Next Level Business Strategies to Hit Your Next Million - Noah Kagan on Leveling Up (Episode 1.2)

Hi everybody.

Liftoff.

That's really interesting. I mean, if you look at Richard Branson, started over 400 companies, right? And what I understand about his day-to-day is he has 2 assistants running his day and he really doesn't— he works for maybe 4 hours or so and then he's just done. So he's become this master delegator, right? And it sounds like that's kind of what you're moving towards now. And, you know, I have to wonder too, what's your end goal with all this stuff?

Well, and I think everyone— it's not— no one watching cares about me except my mom, and she'll watch, and my girlfriend. Hey mom. Hey mom. Everyone cares about themselves. So the end goal, I think what everyone needs to think about is like, what do they really want, and is this really aligned for helping them get it? 'Cause what I've noticed is like, for the first few months this year, I was focused on my podcast and my YouTube channel, Noah Kagan Presents.

Yeah, really good one.

What you have to realize is that like, let's say you, people watching, like, my goal is to make a bunch of money. Let's just assume you have a lot of money. Do you wanna go to work tomorrow? And then they're like, no, work fucking sucks. Okay, so you're not gonna sit at home all day though. So how do you just create that lifestyle now? How do you work on problems that even if you were a billionaire or you're poor, you would just continue on? I think there's something fascinating if you wanna pattern match like the most successful people in the world, like everyone knows the top 10, you know, like Gates and Buffett and Zuckerberg and, you know, Ellison or whoever else these guys are. I think what's kind of really fascinating about the people I admire is that they're still working. So many people are like, well, if I got rich, I could stop working and I could go travel and do all this shit, but the people who are the richest, Don't have to work ever in their life. Their whole, their next 1,000 years of their family don't have to work, but they're still doing it.

'Cause it's fun.

It's fun. And they, it's not even, it's the fun and they have some purpose around it. And so I think that's something that like to admire, like, all right, look, think about it. How do you just find problems that never end? That no matter how much money, no matter how much, there's not. And I think when you're having a business, if you have a vision like that, that's how you recruit people. That's actually how you get the best people. You're like, hey, we're going to fucking Mars, bitches. Like that is a fucking strong vision that other people wanna be a part of a vision. And so for me, I love helping small businesses grow. I don't wanna help, I don't have this arbitrary goal of a million. I don't have a goal of like, I wanna like help all the earth. I don't care. But the products and companies that I admire, I either wanna promote them with AppSumo, give them the tools with Sumo.com, or maybe something else in the future, but that's really what I enjoy, like finding great things and making sure the world knows about them.

Got it.

And so, yeah, I don't probably have to work as much anymore. I could maybe move to India and live forever there, or Thailand, or some of these places. And most people, if you actually have a low burn rate, you could live in almost anywhere forever and not have to work too much. But I like working, and I want to work on this stuff in some way or capacity, probably until I die, or maybe I'll live forever.

Love it. And so how does— we just talked about Noah Kagan Presents, listen to the podcast, it's really good. Also his YouTube channel as well. So you're doing all this content, how does this tie into everything that you're doing right now?

I don't think it does. So here's what I think is helpful for everybody else, and what I've noticed is that I started adding a bunch of things to my plate over the year, and so as you grow a company, when you're individual, when there's 4 of us around this table here, it's very easy to move quickly. Thomas, do this. Eric, do that. Teresa, go do that. And it's like boom, boom, boom, everything happens quickly. And then as you multiply that to 40, or 400, or 4,000, the complexity happens and it slows down. And so what I've done is that 4 days a week, I only focus on sumo.com. That's all I do. And it's 80/20, by the way.

Hmm.

4 is 80%. And Friday is 1 day a week, which is 20% of your week.

Pareto principle.

Wow, crazy. Yeah. So it makes it really simple. 4 days a week, hardcore Sumo.com. Anything for Sumo is 4 days a week. That's it. And on Friday, and it gets, you know, Friday is my experimental day. So YouTube, podcasts, OK Dork, anything that I'm experimenting with. And what's fascinating about that, what I've noticed, is that because I can do experimental things where there's no risk, meaning that I'm not losing anyone's job, and I can fuck around, and I can try things that are more risky, I can then bring that back into Sumo.

Mmhmm.

So a lot of the people that I've worked with as, like, consultants or trials on OKDork, I've brought into Sumo. And a lot of things that, like, hey, YouTube, here's ways that we should be building our videos. Alright, I just fucked around a lot, and now I can bring that into Sumo. And so, I think with companies, what you have to realize is that there's certain processes. Like, everyone's got this process and way that they do things, and it's very hard to adjust that. So I think you need to create some space for, like, failure. Like, create allocated time that you can go do things that may or may not work. That you can then bring back into the machine.

So your Fridays are completely blocked off for just you?

Yeah, it's more like I don't feel guilty. I still feel a little guilt, I'm not gonna lie, but it's mostly like Friday is a day where I'm like, I can experiment with things in a very quick manner, and then anything that works, I can bring it back into the company.

Got it.

Because like, if I jeopardize this stuff, like, hey, let's just not blog for these few weeks and like not do some of this stuff, that could potentially cost people's jobs and stuff like that. So it's better to do it like— and I can also move quickly. And then when that thing works, I know then I can loop it into the bigger thing.

You've hired a really good up-and-coming marketer, and you managed to convince him to move from China to here. And like, how do you— so how do you go about doing that? There's some tenacity that's in there, it goes into your heritage and all that, but go.

Yeah, well, I think here's— if you actually look at my career, I don't think I'm gifted. I wasn't in GATE, I'm not the smartest person.

Me neither.

You're Asian. You're like naturally great. I have a tiger mom. We all do, I guess.

Yeah.

I think what I've been— what I've done well in my career is a few different things, but I think specifically, I've looked— I've hired the right people. And here's the thing with hiring. There's not a person listening or watching that's not gonna be like, yeah, I hire great people. I know how to hire. Everyone fucking knows. It's one of these cliché things like, build a great team. I don't know. Give value. We all think that bullshit stuff. But in reality, I think a lot of my success is attributed that I've like, spent a lot of time looking for amazing people.

Mm-hmm.

And like truly amazing people, 'cause it really does, like, you know when we talk about 80/20? It's even in hiring. At companies, there's really only gonna be a few people that are your like, who would I take with them to my next thing? And those are the ones that are gonna make all the difference. So, I would say with like, with Mint.com, I found this guy named Viet, who was this up-and-comer writing personal finance. I really loved his stuff. And I basically was like, what would it take for you to come work with me? And he is the reason I think Mint content-wise did so well. Not me. I just recognized that he was the one, and I helped guide him a little bit and help structure it, but it was him. With our content team, we have great writers, and with Chris, I saw his writing publicly, and I was like, all right, let's work together as a trial. So we did a project together, and I was like, what would it take for you to come from China starting on Monday to come work together? And he's like, here's what— he's like, well, I wouldn't do it, I wouldn't do it. I was like, what would it take? This. Okay, I'll give it to you.

What would it take? Where does that come from? What would it take? I feel like that's some negotiation thing you do.

No, I'm actually a horrible negotiator, so here, I'll teach everyone how to negotiate. It's very, very simple. Number 1, tell the other person you suck at negotiating. That's exactly my— I always do this. I suck at negotiating. That's how I start it off. Then I say, what do you want? Like, what would it take for you to get what you want? They say that. That's their Venn diagram. And then I say, alright, well, here's my world. And as long as it fits within my frame, I just give them what they want.

So practical.

I know, people— there's so many fucking books about how to start businesses and like negotiating, all this stuff. I'm like, Just give them what they want, and then as long as you get what you want, you're happy.

As long as both sides are happy, right?

Yeah, I mean, with salary, it's the same. Here's a simple one. Salaries for Sumo.com and AppSumo. We have a budget. Let's say our budget for a developer, really just give them $100,000. We hire a developer, we say, hey, how much do you want for your salary so that you'll be really happy? I want $110,000. Okay, close enough. Fine, you get it. And then they feel fucking awesome. Like, when I worked at Mint.com, I remember I was 25 years old, and now $100,000 is not a lot anymore. Now these kids are fucking like ungrateful, but to me it's still a lot of money. And like, I was 25 and they're like, we're gonna pay you $100,000. And I've just never forgotten the feeling of like, one, I thought how stupid they are. I thought they were so stupid for giving me so much money. But two, I remember because they thought I was better than I was, it made me perform better than I thought I could.

True.

Ooh, I hope you recorded that one.

Yeah.

But because they were like, hey, the bar is here, and I only thought of myself here, it actually made me keep improving my performance up to that part. There can be negative stuff, which I'm not gonna get into, but like, because they set the bar and like, we're gonna pay you a lot, I was like, man, I'm great, I'm gonna go do great things. And that kinda gave me a little bit more probably confidence to, I think, do great stuff for Mint. And that's what I wanna do here too.

Versus like when you try to negotiate them down and it feels like they got pummeled to the ground and—

How motivating is that? Like, I think there's something, and there's a balance in that. So there are people that have come and be like, I want $200,000 to be a developer, and I'm like, you know, there's people like Eric Fernandez who's amazing, he's been with us for 6 years. He's worked his ass off. Like, that guy should have whatever he wants. He's proved it. And I think there's a little bit of— it's a balance. It's a balance. We can't just do all of it, but there's people like Ayman who run AppSumo. Ayman came in and be like, yo, I made this at Microsoft. I want it around that. And I think as a leader of a company, or if you're running a company, I proactively raise people all the time. So I go to Ayman and be like, you need to get paid more money. We're giving you more. He's like, oh, okay. He never asks. And so it's a trade-off where I don't want him to not want more money. Like, you want people that are hungry and aggressive. But as a company leader, I think you need to be proactively looking out for the interests of your people. And more and more what I've noticed is like, fuck millennial stuff that everyone whines about. Everyone now that's great— the shitty people, there's a bunch of them, so don't worry about them— but the greatness have options. You could go out the door and walk into the next building and you'd have a great job. So dealing with that in 2017 or 2018 and beyond, you have to create a new environment for this type of worker. It's not that you have to pamper them because they do want to be challenged, but They wanna have the autonomy, they wanna have some outcome. If it's a great outcome, not just the bosses get rich anymore. They wanna have some outcome, and they wanna work on things that are challenging, and ultimately as well, you know, some purpose of what the hell the company's trying to do.

Got it. Couple more things I wanted to talk about. So you have a playbook. I can see it's very deliberate about the way you do things. So you look at AppSumo, there's a playbook there, right? Ayman was telling me about the cadence that they have, whether, you know, you talk business, you talk personal, kind of where you're at, and you talk about holding them accountable. You do the same thing here too. So, you have a playbook, and I think that's interesting, 'cause you can duplicate that for every single company you start in the future. Can you tell us about that playbook?

What's the playbook? I don't know what playbook. Come join us and you'll find the playbook. I think there's an interesting thing. In business, you need systems. And everyone says it, and I'm always like, what's this system that they're using? Like, everyone's looking for some system. But I think in business, like, if you wanna scale or grow, you need predictability. And so, how do you have predictability? You either need some types of checklist or process that are repeatable. The only thing with process is that it makes people stupid. Oh, oh, oh, oh! So process is good if you wanna work at McDonald's. Process is not good in a tech company 'cause it limits the amount of innovation you're gonna be creating 'cause you're like, well, that's our process. Why do you follow it? I don't know, that's just what we do. So the way that I've structured our companies that have worked for me, and the way I think about business in general, it's very simple. Like, here's the destination and here's your car, right? You could drive here, or you can fly here, or you can walk here. I'm only telling you my way, what's worked for me, and not necessarily what will work for everyone. But it's worked for me multiple times, and seems to be doing pretty well. Number 1, choose a very clear objective that's measurable in your business. Most people, I have one guy who I talk to every week, and I'm like, hey, what's your objective? He's like, man, it's just to do better. How do you know if you're doing better? He's like, I don't know, I just feel it. I'm like, okay, just feel it, tell your landlord you feel about the bills. Like, tell me how that goes. And so I think number 1, have a very clear objective with your business, right? Like, I wanna make this much money, I wanna help this many customers, I wanna do this much revenue, whatever it is, or this many email subscribers, or this many views, Or I wanna hire this many people, whatever it is, I don't care. And then you just have to have some plan on how you're gonna get there. So let's say you wanna get $1 million. Each team has some accountability towards that goal. Let's say the marketing team, they need to be generating a certain amount of revenue. Now, all I do is say, alright, there's $50,000. You have $25,000, you have $25,000. And then for the most part, I leave the people alone, and I check in with them once a week to make sure they're hitting their goals.

What do you use to track all that?

So it's actually really simple, and I'll tell you on a personal level what I do and what on a professional level I do. So let's just say for like Facebook marketing, you can talk to Natalia who runs the Facebook ads here. She has a very clear goal, and every Monday we check in on her goal, and she tells me what's going well and what's not going well. And during the week, if she has questions about it, I'm— I think of it like a football team or like a professional sports team. This is not— I didn't come up with this, I don't know where I heard it from, but as a professional sports team, I am not on the field playing. Natalia is running the plays. Maybe it's lacrosse, I don't know what she likes to play. I am on the sidelines being a coach. If you want me to suggest about how to run plays, I can give you the guidance, but if you feel comfortable, and as long as you're scoring to the goal or the touchdown or whatever it is, then for the most part you should do a good job of leaving them alone. So Derek Sivers said it well, trust but verify. Have a clear goal, check in with them regularly, and basically as long as they're running and hitting their goals, for the most part I think you should leave people alone. And the great people want to be left alone.

So that's the playbook, step 1 and 2, huh?

There's other nuances of the playbook. I mean, obviously you have to create a— I think most people get confused about marketing and product, meaning that they wanna— they have a— they think they have a marketing problem, but really no one wants their product.

Mm-hmm.

They're like, oh, why— how do I get help with marketing? I'm like, well, yeah, cancel your business, 'cause no one wants it. And generally, well, then how do you know if people want it? That's a whole separate video. I think the other things that I try to aim for, and what I think I've done well with, are 2 things. Number one, In business, not everything works, but what are the things working? So for example, with YouTube, just as a very easy example, in the past year I've put out maybe 50 different videos. Of those 50 videos, 3 have gotten popular. So what do you think I'm doing from now on? Making videos like that. And so the 3 that have gotten popular are when I go and interview people that are on YouTube and we make like a documentary, kind of like this. That's what works for me and my audience and our editing and our style. So every other type of video, I stopped doing. I was doing these videos about, like, focusing and empowerment, but it didn't work. And I think what most people do in their businesses is that they just keep doing all of them instead of saying what's actually working, do more of it, and what's not working, and really remove that. The second part of it is I like predictability. I like surprises in life, not in my business. I don't want to be surprised in business ever. I don't want hope. I don't believe there should be the word hope in business.

Yeah. You don't necessarily have to have like, oh, let's raise a bunch of money and then grow really quickly, right? I think slow and steady wins the race. And you haven't raised any venture capital for the last 2, right? None of them. None of them? There you go. Is that some heritage thing?

No, I mean, I'm not opposed to raising money, and that's a separate thing we can get into, but just in terms of predictability and not having hope and not having surprises, what's an example of that? So let's talk about the Sumo.com marketing. I wanna know everything coming out in the next 2 weeks, and I want it to be ready. And I wanna know that these are the types of, let's say for our content, we know that our Sumo Growth Studies do really well, where we document how a company does. So every other week, in the calendar, I can see that it's coming.

Like clockwork.

And then with emails, we know that the emails need to be set up. And so it's more, how do you create like a little calendar, or like a checklist, so that when we have an email, like, here's an example. Every one of our clickable links in our email needs to be bolded. So every single email, we create a new checklist that's like, are the links bolded, yes or no?

Check.

I don't wanna be surprised if they're bold or not. Have we checked all the links? Yes or no? Anyway, so the more it's like, how do you create a calendar, or checklist, or things so that you basically remove air in your systems too? I think that's definitely something with our marketing and our business is part of a playbook that we've done in all of our teams.

Got it, cool. And this is all organized in like a Google Drive or something?

Yeah, it's just like, so sales team, we call it the Sales Torah. The support team—

Sales Torah, yeah.

Basically in the sales team, support team, marketing team, you should have very clear like documents of just like if you were to bring in someone. So here's an easy way for you to think about it for your business. If you were to bring in someone today, how long would it take for them to ramp up, right? And most businesses would probably take a few weeks because they don't have anything documented. And I don't think we're the best at documenting. If you came in here, you're like, oh, it's not as well as I thought, you said it was great. But in most things, there should be some type of documentation about like, how do we create our content topics? How do we do our promotion? And then someone can come in and be like, oh, that's exactly how they do it. All right, I can just follow that formula.

Got it, there you go. Document your stuff. I was actually just talking about yesterday. I came directly from an offsite. Our thing for the next year is just process and documentation. That's how important it is.

Woo!

That was really good.

That was amazing, right? Yeah, I loved it. That was really good. Noah just knows his stuff. I'm also Noah, one of the producers on the show here. I'm Noah too. No, this is Bryce. Eric is gonna be back at you with another interview right after this, so be sure to subscribe so you can get the next episode. We've got lots of great interviews on Leveling Up coming your way. Let us know in the comments What your plan is to level up, and be sure to subscribe. We'll catch you in the next one.