Hello friends. Well, I’m finally catching up from traveling to two excellent conferences this past couple of weeks (AIN & NASAGA). During the past two and half weeks we’ve conducted three more Biznik Live shows focused on “Surviving & Thriving Amidst Economic Uncertainty”. In this and the next few blog posts, I’m going to share a little about each show. I hope the following summaries tempt you into listening if you haven’t already! The audio in this 2nd show was somewhat poor, but there was some great content -enjoy!What did Tim & our audience cover in this second Biznik Live show?
- A summary of the Four Hour Work Week DEAL (Define->Eliminate->Automate->Liberate)
- Clarification on the somewhat controversial chapter on Automation
- The importance of testing, testing, testing (before investing $, time, effort)
- Should you hold onto your assets during the current economic uncertainty?
- Taking advantage of the likely drop in offline marketing prices during this recession (Radio & TV spots)
- Ruthlessly applying the 80/20 Pareto Principle to your business
- Learning how to say “No”, and facing the ‘difficult conversations’
- Which businesses are likely to do well during a recession?
- Clarification and advice on outsourcing
[display_podcast]Transcription of show:
(Times are not 100% accurate as final show underwent some edits)
| Leif Hansen: Hello. Welcome back to Biznik Live. You got to just love technology like that. This is Leif Hansen. I’m your host. I want to thank you for joining us. Biznik Live is a show produced by biznik.com that connects you with nationally recognized authors whose powerful ideas will help you make successful choices for your business. In just a minute, we’re going to be talking with Timothy Ferriss, author of the widely acclaimed book, “The 4-Hour Workweek.” We’re going to be hearing his advice for entrepreneurs and other indie biz free agent types, particularly in the context of the current economic craziness.I really forward to connecting with you guys today in the second half of the show and later on biznik.com. | |
| 00:59 | In addition to his excellent book, “The 4-Hour Workweek,” serial entrepreneur and ultra vagabond Timothy Ferriss has been featured by dozens of media including the New York Times, National Geographic Traveler, NBC and Maxim. He speaks six languages, runs a multinational firm from wireless locations worldwide and has been a popular guest lecturer at Princeton University since 2003 where he presents entrepreneurship as a tool for ideal lifestyle design and world change. Hello, Tim. Welcome to Biznik Live.Timothy Ferriss: Thank you for having me. My pleasure.Leif Hansen: It’s great to have you here. As you are the world traveler, where in the world is Timothy Ferriss today?Timothy Ferriss: Tim Ferriss is in San Francisco, one of my favorite places in the world.Leif Hansen: That’s home for you, right?Timothy Ferriss: Yes, it is home. It is close to home as I have at the moment since Francisco Bay area would be what I would call home for the last seven or eight years. Yes, I can drive my Fuson within two hours, and it’s just a fantastic place. |
| 02:03 | Leif Hansen: Excellent, kind of a sister city to those of us here in the Seattle area; a lot in common. I love San Francisco myself. So I wanted just to start by saying that a ton in your book I found very refreshing. It’s like a wake up call, a paradigm shift, and it’s just so easy to buy into the whole concept of -why are we buying into this deferred life plan? Why are we postponing our whole life and buying into this century-old 9 to 5 and then live the rest of your life maybe at the end of your life if you even make it that far? Just the concept of finding your goals and your dreams, the 80-20 Pareto Principle.My partner has a company, 80-20 Vision, so I’m very familiar with the idea that 80% of our productivity comes from 20% of our time; and then that the other 20% gets eaten up by 80% of our time. |
| 03:01 | So just cutting out the excess information, the unproductive time, the unproductive systems, the distractions and all that and perhaps, like you’ve mentioned, taking a week-long media fast - what a cool idea. Just tons of good stuff in your book. It seems like what was most controversial in your book, for me and when I read other reviews and blogs, is the chapter on automating and the different ways that you can do that to generate streams of income in your life.So before I even ask a question about that, could you summarize for our listeners what that chapter is about and do you think that’s affected at all by the current economic climate? |
| 03:39 | Timothy Ferriss: That’s a good question and I appreciate the kind introduction. I think it is important that people realize also that this book was rejected by 14 out of 15 publishers and had a very long path to the publication that one is not expected to do what it has done. And for what it has done, I’m very grateful obviously but the automation chapter just to give you the brief snapshot. The book is cut into four sections: definition, elimination, automation and then liberation. The first portion looks at different tools and metrics, commission your life differently. The elimination section focuses on as you might guest with moving as much to track as possible before you try to organize to plan anything.And then the automation chapter really looks at - some people, I think, misinterpret the automation chapter as about creating a business that is 100% automated. That is one application of it but out of its core, the automation chapter is about taking whatever remains after you eliminate and creating rules and processes so that those facets of your life or your business work as elegantly, as seamlessly as possible without you as a bottleneck. So that is the basic.Then liberation talks about mini retirements and taking advantage of mobility and geo-arbitraging and things like that. |
| 05:13 | Leif Hansen: Tim, before you continue, I’m just going to ask. We’re having a little bit of an audio issue. If you could speak a little unusually louder than you probably would normally, that would be awesome. Timothy Ferriss: Sure. Yes, no problem.That is the snapshot of automation, and I’ll let you continue on with whatever question you might have.Leif Hansen: I guess the second part of that is, with the current economic climate, it’s like a stage five river ride out there and a lot of people are uncertain. A lot of those automation systems seem to rely on newer technologies and marketing yourself. It seems like some of that could be affected by the economy right now. Do you think that is true, and have you seen that yourself? Just what are your thoughts on that? |
| 06:02 | Timothy Ferriss: I think it is expected, so let me take a step back and just for people who may not be familiar. A few of the approaches that I advocate in the automation section which is a collection of, I think, three chapters, includes micro-testing. It is one example. The 4-Hour Workweek, the title itself was determined by using Google AdWords. So I set up a Google AdWords campaign with several titles and headlines, several subtitles and its ad text and then keywords related to content as the fixed variables like world travel, retirement. And with less than $150 in the span of a week, I was able to see which combination of the title and the subtitle performed the best. And that informed the decision to better use that title. So micro-testing will be one approach. The second, I talked about in the case that you are in an entrepreneur or a freelancer, how to market your services or test different business models and so forth online. |
| 07:03 | I think both of those are effective by the economic conditions right now, but I think they are effective in a positive way. Number one, you have to, I think, when resources are fewer, test before you invest. And I have a very low risk tolerance. Very many people don’t realize that because it seems like I do extreme things. But those decisions are very, very well-informed and I almost always hedge my losses. So for example, in June, I took 90% of my foreign take and put it into a cash equivalent. I took it out of the market completely. Actually, it was not even six months. It was three months ago. And I have an almost all fixed income portfolio, and most people would expect me to have a comfort level of let’s say 20%. Maybe there’s absolutely no way I would panic. So I’m very low risk. But I do test extreme options, and I think that that is a very valuable tenet for people who don’t have large budgets for marketing. |
| 08:16 | If you don’t have a large budget for marketing, it doesn’t make sense to cheat the headline based on an opening statement where you’ve got instinct and then pour hundreds of thousands of dollars into, let’s say, a radio campaign over 150 stations. You should actually take the time to do AB testing which you can do for free if you use something like a Google website optimizer and test it online, get immediate real-time feedback and then if you’re going through investing something more expensive, take that data and transfer or whatever. So I think that whether you look at a smaller enterprise or a single-man shop or if you look at extremely large companies, I speak to Fortune 500 companies also interested in setting up rules and processes that take out error and redundancy and static because you need to make better use of your resources in a recession. If you can’t hire more people that you have bigger sales goals, you need to get greater output per person. You have to spend less time wasting time.So I think that they are actually equally relevant and most likely more relevant and important as we go into a recession which seems inevitable. |
| 09:35 | Leif Hansen: That was going to be a point. You do think that it’s going to be continued to move into a recession and we don’t need to go into that but if you want to go into it, say something. Timothy Ferriss: I’ll just cover it very briefly. I think that we are effectively in a recession. If you look at the monthly job creation versus population growth and so forth, but I don’t think that’s actually that worrisome. And particularly for entrepreneurs, I think it’s actually in some cases a very big thing. |
| 10:06 | For example, you’re asking about marketing costs. Well, what happens when a radio station’s biggest advertisers cut back on advertising? What happens? The cost of airtime goes down. So I think that as bigger companies begin to make huge cutbacks in employees and marketing, you’ll have more talent on the market available at better cost, and you’ll have cheaper advertising options and cheaper marketing options. So I think it’s actually a very good thing for entrepreneurs. I would also emphasize for people who are panicking about market losses. In fact, I’ve also lost money in the market but you actually haven’t lost it unless you sold it what you had. So if the value on paper of your equity portfolio has declined, you haven’t lost any money unless you sold it all. And I actually - |
| 11:55 | Leif Hansen: Hi there, folks. Sorry about that. Timothy lost his connection. I think we’re going to be hearing back from him soon. He just called me on another line. I’m sorry about that. So I believe this is him here now. Timothy Ferriss: Yes. Are we live?Leif Hansen: Yes, great. All right. Thanks for calling back in here, Tim. Do you want to continue what you were saying there?Timothy Ferriss: Yes, I’ll continue. So maybe eBay and Skype are laying off employees. That could be why I dropped off.I think it’s a very good thing for entrepreneurs. And for that reason, I really don’t think in most cases that freelancers don’t need to be concerned with enormous macroeconomic movements very much in general. So that would be my short commentary on economics.Leif Hansen: It’s very complex obviously.Timothy Ferriss: It is but I figure there are some really smart people I deal with regularly, economists or whatnot. I think that we’ll see the market rebound significantly, probably third quarter of 2009, so I’d say just hold on there. |
| 13:05 | Leif Hansen: I’m wondering another just general question for you. In the expertise that you offer in your book, obviously most of our listeners are entrepreneurs and other Indie biz folks. What general advice would you give them during this time? Obviously, you’re telling us hold on to your assets. Don’t go selling right now. But as far as business moves right now, are there smart things that they can do? What are maybe the top two pieces of advice that you would suggest? Timothy Ferriss: The top two pieces of advice, I would say: Number one is test, test, test. So when I mention micro-testing, there are excellent tools out there right now for testing and split-testing.Split-testing, I just mean if you have, let’s say, a website or a newsletter and you want to test the click-through rate based on a specific headline or a specific closing tagline that you can do that for free. There are excellent tools out there. So whether that’s Google website optimizer or whether that’s Optimus, there are a number of others that you can use. |
| 14:17 | But more if it’s an email program, you’d use something like Sharecasting contact or AWeber has options for this. That would be number one, to test. Ensure that you refine whatever marketing you are doing, whatever messaging you are doing. So that you take that and then expand it elsewhere, you’ve maximized the likelihood of success. I would also say really start looking at expanding. I’m sure a lot of people listening to this are based online primarily. I would consider people to start looking at offline options in some cases. One of the best ways to drive traffic and therefore conversions in my opinion is going to where the channels are emptiest. And in that case, it’s often radio or television. You can look at remnant advertising agencies, whether that’s Manhattan Media or there are quite a few of them, some of them I detailed in the book. And you can get full-page advertisements, half-page advertisements, 90-second, 60-second spots for 80 or 90% off of retail especially in a recession when people are going to be cutting back on advertising budgets dramatically. There’s going to be a plummeting phenomenon in advertising costs. |
| 15:43 | So I would encourage people to be very conservative but test on a small level very frequently and then take those data online and experiment offline. I think testing is my first and second recommendation. But if I had to give a separate recommendation, it would be to do ruthless 80-20 analysis. You mentioned it earlier. Just to put in concrete terms, really focus on the critical fuel and eliminate or ignore the trivial money. Meaning, identify the 20% of customers that are producing 80% of your profit. Identify the 20% of products or services that you offer that are producing 80% of your profit. And either get rid of the rest or stop spending time on them. And really profile this product and customers that work and try to duplicate them. |
| 16:38 | Leif Hansen: Why do you think, Timothy, that’s so hard for people to do? It’s so clear that that’s an obvious thing that we should do, and I’m sure all of us have heard it to some degree. Why is it so hard for people to really look at how effective their time is and who the real 20% customers that are giving them the 80% of income? Why is it that so hard? Timothy Ferriss: I don’t think looking at it is hard. I think putting the elimination into practice is difficult for people who are unaccustomed to having uncomfortable conversations. So I really think that success in almost anything, certainly interpersonal, can be measured at the number of uncomfortable conversations you’re willing to have. That will be number one.The second reason it’s difficult is because people will often use prior investment of time, energy, of income, let’s just say the extent, a year developing a portfolio of 10 products, they’ll be loathe to eliminate eight of those two because they’ve invested that time. But it does not make sense that I would just look at that as a testing period. |
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