Rand Fishkin is the Founder of SparkToro and Moz, author of Lost and Founder, loves whisky, travel, and helping people do better marketing.
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Sparktoro – Rand’s website
Lost and Founder – Rand’s Book
Rand’s Twitter – Follow Rand on Twitter
3 Value Bombs
1) “It takes 20 years to build a reputation and 5 minutes to ruin it.” – Warren Buffet
2) Don’t kick yourself. At some level, we are always trading time for dollars, so just don’t have this dreamy notion that just stops happening at some point.
3) You can get some folks who are very talented at what they do and they’ll be a very poor fit for the company.
**Click the time stamp to jump directly to that point in the episode.
Audio Master Class Show Notes
Today Audio MASTERCLASS: How Silicon Valley Biases Startups to Do a Lot of Dumb Shit with Rand Fishkin
[01:39] – Rand shares something about himself that most people don’t know.
[04:16] – What we’re going to talk about today…
- Rand’s opinion of how Silicon Valley pressures startups to do a lot of dumb stuff.
- The comparison between product business versus consulting business.
[08:46] – Why the Minimally Viable Product (MVP) can really stink sometimes
- Find out what Rand’s perspective is re: launching an MVP as a new business compared to doing it as a well-known business.
[11:30] – What are we if we are not our brand? What do we stand for? What happens when we drop stinkers?
- “It takes 20 years to build a reputation and 5 minutes to ruin it.” – Warren Buffet
[12:39] – Why a service business might actually be better than most product businesses.
- This is one of those areas of entrepreneurship where Rand thinks Silicon Valley start up thinking and venture capital thinking has really biased a lot of our thinking as entrepreneurs.
- He establishes a comparison of trading time for money into renting / buying a home.
- The service/consulting business can do many of the same things a product business can do, but also, there are things that they can’t do.
- Many of the things that Silicon Valley is trying to recommend are designed to give someone a shot at being that billion dollar unicorn, and for most of us, that is the wrong thing to pursue.
[21:14] – The pros and cons in JLD’s and RF’s businesses
- Rand shares his personal experience in his business around hiring the right people
- In his experience, you can get some folks who are very talented at what they do, but they will be a very poor fit for the company.
[26:46] – Let’s talk about numbers. Rand shares his numbers in terms of hiring people.
- Rand has hired 60-70 people directly and 400-450 people indirectly!
- Out of all the people he has hired, whether directly or indirectly, he only has around 7 of 150-ish people who have stayed up to this date
[28:49] – A key takeaway from Rand that will absolutely help entrepreneurs about hiring people – tune in to hear this, Fire Nation!
[30:04] – Why does a Singular Focus win?
- The huge advantage of being very, very focused: you do one thing and you do it better than anyone else in the world. You get to build brand association, recall, and a memory with people that is extremely powerful.
[33:38] – How can growth hacks bring you failure, and what you should do instead?
- The thing to remember about a growth hack, or any type of hack, is that it’s called a hack for a reason: it’s not a well thought-through long-term solution.
- Rand’s great alternative to growth hacks: create a big marketing flywheel that scales with decreasing friction.
[40:54] – Fire Nation, get excited about learning THIS from Rand’s book!…
- This book tells a side of the entrepreneurial journey that most folks would rather keep quiet.
- The two things Rand hopes you can do after you read his book:
- Avoid a lot of painful missteps, and
- When you encounter that pain, know that the rest of the people suffer, too.
[43:37] – Rand’s parting piece of guidance: “Anytime there is common wisdom or a best practice out there, I have found value in questioning it.”
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 I digress. Today, we're pulling a timeless EOFire classic episode from the archives in today. We'll be breaking down how Silicon Valley convinces a lot of startups to do a lot of dumb stuff to drop these value bombs. I brought Rand Fishkin into EOFire studios. Rand is the founder of SparkToro and Moz, author of Lost and Founder, loves whiskey, travel, and helping people do better marketing. And today Fire Nation, we'll talk about why Bill's 20 years to build a reputation and five years to ruin it.
Also talk about how at some level we're always trading time for dollars and that you can get some folks who are very talented at what they do, and they can still be a poor fit for your company and how you can avoid this. And more. When we get back from thanking our sponsors as a small business owner paying and taking care of your team can be tough. That's why Gusto built easy to use payroll benefits, onboarding and HR tools. And right now you'll get three months free. When you run your first payroll at Gusto.com/fire. Wondering what to do when you need motivation, wish you had a go-to guy when it comes to preventing burnouts tune in to Jenna. Kutcher's The Goal Digger Podcast brought to you by the HubSpot Podcast Network.
0 (1m 26s):
Listen to The Goal Digger Podcast, wherever you get your podcasts. So Rand, say what's up to Fire Nation and share something interesting about yourself that most people don't know.
1 (1m 41s):
Absolutely. John, thank you for having me and thanks to everyone of Fire Nation for listening. I really appreciate it. Something that people don't know about me. Ah, I'm actually kind of crazy for animals. A lot of times when we go on vacation, I'll try and pick some place where, you know, we're out in the middle of a rainforest or something, and I can spend hours just watching for, you know, frogs and lizards and birds. And it's weird because I live in a city and I mostly traveled to cities, but I think I have that from childhood where my parents had a giant forest out back of their house. You know, middle lived in the middle of nowhere. Didn't really have a lot of friends out there and did in the forest and looked at animals.
0 (2m 21s):
You need to come visit me in Puerto Rico sometime I'm telling you I had this killer trail path right behind my house. And I go on it. It's like a dirt path. And I, I honestly feel like I'm entering Jurassic park every time I do that. And I actually tell Kate, when I leave, I'm like, Hey babe, I'm going to run with the iguanas because literally I like I'm running. And there's just a Guan is running next to me. And I'm like, what's up guys? Like I have names for them. It's pretty funny.
1 (2m 43s):
Oh my God, that sounds like heaven. I would love to do that. Invitation accepted.
0 (2m 48s):
I love it. So Fire Nation, something I'm going to tell you that you might not know about Rand as well, that we were actually chatting about in the pre-interview is unless you're like the most faithful of all Fire Nation faithful and you've listened to every episode. It has been 2018 episodes is ran last, joined us back on episode 15, 15, which means rant that I had. I had written you down as one of my power 20 that I called it back then where I sat down and I list out 20 people who were my dream first 20 people to interview. And I got yeses from all of them. So I got to interview these 20 people and anybody in that first 20 was on my power 20. And so I interviewed you before I even launched the show.
0 (3m 30s):
And now your episode, 2033.
1 (3m 33s):
Amazing, amazing. I love it.
0 (3m 34s):
Oh, Fire Nation. So go back, listen. The episode, you'll have a lot of fun episode 15 and today's audio masterclass is going to be awesome. And I'm really excited for a number of reasons. And we're going to be talking about how Silicon valley pressures startups to do a lot of dumb stuff. And it is so true. And that's why, as I mentioned in the intro Rand's book, which is incredible by the way, you know, lost and founder, which we'll be talking about a little bit today. So ran give us a little preview about what we should be expecting from this masterclass.
1 (4m 7s):
Yeah. So broadly speaking, I think that Silicon Valley's mostly venture backed model has been the pinnacle of what startups try to achieve and many, many entrepreneurs, whether they realize it or not, whether we realize it or not, I should say fall into this trap of reading about and hearing about, you know, the incredibly impressive companies of Silicon valley and the venture capital model. And because it gets so much press and attention and so much popular culture, attention and media attention. I think it, it influences us, it pressures us into doing things like they do them and that is not necessarily wise or the right move.
1 (4m 54s):
And there's a lot of things inherent in the venture model and in the Silicon valley classic startup model that are not right for every other kind of startup. And yet we all try to shoe horn ourselves into it. That's what I want to talk about.
0 (5m 6s):
I mean, there's so many things in your book that just really kind of made like my hair sending up on my back. So I'm like, oh my God, I just love when people speak the truth and they're open and they're honest and they're transparent. And one thing I just want to share right off the bat is something that really just kind of made me, was like, Kate, you gotta look at this, you gotta read this. I mean, you know, this is a guy that's finally just sharing. What's actually going on as you like, you're like, listen, like, yes, like I found it and you know, for a long time was the CEO of this company that was $45 million of revenue a year. And so everybody thinks that I'm like this, you know, DECA millionaire, if not, you know, even, even more like hitting me up for million dollar loans and stuff like that. And you're like, dude, like I live with my wife in a two bedroom apartment in downtown Seattle and you know, I've never made more than $167,000 a year as my actual salary for what I do.
0 (5m 56s):
Yes, of course I own a percentage of the company. So if, and when it goes public, like I'll be able to take that, but it's like, I'm not living this, you know, yacht life. Like I'm not living this bottle of lifestyle. I'm living a real person lifestyle with real person problems because that's what I'm doing. And I just want to say, thank you off the top for, for sharing stuff like that.
1 (6m 13s):
Yeah. Yeah. I mean, look, my, you know, my salary when I left MAs was $205,000 a year, which is a phenomenal salary. That's a wonderful salary. You make a lot of money, but you don't qualify as an accredited investor. Right. So when someone says, Hey, will you invest in my startup? You know, you say, oh, I'm sorry. I have to, you know, jointly with my wife Geraldine, we'd have to be making, I think it's 350 or $400,000 a year, or we'd have to have assets worth more than a million dollars that doesn't count a primary residence. So I can't, I can't do that. Right. And yeah, yeah. They're sort of like, wait a minute, what at a $50 million run rate and you own, you know, 23% of it or whatever, what what's going on, why don't I thought you would have money?
1 (7m 3s):
0 (7m 3s):
Yeah, this is the reality. I make really good money, but you know, I don't have like just money coming out of my ears or, you know, I'm not actually realizing $50 million a year of that $50 million a year run rate.
1 (7m 16s):
The biggest thing is I want to, I want to compare and contrast that with people who think that, oh, the product business so sexy, right? The venture backed product business. So sexy, you get to these tens of millions of dollars of revenue. That's amazingly exciting versus consulting for example, right. A services based business where many of my friends are, right? Many of my friends are in the SEO or web marketing consulting world. And you know, they sort of, they look, they look like they're staring and they think the grass is greener on the other side. But in fact, many of them are absolutely out earning me. And many of them have much greater wealth because their businesses, you know, if they make $2 million in profit one year, they could decide to just take that $2 million off the table.
1 (8m 3s):
Right. They can just pay themselves to that money. That is a huge difference between no Mazda, you know, four and a half million dollars in profit last year. But that just goes back in the business. Right. And will until there's an exit.
0 (8m 16s):
I want to talk more about that in a minute, because I think that's so important. So key and maybe talk about some specific examples, but first I really just want to talk about this topic because you know, we, as entrepreneurs, we all hear about the MVP. Like everybody's like chanting, MVP, minimally viable product, minimally viable product, go lean, pivot, pivot. It's amazing. And guess what it is great in some areas and maybe it's not so great in others. So we can't just paint this broad brush stroke. And that's why I want you to take a second and share with us why MVPs can really stink sometimes.
1 (8m 49s):
Well, I think the big problem is when we, as consumers, you know, whether we're we're in our business and we're buying a business, a business product, or whether we're consumers and we're buying a product for consumers, when we buy a product or try a product or a service, the following never happens. We never go, oh, you know, this is a pretty crappy version of this thing that I want, but I guess they can see how, if they keep iterating on it and making it better in six months or a year or a couple of years, it'll be really, really good. No, no consumer has ever thought that way. You get a, you get a crappy product and you think this is a crappy product.
1 (9m 33s):
This company makes crappy products and your brand gets burned, right? Your brand gets, gets hurt. Now look, if you're a very tiny startup, absolutely entirely brand new, and your only customers are the, you know, seven or eight people in your network that you're sort of testing things out with fine, no problem to, to launch an MVP, right? Cause it's only a handful of people who have told you, they found the product valuable enough and want to use it. And then you're going to be iterating on it for them. And as you grow your product quality, you'll be growing your brand as well. So that works fine. But if you're already a well-known brand or you have thousands of people in your audience or tens of thousands of people, right, or you're well-known entrepreneur, or you've been making products for, you know, years, you launch something that's, that's kind of crappy and minimally viable, just barely gets the job done.
1 (10m 23s):
And people start to associate your brand with, they make crappy products. And MAs, we did this, we did this many, many, many times. We kept having that, Hey, this is the thing our customers want. Well, let's make an MVP of that thing and launch it. And then we'll iterate until we get to the thing that our customers want. And that burned our brand. So many times that I think people actually came to have this association in the SEO software world that MAs made sort of, you know, there for like the beginner and intermediate SEOs. But if you're an expert, you're going to use something better. And that even when our products got to be expert level, even when they got great, we couldn't convince people, right.
1 (11m 5s):
That brand bias stuck with us. So that's the problem with MVPs?
0 (11m 11s):
I mean, what are we, if we're not our brands? I mean, what we stand for. I mean, what people say when we're not in the room and I love that Warren buffet quote, that it takes 20 years to build a reputation of five minutes to ruin it. I mean, you know, Mohs could have gone five years just, you know, launching the best of the best and all this great stuff and have this cool reputation. But then, you know, they launched like one real stinker where they just really let everybody down and that, that doesn't go away right away. Like that stink kind of stays that there's a residue there. It takes time to earn that trust and that faith back and you see a lot of companies do that. And I mean, you know, why do some of the big companies changed their names because they dropped some stickers and they're like, you know, Equifax. Yeah. Okay. Like what are we gonna do now? Let's just change our name.
0 (11m 51s):
And, you know, everybody can tell you that never happens and ran. One thing, you know, that people are always chanting that we just mentioned, you know, is M V P. And we just kinda talked a little bit about why that works maybe in some scenarios, but not at all scenario. So really think about that. People are also chanting scale. Leverage only do things that scale don't trade time for money, all these different things. That's all we hear these days and you tease us a little bit earlier. We got a little bit into a, well, let's dive deeper as to why from your perspective, a services business might actually be better in a lot of ways than this quote unquote scalable product business.
1 (12m 27s):
Yeah, sure. So this is one of those areas of entrepreneurship where I think a Silicon valley startup thinking and venture capital thinking has really biased. A lot of our thinking as entrepreneurs, we are always trading time for money. There is, there is no alternative. Now some of our time over time may, may get more valuable, right? We can charge higher prices for our time, or we get paid more for our time as our business grows. But don't, don't fool yourself into thinking that there is this magical, oh, I can, you know, I'm an entrepreneur, but I'm gonna make money while I sleep and actually make money while I sleep works.
1 (13m 9s):
Because that's the only time you're making money and not working as an entrepreneur. Right. But all the rest of it is trading time for dollars. And so there's, there's almost this silly logic inherent in the idea that I am not doing that. If I build a product business, maybe you'll get more scale. Maybe you will get more leverage, but it almost always takes a lot more, a lot more upfront costs, both to acquire customers for product business and to deliver a product before you have customers for it, right. You're investing in R and D and in building and then iterating on that product. And we all know what the price of, you know, whether it's software or hardware or whatever you're building, you know, engineering talent costs are incredibly high and not incredibly reliable.
1 (14m 1s):
You know, it takes a real, it is a real challenge to build a great team. So I think that's, you know, that's another problematic bias that people say, oh, build a product business. So you're not just trading time for money. I think it's a little bit like renting and buying a home either way. You're paying money out the door and you're getting a place to live. And people are like, oh, but a home is an investment. When in fact, you know, if you look statistically at it with it, with the exception of a few markets, a few, you know, over a few decades, most of the time you would be better renting and putting the extra money into the public stock market, you know, in an index fund or something where you would make a lot more than the investment you've made in your home
0 (14m 45s):
And real quickly. And let's even talk about numbers. I'm a huge numbers guy with it's like, let's say you buy a house for 500,000 in the best case scenario, a couple of years later, you still a, for a million dollars. Well, did you make like $500,000? Like, no, like you're paying your realtor a huge shock. Then you're going to get this nice little bill at the end of the year, you know, paying a huge percentage on the sale of that house. So that for taxes at that profit. So now at the end, yeah, you made a couple hundred thousand dollars. That's awesome. But guess what, like $500,000 like invested into index funds over time, like does really well as well. And so there's some things too, and I can tell you owning a home down here in Puerto Rico. I just went through hurricane Maria. I would have loved to have been renting during that time.
0 (15m 25s):
You know, I think this is, this house is, well, let me rephrase that. Cause I never actually looked or thought this house was a quote unquote, great investment. But you know, that is one thing that I bought this house because I was like, Hey, I'm committing to Puerto Rico and this is part of what I'm doing, but there's this, you know, every time I look and I see like a smudge on the wall or like a crack in the tile, I'm like, I need to fix that right now. But if I was renting it, I'd be like, oh yeah, that's somebody else's problem. So there's just pros and cons to everything in life. So get back to where we saying, right? I want to just to jump in there with some real numbers.
1 (15m 53s):
I think that's, that's perfectly the, the analogy fits so flawlessly because as a services business or a consulting business can do many of the same things that a product business can do. It can scale with decreasing friction over time, right? So you can find great methods to hire people, you know, out of college and turn them into productive consultants very quickly. You can add software and processes to your team that will make them more efficient. You can increase your prices. You can get better customers, all these kinds of things, right? The same sorts of things that you do in a product-based business. Now, venture capital loves product-based businesses because unlike services businesses, they do have a one in a hundred, 100, 200 shot at being billion dollar unicorns and services businesses almost never do.
1 (16m 48s):
I think, you know, maybe there, there have been a few sales of services businesses in the quarter billion dollars and up, but, but none in the billion dollar category, certainly not completely self-built by, by one person or those kinds of things in the last decade. Anyway. So I think that many of the things that Silicon valley startup culture recommends are designed to give someone a shot at being that billion dollar unicorn. And for most of us, that is the wrong thing to pursue. If you are into pursuing that great, all the advice, all the advice and representation out there is for you. Wonderful. If you're not, you should question why you're doing a lot of the things that you might read about like, oh, Facebook does this.
1 (17m 34s):
I should try that, oh, Google does this. I should try that. Oh man, you know, this, this really smart entrepreneur, who's now a VC at Andreessen Horowitz said, I should go, you know, try this thing with my startup and that this is the way to get growth. And here's how to think about hiring. And well, maybe that advice isn't necessarily for you. The last thing I'll say about services and product is Silicon valley startup culture hates services revenue so much because of the way public markets value it and acquire a value at that. They try not to let it into product businesses at all, right. You're in your investors. And lots of the advice out there will bias you against adding, adding in consulting revenue.
1 (18m 15s):
Now, actually I will say this about Mazda's investors. They were thoughtful and savvy about this and did actually recommend like, Hey, maybe we should add in some services component, right? We added a customer success team that was very successful. We've talked about adding some, some consulting and some services and, and I think that's actually gone well. So our investors maybe are an exception, but much of the advice out there will bias you to think that you can't combine them and you can, you can combine them in wonderful ways. And a lot of great companies probably most famously, recently is HubSpot who's, who does a lot of consulting along with a lot of product, even Salesforce.
1 (18m 55s):
There's a lot of things in there that are services revenue. They just try not to call it that
0 (19m 1s):
Fire Nation. I want to make something very clear. Don't kid yourself at some level, we are always treating time for dollars. So just don't have this, you know, dreamy notion that that just stops happening. At some point, we are always doing that at some level period and ran. I loved how you talked about this before, about how you've had some service based business friends, you know, that might, so let's hypothetically say they made $2 million in the course of a year, and then they're comparing themselves to you. And they're like, well, ran his company made $50 million. They made $4 million in profit. That's so much better. And you're like, well, wait a second. Like we made 4 million of profit that want all that back into the business. I'm getting $200,000 of a salary of which I'm having to pay taxes on top of you could take that two-minute I was off the table, you know, Mr.
0 (19m 43s):
Or Mrs. Services based business person and, and go do something. And for instance, like, what am I doing this coming fall? I'm taking a 65 day trip with Kate to Europe doing 13 countries. It's nothing business wise. We're literally just traveling Europe. We're taking a 10 day cruise at a Rome. And I don't think you probably would have been able to do that Ram when you were the CEO of Moz, you know, making $205,000 a year.
1 (20m 8s):
No, I'm pretty sure it's 65 day a trip to Europe is the thing where your investors, you know, your board of directors says, that sounds lovely. You get to do that after the exit.
0 (20m 22s):
Oh my goodness. I love all this. And this is what we're doing. And we're just talking about both sides of the coin, because so often you just hear one side of the coin, like we're not saying one way is the best. And one way is the worst. We're saying here's all the information. There's, there's plenty of cons to my business. I'm not going to lie. We can talk about that too. There's plenty of cons to moving to Puerto Rico. John's like, people are like Johnny moved to Puerto Rico. Caribbean life is good. I'm like, I just went through a category five hurricane, like my roof ripped off, like believe me, there's cons to everything you do in life, but there's pros too. So let's talk about both sides of the equations in one area. I can tell you firsthand ran that my audience struggles with and I struggle with is hiring. I mean, it's so hard to hire the right people and you do this so elegantly in your book, like you talk greatly about how and why so many companies choose the wrong people to hire, but then even worst case and even more of a, head-scratcher why they keep them on the team for so long.
0 (21m 17s):
So I'll talk about that.
1 (21m 18s):
1 (22m 4s):
They won't do a great job of producing what they're supposed to. They have a lot of conflict with you and with other team members and as a result, you know, productivity and quality of work. And what you're paying for is, is not high. On the flip side, I have worked with many people who were probably too junior, right? Like they, they would, they would be classified as, Hey, you're hiring this person. For example, I hired a friend of my wife's very early on at Moz. I wrote about this in a book, a guy named Ben Hendrickson and Ben was maybe only a year or two out of college. I think he had worked 18 months or two years at Microsoft, you know, pretty junior developer, but a very smart guy.
1 (22m 47s):
And I asked him like, Hey, do you think you could build a clone of Google's web index, which is an insane project. That's an, that's an insane request, right? Google, even at the time had, you know, hundreds, if not thousands of engineers working on this and Ben was sort of like, yeah, yeah, I think I can, I can figure that out. Right. We're in a Greek diner, you know, drinking coffee and he just stares into space. And then it's like, okay, I'll give it a shot. And, and, and because of a few things, because Ben was very passionate about this project because he and I got got along and still get along fantastically well and work really well together and know each other quite well and have, you know, both personal and professional bonds.
1 (23m 31s):
And we think a lot of the same ways and we share problems openly with each other. And we're really good at describing when we're frustrated and why he's very good at estimates. And I'm very good at working with estimates. So because of these sort of these sort of things, the relationship went terrifically. Well, the project went phenomenally well, you know, he took about a year to build it with, with another guy, Nick earner, and then a month after we launched it, the company was profitable again, right? Because this was such a, a huge need in our field. And I think that one of the things that we forget when we make a hire is will this person's skills and talent improve.
1 (24m 16s):
And the answer to that is almost always yes, will their attitude will their approach to work, will their relationship? Well, the, the working relationship that we have will their values and what they believe about how work should be done, will those things improve. And that answer is much less certain our skills and our talents as we apply them and use them, they improve that's what skills and talents do right? As they get used, it's like a muscle, you know, you go to the gym every day, you work out, and boy, now you can lift more, right? The same thing is true of your ability to code or program or design or do marketing, or do operations or handle taxes or whatever it is, right. You get better at things.
1 (24m 58s):
What you tend not to get better at is sort of, you know, attitude and approach and core values and culture fit. Those things tend not to improve. And yet most companies incorrectly hire for talent over sort of values and culture fit. And then when they have some, with someone, with a culture, you know, core values, conflict internally, if that person is talented, they will keep them rather than letting them go, which brings down the whole rest of the team. And if they have the reverse someone who's, you know, great at values, a great culture fit, but doesn't yet have the skills, right. Is taking a while to get the skills.
1 (25m 40s):
They let that person go rather than training them, investing in training them. And in my experience that that is an incorrect reversal.
0 (25m 49s):
So there's so many things, Fire Nation that go into the hiring and the firing of people. But I just love how Rahn broke that down. And the two big notes that I took will this person's skills and talents improve. And the answer is yes. You know, like he said, like going to the gym, you lift every single day, you're gonna get stronger. So that's a yes, but will their attitude in company fit improve? Will it gel more? And that's the big one and Hey, this is a person ran. Who's done this hiring thing a long time. I mean, if you would just throw a number out there, maybe, you know, exactly. Maybe you just know ballpark, but like how many people have you hired over the course of your career at Moss
1 (26m 26s):
Directly? Probably in the 60 or 70 range. And then indirectly somewhere in the 400, 4 50 range
0 (26m 33s):
Percentage of people, would you say that you've kind of been even both directly and indirectly, you know, are still there to this day? Like, what's the percentage stick really
1 (26m 41s):
Low, probably let's do this. How about, let's say of people that I hired while I was CEO for seven years. So from 2007 to 2014, there are still there maybe seven out of 150 ish,
0 (26m 57s):
Seven out of 150, I mean, Fire Nation. And that's not a normal, I mean, that is what it looks like. I mean, especially in this generation where we have the millennials coming and you know, I love millennials. I have them on my show all the time, but guess what? They're not going to stay somewhere. They don't want to stay like they're going to uproot. They're going to move. They're going to try something different. They gonna try something new. That's just the thing.
1 (27m 16s):
I think that I looked at the average job tenure in the bay area at technology companies just dipped under 11 months. So it's a little under 11 months that you have your average person working at your, you know, your tech firm in the bay area. Now it's much better in Seattle. I think it's more like almost two years. And I think Mazda's average tenure was a little over that like two and a half, maybe two and three quarters, something like that. But of course, you know, what is it four years since I was CEO? So the average tenure is almost double now for even the people I hired at the very end. It's no surprise that not many are there
0 (27m 58s):
So random. You could write a whole another book just about this one topic. So maybe just like one or two sentences, like sum up this area for fire. Daysha like maybe a key takeaway or two that you think could really help entrepreneurs that you know, are looking into that
1 (28m 12s):
First one is have self-awareness about yourself and your company so that you can craft questions, interview questions, and processes that let you get a look at someone's values and culture fit for your company. And the second one is, if someone is a phenomenal culture fit and they make your team better and people love seeing them at work and you love seeing them, but their productivity and what they're getting done. And you know, where their skills are at needs work, work on that with them. Because I guarantee what you're doing now is the reverse. You are working with people on their culture fit and how they're getting along with people. And that is far harder to change than skills
0 (28m 54s):
Fire Nation have. Self-awareness about yourself and your company. And just remember this great culture fits when they just win the long run. And we have some more value bombs. Come in your way. When we get back from chatting with belly, some business owners refer to it as building and growing sustainable customer relationships, maintaining unique customer needs, even personalizing the customer experience. HubSpot calls it being customer centric and a HubSpot CRM platform is designed to help you do just that build, maintain, and personalize your customer's experience into a remarkable one. How do they do it? Well, for starters, HubSpot has game-changing payment tools like native payment links and recurring payments.
0 (29m 38s):
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0 (31m 1s):
Again, that's Gusto.com/fire. I'm telling you, you're going to love Gusto. Get started today at Gusto.com/fire. So rans, we just had a nice chat with Billy. Appreciate that belly. I want to kind of dive into a singular focus because we live in a world, which I like to call the weapons of mass distraction. They are everywhere. They will take us down. We just can't seem to focus on anything these days, but at the same time, it seems like those that do when the such a high level. But why is that the reason? Why does a singular focus when?
1 (31m 37s):
Yeah. So when I talk about this in regards to entrepreneurship and building a company, I think that the huge advantage that you get is a very, very focused firm as someone who does one thing and does it better than anyone else in the world is that you get to build brand association and recall, and, and, and a memory with people that is extremely powerful. And whenever someone has problem X, they always think of your brand, as opposed to you doing 10 different things. And so, you know, people, when they think of X, they think, well, there's a bunch of companies in the space.
1 (32m 18s):
There's these guys they're pretty good. They do a bunch of other stuff, too. The challenge is trying to build a great brand and build a great product in multiple sectors, as opposed to just one. And I see so many entrepreneurs, myself included in so many companies trying to be everything to everyone, trying to serve their customers with a suite of products or trying to, you know, have a services business that takes care of all their customer's needs, as opposed to being best in the world at this one thing. And I think, I think if you can focus, you can actually build a better business. So,
0 (32m 55s):
Well, I love so much about this. Number one, ran focus is actually my favorite word in the dictionary. Do you know what my acronym for focuses follow one course until success? What do you think? I love it. You can use it. Just give me a credit twice. No, give me credit twice. Then it's yours forever.
1 (33m 14s):
God done. And
0 (33m 15s):
I'm also a huge believer Fire Nation went, ran just kind of finished off there where the, which is when you try to resonate with everybody, you will resonate with no one go one inch wide in one mile deep, just get down there and focus that singular focus and dominate down there. So many people are just trying to spread themselves so thin going one mile wide and one inch deep and all these areas. And they're like, why aren't I making an impression anywhere? Because you're just going so shallow and all these things go deep, go deep. So, anything else you want to say about this topic, Rand, before we move on?
1 (33m 46s):
I think, you know, maybe one, one element I would pose to you is if you can regularly once a quarter, once every six months look at all the initiatives that you have in your company and in your personal life and find ones to cut out rather than ones to add in, right? Not saying, okay, what else are we going to do next quarter? What are we going to stop doing next quarter? I think that is a really powerful tool to get to focus,
0 (34m 14s):
Get to focus. I love that. So a lot of people are talking about growth hacks as the way that you, when you know, people are all trying to biohack their health growth, hack their company and all these things. And again, there's two sides of the coin growth hacks can work. Sometimes biohacking can bring you some good health gains sometimes, but there's also the other side of the coin. And that's what we're talking about a lot today here, Rand is the other side of the coin. So how can growth acts bring you failure and what should we do instead?
1 (34m 44s):
Yeah, so we like most startups, like most folks who try to do marketing, you know, fell into the trap of pursuing growth hacks relentlessly. And I think the, you know, the thing to remember about a growth hack or, or any type of hack is it's called a hack for a reason because you are because it's, it's hacky. It's not a, it's not a well thought through a long-term solution. It's something short-term that sort of plugging a hole with your finger, but now your finger is stuck in that hole and you've got to figure out something else. I, I have had plenty of experiences and I think this is, you know, nearly universally true, almost such to the point that it could be a law of marketing that when something short-term, you know, when some short-term marketing investment, some growth hack works well, it almost always follows what, what the marketer, Andrew Chen calls the law of, he uses a different word, but the law of crappy click-through rates.
1 (35m 52s):
And that is essentially when something is very new, right? The first time the pop-over ad was created for the web, it works really well. Right. The click-through rates were like five or 6%, so cool. What does this pop over? I don't get it right. Or the overlay or the negative opt-out overlay, you know, where you have to click. No, I don't want to become a better marketer in order to close the window, or, you know, as opposed to saying yes and give you my email and, you know, whenever any tactic like this emerges, people abuse it, right. They use it and abuse it and then consumers get savvy to it, right? People get savvy to it and it loses its effectiveness.
1 (36m 34s):
And that's sort of that law of crappy click-through rates and growth hacks are the same way. They tend to be short term. They tend not to work well. And so in, in Loston founder, I walked through a ton of the most popular, you know, growth hacks, the ones that, you know, Hotmail used in their early days, or drop boxes, you know, double opt in, sorry, double, you know, referral bonus signup system, or, you know, Airbnb's Craigslist hack, or, you know, a bunch of these things Uber's hacks to, you know, trying to feet lift. Lots of them are some combination of violating terms of service, you know, questionably, ethical, questionably, legal, and most of them do follow this law of crappy click-through rates.
1 (37m 17s):
And the alternative to this, the alternative that, that I propose and that I've found to be very effective is to build a great marketing flywheel. A flywheel is something that scales with decreasing friction. And what that means is that when I do it the first time, it's really hard, right? When I make whatever marketing investment, whether that's, well, I'm doing content marketing and blogging, or I'm running a podcast, or I'm, you know, investing in an advertising program or I'm doing partnerships or influencer marketing, whatever it is, whatever it is, those investments tend to be really slow to get up and running. But then the next time you do it, the next time you do it, the next time you do it, just like skills and talents, you get better at it.
1 (37m 59s):
And it has better returns for you at a lower cost. And it doesn't require as long. And doesn't require as much effort that is scaling with decreasing friction and growth hacks can be awesome when you find a point of friction in that flywheel, right? So there there's some point in the flywheel where you're just, you're not getting anything going and you shove a growth hack in there to make that flywheel turn so that you can turn again more easily the next time. But now you have a flywheel running as opposed to just a growth hack. That's going to give out within a few weeks, a few months, so
0 (38m 36s):
Much, I love about the book. And one thing I will say Fire Nation is that this alone, this flywheel parts, this is worth 10 X, the cost of the book alone. Like that was the part that I was like taking pictures of and like sending an email to myself, to like remind myself, because this is stuff that you could apply into your business and just opened up some new ideas for me. And I just loved that specific section. And I do want to take a minute or two Rand to talk specifically about the book. And the first question I have, which I don't ask everybody, because frankly, there's not a lot of great book titles out there, but yours is the exception to the rule. And everybody, I tell them this book about their dislike, that is such a good title, lost and founder, how long have you been sitting on that title and where to come from?
0 (39m 18s):
Like where was the aha moment?
1 (39m 20s):
So my editor and I went back and forth on a lot of titles.
0 (39m 24s):
That's number two real quick, just before I forget, like, what was the number two title? Like I remember, I remember when Tim Ferriss talks about this, he's like, you know, it came in second place for him is like how to sell drugs for money. Like overnight. It was like something like that. Cause it was, you know, how he did like, you know, brain supplements and stuff like that. And it was like this really horrible title about drugs and money and all this stuff is his editor was like, you got to go back to the drawing board on that. But that was like almost the title of the four hour workweek.
1 (39m 51s):
Mine was something super boring. It was so boring even. I can't remember it. So I think it's good that what was
0 (39m 57s):
The aha moment for Lawson founder?
1 (39m 59s):
So literally I just talked to my wife, Geraldine, who Geraldine is a writer, you know, she throughout this book all over the place that was published last year and has done well. And now is sort of like a, a very notable person in the, in the, in that world. And she instantly came up with Loston founder. Just, that was the first thing she came up with. When I asked her for the book title, I brought it to my editor. She sat on it for probably a few weeks and then came back and said, okay, yeah, this is the best one.
0 (40m 31s):
Now, what is your, wife's a book about all over?
1 (40m 34s):
So she is, she historically has been mostly a, a narrative travel writer and so all over the places, a narrative travel book and yeah, it's, it's fun. It's funny. She's a humorist by profession and it's, it's been cool to see her career taking
0 (40m 54s):
All right. Fire Nation, add these two to the read list, lost and founder and all over the place. I think I'm going to have to read before I go on this 65 day jaunt in Europe.
1 (41m 5s):
Yeah. You'll probably enjoy it. So Geraldine is a Italian, she was the first first person born in her family and in the United States. And so, you know, grew up speaking Italian and, and has a lot of connections to, to that country. And the, the book explores a lot of that, you know, sort of new to America, one foot in Europe position. Yeah.
0 (41m 27s):
Besides what I've already kind of shared. And we've already talked about, you know, about how I love, how transparent you are about the financial side of things. When it comes to actually being, you know, VC backed and dah, dah, dah, and like the parallels of potentially going public and not, and taking money and not as services and product based, all this stuff was just so fascinating. It's such a good read by our nation. What would you say is just one thing that you think you could tell Fire Nation that they can really get excited about learning from reading the book loss and founder.
1 (41m 55s):
This book is trying to tell a side of the entrepreneurial journey story that most folks would rather keep quiet. So I think that, you know, 99% of the time when someone's written a book about what it's like to build a startup or build a company, it is marketing, right. They're essentially trying to tell you, you know, I was down on my luck and I struggled, but then I built something great. And here's how you can too. Right? That's I think that's the formula for almost every business book in this genre,
0 (42m 32s):
1 (42m 34s):
Almost everyone and, and lost. And founder is the absolute opposite. It is. Here are a bunch of things that we tried that went well. Here are a bunch of things we tried that didn't go well. And the end, I think the end might be unsatisfying in a way, but it is also much more realistic because I can't tell you how many entrepreneurs I've talked to. Where I see the headline I see in tech meme or tech crunch or whatever, you know, X company sells for $75 million X company. Y company sells for $250 million. And I, you know, I have a relationship with the entrepreneur because you know, we've been in the startup world together. I email them and I say, Hey, man, I hope I can send you congrats. I hope this was a great deal for you.
1 (43m 15s):
And they'll write back and say, oh, I can't say much, but sadly not really. So that is, that is so common that I think the, I think the gold rush right of startup culture makes us think that this is that these outcomes, you know, produce extraordinary wealth and that they produce these happy stories. And that's so often not the case. And I hope I hope this book can help you do two things. One avoid a lot of the painful missteps and lessons you're going to, you're going to make your own painful mistakes, but you don't have to make my painful mistakes.
1 (43m 56s):
And then, and then the second thing is when you encounter that pain, I want you to feel less alone. I want you to know that the rest of us suffer too, right? That we went through the same thing that we have empathy for you, that there are people out there who you think are incredibly successful, who you model your business after, just like I did. And then when you find out the truth, it's, it's not like that. So that's, that's what Lawson founders for
0 (44m 24s):
Rand. Why don't you just give us as entrepreneurs that are listening right now, a parting piece of guidance. And then we'll say goodbye.
1 (44m 31s):
I would say any time there is common wisdom or a best practice out there. I have found value
0 (44m 39s):
In questioning it, not always doing the opposite, but absolutely in questioning it. And I would urge you to do the same. I love that. And any call to action or any place you want Fire Nation to learn more about you?
1 (44m 51s):
Sure. Yeah, absolutely. So if you're in the, in the marketing world, or if you have marketers on your team, we're building something new. My new company is called SparkToro, and you can check us out at sparktoro.com. If you have any questions or there's something that I can help you with with regards to anything to do with your journey at Rand fish on Twitter is the best place to go
0 (45m 13s):
And ran, just, you know, to kind of chat real quick about your parting piece of guidance. It really does remind me of this mark Twain quote that I think is really applicable to us Fire Nation, which is when you find yourself on the side of the majority, it's time to pause and reflect. You know, it doesn't mean you're in the wrong place, but maybe it's just time to take a second and step back and just reflect on where you're at and not just to keep going down this path because the majority is going down this path and Fire Nation. You are the average of the five people you spend the most time with. You've been hanging out with RF and JLD today. So keep up the heat and head over to EOFire.com type of Ray. And in the search bar, you'll have a blast. If you go back and listen to episode 15, I can promise you that.
0 (45m 56s):
Because again, I wasn't even a published podcast host at that point. This is prelaunch. When I interviewed, ran back in 2012, it was like August, I think maybe July of 2012, just insane this. And you'll definitely hear he really a different, JLD a different skilled hosts for sure. Different ran to it. Let's be honest. And that was episode 15 oh crazy times. And the show notes page is going to have everything that we talked about. I did tell this to ran. I'm going to say it now. Like, listen, you know, Fire Nation time is very valuable. I don't have a ton of time. I probably read five to 10% of the books of the people that I interview. And, you know, that's a Lux. I interviewed a lot of people and, and rans is one of those that I started reading and I just didn't stop.
0 (46m 40s):
I read it from cover to cover. And that's why I was fired to get them on to talk about this because it is a, it's inspiring read on so many different levels. So lost and founder definitely checked that out and I'm going to be checking out all over the place by Geraldine as well. That's going to be cool before my trip, et cetera. So that'll be a fun time as well. And SparkToro is where Rand's doing all his greatness now. So get on over there, SparkToro and see what's going on in his world. And Ray, I want to thank you brother, for getting on sharing your truth with Fire Nation today. For that we salute you and we'll catch you on the flip side picker. Hey, Fire Nation. Hope you enjoyed our chat with ran today.
0 (47m 21s):
And if you are wanting to accomplish a big goal, well you should, because goals are so key. The freedom journal will give you a step-by-step process, a proven process that I created to accomplish your number one goal in 100 days. So just visit the freedom journal.com, use promo code podcast for a nice little discount. And thank you for listening to my podcast. And I will catch you there Fire Nation, or I'll catch you on the flip side. As a small business owner paying and taking care of your team can be tough. That's why Gusto built easy to use payroll benefits, onboarding and HR tools. And right now you'll get three months free. When you run your first payroll at Gusto.com/fire.
0 (48m 4s):
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