Okay, so have you ever had like a really brilliant idea for a business?
You know, something you were absolutely sure would be a hit.
Oh, yeah.
Like you could practically picture the lines of customers.
Right.
But then crickets, nothing.
No one's buying.
Oof.
Yeah.
Ouch.
Well, today's deep dive is all about avoiding that entrepreneurial heartbreak.
We're going to unpack the wisdom of Josh Kaufman,
Okay.
author of the personal MBA, and we're going to extract like the core principles
that can help you build a thriving venture.
So what I think is so exciting about Kaufman's approach is that it applies
whether you're launching a full blown company.
Yeah.
Or just trying to get ahead in your current job.
The stuff we're working with are excerpts from his interview on the diary
of a CEO YouTube channel.
Okay.
And it's packed with practical advice.
Awesome.
All right.
So our mission today is to give you that like business insider edge.
Yeah.
Kaufman has this really cool concept.
He calls the five parts of every business.
It doesn't matter if you're running, you know, a multinational corporation
or selling homemade cookies at a farmer's market.
Right.
These five parts are always in play.
Such a useful mental model.
You can use it to analyze any business.
Yeah.
Spot opportunities even figure out why some companies just seem to get it.
Yeah.
While others struggle.
Think of it as a checklist.
Value creation marketing sales.
Okay.
Value delivery and finance.
Okay.
Let's break that down.
Value creation.
Yeah.
That sounds pretty basic.
Sure.
You make something people buy it.
Not so fast.
It's not about what you think is valuable.
It's about what your customers are actually willing to pay for.
And sometimes what they truly value is surprising.
Oh, really?
Kaufman tells this great story about the invention of liquid laundry detergent.
Okay.
You'd think it was all about better cleaning.
Yeah.
Better cleaning, brighter whites.
But it wasn't.
Oh.
I'm intrigued.
What was the real story?
Researchers observed that people would hesitate before pouring powdered detergent
into the washing machine.
They'd wait for the tub to fill up a bit because they were worried the powder
wouldn't dissolve properly.
It was like a hassle, a tiny bit of anxiety in their laundry routine.
Liquid detergent solved that.
So the real value wasn't about cleaner clothes.
It was about a smoother process and peace of mind.
Exactly.
It highlights the importance of truly understanding your customer.
Yeah.
Don't just ask people what they want.
Right.
Watch how they behave.
Look for those little workarounds.
Okay.
The frustrations they might not even realize they have.
That's where you find opportunities to create real value.
That's such a good point.
Now let's talk about getting an MBA.
Okay.
It's like the golden ticket to the business world, right?
Well, Kaufman challenges that assumption.
He actually argues that MBAs might not be the surefire path to success.
Okay.
That they're often made out to be.
Mm-hmm.
He cites a study by a Stanford professor that found zero correlation between
getting an MBA.
Okay.
And long-term career success.
The study actually found that the personality traits of the individual were
far more indicative of long-term success.
That's pretty mind-blowing.
Okay.
So what's the takeaway here?
Yeah.
Should we all ditch our business school aspirations?
It's not about saying MBAs are worthless.
Right.
But rather about thinking critically about the return on investment.
Yeah.
These programs can be incredibly expensive.
Yeah, they are.
So you need to weigh the costs and benefits carefully.
Mm-hmm.
Is an MBA the best way for you to gain the knowledge and skills you need?
Right.
Or are there alternative paths that might be more effective, affordable or relevant to your goals?
That's a question worth pondering.
Now let's move on to marketing.
Sure.
I feel like people either have a knee-jerk negative reaction to the word marketing.
Yeah.
Or think it's all about coming up with a catchy slogan.
Right.
You have to get the jingle to stick in their head.
Exactly.
But Kaufman's approach to marketing is far more nuanced.
Okay.
He digs into the psychology of what makes people tick.
He talks about the five core human drives.
Okay.
The drive to acquire, want, learn, feel and defend.
Okay.
I can see how those drives would play into consumer behavior.
Yeah.
Give me an example of how a company might tap into one of these drives.
Think about a brand like Apple.
Okay.
They don't just sell phones and computers.
Right.
They sell a sense of belonging, of being part of a community, of creative, innovative individuals.
Yeah.
Their marketing taps into that deep human need for connection and self-expression.
Okay.
That's the bond drive in action.
That makes total sense.
Yeah.
And it's so much more effective than just listing the features of their latest gadget.
Exactly.
So how do we translate this into something actionable for our listeners?
The key takeaway here is to think about the deeper motivations behind why people buy things.
Okay.
What needs desires or anxieties are you addressing with your product or service?
How can you frame your messaging to resonate with those core human drives?
This is reminding me of that company, Liquid Death, that sells water in a can.
Oh, yeah.
It's like they took the most mundane product.
Right.
And turned it into something cool and edgy.
They're masters of counter signaling by rejecting the traditional boring image of bottled water.
Well.
They tap into the drives to acquire something unique, bond with a tribe of like-minded individuals.
Yeah.
And defend their sense of individuality.
They're literally selling rebellion in a can.
It's fascinating how powerful those psychological levers can be.
Yeah.
And it underscores the importance of understanding your target market.
You wouldn't market edgy canned water to say grandmothers who knit.
No, you wouldn't.
You'd want to understand their motivations, their needs and desires.
Precisely.
Yeah.
And that brings us to the next part of the framework, sales.
Okay.
This is where things often get tricky.
Yeah.
People have all sorts of negative associations with the word sales.
It feels pushy manipulative like you're trying to trick people.
Right.
Into buying something they don't need.
Kaufman flips that script.
He argues that sales when done right is about helping people.
It's about helping people solve problems and make their lives better.
It's about building relationships and creating happy customers.
Because happy customers are repeat customers.
Yes.
And repeat customers are the lifeblood of any business.
It's absolute.
They spend more, they're less price sensitive and they tell their friends about you.
Right.
It's that lifetime value concept Kaufman talks about.
Exactly.
But so many businesses treat customer service as an afterthought.
They focus all their energy on getting the initial sale.
Right.
Then drop the ball on making sure the customer has a positive experience.
Yeah.
It's like shooting yourself in the foot.
It's like that saying it's cheaper to keep an existing customer.
Right.
Than to acquire a new one.
So how do we excel at sales without feeling sleazy or pushy?
It comes down to understanding the difference between features and benefits.
Okay.
People don't buy features, they buy benefits.
Right.
Let's say you're selling those homemade cookies we talked about earlier.
Listing the ingredients.
Organic flour, free range eggs, Belgian chocolate.
Those are features.
But telling people how your cookies will transport them back to their grandma's
kitchen with every bite.
Ah.
That's a benefit.
It connects with an emotion, a memory, a desire.
Exactly.
And it taps into those core human drives we talked about earlier.
Are your cookies helping people acquire a sense of comfort and nostalgia?
Yeah.
Bond with loved ones over a shared treat?
Feel a sense of indulgence and satisfaction?
So it's about understanding what your customer truly values.
Yes.
And crafting your messaging to resonate with those deeper motivations.
Now let's tackle the final piece of Coughman's business puzzle.
Okay.
Finance.
This is where a lot of people get intimidated.
Yeah.
They either avoid thinking about it altogether or feel like it's beyond their grasp.
Right.
But Coughman wants to demystify finance.
Yeah.
He argues that you don't need an MBA or a degree in accounting.
Right.
To understand the basics.
Mm-hmm.
He tells this funny anecdote about Richard Branson, the founder of Virgin Group, who
admitted he didn't fully graft the concept of net profit until someone
explained it to him using a simple fishing analogy.
I love that story.
Okay, I have to hear this analogy.
It's Richard Branson.
Someone told Branson to imagine he went fishing and caught 10 fish.
That's his revenue.
Okay.
But he had to spend money on bait tackle and fuel for the boat.
Right.
Those are his expenses.
Yeah.
The fish he has left over after covering those costs, that's his profit.
I love that.
It makes something that can seem really abstract, suddenly tangible.
Right.
Yeah.
The point is finance doesn't have to be complicated.
Okay.
It's about mastering the core concepts.
Revenue expenses, profit and cash flow.
So it's about knowing how much money you're bringing in.
Yeah.
How much you're spending and whether you're making more than you're spending.
Exactly.
Okay.
And understanding those numbers will empower you to make smarter business decisions.
This has been an incredible overview of the five parts of a business.
Yeah, it's a good framework.
It's like a mental model we can use to analyze any business no matter how big or small.
Absolutely.
And it's given us a solid foundation for our deep dive.
Awesome.
Are you ready to explore some of these concepts in more depth?
Absolutely.
Let's dive in.
All right.
So we've covered the five parts of a business.
Value creation, marketing, sales, value delivery and finance.
But I feel like there's another piece of the puzzle here.
Something that can make or break even the most promising venture.
You're thinking about competition.
Exactly.
It's easy to get intimidated when you see other businesses already doing what you want to do.
Maybe even doing it really well.
Right.
It can make you question everything.
Like, is there even space for me?
What's interesting is that Kaufman actually sees competition as a good thing.
He argues that if no one is doing what you want to do, it might be your red flag.
Wait, really?
Explain that one.
Think about it this way.
If there's truly a need for your product or service,
wouldn't someone already be trying to fill that gap?
I guess so.
If there's no competition, it might mean there's no real market demand.
Okay, that's a perspective shift.
So instead of seeing competitors as enemies, we should view them as validation.
Exactly.
Their existence proves there's a market for what you're offering.
Right.
And even better, you can learn a ton from them.
Kaufman calls this stealing with your eyes.
I love that phrase.
Tell me more.
Buy your competitor's products.
Study their websites.
Analyze their marketing.
Okay.
What are their strengths and weaknesses?
What are their customers saying about them?
What are their pricing strategies?
You can glean so much valuable information without having to reinvent the wheel.
It's like free market research.
They've done the trial and error, so we don't have to.
Right.
But of course, we don't want to just copy them outright.
Of course not.
The goal is to use this intelligence to inform your own unique approach.
Right.
What can you do differently?
Yeah.
How can you create a value proposition that sets you apart?
This reminds me of the Segway.
It was hailed as this revolutionary invention.
Yeah.
But it ultimately flopped.
Kaufman uses it as a case study of how even a brilliant product can fail
if it doesn't solve a real problem or address a genuine market need.
The Segway was cool, sure.
But people weren't willing to pay a premium price
for a slightly faster way to walk or bike.
Yeah.
There wasn't a strong enough pull in the market.
So the lesson is don't fall in love with your idea
to the point where you're blind to the reality of the market.
Right.
Be passionate, yes, but also be objective.
All right.
Test your assumptions, gather data, and be willing to pivot if necessary.
Which leads us to another key concept from Kaufman,
the Explore-Exploit mindset.
OK, I've heard this phrase a few times now.
Break it down for me.
Imagine you're a bee buzzing around a field of flowers.
You need to find the best sources of nectar, right?
OK, yeah.
So you spend some time exploring, trying different flowers
to see which ones are the most rewarding.
Makes sense.
But you can't just keep flitting around forever.
Exactly.
Once you've identified the most promising flowers,
you switch to exploiting them.
You focus your energy on maximizing your yield from those prime sources.
So how does this apply to business?
It's about finding that balance between trying new things
and focusing on what works.
OK.
In the early stages, you might need to experiment
with different marketing channels, product variations,
or pricing strategies.
But once you start seeing traction,
you shift your focus to maximizing those successes.
So it's not about having all the answers up front.
It's about being willing to iterate, experiment, and adapt as you go.
Precisely.
It's about embracing that startup mentality,
even if you're not running a startup.
Be curious, try new things, gather data,
and don't be afraid to fail.
Speaking of failure,
Kaufman has some really interesting insights on learning.
He challenges the whole 10,000 hours to mastery thing
that's been so popular.
Oh, yes.
His book, The First 20 Hours,
argues that you can make significant progress
in learning a new skill with focused effort
in a much shorter timeframe.
This is giving me hope.
I always feel like I don't have enough time
to learn all the things I want to learn.
Tell me more about this 20-hour rule.
Kaufman breaks it down into 10 principles,
starting with choosing a lovable project.
Yeah.
It has to be something you're genuinely excited about,
something that matters to you.
Otherwise, you'll never stick with it when things get tough.
That's so true.
I've started learning languages and musical instruments countless times,
only to give up after a few weeks
because I wasn't truly passionate about it.
It's about finding that intrinsic motivation,
that drive that comes from within.
Once you have that,
the next step is to break down the skill
into smaller, more manageable sub-skills.
Okay.
For example, if you want to learn to code,
you wouldn't try to build a complex website on day one.
You'd start with learning the basic syntax and commands.
It's about setting realistic goals
and celebrating small wins along the way.
What are some other key principles from Kaufman's approach?
He emphasizes the importance of eliminating abstractions,
creating fast feedback loops,
and practicing by the clock.
It's about being intentional with your time and effort,
maximizing your learning efficiency.
So it's not just about putting in the hours,
it's about putting in the right kind of hours.
Exactly.
And don't be afraid to make mistakes.
Mistakes are inevitable, especially in the early stages.
Embrace them as learning opportunities,
analyze them, and use them to refine your technique.
This is all resonating with me.
It's about shifting our mindset from fear of failure
to a growth mindset,
where we see challenges as opportunities to learn and improve.
And it's about recognizing that learning is a lifelong journey.
It's not about achieving some arbitrary level of perfection.
It's about constantly expanding your knowledge, skills, and abilities.
This has been an incredibly inspiring and insightful conversation.
We've covered so much crown from the five parts of the business
to the power of competition
and the principles of rapid-skill acquisition.
It's been a deep dive in the truest sense of the word.
Where do we go from here?
In the final part of our deep dive,
we'll explore the broader implications of these insights for business,
entrepreneurship, and personal growth.
We'll talk about the role of innovation,
the strategies for building a fulfilling career,
and the importance of having a strong why that drives your actions.
Sounds fascinating.
Can't wait to continue this exploration.
Welcome back to our deep dive into the mind of Josh Kaufman.
We've covered a lot of ground already.
From his framework for understanding any business
to the power of competition,
and even his 20-hour rule for learning new skills.
It's been a journey.
It has.
But now I think it's time to zoom out a bit.
Oh, okay.
And look at the bigger picture.
So how can you use these insights
to not just build a business,
but to create a really successful and fulfilling life?
That's the ultimate goal, right?
Absolutely.
One of the things that I really took away from Kaufman's work
is his concept of goals law.
Oh, yeah.
That's a good one.
He says that any complex system
evolved from a simpler system that worked.
Right.
It's so easy to overcomplicate things.
It is.
Especially when we're starting something new.
Like, we try to create the perfect product
or have the super detailed business plan right out of the gate.
Yeah.
You want to have it all figured out.
Exactly.
And then we end up feeling overwhelmed
and just stuck, totally.
So Kaufman is encouraging us to start simple,
focus on the core essence of what we're trying to achieve
and then build from there.
Don't try to build a skyscraper
before you've laid the foundation.
Right.
He uses this really interesting example of a fitness tracker.
Okay.
Adding something as basic as a watch to the device
could have actually ruined its success.
That's counterintuitive.
Explain that one to me.
Think about it.
A fitness tracker has a very specific purpose.
It's designed to track your activity levels, you know?
Yeah.
Help you make healthier choices.
Right.
But when you add a watch,
you suddenly change the entire frame of reference.
It becomes a watch that also happens to track fitness.
Okay.
Yeah.
And now you're competing with all the established watch brands,
not just other fitness trackers.
I see.
You've added all this complexity,
maybe diluted the value a little bit.
Exactly.
And potentially confused your customer.
It's a good reminder to be mindful of how each decision we make
can impact the perception of our product or service.
Yeah.
Sometimes less is more.
Often less is more.
It goes back to understanding your customer, right?
Absolutely.
What are those core needs and desires?
How can you deliver value in the simplest, most effective way possible?
I'm seeing all these connections now.
But okay, let's talk about those times when, you know,
you have a great idea, you're passionate about it,
you validated the market, but you still hesitate.
No, yeah.
You let fear hold you back or self-doubt or procrastination.
I think we've all been there.
We have.
So how do we silence that inner critic and move forward with confidence?
I think it starts by acknowledging that fear is a natural part of the process.
You know, every successful entrepreneur, every artist,
every innovator has faced moments of doubt.
Right.
They just don't talk about it.
Exactly.
It's about reframing our relationship with fear.
Okay.
So instead of seeing it as a sign of weakness,
we can view it as a signal that we're stepping outside our comfort zone.
You mean you're growing.
Exactly.
And you don't have to have all the answers upfront.
Right.
Often it's better to just start.
Take that first step, even if it's imperfect.
The ready-fire-aim approach.
Exactly.
You'll learn and adjust along the way.
And it's so important to, you know,
surround yourself with a good support system.
Oh, absolutely.
Find mentors, join communities,
connect with other people who are on a similar journey.
Right.
That support can make all the difference,
especially when things get tough.
Well, this has been a truly incredible deep dive.
It has.
We've explored so much.
And I have to say, I'm feeling very inspired.
Me too.
If you're...
Don't wait for the perfect moment.
Start now.
Even if it's just for 20 minutes,
you might be amazed by what you can accomplish.
You really might.
Thank you for joining us on this deep dive.
We hope you found it insightful and inspiring.
And until next time, keep learning, keep growing,
and keep pushing the boundaries of what's possible.