Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, where I interview entrepreneurs about how they built their businesses.
And when I was at school at NYU, there was one professor that I especially loved. This was a guy who really started his own company and would come in to teach entrepreneurship, and he taught it in a very practical way. He even said, “Look, if we’re having a business plan competition and you want to copy someone else’s business plan, go do it. That’s the way it works in the real world. But be prepared to defend it. Be prepared to explain it. Be prepared to back up what you’ve done.”
So this guy, who really brought business into the classroom, also gave us this one book recommendation that changed the way that I do business, that influenced it forever to this day. It was called “The E-Myth Revisited.” And the whole idea behind the book was, “Hey, entrepreneur, systemize your business. Organize it so you can grow beyond just you.” It was the way that I ran my first greeting card company, the way that I run Mixergy here.
And I am so glad that now I get to interview the author of that book because he’s got a new book now that builds on what he taught before that makes it easier to use what he taught. His name is Michael E. Gerber. The new book is called “Beyond the E-Myth: The Evolution of an Enterprise from a Company of One to a Company of 1,000.” That’s what it’s really about — growing a company beyond you.
This interview is sponsored by two great companies. The first will help you hire your next great developer. It’s called Toptal. The second will actually organize your books in a way that I think even Michael E. Gerber would love. It’s called Bench. But first, I’ve got to meet Michael. Michael, good to have you on here.
Michael: Well, a delight, Andrew. Thank you.
Andrew: The problem that we’re solving– how does an entrepreneur who’s doing it wrong experience it? Can you describe it so people can feel it viscerally the way I did back in college, the mistake?
Michael: Well, they all know it. You understand everybody knows when it’s not working. Everybody knows something is missing in this picture. Everybody knows it sucks. So they have that experience. If they don’t have that experience, they’re dead from the neck up, so it doesn’t make much difference.
So I don’t really get to talk to people until they experience it. In fact, nobody who’s ever read my book who hasn’t experienced what I talk about in my book really appreciates my books. You’ve also got to understand I’ve written 28 of them.
Meaning still, trying to get into the mindset of somebody who hasn’t even started a small business yet, to open their eyes, their ears, their mind, their heart to the possibility that there’s something extremely magical and something extremely pragmatic about starting a company step one, step two, step three, step four. And none of those steps are dealt with in business school, and none of those steps are dealt with in incubators. And none of those steps are dealt with by anybody who’s written anything about business at all.
And I finally said 28 books is fine. Here I am. I’m beating myself up, beating myself up getting this message out to millions of readers. But what I also know in the constant conversation, Andrew, that I’ve had with so many of my readers, “I love your book, Michael. I love your book, Michael, I just haven’t been able to do your book, Michael. I love your book, but I haven’t done your book.” My statement right now, Andrew, is in my 80th year. So I celebrated my 80th birthday on June 20th, this year–this is 2016–we had over 83,000 people attend my birthday on streaming video.
Andrew: Wow. Yeah.
Michael: Yet, I know that while so many of them told me how much they loved my work, how much they loved my work, they don’t do my work.
Andrew: And you know what? I can’t point fingers because when I started Mixergy, I remember I found a potential guest, I emailed them myself and asked them to say yes to the interview. I went back and forth endlessly with them. Once the interview was done, I edited the interview myself. I posted the interview on the site myself. I emailed the guest afterwards. This list goes on and on.
I’m a guy who read your book, who lived it, who taught it to my employees at the last company, and here I was making the mistake. I remember it was AJ Vaynerchuk, one of the entrepreneurs I interviewed who said, “Andrew, this is madness. You can’t continue like this.” Within the interview he called me out and said, “Now I want you to hire someone. Maybe someone from the audience can volunteer to help.” That got me started towards systemizing.
Michael: Incredible.
Andrew: That’s the pain of someone who’s read “The E-Myth,” who’s studied it who still hasn’t enacted it. What you’re saying is, “I want to make it easier for you.”
Michael: Well, I not only want to make it easier for you. I want to make it work for you. So you’ve got to understand the reality is that most businesses–and they’re not businesses, Andrew, this is a false claim, a false attribute.
Andrew: You mean a company of one, a solopreneur is not a real business?
Michael: It’s not a business. It’s a job.
Andrew: It’s a job.
Michael: It’s a job for the guy who’s doing it, doing it, doing it, just like you said, “I edited it myself. I made the appointments myself. I called the guy back myself. I did it. I did. I did it.” If that great buddy who interviewed you hadn’t called you on it, you’d still be doing it, doing it, doing it because you’re a control freak. You absolutely–I know you are.
Andrew: Yeah. I had someone edit and then she didn’t do such a good job. She didn’t turn it around fast enough and I said, “This is not worth it. It would take less time do it myself than to teach her to do it right.”
Michael: Of course. Andrew, that’s a recording. What you just said is a recording. We have worked with over 100,000 small business clients in the 40 years of the work I’ve been doing, over 100,000 clients in 145 countries.
Andrew: Okay.
Michael: And everybody says what you just said, “By the time I tell them to do it, I could have done it 22 times myself. And they never did it the way I wanted it, they never did it as well as I could.”
Andrew: So that is a genuine problem. What do you say to someone who says that, “I can do it faster than I can teach it to someone else and they’re never going to do it as good as I do it?”
Michael: I say, “Wake up, stupid.” That’s what I’d say.
Andrew: And what’s the solution, then, for that?
Michael: But here it is. This is the point. The point is this all begins with a question. And the question is: Why am I starting a business of my own? What do I really want to get from it? When somebody begins to ask that question in earnest–understand I don’t mean right there where they are, doing it, doing it, doing it.
I mean right here, right here in this mindset we’re attempting to establish here, what I’m calling the Gerber paradigm, which is really the Ray Kroc paradigm, which is really the Starbucks paradigm, which is really go on and on and on. It’s the paradigm of growth. So I’m saying there’s only one reason to start a company of your own. That’s to eventually sell it.
Andrew: Okay.
Michael: Effectively you’re a young man. How old are you?
Andrew: I am now 40, 42.
Michael: 42 years old? You are exactly the age I was when I started this. I wasn’t in business, didn’t care about business. I wasn’t a wanting entrepreneur. I wasn’t all the stories everybody tells, “When I was a kid, I sold lemonade . . .”
Andrew: And candy, you didn’t do any of that?
Michael: Never. Never. I wasn’t even interested. So you’ve got to understand–I started my career as an “entrepreneur,” what now is called a thought leader, at your age. But when I started that career, I didn’t start it to become a coach, become a consultant, to do any of that.
Andrew: Okay.
Michael: I started it to build a system to “transform the state of small business worldwide.”
Andrew: I see. You didn’t say what a lot of other people say, which I want to be the speaker who gets hired to speak at a lot of events. I want to be the guy who companies hire to teach their people. You said, “No, I want to be the person who creates a system that companies can use on their own or they can hire my people who implement my system to help them implement the system too.”
Michael: Yeah.
Andrew: That was the thought process?
Michael: At the very beginning of my “entrepreneurial” career, my partner and I–he was the Tom, I was the Michael–Michael Thomas Corporation, that was the name of the business development firm. We had a dream, a vision, a purpose and a mission. My dream was this–to transform the state of small business worldwide.
Andrew: I see. So what you’re going through is you’re saying, guys, if you’re listening, here is the way to think about implementing this process that will take you from a company of 1 . . .
Michael: You’ve got to.
Andrew: . . . to a company of 1,000 and the first is to be clear about your dream and your dream was at the Michael Thomas Corporation?
Michael: To transform the state of small business worldwide and it hasn’t changed from that day in 1977, when we came to the conclusion that was the end result we wanted to produce.
Andrew: Okay. So that’s the first step. Be clear about the dream, and then the next step is get the vision down?
Michael: The dream is the end result. The dream is the outcome of everything.
Andrew: Okay.
Michael: The dream is the great big idea. The dream is why you’re doing everything you’re doing. Now, that’s really important. You should understand the dream isn’t about me. The dream is about them.
Andrew: Okay.
Michael: Transform the state of small business worldwide not to be the transformer–you understand?
Andrew: Yes.
Michael: But to create that transformation.
Andrew: Okay.
Michael: Now I had to figure out how to do it.
Andrew: Okay.
Michael: So the second step is the vision.
Andrew: Okay.
Michael: And our vision was to invent the McDonald’s of small business consulting, literally word for word. You understand? Exactly, explicitly like.
Andrew: When you say the McDonald’s, you mean the systemized business.
Michael: Turnkey. I can scale it. I can replicate it. I can open up 37,000 stores.
Andrew: Yeah. It’s amazing that back then McDonald’s was seen as this ideal, and today suddenly it’s seen with scorn. But you don’t care about either one of those. What you want is the bigger idea of system. You can replace McDonald’s with Starbucks.
Michael: I don’t care what this empty-headed nonsense about McDonald’s is. Do you understand how brilliant McDonald’s is? Scorn? That’s stupid. Scorn? It’s because of the food. The food isn’t it. Scorn? Stupid, stupid, stupid. McDonald’s is the most successful small business on the planet. You don’t treat that with scorn. You ask yourself the question what was it that Ray Kroc knew and did that enabled a guy starting out at 52 years of age–he was 52. He didn’t sell his first franchise until he was 59. How did you do that, Ray? And he wasn’t successful in business before that.
Andrew: And I see a Bloomberg article from 2016 saying McDonald’s wants to open more than 1,000 new restaurants in China. It’s still continuing to grow with this formula.
Michael: Yes. McDonald’s opened 600 stores in China in one year.
Andrew: In one year, right.
Michael: One year. Get it. I don’t want to open up 600 stores. It’s not whether you want to open up 600 stores, stupid. It’s whether or not it would have a profound impact doing something absolutely extraordinary.
Andrew: Okay.
Michael: That you get to choose to do. Transform the state of small business worldwide–that’s the extraordinary thing. That’s the great dream. The great how, the vision is to invent the McDonald’s of small business consulting–turnkey, turnkey, turnkey. The purpose, which is the third most important thing, is to enable every independent small business owner to be as successful as a McDonald’s franchisee. Hear me–that’s a miracle. If every small business, independent small business out here in the street, wherever you are–I think you’re in Toronto.
Andrew: San Francisco today, yes.
Michael: Oh, in San Francisco. Wherever you are, if every small business on the street were as successful as McDonald’s, the entire world economy would be completely transformed–completely transformed. So there would be no hardship. There would be no frustrations. There would just be extraordinary joy.
Andrew: Because these hundreds and maybe even 1,000 McDonald’s operators, small franchisee–actually, I don’t even know if they do franchisees in China.
Michael: Yes, they do.
Andrew: Wherever a franchisee opens up a McDonald’s, they’re not wondering, “What do we create?” They’re not wondering even where to put the hamburger on the wrapping paper. I don’t know if you’ve ever noticed this or if our listener ever noticed it–if you go to McDonald’s–and I’m a vegetarian, so I haven’t in a while. I went yesterday for the French fries, which are vegetarian and delicious–if you get a burger, you see the sheet actually has a big circle in the middle of it, the sheet the burger is wrapped in. That’s where they put the burger and know how to wrap it up.
Michael: Yes.
Andrew: So a guy who opens up a franchise, a McDonald’s franchise knows what they’re making, where to put the burger, how to train their people, how to bring in new customers, that’s what you’re talking about and you wanted to do that for other entrepreneurs everywhere to give them that clarity to allow them to create it.
Michael: I want to teach every small business owner to be as smart as Ray Kroc was. I want to teach every small business owner to be as smart as Ray Kroc was. I’ll say it four times. I want to teach every small business owner to be as smart as Ray Kroc was. I want every small business owner to suddenly understand they have to become systems thinkers. They have to think systemically. The entire system of their company, the livelihood of their company depends upon it.
Andrew: Okay. So what you’re saying is–
Michael: Those are the first three steps.
Andrew: For anyone who wants to do this, they want to be clear about their vision the way you are–excuse me, be clear about their dream first, then their vision, then their purpose and finally their mission. What’s your mission? Give us an example.
Michael: Our mission was to invent the business development system–artificial intelligence before they were even using the term, the business development system, I could then turn around and teach to a relative novice who’d never consulted about business, didn’t know anything about marketing, anything about management, anything about money, anything about business whatsoever. But using our system, that individual could in fact transform the state of their client companies like that. How could they do that? Because the system worked.
Andrew: Okay. We need to be that clear about our mission–what do we do tomorrow morning? What do we do right now?
By the way, this is a little bit off-topic, but your hat. I noticed you wore the hat. We record this twice. Once my connection blew out and I lost the recording. Thanks for doing it again.
Now, again, early in the morning, you’re wearing that hat. I’ve seen it in the photos. I get the sense that with you, that’s not happenstance, that you didn’t happen to wear that hat twice in a row here and in photos.
Michael: No.
Andrew: What’s your thinking behind the hat?
Michael: It’s an incredibly long story. I’m not going to share it with you here, but one day I’ll write it to you and you can share it with everybody.
Andrew: I would love it.
Michael: It’s an important story.
Andrew: My sense though is you realize it gets attention, it does some job for you and so you’re willing to repeat it to continue that job.
Michael: No. Well, that’s true. But you understand I’m a systems thinker.
Andrew: Yes.
Michael: So everything I do is about systems.
Andrew: In your book, I remember you saying, “If you find that a blue outfit works for you and gets you more sales, just systemize it, wear the blue outfit.” Steve Jobs eventually figured that out.
Michael: Look at Jobs and his black shirt.
Andrew: Yeah.
Michael: Just on and on and on and on. He had about 32 of them in the closet. You don’t have to ask yourself, “What am I going to wear today?” This is what I’m going to wear today.
Andrew: You do that too? You wear a black shirt frequently?
Michael: This is part of the process. So understand it’s part of the system. I know what I’m going to do when I’m in front of people. I know what I’m going to be wearing. I know what I’m going to look like and I know why I’m going to do that. I do that because it’s a part of the visual presentation of our company.
Andrew: Yes.
Michael: You understand? Years ago, in the E-Myth days when I was the founder/CEO etc. and so forth of E-Myth and E-Myth Worldwide, then it was a navy blue three-piece wool suit with a starch white shirt and a red silk tie, black wingtip shiny shoes and black socks up to my knees. Now, every single guy in our company wore those. When they went out in the street knocking on doors, which is what they did, calling on every small business in the town we lived in, when they did that, they were the guys in the blue suits.
Andrew: I see.
Michael: Everybody said, “You’ve been here before.” “No, that was my buddy. I’ve not been here before.” “Oh, you’re the guys in the blue suits.” “I forgot to wear my blue suit today,” a client will say. It became something to identify us with. What it actually identified–well, one professional, two, rigorously systemic, meaning we know what we’re going to wear. We know why we wear it. We know the impact of it.
This is so important. Look at Apple. Go to Apple online. Apple online is the perfect visual representation of world class. Everybody knows it. Everybody sees it. Everybody expects it. Just about everybody else is the visual representation of world stupid because nobody really put any intention behind the visual impact of what they do. It’s so critical.
So everybody is dressing for themselves. All of these solopreneurs are doing it for themselves. I’m saying you’re not in business for yourself. You’re in business for the people you’re here to serve. So now, what about them? That raises a huge question now, doesn’t it?
Andrew: What about the person who we’re here to serve?
Michael: I’m sorry?
Andrew: You’re saying what about the person we’re here to serve? What about my customer? What about my listeners?
Michael: What’s missing in this picture? What’s missing in this picture for the guy I’m here to serve? What’s difficult for the guy I’m here to serve? What frustrations does the guy I’m here to serve have every single day? How come he can’t get the results that he wants? Why is he afraid to grow exponentially? Why do I always get this if I say that and so forth and so forth? You follow me?
Andrew: Yes. So I have a sponsor called Toptal. I said, “Guys, fly one of your people in. Let’s have them teach a class about how they organize their company.” He did it. I said, “You flew all the way from South America to be here. I love how you guys hire developers. Teach my audience how to hire developers the way you do.” “Andrew, we can’t do it.”
I said, “Why can’t you do it?” He says, “We just can’t.” I said, “You don’t have a process? You can’t explain it?” He says, “No, we have a process down.” He got fiery with me. “How about recording it?” He goes, “I don’t think we can share it.”
I said, “I’ll tell you what. I’ve never done this before. I’ll give you the ability to record your process for how you hire developers. If you don’t want it, if your CEO does not allow it, we’ll delete it.” He recorded it. I’ve got to tell you, Michael, systemized–how they figure out who the top people are, how they ask them questions, how they get beyond the answers to understand what these developers are.
He recorded it so beautifully. I said, “All right, now we can publish it?” He goes, “Check in with the CEO.” I check in with the CEO, he goes, “If you publish that, I might have to break your leg.”
The thing that I took away from that is this is a company, very young company, under five years old, I think, doing over $100 million in sales helping companies hire top developers. That’s not an easy thing to figure out. Most companies can’t hire one top developer. That’s got to do this hundreds, thousands of time.
Michael: Let alone keep him.
Andrew: Sorry?
Michael: Let alone keep him after they hire him.
Andrew: Right, which they do. They keep them for years. The thing I took away from it is if you have a system that is so good, that is worth hiding. If you have a system that’s so good, it separates you by miles from your competition. We should all have processes that are that good. Since I brought them up, I will tell my audience my sponsor is Toptal.
If you need to hire a developer that is that good, I’m telling you, go to Toptal.com/Mixergy. That’s Toptal.com/Mixergy. They’re going to give you 80 free hours when you pay for your first 80 and a no-risk trial period. The reason they can do it is because they their people are freaking good. They would not offer you that if they didn’t know it. I only wish I could show you guys this course of how they did it. They actually made me promise to delete it, which I did not promise. I don’t know if they realize that I didn’t promise. I still hope they’ll let me publish it.
All right. Let me take just a second here. Sorry.
Michael: It’s their proprietary method.
Andrew: Yes.
Michael: It’s what distinguishes them from everybody else in their business.
Andrew: And that’s what you want us to have. Everybody should have a system that good that it allows us to grow the way that Toptal did and a system that good that we want to guard it.
Michael: That’s the point.
Andrew: So, can people do this at an early stage in their business?
Michael: They have to do it.
Andrew: They have to?
Michael: It’s not can they. They have to. It’s 101. It’s business 101. It’s not, “Can I do it?” It’s you absolutely have to do it. Now, let me tell you why they absolutely have to do it. Because unless they do it, by the time they get to the point where they realize they’ve got to do it, they won’t be able to do it because they’re going to do the wrong thing. The wrong thing is they’re going to then try to fix their broken business. You can’t get there by fixing your broken business. That’s what “Beyond the E-Myth” is all about.
Andrew: Why can’t I do that? If I’m an entrepreneur who, for five years, has done everything himself and realized I know the problem there. You get close to burnout but not burning out, why can’t you at that point say, “I’m reformed. I’ve found the religion, the Michael Gerber systemize your business, I’m going to go and systemize it.” Is it too late at that point to do it?
Michael: No. It’s not too late to create a new company that’s built the right way. It’s too late to fix Old Co. that’s done the wrong way.
Andrew: Why?
Michael: Well, very, very simple–it’s very difficult to fix things that don’t work. Hear me, Andrew. It’s almost impossible to fix things that don’t work. There’s so much energy, negative energy, so much resistance to fixing something that doesn’t work. So I’m saying in “Beyond the E-Myth,” don’t try to fix what doesn’t work. Let’s create what does.
So it’s two things now. It’s Old Co., the company you’ve got, and it’s New Co., the company you’re about to create. A blank piece of paper and beginner’s mind–that’s what it is, a blank piece of paper and beginner’s mind. You begin it in the dreaming room. The dreaming room is the place that we awaken your imagination to begin to see what was missing in the picture all along.
That’s the critical first step. That’s what “Beyond the E-Myth” was intended to do. It’s intended to say to everybody who’s listening to us right now, there’s a right way and there’s a wrong way. You’ve been doing the wrong way all this time. Now let’s start the right way.
Andrew: So if I’ve got someone in my audience, single entrepreneur, doing his own coding, creating his own landing pages, doing the A/B tests on them, doing customer service himself and is driving himself nuts, he should not–should he literally reincorporate start a brand New Co. and start from scratch?
Michael: Don’t think about reincorporate. Don’t think about any of that. Just hear this–take it exactly as I say it. You keep doing what you’re doing over there. Over there is Old Co. Keep on doing it. Don’t mess with it. Don’t fix it. Don’t improve it. Don’t become smarter about it. We’re not going to worry about it. We’re going to come over here instead in New Co., sit here and have this conversation. We’re going to start a brand new enterprise from scratch. You don’t have to think about new incorporated, new this, new that–this is not legal. This is imagination.
Andrew: I see, a mindset shift.
Michael: Yeah. This is a mindset shift. So I want to take you over here so we can begin to talk about what would you do if it were possible to do. Why would you do that? What difference would that make? How would that make a difference? We’re going to begin to ask all the questions you needed to have asked and you may have thought you asked, but in fact you didn’t because you got so busy doing it, doing it, doing it, doing it, making a living, getting the job done, getting the job done, getting the job done. It is running you. You were not creating it.
And so, I’m saying let’s sort of just forget about that, keep doing what you’ve got to do just to get by. Over here, we’re going to do what in fact is waiting to be done and that’s where the process is. So in “Beyond the E-Myth,” I’ll take you step by step by step” in only 130 pages so that you’ll understand the process that’s so critical to creating an extraordinary company.
Andrew: What’s the dreaming room?
Michael: The dreaming room is a place in which people come and I’m holding one, in fact, in San Diego, my very first new dreaming room on December 9th, 10th and 11th, and we’re launching the new book at exactly that same time and they’ll be able to come and spend three days with me. This is the first time in years I’ve led a dreaming room. This is the new dreaming room. This is a dreaming room that’s going to shift their attention–don’t ask yet, let me say it.
Andrew: Okay. You saw me winding up. Yes.
Michael: Shift their attention so completely as to blow their minds. They’re going to walk out of their on fire and they’re going to walk out of their on fire because they’re going to suddenly realize it’s a great opportunity waiting there for them. In fact, they can seize it. They have the possibility, the potential to seize it. That’s what the dreaming room is. Once they complete it, then they redo it.
But then they do it online with one of my master facilitators who’s going to walk them through the process of implementing it. The dream, the vision, the purpose, the mission, the job, the practice, the business, the enterprise–grow a company of one to 1,000. Grow a company that has the power to grow exponentially. Everybody can do that.
Andrew: So the dreaming room is something we can do only with you, or is it something that if we read the book we can do on our own just to–
Michael: No. You can do it on your own. You don’t have to come visit me. I’m just saying you have an opportunity to do it with me should you choose to.
Andrew: Okay. I can see how it would be better to do it with the person who’s originated the process, the person who I think Tim Ferriss looks to for direction on how to organize a business. But the dreaming room, if we were to do it on our own, that’s where we figure out the job, the business, the practice and the enterprise that we’re in?
Michael: It’s where you discover your dream, your vision, your purpose and your mission first.
Andrew: I see. Okay.
Michael: First the dream, then the vision, then the purpose, then the mission. That’s the platform for growth.
Andrew: Okay.
Michael: You’ve got to have that for growth, otherwise why are you growing? What are you doing? What’s the difference between what you’re going to do in anew as opposed to what you’ve been doing up to this point in time? See, what you’ve been doing up to this point in time, what I call fixing a broken business, simply goes to try to reorganize something–
Andrew: I get it. Michael, so far what we’ve talked about is it’s rethinking, re-visualizing, redirecting our energy, but we haven’t actually done anything with this new energy. Now that we know we have this New Co. we’re going to start from scratch, what do we do? When we know what our dream is right down to our mission, what do we do? What’s the actual action?
Michael: The actual actions are very simple. Now we start to create New Co. New Co. is the company that is extraordinarily capable of replicating itself, of growing. It’s your McDonald’s prototype. It’s your franchise prototype. The first step in that is the job. The job is the client fulfillment system.
So we’re going to invent a client fulfillment system together and that client fulfillment system is your core product, your core capability. It’s what you deliver to your client. It’s what your promise is. We’re going to build it. We’re going to design it, build it, launch it and grow it and turnkey it. When you get done with the job, you’ll have a system right in your hand.
You’ll be able to turn to Mary and John and Jim and Jerry and say, “Let me teach you how to do it, let me teach you how to do it,” just like you said I was doing it, doing it, doing it and I realized, “I can’t keep on doing this. I’ll go crazy. I’ve got to be able to teach somebody else to do it.” How are you going to teach somebody else to do it? You’re going to design, build, launch and grow it and have a manual that says, “Step one, step two, step three, step four,” like this, like this, like this. Just like the circle in the middle of the paper.
Andrew: So I’ve got someone–right, the circle is such a good example–I’ve got someone in my audience who used to do general consulting, all kinds of different things. He said, “I’m going to specialize now in conversions. Anyone who has a sales process that needs to increase conversions, that’s what my business specializes in.” You want him in the job to be clearer about what that fulfillment system is. By fulfillment system, do you mean how he fulfills it? What he does?
Michael: He’s got to turnkey it.
Andrew: Sorry?
Michael: He’s got to turnkey it. Otherwise he’ll have to do it.
Andrew: I see.
Michael: You understand.
Andrew: Systemize how we deliver that. It’s not enough to say we’re going to increase conversions.
Michael: Just be specializing–Andrew, just by specializing, without a system, it’s just different. You understand? We’re not interested in just different. We’re interested in better.
Andrew: Right.
Michael: So when he decided he’s going to specialize, he’s going to design, build, launch and grow a system for conversion that effectively he can then download to his new people who can apply that to their clients, then he can scale it.
Andrew: Okay. Is that the job? In your list of job, practice, business, enterprise, that is the job.
Michael: Yes, that’s the job.
Andrew: So he tells his people, he hires anyone off the street–
Michael: Not anyone off the street. It’s never anyone anywhere. It’s someone off the street. And that someone has a very specific model just like your developer guy.
Andrew: Got it.
Michael: He’s got standards.
Andrew: Yeah.
Michael: He’s got standards. He’s got a system. It’s a rigorous system.
Andrew: Right. He’s not just hiring somebody off of Upwork. He’s hiring someone who’s the right person for the job but that person knows the first thing we do is we get their Google Analytics data. The second thing we do is we see what they. . .
Michael: Of course.
Andrew: That is what the job is. The second thing we do is see what are they using for conversions. Next thing we do is we look at the numbers on those conversions, etc. All those steps, that’s the job.
Michael: That’s the job.
Andrew: What’s the practice then?
Michael: It’s the client fulfillment system. It’s the product.
Andrew: Okay.
Michael: Once we’ve turnkeyed that, we’re ready to grow.
Andrew: By turnkey you mean it can be so simple that anyone can just be able to turn a key and make it work.
Michael: Of course. It’s got to be something everybody can use. If they can’t use it it’s stupid. So understand, we’re going smart, not stupid. If it doesn’t work, it’s stupid. So we’ve got to create system that in fact I could teach to the right person who can effectively implement it in the right way so that we can deliver the right result, the right time at the right cost in exactly the way our business model says.
Andrew: Okay.
Michael: Now we’re going to grow the company. The next step is the practice. The practice is what I call the three-legged stool. It’s lead generation, lead conversion, client fulfillment. We already have the client fulfillment system. Now what we have to be able to do is to provide the producer that is the individual who’s our consultant or our coach or our chiropractor or our heart surgeon or whomever it is who’s delivering the product, the client fulfillment system, we have to be able to deliver new clients to them.
Andrew: Okay.
Michael: We have to now turnkey lead generation and lead conversion to the point that we can provide at optimal capacity the individual who’s doing this work in our company with exactly the number of clients they need to retain a continuous cash flow.
Andrew: Got it.
Michael: That is a system.
Andrew: And that also needs to be systemized.
Michael: Of course.
Andrew: Let me ask you about both of these things, the job and the practice. The world changes so much. If we come up with the lead generation system that involves Twitter, Twitter starts to lose its power and now we’re stuck. We have to reinvent it for Facebook. If we do it for Facebook, whatever works on Facebook will change next time Facebook changes their–
Michael: Yeah. You would if you did that. But you’re way ahead of the game. You understand the game I taught you in E-Myth is innovation, quantification and orchestration. It’s called continuous improvement. So you understand we’re not just creating this and that’s it. We’re creating this and that’s it until we improve upon it.
Andrew: I see.
Michael: But we’re improving upon it all the time.
Andrew: So our lead generation system might consist of Twitter and Facebook today, but we keep looking to improve on it.
Michael: We’re always improving on it, always.
Andrew: I see.
Michael: That’s the business development capability that exists within our company, New Co. It doesn’t exist within Old Co. Old Co. is just fix this, break that, do this, do that, do this, busy, busy, busy, busy. I’m certainly saying New Co. is absolutely extraordinarily well-organized to produce the results you’ve set out to produce–turnkey. So, you have a turnkey system that’s continually being improved.
Andrew: Okay.
Michael: Understand, the way you make a hamburger at McDonald’s hasn’t needed to have been improved in all these years. The genius of a Ray Kroc, the genius of Starbucks, for example, is they have converted a commodity into a product. Hear this–they’ve converted a cup of coffee that you can buy at $0.50 into a product that you buy for $1.99. How do they do that? That’s the art of organization–to produce a brand that effectively speaks to the consumer in a way beyond anything 99% of all the small businesses on the planet do. That’s part of the system.
Andrew: Okay. Let me take a moment here to tell people about one part of their business they’re going to have trouble with, which is bookkeeping.
There’s a guy who I interviewed, an entrepreneur named Patrick McKenzie. This is a guy who is totally into organizing his business to the level that you, Michael E. Gerbera re talking about. He said, “I have to do the books. We’re getting in people who are buying my software. I need to make sure I’m accounting for every dollar that comes in and every dollar that goes out so I don’t lose money, so I actually know what’s working and what’s not.”
And he taught his virtual assistant how to do the books and she was doing it okay, but there were little problems that kept having to suck him back in to do the books again or to adjust it. He was always worried if she got a little bit wrong, if she misplaced a decimal, he could wind up with a tax liability that could be dangerous for him and his life and later on for his family.
So he finally said, “Why am I doing this? Why am I teaching her how to do this? Why am I doing this myself? Why don’t I just find a better solution?” This is a guy who loves to do his research. He’s known for it. He discovered a company called Bench. They are the systems experts when it comes to doing bookkeeping online.
They use software to do books, meaning they use software that sucks in data from companies like Stripe, from PayPal so they get all the data automatically organized, but they also have a team of accountants who organize, who go through the data and make sure it’s all right and organize it properly. He said, “I’m just going to hire them. I’ll just give my stuff to them.”
They actually don’t charge that much over at Bench because they use so much software. All their people do is make sure the software has done a good job. And then he worked with them and he loved it so much that he just did a blog post where he talked about what his revenues were for the year, what he learned for the year and recommended or talked about how much he did with Bench and how much they improved his life.
If you’re out there and your books are not in good order and you keep trying to do it right yourself or you want to hire a bookkeeper who could organize you but in reality is probably just going to do the job themselves, minute by minute trying to figure things out. I urge you to go with the systemized company, one that actually will do this right because that’s all they do.
It’s called Bench. Check them out at Bench.co/Mixergy. If you do, they’re going to give you 20% off your first six months–Bench.co/Mixergy. Really good price, great service. If you look at the very bottom of the page, you’ll see two people that if you’re in the startup world, you know and respect who have said really good things about Bench. Go check them out, Bench.co/Mixergy.
Michael, then the next step is the business and the enterprise. What’s the business and what’s the enterprise in this framework?
Michael: Right. We’ve turnkeyed the practice. We now have a lead generation, lead conversion, client fulfillment system. The little sucker works. It works. It works. It works. It works. I could take you to the book. I could show you the book. You can read the book. You can understand exactly how it works. Now we want to replicate it.
So all a business really is in my lexicon is nothing other than up to seven turnkey practices plus a turnkey management system. So understand the business now is we need practice number one, practice number two, practice number three. . . What’s the practice? Chiropractor number one, chiropractor number two, chiropractor number three, bookkeeper number one, bookkeeper number two, bookkeeper number three–you follow what I’m saying.
Andrew: Yes.
Michael: So Bench has a bookkeeping system that effectively means they can replicate that bookkeeping system with the software but also with people. So if the people and the software are not autonomously connected, united toward a very specific result, it creates chaos. In this case, it creates order.
And so a business is nothing other than order personified. Therefore, you can begin to see it’s just like Lego blocks. Put the pieces together and it works. If you build it the way I’m describing it–design, build, launch and grow, now we’re got a business. Now we’ve got a turnkey management system.
Now we’re going to replicate the business. How do we replicate a business? We create an enterprise. What’s an enterprise? An enterprise is nothing other than up to seven turnkey businesses plus a turnkey leadership system. Lego blocks–from one to many. That’s the genius of Ray Kroc.
Andrew: Give me an example. Mixergy–what would a business at Mixergy, my company be? Would one of the businesses be doing interviews and another business be courses? Is that what we’re talking about?
Michael: What I’m talking about is–in order to understand what your business is, I’d have to understand what the component parts of your business are. So meaning the interview is one piece of your business. So this is not just you get up and you interview people, interview people, interview people and you get to clients, advertising their services on your–that’s not your business. That’s a piece of your business. What’s the rest of your business?
Andrew: Once someone listens to this, if they want to take it to the next level, they can pay for Mixergy Premium, which gives them access to all the old interviews we’ve done, over 1,300, but also courses taught by real entrepreneurs who teach things like how to do copywriting, how to hire, etc.
Michael: Right. So what you’ve done, you’ve assimilated all of these experts by providing them with a channel of reach. That channel of reach is your entire audience and let’s say you’ve just got millions of people listening in right now. We’ve probably turned off about most of them. But just imagine millions of people listening right now. Now you’ve got this recording and you have it in your inventory. You inventory says, “The Michael Gerber Recording,” and here’s the “Steve Jobs Recording,” and all these recordings are now accessible to anybody who’s enjoyed listening to this one. That’s another piece of your business.
So look at the wheel–you’ve got a wheel. That’s your business. Look at the hub of the wheel. The hub of the wheel is what? What is it you’re actually delivering to your clients?
Andrew: I see. The ability to grow their businesses.
Michael: Okay. So you’re in the business of assisting or inspiring individuals to grow.
Andrew: Yes.
Michael: Right?
Andrew: Entrepreneurs specifically, yes.
Michael: Entrepreneurs to grow a company.
Andrew: Right.
Michael: I’m saying, for example, a company of one to a company of 1,000. I give the example of a company like Infusionsoft, someone who came to our dreaming room when they were very, very small.
Andrew: What I’m getting at is it is a business–what’s the difference between a business and an enterprise? I’m still not following that.
Michael: Well, it’s very, very simple. Infusionsoft is an enterprise. Infusionsoft went from a handful of guys, which was a practice in waiting, a handful of guys. They came and they got it. They realized they’re not really in the software business. They’re in the growth business. They’re in the business of helping small businesses grow. They had to organize or reorganize what they do. And they came back together again and drew the picture of what they do and how they’re going to do it.
Then they went to work on each of the component parts of their system. What system? The client fulfillment system to organize it in such a way that it would have a profound impact on their client’s growth. They had to selectively say, “Who are we interested in working with and who aren’t we interested in working with?” They had to select the right demographic. Is it a company of one or is it a company of six or is it a company of twelve?
All of this work that’s going on configuring what business we’re actually in. Well, Infusionsoft went from a very, very small company to today with 37,000 customers.
Andrew: But a business is–if I’m understanding you right, it’s–
Michael: It’s an enterprise now.
Andrew: Okay. Yes.
Michael: It’s over $100 million in revenue growing to $1 billion.
Andrew: Yeah, they’re huge. I’m a customer.
Michael: Hear me. It started as a handful of guys.
Andrew: I get it. I guess where I’m lost is what’s the difference between a business and an enterprise.
Michael: Scale. Size.
Andrew: Oh, I see. It’s the scale of it. Okay. Got it.
Michael: One to 1,000.
Andrew: Got it. Let me ask you a challenging question.
Michael: Hear me. Without the system, you can’t get the system, you can’t get size. You understand? You can’t go from one to 1,000 unless you build it out correctly because as I said, it’s like Lego blocks. You understand? Their company today is exactly the same as it was three years ago. The system is the solution. They’re continually working on it and improving it, but it’s turnkey.
Andrew: So anyone else, not anyone else, but the right other people can come in, buy Infusionsoft and take it over and grow it. If the founder is no longer there, the business continues without him.
Michael: Of course. The business will go public.
Andrew: What about this–yeah, and I can see they just keep growing and growing–you’re here still, your businesses are still doing an interview with me.
Michael: I’ve already done this. You understand I’m the spokesperson for New Co. New Co. in our case will be the new dreaming room in 150 cities throughout these United States, throughout Canada, throughout Australia, throughout the UK, all English-speaking countries and then to every other country on earth where it makes sense. It makes sense to do what? It makes sense to awaken the new entrepreneur within–
Andrew: The dreaming rooms will happen without you. You’re just here as a spokesperson to grow it.
Michael: Everything is being done without me. All I’m doing is talking to you about it.
Andrew: I know. One of the beauties of doing this interview is I get to see people behind the scenes. Behind the scenes, David, who set this interview up, emailed me with like a personal note that made me feel like he’s been a lifelong fan. I don’t know if he is or not, but he made me feel like he was a lifelong fan.
He followed up with me with the first few chapters of your book, made sure I had a page of all the information in case I didn’t read them, gave me a recording in case I’m not someone who reads but listens, made it feel like it was made just for me, gave me your Skype number, gave me his phone number in such an organized way that when I forgot all this stuff, I could go back to the single email where all of this was kept.
You really do keep things incredibly organized, incredible processized–I don’t know if that’s a word, but I really liked doing business with your people because of that.
Michael: We call it Gerberized.
Andrew: What is it?
Michael: You can call it Gerberized.
Andrew: Gerberized. I really do feel like David was Gerberized in the whole process of working with–
Michael: David is an absolute star. But hear this–David is using an absolutely brilliant system.
Andrew: Yes.
Michael: So as we grow–and we’re growing exponentially over this next year, exponentially. It will not depend upon David. It will depend upon the system that we’ve invented with David so that we can expand our reach exponentially as well. I’m saying the beauty of this is anyone can do it when you apply the right mindset and process to it. Dream, vision, purpose, mission, client fulfillment system, client acquisition system, turnkey management system, turnkey leadership system. Let me show you how it works. Let me show you how it works.
It works so you don’t have to, so you can grow. Why? Because here’s the point–you, Andrew, ultimately are going to sell your company. The only way you’re going to sell your company is if your company works without you. The only way you’re going to be able to sell your company is if your company is a system that can scale exponentially. That’s the only way anybody is ever going to sell their company. And that is the great outcome of being an entrepreneur. You follow?
Andrew: Yeah, I do. All right. This is a good place to leave it. If anyone wants to learn more, the book is “Beyond the E-Myth.” It’s, of course, available everywhere, “The Evolution of an Enterprise from a Company of One to a Company of 1,000.”
Michael: Let me add one thing.
Andrew: Yes?
Michael: Go to www.BeyondEMyth.com and you’ll get the preview of the book at no cost, you’ll be able to read it, you’ll be able to understand it, you’ll be able to get it, you’ll be able to buy it and you’ll also be able to get an invitation to come join me in the new dreaming room in San Diego, California, where we’re going to do something in three days that will absolutely blow your mind and it’s going to transform the economic reality of the world.
Andrew: I’m so fascinated by how you would work in person. I’m glad you brought that up. BeyondEMyth.com. And, of course, my two sponsors are Toptal. If you want to hire a great developer, go to Toptal.com/Mixergy. And if you want a bookkeeping service that uses software and people in a very organized way, go check out Bench.co/Mixergy.
Michael, it’s an honor to have you on here. I know I went a little bit late and I appreciate you staying with me. Thank you.
Michael: Thank you, Andrew. Take care.
Andrew: Bye, everyone.
