter here in Philadelphia. That’s something that if you achieve certain business size and meet their membership requirements, you can join. There are a lot of types of groups and I get different things out of the different groups. And those things change over time as our business changes. It’s kind of a constant evolution, to be looking for a group that matches the types of needs that you have.

Andrew: Can you give me one piece of advice? If I ever join a group, which I’d like to at some point, or if someone in the audience is part of a group, what do we do to make it work well?

Ton: Participate.

Andrew: What do you mean by participate?

Tom: Show up to meetings, if it’s an e-mail list or an online list, be an active contributor there. You only get out what you put in, so if you’re holding stuff back, you have to imagine that everyone is holding stuff back. I feel like when you expose the soul a little bit, you’re more likely to get other people to expose the soul as well. You have to be in a group where you can trust the information that you talk about is going to be confidential. Some of that comes with time, and just getting to know people. The group that I’m a member with Aaron, I’ve known most of the people in that group for close to a decade now. The level of trust that I have with them is different than with someone I might have met just last week. You’re able to talk about different things, and the level of confidentiality and understanding that you have. There’s certainly folks that I’m closer to than the general group. It’s just like when you have friends; you have the inner circle, and you have the ones that you hang out with here and there, and the others that you just drink beer with at the bar, but they’ve never been to your house. There are different degrees of friendship, and the same thing with the different groups. Eventually, in the groups that I’ve found have been most beneficial for me, I’ve become friends with all of those people. There’s people that come over to my house when they’re in town. They’re folks that I will go out of my way to meet up with if I’m traveling somewhere, to meet up with for lunch, or dinner. It’s just participating, expose your soul.

Andrew: You’ll just get together with someone, and just have a beer.

Tom: Exactly.

Andrew: Let me ask you this, why is that? You do want to do a pre-interview with us, which I get, it’s two hours. So I feel like, Tom is someone who watches every minute of his time, he is not someone who blows off even ten minutes, let alone an hour.

Tom: I was expecting you to tell me to go away.

Andrew: You were expecting that I’d say no interview, then.

Tom: I appreciate you doing that. You have to be governed about your time. There’s only so many hours in the day, and I don’t know anybody that gets to the end of their day and goes, “Wow, that was a really long day, I wish there weren’t as many hours.” Everyone always wishes there are more hours. I think you can grab a whole lot of those hours back by being more conscientious of how you spend them throughout the day. There’s a lot of crap that we all deal with, every day, and we probably don’t actually need to deal with it. We just think we need to deal with it. Some of that is an artificial thinking you’re more important than you necessarily are, or that, “I have to take this phone call, right now,” No, you probably don’t need to take that phone call right now. My friends often comment, “You never get phone calls when we’re out.” Yeah, I do, I just ignore them.

Andrew: That’s the thing I’m trying to figure out. I guess what you’re saying is, yeah, grab a beer with someone, and just hang out and don’t talk about business, and that closeness means when I do talk about business with them, it’s a much more valuable conversation. I can be more open with them.

Tom: Absolutely.

Andrew: Part of the reasons I pushed for this question are that Aaron and others have invited me to different business groups and I say, “I’m too busy, I don’t have time,” and here I have someone who doesn’t have enough time who says “Yes!” to those groups, and I wanted to see what you get out of them, and I think I’ve learned a little bit. Going back to what you did before: one of the first things that I noticed about your site is that there’s not a lot on there. There’s a lot of text, but not a lot of features, of course. There was an affiliate program right from the start. Why did you decide to do that?

Tom: Word of mouth. Word of mouth advertising, and there’s no better way to incentivize than word of mouth and also give some dollars behind it to back it up. It was something that I was familiar with, was a leading edge marketing methodology in ’98, and continues to drive a significant amount of revenue for us. We also drive a significant amount of revenue just from word of mouth that has no affiliate reseller attached to it. It’s something that I’ve found to be very beneficial for us over the years.

Andrew: How did you then get affiliates?

Tom: Word of mouth.

Andrew: What do you mean? How do you stoke word of mouth?

Tom: How do I stoke it?

Andrew: Yes, you’re not someone who would have launched an affiliate program and said, okay, now that it’s up, people are going to join because I built it. You did something to get the word out. How did you do it?

Tom: You have to deliver a tremendous amount of value for your customers, you have to overdeliver. One of our core values is: Be remarkable. When you deliver remarkable experiences for your team, for your customers, etc., the remarkable part is driving results for them, driving value for them, and in return for that, you typically end up with a lot of word of mouth. “Hey, these guys are awesome, they did this, this, and this for me.” And that’s not that they’re trying to advertise us, they’re talking about how they were excellent, they just happened to use our product to help them be excellent. Our tool is not awesome. Our tool makes our users look awesome. It’s allowing them to create e-mail marketing, newsletters that they’re sending out to their audience that looks amazingly professional, makes that business look really good. When I see a newsletter that someone sent out that looks awful, it kills me. It kills me when I see a newsletter that looks awful because I’m like, “How did they do that, how did they make it that awful looking?” Those are always the things we’re looking at, trying to improve. It’s hard for people to make themselves look bad. I feel like we fell down when someone creates something that looks really ugly with our tools.

Andrew: This was a time when there weren’t easy tools for people to talk about a product that they love, we weren’t all going on Twitter and talking about every single thing that we use. Frankly, even today, a company that makes an awesome product has got to do something to make people understand how awesome it is, to get people to try it. What did you do? Who did you talk to to get your first customers?

Tom: The first customers were a lot of the guys I had been working with, from the wireless modem company.

Andrew: How about the first customers that you didn’t know- do you remember the first customer who came to you whose name you didn’t recognize?

Tom: There were so many so quickly, to some extent, you don’t even know. It’s one of those things that just spread. It’s funny, you say there weren’t places to talk about those things, there wasn’t Twitters and Facebooks. I’d say that there wasn’t a Twitter, and there wasn’t Facebook, but there were plenty of e-mail discussion lists, and there were plenty of marketing conferences and things going online. It wasn’t like when the Internet popped up and people started doing business online, and there were people who were just figuring out how to do business. It’s funny, I often laugh at the perception that people have an online business. Very few people have an online business. You have a business that is marketed online. To me, that’s not an online business. We send a postal letter to all of our new customers. Every single new customer gets a postal letter from us with information about our customer solutions teams so they can contact us better. We’re an e-mail company, I still send postal letters to people. We get feedback back from customers that’s like, “Wow, I’ve ordered so many things from companies online, and unless it’s something like Amazon where they’re shipping me an actual product, I never get anything from them.” I can send a $0.40 letter with such an impact that they’re likely to talk about it, and they do talk about it. Who talks about getting postal mail, who cares? But when you do business, and so many companies have set this perception that they only do things online, and they’re only going to send things in e-mail, and you never hear about them in the physical world, you never really gain that market sharing, that mind sharing from somebody, to then go and talk about them when you are linking up with your business buddies over a beer, or at a conference, or something like that.

Andrew: I’ve seen those. I’ve also, as a customer of yours, gotten postcards from you. If I have an interaction with someone at the company through tech support, or maybe even on Twitter, they’ll send me a letter soon afterwards.

Tom: We send out a couple dozen of those every day.

Andrew: How do you make sure you guys get this done on a regular basis, that it’s part of your company?

Tom: Our CS team does it every day. Most people do three to six postcards every day, just based on various connections. If there was a particular connection that someone had with someone on the phone, or via e-mail, or livechat, or whatever, a memorable conversation. It doesn’t take long, it takes 60 seconds to write a postcard to someone and put an address on it. But it gives it that memorable, “Hey, we’re great people,”To get a hand- written postcard in the mail. It’s the same reason when you do a livechat with us, we try to have everyone’s avatar image up there, so you’re not just talking to Bob in our CS team, you’re talking to Bob that has a picture, there’s a person on the other end, it’s trying to humanize that. We’re not a big corporation or this big company kind of thing, we’re all people. We all show up here every day and we interact with our customers and help them and drive value for them. You have to be able to connect at that one-to-one level to drive things forward, and create an experience for someone that they’re going to remember, and then go talk about with other people.

Andrew: Here’s one of the cards that I got from you in May 18, 2012. I always scan everything that comes in. It says: You’re awesome. Hey, Andrew, thanks for using and recommending AWeber. Congrats on all the growth and success of Mixergy. Cheers, Justin Premic [SP]. And the stamp says, “I <3 AW," I just noticed that. You print out a stamp too, with the person's name? Oh, no, that's "I <3 AWeber," I thought it was my initials. I see now. There's another one here from Mary Henworth [SP]. You guys send out a bunch of these. At what point did you start doing that?

Tom: About two or three years ago, now. It's been a while. With the postcards, the postal letters, we've done that for seven, eight, nine years now? We've done that for quite a while, I'd have to go back and look. It's little stuff like that. There's no way that you can sit down and measure the ROI of the postage and the postcard printing and the time spent to do that, you can't measure that.

Andrew: Do you do any cohort analysis that tells us: people that got a letter stay with us longer?

Tom: Every customer gets a letter.

Andrew: Are people that get postcards much more likely to stick with us?

Tom: I'd love to be able to answer that question "Yes," but I can't. We probably could, had it been something that we wanted to spend time on doing. It just feels right. There's certain things that you do because you know they add to the bottom line, and there's certain things that you do because you know it's the right thing to do. That's the right thing to do. You're not the first person that I've had conversations about this with. I'll frequently run into people at conferences who say, "Hey, I got a postcard from you guys, that was awesome." You're coming up to me at a conference just to talk about a postcard you got in the mail? I love that experience, too. Some could say that I'm priming the pumps to get those experiences when I go to conferences.

Andrew: Give me one other tip like that. What else do you do that's easy and connects with people in a way that most other companies don't.

Tom: We call every single new customer as well. It's funny, because usually the first 30 seconds of that phone call is not the, "Hey, how are you doing," sort of thing, it's usually disarming the "Hey, what are you trying to sell me," thing. Because when you just sign up for an account, and you get a phone call within two or three days, what would your natural reaction be?

Andrew: They're trying to upsale me now.

Tom: That's not what we're trying to do at all. We're trying to make sure that one, you got all your log-in information, you've been able to log in successfully, answer any questions you might have, and identify that we're real people, we're friendly. I'm not a random bot operator that you'll call and be stuck on hold with forever. If you need us, we're here, we're really people, we can answer your questions. If you happen to have any now, I can answer them now for you. If not, you'll be getting a letter in a couple of days from us. All of our information is on there. Please give us a call. And it helps tie all of those pieces together.

Andrew: Doesn't it also mean that if people start using a (________), start integrating it into their business then they're your customers. And if they don't do it within a few days maybe you have the stats that show you've lost them.

Tom: Yeah, there's definitely an on-boarding element of that. We want everybody to be successful. I don't want to take money from anybody that's not getting value from our service. That's not a win-win situation. The win- win is when the customer pays us money and we're able to provide 100 times the value back to them than what they paid us. I'm hoping that the value that you get from your account over exceeds the value that you pay us in your monthly subscription fees. I would imagine that probably does because you continue to be a customer with us.

Andrew: I've been a customer now for four or five years.

Tom: Exactly. So I hope that if that ever changes in any way that we've established a connection with you and everybody else that would allow them to say, "Hey, I'm just not seeing it here. Is there something that can drive additional value for us?" So it's just about being able to open up those communication lines and make it a partnership that we're all being successful based upon that.

Andrew: How long would you say it took you to quit the Olive Garden job?

Tom: I'm trying to think what the actual timing of all that was. Well, I quit that job around the same time because I moved. We got our first customer at the end of August in '98 and the timing of that was mainly that I was supposed to start school in the Fall, so I went to Penn State for a year and then I was a mechanical engineering major and I changed majors to finance and I moved home my second year, so I was going to change, go to a different school. And so I was going to a community college my second year in school and that's when I started getting this wireless modem stuff, I came up with the idea, and eventually decided to launch the business end. As I was going back to school that Spring semester, I was basically kind of deciding, "Hey, I'm going to give this a shot in the Fall," and my goal for getting a product out there at launch was the Fall, so that I had this business. It wasn't like, "Hey mom and dad, I'm working on this. I'm going to launch it sometime soon. Can I still live here for a little while before you kick me out?" So it was really something where once I had this off the ground, I moved out pretty much right after that, and I moved back in with a roommate that I had in York P.A., when I was going to Penn State. And I ran the business from there for the next year and a half before I actually hired somebody. Yeah, so the timing of that was around school and when I moved, then that's when I had quit the job as well, so I quit the Olive Garden stuff.

Andrew: How long would you say it took you to get to a million in sales?

Tom: I should know that number. I don't know that number off the top of my head.

Andrew: Roughly.

Tom: A couple years.

Andrew: A couple years?

Tom: Yeah, a couple years.

Andrew: That's a lot of customers to get when you're charging, what was it, where was that number again? Like, 20 bucks a month?

Tom: Yeah, here, I can tell you here real quick. Let me see here. Now I'm curious for my own just because I don't know that off the top of my head.

Andrew: What are you looking at to see that?

Tom: It's one of our internal metric's tools. It was 2004.

Andrew: So it launched '98.

Tom: To 2004, then.

Andrew: 2004 was your first million dollar year?

Tom: Yep.

Andrew: What did you do that other companies that launched around that time didn't do? Why did you get to grow so much faster than others?

Tom: I don't know. I wish I had ...

Andrew: OK.

Tom: ... something set. We grew so much faster. When I look back at it, it was more about, "What did I not do that I should have been doing that would have allowed it to grow a lot faster?" I actually just gave a (________) talk down in Philly two weeks ago about the entrepreneur's success secrets kind of stuff, and for me it was, I should have hired people sooner. Now we have the cash flow to be able to do that and I didn't because I didn't know how. I thought it was more complicated than it was, and actually once after I actually did it, it was like, "That's not so bad." Yeah, there's certain things that you kind of set as roadblocks in your head. You think they're a lot harder than they actually are. And once you kind of come up against the roadblock like, "I have to do this. I must figure out how to do this." Then you go and figure it out it's like, oh, it's not that hard. Why didn't I do this months ago or a year ago. So it's kind of overcoming the internal roadblock that keeps you from doing certain things.

Andrew: How were you even aware that you had this roadblock? Both people just say, "I'm not going to hire" without being aware of "Hey, I think it's too hard." Or, "I think I don't have the money for it," or whatever, we're not even aware of those inner limiting thoughts.

Tom: I think some of that comes from talking to other people depending on your network of peers that you have around you and the relationship that you have with them. They can often tell you when you're limiting your own potential. It's much easier for somebody to see sometimes from the outside in than the inside out. When you're in your own problem space all the time it's sometimes difficult to solve those problems. Where somebody else can come along. You're working 24 hours a day, you barely sleep, you need to hire someone. "OK, that's really hard." You verbalize things and it change how you think about them. And that's going back to your peer groups. That's one of the things that I think has been so beneficial for me is just being able to talk about those things and get them out there. It's a business psychologist, almost. Other people might call them mentor or peer, there's a million and one ways you can describe somebody that's going to give you that kind of advice, but just having good friends that have experiences to take from.

Andrew: Who's the first person that you hired? What position was it for?

Tom: Our customer solutions teams, our customer service team.

Andrew: People who talk to customers who have problems.

Tom: To help people through the software end of things. I was spending all of my normal business daytime hours doing that because we had a customer base that needs to be supported. And when there's only one of you and you've got three people or four people on hold, you need to be able to multiply that effort to some extent. Even after I hired somebody I still jumped in and did customer service periodically. So it's one of those things that just kind of evolves over time. So we hired that. The next person we hired was a developer, then business development, web designer. There were a number of things. I outsourced a bid of development engineering but most of that was the server installations more so than the actual software development. I've never outsources actual software coding for the A Webber platform itself. It's always like I need a Solaris box which is what we were running back in the day, with Apache and (??) and this, that, and the other thing installed in it.

Andrew: What made you decide to go from drip to full on email software that delivers software as often as the sender needs to send it out?

Tom: A lot of that was internal usage ourselves. I needed to send newsletters to people that had signed up for the service. I needed to say, "Hey, we have new features." So it was like, hey, we'll build it for ourselves. I won't say that's a primary motivator in what drives our feature product life cycle now but it's still definitely an indicator. I look at it as, hey, if we need this feature then there's probably a lot of other countries out there in the world that need those same features. If I find something lacking in our earned product, one I can make those changes, and two those changes will probably be beneficial for other people as well. That's what drove a lot of that. There's feedback from customers themselves. There's an interesting caviat with that especially from the software design perspective. The whole Apple paradigm, people talk about Steve Jobs and the influence he's had there. Your customers and users will often tell you they need XYZ feature but they're not actually telling you the problem that they're trying to solve and being able to understand the root problem that they're trying to solve will often allow a company to solve that problem in a more elegant way than the customer asking for a specific feature will necessarily do.

Andrew: Give an example of that, of a feature that someone asked but when you understood the root problem you created something better.

Tom: I'm blanking out on a really good one at the moment, but just little things about how people want to automate different tasks. When someone does this, I want to add them to this mailing list, and when they don't do this, I want to take them off of this other list. So, use segmentation, and then those are all automatic based on their behavior. That's a good one, actually, using the segmentation tool to be able to use and save different segments within one mailing list rather than creating an entirely different and static mailing list. That's probably one. There are dozens of examples about how customers edit their messages, about how they add different content to things. I'm blanking on any other really good examples. You can't necessarily implement features based on what people are asking for, you have to understand what the problem is that they're trying to solve with the feature.

Andrew: I asked people who weren't using AWeber why they weren't using it. One of the answers I heard back was from one of your competitors, I'll say the name: InfusionSoft. One of the people who I talked to said that "When someone takes an action in InfusionSoft, I can trigger a different e-mail based on the action that they took." Germain Griggs, who did an interview with me in the past, who teaches people how to play piano by ear, he sends out an e-mail, he says "Which of these kinds of music are you into?" If you click on jazz, he'll send you a certain e-mail, if you click on classical, you get a whole other e-mail. You guys don't have that kind of if-then process.

Tom: Based on the example you just gave, yeah, you could do that. There are things that no, you cannot do right now, but everything is an evolution. The example that you just gave, we totally could do.

Andrew: So I could send out an e-mail to my audience that says, Do you have a business or not, and then if they click, Yes, I have a business, I send a sequence of e-mails, and if they say No, I don't, I send a different sequence of e-mails.

Tom: That's a different example.

Andrew: That's what I meant before.

Tom: In the initial example, where someone is signing up, and they say I'm into jazz, I'm into this that and the other thing, that you can sequence them at the time of sign up, based on that. Afterwards, you could send broadcasts to them, you could send newsletters to them, you could send a sequence of messages.

Andrew: I don't know that we could always do that, because I think we tie an identifier to the person's URL so that if someone clicks a link, and they come to our site, I know who it was who clicked the link, but that means that I can't then segment out based on the clicking of the link, because you see all of those URLs as separate, because each person got a link with a different identifier.

Tom: It depends on how you're identifying those links uniquely.

Andrew: If I say "Go to mixergy.com/=?tom," to you, and to me it says "Go to mixergy.com/?=Andrew,"

Tom: You're probably populating a dynamic variable, so our software will only see the first part of that, not the end of that, the dynamic aspect of that.

Andrew: I thought you guys see that as different links. Anyway, the automation isn't what it is for our competitors, and that's why people are going there. Why?

Tom: There's always a constant evolution. There's always going to be some features that we have that somebody else doesn't necessarily have, and like I said, that might not be a feature that's a yet capability, so we have thirty-five engineers that are constantly working on the product, and we definitely have some really cool interesting things in the pipeline.

Andrew: When are you thinking of launching that?

Tom: What's that?

Andrew: The segmentation stuff.

Tom: We don't talk about unreleased product before it's released- especially on interviews that are widely distributed. One of those historical learned lessons, I don't go there anymore. When it's released, or when it's ready to beta, you'll hear about it.

Andrew: I'm not allowed to e-mail people who unsubscribe from my list, yet you guys charge me for maintaining a list of people who unsubscribe. Why is that?

Tom: We charge for people in your account. If they no longer have business value for you, then you can certainly delete them. There's an element of that that causes people to clean up old dead data rather than leaving it sitting around forever, that causes issues down the road.

Andrew: What kind of issues does it cause if I have 2,000 people who are unsubscribed? What kind of issues does it cause for you to maintain it?

Tom: Well, a lot of that is the statistics and other things around those subscribers, and the general bloat that comes. Like, 2,000 subscribers - probably not a big deal, but a lot of people have a lot of churn in their mailing list. And eventually you have 2,000 subscribers and 200,000 people that are unsubscribed, and that just causes things to kind of stack up, and not be as optimal as they could be. So, having that be part of the overall effect there, there is that, and, frankly, having people...cost-involved and managing account is not just sending an email. It's also definitely a cost in managing and providing and storing all of the data that goes along with the account. So, that's just part of it. And that's not an uncommon thing; a number of other service providers do the same thing for the same reasons.

Andrew: You mean, the cost of keeping 200,000 email records, is that as high as it is...sorry. The cost of keeping 1,000 people who are unsubscribed in your database is as high as keeping 1,000 people who are subscribed, who get the email too? 'Cuz we always charge the same price to...

Tom: Yeah, but, you're....You're looking at semantics of pricing. There's a price-simplification factor. If you had two different prices for something like that, you're just, you're causing additional complications in understanding a pricing model. A pricing model, we try to keep it as simple as possible. It's based on the number of email addresses that are in the account, whether you can email them or not. We don't really get into the semantics of subscribed/unsubscribed, or otherwise. If it's an address in the account, that's what our billing is based upon. We try to keep it as simple as it is humanly possible to, so that everybody can understand it, and if there are a lot of 'If/Then' statements, or it's...you know, if you have this, then it's this add-on, if you have that, then it's that add-on. We're just trying to make it as simple as possible. It's generally, historically, been the best way for us to manage that, for all the small business owners.

Andrew: How do you know that? What do you do to know that that's the best way to do it? How do you know that that's the best way to charge, how have you tested it?

Tom: What we do...we've done a lot of price-testing over the years. So, yeah.

Andrew: How do you feel about this question? I feel like suddenly the tone changed.

Tom: [laughs] Why? How do I feel about the question?

Andrew: Yeah. Yeah. [laughs] I noticed that suddenly the tone of the conversation changed.

Tom: Well, it's the...no, I wouldn't say the tone necessarily changed, it's more the ...what's the best way...they're very specific use cases that I don't necessarily think would be applicable to a lot of folks. So, it's more of the...it's not something that I generally get questioned about, but it's definitely something that does come up periodically. But it's not something that is a major issue with folks, you know, I think price- simplification is much better over the, you know...kind of delve into the specific of...you know, trying to dive into it in three different ways, you know what I mean? Like, you could...like, there's a number of analogies that you could kind of look at in the marketplace now. You've probably seen commercials for the little GPS units, Forcetrackers, that insurance companies are giving out to people, that if you drive this way, you can get this insurance rate, or if you drive that way, you get that insurance rate. But there's not a whole lot of clarity about how those rates are derived based on the data that are being fed back from those little GPS trackers.

So, you know, it's kind of hard...it becomes...there's not a lot of clarity in how those are priced versus, you know, real simple, you call, you get a quote, based on the vehicle that you're driving, the age of the vehicle, probably your age, and a few other areas that...But, you know, it's, like, could I lower my insurance another 10% by driving five under the speed limit all the time? You know, and then there's lots of other similar pricing complexities that you could get into with the different business models. But, yeah, a price that you necessarily pay for something is not always directly attributed to the direct cost of exactly what that particular element of that thing is. You know, could we break out our customer service, and put a cost on every single time somebody calls us? Absolutely! Do some business models do that? Absolutely! Do some business models not have customer service at all? You know, you can't call them on the phone. Absolutely! So, it becomes, like, one of those, well, I didn't call you last month, does that mean I get 10 dollars off? You know, no, that's part of, it's a fixed cost, is part of that. And that all comes into the pricing models that various businesses use in there, you know, in their business.

Andrew: I get what you're saying, at some point it becomes too complicated to attach a price directly to the cost.

Tom: Every single cost item, yes, absolutely, it's not, it's not always about every direct cost. It's the overall average of the cost that's across an entire customer basing. Where a customer is seeing value, or not seeing value.

Andrew: Why didn't you expand beyond email?

Tom: We do email really well, why branch out into other things that we don't do well, that we don't have core expertise in. Does that mean that we won't ever expand out? No, I try to never say never, but it's, I haven't felt the need to do that. You know, there's lots of, there are a number of companies out there that you're probably familiar with that do a whole bunch of different things, and they do a whole bunch of things, not very well. [Laughs] Where, I think that when you maintain focus on a specific market and look to provide the best solution you can to that market. I think that in the long run that'll do you better, so.

Andrew: I did a Google search for your name, and then I stepped forward, years, you know, how you can limit it to, the results from 2000, 2001, I tried to see when blogging was hot. Did Tom try to come up with a blogging platform to compete with Movable Type, and Word Press? You didn't do that, did you try ever building, like a side business and then say no, this just isn't for me?

Tom: We have had other products, we had a, an ISP Delivery product that would help track overall deliver ability. So, we had that product and that was around for five years, five, six years.

Andrew: That was for ISP's who handled email for their clients, to be able to get deliverability?

Tom: It was for, it was for businesses like yourself that want to see how much of your mail is getting to the inbox, or going to the spam folder, or otherwise. Everybody says that they're very concerned about deliverability and they are very concerned about deliverability and making sure they get the best, and we, so we developed some tools to help businesses actually measure that for their own campaigns, because it is [??]. And there was, there was a lot of like, oh, yeah I'd pay for that, but when it actually came time to paying for it, it really wasn't that valuable and that the, it'd become a, it became a focus thing. You know, we had a certain amount of engineering time being devoted to that product. And the return on investment when you, when you looked at the balance sheet of like, what was driving the majority of the revenue. It was still the core, email marketing A Weber versus the other product that we had. So, you kind of always had to be thinking that justification of, OK, do we spend the time here to help make this a better product, to help grow its revenue? Or, or do we just continue to make the product that already has a substantial revenue base, and substantial customer base, better, in and itself? To be able to grow that? So it was kind of making those different choices and at the end of the day, there was, there were a number of decisions that kind of went into killing that off, that was definitely one of them, there were a couple of others. But it kind of came back to that focus thing, and we killed that off and we're able to continue to focus on making A Weber the best product that we can.

Andrew: Have, someone in the audience who I talked to just the other day, said, how do I know? If I just haven't been working at this long enough, and that's why it hasn't succeeded yet? Or if I just not the right fit, and no one's ever going to love it? You were basically faced with that here, with this product, how did you know, it wasn't a matter of just give it a little bit more time?

Tom: Well we had a substantial base of A Weber clients that we were working with, we were marketing, we were cross marketing to them, and the adoption wasn't there. It was, it tended to be that there wasn't a whole lot of customer overlap, the customer's that we had on the other solution, were not also A Weber consumers, which was surprising to us. We figured it would be a pretty much, a if you need one, you'll probably want the other once you get to a certain size. And there was going to be a certain size, was going to be somebody who was doing larger campaigns. And we weren't seeing that, it was businesses that were using other solutions elsewhere that were not necessarily always in a market I was happy serving. And, you know, it was just, it was a variety of things around there. But how do you know when you've given it all?

Andrew: Yes.

Tom: I don't know, I think you just have to kind of make a gut check about it, I think it's easier to do if you have something to fall back upon, and that's basically what we were doing there. We weren't betting the farm on this new product. I never expected it to be as large as the core AWeber product was. I just thought it was something that was a tool that we had developed internally that I thought would be useful to other people as well. I had people tell me that it would be useful, but when it came time to pull out the checkbook, you know, the credit card, there weren't that many people that voted with their credit card to say, yes, it actually was useful.

It definitely drove value for the people that used it, but there weren't enough people that made that decision that it was valuable for them. I don't know. I think you just kind of have to do some searching, and know that you're giving it all that you can and it's time to iterate. It's definitely a tough place to be to be able to move those things forward, and make those calls. It was something I debated about quite a bit. I was like, oh, we're going to kill it. Then I'd come in and somebody would talk me out of it.

Andrew: [laughs].

Tom: Like a month later, I'd be, like, oh, we're going to kill it off. Somebody else would talk me out of it. Eventually, I was, like, no, I've had enough. It's usually one of those things when the conversation in your head is the same over, and over, and over again. You've probably just not come to the point where you can say it out loud, but you probably need to. It's the same thing with HR management, with management of a team and growing a team. If the same person constantly comes up as being a problem, in some way or another, they're probably not a right fit for your team.

It's usually when you've exhausted all possible avenues for making that better, and they still continue to be the person that's coming up all the time in the conversations as kind of the problem child. It's probably not something you're not going to able to effect change on. You need to own up to that, and make the difficult decision and move on for all the parties involved. It's just kind of getting to that point that is often the hard thing to do.

Andrew: One of the interesting things that I saw when I went through your Google history year by year was an interview that you did with the RO Star Act about six years ago. I started listening to that. Audio was so bad, but it was one of the early podcasts for business people. It was a good program.

There was one thing that you mentioned there that I wanted to follow up on which was you had trouble with deliverability in the early days. How did you overcome that? What was the problem actually, and then how did you overcome the trouble of getting your email delivered into different people's inboxes?

Tom: I wouldn't say that we had deliverability issues in the early days. Deliverability's always something that you have to manage.

Andrew: Yeah. That's what you said. Deliverability is always an issue. Not necessarily that it was . . .

Tom: Yeah. It's not that it's an issue in that you're not getting delivered. It's an issue in that you're always managing it, you're always trying to build your reputation. You're always trying to manage the customers that you have on your network, and that they're doing the right thing.

It's not so much a deliverability management, it's another way of saying it's an abuse management. We're always looking at customer base to make sure that they're doing the right thing. That they're delivering to people that have requested those emails, and that they're delivering content that is requested. That their content that is requested, and that their content is something that is appropriate to be delivered.

It's two ways of saying the same thing. That's just something that has evolved over the years to different tools, different algorithms that we look at. A lot of that is automated these days, as far as abuse identification, and being able to identify customers that are doing bad things. That kind of outliers is probably the best way to describe that.

That's always something that you're doing. It's not something that a lot of businesses have to do, but when you're dealing with a network like ours where there is that potential for somebody to be abusing their other resources.

If you go to an office supply center, they're probably not going to kick you out, because you're abusing their paper when you take it home. It's a different type of business model, much like an ISP might have an abuse quotient of somebody that's downloading illegal content, something like that. Or just using their internet connection in some way. The car company's probably not going to come and take your car away, if you start driving it recklessly, but your insurance company might take your insurance away. There's similar anal- . . .

Andrew: Email is one of the most dangerous things to be in charge of. I could never do your job. People, when they start building their businesses, get kind of desperate. Then they get all those e-mail addresses that they have in their inbox, and all those e-mail addresses of business cards that they collected over the years, and they suddenly imagine that those people want to get their new newsletter and hear everything about their new business. They start cramming those e-mail addresses into a list, they start sending cheerful messages trying to get people to buy, and then they start sending more aggressive messages, and that's a real headache. You have to tell them, no, this isn't the way e-mail is done.

Tom: It can be. A big part of that is the education process, of talking about the right ways to do e-mail marketing. Most people don't start and say, "I want to send as much junk e-mail as I possibly can. I want to send as much spam to people as I possibly can." That's not what most small business owners do. There are certainly people that have that intention, but it's a tiny minority. Most people do it wrong because they don't know any better. They do it in spite of themselves; they have good intentions but they just don't know not to take the address book and start mailing that. The nice part about having very large customer bases and having done this for nearly fifteen years now is that we know what to look for. Those things are algorithmically programmed. We can generally tell when you upload your address book before you ever send a single e-mail.

Andrew: How can you tell?

Tom: I'm not going to tell you, come on!

Andrew: You're saying that if I'm uploading my address book, versus the addresses of people who signed up, you'll know?

Tom: Generally, yeah. There's lots of different ways that people give that away.

Andrew: Do you do newsletters, yourselves? Do you e-mail your customers?

Tom: Absolutely. I'm surprised you don't get a few of them.

Andrew: I'm on your website every single day.

Tom: You probably just read it and think that it's a one-off, or that it's something specific to that time period, but its newsletter content.

Andrew: You guys got hacked, a while back. I didn't know that you guys got hacked until my customers complained about it to me. My customers are the most untrusting bunch I can imagine. I look at their e-mail addresses, it's always Something+Mixergy@gmail, or Mixergy@theirdomain.com. They said, Andrew, you're spamming us, and I said no way and pushed them off. And then, I started looking into it, and I said, Oh, you guys got hacked, your e-mail addresses were taken, and people started spamming. Why didn't they tell me about this? I log into the site every day. I didn't get an e-mail about it, I didn't get those phone calls, or postcards.

Tom: There were definitely announcements sent for that, especially logging into your account, absolutely.

Andrew: I must not have seen it. Why not?

Tom: Do you have other people that log into your account as well?

Andrew: Yes.

Tom: They probably saw them, clicked through them, and it was something only displayed to them. It wasn't how we do interstitials and those sort of things, it was probably something that they saw that you didn't happen to see because they'd already logged in and identified that they'd seen it.

Andrew: That might have been. Why don't you guys do multiple accounts? I feel so nervous about giving people on my team access to the account, but you don't have user accounts.

Tom: It's on the list.

Andrew: So why not e-mail about the hacking, if it were such a big issue?

Tom: Why not?

Andrew: It's a big issue for your customers, it's a problem that they should be aware of. Why didn't an e-mail go out?

Tom: It didn't affect all customers.

Andrew: You weren't sure who it affected?

Tom: Not exactly. We did send notifications in accounts and on our blog, and so forth. There were absolutely notifications.

Andrew: I changed the tone of the interview again

Tom: I don't know how else to answer that one.

Andrew: These questions are important to ask, because if I were listening to this interview, and all this guy did, all this Andrew Warner guy did was talk about how he got this postcard from the company, and he raved about how nice it was, I would say, you're not asking the questions that I as a user care about. Why isn't there automation like his competitor? What happened when there was a spam issue? So I have to bring it up. Is there a question I didn't get to ask that you wished I would have included?

Tom: Not that I can think of, offhand. It really depends on what you think would be most interesting for your audience, as far as for them to know to be able to move their businesses forward.

Andrew: That's a good question. I was going to ask about how to do e-mail marketing right. I saw that some people asked you about that in past interviews but...

Tom: That would be a good one.

Andrew: Alright, let's do it. How do you do email marketing right?

Tom: It's the end of the day. How to do email marketing right. The... on the same topic of managing abuse and so forth, most people don't come in with the intentions of doing the wrong thing, they just don't know any better. The biggest part about email, about doing email marketing correctly is setting expectations. One, only sending email to people that have explicitly requested it. Having talked to you in some point in the past does not mean that it's okay to add me to a mailing list. Unfortunately, a lot of people do it. I would say the same thing about... a lot of people speed. That doesn't make it okay. The police officer's not going to not going to give you a ticket just because somebody else just sped by you at 80 while they were giving you a ticket. There are of things that people do in the world that are not the right thing to do and are not appropriate to do that people do anyway. It doesn't make it okay for them to do. So make sure that you're only mailing people that have explicitly requested it is important. Set expectations when somebody is signing up, so expectations are about the frequency of the mail that you're going to send out, as well as the content that you're planning on sending. So don't send... don't tell people at all how frequently you're going to send and then start sending them multiple emails a day. I guarantee you that your unsubscribe rate is going to be really high, and you're going to have a really high complaint rate. Those are the things I can guarantee, whereas if you tell you, "Hey, I'm going to email you once a month." Send them an email once a month. Okay, you might be able to sneak in an extra one in there every now and then and you're not going to see a whole lot of complaints about that. But don't tell someone you're going to mail them once a month and then mail them once a week, or once a day, or multiple times a day.

You have to set the expectations. Because when you go to a subscribe form and there is no expectation about how frequently you're going to mail me, they're making an assumption about how frequently you're going to mail me. And so a lot of, most people like me make that reasonable assumption that okay, you're going to email me monthly. And then you start sending them 3-4 emails a day, your expectations don't line up, and thus the likelihood of someone complaining is much higher. So those are really the core fundamentals. You can get into creating a subject line, and creating the addresses that you send from. I think that from a small business perspective, one of the common things that I see people make a mistake of all the time, almost everyone has their own domain name. You know, Bobsplumming.com, or whatever. But they use a Gmail address or a Yahoo address or a MSN address or a Comcast address or a Verizon address as their reply address. It's their email address that they put on their business cards, and that they put on their email marketing campaigns. You can usually have "Bob@Bobsplumming.com" as well, set up, and those are usually pretty trivial things to do, to configure, but it might take a 10 or 15 minute phone call to figure out to set that up in your email client. But from a branding perspective and a marketing perspective, it's much better to have your old identity there rather than Verizon or Comcast or Gmail showing up there.

Andrew: Let me get one that I learned from Justin Premick. When I started doing courses on Mixergy at MixergyPremium.com, guys if you're watching, go sign up, but when I started doing it, you guys were so helpful. Justin Premick was one of the first instructors, he came to teach email marketing, I was still figuring out how to do stuff then, and so it was really, he did me a solid by coming in when I was still trying to figure things out. And here's one of the best things I learned from his course. He said most people don't understand how to do AB testing through email. And he suggested that what we do is take our list and break it up into 5%, 5%... actually here's how we do it. Before we send out an email, we break the list up into 5%, 5%, I think it's 10% and then 80%. We run our first email test to two groups of 5%, and we see what gets the most open rates, what people click on, etc., and then based on that, we email the rest of the list.

Tom: Absolutely. Yeah, and that's if you're running larger campaigns, I absolutely recommend doing that sort of thing. Most people, most encouragement they need is just doing it to begin with, send something, because you don't... a lot of folks, they get writers block. Or they just get to like "well I don't know what to send"! Well do you email back and forth with customers? "Oh, yeah all the time"! Well, what do you email back and forth about? Do they have questions that they always... "oh yeah yeah yeah"! Well take one of those who already wrote to somebody else, and put it in an email, and that's part of a follow up sequence. Boom. Done. Problem solved. Do you publish a blog? "Oh yeah, we do that all the time"! Well the stuff that goes in your email newsletter, it is your blog. Set up a blog broadcast that will turn it into an email newsletter automatically, or just reapportion some of that content that's going there. It's the same communication content that you would otherwise put on your website or talk to a customer directly. I think the biggest thing to remember is when you're emailing, whether you have 10 people on your mailing list or 100,000 on your mailing list, you're talking to one person at the other end of the computer or their smartphone or whatever. It's one person that's reading it.

Use the voice that's talking that one person versus trying to talk to an entire stadium full of people. You usually get better results that way. And it also allows your mind to write to them more uniquely and to be able to address their questions and answers. Usually the campaigns we see that get miserable results are the campaigns that kind of set it and forget it. They send it out and don't know how they interact with it, there's no link to click on there's no call to action. You get this newsletter and you're like " what am I supposed to do with this." Doing something is always better than doing nothing. If you send nothing, there's nothing for people to respond to.

Andrew: It took me a long time to start sending out those emails. I was nervous for a long time. What do I say? How do I get it right? I still feel we're learning a lot. I'm still not doing how I'd like to.

Tom: You're not going to learn if you don't mess it up.

Andrew: How cool is this? We're half way through the day and I already have 110 new subscribers on your list. I love that. That's what I care more about than my traffic numbers. I didn't explain our way of A-B testing. In the comments I will describe it in more depth. This is a premise system that we customized for us. Final questions, revenue, what kind of revenue are you doing now?

Tom: We're a private company that's not disclosed.

Andrew: Are you doing more than 10 million?

Tom: Maybe.

Andrew: Okay you guys are impressive I don't know exactly how impressive but I knew the revenues are incredibly impressive. You gave the emails out before. If people send out a thank you note is that something that you're open to?

Tom: How many people watch these?

Andrew: Maybe five. I always say, don't ask Tom for anything just say thank you.

Tom: As you already said, I'm Tom@aweber.

Andrew: You had it at the bottom of your old webpage and you were using your old address.

Tom: I'm not hard to find, I'm on twitter and Facebook all the usual places.

Andrew: When you send your emails keep them short as a favor to me.

Tom: Thanks for having me Andrew.

Andrew: Thank you for being a part of it, bye guys.

Andrew: Coming up, do you believe, I mean really believe, in a work life balance? Well, I asked the questions that you really wonder about it, but are too polite to bring up. I’ll bring them up towards the latter part of this interview. Also, are you trying for to many homeruns? You will want to see what today’s guest did instead, it might change your approach to business. Also, finally, you’ll never guess who today’s guest, oh, that’s a lot of G words. You’ll never guess who today’s guest had as a neighbor? But you’ll find out towards the end of the interview, all that and so much more is coming up.

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Hello freedom fighters my name is Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious upstart. Hey, how does an idea that Exxon didn’t want turn into nearly a billion dollar business? James Cusumano is the co-founder of Catalytica. When the company he worked for thought his idea was too small for it, he decided to launch a startup and pursue it on his own. What’s Catalytica? Well, if you ever used Neosporin, Sudafed and Actifed, there’s a good chance that his company made it. It manufactured drugs and developed a low cost pharmaceutical process and we’re going to find out about how he built that business. It also, actually, and I don’t see that in my notes, but I remember it from going over this. It also developed clean power generation, that’s the other part of his business. All right, more recently though, James wrote Balance, the business life connection which provides a proven template for creating successful business and simultaneously long-term balance and fulfillment in your life.

James, I went really long with this intro, that’s why it took me so long to get through it, but I left so much out. First of all, thanks for doing this.

James: I am in life #5.

Andrew: No kidding. Life #1, or maybe it’s not even #1, but early on you created this bump. I’m listening to this song right now in the back ground, Short Shorts. That’s you.

James: Yeah, actually I signed with a group called the Royal Teens, recorded at…actually, long before you were born. You probably heard it because they use it for an air [SP] commercial.

Andrew: I heard it when I used to listen to the oldies station on the radio, who wears short shor, that was you singing it.

James: I’m sorry?

Andrew: That was you, Dino.

James: That was Dino, yes.

Andrew: The Dino of you. How does a guy who sings that, who’s on television, who’s a rock star, end up at Exxon?

James: Well, it’s because I had two loves as a kid and I discovered them quite early. One was, I lived in Elizabeth, New Jersey, where I was born and grew up most of my young life. And I was very interested in science and my father bought me a chemistry set, that’s how I got into the science part, for Christmas one time. The other is that I’m the oldest of 10 children and by any common standards now we didn’t have very much money so we all had to go to work when we were about 10 or 12 years old. I didn’t like working outside as a newspaper boy which I did or selling fruits and vegetables in the Italian Market so I took piano lessons to start a band like the Props [SP]. Next thing you know I was writing…this is the heart of rock and roll right across from Manhattan. I was writing rock and roll music and selling it across the bridge in Manhattan to doo wop groups. And that’s how I eventually made it into rock and roll, and I loved both. The entertainment and science and technology have sort of followed me through my whole life and like both of them but I knew that my real passion was to be in science and technology to build companies. I didn’t realize that until I had gone to work for Exxon and worked in a large corporation that I really had to get back into the entrepreneurial thing.

Andrew: Wow. And when you got that chemistry kit as a kid, from what I understand, you started making cosmetics?

James: Yeah, what happened was, you know how boys are, after you get through the business of making rockets and fireworks and stink bombs and all the other stuff that you could do with chemistry sets that were made during the 50′s and 60′s. This was before the Environmental Protection Agency so you could make gunpowder and all kinds of things. After I got done doing that, I went to the library and I found a book, 1001 Recipes. And it was all kinds of things like cosmetics, (_______), you name it, and I started making these things in my, we lived in a two family home in Elizabeth. My grandmother owned it. We had a cellar there and I had a little lab and I started bottling cosmetics that I was making and selling them in the neighborhood. What really got me so excited and pushed my spirit, even as a young nine, ten year old, was that somebody was willing to pay for something that I had made, technology, and they were willing to pay for it. I didn’t think of it then, but it was so exciting that I think that was the spark that started it.

Andrew: And so I see the entrepreneurial side of you. I see the creative part of you. I see the science part of you, already there early on in your life. You end up at Exxon and you have this idea that you take back to the higher ups. What was the idea?

James: Well, what happened was I became the Director of Research for Catalytic Research for Exxon and we were building a corporate Research Laboratory and I happened to be there at the right time, so I went in as a scientist and after I got my PhD in Physical Chemistry, I went in as a Research Scientist, and within three years they promoted me to Director of Catalytic Research. I really enjoyed that but what happened was we were developing prophecies and some of them were commercialized, but many of them were not commercialized because they didn’t bring in enough revenue. For example, one of them, (________) which was a really neat process would only bring in 75 million dollars a year. And when the President of Exxon engineering said, “You know, Jim, this is great stuff, great chemistry, but we just can’t afford that kind of thing. We need something much bigger than that.” I said to myself, “Why don’t I take something like this and go on my own.” And so a friend of mine overheard me saying that, who was working at Exxon and said, “Look, why don’t we think about what we can do,” and that’s how it started. It started with saying, “Look, we’re experts in Catalytic Science and Technology, and one way to look at (________) is about 30 percent of the gross (________) product in the Western World is made using Catalytic Science. And we were experts in the field. And so what we discovered is maybe we could take this out and start developing our own technologies. Now the problem Andrew was this was right after the worst recession after World War II. It was 1974. And so we had a very simple strategy. We were going to start as consultants. We work and make some money and hopefully become profitable. Then we will start doing contract research, and if that works out well we’re going to manufacture it. That was the extent of our strategy at that time. And so we built a very successful consultant company from 1974 to 1980 …

Andrew: I want to make sure to really understand everything before we continue here. Starting with, what is this process that you developed? I hate to be open about my ignorance with all these people watching us, but I’ll just say it. I don’t understand it. How would you explain it to, say, a nine year old?

james: Well, first of all, let me make something really quick. What happened was we developed a process at Exxon (________) a presentation to the President of Exxon, Exxon Engineering, and he said that they weren’t interested. But that process wasn’t the one we took out. We didn’t license after (________). What we discovered is, our capability, which is Catalytic Science, now a catalyst is something that speeds up a chemical reaction, plus the other cool thing about a catalyst is the world was beginning to enter the field of molecularly designed catalyst. We designed them at the nano scale and had them selectively make only the products you want. So we became experts at a selective catalytic conversion prophecies and we said, “You know, if we can do that, we can save people lots of money and eventually …,” so it was a general knowledge base that we had.

Andrew: I see. It wasn’t a specific process that you developed for Exxon. You just said, “We’re the experts at this. This is where the world is going. Let’s bring this out to the world and build a start up around it. Do you have a concrete example of a use of the catalytic process?

James: Sure. All of the plastics that you know, polystyrene, polyethylene, polypropylene, they’re all made with molecular catalysts. Even something as simple as oil margarine is made by hydrogenation using a catalyst. Gasoline, all of the energy fuels, they require catalytic technology to make them. The problem is the old catalytic systems that were developed during the’ 20s, ’30s and ’40s, maybe even the ’50s, they not only made the product you want they made a lot of toxic by-products. And so just like genetic engineering was developing catalytic engineering, molecular engineering of catalysts, was developing so that we could go down at the molecular level, design a catalyst and make things selectively. And that’s what our expertise was.

Andrew: OK, and as you said this was 1974, the world didn’t have the venture capitalists and accelerators that we have today who are just throwing money at anyone with an idea, what did you do for funding?

James: Well, here’s what happened, this was right after the Arab embargo when I guess it was the Yom Kipppur war and the Arabs decided they weren’t going to ship any kind of petroleum to anybody who sympathized with Israel at that time. So Japan, the United States, I don’t know if you’ve ever read about this but there were huge lines of people waiting at gas stations to try to fill up their cars to get a few gallons. So this was a tough time and there was no venture capital so we raised. There were 3 of us, myself, Ricardo Levy, my partner from Exxon, and a professor from Stanford University who was a world authority in catalytic science and happened to be the thesis adviser for Ricardo at Stanford when he got his PhD and also a consultant to my group at Exxon, that’s how the three of us knew each other. So we put $10,000 in a piece and we said OK we’re going to go out to Silicon Valley, it was December of 1974, we’re going to open an office and we’re going to start consulting. And lo and behold we were able to convince the Department of Energy, then called ERDA, Energy Research Development Administration, and the Electric Power Research Institute to give us a $200,000 contract. This is when we discovered cash flow because we thought we were going to get paid on a monthly basis and as the government works you don’t get paid until the whole project’s done and then they have to be sure it’s right. So that’s when we discovered that we had to get a relationship with a bank and so we did that and had a little . . .

Andrew: That’s how you solved that because a bank will give you money up front if you have a contract with the government, they feel like that’s a safe bet?

James: Exactly. So we were able to get a line of credit, eventually learned about cash flow, and then we made the transition to consulting for large Fortune 500 companies. Many of the contacts were made by Michel Boudart who is the professor at Stanford now. He seems like he knew all of these people around the world and he would open the door, Ricardo and I would go in and do our little sales job and then we would go back and do the work. Then as we got more and more profitable we had more and more people from around the world . . .

Andrew: So Michel was the partner who was just there to open up doors and give you credibility and guidance?

James: Exactly. He was one of the premier professors in the world in catalytic science.

Andrew: I see. And how did he know so many people?

James: Well because he went to meetings, made lots of presentations, he consulted for lots of companies, very large companies all around the world. He had a sterling reputation, he was nominated for the Nobel Prize several times and unfortunately never got it before he passed away. But it was that kind of ability that gave Ricardo and I, because we were young guys, I only worked at Exxon 7 years. I had a number of publications but I was still young, I think I was 32 years old when we walked out the door and started Catalytica.

Andrew: You know what, I remember actually, I used to read as a kid Jeffrey Archer novels and I think in at least 2 of those novels there’s a situation like that. A young guy who had no credibility partnered up with someone who was older who had lots of credibility but no energy and no interest in starting a company and the older guy would get a small share of the business and the younger guy would run it. What share of the business do you give to someone like Michel for something like this?

James: Well actually we did something very generous I think, all of us, because it’s really hard to put a figure on what he did in terms of allowing us to get off the ground. When we started this we did a third, a third, a third in terms of ownership of the company. And as we went on some of the challenges we got into were because he was much older and wanted to take money out of the company, we could care less, we were trying to build this beautiful thing, we weren’t thinking about making tons of money. We were thinking about just building this wonderful company and that posed a little bit of a challenge, but we got through it because we had tremendous respect, that’s the up thing. The three of us had really tremendous respect for each other personally. In fact, Ricardo, to this very day, is my very closest friend. We were business partners for almost 30 years and that’s very unusual.

Andrew: Okay. How do you get the rest of your…is it all Michel for the first few years introducing you to customers?

James: No, actually, what happened was, maybe the first three or four years Michel helped us a lot. After that we developed our own credibility because we started making companies millions of dollars. I mean we’d go in and work on a process for Merck. And help them fine tune their catalysts and all of a sudden the yield of drug they were making were the intermediates to make the drug went up by 20% and that was equivalent to a huge amount of money. So we did that many, many times and that developed the credibility that we knew what we were doing. We also were able to bring in some incredibly bright people to compliment ourselves all over the world. I remember time we had 32 languages in Catalytic, so we had people from everywhere. We just hired the best people we could find from any country.

And then, what happened was, we started saying, you know, if we really want to make an impact we’ve got to get out of this consulting, we have to get in contract research and start developing our own technology. And that was around 1982. And that was a tough decision because the only way we could do that is Century Capital was coming up again, and was to raise metric capital. Which meant giving away control of the company and I don’t know if you’ve ever gone through that, but anyone that’s gone public or built an venture-based company, when you all of a sudden start giving away company and arguing back about how much it’s worth and all of that sort of thing, that’s a tough emotional roller coaster. But we were lucky, we got some extremely good venture capitalists and they were in it for long haul with us. And in the end they made a lot of money.

Andrew: What sizes of revenues were you doing at the time went for venture capital?

James: We were doing, 1983 we were doing $20,000,000 a year and we were profitable. And it was a well-run company and so the venture capital…the first group we had was a Mayfield [??] and they put in $3,000,000 and then we got Lupers Oil Corporation from Cleveland and they put in $18,000,000, and then we got the Rothschild’s from England, they had a bio-tech bond and they were interested in us and they put in money.

So that got us going, but then we started burning cash, we were no longer profitable [??]. With our own technology, we were a venture financed company and that’s when we ran to a very interesting challenge. The way I like to say it, we were working on projects that were all homeruns. They would all change the world, towards the [??]. We were working on catalytic process that would do away with LNG Tankers, liquefied natural gas which are very dangerous. And this technology would allow you to take directly out of the ground natural gas and pass it through a catalytic device and convert it into fuels. Which means you could ship it without refrigeration; it wouldn’t be explosive, and all of that sort of stuff. But a very challenging technology.

The other thing we were working on, a homerun, was a catalytic combustion of fuels with no pollution, zero pollution. And that also was tough. So we were burning cash and we started to sense that the investors were beginning to get a little tired. And not just the Metro Capitalist, but other people who were there, and so we decided, we better hit a couple singles instead just homeruns, to use a baseball analogy. And that’s when we said to ourselves, what area could we make a big impact and I looked around and studied some different things and we decided on pharmaceutical.

Pharmaceutical would be the area because every drug company, I don’t know how it is now, but certainly when we were in the business, they would send a scientist in the laboratory to design a molecule, to train certain disease, and they didn’t care to much how they made that molecule because they only wanted small amount to test on mice, dogs, and whatever, to do clinical trials. Sometimes it took 10 steps, maybe more, to make a particular molecule. So if you get 50% yield on each one of them 10 steps and you take .5 to the 10th power you don’t have very much stuff left at the end. Plus, you get a lot of waste and they used a lot of toxic materials. What we said is we can make these molecules for you in fewer steps and try and do away with a lot of those toxic materials.

So I went to Pfizer they didn’t know who we were, so I said give us some of your toughest molecule. We went away came back six months later with a process that made some of these molecules much easier and much cheaper. And Pfizer turned around and said we’d like to invest in your company and they invested $14,000,000 in order to get access to some of our research. So that helped tremendously in terms of credibility and those singles were really starting to make processes that could make a drug molecule simpler. But this was only in the laboratory and designing the process, we wanted to get into manufacturing.

Andrew: By the way, when you were a musician . . .

James: Uh-huh.

Andrew: . . . and working at Exxon, someone came up to you. This girl came over and said can you please give me your signature Dino and everyone’s watching you and you’re handing over a signature and you’re kind of a celebrity that even a teenage girl would understand what you do. What’s it like to then switch to this technology that a guy like me who has researched you sometimes has, not sometimes, often has trouble understanding it? What’s it like?

James: What’s it like to . . .

Andrew: To switch to work on technology that the average person doesn’t understand.

James: . . . well, I would say this, there’s two things. One is I guess I’ve always had such a tremendous desire to make an impact on the world that when I found out catalytic technology could do that I fell in love with it and I did my PhD in that area. What I have done though is I’ve tried to, in the number of articles I write, I write an article every two months for a magazine called ‘Leaders Magazine’, and I try to write about things that are complex and make them in simple language. Which is not always easy to do. It never bothered me but I think it is an interesting challenge to try to communicate to the intelligent person but maybe somebody who has no technical background what-so-ever, why is a catalytic system that makes high octane gasoline important? Why is a catalytic system that makes a particular drug, like Prozac or even any of the others that Pfizer was making, why is it so important? And it’s real important because if they didn’t have these catalytic systems it would be terribly expensive. In fact that’s what drove our people. The dream we had when we started getting in to pharmaceuticals was, we’re making products that are cleaner and cheaper. Everybody has a grandmother who had to go to the pharmacy and spend God knows how much money on prescription drugs and so that was a motivating force for our employees. To be able to make things cheaper and cleaner.

Andrew: When I try to explain a tough concept to the audience or frankly just communicate it quickly to my audience I look for something that they touch and relate it to them. That’s why all the research that I did on you and all the thousands of words you heard that Jeremy put together for me based on his pre-interview with you – I found three words and I thought alright that’s going to help: Neosporin, Sudafed, and Actifed. People in the audience have touched that, they’ve seen it, they know what it is and so if I can connect your story to that, then it’ll be easy for them to picture what you did. What’s another way that you make tough concepts simple for people to understand? How do you do it?

James: Usually with pictures. It’s something that people will generally understand is drawing simplified but truthful pictures about how a system works. How some molecules sit down upon a surface, how they recombine to form a desirable product. That’s one way. But you’re right – things like Neosporin – which by the way, these were over the counter drugs and they’re things that people know but we also made for Glaxo Wellcome, the world’s supply of AZT for treating AIDS. It was the first very powerful drug, until two years ago, for treating that disease. We made Wellbutrin, the world’s supply, for treating depression. A huge number of drugs, cardiovascular drugs, we made almost a hundred different drugs so we were contract manufacturing these drugs for large pharmaceutical companies. And then the second thing we were doing was developing processes to make their new drugs and that’s where we started to really take off. The thing that I always remember the most because Jeremy was asking me, what was kind of an exciting point in your life. We went through this consulting business and we built up a nice little contract research company but there was a time when with the stroke of a pen we went from basically 150 people and revenues of $16,000,000 to 1300 people and $375,000,000 and then ultimately built that up to a half-a-billion dollars of revenue. And that came because we were patient and we knew where we wanted to go.

We had a dream and we followed it. There were tough times along the road. But, ultimately that was a very, very satisfying point.

Andrew: What was the stroke of the pen? How did you do it? And what were you doing?

James: Well, this is when we went from Catalytica, we had a small plant in East Palo Alto, California. We bought that plant for almost no money from Sandoz to demonstrate that we knew how to manufacture drug molecules. We needed to; if we wanted to become a global player. We really had to increase the capacity of our operation. So we looked around and looked around. We found a plant in Greenville, North Carolina. That was going up for sale that was owned by Glaxo Wellcome now known as Glaxo Smith Kline.

We competed against five multi-billion dollar companies, for example a buyer in Germany, ESN Pharmaceuticals in Holland. We won that and we didn’t pay the highest bid but we were very careful about how we put this package together. We guaranteed the jobs of all the employees. It was the largest employer in Greenville, North Carolina. So we made a lot of people happy. That’s how we went from basically 150 people to 1300, basically and signed a contract.

Andrew: And this all started when you walked in the door of Pfizer, who didn’t know who you were and what your company did, how did you, with that kind of environment, how did you know who the right person was at Pfizer to talk to you? And how did you convince them to give you a shot?

James: Well, one of the things, Andrew, that we had is we put together over the years is a really, really good board of directors. And one of the people on our board, was Earnest Mario. Ernie had been the CEO of Glaxo Pharmaceuticals. He had left there and was an entrepreneur running some other things on his own. And so people like him, Paul Cook, who started Bray-Camp Corporation, a billion dollar specialty polymer company. Then eventually we got Barry Bloom, who was the executive Vice President of Research and Development for Pfizer. He sat on our board. So these people were all able to advise us about the types of people we should talk to and how to get to them, and what was the best way to approach them. The board is really, really, critically important.

Andrew: I see. What other kinds of advisors and mentors have you had?

James: Well, we had a number of, in the technical end; we had a number of professors in various areas of science and technology all around the world. Palo Alto, because our labs were located in Mountain View, right next to Palo Alto, we were fortunate to be able to have access to some of the best legal advice, some of the best banking advice, some of the best, through our venture capital investors, we had some of the best financial people. And so, really it pays to, even when we were small, we had expensive lawyers. We had Wilson Sonsini, one of the premier firms in Palo Alto, California. In fact Larry Sonsini, who started the firm up, was one of the advisors to us for a long time and helped us with our IPO. So having people that may be expensive but are tops in their field was, I think, critical to help us move along.

Andrew: One of the big challenges that you had taught you a lesson: Never bet your company on one source of funding…

James: Yeah.

Andrew: What happened?

James: That’s probably the worst thing that ever happened to us in our entire professional career. Certainly speaking for myself and for Curt, he would say the same. What happened is, without mentioning the company name, we had a large privately held company, came on with a significant interest in Catalytica. They wanted to get into catalytic process technology. So they wanted to fund, instead of starting their own laboratories. They wanted to fund us. They put in, let’s see, 15 million dollars a year in research, contract research. And what happened is one of the people in the company decided after one year that he didn’t’ like funding contract research. He convinced his brother and partners to get out. They gave us almost no notice. It really was a significant battle and the only way we could save the company at that time was to let go 20% of the company. It is the only layoff we ever had. But had we not done that, the whole company would have gone under. That was a terrible decision. I mean a terrible thing to have to make, but it was the right decision.

It’s very difficult for people who stay behind to see their colleagues go. Some of the people eventually when we got back on our feet, we hired back. That was a really tough one. I guess what we learned out of that, is never bet your company with a lot of money on one source. No matter how wonderful they tell you things are going to be.

The other thing is I think that Ricardo and I had a sense from the beginning that our basic values, the way we run a business with the way they run a business, were really very, very different. I’m not making a judgment about right or wrong. I’m just saying their values were different than ours.

Andrew: What were the two values?

James: One of the things that for example, they were very hierarchical. Somebody at the top makes a decision and that’s it. It’s like, oh, you do it. We didn’t have that. We built teams. We were collaborative. Yes, we made decisions but we tried to get the best information from smart people in the company. That wasn’t the way we liked to function.

I think they didn’t hesitate to fire people on the spot. When we let people go, we fired people when it didn’t work out. We tried to make it work out. But we did it compassionately. We worried about where these people were going to go. And we tried to help them. That’s different. Those were two values that we just weren’t in alignment with.

Andrew: Could they fire your people?

James: No. But what they did was they could take money out of the company. Within three months, they gave us three months notice. There was no way we could make up for that loss.

Andrew: I see. You’re saying that you partnered with a company that had the same concern for their employees as you did, they would’ve understood. Hey, if we’re taking funding away from these guys. They’re going to have to let their people go. That’s not something that we do. That’s not our values. We can’t allow them to do it either.

James: Yes.

Andrew: And before that, maybe say, they’re different, we’re different. We operate in our own little world. It’s fine that we’re different. Then you realized there was a clash. And that’s important.

James: Precisely. If they had said, ‘Look, this is not working out. We thought we’d like to be in this area. But we’d like to phase out. Let’s find a way that we can do that that doesn’t hurt both companies. That would’ve been wonderful. We would have accepted that and understood it. But not bang, like that, with a hammer. It wasn’t the right thing to do.

Andrew: You stayed with the company for how long? You left before, I mean, you left day-to-day operations before the sale. Right?

James: Yeah, just before. I was helping Ricardo. That story is pretty straightforward. My first wife who’s deceased, was a screenplay writer. My middle daughter Polly, who is now Polly Cole. She’s an actress in Los Angeles. Jane had written a script called ‘What matters most’. She wanted Polly to star in this movie.

I had on my board somebody who was dating Shelly Lansing who was the chairwoman and CEO of Paramount Pictures. He introduced me to Sherry. She read the screenplay. She says, ‘Wow, this is great.’ But Jane wanted to direct the film. She says, ‘I can’t let her do that. She’s never directed before. This is Paramount Pictures.’

So I said, ‘Well you know, we’re in the process of selling our company. I’m going to start a film company for my wife because this is her dream.’ We had enough money to do that. We’re going to go out and [??] ourselves. So we did.

We started of all things because I didn’t know the future. At Chateau Mcely which is where I am now. I started a company called Chateau Wally Films. It’s because that was the name of our estate in Ojai, California near Santa Barbara. So we were just getting ready to go out to the Panhandle of Texas to shoot this film.

Unfortunately, Jane found out that she had stage four breast cancer. There is no stage five. You pretty much know what’s going to happen when you get stage four.

So I said to her, What do you want to do?’ She said, ‘I want to shoot this film. I want to make it.’ And I said, ‘All right.’ So I called her oncologist at Stanford University. And the doctor said, ‘I’ll arrange for her to get chemo every week, every Friday in Amarillo, Texas. Because we were shooting in the panhandle just outside of Amarillo.

And she did, she shot the film. And unfortunately, she knew she was going to pass away. But she got to see the movie. She died one month after we finished the film, after it was fully edited in th can. She never thought it would be distributed.

So I said, being an entrepreneur, ‘I don’t know anything about movies. I made the movie because of my wife.’ I said, ‘You know what? I’m going to find a way to get this distributed.’

So I started calling people all over. I called Sherry Lansing. She looked at the film. She said, ‘Wow. This is [??] great, but not for Paramount. The actors are not that well known.’

I said, ‘What should I do with it?’ She said, ‘Go to Lifetime Television, the largest cable network in the world.’ I went there and I told them, ‘Sherry Lansing sent me.’ They looked at it. And they said, ‘Well, it’s not bad.’ And they took it. They took it for three years, and it became one of there best films, and they renewed the contract for another three years. So that’s how ‘What Matters Most’, which you can buy now on Amazon and other video places, that’s how ‘What Matters Most’ got made.

And so that was kind of a one step for me. Also, I felt comfortable being back in entertainment. I was dealing with entertainment people. Even though they were movies, I had been in rock and roll, I kind of understood their mentality.

And so there I was. And the movie, we also submitted it to a number of film festivals, and it won in three or four major international film festivals. That’s how I got incentivized to try to get it out there and have it distributed.

Andrew: You know, I used to ask interviewees, “What’s the best part of having made it?” At the end of the interview where we go through all the trials and tribulations of building a company. And they often would say, “The freedom to do what I want.” For you, is it the freedom to do this with your wife, to produce what matters most? Is that the best part of your success?

James: Well, yes. I would say, in that case, the best part of my success, and it’s still what I like to do, I love to inspire and motivate people to do great things. Not just small changes, but great things. And I like to provide the capabilities around them, so they can do it. With success, if you asked me one of the major reasons for the success of Catalytica, it was because Ricardo and I, yeah, we were smart enough to know certain things, but everybody we hired was much smarter than we are. What we knew how to do was hire smart people, and inspire them to do great things. And that’s what I still like to do. That’s why we’re balanced. I really like to inspire people to do great things for themselves, because when you find out what you’re good at, and my wife is good at writing screenplays, and you connect it with a need in the world, the film is a beautiful film about doing what matters most in your life, you get passionate, that’s really what you want to do, that’s your sense of purpose. It’s exciting.

Andrew: I want to talk about balance, and ask you a question about that. Because I think just the title, alone, is going to make some people in the audience think, “No. That doesn’t work, already.”, before they even give the ideas a thought. But I want to ask you about hiring people who are smarter than you. You saw the hesitation I had to even ask you about the technology because I didn’t want to look like a fool in front of you, I didn’t want to look like a fool in front of the audience. Well, when you hire someone, and they’re counting on you for guidance, and you have to say, “I don’t understand that. Can you explain it to me like a nine year old?”, that’s a challenge, right? Where they loose respect for you. Where they feel like, “Maybe this guy doesn’t know enough to lead me.” How do you deal with that?

James: Well it’s not that dramatic, Andrew. Here’s the way it works.

Andrew: Okay.

James: I understand chemistry, chemical engineering, physics, generally speaking. And so if I hired, let’s say, an organometallic chemist, or a chemical engineer, and the chemical engineer is developing a process, I know enough to ask the right questions. I don’t know how to solve all of the equations to design a reactor, or maybe synthesize the molecule, that’s organic chemistry, but I know how to ask the right questions, and I know how to get to the essence of, “What is it we can do with this that would be great?” And you have to know a certain base load. You can’t just say, “I don’t know anything about chemistry, and now explain it to me.” That would never work. You have to have a certain background. Once you have that basic background, what you do is you hire the best financial person, the best organic chemist, the best commercial development person, the best chemical engineer for your VP of engineering. Then what you do is you try to get out of them how to put the pieces together and make something really big. And then you stretch them. You say, “Look. I think we could do this.” And they go, “Uh, I don’t know.” And you send them away and say, “Please, think about it.” And they come back, and most of the time, they find a way to do it, because people always underestimate how smart they are. They’re generally much cleverer than they think, especially if you provide the right environment, or an incubative environment where they can be passionate.

Andrew: So the right environment, and then you say, “Think about it for a little more.” And that gets them to stretch beyond what they though they could do?

James: Exactly.

Andrew: Because you had confidence in them, is that part of it?

James: It’s because you have confidence in them. And the thing that they always want from Ricardo and I is: We created the dream. We said, “Look. Catalytic technology could change the world. It could change the world. Don’t you want to be part of changing the world for the better? Do you want to put a dent in the universe so that when you die, someday, forget about the money you’re going to make, yeah, that’s going to be nice, but don’t you want to just say that you’ve helped a lot of other people do something better?” And everybody wants to do that Andrew. And you know that. You’re an entrepreneur. Everybody, that’s why you’re doing what you’re doing. You really want to help other people.

Andrew: Yeah.

James: And that, that touches your soul. That touches your spirit inside. That gives you a sense of purpose, your life a purpose, a tremendous passion and ability to hang in there.

Andrew: You know what James, I remember in the beginning, when Mixergy was just me and a part time editor, I wanted to inspire him to edit and to not just see this as a small job that he had to do but something he wanted to do because it was going to impact so many people. And I said, you know what I should do? Is tell him about all the people who are going to watch this interview. Who are going to be changed by this. Who will one day will then come back and do an interview themselves because of something they learned because of an interview that he edited. And then I thought. Oh. But if it doesn’t work out, you’re going to look like such a fool. Why tell him that this is going to be so big. What if no one is watching right now. Maybe? How do you get over that inner voice?

James: I think what you do is after some time, and it doesn’t happen early on because we’re all afraid to ask dumb question in the beginning. You have to sometimes realize that asking dumb questions is not a bad thing to do for two reasons. One is there is a lot of other people around you that want to ask that same dumb question but their ego won’t allow them. The second thing, and it’s equally important, it makes you vulnerable. And when you are vulnerable in front of another person. When you are not afraid to say I don’t know the answer to this. That other person says wow. I mean, think about it. When somebody does that to you and says look, I really don’t understand that. Can you help me with that? All of a sudden you want to help them. You don’t think, oh what an idiot. Very few people with think that. They connect with them. They connect with that vulnerability.

Andrew: What about the stupid questions that our own brains ask us? Like, you’re about to do something and the brain says who are you to go give this presentation? Who are you to interview James – this guy is so? Who are you to tell your employees, 1300 of them, that they’re going to change the world. You’re not Steve Jobs to refer to one of your neighbors. Do you ever have one of those thoughts? How do you deal with it? You’re smiling because you recognize it. What do you do with them? What are those voices in your head and then what do you do with them?

James: Well, I think what I do with it is I first, I have to believe it. I can’t say anything I don’t believe because people will know. So I think the first thing you do, is when you’re going to tell somebody something like you’re going to change the world, let’s say, you have to truly believe it. Really deep down, not just mentally. You have to believe it in your conscience. And when you do that and you think about it and you say we really think we can change the world. I really think we can. Darn it. I know we can. I know we can. Then, it’s a matter of how do you communicate it to certain people. Because I’ll never forget. Prince Eltenberg was our VP of engineering, and the first time I interviewed him I said someday we’re going to be a 100 million dollar a year company, and don’t worry about the money, that’s going to come as a consequence from changing the world. And he was from Holland. He was laughing and said let’s go have a beer. You’re dreaming. And slowly over time, over one, two, three, slowly, he got more and more close to believing. Finally after about three years he said, I’m with you. I’ll follow you wherever you want me to go. So it’s not always, you can talk to the editor and in 30 seconds he or she is going to say oh yeah, I got it. Sometimes it requires a process that they have to see that you walk the talk and that you deliver. And that many times you deliver the things you say you’re going to deliver. And you earn trust. You earn credibility by what you do. You’ve got to be patient and there are people that hang in there. Some people never do. There are exceptions, of course, for a variety of other reasons.

Andrew: Steve Jobs, as I mentioned earlier, was your neighbor for five years.

James: He was. Yes. He was my neighbor.

Andrew: What was that like? What did you learn from him?

James: I learned a lot of things I didn’t want to do.

Andrew: What do you mean?

James: Well, I had tremendous respect for Steve Jobs in terms of his, how shall I say, his drive? His ability to create the future, but I must be very honest that he and I are diametrically opposed with respected management styles. There were a lot of bodies left along the path in Apple. And so, with all do respect, he and I disagreed on a number of things. For example, he felt that he always knew what to do, I mean, generally speaking, and he would tell people to go do it and if they couldn’t do it he would verbally abuse them. Some of them would take it and they’d go back and figure a way to do it. And some of them were highly motivated, look at his track record, you can’t argue with a track record. However, I will tell you without giving the details because I have a lot of respect for him, especially now that he’s deceased, and I really don’t want to talk about it. I think there were a lot of people left behind that got damaged and hurt because of his style of management. Yet, it tremendously helped the company. The development of the iPhone itself…there’s some numbers, I don’t know if you’ve ever seen these iPhones in my book. When Steve and his group were developing the iPhone, it came out in 2007, in June of 2007, I think. And I guess, after two years, three years later it had profits of $1,100,000,000. Just the iPhone, that group, not Apple, just iPhone.

Now to give you some comparison, now Apple didn’t know anything about telephones, they went in from scratch into telephones. And Nokia, on the same quarter, the third quarter of 2007, I think it was. Their profits were $1,100,000,000, where Apple’s was 1.3, here’s the interesting number, Apple who only had 3% of the world market, Nokia had 35%, more than 10 times. So you can’t argue with that kind of success, so I have a lot of respect for the things that he was…

Andrew: So what lessens do we draw from that, getting now into the book, Balance? What lessens do we draw from that?

James: Here are the lessons that I would say, if you want to have short-term successes in a project you can manage the way Steve managed. If you want to have long-term success, I mean, build people, build leaders, no replacements for yourself I don’t think that’s the best way to manage. I think the best way to manage is to inspire people by getting the best out of them for themselves and for the company.

Andrew: And tell them how they’re going to dent….What I’m seeing from your management, Sal [SP] you just kept painting blue skies, saying this is where we’re going, we are going to change the world. Think about the impact that you are going to have after you’re dead.

James: Yeah, exactly. When you’re laying down on your last day before you’re going to die what do you want to have $5,00,000 000 in the bank or do you want to say you’ve changed the world for the better…yeah, but that $5,000,000,000 you can’t take with you.

Andrew: Oh, okay.

James: You might be able to take the spiritual component, I don’t know where you go after you die, but you might be able to take that spiritual beast with you that you changed the world because that’s intangible, that’s not something you could put your hand on. Nobody could ever take that away from you. They can take your money away, but that can’t the fact that you changed the world.

Andrew: The title of the book is Balance and the quote that I read came out of Amazon which provides a proven template for creating successful business, and simultaneously long-term balance and fulfillment in your personal life. Does life really work that way? I mean, if you were just a self-help guy who was selling Balance as a concept, I’d go, these self-help people are selling a dream. Real entrepreneurs know you focus insanely on your business to the exclusion to everything else and then you come back to the second half of your life and you pay attention to your personal life. Isn’t that the way things work?

James: Well, that is the way things work very often, yes, it is. And in fact, that’s the way it worked in the early part of my life and it’s only over time that I learned the power of balance. Let me tell you what I mean by that. What most people…many entrepreneurs don’t know because they’ve never achieved balance, they’ve focused most of their energy professionally at the expense of personal things. That’s usually the common thing, it happens very often in Silicon Valley, and the divorce rate is very high and that kind of thing.

Andrew: If they even get married in the first place.

James: If they even get married in the first place, yeah. But they used to get married and they’d go through a bunch of wives. What I found is, and I found it not just for myself, but I saw it other people and other executives. If you achieve balance much of the time and it’s an interesting challenge because you have to put together the right plan to do this. And I talk about exactly how to do this in the book. If you achieve balance, you find that your efficiency when you are working professionally or personally goes up exponentially. Your ability to solve family issues, professional issues, reach goals, if the ability to be creative and reach them goes up, you become extremely productive. And the amount of time to achieve the things you want to achieve goes down. As opposed to putting your nose to the grindstone and working 100 hours a week and maybe 20 or 30 of those hours are very inefficient because you’re barely awake and you’re trying to read a contract at 3:00 in the morning and you’re having to read the same paragraph four or five times. So what I’m saying, is…

Andrew: I’m sorry to interrupt but I really want to understand this concept because at least if you’re at your desk at 11:00 reading the same contract four or five, even seven times, hopefully by the end of the seventh time you’ll have understood the contract.

James: Right.

Andrew: But if you’re family at 11:00 or sleeping at 11:00 you have no chance of understanding that contract at 11:00, so how are you more efficient by spending more time away from work?

James: No, what I’m saying is that you have two things in your life. You have your personal life with a bunch of things that you need to do, you have your professional life with a bunch of things that you need to do. What I’m saying is the amount of time you have to both of those things when you’re in balance goes down, so you can get most of them done. Now it is true that sometimes you have to say to your family, if you’re really concerned about it, look, for the next two months I’m doing this acquisition, I’m really going to be out of pocket, but when September gets here, or whenever it is, we’re going to take a nice long vacation and I’m going to get back in shape again. And that’s okay, occasionally, because there’s sometimes that requires that. The acquisition is not so welcome, but that’s basically what I said to my wife at the time. I’m going to be gone for next several months but when it’s over, this is what we’ll do, and I came back afterwards and got back in balance with me family and children.

Andrew: How does spending more time with your family make you more efficient when you’re at the office?

James: For me spending more time with my family makes me more efficient, it may not make other people more efficient and I’ll tell you why. In order for you to be balanced between profession and personal you must put one other thing together and that’s a values based plan. Okay?

Andrew: Okay.

James: And I show how to do that in the book and when you have this values based plan, I’m not making any judgment on what is right or wrong. What’s important to you in your professional, in your financial, your knowledge, and your spiritual, whatever the case may need your help. There are six spheres that I talk about and you have to come up with those values and you have certain goals within those values. And if you follow those goals and if some of them are to spend a certain amount of time with your children, if those are really, not just saying it, but they really are deep down what you want to do, if you violate them you will not feel good, if you do them you feel great. And if you feel great you do your professional stuff even better. That’s what I found.

Andrew: I see. All right, the book of course is Balance. When is it going to be released?

James: Actually, April 16th.

Andrew: April 16th, so we’re going to publish this interview after the book is released so people can go to Amazon and get the book. You are an entrepreneur who’s done it, and who’s now written a book. What’s the point? I kind of find that entrepreneurs who have done it, write biographies to have everyone else ogle their success. People who haven’t done it, write self-help books so that other people can look at them as leaders and maybe get some success with it. It doesn’t usually happen like this, why did you write this book?

James: I wrote this book because my sense of purpose right now, everything I’m doing in my life, every single thing that I’m doing, both professionally and personally, is to help people achieve their dream. With my wife, Annes [SP], her dream has to do with Chateau Mailly [SP] and some of the things we’re doing here. And I support her with my…and many of the people here I’m building professionally and entrepreneur and that excites the heck out of me to inspire leaders for the next generation. So that’s why I wrote Balance. I want to try to get the benefit of what I learned to young people, or to the older folks who just never discovered on how to live a life of fulfillment. Because my feeling is, if you live a fulfilled life you do both professional and personal things well. If you are fulfilled only professionally, but you lost your family, there’s a piece in here that you lose. But if you’re very successful with your family and you never achieved a goal that you want professionally you are equally [??].

So the question is there’s got to be a way to come and raise many people. I spent 30 years in Silicon Valley. Most the people in Silicon Valley would say, “Gee, I don’t know about that. I’ve never tried this balance thing. I really wonder if it works, because I’m working 100 hours a week as it is just to be able to get promoted, and get those stock options, and whatever the case may be.” I think if you keep doing that you get burned out. You may have some money in the bank, but quite honestly Andrew, I think it’s not all about money.

Everything I ever did where I made a lot of money was because I was excited about what I was doing. I wasn’t thinking about making a lot of money. I think there’s three ways to look at your profession. One is a job. I’ve got to go do something to make money to pay for the mortgage and the car. That’s fine. Okay. Certain people have to have a job.

The other is a career. If I reach these goals I’ll get promoted and I’ll get a stock option.

The third, and that’s really been my whole life, is a calling. It’s something inside that says to me, “I’ve got to do this. If I do it right, I will find fulfillment professionally and personally.” I had a calling both personally and professionally and I put them together. I really want people to be able to find that it’s possible to do. You don’t have to buy this burnout business of being an entrepreneur and thinking you have to work 90 hours a week or 100 hours a week only professionally, and try to sneak in a Saturday once a week with your kids. By the way, if that’s with your value system, I’m not even going to make a judgment. If that’s really what you want to do and that’s what’s important to you, then that’s what you’ve got to do. Most people–that’s not what they want to do. They want both. They want a profession and they want their family, or whatever supports them personally.

Andrew: It’s about having a calling, and that’s what builds your passion. That’s the way that you did it. You told Jeremy, “Don’t plan on being wealthy as a professional life goal, but do good and do something you’re passionate about.”

James: And you will do well. I guarantee it. I really think there are very few things in this world that you can do when your passion and you have the commitment, the patience, you don’t really want to think that you’re going to do this is six months. Whatever you’re passionate about, you have to enjoy the journey, and truly enjoy. The Buddhists got it right. Enjoy the journey. If you do that; somehow, you’ll wind up being successful and making money. I guarantee it.

Andrew: This is coming from a person who’s done it. We’re talking about half a billion dollars in revenue roughly. Sixty million dollars in free cash flow, a marked value of about a billion dollars. Congratulations on your success and on writing a book where you’re passing on what you’ve learned to other people. The book of course is called Balance the Business Life Connection. That’s what it is.

James: Can you do the website for that?

Andrew: Yeah. What’s the UR.. I shut down my browser because I didn’t want it..

James: I’ll say it if it’s alright. It’s www and then it’s the title of the book, Balance the Business Life Connection .com.

Andrew: It’s a really nicely designed website.

James: Thank you.

Andrew: Thank you all for being a part of it. Bye guys.

James: It’s great.