Podcast appearances and mentions of todd what

Todd: OK, Diana we are going to talk about your hobby.Dianna: OK.Todd: What is your hobby?Dianna: I have lots of different hobbies but right now I'm learning to play the guitar.Todd: Great. How long have you been playing or practicing?Dianna: I got my guitar two years ago but I've probably spent a total of two weeks practicing.Todd: Did you bring your guitar to Japan?Dianna: I didn't. Actually, my brother wants to learn to play also so he's taking good care of my guitar while I'm here, but when I get back I'll jump right back into practice.Todd: OK, great. Well, who's a better player?Dianna: I am for sure, but I told him that if he gets better than me while I'm away that he has to teach me everything he knows.Todd: Oh, that's only fair. OK. Can you play any songs?Dianna: Yes, I can play "Joyful, Joyful, We Adore Thee" and just the last part of the "Star-Spangled Banner". Not the beginning, the beginning's way too hard.

Todd: Hello!Jeanna: Hello!Todd: Hi, what's your name?Jeanna: Jeanna.Todd: OK, Jeanna, how old are you?Jeanna: I'm 15 years old.Todd: 15! OK, are you in high school?Jeanna: Yes, I am.Todd: OK. What do you think about high school?Jeanna: It's fun. Very diverse.Todd: What do you like to study in high school?Jeanna: I like history a lot.Todd: OK. Why do you like history?Jeanna: It's interesting to learn about the past, different things, and different cultures.Todd: OK. What's one thing you don't like about high school?Jeanna: People can be really cruel.Todd: Oh, really! How? How are people cruel?Jeanna: There's a lot of judgmental-ness.Todd: Oh, that's too bad. So, you're nice to everybody?Jeanna: Generally.Todd: OK. OK. Who's your favorite teacher?Jeanna: Probably my English teacher

Todd: Hello, Yoko.Yoko: Hello, Todd.Todd: How are you?Yoko: Good. How are you?Todd: Good. OK. We're gonna talk about trains.Yoko: OK.Todd: Do you take the train everyday?Yoko: Yes, I have to.Todd: Oh, really?Yoko: Yeah, cause I don't have a car.Todd: Oh, really?Yoko: Yeah!Todd: Are you have happy with that? Do you mind?Yoko: Actually no!Todd: Yeah, well, what's the train like in the morning when you get on?Yoko: It's really crowded.Todd: Yeah!Yoko: Yes.Todd: OK. How much is your train fare?Yoko: Almost 500 yen.Todd: What's the best thing about taking the train?Yoko: Mm, nothing.Todd: Nothing.Yoko: Nothing. I don't think it's great. Ah, I can sleep on the train.Todd: OK. Do you normally get a seat?Yoko: Ah, sometimes I can.Todd: Yeah.Yoko: Yeah.Todd: OK. Do you read?Yoko: Cause I can't read a book. I'll get sick.Todd: Oh, cause your eyes move around.Yoko: Yeah.Todd: Yeah, I gocha. What's the worse thing about the train?Yoko: Ah, too crowded in Japan.Todd: Yeah. It's terrible.Yoko: And I have to pay.Todd: Oh, you have to pay. Your company does not pay.Yoko: No.

Todd: OK, Yoko we were just at a festival.Yoko: Yeah!Todd: Do you want to talk about festivals in Japan?Yoko: Yes, OK. So, I think in Fall we have lots of kind of festivals, but it depends on the places.Todd: What are some things that most festivals have, like, what can you see if you go to a Japanese festival?Yoko: Omikoshi.Todd: Omikoshi.Yoko: Yes. Do you know the word?Todd: I think so. What is Omikoshi?Yoko: Ah, it's really difficult for me to explain in English, but Omokishi looks like a bigbox, lots of people, adult people try to carry together, and they usually go to temples, and they kind of celebrate a harvest or our happiness or those kind of thingsTodd: OK. Do you ever carry the Omikoshi?Yoko: Ah, you know, I'm not a strong guy so, I've never tried it.Todd: OK. What about foods? What kind of foods do people like to eat?Yoko: We can see lots of small shops along the street and we can buy really Japanese food, like watagashi, it's a really sweet candy but it looks like, how do you say that?Todd: I don't know.Yoko: I don't know. I don't know either. White small stuff.Todd: White small stuff.Yoko: Yeah. Sorry. You should see it. So it's watagashi or watame. It's really popular food in matsuri, and we can see okonomiyaki. Yeah, it's, some people say Japanese pancake, or something, but tastes different.Yoko: It's not sweet.Todd: It's not sweet.Yoko: It's not sweet. So vegetables, meat, and some sauce.Todd: Oh, wow! Sounds good.Yoko: Yeah, I think so too. You should try it.

Todd: OK. Ramon, we're going to talk about opposites.Jamon: OK.Todd: What is big?Jamon: The earth is big.Todd: Yeah, I agree. What is small?Jamon: I'm small on the earth.Todd: That's true. How much do you weigh?Jamon: I weigh 65.Todd: Wow! 65 kilograms.Jamon: Yeah.Todd: Yeah, yeah. I'm a little bit heavier, about 72....What is expensive?Jamon: A big house is expensive.Todd: Yeah, pretty much anywhere. Ooh..loud motorcycle. Sorry! What is small? I mean..I'm sorry..what is cheap?Jamon: What is cheap? The 100 Yen shop is cheap.Todd: Yeah. What can you buy at a 100 Yen shop?Jamon: About everything.Todd: Yeah.Jamon: Which is good.Todd: Do you think 100 Yen shops are a good idea, or do you think they're environmentally a bad idea?Jamon: No, I like the 100 Yen shop.Todd: Yeah. The cheap stuff. Actually. I do to. It's nice. Alright. Thanks a lot.

Todd: OK, Jamon, we're going to talk about abilities.Jamon: OKTodd: Can you cook?Jamon: I can cook a little bit. I like cooking.Todd: What do you like to make when you cook?Jamon: Just simple things. I love salad. I make a huge salad.Todd: I love salad. OK, can you sing?Jamon: No, I can't sing. I just sing for me. On the...when I have a shower.Todd: Oh, really, you sing in the shower? Nice, what, what songs do you sing? Like pop songs or just...?Jamon: No, mainly reggae. I love reggae.Todd: Wow! Can you play any musical instruments?Jamon: Dijuridu!Todd: Oh, really.Jamon: It's an Australian instrument.Todd: Yeah, yeah. Where did you learn that?Jamon: I learned in Switzerland.Todd: Really. OK. Is it popular in switzerland?Jamon: Yeah, it's popular. Everybody knows about it.Todd: Wow. How long have you played?Jamon: A couple of years maybe. Maybe 4 years.

Todd: Hello! What is your name?Kentaro: My name is Kentaro.Todd: Kentaro. And what is your full name?Kentaro: My full name is Kentaro Sugimori.Todd: Sugimori.Kentaro: Mm-hm.Todd: OK. And where are you from?Kentaro: I'm originally from Hamamatsu city. Which is in Shizuoka Prefecture, Japan.Todd: Oh, really. Shizuoka is a nice place.Kentaro: Oh, really!Todd: Yeah!Kentaro: Have you been there?Todd: Yeah, I used to live there.Kentaro: Oh..Great!Todd: Tell me about Japan.Kentaro: Well, Japan is, compared to the states, it's small, homogeneous, however and it's also has it's own culture.Todd: OK. Yeah. Yeah. I agree. Japanese culture is very, very unique.Kentaro: Mm-hm.Todd: What is the capital city of Japan?Kentaro: Tokyo.Todd: TokyoKentaro: I believe so.Todd: OK! Yeah, and who is the leader of the country?Kentaro: Well, our political leader is Mr. Prime Minister Koizumi Junichiro.Todd: OK.Kentaro: But our psychological leader will be our Emperor.Todd: OK. Nice, and do you like the Prime Minister?Kentaro: Yes, I like him.Todd: OK. Yeah, me too. Alright. Thanks a lot.Kentaro: Thank you.

Todd: OK, Jessica, we are going to talk about cooking.Jessica: OK.Todd: Now, you like to cook!Jessica: Yes.Todd: OK. What can you cook?Jessica: I can cook Manicotti, Tacos, lots of food.Todd: OK. So what is Manicotti?Jessica: Manicotti is...it's a big noodle. It's hollow on the inside and you fill it with different cheeses and then you put red tomato sauce over the top of it and..it's pretty goodTodd: So how do you make it?Jessica: Well, you use Ricotta cheese, Mozzarella cheese, um , Parmesan Cheese,a little bit of salt, and basil and stuff and you mix it all together in a pot and then you stuff it in the noodle, and you put the noodle in the pan and shove it in the oven for 35 minutes and let it cook.Todd: Yeah!Jessica: And it's good.Todd: That sounds really good. How often do you make manicotti?Jessica: Oh, a couple times a month, probably.Todd: What is the secret to good manicotti?Jessica: You got to make it tasty, cause if you add enough salt or Parmesan cheese then it doesn't taste as good.It just tastes like your eating cheese. That's it.Todd: OK. Well I'll remember that. Thanks a lot Jessica.Jessica: You're welcome.

Todd: James!James: Yo!Todd: if you had a million dollars...James: Mm-hmTodd: if you won the lottery...James: Yes.Todd: What would you do?James: I would buy a small island, build a house there, and invest the rest of my money so that I would never have to work again.Todd: OK, So are you talking a tropical island, or...James: A tropical island, yeah, or maybe I would give it all to charity and have a bridge named after me.Todd: That's two different things there. How bout the island? Would you want to be alone, on a secluded island or?James: No, I would want all of my friends to come and visit me often.Todd: OK. Nice. So how would you pass the time on this island?James: I would read books. I would study. I would go swimming, go fishing, and play with my dog.Todd: OK. Do think money can make people happy, can buy happiness?James: No, but it can sometimes make it easier. It depends on what you buy.

Todd: Hey, James!James: Yeah!Todd: Let's talk about seasons.James: OK.Todd: James, what is your favorite season?James: My favorite season is spring.Todd: Yeah, why is that?James: Because it's not so cold but it's not so hot that I'm sweating on the train. I can go to the beach. I can relax with my friends outside. It's very nice.Todd: OK. What is your least favorite season?James: My least favorite season in Japan is the rainy season ...because I don't like rain at all.Todd: OK. What season are we in right now?James: Right now it is the very end of winter. It is just starting to become spring.Todd: What's the weather like today?James: Today, it's very sunny. It's a little cool. A little breezy. It's very nice. I enjoy it.

Todd: OK. Jamie. We're back.Jamie: OK.Todd: Jamie, you're a businessman.Jamie: Sometimes.Todd: OK, so...Jamie: Not his week.Todd: Not this week! OK. We're going to talk about globalization.Jamie: OK.Todd: What do you think about globalization?Jamie: Globalization! I'm not really sure, I have a clear definition of what globalization is, but if globalization is several nations trading on the open, or semi-regular basis then I think globalization is a relatively positive thing.Todd: Yeah!Jamie: For, certainly for the countries that are involved in the, in the business that is going on between the nations that are obviously involved with that business.Todd: Yeah. OK. Great. So do you think it makes the world a better place?Jamie: Yeah, the world a better place? No, I don't think it makes the world a better place. I think it's just good for the countries that are directly and indirectly involved with the business that is going on between countries.Todd: OK. Great. Thanks a lot.Jamie: My pleasure.

Kerys: OK. Let's go. Take two!Todd: OK. Hello!Kerys: Hi!Todd: Hi! What's your name?Kerys: Kerys.Todd: Kerys, what's your last name?Kerys: Williams.Todd: Williams. OK. And how do you spell Kerys?Kerys: K-E-R-Y-S.Todd: Oh, OK! Oh..that's quite unique. And where are you from?Kerys: I'm from Manchester in the North of England.Todd: OK. What is Manchester like?Kerys: It's quite boring, quite gray, quite rainy, not a lot of things for, to do, not a lot of things to do.Todd: OK. And how long have you lived in Manchester?Kerys: I don't live there.Todd: Oh, OK. So not anymore, OK. I'm sorry!Kerys: No. Not anymore.Todd: OK. Um..what other places have you lived?Kerys: I've lived in Thailand, I've lived in Spain, and France, and I now live in Japan.Todd: OK. What's your favorite country so far?Kerys: I love Thailand.Todd: Yeah, Thailand's great.Kerys: Yep!Todd: What did you like about Thailand?Kerys: I love the fact that people smile all the time.Todd: That's true. The land of smiles.Kerys: Yep.Todd: Alright. Thanks Kerys.Kerys: No worries.

Todd: So what are you doing this weekend, Adrianna?Adrianna: I'm going to Fukuoka with...to meet my friend.Todd: Oh cool, how do you know her?Adrianna: She went to university with me.Todd: What's she doing in Fukuoka?Adrianna: She's on the Jet Program, teaching.Todd: Oh, cool. Does she like it?Adrianna: Yeah, she likes it. She renewed her contract so this is her third year.Todd: Excellent. Do you know what you are going to be doing down in Fukuoka?Adrianna: I think she's going to take me to a pub.Todd: You've not been to any of them in Japan?Adrianna: No, not.. first time. And we are going to...What are we going to do? Oh, we're going to have a Thanksgiving celebration on Sunday and we're going to go to a Karaoke.Todd: OK, have you been to any Karaoke bars here?Adrianna: Yeah, I went to a Karaoke bar in Roppongi.Todd: Did you sing?Adrianna: Of course.Todd: Excellent. In English?Adrianna: Ah.. yeah. My Japanese isn't too great.Todd: What has she told you about Fukuoka?Adrianna: How do you mean?Todd: Like, do you know about the city?Adrianna: Not much.

Todd: OK. Daisuke, we're going to talk about the guesthouse. We live at the same guesthouse.Daisuke: Yes.Todd: There are lots of people here.Daisuke: Yep.Todd: What do you think about the guesthouse?Daisuke: It's quite nice to meet different people from different countries.Todd: Uh-huh.. What do you do at night at the guesthouse?Daisuke: At night?Todd: Yeah.Daisuke: Normally, I work quite early so I start working quite early so.. I'm sleeping at night.Todd: Oh, you don't party with the people or have drinks or anything?Daisuke: Only on Saturday. But Saturday, after I work. After work, I go to Ginza to have a drink with my workmates.Todd: Oh, OK.Daisuke: Then, I come back quite late so maybe I stay here maybe for two hours or something.Todd: Oh, really? Oh, OK. Do you know everybody at the guesthouse? Do you know everybody here?Daisuke: I don't think I know everybody but I know some people who come down to the first floor and yeah..Todd: Yeah, you just hang out?Daisuke: Hang out. Yeah..Todd: OK. How long do you plan to live here at the guesthouse?Daisuke: My plan is I'm gonna live here within one month so it will be four months.Todd: Four months. Oh, you're going to move.Daisuke: Yeah.Todd: Really? Why?Daisuke: I'm searching for a job in the restaurant. As long as I get the job I'd like to move and live close to the restaurant. Cause the restaurant life is quite long hours so I have to live, you know, live close to the restaurant. Get some sleep.Todd: Yeah. What kind of restaurant job? Cook or waiter or..?Daisuke: A chef.Todd: A chef?Daisuke: A cook, of course, cook.Todd: Oh, OK.Daisuke: I don't get any skills, I don't have any skills so I have to start from the bottom but I want to do the Japanese cuisine.

Todd: Clare, you're from England.Clare: That's right.Todd: How would you compare England and Japan?Clare: Well, I think.. let's take price-wise, they're actually quite similar. Well, not maybe not England as a whole but say Japan and London is very similar. I found in supermarkets, in housing and things like that.In other respects, the people are certainly different. I mean, British people are renowned to be very polite as Japanese people are too. Japanese people are very helpful as well, probably more so than British people I would say. Mm, what else?Todd: What about the weather?Clare: The weather? Well, it's been raining a lot in Japan recently so we could say that it's quite similar, although actually when I was e-mailing my parents they've been going on about how there hasn't been much rain the past couple of months and how they think there is going to be a drought. That typical British stereotype of the weather is not true at the minute and it's probably wetter in Japan. But yeah, I think that climate-wise it's quite similar in terms of temperature. It's definitely much more humid here than at home.Todd: OK. Thanks a lot.

Todd: Nicola, you were talking to us the other day that you went diving in Australia?Nicola: That's right I did.Todd: Wow, so what was it like?Nicola: Well, actually it was quite scary, to be honest. When I first started I did an introductory course which was just maybe like two days.And so they just sent you out with all of the equipment, put you in the sea and guided you, but then when I did the real course we started in the swimming pool which was fine and it was all great fun.Although, there were two men on my course who completely freaked out and had to leave.Todd: Oh..Nicola: Yeah, so that was fine but then they took us out to sea which was a bit different. Yeah, they made us set up our own equipment, I mean they still checked us and everything so we didn't die but we had to put on our own equipment. We had a diving buddy who I was with and I was with my friend Graham, who I was traveling with anyway and we went down into the sea. We went down maybe fifteen meters. And they always say like 'Don't Panic' just keep breathing normally and everything. But I did kind of panic a bit.Todd: Oh, no!Nicola: So then I rose to the surface really quickly which you know, you're not supposed todo in diving. So I went up really quickly. Luckily we weren't deep enough to do any damage but my diving buddy Graham was having a great time down there looking at shipwrecks and didn't even notice that I was missing.Todd: What a terrible guy.Nicola: Yeah, I know. so, then...Todd: Wow! Did they fail him? I hope he failed the course?Nicola: No, he passed. He paid enough money. He passed. But it meant that I couldn't go diving for the rest of the day cause I had gone down quite deep so that was a shame, but...Todd: That's terrible. But you didn't hurt yourself, you didn't come up too fast?Nicola: No, I was fine in the end but it was a shame because that was the end of my diving day. But we had a few more days to do it.Todd: So now you are comfortable diving. You don't freak out anymore?Nicola: I don't freak out anymore but I couldn't go diving now on my own because it has been so long. Yeah.

Todd: Hey Leath!Do you want to go ahead and talk about the story you we're going to say?Leath: OK. Yeah, this was about-- I'd say a year and a half ago and it was in Harare the capital, where my mom lives.I was on holidayback home seeing my mom and anyway it's a Sunday morning and I was in the shower.Got up pretty late, it must have been about half ten and all of a sudden my mom burst into the shower and she says," Leath, Leath, there's a snake, there's a snake in the kitchen."And so I thought, "Ah, what kind of snake would this be?" because we live in the capital, residential area almost high-rise. Well, not high rise but residential area.And so I put a towel around my waist and walked bad-temperedly through to the kitchen. Attached to the kitchen we've got this little courtyard where we set out to have morning coffee and breakfast. It's tiled and leads onto a small garden. And so I walked out onto the courtyard and there was a seven-foot Egyptian cobra. Wow! I was really, really blown away because I know a bit about snakes and I know that a bite from an Egyptian cobra in a country where the antidote isn't readily available is almost certainly fatal. And there we were, my mom and I, with a seven-foot Egyptian cobra slithering between the courtyard and our kitchen. And, eventually, we trapped it in the courtyard and I went to fetch guys who work for national parks. National parks are the guys who kind of look after animal problems within the city and brought them around And we were hoping that they were going to catch it because Zimbabwe isn't so rich at the moment and stuff like that. They don't have the facilities to keep caught animals so unless it's endangered they just shoot it, so the guy shot our seven-foot cobra.Todd: Oh, they shot it huh?Leath: Yeah, and we had to bury it outback.Todd: Really? Well, still I'm glad you just didn't want to be bitten or anything.Leath: No, no. No way.Todd: What a story. Thanks!

Todd: OK. Kevin, we're back here in the forest. We're gonna talk about sports.Kevin: OK. Great. I love sports.Todd: What sports do you like?Kevin: Well, my favorite sport is baseball. Obviously, I grew up and my father was a baseball player so I was always aroundbaseball.Todd: Wow.Kevin: My whole life.Todd: You mean your father was a player in the Major Leagues?Kevin: Yeah, exactly. Not only was he a player in the Major Leagues, he was fortunate enough to play in the World Series twice with the New York Mets.Todd: Wow! That's amazing.Kevin: Yeah, The Amazing Met's. 1969.Todd: Wow, that's great. Did you play baseball yourself?Kevin: Yeah, I played baseball pretty much my whole life up through college and university.Todd: OK. Why did you stop?Kevin: Well, it wasn't exactly by choice. I wasn't drafted high enough in professional baseball to.. in order for me to sign, so I ended up retiring from baseball and pursuing other things.Todd: OK. Great. Do you like any others sports?Kevin: Yeah. I actually, I enjoy all competition. You know I enjoy the other typical American sports of basketball and American football and so on, but I also try to learn about and enjoy the national sport of the countries that I'm in. For example now I'm in Japan and I've actually gotten quite into Sumo wrestling.Todd: Oh, really?Kevin: Yeah.Todd: Nice. Have you ever seen a sumo match live?Kevin: Yes, I have. I've been to two sumo bashos as they call them, or matches in Tokyo.Todd: Nice. Yeah, I wanna go. I wanna go myself.Kevin: Yeah, let's go sometime.Todd: OK. Let's do it.

Todd: OK. Hello?Steven: Hello, there!Todd: How are you doing today?Steven: Pretty good.Todd: Could you please introduce yourself.Steven: Yeah. My name is Steven and I come from the north of England.Todd: Oh, really? Where in the north of England?Steven: A little village called Gawsworth.Todd: Is it a big place?Steven: No, it's about 10 thousand people I think.Todd: Oh, really? Do you go back there often?Steven: Not so often. The last time I went back was Christmas.Todd: Oh, really? OK. Did you have a good time?Steven: Yeah, it was very nice. I saw old friends and family and did the usual Christmas things.Todd: What actually are the usual Christmas things?Steven: Oh, I guess a lot of eating and a lot of drinking and a lot of laughing. Just general fun and games I guess.Todd: Great. How many of your family members still live in this town?Steven: Well, they don't actually....my mom and dad live in the town. My brother and sister actually live pretty close to this town, so my family is all in that general area.Todd: Oh, OK. Great. Thanks a lot Steven.

Todd: OK. Jamie, we're going to talk about movies.Jamie: OK. Great!Todd: What is your favorite movie?Jamie: My favorite movie is kind of a heavy movie. It's a called Sophie's Choice with Meryl Streep and Kevin Kline.Todd: OK.Jamie: It's a movie, it's set in World War II. Meryl Streep plays a Polish woman who has come to America and she's met a man, Kevin Kline. Who has a series of problems of his own, mostly psychological which she is not 100 percent aware of and she does a bunch of scenes where she thinks of the past and the very difficult decision she had while during the war living in Poland. She had to decide between two children which one would be murdered by the Nazis and which one wouldn't. It's an ethical delimma that she faced at that time. She made and immediate decision on and it affected her the rest of her life.Todd: OK.Jamie: It's a fantastic movie. Not the story in itself, of course the story was brilliant but the acting, the fact that she speaks Polish, she speaks German, she speaks English with a Polish accent which is amazing. A writer who is actually a narrator to the movie as well, his character is great. Kevin Kline's basically a psycho character. He is a little bit deranged in itself is pretty neat. All in all, the characters, the plot line, the movie it's fanatasic.Todd: OK. Great. Sophie's Choice.Jamie: Sophie's Choice. I think it actually won an academy award in 1985 or '84.Todd: OK. Great. Thanks a lot.Jamie: My pleasure

Todd: OK, Conrad.Conrad: Yeah.Todd: You're quite the jock!Conrad: Thanks Todd.Todd: Yeah. So, we're gonna talk about sports.Conrad: All right.Todd: What sports do you like?Conrad: Well, I like a lot of sports but basketball is my favorite. Definitely.Todd: Oh, really?Conrad: Yeah!Todd: OK. How long have you been playing basketball?Conrad: Let's see.. Probably about thirty years. I'm thirty seven now and I think I was in elementary school when I started to play at first.Todd: Wow, at what age were you your best?Conrad: Let's see.. Probably around 20 maybe. Sometime when I was in college. Yeah.Todd: What position did you play when you played basketball?Conrad: Guard. A little bit of forward, depending on what kind of team I was playing on.Todd: Yeah, were you mainly an offensive or defensive player?Conrad: Defensive. Yeah.Todd: OK. Do you still watch a lot of basketball on TV?Conrad: Well, now living in Japan I don't get many chances to watch the NBA but I do follow it on the internet.Todd: OK. Do you still play basketball?Conrad: Yeah. I play about once a week with my-- at the university I work at with the club team there.Todd: OK. Great. Alright. Thanks a lot Conrad.Conrad: Sure. No problemTodd.

Todd: OK. Hello?Kevin: Hi! How you doing?Todd: I'm doing pretty good.Kevin: Good.Todd: What's your name?Kevin: My name is Kevin.Todd: Kevin. Where are you from?Kevin: I'm from Pheonix, Arizona.Todd: OK. Nice.Kevin: In the United States.Todd: Wow, were you born in Phoenix?Kevin: Actually, no. I was actually born in New York because my parents happened to be living in New York at that time. My father was a Major League baseball player and the year I was born, 1971, he was playing with the Mets in New York City. My birthday is in May, May 25th to be precise, and so my mother happened to be with my father in New York because it was baseball season. So I was actually born in New York but I grew up in Phoenix. Phoenix is what I consider to be my hometown.Todd: Wow! That's amazing. Do you remember anything about New York?Kevin: Yes. Actually, I do have a few memories because we spent probably three years there from the time I was born. Obviously, until I was about two and a half or three years, we spent the summers or the baseball season in New York. We rented a condominium on the second floor and I remember it was right across the street from La Guardia Airport. Of course, when I was a little kid, one and two years old, I used to love sitting by the kitchen windows. I even remember it was a bay window, the kind where you can roll the window open. I used to roll the window open and just watch the airplanes take off and land all day.Todd: Wow! That's cool.Kevin: Another memory I have is the people, the couple that lived below us was an elderly couple and they acted pretty much like our grandparents. I actually called them Grandma and Grandpa. Grandma Stevenson used to give me a bath in her kitchen sink because I was so small.Todd: Wow!Kevin: That she would actually give me a bath in her kitchen sink and I remember that as well.Todd: Wow, those are good memories.

Todd: OK. We're back with Jeanna. You want to talk about your summer vacation.Jeanna: Sure. I went to Las Vegas, Nevada; Reno, Nevada; Tahoe, California; and San Diego, California, and I went to Disneyland.Todd: Wow! Sounds like a really good time.Jeanna: Yeah, it was. It was a lot of fun.Todd: What was the best place?Jeanna: Probably Las Vegas. It was the most interesting.Todd: OK. why was it the most interesting?Jeanna: It was just really busy and there was always stuff going on. You know, never resting.Todd: OK. For example what stuff is going on? Like, what did you do?Jeanna: Well, we went shopping a lot. In a lot of different casinos that had malls in them, went and visited the Hoover Dam.Todd: Oh, wow! It's pretty big.Jeanna: Yeah, really big.Todd: That's a lot of water. Did you go swimming?Jeanna: No.Todd: Can you swim in the Hoover Dam?Jeanna: You can swim in the reservoir.Todd: I mean in the reservoir. Yeah. OK. How did you get to Las Vegas?Jeanna: By plane from Oakland to Las Vegas.Todd: OK. How long did it take?Jeanna: About an hour and forty-five minutes.Todd: OK. Do you think you'll go back to Las Vegas someday in the future?Jeanna: Hopefully.Todd: OK. Great. Thanks a lot, Jeanna.Jeanna: You're welcome.

Todd: Keri, I heard you have a new house.Keri: Yes, I do.Todd: Oh, so what's your new house like?Keri: It's small, it's old. It's mostly wooden in the inside. It has two bedrooms and a balcony off of those rooms. Downstairs, there's like a living room area and a tatami mat room, kitchen, bathroom.Todd: Wow, so do you live in the tatami mat room?Keri: No, there's two tatami mat rooms. There's one upstairs and there's one downstairs and I don't live in either. One we use as kind of a spare room and the other one is my roommate's bedroom.Todd: Oh, OK. So you have a roommate?Keri: Yes.Todd: What's it like having a roommate?Keri: It's good. I like living alone too but sometimes it's nice to come home and have someone there. My roommate gets home before I do and she likes to cook so often she's cooked dinner for me.Todd: Wow, that's nice.Keri: I know.Todd: Well, you do all the cleaning?Keri: Now that you mention it, I do a lot of the cleaning but not all of it.Todd: Oh, OK. Well, what kind of things does she make you?Keri: Last night she made curry. I think it was an Indian curry, tomato-base.Todd: Spicy?Keri: Yes.Todd: Cool. Thanks a lot, Keri.Keri: You're welcome.

Todd: I'm here with Natalie and she is working in Bangkok. And how long have you been here?Natalie: I've been here about 10 months.Todd: It's interesting to hear your thoughts on Bangkok because I was an English teacher here over 20 years ago from 1994 to 1998. It was my first teaching job and Bangkok was very different then than it is now. Now I would say it's a pretty amazing cosmopolitan city. Could you agree?Natalie: Yeah, that's part of the reason why we chose it. My partner and I traveled for about a year and a half and we said, "Okay, now let's live somewhere." So we decided to move to Bangkok because it has this great balance of you're still in Southeast Asia, so it still feels like it's developing, it's on its way to something, perhaps what we see Japan or China as now, but it's not quite there yet. And also you can get all the modern conveniences that you could possibly need here in the city. It's really well connected, so it feels like a regular metropolitan city, but at the same time it still feels like you're living in Southeast Asia, which is really cool.Todd: It has done an amazing job of one becoming this just bustling, beautiful cosmopolitan paradise. I mean, the skyline was not here 25 years ago. So all the buildings that they've built or it's just amazing. So now it almost rivals Hong Kong or New York and years ago they didn't have that. So in terms of the city planning, it's just phenomenal what they've done. But also, like you said, they've kept the kind of original cultural vibe to the city-Natalie: Absolutely.Todd: Which is pretty amazing.Natalie: You have different neighborhoods that you can live in. So there is the, I guess a main arteryof Bangkok is the Skytrain. So we call it the BTS. And this a, I guess what they were considered to be high speed and transportation rail system that goes right through the heart of Bangkok. So a lot of the neighborhoods that I would talk about kind of populated around the Skytrain. So you will have pockets of Bangkok that will feel very Thai. So they will be further out on the BTS Skytrain. But you can still get to the heart of Bangkok where all the malls are, or perhaps where all the business areas are within, I don't know, 20 minutes. And obviously, with it being in Southeast Asia, it's still really cheap.Natalie: You can go way out into the areas that are super Thai. You get amazing street food, you'll see very few tourists and then you can, within 20 minutes you can be in, say the Japanese area, which is more expensive and it has a lot of Western restaurants and obviously Japanese restaurants. 20 minutes later you can be in the tourist center where you'll see all the malls and perhaps the more city side of Bangkok. So it's very accessible.Todd: Yeah, it's interesting. How have you been to Dubai?Natalie: I haven't, no.Todd: What's interesting is Dubai and Bangkok have almost the exact same developmental model. So what they did is they built a nice train line, an elevated train and then along the train they built a bunch of shopping malls and condos and they've built a world-class airport and made it a hub for travel to other areas. And even though Dubai and Bangkok they're so different culturally, it's quite interesting to see that economically they're kind of thriving onthe same model. They get lots of international travel, they have a lot of things for tourists to do when they go there. They get a lot of people now that want to retire or maybe live there.Natalie: Yeah. The people that I speak to you about that they're saying the same thing. Bangkok is almost the center of Southeast Asia. You can get pretty much anywhere in the world on a long-haul flight. So you can fly to the UK directly from Bangkok, which is insane. You don't have to stop anywhere. If you want to go to Vietnam from somewhere in the West, you have to stop in Bangkok for the most part. There are very few direct flights. And you can get to the likes of Japan and China within just five or six hours.

Todd: Well I have to admit, because even English teachers will tell you, and they're lying if they don't admit this, even on tests like the TOEFL, it's very hard for a teacher to get 100%. Not because of knowledge, but because of concentration.Rufei: Yes.Todd: Right?Rufei: Exactly. We have a lot of questions and some of them, they are kind of tricky.Todd: Right.Rufei: Yeah.Todd: So they mislead you a little bit.Rufei: Yeah.Todd: Oh no, that's great. So you took all these courses, what was the course you were best at and the course you were worst at?Rufei: English was my worst at.Todd: Oh no, your English is wonderful! Really?Rufei: Yeah.Todd: Oh I disagree.Rufei: It was.Todd: Oh, OK. How do you learn English in China?Rufei: Actually, my speaking skills I gathered from my traveling, I did solo traveling last year.Todd: Wow, you've learned a lot, quickly.Rufei: Thank you.Todd: That's great! That's really inspirational I think for a lot of the students that listen to this site. One year?Rufei: Yeah.Todd: Fantastic.Rufei: But the thing I have to mention about is, you have to know a lot of words. Before you start to speak English, you have to know what you know. Like you have to remember a lot of words, and then you can use it when you have to use it.Todd: Okay, right. So English was tough, not easy.Rufei: Not easy, for everything you have to learn. Learning isn't easy and funny stuff for everyone. Starting is hard and it's kind of betray the human ...Todd: Spirit?Rufei: Yes.Todd: Wow, that's crazy. So how many students would be in an English class? I hear that China has huge English classes. Like there might be 100 students in one class.Rufei: It can be, but it depends. In my high school we have the same class at the same classroom always, and in my university we have 30 students in my English.Todd: Oh okay, that's kind of normal. That's still a lot, for an English teacher that's a lot. Were your teachers usually Chinese, or an international teacher?Rufei: Chinese teacher.Todd: Chinese teacher, okay. And so there was a big stress on grammar and vocabulary, things like that?Rufei: Yes.Todd: How about listening?Rufei: We only do the audio listening test. So it's always the same pronunciation.Todd: Yeah, so you don't have a lot of variety of accents?Rufei: Yes.Todd: Yeah. Okay, well you have to introduce to China.Rufei: Yeah, cool.Todd: What was your best subject?Rufei: My best subject was mathematics.Todd: Oh great. Yeah, that's impressive. I have a degree in economics and there's a lot of math. I went to a good school but I was not strong at math and I was terrible at physics. And physics and economics are kind of related, but not really, I did not do very well in physics. So how are you at physics?Rufei: Actually I love all the math stuff, but also included physics, because you also have to use a lot of mathematics on your physics. For the physics you have to know the formula very well, then you can use it. If you don't know the formula very well, when the question is there you cannot ...Todd: Apply?Rufei: ... apply that.Todd: Yeah. Oh yeah, I agree, it's tough. I am very impressed with you because whenever I meet somebody who is good at math or physics, I have great admiration. My degree was math heavy, but math was not my strong point.Rufei: So what was your strong point?Todd: That's a good question. I was never a good student at anything. How I got to a good university is actually surprising, but I was always middle of the road. Middle of the pack, as we said. Always B- student, in everything.Rufei: I see.Todd: Yeah, I was not exceptional like you.Rufei: You don't have to be very good at starting, but you can handle your life very easily. That's also an important thing for a human.Todd: That is true, I do agree with that. But I think if I was a student in China, I would be that Mister 2000.

Todd: Rufei, you are from China. In America, Chinese students have a reputation of being very hard-working. Is that true?Rufei: Yes, exactly. In my high school, in one class we have around 70 students in one class and everybody wants to be the top student, so everybody works so hard. I say my high school was kind of like a prison. You have to go to school every day from 6:35 AM to 9:40 PM.Todd: Really? That long?Rufei: Yes.Todd: That's over 12 hours; that's like 13, 14 hours a day!Rufei: Yes, exactly.Todd: How did you feel as a student studying that much?Rufei: Sleepy.Todd: I bet.Rufei: Every day I'm so sleepy.Todd: I can imagine. Do you think it was productive studying that much?Rufei: I think their purpose just like as to stay as much time as we can in the school and we cannot get distracted by other stuff, so we always stay at school and we always focus on our studying ... We cannot know anything about the outside of the wall from school.Todd: That's amazing. For such a long day, can you talk about the daily schedule? What was your schedule like everyday?Rufei: From 6:50, we start to have class. From 6:50 until maybe 11:45; we have 45 minutes class and then 10 minutes break. We also have 30 minutes we have to do exercise on the playground and, in the afternoon, is the same routine. Then, we went to dinner around 6:00 to 7:00. From 7:00 to 9:40 we have to do our homework.Todd: So, you study at school? It's not homework, it's schoolwork; you don't actually go home, right?Rufei: Yeah.Todd: That's crazy. How many classes would you have every day?Rufei: Eight classes.Todd: What were the subjects?Rufei: We separate the subject. If you learn more Mathematics, we learn mathematics, English, and Chinese, and physics, chemistry, and biology.Todd: That's very rigorous. Did you enjoy all the subjects?Rufei: Yeah. I love physics and biology and chemistry.Todd: Now you are training to be a doctor?Rufei: Yeah.Todd: That's fantastic. Did you know you wanted to be a doctor when you were in high school?Rufei: I kind of know because my father is a doctor and he was kind of forcing me to study medicine.Todd: Nice. We have a phrase in English; we say, "Follow in your father's footsteps." You definitely are following in your father's footsteps. That's great. Is your mother a doctor?Rufei: My mother is a businesswoman now.Todd: Okay, great. You had all these courses. In America, there's a big controversy about tests, that the kids take too many tests; it's too test driven. What about in China? Do you have a lot of tests?Rufei: Yeah, I have test every month. They will make a list of every single person; how much score you got in this test-Todd: Whoa. They rank everybody to see-Rufei: Yes.Todd: That's very competitive.Rufei: Yeah. I think that's kind of bad for our emotion.Todd: Yeah, so it creates a lot of stress.Rufei: Yeah. We have 2000 students in one grade.Todd: That is crazy. So, you can be number 2000, you can be the lowest student?Rufei: Yes.Todd: And they put that out there?Rufei: Yes.Todd: Really? They could never do that in America.Rufei: Yeah, I think so.Todd: Oh my gosh. Do you think that's a good idea?Rufei: Depends on the person.Todd: Right; yeah. Wow. You have a lot of pressure. Did you feel pressure from your parents, from your peers, from your teachers?Rufei: Yeah.Todd: Who gave you the most pressure?Rufei: Myself.Todd: That's good.Rufei: I don't want to be lazy. I don't want to be worse, so I have to always work hard to chasing other people ... Everybody wants to be the best, so everybody worked really, really hard. Even we have breaking time, they don't break at all.Todd: Seriously?Rufei: Yes.Todd: What do they do during the break?Rufei: They do questions.Todd: Wow. They quiz each other? The students quiz each other or they just do homework?Rufei: They do their homework and they find out what problem they've had and they solve the problem with teachers or other students. They just starting all day; they can't do that.Todd: That's amazing. Kids do this 14, 15 hours a day?Rufei: Yeah.Todd: Wow. That's really good for China!Rufei: We don't have that much summer vacation and winter vacation. In winter vacation, we have two weeks because of the Chinese New Year; it's about two weeks off. We have two weeks in winter vacation and one week summer vacation only.Todd: Is that enough?Rufei: Of course not. Even we have vacation, the teacher would give us a lot of homework to do.Todd: That is very impressive.Rufei: This is very not good experience.Todd: We'll talk about that in the next interview; I think that's a very interesting point.

Abidemi: Todd, are you good at saving money?Todd: No, I'm terrible. I waste money. I waste so much money.Abidemi: How?Todd: Well, I don't buy things on sale. I don't use coupons. I buy anything I see.Abidemi: So, when I shop, I don't look at prices. I just see the food or the thing and I get it and I buy it and I pay for it. And, then it's sometimes very expensive, so I just waste money. I don't budget. I need to budget my money but I don't budget my money.Todd: What about you? Are you good at saving money?Abidemi: I don't think I'm too bad at saving money. I look at prices a lot. I also buy a lot of things on sale, so I'm able to save some money.Todd: So, you look for discounts.Abidemi: Yes, I do.Todd: Do you use coupons or special offers?Abidemi: No, I don't, but if I see some I will use them.Todd: So, do you waste money on anything? Like, maybe eating out, buying clothes, renting movies?Abidemi: I waste money on buying clothes.Todd: Oh, okay!Abidemi: But, I save a little bit because I buy them on sale.Todd: Ah, do you buy things online?Abidemi: No, I don't. I usually go into the stores to shop.Todd: I'm good with clothes too, so I don't spend much money on clothes. I only shop maybe once a year. Or, I only shop if I need something, like it's really cold and I need a jacket.Abidemi: I see.Todd: And, I'm really bad, so I often only wear clothes people give to me.Abidemi: That's good!Todd: Yeah, so I get shirts or ties for Christmas gifts or a birthday gift, and I do that. My mom often asks ... every year, my mom asks, "What do you want for Christmas?", "What do you want for your birthday?"Todd: And I'll say, "Underwear and socks" or "Socks and T-shirts". And so, she buys them for me and then I don't have to buy them.Abidemi: Wow. Sounds like you're an easy person to give a present to.Todd: Yes, for clothes. Yes, for clothes. But, I waste money on computers and electronics and those things are expensive, so I buy a new computer every year. I have four computers now in my house.Abidemi: Wow.Todd: I have five mobile phones.Abidemi: Wow.Todd: I have an iPad. I have lots of electronic equipment. So, I spend so much money on those things.Abidemi: I waste money on traveling.Todd: Ah, yeah.Abidemi: Every year, I take about one or two trips to different countries, so that's where a lot of my money go.Todd: Yeah, traveling is expensive.Abidemi: Yes, yes.Todd: But, when you travel, do you save money? Do you stay at cheap hotels? Or, do you buy cheap plane tickets?Abidemi: I try to. I try to all the time. But, usually the plane ticket is so expensive that a lot of my savings is already gone.Todd: Yeah, I know. I buy my tickets online, usually with Expedia. And, it's cheap. It's pretty cheap. I waste money on food. I eat out almost every day.Abidemi: Wow.Todd: Or, I buy my dinner at the supermarket almost every day. Do you waste money on food?Abidemi: No, I don't. I usually get bored if I eat out too much, because even though I am not a very good cook, there are some thing that I cook that I like to eat. So, I would miss those things. So, no, I don't waste money on eating out.Todd: Ah, that's interesting. So, you save money, I waste money. You have to teach me your tricks. You have to teach me your tips on saving money.Abidemi: Please teach me how to get cheap travel tickets.Todd: It's a deal.Abidemi: Thanks.

Todd: Rachel, I thought we would talk a little bit about items and their shelf life, like how long will you keep something? For example, like a book or clothing, because yesterday I was talking to my students and they were surprised when I admitted that the shirt I was wearing, I had had for over 10 years. Now, they're young and they can't imagine that.Rachel: No, that might be a function of being young.Todd: Right, exactly.Rachel: Because their clothes of 10 years ago are obviously too small.Todd: Yeah.Rachel: It depends on the clothes.Todd: Do you like to keep your clothes a long time?Rachel: If I really like them, I might.Todd: Yeah. How often do you toss out your clothes?Rachel: I toss out clothes once or twice a year. I'll go through my wardrobe and throw out things that are too small or have started to look shabby. But there are other things that I just keep year after year after year, probably things people don't see as often like pajamas might last a little longer.Todd: Yeah.Rachel: Some people advise that if you haven't worn something for six months, you should throw it out, but that seems to me to be not logical, given that there are four seasons and they last a year. If you haven't worn something for a year, maybe you should consider throwing it out. But yeah, definitely, at the start of the season, not in the opposite season. You have to think about the weather.Todd: Yeah. What about food? We live in Japan. We're both teachers in Japan. One thing I often wonder about is the sashimi and the sushi, the raw fish. How long can you keep it before you eat it? They say you're supposed to have it that night, but I sometimes eat it the next morning or even for lunch.Rachel: With fish, as well as other meats, I think it's very easy to tell, because you can tell by the smell whether something's good or not. I actually think that rice is more dangerous.Todd: Oh really?Rachel: Yeah, because it will grow bacteria. Because it's been warm, it will grow bacteria easily at room temperature. The rice is the part you need to be careful about.Todd: Oh. Well what about other foods? Like are you somebody who's really strict about the expiration date?Rachel: I'm not. I think the expiration date on most products errs on the side of safety. And another thing is people confuse the best by date with the expiring date.Todd: Right.Rachel: The best by date is just about freshness, flavor. For example with spices ...Todd: And that's the date they put on the package in the store.Rachel: That's often the date that people go by.Todd: Sell by, yeah.Rachel: Yeah, sell by and best by. For example spices might have a best by date. After that, they might plump a little, they might lose a little flavor, but they're not dangerous.Todd: You can still eat it.Rachel: You can still use them, yeah.Todd: My rule is always three days. So, I'll eat anything if it's within ... except for meat, maybe, but anything if it's within three days of the expiration date or the sell-by date on the store's ...Rachel: Oh, I think that matters ... To me it makes an enormous difference what it is. For example, moyashi, which is bean sprouts, I'll eat them on the day or the day after, but not after that. They start getting bad really quickly. But, for example, a jar of pickles, that's going to last much longer than the three days after.Todd: Right. I think the big one, I guess, you're right about time, is dairy. Milk is obvious, because milk you can smell. But cheese ...Rachel: But on the other hand, it just turns into yogurt.Todd: Right, yes. So that's the other one is yogurt. So yogurt, I'll see it in the fridge and I'm like, "How long can I keep this?" Like sometimes it'll be past the expiration date, but it smells fine, it looks fine.Rachel: Well, yogurt is soured milk, so it's difficult to say at which point it sours, because it's already sour.Todd: Yeah, and cheese too lasts forever it seems like.Rachel: Pretty much. You can see the mold on cheese.Todd: Yeah. So what about if you see bread and there's a little mold on the bread?Rachel: No.Todd: Are you old school? Will you cut around it?Rachel: No. I used to and I used to cut the mold off cheese, but having learned more about visible mold is only a small amount of it and parts of mold you can't see are branching into the food.Todd: Oh, I see.Rachel: Yeah. So that makes it a little dodgier. So, no I probably wouldn't eat bread that had any kind of mold on it. And I'm dodgy about cheese to. That's got the wrong sort of mold on it.Todd: Right.Rachel: There's the right sort of mold like a blue cheese, and that's fine.Todd: Right. And I should clarify here, neither of us are medical professionals.Rachel: Don't take this advise.Todd: We're just talking about our own habits here, so ...Rachel: Another thing that ...Todd: What about juice? What about juice? Like how long can you keep juice? Can you smell when juice is bad?Rachel: I don't usually buy juice, so I don't really know.Todd: Oh, yeah.Rachel: Maybe you can smell it.Todd: Maybe you can smell it.Rachel: Yeah, I'd probably toss juice because I'm not experienced enough with it, obviously, to have made my own mind up about it, so I'd probably go by the date with that one.Todd: What's interesting is when you see some foods that you think would last forever, but actually they won't, they just have an expiration date that's way in the future, like canned goods.Rachel: Yes.Todd: Sometimes it's surprising when you're like, "Oh, there actually is an expiration date on there."Rachel: There is.Todd: But it's way in the future.Rachel: It's way in the future, as long as the can's not dented, I think ...Todd: Or rusty, right?Rachel: ... is the rule for that. Yeah.Todd: Yeah. Interesting topic.

Todd: I'm here with Rachel. We were talking about expiration dates. You were saying that you throw out your clothes regularly.Rachel: Fairly regularly.Todd: Yeah. Do you donate them or just toss them?Rachel: I put them in the recycling.Todd: There you go.Rachel: And hope they're going to be remade into something else.Todd: Yeah, I guess, yeah I always take it out on the day that they'll say that they'll pick up clothes.Rachel: Yeah. The reason for that is because I usually put, throw clothes out when they'll start to look a bit shabby, so I don't think anyone else wants to wear them.Todd: Right.Rachel: By that stage.Todd: What about furniture? How often do you try to get new furniture?Rachel: Almost never.Todd: Yeah.Rachel: That's something I don't ... Yeah, I'll put up with what I've got.Todd: Yeah.Rachel: It seems like such a waste to throw out such large things.Todd: Yeah, but you never want to replace the couch or the chair?Rachel: The couch has been replaced three or four times.Todd: Right.Rachel: That's a big one, but we've still got the same kitchen table. We had got to get some new chairs.Todd: Yeah, I've never been a big furniture guy, but I just when I see something that's really cheap ... I would never buy new furniture. I'm always amazed like who buys new furniture? Because when you walk by a store and you see the furniture, it's so expensive. I'm gonna sound really cheap, but it's like I'm like, wow, why would you pay hundreds of dollars or thousands of dollars for that when you can just buy one used or whatever for ten bucks or twenty bucks?Rachel: I'm definitely a used furniture person now.Todd: Yeah.Rachel: When we moved into our house we did go to a furniture store and bought all new furniture. It's easy. It's done. Everything looks new. It's kind of nice, but I almost exclusively buy second-hand furniture now. Depending on which store you go to, you can get some really good bargains on some beautiful old antique, that look really nice in your house, and cost a fraction of something new.Todd: Yeah. That's why you like anything that's made with metal or wood because you usually think it's going to age well.Rachel: Yes.Todd: Plastic, not so much.Rachel: No, no. I've definitely sworn off plastic. I think plastic's a fill in if you need something quickly.Todd: Yeah.Rachel: And cheaply, but definitely don't like to buy plastic now.Todd: What about electronic goods, like getting a new TV, a new refrigerator, stuff like that? How often do you buy?Rachel: We just wait until that breaks down. That's a pretty easy one.Todd: What about the TV though? The TVs don't break down. They go on forever. How often do you think, oh I want a new TV, I want a new nicer TV?Rachel: Our last TV broke.Todd: It did?Rachel: Well, we had lightning hit the house, and we lost several electronic items.Todd: Wow.Rachel: We lost a keyboard and a computer. I think we lost two out of ... We had three hard disc DV players.Todd: It was an electrical surge that fried all the circuits?Rachel: It fried the house, yeah pretty much.Todd: Wow. I did not know that could happen.Rachel: Yeah.

Todd: So Rachel, you said that in your home country, New Zealand, there're lots of birds that don't fly?Rachel: Yes, there are a lot of birds that don't fly.Todd: Wow, so I only new of the kiwi and of course the penguin, but I didn't know of other ones. So first the kiwi. It doesn't fly, right?Rachel: That's the famous one.Todd: Right.Rachel: They don't fly but they can run very fast. I've seen them.Todd: Liike and are the kiwi all over? Like are there different types of kiwi?Rachel: Yeah, there are several different varieties. They're very rare though, and they're nocturanal.Todd: Oh, nocturnal.Rachel: I'd say most New Zealanders have never seen one in the wild. I've only seen them in Kiwi parks.Todd: Oh, really.Rachel: Yeah, you don't see them.Todd: So, I thought they'd be like kangaroos in Australia, or something like you go and there's one.Rachel: No, they're very precious and very rare. One that you see more often is the pukeko which is ... it looks a little bit like a stork I suppose except it's dark blue.Todd: What's it called?Rachel: Pukeko.Todd: Pukeko.Rachel: Ah, yeah, and they're a lot more commom. And takahe is another oneTodd: So the first one ...Rachel: You can see them along the side of the road. When you're driving through the countryside they're much more common.Todd: So this pukeko, does it fly?Rachel: No, they don't fly.Todd: Really, and it's like a stork. It has long legs?Rachel: It has quite long legs. Yeah, it a very cute little bird, but it's very dark.Todd: How tall is it? Like up to your knee? Up to your hip?Rachel: Up to your knees.Todd: Really.Rachel: Cute little bird.Todd: That's awesome. So what was the other one you mentioned?Rachel: Takahe. It's very similar looking to that one. It's a little different. It's difficult to tell apart.Todd: Really, and it's also kind of dark blueish.Rachel: Yeah, another one's a kakapo. A very famous one. It's New Zealand's flightless green parrot. It's kind of like a large fat parrot that lives on the ground.Todd: Really.Rachel: It's extremely rare. I'm not sure what the numbers are now, but around twenty years ago I think there were only 45 leftTodd: Oh, that is rare.Rachel: Extremely rare, so there's an intensive breeding program for them, and of course nobody's seen those in the wild.Todd: Yeah, you have to be careful or it'll go like the way of the Tasmanian tiger.Rachel: Yeah, they breed and they nest on the ground. They lay their eggs on the ground, so they're very vulnerable to introduced predators, to any animals.Todd: Yeah, I know that, you don't have snakes, but I know that snakes when they got into Guam they like decimated the bird population.Rachel: Yep. That's what would happen and that's why New Zealand immigration customs is very strict about what kind of animals you can bring in. We don't even have snakes in zoos.Todd: That's smart.Rachel: Michael Jackson famously came to New Zealand in the 1980's and wanted to bring his pet snake with him and he wasn't allowed to.Todd: Oh, good on you.Rachel: There were no exceptions to that rule.Todd: Are there any other birds that don't fly? For example do you have penguins?Rachel: Oh, yes, there's lots of penguins in New Zealand.Todd: In the south right?Rachel: Yeah, in the south. Oh, they come up to the north sometimes.Todd: Really, that far north?Rachel: Yeah, occasionally. The big colonies are down south.Todd: Ah, that's amazing. How cool. Any other birds that don't fly?Rachel: Not that I can think of off the top of my head. I'd have to look it up on the Internet.Todd: No, that's still though ... that's quite a few. That's so nice.Rachel: The most famous was the moa of course.Todd: The moa?Rachel: Which is an ostrich sized bird.Todd: Oh, really.Rachel: Yeah, but they were ... they were killed off before Europeans arrived in New Zealand.Todd: Oh, easy hunting.Rachel: They were easy hunting. Yeah. And a big feast.Todd: It's funny how when you go to a place, you really want to see like a local animal, so last year I went to the Middle East. I went to U.A.E and Oman, and I just wanted to see a camel. I wanted to see a camel so bad, and I thought like I'd go down the road..Rachel: Everyone drives a Mercedes these days.Todd: and there'd be a camel, and I was kind of going out in the countryside. I wasn't just in the city, and I never saw a camel, and I was asking people that work there, and they're like, "yeah, you do see them" but I was just so heartbroken that I never saw a camel.Rachel: Ooh!Todd: It's one of my favorite animals. I just think they look so cool, so when I go to New Zealand, I have to make sure I see a kiwi.Rachel: But you'll have to go to the kiwi house.Todd: The Kiwi House.Rachel: The Kiwi House it's called. Or just look up zoos.Todd: And they got 'em?Rachel: Yep, they got 'em there. But you won't just see them driving around.

Todd: Okay, so, Jen, we're gonna talk about media and technology, phones and music, things like that. So the first one is, how addicted are you to your phone? How long can you go without using your phone?Jen: That's a difficult question because I'm very, I would say I'm very addicted to my phone because I keep on checking it every five minutes. I feel like without my phone my head doesn't, my brain stops working, you know?Todd: Wow.Jen: I would say the maximum I can stay without it would be one or two hours.Todd: You've got to be kidding me.Jen: I mean, if you asked me in the past, yeah, I could stay without it for awhile, but nowadays, I don't even own a watch so that would be my time as well, so, I have to keep checking it. What about you?Todd: We are polar opposites. Actually, I am so bad about not using my phone, and that's a smartphone, actually, I have two. I have an Android Galaxy and I have an iPhone. I set them down and forget where they are, and go days without actually checking them sometimes. I'll go to work and somebody will be like, are you mad at me? I've been trying to reach you and you won't ... And I'm like, no, I'm not mad at you, why? I'm like, oh, I haven't checked my phone in two days.Jen: That sounds so crazy to me because I could never go without my phone for two days.Todd: Well, one, there's a couple of things. One, it's old school, right? And two, I get all my information on the Internet on a PC. So I'm working, so I get everything on the Internet, like Facebook, news, stuff like that. The computer, like you said, tells the time. So I actually forget about my phone.Jen: I think if I have a PC then I would also forget my phone.Todd: But your generation, it's all in your hand, right?Jen: That's right because it's more convenient.Todd: Have you heard the term second brain?Jen: No.Todd: Yeah, somebody at some teacher conference was saying that phones are students' second brain, so they use it, you hold it and you have two brains, one in your hands and one in your head.Jen: I would agree.Todd: It's weird. So how about music? How addicted are you to music? Do you have to have music playing all the time?Jen: Not all the time but then I would have to listen to music at least once a day because it just refreshes your mind and you can relieve your stress through music. But it depends upon what kind of music you have. What about you? Do you like listening to music?Todd: No. I do, but I'm not a music aficionado, and I always listen to the same ten songs. I think a lot of older people, we kind of get into that rut where I listen, honestly, to music. And I'm from the 80s, so I'm 48, I'm almost 50. So I love music from the 70s and 80s and that's all I listen to.Jen: That's understandable. Actually, I also have a lot of old songs, but I just don't listen, I just, it's not like I just keep on listening to that music. I actually keep on adding more music, more songs to it so that my playlist is updated every now and then. I think, if you have good music, you will actually be addicted to it. Maybe you don't have good music.Todd: No, the music from the 80s is good. Okay, so what about TV? Do you watch TV every day?Jen: Not so much because lately, I've been so busy at school so I cannot really, yeah, I don't watch much TV. But, during weekends, yeah, I do like to watch new movies or different series.Todd: What about, are you one of those people that will stay up till 2:00, 3:00, 4:00 in the morning just watching YouTube videos?Jen: Not YouTube videos but yes, if I'm addicted to some series then I would just binge watch and watch them till 5:00 in the morning.Todd: What shows do you watch?Jen: Shows. Recently I've been watching Suits, it's like, it's a new series and it's really good. You should try it, too.Todd: Okay, I'll have to check it out. Thanks.Jen: You're welcome, Todd.

Todd: Okay, so I'm here with Jen and we're talking about clothing. Now, Jen, I'm a bit older than you, so I probably don't really care about what I wear so much. I always kind of pay the same price for my clothing. So I'm wondering, what's it like for a younger person? How much are you willing to pay? What is your price range?Jen: It depends upon like what you're buying. For example, if it's a pair of jeans then I would pay around 4,000 yen, that's Japanese yen. $40?Todd: Oh really? That's still relatively cheap. Like some people pay like $100, right? Or $200.Jen: I don't think I would ever pay that much because I'm a student right now,so paying more than that would be something I wouldn't do.Todd: Well what about in your home country of Nepal? How much would people pay for pants there?Jen: In Nepal, like compared to Japan, it's really cheap there. You can actually get a really decent pant in 1,500 yen.Todd: That's like $15.Jen: Yes.Todd: Around. Oh that's good. What's the cheapest you would pay? I mean, I guess you could get stuff for free, but what's the lowest you pay for clothes? Or for pants? For pants?Jen: Okay, so sometimes when there's a sale and especially if there's shorts then you can just get it for like 500 yen.Todd: Oh wow. Five bucks.Jen: Like five bucks, yeah.Todd: That's good. Now what about shoes? Do you have a lot of shoes?Jen: Yes I do.Todd: Okay, for some people like shoes they spend a lot of money on shoes. I have a rule, unless it's dress shoes for work, I don't like to spend anything over $100. If it's athletic shoes, like sneakers, never more than $50. Ever.Jen: Okay.Todd: Like how much do you on average pay for shoes?Jen: I think it's different for girls, because our shoes range from $10 to, you know, a lot of money.Todd: What's the most you've ever paid for a pair of shoes?Jen: $100.Todd: Oh really? That's not too bad.Jen: Yeah, it's not bad at all.Todd: Yeah, no, that's good. Kind of good range. How about the cheapest? Five bucks?Jen: Not five bucks, maybe 10 bucks, yeah.Todd: 10 bucks, yeah. All right. I don't even know if I could find shoes for five dollars. They'd fall apart, right?Jen: You can, though.Todd: Oh yeah?Jen: Yeah. On sale you can even get it in like three bucks.Todd: Okay. That brings up a good question because we're talking about shoes. How important is fashion for you? Are you willing to wear uncomfortable clothing to look good?Jen: Not always, because I really like comfort. I would rather wear pajamas and go out than, like you know, wear something really uncomfortable. But it depends, like if you're going to a party then you would obviously want to look good and wouldn't really care about comfort much. But in a daily basis, I would go for comfort always.Todd: Okay. Nice. How about for example, jewelry? Do you like to wear necklaces, earrings, rings, things like that?Jen: No, I'm not much of an accessories person.Todd: Okay. Now in your home country, Nepal, is it common for people to wear a lot of jewelry?Jen: Yes, they do.Todd: Oh yeah? Oh, okay. What do people like to wear?Jen: Everyone prefers gold I guess, because it's like people think that if you wear gold then you are rich. And yeah, gold, silver, and some wear diamonds.Todd: Okay, nice. Nice. I don't have any jewelry, I don't think. Oh wow, I didn't even realize that. I don't have one piece of jewelry.Jen: Really?Todd: Yeah, I have no rings. No necklaces. I have a broken watch. But yeah.Jen: Don't you ever feel like buying one though? Don't you ever follow a trend and thought about piercing your ears or something?Todd: That would be interesting, piercing my ears. You know, when I was your age, which was about over 20 years ago, it was just starting to happen that boys or men would pierce their ears. But it was a bit controversial, it wasn't like it's common now. So yeah.Jen: What about necklaces?Todd: Yeah, I used to have a necklace, yeah. And I just stopped wearing them, it's just not a thing. Yeah. How about you? Would you like to have piercings? Like do you have, you have earrings, right?Jen: Yes, I do, but I rarely use them because at some point it's just hurts and you just feel like you don't really need it, so yeah.Todd: What about in your country, do people have piercings in different places like eyelids or lips or ... ? Like a nose ring?Jen: Yeah, they have nose ring and then they also pierce their ears, like in so many different places. But I've never really seen anyone really piercing their eyelids or stuff. I would want to pierce my-Todd: Belly button? The belly button?Jen: Yes.Todd: Oh my gosh, that looks like it would hurt.Jen: I know-Todd: So much.Jen: -but I really want to do it.Todd: Really? All right, well, just be careful.Jen: Okay, I will

Todd: So what are some fun holidays you celebrate in Australia?Megen: Well, we have Australia Day. And it is a public holiday, so on that day we go to the beach, and we do various Australian kind of things. We have barbecues and picnics, and it's a day to wear the flag colors.Todd: So it's your patriotic day?Megen: Yeah, it is.Todd: Like our fourth of July.Megen: Yes, yeah, like that. We don't usually have fireworks though.Todd: Oh, because of fires?Megen: No, I don't know why we don't, but I guess fireworks are popular on the Fourth of July right?Todd: They are, although these days they don't do it so much because of fires.Megen: Oh, it's summer in July.Todd: Right, so it's dangerous. ... what about other holidays like for example Valentine's Day? Do you celebrate Valentine's Day?Megen: Yeah, we do.Todd: Is it a romantic day?Megen: Yeah, so for Valentine's Day, usually you'll go out with your partner for dinner ... usually chocolate and flowers. It's pretty extravagant actually. The flowers are becoming more and more extravagant, and people like to send bunches of flowers to their partners work, and there's decorations and a lot of the products in the store are aimed at Valentine's Day I think.Todd: What do you think of Valentine's Day?Megen: Well, I didn't want to get caught up in everything when I was in Australia. I would go out for dinner sometimes, but nothing big.Todd: Now in Japan they have two days. They have Valentine's Day and they have White Day. Can you explain that?Megen: Yeah, well, I was surprised that is the day when the girls are supposed to give something to the boys.Todd: Right, it's reversed.Megen: Yeah, because I think in Australia on Valentine's Day, it's very important for boys to give something to girls, but not necessarily as important for girls to give something for boys.Todd: So when do boys give something to girls?Megen: So that is what White Day is for. So the White Day is the day is the day for the boys to reciprocate the action of giving chocolate or something to their partner, and the students are school as well, they will exchange chocolates or candies that they've made and they will give something back on White Day.Todd: Yeah, it's kind of nice how they flip it around. I actually like that it's broken up.Megen: It gives you time to think about what to do, maybe.Todd: Right, exactly.

Todd: So, Katie, you are from England, correct?Katie: Uh-hmm, that's right.Todd: Are you from a big town?Katie: I'm from a very small town.Todd: Oh, what's the name?Katie: It's in the southwest. It's called Torquay.Todd: Torquay.Katie: Uh-hmm.Todd: OK. Is it a fun place to live?Katie: I think so. It's, it's very famous in the UK because we lots of beautiful beaches.Todd: Oh, that's nice.Katie: Hmm.Todd: So, in your town, where is a good place to go food shopping?Katie: There are a lot of supermarkets that you can go to. Most of them you need to go by car.Todd: Oh, that's a problem.Katie: It's difficult to walk to a close supermarket. But I'm lucky because there is one very close to my house that I can go to.Todd: OK. And can you recommend a good restaurant in your town? Where is a good place to eat dinner?Katie: There are lots of amazing restaurants along the sea front. So, you can sit in a restaurant and you can look at the beach at the same time.Todd: Oh, that's nice.Katie: Uh-hmm.Todd: How romantic.Katie: It's beautiful.Todd: Is it expensive?Katie: It depends what restaurant you go to. If you go to an Italian restaurant, that's going to be expensive.Todd: What kind of foods do they have?Katie: They have all kinds of foods, but the most popular food in my home town is Italian food and Chinese food.Todd: OK. No British food?Katie: Not really. (laughs)Todd: OK. We don't have American food either except hamburgers.Katie: They're good though.Todd: In your town, where is a good place to exercise?Katie: It depends on what kind of exercise you like. But we have lots of parks and people are always playing football in the parks.Todd: So, there's a, is there a big park in the middle of town?Katie: Uh-hmm.Todd: OK. Is it easy to get to?Katie: It's pretty easy to get to. Most people can walk there.Todd: So, that brings us to nature. Where's a good place to see nature?Katie: Well, you can see beautiful beaches wherever you look. There are so many beautiful beaches in Torquay. But there are also lots of beautiful gardens and you can see lots of flowers.Todd: OK. Nice.Katie: It's very nice. Yeah.Todd: That is nice. So, are there walking trails on the beach?Katie: Uh-hmm, and in the gardens too there are walking paths that you can take. And you can go in the mountains—Todd: Oh, beautiful.Katie: —and see stuff there too.Todd: That's lovely. So, in your town, where is a good place to meet people?Katie: Well, I keep saying the beach but lots of people from all over the UK come to Torquay to see the beach, so you can meet lots of different. People come for their holidays.Todd: OK. So, you can meet new people.Katie: Lots of new people. Yeah.Todd: That's cool.Katie: You can make lots of new friends.Todd: Now, what about a quiet place? Where's a good place to study or read or just relax?Katie: Well, we have lots of cafés that you can go to if you want to just have a quiet moment or just to read some books. You can go to a café.Todd: OK. And are the cafés easy to find?Katie: They're very easy to find. And we have lots of famous café brands as well.Todd: OK. Are there cafés on the beach, too?Katie: No. They're in the town center but the town center is very close to the beach.Todd: OK. Now, when is a good time to visit your town?Katie: Well…Todd: So, you say the beach, so summer?Katie: Yeah. I would say summer is a good time. But in England, there is not usually a good time because it's raining almost every day. But if you want to go to the beach, probably summer is a good time.Todd: OK. What about the fall?Katie: I mean, the fall is okay. Winter is good. Lots of people go to, go swimming on Christmas Day.Todd: Well, I definitely want to go there.Katie: Yes. It's a lovely place.

Todd: So Meg, are you busy this weekend?Meg: Yes, I'm so busy because I'm moving.Todd: Oh, no.Meg: Yeah, there's a lot of work to do.Todd: What do you have to do?Meg: First, I have to prepare my apartment, so I need to pack all of my things.Todd: That's not fun.Meg: No, it takes a long time.Todd: Do you need help?Meg: Yeah, do you have time to help me?Todd: I can help you on Sunday.Meg: Ooh, are you busy on Saturday?Todd: Yeah, on Saturday I have to work. I have to teach two classes, and then after I teach, I have to grade papers. Oh, it sounds like you're really busy too. Plus, I have to meet my friends that evening.Meg: Oh, what will you do with your friends?Todd: I'm helping my friend also. My friend has car problems, so I have to take him to the mechanic, but on Sunday I can help you.Meg: OK, that would be great because on Sunday I have to take some trash to the dump, and I have to finish some paperwork at city hall to prepare for moving to a new countryTodd: Now, because you're moving, do you have to go to the post office?Meg: I do have to go to the post office. I almost forgot. At the post office, I have to submit a form to say my new address.Todd: Ah, that's good because I have to go to the post office, too.Meg: Oh, really.Todd: I have to send my mom's birthday gift to her.Meg: When is your mom's birthday?Todd: It was one month ago.Meg: Ah, so you have to send it quickly.Todd: Yes, I have to get on it.Meg: OK, well, let's go together.Todd: So, I'll see you Sunday. What time should I be here?Meg: I have to go to city hall by three p.m., so can you come at two?Todd: OK, but if you want to go to the dump, the dump closes at noon, so we have to leave early.Meg: Ah, OK. Can you come at eleven?Todd: Yes. OK, so I will see you at eleven o'clock.Meg: Great, see you then.Todd: Bye.Meg: Bye.

Todd: OK, we'll talk about movies.Katie: OK.Todd: Have you ever seen a German movie?Katie: I haven't seen a German movie. I haven't seen very many movies.Todd: Oh, OK.Katie: Even in English movies, I haven't seen very many.Todd: Well, have you seen a Canadian movie?Katie: Uh, I don't know. Have I?Todd: Well, the thing is, in Hollywood in America, all the famous actors are Canadian, so I think everybody's seen a Canadian movie.Katie: I've definitely seen a Canadian actor.Todd: Yeah, all actors in America are Canadian it seems like.Katie: I think so.Todd: OK, have you ever bought something from Italy?Katie: From Italy. I have. I have bought - not for me - but I bought my mother a bag from Italy one time.Todd: OK, what was the brand?Katie: I have no idea. She asked me to buy a brand and I bought it, but I don't know which one it was.Todd: OK, have you bought something from Japan?Katie: I've bought lots of things from Japan. I've lived in Japan for a few years, so I've bought all kinds of things from Japan.Todd: OK, and now we'll move on to countries.Katie: OK.Todd: Have you ever been to France?Katie: I have. Actually, I have been to France a couple of times. My high school has a house in France, so for our school trips we would go to France every year.Todd: Ooh, how nice.Katie: Yeah, how about you? Have you been to France?Todd: You know, I haven't really. I took a bus from England to Prague, so the bus drove through France, but it never stopped.Katie: I see.Todd: What other countries have you been to?Katie: I've been to Germany, I've been to Hong Kong, I've been to South Korea, and I've been to China.Todd: Wow, you've been to a lot of places.Katie: Yeah. How about you? What countries have you been to?Todd: Ah, I've been to countries in Europe. I've been to Israel. I've been to Cambodia and Laos. I worked in Thailand, and I've been to Taiwan and Korea.Katie: Wow. Which country did you like the best?Todd: Oh boy! That's impossible. I will say this, I love ... I love Seoul. I love Seoul, Korea. It's a great city. OK, anyway, thanks, Katie.Katie: Thank you.

Todd: So Aimee, let's talk about routines?Aimee: OK.Todd: What time do you get up most days?Aimee: I get up ... I get up about six.Todd: Oh, wow! That's early. I'm about the same. I get up at 7ish, usually.Aimee: OK, and what do you eat for breakfast?Todd: I usually have toast. I'm lazy. I don't cook in the mornings, so toast, but I always have coffeeAimee: Right. Yeah, that sounds good.Todd: Yeah, I love coffee. Do you have coffee every morning?Aimee: I have coffee every morning. I also have hot water and fresh lemon juice, every morning.Todd: Why?Aimee: Because it is good for your body, and I enjoy it.Todd: OK. Good. So when do you leave the house most days?Aimee: I leave the house about seven o'clock.Todd: Wow, that's early.Aimee: It is. Maybe between seven and seven-thirty. Yeah. How about you Todd?Todd: A little later, usually around 8.Aimee: OK.Todd: And where do you eat lunch every day?Aimee: Every day? I eat lunch at work every day, so I will buy something from the cafeteria at my work, or I will bring somethingTodd: Most days, what do you have for lunch?Aimee: I have a sandwich and a smoothie.Todd: Mm, that's healthy.Aimee: Yeah.Todd: You're healthy.Aimee: No, not really. (laughter) Yeah, sandwich and a smoothie and probably a chocolate biscuit.Todd: Ooh, OK. That's not healthy.Aimee: It's not. And you?Todd: I eat at the cafeteria every day at my school and I always have salad every day. I love salad, yeah! I usually have a very healthy lunch. I have lean meat. Chicken usually and a salad and tea.Aimee: That does sound healthy.Todd: It is, kind of. A healthy meal of the day.So, every day, who do you talk to?Aimee: I talk to my children every day. Yes, we talk a lot.Todd: What do you talk about?Aimee: We talk about our everyday routine. I remind them to do their tasks, and I remind them to get on with ...Todd: the chores?Aimee: Yes. Chores and their routine.Todd: What do they do? What chores do they do?Aimee: Well, they're still young, so my two-year old doesn't do anything. She brings her plate to the kitchen when she's finished. She's good at that actually. My eight-year old, she folds her clean laundry and puts it awayTodd: Oh, that's good.Aimee: Yes.Todd: Nice. Very responsible. So when do you get home most days?Aimee: I get home around six o'clock. How about you Todd?Todd: Oh, I get home late. I get home around ten o'clock.Aimee: Oh, that is late.Todd: Yeah, very late. So I work late. I live alone so, I work late and I go to the gym and sometimes I go eat at a restaurant.Aimee: Nice.Todd: I never cook.Aimee: I never go to the gym.Todd: (Laughter)Aimee: (Laughter) What time do you go to bed then?Todd: I go to bed early actually. I get home at nine or ten and I go to bed by eleven usually. And you?Aimee: Eleven's early.Todd: It is early.Aimee: OK, I think I'm probably about the same. Eleven o'clock. Yeah, I go to bed about eleven o'clock.Todd: OK, so how many hours do you sleep most nights?Aimee: I guess I get about seven. Six or seven hours.Todd: Yeah, I get eight. I love sleeping.Aimee: You sleep more at the weekend?Todd: Hmm! You sleep in Saturday and Sunday?Aimee: I try if I can.Todd: Sunday is easier to sleep in.Aimee: OK, thanks Aimee.

Todd: Hey Aimee, how are you today?Aimee: I'm good, thanks Todd. And you?Todd: I'm good. Pretty good. Let's talk about your favorite things.Aimee: OK.Todd: What is your favorite food?Aimee: Ooh! My favorite food is avocado.Todd: Avocado?Aimee: Honestly.Todd: Wow!Aimee: How about you?Todd: My favorite food is pizza, I think. I love pizza.Aimee: Oh, me too!Todd: It's so good.Aimee: It's so delicious.Todd: Yeah.Aimee: And what is your favorite movie?Todd: Well, my favorite movie is Star Wars.Aimee: Classic!Todd: I know. And you? What is your favorite movie?Aimee: Well, I do love Star Wars too, but my favorite movie Ferris Beuller's Day Off.Todd: Ooh! I like that movie a lot. Very good. Very good. So I was in high school the same time as the movieAimee: Were you?Todd: Yeah!Aimee: Great!Todd: So cool. Who is your favorite actor?Aimee: My favorite actor is Jean Reno.Todd: Hmm, the Frenchmen.Aimee: Yes. Yes, he's French, but he's been in a lot of American movies too.Todd: Yeah, I like the movie Leon.Aimee: Love it!Todd: It's very cool.Aimee: Yes, I agree. How about you?Todd: My favorite actor is Brad Pitt, so I like Brad Pitt a lot.Aimee: He's great.Todd: Yeah, he is good.Aimee: Very talented.Todd: Ah, who ... I'm sorry ... what is your favorite season?Aimee: My favorite season is probably Spring. I think. It's ... the cool of winter has passed and it's not too hot yet, so I think Spring. How about you? What's your favorite season?Todd: Oh, my favorite season is the Fall or Autumn. I love the Fall. I love the colors. It is not hot. It is not cold, and they are many holidays, and my birthday is in the Fall.Aimee: They are great reasons to love Autumn.Todd: So, when is your birthday?Aimee: Actually, my birthday is also in Autumn. My birthday is in October.Todd: Oh, wow! Me too. My birthday is also in October. What day?Aimee: 14th!Todd: 14th!Aimee: And you?Todd: The second. Cool! So next year let's have a birthday party together.Aimee: OK.Todd: October birthday party.Aimee: Good idea.Todd: So what is your favorite city?Aimee: My favorite city is probably Osaka.Todd: Oh, in Japan.Aimee: Yes, yes. So far. Yes, Osaka is very noisy and colorful and the people are very open and talkative, so I really enjoy Osaka.Todd:Nice.Aimee: How about you? What's your favorite city?Todd: I think my favorite city is Barcelona.Aimee: Ooh, in Spain.Todd: Yeah, it's very nice.Aimee: It is.Todd: It's warm. It's beautiful. The food is delicious.Aimee: Yes.Todd: People are nice.Aimee: Yes.Todd: But it's expensive.Aimee: Right.Todd: A little bit.Aimee: Yeah.Todd: But Osaka is expensive.Aimee: That's true.Todd: Very expensive.Aimee: Yeah.Todd: OK, thanks.Aimee: Thanks, Todd.Todd: Bye.Aimee: Bye.

Todd: So Meg, we are talking about clothes, and you always look nice at work. You have a very nice fashion sense.Meg: Oh, thank you.Todd: So you must go shopping a lot.Meg: I do go shopping sometimes. It's fun to go shopping and buy new clothes especially when it's a new season.Todd: Like what do you like to wear per season? For example, what do you like to wear in winter?Meg: In the winter, it's pretty cold. So I like to wear sweaters. Sometimes, a t-shirt with a sweater over it to stay warm. Lots of long-sleeve shirts. I like to wear long-sleeve shirts. And I still wear skirts in the winter. So sometimes, I wear tights underneath the skirts to stay warm.Todd: What about dresses? Do you like to wear dresses?Meg: I do like to wear dresses. In the winter, it's a good time actually to wear sweater-dresses. They're warm and a dress, so it's nice for work.Todd: Sweater-dresses.Meg: Have you seen a sweater-dress before?Todd: I have no idea what a sweater-dress is. What is a sweater-dress?Meg: It's a dress but made of sweater material.Todd: Ah.Meg: So sweater-cloth made into a dress. So it's very warm.Todd: Okay. I was picturing a sweater with a skirt attached to it.Meg: [Laughs] You might find that but I think a sweater-dress is a little different.Todd: Okay. What about… What about in the summer?Meg: In the summer, I love to wear flip-flops. It's my favorite thing to wear. So I often wear flip-flops with jeans or shorts, skirts again. I don't wear tights in the summer because it's too hot.Todd: Right. Do you wear flip-flops to work?Meg: I can't wear flip-flops to work. So when I go to work, I often wear high heels or flats, some dress shoes.Todd: Okay. So do you like to wear shorts or skirts. Which do you prefer?Meg: I prefer shorts because it's more comfortable and easy to move around. But I also can't wear shorts to work. So I have many summer skirts for work.Todd: Okay. Now, let's talk about shoes. So women often have many types of shoes, high heels, boots, flats, like you just said, sneakers. So what kind of shoes besides flip-flops do you like to wear?Meg: I do have many pairs of shoes and so I like to wear flats and sandals especially in the summer. In the winter, I like to wear boots and rain shoes when it rains or rain boots. When I'm exercising, I like to wear sneakers or tennis shoes because it's good for your feet.Todd: Oh right. Now you travel a lot, we both travel a lot. What shoes do you usually take when you travel?Meg: When I travel, I usually take flats because they're easy to remove at the airport and they're light and convenient for traveling.Todd: Oh, right.Meg: What shoes do you usually use?Todd: Just my sneakers. So my sneakers I wear everywhere. Now, women sometimes have accessories, you know, like earrings, necklaces, scarves, things like that. What do you like to wear?Meg: I like to wear necklaces especially long necklaces. I don't like necklaces that are too short. It feels uncomfortable. I don't like to wear bracelets or a watch because I don't like anything on my wrist, but I do love to wear rings. I usually wear one ring each hand, just for fashion, not for anything special.Todd: Oh that's nice. Cool. Well anyway, thanks, Meg.Meg: Thank you.

Listen to Aaron and Terry talk about tips and tricks for navigating e-commerce. They welcome industry expert Todd Downing who shares great insight on navigating Ecwid and Shopify. Together they will explore ways you can best utilize these tools to make your e-commerce store profitable and successful. They cover topics like school stores and the number one tip for eCommerce success. Sponsored by: Embrilliance.com. Get 10% off by using the code 2RG at check out. Our regular listeners know this, but 2 Regular Guys are all about garment decorating, a bit of fun, and no rants or lectures or selling. We are not doing this for our employers, but rather for our industry. Since February 2013, The 2 Regular Guys have been the first and the most listened to garment decorating industry podcast on this planet! We are humbled by all of you tuning in each week. We work hard to bring you information that will make your business better, and our industry better. Take a look at our incredible weekly guest list and you'll understand where this industry goes for news, interviews and the heartbeat of garment decorating. Thanks for listening! eCommerce Tips and Tricks Todd Downing started Fat Dad Custom Designs in a spare bedroom 13 years ago, really started taking things seriously 4 years ago and now has an 8,000 square foot mall storefront. He is one of the Admins of Sublimation and more a Facebook group of over 40,000 members. Todd also recently started the Fat Dad Wholesale Business Basics Facebook group aimed at helping those micro-businesses make the leap to the next level.  Aaron: So start us out with the planning phase for you. What is important to have figured out in your head before diving into setting up an ecommerce store?  Todd: What do you want the store to do for you? What kind of results do you want? Do you want leads, do you want sales, or do you just want a place where people can find you.  Terry: Where do you spend the most time and what section of the ecommerce site is the most important to you? Todd: in the mock up stage. Pics sell so make sure you use great pics.  Aaron: You do a lot with ecwid and I believe are even working on some specific training for that platform. What lead you to pick that over lets say a Shopify or BigCommerce? Todd: 3 things lead me to Ecwid, the first being its free. There are so many paid choices out there it's hard to know what's going to work for you and if it's worth it. 2, the ease of set up, I can have a simple store up and running within a half hour from sign up to first sale. 3. You aren't tied to one platform. Ecwid can be tied to many different sites.  Terry: You've talked about images and mock-ups. Do you have any other tips for those on the site?  Todd: Every major supplier has their images on their websites, use those to make your mockups look as realistic as possible.  Aaron: Let's talk about getting people to the site. What are some suggestions to drive traffic to your new store? Todd: Post post post and post some more. Spread the word everywhere. Post the link in your emails, blog posts, Instagram post, Twitter, everywhere!  Terry: What are some other uses for having an ecommerce store outside of just selling your products online? What are some other markets? (For Todd - Examples might be Team Stores, Merch for YouTubers etc.) Todd: At any one time we have at least 5 stores going that include team apparel, fundraisers,benefits, and corporate apparel.  Aaron: If you could only give someone one tip, what would the #1 Tip you would give people setting up an eCommerce Site? Todd: Don't be afraid. Facebook Live Video Other Events Aaron's Online Video Series "Small Business Saturdays" #SBSVideos Every Saturday Check out the Podcast version at SmallBusinessSaturdaysPodcast.com Complete Screen Printing Business Course Nashville with Atlas Screen Supply will be October 26-27 Complete Screen Printing Business Course Phoenix with WorkHorse Products will be November 2-3 The Sublim...

Okay guys. Strap in and pour a few glasses of wine, this is a long one guys. This week, Jess unfolds the multiple murders commited by Canadian serial killer, Bruce McArthur. Even Seasame Street couldn't prepare MArci and Jess for the body count by this kinky psychopath. This episode leaves Marci with many questions such as: Why name your kid Todd? What is with the cannibals? And, FOR THE LOVE OF GOD, What was the fabulous Halloween Costume?!

Managing people when you are not a people manager keeps most property management businesses within 0-200 doors. They can’t scale beyond that without hiring a significant number of people. How can you shift to outsourcing to scale, save money, and improve business operations? Today, I am talking with Todd Breen of VirtuallyinCredible, which helps answer property management leasing calls every day through its experienced call center. Also, VirtuallyinCredible can hire virtual assistants (VAs) and customer service representatives (CSRs) with or without phone skills for you and your property management business. You’ll Learn... [03:15] Outsourcing: Follow rules to get it right, and select best solution to avoid failure. [04:03] Outsource companies often find and hire virtual assistants (VAs) and other team members from foreign countries causing frustration instead of support . [06:00] Small businesses need an entrepreneur, people manager, and task-oriented employees. [07:43] People Manager Traits: They care for their staff and have strong coaching, communication, and development skills. [08:50] Avoid pitfall of a property management entrepreneur who manages a team, but shouldn’t; they’re nice people, but they’re not making money or sales for the business. [12:30] Grow your management company by adding more doors and a people manager. [13:35] Entrepreneurs are sales-oriented, driven, and willing to do things others aren’t; they start controlling everyone and everything, so they need “inspired staff.” [16:25] Systems can make or break businesses; is your business systemized; and has it established and documented processes, policies, and systems? [20:14] HR should find, hire, and train employees; supervision is quality assurance. [21:38] Three Outsource Options: Hire your own VA directly; hire a VA reseller/recruiter; or select turnkey solution to hire VA for you. [27:54] Ask for and get good reviews by offering good service. [38:30] Don’t underestimate or overestimate software; technology is another tool. besides outsourcing that creates leverage, and lowers operational and staffing costs. Tweetables Property management businesses can’t scale, stay stale without hiring lots of people. Shift to outsourcing to scale, save money, and improve business operations. Outsourcing: Get it right by following rules and avoid failure by selecting a solution Lifeblood of Real Estate Business: Answer phone, get listing, rent/sell new listing Resources Todd Breen’s Email VirtuallyinCredible HireSmartVAs GatherKudos SuperTenders Property Meld EZ Repair Hotline DGS 39: Property Management Outsourcing with Todd Breen DGS 43: How Virtually Incredible Can Help a Property Management Business Grow with Todd Breen DoorGrow Website Score Quiz DoorGrowClub Facebook Group DoorGrowLive The online Windows XP simulator runs in a web browser and its operation imitates the operating system. You can use it to prank someone. Transcript Jason: Welcome, DoorGrow hackers to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, and expand your rent roll, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow hacker. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, expand the market, and help the best property managers win. If you enjoy this episode, do me a favor, open up iTunes, find the DoorGrowShow, subscribe, and then give us a real review. Thank you for helping us with that vision. I’m your host, property management growth hacker Jason Hull, the founder of OpenPotion, GatherKudos, ThunderLocal, and of course, DoorGrow. Now, let’s get into the show. Today’s guest, I have with me, the wise, experienced, property management guru, Todd Breen. Todd, welcome to the show. Todd: Thanks, Jason. It’s awesome to be here. Jason: Todd, you are talking to us live right now from Manila, right? Todd: That’s correct. I spend a few months a year here working with our team and been enjoying my time here, and getting a lot of work done. It’s an honor to be on your show all the away from around the world. Jason: It’s a tropical island though, right? Todd: It is. It’s actually the cooler season right now, so it’s similar to where I live in Florida. It’s just a nice weather. Jason: Maybe there’s a little bit of fun in it while you’re there too. Todd: Yeah. I played golf today while you guys were sleeping. Jason: Yes, nice. Cool. Todd, today, we are going to be talking about outsourcing roles for small, medium, and large companies—perhaps there’s some differences there—and connected to Virtually inCredible. Tell everybody, what is your thinking behind outsourcing in general. This is a topic that used to be taboo. It used to be a bad word. “Uh-oh, they’re outsourcing. You’re not using people in the US, you’re like some sort of evil entrepreneur.” I think the temperature shifted. Todd: It has. I first started outsourcing eight years ago in 2010. Back in those days, I got a lot of raised eyebrows and funny looks. Now, when people hear that we’re outsourcing to the scale that we are, a lot of people are like, “Wow! That’s awesome! How can I save some money and improve my business operations in the process?” It’s really matured nicely. The topic today is about how to get it right if you’re going to try and outsource, whether you’re a small, medium, or large business. I’m really excited to share what I’ve learned in eight years of helping small, medium, and large businesses outsource. I’ve seen what’s worked and what hasn’t. In this, I’m just going to lay it out for you and say, “Hey, if you’ve tried and failed in the past, I can probably pinpoint how that happened.” We’ll do it in a very simple grid that I’ve made for you guys. If you’re a first timer and you want to get it done right the first time, we’re going to explain the rules for you and have what it takes to do it right and to pick the right outsourcing solution. Jason: Anyone that’s listening to this show knows we’ve had a few different companies that help with like either VAs or outsourcing or finding assistants for things, and I’ve revealed multiple times, I’ve had my fair share of failures. I’ve had team members in India, Bolivia, Philippines. Right now, the bulk of my team are in the US because I’ve had so many struggles dealing with a lot of that. But we’re now just now ourselves getting back into hiring and sourcing some talent in the Philippines to add greater support for my team and my staff. Our team has helped your team with some branding work and designing new logos, so check out Virtually inCredible’s new shiny logo. I’m really liking it. We also helped out HireSmart VAs and have cleaned up their branding. It’s been awesome getting familiar with people that are making a difference in the space of property management. You’re also making a difference in the lives of people in the Philippines. Todd: I grew up in the real estate business. My dad was a very busy real estate broker, very successful, and he was working days, nights, and weekends, and he was always answering the phone. Because he couldn’t afford not to answer the phone because the lifeblood of any real estate business is answer the phone, get a listing, answer the phone, rent or sell new listing. I have a real passion now with my four kids to give them a better quality of life as third generation property management company. They just look at me and say, “Dad, how did you do it before you could outsource your leasing lines or before you could have your own private virtual assistant that was full time helping you?” And I said, ‘Yeah, it was a lot of hard work and now, it’s a lot of smart work.” Let me get into what the rules are so that the viewers will have an idea what it takes to get the right solution for you no matter what stage of business you’re in. Is it alright with you if I share my screen? Jason: Yeah, you can share your screen. Just make sure you’re talking through it because some people would just be hearing this. Todd: I’m sharing my screen, I’m going here, I’m hitting play, and tell me if you can see my slides. Jason: Yup, I see them. Todd: If you’re a small business, you’re all three of what a business needs. Because a business needs an entrepreneur that actually is the driving force behind the business, a people manager and task a score of people or employees that actually perform the tasks needed to get the job done in the business. Me, I’m an entrepreneur, always have been my whole life, and I struggled building my management company with one thing and that was managing my staff. I was pretty good at managing owners and tenants, but you don’t work everyday, all day, eight hours a day with your homeowner and your tenant. You get intermittent relationships with them. You have to actually build a relationship with your team. Whether it’s inhouse, whether it’s onshore, whether it’s offshore, if you can’t manage people, then my aha moment was, “I needed a people manager.” On this screen, I'm listing the things that a people manager needs. They’re good at caring for their staff. Me, as an entrepreneur, that’s not in my DNA. I’m not going to trouble you with my troubles and I appreciate it if won’t trouble me with yours. Entrepreneurs are not the warm fuzzy people managers. People managers are good at coaching, communicating, development, they take an interest in the development of the staff. I’ve got a graphic on the screen, there’s things that a people manager does. Number one, they know me. Number two, they focus on me and help me to focus. Number three, they care about me as a person. When all three of those things happen, they inspire me to do my best. There’s a long list of things that people managers do, but that inspiration in getting into the minds and hearts of the team and building a team is what a people manager does. Jason: Just to back that up, what I’ll say is, I see this a lot. That’s what I get to do all day long is—I’ve talked to hundreds of different property management entrepreneurs, especially when they get into that 2-400 door range—they end up in this pitfall where they now have a team and the trap because they’re trying to manage this team, and they have this to-do list that’s ever growing and endlessly long, and everything on their to-do list have been sitting there for more than two weeks. It’s probably there because they’re not the person that should be doing it. They’re in a situation which they are not natural managers. It’s just not who they are. Todd: Right. Jason: They end up in a difficult situation in which they’re not managing well, the team’s not performing well, and then they’re blaming the team. Todd: They’re really in the wrong role. An entrepreneur is very rarely a people manager. If we meet an entrepreneur who’s an awesome people manager, you’re looking at the one in a thousand entrepreneurs, or one in a hundred. It’s rare to see somebody who’s a gifted entrepreneur, and a wonderful people manager. Jason: Virtually, if they are really good people managers, they’re not so great at the entrepreneurship, the sales side of the business is struggling, they’re really nice to people, but they’re not making money. Todd: On the screen, I’ve got a picture of my wife and I right now. My wife is the consummate, ultimate people manager. She’s tremendous in managing people. We have a team of well over 150 here in the Philippines. They all think of her as the mother goose or mother hen, but they love and respect her, and they all do for her above and beyond because they’re inspired by her. It’s awesome for me to see that because I don’t have that skill set and it’s wonderful, it defines our company. Let me explain to you why that’s so important. If you are a small business, you’re the entrepreneur, and you hire your first staff member—maybe it’s a property manager, maybe it’s a secretary, or a receptionist, maybe it’s an inspector, or a work person/handyman—as soon as you start managing people and you’re not a people manager, that’s what keeps most property management businesses in the 0-200 doors. Because you can’t scale beyond 200 doors without hiring a significant number of people. Whether you hire them yourself, or you outsource them, it’s up to you, but you need people to blow past 200 doors. The companies, they get from 150-200 doors and grow up to 500 doors, they have to develop a people manager and get reliable people that work for them. There’s ways that you can get a people manager. You can hire one directly. By the way, if you were 500 or more doors, the companies that are 800-1000, 2000 doors, let me tell you something, they have a people manager on staff. Jason: Sometimes multiple. Todd: That people manager is the reason why they’ve hit that level and it’s the missing ingredient. Everyone says how do I grow my management company. I say, We’ll, there’s two ways to grow your management company. One is add more doors but at some point, you’re going to need to add a people manager.” You can actually rent a people manager or you can hire one depending on how you outsource. That’s one of the keys to today’s lessons is, “Hey, if I’m 100 doors and all I really want to do is get to 200 because the cash flow just looks so amazing then I want to go to 300. How do I best do it?” There’s some real super rules that I’m going to walk you through on how to do that. I’ve switched screens here now, for those who are listening. If you don’t have a people manager, you’ll have staff turnover, more than you want staff turnover. You’ll notice that it’s easier to get bad reviews than it is to get good reviews because you don’t have inspired staff on your team. You’re going to hit a slower growth process because normally what happens is, the entrepreneurs grows the business to the first 100, 200 doors and then, unless the entrepreneur replaces him or herself and stays working in BDM or business development and growth, then they’re going to slow down on their growth. They won’t know what to do to kickstart the growth because they’re so busy putting out fires because they’re not a people manager. Their lifestyle will suffer and they’ll say, “I’m not having any fun.” Jason: You’re referring to inspired staff. I heard this phrase several years ago that’s always stuck with me that I believe it’s true, that I love sharing with people connected to this and it’s, “Whenever we fail to inspire, we always control. Whenever we fail to inspire, we always control.” What ends up happening is, as entrepreneurs, because we’re generally really driven, risk-oriented somewhat and we’re willing to do things that other people aren’t willing to do—and sometimes we’re more sales-oriented and driven—by default if we’re not able to get people to do things, we start just controlling. The opposite is to make them inspired and they just do it. You’ll end up with these business owners that are trying to micromanage, push their team, control them, force goals on them, and they aren’t inspired to do any of it. These are the team members that are B players, that’s the only ones that will stick around in a situation like that, and they are the ones that are complaining about you, the boss, and they go home and live for the weekend. They’re just hoping to get a paycheck. That creates a company culture of hiders, they’re hiding. Todd: They’re hiding even when they’re at work. They might hide behind their voicemail. What’s the solution? We pointed out that if you are a small business and you want to go to large, at some stage you’re going to need a people manager. You can actually hire a local people manager which might cost you $50,000 or $80,000—depending on where you are—or you can hire a virtual people manager for some of the tasks at your business. By doing that, you’re now a well-rounded business. You have the entrepreneur, you have the virtual and local employees, and you have a virtual people manager. We’re going to ask you guys to rate your business. How do you rate for systems? If you’re listening to this right now, “Am I systemized, yes or no?” And if you answer is, “Yeah, I’ve got a system for everything.” If I hire somebody, I sit in my desk, and they can open a training manual, and they can open policies and procedures manual and all of the answers are there. If the answer is that you’ve got your policies, procedures, and systems setup, then you’re halfway there to being able to onboard people. A lot of people, small business owners, and entrepreneurs, they do the trial by fire. They’ll hire somebody, sit him at the desk and say, “Figure it out,” and if the person survives, then they walk through the fire, and if not, they burn up, burn out, or they leave, or they get fired. And that’s all due to a lack of systems, policies, and procedures. Now, what I’ve seen is that in the 0-150 doors, unless you have a franchise that they’re giving you every system that you could imagine, and even some that you don’t need, and then you tailor them to your local market, unless you’re one of those people who has bought or created your own systems, policies, and procedures, then from 0-150, you’re winging it. You’re figuring it out yourself and it’s all in your head. If you’re listening to this you’ll say, “Yeah, that’s me.” Then what’s going to happen whether you hire a local staff or a virtual staff and it’s all in your head? Jason: For those listening, they can break it down even further because in a business there’s not just like one system. A lot of people think, I just need a process system for processes. Every business needs some sort of sales system in their business. They need a communication system as a team in order to communicate effectively. They need a planning system in their business—which a lot of businesses don’t really have—for setting goals and milestones and allowing people to know what outcomes that are being worked towards. They need an accounting system, and they need a process system, if I didn’t already say that, for documenting, capturing all the process. Whether it’s a manual or something like Process Tree. And they need a support system for managing all the customer requests and everything else. They might be a 10 on 1 of these and a 1 on another. It really takes all of these different systems. And then you need processes for all the documented. Todd: What happens is in those 0-150, most entrepreneurs still haven’t even started with these systems. From the 150-500, they slowly come to realize that, “These systems are going to make me or break me.” By the way, we’ve outsourced for large businesses that are over 500 and they still have horrible systems, horrible policies, horrible procedures, and believe it or not, really interesting staff and that’s the nice way to put it. Jason: That’s probably the norm which is sad. Occasionally, you’ll see the conversed side where you’ll see somebody that is super systems-oriented entrepreneur. They’re basically an operator trying to function as the CEO. They will focus so much on process, and operations, and systems and they have no revenue. Todd: It went off work and they’re not growing. If you’re good at systems, give yourself a pat on the back with your policies and procedures. The next we’re going to talk about is your HR. If you;re going to grow your business and scale it and have quality and lifestyle, you have to have HR that can find good people. Then you have to get those people trained, and training does not mean you sit up the desk and figure it out, it means, before we put people to work on their tasks, nobody goes to work with less than one week of training. That’s 40 hours of specific human training. It’s a live trainer, training somebody with what’s our business, what’s out vision, mission, values, and then how do you do the actual tasks that you’ve been hired to do. Supervision is quality assurance and etc. If you have all of those things, probably, you’re closer to 500 and more doors. If you’re missing any of those things, you’re probably in that 0-400 doors. You can say, “I’m good at some, but man, I got major holes and others.” That really impacts how you should outsource. I’ve got a graph up on the screen. The graph talks about if I am rough on my systems or rough on my HR, in other words, if I didn’t rate myself high on that last five minutes of conversation, how should I outsource. The answer is, you have three choices: You can hire your own virtual assistant direct by going to the destination country, for instance, the Philippines, wherever, and you can run your ad and try and hire somebody. Not recommended for anybody of any size that’s rough on their systems or rough on their HR for obvious reasons. Jason: Yeah. You’re setting them up for failure. Todd: Yeah. I see people say, “I don’t need a reseller or a turn-key. I’ll just do it myself.” I’m like, “How are you doing with your systems and you HR with you onshore operations because that’s going to directly impact or give you an insight into how your offshore is going to be?” And then they look at me and say, “Yeah, not so good.” I’m like, “Well, running out of the country isn’t going to make it better.” The first option is to hire your own virtual staff direct. The second is hire a VA reseller which is either a recruiter or somebody who will actually stick around after they recruit for you. And then the third option is, “Hey, I just want a turnkey solution that will take care of it for me. In other words, I want staff but I’m paying you to also provide me good systems and processes and good HR because I don’t have that yet. In fact, I don’t think I’m going to have it anytime soon because I’m busy in that 0-150 doors just getting volume and growing my business.” If I can figure out a way to affordably get good systems and HR brought into me by outsourcing, that sounds like a dream job to me. This tells you that turnkey is your number one solution. If you can go to somebody that offers turnkey outsourcing and just give them some process or system or some of the workflow from your business, and then it’s called set it and forget it, and just manage the results, you’ll be thrilled. If you hire a reseller, you may or may or be thrilled based on how well systemized those systems are for the work that you give. “Have you got a system, or policy, and procedure for the specific work that you’re giving?” And/or, “How good are you at managing onshore staff and how well do you think you could manage some offshore staff?” Jason: Right. Todd: Let me go to the next screen which is a hiring guide; if you have good systems already in place and you have a people manager. In my case my wife, in your case, if you have somebody who’s a good people manager, wow, what should I do? The answer is, the world is your oyster. You can do turnkey from 0-150 and that allows you to just focus on growing your business. And then when you start hiring locally, from 150-600 doors, it means that it’s one last thing to worry about. Now, 600 and more doors, you’d be looking at a big bill from a turnkey operator and you’d be saying, “Look, I can do this myself. I should take this over inhouse with either my own DA resellers,” where I pay a recruiter to hire me an offshore staff, or by going to the destination country yourself to hire which can all be done virtually or you can actually take some trips depending on how far away you go. But good systems, good HR, and a people manager is important before you start hiring individual offshore staff that are going to report to you and work for you directly. Does that make sense? Jason: Absolutely. I think people really need to realize that they need to figure out what’s the best fit and works for them. One of the biggest mistakes I see people really early on is their default thought is, “I need to go hire somebody like me right here in the US.” That’s the first employee. They’re like, “I need to go get another me and duplicate myself,” and they’re doing 20 different things; they’re wearing 20 different hats. They go to try to hire and they’re not ready for that. They can’t even bring on somebody, they really should with technology and just start with outsourcing solutions like Virtually inCredible because you’re bringing to the table a lot of the stuff they aren’t even aware of that they might need yet. Todd: One of the things that I outsource at my management company, for those who are listening who aren’t aware, I had a property management company since 1985. I used to absolutely hate the answering my leasing calls because I knew if I didn’t answer them during the day then I had no return calls. I knew if I didn’t answer them in the evening or on the weekend then I wasn’t going to fill my vacancies and I’d have to return more messages. My phone was glued to my ear. I decided to outsource my leasing calls and so many other managers heard about and said, “Will you take my calls too?” It’s such a systemized process with us that it’s not like you could just hire somebody if you’re 120 doors. You can’t hire somebody for what you pay us because you’re going to pay more for your outsourced people, and they’ll only answer 40 hours a week, and we’re answering 80 plus hours a week. There’s a stage which it makes sense to take it over yourself, but there’s a stage where you just say, “Get rid of this and let me focus on other stuff.” When we talk about capacity in online reviews, this is the DoorGrow Show and Jason, I’m one of your customers for the review, what’s the software you have? Jason: GatherKudos. Todd: GatherKudos, thank you. I think we’ve had it for several years. We’ve had good reviews in my management company and that’s because we offer good service, and we ask for the reviews. Seasonal workload variations can actually impact your reviews. Let me explain to you why. I’m going to show you what the variations look like. This is what your work orders look like. This is from Super Tenders. Hundreds of thousands of doors went into this. In January until May, you don’t have near the work orders that you do in June, July, August, September and then it’s slower a little bit again in the fall. You’ve literally got double the work orders between April and July. April is half of what July is. How do you staff for that in your business? Jason: Yeah. The question is, “Are you going to just double staff and then fire half your staff every season?” Todd: What happens is, if you look at when you get your bad reviews from tenants who are tired of work orders taking forever to get done, you’re getting those reviews typically, not April, you get them in June, July, August, September. That’s when the majority of bad reviews come in. It’s no secret, if you’re not staffed for the increase in volume, you’re going to have a problem. At my management company, we use Property Meld to technology, really accelerates the communication process and then we use EZ Repair Hotline. Now I can outsource. I’m pretty good at it, but I hire somebody else to do my work order outsourcing because they’re pretty good at it. I haven’t chosen to do that in the Philippines yet and it’s got a US-based team. What do they call about eating your own dog food or drinking your own Kool-Aid? I outsource to other people at my management company because it makes sense for me to do it and I’m under 300 doors. I’m not at that stage where it makes sense for me to take it over. The same goes for our leasing call volumes. This is data courtesy of Virtual inCredible. This is our call volumes across the entire United States on a monthly basis, and you can see, December’s the slowest month of the year. Thank goodness, right? Going into the holidays. November, December are great, but literally there’s double the volume between December and June. June is going to crush you and people say, “Man, I can’t answer my calls or my properties take longer to rent.” It’s because you’re not really staffed to handle it right. This is called a heat map. For those of you who are listening, it’s a counter Monday through Sunday, and it shows the darker hours of the day are when we have higher call volumes and the lighter colors are lower call volumes. Throughout the course of the week, on an 80-hours of answering your calls, days, evening, and weekends, there’s a tremendous call volume variation between Monday all day. By the way, there is a reason why Mondays are Mondays. Your phone’s going to ring with your highest call volume on your leasing calls on Monday. Jason: Compared from the weekend because we aren’t generally doing it over the weekend. Todd: Or they didn’t get you on the weekend. It could that too. Wednesday is a calm day. How do you staff for that? When you’re at 120 doors. When it’s just all hands on deck at all times when you’re at that volume. It makes sense to just say, “Hey, take my calls. When I grow to a certain stage, I’ll take them back.” That’s where people are able to make a tremendous good decision for their business because if you’re under capacity, under staffed, you’re going to get bad reviews. Jason: Yeah. Todd: If you have sufficient capacity at all times throughout the season of workload variations, you can get good reviews if you ask for them. If you have too much capacity, too many staff, you’ll get good reviews but your profit will suffer. Managing that becomes a full time job when you go past 500 or 600 doors, you’ll start to do that yourself but under that, it just makes sense to outsource some of these stuff. It will save you a tremendous amount of time and money, it’ll make getting good reviews easier, it’ll make your staff happier to get rid of some of your high seasonal workload that varies a lot, and just outsource it until you’re big enough to take it back inhouse. Jason: And if you’re built out to the point where you can handle the amount of seasonal growth and seasonal increase, then what happens during those lean times, you end up with team members that are sitting at unused capacity. Nobody likes being in a position, or a job in which they feel like they’re meaningless, or there’s lack of purpose except really bad team members that you wouldn’t want. Todd: They’ll never tell you that they’re not busy. Jason: Yes. They will never say, “Oh, I have so much extra time right now. I’m probably not relevant during these few months. I probably shouldn’t be here.” It makes a lot of sense. Todd: If you’re a small company and growing, this is the last part, I don’t have slides for this, maybe I’ll stop sharing my screen. Jason: I’ll point out, connected to that, it’s not a great investment to have a team member that’s sitting in the garage half the time not being used. Imagine you live in a big city, and you’re taking the subway all the time, and you have this expensive car that you’re maintaining constantly but you’re not using. Financially, it becomes incredibly costly to have a team that is under utilized especially if they’re US-based staff, they’re really expensive, and you’re not just able to use them. You’re [inaudible 00:34:56] the money whether you’re using them or not. They’re not making any money. Todd: Can you imagine what it’s like being me? We’ve got hundreds of staff and our volume is following that curve. We figure out how to do it. There’s something I wanted to share. This is on a personal note from a guy who’s grown a management company through a few cycles. If you’re in that 150 or less, I want you to ask yourself, “Is it easy to get leads to grow my business?” If it is, great, if it’s not, check out DoorGrow, check out some great ways to get improve your leads. Second is, “Am I too busy to grow my business being an operator instead of being an owner?” An owner knows how to grow a business and knows how to keep the capacity to grow the business open because that’s what it takes. You know, 60% or 70% of calls to a business are your leasing calls. When you’re sitting there answering somebody who says, “How much is that house with the red door?” You’re considering the brain damage that’s giving you. Meanwhile, your phone’s ringing on line two and it’s an owner who has a nice listing and you didn’t get to that call. If you’re struggling to grow your business and you have leads, but you’re not growing your business, man, clear your plate, get rid of some of your work, and grow your business. You can always take it back. And then work on reducing your labor costs. If you’re in the stage in your business where, “Oh I don’t get enough leads or I don’t want to grow my business.” Well then fine tune your business, that’s great. But as long as you can grow and you want to grow, clear your plate and move forward on growth which is your highest dollar. People are valuing management companies at between $2000 and $4000 per door. Each new listing that you can sign up is going to increase your net worth, your asset value of your company by $2000 or $3000. If you can get five new listings in a month, and that’s worth $3000 a listing, we’re talking $10,000-$15,000, that’s what you’re increasing your net worth. You grow up that rate in a year and you’re $150,000 and $200,000 in your net worth. It’s all because you’re focused on growth and clearing the decks to make it possible. That’s what it takes to grow your business. Then as you bring in the new volume of work, decide carefully, “Should I insource or outsource? Do I have a people manager or don’t I? What’s the best way that’s going to keep the machine moving forward?” That’s what I tell people because if they fail that outsourcing, I usually say, “Well, who’s the people manager?” And when the entrepreneur says, “I am.” I’m like, “Oh, okay.” Jason: It didn’t work for me. You just did it wrong. Todd: Did you learn something, Jason? Relative to your world and your lives that you’ve been living with our outsourcing? Jason: Absolutely. All of these makes so much sense. Over the last decade, I’ve had plenty of failures in outsourcing things or I’m trying to do things. I think if I were to add one thing to this is one thing that has really helped me is to not underestimate or overestimate technology. Because technology, like you mentioned, like Property Meld for example, technology is another tool besides outsourcing that creates leverage, and lowers operational costs, and lower staffing cost. A lot of people will try to go cheap on software. I believe that when it comes to software, you want the best tools, the best softwares. I have spent a lot of money on software tools and I buy the best. I don’t buy the Swiss Army knife that can do everything crapily or terribly, but I buy the best in each category to make sure we have the best systems for process, or the best communications system in our business. That allows my team to get more done, and be more efficient, and more effective. Whether you’re going to outsource directly or you’re going to outsource to companies, make sure that you have the best tools available software-wise because even if software costs you hundreds of dollars a month, people are always going to be more. If you can give them the tools that they need to do the job well, you’re collapsing your cost and making them far more efficient, and it always pays off. Todd: Very true. Listen, if anyone has any questions about this, I’ll just briefly tell you how we can help you at our company. We do answer your leasing calls, we also have a tenant screening department. That scales too because you get your number of applications in the summer, is a heck a lot more than it is in the winter. We do that. Those are full termkey systems, where you’re actually putting a department into place and you don’t need a local department to do either of those tasks. In addition to that, we also have a brand new service where we’ll hire an individual VA for you with or without phone skills. You can get an admin VA or you can get a CSR, a customer service rep that can answer calls for you, and they’re all screened by our company and trained in property management. I used to be a trainer for the Property Management Academy. We put all of our people through all of that training now before they show up at your job. You get screening and training though our VA. If you like some more information, just send an email to todd@virtuallyincredible.com. Be happy to help you out however I can. Jason: Awesome. For those listening, when we put on our conference, DoorGrow Live, we gave Virtually inCredible an award because they have consistently been one of the best in class or the best in their category for what they do inside the DoorGrow Club and inside the feedback that we hear from clients. It’s not just my recommendation, it’s a recommendation of a lot of people, and you provide a really good experience for people. You are making a difference in the industry. Todd: Yeah, thanks. We’re having a ball and appreciate all you’re doing to help people grow with creative ways that aren’t obvious. I’ve been through some of your education, it’s really high quality. Thank you for what you do. Jason: Appreciate it. Todd, thanks so much for coming on the show, and appreciate you sharing all these insights. I think there’s some solid takeaways that people listening this show. I think some rising like start with technology, then start with outsourcing to a solution like Virtually inCredible, and then maybe once you start getting some things dialed in, you might want to start bringing the staff in-house eventually, but you may not. It’s going well. If it ain’t broke don’t fix it. Todd: That’s right. Jason: Todd, thanks again. Todd: Alright, guys. Take care. Jason: Alright, it’s great having Todd on the show. Again, to make sure to check out the previous episodes in which we talked specifically about leasing lines and the challenges with those with Todd. You can just search for Todd Breen and DoorGrowShow, one word. If you are listening to this on iTunes, be sure to give us your feedback in iTunes, they helps us out, also makes us aware of how you feel about the show. We love getting your feedback on these different shows, and make sure you are inside our Facebook community where you can hang out with cool people like Todd and other really savvy entrepreneurs. You can get to that by going to doorgrowclub.com and this is a community unlike any other. It’s a special community of property management business owners that believe in this vision and message that collaboration is more significant and important than competition in what this industry needs right now. If you love the idea of collaboration and helping level up the entire industry, we’re just going to help every property management business owner succeed and grow this business and industry and get more market share then that’s the place for you, that’s your home. Join us in the DoorGrow Club. Thanks everybody for tuning in. Until next time to our mutual growth. Bye, everyone. You just listened to the DoorGrow show. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrow Club. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff: SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com, and to get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time. Take what you’ve learned and start DoorGrow hacking your business and your life.

Listen to the first 1/4 of my keynote presentation from FHL. We talk about what funnel hackers are doing and start digging into “Hook, Story, Offer”. On today’s episode you will hear part 1 of 4 of Russell’s first presentation at Funnel Hacking Live 2019. Here are some of the super awesome things you will hear in part one: A little background into how Clickfunnels got started, and stats of where they are now. Find out why hook, story, and offer are the keys to your success. And listen to Russell show how increasing value in an offer is better than decreasing price to compete with others. So listen here to hear the beginning of Russell’s first presentation at this year’s Funnel Hacking Live about the Hook, Story, and Offer. ---Transcript--- What’s up everybody? This is Russell Brunson, welcome to the Marketing Secrets podcast. Today I got something really special for you guys. For those who were at Funnel Hacking Live, you may remember my intro presentation. It was called Hook, Story, Offer and how it relates to the Perfect Webinar. It was a lot of fun, and we actually streamed it live, so that everyone who wasn’t at Funnel Hacking Live would get extreme FOMO, fear of missing out, and want to come to Funnel Hacking Live next. So you know what? I thought as long as we streamed it live online, why don’t I give it to everyone on the podcast and give them all FOMO as well? For those who weren’t there, and for those who were there, just to give you a reminder on the foundation I laid out for the event, because it’s the foundation for all the different things. It’s a presentation I’m really proud of and I think it’ll help a lot of you guys. So it’s going to go into hook, story, offer and how it ties back into the Perfect webinar and believes and a whole bunch of stuff like that. We’re going to break this up over probably four episodes. There’s a couple of parts I’m going to cut out just because they don’t make sense to show you. For example, we do the year in review video that was really, really fun, but if you can’t see it, it doesn’t really make sense. So we’ll pull some of those pieces out of the podcast episode, that you have to be able to see visually. But for the most part, you’ll have a chance to hear my opening keynote presentation from this year’s Funnel Hacking Live. If you haven’t got your tickets yet for next year’s Funnel Hacking Live, you are insane. This may be the last year we do it in the future. Maybe we’ll do it in 5 more years. I don’t know. But I do know we booked the hotel, we paid the money, so it’s happening 1 year from right now-ish, and I want you there. So if you haven’t got your tickets yet, go to FunnelHackingLive.com and grab your tickets. And with that said, I hope you enjoy over the next four episodes, my keynote presentation from Funnel Hacking Live 2019. So I’m going to queue up the theme song, and when we come back we’ll start into my first opening presentation. How many of you guys are pumped to be here this week. This is like, we’ve been talking about this for the last 12 months, since last time we were all hanging out. How many of you guys feel like this is your Clickfunnels, Funnel Hacker family reunion. It’s so exciting to have all of you guys here. It’s funny, as we were kind of preparing this whole thing, and you guys know I’m obsessed with t-shirts, you’ve all gotten at least one so far right? There’s more coming. But we were looking at, what’s the right message for the t-shirt everyone’s going to be wearing when they come here today that’s going to really connect us as a family?  And at one of my inner circle meetings, I can’t remember who it was, they posted this quote up during the presentation and I read it and I got chills and I was like, “Oh my gosh, that’s the message.” So if you see the first slide here, this is the back of the shirts you guys all got. It says, “Surround yourself with the dreamers, and the doers, the believers and the thinkers, but most of all, surround yourself with those that see greatness within you, even when you don’t see it yourself.” And I think sometimes that’s how it is inside of a family, right. Obviously everyone that’s here is in a different stage of their business, of their life. Some of you guys are at a spot where you’re trying to figure out the next big thing to take your business to the next level. Some of you guys are at the very beginning, trying to figure this out. So we’ve got a lot of you guys here together, so what’s amazing about this community, this family is how everyone works together to help each other and to raise each other up, which is really cool. A couple, about a month and a half ago or so, as I was preparing for the 10x event…how many of you guys were at the 10x event? In front of 35,000 people in a baseball stadium, with an echo that made it impossible for anyone to hear, so much stress. And then this event, which is like, all this stuff, it was heavy on me. I remember I texted Garrett White and I was just talking to him back and forth and he sent me a quote that meant the world to me. And I think for a lot of you guys who are here in this room, you probably feel this pressure a little bit. This is what his text sent to me, it said, “Heavy is the head that wears the crown.” And he said that to me, and I started thinking, and then he messaged me a few minutes later, he said, “I want you to understand, I understand where you’re at. You’ve chosen to go out from the world. Most people sit at home and they watch TV and they do as little as possible. You’ve chosen to step out into the world and try to change it. And that’s different, it’s not normal. People don’t do that, and you’ve done it.” He said, “I see you.” And as I was preparing my presentation today, I was thinking about how many of you guys are here doing the same thing. It is way easier to stay at home and not be here right. It is way easier to just go to a job. Or it’s way easier to just plug in and watch TV or watch Netflix, or do whatever it is. It’s harder to come here and try to learn a skill set and the thing where you’re going to go out there and put yourself out there. It’s going to be awkward and uncomfortable a lot of times. How many of you guys feel awkward here right now? Where are my introverts in the room? Yes, it’s hard right. That’s why I’m onstage because I’m scared of everybody. I understand it, it’s tough, but it’s worth it. I wanted to say it to all of you guys who are in that situation right now, I see you. I see what you’re doing and that’s why we’re killing ourselves. People ask me all the time, “Russell, why are you still doing this? Pretty sure you got enough money from all those Clickfunnels people, right.” Yeah, it’s not about money at this point. It’s because I understand the process and the path that you guys are going down. So every single day I’m going to do my best to trail blaze as well, so I can show you guys, “It’s over here, come over here. Come on, keep coming.” Because I know for me, when I was trying to figure this stuff out, there are people that I plugged into, people that lead me, so I’m trying to do my best in this role here, to do that for you guys as well. Thank you. I know that as you’re doing this stuff, as you’re becoming entrepreneurs, you’re building a company, there’s loneliness in a lot of things. There’s loneliness in leadership. It’s interesting, a lot of people when you’re leading a movement you’re leading your group of people, right. You’re there, you’re trying to share your message and you may have a team of people, which is amazing, but when all is said and done it’s you out there putting your face online. You doing the facebook live, you writing the book, you doing the presentation. It’s you and it’s scary sometimes, right. There’s loneliness in leadership. But there’s also loneliness in faith. The faith of like, ‘Is this actually going to work?” I know for a fact that half of you guys who are in this room right now came on faith, and hope and a prayer. I was telling somebody earlier, I said, “You know half of the room that’s here are people who have come to this before. This is a big family reunion and they’re excited to be with their friends and their family, start growing their business to the next level. And the other half, it’s your first time.” Right, and you’re scared. You have faith in this process, a little bit. You have hope it’s going to be amazing. But you’re like, “Oh my gosh, what if it doesn’t work? What if I spent all this money and I flew all this way and I’m here taking a week off of work, does it make any logical sense?” Sometimes it doesn’t. So I understand there’s loneliness not only in leadership, but there’s loneliness in the faith of trying to do that thing and trying to step out there to do it. And then the last thing I want to share is, I did a podcast a little while ago called Entrepreneur Scars. How many of you guys listened to that? I know that a lot of you guys that are here in this room have entrepreneurial scars. You’ve tried to risk everything right. You tried to go out there and do the thing. You’ve tried to do a business, tried to launch something and it didn’t work. Or you had something that was working really good for a while and then something happened and it crashed. I want you guys to understand, we have all been through that. I feel like one of the most amazing gifts that our founding fathers gave us when they founded this country, America, was the ability for entrepreneurs like us to be able to risk everything, and if we messed up and failed, it was okay. They gave us bankruptcy laws, they gave us things like that to give us the ability to risk without the fear of if you mess up you’re locked up in jail for the rest of your life. I think so many of us risk everything, we’re trying to change the world, we do this thing and then it fails, and then we shrink back and we’re like, “I just gotta hide because I don’t want people to know that I messed up.” I know for a fact there are people in this room who are in that spot right now. You’ve had success in the past but there’s that fear of putting yourself out there again. So for all of you guys who are here, I want you to understand, I see you, I understand what you’re going through and we are here for you to support you as a community. Okay so the theme of this year’s Funnel Hacking Live is the theme of every Funnel Hacking Live. I want make sure I’m showing my slides up here as well guys, because I got a lot of slides that are great. As much as I like to see my face, I want to make sure you guys see what I prepared as well. So the theme of this year’s Funnel Hacking Live event, is the same as every year. People are always like, “What’s the theme this year?” I’m like, “It’s the same thing.’ I’m not changing it, I love this theme. And there’s a couple…I’ve got to create six presentations, yeah I’m going to do a theme every year too, come on now. The theme is one funnel away. I wanted, for those that are like, “I thought you were going to change the theme?” no, this is the same message. Everyone’s here at a different spot than you were last year, and a different spot than two years ago, or three years ago. Some of you guys, you’re one funnel away, you’re here, you’re putting it all on the line. You’re like, “I’m going to gamble, I’m going to try it.” And this is your shot, your one funnel away shot. You’re trying to figure it out. For others of you guys, this is your second year, third year, having success, things are growing, things are amazing, are happening and you’re one funnel away from the next step. In fact, I want to share a really quick story in Clickfunnels. We’re going to share the numbers and stats and growth here in a few minutes. But as we started growing Clickfunnels, as we got bigger and bigger it got harder to grow. And we started getting to a sticking point. In fact, the last 12 months, we continued to grow but at a much slower rate. It got harder and harder and harder as we got more and more people. And all of us inside of Clickfunnels were freaking out, “How do we grow this thing? How do we get from 50 thousand, to 500 thousand people? How do we grow it?” And we just couldn’t get past some sticking points. And literally six months ago I was sitting in an inner circle meeting, and Natasha Hazlett, who’s going to be speaking to you guys tomorrow…where’s Natasha at? Natasha is right here. She’s pregnant with twins, she might give birth tomorrow onstage, I’m hoping. It’s going to be amazing. But Natasha gets onstage, with her humble little self, and she’s like, “Hey, we tried a book funnel and it didn’t really work, so we tried this channel funnel instead and it’s really working good for us.” And we looked at it and I was like, “Oh my gosh, I’ve seen challenge funnels before, but not the way she explained it.” And we went back to the drawing board, we started freaking out, started doing some stuff. And how many of you guys went through the one funnel away challenge so far? So because Natasha gave me that idea, that one funnel we launched it, the last 6 weeks in Clickfunnels, we’ve had more growth per week in the last 6 weeks because of the one funnel away challenge, than we have in the last 2 years. So for some of you, Natasha, you need to her. She’s going to tell you a story about her funnel and just be like, “that’s the thing I need.” Some of you guys it’s going to be somebody else. We have so many amazing speakers who are all sharing different types of funnels, what’s working for their business. I want you guys listening with ears, not that you have to create everything, you shouldn’t be creating everything, but listening like, “What’s the next thing for me? What’s the one funnel for me in my stage right now?” Some of you guys it’s one funnel to launch your business. Some of you guys it’s one funnel to get to the next level. Whatever it is for you, I want you to just listen with those ears, because if you’re listening with the right ears you’re going to get it, and you’re going to hear it. I could have easily been in my inner circle meeting and been like, “Oh Natasha’s paying me to be here. I’m not going to pay attention.” But I was listening and I was like, “Oh my gosh, that’s amazing.” So I want to make sure throughout this whole week you guys are listening with your ears to hear the things that are here, created for you. This is a picture, let me go back one slide. This right here, a couple of months ago we did an interview with Andrew Warner, who is the host of the Mixergy podcast, which is my favorite podcast. And I asked Andrew if he could come and interview me on the Clickfunnels startup story because I wanted to kind of tell the whole story. Obviously a lot of times you guys here parts of the story, but I was like, “I want to tell the whole story and he’s my favorite interviewer.” And it’s funny, Andrew is famous. He does these things called Scotch nights, where everyone gets together and they drink Scotch. I didn’t know what Scotch was, I thought he was talking about Butterscotch, like candy. I was like, “What?” and it turns out it was alcohol. I don’t know these things. And I was like, “I want you to interview me.” He’s like, “We could do a scotch night.” I was like, “But I’m Mormon, I don’t drink Scotch.” Then I was like, “Wait a minute, there’s this place in Utah, it’s a bar, but it’s a dry bar.” He’s like, “What does that mean?” I was like, “It means it’s a bar that they don’t serve alcohol. We should do the event there.” and it turned out really cool, so we brought him and me and we did this butterscotch night, it was amazing, at the dry bar comedy club. And he interviewed me about the Clickfunnels startup story. How many of you guys have heard that interview. The first half it just went live on the podcast today, and the next half goes live in like two days. So if you want to hear the whole interview, it’s there. But what’s cool, before he did this, he does tons of research and he’s like, “So show me the funnels you did before you launched Clickfunnels.” And I was like, “Okay.” So I went back in the domain archives of every domain I’ve ever bought from the beginning of time until now, and all the ones that we actually produced and there was over 150 funnels that we created and launched. In fact, here’s a couple of them. I’m going to show you guys pictures of all the stuff I tried before Clickfunnels. In case any of you guys are wondering, “When’s my funnel going to work?” You might need to do one or two or three or four. A whole bunch. This is just the ones that were good screen shots. There were a lot of other ones. So for any of you guys who are like, “I tried my funnel and it didn’t work. This thing’s a scam.” Its’ like, you should try another one. I don’t know, I did a lot of them before I found Clickfunnels. Some of you guys are like, “I’m waiting for the perfect business, when the perfect business shows up, then I’ll build a funnel.” If I would have waited for this, if I would have waited for CLickfunnels, guess what would never have happened? I would never have been ready to be able to run Clickfunnels. I would have run it into the ground two days in. I had to go through all of this to figure out how to lead you guys along this path. And the same thing is for you. Thank you. In fact it’s funny, the first time I tried to build Clickfunnels was in 2005 and it was called ClickDotCom.com, how many of you guys came to the ClickDotCom.com event? Nobody. My wife’s there. I got my one super fan, thank you. But what’s amazing, Dylan Jones, who was one of our original cofounders in Clickfunnels, I actually hired him to do the design initially. So if you look at this, this is the initial designs of ClickDotCom.com, we had sales processes, they weren’t called sales funnels back then. But I tried this game a long time ago, back in 2005, trying to get this live. I understood this was the vision I wanted to go, but I couldn’t figure it out. And I tried and I failed, and I tried and I failed, and I tried and I failed. It went over and over and over again.  It just didn’t work for a long, long time. Until I had a funnel, and I was one funnel away from a success story. But what’s interesting is this funnel was a complete failure. And I’m telling you this story because how many of you guys have launched a funnel and it was a complete failure? The rest of you guys haven’t tried yet? Not even one? Come on now. I want to share a story because we launched this funnel, this was after I’d built up a big company, everything collapsed, I told this story a couple of Funnel Hacking Live’s ago, and those who’ve gone through the One Funnel Away Challenge have heard me tell the story. But we built the company up to 100 people, the whole thing collapsed, I had to fire 80 people in one day. I’m not going to get into that whole story, but on the back side of that I was trying to figure out, “What am I going to do when I grow up?” which is a question I think all of us should ask ourselves at least once a week. I was like, “What do I want to do when I grow up?” and I’m laying in bed, stressed out trying to figure out how we’re going to make money. I didn’t have a vision or idea and I went to flippa.com, and flippa is a website you can buy websites. So I’m on flippa.com and I’m scrolling through my, I think I had an iPad at the time, scrolling through trying to find, what’s the vision for this thing. And this website came up called Championsound.com. I looked at it and it was an email/text messages auto responder for bands. And I was like, “Oh my gosh, what if I bought this and it would be an email/text message auto responder for bands but I could rebrand it and make it an email/text auto responder for dentists, and then make one for chiropractors, and then for entrepreneurs, and all these different businesses.” And I was so excited. By morning I had sold myself on the idea and I went to go buy this site, and I didn’t have the, it was $20,000 which we did not have at the time. But I was like, this is the vision, this is where we’re going to go. So I bought championsound.com with money we didn’t have, calling the banks, increasing credit limit, how many of you guys have ever done that before? I’m like, ‘I need this, this is important. This is the future.” So I buy championsound.com, and after we get it, I have, I tell our programmers, “Okay, put it on our servers and we can start selling this, it’s going to be amazing.” And my programmer looks at it and he’s like, ‘I can’t put it on your servers.” I’m like, ‘Well, why not?” He’s like, “It’s coded in Ruby On Rails.” I’m like, “What does that mean?” he’s like, “You know how you speak English?” I’m like, “Yeah.” “You know how other people speak Chinese?” I’m like, “Yeah.” He’s like, “This is written in Chinese. I only speak English.” I was like, “What does that mean?” Hes’ like, “I can’t help you.” I was like, ‘Oh, crap.” So then I’m like, okay, I try to hire someone on Odesk. I’m like, “Okay, can you transfer this Ruby On Rails thing to a thing, to a server?” And I didn’t even know what that meant, and they were trying. 5 or 6 people tried it and after like 2 weeks of trying, nobody could figure it out. I was like, “great. I spent our last $20,000 we didn’t have on this funnel, on this company, on this brand, and I can’t even do anything with it.” And I remember that day at the office, I’m like, well I’m just going to walk away from it. It’s just a lost cost. And then after I packed up my computer, I was walking out the door, I stopped and I had this thought. And I’m so, so grateful that I listened to that voice. And it said, “Turn back around and email your list because somebody on your list, knows what Ruby on rails is.” I’m getting emotional here. So I come back in, and this is like the lowest peak of my business where everything has collapsed around me, I don’t even know what I’m doing, how we’re going to survive, what we’re going to do. And I email my little customer list at the time and say, “Hey, I’m looking for a partner, I bought this thing it’s coded in Ruby on Rails. If any of you know Ruby on Rails I’d love to be, you know, I need somebody to help me on this thing.” Sent the email out and a couple of hours later I get an email back from a guy. And I never met him before, he sends me this email and he’s like, “Hey, I know Ruby on Rails and I’d love to partner with you on this.” He’s like, “Send me the login and I’ll see if I can fix it.” So I send him the login that I’d gotten from the guy I bought it from, and I didn’t even know what it meant. I’m like, “Here you go.” And then I went home. The next morning I come back and there’s a message from him, it’s like, “Hey man, I fixed it. It’s good.” And I’m like, ‘What do you mean?” He’s like, ‘yeah, it’s done.” I’m like, ‘It’s done?” He’s like, “Yeah, I fixed it. And when I was in there I found all these other bugs and stuff and I fixed those as well, got those working and now it’s all done.” I was like, “Are you kidding me?” And it started my friendship with this person, and that friendship grew over the next two years that we worked together on projects. And the day that we had the idea for Clickfunnels, we sat in a room for about a week whiteboarding out the whole vision of it, and on the way taking him back to the airport, he was flying back home to where he lives in Atlanta, he said one thing before he got out of the car. He said, “Hey, really quick though. If we’re going to do this whole Clickfunnels thing, I don’t want to be an employee. I want to be your partner.” I remember being so scared like, I don’t know if I, I’m an entrepreneur. I control everything all the time. And I was so scared. And in that moment I made the second greatest decision of my life, outside of marrying my wife. I told him, “yes.” And that man is Todd Dickerson, who is my cofounder and partner in Clickfunnels. Let’s give Todd a huge round of applause. Stand up, Todd come on out. Todd: What’s up? Oh man, wow. What’s up, Funnel Hackers? Wow, that was amazing. Thank you for that insane intro. Russell: I’m emotional, so you’re up now. Todd: I know. Russell: This is Todd, he’s been the best partner, the best friend, the best mentor that anybody could ever ask for. And he was the one who initially sat down and built Clickfunnels. After I tried for decades to make it work, and he did it in like a weekend. It was amazing. Todd: A little bit longer than that, most of that was true. Russell: So really quick, I want to show you guys something really quick. So this was actually, show you guys the right slide. So September 23, 2014 this was the day that changed my life and all of you guys’ life forever, even though nobody knew it. This was the day that Clickfunnels officially went live. How many of you guys remember that day? Todd: Yeah, three of you. Russell: Yeah, nobody really knows. So here’s the back story. We were one funnel away too, but we didn’t know which funnel it was. So this is the initial branding and logos from Clickfunnels, so we picked that one. You guys would all be wearing completely different swag today, had we picked a different logo. This is us in front of a whiteboard. There’s Todd and this is one of our other original cofounders, Dylan Jones, sitting in front of a whiteboard mapping out what Clickfunnels was going to become. We launched it the first time and nobody really bought it. Then we built another funnel, we launched it and nobody bought it. The third, the fourth, the fifth, I think it was the sixth time, we got invited to speak at an event, and this is the picture from the event. It was in a room of about 100 people and I did the very first time, I did the Clickfunnels presentation. We did the presentation and like 35% of the room ran to the back and bought. And I remember we were all excited and that night we went to dinner and we were sitting around and I was like, “Just so you guys know, that’s not normal. What just happened is, this is game on. This is going to change everything.” We went from that point forward and started growing like crazy. So I’m going to have Todd go through some of the stats that have been happening ever since that day when we launched Clickfunnels. Todd: Yeah, absolutely. So after that presentation Russell’s like, “It’s game over. We’re going to be at 10,000 customers next week.” Which didn’t quite happen. Russell: Close. Todd: But by the end of year one, we actually did hit 10,000 customers. Russell: Yes. Todd: It’s crazy, crazy. Followed by year two 20,000, doubling over. Then year three, crazy growth with the books and the amazing training that Russell was putting out, 50,000 customers. Year four, last year, at Funnel Hacking Live we were 60,000. This year as of today, we are at 76,700 thousand customers. How crazy is that? So insane. Russell: that’s amazing. Todd: And Devon alluded to this earlier, we processed over 2.5 billion dollars in sales through Stripe alone. Russell: All of you guys. Todd: That means all of you guys have done 2.5 billion dollars in sales. So crazy, which is actually 1.5 billion more than last year. So in a year, you guys did 1.5 billion dollars. So just to give you a comparison here, last year GDP rate… Russell: We showed you this last year. If you took all the GDP of all the countries in the world, Clickfunnels right now is number 15 highest GDP in the world, which do you know what that means? Check out the next slide. If there was a country and our people were called Funnel Hackers, we would have higher GDP than 15 other countries. And I’m kind of thinking about, do you guys like this venue? I feel like we’re in Funnel Hacker, like our own little city here. What if we all just moved here and lived here and took over like 15 other countries. Todd: Funnel Hacker island, I like it. Let’s do it. Check this out, so we also, the Two Comma Club winners, we’re up to 505 total winners, which I got an update right before we came out here, it’s actually 506 now so… Russell: Congratulations somebody! Todd: And that’s actually 241 new ones in the past 12 months alone, since Funnel Hacking Live last year. So insane. Give yourselves a hand. And we have the Two Comma Club X award, which is the 8 figure award. There have been 38 total winners for that now, and 22 of those in the past 12 months alone. Russell: Amazing. Todd: And in order to keep serving you guys, we’v ehad to grow our team like crazy. We’re up to 251 amazing people serving you guys right now, 252 again, as of yesterday we had a new hire. So there you go. Russell: if any of you guys need jobs, we’re looking for people. It’s a big army to serve. Todd: Yes, we’re looking new people every day. That’s 132 customer support people, 43 people working on product development with me every day, and 26 people in marketing working with Russell every single day to provide amazing stuff for you guys. Russell: Amazing. Our mission at Clickfunnels is to help free all entrepreneurs so that you guys can focus on changing the lives of your customers. That’s our goal and our mission for this entire week. We’re so excited, we got so many amazing speakers who are coming here to serve you guys. We don’t pay our speakers. They come because they love you, because they’ve been in the same spots you are. Half our speakers were in the chairs last year sitting there, and this year they’re up here to serve and give back to you. I’m so grateful for all of them. One last thing before we move in the presentation. I feel like if we’re going to move from 76,000 customers to 760,000 and beyond and build this community even bigger, I think one of the big things we need to do is start changing some of our language patterns. We have to stop being marketing, nerdy geeks. How many of you guys are willing to help me with this. I’m going to talk more about this later, but I think one of the big things that we’ve been struggling with, trying to get our message out to more people is we’re using things like, “Tripwire Funnels” and “High ticket application funnels” and all these geeky, nerdy things. So we’re going to try to simplify the language and I’m going to talk a lot more about this the next year, just try to get things more simple. So I got some pictures here of just some stuff. Instead of calling things squeeze page funnels, which is like when I tell my buddy who’s a chiropractor, “You need a squeeze page funnel.” He’s like, “What does that mean.” I was like, “Well, it’s a funnel that generates leads.” He’s like, “Why didn’t you call it a lead funnel?” I’m like, “Oh, that makes more sense.” And then I was like, “The next thing you need is a tripwire funnel.” He’s like, “That sounds really dangerous.” I was like, “Yeah, but..” I explained it and he’s like, “It sounds kind of like a shopping cart.” I’m like, “Oh yeah, it is.” We call them cart funnels. We kind of went through and you’ll see instead of webinar. Like what’s webinar? It’s a presentation funnel. What’s an application? It’s a phone funnel. So we’re going to try to start making our language more simple so that we can get more people into our community and start understanding what we’re doing. So we’re going to go through more of that later, I just, I want to simplify the names. Alright, with that said, I want you guys all to give Todd a huge round of applause for his huge contribution to this community. Todd: Thank you guys. Russell: Thank you so much. Todd: Thanks again. Russell: Okay, now we can get started, now that all the tears are out. So what I want to do right now, I want to kind of move into my first training portion of this. And I wanted to lead this out, how many of you guys have gone through the one funnel away challenge. Those of you who have gone through it, you know that I stress a lot about one simple thing, which was hook, story, offer. I talked a lot about that. And I want to talk about that for the next hour or so because throughout this week you’re going to be learning about a lot of different types of funnels. About challenge funnels and summit funnels and all these different things, and some of you guys may get confused. I want you to understand the core fundamental foundation of what you have to become good at as an entrepreneur is understanding this one concept, mastering hook, story, offer. So I’m going to spend some time going over that, hook, story, offer. I gave everybody a handout that came with your, it should be on your seats, you guys take notes on and stuff like that. But one of the things it says in there, I think on the very front page, “If something’s not working in your funnel, it’s always either your hook, your story, or your offer.” Every time. Everyone’s like, “My funnel’s not working, Russell. What should I do?” I look at it like, ‘Oh, your hook is horrible. That’s why nobody is clicking on your ad.” Or “Your hook is good, people showed up, but your story is boring. That’s why no one’s buying.” Or it’s like, “Your hook and you can tell a good story, but man, that offer is horrible. No one would ever give you money for that.” And I’ve learned like as I’ve broken down consulting to like three things, it’s always one of these three things. So I’m going to spend the next hour or so going over this, giving you guys ideas, opening up your mind to becoming better at that. If you become better at that, this framework fits into any funnel. If I’m selling a book I’ve got to be good at hook, story, offer. If I’m selling something through the phone, hook, story, offer. If I’m selling something through webinars, hook….This is the framework that we all have to become masters at. So I want to lead with that today and then as everyone starts training on different funnels and strategies, just remember if my funnel’s not working, it’s because of one of these three things every single time. If you were to hire me for my insanely high consulting rates, “Russell, my funnel’s not working. What should I do?” I’d just be like, ‘Thanks for the check. It’s either your hook, your story, or your offer.” So next time you’re like, “Man, I wish Russell would look at my funnel.” Just sit down and be like, “What would Russell say? He would say, ‘it’s either your hook, story, or offer.” It’s always one of those three things, every single time. So hook, story, offer, it goes hook, story, offer. But I’m going to start with the offer first and then move backwards, just because that’s kind of the framework of how it works, okay. So the offer. A lot of you guys have gone through my training with the perfect webinar and stuff like that. So you see this thing called the stack slide, how many of you guys are familiar with the stack slide? Good. Okay, the stack slide is how we create an offer. And even if you’re not doing a webinar, you still create a stack slide. There is no circumstance where I ever sell that I don’t use a stack slide. If I was emailing somebody and they’re like, ‘Hey, what does it cost to hire you as a consultant?” or “hire you to do whatever?” I would literally send them an email and I’d have a stack slide. I’d be like, “Bullet point one, value. Two, value.” I would use this in everything. I’m going to show you guys some examples today. It doesn’t matter if you’re selling coaching, or supplements or physical products or services. You should always have this. To begin with I want to talk about one of the founding fathers of our industry, a lot of you guys may not even know him or heard of him. His name is Claude Hopkins, how many of you guys have heard of Mr. Claude Hopkins? Alright, all my OG’s, all the originals. Okay, this is your marketing history lesson. So Claude Hopkins was the father of modern advertising. And what’s interesting, way back then in the early 1900’s what they called, what he was called, what his job was, he was what they called a scheme man. He was a scheme man. And what the scheme men did is they came into a company and their whole job was to come up with offer. That was it, the most important part, which is the offer. Now, to show you the value, even in the late 1800s, early 1900s, the value of becoming a scheme man, the person who actually creates the offer, Claude Hopkins back then made, $52,000 a year in 1907. The equivalent of that is 1.39 million dollars in today’s dollars. They paid this dude over a million bucks a year to come in and be like, ‘This is what your offer is.’ And most of you guys never even think about this and you just kind of go off and do whatever. And I’m not going to, I’m excited Stephen Larsen is going to be talking in two presentations and he’s going to go deep into a whole bunch of really cool offer stuff with you guys. But understand, this is the value of the most important part of the offer. You have to understand that. It’s so valuable that back then they paid people that much money to come create offers for them. So it’s worth your time to start figuring these things out. Now I want to kind of talk about what an offer isn’t for a minute, because most people in business, they think about “What’s the product I’m going to create?” and the biggest problem when you create a product is that when you have a product it is a commodity and anybody else can create it. And if you have a product and it’s a commodity, when you’re trying to figure out how to sell it the only thing you have as leverage is price. That’s why when you go to Amazon, someone’s selling the thing at this price it’s like, “Oh, well if I’m going to beat them I gotta sell it for less and I gotta sell it for less and less and less.” And it’s a race to the bottom, which is the worst type of business to be in, by the way. Dan Kennedy told me when I first got started 14-15 years ago in this business, he said, “There is no strategic advantage of being the second lowest price leader in town.” So if you can’t beat Walmart, there’s no sense in being the lowest price leader in town. But there’s a huge strategic advantage of being the most expensive person in town. So if you’re creating something like, you create a product and become a commodity and you’re racing to the bottom, or you understand how to create an offer, which de-commoditizes you, I’ll show you here in a minute, and makes it so you can charge whatever you want. So that’s kind of the key that you have to understand. So a product is like a one singular thing. An offer is you take a product and you bundle it with a bunch of other things to increase the value and make it unique and separate and different. If I would have sold this as a digital marketing event, there’s like 800 digital marketing events you could have gone to right? Why did you guys fly here in the middle of the rain? It’s because it’s different right, it’s wasn’t just a product. It’s not a marketing event, it’s a whole bunch of other stuff. When you bought Clickfunnels, most of you guys didn’t buy it because “here’s software that builds websites.” There’s tons of software that builds websites, right. We created irresistible offers and bundle them together to make you go crazy to come and buy and come here and do things right. I spend a ton of time focusing on how to create an offer. One thing you have to understand, there are, basically there are two ways to make your product the cheapest in town. What’s the best way to illustrate this? The first way is obvious, if you want to be the cheapest product in town, you have to decrease the price, which again, funnel hackers don’t do that. We don’t. We should make a t-shirt that says, “Funnel Hackers don’t decrease prices.” If you decrease the price you become cheaper than somebody else. The other thing is if you increase the value of what you’re offering, then you become cheaper. Because if I sell you something and it’s worth a million dollars and I only sell it for a thousand, that’s cheaper than the person that sells you something that’s a thousand bucks and it’s worth a thousand bucks. Does that make sense? So I can either decrease the price or I can increase the value to increase the value of the thing. But if you look at this, it’s interesting. I had this conversation with my kids the other day. How much money you make is 100% tied to how much value you give. It’s 100% correlation. So my kids were asking me, my kids are cute because they’re at the age where they’re trying to start figuring things out. And one of my sons, Bowen was like, ‘Dad, it doesn’t make any sense. This guy over here (one of our friends) is a doctor and he’s way better than you and you make way more money than him. How come?” And I said, “You get paid based on how much value you offer.” He’s like, “But dad, he operates on people. That’s way more valuable than what you do.” And I smiled, I said, “It’s definitely more difficult. I can’t imagine that. But you don’t understand. He’s only able to operate on one human being at a time. So he’s offering insane amounts of value for one person. So because of that, he gets paid really, really well, but it’s finite. It’s as big as it can be. I’m able to offer value to 4,500 people or 76,000 people, or a million people because I create something of value and I create and sell it so many more times.” So I said, “That’s the reason why I’m able to make more money than doctors, because of how that works.” And I kept explaining this to him, so I told him, “Look, if you want to get a job you get paid based on how much value you have. So if you get a job at McDonalds and they’re paying, whatever it was, minimum wage nowadays, $8 an hour. That’s how much value you’re getting. But if you go and create something and you can do something bigger, the value is so much higher and you can get paid more money for that.” And I was trying to explain this to a kid which is really fun. So the whole name of this game is you’re creating funnels and you’re figuring out your hook, your story, and your offer. You’re trying to increase the value. So the offer increases the value of whatever it is you’re trying to sell. So I’m going to show you some practical life examples. The first one here is dating. When I met my beautiful wife, Collette the very first time, there were tons of men who wanted to date her. And I was just a product, I was like, “Hey, I’m wearing baggy pants and I have a shaved head and glasses.” That was the product, that was the best I had. There were much better looking dudes who dressed nice and all sorts of stuff. And I was like, looking at me in a lineup, there’s much better offers, there’s much better products, because I was a commodity at that time. So it’s like, okay, if I’m going to convince my wife to marry me, who’s way more beautiful than me, what do I gotta do? I have to create an offer. I have to make this better. This is true for any of the single men who are trying to figure out how things work, you’ve got to bundle. So if I’m like, “Hey, do you want to go on a date with me?” She’s like, ‘I got asked by four other people this week.” I’m like, “Okay, this is the deal. I planned a date that’s going to be amazing. What we’re going to do is we’re going to go to dinner. What’s your favorite place to eat? We’re going to go there. And then what do you like to do?” and we plan an actual date and make an amazing offer. Then she’s not judging it as me versus somebody else, product versus product. She’s like, “Oh man, that experience seems amazing.” And the offer is better. So when you’re dating it’s the same thing. When you’re business partners, when Todd came to me as a business partner, he had so much value. It wasn’t just like, ”Oh I’m a programmer.” It’s like, “I’m a programmer who can turn your dreams into a vision, into reality.” I can do this, I can do this, and it all the sudden becomes this amazing offer. It’s like, “Oh my gosh I can’t say no.” The value gets so big. So it works in dating, and it also works for movies. How many of you guys are pumped to see this movie next week? How many of you guys have no idea what movie this is? So if I came up to you and I was like, “Hey, Captain Marvel is coming out next week. Who wants to go with me?” This room is fine, but if I walked into a normal room like, “Who wants to go to Captain Marvel with me?” they’d be like, “Eh..” I’d be like, “This is the deal, Captain Marvel is coming out. I’m so excited to come and se this movie. I’m so excited that what I did, it comes out on my birthday, March 8th is my birthday and that’s the day it comes live, but the night before they’re doing a private screening in Boise. And I saw this commercial for it the other day and on the commercial it said ‘the movie is coming out, make sure to book your tickets now.’ So I went to the little app, to Fandango app, and I looked at the theater, there’s only one theater playing it at 7:30 at night the night before and half the theater is taken. And I was like, ‘half the theater is taken.’ So I bought the other half. “ This is a true story. Collette’s like, ‘Why do you keep buying all these tickets.” I’m like, ‘I don’t know, I’m sure someone’s going to want to hang out with me.” So if I was like, “This is the deal, you could come to Boise with me and we’re all going to go together. We got half the theater just for Funnel Hackers, it’s going to be amazing.” Now it went from a movie, a $20 movie to this experience. “And then ahead of time what we’re going to do, we’re going to go to my favorite sushi restaurant, there’s a roll called the rattlesnake roll and it’s like this little Podunk joint in Boise that seems kind of weird. But the literally have the best sushi on planet earth. I always bring people and theyr’e like, ‘oh yes, sushi in Boise is going to be great.’ And then they have it and they’re like, ‘oh my gosh, this is the greatest sushi I’ve ever had.’ I’m like, ‘I know.” How many of you guys have been there with me? A couple, yeah, it’s insane. “So what we’re going to do is we’re going to go to sushi first, I’m going to introduce you guys to the rattlesnake roll, best roll on planet earth, then we’re going to go and have a separate funnel hackers section, we’re going to watch captain marvel together, third thing is I’m going to buy costumes for each of us, and all of us get to pick somebody, it’s going to be amazing. It’s going to be awesome. And then fourth off, after it’s done, we’ll come back to my house and we’ll just goof off. We’ll play in the wrestling room, play on the tramps and stuff, it’ll be amazing.” How many of you guys want to come to that movie now? Do you see how I increased the value? It went from “it’s a $20, I’m going to a movie.” To “Oh my gosh, I’m going to book a plane and we’re going to fly there tonight.” Right. Just by increasing the offer. So if someone’s not buying your thing it’s because the offer’s not good. How do you increase the offer? How do you make it better? Always think, “How do I make it better? How do I make it better?” We have a product we sell right now, it’s 2 pieces of paper and we sell it for a thousand bucks. How many of you guys will give me a thousand bucks for two pieces of paper? My die hards, thank you. We literally do. I have two pieces of sales script, high ticket sales script, it’s two pieces of paper we sell for a thousand bucks. And if you look at it you’re like, ‘I would never pay a thousand bucks for two pieces of paper Russell.” And most people wouldn’t, but I’m like, “These two pieces of paper, guess what they are? This is our high ticket sales script. Today we’ve done just short of 30 million dollars in sales with these two pieces of paper. Someone picks up the phone, you read this one, then you read the other side, then they give you money. It’s amazing. It just works, every single time.” And I didn’t make it up, people have been using it for years, there’s been billions of dollars tracked back to these two pages, and the person I know in the world who’s the best at this is a guy named Robbie. In fact, Robbie’s here in the room, where’s Robbie at? He’s here somewhere, he’s probably out…Robbie is the one who showed me this script initially and he trained me and then he trained our sales guys and built a whole team and he had everyone on it. “So for a thousand bucks I’ll give you two pages, but then I’ll also give you Robbie in a box. So how many of you guys would also like Robbie to make videos to train your entire sales team for you? It’s amazing right. So you hire sales people you give them these two pages, and you say, ‘watch the video of Robbie teaching you.’ They watch those for like 3 hours and they come out ruthless sales people who can sell anybody anything.’ And then you’re like, “That’s cool but I don’t have any ads.” I’m like, “Okay, how about this? I will give you the ads we run and I’ll give you the funnels I run. I’ll just give those to you as well. And then I can hook up a call and you can jump on a call with Robbie for 30 minutes and he’ll train your sales people one on one and make sure it customizes the script specifically for you.” Now how many of you guys would pay a thousand bucks for that offer? Do you see how it works? It went from two pieces of paper til I bundle it and all the sudden it’s like, ‘oh my gosh, I have to have that.’ If people aren’t buying, again, it’s always hook, story, offer. If it’s offer it’s because you don’t have, you gotta figure out how to make it better, how to increase it. The one funnel away challenge is the same thing. This is a challenge where you get to jump on a coaching call every day for thirty days. Did you see the energy like, ‘ugh’? Now let me tell you all the stuff you get, the first thing you get is the big old box in the mail. Inside the box is a book called thirtydays.com where 30 people of our two comma club winners each wrote a chapter about how they got in the two comma club. Then there’s videos of them showing behind the scenes of each of their funnels. Then on top of that you’re going to get 30 days of video from me, then you get 30 days of video from Julie Stoian, and then on top of that Stephen Larsen’s going to come one every single day and yell at you and make sure you actually get the stuff done. By the time they’re done, your funnel is going to be finished. We go on and on and on and all the sudden this is the most irresistible offer of all time. The first challenge we had 7500 people sign up for it. My goal is to get 10,000 people a month signing up for this challenge and we keep making the offer better and better and better.  If you want to sell more stuff, figure out your offer and make it sexier, increase it, make it better.

Today we’re joined by Todd McCarty of the Heat On The Street blog where he shares insider insights on the music industry and how to find fans for your music.   You might be wondering why we're discussing music industry stuff here on the Musicality Podcast, where we normally focus on the music side rather than the business side of being a musician. Well, we're not suddenly making a shift to focus entirely on career topics, but we were really keen to feature Todd on the show because we know that a lot of musicians, particularly hobbyists, would love to get their music heard - but are either intimidated or overwhelmed by the modern landscape of music publishing. Streaming services can in theory provide immediate listeners - but may not. And record labels are still doing what they did in the 1950s - or are they?   We wanted to ask Todd about the real story behind the successes in the music industry and what the opportunities are - not for the rare "talented" virtuoso, but for the passionate amateur musician who just wants to get some fans.   Todd was a professional drummer who went on to act as tour manager and promoter, run a record label and be a Senior VP of Sales at Sony Music. He has several platinum and gold sales awards to his name and so he's certainly a man who knows what it takes to make it in the music business.   In this conversation we talk about: • Todd's own background as a professional drummer and how a pivotal audition hammered home an important lesson about the music business • We find a polite way to ask Todd: What's the point of record labels these days? • And he reveals the one thing that musicians get absolutely backwards when it comes to getting fans   Todd has a refreshingly clear and frank perspective on the music industry, something that can all too often seem confusing and overwhelming, and he provided some really big insights and mindset shifts that we know will help you, whatever stage you're at in getting your music out there.   Subscribe For Future Episodes! Apple Podcasts | Android | Stitcher | RSS   Full Show Notes and Transcript: Episode 098   Links and Resources • Heat on the Street • About Teachers, Coaches, and Mentors • 35 Ways to Make Money with your Music • How to Get Followers on Spotify • Sign up for the Heat on the Street mailing list     Enjoying the show? Please consider rating and reviewing it! Click here to rate and review

In this episode of Building Infinite Red, Jamon, Ken, and Todd touch on the exciting world of lawyers, accountants and bookkeepers, as well as a variety of finance-related topics such as cash flow and different types of accounting. Be sure to listen to the end of the episode as Jamon shares the vision for Season 2 of Building Infinite Red. Show Links & Resources YNAB – You Need A Budget Saturday Night Live Highlight: First CityWide Change Bank Episode Transcript TODD WERTH: Hello, everyone. Today we were talking about which topic to talk about, and we had the idea, how can we come up with a topic that's extremely boring, that no one wants to talk about, but actually is super important? So, we're going to talk about lawyers, accountants, bookkeepers, finance, and other things. Basically, how to start a business and still feed your family. Let's start off with you, Ken. If I were starting in business and you and I are sitting in the airport and I knew you had started one and I asked, "Hey, Ken. What should I worry about first off when I'm starting a business?" What would you say? KEN MILLER: I would tell you to go find a good accountant and a good lawyer right away. You don't need to pay them to set up the business for you. You can do that yourself or you can use a service like LegalZoom or something like that. But you need to have somebody who is familiar with the kind of business that you're planning to do. We have a great lawyer who happens to specialize in digital agencies. I've got an accountant that I've personally worked with for many, many years. It's not the cheapest, like you want your accountant to be good. A bookkeeper is sort of a different matter since your accountant is not doing your day to day books, and you don't necessarily need a bookkeeper right away because you're probably not going to have a lot of transactions right away. To be honest, I found it was helpful for me to just do it personally for a little period because then I understood what was going on better. JAMON HOLMGREN: Ken, what's the difference for those who may not know between an accountant and a bookkeeper? KEN: Well, I'm told bookkeeper is a little bit old fashioned, but it's still very descriptive. Your accountant, aka your CPA, your Certified Public Accountant, that is someone who will do your state and federal and maybe even international taxes for you. They may or may not have people who will keep your books and stuff. Now, bookkeepers, they're the ones who will record transactions coming in and going out basically, so that your books are an accurate reflection of what's happening in your business. Todd, do you want to interject? TODD: Yeah, just real quick. Sorry to be pedantic, but my wife's an accountant. Bookkeepers often are not accountants. Some of them are just people who started doing books at their company and continue to do it. When you get to accountants, you have two types of accountants: One is CPA, which is a tax accountant; and then there are other accountants who specialize in corporate stuff, like my wife. She went to college for it and is highly trained. KEN: That's the kind I recommend you get, is the kind of who is trained in accounting practices. JAMON: First of all, what's the more modern term for a bookkeeper? Is there? KEN: I think Heather liked the term, what was it? Financial assistant, something like that? JAMON: Okay. TODD: I think that's what she said. Heather is my wife, by the way. JAMON: And then secondly, what does an accountant give you that a financial assistant does not? KEN: Well, A, They are literally certified by the state. And B, They have experience in tax law. JAMON: CPA does, but they're more corporate accountant. They're going to bring more like ... It's my understanding that they can bring more strategic ... KEN: Yeah, they can be more strategic help, they can help you design your practices for paying people, for collecting money, because there's just a lot of i's and t's that need to be dotted and crossed. JAMON: Yeah, that makes sense. TODD: Yeah, not to keep on interrupting about accounting. Sorry, my wife's an accountant. JAMON: We're gonna play a little game. How many times will Todd mention that his wife is an accountant? TODD: All CPAs are accountants. Not all accountants are CPAs. My wife has absolutely no interest in being a CPA, she never did, it had nothing to do with her job. However, if you need ... One of the things she specializes in is international accounting. So, a bookkeeper is someone who enters data, basically. They're gonna get bills in from the outside via mail, they're gonna enter those into the bookkeeping system, or the accounting system, they're gonna pay invoices, whatever. They're a clerk. An accountant is more like a programmer. They investigate where things went wrong, they figure out the best ways to do things. If you have a half million dollars in pounds in the UK, and you need to transfer in the US as US dollars, how do you go about that? There's very different ways. Some are very expensive, some are not. So, that's ... An accountant spends a lot of time doing strategic-type accounting stuff, as opposed to data entry, which is more what your bookkeeper does. JAMON: Yeah, so when I started ClearSight back in 2005, one of my early employees, his dad was a controller, which is like kind of an accountant, but it's specifically to a- TODD: That's really interesting, Jamon. Did you know my wife was an accountant? JAMON: I did not know that, Todd. I hope you remind me again. A controller is basically, it's a type of accountant that's kind of high up in a company and focused on ... Basically, in charge of the company's finances, and ... So, he was a controller and I went to lunch with him and I asked him for advice. And the first question he asked me, this was kind of interesting because I did not expect this, he said, "How's your accounts receivable?" And I was like, "Uh ... I know what that is, but what do you mean by 'how is it'?" And he kind of helped me think through my terms, like how long until the payment was due, and was I taking money upfront? Which I wasn't, weirdly, I wasn't taking money upfront. I was just doing the work and hoping I'd get paid. TODD: Hoping is the key term. JAMON: Hoping, yeah. And more than once I didn't get paid. And that sucked, especially when I wasn't getting paid very much. KEN: That's definitely one of the harder things to learn when you start doing this, is if you've only ever worked at a company, you don't realize how much effort goes into just getting people to actually pay you, right? 99% of the time it isn't out of any malice, it's not people trying to mess with you, it's just their processes are also run by humans. Maybe they're a small company, maybe they're a big company and something got lost, or things didn't get signed off correctly, right? There's just a million little things that have to be kept track of. And so, whoever is doing your day to day accounting, be nice to them. TODD: Yes. KEN: Be nice to them because you really need to trust them to be on top of what they're doing. TODD: You do not want to piss off an accountant if you value eating, for sure. Cause they won't do anything wrong, but they will sure drag their feet on your particular account. One other things I wanted to add, especially with larger companies or companies that have accounting departments, accounting is never personal, okay? And Ken said they probably don't want to mess with you. They may not want to mess with you, but they may actually have a policy not to pay their vendors, which seems absurd but it's true. So, in other words, if you're sitting in an executive meeting at a company that has 5,000 people, and your cash-flow ... you need some cash or whatever. The directive to the accounting department could be, "Only pay the vendors with the highest interest, the top 25% of them. Do not pay anyone else." And so, it's not ... they're not trying to get to you, it's just business. KEN: I think it's also very tempting when you're ... If you're a creative person and you're getting into business and you wanna be able to be a partner to your clients, and that's all very laudable and we wanna do that and we strive to do that. But at the end of the day, when you're negotiating a contract, you have to take it seriously. You have to take what it says seriously because there may come a situation where it's no longer you and the friendly person you're talking to, it's just you and the contract and someone unfriendly. Or you and the contract and someone not unfriendly, but as Todd says they're just ... implementing a policy. It's a lot harder to do something about it than possible which ... It really highlights how important the relationship is, as well. So, you need to have a good contract that actually reflects what you and your counter-party actually mean. And you have to keep that relationship good all the way through. JAMON: Absolutely. We had a client a while back that wanted to use their own contract, which is not uncommon. I mean, we have our own kind of Master Services Agreement that we'll send over, but in this case they had their own, they wanted to send it over. And this sort of brings it back to having a good lawyer, because in this case, something fell through the cracks and we signed it without sending it over to our lawyer. And this was a big mistake because- TODD: Big mistake. KEN: Big mistake. Did we mention it was a very big mistake? TODD: My wife, who's an accountant, by the way, said it was a huge mistake. JAMON: Oh, she is? Oh, that's interesting. But what happened was the project started off really well, and it went very well through the first month. And then, abruptly, we don't know what happened because the whole way through the client was telling us we were doing good work. Even after things went weird, he was telling us that we were doing good work, which really didn't make sense. But he wanted out of this contract, or he wanted to hold our feet to the fire. And we realized, and we sent our contract over to our lawyer, and Ken ... Wasn't his response something like- KEN: He said it was the most punitive contract he'd ever seen. JAMON: And he said that it was designed to be used as a weapon. TODD: Yes. That's what he said. JAMON: Which was not a great place to be in after we had already signed this thing. TODD: Against us, by the way. Not for us. KEN: Yeah. JAMON: So, luckily this particular client ended up taking a route ... It wasn't an easy route, but he took a route out of our contract that let us off the hook, essentially, with some work from Ken. So, thanks Ken. But we made it through that one, but not everybody would. That could be a really big problem. So, having a good attorney, which we did, and actually using him, which we did not, is really important when you're putting these contracts together that you're talking about. And then, of course, there's a certain amount of teeth to it, so they will pay you. KEN: We designed our standard contract to be, we think, really, very fair. JAMON: I think so, yeah. KEN: And so, if a client wants to use their own contract, we now ... It always goes to the lawyer. It doesn't matter what it costs. And he's very reasonable with how he charges for that- TODD: Sorry to interrupt. That's a good rule. If you don't feel that it's worth paying your lawyer the $300 an hour, or whatever your lawyer costs, it goes up from there, trust me, because this project isn't big enough, then don't take the project. And that sounds harsh, but if you can't pay your lawyer to look at the contract, then don't sign the contract. It's not worth it to you. KEN: If it's a small project, we don't accept- JAMON: Yeah, and that's why we have a standard contract, because the lawyer drafted it. And so, we can send it over and we don't have to pay him every time. Of course, it costs more to have him draft it, but then if they sign it then we know that we're good to go. But if they want their own contract, you need to have it reviewed by your attorney. And if you don't know of an attorney, you can ask around on social media and stuff, you can generally get some recommendations. TODD: One thing I do wanna say, though. And this is often somewhat shocking to people who have never ran a business, who worked for other people or other corporations throughout their career. The world for you as a business owner, is very different than the world for you as an employee. If your employer doesn't pay you, you can go to the labor board, and the government will come in and they will sue that company and they'll get that money for you. Because of that, your employer's gonna pay you. KEN: And your wages are legally privileged. So, if they're in bankruptcy, you get your money, not necessarily the very first, but it's a very high priority. It's a very high priority debt. TODD: Correct. If you have a personal contract with ... between two people or between two companies, or between you and a company, there are no such protections whatsoever. You will get paid if the person who's paying you wants to pay you. If they don't pay you, there's no government agency you're going to go to who's gonna help you- KEN: Well, there's the courts. JAMON: The court, basically. TODD: ... other than the courts. And if you're talking about a $10,000 bill that they owe you, you are not going to court for that. You can try to go small claims court, that kind of thing. But the reality is you're not going to go to court for that. And people know this. And there's a lot of people ... And you're like, "Well, you know, I did this contract with Bob, and Bob's wonderful. I mean, I love Bob. He spends his time saving orphan kittens on the weekends." That's great, but Bob's company was just bought by Joe, and Joe is a complete jerk. And Joe now has all your contracts. And Joe used to be a lawyer, bless his heart. And Joe knows that you're not gonna do anything when he doesn't pay your $10,000, so he just refuses to pay you. JAMON: By the way, this is not a hypothetical, this happened to me. TODD: And so, we changed the names, obviously. But Joe does that, and there's really nothing you're gonna do and you're just gonna lose that $10,000. You can try to do collections and irritate them into paying you. But here's the raw fact, if they need you for something they will pay you. Meaning if you still have work to do, they will pay you because they need you. Be very weary of the end of a working engagement when they no longer need you. KEN: This is not to say that everybody is like this. There's plenty of extremely honorable- TODD: Like Bob, Bob's one of them. KEN: ... companies out there. Yes, there's many, many, many great, wonderful, honorable clients who pay what they owe, and they would never screw you. TODD: Correct. KEN: But there's more people out there who, like I said, not necessarily even out of malice, sometimes just out of laziness, kind of don't get around to it. TODD: Another example is if you get a contract where you take liability for stuff that you really have no control over. So, you're like, "Well, Bob's not gonna sue me. Bob's a great guy. He has the same values as I do." But Bob gets successful and Google comes and buys Bob, trust me. Google's lawyers will sue you. If they can, they will. It's not personal, it's just business. JAMON: Beyond accounts receivable, which is obviously a big topic ... And by the way, get as much money upfront as you can. That's a very straightforward way to fix some of this stuff. But beyond that, accountants can also give you a really great insight into the engine of your business. So, they're sort of like your oil pressure. They're your check engine light. And they will give you information that allows you to make decisions, business decisions, going forward. So, an example of this is how much are we gonna pay our employees for bonuses? We need to know what we can afford and what's budgeted for that. Other examples are could we go out and maybe acquire a small business? Or can we invest a bunch of money into R&D? These are all things that we've actually looked at within Infinite Red over the past three years. And we needed to have good information from our bookkeepers and our accountants. And we haven't had always that. That has actually been one of the stumbling blocks that we've run into with Infinite Red, is that we've run into situations where we've been fed what turned out to be inaccurate information. And we've made decisions based on that, and it's caused the engine to run more roughly. KEN: Suffice to say, you really need it to be accurate. So, one of the things that we've done to help make that be the case is that we have our CPA, our tax accountant, and our bookkeepers are totally different, so that we at least have two competent people looking at it periodically. It's not a perfect safeguard by any stretch of the imagination, but it does help a little bit. JAMON: And it's tempting to have one company do both, right? KEN: It is tempting. And I would argue you should not do that. JAMON: Always keep them separate. TODD: Yeah, I would say at the beginning, you do your bookkeeping and then let your CPA do the taxes. And we get to a point where ... For instance, this is the difference between a bookkeeper and an accountant. If you're setting up your books and you're setting up your own chart of accounts, and that kind of stuff, a bookkeeper will just do it. They'll do what you say. Put this in here. Do this, do that. An accountant will say, "Okay. You see how you set up your accounts here? Later, when you get audited ..." And then you're like, "Why would we get audited, what does that even mean?" Well if you need a big loan, the banks are gonna require an audit your finances. Obviously that's the audit on the tax side, but that's your tax accountant. And so, what she'll do is she'll say, "Look, I've been through many audits, this is what they're going to look for. You should set it up this way so that that audit goes smoothly so that loan you need ... Say you get a big new client and you need $250,000 to service that client, and you're gonna make millions? Delaying that loan by a week or two could be disastrous." So, that's the difference between an accountant and a bookkeeper. They know what they know, and they know what's possibly gonna happen. JAMON: Yeah. Banks are a whole other aspect about this that we could talk about. One of the things about banks is that they are generally very slow. You're just one file on their desk. They're not particularly invested in making sure you succeed. And it can really trip you up. Like if you need that loan ... We've been in a situation where we said, "Hey, we wanna borrow some money for a particular thing." And it took ... I think ... I don't remember the timeline, but it was months longer than I expected. Like it was a lot longer. KEN: It took forever. JAMON: Yes. And it felt like most of the issue was on the bank side. Now, being prepared for that, as Todd said, is really important. KEN: In that particular case, there was something that didn't get filed correctly two years ago with the ... I mean, it's ... JAMON: So, another aspect of this, and we can touch a little bit on another property of our business, and that is remote work, is the- TODD: Oh God, banks and remote work. JAMON: Banks, as well as government agencies ... Ken, you've had to set up I don't know how many states now for Infinite Red employees. KEN: Seven, and I need to set up an eighth. JAMON: Yeah. So, this is a whole aspect of kind of the boring ... We're talking about the boring parts of business. But if you're starting a remote work company and you're hiring people from all over, you need to keep this in mind that you're gonna have to set up, what's it called? Nexus? If you have nexus, you have to set up the state ... KEN: Yeah. And having an employee- TODD: What is nexus, by the way? KEN: Nexus just means that you legally exist in a location. And typically the place where you have nexus or not have nexus, as a US company, is in individual states. So, if you have ordered something online and you live in a sales tax state, but they didn't charge you sales tax, the reason they didn't have to do that is because they don't have nexus in your state. So, famously Amazon, for a long time, didn't have nexus in California, or at least they argued that they didn't. And so, Californians didn't have to pay sales tax when they ... I mean, nominally they were supposed to be paying it to the state, but Amazon didn't have to collect it for them. So, that's nexus, and it applies to all kinds of tax, not just sales tax. So, for example, basically everywhere we have an employee, we have to pay taxes. JAMON: Yeah. KEN: This is one of the less glamorous, less wonderful parts about remote work, to be honest. JAMON: There are PEOs or POEs ... KEN: PEOs. JAMON: PEOs, and those will ... They're basically companies that have all this stuff figured out already and you hire your employees through them. KEN: Yes. I believe there's some issues with that. If I were doing this over again, I probably would go with a PEO to avoid a lot of that stuff. JAMON: They're expensive, but they kind of ... They make it ... It's sort of like, in a software engineering world, using Heroku, which kind of spins it all up for you, versus setting up individual Amazon AWS servers. TODD: The other problem with banking, especially with governments in general, is their complete ignorance of the laws about things like signatures. So, I think this is a funny story. So, Ken sent over something that needed to be signed. And I have a bunch of digital signatures of mine that I apply to PDFs. Which is my real signature, and it's perfectly legal, as my wife, who's an accountant, would say. She actually worked for a company that did digital signatures- JAMON: You said your wife's an account? TODD: Yeah, my wife Heather is an accountant. I don't know if I mentioned that. But the signature's legal. So, I legally signed the document Ken sent, and Jamon legally signed it. And they're like, "Well, we can't accept this. We can accept a fax." Okay, so a fax. So, I'm going to go back to 1995 where my fax machine is, and I'm gonna fax it over. "So, okay can't do a fax cause you don't live in that decade. But it can be digital, right? But it can't be digital, it can be a picture of my signature, right?" So, you take the PDF you just signed digitally, you print it out, then you take your camera out and you take a picture of the digital signature you put on the PDF. And then you send them the picture, and then that's fine. It's this kind of ... In some cases we had to have things overnighted between the three of us to sign things. In some cases, we had to go in to the local Chase branch or Bank of America branch or wherever and sign it. And none of this is required by law, at all by the way- JAMON: It's just their corporate policies. TODD: They probably have pneumatic tubes in their offices where they send things to each other. It's crazy. I literally took a picture of ... I made it quite obvious I took a picture of it, too, just to be a jerk. JAMON: So, another aspect of finances is budgeting. So, one of the things I did was I ran a budget with my business, was very happy to hand it off to Ken once we merged. That was one of my favorite parts in the merger. But it was really, really important. So, I did it on just a straight up cash basis. So, money would come in, and I would use a program called youneedabudget.com to enter these transactions, whether they were in-flow or out-flow. And then they have this zero-based budgeting system that lets you allocate money for this and that. It's really good because then you know if you had a couple hundred thousand dollars in the bank, and you needed a certain amount of money for payroll, or you needed a certain amount of money to pay your SaaS products, like your GitHub bill, things like that, you know that you had the money or not in the bank. And it gave you really kind of granular data there. It's not quite the same as using QuickBooks. QuickBooks has a useless budgeting feature. I've looked at it. It's just not ... It's sort of like, "Hey, let's plan out the next year." Which you hardly even know what the next month is gonna be like. But having some sort of zero-based budgeting system is quite useful, I think, especially at first. KEN: Can you explain what zero-based means? JAMON: So, essentially, a zero-based budget is where you start with the amount of money that you have, generally, in the bank, and you take that money and you start moving down the line of categories, allocating bits and pieces, subtracting it from that total until you get to zero. So, such and such for payroll, and such and such for your credit card payment, and such and such for your SaaS products. And maybe you need some for team dinners and travel. And you're just moving down. And eventually, the money runs out, right? You hit zero. Or you run out of categories, and you're like, "Okay, I've got money left over and I'm gonna put this into a kind of slush fund or something that just kind of like keeps it for a rainy day." TODD: Isn't slush funds illegal? We should probably just use a different term. JAMON: Okay, maybe I used the wrong word there. Did I use the wrong word? Sorry. A rainy day fund. TODD: Ken would know. JAMON: An emergency fund. And then eventually, you could even bring that money home if you're the owner. But that's what zero-based is. You always get to zero, and you don't go any further than zero because there's no more money. If you don't get to zero, then that means there's money just kind of hanging out not- KEN: Yeah. So, the amount of cash you have determines how far into the future you can budget, basically. JAMON: Exactly. Yes, that's right. So, when you're starting up, it's really important because you don't actually know what kind of expenses are gonna be coming in. You just can't really predict that. So, doing budgeting gives you that insight into where is your money going. You have to allocate for it, and then you enter it into the system. Once you've got a pretty good rhythm going, it's less necessary because you know where the money's going and you can keep an eye on sort of more macro numbers that will give you ideas of health. I would definitely recommend it for probably the first ... I would say, probably the first three years. KEN: And to be clear, it's not a substitute for real books. But I did find it very helpful in just thinking about how money moves around. JAMON: It's also a little bit inadequate in that it is cash basis. And while cash flow is king, and we need to talk about that, Ken, there's also accounts receivable and accounts payable that will affect the money going in and out. TODD: Yeah, there's something called cash basis accounting. KEN: Yeah. Talk about it just a little bit, which is if you're starting up a business you should be cash basis. Like almost full stop, unless you're doing a hardware startup, right? If you're doing something which has a ton of physical inventory, then you might not want to, but frankly if that's true, I mean you need to be talking to a professional, already. JAMON: Yeah. TODD: The other one's called accrual basis. KEN: Accrual, yeah. So, cash basically is very simple. It's like money coming in, money going out. Period. TODD: It's what you would do at home. KEN: Exactly. It's what you would do at home. It's what you probably think accounting is already like. Accrual is like as soon as we have agreed to pay something, then it immediately goes out- JAMON: And as soon as someone agrees to pay us, then it immediately comes in. KEN: Fancy ways of accounting for inventory, and I personally don't actually understand it very well, so that's about all I can say about it. JAMON: It's useful because it gives a more accurate model of where your business actually is, versus cash which can lag or be ahead of itself. But cash is so much simpler that it's definitely worth doing for a while. TODD: Not to turn this podcast into a company meeting, but Heather actually said we probably should consider going to accrual. KEN: Yeah, well we're large enough now that- JAMON: Wait, Todd. How would Heather know to do that? TODD: Oh, Heather, my wife, she's actually an accountant. JAMON: Oh, okay. Okay. That's helpful. KEN: She's been helping us with our books lately. Anyway. So- TODD: Joke never gets old. Never gets old. JAMON: We gotta liven this up somehow. I mean, it's about accounting and lawyers. TODD: And she's gonna listen to this podcast and today's our anniversary, so this is a special "I love you" to my wife. JAMON: Oh, yeah. Well, happy anniversary Todd and Heather, the accountant. TODD: Twelve years. KEN: Of accounting. TODD: Of marriage. KEN: Oh, I see. Okay. I know this has been a very dry podcast, and I apologize but I tell you what. If you guys are thinking about doing this, if maybe you're already doing this and you're feeling the pain already, this stuff is absolutely vitally important- JAMON: It really is. KEN: ... to what you're taking on. JAMON: If you have a solid basis, if you've got some professionals working with you, it gives you so much more confidence and the ability to sleep at night if you know where things stand and what you need to do. KEN: Yeah. TODD: And here's the truth. Many of you are just gonna ignore us. Cause I heard this, too. KEN: Yeah, I know what you mean. JAMON: I did, too. TODD: It's like, "Okay, yeah. Sure. That sounds like the right thing to do. I should do that, but I'm not going to because ... " for whatever reason. And then you learn and suffer like we have, and you eventually do a podcast where you tell others about it, and they ignore you. KEN: You whistle into the wind. TODD: And the perpetual cycle of business stupidity continues. KEN: So, I'm gonna talk about cash flow last. JAMON: Oh yeah, please. TODD: Make it impassioned, Ken. We want some fire here. KEN: So, I remember my very first job that the controller ... So, the controller is sort of the chief internal accountant. Not the CFO, but the kind of hands on- JAMON: Sometimes it's called the comptroller for some reason. KEN: I think that's a British thing. JAMON: That's a British thing? TODD: In government call them comptrollers. KEN: So, they're the ones who would be doing this at a typical company. So, I remember he had a little sign on his desk that said, "Happiness is positive cash flow." And I remember a client saying, "Cash is king." And I remember hearing these things, but I didn't have anywhere to file them. I didn't understand what that meant, right? And I really understand it now. I really understand it now. Where it's basically, cash flow, it's very simple. It's literally the flow of actual money in and out of your business. So, the money you pay out to payroll, the money that your clients actually pay you, not that they have on contract, but they have actually paid you. And what we found is what you think of a business is trying to do is create a profit. And that is true in the long-term. What you want to do is create the largest profit you can. However, to get there you have to keep operating as an entity. And the lifeblood of a company is cash. The lifeblood of that company is that cash, it's the food. So, if you don't get the food in time, it doesn't matter how much you were gonna get. If you run out of money and don't make payroll, something like that, that company will cease. JAMON: I think that's actually a good analogy. If you're playing Minecraft or any other game where you have a health or a hunger bar, and if you're planting fields and fields of wheat and you're waiting for it grow and you wanna go harvest it but you die of hunger before you get there, that's a problem. That's a cash flow problem. It's the ability for you to pay your bills on a day to day basis. So, yes, cash is extremely king. KEN: Well, yeah, imagine your business is collecting Beanie Babies. And you're like, "I'm gonna buy a bunch of Beanie Babies and I'm gonna wait for them to become valuable." That's not a business. Maybe it's an investment, maybe, right? But because you don't have this cycle of things coming in on a routine basis that lets you continue to operate, you just spend a bunch of money and then you wait 20 years. Right? So, it may be profitable in the long run, but it's not really business. JAMON: So, Ken, how does that look in practical terms for Infinite Red? How do you apply that principal of cash is king? KEN: So, yeah, for example, I was very resistant for a long time to take credit cards. This is another thing you learn once you're on the business, you're like, "Holy crap, the credit cards, they take a lot of money out." JAMON: Yeah they do. TODD: Three percent. KEN: Three percent. TODD: Which is a lot on $100,000. KEN: Yeah, exactly. On a $100,000 project, that's actually a lot of money. I think I'm a little more nuanced about it now, because what they do is they make it easier to pay. They make it easier for someone mid-level in a company to pay. They reduce that friction, and it means you get paid sooner. Getting paid a month early is worth actual- TODD: Money. KEN: It's actual money to you. It is worthwhile getting paid early. And so, we're a little bit more lax about how we accept that. TODD: Why is that, Ken? Why is it when you get paid sometimes more important than any profit you made from that money? KEN: Well, for us our biggest expense is payroll. And that happens twice a month no matter what, right? And so, having that money in hand now- TODD: Knock on wood. KEN: That's right. Having that money in hand now makes a real tangible difference. It's not that you don't wanna pay attention to profit at all. It's like there is this ... I remember back in the original dot com boom, there was a Saturday Night Live spoof where they were like, this business was like, "We make change." Right? They're like, "We make all kinds of change. How do we make up for it? Volume." You can, in fact, cash flow yourself into the dirt if you're not paying attention. JAMON: It is interesting to see in situations where we're really monitoring our cash flow very closely, and we do some things that we know maybe they're not going to pay us for a few months and you're maybe struggling through. And then boom, it does come through. And you see that profit actually hit the books, and that is actually a cool feeling, as well. So, you do need to obviously pay attention to your profitability- TODD: Profit matters long-term. Cash flow matters to stay in business. JAMON: That's right. TODD: Cash flow's also power. And this is something that not everyone groks, to be honest. There's a reason that congresspeople like their job. And it's not because they may not personally be getting rich, and the reason they want to get on committees, especially the finance committee and that kind of stuff, is because what really gives you power is not wealth. Cause wealth sitting in a bank account gives no power, cause you're not transferring it. But control of cash flow gives you power. Now, in the case of Congress, congresspeople or senators, most of that's just evil. But in the case of your business, what I call power isn't necessarily a negative thing. Power means you can buy services. Power means you can give that bonus to your employees and that sort of thing. And really how much cash flow you have flowing through is how much you can do, more so than the profit. JAMON: And this is one of the things that if we can point to anything that is sort of a mission for Infinite Red, a lot of it, I think, centers around enabling remote work and the lifestyle that we all want from Infinite Red. And having the ability to pay for that and enable that through our cash flow is what you're talking about, Todd. TODD: Yeah. So, a lot of lawyers and accountants, to be honest, suck. And that's true of all professions, whether it's doctors, programmers, or whatever. So, I know it's not like you can just Google it and find a good one of them a price that you can afford. So, I know we went through a variety of stuff, a variety of people and/or companies, and I was just curious your experience in how you find a good lawyer, a good bookkeeper, a good accountant. That sort of thing. JAMON: I needed an attorney ... I forget when it was. It was during the ClearSight days. And an employee that worked for me at the time, he was my creative director, Mike [Wozezak 00:37:49], really great guy, he knew an attorney that specialized in creative agencies. And I went and met with him, and talked with him, and I really liked him. He was a former CPA, so he knew kind of the nuts and bolts of accounting, which was helpful. And he also specialized in companies like mine. I kind of brought him along to Infinite Red afterward, and we sort of just adopted him as our corporate attorney. And that was really helpful. So, it was a word of mouth thing, for sure. I think one piece of advice that I would give to people is treat it sorta like you would a doctor. It's okay to go someone, have them do something, see if you like the way they operate, and move onto the next one. If you have to do 10 different lawyers before you find one, do it. Don't settle. Do not settle for a bad one. Keep moving until you find a good one, because I can tell you, I think our lawyer is so great that he is absolutely worth every penny that we pay him. And he's helped save us from bad situations, he's helped us get out of some scrapes, and it's totally been worth it. So, definitely treat it more like you would a doctor. TODD: His name is Josh, and he is wonderful. I've had other lawyers at other companies and I wish I had Josh back then. KEN: Do some networking. Talk to other people in similar positions to you. See if they have someone they can recommend. I would also say, for both, having someone who is always willing to take the time to actually explain to you what they're doing in language that you can understand. That is vital. If you feel like you're being snowed, if you feel like you don't understand what's going on, keep looking. JAMON: Yes. And there are professionals that will do that. KEN: They do exist. They're doing a very important service for you, you want someone that you can trust implicitly, they're gonna be interested in earning that trust. JAMON: There are also specialists. So, we had looked into some legal implications surrounding some blockchain work that we were doing. And we talked to Josh, and he said, "I can't provide the insight that you're looking for. This isn't something that I have training on." And so, I did find another attorney. We didn't end up using her, because we went another direction with the service we were looking at. But she was a former FCC attorney who really understood the blockchain legal ramifications. That was helpful. KEN: Once you start getting into specialized stuff it's a little different. But that's where having that primary counsel- JAMON: Exactly. KEN: ... is very helpful, because they can help translate. JAMON: Now one of the things that attorneys do is they ... A good attorney will do, is they will inform you of the risks, but they will also let you make the decision. They won't try to control the process. So, one of the things that Josh will do is say, "There is a risk. I think it's a fairly small one, but here's the risk that I see. And if you feel that it's worth it from a business standpoint, then go ahead and pull the trigger." But he'll let you make the decision, and he'll give you the information to do that. KEN: Yeah. And a not as good lawyer, will be like, "Oh, no, no. Don't do this because there's this horrible risk." Right? Guess what. Every single deal you do has risk. Every single one. And the truth of the matter is, people will sue you, not usually because they have a case, but because they're pissed, right? A lawyer who understands the limits of the legal process is also really important. TODD: I'd like to add that some previous companies that didn't have a Josh or a good lawyer, and a couple things. And it's true of accountants, by the way. Both are true in what I'm gonna say here. So, Ken said the worst ones are ones that think everything you're doing is horrible and you shouldn't do it. I mean, they only care about risk reduction. Of course, you can reduce your risk by simply not being in business. That is horrible, for sure. But there's another one that I think is even worse. One that's doing that on their side, and they won't even tell you to begin with. So, anything that's risky that they don't wanna ... I mean, they basically just cover their ass at all times, they don't tell you anything. They only do what you tell them to do. I'm not sure how you're supposed to know what to tell them to do because you're not a lawyer, you're not an accountant. I deal with that a lot. They're just an assistant, they just do what you tell them. Well, I don't ... If I could do that, I wouldn't need you. And it's actually something that ... With our clients, we're really trying not to do. We don't expect our clients to know anything. That's our job, to guide them through, give them good, coherent options. Tell them the risk and reward of each option, and let them choose. JAMON: Exactly. TODD: That's our job as professionals, and sadly it's kind of rare, unfortunately. JAMON: Yeah. I'm glad we're taking on this topic. Obviously, it is sort of more of a dry topic, but we can only go so far with the series. And this is our last episode of the series. TODD: Of this first season. JAMON: The first season of the series. We are gonna do more seasons. TODD: Unless you're in the UK, and then in which case it is the first series. They call a season a series. JAMON: Oh, funny. TODD: A little factoid. JAMON: Yeah, I'm sure that our UK listeners will appreciate that. TODD: That sounded snarky. We have people in the UK who love us. JAMON: Do we? Awesome? TODD: Why you so mean, Jamon? JAMON: I didn't mean it to sound snarky. TODD: That's why my wife, who's an accountant, doesn't like you. No, she loves you. JAMON: I like Heather. Even if she is an accountant. No, it is good. It's ... This is what ... Well, we took on two topics at once and we were able to kind of lump them in, but it's something that everybody who's starting a business ... And I know, cause we get feedback that there are some people who are listening to our podcast and using some of our advice as a guide as they start their businesses, this is something they need to pay attention to. And when I started my business, it took me many years to get a lawyer and many years to get a good accountant. I did have a bookkeeper, or financial assistant, I guess, for some of those years because once I started payroll, I started getting out of my depth. I had no idea how to do that. And she was great, I could ask her for advice. She was actually trained as an accountant, as a CPA, actually. But she was, at the time, sort of semi-retired and just kind of doing her thing. Now, with Infinite Red, I feel like we have a really great attorney. We have good accountants. We're still working on figuring everything out, but having Heather help us has been really helpful, as well. It's nice to have professionals that know what they're doing. TODD: Thanks so much. Maybe a little dry, but I think super interesting to people out there, especially when you're starting. I've actually found- KEN: Bookmark this, like when you're actually starting this, bookmark and go listen to it again. JAMON: Yeah, it's a good reference. KEN: If your eyes glazed over, I totally understand, but trust me. TODD: I actually found it pretty interesting. I'm surprised how that flew by. And a podcast that flies by when you're recording it, it usually comes out pretty good. So, I would like Jamon in the close to explain what our plans are for this podcast going forward, since this is the last episode of this series/season. JAMON: Yeah, absolutely. Well, I'm really pleased with how season/series one went. And it was a ton of fun to do with you, Todd, Ken, Chris. We do plan to do more. We probably won't take a really long break. I'm hoping to maybe take a month, or at the most two, and then hit another season. This season we really wanted to kind of get our voice out there as a founder team. So, Todd, Ken and myself, as the founders of Infinite Red, we wanted to talk from our perspective on building Infinite Red. But as Todd mentioned, I think in one of the early episodes, it wasn't just us that built Infinite Red. It was definitely a team effort. It was, in a lot of ways, our vision, but there's so much impact that our team has on what Infinite Red is. So, for season two, the intention is to bring in key team members, and have them sit around the round table, so to speak, with us. They're not gonna be interviewed. We're not gonna be talking at them. They're gonna be just involved in the conversation as we go forward. And we'll be talking about more things that are, I think, a little more specific, a little more even maybe situational, or things like that. I think it'll be interesting, from a standpoint of getting to know some of our team members. They're really great. We- TODD: They are, they're awesome. JAMON: They're so awesome, and I'm really excited to give the world a glimpse into who else is here at Infinite Red. But it will probably be one, maybe two guests on, and just co-hosting with us. They're not going to be an interviewee. I also wanna say thank you to everybody who has listened and promoted our podcast, who submitted questions to us. It's an incredible honor to actually to be in your podcast rotation. We don't take that for granted. I know there are a ton of really good podcasts out there. I had one person, actually, I went to lunch with Bruce Williams, a really great guy here in Portland. And he said, "Jamon, there a lot of good podcasts out there, but I think one of the things about Building Infinite Red is that you are doing an important podcast. The message needs to get out there about our remote work and the way that we do work." Which was a huge compliment. Bruce isn't the type to just hand out compliments lightly. He's a great guy. We take it seriously. This isn't something that we're just doing as a marketing stunt, or anything like that. We really do believe in the message that we're putting out there. So, thank you all for listening. TODD: Yes, thank you.

In this episode of Building Infinite Red, Jamon, Ken, and Todd answer a question from the podcast channel in the Infinite Red Slack Community about what they have learned and observed from businesses over the years who have succeeded or failed. Episode Transcript CHRIS MARTIN: We had someone reach out on the podcast channel with an idea for an episode. He said: "You three must have watched a lot of businesses starting up/establishing themselves and subsequently succeeding or failing. What have you learned or observed from those businesses? In your view, what made them successful or otherwise?" KEN MILLER: That is a great question. The first thing I would say is no one, literally no one can predict which company is going to succeed, especially like in a big way. The startups that we have been part of in our careers or, have worked for as clients, the ones that are trying to hit it big, there's no one who can predict that. That said, we do see mistakes, we do see things that will hinder success or prevent it. One of the big ones I would say is having the wrong amount of money. That doesn't necessarily mean having to little although, that's by far the most common version, but sometimes having too much. I've seen startups that had so much money that they just wasted it and never had any discipline, and they crashed and burned. So, having too much money surprisingly, can be a problem. Having too little is much more common, you don't hear about it as much, because they tend to fizzle in a very quiet way. There's a fairly frequent thing that we will encounter which is the self-funded entrepreneur who comes to us and says, "Hey, can you do this for $50,000?" The answer is almost always no. Any interesting app is likely to be more than $50,000. But more than that, if your only source of funding is your own life savings, or yours and your parents' life savings, that's a big red flag. Because it means that you have no room to move or develop or anything. If all you have is $50,000 to spend, and it's your life savings, and you want to build the business. I'm not saying don't do it. But what I am saying is you need to use that $50,000 to validate your idea more than you need to build an app or a website or whatever it is that you're looking for. That can take a lot of forms, right? But take that $50,000, quit your job if you have a job, go interview customers, go do things that don't cost money that let you validate your idea. And then you can go find people who can help you. We are famously bootstrapped here, and the reason that we're able to do that is because consulting is a very easy thing to do the first one. Because it's just you, and you go out and get a contract and you grow from there. A lot of businesses, that's not true. And if you need investors, because your idea has enough going on that you have to build something, then use the money you have to start that process rather than blow it all on an app that then can't grow because you've run out of money, Todd. TODD WERTH: If the kind of business you want to build is $10,000 to actually build it, and then $50,000 is a great amount of money because then you can build it and iterate on it and have extra funds. The problem is something like an app that typically costs $100,000 or more is not only do you need the initial cost of it, you need all the capital to run that business and modifying and really adapt it to what you find the market actually wants. That being said, there's nothing wrong with starting out bootstrapping. However, it is a little bit of a red flag if you haven't convinced anyone other than your mother to give you money for your idea, because if you can't convince one person, it's going to be hard to convince all the users to give you money to use for said business. JAMON HOLMGREN: To play off of what Ken said earlier, I think that a lot of it is you want enough money that you're not making decisions based on fear, basing it on desperation. But you also don't want to be in a position where you just don't care. Where who cares if you blow this money because it's not your money and whatever. You need to have some level of skin in the game, so to speak. KEN: Yeah, I would say that the ideal that we look for is whatever budget we think we need to build the most focused version of your app, we would love to see that you have two, three times that total somewhere. Not because we want to spend it for you, but because you're going to need it for something. And it's a measure of your health as a startup. Even more ideal than that is, you have that much in hand, and you know what you're going to do to get more when you need it. JAMON: Moving beyond the financial side of it. Another thing that I've observed in my 13 years of doing consulting work is when the stakeholder, generally speaking, the founder CEO, but not always, feels that they have all of the answers already. And they just need to build this thing. Just get someone to build it, get someone to design it, build it, put it out there and the money will flow. That's extremely rare. Very, very rare. TODD: I bet it doesn't exist at all. JAMON: I would tend to agree. One of the things that we say, as we're going through the sales process with a particular new client is, if your app does not change during the process, if what you conceive of as being this app at the very beginning does not change, then that's probably a failure. You're probably not listening to your clients, you're probably not ... Or your customers, or your users. You're probably not listening to the experts you're surrounding yourself with, which would hopefully include us. We've been through this quite a few times, and if you're not willing to say, "Hey, I don't know everything. I need to learn some of these things. Then that's a problem. Of course, conversely, we do expect people to bring some level of expertise in the domain that we're talking about. So, you should have some ... I'm not going to go and just start a business making farming equipment or something. I've never run a farm, I don't have any clue what it would take. So, having no experience whatsoever in the domain can be an issue as well, and you're not going to be able to just rely on other people to fill in all of those gaps. But, I think that there has to be a happy medium where you do have some domain expertise, you have some things in mind, you have a framework to make these decisions. We also understand that you don't know everything, and that you're going to need to gather information and evolve your view of what the app is going to be during the process. TODD: Another one that's very common, you see it right up front with people. Either they're telling you their story about their business, or I've worked with them, or whatever, is they don't really care that much. They act like they do, but they don't really. Meaning, they put a few hours in a week or a month or something, and they show up every once in a while. You get this a lot with people who are extremely wealthy maybe. It's a side thing for them, they're playing around and they just don't really care. It's pretty true that the person who cares about your business the most is you. There will be no one who cares about it more than you. So, if that's not true, there's a big problem. That being said, a lot of successful people don't have a lot of funding, maybe they bootstrap it at the beginning. They don't take for granted they know everything. They asked for help. They try to learn. They accept the fact that they're going to have to be salespeople and finance people, and operations people and everything. Even if something applies to a particular person that we've already mentioned or are going to mention more, they may have other features that totally overwhelm that meaning. If you're particularly a good salesperson, you can be pretty bad at business and still be successful. That's just a fact. If your idea's so compelling that even though you're a horrible salesperson, when people hear it, they're like, "I want to give you money for this, because it sounds amazing." Then that person knows enough to hire someone who can execute well like us, Infinite Red. I'm not good like Jamon is with the plugs ... those people can be very successful as well. KEN: To flip this around to a more positive script. To some degree, we approach the clients that we take like an investor would to some degree. An investor is going to do more due diligence than we would obviously, but we're looking for: Do they have adequate access to capital? Do they have a high degree of commitment? Do the founders get along? Are people in agreement about what the vision is if there's more than one person involved? By the way, we have plenty of projects projects with established companies and it's totally different. Because then, a budget is a budget, et cetera, et cetera. This is talking startups. These are all things basically like, if you have all of those pieces, and a deep understanding of, and relationship with their target customer. If you have all of those, then it's between you and the market. That's ... you have all of the tools that you need at that point to succeed or fail on the merits of the idea. It is very hard to predict what's going to happen with the market. And that's the part that no matter how good you are, you might still fail. The commitment helps. You hear the word pivot applied to startups because what happens is, they have all the other pieces; they have access to capital, they have a committed founding team, they are working very hard. What the market tells them is that their idea is wrong basically. The thing that they thought that they wanted to build, turns out, they misunderstood the market, the market changed, something happened, and then they're like, "But as we were deep in the muck of figuring that out, we saw this other thing and we're going to run at that now." TODD: You'll find your subconscious as very creative and very strong and very secretive. What I mean by that is, if subconsciously, a person knows that their business model and their revenue model doesn't actually work or they fear it doesn't work. They haven't actually looked into it, they'll come up with super creative ways to get away from or not do those plans. When you ask them for it, they can either avoid it, sometimes become hostile. Whatever secret fears you have, sometimes just sabotage yourself by avoiding those particular things. If you find that you're just very anxious about doing a business plan, you don't know why. It may be because your subconscious thinks that if you did it, you're going to realize that even best case scenario, this business does not make money. JAMON: That's why one of the questions we ask during the sales process is, what are your biggest fears with this process? Because it tends to let them come up with the answers to that without us being hostile about it, or anything like that. We're on their side, we're trying to solve those problems as much as we can. I had a client back in the ClearSight days. We did a bunch of work for him, and he was this incredible engineer. Came up with just some amazing stuff. But he loved to invent. He wasn't super big on running the business. He didn't really enjoy a lot of the parts of running a business. He brought onboard a series of CEOs to run the business over a period of many years. At one point, it just became obvious to me that that this was really hurting his business. Because all he wanted to do was work on the product, and he didn't want to necessarily work on the business itself. The stuff he was building was amazing. It was awesome. I really loved it. And he was a very good person. He always paid his bills to us, always appreciated us, but that blind spot, I think it really hurt him. TODD: Yeah, that gentlemen, I don't know who you're referring to, but that gentleman needs to accept the fact that a business person is super important, and they need to find theirs to be a co-founder with them. JAMON: I think a big part of that is just seeing it as a business and not just the product itself, which actually is a big failing of a lot of people that think of building apps, they think of the app. They think of the product, they don't think about the business itself. It's hard because business, there's a lot to it. We're doing a whole podcast series on it right now. There's a lot to talk about, and there's a lot to learn, and there's stuff we're still learning. It's definitely having a characteristic of thinking more holistically about the whole business and being willing to just dive in and learn things that you haven't done before. All of those types of things, but that's a positive characteristic. There are a few other negative characteristics that I've seen over the years. One actually is, over-confidence and over-optimism. Now, I tend to be a very optimistic person. I'm very confident. TODD: Are you talking about me Jamon? JAMON: Sometimes. TODD: I'm very optimistic that you're insulting me right now. JAMON: But then again, sometimes it's me, and Todd has to ground me. Now, Ken's always grounding both of us at the same time like an anchor in some ways. TODD: That was mean. That was very mean. JAMON: We're dragging this thing ... No, I'm joking. There's one gentleman that we worked for a long time ago, and he was very optimistic that the funding was going to come through. So, he had us do a whole lot of work. The funding didn't come through, and that put us in a tough position. That was a lesson that we had to learn, but it certainly put him in an even worse position, because now he owes his vendors money, and it's not ready to go yet. So, the Elon Musk sort of thing. Although he seems to have access to bottomless levels of cash. KEN: Elon Musk has easily inherited the reality distortion field from Steve Jobs. JAMON: Yes, exactly. KEN: And put it to shame to be honest. JAMON: Right. That sort of thing can kill you if you're not Steve Jobs or Elon Musk. KEN: Yeah, and actually, anybody who comes in acting like Steve Jobs or Elon Musk, which usually means being an asshole and playing fast and loose with the facts, which is not what I'm saying that Jobs and Musk are doing. I'm saying that that's what the people who think that they're right tend to do. That is a massive red flag. TODD: They're pale clones of the original, and probably only cloning the worst parts. A couple of quick hits here. One is, if you don't like your customers, or worse, you hate your customers, huge problem. Your business provides value to customers. If you hate your customers, or loathe them or don't want to interact with them, and you'd be like well, "Todd, that's ridiculous, who would do that?" You would be surprised how many businesses hate their customers. That's a problem, you really should look for customers that you enjoy servicing, you enjoy providing value to, it gives you a lot of personal, and the company and a lot of gratification for sure. The second one is, when you describe your product or your business to someone, if they think it's awesome, and it's really good, and when can they get their hands on it, that's, that's a good sign. Anything below that from mild praise to praise means they really think your product sucks. Especially, if you know those people. So, take mild praise as this is horrible. So, really find something that where, when you're leaving the discussion, they're very interested in how they can get their hands on this thing and when. KEN: Related to that. I would say, if you're a startup ... Well, okay two things. Back up. One, what kind of business are you? Are you a startup? By startup, that means you think there's a large opportunity, and you've got to get to it fast before somebody else does. Maybe it's winner take all. You're aiming to be a big thing. It doesn't necessarily have to be like unicorn big, but it's big. In which case, you need to optimize for hitting that and failing relatively quickly if you're not going to. Versus a lifestyle company, where you want to make a long term sustainable thing, you probably want to bootstrap. TODD: Like us. KEN: If your ultimate idea is not subject to bootstrapping. It's not something that you have to get to in the next year or two, or you're going to miss it. Then find the idea you can bootstrap that's more practical. Do that first, and then work on the big thing. But those two strategies are different. They require very different mindsets. They require different ways of capitalizing. The worst thing that can happen to a startup by the way, is not failure. Outright failure in a startup is not the outcome anybody wants, but once it's gone, you're free, and you can do the next one or something else. The worst outcome is kind of success. Where it makes just enough to keep going, and you never know whether to pull the plug. I've seen a couple of those. That is the worst outcome for a startup in my opinion. JAMON: I worked with a startup many years ago that it was actually a success. I'd like to talk about that one a little bit. The founder, I think he had a lot of the characteristics that an ideal founder would have. He was a very nice guy, but also very driven. He was really great to work with. Everybody that worked on this project really loved it, which was good because you'd get their best work and they would really go out of their way to try to make his product a success. It was very much a niche market. It had to do with transportation, and he was really, really great at identifying the problem that people had, these transportation companies, and solving one very specific but very painful problem that was hard to solve. You couldn't just do it in house. If you did it in house, you would inevitably fail, and you would have a real problem on your hands. Almost everybody has this issue. He had us build a web application that mimicked a spreadsheet that he'd been solving this problem with. He'd already gone through the manual labor of figuring out a lot of the issues and doing this almost on a notepad in a way, as a consultant for these transportation companies. He had figured out his business model, and then he had us build a web app. He wasn't afraid to spend money if we said, "Hey, we need to beef up this section of the web app." He would he would totally be cool with it. He wouldn't spend money willy nilly, but if we said it was important, then he would budget the money for it and he would do it. He was also very good at networking and getting out there and talking to his customers. He would come back and say, "Hey, I've got this customer, it's a big, huge company you've heard of, and they're having a problem with this part of the application, and this is how I think we should fix it." He actually spent the time to figure out how we worked and the language that we needed from him to solve these problems. He would also very much listen to that feedback that we would give him. He now works for a big company. They hired him specifically for this expertise. They have a lot of trucks on the road, and a lot of different jurisdictions that they're rolling through, and they need to have their ducks in a row. The application itself is, I believe, he's either sold it, or is in process of selling it, exiting. That was a very good experience. It was something that I learned a lot from. One thing that's for sure, is that founder put in a ton of work, learning from his customers, learning all of the domain expertise that he needed in order to be the expert in this particular field. That was very instructive. He was not lazy, he was very much a go getter, but also willing to listen to us. TODD: Yeah, I think developing partnerships with either your partners, your team your vendors is hugely important. And what I mean by partnership, it sounds like corporate speak or whatever, but what it means is not adversarial. Meaning, one of the things was working with lawyers, bless their heart, as clients, in my experience is they're trained to always start everything adversarial. That can work to a point. But really, if you work as a partner, meaning, you're looking out for your partner's best interest, and they're looking out for your best interest, and then you're looking out for your own best interest, and vice versa. Then you tend to get the best results. If you're trying to compete with them, or one-up them or nickel and dime or whatever, it's not going to do that. KEN: If you want to start a business, don't be discouraged by anything what we're saying. Because you can go into it the wrong way, and end up someplace fine, if you're committed. When Todd and I started, we were going to build an app. I had a little money in the bank so I could quit my job. It didn't work. Let's be perfectly honest. We built a really nice app that 300 people in the world really, really loved. They still occasionally email us. TODD: We did get a number six in the Apple Health and Fitness category above Nike by the way. KEN: Yeah, that was- TODD: For whatever that's worth. KEN: That was a little bit of a fluke. TODD: Which is nothing. KEN: But in any case, it didn't work. We started to take on clients, but we were out of money, and we were looking at, what's going to happen next. I realized that I was like, I will break IRAs. I'll break my 401Ks, I will sell my stock in order to keep this going. That was the point where I knew I was committed for real. It's like until you have a moment like that, you and everyone around you can have some doubts legitimately about whether you're actually committed. But once you're like, I will put everything on the line if I have to. Not that I wanted to, unfortunately, I didn't have to. But when you make that transition in your head, that you're willing to do whatever it takes to make it succeed, then your odds go way up. Because if you are smart enough to be able to manage things so that you can keep trying, and you have the drive to keep trying even after a failure, then you're doing pretty well at that point. JAMON: I'm kind of scanning through a list of old clients and I think that of the ones that failed ... I had a lot of existing businesses. They already had business models that were working and things like that. I did a lot of work for existing businesses. But the startups that failed, I think the commonality from what I'm seeing in this list that I'm scrolling through, is that they didn't really have a business model that worked. They didn't really have something that they could point to and say, "Yeah, this is what people need, and this is what they're willing to pay for it, and yes, that will sustain not only paying for this app, but also, my salary and salary of the staff, everything." That was actually I think one of the biggest issues. The ones that did succeed had a fairly compelling and simple and straightforward business model. There are a few that they would have 14 different ways that they would make money on this, shave a little percentage off of this, and a little bit off of that, and we're going to make a little bit here, or they'd have astronomical user numbers that we're going to be impossible to hit in order to make these numbers work. That was a fairly common thing. And that's something that I think that if you're moving into a business, you need to be able to sit down and look up, and do a realistic projection of how am I going to appeal to these people? How am I going to get sale number one for one thing? Then, what kind of dollars are we looking at? Is this going to sustain us? TODD: I have a positive story. None of this is a secret. I wasn't under NDA or anything. I actually, this is circa 2008. I don't know 2007, 2008 something like that. I interviewed at Airbnb. At that time, they were in their apartment in San Francisco. There was the two founders, and a couple other people working there. They had one engineer working on their system, but he was going to school, and he wasn't full-time. They were interviewing me for basically one of the first full-time engineering positions. I did not take that job. I actually took a job with Ken instead. So, thank you for that Ken. But what was cool about it is a couple things, I knew they were going to be extremely successful for multiple reasons. One, the two young gentlemen in there, they were like 24 at the time, I was quite a bit older then. Were very impressive people. They were trained industrial designers. They had actually started their business by actually doing it. They did the Airbnb model with their own apartment, and they had some success. But more than that, when they showed me their pitch deck, it was good and compelling. But they had a great customer acquisition plan. Their plan was very specific. The DNC, the Democratic National Convention was happening in Denver that year. It's very common to know that if you have to get housing early, and they completely run out of housing, because the size of the event, and the size of Denver ... I believe it was Denver. Their whole thing was okay, we know that this periodic thing happens. We know for a fact that they run out of tons of housing, and we know for a fact that there's a lot of young people who go to the political conventions because they're more idealistic in the parties. They were going to do their huge push, and they're planning on putting all their wood behind that arrow to get Airbnb set up and operating and making money at that venue. As we all know, because we've probably all used Airbnb, or least know about it, they were very successful in their company. Now, they did some more nefarious marketing things later, but just sitting down ... And by the way, when you interview at a very small startup like that as an engineer in the Bay Area, they tend to pitch to you because it's hard to get engineers, and they want to convince you that their startup's going to make it. I did walk away feeling like yeah, although I didn't particularly want to join their company because at the time, I didn't want to be on a tiny team. I wanted to be on a bigger team, and it would have just been a team of me and this one gentleman who was working part-time from the East Coast. But I did walk away knowing for sure that these people were going to make it because they had all their ducks in a row. JAMON: Existing businesses tend to have maybe a little better success with startups. They may not blow the lid off of things, but they're going to have a little better sense for some of the pitfalls that can come along. I worked for a company, I was doing their website. This is way early when I was first started. They were selling, I think they were auto parts or something. Something along those lines, it has been a long time. But they decided they were going to get into re-manufactured parts, and they wanted to sell those online, not just new parts. They did a lot of things really well. That was one of our more successful projects. I think it's still running to this day. What we had to do was make sure that mechanics who were, and still are fairly non-technical, not super computer savvy clientele, that they can jump on to this website, find what they needed, order it very quickly, and be done with it. We also optimized for SEO and things like that. But this company was owned by an older couple. They worked together, husband and wife. They were really great to work with, they really had a keen eye for business, how they were going to make money with this, how they're going to reach their customers. They just didn't know the online part of it. And that's where they brought us in, and they were very good about listening to what we had to offer. We also built a back office system for them so that they could monitor all of the orders coming in, provide customized quotes where they needed to, and fill the orders. When we started this project, they said, we see the writing on the wall for our current business, which was aging as far as how they were ... Like anything retail, or online orders is going to get sucked up by Amazon and these other big companies, right? So, they needed to provide something that Amazon wasn't going to be able to do as easily. After the project, and after it had been going for a while, the owner called me up and he said, "Hey, I think this saved our business. I think this really helped." It was bringing in tens of thousands of dollars per month in revenue, and probably approaching hundreds of thousands. They just had this idea they were willing to explore a little bit into a territory that they weren't very used to. But they also were very much thinking in terms of dollars and cents, business model, marketing, all those other aspects of the business. That was good for me to see, because I could see that yeah, you can create something out of nothing, essentially. As long as you're willing to put the work in, and have a complete business from start to finish, you don't skip any other steps. TODD: I would like to ask Ken. Ken worked for a photo which later was bought by Kodak. And then Kodak destroyed it through pure stupidity, but I would love to hear least from your perspective if you feel that's a good story Ken about your experiences at Ofoto? KEN: I wasn't around at Ofoto when it started by the way. It had already been bought when I joined them. Anything I know about the early stages is lore, it's second hand. But they were always a very sensible company, and I liked that. That was one of the things that I liked when I joined them, which is that you know at the end of the day, they sold photos. TODD: Could you tell our younger audience who Ofoto was? KEN: Ofoto was one of the first generation of online photo sharing sites. JAMON: That's O-F-O-T-O. KEN: O-F-O-T-O. It was a great name, by the way. It was an amazing name that Kodak just threw away. TODD: What did Kodak call it by the way once they bought it? KEN: Kodak Easy Share Gallery. TODD: That rolls off the tongue. Ofoto was so hard to remember. KEN: Yeah. TODD: Kodak Easy Share Gallery. It's just amazing. KEN: I heard a lot of stories about that. There was a lot of amazing people there. But boy, were they a case study in how to throw away a century of legacy. Anyway, but they were very sensible, right? So, A, they could offer all the photo sharing stuff for free because they sold prints, and that was when people still cared about prints. Eventually, people stopped caring very much about prints, but their primary competitor who for a long time was never bought by anybody was Shutterfly, and they're still around. I think they bought the assets of Kodak Easy Share Gallery when Kodak quit. That's what I liked about it at the time when I joined them was like, their business model was extremely straightforward. They sold prints at a healthy markup, they had a great operation, there was two teams. There was the site team, which was the user facing, the sharing and all that, and there was the lab team. Which is this elaborate system that controlled the printers and the workflow for the people who operated them. It was great. I loved Ofoto. TODD: Ken, you also worked for the company Yammer, who later got bought by Microsoft? Can you tell us a little bit more about that? KEN: Yeah. Yammer is actually a great example of a pivot. It was a spinoff of an internal project at, I think it was called Geni.com. So David Sacks, one of the PayPal mafia, along with Elon Musk, and Peter Thiel, and all those kind of people. He was the primary founder and CEO. It was a spinoff of Geni that made this internal Twitter-like tool just for internal communication. And we're like, "Hey, this is actually a pretty good idea. It's got some legs." So, it turned into Yammer. They cared a lot about culture and productivity and how to make a team work and they thought about it constantly, which I always admired. But one of the interesting things that I would say is that, the things that you as a programmer, all the good habits you have as a programmer, if you become an entrepreneur and you're building something new, I'm not saying throw them out. But I am saying your first problem isn't having a scaling problem. Your first problem is to find your market fit, and clean codes, scalability. All that stuff doesn't matter if it doesn't work. It doesn't matter if you don't get there. The code base when I got to it, and I'm sure all the people here will agree to this, was challenging, shall we say, right? But at that point, it didn't matter as much, because they had the further investment, then they got bought by Microsoft. They had the resources to fix that problem, now that they had a product market fit. Until they had that product market fit, they just worked like hell. They just blasted that thing out. Honestly, I think for that kind of startup, for a big a startup, that's probably the right way to do it. Blast the thing out, go as fast as you can, and then when you've got success and money, then you bring people on who can come in, be code grownups and figure it out. The lesson from that one is focus. It's very tempting when programmers become entrepreneurs to be like, now that I get to like make this Greenfield app, I'm going to make sure that it's just really beautiful and wonderful. You know what, that doesn't matter. If you're being so aggressive that you're constantly fixing your own mistakes, and that kind of thing. Then you need to slow down a little bit. But the lesson is, be laser focused on the one thing that is the most important to you right now. That was a hard lesson for me to learn, but I think it was a good one to learn. Anyway, go ahead. JAMON: I was just going to say, we've had to apply that to our own business for sure. It's easy to get distracted by all the other things that are possible out there. But making sure that we're laser focused and have all of our ducks in a row, and have a business model, and marketing, and are talking to our clients. One of the things that we did when we actually hired a consultant to go out and talk to a bunch of our clients and ask a bunch of questions, was why haven't we done this before? We tell our clients to do this, but we hadn't done it up to that point. It was a no brainer, face palm moment. Like, oh man, we really should have been doing this. TODD: Yeah, that highlights a point, you can make mistakes, you can do exactly opposite what we said you can. If you just keep on keeping on, it'll be okay. It is hard to keep on keeping on. The less mistakes you make, the easier it is to keep on keeping on, but that is really the only secret. KEN: The takeaway from some of these negative stories, by the way, is that you'll see statistics like, nine out of 10 businesses fail, or 19 out of 20 are ... I don't know about the statistics are. But it's something like. Some large number of businesses will fail within the first couple of years. If you have the things that we talked about—commitment, knowledge of your market, access to capital—your odds are way, way better. Because all of those statistics include all these weird cases that we've seen in our careers. Don't be discouraged. If you're the type who really, really believes that you need to be an entrepreneur, keep at it. Because these are all solvable issues. JAMON: I think one of the things that I've seen from a lot of companies that don't have much of a chance of making it, is they're just looking for a formula that works. Rather than doing the difficult work of identifying what it is that you have a unique perspective and advantage on and then building a business around that.

The theme of this episode is centered around the lessons learned in charging for software development. Starting with a question from the Infinite Red Community, Todd, Ken, and Jamon touch on hourly vs. project pricing, the tension between time and value, how software estimating is a lot like weather forecasting, and the many experiments conducted over the years to find the right pricing model for Infinite Red. Episode Transcript JAMON HOLMGREN: We received a question from the community, community.infinite.red, it's a Slack community that we have. Trent asks, "Hey Jamon, I'm enjoying the podcast. Will you guys be covering hourly pricing versus project pricing? It's a question we're dealing with right now. Which do you guys prefer, and what are some lessons learned to bring you to that choice?" I think this is a really great question. Todd, do you wanna talk about what we're doing right now? And then we can go into maybe what we've done in the past, and what brought us to that choice? TODD WERTH: Sounds good. Yeah that's a great question, and it's actually a really tough one to deal with. So, what we do now, is we do weekly pricing. We charge per person-week, and we call it "person-week" as opposed to "a week of work" because it could actually be two people working maybe half a week each and that would be one "person-week." Because we're doing person-weeks, we have a point system. So, 100 points equals a person-week. We don't track time. We used to, and we can talk about that—we used to bill hourly. We don't track time, we don't actually know how long things take, it's just, we estimate our tasks in points, and if we've reached a hundred or more per person-week and we charge per person-week, then we're accomplishing our goal. JAMON: There's a bit of a tension between time and value, and this has been something that we've dealt with, I mean, I've dealt with, since I started my first consultancy. Of course, value-based pricing is kind of a holy grail of pricing for consultancies, and we've heard this for a long time, that you should charge for the value, not just the time that it takes. So an example, this would be fixed-bid pricing, where you're essentially betting on delivering the software in a reasonable amount of time, but you're getting paid on the value to the client. The problem is that our costs are not based on value. So, we're not necessarily paying our people based on the fixed-bid, a percentage of the fixed-bid, or something like that. There are industries that do that, but ours is not one of them. So we're paying people salaries, and our costs are over time, and so if something takes a very long time, then our profitability and the ability of the company to remain financially solvent is threatened. Conversely, you have, of course, hourly. We've done that in the past, and the nice thing about hourly is that it corresponds, obviously, very tightly with the amount of time that it takes to do. But the problem is that every hour is not equal. You have hours that are maybe really valuable, you've automated something and in a lot of cases you're actually delivering more value than the client is paying for, quite a bit more. And then there are others where the person's getting spun up, or they're hung up on a particular problem, whether it's their fault or not, and that turns into a bit of an issue, because then you're billing hundreds of dollars an hour for something where the client isn't really getting a lot of value. So I think that's why we ended up where we are, in a way. TODD: Yeah, both have issues. When you're doing hourly, it might seem to a client that's more fair, but it's not. It means every time there's a bug, or any time there's an issue, we basically are nickel-and-dimeing them, and they don't necessarily like that. We have to spin up someone, like Jamon said, where in our value system that we use now, they don't see any of that. We fix the bugs because it's part of the value of that particular feature. It does mean, though, sometimes, that we can produce a feature faster than the hourly would've been, and so they get charged, I guess, more for that. KEN MILLER: There's a couple of different ways that hourly works out sometimes, though. There's certainly the very literal, like, you sit there and you run a clock, like the way a lawyer would, you actually have a little timer that shows exactly what you're doing. When I worked for a large sort of corporate consulting company, Big Five-style, back in the '90s, I remember my first week I was filling out my time card, and I filled in the insane hours that I worked, because that's the kind of work that you do. And my project manager comes over to me and he's like, "No no no no no no no no, this is not what you do." And he took my time card and he filled in "eight, eight, eight, eight, eight." (laughter) TODD: That's ridiculous. But... KEN: Right. So that's how the Big Five work, often. TODD: So it's completely fake in that situation. KEN: It's completely fake. It's basically pretty close to what we do now, which is that weekly billing. Where an hour is just a way of measuring a week. To answer the question directly, you know, do we prefer hourly or project-based, we prefer hourly. JAMON: Yeah. KEN: Hourly leads to less problems in the long term because the trouble with fixed bid, although it seems like it's appealing—It's appealing from your point of view, if you think you can be really efficient, and it's appealing from their point of view if they think you can't. But that's exactly it right there, it creates this adversarial relationship. Todd? TODD: Yeah, clients all– not all, but many clients think they would love a fixed bid. And in truth, they will hate a fixed bid. Ken's right. Fixed bids create an adversarial situation. Even if both sides are extremely... They're at the table in good faith, and they're trying to do the right thing and do their part and stuff, it still means that the client is trying to get as many hours as possible out of you for the same price, and us would be trying to do as few hours as possible. Like I said, even if you're both being very nice and very ethical in the way you're billing, that always creeps in. It also means that you have to lawyer every change. You'll have companies that have change order systems that are pretty complex. Clients hate that. When I talked to especially start-ups, one of the things I say is if the project we're working on at the end ends up exactly as you envisioned at the beginning, that's a huge red flag. That means you didn't listen to your beta testers, that means you didn't think at all during the process even after you got in your hands what could be better, it means a bunch of different things. So, we have a pretty strong process, but it's designed to be flexible. We wanted it to be flexible. So when we get to the point when we do estimation after a research phase, it's fairly accurate. The likelihood that it will actually produce your project for this estimate is extremely low. Not because we're incompetent– I'm sometimes incompetent– not because we're incompetent, but because you're gonna make a bunch of changes, and we welcome that. We don't lawyer that. But that's a little bit difficult, there's a little bit of education involved in getting people to understand that fully. JAMON: One of the objections is that, well, there are other companies that do fixed-bid, and they seem to do just fine. They're able to sustain that and their customers are generally happy, and things like that. But I think there's a hidden cost in there that people don't take into account. Which we've sort of driven a stake into the ground, we've said, "Hey, we're not willing to go down this route." And that is that those companies put the burden of hitting those estimates onto their employees. They essentially say, "Okay, well, we estimated this amount, you're not done yet, so you're gonna stay late until it's done." And they push, and push, and push, and they really, really just drive the screws in on their employees. Maybe not overtly, maybe not directly, but there's a culture and an expectation of being able to hit those estimates that puts a lot of stress on the employees. KEN: Yeah, that doesn't necessarily look like a slave driver. It can look like a "Rah-rah, sleep when you're dead," "work hard, play hard." "Rah!" But like, that kind of corporate culture. There are firms out there that I respect that do fixed-bids, and they seem to make it work, and that's fine. But in our experience, someone is paying for that somewhere. JAMON: Exactly. TODD: There's another type of fixed-bid which isn't just slave-driving your employees into the dirt. It is, you think it's gonna cost $100,000 on this project, you bid $800,000. So no matter what, unless you're ridiculously off, you're fine. The problem comes in when clients want both the lowest possible price and a fixed-bid. That just... It's not really possible. JAMON: So, our system is different. And Todd, I'd like you to talk a little bit about why our... Because, we are giving an estimate with points, and we're trying to hit those points, so it may feel like a fixed-bid, but do you want to explain what we're doing differently, where it really does change over time as you do a project? TODD: Yeah, so we do spend a decent amount of time doing research, architecture, that kind of stuff, before we estimate the points. So we're not just doing a ballpark estimate. We do a ballpark estimate at the beginning, but that's a few hours of our time. But we spend a few weeks or whatever doing research, architecture, that kind of stuff. And at the end of that, we produce an estimate in points. So those are fairly accurate. Obviously, anyone out there who does software development... By the way, everything we're talking about here is for development. On the design side, we do fixed-bids, and that's a different discussion. The gentleman who asked us the question was more towards the development side, so that's what we're talking about. JAMON: Right. TODD: So, our estimates are based on a whole lot more information than a lot of people do. And we do have clients who want an accurate estimate earlier, and we just have to push back, because in that situation we have only two options: We either push back against them and try to educate them in the process and help them do a successful project, or we lie to them. (laughter) And unfortunately a lot of companies just lie. They just come up with a number, they act like they put some thought into it– they didn't. I worked for a consulting company in the late '90s where the way we estimated was we asked the sales person how much they could afford. That was our miracle estimate. Which to me, I hated as an engineer. I just loathed it. I'm digressing a little bit here, but I don't want to make it out that our estimates are super accurate or that estimating software at all is an accurate thing at all. We know it's not. KEN: One of our sort of colleague companies out there calls them "forecasts," which I really like. People understand, like, a weather forecast is not necessarily going to be accurate. It's like, "Based on what we can see right now, this is what we think is gonna happen." And everyone understands that. So I really like that as a bit of language. TODD: Yeah, we should call it "forecasts." KEN: I'm tempted to steal that, but... (laughter) TODD: The other cool thing about a forecast is it's known: the further out you are from the date, the less accurate the forecast is, and the closer you get, the more accurate, and that's very true in our situation as well. JAMON: That's a great point, Todd, because we will definitely adjust those estimates as we get into things, and as we learn more. And I try to, I do a lot of the sales calls now, and one of the things I try to do is set the expectation that over time, the estimates will get more and more accurate, as we know more. The same thing with the weather forecast. You look at the ten-day, and you look at day number ten, and as you get closer and closer, you're gonna see a better and better forecast. And it's not uncommon for that to change even quite drastically, because weather systems can get delayed a little bit or something, and that can impact which day they land. KEN: Unless you live in California, in which case our weather never changes. JAMON: Yeah. No, I live in the Pacific Northwest near the Columbia River Gorge, and nobody understands the weather here. TODD: Our weather's hot and sunny. Tomorrow? Hot and sunny. The next day? Hot and sunny. JAMON: What if it's- KEN: And then a terrifying thunderstorm. And then hot and sunny. TODD: Once a year, we have terrifying water from the sky. I live in Las Vegas, Nevada, which is in this very small patch– I'm totally digressing here– but it's a very small patch in the US with the most sunshine out of the whole US, and it's just basically Las Vegas and around the desert area here. I think it's something ridiculous like 300 and some days of pure sunshine. Which is nice, as I lived in San Francisco for 20 years, and it is the opposite of that. And I enjoyed that for a long time, but I enjoy this. Anyways. So one of the things I wanted to bring up is, and we should talk about estimates. Because estimates are a big part of how you charge. And it is a difficult problem, and we have all sorts of issues that, I think, would be very interesting for listeners to hear that they're not alone in, and that we're still struggling with. KEN: Nobody has a magic bullet. Nobody has a magic bullet on that. TODD: It's a soft problem, it's definitely a people problem, and it's something that I'm actually actively working on all the time. But to finish up what we were saying before, we do find that weekly billing has worked out very well. It does require education. Your clients may instinctively go, "Okay, well they're just doing this to make more money because they're gonna get it done way faster, and they're actually gonna charge me this extra money, and they're not gonna do anything." And that's a perfectly normal human reaction. But one of the ways that we added some sugar to that tea is we say, "A bug comes up, sometimes bugs take five minutes, sometimes bugs take a half a week to fix. That's all included in that estimate. You don't have to worry about that. No nickel-and-dimeing." When the estimate goes up, say we add person-weeks to the overall estimate, and then maybe we add some calendar-weeks... By the way, we have typically a minimum team of two, and most times people work on one project full-time, so if you have a two person team on a project, we're producing two person-weeks per week. From that, and the number of points we estimate, we can calculate the calendar time, as opposed to the person-week time. And the calendar time does get extended, and the person-weeks do get extended. But it's always– not always, but it's usually from changes, and we try to be very good about being very transparent in explaining, and the client should know what all those changes were. They hopefully have approved them, and that's what adds the person-weeks and that sort of thing. JAMON: There are some times where we will feel like maybe we made a mistake, in such a way that it was maybe, we're not comfortable charging the client more for a particular thing. And in that case we will adjust what we're billing for a particular chunk of a project. And we'll take on that risk. There's a shared expectation of being reasonable in this. If a client's asking for something, then we're gonna bill more. If we make a mistake, then we'll try to rectify that as much as possible. But it does have flexibility built in, and that's important. But then also, like you said, Todd, the bug-fixing is built in and things like that. That really helps mitigate the amount of risk that the client is taking on. TODD: And truthfully, it's much easier for people doing the actual work, because they don't have to constantly, "Oh, this three-hour task is now a five-hour task, I have to ask permission for those extra two-hours, and it's just a lot of paperwork and a lot of thought about stuff that has nothing to do with making a great project." But yeah, and I also want to add on to what Jamon just said, the way we deal with issues... Let's say the value wasn't there, we had some problems, we typically deal with it on the invoicing side. We tell our people, "Okay, for whatever reason we're not gonna be charging for these person-weeks." But from their perspective, it doesn't matter. They're estimating points, they're working during the week, they're getting at least a hundred points per person-week, and they just keep on going forward. We'll adjust it on the back side, on the invoicing side so that our process keeps going and we have accurate data, even if we're in a situation where we made a big mistake or something like that, and we're not charging them for, say, a few weeks or whatever. JAMON: Yeah, totally. And Ken, would you wanna talk about the chronic problem of under-estimating? 'Cause I know this is something that's near and dear to your heart. KEN: Yeah, I don't know why engineers... I don't know if they want to feel like they, you know, they're really fast, or they feel guilty, or if it's imposter syndrome, or whatever it is, but it is a chronic problem. Engineers will estimate too optimistically. So we have sort of structures and practices, and this is not an easy problem to solve, right? But we have sort of structures and practices in place to sort of counter-act that, hopefully, whether it's sort of checklists like, "Have you considered these sort of failure cases? Have you included the bug-fixing and the testing time? Is the testing time including every platform that you could possibly use this on?" Et cetera, et cetera. Todd? TODD: Yeah, this is a problem we have not solved. We really try to hire, and I think we have hired, really decent, ethical people. Which is fantastic, and that's the intention, and I very much enjoy working with almost everyone here (maybe not Ken, but that's okay). (laughter) KEN: You can't fire me. (laughter) TODD: I cannot. I've tried many times. KEN: It's a perk of the job. TODD: Actually, it's funny, because I've been working on this a lot lately. We hire good, ethical people, which I very much enjoy. But they tend to feel more guilt, and they tend to be a little... They contemplate it and worry about it a little too much, to be honest. And so we do have chronic under-billing. One of the things we do is, we ask them for estimates, and we never ever– up to this point I've ever said, "This estimate's too high. You need to reduce this estimate." Because this is the estimate they're giving us, and they're gonna do the work, and it's not fair for us to come and say, you know, "You said it's gonna take a hundred points, I think it'd take 50 points." And of course when they do it and it takes a hundred points, they've failed, but only because in my opinion it should've been 50. We never do that. We never push back on that. So you would think that just human nature, in order to alleviate stress, they would say, "Okay, that's gonna take 50 points, but I'm gonna make it a hundred and 50 points just to give me an allowance." No one does that, surprisingly. That is not the problem we deal with. It could be just our team. Probably not just our team, I'm sure there's a lot of people out there who do that. KEN: I mean, I've seen this everywhere I've ever worked, right? People wanna feel like a hero, people don't... It's not as much fun to think about all the ways that things go wrong, well, depending on your personality I guess. But yeah, the ideal way that we're always striving toward is basically, the engineer gives us as accurate and conservative of an estimate as possible. And then in terms of how we present it to the client, if we feel we need to make an economic adjustment in order to get a sale, for example, then we will do that on our end. We don't want it baked into the estimate. JAMON: And Todd actually ran an experiment with our own engineers at one point. He took a screen, I think it was a login screen of a project we'd actually already done- TODD: Yes. JAMON: -and sent it to several engineers and asked what their estimate was. Do you wanna talk about that, Todd? TODD: Yeah, I've done a few of these to try to kind of understand this problem. In that case, it wasn't clear what kind of project it was, whether it was a mobile app, an iPad app, a website. I did that on purpose. I also didn't give them any requirements other than I gave them a screenshot. Which is not untypical to get from a client if we didn't do the design, to just get the screenshots. So I wanted to see A) how they approached the estimation process, and B) what their estimates were. I'll skip to the spoiler part. The lowest one was like three hours? This is back when we did hours, we weren't doing points. The highest one was like 46 hours. So the range is three hours to 46 hours. Some people, their estimate wasn't accurate for obvious reasons, they got back to me within five minutes and didn't ask any questions. And that was more on the junior side, and that's perfectly fine. Estimating is probably one of the most difficult things that we do, and so it's understandable when people with less experience do it less well. But the interesting part is that a lot of people didn't even ask what platform it was on. The person who did 46 hours, the highest one, had a huge write-up of all the reasons why it was 46. And when you look at it, you're like, "Yeah." Because it seemed very simple. Like, it's a login screen. It's two text inputs and a button that says "Login." But there's actually a huge amount of stuff. A lot of people assumed they were just doing the screen as opposed to actually making it work, like, making you log in to the backend, and Facebook integration and all this stuff. But the fascinating part is how different it was and their different approaches. KEN: It should be mentioned, though, just for the record, that the way this exercise was set up was intentionally, on Todd's part, very vague. Right? It wasn't like, "Hey, I need you to do this for a client so that we can get a good estimate." It was a very off-hand... But the range of responses to that very vague setup was illuminating. Because some people are constitutionally incapable of not treating that seriously. (laughter) And some people are like, "Whatever Todd, I've got work to do." Right? So there's gonna be a very broad range there, and the range of real estimates is probably not gonna be quite as wide. But still. TODD: Ken has a particular personality, and so does a few other people on our team, where he really didn't like the "gotcha" part of that question, the vagueness of it. And he felt like I was looking for a real answer and he was set up to fail on the real answer because I didn't give him any information. That wasn't the point of it. I actually didn't care what their answer was as much as the process by which they went around the answer. And I didn't say that, on purpose, too. And so he was a little bit like, "You're setting me up to fail, I don't like this, go to hell." Which was kind of funny. But it's funny from my perspective, but it's also illuminating. For people with that type of personality, that's the reaction they have to that, and that's a very real thing. KEN: Well, it's also, like, if you just ask me a very vague off-hand question, I'm gonna devote a vague off-hand amount of attention to it. Right? And I think a lot of other people are gonna be that way too. It's kind of like, "Oh, okay, without any further information, why am I gonna spend an hour breaking down this problem for you?" Or however long it takes. JAMON: I will point out that mine was both quick and accurate. TODD: Yeah, I hate giving Jamon a compliment, but I thought Jamon's was one of the more accurate, and he did it very fast, and it was very thorough. KEN: We brought Jamon on because he's lucky. TODD: That's right. I have a rule: Every quarter, I randomly fire one of our team. And the reason I do this is very simple. I don't want anyone unlucky working at our company. That's a joke, in case anyone thought it wasn't. We don't horribly fire people because they're unlucky. But yeah, so that's a very interesting thing on that. There's other interesting things too. Another experiment I did was, I had people estimate something simple again. Then they gave me the estimate, whatever it was– the numbers don't matter, but let's say they said 10 hours, and this is once again, back when we did hours. If they said 10 hours, then I would say, "Okay, what's the likelihood– are you 100 percent confident that you can do it in 10 hours or under? Are you 90 percent confident? 80 percent confident?" And then I would ask them, "Okay, how about eleven hours? How about twelve hours, how about thirteen hours?" And what I found is that the first estimate they gave me, almost no one was confident they could do it in that time. Which was fascinating- JAMON: Yeah, it'd be something like 60 percent or something, and then you'd have to go quite a ways up before they were 90, 95 percent confident. TODD: Correct. So I'm not sure exactly what to make of that, except for, that's a phenomenon. JAMON: I did ask some of our employees that were doing an estimate to include a confidence factor. And that estimation is not done yet. It should be in the next week or two, and it'll be interesting to go through that and see where they landed. KEN: Yeah, that would be interesting. JAMON: There are some other reasons why you might not be confident. Maybe there are a bunch of unknowns that we will have to dig into before we'll know for sure, and there's no amount of hours that would satisfy that necessarily. But I think that that's something... You should give a number... Again, we're not doing hours, but doing the point system you should have your estimate units, of course, for each task, but then also include a confidence factor. And that might be a percentage or something that you're confident. I think that's an aspect that maybe will be helpful going forward. TODD: To be clear, that's a hypothesis. Jamon has at this point, we haven't tested that. So take that as an idea. JAMON: That's exactly right, yeah. TODD: Another thing I asked them was, it's very fascinating, the same kind of line of questioning on giving them a very simple thing to estimate. And then I asked them, "Does that include tests? Does that include QA? Does that include bug fixes? Does that include any production issues when it goes out to the real world?" All over the map, whether or not they included, very few people said it included all of that. So when you asked them, "How long will this take?" They didn't take that question as, "How much time will you spend to have this completely done and you never touch it again?" Very few people took it that way. They more took it as, "I could get it done and in the app and then later we would debug it or test it or make changes or whatever, but that's not included in my estimate." So that was a fascinating result, also. Now, I don't have any recommendations for any of this, other than it's very interesting to see how people's minds work, and how different people's minds work differently when they're given a task to estimate how long something will take. JAMON: There's a couple of ways that we can mitigate that. Ken mentioned earlier, checklists. I think those are probably under-utilized. That's something that we should use more. So when you're looking at a screen, you'd have a checklist of things. And maybe some of them don't apply and you just mark them off. But some of them are definitely... KEN: Yeah, there's something else that we're trying, which I've never really heard of anyone else doing, I've never encountered it before. We're trying to keep a database of past features so that instead of sitting and de novo every time, sort of like thinking through step-by-step every feature, you say, "Does this feature feel more like this one or that one?" Right? And then you just take the number that we actually empirically determined previously. JAMON: So it gives you kind of an anchor point, and then you can determine if it's maybe more or less than that. KEN: The jury's out on whether this could work as a system or not, but. JAMON: Exactly. TODD: What does "de novo" mean, Ken? KEN: From the beginning, from new. TODD: So, you replaced "from new," which is two syllables, with a three syllable word, "de novo." Okay, just making sure I understand. (laughter) KEN: It has further implications, but whatever, Todd. Feel free to make fun of my vocabulary as much as you like. TODD: I would make fun of your vocabulary, but the word "vocabulary" isn't in my vocabulary, so... KEN: Obviously. TODD: It's a vicious circle. JAMON: So I think it's good maybe for us to go back a couple years, maybe. When we merged, we had... We try to be a little bit unconventional in our thinking. We try not to bring a lot of preconceived notions into what we're doing here, and think things through de novo, you know, start from the beginning, start from– you like how I did that?– start from first principles and kind of look at it in a way that... "Okay, can we innovate on this? Can we look at it and come up with something new?" And we did, actually. And I don't actually remember whose idea this was, maybe one of you does, but we had the idea, "We're gonna bill hourly," was what our initial thought was. "We're gonna bill hourly, and then let's have a base salary for all of our developers and designers, but then pay them per hour billed that they personally billed." And it was an interesting experiment. I think we ran it for probably a year, maybe it was two years? Something like that, with varying success. And we learned a ton of things that you wouldn't when you just start out as salary employees. I will point out that we are now on salary. But we should talk a little bit about that experiment and what we learned there. TODD: Yeah, that was... We had specific goals, and we had tons of good intentions for those goals. And like all good intentions, we fell on our face. But that would be a very interesting podcast in itself, the lessons... What we did, what we went through, what we changed to, and the lessons we learned during the process. JAMON: I think to just kind of give it a really quick little thing, since we've teased it here, one of the things that we found is that people are generally not that motivated by money. Because they can certainly bill more hours and make more money, that was one of the benefits of the system, if you were very productive– KEN: A couple people did. JAMON: Yeah, some people did. KEN: Some people took advantage of that. JAMON: Yeah, for sure, but it was not anywhere near even a quarter of those people. So that was good to know. Other people, they were just motivated by different things. They were motivated, it's not that they're not motivated, but it just wasn't purely by money. Another thing was that there were some situations that ended up not really being very fair. So, some people would be in projects where bill hours were very easy to come by. And others where we really either had to supplement their bill hours or something along those lines. It also didn't really encourage collaboration between people, so there's some silos. The benefit to the company, obviously, is that if we're having sort of a down month because, you know, it's cyclical, then your costs go down. And the benefit to the employee is if you're having a really busy month, then you're getting paid more. But ultimately, that whole system, we went away from, and went to the system that we're using today. TODD: Yeah, I can, in my opinion, it was a complete failure. That being said, it was, I'm pretty sure, originally my idea. And like I said, great intentions, but I think that was one of our biggest failures, to be honest. JAMON: We learned a lot. I think that was the big thing. And those lessons will stick with us. TODD: We learned a lot, and we changed, and, you know... But I think it was more painful than it should've been. KEN: I forget where I sort of read/heard this advice, but basically, when you're starting a new company, you're trying to do something innovative, you should limit what you try to do that's innovative. Focus your innovation where it really counts, and then don't try to innovate too much in the rest of your business practices. I think that that's part of what we learned there. Even setting aside all these sort of incentive things, there's a bunch of things that just work better when people are on salary. Right? Their benefits work better, insurance works better– TODD: Vacation time. KEN: -vacation time works better, there's a bunch of things where there's a whole ecosystem of support for how to run a business. And if you try to innovate in how you do that, you cut yourself out of all those things, and make yourself less competitive on the labor market. You make yourself... You know, you spend more time on things you shouldn't be spending time on. And so, you know, I think we've become in some ways a more conventional company in certain aspects, so that we can stretch out into places that we still want to stretch out. TODD: It's so interesting you said that, Ken, because I literally give people that advice when they're starting out producing an app or a website or whatever it is. For the things that don't matter to your particular customers, or don't matter to your particular business, stick with tried and true. That's well-known, you don't have to worry about that stuff. Put all your innovation and your avant-garde ideas into the things that really differentiate your company from other companies. So it's so funny that you said that in respect to our company, because although we didn't apply it ourselves, it's advice we give. KEN: Well, I had heard that advice before we did all of this. And the truth is, when you're there, you don't always know which one is the most important, right? So that's gonna happen. But it's worth bearing that in mind, to always be asking yourself the question, like, "What really makes us different as a company?" And if it's not this thing that we're doing and spending a lot of time on, maybe rethink that. TODD: I'll personally admit to hubris. KEN: What?! Never. TODD: "We can do anything, and we'll just apply our big brains to it, and we'll figure it out." KEN: Big brains are not the commodity that's in short supply. It's time, right? It's time and attention. JAMON: I think I'll actually disagree a little bit, here. We've actually gotten the feedback that we all agree a little too much here. So I'll play the part of the devil's advocate here. I think it was well worth trying, and I think it was actually based on some things that we... I think in certain cases, actually, it could work, I think it could be actually be something that a particular company could actually make work. It's just that we didn't like some of the side effects of it. Sort of like, taking a certain experimental medication. Maybe it works, but the side effects are not worth it. And I think that that's actually where we ended up with that. I wouldn't, like Todd said, I wouldn't necessarily classify it all as a complete failure. I think there were parts of it that were a failure. And I'm happy with the system we have now, but I'm also very much happy that we tried that. TODD: It was 90 percent a failure. KEN: It got us to the point we are now. TODD: Well, sure. JAMON: What's your confidence level on that, Todd? TODD: I am 90 percent confident that it was a 90 percent failure. CHRIS: Do you guys wanna touch on psychology and perception in the role of pricing? KEN: Oh, man. **CHRIS: That's something I was kind of thinking about as you were talking.## JAMON: Yeah, actually, I do have some thoughts on that. So, one of the questions that comes up is, "When you are selling fixed-bid or hourly, what do clients think? Is it hard to do?" And I've found that neither fixed-bid nor hourly are particularly hard to sell. Both are well-understood. Our current system takes a little more explanation, and so I think that's something we need to continue to work on, our messaging on. But most people understand them. Some people have a problem with it. They'll say, "You know what, we're not willing to do hourly. That puts too much risk on us." And that's totally cool. It's not something that... maybe they're not a good fit for us. KEN: Well, yeah, the thing is, whenever you're asking a vendor to assume risk for you... You're paying for it somewhere, right? You know, if they want you to be the insurance, then you're paying them to provide insurance. Either that, or they're mismanaged and they're gonna go out of business and then you don't have support. You know, when we switched to weekly, I was concerned that we'd have trouble selling it. It doesn't seem like it's been too big of a deal. For the most part, people still mostly care about the total number, correct? And how you get there? TODD: Correct. KEN: They're not as, they're not usually as concerned with... We've had a few cases where... We had something recently where the upstream source of funds was a grant that had rules about how it's charged, so there's things that come up around that. So sometimes we'll make exceptions. And we have at least one enterprise client that we still use hourly. But for the most part, this has been pretty popular. We feel like it has the best of both worlds in some respects, that it has more predictability than hourly, but it still has built-in flexibility that a fixed-bid doesn't. TODD: Our team definitely thinks the weekly is a success. It wasn't that difficult to convert clients from hourly to weekly, and for new clients, they don't seem to mind whatsoever. It's interesting from our team's perspective. Sometimes they could be working more than they used to, because they have to fix these bugs or whatever, but because they don't have the stress or the guilt, a lot of times of the hourly, they still like it better. It's kind of counter-intuitive, in that way. JAMON: Yeah, I think there's three vectors, or three metrics that you would go off of, you know. "How satisfied is the client?" "How stress-free is it for the employees?" And then, "How much do we as owners like it as a business model?" And from those metrics, I feel like all three have been a success. TODD: Yeah, it's definitely been a success. I think we could definitely do with hourly, but I think the weekly billing has been a huge success. I'm 90 percent sure that it was 90 percent a success. (laughter) As far as the psychology from the client standpoint? We understand... One of the things we do, we hire a people who have a lot of experience, either they ran their own small businesses, they ran teams, that kind of stuff. We have a lot of people who have real-world kind of business experience. We're definitely not business consultants, per se, but we do work with a lot of start-ups who need some basic, not basic, but need some of our business consulting. And one of the things that we do is we understand the risk involved. And there's a lot of companies like us don't talk about this at all. For example, from a client's perspective, it's a big purchase. If you're spending 100,000, 200,000, 500,000 dollars? That's a large purchase. If you're a start-up, that's a risky thing. So we try to really think about their risk. Now, we have our own risks, too. We could put five people on a project for a few weeks, incur a huge amount of money, and they could just never pay us, go out of business, whatever reason. So we have risk as well. So we're not here just to alleviate all their risk and put it on our shoulders, being the insurance risk, insurance Ken just mentioned. But we do try to figure out a way to have a nice balance between us helping them with their risk, and them helping us with our risk, and just being up-front. Like, "This is risky, you don't know us. You've had a recommendation, maybe you liked us during a sales call so you're choosing us, but you really don't know us." And we're a huge believer in gaining trust over time. So at the beginning, or whatever that word is Ken had, I forgot now, already, at the beginning, the risks are much higher. So we do put a lot of thought into that. Some clients, to be honest, aren't a good fit for our system. We're very happy to help them find someone who would better fit the system than us. So we do lose some clients, for sure. JAMON: One way that some clients have asked us to share an undue amount of risk is when they ask us for hourly with a cap. That is sort of the worst of both worlds for us. If we finish early, we make less money, but we also take all of the risk of when it goes over. So we really do refuse, essentially, to do that. Now, there have been some situations where we've put such a cap on ourselves because of particular circumstances, but we don't work for clients that demand that sort of thing. TODD: Yeah, we have a general rule where we strive not to work for free. Which sounds funny, especially if you're in a different kind of business than ours, but it's actually super common for businesses like ours to work a lot for free, for nothing. And it's actually, in my opinion, a rampant problem in our industry. So we really strive not to do that. I think that would probably come to a shock for a lot of people. If you're selling hamburgers, the concept, "Well, you know, 30 percent of the people walk through today, you're just gonna give them the hamburger for free." That would be shocking to them. But that's kind of like what people like us do, too much so, in my opinion. Anything else on the psychology from the client standpoint that we could talk to, or talk about? KEN: I mean, pricing is a huge topic. TODD: Could you talk about pricing per week or per hour, the psychology? Because I know you've discussed this in the past, Ken, and I'd love for you to tell people. KEN: Yeah, so one of the things we... We've tried a bunch of different ways of pricing. So one of the things we did before, we would only bill for extreme, like the instant we step away from the keyboard, the timer goes off. When we first started, we tried to do this. So we would charge like a pretty high hourly rate. But then, the actual number of hours burnt would be low. Nobody liked that. Nobody understood that, it was much better to bill in the way that people kind of understood about that. When we would bill hourly, like an hourly rate, we're much more likely to get really kind of angry responses sometimes. To people who didn't really have a sense for what software costs. Because what people will do is, they'll look at the hourly rate, and they'll compare it to how much they make. Right? They'll go, "Wait a minute, that's what a lawyer makes!" Or something. It's not actually what a lawyer makes. But we would get this very visceral reaction to that. But by doing it weekly, where we've kind of smoothed all that out, then they can kind of approach it more like a product that they're buying. Kind of like, "Well, it comes in this many chunks, and okay, that makes sense." So that, I think, was always one of the benefits of fixed-bid for people. Fixed-bid in sales has always been nice, because you can just say, "Here it is, and that's your price." Although, it's 100,000 dollars, they were like, "Well, my budget's 150, so I could do that." Right? And with doing this weekly, although it's not quite there, it is a little bit like... The way we're doing it now is a little bit like fixed bid plus an extremely well-oiled change request process, basically. JAMON: Yeah, exactly. KEN: And that seems to solve both of those problems. Where it's like, they can look at that and instead of being some unknown number of hours, weeks seem like they're easier to kind of grapple with. And that's exactly what we want, right? I don't think we end up charging more, particularly. But it does come in these chunks that are easier to grapple with. They know what size the check are gonna be that they're writing next week because it's gonna be a certain cadence. It's not the surprise every time. It just seems to work better. Go ahead, Todd. TODD: People will pay extra money to remove the surprises happily. KEN: Yes, absolutely. TODD: I don't think our weekly is more money, but even if it were, they would be happier. It's so funny, what Ken said is they associate their salary with their hourly, or even if they take their salary and divide it by 40 and divide it by 52 or whatever, and they compare it to ours, and they think, "Wow, these people are getting paid a massive amount." Of course, they don't see all the other business stuff. There's actually no– KEN: They're not counting the overhead, they're not counting the things that they're not having to pay for. TODD: I'm not complaining at all, but it's just a fact of our business: we actually have fairly low margins for a business type. Our team is extremely expensive compared to other businesses, extremely. Not saying we overpay them, I'm not claiming that, it's just the nature of their jobs. JAMON: Yeah, and another aspect of this, and I realize we're going a little long here, but another aspect of this that we could talk about is that with the point system, it's not 100 points for each person, it's if we have three people working on it, the whole team needs to deliver 300 points. So they work together to divide up the work in such a way that maybe someone's doing 150, the other person's doing 50 but they're doing a lot of client communication. And allow them to divvy up the work in a way that makes the most sense to them. Where with the hourly bonus structure that we had before, that would actually hurt the person doing most of the communication with the client. And that was a problem. TODD: That's huge. And that was a decision we made. And because we chose that, meaning that we don't track individual contributions. I mean, technically we could probably figure it out based on Trello cards and that kind of stuff. But we don't track individual... It's team-oriented. So if it's three people, like Jamon said, it's 300 points. And we give them the flexibility to figure it out, how to be the best, most efficient to do those 300 points that they can. And I think that's worked out really well. It has some downsides. It is harder to keep metrics on individuals that way. JAMON: Yeah, a lot of what we do for that is to simply ask their teammates how it was to work with them, try to encourage them to be honest about their contributions and things. It's not a perfect system, but we are able to track individual contributions a little bit better, just through the perceptions of their teammates. TODD: I do it more efficiently, I get 'em all in one room and I say, "Out of all of you, who's the worst?" (laughter) And then I let 'em... It's kind of like that inspirational movie, Hunger Games? JAMON: The inspirational movie? TODD: Yeah, so, and it's quite efficient, and you get right to the meat of it, literally, sometimes, to the meat of it. JAMON: Literally. KEN: And what they say is, "You are, Dad, you are!" TODD: And I remind them once again, I'm not their father, that's Darth Vader. Fact. JAMON: There's a lot more we could talk about here on this topic, this is probably something we could revisit at a future... KEN: You may have noticed that we like to talk? Especially Todd. But, yeah... TODD: My words are all very small, so I need lots of them. KEN: We get very passionate about very dry things, sometimes. TODD: There's some things to be said, too, on the subject of billing... It's a touchy subject, because although you can say that clients can be difficult in certain ways in regarding to this, it's all... Assuming that the client isn't a jerk and they're just trying to squeeze a rock for as much blood as they can, and let's assume that's the case, and most times that is the case. From their perspective– KEN: Wait, you should be clear on what you're saying is the case. 'Cause otherwise, you mean... Most of the time, they are not trying to be jerks. That's what you're saying. TODD: Most of our clients– KEN: Okay, good. TODD: Most of our clients are really great, and they're showing up, and they're partnering with us, and we're both working towards the goal of making something awesome. So if they are being difficult in a certain way that we may complain about in the background, they always usually have a reason why. It's usually a miscommunication, it's just something that they're misunderstanding on their end. KEN: And like you said, presumably they're getting the software because they need it for some reason. Right? And it's a lot of money– TODD: It's scary! KEN: Yeah, it is scary! TODD: And the last thing they wanna hear is, I mean, if you're doing a bathroom, you don't want a contract to come over and say it's gonna be from 50 dollars to 50,000 dollars. Which may be a true statement, but you don't wanna hear that, that's horrible. JAMON: Well, one of the ways that we can mitigate that is if someone does have a fixed, like, hard-cap budget, which does happen and we understand when that is, then something else has to be flexible. And usually it's scope. We're not gonna compromise on quality. We wanna deliver really quality experience. But scope can be adjusted, and if a client is willing to work with us on scope, we can accommodate a tighter budget and still deliver a quality, but narrower scope, piece of software. TODD: That brings up something very interesting, Jamon. It is a trade-off between low-price and low-risk. So, if we crank up the risk, we can give a quote at a very, the lowest price possible, because it may change. "We think we could possibly do it at this price." The easier thing to do is have a much larger price that reduces risk, but they're almost guaranteed to pay a lot more. Some companies hate the first one. They'd much rather have a much bigger price that's reliable and low-risk. Other companies, especially if they're really lean, they would prefer the first one. And the problem from our perspective is, we don't know who's who. And it's hard to get them to tell us, or they may not even know. So when you choose to go down one of those paths, do we give them as lean as possible estimate but we know it's much more likely to change? Or do we give them a much larger estimate that reduced the risk? When you're doing that, you're kind of choosing your customer at that point, too. It's all very complicated.

Be a fly on the wall during the ClickFunnels partner meeting and hear the #1 thing each of us learned on our journey so far. On this episode we get to hear from the entire Clickfunnels partnership team. They all share the big takeaways they have received as they have watched the company soar to over a hundred million dollars a year in revenue. Here are some of the cool things you will hear. How Russell learned that having a great partnership and team was better than being on his own. Why Todd thinks it’s important to have someone who is obsessed with the product you’re selling. Why Dave thinks the Dream 100 is so important. How John prioritizes and delegates to make sure everything is done by the appropriate people. Why Brent thinks it’s important to stay small and nimble as long as possible and why you shouldn’t sweat the small stuff. And why Ryan believes that constraints are not a limiting factor, but what helps you focus and succeed. So listen here to find out what the Clickfunnels partnership team members have learned that have lead the company to surpass their goal of a hundred million dollars in revenue a year. ---Transcript--- What’s up everybody, this is Russell Brunson. Welcome to the Marketing Secrets podcast. Today is a special episode, we’re here above the ice right here, there’s hockey happening down there. But we’re in our partner planning meeting, here are all the cofounding partners of Clickfunnels, hanging out and plotting world domination. The theme of today’s event and the theme of this podcast is this: It comes from social network, millions of dollars isn’t cool. You know what is cool? A billion dollars. Alright everybody, so welcome back. We’re excited to have you guys here. We’ve been here locked up in this awesome office for the last day and a half planning world domination and how to make Clickfunnels better for you as a user, how to get more of you as users, so we can serve more people, more audiences and more entrepreneurs. It’s been really, really fun. We’ve been going around plotting and scheming and planning and creating and doing and a whole bunch of really fun stuff. So I thought we’d take a quick ten minute break here and I thought it’d be fun because we actually had a call yesterday with, I guess they’re not really competitors, a cool company that we like what they do. We’re potentially interesting in maybe buying them or whatever. It’s funny because they’ve been watching what we’re doing, obviously and he’s like, “You guys are what, 10 million dollars a year in revenue?” and we’re like, “No.” So in case you guys are wondering, we passed $10 million in revenue year one. We’re year three. So I thought it would be kind of fun to maybe look at this, a little bit ago, like 2 months ago we passed a hundred million in revenue. So we went from zero to a hundred million dollars in about 3 years. And I wanted to say what was the biggest aha that each of us individually got, that we’ve learned in that process. So you guys get ideas from everybody inside the team here. So just a really quick intro with everybody, then I’ll share my aha and then move on. So I’m Russell, I’m the nerd who is the dancing monkey who’s talking about Clickfunnels all day long. That’s what I do here. This is Todd Dickerson, he is the genius that built all of the original Clickfunnels and look at that beard, so manly. Over here, this is Dave, he’s all the business development stuff, he’s got the retro Clickfunnels shirt on. Then over here is John, he does all of our ads, and if you see us every day on every platform it’s because of that guy, so blame him. Over here we have Brent Coppieters, he does all our operations stuff and he’s going to be transitioning to a bunch of our new, something we can’t talk about live or publically yet. It’s going to be cool. And this is Ryan, what’s up Ryan. Ryan is the genius who is always coding. So I thought it would be fun to give you different people’s perspective, because obviously we’re all in different parts of the company, lifting different parts, doing different things, so I thought it’d be interesting to hear everybody’s ideas. So I’ll start with mine. So I think the biggest takeaway, I shared this last night with these guys, is as I was growing my business initially, the first 8 or 9 years I was very, I don’t know what the right word is, scarcity mindset or whatever. Where it’s like, I am Russell. I am the leader. I own the company, and all these things. And I think I had one or two deals with partners that went sour because I was like, I will never have a partner, I will only be me. It’s funny, with that mindset and that attitude, we were able to get to this level and we kind of camped out there. And I’m lucky for me, Todd came in. Trojan horsed his way in, where he basically worked for free for an entire year, which was awesome. And then we worked together for a couple of years. I don’t even know how many years it was ahead of time, a couple of years before that, and then we had the idea for Clickfunnels. We were sitting in an office in Boise, we bought the domain, we were going to call it something different and then we finally found Clickfunnels, we bought the domain, then for a whole week we were mapping out on the whiteboard everything. At the end of the week, and this is to kind of take you back, this is on the backend, we had 100 employees, the whole thing collapsed, we had to fire 80 people. I had to go from a 20 thousand square foot building to a 2 thousand and we could barely afford the rent. It was the most humbling, painful time of my life. I think that the Lord or whoever, whatever you want to call it, humbled me to a spot where I was willing to say yes to this. And I am so eternally grateful that I did. But at the end of that week Todd was like, “Okay, I’m going to go back to Atlanta. I’m going to build this thing, the Clickfunnels thing. But I don’t want to do it as an employee, I want to do it as a partner.” And the Russell two or three years earlier than that would have been like, “Um nope. This is the Russell show.” And I would have done something stupid like that. But luckily I was at a point where I was sufficiently humble. I was like, you know what I’m going to do that. And I’m so grateful that I did because then Todd built Clickfunnels. Holy crap, seriously. It’s insane. And then after that, that’s when we brought in these other guys as partners as well. They’re all rockstar people. It wasn’t just like, “I’m going to give you a base salary.” Or whatever. It was like, “Okay, come in and become a partner in this thing.” For me it’s like, as you find the right people and incentivize them….If I were to ever build a company again, I would never build a company where Russell’s the thing. We went and watched Justice League last night, so maybe this is because it’s in my head. Justice League, Avengers, Batman, whatever. I would literally, if I ever build a company again, the initial thought will be, I’m going to build my Avengers team, my Justice League. I’m Batman, there’s Iron Man, everyone’s got their spot. Ryan’s Wonder Woman, I just want to look like Aqua Man, that dude is ripped. But if I ever start a company again, the first thought will not be, what product should I sell? It will be what team should we assemble? And then I would carve out where everyone’s roles were going to be. I’m not going to be CEO next time, so any of you guys can pick that, I’m done after this. But we each pick our different roles and then from there, collectively, be like, “What should we create? What should we build? Who should we serve?” And then we’d go from that. So my biggest takeaway from going from zero to a hundred million dollars is definitely give up control, build your Avenger team ahead of time, because Russell Brunson could have never gotten here. It took these guys and the team we built to create that. Anyway, there’s my number one. So I’m handing it off to Todd now to share the biggest thing he’s learned from going from zero to a hundred million dollars. Todd: What’s funny is that I was actually thinking about saying very similar things. One of the biggest things is the team. Seeing how to build a team around you and actually do things as a team as opposed to by yourself independently. That’s how I’ve always done things in the past, on my own more or less, same type of scenario. But I think something else that stands out to me is having someone who is obsessive about the product itself. We always talk about how marketing is the big thing, and it is. But if you’re focused on the marketing, you still need someone on your team that is obsessed with the actual product. Making sure you’re delivering the best possible thing to people. So when you sell it to them, they actually like it and they come back and want more. So that’s my other big epiphany I think that I’ve had over the past… Russell: Especially in our world. Our world, everybody’s obsessed with marketing, rightfully so. A lot of times if you’re in the marketing and product, if you do them both, it’s really, really hard. I tried to build software companies in the past where I was like the marketing guy, plus trying to convince the developers how to do it. Whereas with this, you were able to run with the product and I could just sell. Todd: Absolutely. That’s why I think that’s worked as a great partnership. Russell focuses on the marketing and I focus on the product. And I think having that really makes a difference. Pass it on to Dave here. Dave: Hey there. So we talk about this all the time and I cannot express the importance of it, and that’s the Dream 100. So I took a look back on everything that’s happened as far as first of all having an amazing product and then amazing leaders, and then Todd and Russell, the two of them are amazing together. I think the part for me, is I look at everything we’ve built over the last three years now, is the importance of the Dream 100. Originally Dream 100, as far as affiliates, and even most recently when we did the book launch, what I really learned a lot from that was the importance of understanding it’s a Dream 100 per platform as well. So as far as your influencers, where are they at? Are they on YouTube, are they on Facebook, are they on Twitter, or are they in Instagram? Wherever they might be. And then as recently, as far as, a new Dream 100, as far as hiring partners that you really want to end up working with long term. So for me, I think the most important thing is when you start looking at building something, is really identifying your Dream 100 and then being very, very consistent in continuing to mail out every single month to them. Establishes and builds that relationship with them, they get used to seeing you. It’s been fascinating as we’ve gone out and traveled and go to these different places and people remember the boxes and things that have been sent. And they’re like, “Oh, how do I get on that list?” And if they’re asking to be on the list, I don’t need them on the list, I don’t need them basically. But the reality basically says that it actually works. So I would say, in building a hundred million dollar company, and any size company I would definitely say Dream 100 is one of the most important things. John, up to you. John: Alright, so a really interesting journey we’ve been on. It’s been so much fun. One of the things that I’ve learned which is just huge, is prioritizing your time and your tasks. I mean, especially when we’re all internet entrepreneurs, we’re on the computer, it’s so easy. The computer is a gateway to anything. So a huge thing for me is to, before even opening the computer, physically write down or use your phone or use something else that’s not your computer, to structure out. We all do this, Russell does this, I do this. We structure out what we’re going to do.What are the next things I need to do? Because if you can get that basically spiritually created, if you can get that thought through before you actually begin, then it changes everything. Then you’re actually getting through stuff instead of just fumbling along. It’s so easy because we’re all bombarded with a million different things, we could be paying attention to a million different things. Only some of which are really going to move the needle. And the other thing is, especially as you grow your team, as you get more people working with you, it’s about….So I build out that list and then the next thing I ask myself as I go through that list is, “Okay, who can do this? Who can I get to do this? Who can I get to do this?” And that specific question, as I go through the list, as who can I get to do this, that allows me to go through and delegate as much as possible to team members, so then I become more of a leader. Because it’s so easy to just be like, I could just do it all. Yeah, you can probably. But maybe you shouldn’t be doing it all. You know, that’s something to think through. So build out that list, really think through it before you start to take action in the day, prioritize it and then go through and glean through the list and be like, “Who can get to do these things.” Assuming you’ll be doing none of them. Of course there will be a handful that you end up doing, but that way it’s just a mindset that will help you get things delegated properly. Here you go Brent. Brent: Awesome. Hey everybody, it’s good to connect with you. I just want to express how much we appreciate you. Everybody who follows us, who’s obviously dedicated listeners of Russell’s program. It’s funny, more and more as we travel with Russell, even locally here in the Boise area, he’s getting like, people recognize him all over the place. They see the jeep, or they see him in the hallway of the hotel and they’re like, “Hey, I’m your neighbor.” Just these random……Albertsons…..it’s just funny. Anyway, a couple of things. I’ve had the privilege of working with Russell for over 11 years and the one thing I think that you just cannot replace, or that’s absolutely needed is hard work. You have to be dedicated in getting this business and be willing to sacrifice what you need to sacrifice to get going. Another thing that I think we’ve learned through this journey is stay nimble and small as much as you can. Don’t go out and try to lease some big office space until you’ve got sales coming in, consistent sales, your business is in good shape that way. Another thing that we’ve kind of followed here in our company is we’ve been slow to hire and quick to fire. Building a team, and Russell’s done a tremendous job of this, obviously we’ve got great partners here. And then that has extended to our team members. Again, we love all our team members. We are essentially a great family of likeminded individuals who are focused on a goal. And the leadership in this company has helped us all work to achieve that goal. So that’s been awesome as well. So stay small as long as you can, be nimble, be humble, but you gotta work hard. Once you do those things, don’t sweat over the small things. We’ve had different variations of an employee handbook, and I’m just finally getting it out here in the next few weeks. And we’ve been in business three years. So don’t stress about the mistakes. We were somewhere, we were at an event in Denver a few weeks ago, it was related to customer support, and that’s very normal. For small startups, that’s very normal. Those things just come, but don’t worry about those little details. They work themselves out. But work hard and you’ll achieve that success. So I will hand this over to my buddy, Ryan. Ryan: So I love talking about this topic, and I think it’s best summarized as, “Worse is better.” You can do a lot more than you think. Gary V told us that when we met with him on the social media side. We’re like, “We already do everything, we already do a ton, we’re on everything.” He’s like, “You can do more.” And I think this is true on everything we do in engineering, everything we do when it comes to product. You’ve heard it in every single answer from everybody to some degree. But I think the killer, underlining subtext to all that, is that constraints are not a limiting factor. They force you to focus, the focus forces you to prioritize, that forces you to do the one thing everyday that’s most valuable so that you can compete with somebody who’s got 40 million dollars in funding and you’ve got three guys in an office trying to figure it out because it makes you laser focus on the thing you have to do every single day. That’s what enables you to compete at a higher level, that’s what enables, and I believe the most important thing we’ve done in our culture is force everybody, from hiring decisions, to business processes, don’t worry about the handbook, don’t over complicate this, simplify this. Because those constraints are what make us as powerful as we are and what enable to be a hundred million dollar company with a hundred people. To grow to a billion dollars with fewer resources and a fraction of the budget and everything else. Everyone else who’s competing with us, they have no idea how we do it. They’re all like, “Wait, how many engineers do you have? How do you do this? How big are you?” it blows their mind and I think that’s the thing they miss. Those constraints are what enable us to do it. Our weaknesses are our strengths and people see them backwards. And we see it the opposite. That’s why everyone’s so blown away and why nobody gets it. I think that’s our secret sauce in many ways. So I love that. That’s our thing. That’s what I learned, that blew my mind. Russell: That’s awesome. Well, I hope you guys enjoyed this episode. Its fun hanging out and we just want to thank you guys so much for allowing us to serve you and serve your audience. We love what we do. We’re obsessed, we’re passionate, we’ve been up for the last two days going crazy trying to figure out ways to do it better. You know, for us, a lot of people say, “You guys made it to a hundred million. That’s crazy.” That’s step number one for us. We’re just getting started, wait until you see what’s going to be coming out over the next twelve months and beyond. We love you guys, we appreciate you, we’re so grateful for the ability and the right and the gift we have to be able serve you guys in what you guys do. So thanks again so much for everything and we’ll talk to you guys soon, bye everybody.

Podcast's Bravest Jack and Dan watch Season 15's The Fat and the Furriest, an episode featuring a lot of riffing that's sort of like Moby Dick except the whale is a bear and Homer is Iron Man. Who is older, Rod or Todd? What is Horse Code? What's the ideal plot of Avengers 3? All that, plus neuronics, Bearmember, and the Steven Weber Podcast.  NEXT TIME: Season 22's Elementary School Musical Visit us at: www.weepodcast.com  Discuss at: www.reddit.com/r/worstepisodeever Shop through: http://amazon.weepodcast.comSupport us at: https://www.patreon.com/weestudios   Sign up for the newsletter at: newsletter.weepodcast.com