Transcript of Interview with Mike Michalowicz
Dan: Welcome to another episode of Shoulders of Titans. This is Dan Lok and today I have the privilege of introducing you to another great entrepreneur; a professional speaker, author of multiple books which I’ve all read, and someone I’ve been wanting to bring on the show for a long time, so I’m very, very excited. Mike, welcome to the show.
Mike: Dan, thank you so much for having me, it’s truly a privilege to be on your show.
Dan: Mike, maybe, take us back a little bit, share with us how did you get into what you do today?
Mike: Well, my background is entrepreneurial. Out of college, really didn’t have the job of my dreams, far from it, nor did I see any career path there, so I left to start my own business and I’ve had the good fortune of building a couple of companies. Two of them were in the tech space, tech services: sold those businesses and then found my passion. But I think the interesting part of the story is: after selling my second company, it was acquired by Robert Half international, which is a Fortune 500.
My ego exploded then; I thought I knew all the answers to entrepreneurship, and the lesson for me now is: once ego takes control, at least of me, you can stick a fork in me, I’m done. And I started blowing money left and right on just material items — I really was just more was trying to be trophies for me. And also, trying to start all these little businesses as an angel investor, something I don’t have — I should never have been in, I don’t have the skill set to do that stuff. And it became, kind of, for me, an awakening, that I didn’t understand some critical elements of my business even though I thought I did. So that triggered me to where I am today. I started writing books, first to fix my own wrongs. How to make a business profitable? I didn’t know. How to make a business grow healthily? I didn’t know. So I started writing about that for myself but ultimately thinking books, and today, in addition to owning a couple of businesses, I’m a full-time author.
Dan: Well, Mike you’re not alone. Something I can relate to. After I made my money I tried to be an angel investor, I invested in ten tech companies, all lost money.
Mike: I’ve been there brother! Oh, my goodness. The magic number of ten. I had ten businesses too.
Dan: Suddenly I thought, maybe this is not such a good idea.
Dan: And talk to us about when you sold those two companies. Because a lot of entrepreneurs, they started a business, very few of them could sell it. Like how did you sell it? What was the process like? Or were you thinking of selling it like, the day you started?
Mike: No, the first business I didn’t think about selling. I had never had a business before, I just wanted to grow it, and the opportunity presented itself. There was a strategic private equity that was looking to take over a business like this and move into a more strategic capacity to kind of reposition it. And so, I sold that to them. And it wasn’t like a few money, but it was the first — I was like, “Wow, this is real money.”
And then I was thinking, as I sold that, I can do this again with more — be more deliberate — so my second company was in computer crime investigation, and the day I started that — I started with a business partner — we both were like, this is going to be a quick build, quick sell. And it actually played out even faster than we thought. We took two and a half years, maybe it was just three years, and we were on a run for seven million dollars. We boosted up our business the entire way and then Robert Half came in and for them, they just wanted something to plug into their company. They wanted a revenue, they wanted us — and they didn’t want to build it from scratch. So almost three years to the day, or two and a half years, they acquired us and that was the big exit.
Dan: Oh wow. Mike, why do you think like most entrepreneurs, when they start, why they get stuck at that early stage? Maybe they couldn’t scale, or — and do you recommend, like, bootstrapping or raising capital early on? I’m just curious.
Mike: Yea, I’m a — let’s start with the bootstrapping question. I am a big fan of bootstrapping, and the reason I am, is bootstrapping forces us to identify what’s working and what’s not working very quickly. We’re very sensitive. I’ve raised money before, angel funds so nothing massive. What I found, when I’m using other people’s money, it’s much easier to spend. Actually, I hate to say frivolous, I don’t feel like I’m being frivolous at the moment, but I’m much more frivolous. “Oh, we can move into this nicer office space, we really should because it’ll impress customers. Oh, we should run multiple advertising campaigns simultaneously to get bigger splash.” But when I bootstrap, the office space can wait, the advertising campaign; I’m just going to pick one, measure it and if it’s working I’m going to ramp it, if it’s not, I’m going to have to redirect quickly. So I think bootstrapping is a better start.
I think most — about scaling — I think the reason most people fail to scale is they fail to change. What it takes to start a business, from the ground up, is you have to be what I call a ‘doer.’ I mean, you got to do everything. You got to do the books, you got to do the servers, you got to do the sales, you got to do do do. But when you get to the next stage — I call The Four D’s. So, you move from doing to what I call deciding. Most people call it delegating, which is actually the wrong definition. Most people say, “Oh, when I get that first hire I’m going to start delegating the work.” But what happens is they actually start task rabbiting. They start giving people tasks, but those people come back asking for decisions. They say, “Oh, um, what do I do now? This didn’t — what do I do now?”
And there’s a famous Indian goddess from — that’s worshipped, that has one head with eight arms, I think that we’ve all seen it. And that’s what it’s like, our businesses move from us doing the work to this deciding phase, where we’re just the head, deciding for my three or four employees that keep coming in with an endless stream of questions and get frustrated at. So, most of us get stuck there and say, “I can’t take on all this work of doing all the decisions for everyone, because I can’t even do my own work. It’s easier for me to go back the way it was.” And we jump back to the doing stage, only to ultimately get exhausted from that and say, “I can’t do the work anymore, this is too much, I need to hire someone.” And we flip flop.
The way out of that, to scale, is you have to move to what I call ‘true delegation.’ And true delegation is the assignment of the task, but the assignment of the decisions around the task. The employees know when you run into a question you must find the answer, and there will be no punishment if you seek out the answer and make a decision. Now if you make decisions that hurt the company over time you’re going to be moved or maybe laid off. But if you don’t make decisions, you’re fired. I need people who will make decisions who in their best belief, believe it’s in the best interest.
And once you start truly delegating, the next step and the final step in the Four D’s is designing. And that’s when we move to, instead of being in the business, we’re now viewing it from above, almost like it’s a chessboard and we’re starting to move pieces around and try and get them into the right position to have a winning business.
Dan: That’s awesome. That’s awesome. And I can also see — I tell my students too: don’t delegate what you don’t understand and you haven’t mastered. That sometimes you can’t — oh yea, just hire that SEO person or hire that Facebook guy. Do you know Facebook? And if you don’t, how do you know if he’s working or he’s BSing you? How do you know, right?
Mike: Right. How are you going to measure it?
Dan: How are you going to measure it? You won’t know. So I think we still need to know, we still need to learn, but I love the design and delegate, that’s a little bit of a distinction but it’s a very, very important distinction. What about — let’s say they do, and they going moving towards the decide stage, that they start looking to build a team. What’s your advice for finding those superstars and finding those team members?
Mike: So, this took me a long time to learn, and I’ve had some good luck with this. I used to look for people with the experience I needed. So I’d look for someone — say I needed to hire a bookkeeper, right? I can’t do the bookkeeping for my little business anymore, I need someone else to do the bookkeeping. Who do you want to hire? A bookkeeper, it’s kind of obvious. But what I noticed was how many of these people were coming in, Dan, that had the ability to do bookkeeping but the experience meant that they had their own preconceived set of rules on how to do it. They had their definition of what they believed was the right way to do bookkeeping, which was different to me. So I actually had to unwind their knowledge and experience and reteach them how I do bookkeeping. So it ended up being like a total failure.
The second thing too, is I found what’s called reverse golden handcuffs. The idea of golden handcuffs is where you have an employee and you pay them so well that there’s no way they can afford to leave. I actually had the reverse. As my experienced employees came on, especially my tech business, like the high end technical support staff, they were the only people who knew how to do specific tasks and therefore they’d come back to me and say, “You know what Mike? You’re not paying me enough to do this, I’m going to walk out the door. And by the way you’ve no one else that can do this, you’re screwed.” So they actually put the golden handcuffs back on me. I had to pay them more and was trapped by them.
So what I found is, I no longer hire on experience. The only thing I can give to people, of course, is training, and ultimately experience. But I can’t give them intelligence, I can’t give them desire, attitude, drive, compatibility to our culture. So I look for that.
And here’s a couple of mini hacks I’ve found along the way, Dan, that I think will help your listeners.
The first thing I do is, when I run an ad now, like on Craigslist or on the online things like Upwork or whatever is out there or just the local paper, whatever, I run these super super long ads, like 10 paragraphs long: every detail about what the position is about, every expectation we have, what they should experience at the company. And then near the bottom, but not at the very end, but in the last one or two paragraphs, we put “if you’re in fact reading this entire ad, you must respond by including these words in the subject line of your email response.” Something like “I’ve read the ad.” And what I’ve found, Dan, is when people respond, of the 100 resumes I get back, maybe three or four actually respond following the protocol I requested. Then no one else can follow our rules, our direction, I definitely don’t want them. They’re not meticulous, I don’t want them. And if they’re skipping the ads, I don’t want them. And that little simple trick roots out the 97 inappropriate colleagues or employees for me, and it brings in the three that are probably a good fit.
Dan: That’s awesome. I have a trick too, I’ll share with you. I basically ask — I’ll say, “Don’t send me a cover letter, just send me a resume, one page, and I also want a two-minute video cover letter.” When I do that it eliminates 99% of the people, but I can see — but if people are asking too many questions, “Oh, why do you want a video and this and that,” I don’t want them. Because it tells me they are not culturable. And I purposely tell them, I want you to upload to YouTube and make it unlisted. And all these little things tell me a lot about them. Because I believe how you do anything is how you do everything, right?
Mike: Yea. We’ve been doing that in the last year, and I wonder if we learned that from you. It’s unbelievably effective, and it’s free advertising, right? So now you have these people up on YouTube telling about him looking for a job with Dan Lok and this is why I’m the best qualified candidate. Well other people are seeing that too, and they’re finding out about you, Dan. That’s awesome.
Dan: That’s exactly it. So basically you hire for attitude and you train for skills.
Mike: That’s right.
Dan: Okay. And let’s say they have good attitude and is there — what if, Mike, there’s some position that you actually need someone with, let’s say the guy who was kind of holding you hostage, your employee. “Hey Mike, I’ve got the skill, you need me, I want more pay.” What do you do with that person? Because what if some positions you actually need a lot of skills?
Mike: Yea. So my second company was a forensics business. My first company, and talk about life skills, that’s where you need it. My first company was computer network integration, and that’s where I had that first golden handcuffs experience, it was a high-end guy, we’ll say his name was John. “No one else can do it the way I do it and either you pay me more or I’ve got to leave.” And first I paid him more. I cut my salary, I needed this guy. And six months later he needed more, and three months later he needed more. And it became pretty obvious that enough would never be enough. And that’s when I realised either I got start this capacity from scratch, or I got to find a new way to do it or I’m never going to make a dime, because he’s just going to keep on putting the handcuffs on me, and other employees would do the same.
So what I started to do was not — I didn’t get rid of him, not right away — what I did instead was to start simplify our product offering, which sounds kind of crazy but ironically clients want simplified solutions. Meaning, instead of doing this diverse stuff — we were supporting Novel networks, Window networks, this thing called LANtastic, all these different systems out there. We supported them all. We said, “You know what? We’re dropping them all, we’re just going to Windows NT.” Which became Windows Server. But we’re going to Windows NT. We used to do phone systems, cabling, all these things. We said, “You know what? We’re not going to do phone systems anymore, we’ll let other companies do that. The cabling, we’re going to find a company that’s going to be our regular contractor.” And we narrowed down the number of products that we serviced. We were able to get lower level people to master these fewer things faster, because there were fewer things for them to master.
So by narrowing down our service set, and also narrowing down our client base, we started focusing on a niche, we started focusing exclusively on hedge funds that needed Windows servers. Very quickly, we figure out, like, here’s the fifty steps to make a hedge fund excited. But the best part, Dan, was that the hedge funds started paying us a premium because we became specialists in it. So lower end skill set people needed, it was a faster learning curve because it was more narrow, and our clients paid us more. And that’s how we ultimately moved into getting rid of these high end reverse golden handcuff people.
Dan: Very, very smart. So basically, it’s not just an employee issue, it’s also a business model issue, something entrepreneurial. We can look at our business model and say, “Hey, this doesn’t make sense, and if I scale does that mean I need more of these people that would blackmail?” Or can I reverse that and kind of restructure the offer a bit and say, “Hey, I can do this.” And plus you switch yourself to hedge funds means you switch yourself to people that’s got money, right? That also makes a difference.
Mike: There’s no question that we can simplify our models. I mean I look at McDonalds, for example. You don’t ever expect someone to come in there into McDonalds and say, “You’re going to pay me $100,000 a year to flip those burgers or I’m out of here.” Of course not. It’s going to be a minimum wage position because that’s how the company has been set up. But there has been tons of thought put into those systems. A chef cooking at McDonalds — I don’t know what they make but let’s say it’s minimum wage. A chef at a restaurant down the street that’s higher end, the chef probably makes more, but the food at McDonalds is so routinized, the process is so systemised, you don’t need someone that’s higher end. I’m not saying that you should make the McDonald’s motto verbatim, but I think there’s a lot to learn in bringing about that systemisation to our business and its ability for us to hire more entry level people.
Dan: And Mike, one of my favourite books of yours is Profit First. And I shared with you before the show, that book has made me so much money and saved me a lot of money as well.
Mike: I love hearing that. I love hearing that.
Dan: It’s awesome. And I never liked those type of numbers books, but I knew it was from you, so like, “Okay, Mike’s new book, I’m going to get it.” And I read it and was like, holy shit! This is awesome. Because it’s very very practical and it’s something that I’ve experienced. And when I read the book I was already doing some of it, or most of it, but I learned it the hard way, which is kind of dumb, and I’m so glad you put out a book like that. Share with us the concepts within the book and what inspired you to write that book.
Mike: So it was the same thing that’s gotten me inspired to write every book. When I wrote that book it was because I needed that solution for myself. I didn’t know how profitability works. I didn’t know how to manage my books as my accountant was directing me to, to read my income statement and my balance sheet. All I was doing was, I noticed that when my accountant would say, “Mike, you got to read your balance sheet and income statement and tie it back to cash flow,” that what I was really doing was reverting to what I call bank balance accounting and looking at my bank account. So I developed that system to capture my existing behaviour. So that’s why I did it at first, I did it for me. That’s what inspired me to write the book.
How it works, is realizing that for every human being I’ve ever known, ever met, it’s really hard to change who we are. I think we have a predetermined hard-wiring in us, our behaviours, and yea maybe we can influence a little bit, but most of us stay consistent with our behaviour. So therefore, instead of trying to change who we are, we need a system that works around our existing behaviour and channels that behaviour to get the positive results we want. And that’s what Profit First does. We don’t need to change who we are as entrepreneurs, we simply now have a system that works with the natural behaviour of most entrepreneurs. And therefore it ensures profitability, because it works with who we are.
Dan: And I think one of the big mistakes that I made, I think a lot of entrepreneurs make the same mistake, is that we focus on: let’s bring in more customers, let’s focus on marketing or creativity, let’s focus on revenue. We only talking about revenue and we don’t focus a lot about profit. We believe it’s almost like: well there’s enough revenue, there’s got to be some net profit somewhere, which may not be the case, because sometimes I see companies where they grow revenue year after year after year and boom they’re out of business.
Dan: Why is that?
Mike: So it’s top line thinking. And there’s this mentality — Dan, I know you know it’s in the entrepreneurial community — we pound our chests on revenue. And so the question is: I call it the how big is it question. People will say, “Hey, how’s business going? How many employees you got now? How many customers you dealing with?” Everyone’s trying to get to how big is your business? How much revenue do you have? That is also kind of supplemented that belief of size matters or top line matters by the stuff we see in the media. When you look at the cover of the big magazines, it’s always these businesses that have had this stratospheric growth. I’ve never seen the cover of an ink magazine saying: here’s a small business owner that’s figured out profit. Yet that’s what it should be about. But they’re like: no, look at this guy he took it from start up to 25 million in only 2 years. And everyone’s like, “Oh my gosh, how did you do it?”
Now here’s the challenge of top line thinking. Revenue is vanity, that’s the point I was making first, but also its stress point. Meaning: the more revenue is coming in my business, there is more stress put on my business. I need to sustain that revenue. I need an infrastructure that supports that revenue. So the more money I bring in, the more weight and stress it puts on my business to perform. The entrepreneur often feels it manifested by saying, “Oh my god, to keep this business going at this growth rate, if I don’t get a sale next week I got to refinance my house or pull my money out of somewhere else.” So there’s actually a manifestation stress.
Profitability — where revenue is vanity, profitability is sanity. Profitability is the balance to revenue. It’s kind of like the HDL/LDL, which is cholesterol. They say, “Oh, you have really high HDL you’re at risk of a heart attack.” But they say, “Your LDL is so high don’t worry about it, you’re actually a super healthy guy.” So profit brings about that healthy balance, and we need it. Quite frankly I would way rather have a small business that does a few hundred thousand dollars in revenue and I take home a hundred thousand, than to have a ten-million-dollar business where I’m taking home $70,000.
So it’s an established mentality and I’m trying to fight it. I’m trying to have people do or ask a new question. So instead of asking: how big is it? Or some variant of that, I ask: How healthy is it? So when I meet an entrepreneur and he says, “Hey tell me about your business, how many people you got? How big is it?” I’ll say, “Great question, but let me respond by telling you how healthy my business is. And I want to ask you the same question. Tell me how healthy your business is?” And some guys stand there like a deer in the headlights. “What do you mean healthy?” You know, how strong fiscally is your business? “No one really asks that, we’re making a lot of money.” I’m like, “Are you taking any money? It’s how much you take not how much you make.”
Dan: Yes and don’t be so impressed with, “Oh yea, I’m at ‘x’ amount of revenue.” At the end of it, how much are they keeping.
Mike: Yes, that’s what I care about.
Dan: Right? And I like the philosophy, like in all your books: the business is a vehicle, it’s a mean to an end, it’s not an end by itself.
Mike: That is true.
Dan: That we want to know — not everybody’s interested in building a big business, not everybody is interested in building it and selling it. Some people just — they may be lifestyle entrepreneurs, they want to make money and sustain and maintain a certain lifestyle and that’s perfectly fine. Not everyone’s, “Oh I need to build a hundred-million-dollar company.” Yea, if that’s your goal, go for it, if it’s not, that’s ok.
Mike: That’s totally ok. I read — and I can’t remember who said it anymore, but someone said: the right sized business will find you. And I believe that emphatically. I thought when I was starting out, I want a hundred-billion-dollar business, I want Amazon or Google. That’s actually waned now, I don’t want that. Because I also see the responsibilities will change if I did have that to something that’s not intriguing to me. I don’t want to report to investors. I don’t want a board of advisors I have to report to. I don’t want to do those type of meetings. I don’t want to be doing the work either. I don’t want to be the person out repairing computers. I want to have a small business where I do the things that I love to do. Like, I love to spread the message, I love the marketing side of business.
So just kind of substantiating your point, Dan, I think it’s ok to have any sized aspiration we want, but also, it’s okay to realize that as you move along there’s a certain point where you’ll say, “You know what? This is the right size business for me.” And then congratulations that’s the right size. Do that!
Dan: Yes. And bigger is not always better.
Dan: Just listen to us, bigger isn’t always better. Mike, when they go to your website, we can see that you’re different, you’re a funny kind of entrepreneur, right? It’s not, like, very stiff and you’re like a fun kind of cool kind of guy. And even through your video clips that I see — that and you wrote a book named Toilet Paper Entrepreneur. Like, even from that title and the cover from your work, you get a glimpse of your personality, right?
Actually, talk to us a little bit about The Toilet Paper Entrepreneur. That’s kind of funny, like, when I first see the cover I’m like: what the hell is this? What does that mean? What does that actually mean?
Mike: So what it means is — I call it ‘the three-sheet moment,’ and that’s the cover of the book. There’s always that — everyone’s experienced that moment where you’re short on toilet paper. But no one, like, gives up and says: I’m done with my life here. You find a way to get through that situation. And the argument of the toilet paper entrepreneur is that the lack of resources is often your biggest ally. So when we don’t have money or we don’t have contacts or we don’t have the resource of experience and knowledge, many people say, “I can’t start a business. I need that network of people who are going to buy from me, I need the experience of my industry.”
Dan: I need capital, or whatever.
Mike: I need capital! Oh my god, yea. I’m finding it’s the opposite, Dan, the lack of education means you don’t know the rules and you become a rule breaker. That’s what the industry needs. When you don’t have money, you have to find ways to be more innovative, more frugal, and that always changes an industry. When you don’t have the contacts, you have to find a way to get contacts, means you have got to become masterful in marketing because you have no customer that’s going to knock at your door by default. So that’s what that book is about.
And then in regards to my website and the book titles being different, the adage I have in marketing is: ‘better is not better, different is better.’ I see business after business trying to be better than the competition, in fact they’ll say that on their website, ‘we’re better than the competition.’ Everyone thinks they’re better than everyone else. Therefore, it’s a zero-sum game. But different is what stands out. So when I build my businesses or partner in another business, I always pursue what can we do that no one in the industry has done before. What is different.
And so, when people visit my website — I’m an author — my expectation is to set up a website, and hopefully that’s what you experience, that is like no other author. It’s that different. And that way if it’s different it’ll become memorable.
And one last thing: different does not guarantee me the business. Different doesn’t guarantee anyone the business. It does guarantee the attention. I know if I’m different I have your attention, at least for the moment. Then it’s my responsibility to convert you into a customer, someone that has intrigue and wants to learn more. So different guarantees attention but only for moments. Our then, responsibility is to engage the customer and get them moving along with this.
Dan: I totally agree. Obscurity kills businesses. And most of the time it’s like, “Oh, how can people not buy my stuff?” Well, because people don’t know your stuff. They don’t even know you exist, that’s the problem.
Mike: Yea, yea exactly.
Dan: And it’s not like you have a good product — “Oh, but my stuff is good.” Yea, but unless they’ve tried it, they don’t know it’s good. Now Mike, I can see that one thing we’re on the same page, something that we share, that you are very big on personal branding as well. I am curious, what’s your take on personal branding and maybe what are your personal branding strategies?
Mike: So personal branding is extremely important for me. And my take on personal branding is first this: that a personal brand is the only brand in the world that cannot be duplicated. No one can go out there — like Dan, I can’t go out there and say, “Hey, I’m the new Dan Lok. Everyone do business with me.” Impossible. And you can’t go out and say, “I’m the new Mike Michalowicz, everyone do business with me.” No. There’s only ever be one of me: I look my way, my name’s my way, I’m particularly unique and so are you.
So, in a personal brand there’s a massive advantage in that you can’t get copy cats. Now if I came out and said I have this super unique soda and I call it Coke, Pepsi can come out a minute later and say we have the better tasting soda and then the fight begins. So with the personal branding, no one can clone you whatsoever. That’s the big advantage.
The challenge of course is it’s just you. How do you build a personal brand beyond you? And so what I found for a personal brand is: you, me, will have to be the spokesperson for ourselves forever, or at least close to it. I think there’s a way around it. But if I want my brand to build, I am the spokesperson, I have to be the one getting out there and circulating around. Now I do have a team of 12 colleagues here who work in my office. I have a team that helps with the writing, helps me with the social media —
Dan: The PR, everything.
Mike: Yea. But at the end of the day, I still have to be the front of the band if you will. So how do you transcend that? The only way I’ve found is through making products of ourselves that live into perpetuity, and the only product I’ve found that lives into perpetuity so far are books. A lot of people still know Dale Carnegie who wrote “How to stop worrying and start living”, even though he’s long gone. A lot of people still know Napoleon Hill’s “Think and grow rich,” even though he’s long gone. So I found books have permanence. Now I’m not saying video or audio won’t do the same and maybe it will, but for now books seem to have something that transcends time.
So when we build a personal brand, I encourage people to seek out products for themselves that can transcend even their lifespan. Because then if you do that, the day you say I need to take a break and I can’t be the spokesperson, if you have a book that’s going on its own, you’ll still have income, you’ll be still having an impact, but you can get a breather.
Dan: I also noticed, Mike, that if, let’s say someone — I’m curious what’s your take, because this is what I’ve learned — let’s say someone is a CEO of XYZ company, and that’s okay if the company is very, very famous. But assuming just like most companies, whatever XYZ company. And they see him as just CEO okay. But whereas if you’re a personal brand — I found that in business, it’s easier for me to get through to people because I have that, you could say the currency right, the —
Dan: — influence, right? And it’s much easier: “I want to interview the CEO of XYZ company, I’ll interview the person. And I see this like, Trump is a very good example, Richard Branson is a very good example. Richard; Virgin, if you think about it, it is Richard, right? Branson in some way. But he’s got all these companies, hundreds of companies. So like, what’s your take on that.
Mike: Yea, you can crack in doors much quicker. What happens with a personal brand, I’ve found, is that it builds fandom as opposed to consumer brands or companies that build consumers. So Coca Cola, as an example, has lots of people that like and drink Coca Cola. They are consumers. They don’t go to rallies to say, “Hey, everyone should be drinking more Coke.” They don’t take on the values of Coke, necessarily. But you’ve mentioned Trump. Like him or hate him, or love him or hate him, he spurs people to action and there’s people that take on his message and carry it. And there’s people that absolutely resist it. But it does spawn fandom. And it’s true for Richard Branson, it’s true for any personal brand.
Even if you’re just starting out, you can do the same. I have, I can’t say it’s massive, but I have some uber-fans. I literally have two people that have tattooed their bodies with my brand. Thank god, it’s not my face, can you imagine, that would be really bizarre. But they’ve put ‘profit first’ on themselves and they associate a life change with it. And if you can get people branding themselves, wow. But more than just that, they’re carrying on the message. It’s almost like they’re part of a congregation of some kind of religious community and start spreading the word.
I today find more people — ‘Profit First’ is my most popular book — I find more people on a daily basis talking about ‘Profit First’ than I do now. And that, to me, is the tipping point of a personal brand, when people start carrying the message, not for you, because it serves them and serves their community and they just want to carry it on. That’s something we can do with a personal brand that a traditional brand can’t do.
Dan: Yea, and you see that sometimes when people want to invest in your company or they want to do a deal with you, they’re not just doing a deal with a company, they’re doing a deal with you, they are placing their trust in you as a person. And I think in some way — I don’t know if this is true, again, this is my theory of it — that when someone puts their name out there and it’s a personal brand, it almost creates a little bit more trust in the marketplace. I’m putting my name on it, not some company, my name on this thing, on this project. It’s my name that’s on the line. It’s like, “Oh yea you’re not going anywhere.” And nowadays with social media it’s hard to just be a nameless faceless person/entity. People want to see you they want to see what you’re like and what you’re like in person through all this social media. It’s important. I don’t care how big of a company you run, right.
Mike: Yea, there’s a little bit of this voyeuristic experience that may happen. So it’s actually interesting. So I was just on a speaking tour and my wife decided to come along with me because we were travelling some beautiful parts of the central southeast. And we were in Savannah, Georgia etc. And we went to this one event and after the event people were coming up and talking to me and we were trying to head over to the car because we actually had to hightail it to the next event, we were driving across Georgia from Atlanta to Savannah. And so my wife is with me and people come and go — first they go, “What’s it like to be married to Mike?” Which is really uncomfortable and odd for my wife and she’s like, she basically says, “It kind of sucks. It’s not the best thing.” But people only see the stories, they only see a little fraction of what’s going on. And so there’s a misperception.
The second thing is, and this isn’t really necessary. But I do share parts of my personal life in my books. I think it’s important for people to see the personal side and the challenges that entrepreneurs go through in their home lives. So I put that in there. But now people know some of my intimate stuff. And I’ve grown callous to it, you can ask me about how I lost all my money a million times, my daughter taking her piggy bank and putting it down in front of me. I’ve lived that story so many times that — it’s still very impactful for me, but I’m used to it. When people come running up to my wife and say, “That piggy-bank, what was that like?” It shocks her. She’s like, “You know about that?” There’s a challenge when you really put yourself out there authentically, is people are going to know you to a degree that you don’t know them, and that’s a little bit disconcerting at times.
Dan: Yes, and sometimes they walk up to you and it’s the first time you’re meeting them, but they feel like they know you for a long time, right?
Mike: Yes! “You’re great Dan, I love Dan.”
Dan: They want to hug you: “So good, I watch your stuff and watch your video.” It’s like, “Hi”, right? It’s a little bit bad too.
Mike: Yea, “I remember when you did this Dan, so funny, remember that?” “Dan, I saw you six years ago, we ran into each other for two minutes, I don’t know if you remember but you got to remember, it was so great!” And from their perspective I get it. I get it. Because from us, when you’re building a personal brand Dan, me and you, we live this every single day. This is what we’ve chosen for our life’s passion, our life’s careers, our life’s purpose. Our goal is to have impact on others. And we’re delivering on that. The strange thing is, Dan, through your work, you’re touching thousands and thousands, tens of thousands, hundreds of thousands of people. Of course you can’t know them intimately but the impact you’ve had on them has been so intimate, that they feel that bond. They come to you and they just think they know you that well. It’s a weird — to me it’s actually kind of cool and I love it, but I also know that it’s going to be kind of weird at times, because people are going to feel that connected and I just won’t know the story around that.
Dan: And the way that I see it is kind of the Spiderman quote: “with great power comes great responsibility,” that I see myself, if I’m being seen as a role model and someone they like to study and follow, that I want to be better, that I want to keep growing, I want to keep delivering value and it’s not something — that’s why people thinking about personal brands, “Oh, I will do a couple of podcasts, I’ll make some videos.” It’s not like that. It’s once you make the decision to be a personal brand, that’s it. Like, the rest of your life, all of the time, right? And it’s not something like, I guess I’ll stop being a personal brand. Once you decide to do it, this is it right?
Dan: And I find that to be the case. And I love it. I think I embrace it and like you said, there’s some huge advantages, there’s some disadvantages, but I think the advantages far outweigh the disadvantages.
Mike: Yea, I think it’s a little bit — like what you and I do and so many other people — I think it’s a little bit like the TV stars or the movie stars of the last decade, of the last few decades. What we do is it’s work but it’s also a performance. We have to entertain, educate, deliver, we got to be on. And I think I’m only as good as my last performance. Whatever that may mean: my last book or my last speech. And if I don’t keep turning up the heat, if I don’t deliver more, the audience is going to go to the next person that is delivering more. Kind of like the actor who, he’s a great child actor and then you never see him again. We run that same risk and challenge. I know you’re up for it and I’m up for it, I love it. It’s just a reality of the business we’re in.
Dan: I agree. I’m curious, also Mike, what are some habits that you have that you believe make you successful?
Mike: I wake up — I say it’s early — 5:30 every morning. I know people that wake up at 3:00, so I’m not ridiculous, I consider that ridiculous. But I get up at 5:30 every morning, religiously. And first thing I do is work out. Five days a week. So cardio, gym, so forth. And what I’ve found is the more I work out the better I sleep. And I really value sleep. I’m an eight hour to eight-and-a-half-hour guy, so I’m literally in my bed at 9 o clock, sometimes if I can coerce my wife I’m like, “Hey, it’s 8:30, why don’t we just call it a night now.” She’s like, “Yea, yea.” So 9 o clock I’m in bed. And I believe in exercise for the energy it brings and the quality of sleep it brings.
The second thing is I carry my phone with me to record thoughts that come around. So I always have my phone with me. I don’t bring it into the shower, but it’s right next to the shower. When a thought strikes me I stop and record it. So it was funny, yesterday I went for a run, I’m getting prepared for a half marathon and I started to injure one of my feet, I could feel the pain building. And there’s a saying in sport, fight through the pain, push through the pain. And I stopped and I had my phone with me and started recording. I said, “You know there’s a saying, ‘fight through the pain’, but we have to realise there’s two types of pain. There’s pain that is indicative of a growing injury, or there’s pain of mental fatigue. And pushing through mental fatigue actually brings you to the next level, and we should fight through that pain; but the pain of injury you actually further injure yourself and you disable yourself from doing the thing at hand. And then that type of pain we have to stop.” So, my habit is to always have a recorder because those ideas hit me and that was recorded, it might go in a future book, it might become a blog, maybe it goes nowhere, but I’ve captured thousands of thoughts that way.
Dan: Oh, wow. Smart. I like that. I’m going to do that starting today, that’s awesome.
Mike: Yea, any thought that hits you, just record it. And then I have a full time assistant. Her name is Kelsie, she’s unbelievably amazing, she’s here in the office. I believe that any entrepreneur, any personal brand, any anyone, get yourself an assistant. And listen, if your job is being an assistant, get yourself an assistant. It’s just like, everyone should have an assistant. Because there’s work that we’re talented at and then there’s the 90 percent that we’re not. And if we are stuck to the 90% it drains us from doing that other 10% we’re good at, even doing that stuff well. But if we can get half that 90% off of us, a quarter off of it, now we have more time to work in our zone of genius and we have more energy when we work in our zone of genius, and things ramp up.
Dan: And Mike, are there any tools, like maybe apps or websites that you just cannot live without?
Mike: So Asana is my most recent one.
Dan: Asana, yep, awesome.
Mike: So for our team management, we do that all the time. Zoho is my CRM, I love that. This little CRM tweets right, it competes with like an infusion software or something. So I love that. And then the apps, couple ones I can’t live without: I have a white noise app. When I’m at a hotel I can be — because I travel a lot — a loud hotel, and white noise sounds like a fan’s running in the background is amazing. Oh, and another one I just got into is VPN. Travelling anywhere, you can get hacked so easily on public Wi-Fi that I now have a VPN for added security protection.
Dan: That’s awesome. And also a friend of mine, who’s actually a — people hiring him as a consultant to defend hackers and stuff, when he shares some of that stuff with me, it’s so scary. It’s amazingly scary what he can do, right?
Mike: It’s unbelievable. It’s so funny, my next meeting today is a meeting with the insurance company that does cyber-crime insurance. Because it’s so pervasive, it’s everywhere. I went to a conference, a private conference, there’s about 30 people in the room, and the host of the conference said, “We want to show you something from the dark web.” And they asked for permission in advance, but, “We’re going to show you something.” They went on the dark web, which is the criminal side of the internet. And they pulled a database, and they literally said for Mike Michalowicz, here’s your banking website, here’s your username and password — and I was like “uhhhh” — for your email. Here’s your username and password. It’s been stolen already and now people are selling it. And I was like, holy cow. And their point was: a) change your passwords constantly. Protect yourself. Secondly, get some kind of protection with insurance because this isn’t going away anytime soon.
Dan: Correct. It’s very, very scary. It’s very, very true. It’s not like we’re trying to scare you or anything like that. It’s real, trust me. My friend could sit next to you and put down the iPhone and he can hack into stuff so easily. The way he gets clients is interesting, he’ll go into a meeting, he’ll turn on their computer and he’ll just hack it right there and just show that’s your defence system, that’s how vulnerable it is. Every single time. Closing 100% right.
Mike: Yea, it’s unbelievable. The key of course is to, if you do that technique, is to get the permission of the people in the room. But you do that and there’s no denying, I think that’s the ultimate sales tool. I’m trying to figure out that for my line of work. If I could do something that convincing in the moment. You know, here’s all your passwords, woops.
Dan: Boom. Done. Mike, talk to us about Profit Con. Because I know it’s a conference that you’re very proud of and it’s very unique. Talk to us what’s the conference about and why should people attend?
Mike: Yea. Profit Con — anyway I was telling you off air — Profit Con, I believe, is the only conference in the world that is dedicated to profitability. That’s the entire focus: how do we make businesses more profitable? So we have it annually, this is our third one. We’re doing it in a town called Marstown, New Jersey. This is near Newark airport, our big international airport in New Jersey. And it’s a three-day conference, starting September 27th going to the 29th, and we’re going to help businesses become more profitable than ever before, give them the hacks, the tricks, the techniques, the behavioural changes, all the tools to increase profitability. And we have a website dedicated to this, so if anyone wants to check it out it’s called profitcon.us. And we’d love to have some more guests out there. It’s going to be amazing.
Dan: And this is the be third year you’re doing it now, correct?
Mike: That’s right. Bigger and better than ever before.
Dan: Yes, and there’s a great video you’ll see on the page and gives you a glimpse of what the conference is about, the people having fun, people have a good time and it’s a packed agenda. It is a packed agenda.
Mike: Packed agenda. And it’s a boutique show, like, it’s only our third year doing it, it’s not like there’s thousands of people. We’re expecting 150 to 175 people this year. So it’s a small, intimate event, you get to meet everyone speaking. If anyone comes that’s listening to this show we’ll be drinking a beer together that last night. So join us before we get bigger. It started off the first year it was 15 people. So just to give you a sense, we’re getting bigger. It’s still very small but we’re getting bigger. We’re pretty serious about this, going the distance.
Dan: And the ideal attendee for the conference, is it like a start-up or they should be making a certain amount of money? Like, what kind of entrepreneurs should attend. Should they be tech entrepreneurs or any kind of entrepreneurs?
Mike: If you’re a small business this is ideal for you. Anything sub two million we think is good for entrepreneurs. If you’re an accountant or bookkeeper or coach, you help your businesses and financials, you have to be there. I consider it mandatory. What we’ve found is teaching one entrepreneur is hard. Teaching one accountant is hard. But once that one accountant gets it, they roll it out to their 50 clients, so the impact is much bigger when accountants, bookkeepers, and coaches buy into it. So if you’re what we call the ABCs, accountants, bookkeepers, coaches you got to come. There’s no excuse.
Dan: Yes and also, I think even for someone running a company if they have someone — because if they read your book ‘Profit First’, they would see that your philosophies, it’s a different way of thinking. It would be nice to bring the team members, the CFO, whoever is handling the money, right.
Dan: So, it’s one thing for you to explain it all, “Hey, I learned this from Mike, this is what it is.” “Huh. What?” Just bring them to the conference it’s a little bit easier, right?
Mike: Yea, it’s absolutely true.
Dan: Let Mike do the work. I assume that you explain a lot of concepts and kind of dive in depth and talk about applications within the book, right? Just take it from the book to the conference.
Mike: We do, we do. We have a section just dedicated to, that I teach, the Profit First principles. Then we have guest speakers coming in that speak about all the different elements of properly — how do you take cost cutting, how do you go step by step through reducing cost. We have one person — actually we’re talking about the organisation of an office, or we dedicate an hour to literally the layout of space and how it makes your business more efficient, aka drive profitability. So we dig into the nuances of stuff too.
Dan: And I highly endorse Mike’s book ‘Profit First’. I’ve read different books on how do you read financial statements and understanding numbers and I don’t like those things, but I have to learn about those things and I say that Mike’s book, and this is coming from me, that first time I read a book that answers my questions. Not like, “Ok, now I know how to read these numbers and balance sheet and profit loss statement, now how do I use this damn thing, what does it mean? But Mike lays it out: hey, this is how much you pay yourself, this is how you should calculate it, this is what you do. It’s very, very practical, it’s not boring. You can take something you can read that chapter. Boom, the next day you can implement it. So I highly endorse it.
Mike: Thank you.
Dan: And Mike, I ask all my guests this question. I’m going to ask you this question, it’s a deep question. If you could travel back to any day of your early start-ups and have a five-minute conversation with your former self to communicate any lessons that you’ve acquired with the intention of saving yourself mistakes and headaches, what would you tell yourself?
Mike: I would probably — in regards to my partners, so I’ve had partners in a lot of businesses, to establish regular communications. Meaning, not just say, “Hey, we’ll talk when we talk”, but every single week sit down and get what I call jawbone time. Get that mouth moving and talking. Because the greatest insights for our business come through just talking and the comfort in working with each other comes the more we talk. So just talk more, as simple as it sounds, the impact is magnificent.
Dan: Awesome. Just that regular frequency of communication.
Mike: That’s right.
Dan: Awesome. And any final thoughts and contact information so our listeners can learn more about it if they want to get in touch with you or buy your books?
Mike: Sure, sure. So if you’re interested in discovering Profit First or the Pumpkin Plan or any of my books, The Toilet Paper Entrepreneur, it’s all on my website. I have a shortcut to get there. It’s mikemichalowicz.com. It’s a doozy to spell. You can google me ‘Mike’ and then type in spacebar ‘Mic’, you’ll see my name drop down. It’s the longest most Polish name. But the shortcut is Mike Motorbike, that was my nickname in high school. So if you go to mikemotorbike.com it’ll bring you to —
Dan: That’s cool, I love that nickname.
Mike: The irony was that I never had a motorbike. But mikemotorbike.com. Go there, it’ll forward you onto my website, and I have chapters from all my books available for free. I used to write for the Wall Street Journal for a couple years, and my ten most popular archived articles, meaning you can only get it as a subscriber to Wall Street Journal, you can get for free if you sign up at my sight, I’ll send all ten articles to you.
Dan: Definitely. Get all of Mike’s books, it’s a fun read, it’s practical, it’s interesting. And small business, big business, doesn’t matter. I think it’s just great. There are a lot of authors that I read, but Mike, one of my top ten. Hundred percent. Mike, thank you so much for inspiring us today with your story and your ideas and strategies and your wisdom. I appreciate it, thank you so much.
Mike: Dan, I appreciate you, thanks for having me on.