Transcript for:
Lecture on The Personal MBA and Core Principles of Business

every business has five parts and only five parts every business creates something of value they attract the attention of people who might be interested in that thing which is marketing they sell that offer to people who want to buy it which is sales they deliver what they've promised to their paying customers which is value delivery and then there's finance you look at all the money flowing out you look at all the money flowing in and you answer two very important questions a is more money flowing and then flowing out if not you have a problem and b is it enough is it enough to make all of this time and effort and stress and frustration worth it i um this i need to put a disclaimer out before we get started usually the camera is not right up to my face if you're watching on youtube you will be able to see this this is the first horizontal cast that i've done since uh my achilles repair recovery um so my foot is currently all the way over there in the air uh and i'm back here but we're making it work or aren't you fragile and uh today we are celebrating the 10-year anniversary of the personal mba man how does that feel it feels great it feels surreal like uh i remember writing the first draft of the book and it doesn't feel like 10 years ago but it's it's been really gratifying to see uh how much people all over the world have enjoyed it and found it useful and uh it's always an interesting experience going back and editing things that you wrote 10 years ago um so so the past year and a half two years that i've been working on this project has has been very interesting from from a personal time capsule uh standpoint uh my my my writing has changed my my thoughts uh about us a lot of things have changed so it was it was great to be able to to revisit this particular work and and really update it for 2020 and beyond have you when you go back through things have you found that much about your thinking has has changed have you got you sort of curling your toes a couple of little bits here and then you think oh my god why did josh 10 years ago think that the the thinking overall i'm happy to say is still really solid uh i used a lot of adverbs 10 years ago and i i don't know why i will have to go back into my word document and figure out how many adverbs i deleted and it is it is in the the probably mid thousands uh so so just like you know i think as a beginning right this is something that i think beginning writers do a lot you want to emphasize the things that you're emphasizing in your head as you write and the way to add that emphasis is you know adverbs or italics or you know exclamation points getting really excited and and so for me it was like being able to take a step back and say okay you can get a get this point across far more effectively by being clear and simple and concise in your language and let the construction of the sentences do the work instead of trying to underline and bullet point everything in the manuscript so i think that's a really good principle manner i think part of it's probably to do with maybe confidence of getting a little bit older you know like having the the um belief in the hope that the audience is is there for what you're writing as opposed to needing to give it the bells and whistles and and embellish it and i think as well as part of getting older you just realize people have you know you have a finite number of books that you can read even if you're like 16 you have a finite number of books that you read and as you get older you need to be more and more selective so therefore if you can get the point across in fewer words then i think you've uh you've definitely done a good a good second pass there so my main question upon reading the intro to the personal mba you will have some strong thoughts about business school and uh sort of business degrees in general did i need to spend five years at university and get two degrees to be able to run my business probably not no um i i think there there are many things to be said about about universities and degrees in general um i i think the the fairest universal thing to say is that the vast majority of people in the world can benefit by learning a lot more about business and in order to do that you don't necessarily have to quit your job go back to school borrow a bunch of money spend a lot of time the essentials of business are very clear and very straightforward and relatively few in the grand scheme of things and so spending some dedicated time learning what those fundamental principles are how they work why they're important that's a great use of time for pretty much everybody the the set of people who are well served by existing business schools is relatively small and i think if if your primary goal is to start a business work independently um be in control of your destiny you're far better by starting your business on your own and skipping the debt part and investing all of that into the actual business uh then then going to school and and having both the time investment but then also the financial investment having to recover that over the course of your career um ends up being a pretty big weight for a lot of people yeah well i mean me and my business partners sat next to each other in our first ever seminar so i started operating my business from essentially the the exact same types like the starter pistol was fired on university and on becoming an entrepreneur on the same day and um man i did a three-year bachelor degree with one year in industry and then a master's in international marketing i just all i saw was this massive bifurcation between what i was learning in class and what i was experiencing in practice in the particular industry that i went into go saw me gave me a broad cross-section hr marketing accounting b2b b2c like course everything everything and i was like i am sick what do i need to know henry ford's scientific model of management for like why do i need to understand about kaizen and laissez-faire like autocratic management styles and stuff like this it felt so archaic and maybe it's been updated a little bit like there wasn't even a module on social media when i was there um so it might have caught up a little bit but something something tells me that it hasn't so what do you learn typical formal mba what do you learn so the a lot of the formal mba is about mbas make some assumptions about what you're going to do when you get out right you're you're going to be the ceo of a retail or manufacturing operation you're going to go into corporate finance or you might go on to be a cfa or a cpa um in certain circumstances i mean or now it's hedge fund manager is is the the big kind of newer entry since i went through um which doesn't capture what a lot of business people hope for their careers right now um there's there's much more of a focus on entrepreneurship and independence starting your own thing running your business on your own terms um that that some of the classic things that are taught in business school like for example uh michael porter's five forces very useful from a corporate large you know fortune 50 corporate strategy standpoint if you're starting a new business from scratch you don't have to think very much about porter's five forces there are 5 000 other things that will be more useful for you to start with so and and i don't know about you but the the thing that struck me because i i did a business undergrad as well um it was a five-year program that had uh an extended internship component which which i thought was the most useful part of the whole thing operating in industry teaches you a lot uh but the thing that struck me on the academic side of things was that there was never an attempt to define what businesses are or how they work in like the the grand when we say we're doing business what is it exactly that we're trying to do here having some organizing theory around what this is how it works why it's important how to do it better would be very useful and and business academia is still extremely siloed so the finance professors teach the finance stuff the operations folks teach the operation stuff and there's very little attempt to try to bring that all together into a cohesive understanding of what it is we're trying to do here and what does it look like when we're doing it well man i uh i felt that very very harshly that the the synthesizing of all of these different points of view were just totally totally totally absent so what are the fundamental principles that underpin being an effective business operator yeah there's um this is this is funny i um i'm kind of flabbergasted that i'm the person who wrote this book because when i started the project i was looking for a book like this that was probably written by a business school professor 50 or 60 years ago and it just as far as i could tell it just didn't exist so the whole genesis of the project is like well this is important it doesn't exist yet so let's here we go let's make one um so the way that i organize business knowledge is is around a framework called the the five parts of every business and it's it's really uh an attempt to define exactly what businesses are and what businesses do regardless of industry market organization size regardless every business has five parts and only five parts every business creates something of value they attract the attention of people who might be interested in that thing which is marketing they sell that offer to people who want to buy it which is sales they deliver what they've promised to their paying customers which is value delivery and then there's finance you look at all the money flowing out you look at all the money flowing in and you answer two very important questions a is more money flowing and then flowing out if not you have a problem and b is it enough is it enough to make all of this time and effort and stress and frustration worth it and that's really it like every business from the largest fortune 500 to the smallest like just getting started in your garage workshop kind of venture every single business operates in that flow with the same set of problems with the same set of questions with the same set of criteria on is this working or not the scale might be very different but the fundamentals are exactly the same so to me that's where you start business is this the set of five things that you must do if one of them is missing it's not a business it's a hobby or a non-profit or a flop or a scam or a bust like that's you can't get rid of any of them and and so using that as the fundamental organizing principle behind this is what we're doing when we're doing business you you get all sorts of wonderfulness out of that so first of all for each of those concepts or for each of those stages of the business there are really only 30 on average concepts that are really important to understand in each of those areas and so it's it's very straightforward to say okay i'm trying to attract attention and gather interest in in what it is that i've made how do i go about doing that and so understanding the fundamental principles of of attention and demonstration and you know all of the things that allow businesses to attract attention and make people interested understanding that small handful lets you do that job way better than you would be able to do if you didn't understand those things so the the whole organizing concept of the personal mba is okay here's what we're doing here's the small set of things that you need to understand to do that well and then by understanding those you can be in a practical business situation or or have a practical problem say this reminds me of something that i learned and you pull the concept and use it in the situation in which it's designed to be used i love the beautiful simplicity man and having the feedback from the real world you know having stuff that is um emergent bottom up rather than kind of dictatorial top down just seems we're not if you were a businessman you are not here to armchair philosophize about what is the best way to run a business like there are ugly businesses out there people that do like sewage removal and like you know that create nuts and bolts and stuff like that they just need to know what works so if it's as simple as you've made out there why do people over complicate business so much why why do they overestimate how complex business is perhaps would be a better question i think there are a couple of different reasons um i think a charitable way of putting it is there are a lot of people who operate in business who want to be seen as smart and sophisticated insiders and so they tend to use large fancy words and explain things with a great deal more complexity than they actually require um here's here's a good example um from from the book in marketing i talk about uh branding which is a word that's thrown around way way too much um and and people people will wax philosophical for years if you let them about the value of branding the importance of branding what makes a good brand all of that stuff if you reduce that very complex can to an outsider seem um like this impenetrable thing that experts know how to do and uh people who don't have experience don't know how to do um if you reduce that to reputation and you do things that will likely result in you increasing or earning a good reputation and you stop doing things that will probably decrease that reputation you are 98 of the way there to branding the rest of it is graphic design um so it's just like i i think there's this this tendency with people like they just want to seem smart and special and i think all of us as business people you know whether we're on the corporate side or whether we're starting our own things there's a lot of value to be gained in simplicity and straightforwardness of thinking um not dressing up the ideas making them sound um sound more complex than they actually are um i think that's that's really that's a hallmark of sophistication and intelligence when you can look at a situation and find the simplicity in it and ignore all of the things that are mostly distractions and don't add a lot of value i think sadly business is not the only industry which is cursed with this particular proclivity of of people right it is the mark of a charlatan to explain a simple thing in a complex way it is the mark of a genius to explain a complex thing in a simple way and it's pervasive across absolutely everything you know it got me thinking there you were talking i can't remember tyron woodley come to me ufc champion x ufc uh want to say middleweight champion and he had this philosophy about his fighting which was if you win nothing else matters like his argument is that if you are successful at the end result of the thing that you are supposed to do everything that came before doesn't mean he wasn't big into sort of smack talking and he kind of he's all right with the press but he just sort of cracks on and he's maybe his fighting style isn't like the most exciting but he was he just dominated people and it's the same with this it's like it doesn't need the bells and the whistles and you're adding friction into your own system which is giving all of your competitors an advantage you don't decide to do that by using the crazy terms or by having 20 meetings a month about about the the graphic design and the branding and stuff like that here's the story here's a story for you man so um bruce stuckworth the co-founder of turnerduckwith the graphic design company they were the people they were the people that made the amazon smile logo oh nice um so late 1990s amazon's just breaking out of making of selling books they're starting to do all other stuff and they go to bruce and his his partners and he sat down with jeff bezos who at the time he's not richest man on the planet but he's like still he's still pretty big time anyway they put across to him the a to z the smile with the little arrow and there's like loads of clever stuff going on when you actually i didn't realize it was an a to z that arrow goes from a to z and that other bits and pieces and uh jeff's sat down and he says ah i love it bruce brilliant fantastic and he's got his jeff's got his cronies with him and they say right brilliant should we start we'll start split testing we'll focus group it and jeff's like no no no no we don't we don't need to do that like it's fine and they're like jeff it's it's we're quite a big company this is a this is a large decision for you to make off the back of a whim like we really and they sort of pushed back against him and jeff turned around apparently in the meeting and said anyone who doesn't like that logo doesn't like puppies and that was it yeah that's the level of non-bullshittery that you want to get your business to yeah and when you think about it another you know corporate branding uh graphic design sort of thing you know fedex is very famous for the arrow that's in in the shape which which is cool if you notice it but if you had to gauge on on a scale of 0 to 100 is the success of fedex because they have a little hidden arrow in their logo or because they can get a package from point a to point b overnight wherever it is in the world what do you choose like they could just spell their name and it would be fine um so yeah it's it there's there's an enormous amount of value and power in being able to look at a business or a business situation and identify very quickly what are the things that are going to be most important what is going to determine success or failure in this instance and what are all of the things that you can just afford to ignore or not pay attention to how much of success in business is that elimination um quite a bit and i i would say that um in conjunction with something else that's really important um which is experimentation um so you see businesses that tend to succeed over a long period of time have a process of continually trying new things gathering data about what works and what doesn't and they keep doing the things that work and they stop doing the things that don't um so i think amazon is a great example of this in in terms of the large company culture um and and smaller businesses do this all the time if if you are responsible for putting food on your table and you are doing a bunch of things that aren't uh attracting attention or closing sales to get revenue in the bank account so you can pay your own paycheck that's a problem and and so you see particularly early stage businesses that do really well they avoid making dumb mistakes so betting the the farm on something that is in reality an experiment but they just don't have good data yet and so avoiding avoiding mistakes or decisions betting everything on something that's not tested but you also see them testing a lot of different things and then gathering data about what works and what doesn't and then shifting resources towards the things that do indeed work i suppose that's a massive advantage we often hear about diseconomies of scale you know the increased friction in having to communicate between 45 different area managers and flights and you know all the other endless emails but that's a perfect example of real economy of scale the fact that you just have so many resources endless computer space you know like bottomless pits of money that you can continue just everyone wants to work for you because your ability to talent recruit is super high so yeah i am i think it's it's nice to see the diseconomies of scale kind of being battled back i got i was quite fatalistic about um scaling up businesses for a little while and then thankfully companies like google and and facebook and amazon that have a flexible approach to a large size business i think have really really changed that so in your experience what are the most common errors that you see people making by the new businessman or established ones um okay one of them is related to what you just said um which is a concept in the book um in the people section so the the book is structured three uh three primary parts business people and systems and so when you think about it businesses are created by people to serve other people for the benefit of people so understanding human psychology and how people work that's that's a really important thing to know and so in um in the working with people chapter there's a concept called communication overhead and you can think of it in in terms of for every person that you need to communicate with on a day-to-day basis to do your job the larger that group becomes the higher and higher and higher percentage of your time and energy is spent communicating sharing information among the group of people that you're working with not necessarily working on value creation marketing sales value delivery and finance and so that's a very real cost um i don't know if you've ever worked in a large corporate environment um i worked i worked for a fortune 50 company huge cpg company global procter gamble for seven years and uh a good dramatic example of this is that uh i was responsible for uh measuring the effectiveness of online advertising for png's brands online uh with with all the the advertising that they were doing on the internet this was new so so i was trying to figure out all right you know we're spending x million dollars a year in banner advertisements on the home page of msn.com uh does does that work and in that role i was responsible for talking with probably 30 or 40 people who had a stake in what this looked like when it was done and when the project was done i went back and looked at my schedule i spent three solid months just talking to people trying to get them on the same page to create a proposal of what this might look like after we do a pilot run and so there's there's a certain amount of like yeah in a big company you have all of these resources you have potentially millions of dollars you have very smart people to work with and yet when the group becomes so big people spend most of their time communicating with each other and not necessarily pushing the work forward in a way that actually creates value and so one of the advantages that small companies have and one of the reasons that i chose to leave the corporate world and do my own thing is your communication overhead goes way way down if it's just you or a team of two or three uh the research says that up to about eight in terms of a team who is uh that is dedicated to do a specific thing is ideal because every additional team member adds capacity but the group never becomes so large that you're spending more time and energy on communication and coordination versus actually doing the work the team is ostensibly responsible for completing does that make sense that's the uh business equivalent of dunbar's number absolutely so can you get them around a normal sized office table if you can't you know like those rough the roof like diet guides it's like well you should be looking to eat around about a handful it's like you don't need to measure it it's like just get a business table if everyone can sit around it great if they can't maybe a bit big i we've brought up amazon a couple times in our discussion i think their internal way of describing this concept if if i'm getting it right is two pizza teams like if you need to order two pizzas to to have like a late night business meeting if you if you get beyond that threshold you're too big you need to split this team into different groups i love it um it's a it's a nice way of visualizing the the same thing yeah i love it so okay what are the what are the common errors so we've got this kind of um i guess the the diseconomy of scale or just general inefficiency in terms of friction excessive meetings too much too much back and forth what else what are some other common errors um so i would say not enough experimentation uh which we've talked about previously um there's there's an example um one of the new concepts in the the 10th anniversary edition of the book is called um exploration and exploitation and so this comes from a famous study in decision theory and computer science which is um i would have to preface this i do not condone gambling in any way shape or form but this is the example that they use in the research literature so this is this is the example that i'll use imagine you walk into a casino and there's a row of slot machines in front of you you don't have to pay money to play the only cost that you pay is your time so you go up there's this row of machines and your job one of those machines pays out way more than the others do but you have no idea which one so the research question is what is the process that you use to figure out that best option in the world of all of the options that you could take and the the the insight is fascinating so when you start with no information the first strategy is pretty clear you just play machines at random and you collect some data from the world about what's giving you a good result and what's giving you a less good result and then over time you shift more and more in the direction of doing the thing that you know gives you a good result consistently so you know as a percentage of your time your your highest option becomes more and more and more of your total decisions made or time and energy invested but and this is a critical part the optimal strategy is never to choose what you think is the best option and do that 100 of the time the best option is to always devote a certain percentage of your time to experimenting and gathering information because there's a very real possibility that you get into what's usually called in statistics for analysis a local maxima right by a fluke of statistics one option looks like it's the best but it's not the best in the grand scheme of all of the options you have at your disposal so always dedicating a certain amount of your time to exploration to trying new things gathering new data seeing what works is absolutely critical it's critical if you are a massive company who is very comfortable selling the products that you've always sold um it's critical if you're just starting something new and you're not sure of all the things that you could offer to customers which would have the highest uptake or or have the highest profitability i think most people don't think about experimentation enough as both a learning strategy but also a how to maintain your competitive edge over a long period of time strategy it's the same fundamental process and it gets you both of those rewards so that makes it really important that's um the interesting thing there from a game theoretical perspective is it's not just you playing the slot machines there's actually a bunch of competitors who are all in maybe not playing your slot machines but they've got like um the floor above and the floor below and all of the slot machines are all like linked in together somehow and they might stumble up across the slot machine which actually pays out jackpot it's it's like you're writing my book like on this conversation um there's another concept in the book called the hidden benefits of competition which is exactly that um most people view competition as a bad thing and this is this is particularly a beginning entrepreneur's classic mistake of you have this brilliant idea for a business that's going to be awesome and then you go to google and you type it in and you're like oh man someone's doing this already i can't do it now this is terrible um so having competition is a wonderful thing from multiple perspectives the first is that it's kind of in the explore exploit framework it's like you get to watch other people play this game and you get to notice what does well and what doesn't without spending your own time and energy and resources playing the game is a much faster way of collecting information from observing the world around you and gathering knowledge and data from that the other thing which is really important particularly for beginning entrepreneurs to understand if people aren't interested in spending money on what you have to offer there is absolutely no possible way that your business will work uh this is an idea called the iron law of the market if there is not a market of people who are willing to pull out their wallet checkbook or credit card and say yes please i'll take one you're screwed like there's nothing you can do and so the nice thing about having competition is it is a 100 guarantee that you're on the right side of the iron law of the market you know people are spending money you're watching them do it and so if you're looking at all of these different options and you have a choice between uh an offer where there is a clear established group of people who are spending money or a completely green field that you think is new to the world uh bet on the one where people are spending money that's probably a higher percentage bet for you i think the the cliche quote is idea is the constant execution is the multiplier and there's that yes that teal quote which is any idiot can learn by experience i prefer to learn by the experience of others yes absolutely yeah i think the the uh multiplier thing came from derek sivers right it's like yeah a awesome idea with mediocre uh or non-existent execution is maybe worth ten dollars but an awesome idea with awesome execution with an awesome market can be worth billions um so yeah it it and it really helped this this is where particularly for people who are new to business it helps to have a solid understanding of what it is you're trying to do and how it works because the the number of people who will um start a business without thinking once about the market or doing any sort of market research is astounding uh the number of people who will put together an offer and not do math about if this offer is financially sustainable is huge and and so just having um the the the term of art for this sort of thing is is a mental model a mental representation of what a business is what its parts are how it works how they interact with people um in the same way that people have a mental model of how it is you drive a car and what's supposed to happen when you step on the gas pedal and what's not supposed to happen when you step on on the the brake you get a sense very quickly of like something unexpected happens this is bad for me i should do something right away uh we're just trying to do the same thing for business like understand what it is understand what you should be seeing or noticing about um about what it is you're trying to do and that allows you to make very quick and very accurate valuable decisions in the moment about what you should either start doing or stop doing here's something that me and every friend i know that is an entrepreneur young entrepreneur has come up against i want to hear your thoughts on this whether your experience has been similar we had for the first five to ten years of running our business an absolutely irrational fear of raising the price i was terrified of raising the price so i would say as another little heuristic people to watch out that is new to business you can probably raise the price more frequently than you think especially if you've got demand yeah i'm curious to hear from from your perspective um looking back on it why your price was low in the first place and what caused you to raise it but what was that experience for you so i run club nights and we had a particular discounted entry before 11 o'clock on our saturday and we were rammed beyond belief like so crazy busy we totally cornered the market but me and my business partner felt that our success was on such a knife edge it's a particular quirk of our industry that it is very fickle very fast moving um it occurs on a weekly cadence as well so you've got like week after week after week which is kind of performance and you're always obsessing over this week versus last week numbers revenue top line bottom line stuff like that very unique sort of um industry to be in and um we had this stupidly low price but that was what we thought had got a success and i remember we were talking about putting it up from 2 pound 50 to 3 pounds to get into like the big biggest best club night in the city and i remember the night before sleepless night because i was adamant that that was going to be the beginning of the avalanche that would snowball to topple the company like right yeah that 50 pence man that that that fifth that's it you know we're gonna we're gonna do it and i'm like absolutely crap in my pants whereas now me and my business partner having sort of swallowed the very very large red pill we needed to to understand that we're more than happy when we see the demand like basic economics what do you do when demand out strips supply like the fundamentals and yeah i've got two uh co-hosts on the show johnny and yousef that all of the listeners will be familiar with and they were doing diet and training plans personalized diet and training plans for like 35 pounds and it would take them hours hours and hours and hours and they were terrified and i'd gone through this situation and i was saying boys that that plan's worth like 100 or 200 pounds oh no and they had to swallow the fear as well is this something you see elsewhere is it just a quirk of the north of england abs no this is this is an absolute universal thing every entrepreneur experiences it and a lot of it a lot of the time it comes from from feelings of insecurity right you don't know if people are gonna like what you're offering um rejection feels really big and scary and most of us given the option would prefer to avoid it and so we think that the best way to get people to like what we're offering and take us up on the deal is to make sure that the price is so low that it would be objectionable to no one and so i think the rule of thumb um i've done uh consulting and advising for many years and the rule of thumb for beginning entrepreneurs is take the price that feels like the gut obvious this is where i should start triple it and you're almost in the ballpark no way of where you should start yeah it's and it it's taken me in some instances a lot of persistence and persuasion to get people to test it um i'm curious in your experience did you did you see um or what happened to demand when you raised went up yeah why do you think that is uh this is a really important thing to understand so i could argue that maybe people use price as an indicator of quality that there's a little bit of price signaling going on um there was some other externalities that were happening like we just had the market and we were doing well us having more money allowed us to reinvest more money which made the product better which meant that we were more competitive we could spend more money on marketing it also meant that we didn't obsess so much over time on the accounts which meant that we spent less time on the back end and more time on the front end driving revenue um driving uh doing things that drove revenue rather than obsessing over how much we had um it's just raising the price is such a wonderful feeling because it's the thing that you were doing yesterday but more money for you right nothing else changes is a good thing because you're right you can reinvest in marketing you can have a a better quality value delivery process you're stressed less so you don't have to to count your pennies and you can invest that time and energy and making the offer better one of the things that that i expanded quite a bit in the new edition of the book is what you mentioned first was the the status issue social status is a a huge ingrained part of the human brain over millions of years of development and uh understanding social status dynamics particularly social status dynamics with respect to price opens up a lot of opportunities that aren't necessarily intuitive before you learn that relationship so tangible example um a rolex does not tell time better than a timex it actually tells time worse it's not as good at the thing that a watch is supposed to do but that's not the point the point is it is expensive it is visible it is exclusive it sends a signal to other people about intangible or what would otherwise be intangible qualities of the person who is wearing the watch that's the value and that's the reason why people are willing to spend frankly way too much money on on something that in the grand scheme of things is not super important it's because of that social signaling component and so in in the economics literature um this is called a veblen good veblen was an economist and veblen goods you know bringing up supply and demand earlier veblen goods are the exception to that very familiar pricing curve because for status signaling goods demand goes up when price goes up they're the ones which is just that that's the industry that you want to be in man super weird that's the yacht that's the yacht and the retire at 35 industry that's where we want to be yeah it's um that will have been turned up to 11 as well given social media we're all self branders the uh transparency of what we do with our money and how we spend our lives is now in itself a shop window for other people to watch yes yes and you you get the performative aspects of social media specifically because of social status it's it's not let me inform people of an accurate representation of what my day looks like it's how do i construct and broadcast an image that makes me look good in front of other people that i care about it's it's a very very different way of thinking which is beneficial in two ways uh the first is that from a business perspective if you think explicitly about social status status signals quality signals all of those things they're legitimate ways to make your offer better and more attractive to more people you can improve and offer a great deal just by thinking a little bit about when people buy this or when people use this how does it influence how they are perceived by the people around them that they care about the other thing is for you as as a decision maker both as an individual and as a business person you can get so much mileage about thinking about status considerations from the other angle just for a second of like am i buying this because it's going to be effective or am i buying this because i really want to look good um classic entrepreneur example waste of time at the beginning uh stressing about logos and business cards zero percent correlation with the success of your business absolutely zero but it feels like this really critical thing that you need to put a lot of thought and care and attention to because this is how you're representing your new position in society your new responsibilities your new how you stack up with regard to everybody else and so understanding this on the personal level can help you it saves an enormous amount of time and energy because you can kind of defuse the things of like yeah i don't need to be spending time working on this stuff right now i'm going to pay attention to the things that actually matter there's a quote from a daniel schmacktenberger episode who i did with a little while ago and he says the more i reflect on the biological predispositions that arise the less i am controlled by them yes and yeah oh my god if that isn't true you dude like i like i say i've run nightclubs for 14 years now the popping bottles let's spend a grand on vodka that the five people sat around the table can drink like a quarter of uh the glass is more expensive than the liquid inside of it i actually had a sociologist a lady called ashley mia's on you might like a book it's called uh vip she did uh ethnographic research i'll send you the i'll send you everything over once again um she uh she became a party girl and followed the biggest promoters around la and miami for six months as part of her like ethnographic research for this into status signaling uh and and um what's it called high or waste we call that waste signaling or something like that basically you buy something where people can see that you couldn't even drink that much you couldn't even eat that much like you don't even it's the 75-car garage that people know you can't even drive those cars once per week per year like that's that's why here's something the person element of business is really really what fascinates me the question i had for you was whether you think someone's performance in business is a projection of their personality and whether there's a point where business development is limited by a lack of self-development i think that yes that is broadly true that i think the more you develop yourself and your skills and your abilities in the areas called the economically valuable areas of business value creation marketing sales value delivery finance the better you are at those things or some sub subset right so the nice part about larger companies is you can have specialists in those areas instead of having to do all five of them yourself so i think it's true that the the more skilled you are in those five things the more successful you're going to be i think successful is important to qualify because successful is doing something that you enjoy in a way that pays the bills for you um that is not entirely draining and allows you to live whatever the definition of a good life is for you um so a tangible example here i have quite a few friends in industry um very successful at building companies um their revenue is between 10 or 100 x mine um they they are in the you know 50 to multiple hundreds of employees category and i've had a real good up close look at the inside of their business and what their life looks like running the business and if i tried to do what they're doing i would be miserable every minute of every day for the rest of my life or or however long i ran this business it is not for me and so i think there's a there's a very underrated part the personal side of business is deciding what kind of life you want to live what kind of work is rewarding to you how do you want to spend your time who do you want to spend it with and for me success in business is getting closer and closer to that ideal of you're doing what you like with people you like on projects that are interesting and and on the other side of things eliminating stress or eliminating worries or eliminating lower value less things you care less about in favor of the things that you care intensely about and so you know i i think business in particular because there is a numerical figure attached to it right how much did your business bring in this year how many employees do you have how many millions of dollars of venture capital did did you raise in your a round you know there's in getting back into the status consideration there's there's the gamesmanship that goes on in terms of you know well you know it's not a it's not enough to have a a company that got or earned a hundred million dollars in profit this year if the company over there got 101 million dollars in profit that way of thinking in the absolute is absolutely nuts um so i i think it's really important and the best thing that you can do for yourself is be very very clear in defining what it is you're trying to do and why what's important to you and what's not and then just it gets back to the experimentation bit notice what's happening around you as you make decisions in your business or in your career and notice when you're getting closer to that ideal or or when you make decisions that gets you further away from what you want i think especially if you are someone who's sort of classically working class who's grown up perhaps in a household which is work is a labor work is something that you have to do not get to do um right you can carry that puritan work ethic over quite easily into operating a business i certainly found myself doing that i wonder whether or not you you see that quite typically oh absolutely um i've seen it in my own life so so good example is um i remember the day when i told my father that i was going to quit my job at big company to start my own thing and so for background uh dad was a elementary uh school teacher and then a uh a principal of small farm town uh school northern ohio in the united states and straight out of college i made as much maybe a little bit more in my big company job than he had made in his you know 25 30 year career at that point so from his perspective what are you doing like you have this amazing job um it's it's only upside from here why would you throw away the secure thing in order to chase something that may not be as good and the answer to that for me was that the environment that i wanted to work in the types of projects i wanted to do and the latitude that i wanted to have over my own day-to-day life and decisions was not compatible with the large company job and so even if it paid less in the short term i was willing to trade this sure thing for a chance at maybe getting closer to something that would be more ideal for me and in retrospect it was the best decision i ever made because had i not done that thing um i would not have been able to experiment my way into something that worked in in a really wonderful fashion i think a lot of people particularly people who like me i didn't have a business background growing up i grew and grew up in a small town um my conception of business was that there were places where people went to draw a paycheck like i knew i i didn't understand anything about it and i think if you don't if you come from a working-class background um or there are a lot of folks who grow up in rural rural environments and don't have the day-to-day exposure of what this kind of life looks like um it can be really challenging to break away from those conceptions of what you're supposed to do or how things are supposed to work in favor of an uncertain experiment that feels like it may turn out well or may turn out not so well the nice part about it is that in terms of building a business that gathers enough income to support yourself in a comfortable fashion that is way way way more accessible than most people assume it is if you don't come from a background where people do this on in a common basis there's a strategy in pickup artistry called you are the prize and it basically uh suggests that as you step into the frame with the person that you're trying to speak to that you should come from a place of abundance not a place of scarcity and yes that as a strategy for business is so so useful because it stops the neuroticism of what-ifs what if i make this jump to something that i i know i love but might not succeed and i lose the secure thing that's behind me well you already got the secure thing that's behind you you'll probably just get it again or maybe even the thing you wanted won't happen but you'll get a better secure thing around the corner or whatever it might be i think far too far too many people have such pervasive imposter syndrome that it it sort of secures them it glues them to the spot and remembering that imposter syndrome really can only smash itself up against the success of your reality so many times before it's not imposter syndrome anymore it's more like an addiction it's more like a thought addiction that you've got on your side where you're just not prepared to give yourself the credit that you're due it's like look go for it man like go and do the thing go and do the thing and if it doesn't work you will make something else work you've got this far you've got the talents the skills that you've got the passions that you've got whatever it might be and if anyone's got any reservations about that realize how scary it is for you to think about doing that and realize that not only are you competing with everyone with your potentially superior skill set but that by making the decision that is the separating factor by deciding that you do the thing you are in the top one percent regardless of skill regardless of experience regardless of background all of that stuff you're in the top one percent by making the leap and the reason that you can tell that that's the truth is how terrifically like us bendingly terrifying it appeals to you right now absolutely there's there's another similar trick in the same vein that that i have gotten a lot of mileage out of and highly recommend um and it comes to to making requests of people um very relevant to our our previous conversation on pricing uh so let's say you're you do what i recommend which is triple your price and see how it goes uh the the per the the first thing that people will say is like oh no no nobody's going to sign up for that nobody's going to pay me that there's no possible way the mental trick is make other people tell you no don't assume the rejection before the rejection actually happens make the request and if they're going to say no to it make them tell you no and just that's that shift of okay this might not work but i'm going to make the ask and i'm going to get the data before i decide whether this is a good idea or not um it it prevents an enormous amount of self-rejection or or closing off potentially viable worthwhile lines of experimentation and inquiry because you didn't have the courage to make the offer and just see if that was something that would work or or wouldn't so you know this this um very often comes up in a less entrepreneurial more more job um job context of looking at looking at a job posting and be like oh i they would never hire me for that like i don't have five years of experience in some weird technology they're asking for or i don't have any i haven't worked in this field before whatever uh no apply to the job anyway make them tell you no um wanting to get a promotion wanting to um start a business and and make an offer to see if it works just having that mindset of i'm not going to assume that people don't want this or this doesn't work for other people i am going to try it if it doesn't work okay i got data that's useful but very often it does and and you're absolutely right you have to put yourself out there and actually ask or do the thing to get that accurate data otherwise you're just assuming something is a fact about the world that may not necessarily be accurate being comfortable with the rejection is a power a superpower being able to take it and not feel like your ego is being destroyed and just taking out what it is well maybe at the wrong time maybe it was the wrong price maybe they've already got a insurance provider computer systems manufacturer whatever it might be like it's a it's a good way to be anti-fragile josh man yeah i uh i've loved today it's been absolutely absolutely awesome super fun hanging out um thank you so much for having me on this has been fun yeah it's been great man so the personal mba the 10th anniversary edition will be linked in the show notes below where else do you want to send people any of the stuff that they should check out of yours online yeah so so two things um so the personal mba website personalmba.com um you can find a list of all the key terms in the book you can find a recommended reading list so all of the business books i recommend if you want to go deeper in any of these topics they're all cited referenced on there um and then uh trying to take my own advice i am constantly doing uh research and experimentation in all sorts of different topics and so if you're interested in more of the r d side of me joshkoffman.net is is my website you can find a lot more about my other research in learning and skill acquisition uh research into uncertainty and change and some of the more philosophical um practical side of ambition is probably a good way to to put it um you can find all of my other books at joshkoffman.net josh i have to get you back on for that one i might have to have the uh batman alter ego i've had bruce wayne and now we need a batman on him we can do we can do another one i am happy to hang out anytime brother awesome thank you so much for your time