In the fourth episode, Samuel P.N. Cook interviews James Schramko - business coach, mentor, investor, and author of “Work Less, Make More” book. You will learn the difficulties that a digital marketer faces in the beginning of his career, the questions he asks and the solution he finds. You’ll be able to compare online courses to professional coaching in terms of learning opportunities. You’ll understand the pros and cons of affiliates as well as the differences of American, European, and Australian marketing approach.
Guest: Samuel P.N. Cook and James Schramko
Date Added: Jan 15, 2018 7:53:06 PM
Length: 60 min
Podcast moments that will matter to you:
James Schramko’s professional story
How Sam met James
What is more crucial, to have a business partner or a coach?
A challenges of having a partner
Three core things to expect while looking for partnership
James’s business approach to clients
How James’s concept for coaching mastermind appeared and evolved
How James formed and maintained his peer group of world-class experts
The benefits of getting business coach on a beginner’s stage
Online marketing courses and mentorship program compared
Internet marketing syndicate explained
The importance of knowing the product you offer to the market
James’s position regarding affiliates
Is affiliate marketing suitable for an industry beginner
Main concepts of James Schramko’s “Work Less, Make More” book
80/20 productivity concept
Story Matters Live event by James Cook Media
Samuel: [00:00:17] Welcome to another episode of the Story Mentor season of the StoryMatters podcast. This is Samuel P.N. Cook here and I have the privilege to introduce to the audience here my first paid business coach.
And this is a huge event in my career in terms of the acceleration of my learning, and Paddy and I talked about this in the introductory episode where we summarize the season. So without further ado, I'm going to introduce James Schramko. James, how are you? Welcome to the podcast.
James Schramko: [00:00:53] I'm good, thank you. Thank you so much for having me Sam. It's good to catch up.
Samuel: [00:00:58] Yeah it's great to catch up. We reconnected recently when I was doing the mentor series -planning. I realized how much I missed coaching, and I was in your coaching group I think until about three and a half or four years ago. And I think it's about time to pick up the coaching again on the digital marketing with you.
So I just wanted to have you introduce yourself quickly to the listeners and then we're going to get stuck right into the materials, as you say Down Under.
James Schramko: [00:01:28] Well, these days I am spending most of my time working behind the scenes with business owners to help them grow their business, to be more profitable and to avoid many of the mistakes that business owners make.
And so they're not doing it by themselves. And that's going really well. I also surf every day and I live by the beach and travel around a little bit and spend a fair bit of time with family.
[00:01:54] If you go back a year ago, I was running some service businesses as well, in particular, website development and search engine optimization, which I built from scratch. But after about seven years, I sold them both so that I could just focus on the coaching and earn something for my efforts upon sale. And if you go back a little bit before that, I was doing a number of things.
I used to sell other people's products for commission, as an affiliate. And for the longest time now, about nine years, I've had coaching communities that have been ticking away there and it's really stable business space.
[00:02:42] And before that I used to be a general manager at a Mercedes Benz dealership, which was sort of the pinnacle of my career which I didn't know either through the sales past sales management general sales management general management. So that's where a lot a lot about real business that luckily for me actually translates online. So hopefully that's a good quick background.
Samuel: [00:02:59] James, very comprehensive, short, sweet to the point as is your style. So I could go on about a lot more of your background but I think we'll leave the reader or the listeners at the end with something where they can get a lot more from you. And we'll dig right into the content here and talk about the journey I had working with you as a coach.
[00:03:22] Now I remember it very clearly, I got on your email list somehow. I was reading your emails and then watching your videos online-free content videos and then I realised that you had a podcast. And at the time I was an avid triathlete, so I had to run a lot every week.
And I think I tore through most of your early podcasts in quick succession-sometimes many listeners who listen to podcasts go on a bit of a binge when they're doing the things that they can also listen to podcasts, whether it is commuting to work or exercising or doing some other things.
And I did exactly that. And I was so inspired by just the business sense that you had, and the systems and ideas that you had for your business and the great experts that you were bringing on your show, that I ran into a problem with the business partners.
Someone had convinced me that they should be a business partner and I didn't feel like it was a fair deal because I was a new business person, unsure of myself as a digital marketer. And I got in a bit of a situation where I just didn't feel like it was the right partnership anymore and wanted to get out of it.
[00:04:32] And I called you and said (I had like coaching) this is the first problem to solve, which was nice to get some real results right in advance, which was replacing a partner with a coach. And I think one of the reasons many people have business partners is because of their insecurity in business.
Now certainly the case for me. I didn't think that I had all the knowledge I needed as a marketer and that's why I took on a partner in a bad deal that wasn't really the right fit for us long term. I saw you finally as a way to replace a need with something that's a lot less intrusive a lot more, I think, scale-able.
And ultimately was just the best solution, was just taking on a coach rather than a business partner, for someone to bounce ideas off of and have him in your corner without all the emotion and drama of what's effectively a marriage and a business.
So James, when I came to you I had you helped me solve this problem, and it turns out that you solve many problems. So what's your thoughts on business partners and the role that coaches can have in either assisting partners or helping people who think they need partners.
James Schramko: [00:05:41] Well, there's definitely some very different points of view about this. Some tech startup founders say that it is essential to have a partner to balance out your strengths and weaknesses and to have that support. I think there is a lot to be said for how difficult it is doing it by yourself.
Not every person can go it alone. And some people particularly gifted at certain parts of business and very blind in other areas of business. It does make sense that you can't be the most well-rounded balanced person by yourself unless you're a rare individual. So there are people who are actually good at being that A-type driver, visionary and can also take care of logical things in spreadsheets and numbers, but they're rare.
And I would actually classify myself into that box. And say that one of my skill sets is being a generalist and that I can handle most parts of the business, but it is rare. Most of the people that I work with are kind of skewed in one direction or another and they need some help.
[00:06:47] So it's good to get someone to help you. You don't have to do it by yourself. It's very common for people to seek a partner because just that sheer companionship and the idea that you can have someone go through this with you is very compelling.
[00:07:02] The obvious downside is that often you'll give away half of your reward for that. So that's where it can get a bit dicey. Even if you do well you might end up not feeling like you're getting enough for your efforts. If you have more than one partner if you've got multiple partners, of course, the chances of it self-destructing are very high. I can't help but think of that guy from Facebook, Duston kind of got pushed out. Then there's this situation where people tend to move at different paces in life.
If you think about the life cycle we go through different phases: we might be single, go to school, go to college, get a job. Then we go into relationships, we might get married, we might have kids, we might become grandparents, you might move a few times, we might go through cycles of energy and excitement, we might have health concerns.
Our priorities can change, diets can change, your friends can, so much can change. The chance of two people moving through life without too much separation at some point is quite slim.
So, I think it's understandable why there's a lot of business/marriage break ups. In fact, even just general marriage breakups, half of them -half of the actual marriages- break up. It makes sense that in business we're going to have partnership changes. So it's actually really common things that I spend time with helping people work out differences between partnerships and try to find out where the value is.
And often you'll see if the partnership is lopsided then it will destruct, it will break down. So, the key to having a partnership working is where there's an even balance of what you bring to the table and that makes it more sustainable.
[00:08:49] But certainly, having a coach and being in the hybrid arrangement like these sort of deals that I'm doing these days, where I take a very, very small percentage of someone's business without being a director and without being a shareholder.
And you know, there's no question about whose business it is. It's their business. They run the show. They make the decisions, I'm the helper, I'm just there to support and nurture and to bring my experience Rolodex to the table.
Those deals can work really well but in that case, I'm just taking a very small percentage of it. And they feel like they're the boss and in control. So I'm not threatening. I think the 50/50 partnerships are perhaps the hardest.
Samuel: [00:09:31] James, I was really impressed with your thought process on partnerships in general when we were in the group. And you actually were in a partnership before.
James Schramko: [00:09:40] Yeah, I've got all sorts of partnerships in my life.
[00:09:46] Even before my online days, I had partnerships in buying and selling number plates. Before domain names, I had a partnership in an advertising business, had a partnership in my first forum, my first coaching community that ended up needing to be resolved because it became uneven. And you know, you learn about all those things. I've had partnerships in info products and all sorts of stuff.
[00:10:11] Especially when you start it's really easy to get into partnerships and there're a few reasons for that. There's virtually nothing at stake. It's so easy to say to someone well let's go hard and do this together and they go, 'yep, OK.' Often you don't need to put in investment in online businesses, and it really only becomes a problem when it goes well.
So in one of those partnerships I was in, it became a challenge for me when I started the partnership, I expected that we would each put in around about 50% of the effort. But it turned out that I was putting in about 80% of the effort and bringing about 99.9% of the customers to the business.
And I was splitting the profits 50/50. And after four years of sending 10,000 dollars a month to my partner. I just said, 'you know what? I think we need to adjust this. Could we adjust the partnership ratio? Would you like to buy it from me? Or could I buy it from you?' This was the sort of the discussion options that were there, and it just needed to change. I couldn't knowingly keep sending all of my customers to take a 50% skimming.
Samuel: [00:11:27] And how did your partner take that?
James Schramko: [00:11:29] Well, he really liked the way that was going just how it was. He said, 'well you know, it's fine how it is.' And I'm like, 'well really, it's not. It's not fine how it is, and I would like to resolve it if we could.' And he said, 'look, I don't want to buy it. It's not as valuable to me.' Which I agreed with. I said, 'would you sell it?' He said, 'how much?'
And I offered a large amount. My wife was furious with the amount that I offered. It was way too much. And then there was this indecision phase and after several months and no reaction and no agreement to change the percentage, my end solution was to just start something new. And to say, look I'm going to start something new and I'm going to put my efforts there and I'm going to match your efforts here.
[00:12:18] So I reduced my efforts to his level of input. So I brought zero customers to the business and I put in 20% of the effort that I was putting in before. And within a few months, the entire business migrated from the old product to [my] new product and the old one just got turned off eventually.
So he ended up getting nothing except for an experience from it I suppose. But I had a very fair offer and a fair process, but the end result is really interesting. I was making 300% more within three months than I was before.
So the arrangement was significantly worse for him and better for me and it was a necessary adjustment. Now, if he had been putting in all the effort and I was the one coasting, then I wouldn't have been shocked if it went the other way. I think the market decided and they voted with their fate.
Samuel: [00:13:15] Yeah, that's really important in service businesses. To be a partner you have to bring one of three things to the table: You have to bring money and that can come through investment money. You have to be able to bring in sales, bring in new business or you have to have a unique skill set that is world class, that is really hard to hire - too expensive to hire.
And that's usually the criteria I look at in terms of partnerships, who deserves equity and who doesn't? How do you how do you apply this to employees James? Have you seen businesses that you coach apply equity grants to employees at a certain point?
James Schramko: [00:13:50] Well, that's an interesting one. On your first point there I agree with you. And quite often it's actually just easier to hire in traffic or hire knowledge than to surrender half your business for it. So that's one thing. I could have a whole conversation on venture capital and giving up control of the business when it's not necessary.
[00:14:12] But on the second point about employee equity, I think to some extent the person who is an employee might be in a different frame of mind to a business owner. They may not be as entrepreneurial. They may not have the same risk appetite either. If you think about an employee, generally they're on a guaranteed profit scenario.
So the business owner is swinging from the vines, hoping not to end up missing one and landing on the jungle floor. The employee is kind of riding on your back and you're taking him, you're carrying the risk and they get a profit.
So no matter what happens, unless the business folds, there's a good chance that each time they get paid and they're not going to go into the negative. So, generally, it comes with less risk, a little bit less control of the business.
There is there is potentially some benefit in giving an incentive for employees for certain objectives that is within their control, and I think that's important. Otherwise, it can be a waste, putting an objective in front of them that they have no control over. Because if they can't control it, then it doesn't have any influence on them to reward the behavior that you want.
[00:15:24] Generally I don't worry too much about giving royalties or commissions to my team. I just pay them really well give them bonuses from time to time, not scheduled and not planned reviews. I don't like entitlement. We're a meritocracy.
It doesn't matter whether are young or old, been in the business for a long time or a short time, if they're doing really good stuff and I become aware of it, which I hope to, I will seek them out and reward them.
[00:15:55] We do something around the end of the year. And that's just because the culture of my team makes Christmas a very big part of the year. And they have large families and it can be cash draining and they do have a culture of extra pay at that time of the year.
So that's something I schedule for. The main thing that I've done with my team is we've set up a side project, a little skunkworks where we've worked on a new project that they have maximum control over. I'm almost not involved in this project, well, certainly not more than about a percent.
[00:16:27] And I've given them a scenario where they get to keep the profit that we make from that business from advertising revenue. So whatever advertising revenue we make, I redistribute that as a Christmas gift to the team who current at that time and have contributed to that project.
And that's tremendously exciting for them because it's definitely within their control and I have seen them work pretty hard on creating something special and optimizing the results we get. So they have maximum control over it. That's a key factor.
And it's not an outrageous sum that is foolish for me to do and I didn't have to do it. But it's also not insignificant. So it's not a trivial token amount. But up until now, I haven't really done that before with my team here. But of course, it was extremely different when I was running sales teams in the Mercedes-Benz dealership, where almost everyone in my team is on some kind of performance or commission basis.
[00:17:29] And that's because those were the types of roles that you are attracting. And it was kind of necessary in a direct sales team to have performance bonuses, and also managers can have a big influence on the output of their departments, so it makes sense to bonus that.
Samuel: [00:17:46] Yeah, James thanks for the full rundown on that. I think it's really important for all listeners starting to understand the differences between the different partnership structures, financing structures and also how to incentivize or take care of, let's say your team, so you get the maximum performance. And I think that gives the listener just a little bit of flavor of why I went to James in the beginning when I was first starting my business.
[00:18:12] These were all the big questions that I did not know the answers to. I'd never gotten direct consistent one on one coaching on this.
My experience until that point was people who like my business idea would come up to me and say, yeah I can help you raise money and I'll take a percentage of the money you raise and a percentage of the spend. So, I had a percentage of the equity and a percentage of it. And then I'll put myself on salary which is my first business. So that was a great deal when someone raised money for me and did that.
[00:18:42] And I learned a lot of lessons the hard way and I wish I would've had a coach like James, just guiding me through those points that he just went through. And that was exactly why I went to James and joined your coaching group.
And I want to talk to you a little bit about your coaching group structure, because anyone who's familiar with our business model, or my business and the products we offer will notice, if they study you at all or the business model you used to have at least when you did the services business model, that the model we're going towards is almost exactly like the one that you saw or that you did.
Which had a basic membership site subscription which is our StoryMatters Academy, and then the high end coaching group for people who want more than just videos and some online support, but want that deep one-on-one interaction with a coach like I was just demonstrating with James.
And then obviously some high end consulting funnel builds. I think James, you do now on a performance or equity basis. And we're looking at doing some different custom fuddle builds for different arrangements.
[00:19:50] But the thing that really attracted me to you, James, was when you offered the coaching program. And I was actually a little bit skeptical at first because of the format because it was a group coaching call rather than one-on-one and I really wanted one-on-one feedback from you.
And I was afraid I wouldn't get it. But I was pleasantly surprised by the program, which was your master's circle and it was I think three different group calls every Tuesday.
[00:20:19] You allowed everyone to get on one or as many calls as they wanted and listen to other people on the calls, and then they'd all get their one-on-one time with you.
And you're very efficient, you read people through like an assembly line and took us through what we were going to do that week, what we were supposed to do the week before, and what problems we needed to have.
And the way you were able to get through so many things so quickly, and just get straight to the heart of the issue and strip out the things that we weren't supposed to do, and just help us focus on the one thing we needed to do that week was really powerful. It's something I've taken with me and I model our current coaching group.
[00:21:00] So where did you get the concept for the mastermind James and how has it evolved? Because I know that it's probably evolved a bit because I'm just about to restart it and it's been a few years since I've been there.
James Schramko: [00:21:11] Right. So as with most things, I'm constantly innovating and refining and being able to develop some innovations to the way that I'm doing my coaching. There's definitely a hybrid component of one-to-one and one too many.
And I've also been able to distribute the answers according to what is the most useful for the group, who is on the call at the time, and spread the calls further apart to really get a good range of time zones.
[00:21:41] So some little side thoughts. The group now called Silver Circle since you were there, has also leveled up in terms of who the members are and what they're doing in business. You'll see that a lot of them are now doing millions of dollars a year instead of hundreds of thousands.
And it's just attracting better and better students who need more and more help because actually, a lot happens between that 1 million and 10 million dollar range, which is a real sweet spot for us. So SilverCircle.com has some brief criteria of who it's suited for.
[00:22:19] And then beyond that, since you were around I've developed of the next stage after that, where I take on a silent partnership sort of a role. But as I said a very small percentage, and not equity, not directorship, not shareholding, just a royalty arrangement.
And I think the real secret to those is putting together deals that are really easy to understand and that work really well for the customer. And my end game will be to have only those.
I'll just have a small group of businesses who I'm quietly helping behind the scenes and eventually roll up the coaching staff, it might take quite a few years to do that, but that's the end game. The best of the best of the best. And then maybe just write some more books and do some podcasts and surf a lot more.
Samuel: [00:23:11] Well, it's good to see where you're where you're marching towards. I think one of the things that we all need to get clear on and that is really hard for us to see, especially when we first start our businesses is what we're going towards.
And one of the things that we want to do and I'd like to do, is starting a publishing house where I do the same thing. I work for authors that have great ideas, that I think, deserve to get out there to the world and we publish them in a more of a digital publishing house format.
I think more on the model of mind value digital marketer in that respect, but obviously much different branding and technique than we would do. It's good to know where you're going because there's a lot of steps you need to take in order to get to a place like that.
Thanks for sharing that, James because I'm sure a lot of people want to aspire to be part of that group, especially towards the endgame.
[00:24:00] James, I joined the coaching group for your advice. I joined the coaching group for your feedback but I have to say, and I know you won't take offense to this, but I actually ended up getting a lot more out of the peer group.
When it was all said and done, just because of the quality of the people that you were able to attract in the in-person events that you did at the super fast business conferences in Sydney, Australia, are really powerful for me. In fact, they've had a massive impact.
[00:24:25] I wouldn't be sitting where I am today and doing what I'm doing today if it weren't for the people I met at those conferences. So what's your thought process along building the peer group, and how do you make sure that you maintain a world-class peer group?
James Schramko: [00:24:38] So learn how to get in front of and talk to people who had really good information and also got to meet many of my business heroes, people whose books I'd read. For example, Jay Abraham in a loft apartment in Las Vegas and I chatted to him for hours and hours on end. So, I realized that these connections do sort of make it so very special and I would fly to another country for them.
And now I have these other people coming to my country, to speak at my events, and to meet my customers, and to network the day before. And I can trace so many valuable connections happening at those events. It really is a huge feature of having a high-level group, are the high-level interactions. I've had Instagram experts sharing how they do it. I've had YouTube experts sharing how they do it to people who really needed that information at the right time.
[00:25:31] I've cross-pollinated a lot of the experts. So typically, I would have half a dozen experts attend the event. Sometimes double it, sometimes it doesn't, sometimes six and they would meet the other and then go off and form amazing ventures together.
So if you look at guys like Keith Krantz started a podcast because he was chatting to people at my event. And then you have Ezra Feinstein and Andre Chaperonage, these people have all interconnected and continued on, and Justin Brooke and the list just goes on. So if you want to build your Rolodex, host great events.
Samuel: [00:26:08] Yeah. James, I was not only at your events but on the mastermind calls, I really valued listening to you coach sees other business owners. I remember for a while just kind of coming up and getting my coaching and leaving and then I would stay there and listen to other people and the connections were really magical. I remember watching Rick Gibson, who was doing design and optimization on your call. And you were coaching him on something unrelated to my business but it gave me an idea for something I hadn't thought of.
And next thing I know I call Rick and I end up paying him to teach me how to optimize web pages and to do design supervision, a little bit of UX design. And it's such a rare skill out there, most people, everyone knows how to pay money on traffic.
But very few people know how to optimize stuff, and that's something I learned from, not you, but actually a member of the group who just I dug deep with and formed a joint venture with. Well, I actually just paid them. I became a customer. But I visited him a couple times in Thailand, while I was traveling and then really dug deep into his skill set.
[00:27:16] Same thing - the most famous one that everyone in my audience knows- because I tell the story all the time in our free masterclasses, the Ryan Spanger story of me partnering with him. I hired him to come over the states for a month and I think it was two or three weeks.
And it was basically a mobile film school. I had four clients and a bunch of customers of all these clients, and we just drove around interviewing everyone and learn how to be a filmmaker. Yeah, the list just goes on and on. I think I probably ended up paying about half the people in the group at the time.
James Schramko: [00:27:46] Well, I think that's what you do very well, is you pay to play. You've just come from nowhere, and I mean that in a nice way. You've come from outside the industry, arrived and paid to get expert counsel and master something much faster than if you bought a book on Amazon and sat back in your mom's basement and tried to become a world expert at it, it's not practical likely.
So if you can invest in your education and I've done exactly the same thing. I hired a surfing coach to help improve the way that I surf. So having that beginner's mindset really helped me to understand how to fast track it, and I will take an approach with anything that I do, and I'll optimise it fairly quickly by speeding up the results. If I can pay to have something faster or better, I've paid people to help me get my book ready to be put out in the marketplace. And that's just how you get the results. And people do this every day in life.
I imagine almost every person listening to this will at some point gone out of their house, to a facility where they've ordered a meal and someone else sourced the ingredients, cooked it, prepared it, and served it up on a plate, and even did the washing up after they left. I bet you that everyone's done that. Why wouldn't we do that in business?
Samuel: [00:29:11] That's great. Everyone's done that and why are we so reluctant to do that in business. Yeah, I've wondered that for a while. I always like to look at myself, and I think I'm probably on the opposite end of the spectrum where I'm almost too quick to pull the trigger.
But I think a lot of marketers and salespeople are on the flip side, a sucker for a good contract and are easy to pull the trigger on a deal that they see. I don't know if that's a good or a bad thing but it certainly helped me in my development.
James Schramko: [00:29:39] You know you get if you are like the enthusiastic bicycle rider and you riding a little bit ahead of your ability you might fall off a few times, but eventually you'll be able to do laps of the park, or you know a 100 kilometer rides. Whereas someone else is still sitting there thinking about the bike they might buy one day, or what type of clips they're going to have, or obsessing on what color tape will they wrap the handlebars with. Sam's already doing 100-kilometer rides by then, 100 miles maybe in you speak. But just getting going is a big skill that eludes some people.
Samuel: [00:30:19] James, it's really interesting to get your insights on this because I know you've coached so many people. But just to give the listeners some perspective. It was only four years ago actually that I left the army and started my agency full time, and it was in that exact year of 2013 that I joined the coaching group with you, I think in early 2013.
Before that, I'd been studying online marketing for four years. I bought every single course from I got into the syndicate in the United States, as they call it, the Internet marketing promotion cycle.
[00:30:55] I ended up buying one course, I think it was Frank Kearns first course, and then I ended up getting into all these product launches. I didn't know what was going on and the next thing I knew I'd bought a bunch of 2000 dollar courses and went to a bunch of conferences. And I never even watched most of the courses because the production quality wasn't good. And they didn't really care if you watched them and there was no follow up. I learned more in that one year with you just paying you for feedback and shutting off all of my information sources and just executing.
I will have to admit, and I don't want to say those courses weren't worth it at all just by buying them I had the mindset that I was a marketer. I met a ton of great people, it's like going to university. You're listening to the whole time and you learn something, but you never get out and do anything.
And the way I like to think of mastermind is like a Ph.D. program versus the basic degree at university. Everyone knows that when you come out of university you're not at all qualified to do anything, and you have to get on the job training or if you're going in academia get your Ph.D. and really learn how to do it with a mentor.
James Schramko: [00:31:58] Absolutely. You going to make a few wrong turns. One of my mentors explained this as going into a new kitchen and you're going to touch a few hotplates, now if you keep touching them then that's on you. So I did exactly the same as you, I got sucked into some of that vortex of information overload from people who were supposedly the experts.
And I immediately was repulsed by some of the things that were doing and I realized you know, I think they're not doing it right and decided to do my own thing. And the interesting thing for me is that you know, 10 years down the track a lot of these guys have burnt out their model, or worn out their welcome, and are now rediscovering their business.
And interestingly it looks a lot more like the way that I run my business now. A lot of them have started thinking about recurring subscription models and providing actual support.
Samuel: [00:32:59] Well, James one of the things that I really appreciated from you was the insights on the marketing industry.
And I'm in Europe and my avatar, my hero as we call it in the story based model, is someone who's a European business owner, is aware of the internet marketers and is repulsed by the 'this is my life. Don't you wish you had my life?' And you know making themselves the center of everything in their marketing versus focusing on the customer, and really serving the customer. And it's almost like pay me because I'm famous.
James Schramko: [00:33:31] Well, I think they make themselves the hero in the story instead of making the customer the heroes. It's the biggest definition.
Samuel: [00:33:38] Exactly. And that's a common error, even for less flashy marketer. You know, marketers are the most egregious example for that. But I think a lot of businesses get in the trap of making it all about the story of their product, or the way they worked so hard to create it.
And ultimately the point we make is no one really cares about how hard you work. They care about themselves, their own problems and the journey they're on. The internet marketing industry and America's has taught this digital marketing, maybe, led the movement. But certainly in my perspective there's a better way and you kind of showed me outside of that. That really healthy skepticism, looking back at America where I happened to live at the time, and live for the past 30 or 25 or so years, it really helped me see that industry for what it was.
And that was really powerful for me to get that perspective from you. Where did that come from? and how have you interacted with that community through the years? how's your journey been with members of that community and leaders in their community?
James Schramko: [00:34:35] It's been an interesting one because it was certainly as far as where did it come from. Just the fact that I'm outside the country. When you're in it you can't see it. Like a lot of people inside America love Donald Trump, right? From someone outside of America, it just seems a bit strange.
[00:34:52] So just because we're outside and because we're a long way from other countries, Australia is always outward looking. We're much more aware of geography and world happenings because we're a small country a long way from anywhere else.
And so we tend to look to the big countries, like the USA, you know who's getting married in London and all that stuff, because we kind of came from these other countries, unless you're an Aborigine then most Australians are imported from somewhere. We have a lot of Europeans and we have a lot of people from the UK and some North Americans, but not so many, lots of every other type that you can imagine, it's multicultural. So we have this enormous diversity here probably compared to the USA. So that's one differentiator.
That's how you become aware of it. The relationships been interesting because I still listen to these experts, then went to a conference and won a prize to become a member of a mastermind within the networks, just like you did. I accessed a high-level mastermind. It was a million dollar starting point mastermind. I wasn't making manhandles at the time but I won my spot. So I was instantly now on mastermind's with some of these gurus who were making products.
So where I had seen someone like Mike Filsaime launch a multi-million dollar product called Butterfly Marketing before. Now I'm sitting beside him at a pool in Las Vegas talking about business over a beer. And that was a fast track to the inside circle. So I threw a Silvers event which was called Maverick.
[00:36:35] I was able to access these high-level people like Brad Fallon and other people. Brad Fallon was instrumental in introducing me to Dean Jackson who became a master contact for me, and then he also paved the way with people like John Carlton who then opened up doorways like Von Talbot and you know I spread my network to where initially they were power brokers and then they became peers and then a lot of them became customers.
[00:37:07] And so the relationships changed a fair bit over time. But I do believe that a lot of these people respect my work and look up to me and constantly seek my advice, and I'm okay with that. I think that's where I can offer the most value because I came from outside the industry, and the things that I learned from outside the industry are useful inside the industry because the industry is quite new.
It's still the Wild West. And I came from an industry that was over 100 years old and highly competitive and extremely difficult to survive in.
[00:37:44] So this new frontier where people, you know it's like a rising tide floats all boats. You know, they could have put out dog turds and people would still pay 2000 dollars for it and sometimes they did, metaphorically. And you're just not going to be able to get away with that ten years down the track.
[00:38:01] Here we are now in 2017 with social media holding everyone accountable. You've got to be real. Facebook won't let you sign up with a username Teddie drumsticks 78. You know you got to be an actual person. So I think more than ever integrity and being real in business is a huge advantage. And I think some of these early generation marketers have found the push marketing methods of the old way don't work anymore. The product launch syndication is getting a bit tired now after 10 years.
Samuel: [00:38:40] And for those of you, if you're listening to this and don't know that syndicate means, it's basically a legal cartel. Or maybe it's a bunch of people who agree to get together who agree in the internet marketing world and promote each other. So you'd get on someone's email list and then the next thing you know every month you're getting a product launch from someone else in the syndicate, and you didn't know it at the time because you didn't know their business arrangement.
And they also all kind of held the same pricing and supported each other and it was an interesting idea to support each other. And I do think there's some power in a group that doesn't just compete but supports each other, but it can also go overboard where people just go into it and they just get worn out. You get into that, I call it the 'merry-go-round' of launches and you just get tired and you get off of it. I actually have some of my students, James, who are entering that world and I counsel them that although product launches are exciting they're not a business and this is one of the key lessons I learned from you, is the shiny object of product launches and how fun and exhilarating they are and how dangerous they can be.
James Schramko: [00:39:43] It's a promotion and it's talent as a promotion. Playstation does it. Game of Thrones does it. It's OK to promote something occasionally it's just not a business model. And it's definitely not ideal for customers when they're getting, almost I would say, abused by the marketers, just getting pushed too much. I was checking one marketer out this week who sent 8 emails in 24 hours.
I can't see how that's good for the customer. Even if you were to assume that the customer is not receiving any communication from anyone else, it's still kind of over the top. I'll tell you what it is. It's greed, it's just pure greed and selfishness on behalf of the marketer. And people are waking up to this. It's not acceptable.
[00:40:30] And if you are the person doing the launch, you don't end up with the big number that people talk about. There's this thing called launch mass, and if someone's saying they made a launch of 3 million dollars, what that actually means is it might be 3 million if people make their payments over the next 12 months on the payment plan, before the 30% refunds, and before the 50% affiliate payouts, and before you pay out your copywriters override, and your excess support team, and your hosting costs, and all the other bits and pieces that go along with it. The pinball machine, the Amazon gift cards, or the car that someone won.
[00:41:08] If you separate it all out that person will be lucky to pull a couple of hundred thousand dollars from a 3 million dollar launch.
Samuel: [00:41:15] And you'll ruin your life if you do too many of those.
James Schramko: [00:41:18] When you jump on the bandwagon, you have to go and do it again. Just like a crack hit you know like they need it again because they are exhausted and there's no more money coming in because these people weren't building subscription business front ends or back ends, they were just a one time model.
Get the customer for all they're worth and hope they move on. And then they move to affiliate mode and start pummeling the email list for the next one, and the next one, and the next one. So as with most partnerships, the syndication side of things actually I think eroded because there was some discontent between some of them. Some of them wouldn't reciprocate or promote. And then there was a falling out and then it kind of broke down.
Samuel: [00:41:58] I remember the first marketing conference I ever went to. The first line I still have this notebook somewhere. The first line that I wrote down, the first note that I took down was, 'the product is irrelevant.'
[00:42:09] And I look back at that conference and who gave it. And I thought you know, that's actually what they're teaching, which is it doesn't matter about the product. It matters about the classic you know, how do you get into the business? Will go to google and find search trends and find something that no one else is doing.
And then you go find some random thing that you know nothing about and go write an e-book on it and start to sell it. And who wants to be stuck in business for 10 years selling something that they never knew anything about till they got into the business? And dealing with the customer is horrible because you're the only one in the community that doesn't share a passion for it. It just made no sense to me when people thought that.
James Schramko: [00:42:49] Well people will give advice like copy someone sales funnel. Buy their product and then replicate it. Then you end up with people in the markets, like the supplements market, selling supplements.
They don't even know what the supplement is or what it does or what it's made up from. And they're writing compelling sales copy to convince people to buy a supplement. I think that's actually dangerous and irresponsible and it really does lack integrity.
And [00:43:18] some of those people get so excited about boasting about how big their businesses are, how many tens of millions of dollars a year in revenue they make, they lose sight of being nice to other humans.
Samuel: [00:43:32] Well put James. I love the way you just drill right down to the issue.
Samuel: [00:43:38] Affiliates, James, you taught me -even though you've done this before- you taught me to be very, very careful with your own product and affiliates.
[00:43:49] What's your perspective on affiliates. A lot of people who might be into marketing in the beginning started as affiliates, I think that's how you started. But how do you treat that now?
James Schramko: [00:43:59] Well, I don't have any affiliates for my own products. I just want to make good products and have people recommend them and I can do my own marketing.
[00:44:07] So I guess I'm taking a maverick position on that. I'm more interested in the control of my brand. And I don't want people making promises or claims or grabbing pictures of my head and squishing them into weird pixelated versions to stick on their website that looks and feels a little bit like mine but is a rough doppelganger of it. You know, when I had affiliates I'd find all these people registering sites with my name in it, and my trademarks, and selling my stuff to my customers and taking a cut.
The idea of an affiliate is that they'll introduce you to new business and be a part of your marketing team, and you pay them performance favour. The reality is that often they will stretch that relationship a bit and cross the Line sometimes. And they can run your brand into the ground and a lot of companies, in the future I think, will stop their affiliate programs because they are going to be held liable for the claims the affiliates make.
They will potentially come into trouble if their affiliates start encroaching on their brand. It can really dilute your brand values.
[00:45:18] As you know, probably with your marketing stories and funnels, your image and reputation and the way that you present to a market are important. And I don't want to let people destroy my brand.
I want to preserve my brand, so I'd rather make a little less money and not have the hassle. It's certainly much simpler to have less moving parts in the business.
[00:45:42] And in saying that I still am an affiliate for other businesses. But I'm a good affiliate. You know, I present their products well, we write compelling reviews, we talk about how we use the product and why we recommend it. And we do make commission from it and we disclose that. So I'm not talking about all affiliates. I'm not saying all affiliate marketing is bad. I'm just saying as a product owner it's going to introduce new challenges around brand around quality around the administration and especially around fraud.
[00:46:14] We used to have a lot of people buy products with stolen credit cards and try and get their affiliate payout before the bank canceled the transaction, and it was annoying and frustrating. And in fact, it was when I went to Europe for six weeks and came back and I found about 80,000 dollars worth of fraud transactions from these new affiliates that we had, where they are trying to scam us. And I said, that's it I'm done with the program not doing it anymore.
Samuel: [00:46:42] Would you recommend it for someone who is not quite sure about the business they want to get into, but wants to test industry to see if they're passionate about something?
James Schramko: [00:46:51] Oh yeah, I would say be an affiliate, by all means, that's fine. That's a great way to start. You don't have to worry about building the website, doing the sales copy, having the support creating the product, checking the conversions, all that stuff is optional.
[00:47:04] Just start as an affiliate, learn who your customers are and what they buy and you might have to spend some money on traffic or have to put up an offer page. But it's the simplest way to get started. It's how I got started and it's the way that I would help other people get started.
And if it goes well then you integrate eventually. You could decide if you want to go into that market and that's now you've got some understanding and some capital to do that, so it just makes sense to me.
Samuel: [00:47:36] Next topic on the hit list, James, thanks for the rapid-fire dissection of the digital marketing industry.
[00:47:44] So, James you've gone from becoming a new or being an outsider from outside the industry in America from Australia to becoming a peer, all the way to becoming a person that a lot of these people go to. In fact, I remember when a good friend, Andre Chaperone was considering joining the Silver Circle.
I really tried to pitch him hard on the benefits of it just because I believed in it. I never came to you and asked you for a commission, I didn't think it was even worth it.
I was just trying to help a friend. Same thing I think with when Ryan Krantz was considering joining the Silver Circle. I gave him a good nudge and obviously, you had him speaking at your event.
[00:48:26] I never even thought to ask for a commission, in fact, or some kind of affiliate because I just believed in you and believed in those people and in their success. So it's definitely the best way to be and it's the best model to use. Now, a lot of these people are coming to you for coaching and you've released something that I just read.
And before it goes to print. And I think by the time you're listening to this podcast it will be out in print. Tell us about your new book, James, 'work less, make more.'
James Schramko: [00:48:58] So, this is an introduction to me, for people who may not have heard about me. And also for my students, it's a collection of my prime areas that I would talk about in one place and it's fairly easy to read, concise. I just wanted to get this going, so that I can move on to the next books which might be more technical or more specific on certain topics. But I'll certainly wait and see what people resonate with the most.
And I could potentially turn any of the chapters into an entire book. It's just a starting point and I feel that it was the one item missing from my master plan of about 10 years ago. I called this thing the mafia plan and on it there was a book.
[00:49:39] So I had made a promise to myself to write a book. And people keep asking me, James, why haven't you written the book? Where's your book? Because I've read a lot of other people's books and I feel quite comfortable now that I can at least produce a book that will sit proudly on someone's bookshelf as an equal book to some of the other books that are out there. So I just wasn't ready before, but I've I just wanted to do it and here we are. It's done.
Samuel: [00:50:08] It's it's a great book and just wanted to dig in with a few specifics. It really struck me, James, and also what you're going to be covering in the book and there're nine chapters. The first one is on personal effectiveness which really reinforced a lot of productivity habits that I've learned, but I think got a little bit sloppy on and it's one of the things I want to do in my coaching with you, James, is get really strict on this and have some accountability because when I pay for it I value it. The second one is on planning and goal setting, and the third chapter is on focus and the power of 64/4. The fourth chapter's on building a team. The fifth chapter's on an offer that converts. The sixth chapter's on cash flow and profit formula. Seventh on customer lifetime value, which is one of my favorite topics and least understood for business owners. Chapter 8: Choosing the right business model.And the last chapter, number nine: No compromise. We don't have time to go into all these concepts, but want to dig into 2 specifically I think would be really helpful and give some readers a taste of the value of the books, so that they'll be inspired to pick up a copy.
[00:51:15] 64/4. James, what on earth are you talking about there?
James Schramko: [00:51:20] Yeah, I was inspired by the 80/20 which was talked about in 'the four hour work week' and then Perry Marshall's book of the same name, '80/20'. That's this concept where 80% of your results come from 20% of your inputs, but in that book, I was reading how it's fractal which means that it continues to apply throughout the formula. So I was just curious about if you 80/20'd the 20 what do you get?
And I came to this realization that look, if you get 80% of your results from 20% of the things you're doing, then you actually would end up getting 64% of the results from just 4% of the things you're doing. In other words, almost two-thirds of the results you're getting coming from just 4% of your inputs.
[00:52:11] That was profound for me to discover. And it's just a more leveraged way of thinking of 80/20. That's all. And really what it means is that you could comfortably remove almost everything that you do, like 96% of the things that you are doing now and you probably still end up with two-thirds of the result you're getting. And that is just mind-blowing.
[00:52:37] And most people are operating with so many layers of unleveraged and inefficiency that it's pretty easy to get a result if you can hone in on what that 4% might be. And you can do that with really good questions. For example, if someone already has a business it would be easy for me to say, what are your best-producing products?
Which has the most profit? Who are the best customers? Why are they buying from me? Which traffic source works? And if you can zoom in on that you're probably getting close to 4% and then all the stuff that's not getting a result, that doesn't work, that doesn't sell, you could cut it.
And if I think back to the dealership, we had stock in the showroom and some stock would sell like hotcakes any kind of silver C-class would always sell. And then if you had a weird color like a brown or a beige or green SL or a weird model, it would generally be very slow to sell. Most difficult to sell.
[00:53:41] So we developed what we call a stock matrix and we identified which cars we should keep in stock because they sell faster and we make more profit, and which cause we should never stock. And so it's a great formula to use.
And if you can relax yourself from having to worry about all the things you think you need to do, and realize using this idea, that really a lot of it just doesn't matter. Just let it go. All those to-do list you've scribbled out over the years, you could comfortably say that 96% of the things on your to-do list are not really moving the needle for you. Within there, just a few items will get you two-thirds of the results.
Samuel: [00:54:28] Yeah, that's really profound. And I know that a lot of people give Tim Ferriss a lot of grief for his book, 'The Four Hour Work Week' because it's clear from what he's doing that he doesn't work four hours a week.
But I actually remember reading that book even before I got into the Internet Marketing- Digital Marketing- world. I think it was right at the beginning, it's kind of a gateway drug to it and understanding some of those principles. And the point that he makes is, yeah of course, I work more than four hours a week. But it's possible to not. And actually, you're kind of living that out for Tim.
I don't think you're working just four hours a week but you're working a lot less than you did. In fact, you look, from the time when I knew you, you look a lot healthier and younger than you were because you're just coming out of that phase where you were overworked for quite a bit of time starting your business.
James Schramko: [00:55:20] Yeah, I'm reversing my aging now and I'm literally reversing my aging I'm removing osteophytes out of my osteoarthritis through eating better and connecting with much better information and surfing every day. I liked the four hour work week.
It was a good book. It was fun to read and had some good ideas and it made me think. It also made me think, well OK you're a single guy with Ivy League education from a western society. How hard could it be? Seriously, how hard could it be to get around in life?
[00:55:57] At that time I had four kids and mortgages and a shared portfolio leveraged. So I was not able to relate to everything that he said in the book. But these days typically work 20 hours a week so not doing a four hour work week. I'm sure I'm working less and Tim is but I'm also at a different stage in life.
You know, I've got my wife and I've got kids and I'm more financially set up and more physically fit than I've been for a long time I'm just in a great position and that's really what the book's about. Hey, I think this is actually quite achievable for others. So essentially I put together the book as a prescription for my own kids. I wanted to put my ideas into one place and that's why I dedicated it to the kids.
Samuel: [00:56:51] James, It was really great to reconnect with your material and read the updated version of James Schramko which I knew quite well before. Looking forward to getting to know again. I'm going to take my medicine where I need my digital marketing coach and mentor back on my team. And I look forward to rejoining the Silver Circle and getting my mentorship for listeners listening to this.
[00:57:16] James is an expert at helping high 6 7 and 8 figure businesses scale. Right now, my coaching group is focused more on where James was focused before which was around the 1 to 200000 euro plus range and helping them scale. And it's just a consequence of having been there before a few times myself.
I'm good at that transition but going from the one to ten million transition changes definitely the one to go to for help on that. So if you're in that situation and you come to me I'd actually ask you very carefully to also consider James Schramko's mentor as well as our program because he's just that good. And the guy that I go to for systems and strategy and all the high-level things that I know that I need. So James thank you for providing your insights to the Story Matters audience.
[00:58:07] The last thing I'd like to just put out there on this podcast is the super event that we have coming up planned that is modeled on the events I saw you run which were top notch Mercedes's level luxury type events in Australia and I want to start a similar type of event here in Europe called Story Matters Live and the first one's going to be in July of 2018.
If you listen to this podcast go to the website, JamesCookMedia.com/storymatterslive and you should see all the information on this.
[00:58:41] James, I'm happy to announce, has accepted the invitation to be one of the top speakers at the event with a couple of other experts like Mike Hill and some other surprise guests that we're still working on and one of the things I'm going to James for mentorship on, one of the reasons I want to join his program is learn how to put on an event like he did which was amazing and give Europe something similar quality to really organise this community because the community's not, blessedly not, as formed as the American one and therefore potentially corrupted by some of the bad stuff that happened in American digital marketing industry and can form a new one organically from the ground up that's got great principals and high standards of art and craftsmanship and things like that. So James really looking forward to having you at the event.
James Schramko: [00:59:28] Thank you for being here. Good to visit a new place.
Samuel: [00:59:32] All right, so thank you again. Story Matters Podcast listener for joining us for another episode in the mentor series season and join us next time for the next episode which will have more details in a moment.