In part one of this two-part interview, host James Altucher of the James Altucher Show talks with Early to Rise founder Mark Ford about entrepreneurship. Click here to listen to the full interview originally published on Stansberry Radio Network. If you prefer reading, here’s the transcript below.
James: Mark Ford, thanks so much for joining me on the James Altucher Show.
Mark: Thank you so much for inviting. I got to tell you like I told you before as far as I’m concerned, you’re a celebrity. I’m a big fan of yours and I’m thrilled to know you’re here with me.
James: No, I think people have to know what you’ve done. How many businesses have you either started or been involved in?
Mark: I don’t know but certainly it’s in the hundreds.
James: In the hundreds, okay. So the average investor expects an 85% failure rate. What do you think your failure rate is in all these businesses?
Mark: You know what? It’s hard to tell—
James: I know that you were an investor because you’ve started many of these businesses.
Mark: Right. There are two problems in answering the question. One is that I’m 64 years old so it will all be in retrospect and you know in retrospect, the vision gets cleaned up as you go. The other is that I’m Irish. So my feeling is that 85% and more correct but the truth is I have no idea. I’ll say this. I’m definitely not one of these people that have failed and failed and failed and then finally made it. I never wanted to be that way. I’ve always been extremely cautious as an investor of my time, my resources and my money so my failure—
James: I like how you put that, by the way, time, resources, money. Money last. Time is the most valuable.
Mark: Absolutely. Because of that and then of course it took a long time to learn, I would say that it doesn’t feel like I’ve had a lot of failures but where my failures have been are generally in areas that I knew practically nothing about, for example, investing. My career was basically the career of starting as an employee and then turning into an intrapreneur and then turning into an entrepreneur. Along the way as I was making money, I was accumulating money. I didn’t know what to do with it so I would invest it according to whatever half-baked notion passed my way. I did a pretty good job of losing a lot of that money and I do talk about that.
James: Welcome to the club.
Mark: Right, Yeah, I would say that generally I do think that it’s possible. I think the general idea that to make more money, you have to take more risk is wrong. I feel the opposite. I feel that the way to make money, to give yourself the highest percentage or chance of making money is to avoid investing things and to do things that are more like sure bets. I guess I’m the career equivalent of the parent that says forget about being an NBA player, forget about being a rock star. You can be a doctor, a lawyer or maybe a plumber and just stick with that. That’s my view.
James: But you haven’t stuck with one thing. I mean yes, you started businesses but they’ve been businesses in every category. You say for instance you’re not good at investing and yet you’ve even started businesses obviously in the publishing industry about investing.
Mark: Definitely. Right.
James: So you’ve been able to take this skillset of starting businesses and apply it to like any area, which is opposite of when many people are told to find your passion first and then start a business. What do you think of that concept?
Mark: Well, I thought both ways about it. I think it’s possible to find your passion, turn it into a business and have a happy life but generally I think if you turn your passion into business you’re going to lose your passion. So I think that there are things that we called vocations and avocations. To me, the avocation is the thing that you love and you’re going to preserve. Because the truth is, whatever we’re in love with in terms of a career, we’re in love with it because we know practically nothing about it when we’re kids — being an astronaut or being a doctor or being a missionary. When you actually end up being a missionary and then you’re riddled with mosquito bites and you’re trying to help people and they’re ignoring you and they’re just asking for more money, you say to yourself jeez, I wish I had known about this when I thought it was so wonderful.
So I think that for me, there are parts of my life that I’ve kept as avocations and I’ve never wanted to make a business out of. The other idea, what I’ve really done is I accidentally got into the business I got into. I wanted to be a writer. I started off as a writer. I was working for a small newsletter publishing company in Washington DC writing about Africa. Well, I wanted to write about African culture but the job turned out to be a job writing about African commerce. I knew so little about commerce. I had a Master’s degree at this time. It was called African Business and Trade and I remember thinking, what is the difference between business and trade? In fact, what is trade?
James: That’s business.
Mark: Right. I kind of knew the concept of business but I literally didn’t know what trade meant. Forget about tender trade, barter and all the other things I had to deal with. So I ended up being in that business. In three years, I figured out how to become the publisher of that, the top guy in that very small business.
James: Is that what you mean by intrapreneur? You used that word earlier.
Mark: Yes, I would say you become either THE most valuable or one of the most valuable and you get a compensation deal where it’s tied to the sales or profits that you create. So rather than being the sole boss and owning the business entirely and having that satisfaction, you attach yourself to a larger group that maybe has a lot more potential than you. That’s the way I always felt because there’s so many things I didn’t know how to do like make money. I’d rather have 10% of a big piece than 100% of a very little piece.
James: I think that’s an important concept that a lot of people forget. They think they’re either going to be in a cubicle or they’re going to be an entrepreneur and somehow an entrepreneur is some magical thing and being in a cubicle is some hateful thing. But there’s this interplay. There’s this middle place where, as you call it intrapreneur, you can figure out how your success within an organization can tie itself to your income.
Mark: And I had noticed as a devout reader of your stuff that one of your most popular essays was quit your job or how to quit your job and that’s been a thing. But I have noticed lately that you’ve been mentioning that if possible within some kind of business environment where you’re not the owner to become wealthy and have a good life and I think that that’s true for me. If you go work for IBM or Merrill Lynch it’s probably not going to happen because those companies are so big and so structured that the way to become successful there is if you just do what you’re told and move through the ranks but if you work for a smaller company like Agora—After Washington DC, I went down to Florida. I don’t know if I should tell this story.
James: Go for it.
Mark: Anyway, I decided I wanted to be a journalist.
James: Florida being the ideal place to be a journalist.
Mark: Exactly. No, I was going to Florida to visit my brother-in-law who had a jet-ski rental business in Tijuana. I was looking for jobs as a journalist. I decided to take three interviews in Florida because I thought I would get a tax deduction. I was trying to be clever. So I took an interview at St. Petersburg Times, Miami Herald and some newsletter publishing operation going on at Boca Raton that I’d been getting mailers for. I took the three interviews, assuming I would get none of them because in DC there were no jobs at the time and I got all three.
James: And to be fair The Miami Herald has been one of the best newspapers at least in entertainment.
Mark: No, it’s a very well-respected newspaper and St. Petersburg Times too actually is a kind of a boutique newspaper that has a good reputation. I think I got the job because a woman that was working for me at night was the deputy foreign editor of The Washington Post, if you can believe that or not. Apparently, they didn’t pay their deputy foreign editors enough so she was moonlighting for me and I would edit her stuff. She thought —and it’s so much easier to edit than write, as I’m sure you know — I would criticize something she sends. So she thought I was brilliant and told these two editors. I interviewed with the editor-in-chiefs, Andrew Barnes and whoever else was in Miami.
So basically I had these jobs so suddenly I found myself on the shores of Key Largo in a boat, a jet-ski rental place, sitting down, having three job offers. The guy next to me was—do you remember Sean Penn in Fast Times?
James: Yeah, sure.
Mark: That basically was him sitting next to me and his job in life was to fill jet skis with gas and that was really the only thing he was qualified to do and smoke doobies nonstop. I couldn’t decide but it was really two choices. I saw the Pulitzer Prize over there and I saw a big bag of money in Boca Raton. So I decided I would explain this all to this kid and let him decide. It could have been a coin toss.
James: Smart strategy?
Mark: No, it could have been a coin toss but I knew enough about my life so far to know that I had no idea what was the right decision. So I told him the whole story and he just looked at me and exhaled and said, “Boca. Go Boca.” That was the decision and really, I took the job and this guy turned out to be an amazing entrepreneur, very aggressive — a marketing genius. He was publishing newsletters on robotics, agro business and I didn’t know anything about that.
James: Who was he publishing to? Was it like to other businesses ?
Mark: It was business to business but as it turned out, it wasn’t really a publishing company because his interest was in raising the money to start a publishing company through tax shelters, which existed at the time for those kind of publications. He did have one editor there from McGraw Hill who was a real editor but I don’t think the business would have ever really made any money until a year later, after I took a Dale Carnegie course and I realized that my big problem in life was that I had too many goals.
One common problem is people don’t have goals and then they say you don’t write them down, you don’t do this, you don’t do that, which I think is true for many people. But I had a lot of goals and I was trying to follow them all at the same time just as I still am in a way. I remember we came to that chapter and it said if you have this problem, you’re going to have trouble with this exercise. The exercise was to write down your top ten, now write to three and then go in—the Dale Carnegie program that I took was 14 weeks and every week we would read a chapter and then you’d go and you’d stand in front of this audience and you would tell them what you’re going to do. You make a little speech and if they liked it, you’d get a pencil. I don’t know if you’ve ever experienced that.
It sounds pretty corny but this literally changed my life. I got down to three – teacher, writer and millionaire, rich guy and I could not decide. I was frantic. I was sweating. Driving there, my heart was pounding because I felt that if I chose one somehow I must have subconsciously knew that it would change me and I felt like I was giving up the others. As I was walking up to the podium, I had this thought: Why don’t you just make the money because if it turns out not to be what you think it is, you just give it away? What the hell? You could always do the other thing. So that’s what I did. I said I was going to do that and that changed me. Overnight, it changed me. Everything got clear.
James: Did you have to pick one?
Mark: I had to pick one.
James: Okay. So you had to write down ten. You had to narrow it down to three and then that night you had to pick one.
Mark: And for the rest of the course, which was another 12 weeks or so you had to focus on nothing but that in terms of these goals, both when you went in and talked about things and when you were doing your daily work.
James: So for the next 12 weeks or whatever, you had to kind of come up with ideas that would move you forward to being a millionaire?
James: What was the first thing you thought you needed to move forward?
Mark: Good question. I get back in the next day and I look on my desk and my desk had this huge pile of paper. Back then everything was paper. I’d been writing this long book, basically our own style manual for the publishing company. A style manual, and I know you know but for the audience, is like how do you punctuate things, what’s acceptable usage, stuff that’s very interesting to an English major but everybody else is very arcane. I realized I’d been spending like half of my time writing this manual. Meanwhile there’s the UPI style manual, the Chicago style manual, the New York Times style manual. There were all these other style manuals that my style manual couldn’t possibly equal. That’s when I was actually spending a portion of my time doing. So I just took the thing, I took three months and I threw it in the garbage.
James: Right, because it wasn’t moving you forward towards that goal.
Mark: I knew right away that the only way I was going to make money was to — I knew that the guy I was working for was all about making money so I thought I’ve got to just start doing stuff that actually helps us create more sales.
James: It reminds me though in some sense, I don’t know if you’re going to make this book public or not but I just read Persuasion by you and that in a sense is a style manual and it actually even gets down to punctuation but it’s a style manual that’s about selling. It’s about making money. You used examples from Steinbeck, from literary examples so it’s not that different. Everybody needs to express their ideas, whether you’re a fiction writer or a non-fiction writer or selling something, an advertiser. So it’s the same type of style manual.
Mark: Absolutely. Of course Persuasion is about much more than money. It’s about everything in life. If you have the ability to be persuasive and we all do to some extent, you can get more things done including just about an hour and a half ago, I was at this little—my wife calls it the swamp house but it’s actually a very cute little cottage I’m building on a lake about 20 minutes from here on a pond. I had to use my persuasive powers to convince her and the decorator not to spend $10,000 completely redoing a closet that we would only see once a year and I’m happy to report I was successful.
James: And what was the persuasion technique used? We won’t tell her.
Mark: Only if one of her friends sees it will she find out because she doesn’t read my books and she doesn’t come to my lectures or whatever. Well, of course it started with flattery, by saying that I thought the original idea was very good. I also said that I know that what you like is ample room for the brooms. Anyway, bit by bit I appealed to her, what I thought that she really wanted and tried to explain how it could be done very quickly and efficiently without necessarily ripping everything out and starting all over again. She was cooperative, too. I wasn’t like the most masterful technique.
James: No, but I like the technique. So you say yes and then you list the items, this is what you’ve said before, what you’ve invested in before that that you’ve wanted and here’s how we achieve this with the minimal effort.
Mark: In other words, you do exactly opposite what you feel like doing as a normal spouse. What you normally feel like doing, at least if you’ve been married for 42 years, you’re saying, “You always do this. You always insist…” and then of course you’re going to go nowhere. But this was important.
James: So, you’re at Boca Raton. This guy was very good.
Mark: So almost the next day, I was the editorial director of this and there were like 15 or 20 newsletters already and I realize my job was try to help sell newsletters. So I started look at the newsletters entirely differently, not how respectable they are from a literary point of view or even a technical point of view but were they answering questions that we’re solving problems for people in the industry. It was like I took the shades off and suddenly the answers were so obvious. What needed to be done was so obvious after that.
And virtually in all areas, if I had a conflict with an employee or I had a conflict with the woman that was actually the vice president of the business, I didn’t have the same reactions. I knew that she was going to be gone eventually because she was completely now on the other side. When I came in, I was in her side—this is the corporate mentality – let’s build products we can be proud of as employees and which we can show to our friends and maybe win industry awards for and who cares what it costs to let’s try to make more money so that my boss one day will make me a partner. I knew that she was going to go. I had lunch like two or three days later with somebody else where we had this luncheon meeting and she was telling me about all the things that were wrong with our boss. I knew it was to enlist me into being part of their little clique. I just knew that was the wrong move so I just said listen, I feel uncomfortable about this conversation. I got to tell you right now. I’m hired. Joel hired me. I’m his guy and I’m sticking with him.
From that day forward, the next day, at least once a week I was called in front of Joel by her to try to get me fired. She didn’t know anything about really editing so her husband who worked for us, a freelance editor would give her ammunition and she would come in and she would kind of repeat it as best she could. Then I would very calmly just explain what I was doing, which was making the newsletter more sellable and why I wasn’t paying attention to them.
James: Because you always brought it back to this is going to increase more sales, which I’m assuming means this is going to create more value for our customers. That beats editorial.
Mark: Back then, I’ve got to be honest with you, I didn’t have that elevated view. My view was very selfish and it was very personal. I knew that Joel wanted to make a lot of money and that that’s what he was in business for. Everything I did was about pleasing Joel’s basic desire to make money. That was good but it was bad. I learned an enormous amount about marketing and about building businesses. He was a real business genius, but let’s just say that his moral compass view of life was like you take care of your family like gold and the people around you like silver. I was in that category. Then there’s bronze and then maybe lead or dirt. Customers are in the dirt area. This was actually quite common in the direct-marketing industry because back then you never saw your customers. You never saw them.
James: But you had renewals though.
Mark: We did have renewals. Yes, you’re right. We had to produce better products that would get renewals but I’m thinking of other things in terms of refund policies. We were tough on refunds and we didn’t need to be. I learned later on we didn’t need to be. Anyway, the truth was my goal was to please Joel and my persuasion techniques back then were all about persuading the people in the business to do things that would increase sales. Later on, I almost thought that business was that way and I think a lot of people do, that business has to be this “me-first” kind of activity. Of course, I felt terrible about when I thought I was doing the wrong thing.
James: What was an example where you thought you were doing the wrong thing though still making money?
Mark: Some of our advertising — we actually got in trouble for it — we were selling cubic zirconia diamonds. We sold the publishing business in ’87 and we got into the merchandise business, which he already had some familiarity with.
James: Totally different business.
Mark: Totally different business with the same principles. Joel said to me before this happens, he goes, “Mark, you’ve got to decide if we’re fish or fowl?” I said what do you mean? He says, “Are we publishers or are we marketers?” I said I don’t know; you tell me. He goes, “We’re marketers.” I go okay, what does that mean? He goes, “We’re getting rid of all these newsletters because the stock market is about to crash” this was right prior to 1987, “And we’re going back into the merchandising business.” Okay, let’s do it. I was still about pleasing Joel.
James: How did he know where to buy the cubic zirconium cheap, where to sell it? How do you figure that out from scratch?
Mark: All I can tell you is we had these, it think they were Hasidic Jews that would come into our office at Boca Raton and be selling us stuff that was made in China. Now this was back in ’87 and this is long before China became a huge supplier of stuff. We were buying watches for a $1.50. Before, everybody was selling $10 watches. We were buying everything. We were buying televisions for $16. So we became one of the largest direct sellers of watches, knockoff perfumes, jewelry, and cosmetic jewelry. You name it.
James: Brand? Like fake brand?
Mark: Not fake brand but because you couldn’t do that without getting into trouble but things that resembled the brand that had similar titles. Give me a brand. Instead of Poison, we would call it—I can’t even think of it. Give me another brand.
James: Louis Vuitton?
Mark: Louis Vuitton, we would call that like Pierre Buitton or something like that. Anyway, those are the kind of things I wasn’t particularly proud of.
James: But were you making money at this point?
Mark: Yeah, we were making money.
James: But you personally, was your income tied to the sales of the company?
Mark: Yes, I was making money. I think within a year or a year and a half of that Dale Carnegie moment, I was a millionaire. I got rich pretty quick.
James: So you were about 34 years old at this point.
Mark: Yeah. After I started fixing the newsletters, we decided to go into the investment newsletter area. He was in the investment business before. He had a seat in the New York Stock Exchange. At that time, he was the youngest person to have a seat. Anyway, we went into the newsletter publishing business and—I forgot what I was even talking about.
James: He had a seat of exchange. You were a millionaire at 34.
Mark: Right. We were publishing investment newsletters so now I was trying to learn about it. Business was just beginning back then.
James: This was direct to consumer?
Mark: Direct to consumer, publishing newsletters for individuals on how to invest better. Joel happened to be an expert in penny stocks. I knew nothing about stocks at the time. Penny stocks are stocks that usually go nowhere.
James: Particularly based in Boca Raton.
Mark: Particularly. In fact, they actually did—
James: Boca Raton is like famous, like Las Vegas. It’s like penny stock land.
Mark: I know. There was a New York Times article that actually drew a circle around where he lived at one time as the center of this activity. I hope this doesn’t sound like I’m ungrateful. He was a tremendous mentor of mine and he treated me like gold and silver. But anyway, we were aggressive marketers of newsletters, all kinds of newsletters but including those kinds of newsletters.
James: And would you test? Would you put an ad on this paper, an ad on this paper and see what’s better?
Mark: No, we sold mostly through direct mail, which was sending actual letters, sales letters to people in the mail, people who were buying other investment newsletters.
James: You would buy those lists?
Mark: Rent the list, right. We would rent the list and we would send out a letter. It would cost you 35 cents, 40 cents per piece in the mail. You’d send out a hundred thousand, spend $40,000 and hope you got back $45,000 and then you could stay in business. So the whole direct-response publishing industry began primarily through investment newsletters. Anyway so I was looking at them and none of them interested me. I had no interest in stocks or bonds.
But I was looking at what was working and I went to some conferences and met customers. Most of our customers were people that were in their 60s or 70s or older and these guys were basically my parent’s age. They had been through World War II. Their parents had been through the depression and they had a very particular view of the world and I realized that these newsletters were not addressing that. So I created an investment service, I wrote a package for something that was brand new. It wasn’t just a newsletter. It was a club and that became the Oxford Club which still exists today and is still a very successful financial service right now.
With that, I went to Joel and I said, Joel, I’ve written this thing, I’ve invented the product, I’ve got the product, I’ve got the promotion and I’ve got everything. It took me three or four months to do it so I just want a piece of the action. He looked at it, he told me to wait and he came back the next day and said I’m going to give you a piece. I thought he was going to give me 50% or something. He said he was going to give me 10%. I said great and he goes, “But I like your thing. I think it’s worth at least $100,000.” I said, “Oh thank you.” He goes, “Okay, so give me my check.” I go what do you mean? He goes, “You said you wanted 10%?” I go yeah. He goes, “Well, you’ve got to pay me $10,000 then.” Well, we haven’t even mailed it. He goes, “You agreed it was worth a $100,000.” That was a lesson in itself.
James: That’s actually an interesting negotiating technique where you establish the formula in advance without filling in the blanks, everyone agrees to the formula and then oh, the negotiation is over before we even discuss numbers.
Mark: He was a master negotiator and if we had time I would tell you the greatest negotiating story ever told. We can do this afterwards.
James: No, tell me now. That’s good.
James: The greatest negotiating story ever told, I have that on my podcast.
Mark: And this will be. This will be. Okay so Joel was this great negotiator and he’s such a great negotiator that he got into a little trouble with people in the industry because they would make deals with him and they would leave happy and then three or four months later they would feel the deals were unfair and they would complain. Now I don’t believe in making deals like that anymore because that doesn’t help when you do stuff like that. I saw it with Joel. If you make a deal with somebody, they’re happy and then three months later they’re mad, you have a bad business relationship and that’s not good.
But Joel was just very skillful in the winning through intimidation or through ideas that say take care of yourself first and the other person second. I completely think that’s the wrong way to negotiate. But Joel was very good. So Joel calls me in one day. We had a tax problem. We had made tons of money in all these different corporations and we didn’t structure them right. We were going to pay like $10 million in taxes that we shouldn’t really had been paying. We should have been paying $3 million.
So we had his father-in-law, Cid, settle the problem with the IRS agent. The guy worked hard. He took the guy out golfing. He did everything. It was settled correctly. So Cid basically from his point of view he saved us $7 million in losses. Joel calls me in the office. He goes, “Did you see Cid sent us his bill” I go yeah. He goes, “What did you think?” It was like $85,000 or something. I said it wasn’t what we agreed to. It wasn’t twice what we agreed to but I think we got a great deal and he goes, “Yeah, you’re right. But still, it wasn’t what we agreed to.” I go well, what are you getting at? He goes, “I think we have to bring him in and talk to him about it.”
Come on, this is crazy. We’re making tons of money and this is your father-in-law. He’s rich. You’re rich. The only difference it makes to any of us is me and I don’t want to negotiate. He goes, “You’re right. You’re right.” The next morning he calls me. He goes, “I can’t do it. We have to negotiate.” I said all right. He goes, “All right, it’s going to be you me and Phil.” By that time, his son was working there. We’re going to negotiate with him and we’ve got to plan it out.” I go, plan it out? You’re the greatest negotiator.
James: I like how he brought in Phil who is the actual blood relative of Cid. Joel wasn’t the blood relative but you’re bringing in Phil who was blood.
Mark: Yeah. I haven’t realized it until this point but you’re right. So now I’m completely mortified because this is the worst expression of all the bad things that could go wrong that didn’t. So we actually practiced on negotiating. So to make the long story short…
James: By the way, I want to interrupt you again. I’m sorry that I keep interrupting but the fact that you practiced negotiating, I don’t think people realize how much of business is like 95% is talking about all the interactions you’re going to have. There’s 5% of business that happens and then 95% is you and all your partners talking about how that 5% is going to play it out.
Mark: Exactly, and that is one of the things Joel taught me. As smart as he was, I have never worked with a smarter guy, and he had this amazing retentive mind, he practiced everything. If was going to have the meeting with somebody, he actually boned up for it where I would just go in and wing it. He would bone up for it. That’s one of the things I got from him.
So we practiced. I had my role as the kind of outsider and Joel had his role and then, poor Phil, as the grandson had his role. The day comes that Joel actually sets up — now I may be making this up because I am Irish — but I think he actually lowered the seat where Cid was going to sit. Then we’re sitting around him in this big power office and Cid, I have to do this standing up. Now Cid comes walking in after the golf. Now I realized Cid was like 75 years old at the time. He’s got these little golf shorts, he’s got these skinny, bony legs and he comes walking in like this, “Hey boys! What’s going on?” We were like sit down, Cid. He goes, all right. So he sits down like this and he’s sitting in the chair like a little old guy and we start laying into him.
And I am dying. I’m so embarrassed. We’re just doing it and he’s getting whiter and whiter and I’m thinking, they’re going to kill him, he’s actually going to die and I’m going to be part of this and I’m going to have killed an old man. How greedy can you get? What is wrong with us?
James: And what’s his primary argument? “This is not what we agreed to,” was that everything?
Mark: I don’t even remember.
James: Like Phil doesn’t even need to do talking. It’s just the blood relative in the room and Joel could do all the talking.
Mark: Believe me, I couldn’t think at that point. I have no memory of that. It was like a car accident for me. I can only tell you what we planned to do. Then it started and then I do remember the end of it. I’m watching Cid. He looks like he’s about to die. He’s getting whiter and whiter. We finally stopped and then he goes, “So boys, is that it?” and then we say yeah. He goes, “Well, I only have one question for you.” We said what is that? He goes, “Did you think that was the entire bill?” I’m not kidding. We spent another hour negotiating and we settled for $180,000.
James: Oh my God, so Cid turned the tables.
Mark: We doubled with that one question, “Did you think that was the entire bill?”
James: Because Cid’s argument is I should get a percentage of the $7 million I just saved you. So it’s a matter of arguing over the formula.
Mark: I never know to this day whether Cid, I think that was the entire bill, but Cid was such a master negotiator, he knew with one question he could completely knock Joel’s legs out. And we did — we ended up paying twice what he wanted.
James: So he changed the conversation. He changed it from what we agreed to, to it’s more based on the $7 million rather than what we agreed to.
James: So changing the conversation is a valuable skill. And you refer to this in Persuasion. This is the important emotional content. How would you feel without that $7 million? That’s what he changed the conversation to.
James: So it went from hey, are you going to live up to what you agreed to, to how would you feel without $7 million? And that was emotionally stronger.
Mark: Right, exactly. We don’t have to stay too long in negotiating but Bill (Bonner) gave me a whole different perspective in negotiating, which I admire greatly. I do think to be a good negotiator, you have to have some other skills that Joel has but I would say that I would rather have 60% of what Bill does and this is Bill’s technique.
James: So this is Bill Bonner, head of publishing.
Mark: Bill Bonner, right. This is Bill’s technique. No planning whatsoever. Just discussion beforehand about what the value of this might be to us, what it might not be. Bill comes in with a good assessment of what he thinks the value is. He’ll let you present your thing. He’ll say, “So James, what do you think is fair?” and then you’ll tell him. He only says one of two things. He goes, “Well, that seems fair to me” or he’ll go, “Oh, I couldn’t afford that.” If he says I couldn’t afford that, not only will you not complete that deal, you’ll never do business with him again.
Because what Bill’s doing is much smarter. What Bill’s doing is he’s looking for long-term relationships because he understands that the way businesses work is not by — well, I’m not talking about every business relationship, like Mrs. Hurley getting her muffler fixed, but in terms of building businesses for the long term, what Bill understands is that businesses are built on leveraging good relationships where people help each other. You can find that out from the first negotiation.
Fairness isn’t a dot. Fairness is a range. It’s silly to say that there’s a particular dollar amount that a business is worth and it’s not worth a dollar more or a dollar less. So it’s some kind of range. After seeing Bill do this a number of times, I’ve started to understand that and what I’m looking for in a business relationship in terms of evaluating the business is does this person’s perception of my contribution and his contribution in terms of its dollar value fall in a range that’s compatible with each other. If this is the range, he might be up here and I might be up here but there’s plenty of overlap. But if they’re disparate then I can’t do business with them. We can make a deal but we’re never going to have a relationship because the deal just won’t be satisfactory to each of us.
So the other thing that I do, and this may be contrary to what other people do, is if I make a deal with somebody and then three months later I can see that — and I think you’ve actually mentioned this in some of the stuff that you said—the deal is not good for him, I change the deal. I make it good for him because I want the deal to be good for him. If I make a relationship and it’s not good for me and he won’t want to change then I got in bed with the wrong person. That’s happened in my experiences. I’m fine, I do my thing and then I stop doing business with you.
I have business relationships with other people that I was kind of a partner relationship and I felt like they didn’t handle it right. I was happy. I still have lunch with them. Their business is going down and I hope I don’t have any—what’s that good German word for that? The pleasure in other people’s—
James: Sigmund Freud.
Mark: Sigmund Freud. I hope that but it does pop up a little bit. I just smile at them. Oh, I’m sorry to hear that.
James: But Bill’s technique is fascinating because what I like about that technique is he already has in mind the sense of the value that he wants to negotiate but instead of just saying I think it’s worth X, he asks for advice, what do you think it’s worth. So he’s getting several things out of that. First off, they might say something slightly less but is still within that range of flexibility in which case he’s kind of “winning” the negotiation. But he’s also using it as a test, am I going to be on the phone six months later arguing with this guy?
Mark: Yeah, exactly.
James: And it’s incredibly useful. That’s valuable.
Mark: And it saves a lot of stress, too. I don’t want to make this all about—people would be wondering, “Why did you interview him? Why didn’t you interview Bill?” which you certainly can.
James: No, but you’ve got this wealth of experience from all these different people and obviously you’ve built hundreds of businesses off of it so I want to hear how you’ve aggregated that wisdom from all these people.
Mark: Well, Bill and Joel for me are two people I think about a lot because they’re not Rich Dad, Poor Dad but they’re like hyper—
James: Evil dad and good dad?
Mark: Don’t say it. He wasn’t evil.
James: All right, I’m not going to say evil dad.
Mark: He’s a wonderful guy in many ways but he was let’s say hyper aggressive business-type of dad.
James: Well, but you called it in one of your books, hoarder versus sharer. You did identify him. I know you were thinking of him that way.
Mark: Anyway, I learned a lot from both of them but I think in terms of living a good, much stress-free life, Bill is a genius at that, in his negotiating a strategy. Bill is also is a person who almost never criticizes you. The genius of that, when you don’t criticize people — and I’m not that way, I’m more from the other side — is that you attract people that are very strong people. It’s hard to hold on to great employees if you’re very domineering. You can do it but it’s work. But because Bill has this, I call the business equivalent of negative capability, he allows you to be your full self in his presence. He can see your full self, which is a big plus, your strong points and your weak points because he lets you act out. He’s not battling you. He doesn’t feel the need to battle you so he sees your strength and weaknesses, he makes comments and kind of lets you do your thing.
So as I said, one is kind of a hard way and the other’s a soft way. One’s a tense way and the other’s a relaxed way. I think for me, especially as you get older, I want my life to be 60% or 70% or 80% relaxed. When you get older—you don’t know this yet; you’re still a young guy—when you’re about 60, you’ll have a choice there of two clear roads. The typical road, the big road is you’re going to become old and crotchety and you’re not going to want to do anything. You’re not going to leave. You’re not going to want to travel. You’re not going to want to do anything out of the ordinary. The other one is you can become one of these really cool old people that’s relaxed, they like people and everybody loves them. I’m trying to go in that direction.
James: So we’ve mentioned Agora a couple of times. They sell like $350 million worth of newsletters, information products, other products and I do think the average let’s say 150 million people who are sitting in cubicles right now would benefit from knowing, and you talk about this a lot in your books, particularly Ready, Fire, Aim, would benefit from learning. How can I, A) come up with the idea that will get me out of my cubicle and B) how do I start marketing this? I forget if you said it or someone else said it but school kind of teaches you to get a job but no one teaches you to get seven multiple sources of income.
From your experience with all these different businesses, how can I start from step one? I’m in the cubicle and I’m scared. I think I don’t like my boss and he’s going to fire me or she’s going to fire me. I have kids to raise and I have alimony to pay. I think in my mind is telling me I’m stuck. What’s the first step?
Mark: There are two things you could do simultaneously that don’t compete with each other. One is you have to figure out how to become the most valuable employee you possibly can be and really the most valuable employee in your environment of your business, whatever that is, your department, your division, however far you feel you could make, and you’ve got to figure out what that means. I’ll get back to it in a second. The other thing is you have to decide whether your business is the business where an intrapreneur can thrive. Many businesses are not.
I have to say that becoming an entrepreneur would not work, as I said, if you work in a very corporate environment. If your business is political, it won’t work. A political business is one where position and power are more important than creativity, productivity and profit. Profit, although when I was younger I wouldn’t have recognized it, is the purifying element of business. When you have profit, when everybody’s thinking about making profit, then politics, what you’re allowed to do, what you’re not allowed to do, takes second seat to coming up with good ideas and leaving the business totally.
So you have to be in that environment and if you’re not in that environment, I think you have to move. You do have to quit your job. Generally speaking, for people who are young people I would say, go work for a small business that’s growing. They say a rising tide lifts all boats and we all have different capacities in our own internal boat, the boats of our brains or our emotional intelligence have different sizes. But if you’re in a company that something’s growing quickly, your chances of moving up the ladder are much, much greater and your chances of getting cross departmental experience are much, much greater.
So I do think it’s very important to figure out whether your business is a business that would accept you if you were an entrepreneur, that welcomes and lets people move up as fast as they can. That’s one of the things about Agora. In the old days if somebody said hey listen, I want to start a whole new division, we would go okay. Go ahead and do it. Take a chair. It was practically like that. Maybe that’s not so unusual today when I read about how some of these California type businesses work.
James: But it’s definitely — again, always use Procter & Gamble as the classic example. Usually, those occur at Procter & Gamble, no offence to Procter & Gamble.
Mark: Right. They’re usually not even listening to podcasts. Their system, it may even be that that’s the only way a business like that can be because one of the things I’ve discovered as my business has gotten bigger from $1 million to $10 million to $100 million term to Agora’s now over $500 million is that a lot of things that you hate in the small business happen inevitably. They happen for real reasons. There’s a reason why big businesses are bureaucratic and that goes even people came in decided to make them. It’s just like governments. There’s a reason why governments are so horrible in so many ways. It comes from a natural process of trying to solve problems with multiple people.
But putting that whole issue aside, if you are working for Procter & Gamble however, they’re not going to change so you have to change. You’ve got to move and go into a small, fast-growing business. But in the meantime while you’re waiting to get that better job, you should try to become the best any way you can. By that, it means you have to—and I do talk about this in some of my books—you have to recognize that every business has basically three pieces. They have the sales and marketing side, they have the product production side and then they have the management stuff, everything else that’s done. The management stuff that’s done is not where you’re going to become a partner in your business. It’s very tough to do that. There’s one position basically in that whole structure and that’s for somebody that really knows how to manage profits. There are certain types of businesses where managing profits is very important but otherwise, it’s generally in the sales and marketing area or if there are some limited number of positions in the product production area where you can get a piece of the pie. That first newsletter I invented was I produced the product and I also worked the sales where they’re training so and so. I was kind of in both sides.
What you need to do is understand, how does that work in your business? How does your business make money? How does the marketing work? How does the sales force work? How do products get produced and be invented and reproduced? Find out where you are. Are you in that mechanism? Are you a part of that? If you’re not, can you shift over? Can you start volunteering to at least learn about those things?
I’m not just telling people just try to be the best person you can be. That’s not going to work. This is just a big topic but part of this process is not just being the innovator in the business or being the great marketing guy but you have to promote yourself. You do have to promote yourself within the business because if your business is growing big, there are plenty people who want to take what you’re doing, take credit for it and put you in the closet. So you have to know how to do that, too.
James: That’s interesting. My only real experience with big corporate America was I worked for HBO. You’re right. There was a production side. They made TV shows. There was a sales and marketing side, how do we get more customers for HBO? And there was the whole kind of accounting/IT side within sort of the management side. I of course was on the management/IT side so we were in another building. Nobody talked to us. It was totally worthless and the way I would try to succeed in HBO was moving myself into the production side where I was obsessed.
Mark: So you had the right instincts. My oldest son, Liam, got to kind of like he’s on the IT side of a company that does colorization for movies. They’re the biggest company in America or in the world that does that. He went into the IT side and he started out as engineer. I said I just want you to know that the problem with being in that part of the business is that the person that’s really making the ultimate decision about who makes money in the business is looking at older employees in terms of the ledger. On this side of the ledger are the expenses and on this side are the production people. These are the people that can make me money and they’re the people I need. When you’re an engineer, an IT guy, an accounting guy, or even legal guy, especially legal, you’re on the expense side.
James: No matter what, you’re always at a crosshair.
Mark: I may need them but you’re a cost and I want to reduce that cost and I want to increase this. So how do I do that? By giving these people more incentives, including financial incentives and by just holding these people down because presumably they’re replaceable. He’s doing the same thing, by the way. He’s moving to the production right now because in that industry, like every other industry, he got into it. Believe it or not ten years ago—this is something I’m sure our listeners are interested in but I think you might be—the movie business was still basically analog. The whole movie business ten years ago was 80% analog and all the colorization stuff was done on film. It has only been the last ten years that it went into digital. But now in the last five years, the digital stuff that you were paying $1 million for, you can pay $5,000 for it. It happened so quickly.
James: That’s interesting, that it has a Moore’s law kind of effect.
Mark: Right. Exactly. So he’s a smart kid and he can see the writing on the wall. You can hire people right out of college to do the work that he was spending all night. By the way, the first thing he did was he almost deleted—here’s a lesson for all you young people. He called me up and said, “I’m in big trouble.” This was about after a month—
James: It’s a credit to you that he called his dad when he was in trouble.
Mark: Yeah. “I’m in big trouble.” What did you do? He was working on I think Mission Impossible.
James: Five? The next one coming up?
Mark: No, the first one or something like that. I don’t remember exactly but it was a giant movie like that. I said what happened? He goes, “Well, you know how you kind of like to tinker with things?” and I go yeah. He goes, “Well, I deleted the movie.”
James: What do you mean you deleted the whole movie?
Mark: He goes, “I deleted the whole movie. It’s gone.” I go you mean it’s like $150 million movie and you just deleted it? And he goes, “Yes!” I go well, obviously it can’t be entirely deleted. He goes, “No, it can be recovered but it can’t be recovered until like I do all these things. There’s a meeting tomorrow and whatever his name is, is coming in and they’re going to know what happened. So it thought it was a producer. So I’m like oh boy, you’re in trouble.
I go so they’re going to come in, right? I say I know this much. I don’t really know anything about IT but I know this much about business. The boss, the guy that’s going to have to deal with this doesn’t know anything about IT either and he also knows he’s probably buying a lot of stuff, you’re buying a lot of stuff from vendors, right? All your technology and your stuff? And he says, “Yes.” Then this is the only thing you can do. You’ve got to storm into his office first thing in the morning and start screaming and yelling about those damn vendors. They F’ed everything up. You’re tired of this and you want a raise. I said that’s the only way you’re going to keep your job.
James: This is the Cid technique.
Mark: Exactly. I guess that’s where I learned it from. I was half joking but I was serious because I knew that that’s the only reason I would keep a guy on. Sure enough, he did that. I forgot about it. Then a month later, I was talking him. I said whatever happened? He goes, “I did it. I went in and did it!” I said did you ask for a raise? And he goes, “Yeah.” What did you ask for? He was making $25,000 at the time. He said he asked for $110,000. I said what?! You asked $110,000?! He goes, “Yeah.” I go how? He goes, “Well, I added up all my overtime and I doubled it and that’s what it came to.” I said Oh my God. So he didn’t fire you? “No, he didn’t fire me.”
Well, let me tell you what’s going on right now. This might have been a week or two ago. He’s looking to replace you right now because he’s a smart guy and you’re asking for way more than he thinks you’re worth. So one of two things is going to happen. You will be replaced soon if he can find somebody for $60,000 or $70,000 that’s as good as you or if you don’t get replaced in the next month or six weeks, you will get that raise. It might not be as much. And sure enough like three months later, they flew him to Las Vegas in a private plane, gave him like $90,000 and a free night in Las Vegas.
James: What happened to the movie?
Mark: Oh it went up. It got back up. The problem wasn’t that the movie was permanently deleted. It’s just that by the next morning’s meeting when they came in, they had to tell their clients, “I’m sorry, the movie is down right now. We need another 12 hours to…” but it’s more dramatic when you say it. And that’s how he told it to me. It’s like, “The whole movie’s gone?!” So anyway, that’s the end of the negotiating.
Editor’s note: In part two of this interview, James talks with Mark about creating wealth. Read it here.