Greg McKeown is a speaker, a bestselling author, and the host of the popular podcast What’s Essential. He has been covered by The New York Times, Fast Company, Fortune, Politico, and Inc., has been interviewed on NPR, NBC, Fox, and The Steve Harvey Show, and is among the most popular bloggers for LinkedIn. He is also a Young Global Leader for the World Economic Forum. McKeown’s New York Times bestselling book Essentialism: The Disciplined Pursuit of Less has sold more than a million copies worldwide. Originally from London, England, he now lives in California with his wife, Anna, and their four children.
The Essentialism Academy – Do what matters most, as effortlessly as possible! Sign up today!
3 Value Bombs
1) Shift where you put your efforts. Build something that produces results rather than simply trying to produce results directly yourself.
2) The due diligence alone – the process of confirming that what you’ve been told about business is accurate – would take monumental effort.
3) For people who are part of the HIT squad: the hardworking, intelligent, and talented group of people who are listening… What got you here won’t get you there. Our greatest contributions always lie ahead of us, not behind us.
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**Click the time stamp to jump directly to that point in the episode.
Today’s Audio MASTERCLASS: 5 Things You Can Do Right Now to Create Residual Results in Your Business.
[2:06] – Greg shares something that he believes about becoming successful that most people disagree with.
- Success can become a catalyst for failure. What’s gets us here is not what gets us there. In a sense, distrust success, or at least learn how to become successful at success. Otherwise it will produce behaviors that will undermine the very things that led to success.
[3:25] – Two types of results: the linear and the residual – let’s look at examples of each and the differences between the two.
- Linear and residual results are so different. It’s like night and day.
- A linear result is a 1:1 ratio. The amount of effort you put in is equal to the result you receive. They are limited and cannot exceed the amount of effort exerted.
- A residual result is where you establish a system that may take more effort up front, but the results flow. They are like compound interests.
[6:38] – JLD, as an angel investor, has invested in 13 companies, hoping that the CEOs of these companies are working hard to increase that investment. Does this fit the definition of potential residual results?
- Shift where you put your efforts. Build something that produces results rather than simply trying to produce results directly yourself.
[9:16] – The 5 levers that we can all use to turn modest efforts into great results. Learn, Teach, Trust, Automate, Prevent. Let’s talk about the first lever, Learn.
- Elon Musk packed more knowledge into his head than anyone else alive.
- As Elon has said on many interviews, “It’s important to view knowledge as a semantic tree. Make sure you understand the fundamental principles – the trunk and big branches – before you get in to the leaves, details. Otherwise there is nothing for them to hang on to.”
- Most of our formal learnings force us to memorize in order to get through certain tests.
- Look into the foundational key principles. As you gain mastery of those, you suddenly have something to use again and again in effective ways – and faster than other people. You can just keep innovating from the deep understanding that you have.
[16:00] – Greg talks about the second lever — Teach.
- There’s a far reaching impact in teaching others. It’s a high-level strategy for entrepreneurs.
[18:03] – Trust is hard to attain – wanting other people you meet and engage with to trust you. Greg breaks down this third lever.
- The due diligence alone – the process of confirming that what you’ve been told about business is accurate – would take monumental effort.
- Trust is powerful leverage.
- Warren Buffet uses the three i’s rule. These are the three characteristics of the people he partners with, works with, hires, or invests in. They are: integrity, intelligence, and initiative.
[22:56] – Greg’s key takeaway from either his book or today’s interview, and his call to action for Fire Nation.
- For people who are part of the HIT squad: the hardworking, intelligent, and talented group of people who are listening… what got you here won’t get you there. Our greatest contributions always lie ahead of us, not behind us.
- The book Essentialism is about doing the right things. The book Effortless is about doing the right things in the right way.
- The Essentialism Academy – Do what matters most, as effortlessly as possible! Sign up today!
Boom, shake the room, Fire Nation JLD here and welcome to Entrepreneurs On Fire brought to you by the HubSpot Podcast Network with great shows like the MarTech podcast. Today, we'll be breaking down five things you can do right now to create residual results in your business. To drop these value bombs. I brought Greg McKeown and EOFire studios. Greg is a speaker bestselling author and host of the popular podcast. What's essential. He has been covered by the New York times fast company, fortune political and anchor has been interviewed on NPR, NBC Fox and the Steve Harvey show. It is among the most popular bloggers for LinkedIn. He is also a young global leader for the world economic forum.
McKeown's New York times bestselling book essential ism. The disciplined pursuit of less has sold more than a million copies worldwide. And he is originally from London, England, and now lives in California with his wife, Anna and four children and Fire Nation. We're going to talk about linear and residual results. The five levers that Greg breaks down in his new book, effortless and so much more. When we get back from thanking our sponsors, easy to start and built to customize Thinkific enables thousands of entrepreneurs to run their training remotely, to learn more about their biggest deal of the year. Go to thinkific.com/firefriday.
0 (1m 24s):
That's Thinkific.com/firefriday. Turn your small e-commerce business into the next big thing with Klaviyo. Klaviyo is the easy to use email and SMS platform that gives you everything you need to build genuine relationships with your customers. Give it a try with a free account at Klaviyo.com/fire. That's Klaviyo.com/fire. Greg say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.
1 (2m 3s):
Well, I think the most important thing you would need to know about success is that success can become a catalyst for failure. And so what gets us here is not what will get us there. And so we have to, in a sense, distrust success, or at least learn how to become successful at success, or it will tend to produce behaviors that undermine the very things that lead to success in the future
0 (2m 34s):
Become successful at having success. I mean, that's something that so few people give any thought to. They just spend so much time in the grind, in the dirt nose to the grindstone. Then they look up and maybe months, years, decades later, they've achieved the whatever level of success they're looking for. And then they're kind of like, well now what, how do I actually become successful at this success that I have? And there's one phrase that I actually love, which is how do you go from success to significance? So like once you've achieved success, how do you go to significance in your life? And I want to dive into two types of results, linear and residual.
0 (3m 18s):
Can you give an example of each of these specific results and then share the difference between the tail
1 (3m 25s):
Linear results and residual results are so different in kind it's like a night and day, a linear results. A linear result is one that has a one-to-one ratio. The amount of effort you put in equals the results you receive an employee who works in hour, gets paid for that hour. They have a linear income, a student who crams for a test, regurgitates the facts and gets a grade is acquiring linear knowledge, an entrepreneur who makes money only when she is actively working to make it happen, has a linear business model and so on.
1 (4m 9s):
So linear results are limited. They can never exceed the amount of effort exerted. And there are many entrepreneurs who really don't realize in practice at least that there is a far better alternative. A residual results are so completely different. I mean, you know, this is where you establish a system. It may take a little more effort upfront, but then the results flow to you. So in my field, as an author, you write a book once, but you can be paid loyal. You can be paid royalties for years and years to come.
1 (4m 49s):
That's residual income, a student who learns first principles can apply that understanding in a variety of ways over time. You know, they're acquiring residual knowledge, an entrepreneur who sets up her business to work, even when she's on vacation for six months has a residual business. And so on. I mean, it may sound like I'm exaggerating, but I'm not the thought of getting perpetual results might seem improbable for someone who's used to taking one action and getting one result, but really that residual results are like compound interest.
1 (5m 30s):
You know, and as we all know, Benjamin Franklin talked about compounding interest. He said, it's money that makes money. And the money that money makes makes money. And so it is with compounding residual result.
0 (5m 44s):
One thing that I've been pretty passionate about over the past few years is angel investing. I mean, now that I've been running my business for a decade and acquired a little bit of a financial war chest, I really do kind of look to that residual side of things. And for me, I love entrepreneurship. Obviously I believe that small businesses are the backbone of the growth in America and in this world in general. So I love taking money that I've earned and putting it into businesses that now I'm kind of sometimes sitting there during the day. I'm like, you know, I haven't actually done that much today. Quote unquote work-wise. But you know, I've invested in 13 companies right now and I'd like to at least think that those CEOs and the employees of that company are working harder, hopefully doing some things that could increase my investment within them.
0 (6m 36s):
Does that fit under your definition of residual?
1 (6m 40s):
Yes, it does. And there's so many layers to this. Once somebody escapes the idea of a linear result. For example, Jessica Jackley, a friend of mine was doing voluntary service in east Africa. She meets a local fish monger, Catherine, and there's loads of demand for the fish that Katherine brings in each day. But the problem is she has a middleman. That means that she gets hardly any profit in the system. So she has to sit there selling that produce every day for her to eat for her to survive. It's like the, almost the epitome of linear results.
1 (7m 21s):
And, and so Jessica steps in and says, well, I want to do something to help her. And she finds that $500 is all she needs to give to Catherine to be able to help her build a business that at least is semi residual. You know, at least there'll be some profit each day. So that means she can work on her business, not just in her business. And so she's about to give that $500 and then inspired by Muhammad Yunus and all the Grameen bank, you know, especially fewer at the time. Instead she says, well, well, what if we could do it as a loan because then it could be passed on multiple times. So that's a bit more residual.
1 (8m 1s):
And then she thinks, well, hold on. What if I could create a platform that allows people all over the place, like-minded people who have a small amount to be able to give micro loans. And, and so this is the birth of kiva.org crowd sourcing platform allows anyone to loan any amount of money to entrepreneurs in developing countries. Well, now, as you look back at this, that what could have been $500 to help one person has turned into $1.3 billion with a B in loans with a 97% of those loans being repaid. The, the contrast isn't just 10 X difference or a hundred X difference.
1 (8m 44s):
I mean, that's, you know, well, beyond the thousand X impact difference by shifting where you put your effort, building something that produces results than simply trying to produce the results directly, or
0 (8m 59s):
I love that example. And in your book effortless, you actually break down five levers that we can all use to turn modest efforts into great results. We're talking, learn, teach trust, automate, prevent, let's start going through these levers with learn.
1 (9m 20s):
There's different ways to think about learning. And let me think of one example that I especially like is I'm thinking of Elon Musk, the entrepreneurs, entrepreneur, founder, of course, of Tesla and SpaceX and many others. It was once asked an unusual question. And, and it's a bit of a leading question too, but the, the interviewer said, I know you've read a lot of books and you hire a lot of smart people and soak up what they know, but you have to acknowledge, they said you seem to have found a way to pack more knowledge into your head, the nearly anyone else alive, how are you so good at it? Okay. So it's a leading question is presumptuous question, but still, you know, he tried to give an answer because what a lot of people don't know about Musk is that he didn't have a background in rocket science before starting space X or in electrical engineering or machine engineering before starting Tesla.
1 (10m 19s):
So there's a perception that he had expertise in those areas and then started these businesses. That's not how he did it. So how did he learn so fast because we're not talking about getting basic levels of competence. We're talking about learning so fast that you're pushing the boundaries of what has ever been done before in your field and faster than any of the other competition that you're facing. So that is a different kind of level. And as his answer was, so I think brilliant, he said it's important to view knowledge as a sort of semantic tree, make sure he said, you understand the fundamental principles I E the trunk and big brunches before you get into the leaves details, or there is nothing for them to hang on to there it is.
1 (11m 14s):
It, a lot of people have been taught a way of learning. That is almost opposite of what Musk is teaching. Most of our formal learning was teaching us to memorize some sets of facts, to get through certain tests, to get through hoops. You're designed to forget the information and you are absolutely the design of it. Not that it really people have to think so much about this, but the design of it is such that, that you're, it's confusing. You don't really know how the knowledge fits together. Now there's reasons for that way beyond this conversation as to why the modern system is designed that way, it's, it's somewhat appalling that it is, but what we can do at whatever age someone is listening to this is that we can now take advantage of a much faster way of learning.
1 (12m 8s):
So that is whatever subject you want to get up to speed at. You want to discover the core, the foundational, the essential most important principles, and to understand those really well, and you create his coin, a semantic tree, but another name for it as an architect, tonic way of learning so that you have hooks to add on other information as you have it. And if someone will do that, you can, you can learn 10 times faster than somebody else in your same field. And so you, you're looking for the foundational key principles. First, first principles there, we might call them.
1 (12m 48s):
And, and as you gain mastery of those, you suddenly have something you can use again and again, in innovative ways and faster than other people, because you're not having to copy the applications of your customers. You can just keep innovating from the deep understanding that you have five.
0 (13m 6s):
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0 (13m 49s):
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0 (14m 31s):
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1 (15m 13s):
Well, there's an amazing story that happens through the pandemic that illustrates the lift that is possible. Once you tap into entrepreneur as teacher, this is, there was a shortage. Maybe people remember this, a shortage of clinical face masks for healthcare workers at the very beginning of the pandemic. And there was a project, it was called project protect. It was a collaboration among various community groups in Utah. And their goal was to create 5 million mosques in five weeks. How would you go about doing that? I mean, of course you could do it in a linear way.
1 (15m 54s):
You could say, well, I'm going to, I'm going to try and do it myself. I mean, that sounds absurd. I know it's absurd, but still that's the sort of linear entrepreneur way of thinking. Well, I'm strong and I'll make it happen. Well, of course, they're not going to get there in that method, but they, they also, they did it through teaching. So they created a five minute video, very, very clear, simple video of how to be able to turn basic raw materials into a medically acceptable mask. And, and so they just, the word went out and people would teach other people how to do it and send them to the website and they would pick up supplies.
1 (16m 41s):
And so on within the first week they did 1 million mosques within five weeks, they did 5 million. And, and to me, there's something, I mean, of course there's something really delightful about that from a community perspective, but it also illustrates the far reaching impact that teaching others to teach can have it. It is itself a high leverage strategy for entrepreneurs and beyond trust
0 (17m 8s):
Is something incredibly difficult to attain. When you know, you're meeting other people, you're engaging other people, you're wanting them to know like, and trust you. This is your third lever. Break it down.
1 (17m 21s):
My favorite illustrations of this was when Warren buffet, of course we know is one of the most successful investors in the world. Chairman CEO of Berkshire Hathaway. He was interested in buying McLane distribution for $23 billion. It's a provider of supply chain solutions was owned by Walmart. Okay. So how might you imagined someone would go about such a extraordinarily complex undertaking? I mean, just the due diligence alone. The process of confirming that, what he had been told about the business was accurate would take monumental effort, dozens of attorneys reading every contract equipment, lease real estate purchase union agreement, take a small army of accountants going over every line item of the, the company's annual quarterly, monthly financial statements through every asset lien, every debt, a team of compliance officers, looking at the legacy technology, the stated risk, every capital expenditure.
1 (18m 35s):
I mean, all of this, this is months and months of work and millions and millions of dollars. Why it's so extraordinary. So breathtaking, what actually happened. Perfect closed the McClean deal over a single two hour meeting and a handshake. And it was just 29 days later that the purchase was complete. Wow. Buffett said we did no due diligence on the basis of his prior experience. He couldn't, he concluded that he knew everything would be exactly, as Walmart said it would be. And it was a two hour meeting to a handshake with no due diligence. That's absurd.
1 (19m 15s):
It's extraordinary. But that's the thing precisely. That's the power of trust. That's why it's such a powerful leverage. Now, of course, it's not accurate to say that if you just trust everyone, the way that Buffett trusted the Walmart managers he was working with, you know, no, that's not the right lesson to take away, but he gives at least one really great rule of thumb for who you can trust. He, he uses, well, I call it now the three eyes rule. He's looking for three characteristics with the people he partners with works with, or hires or invest in one integrity, two intelligence, three initiative, the three eyes, he was, what he's looking for is, you know, high eyes in my own work.
1 (20m 14s):
Now I'm looking for people who are nine or 10 out of 10 on all three incidentally Buffett points out that if they don't have integrity, the other two can hurt you. So that's really the foundational one. If you work with high trust people, then you can trust them completely. And that in fact is the other part of the story is that it's not just that they could make this decision on a two hour handshake, but that after the purchase, but it's not in there micromanaging anyone he's investing in the best managers in the world. And he's on record is explaining this. We work with people. We completely trust in them.
1 (20m 56s):
We trust them completely. That is a almost perfect illustration of the power of, of residual results,
0 (21m 7s):
Fire Nation, level four, automate that's how one can use automation to achieve disproportionate results in business lever, five prevents. You know, we're talking about getting residual results in your business, and it's a little different when we're talking about prevents, but these two are going to be a little spoilers for you. Once you get into effortless and actually read, consume, and hopefully implement these things that Greg's talking about here today. I mean, I love it. He was talking about when it came to trust, integrity intelligence initiative, the three I's, I mean, that is such an amazing way to go about looking for individuals to join you, to join your team or to work with in general.
0 (21m 54s):
So I've already kind of teased what they're going to get with lever four and lever five. When it comes to reading your book, effortless, what I want to do now, Greg, as we close down here is hand you the mic and have you do one of two things, either share the biggest takeaway that you want to make sure our listeners get from everything we talked about here today, or the biggest takeaway that you hope people get from your book. I'll give you that choice and then give us a way we can connect with you. And then we'll say goodbye.
1 (22m 27s):
The most important thing is that for people who are in what my brother, Justin calls, the hit squad, that is the hardworking, intelligent, talented group of people who are listening to this. What got them here, won't get them there. There are great contributions that lie ahead of them. In fact, I personally believe that our greatest contribution always lies ahead of us, not behind us. And one of the great obstacles to getting there is that we think that what got us here is the only path that path of hustle of 24 7 of pushing till we break of teetering right on the edge of exhaustion is the only path.
1 (23m 12s):
And I learned in a very personal experience relating to my daughter that I write about at the very end of the book, that there are two parts and they really matter essential ism. The book I wrote before effortless is all about doing the right things. This new book effortless is about doing them in the right way and how we do the matters because if we do it the wrong way, we can end up burning out well before our contribution is made, our project is complete. Our business is successful, or our mission in life has been fulfilled.
1 (23m 53s):
And so in order to fulfill our great potential, our extraordinary potential, we need to find the right way of doing so that we can be a long successful at success.
0 (24m 6s):
Fire Nation. The hook has hit bait. The hook has been baited. Greg has been reeling you in Greg, where do we go to consume all this great content that we've been talking about here today in effortless,
1 (24m 20s):
I would encourage people to, to check out a centralism.com. There's a new academy there that is like a masterclass series of many classes, and we're adding to it all the time. And, and then also as a free resource, they can check out the one minute, Wednesday newsletter. And, and there's the new podcast, the Watser central podcast where we take these conversations in depth.
0 (24m 46s):
Well, I love that and Fire Nation, our podcast listeners. So that sounds like a fantastic resource because everybody here knows they're the average of the five people they spend the most time with is today Fire Nation. You've been hanging out with GM and myself today. So keep up the heat, head over to EOFire.com. If you type Greg in the search bar, the show's page will pop up with everything that we've been talking about here today. And Greg, thank you rather for sharing your truth, your time, your energy, your levers with Fire Nation today, for that we salute you and we'll catch you on the flip side. Thank you. Hey, Fire Nation today's value bomb content was brought to you by Greg.
0 (25m 26s):
And over the last decade, I've interviewed more than 3000 of the world's most successful entrepreneurs and created a revolutionary 17 several map to your financial freedom and your fulfillment. I put it all into my first traditionally published book. The Common Path to Uncommon Success personally endorsed by Seth Godin and Gary Vaynerchuk. The Common Path to Uncommon Success, it's a step-by-step guidance for you to achieve the lifestyle of your dreams. Visit UncommonSuccessBook.com. UncommonSuccessBook.com to order your copy and I'll catch you there. Or on the flip side, easy to start and built the customize Thinkific enables thousands of entrepreneurs to run their training remotely, to learn more about their biggest deal of the year.
0 (26m 16s):
Go to thinkific.com/firefriday. That's Thinkific.com/firefriday. Turn your small e-commerce business into the next big thing with Klaviyo. Klaviyo is the easy to use email and SMS platform that gives you everything you need to build genuine relationships with your customers. Give it a try with a free account at klaviyo.com/fire that's Klaviyo.com/fire.
1) The Common Path to Uncommon Success: JLD’s 1st traditionally published book! Over 3000 interviews with the world’s most successful Entrepreneurs compiled into a 17-step roadmap to financial freedom and fulfillment!
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