Four Principles of Attraction You Can Use to Scale Your Business to Seven Figures
In this YouTube presentation, Tom Augenthaler outlines four powerful marketing principles—selling a primary benefit, leveraging social proof, creating scarcity, and using influencers—that can be applied to grow any business. He illustrates each principle through a detailed negative case study of Bernard (Bernie) Madoff, explaining how Madoff’s fraudulent investment operation exploited these tactics to attract billions of dollars. Augenthaler breaks down Madoff’s two‑business model (a legitimate clearinghouse and a fraudulent advisory service) and shows how Madoff sold the benefit of security, used his NASDAQ and NASD board positions, elite social circles, and exclusive club image as social proof, manufactured scarcity by keeping his fund “closed” and making access difficult, and cultivated trusted community influencers—particularly within his own Jewish network—to spread credibility. After dissecting each principle, Augenthaler emphasizes that the same tactics can be ethically repurposed to provide genuine value, build trust, and scale a business responsibly, aligning with ClickFunnels community values. He concludes with a call for feedback and encourages viewers to apply these principles positively.
Chapters
Hey guys, Tom Augenthaler here. I just want to talk to you all about 4 powerful principles of attraction that can be used to supercharge your business no matter what it is. And by way of example today, I'm going to talk to you about someone who I really don't like. I don't think that you do either when you, when you hear his name. But the reason that I'm using this person as an example is that he got brought up in conversation Over the weekend, and because I used to work on Wall Street, I got asked by someone how this guy got away with what he did. So with that in mind, I think it's a good opportunity to show you just how powerful these principles are and how you can leverage them for your own business. Even though the example I'm going to show you is a negative one, let's turn that around and turn it into something else. So like I said, for my example here, I'm going to take a negative story and I'm going to turn it into a positive one, hopefully giving you guys some, some value here that you can take back and apply to your own businesses, which I know since all of you are involved in this ClickFunnels community here, you are positive, upbeat people and you are looking to provide value to your customers through your businesses. So with that said, I'm just going to Let's just start diving in. So first, I just want to reiterate: I do not condone this guy. I do not make any excuses for this person. I personally know people who were hurt by him, and very badly so. So this example really does resonate with me quite a bit. And also, it's very important to know that thousands of lives were destroyed by this man. Not only did he destroy all the people that invested with him, but He destroyed his own family by perpetuating this fraud, and entire charities were wiped out. And those charities were helping people all around, not just the country, but, but in the world. So he did tremendous, tremendous damage. And the person I want to talk to you about is Bernard Madoff. Unless you've been living under a rock for the past 10 years or so, you've probably heard of this guy. His, like I said, his actions are reprehensible, and the damage he's done not only to his investors but to our society will likely be felt for years, if not generations to come. And I'm a believer that people like this undermine our basic trust in each other as people and our institutions that are necessary for our civilization to be healthy. So with that all being said, I want to dive into to the principles that he used and how he did what he did. But first, it's really important to know that Madoff had 2 main businesses. The first business is what put him on the map, and he built a successful and credible clearinghouse business for over-the-counter stocks. He made a very nice living with this, and he could have had a great life just doing that, building his business and and doing all those good things with that. The second was the investment advisory business. This is where he accepted money from other people and invested it for them. And this is where he stole their money because he wanted— he was greedy and he wanted a bigger life than he had. So he used their money to perpetuate that for himself. This is where the— this is the part of the business where the fraud happened. So the first principle, the number one thing that Madoff sold above all else was a benefit. And we all know that benefits sell and features tell. Well, in this case, the one benefit that he sold above all others was the benefit of security. And with this, by selling this one benefit, he was able to perpetuate the fraud that he did for decades. So why this one benefit? Why did he sell this benefit of security? Why did he not sell big returns on money, which so many other managers, money managers or wealth managers do? Well, Madoff understood his target customer extremely well, and we're going to take a closer look at that. So because markets, all Financial markets are uncertain and filled with risks, and as people, as creatures, we inherently don't like uncertainty. We don't like doubts. We don't like risks. And the stock market and the bond markets are filled with these uncertainties. This is why it goes up and down all the time. There's rumors of wars. Earnings are bad. You know, all sorts of things. Companies coming in and out of business. These fluctuations are called volatility. And many ultra-rich people suffer from the same fears that you and I do. They don't like change, uncertainty, or risk any more than we do. So that uncertainty is equivalent to fear. And Madoff understood this really, really well. So Madoff decided to sell the benefit of security. He didn't promise to beat the markets or even other wealth managers. He promised his customers their money would be safe Because he knew that the market—he knew the markets better than they did. So his sort of mantra was, "Well, you could be safe with with Madoff," and he said that he had a secret trading system that performed well in all market environments. So his returns were what a Wall Street person would would call unusually consistent, and this should have been a suspicious marker. This should have been a red flag to his investors. In a minute, you'll see why. They didn't question him at all. And the reason they didn't question him is because he used the principle of social proof. Madoff used this one like a pro. We all talk about social proof and using it in our own funnels. We look to use customer testimonials, we'll use press quotes, we'll use working with other prominent people, pictures of ourselves with other prominent people. Well, Madoff used social proof like a master, and there's actually quite a bit to learn from him. The first thing that he leveraged to his advantage was the NASDAQ. And if you're not familiar with it, the NASDAQ is a stock exchange for what's known as over-the-counter stocks. I'm not going to get into what all that is, but just take, take my word for it. It's a stock exchange. It's a huge one. Companies like Microsoft are listed on it. Madoff helped found it, and he was the chairman for several years. So this is a huge deal. It gives it gave him immense credibility, and it caused people to trust what he said because he knew what he was talking about. So you bet he wanted people to know about this. The other the other thing was is that he sat on the board of directors for what was what is known as the NASD, and all you need to know about the NASD is it's a regulatory organization for the securities industry. So he was on the board. of that, of the NASDAQ. And this is like, you know, when you think about it, this is like the equivalent of being like a bank thief sitting on the board of advisors for the FBI or something. That's how, that's how bad it is. So the other thing that Madoff would do, he would make a point of being included in exclusive clubs and being seen with very, very wealthy people. So Madoff, here in this picture, is on the left. And he's on board this really rich guy's yacht or something. But it was— Madoff made a point of being seen like this and having pictures taken of him. So he was in magazines all the time and fashion, you know, not fashion spreads, but, you know, those society pages. But guys, this is one of the main reasons people didn't question his unusually consistent investment returns, because he was hanging out with people that other people think are very smart, very connected, and they are very wealthy. So people assumed that Madoff was legit because of all this, and he couldn't possibly be perpetuating some kind of a Ponzi scheme or a fraud, which is what in fact he was doing. So, the third principle that Madoff really worked to his advantage was scarcity. He made people think that it was difficult to invest their money with him. And his target clientele was like ultra-rich people, businesses, and even charities. And his fund was marketed as being exclusive and sort of behind a velvet rope, kind of like a nightclub. And we all know nightclubs keep people waiting on the line outside to To give the impression that if you're driving by in a taxi or something, you're like, oh my gosh, that club must be hot because there's 100 people outside waiting to get in. Meanwhile, there could be only 10 people inside, but those 100 people outside have no idea, and you passing by, you have no idea either. So this sparks the herd mentality in you so that you want to get in. You want to be seen as being on the inside or in the know, the smart, the rich people. And Madoff did something else that was kind of unusual in the Wall Street business. He didn't normally meet directly with investors, which is unheard of. And this sort of gave him a sort of Wizard of Oz aura. He kept things very buttoned up and secretive. And he didn't allow emails even for key staff. And he asked investors who put their money with him not to talk about him or his firm. So, of course, all of this sort of helped create this environment that he wanted of this mystique. You know, this sort of master maestro, you know, pulling the strings behind the scenes. You know, he could, he could manipulate any situation, you know, financially for his investors that he wanted. This is the kind of, you know, kind of mentality he wanted people to grasp onto. And he never actively sold his fund to people. So he usually told them that the fund was closed to new investors. That means if you approached him and said, hey, Mr. Madoff, I I've got $5 million. I'd like to invest my money with you. He'd tell you, sorry, the fund's closed. I can't. I'm not taking any more money. Now, if you persisted and you said, look, Mr. Madoff, I really want to invest with you. You know, I've been trying for a long time. How about if I up it to $10 million? No, no. What about $15 million? Okay, I'll put $20 million with you. I'll put $20 million with you. And This is what he wanted. This is what he did. He constantly said no so that people would want it even more. And then when he did let them in, he let them know that it was being done as a favor. So do you guys see how this works, right? I mean, all of this, this whole principle of scarcity and how it really was used by Madoff to rake in hundreds of millions, even billions of dollars. To invest with him. And then the 4th and final principle is influencers. Madoff was a master with people. He leveraged influencers who were trusted and respected. So his target customers looked to these investors, these influencers, for advice, for help, for guidance. And Madoff sought these people out. He wined them and dined them and And once they invested, he would tell other— they would tell other people about Madoff. So this is how he sold without selling. And really what he did was he was marketing. He wasn't selling so much, he was marketing. He was a very astute marketer in this sense. And he marketed through these main principles of attraction I just talked about. So as you just learned, Madoff used influencers to reach out and connect with his target customer. And he was very, very well aware of who his target customer was. Madoff is Jewish, so he sought out other rich Jewish people, his own people. So Madoff made it a point to meet top investment pros who were Jewish, or big-time investors, big business people, the ultra-rich, celebrities, because with their blessing, many other people in that community would then seek him out and try to come and approach him so that they could invest with him. Now, that's not to say he only took Jewish people's money, because he didn't. He would take anybody's money who was willing to invest with him, a lot of money. But he targeted his own Jewish community because he knew those people so well, because he was part of it. And this included notable people in our society, including Auschwitz survivor, activist, Nobel Prize author, Elie Wiesel. Madoff worked hard to make introductions to people like this, and this is how he marketed without selling. Like I just said, he cozied up to notable people like this. He gained the trust. He gained their trust, and then he got the trust of others that respected them. So they were attracted to him. He never had to pitch anybody to get any money. Okay, so let's take another look at the principles that. Madoff used. The first is that he sold a major benefit security. The returns that he gave to people were features. They were not the benefit. The benefit was security. Your money was safe with Madoff. That was his mantra. The next one was social proof, as we went over. The third one is scarcity. So he made it very difficult to invest. You had to approach him multiple times. You had to come to him. He didn't come to you. And the fourth one was influencers. He got in front of those people in our culture and our society that influencers— that people trusted, and especially his target consumer, rich, rich Jewish people. So he would go after those people that influenced those people, cozy up to them, gain their trust and respect, and then those people that trusted those influencers would want to invest with So what are our takeaways? Well, guys, like I said at the beginning of this, we're here to do good. We're here to help people. We're here to provide superior value. And, you know, just because I went through how an evil guy like Bernie Madoff used these 4 principles for ill, that doesn't mean that we have to. We can take those same 4 principles and we can apply them for good. good purposes to help us build our businesses, to provide our customers with something that they really want, really need, and we can all move forward together and we can actually improve society that way, I believe. I think Russell Brunson is correct about that. I think that if we take things that are positive like this and we really help people and we move the ball in that direction down the field, that we all benefit. So, I hope you enjoyed this today. I hope it helped you a little bit. You know, let me know in the comments if you thought I was crazy. Say so if if it was helpful. You know, please say so. I'd love to hear your feedback, and I look forward to communicating with all of you and getting to better better to know you in the ClickFunnels community. So see ya, see you around, see you at the top.
