Ramit Sethi and Tim Ferriss -- 88 min webcast

Welcome to the webcast. Tim, how's it going? Great. All right. Congratulations. Thank you. Thank you very much. Thank you guys for being on with us. We had a blowout success with the book. We're here at Tim's place. We are having some wine and we're going to answer some questions today. So what we did was we basically took a bunch of questions that you guys submitted. So we're going to answer those, we're going to blow through those. I had some questions for Tim, I want to ask him, and he and I will just chit chat about some stuff and then we'll do some questions at the end on the chat as well. We had about. Boy, we had dozens of questions that were sent. So let's actually, let's start with a couple questions I have for you, Tim. We are here in Tim's house in San Francisco. Let me see. My first thing I've been wondering, Tim, is you've got a really popular blog. You have a book that's been on the bestseller list for like 8,000 years. You know, I've had a blog for a while too, and I get this question a lot, which is, you know, how do you get a lot of readers? And I'm sure you get that a million times a week. What, in your experience, what are the biggest misconceptions that people have about getting a lot of readers?

Whether it's for a blog or a book or anything like, there are a number of misconceptions that come to mind. The first is that you need a lot of readers. So what is important to me is having the right types of readers. And I think that like attracts like in this case, so that if you build a community, and I'll come back to a number of the misconceptions, but if you, for example, like I do, I police the community fairly strictly in the sense that if people are critical, that's fine, but if they're abusive towards other commenters, then I nip that in the butt immediately. So fostering a very positive environment where smart people can express themselves without having to deal with idiots, abusing them basically is important. And a few other things. Just briefly, I think combining offline, I know that you do a lot offline, combining what you do offline with online is a very cheap way to build traffic in many respects. If you're launching a book, if you're launching a product, if you're doing speaking engagements, really refer to assets, information that you have on your blog, really create what you might call evergreen content. So when I write posts coming back to building traffic. The best SEO search engine optimization is good content. And it sounds cliched, but I'll be more specific. Creating content that can really become the default reference for people online for a specific subject. And so like the definitive guide to X.

Like say, using chopsticks.

Yeah, like chopsticks. Or I'll be doing one on steak soon. Like everything you could possibly want to know about cooking steak. And a few things related to PageRank and Google rank, just for people who are wondering the keyword density on a page. So you'll find people who will write the first paragraph of their post and put in like stake, stake, stake, stake, stake. 40 times. That is not what's most important. And that can really backfire as well. What's most important is page title. But even more than page title, it's incoming links and the anchor text that people, people use. So when I'm writing a post, I constantly ask myself, how would someone describe this? And if there are 20 different ways that they could describe it, that's a bad thing. So if it's the definitive guide to steak, people are going to say post about steak, post about cooking steak. There are only going to be a few variations and I want those to repeat because If I have 20 anchor text for a specific term, it's going to be more valuable assuming there's search traffic there. One other just basic tip would be for the title of the post and hence oftentimes the page title, use the Google Keyword tool. And if you're thinking, well, any one of these three or four words or terms is equally acceptable to me, then check out what the average monthly volume is and you can choose that. But really good content that people are going to link to is ultimately what's most important. And I find stumbleupon actually a really good tool to measure how good your content is and look at what is stumbled most often and most positively.

I completely agree with what you said about writing good content. It's cliche, but it's true. And it's not. When you're trying to build traffic and build readers, there's no real tricks. I mean, there are a few minor things. But I'll give you an example. I've been writing my blog for almost five years and just like two weeks ago, my designer asked me, so when you create a post, what keywords do you look for? And I'm like, huh? Yeah, it was, it's all built for the community. And now I'm at the point where I'm like, okay, let me start thinking about keyword stuff.

It's after the fact, though.

Exactly. Yeah.

Like all of my most popular content was before I knew anything about anything and just put a ton of time into producing.

And what I noticed about your posts, they are long.

Yeah, some of them are really long.

Really long pages and pages. And they're not. You don't write. Like some blogs write five posts a day. Yours are maybe once a week.

Once a week.

One thing you guys would like to know is that when Tim talks about monitor your community and stuff, just to give you a sense of what that means, you guys look at any of Tim's posts. He's got 50, 60, 80, 100 comments on him. I got an email from Tim a few days ago and it said important in the subject line. And someone had asked a comment that needed my answer and he took it upon himself to email me and say, please respond to this. That's how important it was to you to make sure I responded.

And I did.

That's the way you really have to monitor your community as closely as that. So so far, I just want to check in with everybody. How are you guys doing? You guys seeing everything okay. And are there any questions that we can answer for you so far? In terms of traffic? We've got about 40 people on the video. Yeah, great. Okay, great. Good, good, good. Yeah. And I love that it's a small community. This is a highly qualified community. That's on today. You guys have taken the initiative to get a book and. Yeah, cheers. Cheers, man.

Cheers, guys.

So.

Let'S go. Can I add just a couple things?

Yeah, please.

So, other misconceptions, just because you alluded to it. Post length. I've tried everything. There's no magic formula. I've been told, like it has to be 500 words or less because people won't read that much. It depends on what you're looking for. If you're trying to hit the front page of Digg, it's pretty tough to do with a really, really long article because you're given a very short period of time in which to get from one dig to the number you need to hit the front page. If, on the other hand, you're looking for something you want to stick on the front page of Google for a certain term for a very long time, for even months or years possibly, then it doesn't matter. Then in some cases, I do think longer is better frequency up to you guys. Better infrequently is much better than mediocre and timely. That Expires two days later because it's no longer relevant five times a day.

You mentioned the type of traffic that you get, and it's important, and I think that's true. Give you an example, there's a couple bloggers in Silicon Valley. One of them is named Andrew Chen. The other one is named Eric Reese. Both of them have relatively small audiences. They have some of the most important readers, though, in Silicon Valley, exactly what they need. So a lot of one of the marketing terms people say is, I'd rather have a list of 1,000 that converts rather than 50,000 that doesn't. And I've measured it. I've compared my list. In fact, I have an email list of about 35,000 or so. And on that list I have sub lists. One of the lists I have is a frugality list. These are people who are by definition frugal. They signed up for one of my frugality things, and I've split tested sales offers to see what would convert. And they convert at a fraction of the rate that people signed up for when they signed up for a program where they were paying for something or paying for value. I'm talking about 10x or in some cases 50x difference. So having a small group of the right type of readers can attract others like that. So I'd say focus on the important ones first and you can grow it out later.

Yeah, absolutely.

Okay. So for me, I'll just talk about what I found in some of my testing for blog posts I used to, I tested, like, how frequently I post and what kind of traffic that drives for me, certainly the more posts I do, the more traffic I get. But I find that I burn out.

Yeah, that's the thing. It's unsustainable.

Yeah, you can't do it. So for me, I'd rather write. Like each time I try to post something, it's like, would I be proud of having this as part of my legacy that's going to be online forever? The other thing is, sometimes it's better not to post than to post something crappy. And finally, you're conditioning your readers. If you post 25 times a day, like if you're a gawker, that's fine. That's a different model. But your readers will come to expect that. You got to think carefully about what you start doing because your readers will get mad if you don't continue meeting their expectations.

What have you found to be the best, Your favorite days of the week or times to post?

Okay, so I tested this as well, and I used to so the email research searches like Tuesday mornings, blah blah blah. Recently I have started posting at night. I post around 10 or 11 and what that does is it gets the early morning traffic extremely early, 5:00am our time, 8:00am on the east Coast. Like when I started my book promotion, I started giving away things at east coast time. What I find is that all traffic, virtually all traffic and mass emails to me dry up around 3:30 to 4:00pm Pacific completely. And so I like to move as early as possible rather than doing it later in the day.

So I've tested this a bit as well and it depends on what you're trying to accomplish. If you're going for evergreen content that you want to stick around for a really long time, it doesn't matter as much. You can just kind of stick it up, let it gestate for a while and germinate. But if you're going for something like dig or you really want something to spread quickly, I found you either want to do it really early on the earlier side, like 5, 6am Pacific. So you hit people on the east coast or for me, doing it later for whatever reason works quite well around I would say I've actually found like 7 to 9pm really specific to work well.

Who does that get?

I have no idea. But for whatever reason it works. It seems to work quite well.

In any case.

So just a few other things that people have asked me about. So maybe this is a chance to explain it to some people. So every once in a while you'll find that a post that I put up disappears off of my homepage. People are like would you delete the post? Or what happened? And and no, I didn't delete it and the link is still the same. But what I'll do at times if I put up a post and it's just not getting traction, it's not getting positive feedback, or maybe I rushed it and it just isn't at as high quality as the other posts, I will redate that post so that it will vanish from the homepage because I want to make sure that when people hit my homepage if it's their first time visit, that they hit good content. There are other ways to do that. There are also plug ins you can use to make one of your posts always appear as the second post down. For example, if that's one of your better posts.

That's interesting if you think really carefully about blog readers or for that matter book readers or any kind of readers. So on any given day I have thousands of people that come to my site, but most of them will never come back. They come back, they stay for a minute, and they bounce. And so a lot of bloggers will focus on like, oh my God, what SEO tactics, or all these tricks. Whereas it's always cheaper to try to retain your existing customers or users than try to get new ones. So on my new site, I've been redesigning a lot, and the goal is to capture people as soon as they come.

So one of the questions is, it sounds like the content that's most successful for you is the content that you have the most personal interest in. Is that true? So this is a great question. And I read a quote from Mark Cuban at Blog Maverick, also a fairly wealthy individual, and he said, forget about writing what you think your readers are interested in. Write what you're passionate about. And I have really experimented with this and I've polled my readers and then tried to customize posts based on their feedback. And it never does as well as when I just have something I'm really excited about or really pissed off about or really frustrated with that I then figure out. And that means that some of my posts, like I put up a video and some notes around it called the Prescription for Self Doubt, and I put this video up at 2am one night when I was just having a really difficult day. And it had an impact on me. And it came out in like 15 minutes. It was very fast. And it's so much better than some of these other posts that I spent hours and hours crafting based on reader feedback. And that's not to say you don't listen to your readers, but write what you have an emotional connection to. At least for me, that is always my best content, Always. And I think it comes across.

I don't know, though. I think that's true for you. I think you've got, for me, the number one skill of a writer is empathy. You understand your readers, and I think you have built in empathy. So even when you're writing something about how frustrated you are, if we go back and read that and look at the video, it's still relatable to someone else. You're not just complaining. And what I see with like, for example, in the personal finance world where I write, sometimes people be like, oh my God, like ing Direct is giving an extra 1%. Like, this is so cool. Or like, oh, wow, we should talk about asset allocation, because I just read it, but nobody really cares. And so I guess I would say there's a balance to Strike between writing what you're passionate about. I agree with that. But at the same time, you have to understand that people have. If your goal is growing traffic, then people have to care about it. So there's definitely a balance to be had there. Let's take this question here. Credibility. This is a great one question about credibility. Tim, you had a successful drop shipping company, Ramit. You were successful with PVWiki. Do you see people gain a lot of traffic without first having previous success?

Yeah.

Online is the place to do it. Yeah. Yeah. There are plenty of blogs where basically people have disintermediated the gatekeepers of media and they've said, look, I have a unique angle on this. Or maybe it's a unique niche that no one has tackled before. For example, I love cheap but really effective pension. I bet if I started a blog on this, I could get 20,000 readers a month within six months. How? Because I'm really passionate about it and I could find where those people hang out. The key is writing great stuff and then finding out where people who would want to read it hang out. And too often people say, if I build it, they will come. No, you got to go out. Tim, you met me when you came and we met in a coffee shop and you drove up there to meet me and we became friends a few years ago. But that was a great example of if you build it, you got to tell people so that they care. If you do that, though, credibility, in my opinion is construed. It's not created. So if your readers believe you are credible, then you are credible to them based on results. So if Tim is saying like, I'll teach you how to use chopsticks and he helped 50 people use chopsticks, then that's credible. That's how I see it.

Yeah. And I think credible also. If we look at credible. What does that mean? It means, I think in its most fundamental respect, that people trust you. So you have to look at how you establish trust. And I think that, coming back to your earlier point, part of establishing trust is accepting and recognizing your weaknesses, expressing emotions that may not on the surface seem to work to her benefit. That is, if I'm having a frustrating time and I'm terrible at swimming and I write a post about that and this is how I overcame that.

Or.

If I deliver bad news quickly, or if I make a mistake, and I recognize that these are all things that you can do without having been the CEO of a company or the co founder of a company. And if you have even a very Small but focused, inch wide, mild, deep area of expertise, even if it's paper packaging. I mean, there are blogs, design blogs that are exceptionally successful that focus just on packaging or typesetting. Then you establish credibility that way. And I think that you can be credible without being an expert, and you can be an expert without necessarily being credible or having people trust you. The challenge is to. Or the task is to try to combine those two.

You mentioned understand your weaknesses. What would you say are a couple of your weaknesses? This is the classic interview question. I'm being interviewed by McKinsey.

I work too hard. Sometimes it's hard for me to pull back. No, I. I'm very impatient. Very impatient. And I think that that can sometimes be a huge asset. Yeah. Because I test assumptions and look for better methods. But I think there are times when I could probably have a softer delivery. In some respects. I have, and this has just been beaten into me by. Through schooling, through mentors. I have no tolerance at all for lateness and I get really pissed.

Yeah, that's true. I was late once to Tim's place. I was very late and he let me know. That's just true.

Yeah. So I think I could use a little bit of tempering on that. Other weaknesses?

Well, I'll tell one while you're thinking. One thing that I'm not particularly good at is applying the 8020 rule to my own life. So there are things where if I do just this much, I get this much result. And then there are things that you can spend a lot of time and.

The results are just miniscule.

And I find that often it's difficult for me to say no to certain things, particularly if, like, a friend asks me. And while if I sat down on a piece of paper and mapped it out, I would say, like, dude, it doesn't make sense to spend four hours a week on this. For a variety of reasons, I say yes, and then I look back and I'm overloaded and I can't do the things that really matter. So from an 8020 perspective, if there's something I could get better at right now, it would be to consistently do an 8020 analysis. Not once, but. But every week and every month. And then relentlessly cut off the things that don't matter to me in a way that's polite but still effective.

Here's a good question. Other than your own and each other's, what is your favorite blog? Do you have a favorite blog or many favorites?

Yeah, favorites. Let me think about that. Do you have one that comes to mind.

I think that for anyone who's interested in startup in startups, technology, entrepreneurship, go to Marc Andreessen's blog and read some of his older posts. Oh my God. So good. I don't know if you'd consider it a blog. I guess on some level it is Venture Hacks also very good. Venturehacks.com is outstanding. There are a lot of good blogs out there, more than you could possibly consume. But those are two that I think are especially valuable for entrepreneurs who are involved in the startup game, which usually involves some level of financing and planning for acquisition, things like that. But really, really solid stuff.

I will put a list of the blogs I read. There's about 70, but I will tell you of a hidden gem that most.

People don't know about.

And in my opinion this is one of the best blogs out there. But no one has really discovered it and it's called calnewport.com Cal Newport is a PhD student in discrete math at MIT and he writes a blog called Study Hacks and it actually teaches you how to really apply a bunch of productivity principles to studying for college students. But if you think about it, it's more than just college students. It's what you can apply to life. It's how to get things done in a guilt free, productive way. I've used a lot of his principles myself. Calnewport.com.

There's a pretty good one for you. How do you kill early termination fees.

From cell phone companies? Yeah, so yeah, how do you kill early termination fees? The truth is it's very difficult. You signed a contract. I personally have not been able to do it. So if there's someone out there I would love for you to do it and let me know. But in my opinion you just have to probably eat it up. You should try. No doubt. You should always try. You may just have to eat the fee and try to earn it somewhere else and we can talk about earning money a little bit later. Okay, let's go on to a couple other questions we've got and if you have more questions, just put them in the comment box. So Tim, I had a question for you.

Just quickly. Paul Graham. Someone had asked about Paul Graham. I think Paul Graham is exceptionally smart. I'm also an aspiring on some level, lisp programmer. Actually I would like to learn Lisp, but it's pretty far down the list right now. I think he is very smart. I've invested in a number of Y Combinator companies. I think that they're very good at coaching Startups, especially programmers and builders, who need the additional skill sets of business development and fundraising and so forth. I think he's a very, very smart guy.

He's done an amazing thing with his program, Y Commandeer. Alright, a question for you, Tim. This is something that a lot of people ask and it's one of my pet peeves because a lot of times people wonder, oh, oh my God, like, how do I do this? I don't know how to do this at all. And in my opinion, you can't just learn it from sitting in your room. You have to go out and talk to other people. So my question for you is, if you wanted to meet someone famous, say Oprah or a politician or somebody up here, how would you do it? And have you done it before?

Okay, that's a good question. So, yes, I've done it before if I wanted to meet, let's say, Oprah or someone of that level. And this is something, as you know, I teach my Princeton students to do with this challenge that I've had for the last few years that entails getting in touch with impossible to reach people like the CEO of Comcast, or CEO of HP, or George Bush Sr. Or Eric Schmidt at Google and Tommy Hilfiger. Those are all real examples, by the way, Warren Buffett, another example, and there are a couple of different approaches that you can use. The first is recognizing that you should never contact someone for the first time if they are exceptionally busy, which all these people will be with a request for a favor. That is just not the right way to initiate contact. And so there are a number of different contexts that allow you to make that contact without seeming like you have an ulterior motive. The first is, this is what I did very early on, when I had absolutely no background, no credibility, no credentials, was volunteering for nonprofits that routinely had speakers and pants panels who were of that level. So I volunteered at the Silicon Valley association of Startup Entrepreneurs, very long name, which is Essbase. But I ended up doing more than my fair share, taking on additional responsibilities as a volunteer. And then because of my track record, over a few events, was invited to provide more feedback. And then I asked if I could be the chair for one of the main events and actually get the speakers.

Did you charge anybody for all this?

Did I charge anyone?

Yeah.

No, this was all volunteer. And that's how I met Jack Canfield, who many years later ended up introducing me to my agent, which led to selling the Four Hour Workweek. And I never, I really didn't ask him for any favors during that, that, that period of time between when we first met. I did keep in touch. Every once in a while I would have some type of philosophical or life sort of broader picture type of question that I would imagine fairly few people had asked him. And it was always very specific. Guys, a bad question is, what should I do? I remember very early on when I first moved to Silicon Valley, I met this amazing entrepreneur who's actually, since we reconnected and become friends, but I met him and I was so excited to have met somebody at such a high level that we engaged in this dialogue. And then I sent him this email at one point and it was like something along the lines of, what should I do with my life? It was a little better than that, but not much. And he wrote back and it's just like, how the hell am I supposed to answer that question? And I took it really personally. I was like, God, how could he not take like five minutes to help? And it's a terrible question. You need to be specific. So volunteering would be one second is the best way to meet somebody who's extremely hard to meet is to meet someone who's good friends with them. Don't go directly after them. So that could mean their personal trainer, their dietician, their cardiologist, their pastor, someone who is one degree of separation away with whom you can establish trust. Because the messenger in this case is more important than the message. The biggest fear that high profile people have is that.

You are going to.

Be associated with them and you're going to do something bad or embarrassing and then they're going to have to pay for that. So it's very important to become trustworthy first. And it's all the same guys showing that vulnerability, being honest, being transparent, recognizing when you're wrong or don't know anything. Once you do that, you'll find that very often that person is one degree away. Hey, you know what? Yeah, you should really meet Oprah. I think you guys would like, enjoy having tequila shots or something. And don't make it a business engagement. It doesn't have to be. That's another thing I try to do. If I want to meet somebody who is very high profile, I'll try to find common ground with them. It's something that we have in common. It's like if they wrestled in high school and college. Well, guess what, we're going to have some cool conversations. It does not have to be about business. And then once they're like, Tim Ferriss is somebody who's fun to have drinks with. Then sometime later, if I want or need their advice on something, we'll get there. But don't be in a rush. You need to try to establish your network before you need it.

Yeah, I noticed you didn't say you asked someone for money or you asked someone to write a blurb on your book or something like that. If you were to do that the first time you meet, boy, how do you think that person feels?

Yeah, and I get. And I'm sure this happens to you, too. I get probably 20 requests a week from people I haven't heard from in a year or never. And they're like, hey, sorry for the short notice, but this is who I am. And my book's coming out next week. I'd really appreciate it. A blurb. And maybe you can put it on your blog.

Yeah, I just got that this week.

I feel like a whore.

Thank you.

No, no, that's the wrong way to go about it.

Yeah, and it closes the door for the future. So I want to spend a couple minutes talking about this as well, because here's what. In my opinion, when you want to meet someone, the first question is, why do you want to meet them? A lot of times we get intoxicated by the idea of, I want to meet Oprah. Why? What's the point of that? Sometimes you just know, though, you know, like, this person is interesting, and I bet we have stuff to talk about. The first thing I would say is, put yourself in their mind. If you're trying to meet Oprah or Tim Ferriss or something like that, you.

Got to do your homework.

What is it that somebody really busy wants? Right. Stop thinking about what you want and think about what they want. And I'll give you an example. This is a great case study. Applying pretty much what Tim just said. So a friend of mine wanted to meet Tim, and what did he do? He went through me because I wasn't as busy as Tim, and he asked me what I wanted. He did his research, he looked up all my delicious stuff, and he realized, oh, Ramit needs help editing video. And so he said, I'll help you do video and I'll help you do it for free. He offered to help me for free, which was a huge incentive for me. What is it that I'm concerned with in terms of mitigating risk? It's like paying some dude who's not going to deliver. Just wasting my time for three months. This guy said, I'll help you. I'll do it for free in Fact, here's a video that I've already done. What better way could you use to meet someone and impress them? So after I qualified him to be pretty good, then I introduced him to Tim. And I'll just say that he didn't ask for anything upfront. He certainly didn't ask for anything that would require a lot of time. But he spent time researching what I needed. And then he showed himself to be a cool guy. He showed a couple people he had in common. And then it turned out that Tim and I were in common too. So I would just reiterate what you said. Don't go to someone when you need something. Do it a year or ideally two.

Or three years before.

And the other thing is, make sure you're interesting too. There's a lot of people who want to meet and they're just like, oh yeah, we should grab coffee. There's like 50 people who want to do that a week. So hopefully you have something in your portfolio, whether it's a blog or anything that will get people to be interested in chatting with you, because I bet there is something interesting. You just have to figure out how to represent it.

The other thing that I like to point out, I'm not going to mention by name, but the same guy has been very specific. Yes. Okay, so it wasn't, hey, let's meet up. I'll do anything to help. I just need you to give me direction in my life. That is a scary email to get because it's like, can you please be my free consultant for life? Or therapist or life even worse. Instead, it's like, hey, you seemed like you could have needed this and this. Or I saw in your comments on this post and in Delicious that people were asking for this. I just went ahead and did it.

Here's a link.

No hard feelings if you don't use it.

I just went ahead and did it is the best, sweetest words that I can hear. They're the best things ever. And if someone emails me, for example, says like, I have 10k sitting in my bank account. What should I do to me if I write back, which I probably won't, it is, have you read my blog? From beginning to end. If you haven't done that basic homework, then you're pretty much just raising your hand and saying, it's not worth the time to spend. So do the homework before you meet somebody, know everything about them. And then you'll have a much more specific question.

Quick question. Any advice on selection of an attorney or CPA regarding a startup My answer is find someone who used to work at one of the firms that does tons and tons of deals with startups. So Fenwick and West would be one. Wilson Sonsini would be another. Morrison and Forster, Morrison and Forrester. Oric also does a fair amount of work in startups. Find someone who's gone out on their own. They're not going to have a lot of the overhead that they'll need to charge you for, and their response time will tend to be better. Find someone who has all of the boilerplate documents and this is going to sound really bad, but if you're planning on getting into the startup game with financing and acquisitions and talking to companies like Yahoo and Google, if it's in the tech world, this is going to sound bad, but don't go to some law firm in the Midwest. I've seen, especially as an angel investor, cases where I want to invest in a company. I've brought a couple of really good entrepreneurs or VCs or whomever to invest, and we get the documents from the other side and it's like, oh my God, we're going to have to rewrite 60 pages of documents because they're trying to reinvent the wheel or they're not familiar with the process so they're questioning every clause. This is going to be, it's going to be like $50,000 just to get to square two. And it doesn't work. It's very expensive and you can cause a lot of problems later. So find somebody who's done a lot of those deals.

Yeah, my opinion as well. It's just a cost of doing business. It seems outrageous what you have to pay, but you got to pay it. And if you don't, you pretty much just raise your hand and self select yourself to be known as the guy who doesn't know what's going on. Tim recommended someone who has left. I would recommend asking your friends who are at other startups who they use and if they like them and if you like them and you have a good relationship. And these lawyers will meet you for free for 30 minutes. They're great.

I'm very impressed.

With lawyers in the Valley, you'll quickly find out who you like and respect. Let's go to a couple other questions. Actually, let's take it to reader questions. Now. We had a bunch of people submit questions through SurveyMonkey. Okay, I love this question. My opinion has changed over time. Question is, you both publish best sellers.

Now through traditional publishers.

What do you think about self publishing?

I want to hear your Thoughts on this first? Okay.

Yeah, I'm curious about yours as well. When I started writing my first book, this is my second book, my first book in 04, I was very negative on self publishing. It was not credible. It was for people who couldn't get a real publisher and people had these dreams of grandeur, of oh, I'll appear in Barnes and Noble and stuff. Well, things have changed quite a bit. Self publishing has become, in my opinion, a little bit more credible. And I think it really goes back to the goal. If your goal is to make money off your book and you have a large audience or community or platform, then if your goal is to make money, then I would just self publish. If your goal is to build a platform beyond what you've got and it's to go national and you need support in reaching national publicity and things that you couldn't do on your own, then I would go with a publisher. With that said, not all publishers are the same. Most are really bad. My friend, his advice is great. It's right on. He said publishers are good at two things. They're good at distribution and they're good at designing book covers. And one thing is that every author knows is publishers don't do marketing for you. So self publishing or regular traditional publishing. The most important thing in my opinion is having a platform of people who already like you and will buy your stuff before you write a book regardless of what it is.

So my feelings are very similar. Just a few additional points. Publishers are primarily useful. They're useful on many different fronts. It depends a lot on the publisher. It is good having seen some awful, awful self published books that could have been awesome. With proper editing there is some value to having editors, believe me. But primarily you're looking at retail distribution because if you have a self published book, it's going to be next to impossible to get into Barnes and Noble when you recognize 70% of the books there are backlist, meaning they're kind of classics. So you're fighting with.

I already know that number.

Yes, you're fighting with every new published book, like 200,000 books per year plus in the US alone for like 50 square feet shelf space. So you're not going to get in. So retail distribution and then also the mainstream media, tv, print will look at your publisher as a filter. It's very challenging to get the press on the mainstream media if you don't have a traditional publisher, generally meaning one of the big six like a HarperCollins or a random House or Crown, one of the imprints Second is most of the value that I have received from the book. Outside of reader feedback and the blog and other things, my compensation, so to speak, has been access to people and resources more so than my royalties. So could I have made more money by self publishing? Probably not just because it was my first book, but with the next book I'm going through the same publisher. Why would I do that? I think self publishing will be more recognized as a viable alternative in two to three years, especially if Borders goes out of business, which could be possible. But what I get by going through a Random House is the ability to be viewed as a legitimate author. And there is a certain magic and credibility that goes along with that, a tremendous amount. And that has given me access, I think indirectly to people, to places, to resources that have nothing to do with the checks that get written to me by Random House. For those of you who might read my blog, you know that I have, I believe there are many different currencies. Income is one of them. Time, mobility. But there's also authority, authority, reputation, audience. And having a traditional publisher has helped a lot in building those other currencies in my respective bank accounts, so to speak. And that's what I care most about. What is your true net worth? And I think your true net worth on some level is if you had every penny taken away from you. It's what you have left. And the book through Random House, I think has helped to build up all of those other assets that if you took everything away from me, I wouldn't be happy about it, but I'd recover. I like that.

That's also the point of I will teach to be rich. A lot of people, you know, we talked about how it sounds like a big fat scam for our work week also so ridiculous. But you know, you read it for two minutes and you realize rich, only a small part of that is about money. And I think the authors I've come to respect think relentlessly. Long term, they could easily monetize things so much more. But they focus on the long term because they know that there's credibility and there's a lot more money and a lot more time and a lot more everything to be gained from those.

So what do you think of Luther's question? One of these two. Yeah, Luther or the other one? What do we want to take?

Let's take Luther's question, Tim. Do you think four Hour Workweek is at odds with personal philanthropy? And Ramit, how do you become rich while giving back?

I love that. Alright, so I don't think it's at odds at all. I think that the way I evaluate nonprofits and because I don't get caught up in arguing about causes because there are way too many causes, you can get into this, my cause can beat up your cause type of argument. And the fact of the matter is there are a million charities, all of whom want your money and your energy and your attention and your time. But if you look at it almost like angel investing and you say, alright, for every dollar I give to these companies, which of these Nonprofits are giving 97 cents or more to the cause and not to ridiculous overhead and bullshit administration, the number is small. Really small. So what I'm looking for, and this is very in tune with the four hour work week in lifestyle design, is measuring the things that matter and then choosing the partners who will give me the best output for my input. If I put in an hour of my time, I want that to build a school, not to pay for food for one kid for a day. If I put in a hundred dollars, I want that to produce $1,000 of real world impact. And by going about it that way, I think you can have the emotional and karmic gratification very early on as you're creating wealth for yourself that you really don't need to postpone. And I wrote a post called the Karmic Capitalist or Karmic Capitalism. You might want to look at it, but it talks about how a dollar now is often more impactful than $5 five years from now, almost inevitably, especially with causes that are problems that are growing exponentially, it's a matter of addressing them faster than the problem is multiplying itself. So I think it's actually very much in tune if it's approached the right way. Most people are very wasteful in philanthropy, just like most people are very wasteful with their personal finances and in business. So it's a matter of choosing the right vehicles. I'm very involved with Room to Read Donors Choose. I think Charity Water is also a great example. Those are three charities that operate like lean startups that would get financed.

It's funny, we haven't talked about this in too much detail, but we have some of the same beliefs. I believe that philanthropy should scale just like a startup does. And I actually started my own scholarship, I willteachytoberich.com scholarships and what I did was I basically said it's for young entrepreneurs. Any socially redeeming or idea with social roi and I would fund it out of my own pocket and I would Give money, a small amount of money. And I would give time, attention, mentorship, and introductions, which I think are much more valuable. My goal is this. Right now, I'd like to give away a billion dollars a year. I can't do that. So instead, what I do is I try to create a little venture fund of small, really ambitious people. And let's say I give away 1, 2, 3 a year over 10 years. Do you think that just one of those people will somehow come up with something that will help feed 50,000 people or create a new type of penicillin or whatever it may be? I think chances are. Okay, so you can scale it. It doesn't have to be in giving money, but it can be in picking the right people. It can be in time. It can be in many other things. And I do believe that part of being rich is giving back to the community around you.

Just quickly to add to that. Also, there's some questions like, how does it scale? How does it scale? So one of the things that I'm doing, I just came back from la, where I was meeting with another nonprofit called Music for Relief, which. Which Linkin park and other musicians are involved with. I'm doing a lot of experiments. I'm gathering data about what works and what doesn't, so that I can take those best practices and I can share them with other nonprofits. I don't care if it's my money going in or somebody else's. The models right now don't scale very well. So I, for example, introduced the CEO at DonorsChoose, Charles Best, to Scott Harrison over at Charity Water, and they're doing different things really well. And then they just split, swapped best practices, and boom, all of a sudden, tremendous results. I feel that philanthropy, just like for profit ventures, have a lot of room for improvement and eliminating waste so much.

It drives me crazy sometimes. Okay, I just want to take a second to point out this question. And let's see here. Give me one second. Okay, so there's a question here. What's the best advice you can offer to someone wanting to leave the day to day and start a new company? That's an example of a question that we can't really answer. You got to be more specific than that. So take a second. Think about a more specific, really specific question. We'd love to try to answer it, but that one is just. It's not a good question, so it can't get a good answer. Let's take a question that was sent to us before.

Can I answer that?

Yeah, please.

The first step, and this might help you formulate a more specific question, is defining the absolute worst case scenario in exc. Excruciating detail if you were to leave your company today. So what are the worst things that can happen? What could you do now to minimize the likelihood of those things happening? And if they did happen, then what could you do to get back to where you are now? Break that into three columns and brainstorm that. And then you'll be able to come up with very specific questions. But usually it's an ambiguous unknown that prevents people from taking the actions they need to take.

That's exactly right. Yeah. You and I both, we talk about paradox of choice a lot. We talk about breaking things down. Here's a good question, and I'm curious to hear what you think. Do you. This is from one of the readers. Do you have any practical advice for how I could help the people I love to actively create their lifestyles in a way that's best for them instead of accepting what they assume are their only paths? In other words, this reader's. They're kind of, you know, they feel like their friends have kind of just given up and taken what's given to them.

There are a few things you can do. So the first is leading by example. Honestly, coming out of Princeton, a lot of my friends went directly into management consulting and investment banking and resigned immediately.

To hating their lives.

Hating their lives, working on Christmas, working on just awful, awful existences. Not everyone has that experience, but they just viewed that as paying their dues. They had to work 80 to 100 hours a week for the next five to 10 years. And that was just. That was the hand that they had been dealt. And when I started actively traveling around the world, sending them updates, saying, dude, you have enough money. Or they said, well, if I work another five years, I could be making 2 million a year. And I'm like, what the hell would you do with $2 million a year? And they're like, I do this. I'm like, I can do that for $1,500. You're just being an idiot. Just very persistently and in a good natured way, ribbing them for the inconsistencies in their thinking and moreover, showing them what's possible is a very good way. Secondly is invite them to experience some of the alternatives. An example of that, when people are very resistant to testing, let's say, personal outsourcing. And personal outsourcing is actually a very small part of the four hour work week, people just tend to obsess on it. But what I say is don't start with something important. Start with something ridiculous. I mean, like have somebody in Bangalore set like lunch appointments with your best friends for you. Just the shits and giggles of it. I mean, really start with something like that so that you have the positive reinforcement of a good experience, a fun experience, and that you're able to get some rehearsal in with things that don't matter. And then you can. Once you're past that first threshold, it's really easy for yourself or for other people, for them to see the possibilities once they've had that taste. That's what's important.

I love that. That laddering strategy is really good for just starting off on something that's unimportant. Let's see here. Oh, I will just say that in personal finance, this is a big thing as well. Some of my readers, they really have automated their finances. They've gotten it all together and they're like, my friends don't do this at all. And I will tell you from my experience, I used to try to drive, try to really push it on my friends, like, just manage your money. It'll only take you a few hours. And they just didn't want to do it. And what I've realized is the best I can do is let them know that I'm available. And when they're ready, they're ready. But no amount of me pushing them is going to get them to change. I've tried. They know I've got a book, they know I've got a blog. But yet many of them don't come. They're just not ready. And that's okay. But there's almost no better way to get people to resist you than to tell you, I'm better than you. Let me help you with your money. Because people get really defensive about that.

That's a good one. Requirements for your scholarship.

Yeah, what requirements?

Can you explain for people what that is?

So my scholarship. Iwillteacherbrich.com scholarships and basically what I ask is that you've demonstrated entrepreneurial excellence. So I don't want somebody to cut their teeth on my scholarship. I want them to already show that they've done something. By the way, you could be entrepreneurial for collecting cow milk, or you could be entrepreneurial in doing a Silicon Valley startup. It doesn't matter something. And then the idea, you have an idea, or better yet, somewhat implemented, should be socially. It should have social value. So it's not just about making you a quick buck. One guy Wrote me an application and he said, give me X thousand dollars because I want to take my business to the next level. And it was like, it was like some totally for profit thing. It was like real estate and I'll give 5% of it back to like social causes. And I was like, go to hell. Like there, there are many other people who have real social causes that are built from the ground up. And beyond that, it was really just getting people to apply. The first year I did this, I got zero applications. Okay. And I know because when I was in college, when I was in high school, I had to apply to, I applied to 70 scholarships. I created a system which would almost automate it. I just had to write little chunks every day. I applied to about three a day and it was amazing because so many of my friends just didn't apply at all. And they're like, oh, you can't get it or oh, whatever, self defeatist attitude. And I ended up clearing out a lot of scholarship money. And it wasn't that I was the smartest person, because I wasn't but half the battle. Just apply. Sure, yeah.

Well, I mean the first time I did the, the challenge at Princeton in the high tech entrepreneurship and I'm not a full time professor, guys, I'm a guest lecturer. But I spent a fair amount of time involved with the students. And the prize was a round trip ticket anywhere in the world for contacting these impossible to reach people. And 20 people were really interested. They stayed after class and no one completed it the first year because they all assumed someone else would outdo them or that it would be too difficult. And so I told that story to the next class and then six people did it and the results were incredible. And then I said, look, here's the background on this challenge. If you don't do it, no one else is going to do it. So if anyone had sent me even a mediocre paragraph explaining why they hadn't been able to contact anyone, they would have received a round trip anywhere in the world. So that the participation, the willingness to throw your hat in the ring is extremely important.

Yeah, absolutely. There's an article I wrote on another blog called you should just search for passive barriers. And it really talks about why there are things that may be missing in your life, small things that could have a profound impact on you actually getting stuff done.

Somebody asked about kiva.org, i think kiva.org is an outstanding organization. I think they've done a great job of streamlining and automating the process of microfinance. So I've met the guys involved. I think it's a good organization. Yeah, I agree.

This is a good question for both of us. What next? And this person is addressing me. Your book was great, but other than improving some automation, I was already doing what you recommend. I'm married, we make $200,000 a year.

We have no debt or children.

We've hit the limit for most recommendations and we don't want to buy a house. What should I do? Let's talk about money and then let's talk about lifestyle as well. So on the money side, this is a great question. In one of the challenges chapters of my book, I don't remember which, we talk about the ten year plan. So you've done everything you need to do. You're doing it all right. So what do you do? Talk to people who are 10 years older than you and ask them what are the things that you are thinking about, what's worrying you on a day to day basis? You'll find things that you would never think. So for example, I'm 26. If I ask a 36 year old, they're going to tell me things that I haven't even heard the words of. Diapers, life insurance, homeowners insurance. These are things that I don't think about because it's just not in my cohort. Ask someone 10 years ahead and then get a 10 year leg up on them by starting a plan for those. Right now. I will say that if you've got extra cash, that's a good problem to have. You can invest it aggressively. You don't have to only invest in an ira. You can do investing in a taxable account. You can also do some people if they have extra cash, I encourage them. If they want to pick a couple of individual stocks for fun, do that. Tim and I have started doing angel investing. You're much more involved. That's certainly something you could do. Or remember that rich is not just about money. Point of money is to spend it, to enrich yourself in whatever way that could be investing. That could also be experiences. So I'll kind of turn it over to you for the experience side. But just remember this is a good problem to have. But run some calculators to see how much you'll actually have going forward and make sure that you're protecting yourself on the downside with a emergency fund and all that. But don't forget you can always do more with your money in terms of investing.

So my thoughts I'll take A slightly philosophical angle, which I think is also inherently practical because it forces you to define what finances mean to you and also brings into perspective income as one currency of several. So I for myself struggled for a very long time with defining investing because you can always find something with a potential for higher ROI return on investment than what you're currently doing. But they become more and more speculative and the downside risk becomes greater and greater. So what is good investing? Well, for me, I ended up determining that investing was allocating resources to improve your quality of life.

That's it.

If you've invested, let's say Warren Buffet calls you on your cell phone and says, hey, I have this hot tip. This is going to be our next big play. And you are given the opportunity to invest in that. If it's going to keep you up every night for the next 10 years with sweaty palms and 140 beat per minute heart rate, it's not a good investment. It doesn't matter what their financial return is. So what I would encourage people to do is first and foremost really define your TMI or target monthly income. So for the things that you want to do, for the possessions you want to have, for the experiences you want to have, what is the cost per month to obtain those things? And certainly with financing you can spread it out over 12 months. There are many different ways to do it once you exceed that number. $200,000 a year is a lot of money. If you have no children, no dependents, what do you say? No mortgage. That is a lot of money. I have a very, very low cost lifestyle, which you wouldn't know by looking at it. It seems like I'm jet setting around doing all this stuff. It does not cost that much. So once you hit a certain threshold, you have to ask yourself what other resources am I underutilizing? Where do I feel strained? What are the 20% of activities, people who create 80% of my stress? How do I start removing things? And I think what next? A great what next step is what can I eliminate? So forget about addition for a moment and focus on elimination. For me, part of giving, part of tithing or donating to charities, helping charities is. Reducing self validation through accumulation of income. Okay, so I'll put that in different words. What that means is I don't want my the value, my self esteem, my self confidence to be linked to indefinitely increasing the amount of money I have. Because there are factors outside of my control that can really affect that. This last market crash is a very good example. Even though I Moved everything to cash equivalents in July. But there are things outside of your control. I give away money so that I reduce my dependency on that to validate me. It's the same reason that I give away a lot of my clothing. I give away, I would say, 20% of my clothing every six months or so to Goodwill and other charities. And that is so that I don't tie my value, my success, to accumulating more. And once you reduce your dependency on those things, it is very liberating. Very liberating. And I think that the more you develop golden fetters, or as Seneca would say, or golden handcuffs, just like in Fight Club, they say the things you own end up owning you. And it's very important psychologically for me to avoid that. And I do that by giving things away. So focus on eliminating certain things.

I like that.

I like that.

It's a great framework of we always think of doing more, which is fine. We're pretty good at doing more. Sometimes you should do nothing and just.

Wait to see what happens.

That's an equally valid approach sometimes. And I like your approach because I don't usually think of doing less, actively doing less, rather than just kind of.

Waiting for the world to go on.

So we've got about three more minutes. What I want to do is we'll take one last question, then I will announce the winner of the person who's going to get flown out here to have dinner with us. That should be a lot of fun.

We can do a few more minutes of reader questions, too, if you want.

Let's do it.

I'm having fun.

Okay, let's take one here. Okay, this is an easy one. You mentioned Dave Ramsey. As we know, he's anti debt. Is there a way to build credit without getting into debt in one form or another, like credit cards, student loans, house, et cetera? Actually, in general, no. If you want to really build your credit score, you have to use your credit card. A lot of people confuse using their credit card with being in debt or using it irresponsibly. But I pay off my credit card in full automatically every month. It's building up my credit by default. It does the right thing, and that's all I need. And there are plenty of benefits. Like it automatically gets sent into mint and all this stuff. Don't be afraid of using credit responsibly. If you feel that you can't do it responsibly, you can always get a secured credit card. That kind of limits you. You can always set limits on yourself.

Using barriers.

There's many ways you can do it, but your credit is one of those things. It's a phantom, an important part of your financial life. And most people forget it. They focus on like, let me save money on lattes, let me save money on eating out and stuff, which is important. But in the grand scheme of things, you're talking about tens or hundreds of thousands of dollars your credit when you go to make major purchases like a house. So get your credit right, don't try to trick your way around it and then focus on other things that make you happy.

So a few things related to that. I didn't use credit cards at all until about two years out of college. And I thought that was a good thing. I was like, I have no bad credit, I'm operating on cash, people should love me. But what that means is you have no track record. You don't have any record of making payments on time and in full. And therefore companies are not comfortable extending credit to you. So one of the first things I did was applied for an American Express card that required that I pay in full at the end of each month. And I automatically linked that to my checking account so I could not fuck it up. Pardon my French, but honestly, if you mess up your credit, that is a fuck up. The costs are tremendous and it can be very difficult to. To reverse. So I subscribe to credit, I think it's credit expert to look at my credit score every few months and to make sure that there are no errors, because you can get those reversed if they are in fact errors. And if you have a good payment history. For example, with certain credit cards, there are instances where they will reverse or remove notices of late payment if it's appearing on your credit report. And last but not least, one thing that very few entrepreneurs I know do, which is very simple to do, get a. This is also a way to, I suppose, build your credit on some level. For every one of my bank accounts, I have a credit card through the same bank associated with those accounts. So that if I am overdrawn, I am covered. Okay? That is important for two reasons. Not only do I not have penalties, but it doesn't affect my standing with the bank. And number three, whatever charges have been placed, go through. So if it's an important purchase or with a business partner, you don't have any issues. And I very seldom used that. But in the last month or so, I sold the company and liquidated that account. And there were some lingering payments that were recurring payments. And it was actually very Important that I had that in place.

And if, by the way, you don't do that and you get an overdraft fee, you can use the negotiating tip that I wrote on Tim's blog and get that stuff waived and let me know. Leave a comment on Tim's blog letting us know how that worked for you. I've had my readers save tens of thousands of dollars using that overdraft negotiation stuff. Okay, let's see.

Let's go to a couple other questions.

Okay, so this is a good one. Tim, what do you think about this for a startup? At what point do customers get turned off by automation? If you have a limited number of clients, say under 500, is it appropriate to let your voicemail answer all calls until you can afford a receptionist?

That's a tough one. There are a number of different approaches you can take to this. So the let's say AT and T approach to this would say we don't care if people get frustrated with the voicemail prompt as long as they're completing the voicemail prompt. And there is something to be said for that. Meaning that if it saves you 90% on your call center costs and you're only getting a drop off of 2% and there's a very high cost of switching that is they're going to have to invalidate a two year contract to go to another contract carrier. Well, guess what, you basically have a captive audience in most businesses. That is not the case. So I would say that automation at its core I view as a method of improving your service to customers. It is not a negative thing. It doesn't have to be a negative thing. So for example, and automation takes very many, it takes different forms. It doesn't have to be an autoresponder or a voicemail prompt. It can just mean that I allow other people to make decisions. So in my case, I was spending about 60 hours a week on customer service related issues. As soon as I got in touch with a number of my outsourced service companies like fulfillment call centers, and I said anything that costs less than $100 to fix, fix it yourself, fix it yourself and then log the decision in an Excel spreadsheet and we'll figure it out later. I am no longer your customer. The customer is your customer. As soon as I did that, it went from, I'm not exaggerating this, 60 to less than four hours easily, probably two, maybe even less than that. And revenue jumped. The returns. Product returns dropped from. They weren't high to begin with, but they went from about 5% to sub 3% customer response time for the customers, meaning the ability for customer service reps to address problems quickly, easily doubled. I mean, the number of requests that could be handled, problems that could be handled in a given day, a given shift. So automation was something that improved the customer experience. And I think the only way you determine that is by measuring things that matter. Those would be a few metrics. How many calls are abandoned, how many calls are resolved within categories, two to three minutes, let's say. Also asking your customers, polling your customers. Recognizing, however, that the people who are annoyed are always going to be the loudest. So don't take that to mean that everyone is pissed off because it's not the case. Very seldom the case, but there are companies, Amazon, try to call them on customer service. It's going to take you an hour to find a phone number. It doesn't happen.

But when you find it, it's a really good customer service.

When you find it, it's really good customer service. But their automation in general works quite well. So I think that there are different forms of automation to take and it's a matter of really tracking numbers and being in touch with your customers. If you have less than 500, you can certainly pull a number of them at the end of the first month of automation, the first two weeks, and that will give you, I think, a.

Fairly representative sample size. So I will speak to the value of being personal with it. At PBWiki, I helped build the team. I used to run all support, and then I managed a manager who I hired to run support, and we had hundreds of tickets a day.

We knew everything from our customer response.

Time, which is in the minutes, all the way up to how satisfied they were and broken down by how much they were paying us. So we knew everything. In my personal life and in my own career, I spent a lot of time writing highly personal emails to people, people. So this is the way I actually launched my blog was I would write something that I thought was really good and I would go read a few other blogs and I would read them in detail. I would spend like three hours and then I would write a really good email to them with a clear call to action. And that's how I build a relationship with them. After a few times, they started to say, wow, this guy's not just spamming a million people, he's actually understanding what I'm doing. When I reach out to journalists, I read their stuff and I send them a highly detailed email. So some days I will send out literally 100 or 200 emails.

But they are.

I've spent all day, I spent 15 hours researching stuff and then the next day I just write those emails. So Tim talks about the process of automation and that's appropriate for some people at certain times and companies at the same time. There's something to be said for highly.

Personal messages and I don't disagree.

Yeah, they're not mutually exclusive. The emails that you, I know that you've sent and that we originally, you know, spent, sent to each other were very personal even though we were just getting to know each other. So there's a lot to be said for that. I will also say that I took one of your pieces of advice from the book, which was firing the problem customers. So I run a program called Scrooge strategy scroogestrategy.com and it's a low cost program I run and I give people like one savings tip per week. It's not high cost, so I can't offer the highest touch service, but I do have great customer service. Anyway, this one woman was basically, it's like an email. You basically give me your email address and you get a tip in the email. It's not complicated. And she emailed us like 12 times. The emails weren't coming through so we sent it to a different email address and this and that, on and on. And at a certain point I said, look, we can't deal with this, unfortunately, I'm sorry, this probably isn't a good fit. So we're going to refund your money and thanks very much. And it was the best decision we made. We haven't had any more problems.

I'll give you another example. So the bane of any Internet based or virtual business dealing with credit cards is chargebacks. So people will take the bill, receive the product, use the product, whether it's a service, digital, good, whatever, and they'll say, yeah, no, I didn't get it and you'll get a chargeback. Right now there are within many businesses, entire departments dedicated to dealing with chargebacks. Call the customer, send a letter, then the merchant account provider or Visa or related bank will ask you for documentation. Send us the signature. Guess what? There's no signature. Okay. And you can spend hours trying to resolve a $50 purchase. And what I did at one point is we were spending so much time on it and I was like, look, there's going to be, there will always be a certain percentage of your customers or audience who are just kind of idiots and they love just buying everything. And then Sending it back on the 29th day. If there's a 30 day return policy and we've all played around with stuff like that, that's fine, but there are people who make it a career. So I looked at the numbers and.

I was just like, you know what?

It's less than 3% return rate. Screw it. We didn't fight any chargebacks. We ever got any chargeback. Any dispute refunded, done, and immediately. That freed us up to do better advertising, better analytics.

That key message, I think, is that it often pays attention. It pays to cut things that are not valuable out of your life. We have banned entire countries from accessing companies that I've been at because all they would do is try to hack us and they would never, ever, ever, not in the history of the company, ever pay us a dime. We just banned the entire country, almost the entire continent. Okay, at a certain point, what can you do? Let's go on to another question here. Okay, okay, okay. So this is a very specific question, but I think it's applicable to everybody. I've written a book for wellness practitioners, like massage therapists, on how to grow their private practice. If I can get this book onto the required reading list at wellness schools, I can have great passive income stream income stream going. I don't want to spend 40 years working to convince these schools to do it. So I decided that I'm going to try to get ambassadors at the school, like students, to say, if you can convince, convince your alma mater to put my book on the list, you get.

X as a reward.

And the question is, what should the reward be? Should it be cash or whatever? Now let me first stop you there.

I'll let you go first.

Okay. In my opinion, passive income has been the opiate of many idiotic masses for many years. If you can't, the first thing to do before you try to work on all these fancy passive revenue things that almost always turn out to be scams is focus on your active revenue, negotiate your salary at work, get a promotion, do a better job at work and get more responsibilities. If you can't do that, then you have no business trying to create a passive income. Too many people, literally. I wrote something about an article called I hate Indian network Marketers. I fucking hate them. They always come up to me at Walmart and they try to be my friend because I'm from India or they, look, they think I'm from India, I'm born here, and then two minutes later it's like, want to come to my seminar? No, I Don't want to come to your seminar, dude, I want to get some peanuts and leave. So it's like, okay, look, why would you go into an industry where 98% of people fail and it's a scam? You wouldn't do it. It just doesn't make sense. So first, optimize your active revenue. Then if you're trying to make a passive revenue, build up something trusted, build up something long term, like I have a couple of ebooks and Scrooge stuff or whatever, and I don't even try to make that much money off it. But I know I'll wake up and it will have sold a few copies. Great, I'm happy. But that took me five years to get there. So passive revenue, don't be seduced by it. I would encourage you to just slow it down a little bit, see how you can spend some time and do it the right way rather than this idea or, in my opinion, delusion of passive revenue.

So I'll. So I'll just jump to some of the maybe tactical points to consider if this is something you've already committed to, just to play that role. A few things. Number one is what I would do. There are a few bits of due diligence that I would encourage you to do. First is if these wellness schools already have retail products. Different books, different supplements. I imagine find out if they're purchasing these directly from manufacturers or if they're purchasing from a distributor. This is very important because in many cases, if they're purchasing from a distributor, they do not want to have 20 different relationships, 20 different manufacturers. They want to purchase from one person in the book business. That's often Ingram or others. Okay, so do a little bit of due diligence. This also gives you another opportunity. Okay, and this comes back to how do you contact impossible to reach people. To have a conversation as a student.

With someone who can think about a more specific, really specific question. We'd love to try to answer it, but that one is just. It's not a good question, so it can't get a good answer. Let's take a question that was sent to us before.

Can I answer that?

Yeah, please.

The first step, and this might help you formulate a more specific question, is defining the absolute worst case scenario in excruciating detail if you were to leave your company today. So what are the worst things that can happen? What can you do now to minimize the likelihood of those things happening? And if they did happen, then what could you do to get back to where you are? Now break that into three columns and brainstorm that. And then you'll be able to come up with very specific questions. But usually it's ambiguous, unknown that prevents people from taking the actions they need to take.

That's exactly right. Yeah. You and I both, we talk about paradoxic choice a lot. We talk about breaking things down. Here's a good question, and I'm curious to hear what you think. Do you. This is from one of the readers. Do you have any practical advice for how I could help the people I love to actively create their lifestyles in a way that's best for them instead of accepting what they assume are their only paths? In other words, this reader, they feel like their friends have just given up and taken what's given to them.

There are a few things you can do. So the first is leading by example. Honestly, coming out of Princeton, a lot of my friends went directly into management consulting and investment banking and resigned immediately.

To hating their lives.

Hating their lives, working on Christmas, working on just awful, awful existences. Not everyone has that experience, but they just viewed that as paying their dues. They had to work 80 to 100 hours a week for the next five to 10 years. And that was just. That was the hand that they had been dealt. When I started actively traveling around the world, sending them updates, saying, dude, you have enough money.

Or they'd say, well, if I work.

Another five years, I could be making, I could be making 2 million a year. And I'm like, what the hell would you do with $2 million a year? And they're like, I'd do this. I'm like, I can do that for $1,500. You're just being an idiot. And just very persistently and in a good natured way, ribbing them for the inconsistencies in their thinking and moreover, showing them what's possible is a very good way. Secondly is invite them to experience some of the alternatives. And an example of that, when people are very resistant to testing, let's say personal outsourcing. And personal outsourcing is actually a very small part of the four hour work week. People just tend to obsess on it. But what I say is don't start with something important. Start with something ridiculous. I mean, like have somebody in Bangalore set like lunch appointments with your best friends for you. Just the shits and giggles of it. I mean, really start with something like that. And so that you have the positive reinforcement of a good experience, a fun experience, and that you're able to get some rehearsal in with Things that don't matter as a prospective client without pitching them anything you say, this is who I am. I don't know anything about this, this and this. I've done my research as best I can with this, this and this. Could I perhaps come in for 10 minutes I in town? Anyway, I'm going to be there tomorrow, whatever the wording might be, to ask you specific questions about your pro shop. This is something I'm very diligent and earnest about becoming involved with. I would really appreciate it. Perhaps you could find it in the professor and you to spend a few minutes with me. If you don't, I completely understand. If I never hear from you, I'll understand. But if I do hear from you, it would really mean a lot to me. That's a good email, by the way. And then they say, sure, no problem. You come in, ask them about their business, ask them about how things get into the pro shop, ask them about their. And then you can. Once you're past that first threshold, it's really easy for yourself or for other people, for them to see the possibilities once they've had that taste. That's what's important.

I love that that laddering strategy is really good for just starting off on something that's unimportant. Let's see here. Oh, I will just say that in personal finance, this is a big thing as well.

Some of my readers, they really, they're best selling units. Ask them how often they reorder, they.

Have automated their finances, they've gotten it all together and what type of margins.

If they're ordering directly from manufacturers and get that data first, before you pitch anyone, you need to understand what their limitations, what their needs are. What type of products haven't yet been developed yet, for example.

So, Tim, I had a question for you and this is a little segment I have been wanting to start on my blog and you and I talked about it as well. For your blog, what do you spend money on? So the reason I love this is that one of the ultimate ways that you can show that you value something is by paying for it. And you can pay for it with your time. But I'm more interested in what do we take our wallet out and pay for once in a while or on a regular basis. It tells they're like, my friends don't.

Do this at all.

And I will tell you from my experience, I used to try to drive, try to really push it on my friends, like just manage your money. It'll only take you a few hours and they just didn't want to do it. And what I realized is the best I can do is let them know that I'm available. And when they're ready, they're ready. But no amount of me pushing them is going to get them to change. I've tried. They know I've got a book, they know I've got a blog. But yet many of them don't come. They're just not ready. And that's okay. But there's almost no better way to get people to resist you than to tell you, I'm better than you. Let me help you with your money. Because people get really defensive about that. A lot about it. So start us off and I'll talk about what I spend money on as well. All right.

And then let's get the questions open. So people. Yep.

If you have questions, just.

We're talking about what we spend money on. What do I spend money on? So one thing that I've started doing, and this is very, very recent in the last few weeks, is actually paying to upgrade to business class or first class.

Interesting.

I have never in my life to this day paid for first class. I'm still not there. I did not grow up with a.

Very.

Rich family in terms of finances. We were. I had a very rich experiential upbringing, but we. I had never been able to just purchase first class. And I've just found that if. Requirements for your scholarship.

Yeah, what requirements?

Can you explain for people what that is? So I'm doing a lot of travel, I feel awful and I get sick if I am crammed in economy class for especially long flights. Anything international these days, if somebody wants me to fly international, I'll generally insist on something else.

So although my scholarship. Iwillteachobrich.com scholarships and basically one of the.

Things I've spent money on related to that, just so people know. All right, hold on, let me get it for you. I'll show you guys.

This thing will save your life.

I'm not kidding.

Is it like a defibrillator, just casually sitting around?

So this thing, these guys should be paying me for sponsorship, but. All right, so what I ask is.

That you've demonstrated entrepreneurial excellence. So I don't want somebody to cut their teeth on my scholarship. I want them to already show that they've done it.

So this is a. Let's see, how are we doing? Okay, so you see this thing here? This is a Neil Med N E I L M E D something.

By the way, you could be entrepreneurial for collecting cow milk. Or you could be entrepreneurial in doing a siliconus rinse. Okay.

And you get. It's a combination of basically salt and baking soda that you use to rinse your sinus on either side. It's a hypotonic bottle. You just shoot it up. One nostril comes out, the other blow your nose, do it again on the other side. I have not been sick or had a sinus spectrum in a year and a half because of this. And I'll use this before and after flights as well. The reason that most people get sick on flights, and there's some debate about this, is because you become dehydrated, both not from drinking enough and also from the recirculated air and the relative humidity of the cabin. So get some type of saline spray. On long flights, I'll also use Zycam, which is a zinc gel, basically up either nostril every four hours or so. And I haven't been sick in a year and a half. For me, honestly, the things that I care most about right now are not getting sick, not getting injured. Those are the things that really, really cause major, major interruptions and problems. Other things that I've been spending money on food. I love food. That's my one vice. I'd say I spend a lot of money on food. One of the, I think affordable luxuries that I afford myself, especially, especially in San Francisco where there's a restaurant for eight people.

Silicon Valley startup. It doesn't matter something. And then the idea, you have an idea or better yet, somewhat implemented, should be socially. It should have social value. So it's not just about making you a quick buck. One guy wrote me an application and he said, you know, give me X thousand dollars because I want.

I eat out almost every lunch and almost every dinner. It doesn't need to be super expensive, but I enjoy that social environment, certainly writing. Having the inclination sometimes as a writer or a blogger to spend a lot of time solo. I think it's very important to socialize.

Super important.

Related to that, I have memberships at climbing gyms. I have memberships at gyms with swimming pools. Those are all things that I spend a lot. Medical devices too. I've been experimenting with a lot of medical devices. Measuring body fat. Measuring. I bought a pulse. I didn't buy it, but pulse oximeter to measure my blood oxygen content. But I'm a fucking wacko, so you don't have to buy that stuff. But those are the things that I find interesting.

We will get to the Trial by fire question. Don't worry about that.

Yeah. What do you spend money on?

So I spend money like you. My biggest discretionary expense, or for me, is eating out. I eat out all the time. And it's a social thing a lot of times because I spend a lot of time writing alone, and I do want to hang out with friends. I talk about this in the book in terms of if you want to cut down on your couple biggest discretionary expenses, I show you how to do that. I spend a lot of money on books. My Amazon wish list is public. I think there's like 700 books and like, weird Gregorian chant songs on there. And I buy a lot of them. Military books, business books. A lot of people, my friends make fun of me because they're like, you never read fiction books. But except for John Grisham, I don't. I also. I spend money on traveling. For me, like, one of the. One of my favorite things to do is be able to, like, go for a weekend to New York or Chicago and visit my. Visit my friends. So that's something that I take a lot of pleasure in and I feel exactly the same way. As you said in your book, it's not as expensive as people think. When I was in college, I used to do this because I stayed an extra year to do a master's program. And a lot of my friends went to New York to work in banking. I would fly out on Friday and come back on Sunday, and I'd be like, you should come. It's amazing to fly out there for the weekend. My friends at school would be like, no, it's too expensive. I'm like, it's 99 bucks. One way to fly.

So cheap, to give you guys an example. So I sold brain quick. And no one really knows that, so you guys are the first to hear in January. And in part of doing that, I had to meet with a number of business partners in Idaho. So I flew to Idaho and round trip was something like $350. And it was cold there as it was in San Francisco at the time.

To take my business to the next level. And it was like. It was like some totally for profit things like real estate, and I'll give 5% of it back to, like, social causes. And I was like, go to hell. Like, there. There are many other people who have real social causes that are built from the ground up. And beyond that, it was really just getting people to apply. The first year I did this, I got zero applications, okay? And I know because when I was in college, when I was in high school, I had to apply to, I applied to 70 scholarships. I created a system which would almost automate it. I just had to write little chunks.

Every day when I was with the person who was purchasing the company. And we said, well, why don't we just go to Mexico and get some sun? Since I was going to be training him and acting as a consultant for a certain period of time and it was less than $250 to get a round trip to Puerto Vallarta and sit on the beach for a weekend and come back. It's not that expensive, doesn't have to be. So people Brazilian jiu jitsu and my injury just to really cover that quickly. I, after tearing my Achilles tendon, I was training at AKA SO American Kickboxing Academy in San Jose with Dave Camarillo and a lot of the UFC fighters there. So Mike Swick, Josh Koschak, those guys. I'm not by any stretch.

I applied to about three a day and it was amazing because so many of my friends just didn't apply at all. And they're like, oh, you can't get it or oh, whatever, self defeatist attitude. And I ended up clearing out a lot of scholarship money. And it wasn't that I was the smartest person because I wasn't but half.

The professional MMA fighter. I think the game has evolved tremendously and I would never compete at this point. I have way too many injuries and I'm just too old. Quite honestly, even though Randy Couture would prove me wrong, I am not training in BJJ right now. I'm thinking about getting back into it, but the most recent nerve pain that I had in my back is actually after an MRI. Degenerative disc disease in my C3, C4 paddles.

Just apply.

Sure.

Yeah.

Well, I mean the first time I did the challenge at the C5, C6 and C7 vertebrae, and that's from 15 years of wrestling and judo and getting thrown on my head and break dancing and head spins probably didn't help anything. So I am working through that. But I suspect most of my friends who have done those types of sports for as long as I did have exactly the same problems, but I'm feeling better. The high dose prednisone could have something to do with it at Princeton for the high tech entrepreneurship. But I'm not a full time professor, guys. I'm a guest lecturer. But I spent a fair amount of time involved with students and the prize was a round trip ticket anywhere in the world for contacting these impossible to reach people. And 20 people were really interested.

They stayed. What about the TV show?

So trial by Fire, a quick update on that is just decided. I'm not in a rush with it. There were some management changes at History Channel. I did not opt to renew my agreement with the production company that had done the show and realized that as much as I am interested in using TV as a teaching tool, as a leverage point for everything else, I want to do it the way that I.

Want to do it.

And I'm more than happy to wait for the proper time to do that when I have the leverage to do that, which I will shortly. I would say in the next year after class. And no one completed it the first year because they all assumed someone else would out.

So.

There are no plans at this point for a second episode, which is too bad. But the show that ultimately is produced will be, I think will be outstanding. I have a lot of ideas, but at this point, you will not be seeing Trial by Fire anytime in the immediate future. That is in the next 12 months.

Beautiful.

All right, as far as where I track things, honestly, guys, I track most things on Notepad. There is a company that I invested in that I think is very interesting called Jiminy. Their name will be changing, but G Y-M-I-N-E-E.com, if you could type that in, G Y M-I N E E.com, do them or that it would be too difficult. And so I told that story to the next class, and then six people did it, and the results were incredible. And then I said, look, here's the background on this challenge. If you don't do it, no one else is going to do it. So if anyone had sent me even a mediocre paragraph explaining why they hadn't done it, basically exercise and diet tracking online. They have an iPhone app. It's pretty cool. So check it out. I'll be doing a lot with them, but right now, most of my tracking has been done in notepads.

Yep, I agree. I think a lot of times people get caught up on the tools and I do tracking. You would think that, oh, my infrastructure would be so polished. And, I mean, I spend a lot of time on it, but I do a combination of mint Excel paper, and I have an envelope on my desk where I stuff receipts into, so. So whatever works is whatever works. Okay, let's take one last question, and then we're going to announce the winner and wrap it up.

All right, so.

Last reader question. I'm looking at one here.

Give me one second.

Okay.

Unable to contact anyone. They would have received a round trip.

Anywhere in the world.

So that the part.

This is a good question. It's a good question. Tied up on how many false starts have you guys had in your past before the right idea hit. I love this. Well, okay. I have a tag in my Gmail that's called failures. And I actually. I mean, it's grown because I've had it for a long time. And if it's not growing, growing by at least two to three per month, I feel like something's not quite right. Failures can be basically, they can be something as little as the person I wanted to meet doesn't want to meet with me, or it can be an entire business collapsed. I take a lot of different opportunities, and I'm going to put it in this way. I prefer to have the big things in my life very stable where I live. I don't like to move very often. Taxes. I'm ultra conservative on taxes. Yep. But my car, I have a Honda Accord because I'm Indian.

I have a Volkswagen Golf because I'm from Long Island.

But then there are things like negotiations or my website or promotions where I'm ultra aggressive because I understand that and I know the risks. So the way that I can afford to take a lot of risks is to be really stable in certain things, consciously and then consciously aggressive in other things. And that's why there are a lot of failures, man.

False starts. Where do I begin? So I think that there are different types of false starts. Anticipation, the willingness to throw your hat in the ring is extremely important.

Yeah, absolutely. There's an article I wrote on another blog called you should just search for passive barriers. And it really talks about why there are things that may be missing in your life.

And not to turn this into a motivational speech, but the only failure is when you don't try. No, honestly, if you learn something, if you are able to gather data from a relatively inexpensive failure that you can apply later, it's very valuable. So the latest tweet to beat campaign that some of you may be familiar with that I ran. Which will end up helping, probably. I'm just guessing that, like 10 to 15,000 students. And that's nothing to turn your nose at, but it's not nearly as big as I'd hoped. But the data that I gathered through that, because DonorsChoose has been an awesome partner in gathering the data and helping me to interpret what worked and what didn't, will be hugely Impactful when I apply it to the next campaign and combine the best practices from both of the big experiments that I've done. I mean, you name it. The first product I created was the audio book. The how to what the Hell was.

Like small things that could have a profound impact on you actually getting step down.

Somebody asked about kiva.org, i think kiva.org is an outstanding organization. I think they've done a great job of streamlining and automating the process of microfinance. So I've met the guys involved. I think it's a good organization. Yeah, I agree.

This is a good question for both of us. What next? And this person is addressing me. Your book was great, but other than improving some automation, I was already doing what you recommend. I'm married, we make $200,000 a year. We have no debt or children. We've hit the limit for most recommendations.

It was how I beat the Ivy League. I listened to it the other like a few months ago and I was just like, oh my God, this game is awful. It was not awful awful. It was a good effort on my part. A for effort, but it was an example of building a profit. Sorry, Building a product before picking the market, which, as some of you may know, I just don't agree with. I think you want to pick your market and then design a product for them. That thing failed horribly. It didn't sell anything. I think maybe my mom bought a copy. I don't know. It was just a huge catastrophic failure. And I didn't throw away the tapes until like two years ago. I couldn't bring myself. I was like, the orders are coming someday, someday they're coming. And I finally got rid of them. But I learned a lot. I learned the lesson that you don't design a product and then find someone to sell it to. You go the other way around. Recommendations.

And we don't want to buy a house. What should I do? Let's talk about money and then let's talk about life.

Both of us, I think, have had a lot of false starts. And you talk to any. Honestly, guys, I mean, we both know some really, really, really uber successful tech entrepreneurs and entrepreneurs in different industries. And there are days when all of these people do not want to get out of bed because they've screwed lifestyle as well.

So on the money side, this is a great question. In one of the chapters of my book, I don't remember which, we talk about the ten year plan. So you've done everything you need to.

Do you're doing it all right, something up. They had some PR disaster, they have to fire half of their people. It is just mess and crisis after mess and crisis. And that's part of the game. That is part of what you sign up for. If you want the learning curve that's this steep that comes along with being an entrepreneur who's doing things that haven't been done before, you are going to have to.

So what do you do? Talk to people who are 10 years older than you and ask them what are the things that you contend with.

And learn to emotionally deal with setback after setback after self doubt after criticism, after hater after hater. And that's okay because it makes you really strong. And Thomas Watson, who is either the founder or co founder of IBM once said to double your success rate, double your failure rate, figure it out, make the failures inexpensive, gather the data and then step back up to the plate.

Love that. Alright guys, well we have come to the end of it. We had about 50, 55 people. I'm thinking about what's worrying you on a day to day basis you'll find things that you would never think. So for example, I'm 26. I'm actually thrilled the way this turned out. I think this is a lot of fun. I have the winner of tonight who's going to be. Well, we're all winners. Who's going to be flown out here for dinner with you and me, Tim? The winner is Emily King from Washington D.C. curious Emily, are you on the webcast tonight? If I ask a 36 year old they're going to tell me things that I haven't even heard the words of. Diapers, life insurance, homeowners insurance. These are things that I don't think about because it's just not in my. It would be cool if she is Emily King, are you here? Maybe not. That's okay, Emily. We will email you and we'll set that up for everybody else. Thank you so much. We're going to edit this thing, we'll put it up on the website and I'll put it up on this very page so you can come and grab it for the next couple weeks and then we'll figure out what to do with the video. But thank you guys so much. And we'll talk full hoard. Ask someone 10 years ahead and then get a 10 year leg up on them by starting a plan for those right now. I will say that if you've got extra cash, that's a good problem to have. You can invest it Aggressively. See you soon. Yeah.

Thanks, guys. Have a good night.

You don't have to only invest in an ira. You can do investing in a taxable account. You can also do some people, if they have extra cash, I encourage them. If they want to pick a couple of individual stocks for fun, do that. Tim and I have started doing angel investing. You're much more involved. That's certainly something you could do. Or remember that rich is not just about money. Point of money is to spend it, to enrich yourself in whatever way that could be investing. That could also be experiences. So I'll kind of turn it over to you for the experience side. But just remember this is a good problem to have. But run some calculators to see how much you'll actually have going forward and make sure that you're protecting yourself on the downside with an emergency fund and all that. But don't forget, you can always do more with your money in terms of investing.

So my thoughts, I'll take a slightly philosophical angle, which I think is also inherently practical because it forces you to define what finances mean to you and also brings into perspective income as one currency of several. So I for myself struggled for a very long time with defining investing because you can always find something with a potential for higher ROI return on investment than what you're currently doing, but they become more and more speculative and the downside risk becomes greater and greater. So what is good investing? Well, for me, I ended up determining that investing was allocating resources to improve your quality of life.

That's it.

If you have, if you've invested, let's say Warren Buffett calls you on your cell phone and says, hey, I have this hot tip. This is going to be our next big play. And you are given the opportunity to invest in that if it's going to keep you up every night for the next 10 years with sweaty palms and 140 beat per minute heart rate, it's not a good investment. It doesn't matter what their financial return is. So what I would encourage people to do is first and foremost, really define your TMI or target monthly income. So for the things that you want to do, for the possessions you want to have, for the experiences you want to have, what is the cost per month to obtain those things? And certainly with financing, you can spread it out over 12 months. There are many different ways to do it once you exceed that number. $200,000 a year is a lot of money. If you have no children, no, no dependents, what do you say? No mortgage, that is a lot of money. I have a very, very low cost lifestyle, which you wouldn't know by looking at it because it seems like I'm jet setting around doing all this stuff. It does not cost that much. Once you hit a certain threshold, you have to ask yourself what other resources am I underutilizing? Where do I feel strained? What are the 20% of activity activities, people who create 80% of my stress? How do I start removing things? And I think what next? A great what next step is what can I eliminate? So forget about addition for a moment and focus on elimination. For me, part of giving, part of tithing or donating to charities, helping charities is reducing my reducing self validation through accumulation of income. Okay, so I'll put that in different words. What that means is I don't want the value, my self esteem, my self confidence to be linked to indefinitely increasing the amount of money I have. Because there are factors outside of my control that can really affect that. This last market crash is a very good example. Even though I moved my everything to cash equivalents in July. But there are things outside of your control. I give away money so that I reduce my dependency on that to validate me. It's the same reason that I give away a lot of my clothing. I give away, I would say 20% of my clothing every six months or so to Goodwill and other charities. And that is so that I don't tie my value, my success, to accumulating more.