Get Different with Mike Michalowicz

Quick note before the show. On this episode of The Business of Authority, Rochelle and I are joined by author, speaker, and entrepreneur Mike Michalowicz. We only had a few minutes with Mike, so I didn't want to waste any time with his bio while he was on the phone, so here it is. Mike's on a mission to eradicate entrepreneurial poverty and has written 8 books on the subject, including Profit First, The Pumpkin Plan, and his most recent, Get Different. Fabled author Simon Sinek deemed Mike Michalowicz the top contender for the patron saint of entrepreneurs. So without further ado, here's our interview with Mike Michalowicz. Hello and welcome to The Business of Authority. I'm Jonathan Stark.

And I'm Rochelle Molton.

And today we are joined by Mike Michalowicz. Mike, welcome to the show. Yes.

Jonathan, Rochelle, thank you for having me.

So great to have you. I would say dozens, maybe hundreds of people from my mailing list have sent in recommendations that I need to read Profit First. And so I—

Good, they got to you. I was paying them so much money to do that too.

I appreciate it. It was great. I really liked it.

I sold one book.

Fabulous.

No, two. We both read it.

Two. I sold two books. Wow, it paid off.

Yeah. I recommend the audiobook because you get those outtakes. It's very funny, very entertaining, very engaging and useful.

Thank you.

But today what we really want to talk about, our audience is made up primarily of expertise-based solopreneurs. Not a lot of people have employees. I would say probably most don't. Just solo operations where they've got some expertise and they're trying to build a business around it. That means writing a book. And I mean, geez, what do you have, like 6, 7, 8 books out now?

I do, I do, 8 books.

Yeah, and we were hoping that we could talk today about your strategy around the writing a book, building a business around it, the different ways that you package up the expertise contained in the book, you know, communities, certifications, all of those sorts of things.

Let's do it all. I'd love to share.

Killer. Okay, so maybe we could start here. How do you see the books fitting into your business? Are they like a key starting point for each phase?

Yeah, so what's interesting about books is the perception of advice and how it's received in books. Meaning, the stuff I put in my books is the same stuff I share on stage or on a podcast, but they're devalued. When we hear the voice, it's like, eh, but once it's in a book, it becomes biblical for some reason. It's the same stuff. And that's true for audiobooks too, but there's this change in perception. And, uh, so the books serve as an authority source. The other thing, at least for me, is they're an extraordinary revenue source. I would say almost one-third of our company's income comes through book royalties and sales. Um, that was— it did not start out that way. Just as I've built this compendium of books, um, it becomes a great annuity. So there's financial sustainability that comes out of them. But how it serves is, is it builds an audience and it builds at least the content as authority. What's funny is I've talked to other business owners and they say, you know, what's your— there's an acronym, sure, for it, but your acquisition rate, like what's it cost to get a customer? And, you know, people say, oh, you know, $7 a customer, you know, they're bragging about it or $20. And I looked at it, I put negative 8 and they're like, what's that? Like, how's it negative? Customers pay me $8 on average. To upgrade or upsell with our organization. And, uh, what that means is the, the books are an extraordinary source. We don't do any paid advertising whatsoever. There's an extraordinary circumstance where we will, but we generally don't do any paid advertising. We don't market in the paid sense. It's all natural, um, marketing, and, and the book is the mainstay for that.

Okay, so you create this sort of tentpole piece of content serves to build authority. And yeah, okay, so what— that's— this is all very familiar to folks around these parts. So with a book, I mean, I've noticed from your site, but it's also— it's not uncommon, you know. I think of StoryBrand, for example. They had like coaching certification, all these different certifications and things. I noticed that you do that too. In fact, I've got an application out to a Profit First professional right now.

Oh cool.

Yeah.

I hope they're of service to you.

Yeah, me too. So what comes next? Does the book kind of inform what you will build around it, what structure you'll build around it, or do you have kind of a template that you plan on using for each book? How aware of it are you when you're writing the book? Is it tail wagging the dog or what?

Yeah, well, maybe the tail is wagging the dog a little bit, but the impetus for most of my work is Uh, well, I'm in the fortunate position, and it didn't start out this way, but I'm in the fortunate position that I have a lot of readers who will reach out to me and actively share, uh, challenges around their business, what they're doing now. And, uh, I'm engaged with many of them, meaning I have a dialogue with many of them. And what I start looking for is common threads. And once I find the common thread, I'll document and say, oh, this is a recurring challenge for my readers. This is something I need to address. Now when it comes to books and why I've written so many is I am working on any, uh, number of books at a given time, usually 3 to 4 in the works.

Wow.

Um, but at different stages, like I have one I just submitted to my publisher, uh, for print. I have another one that, um, I'm now in the, what I call this, the active writing phase, the season. That is what I call it, where I'm writing about 4 hours a day. But leading up to that, I'm researching and that seems to be always going on. Half of each day is, well, not half, but a good portion of each day is on research and testing. So what I do is I hear needs, then I propose a hypothesis how to fix it and keep on playing around with that, try to break it. Once I think I have something, I'm an equity owner in 6 small businesses, shareholder. We test in our own businesses, and then we test it with our readership. We'll even deploy training services and stuff around it, and that's all in advance of the book. It usually is after 5 years of all that that then I go into full-on codifying of what I learned in— into a book. Um, so that's the, the process that, that manifests a book.

Inter— okay, so the, the book comes out the other end.

Yeah, it's, it's a big turd. Yeah, no, it, it does, right? It gets all digested up and then hopefully a polished turd comes out. But you're right, it comes out. It's not that the book— the book is the starting point for, I guess, lead flow, but it's the endpoint of the knowledge. It's the best of what I've accumulated goes into the book, which then ironically becomes the starting point for someone inquiring about learning on that subject.

Right, interesting.

So I'm curious how you use communities for that feedback. I understand you run it through your own companies, but do you have like a specific community for each book? And do you maintain all those all the time?

Yeah, I don't have a specific community, uh, by my readership. And what I want to do is use a diverse group of people, and I don't want necessarily the zealots. And that's almost a negative connotation. There's certain people that say, I've— your book has such a great impact on me that now whatever you say, I consider to be, uh, true as, as anything else, and it's the gospel, and therefore it's going to work. And so I'll get this conflated compliment around the process when it's not actually the truth. What I want is people have never experienced something I've done to try it out and then give me the critical feedback, like what really did work and what didn't work. So I use my subscribers and say, hey, working on a concept, uh, who's willing to try this out? Um, but I will to some degree intentionally exclude people who've tried stuff out in the past, trying to always approach new people. and, and learn from them using it.

Mm-hmm. And does that interaction happen on a mailing list?

Yeah, I use the mailing list predominantly. Sometimes I'll sneak one, something out like on Facebook or some private channel. Uh, when I was working on my most recent book, uh, well, one of my most recent books, it's called Get Different. It's a marketing book. Uh, I was like, oh, I think this may be the process. We've tested out these, these 3 foundational elements of the model, but now I gotta test it out. And what I did was like, it was a Sunday at 7 o'clock. I'm like, I'm gonna post this thing for 30 minutes. And the, the first, you know, few people respond, I don't care who it is as long as they don't, I don't know them, I engage. And so I post it 30 minutes later, I had enough. I mean, when I say enough, I had like 6 or 7 responses. It's like, that's perfect. Stopped it, reached out to each person and said, you know, here's the model. Uh, I'd like you to try over the next week. I, I wanted to thrust 'em right into it ill-prepared, not like, okay, we're gonna do this just in their normal, application, uh, of business. They're going through their normal churn in work, and now they're getting thrown something upon them. I think the mistake is we— I in the past put people in like almost a lab environment, like, you know, 6 months from now we're gonna go on a retreat and work for 4 days. Well, that's not the natural environment. How's that going to work in a book? So by having people kind of thrust into something while running the business like normal and just adding a little something, that's a good measure of, of impact in a simple way. So that's how I did it with that book.

Yeah, and also it makes it really practical because if that works, then it's a really good sign. One of the things I really appreciated about Profit First was how practical it was and how you, you were like giving people really, really small tasks to do so they could start to get momentum and have small wins and actually start, you know, sort of zero to one, like, like, okay, right now you're doing nothing And all you have to do is, I don't know, take out 1% profit or just set up these, call your bank and set up these 4 accounts and those sorts of things. I mean, have you found, I feel like I'm throwing a softball here because obviously you have, but have you found that that is a critical difference or having not read all of your books, I don't know if it's true of all of them, is that a theme across all the books?

Yeah, no, no, no, make it overwhelmingly complex and confusing. Yeah, which ironically I think is what a lot of people do in their writings is they make it so it's not palatable and, and you lose the reader before you even get a chance to serve them. You know, I was talking with James Clear, which I think is a hero of many folks. He wrote Atomic Habits. And, um, I think we're talking— this is a few weeks ago— I'm like, how do you codify the success you've had? And he goes, oh, it's real simple. He goes, micro steps, Atomic Habits, um, you know, speak to a big need in the community and let them see results as quickly as possible. And it really is that simple, is readers are not coming to us because they are looking for entertainment, at least not in the nonfiction business space. They have a need that needs to be satisfied. And if it takes a long period of time to see any form of measurable result, they're gonna disengage. Small business owners are in, many are in day-to-day survival. That's the survival I lived for so long that I don't have time to absorb and master and deploy No, it's like, am I seeing results today? So all my books are based upon this concept of, of quick, easy deployment. It's roughly based upon Occam's razor, which is a theorem that is misquoted regularly. They say that usually the simplest solution is the correct solution. Actually, that's not the definition of Occam's razor. What the definition is, is the simple solution is the easiest to measure. So it's better to start with simplicity and see how it serves as opposed to going to complexity. But sometimes complexity is the better solution. So for, for my readers to be served, I know that if I can give them the simplest solution and they can get a measurable result, they're going to engage in it further, even though complexity may be the better solution. And I would argue with Profit First, I am not suggesting that Profit First is superior to traditional accounting. The accuracy of traditional accounting is superior, but the effectiveness is so diluted because it's so complex. That's why Profit First wins. You can get a win literally within 24 hours and bring permanent profitability. And while it's a simplistic system, it effectuates change so quickly, it's the superior system in that regard.

Well, I'm also thinking in Get Different, you told this wonderful story. I can't remember his first name, but he's the cigar accountant. Can you talk—

Oh yeah, oh yeah, Gabriel Piña.

Gabriel, that's right. Can you give us kind of a short version of that story? Because I felt like I could hear our audience in that story?

Yeah, so I met with Gabe and he was really down on his luck. He's a great accountant. He does fabulous work. He cares for his customers more than anyone else. And by the way, that's the definition of every single small business because small business, usually the owner of the business is integrated into the service. The sales. We care for the customer. I will tell you, Gabe and all of his contemporaries are far superior than the Jackson Hewitts of the world, which are the box shops. So being better is not enough. But many of us rely on that, say we are better, why aren't we getting more business? We have to be noticeable. So when I was talking with Gabe, I said, well, how are you trying to get noticed? And he just kind of rattled off the same best practice— I'm doing ironic air quotes around that— the same best practice his contemporaries use, which by definition is white noise. If we do the same thing everyone else does and it's not being noticed for them, it'll never be noticed for us. But we, we expect a different result. And so often we double down on what's not working and get frustrated that we're spending more time and money and not seeing results. So what Gabe did is we just brainstormed things that no one else does. And that's basically what you say is like, what, what do people not do? And one thing he found, and it resonated with him, that's the other thing about getting noticed is we have to do something that's different than the common approach that our contemporaries use, our competition uses, and it must be true and authentic to who we are. Because the only experience people have with us before doing business with us is our marketing. And if our marketing is inconsistent with the actual brand experience, there's a mistrust that's going to happen during that conversion period. So He says, "I love to educate my customers." Well, we said, "Well, what?" "I love to give them knowledge that serves their business further." So what he did is he started buying books for his customers. Now, he had a clear avatar, they're cigar shops, so he started buying his favorite book for them. And what he did also, which was super smart, is he removed friction. Getting a book in the mail is nice and flattering, but how many are you gonna read that's just this cold solicitation? Probably none. So it's wasted space. But what he did is he tagged his 4 or 5 favorite pages, circled those pages, explain why they're impactful, and now you could digest the book and its important parts in less than 2 minutes. Now you got— received a gift from this guy, you have actionable strategies, and the last page says, I know this book's a lot to digest, but I think it may transform your business. If you're interested, I'll spend a half hour on the phone with you and walk you through it to be of service to you at no cost, just because I believe in this industry. I love cigars myself. Well, Gabe started getting prospect after prospect. It broke through the common noise, it was of service and consumable, And it distinguished him. So that's just one example I used in the book of that framework, really simple ways to stand out and get noticed.

But the other thing I loved about that is it wasn't his book. He didn't—

Oh, no, it wasn't his book. Yeah.

He didn't have to write the book. He could use what's already out there and curate it in a way that really hit his target audience.

Yeah, which ironically, it's so obvious, but so few people do it. How many people send out like a mug with their own logo on it? You know, my goal is to show you my logo. We all know it's cheesy sales. But here's what's true to human nature, and if we just, I think, pay attention, we'll notice the opportunities. Right now, we could— you can just look around your desk, and I bet out of the 100% of things on your desk, 80% of things you actually know the source. Oh, I bought that on eBay. Oh, this was gifted to me. Like, you have a mental inventory in your mind. So what Gabe was doing was he's giving people something without attribution to himself, without marketing himself. It became a genuine gift of service. And what happens is the mental inventory happens. So his prospects, even if they weren't looking at it the next day, if they look at it 6 months from now or a year from now, they'll say, oh yeah, it came from that Gabe guy. Like, we remember the source. And since it wasn't marketing himself, it wasn't cheesy in that format.

So, okay, so let me ask the obvious question, which is, uh, that sounds expensive and time-consuming. And, and it's right.

So, but you— but we do have to measure that ROI. So the investment, probably $30 a pop. You got to buy the books, you got to package it, there's time consumption. But the return was extraordinary. His prior method was horrible. It was, um, social media posts, running those Facebook ads for a period of time, getting frustrated, stopping them, frustrated he's not getting leads, restarting them. When we added it up, it was thousands and thousands of dollars of spend, tons of times, and zero result, actually negative result. He was becoming frustrated and disenchanted in marketing, so it diminished his presentation of himself. So we're like, oh my gosh, now he's spending $30 a pop and his conversion rate, you know, wasn't off the charts, but it was like 10%, which compared to what he was getting before was off the charts. So for every $300 he was spending, he's getting one customer who represented probably $3,000, $5,000 a year, probably more. And so the return was there.

Got it. Yeah, that makes total sense. That's great. Well, in fact, so, so let me bring up an example that isn't in Profit First, but it's also one of your businesses, Hedgehog. Um, the— okay, so do you want to quickly just say what Hedgehog sells?

Yeah, it's a manufacturer of leather products. I actually, uh, divested from that. I was an investor for 10 years. It's a great little business. Uh, there was an opportunity for me to exit, so I'm no longer a partner in that business, but it continues on today. It's a really cool business making leather sheaths.

Yeah, and I'm a knife guy.

Oh, that's awesome! What kind of knife you have? Uh, what's your favorite?

Uh, full-size Ka-Bar.

Oh, Ka-Bar, it's a full tang knife. Uh, yeah, those are super useful. So yeah, we were actually sheathing Ka-Bar knives.

Yeah, so, so here's the thing that, that the audience will be— I kind of feel like I've just revealed something embarrassing.

Um, I, I'm, I'm looking at you a whole different way now, Jonathan.

Yeah, I'm kind of a I'm kind of a closet bushcrafter. But anyway, so the, the, what's the reason I bring it up is because you mentioned in the book, I clicked on the link, and you know, you just said Leatherworks in the book, but I was like, oh, it's sheaths, no way, right? So excited. Super, super specialized. It's not just sheaths, right? It's like just for a couple of knives.

Correct.

And so you go to buy one, but you can't buy one. You click on a thing, there's a link that there's gallery, and they're gorgeous, beautiful, uh, and more expensive than the knives.

Oh yeah, by far.

But I don't think I saw a price on the site actually. So there's just beautiful, beautiful sheaths, and there's like this how to buy. It's like, well, how to buy? Like, can I just buy it right here? I click on it, says how to buy. Uh, it's like, oh, we just, we do small batches, we do, you know, like quarterly runs, it sounded like. And, you know, just enter your information here, tell us what you're looking for, and it sends an email to I forget his name. Paul. Okay.

Paul Scheider.

Yeah. And boom, you get an email back. It's relatively— it's obviously, you know, it's personalized a little bit. It's clearly an autoresponder, but still it's like, I'm gonna, you know, these are gonna launch on the 18th. These are the 3 sheaths, the 3 knives that the sheaths are for. There's 2 options for each one. But if you have any special requests, let me know. And it was the most bizarre e-commerce experience. Experience I've had in a long time, but it was— there was something totally delightful about it. And it really— now, how strategic is this? Is this just like, is this like an efficient way to get started and it just kind of worked, so that's, that's the plan? Or was it purposely, um, it was it reverse engineered to, to, to, uh, to support the expenses that he could support Yeah, yeah.

So kind of yes to all the above. Um, what spawns is more sales and, uh, but it's an authentic way of doing it. So, you know, you hear these tactics like, you know, use scarcity and people will move and it's true, but it fails when they see it's manipulative. Oh, I thought you had, you know, 90 spots, but all of a sudden you open 7 more because you're trying to make more sales. So what we did is we evaluated the production method and A lot of the principles we used and continue to use at Hedgehog is what's called lean manufacturing principles. Well, one component is short production runs of a certain product is easier to do than, than, than doing actually long extended runs, or even more difficult is changing each time because there's certain, um, I guess, punches and, and formats and, uh, setup that we need to do each time. So you want to be a little less iterative. So what we do is we queue up and see what the demand is for a Tom Brown T1, or my favorite, the Blackbird, which if you're a bushcrafter, you got to get a Blackbird. It's like the definitive knife, and in my opinion. So that's why I have. And what we do is we wait till the demand accumulates to a certain point, and then we go through the sequence saying, hey, it's coming out, We build anticipation. We definitely use these methodologies because they do work, but it's all rooted in the truth. There is no BS. We only have— we're only going to make a run of 50. The first 50 that come and get it, get it. So we get the surge demand. Well, what it has brought about is extreme predictability. And, you know, that's a challenge a lot of these manufacturers, particularly B2C manufacturers where they make it and they sell directly to the customer. You don't have this continual demand. It's a good day versus a bad day. Mike, we don't want to have good days versus bad days. We have predictability. So that's why we deployed that methodology.

Yeah, and I mean, our folks aren't selling physical products, so they don't have a lot of those challenges, but I wanted to bring it up because it's so novel, um, and, and to get people thinking differently about how they could come to market even with their info products and other things that they offer. Yeah, so we're coming up on time pretty quickly. Um, I wonder Should we talk about the idea, you know, since, since we're talking about authorities and they have— they probably are thinking about writing a book or have a book, maybe a couple. What are some of the things that are specific to those folks that people can do to further their mission and have a bigger impact, but also fund their mission so they can keep coming back every day and do it again? And, you know, certifications, courses, and, you know, what, what things do you think make the most sense?

I mean, I'm gonna say something that's so obvious, yet it's rarely executed on, is write a book that is of extraordinary service and people want to read. And I know that's like, duh, that's step one. So few people do it. I see most books are a better business card. And to me, that's a fundamental flaw. It's, it's a partial teach with a hope to engage. Like, hey, you know, here's a little bit of it, but not all. You're gonna have to hire our business. So it's a glorified marketing piece, which I've never seen a glorified, uh, business card go viral. I've never seen that achieve Atomic Habits level. Um, or, or even my experience with Profit First and its level of popularity. What I invite every author to do is give the condensed, digestible, easy to action, take action upon notes of everything you know. And what you'll find is there's two types of people are going to read the book. First, you'll have the DIYers and surprise, surprise, that's 99% of the readers. The DIYers, I'd argue, are such powerful readers because they read a book, they see results from the book, and they become your marketing force. They say, I'll never reach out to this author, I'll never talk to him, I'll never engage his services or anything beyond this, but gosh damn it, this book served me. I gotta tell the world about it. So they're extraordinary. They give the viralness to that book. The 1% are the knowledge seekers. I mean, the expert seekers. They're the ones who read the book and say, okay, I found my guy, I found my gal. This person knows what they're talking about. I trust them emphatically. And they may have not even gone in subconsciously with that perception, but subconsciously they were looking for an authoritative source that they can trust. And if you've given everything you know in there, now you're the trusted source. And so those are the ones who call you and say, hey, I know you know how to do this. I don't want to do this. Would you do this for me? And that's your service sales.

Perfect. Are there any particular services that you think are a great move, or does it depend every time?

Depends every time. So with— I have 8 books. I have 6 companies now that I'm a shareholder in. There's a president for each company. I don't run the businesses, but I give guidance to them. My job now is to be a spokesperson, and some of those businesses are membership organizations. That's the best way to serve the greater community. You explained, probably first you reached out to a PFP, as we call them. That is an organization where we need accountants and bookkeepers with a sophisticated understanding beyond the book. Then other companies that have, like Clockwork— someone reads that book, is about business efficiency. Well, that's something we can directly train to you. So that's the traditional, if you will, training model. So we have a membership, we have training, we have other things too, but that's the primary approaches we use.

What about the masterminds? It looks like you're doing masterminds, sort of small ones and bigger ones.

Yeah, yeah. Masterminding is a powerful revenue source, and what's interesting is really at the end of the day, what our organization is doing is we become the congregation point We actively share that we don't have the knowledge, the solution, but we have access to the community that has unique challenges and unique complements and will bring you together to share. So we become a facilitator in those cases, um, and they are the knowledge source. And it sounds crazy, it's like, why don't they just do it on their own? People don't have the time. It's worth the X-thousand-dollar investment just for someone to manage that group and get you together.

Great. Well, I know we want to be respectful of your time. I know you have a hard stop, so, uh, we'll let you go. But thanks so much, and, uh, we'll have linked to everything in the show notes so that you I don't have to rattle all that stuff off right now.

Sounds good. I appreciate this.

You could pronounce your name so everybody gets it right.

Yeah, well, I'll give you my nickname. It's Mike Motorbike. I mean, my name is Mike Michalowicz, but no one can go there. So if you go to mikemotorbike.com, nickname from grade school, it's the only G-rated name I have. You go to that website, mikemotorbike.com, you'll find all my information there.

Fabulous.

Awesome.

Thanks so much for joining us.

Thank you.

Thank you.

Cool. All right, folks, I think that's it for this week. I'm Jonathan Stark.

And I'm Rachelle Moulton.

And we hope you join us again next time for The Business of Authority. Bye.

Bye-bye.