Today’s guest we are learning from is the one and only Perry Marshall – 80/20 sales and marketing master.
Most wealthy people have wealthy parents. And you might feel like you need a silver spoon upbringing to see success in business. After all, rich people grow up learning from successful people, going to private schools and connecting with entrepreneurs.
But you can be successful, no matter where you came from.
Today’s guest is living proof. Perry Marshall went from being a poor child to one of the world’s highest-paid business consultants.
In this episode, you’ll find out how Perry Marshall became wealthy and how you can do the same. If he can do it, you can too!
Show highlights include:
- Why you’ll never make an impact punching a clock. ([13:28])
- 3 versions of entrepreneurship—and the only useful one. ([15:17])
- Why most business books, courses and seminars harm you. ([16:44])
- If you can’t answer this question, your business is in danger. ([20:15])
- How the “20-120 rule” can ruin your business—or skyrocket it. ([26:42])
- What to cut from your business now to be more profitable, free up your time and live a better life. ([32:27])
- 3 reasons why “no one has money right now” is wrong. ([35:28])
- Why corporations on social media won’t change the world—and why you will. ([41:15])
Note: the time-stamps are from the audio-only version. The video version will have slightly different time signatures and features the full interview.
Remember to download Grandma’s Top Tips for an Independent Financial Future by dropping into https://grandmaswealthwisdom.com/free/. It’s time for YOU to break through to a smart, stable, financial future.
If you’d like to see how Grandma’s timeless wealth strategies can work in your life, schedule your free 15-minute coffee chat with us by visiting https://www.grandmaswealthwisdom.com/call… just like Grandma would want us to do.
Links mentioned on the show and more:
- Get started with Grandma’s Wealth Wisdom here: https://grandmaswealthwisdom.com/start
- Check out this related podcast: https://grandmaswealthwisdom.com/podcast/how-to-get-out-of-debt-and-stay-there/
- Check out this related YouTube video where we combine 80/20 and Profit First: https://youtu.be/6wNkkRJfEKA
About Perry Marshall
Perry Marshall is one of the most expensive business strategists in the world. Endorsed in FORBES and INC Magazine, he’s guided clients like FanDuel and InfusionSoft from startup to hundreds of millions of dollars.
He founded the $10 million Evolution 2.0 Prize, with judges from Harvard, Oxford and MIT. Launched at the Royal Society in London, it’s the world’s largest science research award.
NASA’s Jet Propulsion Labs uses his 80/20 Curve as a productivity tool. His reinvention of the Pareto Principle is published in Harvard Business Review.
His Google book laid the foundations for the $100 billion Pay Per Click industry, and Ultimate Guide to Google Ads is the world’s best selling book on internet advertising.
Marketing maverick Dan Kennedy says, “If you don’t know who Perry Marshall is — unforgivable. Perry’s an honest man in a field rife with charlatans.”
He’s consulted in over 300 industries. He has a degree in Electrical Engineering and lives in Chicago.
A hearty welcome to “Grandma’s Wealth Wisdom” with your neighborly hosts, Brandon and Amanda Neely. This is the only podcast that helps you take charge of your cash flow and leverage your assets, simply and sustainably, the way Grandma used to.
Amanda: Hey, y'all, before we jump in today, just want to give you a quick heads up. This interview was originally recorded on YouTube and we've got the original YouTube full uncut interview in the show notes, if you want to check that out, but in the meantime, please excuse any YouTube-specific references as we go throughout. I know you'll get a lot out of this episode. Perry dropped some really great, valuable information and inspiration for you, so please enjoy.
Today, we've got “the” famous Perry Marshall, the godfather of Google AdWords and awesome author of so many books, including 80/20 Sales and Marketing, and we're going to be interviewing him today. [01:07.5]
If you don't know Perry, here's his official bio. Here we go. He's one of the most expensive business strategists in the world. He has been endorsed in Forbes and Inc. magazine. He has guided clients like FanDuel and InfusionSoft from startups to hundreds of millions of dollars.
He founded the $10-million Evolution 2.0 Prize in the sciences, with judges from Harvard, Oxford and MIT. That was launched at the Royal Society in London and it’s the world’s largest science research award. He has done so many great things even NASA uses his work and it's been published in Harvard Business Review.
Kind of back in the day, at least from my perspective, when Google started having ads, he laid the foundation for that pay-per-click industry, which is over $100 billion. He has the first bestselling book on internet advertising, The Ultimate Guide to Google Ads. He wrote that book. [02:09.3]
He has been lauded and endorsed by so many awesome people, and been referenced in dozens of influential marketing books. He has consulted in over 300 different industries, and we've gotten the fortunate privilege to meet him. I'll let Brandon tell you that story.
Brandon: Yeah, before we knew he was famous in that kind of world, we just knew him as a guy from church that had some experience in business. We were going to launch our brick-and-mortar business and we wanted some advice on how to do it, and so we did the whole thing that we don't like people to do, “Can I just pick your brain?” We did that to him and had coffee with him.
Amanda: A beer.
Brandon: A beer, had beer, yeah. And we hung out, had a beer and asked him tons of questions, and he told us one thing…a bunch of things, but one thing that stuck with us over a decade ago for our business was audition your employees before you hire them. [03:11.6]
And that's what we did. We auditioned people and that basically, I said, then set us up for the 80/20 in our business because we were able to hire, most of the time, the right people. Didn’t work all the time. Sometimes they slipped through the cracks anyway, but we were able to see them work and that was powerful to do, and now we get the joy of having him on our show.
Amanda: We know you'll enjoy. Please welcome with us, Perry Marshall. Welcome, Perry. Great to have you here.
Perry: Great to be here. It's an honor. Thanks for having me on your show.
Amanda: Yeah, thank you. I'm going to jump into the first question. We're just going to see where things go. So, what was money for you growing up?
Perry: There was not a lot of it. My dad worked for a nonprofit missions organization who paid their employees very meager salaries and, in fact, at one point, my dad went and asked for a raise, and the answer he got was something like, Well, then you'd make more money than Mr. App, and Mr. App is like… [04:20.8]
So, this was I think…I didn't even know if he had any kids. He was just this very frugal guy who ran the organization and I'm pretty sure the reason my dad was asking for a raise was there was literally no food in the house. And so, there's kind of this poverty corner of Christianity that's actually quite large.
Now, when my dad actually became a pastor at a church, which did try to pay their staff reasonable marketplace, competitive salaries, we actually had a little bit of money, and I remember my mom coming home with cheese instead of Velveeta for the first time. I remember riding in the car, eating cheese. It's like, Dad got his new job now and he got paid yesterday. [05:14.1]
So, yeah, not a lot of money and, furthermore, he distrusted money, and so, for most of my growing up, that was the grid. Also, a major memory is I was probably five and it's a hot Nebraska summer afternoon. It's humid in Nebraska and I'm picking cherry tomatoes in the family garden, and I was just complaining my dad like, I hate this, and he goes, Well, Perry, Adam and Eve sinned in the Garden of Eden and God said you shall work by the sweat of brow, and this is just what you're going to have to do. [06:00.0]
Now, I could tell you if you want to motivate your children to be industrious and productive, that is not what you tell them. I even think it's a fundamental misunderstanding of work. I think it's a misunderstanding of the Garden of Eden story, which I guess if you want to go into that, we could. But there was a very, very formative experience I had when I was 16. This was a big deal.
My dad had cancer and he got accepted into a treatment program in Bethesda and my parents needed to be gone for a month, and these friends of our family offered to take me and my brother in, and so, we went and lived with this other family, the Lees. Mr. Lee was a…I found out because I sat down and had Cokes with him one night at the mall and he started telling me all these stories. [07:02.2]
They lived in a nice house. They drove nice cars. They did interesting things. They went on nice vacations. He was a professor at the university and he sat down and told me the story. He said he grew up in the Korean War and his family was very poor, and he had a bunch of brothers and sisters, and he would go steal food to feed his brothers and sisters, and he said, “Well, I didn't know God back then, but I told God, if you ever get me out of this mess, I'll work harder than anybody.”
He grew up and, apparently, got through it, obviously, and he went to school and he went to grad school in the United States, and he washed dishes and he worked really hard. Then, he became a research professor, a management professor, and he worked harder than anybody and he got a chair position at the university and he climbed up, and now he's explaining to me, “I am the highest-paid faculty member at the entire university. I charge $3,000 to $5,000 a day for consulting.” [08:05.2]
Now, this was in 1986. I'm like, What? and I suddenly had a complete shift of what I understood work to be. It's like, Oh, because I was living in his house. It was a nice house, and his cars weren't broken down and his daughters went to ballet lessons and all this kind of stuff. I was like, Oh, and it sailed in. It was like, Hey, guess what? If you actually apply yourself and you lean into work instead of avoiding it, because, literally, up to that point, I like, I grudgingly accepted my dad's [belief]. Yeah, I get it, you’ve got to work, get the sweat of your brow and all of that, but I'm going to do as little as possible enough to get by. I will study just hard enough to get a B, okay, and then I'm going to go do what I want. My teacher just chronically complained. “Perry has so much potential if he would just apply himself,” right? [09:08.4]
Perry: Then here's the other interesting thing that [happened] just right at the exact same time. So, rewind maybe six or nine months before that. I just turned 16 and my dad's like, Perry, you need to get a job. Why don't you have a job? My dad was terrified that I was lazy. He was seriously concerned and he would nag me.
Finally, I reluctantly got this job and it was a janitor job, and so every afternoon from 4:00 to 7:00, I’d go to this factory all by myself and I’d sweep floors for three hours and I’d vacuum. It was lonely. I had no social life. It paid about three bucks an hour, and I frankly hated it and I got to where I would wake up in the morning at seven o'clock in the morning to go to school and I would think, I have to get off school and go work at the stupid factory, and I was getting stressed out. [10:08.7]
I had this conversation with my dad some months into this and he was like, Perry, it's okay. You've convinced me, you're not lazy. If you hate your job, you do what you want.
So, we're living at the Lees’ and I had this speaker business. I started building audio equipment when I was 13 and I was advertising in the newspaper, and I was actually getting some business, so while we were standing at the Lees’, I actually quit my janitor job and [was] like, I'm just going to do the stereo equipment thing, and it was actually working.
Okay, so at this point, I stumbled into entrepreneurship. It was much more out of interest in the technical stuff than it was about having a business, frankly, because I just wanted to do it, okay. Then I have this conversation with Dr. Lee, which the path of a research professor was hardly anything that I ever would have even contemplated. Right? I just never would have related to that. And Mr. Lee is watching what's going on. We're talking about it and stuff. [11:15.7]
That completely 180’ed my idea of work and money. It was like, I want to have some money. Having some money, not having money, that just sucks, right? So, yeah, that's a major, major story of growing up for me.
Amanda: Yeah. Thank you.
Brandon: This sounds to me like a rich dad, poor dad, Robert Kiyosaki's…
Perry: It is.
Brandon: I’m like, That is exactly the same thing.
Perry: I mean, we didn't keep having meetings every month for the rest of our life, but, yeah, he was like my rich [dad]. Yeah, I never quite thought of that. You're right.
Amanda: Yeah, and they're probably both part of Grandma's generation, the greatest generation, and that's very typical of the two ways that their generation thought about things, too. [12:07.5]
Perry: Yeah, Dr. Lee is probably in his late-eighties now and my parents would be in their late-seventies. They're both gone, but, yeah.
Amanda: Yeah, okay. So, you have this transformative experience. You go to college.
Perry: Met your rich dad.
Amanda: Father figure, yeah.
Amanda: You go to college, study engineering. You come out of that. You're on your own financially, I would imagine. What was now learning adulting? Even though we didn't have that word probably, adulting.
Perry: When I was in college, I got into Amway, and even though Amway was a big, giant, pink Kool-Aid machine, I learned a lot. A lot, okay? And one of the things you figure out really quick even at age 21 going to Amway meetings is that the adult career world isn't all it's cracked up to be, right, to say the least. [13:08.7]
And so, I figured that out pretty quick, and so kind of I realized that I knew that, Perry, you've got to get yourself to a place in your life where somebody else doesn't run your life and you're not punching the clock just so you have health insurance. If you're 45 and that's where you've ended up, that is the worst.
I also knew at some level, dude, you're interested in a lot of things. You want to discover the world. You want to figure out how things work. You want to make contributions, and you are not going to be doing it if you punch a clock, so I knew that. I knew that. So, I get out of school and my wife and I move to Chicago. When formative memory is when we realized that what I made as an engineer was barely enough to live on. [14:07.0]
I remember we went to this pizza place and we're going through the numbers, and we're like… When I was in college, I thought $32,000 a year was a lot of money. It might be in Minot, N.D., but it's not in Chicago. Yeah, you’d better accelerate that side-hustle thing.
Brandon: So, you were doing the side hustle before the side hustle was a thing -
Perry: Yeah, I was.
Brandon: - or entrepreneurship. Now entrepreneurship is the fad word I feel, and even in our culture now with the crisis that we're in, I think that there's going to be a lot of entrepreneurs coming into the market or, what I like to call it, there's a lot of wantrepreneurs who think it's going to be easy.
Perry: Yeah, lots.
Brandon: And they're like, Oh, I'm going to make a lot of money. It's easy to get a following and to grow this and all of that. [15:01.2]
What would you say to these people who have lost their job or they realize $32,000 is not much? What would you say to them if they're just stepping into this world right now? What would you think this is what you need to focus on?
Perry: I would say that there are two versions of the world. This has always been true. There's the pink Kool-Aid kiddie table version and there's the real version, and then there's a bunch of…let's make a third category, there's the academic version. Okay, so let's have three categories.
Let's start with the academic version, okay. All right, I do know a few MBAs that are really sharp. I would never spend my money on an MBA. What a colossal waste of money, okay?
Brandon: I have a story about that.
Amanda: We'll just say you heard it here, folks. [16:00.0]
Brandon: I had a teacher tell me, “I teach entrepreneurship because I can't do what you do,” and so he gave me a mug, coffee mug, and I was like, Are you kidding me? You're going to get me a mug? And you should give me your paycheck.
Amanda: She teaches MBA students, yeah.
Brandon: Yeah, exactly. Anyway, go ahead.
Perry: So, just set that aside. All right, so in the real entrepreneurial world, okay, there’s the business of selling. Okay, 20, 30 years ago, it was tapes, books and seminars, and now it's books and webinars and seminars, and that is a business of selling information and I am in the business of selling information. There's absolutely nothing wrong with it, but you have to understand that what sells to wannabe entrepreneurs is what people want to hear, not what they need to hear. You have to be acutely aware of the “want to hear” versus the “need to hear,” and you need to be acutely aware that the way that the machine runs on the “want to hear,” it’s kind of a very different version of the news. [17:16.2]
It's almost the opposite of the news. The news runs on negativity and entrepreneur education runs on positivity, but the negativity of the news is out of bounds and the positivity of the entrepreneur stuff is out of balance. Okay? And so, there are truth tellers and you have to calibrate to the truth tellers, but nobody's going to calibrate to the truth teller unless you want to know the truth.
About 10 years ago, I did a seminar and I had a friend come and help me with a seminar. He's a very insightful guy. His name is John Paul Mendocha and he had never worked at one of my events before, and the day after the event, we had breakfast. He goes, “Perry, I discovered something about your people.” [18:09.5]
I go, “What's that?” and he goes, “Most of your people have had not one, but two complete failure cycles.” And I go, “What do you mean by that?”
He goes, “So, I talked to lots and lots of people, and here's a pattern over and over. Well, they got into Melaleuca or something and they did it and they lost their ass, and then they picked themselves up and they dusted themselves off. And then they did like, I don't know, maybe it was real estate or affiliate marketing or whatever, and then they wiped out doing that. And now they're ready to hear the truth.” He goes, “That is who your audience is.”
Well, that's basically me, okay? When I was in Amway, I was not ready to wrap my head around. I wanted to believe, okay, you just do this one thing the way these people tell you to do it and you're going to be successful, so follow the system. Okay? [19:13.5]
There is no real business where you were just going to color by numbers, not even franchises, okay. People even think that franchises work this way. No, they don't. Franchises are always missing something. Usually the ingredients, the manuals, the procedures, the systems, it's all perfect. But guess what? You have to go get the customers. That's usually what it is, okay? And getting the customers is the most valuable part and that's the thing they don't do, and if they could get the customers, they would do it and they wouldn't need you. Okay, and so there's always a version of this and what you have to accept is that you have to come up with a unique selling proposition. [20:06.0]
Actually, I don't think that's good enough. You need to come up with a definitive selling proposition. You need an absolutely ironclad answer to “Why should I do business with you instead of anybody else?” including the option of doing nothing. You have to have a really good answer to that question and nobody can really figure that out but you. Anybody else who can figure it out, they're going to go figure it out for themselves, right, and so that's kind of the harsh reality.
Now, once you accept that, then I think everything becomes easier, but there's a saying it's really hard to con an honest man. Okay, now, most of the time when we hear that, we think, Oh, so people that get conned are thieves or they're just self-delusional. [21:01.7]
There's lots of perfectly honest people who lie to themselves. They would never commit fraud. They would never put a false number on their tax return or something. They would never cheat on a test, but they will sort of cheat on themselves. That’s still just as fun.
Amanda: So, I was reading a quote of you that you said, and you wrote this, “My stated goals, what I talked about, and my real goals, what I did, were two different things.” This rang so many alarm bells with me because so many people we work with, what they say they want their money to do and what they actually do with their money are very different, and we love to come alongside them and help them reconcile and align their money with what they really want. Can you tell us a little bit of what that's looked for you, maybe with your money, but maybe just with your business and your goals? Because I think that might be something really interesting to talk about. [22:00.4]
Perry: When I said that, what I was specifically referring to was about four years ago, we hit a really rough spot in our business where a bunch of things slowed down and I had to cut my staff, and it was really painful. What I realized was, okay, Perry, you say that what your business is about is finding needles in haystacks, finding just the right clients that fit exactly what you do and who you can help, and then working very simpatico relationships and deals with them, maybe taking equity or whatever. So, I told myself I'm in the needle in haystack business. But what I was doing was I was in the promote, promote, promote, promote business, selling to larger numbers of people. And so, what I was saying I was doing what I was actually doing were two different things, and doing what I was actually doing required more staff and more overhead and more complexity and more. [23:02.7]
Human beings naturally bury themselves in complexity and entrepreneurs are even worse because we love new ideas and all that, and so I had to cut, cut, cut, cut and do it. It was circling a problem for months. It was like what happens if every three days for the next three months you get together with your team members and you say, Okay, so what else are we going to get rid of? And it's like thoroughly cleaning out your house, all, sending all the stuff to Goodwill, that kind of thing.
Now, that is very hard. It is completely antigrowth. It's completely contrary to everything everybody's saying, grow your sales, grow your revenue, grow your company, hit $10 million, blah, blah, blah, but those kinds of consolidations are huge. [24:02.0]
But nobody is immune to this. All of us talk one game and live another. Sometimes you just kind of need to remove the judgment and the negativity from realizing that and just go, Hey, it is what it is. We're all flawed human beings. We all do it. We hate it when other people do it. We excuse ourselves. Don’t. You don't need to excuse yourself and you don't need to beat yourself up. You just need to be aware like, Okay, let's stop doing that.
Brandon: Yeah, and so it's kind of like taking from self-delusion to a nonjudgmental realization, so that then you can step forward.
Amanda: Yeah. I like that.
Brandon: It also sounds like some of the stuff we take our clients through. We do a profit first analysis and really helping make sure that their allocations are done appropriately—30% should go to OPEX in a healthy business, and if it's above that, like 70% is operation expense, then you're not paying yourself and then that's not a healthy business, or running up credit cards and all of that. [25:07.8]
And so, it sounded you were like, Man, my operation expenses are crazy. They're not bringing in ROI. And then, you're looking at also probably the 80/20 rule, too, and saying, Is this doing what I wanted to do? and cutting things that you don't need like, I don't know, webinar platforms or stuff that you're just like, Why do I have this ongoing thing that they charge my credit card for?
Perry: Yeah. A lot of times we hang onto those things like, Yeah, but there's this project that I want to do in two months and I'll already have this. Then, okay, subscribe to it in two months.
Grandma always said, “Eat your vegetables. Look both ways before crossing the road. And never risk your financial future on elements of the market you can’t control.” That Grandma, always good for some tried-and-true advice. And although some of her wisdom seems to have skipped a generation, you don't have to be left behind.
Download “Grandma's Top Tips for an Independent Financial Future” absolutely free, when you visit Grandma’sWealthWisdom.com. Don't wait. Get Grandma's best tips today.
Brandon: What else? As you've been along this journey 20 years or so, what are some of the big lessons that stick out to you that we can record here and your grandchildren could watch many years from now and say, This is who my grandpa was. This is the thing he taught us and we want to always remember?
Perry: One of the basic truths that just flows right along with what we're talking is something my friend Len Bertain calls the 20/120 rule, and the 20/120 rule says that 20% of your business produces 120% of your profit; and then 60% of your business is just keeping the lights on and sort of breaks even; and then the bottom 20% of your business loses 20%, which brings you from the 120% of profit that you coulda, woulda, shoulda made to the actual 100 of whatever you did make. [27:14.9]
And this is just about universally true and it's fractal. Fractal means pattern and a pattern and a pattern. It means pattern repeats itself in big scales and small scales like branching on a tree, which goes all the way from the whole tree down to the microscopic beans and leaves. That's what fractal means.
So, the 20/120 rule, first of all, but number 20 is just a rough number. It could be all kinds of things, but the point is there's a top part of your business that's very profitable and often takes very little effort, okay, and then there's this bottom part of your business where there's a great deal of effort, a great deal of money. Not only does it produce little return, it actually is negative. It applies to employees in revenues and time and product lines and clients, all kinds of things. [28:14.5]
Almost every business has products where you are taping dollar bills to every unit that ships out and you don't quite realize it, or that client if they just disappear, if they fell into a hole and disappeared two minutes from now, and you never did anything for him and they never paid you, you would actually make more money than having them as a client, right?
And there are employees like that. If that employee just fell into a hole in the face of the earth and vanished and you never paid him again, the shoplifting would go away and the bad rumors among the other employees would go away, and the negativity would go away. There are customers you have where the support tickets would go down, and so, again, circling problems. [29:09.6]
So, yes, there are times when you don't look back and you don't really think about your operations and you just press forward, and you go get the new clients and you run. There are seasons when you do that, but there are definitely other seasons where you’ve got to catch your breath and you’ve got to start subtracting stuff because it all goes to the top line.
Most people don't know this, and an extreme version of this is you'll hear about these companies that go by 10 corporations and then they just carve them all up. Now, sometimes those guys are just mercenary and they're not really interested in adding value to anybody, but that's actually beside the point. The point is they are very good at doing what I just said and they still get it to work. [30:04.6]
Okay, the cardboard boxes are still going out the door, but they're making 26% more profit than they were before and they consolidated six different accounting departments, so we're not paying for that six times, and they're very good at cutting. Right? And so, there's all this growth-minded stuff, but then there's the other.
Then, all of a sudden, back to the story I was telling you, when we finally got done with all that chopping, it was like, Man, this ship is a lot easier to pilot, man. There's just so much less ballast. So, yeah, I think all of us, our stuff gets overgrown with weeds.
Brandon: What would you tell somebody that maybe they're feeling that? How would they cut the weeds, and what would be your advice to clean up the lawn?
Perry: Okay, so if you go, Wow, I'm just going to cut 20%. I'm going to figure out my bottom 20% of customers. I'm just going to cut them. Here's what will usually happen. [31:07.7]
It might be a good idea, but what will usually happen is we’ve got this big client and we’ve got terribly low margins. We don't really make any money selling to these guys, so we're just going to stop. And then, all of a sudden, your quantity discount on your 55-gallon drums goes away and the cost of everything you buy goes up 7%. Now all these other clients that used to make money with, you don't make any money on that anymore, and now you're in trouble. If you make your cuts too big, that's usually what will happen.
Here's what I've found works. You can almost always find 3% of something that so if you have 30 employees, I just about guarantee you, there is one where if you admit it to yourself, if you got rid of them this afternoon, everything would be better. [32:01.0]
And if you have 30 clients, one of them, you know they're costing you money and you know you're not making money. If you have 30 products, you know that one. We don't make any money on that. That's just hassle, okay, and it costs, let's say, 16 weeks for the supplier to send them over and there's all these problems. Just cut it. You're like, Oh, but I'm emotionally attached. Yeah, that's the problem.
So, if you take 5 or 6, 3% wax, okay, the worst employee, the worst client, the worst product, the worst vendor, woo, things are much better around here, wow. Why didn't we do that? It's giving you time. You go look at your calendar last week; 15 or 20% of what you did last week, you shouldn't have done. Okay, be honest, what is it?
Brandon: But then, if you do, again, your book, the 80/20 Sales and Marketing book, if you put the fire to the ones that are working, that's going to really explode. [33:06.5]
If you learn what's not working and then what is, as you see that, and you put more money or more time or more effort into that, it's just going to explode your business in a positive way.
Amanda: And that's exactly what happened with our coffee shop before when we read your book. We heard about your espresso machine chapter and we were like, Okay, how do we do this? We can't have espresso machines to sell, but how could this apply to us? And we increased our profitability.
Perry: What was your espresso machine?
Brandon: We did a membership site I think.
Amanda: Yeah, so people would pay us 60 bucks a year, $5 a month to be a member of the coffee shop, and a lot of them wouldn't use the discount enough to make that back, but they felt they're being part of something bigger, and that took a $4 latte and made it into 60 bucks.
Perry: Wow. I wouldn't have guessed that would work. Congratulations. That's great.
Brandon: And it also helped us because we sold them in January, which is a slow time in the coffee world regardless of what people think because no one goes and walks around. [34:10.2]
Amanda: At least in Chicago, yeah.
Brandon: And so, it really helped with that. Then we also used that model and said, Hey, we want to do outdoor seating and the only way we're going to do outdoor seating is if we sell a hundred memberships. If you guys want to be a part of that tribe and see outdoor seating that you can be a part of, buy a membership, and a lot of people buy memberships because they wanted outdoor seating.
Brandon: Yeah, it was fun.
Amanda: So, what's next? As you think about your future and how you see yourself, your business and what kind of legacy you want to leave, what comes soon or later?
Brandon: And I want to add to that. In a world that is…I mean, we are in Corona world. Who knows what's happening knowing it's not 2019 anymore, what's next in regards to that, and what would you tell somebody, Okay, we're in a new world? What do we do? [35:09.5]
Perry: Okay, so let's start with that. I think there's more black swan events coming. We haven't seen them all yet. And this is the agility decade, if there ever was one. In the 80/20 book, I talk about bleeding necks.
People spend money when they have a bleeding neck. For entrepreneurs, in particular, business owners, I've heard this a lot. Nobody has any money right now. First of all, that's a crippling belief. Secondly, it's not true. Third, okay, I totally get that some people have less money than they did before and all that. I get it. But there are more bleeding necks right now than ever, okay? If there was ever a time to look for problems to solve, it's now. [36:04.2]
You can get on the phone with anybody and you can say, Hey, we’ve got riots. We’ve got racism. We’ve got viruses. We’ve got quarantines. We’ve got curfews. Hey, would you mind just getting on the phone? I want to hear what you're thinking these days. There's a lot of people who would respond to that, especially if you're there to just listen and not like, Oh, let me inject. Let me give you a little commercial in the middle of it. If you just listen to people, they will tell you exactly what their bleeding necks are.
And you don't have to solve everybody's bleeding necks. You don't have to solve any particular person's bleeding neck. All you have to do is listen to them. But if you talk to 20 people, you're going to find something you can solve, and that's how all these businesses get started in recessions. They aren't just because somebody had a brilliant idea. They looked really great on a piece of paper. It's because somebody knew how to solve a very tangible…patch up a bleeding neck, and that that's what you need to be doing. [37:07.2]
There is no lack of problems in the world. All the little cottage industries that have sprung up, I mean, my wife has been making COVID masks on her sewing machine. It's not even a business. It's just because it needs to be done. But there's all these little cottage industries that have just sprung up around all kinds of crazy things.
And then, Amanda, you asked about what's next. One of my big passions is I've been deeply involved in science. It's almost become a second profession for me. I have a technology prize called Evolution 2.0. It's the largest science research prize in the world, $10 million, and I'm continuing to do a lot of that.
I'll just make a blanket statement that I think could apply to everybody because I don't want to get into big science talk. All of the big systems are broken. The police are broken. Science is broken. Higher education is broken. Government is broken. The financial system is broken. The banking system is broken. And everybody knows it. [38:13.5]
This is when elegant solutions to these badly broken systems that nobody had the will to fix, this is when these things get solved. Okay? Nobody had the will. Everybody knew that there was a police problem. Nobody had the will to deal with it until all of this ruckus started happening. I’m not endorsing looters. That's not what is helping anyway, okay? But there's been a bunch of band-aids ripped off, and whenever that happens, it's rack the shotgun. It’s a phrase from the 80/20 book.
It’s that you divide the crowd into two groups. There's the people that say, I don't want to hear about it. I don't want to see it. I don't want to… Okay. And then you have the people like, Yeah, it is broken, and you know what? I know a way to fix that. [39:06.3]
There’s some other way to run a police department. There's another way to run a government. There's another way to do peer review. There's another way to do science funding. There's other ways to do all of these things and they weren't going to happen until something broke, and you're going to see a lot more things breaking.
Honestly, if you just have this starry-eyed belief in the goodness of human beings, God help you. I think what you can believe in is the ability for a minority of human beings to do a disproportionate amount of good and make a disproportionate difference. But if you're counting on the big institutions, God help you.
Amanda: Love it. So, you're going to do the scientific revolution and we'll do the financial revolution.
Brandon: I do think some of it, and as we started our coffee shop, it was the idea of going upstream and saying, Okay, why are people in poverty in the first place and what do we do about it? [40:06.5]
It was ethical economics, community building and providing good coffee that is not oppressing people in Africa or South America or whatever. What you're saying and what we believe in is you don't just say, Let's look and try and save people out of poverty, give them a sandwich or whatever, which, I mean, the churches do that and that's great. Some of those things are needed, but what about those different sectors? All these different things like science and politics, all of this feeds into a river of poverty, right?
So, what if we go upstream and say, Okay, how do they end up in that place in the first place? And how do we solve that problem? That's a harder thing. It does not have as much glory as feeding a hundred people and saying, Look, I can do a social media posts about this. But I think that's kind of our hope as we go upstream and say, Okay, this is all broken. What do we do here? Does that make sense? [41:14.1]
Perry: Look, the world does not need another lackey at another big corporation, writing some email or social media posts that says, We stand in solidarity with you during these hard times. What the hell does that mean, okay? That's meaningless
What the world needs is people that will go deep into problems and go, So what really caused these problems, right? You're not going to solve poverty with some social media post. You're not going to do any good. How do you solve poverty? You get on a plane, you go to Mozambique and you figure out why they're poor in the first place, okay? You can do this. It's not that hard. You just have to have the will to do it. Those are the kinds of people that the world needs. Those are the kinds of people that the entrepreneur world rewards. [42:09.4]
Amanda: Yeah. Okay, this has been really great, Perry. Thanks so much for joining us. I want to give you an opportunity to make sure you get to share anything else that you want to share about where people can connect with you.
Perry: You should all go to PerryMarshall.com/80-20 and pick up my book for a penny plus shipping, which is seven bucks in the U.S. I mean, it's a bargain and you'll get some bonuses that you wouldn't get from Amazon, and the book will change your life. It's a complete paradigm shift about how business works.
Thank you guys for endorsing and helping us out in spreading the word. I really appreciate it.
Amanda: Yeah, we appreciate you and all the wisdom that you shared with us over a decade ago, and then through your book and through other ways that we can follow you, and thanks for sharing that wisdom with our audience as well. [43:02.7]
Perry: All right. Thank you, guys.
Amanda: Thank you.
Okay, hope you enjoyed that as much as we did. I have three, I mean, so many takeaways. I took a whole page of notes here.
Brandon: And I hope you guys did take a whole page of notes as well because I would have.
Amanda: Yeah. Three big things that I think I want every Grandma Wealth Wisdom revolutionary to remember.
The first one is that it's really hard to con an honest man that if we're truly honest with ourselves, we recognize that we probably have areas where we're deluding ourselves, that we can recognize that without judgment. That's a critical step to find the path forward and the way to align ourselves and be more honest with ourselves going forward. So, a big takeaway there. I think that really applies to our mindset with money and what we are talking about when we do some of these mindset episodes in our podcast.
Then, that 20/120 rule. I remember that from his 80/20 Sales And Marketing book or somewhere. We've read so much of his stuff, but I've never… [44:08.1]
As he was sharing that, of course, I was thinking about personal finance, too, and I totally had an epiphany that I bet for a lot of us, 20% of your spending in your life brings you 120% of your joy, right? And then, 60% of your stuff is just, eh, you’ve got to do it, right? You’ve got to pay the mortgage or the rent or whatever. And then, we probably all have that area, the bottom 20%, that actually we spend money there and it causes us lots of stress, right? And what would it look like if, personally, we recognize that and said, How could I get those things out of my life, so that I could shift that to the things that are bringing me the most joy, or maybe take some at 60% and shift that into more of the joyful part, too.
Then, finally, my biggest takeaway was this whole idea that there will be more black swans and that all the systems are broken, and there's going to be some revolutions. [45:07.8]
Thank you for being part of the Grandma revolution in how you think about your money, going back to those time-tested things, instead of institutions that started in the ’80s and are starting to show how crumbly they are. Continue listening to the podcast, watching our YouTube videos, making sure that you hear how we're talking about that and seeing it unfold.
I was actually just reading this week. I'll keep this quick because I wanted to talk about it more. But I read this week that if you look at the S&P 500 and what it has done over the last decade, but you take out all those big tech companies Amazon, Google and Apple, that the rest of them have grown very little in terms of their stock value, maybe a little over 1%. They're not keeping up with inflation per year, right?
That kind of made me pause for a second. Instead of 80/20, it's the 95/5, right? Those top five companies are seeing lots of growth whereas the other 95% are just trucking along, right? And that tells me a lot about how the systems are broken. [46:17.5]
I totally said that a lot there, Brandon. Why don't you close us out?
Brandon: Yeah, I'm going to just go ahead and end this. This was a lot of great stuff. I think we'll have multiple YouTube videos out of it. We'll have all kinds of stuff.
If you have not already subscribed to the channel, because we will have other great speakers coming on, other great content creators and people that are, I believe, going to help you take charge of your cash flow, leverage your assets and break through to a smart, stable, financial future. Not just us, not just Grandma's Wealth Wisdom. Of course, I think we're awesome, but we want to bring the best to you. And if you like this, comment. Put in the comments Perry and let us know that you're here. And that's it. You guys have a great day.
Amanda: Peace. [47:07.7]
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