In this live stream Rich Schefren walks viewers through two distinct but complementary themes. First, he details his personal knowledge‑management system built in Obsidian, explaining how each vault contains its own agents.md and Claude.md files, how sub‑folders (e.g., the 00 Projects folder inside his primary ActiveBrain vault) replicate this structure, and how different project types (skill‑building agents, personal tools, content creation) follow distinct pipelines that end in packaging, auditing, or distribution. He also mentions the use of a Substack master document for strategy and the role of a brain.md file as a central reference point. Second, Rich shares two contrasting stories about handling disappointment in professional relationships. In the first story he recounts a 20‑year‑old dispute with marketing legend Jay Abraham over a $40K debt. Rather than demanding payment, Rich offers a face‑saving solution: he buys Jay’s $400 book at printing cost, distributes it to his high‑ticket clients, and thereby settles the debt while preserving the partnership, which later yields millions of dollars in joint ventures. In the second story he describes a conflict with copywriter Harlan Kilstein during the launch of the Internet Business Manifesto. Harlan’s rigid stance on compensation (expecting $150K for a sales letter) and refusal to accept a lower, goodwill‑based payout leads Rich to cut ties, forfeiting potential future collaborations and millions in revenue. Rich extracts a core principle: when someone disappoints you, give them a low‑cost, dignity‑preserving way out, keeping the relationship door slightly ajar for future value. He ties this lesson back to his broader business philosophy of over‑delivering at the end of a relationship to reveal true character. The session ends with a call for questions and a toast to higher profits.
Chapters
All righty. Hello, hello, hello. Welcome. Uh, just trying to get Instagram on. I think it's on, but I'm not sure. Let me just make sure. There we go. Cool. It is. And, uh, I was just on a call and someone was like, hey, don't you have a live stream right now? And I was like, oh, Geez, I do. Oh yeah, I said I was gonna do that. Okay, awesome. So Sean said, Rich, please share the story with Jay Abraham and Harlan Kilstein about the 2 options to react when someone disappointed you. Cool. That's what I'm gonna do. I was wondering what I was gonna talk about. And that is an easy one. Since I'm here in my house, hold on, not in front of my office. We spoke about having a Substack master doc for strategy. Does each vault in Obsidian contain its own brain.md file, and would it have its own master doc for strategy? Um, so let me answer this quick. Uh, every vault that I have in Obsidian has its own agents.md file and Claude.md file, but then even subfolders will potentially have an agents.md folder and a Claude.md folder. So for example, my primary workplace is an Obsidian vault called ActiveBrain. And inside— so ActiveBrain has an agents.md, a Claude.md, et cetera. But then Inside of ActiveBrain is a folder called 00 Projects. And when you open 00 Projects, inside of that are about 100 different project files. These are all the projects I'm working on or have worked on and haven't closed out yet. There's an agents.md, Claude.md file in that folder that, that explains this is where we start all projects. It also said that in the regular MD files that use the project folder to start all projects. Then there's a listing of all the projects in that project folder. There's an explanation of what the work that we do in this folder is and what happens when we're finished. If I'm building a skill or an agent, then when I'm done, it has to be packaged, it has to go to student resources, and it has to be audited several times. If I'm building something for myself, it goes down a different path. If I'm creating content, it goes down a different path. And so that's— there's instructions for my agents and AIs in all the strategic places that I use on any frequent basis so that no one ever has to guess what we're doing and why we're doing it based on where we are. So hopefully that helps, uh, Mahatma. And, uh, my dog is resting. Um, so anyway, I am, uh, let me share this story real quick. And I think it, it's very educational. Not as— doesn't have much to do with AI, but it is, I think, a really useful conversation. So, um, I had a disagreement with Jay Abraham, and it's really not important who was wrong or right because it's irrelevant to what I'm trying to convey in this story. Um, but I felt I was right, and, um, and my fear was that subconsciously Jay might think I'm right too. And if that's the case, then if Jay screws me out of $40K, at some point in his mind he's got to justify it. And I've made millions and millions of dollars in my relationship with Jay. I have learned a tremendous amount as well. We've partnered on a bunch of things and made tons of money together. And so I don't want to lose the relationship for $40,000. So, but I got to give Jay a way out. And it has to be a real way. So I go to Jay, and I say, okay, I think you owe me $40,000. You don't think you owe me $40,000. I have a way that I think we can both come out okay on this. And he's like, what do you think? What are you thinking? And I'm like, look, the— one of my favorite books on marketing, period, is the Mr. X book. This was right after I did the manifesto. So I said, I would like to give all my clients your book. That'll put your book in front of, you know, several thousands of people who just paid several thousands of dollars. I want to buy them from you at cost. I want to buy them from the printer, not from you. And, uh, and if you let me buy them at cost, we'll call— we'll, we'll be, we'll be even. And he was like, yeah, that's, that works for me. Now it worked for me because I had just sold BGS, and, uh, this was right after the manifesto, and before There was no e-learning platforms back then. We had to build the first one that would drip out content. So before that was ready, we were actually using a forum and opening up threads like this week's module, right? Or this month's module. And so I told people towards the end of month 1, I was trying to get them this book for free, this $400 book. So that helped retention stick for month 2. Month 2, I told them the whole story of trying to get it and that I finally locked it in and that they were going to get it in month 3. And so that helped retention dramatically for those 3 months. It gave Jay a way out so that we would be even, and I benefited because I kept my clients in the program. And this $400 book, I paid like $3 or $4 or $5 for the printing, and that was it. Great. So that's how I dealt with it, and that was close to 20 years ago. And since then, I've literally, I'm sure, made more than $10 million in my relationship with Jay, as he has too, right? So I'm very happy that I salvaged that relationship. But now let me tell you a different story where someone reacted differently and paid the price for it. So when I did my very first launch with the Internet Business Manifesto, um, Harlan Kilstein, uh, used to write for me, and, um, we agreed that he would write everything for this upcoming launch that I was doing, and he would get 5%. And he took on a client the week before my launch that he was gonna— that he solely dedicated to for $10 grand. And, uh, I wrote the manifesto, I wrote the missing chapter, my right-hand guy Dan wrote most of the emails. And I said to Carlin, we're gonna have to renegotiate. My bad that I didn't fully renegotiate there. He wrote the sales letter but then thought it was perfect, and it really was all biz op, and he wouldn't change it. So I had to call an emergency tele— conference call with John Carlton, um, Carl— I forget Carl's last name, another great copywriter, um, Clayton Makepeace, Brian Keith Voyles, and one other copywriter. And they all told Harlan, like, if you've been paying fucking attention to the launch, you would never write a sales letter like that. So he changed it the night of. So we do the launch. at this point, Harlan's never made more than $10K on a sales letter. And, uh, but I bring in $3 million from that. And so he's supposed to get $150,000, like, on the original rate, but that was if he wrote everything. And once again, I wrote the manifesto, I wrote the mystery chapter. Like, the only thing he really wrote was the sales letter, and even then he had to be pushed. So I told Harlan that I'd give him, I think, I think it was $40,000 or $50,000. So let's say $50,000. I think it was $50,000. So I paid him $50,000. And Harlan decided that he was going to try and make my life a living hell. Unfortunately, I was the Alex Hormozi of the time in 2006. So he could not make my life a living hell. He would— he was like a gnat. But I had thousands and thousands of entrepreneurs as clients. And every week, clients would ask me for a reference to a copywriter. I literally got asked every week numerous times to recommend a copywriter. And all Harlan would've had to have done is said, you know, Rich, I think you still owe me the $150. Okay, you're giving me the $50, but I'd really like you to figure out a way maybe that you can make me whole that doesn't cost you money. And had he said that, I would have, and we would have been clean, and I probably would have sent him about $2 or $3 million worth of copywriting work over the next 2 or 3 years when I was at my very peak. But instead I didn't. Instead I said, I'll tell you who never to use. And so same story. On one side, I was the disappointed person and figured out a way to get that other person off the hook without costing them any money, and I've made tens of millions of dollars because of it. The other side— the other story, I'm on the other side of the equation. I could have sent millions of dollars worth of business and purposely did not. I learned a piece of advice from Joe Schrieffer, um, that, that I was always stuck with me. I try and live my life this way, that you learn a lot more about a person at the end of a relationship when they have no reason to do anything other than what they want than at any other time in the relationship. So I try and live my life to that standard. That like when a client is leaving our mastermind, I wanna make sure that they leave like where we overdeliver that last month and really leave them right. Not because we need to, but because that's where we get a chance to prove how we really are. Like when it's already like the decision's already made and now we're just here to support you. So that's the story. And hopefully, you got value out of that story. It's a story that I've told lots of people and clients of mine, because I think you can learn from it. When someone disappoints you, and they're aware that they're disappointing you, and part of that is based on some miscommunication or lack of understanding, instead of closing the door to that person, leave the door slightly open with the opportunity for them to make it up to you in a way that maybe doesn't them anything, it could be one of the smartest decisions you make. I certainly— had I not done that, Jay wouldn't have been at my house this past week, and we wouldn't have done a Connect the Dots event that was very successful. But like, we wouldn't have partnered as consultants years ago if, if I hadn't done that. We wouldn't have done certain programs together if I hadn't done that. So it literally has really paid me huge, huge dividends. So that's the story for today. Um, And thanks for showing up. And you can always put your questions in here and I'll see them for tomorrow. And yeah, to higher profits and beyond. This is Rich Schefren, over and out.
