Shark Tank Pitch Secrets with Kevin Harrington
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is none other than Kevin Harrington, one of the original judges on Shark Tank. If anybody knows what it takes to have a good pitch, it’s Kevin Harrington. He’s literally heard over 50,000 pitches in the many years he’s been doing this, from listening to pitches for infomercials to listening to pitches on Shark Tank. He has a really great key here which is that, “Consistency is the ultimate motivational tool.” He said, “When you’re out there, you need to show the investors how they’re going to get their money back.” He gives an example of exactly the kind of pitch he would like to hear in order to get him to say yes. He said, “You need to test before you invest.” He gives us great insights into what a magical transformation is that he is looking for when he hears a pitch.
Listen To The Episode Here
Shark Tank Pitch Secrets with Kevin Harrington
Hi. Welcome to The Successful Pitch podcast. Today, I am thrilled to have Kevin Harrington. You probably know him as one of the original Shark Tank judges. He has been so successful in so many different areas. He has written multiple books, one called the Key Person of Influence, and he is definitely a person of influence. He is known not only for his expertise on Shark Tank, but he is the inventor of the infomercial, the As Seen on TV pioneer. Now, he’s involved with Quantum Media, which is a digital media agency. He hears so many pitches. He’s going to give us insights into what makes a great pitch. Kevin, welcome to the show.
Hey, John. You said a mouthful there, thank you for all that.
I’ve been a big fan of yours for multiple years. I’ve watched a lot of your clips on television and your areas of expertise. I always like to go back to someone’s story of origin. Did you always know you wanted to be an entrepreneur?
I was lucky. I grew up one of six kids in Cincinnati, Ohio. My father was an entrepreneur and he always said, “Kevin, I want you to be an entrepreneur, own your own business, control your own destiny.” Now, my mother, her father was in banking, so she came out very conservative, “Oh no, I’d really like for you to be a doctor or a lawyer.” They struggled a little bit. The good news is I have two older sisters. One married a doctor, one married a lawyer. I got to be the entrepreneur.
[Tweet “Shark Tank Pitch: Consistency is the ultimate motivational tool.”]
Everybody filled the different dreams of your parents, so you got to do your own expertise there. One of the things that you’ve recently written about in Forbes is that, “Consistency is the ultimate motivation tool.” I’d love to have you talk about that.
I think that when I look at the infomercial business and I look at the infomercials space, that is an industry of consistency. We take Tony Little, who goes on in HSN and gives his pitch. Then, he hones it. Every time he comes on, he has to be consistently the same. He comes back week after week, month after month, year after year, and we’d take that infomercial and it continues that whole path, all around the world. When I get involved with products and companies and people like the Tony Littles of the world, I get involved once they have reached that level of knowing what the consistency of that pitch is and how powerful it is. Then we capture it on tape, put it up in front of millions of people and take it around the world.
Shark Tank Pitch: It’s a much more authentic world in the world of marketing and business today than it was even ten years ago.
Yes, consistency is important. That’s in a product but also running in the business. It’s the same thing. Why is McDonald’s so successful? It’s the special sauce. They give you the same thing. No matter where you go, you’re going to get that same quality little cheeseburger, whatever it is you’re getting. That’s why franchising works. Ultimately, successful businesses are good because they deliver on a promise of consistency. It’s important. People today, they don’t mind paying a little extra or the right price for something, whatever the deal might be. But they expect to get the same thing each and every time. I think, it certainly is as the millennials are coming out. They don’t want to be messed with. It’s a much more authentic world in the world of marketing and business today than it was even ten years ago.
I think we can use this as a through line for the whole episode because consistency is so important in what you’re doing with Quantum Media. When you’re talking about helping businesses increase their conversion rates and use social media and all these other digital tools to create a brand, it’s so important that brand would be consistent.
Absolutely. Let’s put it this way. In the world of marketing, when we first started, I didn’t even know what an infomercial was, we didn’t call it infomercial, we’re just putting them up. But it got down to where we were running our shows, looking for consistent dollar per phone call. We had an allowable with the station where we said, “Okay, we’re going to let you run this show and we need to get $10 for every time the phone rings.” That’s our allowable, that’s our consistency.
Shark Tank Pitch: If you’re not consistent in the world of digital, it’s even a bigger problem today.
In the world of digital marketing, it’s pretty much the same thing. If you’re going to go on Facebook and you’re going to use affiliates and you’re going to do different things, you have to be able to provide consistent everything. Because if you’re shipping your product within 48 hours and that’s consistent, and all of the sudden you have a delay on inventory and you’re shipping in three or four weeks. Your returns are going to go from 5% to maybe 20%. If you’re not consistent in the world of digital, it’s even a bigger problem today. In the old days, we could say at the end of an infomercial, “Hey, call the number, we’ll ship it within four to six weeks.” Can you do that in today’s world?
No. Not with the drones in Amazon and everything. That’s funny.
“Did you mean four to six hours or four to six days?” Don’t give me four days. I want this in 48 hours. The world expects authentic consistent performance. They just don’t allow for the alternative anymore.
It’s all about giving people an expectation that you can meet and then being consistent with meeting those expectations. Because the minute you lose credibility in an infomercial, on what you’re promising your clients from Quantum Media, or what the ad is promising people if they click on it that they don’t get, then everything goes out the window. Now, you have heard so many pitches. Let’s talk about of course your experience with Shark Tank, how did Mark Burnett pitch you to be a judge?
I’m going to tell you that in one second. I got to finish one point you just made. In today’s world, with the star system of rating people’s products and stuff, that is the other reason why consistency is so important. Because in the old days, you could ship something, if it wasn’t perfect, people didn’t have a way to complain other than call the number and say, “You know what? It’s not exactly what I wanted.” Now, you get one or two stars, you get yanked off the air, you get yanked off a website. You’ve got to be consistent. We’ll close that subject down.
I love that loop. Thank you. Even an Uber driver gets rated now, so everybody gets rated.
I was sitting there. I had done about 300 or 400 infomercials with Tony Little and George Foreman and Jack LaLanne and the juicer and all these different fancy shows and things. Taking them all around the world, built a public company with $500 million in sales and had done literally billions across the board. One day, Mark Burnett was on the line and he’s like, “Hey, Kevin. This is Mark Burnett. I’m a TV producer.” I said, “Mark, I know exactly who you are. I’m in your industry.” He said, “Look, I got a new reality show I’m doing. Would you come out to LA? I want you to meet my team and tell you what we’re up to. It’s something I want to see if you might be interested.”I said, “Mark, what an honor to get this phone call. I appreciate it. Thank you. But any kind of heads-up you could give me so I can be thinking about it? Is there any news on it yet?”He said, “No, it’s coming out but we haven’t shot it yet. It’s called Shark Tank. Don’t worry, just come on out here. I’ll tell you more about it when you get out here.”
I said, “Mark, wait a minute. I’m not sure that this is going to be for me. I do know you do some crazy things to people on that Survivor Island show. I don’t know about a show called Shark Tank. What are you going to do to me?” He thought about it and said, “Look, it’s not crazy like that. It’s a business show, Kevin.” That’s when I said, “If it’s a business show, I’m interested, if you’re involved Mark.” My wife said, “How is Shark Tank a business show?”
It was kind of funny. Think about this. When I was shooting Shark Tank, nobody knew what it was. I tell my wife, “I’m heading out to LA. I’m shooting Shark Tank.” She says, “What are you going to do?”I said, “I’m going to be investing money.” She said, “Wait a minute, they’re not paying you? You have to pay them?” “That’s how it works, yes.” She said, “How much are you going to invest?” I said, “I don’t know. It could be hundreds of thousands, it could be millions.” She said, “When would we get that money back?” I said, “I don’t know, maybe never.” She said, “Why do you want to be on this show?”
[Tweet “Shark Tank Pitch: I’ve heard over 50K pitches over the years.”]
When you think about it, I was investing one of the first deals I did, I’d put a half a million into a company. She closed the doors six months later. It was a very risky endeavor and I was one of the original sharks in putting money up and wheeling and dealing and all that. I think the bottom line is this, once we got distribution, once it was on the air, once it got the buzz, then everybody understood. “Okay, there’s the Shark Tank show. Yes, I understand. Kevin’s on that show called Shark Tank.” Then, it started paying off for me. Much like why are we doing a podcast today. I’ve taken now 50,000 pitches over the last 30 years. This is why Mark Burnett wanted me, because I had taken so many pitches before I’ve even got on Shark Tank that I was an experienced pitch taker, if that’s the right way to say. I go to tradeshows every week somewhere. I’ll do 30 tradeshows this year. I’ll invest in products in every show that I go to, whether it’s the pet show or the fitness show or the beauty show or the golf or the toy fair or the house wares or the hardware. That’s what I do for a living and that’s what I love to do.
The one thing I can tell you, John, is that I have learned what it takes to give a good pitch because I’ll sit there in a day, I took 96 pitches in one day. Just think about this, do five minutes times 96, it’s 500 minutes, and do it back to back to back, it’s an eight hour a day and beyond, and there was time in between. Sit there for eight to ten to twelve hours and take pitches, you’re going to learn a thing or two when you get to 47 and you think you’ve taken 500. You’re ready for a little break in the action and you’re ready for a good pitch. I learned a thing or two about good pitches. That’s what I love sharing with people right now. That’s part of my DNA.
I’ve been called The Pitch WhispererR because that’s equally something I’m passionate about as well. I love helping people become great story tellers, and you and I are on the same page. I’ve heard you talked about the need for a pitch to have a magical transformation. Can you describe what that is for you?
I’m in a very visual business, in the world of as seen on TV products. If it’s Tony Little in fitness, we want to see people losing weight. We want to see people getting stronger. If it’s acne, we want to see their bad skin get cleared up. Just think about it. If it’s a kitchen gadget, we would take a little gadget and turn an apple into a bird, “Wow, what was that? That was pretty amazing.” The bottom line is this magical transformation sells. It’s before and after, before and after. It’s visual, it’s demonstrable, and it works. We know that it does.
[Tweet “Shark Tank Pitch: Magical transformation sells.”]
People ask me a lot of times, and you’re the expert to ask this question to. How real is it on Shark Tank compared to when somebody pitches someone like yourself in front of an Angel group? Because I know you’re involved with the Angel Investor Network as well. The contrast obviously is quite different, but I’d love to hear your answer on TV versus reality.
Look, the one thing that I would always say, Shark Tank is a great show but Mark Burnett is a television producer and he looks for ratings. He’d come down halfway through a day and say, “Nobody has invested any money, what’s going on here? If we’re going to have good television, we’ve got to have some deals.” We’d say, “Mark, you want good television, but we want good deals.” There’s a mix there. We could make fun of people or whatever, which I never really particularly wanted to do that. I was more of a constructive guy. Mr. Wonderful, that’s his brand, to make fun of people. That’s okay. He built his brand on that. Me, I like to empower entrepreneurs.
I would say this, that Shark Tank was about making good TV and getting good ratings and getting lots of viewership. They’ve done a good job of that. Along the way, you’ve got to have a mix of some good deals, or the sharks aren’t going to be interested. I’d be sitting there and somebody would come out with something that you just knew. They were looking for ten grand, for 20% of their company, they haven’t even started and it’s this crazy idea, and you just knew this one that it was just made for television.
Do you think that Mark Cuban, who owns a multibillion dollar enterprise and the Dallas Mavericks, is interested in really investing ten grand in one of these teeny little deals? It’s made for TV that they had to do, whereas when we’re pitching equity deals like Angels network and some of these things, these are hardcore deals where we want to see research. We want to see competitive analysis. We want to see exit plans. We want to see the risk analysis where we can really get into the hardcore crunch of the deal.
I did dozens of deals on Shark Tank and I know Cuban’s done probably, I think I read an article that he had done about 35 or 40 deals. He said a third of them are making some money or in business, a third of them are out of business and don’t know it, and a third of them are never going to make it and are virtually done. Two-thirds were done almost and just selling and not really understanding that they really don’t have a business.
Shark Tank Pitch: People forget, when they come on Shark Tank, it’s not really about them. It’s about how do they get the shark to want to write the check.
I think that’s probably not too far off the investor rule in investing in Angel-kind of deals, is if you can get a third of your stuff to work, that’s probably pretty good. However, I wonder how many of the third that are still in business, as Mark says, are actually going to have any kind of an exit to where he might get his money back even. That’s really the ultimate thing. People forget, when they come on Shark Tank, it’s not really about them, it’s about how do they get the shark to want to write the check. That’s the perspective people pitching a lot of times forget. They’ve got to get the shark to write the check. It’s more about understanding really the motivation of the shark to want to be your partner.
Would you say, for someone like yourself who has heard as many as 96 pitches in one day, that having a really compelling story is a way to get people to standout out of all those pitches? You remember the story more than the product, typically?
I’ll say this. I think the story is important, absolutely. I want to hear the story, but at the end of the day, I focus on a couple of things. I want to know, is there an exit strategy, because one of the challenges is this. If it’s a private company, let’s say somebody wants to have half a million dollars for X percent of their private company. There is never a distributions in these small companies. They always need more money. Here’s my half a million, I’m not going to get it back for a long time unless you sell the company or go public. I want to know that there’s an exit strategy.
This is the other trick that I talk about, and Mr. Wonderful uses this one quite a bit. Is there a way to accelerate the pay back to the shark? When I say shark, to the investor. I’ll give you an example. If somebody says to me, “Look, I want your half a million. I’ll give you 20% of my company, but I’ll give you 100% of the profits until you get all your money back. Now you’re whole. Now you own 20% for the rest of your life. You don’t have to be worrying every day, “Where’s my money? Where’s my money?” You got your money back right away. Now, you can focus on building the business to the exit.
I tell people to always focus on getting that money back to the shark. If you’d notice, O’Leary, in many cases is talking about, “Okay, you’re a donut business. I want 50 cents for every donut you sell,” as a way to monetize his investment. That’s because he realizes that he’s going to be riding these people like crazy if he just has equity and he’s never seeing any distributions. But if he’s getting 50 cents back on every donut sold, he’s getting a distribution on a weekly basis and having the chance to have equity also.
I love it because not only does the investor get their money back sooner than the exit strategy, but also it takes the pressure off the founder not to have an exit strategy until they’re really ready because the investors already made their money.
Exactly. In all of the years of watching and doing Shark Tank and being there myself for 175 of my own segments, never did one person ever actually lay it out to me, the shark, “Hey, look. I’m so focused on you to get your money back fast. My goal as the entrepreneur here is to tell you that I’ve got a great business, here’s my plan, here’s my execution, here’s my team. But my goal is to get you your money back within one year, and this is how I’m going to do it.” If somebody came with that storyline, that’s going to be powerful pitch.
It’s really about showing empathy for the investor as opposed to what you need, isn’t it? I love that, Kevin.
I’ll give you an example. I had a company I got involved with. They needed $20 million. We went out and did a raise. They said, “Would you help us go on the road show?” I said, “Absolutely.” They said, “Look, give us a couple of weeks up in New York. We’re going to have people coming in one at a time, have a couple of group meetings. We’ll have you, if you could. There’s a couple of billionaires as part of this, if you could maybe go and sit in their big building that they own at the corner of 15th and Madison or something. We’ll make a couple of appearances here and there.” I made 90 something pitches over that two and a half week period of time.
Shark Tank Pitch: What is it that you like? What have been some of your most successful investments?
We made 90 something pitches to individual investors. The first thing that I did was sat, talked, got to know them for a few minutes. What is it that you like? What have been some of your most successful investments? They would instantly tell me what it was going to take for them to get the money. “This is what I’ve been doing. When I invested in this deal, I love it. I ride it out for years, and boom, boom, boom.” They would basically, within five minutes, tell me what it was I needed to do to convince them that we might have the right investment for them. Sometimes, you’ve just got to sit and listen.
It also sounds like you’re really smart in asking the investors before you even pitched what their criteria is of what makes them say yes. Also, you get them in the mindset of remembering a positive experience before you even pitch, which I think is also very clever.
Exactly. Because on Shark Tank, the advantage that people have today is they can watch all the Shark Tank segments, and they see what Barbara is looking for, what excites O’Leary, how to make those pitches. But when you’re one-on-one with an investor you just met for the first time, how are you going to pitch them? You’ve got to get in their head real fast. That’s what I like to do.
Kevin, one of the key things I know is so important to investors like yourself is, who’s on the team? Recently, I interviewed Laura Wagner of Digitzs. She put together such an impressive team of people from Apple and PayPal and Google, plus herself. Is that a key factor for you when you’re looking at a company that’s pre-revenue and maybe even pre-minimum viable product, is will they have a great team?
Yes. There are various things that I do look for. If someone says to me, “What is the one thing that an entrepreneur really needs to do to be successful?” I say, “They’ve got to have passion and vision and all that. But they need to surround themselves with experts and a dream team that supports their strengths and weaknesses, and more supports their weaknesses than strengths.” I think at the end of the day, Laura surrounded herself with some amazing people and was very, very successful in doing that. What was interesting is that when she first tried to raise some money via crowdfunding, she had some challenges. The bottom line is, it landed soft in the first part and then when we brought the shark stuff and brought more of this dream team aspect to the table, it has super charged what she was doing. The bottom line is we had some very powerful stuff happen as the dream team came together.
You’ve had your pulse on success for so long, from being on the cutting edge of what’s going on in infomercials, being one of the first Shark Tank judges when there was a lot of risk for you, it obviously paid off. Now, you continue to invest in a lot of startups. Let’s talk about where you see the future with what you’re doing with Quantum Media. What is it about that that you feel is so exciting and has so much growth, and how can people possibly use Quantum Media, and who are you targeting?
What’s happened is there’s been a disruption in a lot of industries. Uber has disrupted taxis and Airbnb is disrupting hotels. Not that they’re putting all these out of business, necessarily. They’re tightening up some of these industries. The TV industry has been disrupted itself. There is 50% fewer viewers on TV. By the way, there is big financial drain in the world of television right now. ESPN is losing millions of viewers every single year. ABC owns ESPN and Disney, they’re hurting because of this. What’s happening is, where do the eyeballs go? If they’re not watching TV, they’re watching digital. They’re on digital. They’re on Facebook. They’re on Pinterest. They’re on Instagram.
The bottom line is that there’s this mass exodus to other places. What do I do? I follow the eyeballs. Quantum Media, what we’ve done, five years ago, it was 80% TV, 20% internet digital. Now, I’m 80% digital, 20% TV. We’re doing campaigns for major corporations, for products across the board. We call it a test before you invest kind of a format and do a lot of stuff long before we go to TV, because TV is so expensive. Quantum Media is our new baby. We shoot very inexpensive videos, test them up on social media channels to see what the results are before we go to the next steps. It’s the new way for us. Digital is without a doubt the future in my mind for not only testing products but also rolling them out and, as you started off this conversation, getting the consistency you need as an entrepreneur.
[Tweet “Shark Tank Pitch: Test before you invest.”]
Nice. We’re going to tweet that out. I love that line, test before you invest. What a great sound bite that is. That’s fantastic. I know that people are probably going to want to follow you on social media. Your handle is @HarringtonKevin. You have thousands and thousands of people listening to your advice. I just want to personally thank you for being such an advocate and inspiration for so many people, myself included.
John, it’s been a pleasure to be here today. Thanks for having me. Keep the pitches coming for both of us. I love to take the next home run pitch. I love every single day when I wake up because I never know what I might be pitched that day. That’s what keeps my days exciting, is knowing that I’m going to be hearing some cool new things. I look forward to doing some more business with you. Good luck in your podcast ventures and taking new pitches.
Thanks a lot, Kevin. I appreciate you being on the show.
Thank you.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Kevin Harrington
- Key Person of Influence
- As Seen on TV
- Quantum Media
- @HarringtonKevin
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Get Your Dreams Funded with Manny Fernandez
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch podcast is Manny Fernandez, who you might have seen on television CNBC’s Make Me a Millionaire Inventor. He was named the 2014 San Francisco Angel Investor of the Year. He shares with us how he had a successful exit, and the three things he’s looking for when he hears you pitch. Number one is of course, the team, and why you’re able to execute your idea. Number two, is how large is this market, because without a large market, there’s no return on investment for the investor. Finally, are you early in the market, in other words, it’s too late to be the next Uber. Enjoy the episode.
Listen To The Episode Here
Get Your Dreams Funded with Manny Fernandez
Hi and welcome to The Successful Pitch. Today’s guest is Manny Fernandez. Manny, you might know as an investor on CNBC’s Make Me a Millionaire Inventor. I’ve watched him be on that show and he’s amazing. He’s also amazing on CNBC’s Squawk Box. He’s quite successful in so many ways, and we’re just thrilled to have him here. He’s had a successful exit. He’s an active Angel Investor, and he was awarded the 2014 San Francisco Angel Investor of the Year and Equity Crowdfunding Leadership Award.
He’s not only the founder of the San Francisco Angel Groups, but he is also the founder of DreamFunded as the CEO. What that company does is crowdfund startups with an online market place. He’s got quite an interesting background. I’m going to let him tell us all about it. Manny, welcome to the show.
Thanks for having me, John. I’m honored to be here.
How to Make Money Investing in Pre-IPO Stocks
It’s great to have you. You have touched every possible touch point on how to be successful from writing a book, How to Make Money Investing in Pre-IPO Stocks, to being on television, to launching not one but two different things. I know that you have been involved with Stanford and Wells Fargo, but take us back, if you will, before you got to be on television as the investor, how did you get involved in this whole world of startups? Because so many people say, “Wow, I would like to be an investor someday, but I don’t have a clue.” What was your journey?
It all started with this thing called real estate, where not as an agent, but I just bought a piece of investment property and learned that I was pretty talented at it and then later, I wanted more. I was stuck with the question, “How do you raise money to be able to buy a hundred homes?” I networked aggressively to figure out the answer. Later at the age of 23, I created a real estate fund, then we bought a portfolio of single family homes and sold at the peak of the market. What many people didn’t know is during the down times, I was studying Computer Science out of our office. I created the online brokerage that was later acquired by the largest Century 21 franchise in Northern California. Later on, I created another real estate fund.
One thing I learned about it was how to work with other people, to invest their money appropriately and get a return. When I was attending Stanford, one of the things I learned professionally was about venture capital, Angel investing. Those are the courses that really stood out at me because it reminded me what happened so many years ago. A lot of the dynamics are the same, that one of the big differences, obviously, the asset class is different. That was the start. As I started to Angel invest and joined a group called TiE Angels and later created our own group called SF Angels. Asked for help like always, and was fortunate to network with someone do an introduction, I’d invested early in Google and Paypal. Was a former partner of this legend, Ron Conway. I learned a lot from him and I did a scary thing, John.
I had to go out, which every entrepreneur has to do. I have to go out and talk to customers about the business. It was the hardest thing that I had to learn, I had to be really high profile in Silicon Valley and that was hard to do. Look at my skin. I had to learn how to public speak and talking to entrepreneurs, those were the customers. I had to let them know that we have money for them, but I had to do it in a different way, John, where I gave them advice and education on the subject to allow them to raise money Which was unheard of because everyone want to keep the secrets, like, “Don’t tell entrepreneurs how to raise money because if you do that, then everyone will have the money.” That’s not the case. A lot of people are still stuck in fear.
Get Your Dreams Funded: I learned how to work with other people, to invest their money appropriately and get a return.
Indeed. Let’s talk about San Francisco Angel Group. I’m really interested in how that works compared to other Angel groups, for example. I know you have 30 plus accredited investors. Do you only typically fund people who are in Silicon Valley? Let’s start with that.
Yes, that was the purpose. The purpose was even more specifically in San Francisco early stage. It did go a little bit more into later stage companies, when they were doing the Series A or Series B round, some of our members had access to it. It was primarily Silicon Valley. Throughout that experience of only funding companies here, I realized there are a lot of great companies outside of Silicon Valley, in Austin, in Seattle, L.A., even Florida. At the same time, just being out there in the community, I was forced then to be a keynote speaker in many parts of the world. Many entrepreneurs wanted funding, but what was the most amazing thing, John, is many investors wanted to co-invest. I said, “Our meetings are every Thursday of every month, come on down.” Obviously, I didn’t invite people if they lived in Shanghai or Singapore or Texas and L.A. or New York. I just held their business cards. I remember that many of the entrepreneurs pulling at my heart strings, they want to get introduction to investors, and there was really no way of doing that. I just started thinking about it.
Interesting. If someone lives in San Francisco, Silicon Valley area, and wants to come pitch to the San Francisco Angels, what’s the process and what does it look like when they get in front of your group?
Primarily, you go on a website and you can apply. Some of the members, actually, they’re the best method to get an introduction, usually they’re interested, they’re investing, they’re “sponsoring” you to be presented to the group. If you’re qualified, the entrepreneurs will say their story and the entrepreneur will be asked to leave the group, then the group will ask a few questions among the group if there’s enough interest to do what you call due diligence. If there’s enough, then we will move it forward to do a little research to see if this is an investment we want to do. That’s it in a nutshell.
That’s great. Because this is The Successful Pitch, I’m always interested to hear, do they get ten minutes for a pitch and then there’s a ten minute Q and A? Is that the format you use or is it something different?
No, you’re absolutely correct. It’s approximately anywhere from seven to ten minutes, and then we ask questions among the members of the group.
Those warm introductions are so important, to get even invited to come in and pitch. I know you specialize in equity crowdfunding, the internet real estate software. Does the group itself look for high tech solutions, or is there a type of startup that you like to see come in?
Yes. Everyone in that group is very specifically focused on tech, software, internet-related startups.
Are you funding people who are pre-revenue, giving them their seed round?
Absolutely.
Those typically range anywhere from … The definition is so broad now. It could be anything as 250, all the way up to a million, typically. Is that in the ballpark of what your group does?
The interesting thing about the group, some people make a group decision and some people do it individually. Sometimes you don’t have everyone’s approval. I provided checks as low as $25,000. This will be the first check in to a company, and give them a little boost and try to connect them to other investors to fill their round. It’s not one individual cutting a check for a million, it’s multiple people coming together.
Can you tell us about a good pitch that you’ve heard, Manny, that you’re thinking, “They had me in the first three minutes, and they’ve been a big success story”, either at San Francisco Angel Group or DreamFunded.
I think that one of the things that I hear a lot is entrepreneurs, they’re not telling a story. A lot of people talk in logical terms and things that we don’t care about. One entrepreneur that worked out quite well, they talked about the market, they talked about the team, they talked about the potential for the investors to make money, and that sometimes gets our attention. I don’t know why.
The best way for the investors to feel like they’re going to make their money is to have a successful exit. It’s what I typically hear. Do you have other suggestions?
Absolutely, that’s the case. If the entrepreneur says they’re going to hold it for twenty years and give it to their step-kids, then that’s probably not the right business for us. If they think they’re going to become the next Facebook and make it go public, maybe that will work. But if they look at they’re going to potentially have an acquired, and these are the natural acquisitioners, then we can understand the thought process behind the entrepreneur. I think the best I’ve seen, they tell a story, the beginning, middle and the end. The beginning is why they created it, their personal problem, what team they have established, the great market, and they have some traction, it doesn’t mean it’s sales. At the end, where they’re going with it if they did have the money? What would it look like at the end? If you can imagine a movie, all the dynamics of it, I think the entrepreneur should probably cover that.
[Tweet “Get Your Dreams Funded: Pitch like you’re telling a story in a movie.”]
Nice, I love that. Pitch like you’re telling a story in a movie, like you’re pitching a movie and have us visualize it. Paint a picture, if you will. I like this, why you created it, how big the market is, what the team is. People are always interested in what you look for, besides sales, in terms of traction. I have some ideas, but I’d love to hear what you think is important, or what you think is valid traction if it’s not sales.
I think there’s one thing I was taught, it was three little things. I think you can screen out 90% of the startups that are presenting, or if you’re a startup, look for these dynamics. Because these are the dynamics that some investors look for for really large returns. Number one, it’s a large market. Without a large market, it’s going to be challenging to make any real money and to make it a big business. Second, early in that market. Not chase after something that’s really too late because there’s many relationships, and most of the market is already taken. Last but not least, it is the most important thing, is the team. The team who’s executing behind it, who did I piece together to make this story into a reality.
Nice. Those are great three things. We’re going to tweet that out, a large market, early in that market, and a great team. Speaking of tweeting, you have quite the award there, Manny, with being number fourteen in the top 100 Angel Investor’s to follow in Twitter. Of course I’m following you. One of 150,000 people. Congratulations on that. I couldn’t resist giving you a little shout-out on that.
Thank you. One day, it will have extra number behind, 1.5 million, because the more information we can provide to the public about how to invest or how startups can use the equity crowdfunding to raise money, the numbers will greatly grow. The motivational tweets that I provide, it really goes viral a lot.
Let’s talk about DreamFunded.com. This is different than the San Francisco Angel Groups. It’s an online capital platform, where people can invest in startups for as low as $3,000. Yet, you guys have done some major investments alongside major VC firms, like Tim Draper and Greylock, etc. Tell us, how did you get inspired to start DreamFunded? For people who are listening, maybe you could contrast and compare? Like, if this is you, then you should go to San Francisco Angels, if you have a warm intro, or if that’s not you, DreamFunded is more in line with what you need to do.
When I started Angel investing, I had a certain vision of it. When I got involved, then I had a certain reality of it. I said, “Maybe, I’ll create a group and get a few of my friends and network together so we could fund more entrepreneurs,” and more entrepreneurs were being funded. However, 99% plus unfortunately weren’t getting funded. Maybe because for whatever reason, they weren’t in our network, kind of unfair. They’re not in our network, they can’t get an intro, they can’t present in a meeting, and I had a problem with that.
Get Your Dreams Funded: Money should be more distributed to anyone that has a desire of creating a business.
In addition to that, it was other entrepreneurs that probably had a small business or a business that maybe couldn’t really scale but could do well for the entrepreneur and their community. I started thinking about that. I always had a problem with that. Money should be more distributed to anyone that has a desire of creating a business. They should be able to be backed because that’s a rare desire, an entrepreneur who wants to do something different than have a job.
One day in the fall, it was a slow period in December. This was in 2013. I had some time to go through my emails, and there are thousands of them, unfortunately, I haven’t read yet. I was going through them and I said, “It’s a good time to go back and see companies that applied and see what happened to them. I could do a self-study.” I saw two companies that presented but unfortunately were a little bit slow. It took an average of 60 days to get funding, and fortunately they had another way they got funded. They went on some big name platform and actually received the funding. I said, “Wow.” I played with the numbers of what the exit was. I’m keeping the name quiet. What was exit and what were they asking for and what our return was, and boy, when I saw seven figures, I got really frustrated. I got upset because I started thinking about all the investors who are out there that wanted to get access to it, and yet if we’re faster, then maybe we could have got in.
I started thinking about the entrepreneurs that were trying to get funded as well as the investors that want to invest. I thought back, “What am I going to do about this?” I got a stack of business cards of many investors that wanted to invest. I have endless entrepreneurs who are looking for funding. I thought back, my early 20’s, my first dream was to create a startup or create a business. My second dream after that was I need to get funded. That was almost impossible. I said, “Okay, I know that, but then now, I’m a successful investor and entrepreneur. My dream is to fund the next big thing.” It just came to me, DreamFunded. I bought the name and used our network at SF Angels.
It was an interesting time because there was this new thing called equity crowdfunding happening, t allowing accredited investors to invest. We were the fourth platform approved by Angel Capital Association, a trade organization. Almost in a short period of time, 90 days, we had 3,000 plus accredited investors signed up for many of the Angel groups nationwide. I was looking at it, I could not believe we had so much interest. Maybe many people were just checking out what was going on, but then we had some pretty well-named companies that we funded through DreamFunded and it just kept growing.
I love it. How do someone decide if they should pitch the San Francisco Angel Group or another Angel group or go to DreamFunded? What’s the criteria for getting funded via DreamFunded?
Now we’re trying to have everyone go to DreamFunded and apply there, because there’s, we call it deal flow, where we have to start there and sometimes it’s right for a group, sometimes it’s right for our platform, sometimes it’s right for our fund. We don’t know until they apply. Going to DreamFunded.com and signing up and applying, we as a team can quickly review what they’re doing. Unfortunately, not everyone is going to get accepted but some people are better to tap in this thing called equity crowdfunding, Title III of the JOBS Act. What that really means, it allows everyday people to invest. Just to say what you said earlier, at one time the minimum was $3,000, but now the minimum is $100.
DreamFunded is solving two problems. One, allowing people who are not “accredited” investors with a million in assets to invest in startups. Secondly, giving a platform without needing to have a lot of connections to investors directly to get in front of an Angel group, to possibly get seen and not only be part of equity crowdfunding, but if it’s a big enough idea, get the attention of someone like you who says, “You know what, this is equity crowdfunding and then some.” Correct?
Absolutely.
It’s really exciting. I think what you’re doing is solving so many problems for so many people that I don’t know how you have time to sleep.
[Tweet “Get Your Dreams Funded: Leverage – have a great team.”]
Leverage, my friend. I got a great team. I may be a good marketer but I have a great team, like my co-founder, Avery Haskell. He just graduated from Stanford. He has been secretly building DreamFunded with me throughout the time while he was in his dorm room. He didn’t want to get his focus off of his study. Now he is really improving the site to great ability, because we really have over a 160,000 members all around the world now signed up. We have about 20 companies that are going to be approved shortly, that’s going to be able to raise a million dollars from everyone. People are really spreading the word about DreamFunded because they see it on CNBC Make Me a Millionaire Inventor, or they may have seen it on Wall Street Journal in December or in Bloomberg in December.
The word is being spread, but the message is, entrepreneurs now, they have an interest in raising money and you’re not born in that special network where you can get access to that special club, this is for you. If you are one of the investors that are out there saying, “I don’t know how to get into that special network,” or, “I don’t want to wait for Facebook to go public. Plus, I don’t have much money, I’m not one of the accredited investors. I cannot invest $25,000 or $50,000. I just want to spend $100 or $500.” Maybe back the entrepreneur that I know, that’s going to be creating something. That’s what DreamFunded is about.
Typically, a lot of people will say, “If you’re going to use crowdfunding, equity crowdfunding or any other kind of crowdfunding, you need to “bring your own crowd.” Is that the case with the DreamFunded?
It’s partly the case. But how I started building it is that I started with the foundation of SF Angels and then many of the Angel members nationwide that are members and many of the talks that I’ve done throughout the world brought a stronger base of investors. CNBC’s Squawk Box in the studio, they tremendously increase the visibility as well as the amount of investor sign-ups. It is helpful for the entrepreneur to have a small handful of people that believe in them, to back them. Many of those people can be just found on LinkedIn, so it’s nothing too complex, it’s a combination of both. In a Shark Tank mindset, we have the hungry sharks, the smaller sharks that are ready to bite on the new startups that are going to be applying.
I’m going to shift gears a little bit. In your LinkedIn profile, it describes your successful exit, and that’s always an interesting topic for everybody to hear. Can you tell us that story?
Some things start off one way and they change and they become something different. I think that’s an important thing to know. Every entrepreneur may start off one way and end up changing their direction based on feedback. I just really wanted to create a site where I thought people want to sell their house when the market would change and they wanted a quicker way of selling it. Then the market changed, and unfortunately they didn’t have much equity in their home.
We had people all across the country who were signing up and ended up devolving into an online real estate brokerage where we receive the commission upon the sale of their house. At that time, it was so early, no one knew what this thing called short sales were. We went from zero to an excess of $5 million in sales in a very short period of time. Sometimes you get lucky. It was acquired by the Select Group Real Estate, the largest Century 21 Coldwell Banker, ERA owner in Northern California, with 60 plus offices, thousands of agents.
Congratulations. What you’ve gone through that experience, like going through due diligence. Now you know what to look for and help people that you’re funding get through that process in a way that gives the investors a great return on their investment. Is there any book, besides yours, which we have mentioned, that you would recommend to people to read either about life or about getting funded?
Think and Grow Rich by Napoleon Hill
I do have a new book that’s coming out, that’s going to help people to raise money. It will be on Kickstarter shortly to allow people to buy the book in advance. For those that want to raise up to a million or raise up to 50 million, the secrets will be in there. One book that I really love is Think and Grow Rich by Napoleon Hill. If any of your listeners are looking for a book that’s probably a free version of our book, just email [email protected]. When that book comes out, I’ll send you a copy of it, just put a headline that you heard about it on the show. There’s no cost, you can save the $20. If you feel bad that you saved the $20, just find an unfortunate person and give it to him.
That’s such a great gift. I really appreciate you doing that. Are there any final thoughts you have on giving a good pitch or just perseverance required to be a successful entrepreneur?
Yes. There’s this guy, and this gentleman came up to me late 2013.I was at this event I was judging, he came and grabbed my arm, he said, “Hey, how are you doing? Nice to meet you. Can you help me show me how to fund my hair product?” I really didn’t understand what this guy said. All I heard was, “fund my hair product.” I’m like, “Sorry, we fund software internet companies.” I turned because my attention was pulled somewhere else. He grabbed my arm and I said, “What is going on?” I turned around and looked at him, and I made a mistake because I looked at his eyes, and his eyes are really sincere. It reminded me of myself a few years ago when I was in my 20’s. “How do you raise money? What is the secret about raising private money? Hey, can you show me?”
Get Your Dreams Funded: How do you raise money? What is the secret about raising private money?
I didn’t have an answer, but instantly when he said that, I thought about it and I said, “There has been a PowerPoint that’s been used by our Angel group,” and I’ve seen it circulated throughout the Valley. For some reasons it’s helping a lot of people get funded. I said, “Tell you what, I’m going to give you my business card, you put PowerPoint on the headline, send me an email, I’ll send you a copy of the PowerPoint”, because in my mind I was going to take out the ingredients and just keep it general so people can have a framework. I gave it to him and later on, about 45 days later, he sent me an email that he raised over $600,000.
What’s interesting about that is because I’ve never seen it work outside of Silicon Valley. I’ve never seen it work outside of tech companies. For a guy who I didn’t even understand what he was saying to be able to raise that, it was like, wow. One of the things I do now is, for those that really want a framework to be able to raise money, I can’t say it’s perfect, but it allows you to think what an investor is looking for. I give this away, if you want a copy of that free PowerPoint that will help many people, just email, [email protected]. It’s no cost. It’s my community gift.
There’s a video on YouTube. Type in the word “equity crowdfunding” and it pops up, the number one most viewed video of all time for equity crowdfunding. It was a talk I did at keynote talk in Finland. I gave out that PowerPoint, and I think many people loved that gift, so they started spreading the video everywhere. Fortunately, it has over 200,000 views now. For the entrepreneurs that are looking for a template, take a look at that, GetFunded@DreamFunded. It also shows you ways to follow-up in terms of how to pitch us.
Fantastic. So much value added, so many great insights. You’re so generous with your time, your insights and your knowledge. Anybody who gets to work with you is indeed lucky, so follow you at @MannyFernandez on Twitter. Manny, I can’t thank you enough for being on The Successful Pitch today.
One last thing, there’s an upcoming TV show we’re doing. It’s a new type of show that allows the public to invest in these companies that are approved. More information will follow for those. Follow me on Twitter, Manny Fernandez on Twitter. You will find out the moment I can release it to everyone.
Good. Exciting little tidbits. That’s a great open loop. That’s how you get people intrigued, everybody. Give them a little teaser. Give them a reason to stay listening to your next tweet. Thanks again, Manny.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- DreamFunded
- How to Make Money Investing in Pre-IPO Stocks – Book
- Equity Crowdfunding video
- TiE Angels
- San Francisco Angel Groups
- Think and Grow Rich by Napoleon Hill
- [email protected] – get new book for free
- [email protected] – get the PowerPoint framework/template for free
- @MannyFernandez – Twitter
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Delegate Or Stay Small Forever With Jim Palmer
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is Jim Palmer, who is the author of several books, the most recent one being on the power of decision, and he has a special offer for people at the end of the episode, where he shows you a link that you can actually get the book for free. Be sure to listen to that. He said, “If you want to be successful, you need to be a good listener to find out what problems there are to solve out there.” And, “Under promise and over deliver to keep your customer’s happy and with you all the time. That’s how you keep customer’s sticking to you like glue.” Finally, he said, “Delegate or stay small forever.”
Listen To The Episode Here
With Jim Palmer
Welcome to the Successful Pitch. Today’s guest is Jim Palmer, who is an entrepreneur, and author, a speaker, and a coach. He’s a marketing and business building expert and in demand coach. That’s for sure. He’s the founder of the Dream Business Academy, and Dream Business Coaching and Mastermind Program. He’s the host of Dream Business TV, the hit weekly web TV show watched by thousands of entrepreneurs. He’s also the host of Stick Like Glue Radio, a weekly podcast based on Jim’s unique brand of smart marketing and business building strategies.
He’s known internationally as the newsletter guru and the creator of No Hassle Newsletters, the ultimate done for you newsletter marketing program, used by literally hundreds of clients in nine countries. Jim, welcome to the show.
John, thanks. Thanks for having me on. I love your format, I love your show. It occurs to me Stick Like Glue is a good name, because we’ll be talking a lot about stickiness today.
Yes, indeed. We certainly will. You’ve done so many interesting products, including a new book you have, which is called DECIDE – The Ultimate Success Trigger. Let’s take people back to, how did you decide you wanted to become an entrepreneur, and become known as this newsletter guru? Tell us a little bit about how you became such an expert in helping entrepreneurs?
DECIDE – The Ultimate Success Trigger
John, in 2000, I was a VP of Marketing. I’ve always work for entrepreneurial companies, and I always thought that someday I am going to have my own business. I think it was part of my DNA, so to speak. But at the time, I had four teenagers and married, mortgage, and all the different things. I thought, “Now is not probably the time to do that.” After being unemployed for fifteen months and one year into the unemployment, I was first had a battle with cancer and so I got to a place in my life, cutting a fairly long story short, John, I got to a place where I was very low, my self-esteem was not very high. I thought, “There’s nowhere to go except up.” I felt really near the bottom.
I decided in October of 2001 to start a business and I knew I’d be probably some sort of a consultant or coach or marketing guy. I also knew, that’s kind of a hard road to hoe getting started, but I’d always done newsletters. I created my first newsletters when I was 21, when I used to manage a bike shop, and everywhere I went from then forward, I was doing newsletters.
I started offering newsletter services to local companies and chambers and associations and nonprofits. That really took off. Five years later, I had a multiple six figure business, I was doing well, starting to get myself together financially again. I reached the point when I had about somewhere around 20 or 22 clients where I had no more time, I felt like I was hitting a ceiling, John, and just kind of maxing out. The question came, sometimes called the question that rocked my world.
My wife asked me, “Why don’t we go on vacation? We haven’t been on vacation in five years.” Although we could afford a vacation at that point, I couldn’t understand how I was going to take off because I was my business. Like so many small business owners, you start with your skill or your talent, you open a business and you just do everything that’s required. Even as you grow, you’re still the chief cook and bottle washer to a large degree, and that’s the trap I fell into.
Crap, that’s not the life I want to have. I decided to start it over. I got immersed in internet marketing, direct response, copywriting, really focused a lot on retention in addition to leverage. I ended up creating my second business, which is one of my core businesses today, No Hassle Newsletters, branded myself the newsletter guru, just for the whole celebrity expertise type of marketing. Off we went, and quickly fast forward again, I have, I think, five different internet businesses. I do a live event called Dream Business Academy and I have my Mastermind and Coaching Program, as you mentioned, called Dream Business Coaching.
There’s so much I want to dive in there with you, Jim. One of the things is coming up with a dream business that investors would want to invest in. It’s something that’s scalable and typically investors are looking to have somebody pitch them where they can answer these two questions. Why you? Why are you uniquely qualified to execute this? Secondly, why is now the right time? Under your expertise of what a dream business is, can you give us some descriptions of how somebody who is looking to pitch an investor could think about that?
The investors are always looking for ROI. Why would he invest in a business, in a product, in an app or whatever if he can’t make money? He could stick it in the stock market and do fairly well. I suspect that if he’s going to invest with a start-up of some sort, he’s going to probably assume doing some due diligence. Obviously there’s always risks. But he’s going to want to make some sort of ROI.
Delegate Or Stay Small: In the pitching arena, it needs to be about the investors, not about you.
I would imagine very much like you see on Shark Tank, for example, when you do your pitch, really first of all, you have to know your numbers, you have to exude extreme confidence, and you have to be able to explain what you’re going to do with the money, how quickly you’re going to grow and therefore let them be able to recoup and things like that.
I think by and large, most entrepreneurs don’t get that. They don’t get that it’s not about them. I think too many people focus on them, what their needs are, what they’re going to do, and it’s the kind of the me language if you see what I’m saying. Especially in the pitching arena. I’m preaching to the choir here, John. In the pitching arena, it needs to be about them.
Yes, I always still like to tell my clients, “The more you show empathy for the investors and the more you can show that you have empathy for your customers’ problem you’re solving, the more people are going to want to fund your start up,” which is exactly what I think you were saying there.
Yes, there’s no shortage of opportunity, there’s no shortage of ideas, there’s no shortage of people who need money to either start or to increase the pace of their start up. But there is to some degree a shortage of people willing to invest. You don’t have too many chances, you don’t have too many bites at the apple before you get your stuff together.
One of the things investors look for when they decide whether they’re going to fund a startup or not is there any traction and how much income, is there proof of concept. You have some really insightful strategy on how to create more income. Can you share that with us?
One of the things I’ve been able to do is create multiple streams of revenue, and now I teach other people how to do it. The secret sauce, so to speak, is being a really good listener and keeping your eyes open as to what problems and what challenges. Frankly, just things that people, AKA your customers and prospects, are asking for. I’ll give you a quick example of how I did that. When I started No Hassle Newsletters it was originally a program where I supplied a lot of content. A number of articles that people who already had newsletters could use in their newsletter. For lack of better description, filler content.
I started doing well. I wrote my first book called The Magic of Newsletter Marketing. I talked about newsletter design and the type of content and how newsletters should be laid out, the type of paper, all that stuff. People started to say, “I’m not big enough to necessarily have a graphics team. Who do you know can design some templates for me?” I said, “I do templates.” I curated some templates which can be quickly and easily adapted to any business. I started with four different templates. That was adding value to my program but it also increased my revenue.
You could make an argument, it wasn’t a new revenue stream, it was just growing my current one. Then someone said, “Jim, I know in your book you talked about how they should be printed and folded, etc. Can you recommend a printer?” It was right about that time, John, when I started thinking. I like to be helpful. I referred people, but I also came up with an expression. I said, “I can keep referring people or I can create a new revenue stream.”
I partnered with a buddy of mine who actually is a printer. I said, “I’m going to feed you tons and tons of jobs. Some might be small, medium, some might be pretty large. But all together, it’s going to be a nice new chunk of business for you. I’m going to get the sale, I’ll collect the money, you bill me and obviously there will be a markup for me on what I charge.” That’s what we did. My third online business was Concierge Print and Mail On Demand Service.
I kept going from there. The next thing was Article Marketing. “Jim, you got a lot of writers that are producing all your content and things like that. Can you recommend a good writer?” I said, “No, but I can create a CustomArticleGenerator.com.” That’s what I did it. It wasn’t me like thinking about, “I wonder what’s the next business I’m going to start would be?” I was actually thinking about, how can I solve my customer’s problems? Instead of just referring them somewhere, how can I make them happy by solving their problem?
[Tweet “Think about how you can solve your customer’s problems.”]
Love it. It’s really, listen to what’s your customers need, figure out a way to solve that and that can be an extension of the current revenue that you’re doing. One of the things I thought was interesting since you’re such a newsletter guru, is when founders are pitching investors, typically there is more than one investor that funds around. They’re looking for let say a million dollars, maybe they get four different people who put in $250,000. During that whole process, they need to keep these investors up to date with the progress they’re making, either with new customers or possibly some press they’re getting, whatever it is, on a regular basis. Do you think startups would be wise to create a little newsletter that would go out to investors that they’d met with as a way to stay in touch versus just an email here and there?
Delegate Or Stay Small: Email is convenient, it’s inexpensive, but it’s getting completely ineffective.
Absolutely. By the way, email it’s convenient, it’s inexpensive, but it’s getting completely ineffective because so much email is not even getting through. But that will be a whole other topic. Yes, the answer is yes. When should you start? You start when you get your first client. If it costs you $5 to run off one newsletter and mail it, that’s what you should do. The thing is, people, when they want to repurchase or when they want to refer, you have to be top of mind. If you’re not top of mind, they’re going to go with somebody who they’re thinking about seeing an ad for, maybe they’ll ask somebody else.
Several years ago, I was out doing a ton of speaking around this topic. There’s a story I would say. I refinance our home. I’m going back 20 years, but it doesn’t matter. It was Sunday, I was looking in the Sunday paper under the real estate section, looking at a big grid, mortgage rates. I called three or four different people. Only one guy actually returned my call and he was super professional and said, “Mr. Palmer, I know you’re busy, how about if I can drop the forms off at your office, I’ll pick them up when you’re done. We’ll get you approved. By the way, for settlement, you don’t have to plan on an entire day, we’ll get you in and out in about 90 minutes or less.” The bottom line is he did every single thing to make it easy for me.
I started retail when I was fifteen. I’m just a student of good customer service. I started referring him. I probably sent at least three or four people, friends and a neighbor, because it was when interest rates were really dropping. Then there was about six or eight months went by, one of my neighbors said, “Interest rates are starting to tick up. Who was that guy that you used?” I said, “Honest to God, I can’t remember his name. “What was the name of the company?” I don’t know. I said. “I can get my car and take you there but I don’t know. I’ll look it up and I’ll get back to you.”
Now, it’s a true story, but imagine if that mortgage company was sending me a two page, even something as inexpensive as a two page black and white newsletter once a month, saying, “Hey, here’s a tip.” It doesn’t even have to be mortgage, because who refinances? Most people refinance every eight years, I came to learn from him as a client. What if there was some tips? How to save heating oil in the winter, or utilities, or if it’s the summer time, here’s some things you can do with your kids to get through a long car ride. Anything. By the way, a big key, it has nothing to do with the mortgage business. It has everything to do with making it fun, interesting and informative for the reader and therefore they’ll read it, and therefore they’re remember you.
Now, it’s almost counterintuitive, especially if you’re in the tech world and you think everything is email, I don’t send anything in the mail. But everyone is zigging and you zag and you actually sent somebody a hard copy of something as opposed to just yet another PDF to open up in an email. You’re talking about an actual physical newsletter, correct?
Yes, that is correct. Now, one of the examples I’ll give, let’s say you got a thousand people on your customer list, nice round numbers. This is just for easy math. Let just say five years ago you could get a ten percent deliverability or open rate, which is pretty darn good. Nobody gets that today. Let’s say you did. That means a hundred of your customers are actually opening the newsletter. Now the flip side to that, if I was a nightly news person, I had to put a negative spin on everything I would say, “90% of your customers are not hearing from you.”
[Tweet “Customers need to hear from you to remember you.”]
By the way there is a statistic from Direct Marketing Association that says every 30 days that goes by when your customers don’t hear from you, 10% of them will forget about you.” Right then and there, it’s like people say, “Jim, I can do email and it’s free.” That’s true, but if it’s only 10% effective at best … There are two numbers you need to know so you’re not so cheap, lazy and or cheap, is that if you know the lifetime value of a customer, it can obviously, John, vary by different businesses. Let’s just say an average customer is worth five grand or let’s just even go $2,000, low side. Would you not invest a dollar a month per customer when the return is likely to be that huge? Now, that doesn’t mean every single customer is going to come back and buy and buy and refer and refer. But how many does it actually take before you completely pay for your newsletter?
Exactly. I can see where you’re going. It’s a really smart use of your time and money and it’s going to separate you from the competition.
One of my longest clients is an attorney and he’s a trusted estates attorney. He does not only some financial planning but retirement planning, all things like that. He does a newsletter. I gave him so much credit because I think he mails about 3500 or 4000 newsletters. It’s a big bill every single month. Once in a while I touch base with him and, “Thanks for being a client.” I said, “I always marvel because when I see your order coming through, it’s sizable.” He goes, “That’s nothing.” He said, “Every time I mail that newsletter, I get at least two new customers by way of referral.” I said, “No way.” He goes, “Jim, clockwork, at least two. We can’t wait to get the newsletter out because I wonder who our two new clients are going to be.” I said, “What’s an average client worth to you?” He said, “Probably $25,000 to $30,000 when they get with us and stay with us.” There’s all kinds of things going on nefariously. Doing services for wills and they do some other things. Could you imagine, that is incredible ROI.
It is. You talked about sticking around if you get a new client. That’s one of the key things investors really look for, is not only if you’re selling dog food they want to see the dogs eating the food. But they want to know that those dogs are going to come back and keep eating the food so that you’re not having to start from ground zero every month on getting new customers. What are some of your tactics for this book, Stick Like Glue, to keeping customers happy? I’m assuming a newsletter is one, but there must be others.
Delegate Or Stay Small: One of the most important things to recognize with any customer relationship is you have to successfully manage their expectations.
There are. Really one of the most important things to recognize with any customer relationship is you have to successfully manage their expectations. I think Dell Computers does a wonderful job at that. I’ve been a Dell guy for twenty years. Whenever I order, almost every two years because it starts slowing down. That’s like ten years in dog’s ears or whatever. Every two years I get a new Dell and get the most powerful one I can and it’s good for a while and it slowly slows down. Whenever you place an order with Dell, they give you an expected delivery time because they build it and they ship it to you. Most of the time it’s pretty fair. It’s going to be there in seven to ten days. I can deal with that. They’re going to build me a computer. It’s not something in a box off the shelf. Don’t you know, what I’m thinking on low side is seven days. That thing arrives in four days. Let’s say I purchased probably eight Dell Computers or ten maybe over the course of my business. I know they do it, but I still smile when that thing beats the delivery date.
It’s really all about under promise and over deliver to keep customers happy. I think that’s what we’re we going to tweet out from this episode.
[Tweet “Under promise and over deliver to keep customers happy.”]
It is. There are things that I do for my customers. When someone with the No Hassle Newsletter, when they’re a client for six months, I will take my art team and we’ll custom design a masthead for their newsletter. Now, some people will say, “I want to start out, can I get that ahead of time?” Now, I normally charge $150. What we’ll do is we’ll charged it but we refund it so we can get it to them early. Sometimes when they order the masthead, we might send him $100 in print coupons to actually save on printing and postage.
That makes people incredibly happy. Now, I’m sharing now with however many people listening to your show. That’s what we do. It is standard operating procedure. If somebody said, “Could I do this?” and we just simply said, “Yes, sure.” You’re going to do it and that’s good, but it doesn’t make it special. One of the thing you want to do is make whatever you’re going to do seem special. I know in my heart I’m going to do it anyway because I really know how much I value relationships. It’s about the power of reciprocity and things like that. I know I’m going to do it, but you always want make it seem in a way like you’re going above and beyond, going out of your way. Because people just totally dig that. Again, that increases the chance that they’ll feel the need to reciprocate.
I love it. Since you’re so busy and running so many different things, and entrepreneurs like you can really relate to the challenges, especially before they get funded or even after they get funded, they still have so much on their plate. Do you have any secrets you can share on how you get so much done?
Yes, I delegate. I think it’s chapter four in my book DECIDE, which I appreciate you mentioning. The chapter is called Delegate or Stay Small Forever.
Wow, that’s a great tweet right there. I love it.
Truth of the matter is, when you are doing work that you could hire somebody, whether it’s an employee, an actual W2 employee, or a 1099 contractor. When you yourself as the owner of the business are doing task oriented things, you are worth what you would pay somebody to do that. I’ll give you an example, let say you’re having somebody do follow up phone calls to new clients. “Hey, thanks for coming.” Or you’re doing database management, or you’re actually sending out books for people that ordered books, what happens every day. If you’re doing any of that thinking, “Nobody can do it as quick and as cheap and as fast as I can. I might as well do it myself so I don’t have to pay somebody else. I’ll keep all the money.”
[Tweet “Delegate or stay small forever.”]
If you’re doing that kind of work, you’re worth about $25 to $30 an hour because you can get somebody, you can get a virtual assistant, very good, to do that for that kind of money. Now to help illustrate this, again just for easy math. If you want to earn a million dollars a year, let’s say you’re going to work 50 hours a week and you’re going to work 50 weeks a year, you’ll take two weeks off. That means you have to earn $400 an hour. If you do that, you’ll earn a million dollars. Now, if you’re doing work that’s worth $20 or $30 an hour, you are woefully going to fall short of your target.
We only have so many hours, don’t we?
I have a team of eleven people that help run No Hassle Newsletters and also social media, the print business, the custom article business. I have somebody that schedules all my interviews like this. I have somebody that specifically takes care of all my coaching clients. All I do pretty much, and I do it three days a week, I am on the phone from 8:30 to 6:00 and I go from either interview to coaching client to interview to coaching client to prospect, but they’re all scheduled. They’re all scheduled calls, Tuesday, Wednesday and Thursday. I take off Monday and Friday. Excuse me, I don’t take off, especially in the winter, but I don’t have any interruptions. Actually, Monday and Friday are very good production days. Whether I’m writing a book or producing content or doing anything, I can just sail through it for as long as I want. I don’t have to stop and refocus.
I love what you said there, Jim, that’s the key, that’s it right there. You have scheduled your time, so you’re not constantly context switching between projects. This is my time to do interviews, this is my time to write a book and I’m not crossing the tube back and forth. That’s how you are so productive.
Delegate Or Stay Small: Anything that is a high enough priority, you will find time to do it.
I was on an interview yesterday, as you and I are doing this. The question was, “You’ve written six books in six years. How in the world did you get that done?” Anything that is a high enough priority, you will find time to do it. I wrote my first book in eighteen months, I wrote my last two in 60 days and that includes editing. I actually wrote the book in about five weeks. The way I was able to do that, because I am fairly busy, I can’t jam too much more into three days a week, for sure. But what I did is, I said, “For about five weeks, maybe six weeks total, I’m going to get up even earlier than I normally get up.” I’m usually up and going by 5:00, something like that.
When I’m in book writing mode for example, I might get up at 4:00. Sometimes I don’t even need to set an alarm just because my brain doesn’t shut off. I get up at 4:00 or 4:30 and I don’t shower, I don’t do anything, I don’t eat, I don’t look at Facebook, I don’t open email. I come into my office, it’s dead quiet in the house, obviously it’s still dark outside. I open up a Word, my file, and I start typing because I’m very focused on writing. Let’s say I’m writing at 4:30. I’ll write until about 6:30 every day. At 6:30, I’ll shower, walk the dog, get some breakfast and start my day, ready for my first calls. That’s a commitment.
Now, I always find some people, “Yes, Jim, but you don’t understand the value of sleep for your health.” I totally get that. I think five or six weeks, if you were to do that, you’ll survive. Again it’s placing a high enough priority on it. The other thing I don’t’ do much of, I do a little bit, but I don’t watch a ton of TV. When I go to events or even sometimes I’m out with family, “Have you seen The Walking Dead? Have you seen this? Do you watch this?” I have no idea what any of those show are about. It’s not that people don’t need some down time. I’ll watch ten hours of football on Sunday. But generally, I just think it’s not a good use of your time.
You’re not the first person I’ve heard say that. It’s really about your priorities and what’s important to you and what you decide. The name of your book, again, is DECIDE – The Ultimate Success Trigger. We’re going to put that in the show notes for people to be able to buy it, go to Amazon or whatever their preference is on how to consume that kind of content. Jim, is there any last thoughts you want to leave our audience with on how to run a business that makes you irresistible to investors?
Yes, I’ll do that. Right before I give that though, I appreciate you mentioning DECIDE, I’d love to give your audience a free copy, if that would be okay.
My goodness, what a gift.
We’re on launch mode. If you go to Amazon, you’ll see it’s $20 and approximately $5 shipping. If you go to www.DecidedForSuccessBook.com, that would be my website for the book. You can order it there, it will be free. We just ask you to pay $6.95 for shipping and handling. I even ship internationally. I think we just shipped a book to New Finland for $28, it’s okay. It’s $6.99. Every order goes out of here in 24 to 48 hours. This book will change your life as far as the thinking, because it’s all about your mindset.
Now, the tip I’ll give you is this, John. No matter what you do, whether you have a product or service, whether you’re an entrepreneur or an investor, whatever it is. You need to understand that you will earn significantly more revenue for who you are than what you do. The amount of money you can earn is not tied to the deliverable. It’s tied to how people perceive that you are the expert, you are the one that’s going to get it done. If that’s good, I’ll leave it there.
[Tweet “You earn more revenue for who you are, not what you do”]
That’s fantastic.
I can give you an example, if you want.
You’re the newsletter guru. You’ve been on TV doing that. I’m known as the Pitch WhispererR. I’m all about getting people to know instantly who you are and what you do and how that differentiates you.
That’s exactly right. Imagine if somebody, “I got to pitch this to a bunch of investors. I could work with a coach. I could work with a communication expert. Wait a minute, the Pitch WhispererR?” I don’t know your tag line off the top of my head but I’m sure it’s pretty cool. Therefore, “That’s the guy that actually does this for a living.” They’re going to call you.
My tag line is “How to go from invisible to investable.”
I like that. You see, that tells people exactly what the benefit is of working with you. When that happens, 90% of the heavy lifting is done.
That’s fantastic. Thank you so much, Jim. It’s been a pleasure. I can’t wait to get this out so people can really dig into your wonderful book about the power of decision. DECIDE – The Ultimate Success Trigger. Thanks, Jim.
My pleasure, John. Thanks for having me on.
My pleasure.
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