Welcome to the newest episode of the Hack The System show!
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The Hack The System Podcast is your access to interviews with the world’s foremost experts on blogging, lifestyle design, traveling, and life/system hacking. In short–you’re going to learn how to kick ass.
In this episode, I sit down with Ramit Sethi of I Will Teach You To Be Rich. Ramit is my brother, so I kind of forced him to do the interview. But also, he is one of the most sophisticated marketers and bloggers on the Internet. He has been featured all over—from ABC, to CNBC, to a 6 page spread in Fortune Magazine. He is definitely a brother with big shoes to fill.
Ramit’s blog started off as a personal finance blog for college students. It’s morphed into an empire, with thousands of readers who have used his free advice, and his paid products, to find their dream job and to become freelancers, making money on the side.
I’m really excited to have such a big name on the blog, so get ready to see my brother and I battle it out!
Watch it here:
A Summary Of This Episode
1:30 – How can you find the right niche for your talents?
5:00 – Is the amount of time you continue to blog the most important factor in success?
7:15 – How do we test a business model?
13:15 – How to begin marketing via an email list
16:30 – What is more important–the quality of a product, or the marketing?
19:00 – How to become a copy writing expert.
23:00 – Our differing viewpoints on Passive Income.
33:00 – How long did it take Ramit to go from starting his business, to making money online.
37:00 – How can you get your first freelancing client?
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Transcript of the Podcast Episode
00:00 Maneesh Sethi: Hey guys this is Maneesh Sethi, number 1 digital nomad, I am coming at you today from Fair Oaks, California, my parents house, and I am here with by brother Ramit Sethi of “I will teach you to be rich” and I am pretty happy and pretty excited. Ramit has offered to do an interview with me about some things that have been on my mind and I am pretty excited to talk to him. So Ramit how are you doing?
00:21 Ramit Sethi: Good, just woke up form a nice 2 hour nap, so I am feeling good.
00:26 Maneesh Sethi: I was just trying to decide because usually I am pretty polite with most of my interview candidates and I am like, this is my brother and I am like smashing him with a pillow.
00:33 Ramit Sethi: Do this interview!
00:36 Maneesh Sethi: So anyways, Ramit has been running aside “I will teach you to be rich” and you are doing earn 1K program, which I believe is your main product and then what else do you work on these days?
00:46: Ramit Sethi: So, my site started off as a personal finance site and really my interest is not in money, it is actually in behavioral change. That is my background, persuasion and social influence. So, I started off just writing about money and I wrote a book, came out in 2009, developed some courses online, earn 1K is one of them, my flagship one. Coming up soon I have got a new major course coming out on how to find your dream job. So we basically are taking people and showing them a very rigorous and meticulous process that we built to help people find their dream job, everything from what is your dream job, all the way down to what are the words that I say when I someone out to coffee for an informational interview or what are the words that I saw to negotiate a 10,000 dollar raise. So that is more like it.
01:33 Maneesh Sethi: Okay, so I this is really interesting because both of us have a different philosophy on the way that we see jobs and the way that we see the working world and both of us are kind of in the same sector and that I try to help people with building online businesses and you try to help people with building some kind of business, no matter what it is. But how do you find what the proper job is for somebody who wants to build a business or wants to build a freelancing career for example?
01:56 Ramit Sethi: Well that’s the number one barrier actually. We did we collected over hundred thousand data points when we were doing our research for earn 1K and the number one barrier for people starting to earn money on the side is, I do not have an idea. So people genuinely believe that they need a magical idea in order to start earning money, but really that is not true. What we developed was basically a loose testing framework so that they could basically write down all their ideas and then we showed them how to apply several tests to find out if this idea would work or not. So, nothing breaks my heart more than hearing people say stuff like “Yeah, I worked on this idea for 9 months and I have this blog and you know I am making like 26 cents but I think if I just put in 2 years into it, I can really make it”. To me it is just colossal waste of time. I would rather help them spend the time upfront, do a lot of testing, before they spend all this time and money. So that is what we teach people, we teach them how to apply several frameworks, one of them is called the Pay Certainty Technique and all these other techniques and then by the time they find one idea, they actually have a stable of ideas, let us say 5 to 10. They go out, they start testing them, they find out what works and then my goal with them is just simple, three paying clients.
03:06 Maneesh Sethi: What is the Pay Certainty test?
03:09 Ramit Sethi: So, the Pay Certainty Technique is basically this. When people start off with their ideas, we ask them 2 questions and I’ll give u an example. Let us say I am a fashion stylist, I feel like I know how to dress really well and I have helpd some friends dress and I want to charge money for it. So let us say you first want to start off by identifying your potential customer, who are they and most people fail to do this ever. So they are just like everyone is my customer and at that point I am just like kill yourself because if everyone is your customer, you are not Proctor and Gamble, you do not know where to reach everyone. So you are going to end up doing it for no one. So, we start narrowing it down. Let us say there are 3 potential customers for me. 18 year old guys, right, who just went to college and they want to learn how to just dress better, 35 year old, mid to senior executives and 60 year old retiree men. So who is going to be the target here and when we apply the Pay Certainty Technique, we ask 2 questions, do they have the ability to pay and do they have the willingness to pay. So ability to pay, does an 18 year old college kid have an ability to pay, let us say 70 dollars an hour?
04:10 Maneesh Sethi: No
04:11 Ramit Sethi: Hell no. Does a 35 year old senior executive male have the ability, yes and does a 60 year old retiree, probably yes, they have some money saved up. Now do they have the willingness to pay, 18 year old dude?
04:24 Maneesh Sethi: Definitely.
04:25 Ramit Sethi: no, he is like I am wearing a T-shirt, get out of my life. 60 year old he is like listen, my wife has been my wife for 75 years and I am only 60 years old, I do not need like dress better. The 35 years old guy, not only does he have the ability to pay, he has the willingness to pay, right? He is like this is for my career, it is an investment. Right there you have eliminated two-thirds of your potential options and if you apply that to your idea, like people come to you like I want to help a non-profit, like learn how to write a better grand applications. Do they have the ability to pay? No. Do they have the willingness to pay? No. Done, not going to pursue them. So this simple test, the Pay Certainty Technique, it ensures that you are certain you get paid by doing some of this simple work upfront.
05:09 Maneesh Sethi: okay, I think it is an interesting point, however I also noticed like even your business took 5 years before your blog really took off you know and it always seems like, that if you look at there is a post recently by Sean Ogle from Location 180, where he said he looked at his RSS Feed and out of the 30 or 40 lifestyle designers that he had on his feed, only 5 were still going and those 5 were incredibly successful and because they worked so hard and took the time and continue to do it, they were able to break through. So, how do you reconcile that?
05:38 Ramit Sethi: That is a great question. Remember that when I started off my blog I was a cocky college kid in 2004 and I had no intention of making money from it at all, infact I had no advertisements, no products, no nothing. I did not even want people to think I was doing it for money, because I was not, it was just a hobby. So, I did not make a dime of that site for maybe 3 years. If I start a business now and one of goals was to generate revenue, which it almost certainly would be, because I have adapted my thinking, then I would want to start off by thinking at least a little bit about the audience. Who are they? What do they want, another part that no one usually talks about, they are just like “I have this great product idea, let me just write an eBook”. They don’t actually sit down and talk to the market. So the way I reconcile is that it is true that those guys stuck around and put the time in, just as I did and now are probably doing very well, but that is a luxury, let us say typically a white young 20 something can afford to do. If you already have a job and you are looking to earn more on the side or if you’re not like 20 years old and you are, you know, like monthly earning more than 700 dollars a month, you don’t want to spend 4 years trying to figure something out. So my thing is like if it is a hobby that is one thing and it is great and sometimes hobby can turn into revenue, but if you’re starting a business, a business means you are generating revenue. So let us at least do a little bit of work upfront. Listening to users, applying some techniques and you can maximize your chances of success.
07:09 Maneesh Sethi: So in a like step by step process how would you that I came down with a list of like 5 or 10 ideas and I said hey, I think these would make me money and you were to tell me okay, let us go ahead and test it. How would we test these ideas?
07:19 Ramit Sethi: This is the magic, this is the secret sauce of my business and it is the secret sauce of earn 1K as well and I would love telling this to people because you’re free to like study what I do with my business and with earn 1 K and with dream job. The fact of the matter is that most people just do not do testing because it is hard, it takes time, it is very challenging to dig through all this data. So let me show you what we do alright, so earn 1K. Oh btw, usually I talk about helping people make money via freelancing, but I am going to talk about earn 1K as a product, because I know a lot of your readers you just want to make products, we can talk about why I disagree with that btw later. So earn 1K is like this online video course, it is an 8 week program and it is sort of very rigorous and we have put thousands of people through the course. So when I went on book tour in 2009, people in every city like I was asking them what do you wish I wrote more about and in every city people were like I love your automation stuff but I want to know how to earn more. I was like really? That sounds kind of like weird, do not you think it kind of looks like a scam and they were like, well I just do not know what to do. So I went home after hearing this in multiple cities and I got my team together and said let us at least investigate into this earning more stuff. So we basically bought every product, every course, and every book on earning more that we could find and we broke it down into this classified universe, we call it cloud research. We created about 5 clouds, so we found like one cloud was passive income, one cloud was like negotiating your salary, one cloud was freelancing and then there were a few others and I looked at it and I was like yeah, I like freelancing and I have raised my rate several multiples in the last few years and I also thought a lot of people neglected freelancing because it is not as sexy as passive income, so I was like I think we have some real advantage here. Okay, this is where the paths can diverge. A lot of times people say I am going to write an eBook about what I know, like I used to charge 20 dollars an hour, now I charge 300 dollars an hour or whatever, let me write about how I did that. But does anyone really care? Does anyone want to read that or do they want to read a different approach. Here, let me give you a very succinct example. There is a very sophisticated market of whose story I heard and he noticed that one of his friends had started an online course in the relationship dating space and this guy was making 40K a month, pretty good money for an online product and this my friend, basically looked at it, analyzed the market and spent several months testing it and he launched his own relationship course and in about four and a half months, he was making more than the first guy.
10:03: Maneesh Sethi: Okay
10:04 Ramit Sethi: Why? He identified through testing several subtle differences in the markets and was able to create a better product, which is number one, market it better by targeting the right audience all these things made it that much better. So what we did was for the first incarnation of earn 1K we collected about 50,000 data points. So we asked people why you want to earn money. Do you even want to earn money and then we would ask them with a kaleidoscopic perspective. We would ask the same question 3 or 4 times and get different answers. We learnt for example, let me ask you, we call the course earn 1K on the site, why do you think we call it that?
10:38 Maneesh Sethi: You tested it I am sure and its because people want to see an exact specific number, a specific verb and they want to earn it on the side, instead of having to, while they are doing their job.
10:50 Ramit Sethi: Yeah. That’s right but it gets a little bit more subtle than that. So, many of my successful students they earn 10K or tens of thousands but if I were to say earn 10K on the site, what do you think they will say?
10:59 Maneesh Sethi: This is a scam product or there is no chance of that happening.
11:02 Ramit Sethi: There is no chance; I am not the kind of person that can earn 10K, right? So that level of subtlety is strategic for your product, product name, even the material you have. On the side, what we found was that if people believed that they are going to earn more money, they have to quit their job and start the next Google, like raise venture capital. I am like you are never going to raise venture capital. Okay let us be honest. So, on the side is very descriptive, right? So we found a lot of these subtleties and we put it into our course and we tested it and tested it and tested it. So we would run some people through it, we would micro test parts of it, infact when I was in college I used to write a comedy column, it was called “Two guys who are better than you” and I have very modest title name scheme as you can tell. Anyways so we would actually go on about this thing, my friend and I would write the column and we would spend like 40 hours a week and then we take it to our friends and watch them read it and if they laughed where they should laugh, we were like got it. If they did not laugh, usually I would be like you are not funny but if 2 or 3 people did not laugh we knew we had a problem. So it is all about validating what you do versus what the market does. For earn 1K 2.0 we collected another 50,000 data base points and refined it further.
12:13 Maneesh Sethi: So you specifically test every single part of every single piece of your product, like videos and stuff? Like how do you lay it out, how like specifically do you lay it out, do you use Google docs, what do you tactically?
12:19 Ramit Sethi: Ahan, we do several things. First of all we do not test everything that is impossible. We test like the big winds. So for us, look everyone loves to talk about AB Testing, multi-variants and we do that but the bulk of our test happens before the product is created. So if you were to ask me Ramit would you rather test your sales page or do testing before, I would always do it before; it is just that much more valuable. So to test if I just use Survey Monkey, I have a standard page of Survey Monkey and we collect 4000-5000 surveys per month, actually maybe even more than that and I read every single one. After about a 100 you kind of know what the people are going to say, but I just read it, just for kicks. We will collect some of the insights into a Wiki either using something like PB Wiki, or we might put them into Google Docs and then we will also put them into Base Camps, so we have this kind of a home grown thing with multiple places but I would say to centralize everything we use Base Camp and then certain things are better suited like if I am collaborating on a document with somebody like I was doing today, we will do it in a Google Docs and we can both type and all.
13:33 Maneesh Sethi: Okay, I think it is interesting because with my product, with the Online Marketing Master Class I recommend that people basically design a landing page where they give away little bits of information, where they give away free products and free things on their website but I do not recommend they create a product until they have testing done via their email list, so what do you think about that?
13:57 Ramit Sethi: Yeah that is a classic model that is being done since before the twenties, people used to put direct response markets used to put advertisements at the back of a magazine for like 10 different books and one book got enough orders that they would write the book. I think that is great and a shortcut way of testing but I also see a lot of people online who do not respect the theory. They simply are like “give me the tactic Ramit, I need a tactic to eat and it is going to be a delicious tactic”. Like that is a tactic and that is great you start getting some feedback, but I think it is intellectually lazy to just do that. I think that once you have a series of let us 100 or 500 responses would be more comfortable for me; I would try to identify who are these people. So okay, they are 27-30 year old males who tend to hang out here. Okay, so let me go and find some of the people, that is actually the first step, I should actually practice marketing to them to try to get some responses because if I cannot even get to fill out a free survey, what chance do I have of signing them for the product. So I would go find them and talk to them in different ways. We start off at a high level with surveys, so I would probably want to do more surveys, right. Like I would like to have let us say a 1000 people fill out the surveys and I would try to have like to have let us say 10 different surveys, around 5 questions each. So now we are starting to see like if my questions are compelling enough if people would answer them for free, no incentive needed. Next I would start emailing these people and ask them can you tell me more. I would sit down and send an email to my list to please write back and tell me like XYZ, write back and I would read every question, we would get like 2000 responses in an hour, then I can hear the words they are saying, I can see the emotions in their email. Then I will also do group calls or even one on ones with my friends. So I think it is a great start to do a landing page but most people stop there “I got it” and they never go into the depths. And just to give you this, a friend of mine was asking me some advice on how to build a product and he was like we make this quick cash and we a lot of users, what do I do. I got on phone with them and I was like listen up guys, in my experience, to build just like a good product you are going to spend 6 month. Why not 12, or 18 maybe, probably 12 months to build the world’s best product in the area, and I showed them the difference in revenues for me and just the customer satisfaction. I have a product that took me a very short time to build and its fine, for most internet standards it would be considered a success but then I showed them another product which took me a long time and it is like night and day difference of what is more successful. So I believe in spending the time on the right thing and you can get what I call disproportionate result. You might spend two times what someone else spends but you might get ten times the result.
16:48Maneesh Sethi: Do you find the quality of the product is more or less or equivalent as important as the actual marketing that you do on a product
16:55 Ramit Sethi: That is a very good question. The marketing is critical, the product quality is critical. We have something called a yes and yes, and that is the answer to your question, yes. When I was in high school I remember there would be these applications like college applications and they had FAQ’s. One of my favorite questions was, should I get a tough class to get a B or should I take an easier class and get an A, and the elite colleges, their answer was just so funny, like we always encourage you to take the more challenging class but to be blunt most of our accepted students take the tougher class and get the A, in other words yes and yes. So marketing is much more important than people imagine now and for me the marketing process starts, like when I was out on the book tour and asking people what do you want that is marketing. Then when I bought all the products and start analyzing them, that is marketing research and then the surveys and all that stuff. The actual marketing what people think is writing a sales copy and designing and what colors are button are going to be. That is like trivial marketing. So all this marketing that comes up front, that stuff is critical. And when I read, I read some peoples sales pages and I am like yes, I am not in the wrong, they have got every concern. Real marketing means, by the time I get to the bottom of the page or whatever the page is, I have knowledge so much that price is now a trivial to me, it doesn’t matter. They could charge me 97 dollars or 2997 dollars, I would still pay. So I think that a short answer to your question is that they are both important and marketing is a lot more important than people understand.
18:42 Maneesh Sethi: so, from a sales page perspective, how do you go about creating a sales page, like what do you find are the most important for a sales page, length wise, content wise, video versus voice versus text. What do you find are the biggest break through on a sales page?
19:01 Ramit Sethi: That is a very complicated question. I will start off by saying that about 4 years ago I decided to get really good at writing copy, I decided to be world class. So I read thousands of sales pages and I bought books, I bought courses and I just studied them intensely form some of the masters, some of the masters who are not with us anymore, so Claude Hopkins, many people have heard of him and then some of the masters who are alive today and are writing copy and are just magnificent. Oh and by the way I wanted to study the copies from all different areas so there is this long copy which many of us have seen on online sales pages where one scrolls and there is this magazine copy and everyone says read Cosmo’s headline, definitely do, they have some of the world’s best copy writers there. There is copy writing told in a narrative format, stories designed to persuade and I studied a lot of narrative and there are a lot of great books I can recommend to your readers, infact I will send you guys a book list. Tactically for sales page, one of the thing I did was I knew performed really well because they were fronts for huge businesses and they were kind of relevant to me, they were like in personal development and I would actually print them out and hand copy them. So some of them are like 30 to 40 pages long, mine is 47 and I would copy word for word but I would change anything to my product and I never published these, they never saw the light of day but I did it to understand what they were doing. This was like really helpful for me because after doing 5, I would say the breakthrough was like around 15, I started to just see things that I hadn’t seen before. So, for example a lot of people would copy sales pages, and they would not understand what is going on. They would be like okay, start off with this, then I do bullet points, then I do testimonials, but they do not understand the theory of what is going on and to me, everything I am talking here about, is not just tactics, tactics matter but the theory matters a lot. So for example certain sales pages should be short, some should be longer, and some use negative testimony, some use positive testimony, video matters, and blah. Tactically I have been hearing great things about video and I have been running some of my own tests. My video page is outperforming my long copy, well my video page is outperforming one of my variants by 50% and that is not even an optimized video, so great things are happening with videos these days. In terms of length, as long as it needs to be. There is another famous story about a marketer who writes about 30 page long emails and someone said who reads these, does anyone actually read it and he just went yeah, only the buyers. So what you learn is if you write an engaging copy, there is almost no length that someone will not read. So if someone is writing about back pain for example and everything you are writing about addressing exactly what they feel, they wake up in the morning how do they feel, what happens when the weather turns, when the xyz, they are going to be nodding their heads going yes yes yes. So the most skilled sales page and copy writers they deeply understand the person they are writing for, they know their age, their gender, where do they live, they know all this stuff so they can put it into words, for example, for my sales page, I know who am I writing for like intimately, so when I start off I talk about another Monday morning, commuting to work, listening to those same old songs on the radio or the same songs on the iphone and you are like is this it? Should not I be flying around on a jet, gallivanting around? Instead I am going to work on this job where I have been going for 3 years and why do not I live the life that I want to live and I talk about how to earn money fits in and that resonates with my audience because I am that audience and first of all I had studied them. Does that answer that tactical question?
22:51 Maneesh Sethi: That does answer the question. I think that is really cool, I think that the hardest part for the people is to understand that it is not an easy to make money game and that it is going to take time and focus and it is one of the things that a lot of times like when I was talking about passive income in the past, when people thought it was easy, people saw my video where they saw me getting passive income by building this system, I think you have seen the video and the thing is that people do not understand that the video, yeah it took me 4 hours a week but it took me also 6 months of working 20 hours a week of hiring tons and tons of people before I get to the point of starting passively. So you have an interesting take on passive income and the way that I phrase passive income is any sort of money that you earn without working, so a good example of it would be any kind of ad revenue, any kind of optimized landing page where people are coming to you via SEO or via ads on the website or via repeat traffic and purchasing what you buy and passive income is not about working 4 hours a week but is a business where you have to just work 4 hours a week. Any additional work would still earn you more, but if you would disappear for a month or two months you still have income coming in, royalties are an example. What are your thoughts on people who try to move away from free lancing businesses, away from job to build some kind of a product to actually generate passive income?
24:18 Ramit Sethi: I do not know if your audience is going to like what I have to say. In general I do not believe that most people are sophisticated enough to earn passive income. I know I studied it carefully; I also earn a lot of passive income so I have been through free lancing and raising my rates to approximately a 100 times. To do passive income stuff I have products and book and all this stuff and the statement honestly sounds like of condescending that “I have done it but I do not think you can do it” but the fact of the matter is that building a sustainable passive income is incredibly difficult and most people do not have the skills, in my opinion, to be able to generate enough passive income to live like, let us call a standard life. So there are many people I know who are making 53 cents a day through Ad-Sense revenue, or there are a very small number of people who are making enough passive income that they can gallivant around the globe and live entirely on something, but put them in US city where they were ordinarily living or might live at some point, I mean you need several thousand dollars a month to be living in a mid size to large city. To make that kind of passive income is incredibly difficult, our need is not only the skills that you need with free lancing, you also need things like customer research, copy writing and stuff like that but then you need a whole other set of skills which is building a product, marketing it online, perhaps SEO, payment processing, all this crazy stuff. It is challenging enough for most people to get to the freelancing point, to get to passive is a whole other step and so what I tell my students is, and I am very clear about this, I said look, I could have made a lot more money by selling a course on passive income, I could but personally I do not believe most of you have the skills to be able to earn, infact I do not believe anyone has, not just my I will teach group. It is really difficult, now some will do it and for them, they have a great life, but I told them I would rather have them focus on this, 3 paying clients, you get your 3 paying clients that is how you will make 5000 dollars a month or 10000 dollars a month. What I tell them is that there is a progression form free lancing to passive. Once you have like 10-15 paying clients and you know intimately what these customers want and you can like build a product to serve them and maybe automate some of the stuff that they are doing, but what is see people doing is that they do not even know how to do free lance and they do not have the basic skills of customer research or anything and they are just like passive, I need passive income and what they do, a lot of times they do surface level stuff, like they’ll build a landing page and what they’ll do is they will not understand any of the rigor underneath it. Now that is okay if you are doing it on your own and you are doing as fun, as a hobby to learn how this works, but imagine that there are another 1 million hungry people doing like that, what makes you think that you are going to differentiate yourself and be able to earn 3000 dollars a month in passive income. I earn that and it is very difficult and still work at times too. So, my basic thing is I tell people I can help you earn in a lot of ways, I prefer to work on those that will get you the most success and me the most success. For my niche, that is the approach that I took and it does not make me too popular in some circles but that is my approach. I do think passive is possible, and I think it is possible mostly likely for people who have demonstrated excellence in earning free lance or some other form like negotiating your salary, whatever it may be. Once you that it will generate some extra cash flow and you know of it feels to deal with an actual customer and then 10 of them and then try going into the passive side.
28:10 Maneesh Sethi: Before I built my passive income I was definitely free lancing for a year and a half before I got there and I got my income from free lancing to fund my passive income but then I made my goal strictly about passive income, now that was the only thing that was important in my life, getting into passive income and my focus on purely arriving t passive income and then everything started to disappear, free lancing contracts I said no to, as I knew by strictly researching passive income strategies and by strictly applying what I learnt in my university and whatever, towards passive income I was able to inch myself closer and closer and I did have to sit down and get the work done but it was because I was focused on passive income that I was able to get to passive income. So where as a lot of people have taken my classes or watched my videos, and have tried and then have not done a half bit attempt to do my work and end up failing and I expect that because they are not doing the work and well if you are going to put in just an hour and a half, you are not going o make a 100,000 dollars a year or anything you know, like it does take work and I feel like passive income because there are so many methods to get there it is not just one specific method, passive income is just a way to look at any sort of income which is automating it. It is not impossible to get to it, there is not one specific strategy, everything needs to be applied with the idea that passive income is in the future. So one thing I am always interested by when people are trying to do businesses they are like the hardest working people, some of the hardest working people, people who you look at them and you are like you will be the best employee in the world, why are not you an entrepreneur, because you can make 10,000 times this if you were not constructing a house. But sometimes people who are extremely good hard workers do not have the creativity to be focusing on building a business or building a sustainable piece of income. They just know how to follow directions or just do steps A, B and C. So what my goal was with my first course of Passive Income: Master Class was to take people who are willing to do hard work and give them a systematic way of earning passive income, that if they put in the effort they would get to that point and so I feel like a lot of people who are good at following instructions might not yet have the ability to break out of the job, where they are told to do things by their boss and figure out a way to build a sustainable income but the way I recommend it to people to people who want to build passive income is that you keep your mind on the goal, passive income, here are several ways to get there royalties, landing pages, search engine marketing, any kind of income such as subscriptions, services, affiliates and anything you do, you do not just focus on the lower part that you are told to do. You focus on building something that has some element tied to a passive income strategy, if that makes sense.
30:56: Ramit Sethi: Yeah, it does I mean the thing I like about that is the absolute focus, So if you have a goal and you are like, okay, I could be making 5000 dollars from this free lance contract but I have decided to go down this route, so no thank you and I am just going to focus on this. I think that is just great. I do think that it is always good to set a time to failure. A lot of people start off with such projects and they never decide how long am I going to do this before I decide to give up, it is important. So like what I have my due is something like at 6 months I want to have 100 customers and if I have 90 customers, that is great, it is good enough. If I have 8 customers, something has gone wrong and by the way I should not wait until 6 months to find out that, I should be evaluating every month. So it is okay to give up on things and move on to something else, because there is nothing worse than seeing someone flogging a project that is never going to take off. It is futile and I think like I said some people do passive income but my thing is I just want people to be realistic and I also like people, for my audience, a 1000 dollars a month, extra is like a meaningful thing in their lives, it is such a huge amount of money for people and what is interesting is many people start off, they come to me and they are like I want to make it passive because I do not want to trade time for money and I always ask them ne question and I have done this many times, how much are you earning passively right now? They almost never respond, or if they do they are like “oh I am just getting started, blah blah blah”. There are people I know who are making a lot of passive income, for them I am happy. Those people though, I find them pretty remarkable and they would be successful at whatever they would do. So you know I also like the step by step approach, like it is difficult, like you said there are so many ways to make passive income or any or free lance, people including me need a step by step way of going through it. Just give me that first 500 or 1000 dollars, I mean then I can prove it to myself that I can do it and then I can be more creative but at least walk through that first
33:00 Maneesh Sethi: Yeah, that is interesting. I think that brings us to our next part about goal setting and planning out how you are going to deciding on when it is time to fail. How to decide, like how do you set your goals for priority that you have in business, how do you set your goals to get from where you first started to when you first became successful?
33:19 Ramit Sethi: What do you mean I was not born successful?
33:21 Maneesh Sethi: Yeah
33:22 Ramit Sethi: That hurts, that hurts me.
33:23 Maneesh: You were definitely not born successful, if I remember anything. No but between the time that you started your blog and the first 3 years for example and then you had your first product, the 8 dollar product, how did it go?
33:35 Ramit Sethi: 4 dollars and 95 cents. Okay so I released a modesty titled eBook called “Ramit’s 2007 guide to kicking ass” and I priced it at 4 dollars and 95 cents which is laughable because I charge over a thousand times now and I thought I would sell 50 copies. Infact if you go look at the sales page which was really just a blog post, I was just like you PayPal me the money and I will email you the pdf, I did not have any fulfillment or anything because I just genuinely did not think that anyone would buy it. I had like this low self esteem, like thing about people buying my product because I have all these free loaders, everyone has free loaders and I thought they would be just like you jumped the shark, you sold out, I could find this free online. Well it turned out that I did get those comments but people also bought it and they bought it just so much that I had to get a fulfillment service and over a 1000 people or so bought it in a short amount of time. So, that was my first product but is your question like how did I set my goals before that?
34:40 Maneesh Sethi: yeah, I mean my question is form that point you started building a business to do a bigger product and I am wondering between then and now, today you are at a point where most people are not and are not going to be for a long time, so how did you set goals when you were first getting started to achieve what you wanted to achieve.
34:57 Ramit Sethi: I may not be the best guy to talk about this because like people will sometimes say like how will you stay motivated and I do not like that question for some reasons because motivation is just a term that is just generally used incorrectly and they are like “I need some motivation so I am going to go and read some blogs”. Okay, you are a loser; you are never going to do anything. If you are like looking for blogs for motivation, that is not a good sign of success. The second thing is I never really had a good answer for it, I was just always kind of motivated on my own, so I wake up and just be like okay, I am going to do this, I knew I was going to fail and it did not really like affect me or set me back, so in many ways I am kind of like a weirdo when it comes to that. I did not set any goals, for the first few years I was like write a lot, write really good stuff and then spend a lot of time understanding how to do marketing. That is one thing I see with a lot of bloggers, like well often the content they write about is often a commodity, so they will write a blog that anyone else could write, you do not want to do that and infact, we have talked about this and the times where you have spent like 5 times longer than you usually use to write a blog post and like 20 times the responses, right? It never fails. People, they want to write these throw away blog posts and their response gets thrown away. When I do my guest post on other people’s sites, I spend like 15 hours writing that guest post but guess what? It is some of the best marketing I ever do. So well I had a book, and I had a book contract for and they gave me 9 months and it took me 8 months to do the table of contents, so I do not think my goals were very affective on that one. I started getting more rigorous about goal setting when earn 1K became a really big success and I could set metrics around that, that may not be as useful to your viewers.
36:54 Maneesh Sethi: Okay so I have a couple of more questions before we wrap up
36:57 Ramit Sethi: Sorry for bombing that goals question.
36:59 Maneesh Sethi: It is okay.
37:00 Ramit Sethi: I had no goals in my real life; I do not know what to say.
37:04 Maneesh Sethi: so when you were talking about free lancing, how do you find Is the best way for people to approach, who do not have a huge portfolio already or who have not had that many clients, let us say a web developer or web designer, how would they find their first free lancing client?
Okay there are a lot of ways to find your first free lance client. First of all understand that technical skills are not always, infact rarely think they are going to get you the job, okay? I have people that I work with, there are people probably more technically skilled than they are but they are super responsive, which always matters to me. They always respond to the emails, they never miss their deadline; they are highly communicative, matters to me. I would rather take someone like that over someone fancy because these values are important to me. The second thing is that there are ways to know whether to work for free or not, a lot of people get into trouble and they go like I am a designer, I work for free. Wrong. You are going to get a couple of scam companies that are going to take advantage of you and you honestly look like desperate if you just go out there and you are just like I am free. I am like you must be free for a reason weirdo. So free to fee is a whole section in earn 1K where we talk about how do you know who to work for, for free and also how do you go from free to fee, from someone not paying to someone actually paying you, it is pretty challenging. My big thing for people is to get a portfolio if you do not have one, so it is okay to work for free, for a couple of times, engineers by the way hate this, working for free, that is ridiculous, do not undervalue me because of these MBAs. I am like dude please, just put your ego aside for one second, your goal is to get a portfolio, so that you can go to somebody else and be like this is what I did and this is why I deserve the top of market. So a lot of my students are like, I have students that went from making 25 dollars an hour to a 100 dollars an hour, but actually for me the most rewarding are the people making 10 dollars an hour and now they are making 40 dollars an hour. Imagine the difference for someone making 10 dollars an hour on the side. They are doing low skilled labor right, like hanging up flyers and now they are making 40 dollars an hour that is like a massive shift. You can do that by a couple of things. One building a portfolio, two deeply understanding your client’s need, so too many times I see free lancing beginners they go in there and they are like here is my service, I can do this for you and they do not even understand what the client wants. So we actually spend 4 weeks in earn 1K and I insist people go through this whole area of deep customer insight. So I teach people basically what in marketing term is called mind reading, really what we are teaching people is to get inside the head of their clients. What are your client’s number one concerns? What are their hopes, fears and dreams? So when you walk into that meeting or you send that email, you are not just like “hi I am a free lancer, I would love to help you with your website”, that is an instant delete but you are like “hi, my name is john, I have been reading your site for 3 years, I love what you have done, you helped me pay off 5000 dollars of debt. By the way I notice you have been putting up some videos and I noticed that the editing is not really great. I should recommend 3 things, X, Y and Z and by the way I already did 2 of them, here you go, here is the link, if you are interested in more, I would love to hear from you.
40:24 Maneesh Sethi: Yeah
40:25: Ramit Sethi: Wow. And by the way that X, Y and Z things, they were things that have been on my mind. Done, it is a done deal. So we teach people a lot of techniques and tactics and strategies for understanding people including like conversational scripts, what do you say when you go meet these people to learn from them and then including like what do u say in the email, what do you do in the meetings and all that kind of stuff.
40:46: Maneesh Sethi: Okay. Yeah a friend was interested in freelancing and finding his first clients also a friend of ours, Charlie Hones wrote a book called “The recession of proof graduate”, which is about working for free for people whom you respect and doing something, offering free help, free consulting until you are ready to build a portfolio, it is a really good book, must check out. The last question I want to ask is about mentors. Basically in the same vein how do you find mentors and how do you connect to people you really want to connect with? For example let us suppose I want to meet someone famous in my space, some excellent lifestyle designer or whatever and I want to interact with him and help him in my way, how would I approach him?
41:28 Ramit Sethi: this is a good question because it separates the wannabe from the real people. So a lot of time people are going to say like I want to meet this famous person and then I talk about, how like my process, some of the people know, their process and it is like pretty hard. It takes a lot of time and what you will see is you will see 2 types of students. One will be like that sounds like a lot of work, I am like you are a wannabe, good bye and the second type of people are like cool, I have already been doing that with other people. So meeting someone famous just for the sake of meeting someone famous, personally it does not resonate with me because I have met famous people and I am like okay, what am I going to do now, I have a photo, what am I going to bribe people that I know this guy. It does not really feel that deep to me. I would rather make deeper connections with a fewer amount of people and have genuine friends with whom you can hang out with or stay at their place or whatever. The number one thing is to think about why, why do I want this? Am I just honestly doing this to my good school and if that is the case that is cool but you have a totally different approach. Like if you want to meet someone famous musician or something, you can probably find a way to do that, get a connection, you can go back stage and say hello and then what is next? That is it. Mentor to me are; like some of those valuable relationships you can have, so I have a series of mentors anywhere from the professors that I used to have at Stanford to other business people who run similar businesses, some of these business people by the way are my age, sometimes even younger, all the way down to personal mentors and things like that. The way that I meet these people is really to approach them, I might approach them through an email, it is best if I go for warm contact that can say “hey you two, I want you to meet each other. Ramit and blah blah blah and then they describe why am I interesting, then they describe why that person is interesting and then they direct us through to the next step. Because I am the one trying to get their attention, I should be the one following up and doing the work. So I will say like know your role. There is always power dynamics in thing like this and you are at the bottom and that is final and that means you meet them close to their office that means you call them, that means you schedule on their times and all these things, right? Then when I meet them all I will try to understand what it is they doing and add some value if I can. I may try not to ask too much on the first meeting but I would just try to add value and what does that mean? It means that if they say they are interested in XYZ and I might happen to know about that or find a link like oh I know the guy who wrote a book on that, would be interested if I introduced you. Wow, they are pretty interested in that. So I am adding value to them and I try to meet them in different ways. So like it is good to meet people socially, it is also good to meet them professionally, that like changes the dynamics once you meet people socially, it is like as you know a whole different dynamics. But I have to say I was thinking about creating a mentorship product and my friend Ben Caznoka and I are both really interested and fascinated by mentorship but when we started to do initial customer research and we discovered that no one would ever pay, like no one. People claim they want mentors but what they want is basically access to famous people so that they can say that they have access to famous people. No one wants to go through the process, or at least not that many people, not enough people to build a course around it, so we are just like alright, never mind but I will tell you that like mentor is this really vague idea you will hear really qualified, really awesome people like yeah, everyone should get mentors and you are like okay, what does that mean, where, who are these mentors, what do I say? That is what I wanted to address with this but it turns out people are not really that interested in doing hard work so if I were to say one thing it would be find someone whom you respect and by the way this person does not need to be in your industry, that is number one, he could be a blogger you read, it could be a magazine article about someone doing something, like I was reading Times Magazine, that it has like 50 best inventions, that is 50 potential mentors if that is what you are interested in, then I would say think about what is it they want, really sit down. We have a technique we call it the “Fireman’s street checker technique”. Just sit down and think about what is it that they want and you are not probably going to offer a noble prize winner expertise as a scientist but you may be able to connect him with somebody. Infact today a friend Michael Elsberg was saying I cannot offer this famous person advice on venture capital, but if he wants to spread his ideas I know how to do that. So then you approach him, hopefully you will get a warm lead you can always remind him through LinkedIn or branchout whatever and then send him an introduction, try to set some time. Understand that they are really busy, so your email, I see these emails, they are horrible. They are like this long life story and end is like would love some feedback and I am like busy people, their feedback is delete. So ask them key question then try to get them on phone or in person with them and build a relationship. There are some great books I’ll recommend your audience offline.
46:55 Maneesh Sethi: Okay, yeah and also when people send in their first email I am always like asking, if I mail out to someone else, hey would you mind if I asked you a few questions and often that has better response rate and also if you help connect people to other people, that tends to overtime build a huge network, so I try to be a connector with other people and I try to connect my mentors to my other mentors and other people they should meet and over time by connecting people to people, you will be able to get better access to mentors. So anyways, that was very helpful, thank you very much for the conversation. You guys check out Ramit’s stuff at iwillteachyoutoberich.com and join his email list and thank you for tuning in.
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