Young and Profiting with Hala Taha - YAPClassic: Josh Kaufman on Launching a Business or Side Hustle

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Starting point is 00:00:28 Taxes and other fee still apply. You're listening to YAP, Young and Profiting Podcast. A place where you can listen, learn, and profit. Welcome to the show. I'm your host, Halla Taha, and on Young and Profiting podcast, we investigate a new topic each week and interview some of the brightest minds in the world. My goal is to turn their wisdom into actionable advice that you can use in your everyday life, no matter your age, profession, or industry. There's no fluff on this podcast, and that's on purpose.

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Starting point is 00:01:35 This week on YAP, we're chatting with the master of launching businesses and side-hussles, Josh Kaufman. Josh is a best-selling author, researcher, and speaker who has helped millions of people and businesses reach their goals. Josh's TED Talk, the first 20 hours, has been viewed on YouTube over 30 million times. His research has been featured by the New York Times, the BBC, and the Wall Street Journal amongst many others. On top of all of this, Josh has published three bestselling books along the way.

Starting point is 00:02:02 The first 20 hours had a fight at Hydra and the personal MBA, which is now in its 10th anniversary edition. His book, The Personal MBA, is literally used as required reading in business schools around the world and the content is pure gold. We and Josh recorded this episode back in March of 2021 and we ended up talking for two hours.

Starting point is 00:02:22 We released the show in two parts for episodes number 106 and 107. And in this app classic, we shortened down the episode to the best parts and focused it on business fundamentals. Josh and I app about all you need to know when it comes to starting a business from how to find a viable market to the different ways that you can test your idea like shadow testing and field testing. We then get into how to price your offering and

Starting point is 00:02:44 Josh shares some incredible sales tips. Whether you're looking to start a new venture or you just want to level up your career, you're going to find a lot of gems in this one. Now here's my conversation with the brilliant Josh Kaufman. The topic that I want to talk about today is starting a business. I've had a couple episodes on this. I had a YAPSNACS episode called Five Steps to Launch a Side Hustle. I thought it'd be great to kind of pick your reign in terms of how to start a new business, because I know so many of my listeners

Starting point is 00:03:14 want to know how to do this in the right way. So I'd love to start off with markets. So one of the first things that you have to do when you're thinking about a new business idea is to have a viable market, to target a market that would have demand in your services. So what's the best way to go about determining if your market is a good enough market, if it's a viable market for your business idea? Yeah, there are a couple of very useful ideas I talk about in the personal MBA directly related to this.

Starting point is 00:03:48 One, which you've highlighted brilliantly, is that you have to have a market to begin with, or the business is just not going to work, right? So if there's not a waiting group of people ready and willing to pull out their wallet checkbook and credit card and say, yes, please, I will take one. You're going to have a hard time. And so there are a couple of things that really help in the process of finding a market that's going to be large enough to support whatever it is

Starting point is 00:04:17 that you want to do. The first, and this is related to an idea called the Iron Law of the Market, which is, I think, was best framed by Mark Andreessen, the now-eventure capitalist, but the founder of Netscape. It just says, markets that don't exist don't care how smart you are. You can have the most brilliant idea. You can have the best technology.

Starting point is 00:04:38 You can have the best of everything. And without a group of people willing to pay you, you have nothing when it comes to the actual operation of a business. The easiest shortcut, which sounds obvious when you hear it, or if you think about it, but it's like pay attention to what people are already spending money on, because you know there's a 100% certainty that people are buying this particular thing. And if you can offer it in a better way, in a new way, with a bit of a twist or to a market that is not used to buying this sort of thing, very often the biggest competitor to a business is not another business.

Starting point is 00:05:18 The biggest competitor is non-consumption. People just not doing this yet, not purchasing this in this way. And so, I like to say a lot of early stage business formation looks a lot like anthropology. You're going out into the world, you're asking questions, you're looking at what people are doing and what they're not doing and what they maybe could be doing if they just knew that there was a better way of solving this particular problem. And so, the early stages is you're going out, you're examining what people are doing, and you're just trying to find opportunities, things that could be a little less frustrating, a little more efficient, a little more flexible, a little more enjoyable. And this is an idea called the Passal Premium.

Starting point is 00:06:06 And so usually the more annoying something is, you know, for a broad definition of annoying, the more people are willing to pay money, perfectly good money to make that annoying thing go away. And so sometimes in the development of a business, sometimes you're solving a new problem that hasn't been solved yet, but then also sometimes you're taking an existing problem and you're just making it a little bit more fun, less annoying, less of a hassle. From there, it gets to a point of almost triage. So you're going out into the world, you're looking at all of the potential opportunities.

Starting point is 00:06:51 And if you're in this frame of mind, it's very easy to come up with a list of 500 things that you could potentially build a business out of. The world is full of opportunities like this. The question becomes which of those opportunities are your best shot? What are the ones that are going to be the most straightforward, the most rewarding, the most interesting? So what should you spend your focus on? And there are two things that really help with this. The first is understanding the fundamental structure of a business, what a business is and what it does, helps you imagine before any of this exists.

Starting point is 00:07:30 Just imagine in your own mind what a business in this area might look like. And this is an idea, it's the first thing I cover in the book, it's called the Five Parts of Every Business. And so a lot of particularly early stage entrepreneurs like I need to ride a business plan. You know, how do I ride a business plan? What's a book good business? Like tell me all about this. It's very, very simple. Take a sheet of paper. You're going to write five headings on it. And these are the headings. Value creation, marketing, sales, value delivery, and finance.

Starting point is 00:08:05 marketing, sales, value delivery, and finance. And so value creation is like, you're making something valuable for other people. So what are you making and who are you making it for? That's value creation. Marketing is, if people don't know that you exist or your thing exists, they're not going to buy it. So how are you going to get their attention and make them interested in this thing you have to sell?

Starting point is 00:08:23 Marketing. Sales is, once you have their attention, you need to convince them to pull out their wallet checkbook or credit card and give you money for it. That's the sales process. How are you going to do that? Once you take someone's money, how are you going to give them the thing that you promised? Because if you don't, it's a scam. It's not a business. And so what is the delivery of the value you look like?

Starting point is 00:08:49 And finance is very simple. So for value creation and marketing and value delivery, you're spending money. For sales, that's the part of the business where money is flowing in. So finance is just the process of looking at how much money is flowing in from sales, how much money is flowing out in value creation, marketing, and value delivery. Are we bringing in more money than we're spending? Because if that's not the case, we're in trouble, something needs to change. But then also, is it enough? Is it enough to make all of your time and effort and attention worthwhile? Can you use the information you have at your disposal to make a better decisions about

Starting point is 00:09:31 either how to spend money or how to bring more money in? And so really, when you look at those five steps, value creation, marketing, sales, value delivery, and finance, that's what a business is. That's what a business does. And if you don't know the answer to any one of those five steps, that's a blank that you need to fill in before the business is going to work. And so, for any business idea,

Starting point is 00:09:59 this is the best place to start. You need answers to these questions. You need to have a clear picture of what this looks like and how it's going to work. And then from there, you can start to evaluate one idea versus another. Do we think the market for this is better than that? Do we think that this is something that we could build once and sell for a long period of time, or are we going to require a large amount of investment ongoing? These are things that I talk about in the personal MBA,

Starting point is 00:10:26 called the 10 ways to evaluate a market, which is once you have a clear idea of what's going on, then you can start to ask some more specific questions of like, is this the kind of thing that seems like it's going to be a good fit for me? But you always start with a clear picture of what the business idea is first, and then you build on top of that by asking some more specific questions. Oh my gosh, I'm so glad that you took us back and you walked through kind of the elements of a business and what we need to think about because I think that's so important.

Starting point is 00:10:57 And I think that a lot of people start businesses without thinking those things through. And then they realize that their business has no margin, that their business expenses are, you know, they priced it wrong and they're not making a profit. And so I think all that is really, really important. So thank you for walking us back. Now let's say we did map those things out. How then can we decide or what are the signs

Starting point is 00:11:23 that we should look for when it comes to our market? So deciding if there's people that will actually want to buy our product. How do we go about understanding if we found a good market? Yeah, let's go through some of the 10 ways to evaluate a market in more detail because there are a lot of specific useful things to think about in this process. The place I always start is urgency. Is this something that people are going to buy right away without hesitation, without caring too much about the price,

Starting point is 00:11:53 without knowing all of the details? If so, you're in good shape. So for example, let's say cures to cancer. That's something that the entire world is going to buy right away, no hesitation, doesn't care how much it costs, right? Like, give it to me now. There are a lot of business ideas that fall on the extreme other end of urgency. Like, oh, yeah, that's kind of cool. It's kind of interesting. When you're talking to customers, it might feel like a certain amount of

Starting point is 00:12:20 apathy of like, huh, okay, cool. And so having, you know, when you're evaluating an idea, the more urgency you feel from customers, that's a really good sign that you're on the right track. Things like market size go into this category as well, right? Like, are you selling to billions of people or are you selling to 10? If you're selling to major world governments, selling to 10 customers might be,

Starting point is 00:12:48 frankly, a good business if you're selling billions of dollars of goods. But in general, the larger the potential market size, the more people who want this sort of thing, the better the market is. The same thing goes with pricing potential. And so the higher the price, generally speaking, that you can charge, the more money that flows in and the more you keep of that as profit,

Starting point is 00:13:12 the more flexibility you have in terms of your pricing structure, the more opportunity there is. There are some related ideas to that too, which is cost of customer acquisition and cost of value delivery. So how much, in terms of marketing and sales activity, do you have to spend upfront in order to get a new customer? And how much do you need to spend to actually deliver the value to them on the back end? So you could think like an ideal business is there's a huge market.

Starting point is 00:13:42 I can sell for an enormous amount of money. It costs me almost nothing to get a new customer and it costs me almost nothing to sell to that customer once I have them. Like that's an ideal situation to be in. Those are the big ones and then there are some, I call this quality of life factors. So how unique is this? Like is this something you and only you can provide?

Starting point is 00:14:07 So, yeah, media, for example, is you? Nobody else can do that. You know, there are other things that might compete for the amount of attention, but there's not going to be another hola. That's not a concern. The more unique you are, the better. Speed to market, which is from the time you're doing this evaluation right now, how quickly can you have something out and selling to the market? And generally speaking, faster is better, right? You know, versus something that you would need to invest in potentially for decades before you have something to sell. That's a barrier. The same thing goes for upsell potential. And so sometimes there are very attractive businesses where the thing that you're selling upfront is not necessarily the thing that's going to make you a lot of money over the

Starting point is 00:14:56 long term. It's a way to sell other things on the back end. So the classic Gillette raz Razer's and Blades model, right? The initial upfront sale of the Razer is not as important as selling refills to the blades over a period of decades. There are a lot of businesses that fall into that category. In some senses, you can lose money on the initial sale and then just make up for it because the lifetime value

Starting point is 00:15:23 of that customer is so high that each additional customer brings in thousands and thousands of dollars in revenue. Insurance is a really great example of that. Then the last thing, which is one that I think an enormous amount about, which is evergreen potential. So, when you make this thing for sale, is this something that you need to continue to invest a lot in in order to keep it relevant and to keep it selling? So technology is the extreme example of this. Companies like Intel pouring billions of dollars into

Starting point is 00:15:59 a chip fabrication factory that's going to be relevant for two years. And then those chips will be obsolete and then they'll have to build another one. On the other example of this, books are fantastic for this because you write the book once and you just print lots of copies. And if you write it well and correctly, it continues to sell for a very long period of time, and you can update it if you want to, but you don't have to. It's going to continue to be relevant over a very long period of time. And so, yeah, in general, I really like to think about businesses. Starting a business is a lot of work. And so, I like to think about like, what are the things that I could invest time, attention, money, and energy into now that are going to be just

Starting point is 00:16:47 as relevant 10 years, 20 years, 30 years down the line without additional effort required on my part, because that makes every offer that I make, every business that I build, an asset that keeps ticking in the background. And then instead of continuing to invest in keeping that thing running, I can build another one, and then another one. And just over time, build this portfolio of businesses and products that continues to do well.

Starting point is 00:17:15 And I think, at least for my personality and the way that I like to go through life, that's a really fun way of running a business that I think is underrepresented and much more possible today than it ever has been. Hold tight everyone. Let's take a quick break and hear from our sponsors. Young and profitors, do you have a brilliant business idea but you don't know how to move

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Starting point is 00:22:52 to take your business to the next level today. Again, that Shopify.com-profiting, Shopify.com-profiting all lowercase. This is Possibility powered by Shopify. Oh my gosh, Josh, you are so smart. I could just hear your voice all day telling your business advice honestly, like, I'm sure listeners are kind of loving this episode. One of the things that I want to discuss is testing our idea. Because like you said previously, you kind of outlined the factors you should think about when launching a business. I think it's important to test your idea before you invest too much money into it, before you get outside funding. You need to make sure that it's a viable offering that people are willing to pay money for.

Starting point is 00:23:35 So what, in your opinion, is the best ways to test our idea before we launch our business? Yeah, there are a couple. And you're right, there are some critical assumptions that go into every business. Like, how much can I sell this for? And how many people are going to buy it? And how much am I going to spend? Making the math work is a really important part of the whole process. And so there are two primary methods that I really like to use for this.

Starting point is 00:24:01 The first one is the fastest and the easiest, which is called shadow testing. And this is essentially, so it has many different forms. Sometimes it's called concept testing, sometimes there are prototypes involved. But it's always this testing and idea with potential customers before you make anything. Like just, you know just an idea on a sheet of paper, just presenting it to the people who are most likely to buy from you, and asking the critical question, which is, is this something that you're willing to pay for?

Starting point is 00:24:36 And the strongest version of this test is you actually take orders from them. Like, yeah, sign on the dotted line. We won't charge you until it's ready, but essentially think of what Kickstarter is, right? Like, there's no product. There's a lot of development and sometimes manufacturing and long expensive processes that need to happen

Starting point is 00:24:56 before the product is ready. But the Kickstarter, it's just a page. It's just some images. It's some text on the internet. There's nothing there, but It's just some images. It's some text on the internet. There's nothing there. But it's enough that potential customers can look at it and say, oh, yeah, that sounds cool. That's for me.

Starting point is 00:25:13 I would like to preorder one. And Kickstarter makes that very easy to do. And so for most forms of businesses, shadow testing is something that is very, very valuable and worth doing because it can help answer that critical question immediately. Are you making something that people are willing to pay for? The longer term form of testing that is just as if not more valuable is fuel testing. And so it's making the thing and then you as the business owner, you and your staff and

Starting point is 00:25:46 the people who are involved in this particular market. The best situations where the company improves to the greatest extent most quickly are very often the companies that use the thing that they themselves make. Because think of it from a speed of learning or a feedback cycle sort of thing. Like if you're using the thing that you make and something goes wrong or something breaks or, you know, it's like, you know, right away, you can act on that information much more quickly than waiting for a bug report to come in from a customer with incomplete information and incomplete context. come in from a customer with incomplete information and incomplete context.

Starting point is 00:26:25 And so anytime there's an opportunity for you to use the thing that you make, you end up improving the quality of the product or the offer much, much faster than you otherwise would. That is such great insight. Okay, so let's say we tested, we have our business idea. You know, we wrote our little business plan. We feel that we have a viable market and a viable product.

Starting point is 00:26:49 How do we decide pricing? Like, what are the steps to decide how to price our product at this point? Okay. So there is a, there are multiple ways of doing this testing. The thing that I like about pricing, which I think is an underappreciated fact. I call this in, I think this is chapter three of the book in sales. I call this the pricing uncertainty principle, which is that prices are 100% arbitrary and malleable.

Starting point is 00:27:22 You can charge any price for anything at any time without limitation. You just want to sell a rock for $10 billion, go nuts. It doesn't mean somebody's going to buy it, but you have an enormous amount of flexibility in the number that you stick next to the price tag on something. And so with that, there are a bunch of different ways that you can kind of triangulate your way into a price that makes sense. And the methods that most commonly come up

Starting point is 00:27:58 are replacement cost market comparison, discounted cash flow, which is the most financial way of pricing something, and value comparison. And so, you know, this is actually going back to our conversation of background. This is something that I learned by studying real estate. And it becomes very, very apparent when you do something like, okay, you have a house to sell. Well, houses don't come with price tags attached to them. You have to put a price on it somehow, how you're going to do it.

Starting point is 00:28:29 And so, a replacement cost is just like, how much did it cost to build the house? Well, that's a pretty good estimate of at least a minimum of how much it's worth. So, let's add up all of that. Let's tack on some margin to compensate for time and energy. And that's a pretty good ballpark of what some things worth. The market comparison method is very often the one that's used to sell houses. Like, okay, let's find another house kind of like this that has already sold. Well, this house is probably roughly comparable to this other one.

Starting point is 00:29:04 We'll charge this much. Discounted cash flow is like, well, okay, let's say we decided to rent this house. There's a series of payments that would come in from the use of it. And there are pretty involved financial formulas that say, okay, yeah, if you can charge $2,000, $3,000 a month for this house, then over a certain period of time, accounting for Interracies and Nieria, you get a lump sum payment of X, that's how much the house is worth. And then you get into the one that has the most promise, which is value comparison.

Starting point is 00:29:41 And value comparison is just like understanding from the customer's perspective, what is awesome about this particular thing to the person who's buying it? How valuable are those things and how much might they be willing to spend because this thing has unique benefits that they can't find anywhere else? So the example with a house might be a rundown, not so great house in every other respect, but if it was owned by Elvis Presley at one point, that house is going to be worth millions and millions of dollars because there's something intrinsic about the house that is valuable to a certain type of customer.

Starting point is 00:30:23 And so when it comes to profit and profit margin, value comparison is where you get your maximum profit and your maximum profit margin, because you're really understanding what the customer is buying at four, why it's valuable, and then your pricing is specifically based on that. For entrepreneurs, there is, as a general rule, new entrepreneurs tend to systematically underprice what they're offering based on the value that they're providing.

Starting point is 00:30:52 I think a lot of that comes from a certain amount of insecurity or hesitation or wanting approval, not necessarily knowing what the market will bear. Let's play it safe and make sure that I give people good reasons to sign up for this. My general rule of thumb for new entrepreneurs is take whatever price that you are initially thinking sounds reasonable and triple it. And you're probably in the ballpark of what the market will actually bear. If you don't feel good about tripling it, at least double it. And you're in a more happy place. I don't know about you, Hala, but I definitely fell into this trap early on.

Starting point is 00:31:35 And it's one of those things that it just feels so uncomfortable. The first time you ask for something that in your mind seems really unreasonable. And it is a very good feeling when the market proves that no, that really, that's all in your head. You don't have to worry about it so much. The market will pay so much more than you expect. I totally agree. I hear this all the time. People undercharge, they don't realize how much their services are worth. They don't calculate or incorporate their own time into their offering as well. I see that happen a lot. And so I totally agree, double or triple what you were originally going to ask for. You'll be surprised. And if somebody is willing to buy it, then you did get a couple more people and maybe you need to, you know, focus it on a certain segment of your market. Maybe your product is not for everyone, right? So I totally agree. Okay, so with pricing, I know you mentioned that value comparison is the

Starting point is 00:32:36 best way to get the most margin, right? So talk to us about high ticket offers because this is like a buzz word now. Everybody's talking about their high ticket offer. How can we, you know, what is the best way to create a high ticket offer? What are the elements of a high ticket offer? Like what do we need to think about there? Yeah, there are some structural advantages in having a high priced, high profit offer, whatever that offer might be. And just think about it in terms of like, you may have fewer customers who are willing to pay that

Starting point is 00:33:09 price, but that also means less value delivery cost. It means less customer support. It means potentially less marketing, less sales. There's a lot of advantages to just like having a group of people who are really into whatever it is that you do, and then paying enough that you can focus a lot of time and attention on them. And so I think it's one of those things that what the high price offer is is extremely market dependent, right? Like you're finding your super fans, you're finding the people who are the most into or get the most value of whatever it is that you have to offer. Okay, so this was such great information. Now, let's say we've got our product, we've tested it, we've got our pricing, we go

Starting point is 00:33:57 to, speak to our customers, we've got people who have paid, but then we start getting our first objections and sales. People are starting to give their objections. What are the different kind of objections that we can anticipate? And how can we counteract them? Yeah, so I think there's a whole bunch of different objections that come into play whenever you're trying to convince somebody of something. And the first thing to think about or realize is there is a psychological tendency when we feel like we're being pushed into making a decision

Starting point is 00:34:30 or pushed into doing something, this is an idea called a reactance. Like there's an automatic desire to push back. So think of the stereotypical really bad used car salesman who's just trying to sell you anything as long as you buy it today. That's something that you want to avoid the feeling or avoid the perception of because it actually works very much not in your favorite, pushes customers away from you instead

Starting point is 00:35:00 of pulling you them towards you or wanting. I think this was, there was a sales trainer, the late Jim Rohn, who talked about the best position that you can find yourself in, is positioning yourself to the customer as an assistant buyer. You're not there to convince them of anything. You're not there to sell them a bill of goods. Your job is to help understand who they are, what they need, what would be beneficial. You have some subject matter expertise in this problem that they're trying to solve for themselves. And so your job is to be their assistant in making this very important, very valuable decision and finding whatever is best for them.

Starting point is 00:35:44 And so as a way of this very important, very valuable decision, and finding whatever is best for them. And so as a way of framing in your own mind, sales kind of has these icky connotations that a lot of particularly new entrepreneurs are very uncomfortable with. When really you can reframe most of that as you are making friends with someone you've never met before,

Starting point is 00:36:02 you're trying to understand what would be good for them, and you're trying to help them make a really good decision, whatever that good decision happens to be for them. And when you think about sales in that way, it becomes a lot less scary, and it becomes a lot more interesting and a lot more fun. Because it also takes the pressure off of yourself of like, oh, I need to persuade, I need to convince,

Starting point is 00:36:24 I need to be the one who gets someone to do something you know, I need to persuade. I need to convince. I need to, you know, be the one who gets someone to do something that they might not want to do. No, that's not how it works at all. And so there are a lot of different methods that you can use to do this. The two best, you know, we talked about value-based selling, like really understanding what the customer wants or needs. And then there's a kind of a close technique. It's not exactly the same thing, but there are similarities called education-based selling, where it's, you are helping the customer become a better customer of the thing that you sell. And so there's a quote by a lady, her name is Kathy Sierra, that I just love. And paraphrasing a relatively long quote,

Starting point is 00:37:11 she says, don't sell better cameras, help your customers become better photographers, because when they become better photographers, they're going to want better cameras. And so just helping people understand more about what it is that you do, it encourages them to want more. And when they want more, they're pulling from you instead of you pushing on them. Now there are a lot of, call it structural barriers to making a sale.

Starting point is 00:37:43 The classic objections, like, I don't have enough money. I don't know if this is worth it. I don't know if it'll work. There's a special case. I don't know if it'll work for me. So I see that this is a good thing. I've seen this work for other people. I believe that, but I'm a special case.

Starting point is 00:38:00 I'm the one, you know, to which the common market does not apply. And the best thing about those kinds of objections, you know it advanced, they're coming. They're always going to be coming. They apply to everything. And so that combination of the mindset shift of, I'm an assistant buyer, I'm going to try to help them make the best decision that I can. And being a prepared seller, knowing well in advance, the types of questions that a customer is going to ask, doing your research, having answers to those things before the sales conversation actually takes place, that puts you in the best position to make the final sale.

Starting point is 00:38:40 We'll be right back after a quick break from our sponsors. Yeah, fam. If you're ready to take your business to New Heights, break through to the six or seven figure mark or learn from the world's most successful people, look no further because the Kelly Roach show has got you covered. Kelly Roach is a best-selling author, a top-ranked podcast host, and an extremely talented marketer. She's the owner of NotOne, but six thriving companies, and now she's ready to share her knowledge and experience with you on the Kelly Roach show. Kelly is an inspirational entrepreneur and I highly respect her.

Starting point is 00:39:12 She's been a guest on YAP. She was a former social client. She's a podcast client. And I remember when she came on Young and Profiting and she talked about her conviction marketing framework. It was like mind blowing to me. I remember immediately implementing what she taught me in the interview in my company and the marketing efforts that we were

Starting point is 00:39:30 doing. And as a marketer, I really, really respect all Kelly has done, all Kelly has built. In the corporate world, Kelly secured seven promotions in just eight years, but she didn't just stop there. She was working in nine to five. at the same time she built her 8 figure company as a side hustle and eventually took it and made it her full time hustle. And her strategic business goals led her to win the prestigious Inc 500 award for the fastest growing business in the United States. She's built an empire she's earned a life changing wealth. And on top of all that she maintains a happy marriage and healthy home life. On the Kelly Road show, you'll learn that it's possible to have it all. Tune into the Kelly Road Show as she unveils her secrets for growing your business.

Starting point is 00:40:12 It doesn't matter if you're just starting out in your career or if you're already a seasoned entrepreneur. In each episode, Kelly shares the truth about what it takes to create rapid, exponential growth. Unlock your potential, unleash your success, and start living your dream life today. Tune into the Kelly Road Show available on Apple Podcasts, Spotify, or wherever you listen to podcasts. Hey, you have, Bam. As you may know, I've been a full-time entrepreneur for three years now. Yet media blew up so fast, it was really hard to keep everything under control, but things have settled a bit,

Starting point is 00:40:41 and I'm really focused on revamping and improving our company culture. I have 16 employees, so it's a lot of people to try to rally and motivate, and I recently had bestselling author Kim Scott on the show. And after previewing her content in our conversation, I just knew I had to take her class on masterclass, tackle the hard conversations with Radical Cander to really absorb all she has to offer. And now I'm using her Radical Cander method every day with my team to give in solicit feedback, to cultivate a more inclusive culture, and to empower them with my honesty. And I can see my team feeling more motivated and energized already.

Starting point is 00:41:19 They are really receptive to this framework, and I'm so happy because I really needed this class. With masterclass, you can learn from the best to become your best, anytime, anywhere, and at your own pace. And we all know that profiting in life doesn't just mean thriving in business. With masterclass, you can brush up on your art skills, or your cooking skills, or even your modeling skills. With over 180 classes from a range of world-class instructors, that thing you've always wanted to do better is just a few clicks away. On Masterclass, you'll

Starting point is 00:41:50 find courses from many app-a-all-star guests like Chris Voss and Daniel Pink. I've been taking their sales and negotiation classes and I've been feeling like a real shark lately. I've totally leveled up my sales skills. How much would it cost you to take a one-on-one class from the world's best? A lot. But with Masterclass annual memberships, it just cost you $10 a month. I have to say the most surprising thing about Masterclass since I started this incredible journey on the platform is the value. For the quality of classes, instructors, the platform itself is beautiful. The videos are super high quality. You can't beat it. Gain new skills in as little as 10 minutes on your

Starting point is 00:42:32 phone, your computer, tablet, smart TV, and my personal favorite way to learn is their audio mode to listen on the go. That way, I can multitask while I learn. Get unlimited access to every class. And right now, as the app listener, you can get 15% off when you go to masterclass.com slash profiting. That's masterclass.com slash profiting for 15% off an annual membership. Masterclass.com slash profiting. Let's play a game because this got my wheels spinning and a cool activity that we could do. Let's pick a product and I'll say some objections and you can counteract my objections about that specific product. So you picked a product.

Starting point is 00:43:12 Let me see what, let's do the camera thing since we brought that up earlier. Okay, so camera. Josh, I think the camera is too expensive. Well, it's really a question of what you value, right? Like so if let's let's say hypothetically, if you own the camera, what would be the kinds of things that you use the camera for? For shooting YouTube videos. Shooting YouTube video. Oh, interesting.

Starting point is 00:43:40 Okay. And you're using your YouTube videos for what exactly help me understand what that looks like. To promote my podcast. Okay, interesting. So if I'm understanding you correctly, maybe the video features of a camera are more important to you than capturing still images. Am I understanding that right? Yes. Okay, so there are a couple of different kinds of cameras that we can look at here, and there's this whole class that are essentially optimized for still images. Those don't apply to you. So we're just going to ignore all of those.

Starting point is 00:44:14 It's not what you're looking for. There are a bunch of different cameras now that come with an integrated video feature that will help you, for example, make sure that you're always in focus. And so, everybody will be able to see your eyes and your face clearly. It will blur out the background. You'll look amazing. There are features that will help control the exposure. So how much light is entering the camera, making sure that you look really great and then

Starting point is 00:44:44 there's nothing weird going on with the image. There are certain kinds of cameras that we can make sure hook up directly to your computer. And so whether you want to shoot video on the go or you're in your office and you want to shoot video for your YouTube channel there. And so based on all, do those sound like things that would be helpful in using this camera to do what you wanna do? Oh, yeah, for sure. Okay, so based on those features,

Starting point is 00:45:13 here are three different options. Camera A, camera B, and camera C. And we could have this conversation over a longer period of time to understand the trade-offs between these features. Like maybe hooking up to a computer would be a really handy thing to do because you always shoot video in your office. You don't shoot it anywhere else.

Starting point is 00:45:35 And so I could confidently recommend Camera C to you because based on how you're going to use the camera, this has the best balance of features for what you want to use it for, and this is the price of that. So basically, you're leading with value, right? What did you unpack what you just did there? You were leading with value. Did you do anything else?

Starting point is 00:45:55 Value comparison, maybe? Yeah, so what I, this is an example of something called qualification, which is when you have a new customer, not every customer you talk to is going to be a good customer, and not all of them are going to be a good fit for whatever it is that you have to offer. And so my first question is, how are you going to use this is a qualification question? Like what is the kind, you're saying that you want a camera, but there are lots of different cameras that do lots of different things.

Starting point is 00:46:29 So if, for example, you were an art student and you're going to be shooting architecture images in black and white and you need the most crazy detail, like, that's a completely different ballpark of camera. And so by asking a few questions upfront, you can really narrow down like, okay, is this a good customer? Is this a customer I can help? What is the thing that they would find most helpful? And then of that, I can ask some additional questions to get more information to kind of try and galape what what potential solutions might be.

Starting point is 00:47:06 So why didn't you jump to discounting? Like why didn't you just give me a discount? What's the problem with giving a discount? Yeah, I think discounts are sometimes a useful tool and sometimes very dangerous. And more dangerous from a strategic standpoint, less so from an individual transaction standpoint. When you think about it,

Starting point is 00:47:26 discounts just eliminate your margin or reduce your margin to a certain extent. And so sometimes there's a certain amount of value that's added by the urgency of an expiring discount. Like, okay, there's a special sale going on. You need to make a decision within the next day or so, or an opportunity is gone. That can be useful.

Starting point is 00:47:48 But unless you understand exactly what it is that the customer wants to buy and why they want to buy, you're not in a position to talk about even price yet, because the customer doesn't have as much confidence in your suggestion, what it is that you're trying to get them to do. So by helping both by collecting more information from the customer like what is the thing that's going to help them the most. You're getting that information and you can use that to guide the conversation in a productive direction.

Starting point is 00:48:18 But think about it from the customer's perspective. You're exhibiting a lot of interest in them in their problem, what it is they're trying to do, what's important, what's not. And so when you have that conversation towards the end of it, the customer feels very well heard, understood, valued. And so instead of just like, oh, you need need a camera you should buy this because it's $20,000 and I would make my bonus this month if I were able to sell it It becomes much more from the customer's perspective like No, this person knows a lot about what they're talking about and I trust that

Starting point is 00:48:57 Because they have the information. They're guiding me in a direction. That's going to be good for me And then is there ever a situation where we should lead with a less expensive product or offering to kind of get a customer in the door or get that name brand under our list of logos that we have? Like is there ever like a case for getting a cheaper customer in the door? Yes. Okay. So there are two broad situations where this is valuable.

Starting point is 00:49:27 The first is called a loss leader. And so that's the selling an offer at a loss at the beginning, because you know over the lifetime of your relationship with that customer, they're going to buy a lot from you. And so you can see this a lot of times where memberships are becoming much more of a market trend. And very often it would be like, the first purchase that you make from us, we're going to give you 20% off to make that purchase or 15% off or whatever it is. The reason that makes sense is because once you're a customer, you're highly likely when you have this need again, you're going to come back and purchase from them over and over and over again.

Starting point is 00:50:08 And so the loss leader establishing a relationship that then you can sell to them over a longer period of time, excellent reason to use discounting. The other thing that you can do, and this is much more on the relationship end. This is called a damaging admission. And so sometimes it's in the context of like, okay, this is something that's not super great about the product, and I wanna tell you about that upfront, so you know about it.

Starting point is 00:50:34 Sometimes in the context of sales, this is saying, okay, going back to our camera conversation, there are three different cameras that fit the things that you're looking for. And A is $5,000, B is $10,000, and C is $15,000. The natural expectation for most customers is like, oh yeah, they're going to try to sell me on the $15,000 one. And so you can sometimes gain a lot of trust with a new customer in particular by saying, no, you should buy the $5,000 one because it does everything that you need, the value

Starting point is 00:51:16 is much better. And all of the other cool features that the other more expensive ones have, super overkill for you. You don't need it, don't worry about it. This is the one that you want. And so that like admission against interest, the subverting the expectation of, I'm gonna try to sell, take you for the,

Starting point is 00:51:35 as much money as I possibly can, you don't have to play that game. And that's where you really establish a good reputation of really looking out for your customer's best interests. Wasn't that wonderful and now you can check get an MBA off your to-do list, but seriously, Josh gave us a master class on the foundations of business. I love learning out with him about this stuff and I hope that you enjoyed the conversation as well. I go on and on about how much I loved the conversation overall, but an overarching theme that I want to highlight is that before you get your business off the ground, you've got to prepare for it and do your research.

Starting point is 00:52:14 Take the time to evaluate the market, test your product or service, nail down solutions to those obstacles and objections and set your price. I've seen so many businesses fall flat because they jumped into quickly and overlooked all of these fundamentals. So there's a couple things to keep in mind when deciding whether or not to move forward with your business idea. The first is the value creation aspect.

Starting point is 00:52:35 How is your business going to bring in value? In business, the gold mine is a product or service that helps people solve a problem. Josh calls this the hassle premium. The more challenging a task is, the more people will pay to have somebody else do it for them. So if you're wanting to start a business but you don't know exactly what you wanna do,

Starting point is 00:52:54 start brainstorming what hassles exist in your life and potential ways that you can solve them. Next, remember the iron law of the market. Markets that don't exist don't care. To generate revenue you need to have people who actually want to buy what you're selling. Now this may sound obvious but if you don't get your research it can be super easy to get caught up in the excitement of your idea and overlook this crucial factor. So remember to look at what people are already spending money on and see if you can offer it in a newer or better way. For instance, when I started the app media production part of the agency, I started it because

Starting point is 00:53:29 I saw that there was tons of people who were paying money to have their podcast produced, but then nobody was listening to these podcasts. There was no promotion or marketing to grow their audience and reach. Basically, there was a lot of people out there spending time, energy, and money to create their podcasts with very little return on investment because nobody was listening. That means they weren't getting any sponsors and nobody was buying their products. It was pretty pointless. I figured that I could offer not only very high quality production, but I could also offer

Starting point is 00:53:59 the promotion and supercharge the growth of their audience and following. The market existed and was viable and I found a newer and better way to service it. Lastly, don't forget Josh's rule of thumb when it comes to pricing. Do your research, choose a number, and then triple it. Entrepreneurs tend to undervalue their work, so give yourself some credit. You worked hard for this. You learned everything you needed to learn to get it done, so set a competitive price and see what happens next.

Starting point is 00:54:26 Yap fam, you are all the absolute best. I'm so lucky to have all the amazing listeners that I do have, and it really makes my day when you guys share Yap on your social media. You guys can find me on Instagram or Twitter at Yap with Hala, and you can also find me on LinkedIn. My name is Hala Taha. It's kind of hard to miss me on that platform. If you guys want to go above and beyond

Starting point is 00:54:46 in terms of supporting me and the show, the best way to do that is to drop us a five star review on your favorite podcast platform. Apple podcast reviews really mean a lot to me. So if you happen to listen on Apple podcasts, make sure you subscribe and drop us a written review. I would really appreciate it. And if you want to hear more from Josh,

Starting point is 00:55:04 we have a lot of content with him. You can go back to episode number 106 and 107 in here, the full two-part series. It was amazing. That's why I ended up talking to him for two hours. And thanks as always for listening to Young and Profiting podcasts and to my awesome app team. I couldn't do this without you guys. This is your host, Halataha, signing off. Are you looking for ways to be happier, healthier, more productive, and more creative? I'm Gretchen Ruben, the number one best-selling author of the Happiness Project. And every week, we share ideas and practical solutions on the happier with Gretchen Ruben podcast. My co-host and happiness guinea pig is my sister Elizabeth Kraft.

Starting point is 00:55:43 That's me, Elizabeth Kraft, a TV writer and producer in Hollywood. Join us as we explore fresh insights from cutting-edge science, ancient wisdom, pop culture, and our own experiences about cultivating happiness and good habits. Every week we offer a try this at home tip you can use to boost your happiness without spending a lot of time energy or money. Suggestions such as follow the one-minute rule. Choose a one-word theme for the year or design your

Starting point is 00:56:08 summer. We also feature segments like know yourself better where we discuss questions like are you an over buyer or an under buyer? Morning person or night person, abundance lever or simplicity lever, and every episode includes a happiness hack, a quick easy shortcut to more happiness. Listen and follow the podcast happier with Gretchen Rubin. Our friends Jeff and Tiffany Sebastian have officially added Buick GMC and Hummer to the classic E-Leap family. If you're wanting a new Buick or GMC look no further than classic E-Leap Buick GMC. If you're not a classic E-Leap Buick GMC, you are at the wrong place.

Starting point is 00:56:44 Shame on you. Make sure you're at classic elite location for a VIP red carpet experience. Remember, it's classic elite. Our friends Jeff and Tiffany Sebastian winners of the GM dealer of the year for 12 years in a row now. Classic Elite.com.

Young and Profiting with Hala Taha - YAPClassic: Josh Kaufman on Launching a Business or Side Hustle

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