Episode 205: The Importance of Peer Coaching to Your Professional Development, with Verne Harnish.
Verne Harnish has spent the past three decades helping companies scale-up. He is the founder of the world-renowned Entrepreneurs’ Organization and chaired for fifteen years EO’s premiere CEO program, the “Birthing of Giants” and WEO’s “Advanced Business” executive program both held at MIT. Verne is also the founder and CEO of Gazelles, a global executive education and peer coaching company with over 150 coaching partners on six continents. He’s also the Venture columnist for FORTUNE magazine, the author of Scaling Up (Rockefeller Habits 2.0); Mastering the Rockefeller Habits; and along with the editors of Fortune, authored “The Greatest Business Decisions of All Times”. An investor in several scale-ups, Verne resides in Barcelona, Spain, with his wife and four children.
Click to tweet: Verne Harnish shares his outstanding experience and insights on Onward Nation!
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Secret – timesaving technique
Verne believes that you have to find the vital 90 minutes a day several times a week to get good at what you want to get good at — if you don’t commit it will never happen. ONWARD!
Daily habit that contributes to success
You have to get a peer coach — Verne believes in using peer coaching to help hold yourself accountable.
Could have ruined your business – but now – an invaluable learning experience
Verne lost about $1 million in eight weeks after 9/11 — and Verne tells the whole story here.
Most critical skill you think business owners need to master to be successful
“Leaders are readers.”
Most influential lesson learned from a mentor
“Write down the names of the 25 people you need to get to support your venture.”
Final Round – “Breaking Down the Recipe for Success”
What systems would you go back and put into place sooner?
I would have built my business model around cash flow.
What one strategy or “recipe” would compound into big wins for business owners?
Decide the word or two you can own in the minds of the market — and become the king/queen of that every single day.
How to exceed expectations and add the most value?
An individual would know what needed to get done — and they’d put in the time to get it done.
What strategy would you recommend new business owners focus on to best ensure success?
- Make your list and work it
- Pick the words you want to own — and get on it
- Find 90 minutes to work on the most important thing
- Don’t run out of cash
How best to connect with Verne:
- Website: scalingup.com
This is Onward Nation. Episode 205: The Importance of Peer Coaching to Your Professional Development.
Get ready to find your recipe for success from America’s top business owners here at Onward Nation with your host Stephen Woessner.
Stephen: Good morning Onward Nation I am Stephen Woessner and we all know that building and scaling a business is hard work but when you have the right strategy, the right recipe for success to follow, the action steps become more like ingredients and can be added systematically into your business, one ingredient at a time. And that’s why I’m so excited to introduce our guest today Verne Harnish.
Verne has spent the past three decades helping companies scale up. He’s the founder of the world renowned Entrepreneurs’ Organization and chaired for 15 years E.O.’s premier CEO program the, Birthing of Giants, and WEO’S advanced business executive program, both held at MIT. Verne is also the founder and CEO of Gazelles, a global executive education peer coaching company with over 150 coaching partners on six continents. He is also the Venture columnist for Fortune Magazine, the author of: Scaling Up, Rockefeller Habits 2.0; Mastering the Rockefeller Habits; and along with the other editors of Fortune, authored, The Greatest Business Decisions of All Time. He is an investor in several scale ups. Verne resides in Barcelona, Spain, with his wife and four children.
Welcome to Onward Nation Verne!
Verne Harnish: Stephen glad to be on the show, thanks for inviting me.
More on Verne’s Background
Stephen: Well thank you for accepting, I’m also glad that you’re here, that you’re taking time out of your compressed schedule to dial in with me from Spain, which is just awesome! But, I’ve only given Onward Nation a pretty brief glimpse into your background Verne, so take a couple minutes. Take us behind the green curtain if you will and tell us a little bit more about you and your experience, and then we’ll jump in with the questions.
Verne: Well, this 34th year of doing one thing Stephen, and that’s just trying to help companies scale up. As you know, so many companies start up. In fact, I just saw this statistic, 11,000 an hour start up around the world but very few scale up. And so, that’s what we’ve really dedicated our efforts to, is building the tools and the techniques and the support around the globe. And in fact, we’ve got a very specific focus over the next 10 years and that is to help 150 cities around the globe put in these scale up ecosystems, to augment these startup ecosystems that already exist in many of these cities. So, very excited and we’ve got a great team around the world to do that.
Stephen: Well this is very exciting that we get to have this opportunity to have this conversation with you. And in our pre-interview chat … I know we’re going to talk about kind of four cornerstones that come right out of Scaling Up and Onward Nation, that’s going to be people; it’s going to be strategy; execution; and cash, because these 11,000 businesses a day … I believe that is what you said, a day, correct Verne?
Verne: No, I think it’s an hour.
Stephen: 11,000 an hour!
Verne: Yeah, it’s a crazy number.
Stephen: Oh my gosh!
Verne: It’s a lot of people, we got seven plus billion people on the planet so-
Verne: And a lot of folks that are … Now look. 24 million of the 28 million in the United States, only have the entrepreneurs, the employees, so there’s a lot of home based in that mix. And the free … you know, everyone’s out there doing their own thing.
Stephen: Well, and I love the … before we jump into the questions here. Just one more thing for Onward Nation to kind of put this into context. I love what you were sharing from the NSA stage and how you showed that in Apple, before it kind of hit that 25 year mark, had about 9,600 employees if I’m understanding the story correctly, about 9,600 employees and then it was that tipping point of 25 years and then right into the iPod being released, that they really scaled to 98,000 now? Am I getting that story right?
Verne: Yeah, that was back in 2011 and their considerably above about 110,000 employees here today. Yeah! You know it’s interesting, the godfather of our world Peter Drucker, the late Peter Drucker, he, you know, wrote 39 books. Only 13 of those, a third of them, were written before his 65th birthday. So, he created twice the books after 65. Picasso who hung out a lot here in Barcelona, of his top 10 paintings, at least considered by the critics, six of those 10 he painted after the age of 50 and four of those 10, when he was 51. And so, the highly creative and innovative, we think of in their 20’s but generally you’re twice as creative after your 50.
And we’re seeing that and one of the messages that we’re bringing to cities is, it’s nice that you’re kind of focused on the young techies but, the next unicorn that’s going to be here in Barcelona is Cesar Martinell, who’s 58 and is building the next billion dollar company and he’s been at it for 20 years. And so, we’re really trying to wake up to the cities, the nautic nore, the older, rare, both entrepreneurs and companies that already exist in their cities.
Stephen: Oh, this is going to be so fantastic and that really ties into our very first question about preparation. And preparation is so important Onward Nation, because greatness is available to all of us if we’re willing to do those common things uncommonly well, which is a powerful lesson that I’ve learned from one of my mentors Don Yaeger. So Verne start us off with, if you want to call it a secret, if you want to call it a time saving technique … Is there something you can share with us that helps you focus and prepare to tackle your most vital priorities each day?
Verne: Well yeah, I think you already named it. You’ve got to pick one, not three, not five, and you got to give it at least 90 minutes. You know if you want to be an Olympic athlete, we’ve got Rio coming up here shortly. You know, it’s not going to happen if you don’t commit three hours every day. If you got a child who wants to dream of being an Olympic athlete but their not up at 4:00 swimming or biking or rowing or whatever they need to do, it’s just their blowing a bunch of smoke. So, you’ve got to find that vital 90 minutes out of the 24 hours, several times a week or, you can take one day of the week and give it six to eight hours but, without that fundamental, you’re not going to get anything really accomplished.
Incorporating Peer Coaching into Your Daily Habits
Stephen: Love it. So, let’s take that even a little bit deeper into the form of maybe habits, and whether this is a habit or two that you perform on a daily basis, or maybe you see some of your fast growth Gazelle CEO’s performing. But, what are some of the daily habits that you strongly believe contributes to success?
Verne: Well, we’re big into the daily huddle. Anybody who is building software is using today, either Agile or Scrum as a methodology, and at the heart of that is a quick 15 minute daily huddle. It’s been key, by the way, to 24 plus years of marriage, is making sure my wife Julie and I, whether I’m on the road or I’m here local in Barcelona, get that kind of 20 minutes where she can kind of download what’s happened in the day. But, by the way, to make all of this happen, to me the most important thing Stephen you got to do, is something Marshall Goldsmith, a great leadership guru suggests, you have to get a peer coach. That’s different than a mentor. This is peer coaching.
So peer coaching for me, it’s my dear friend Sebastian Ross. And you’ve got to decide what are the three or four habits, whether you’ve got to start a daily huddle, or you’ve got to give it 90 minutes on your priority. Whether you got to reach one influencer every day, which I did for three months when Scaling Up was released, and we took it to number one. You’ve got to decide what are those two, or three, or four, things you’re going to do more of, less of, or differently, every day. And then, the key is to have a friend hold you accountable and so Sebastian and I E-mail each other every day, and I have to let him know, did I do, right now there’s four I’m focused on, did I do those four things. And it’s crazy, when you’ve got to report out and it takes me in the long run about 60 seconds to do it.
You know, you’re either going to lie to your friend or you’re just going to get it done. And after three or four days of saying, “No I didn’t. No I didn’t. No I didn’t”, you’re going to get about doing it or, you’re going to realize that you’ve got to quit fooling yourself and pick something else.
And so, the power of peer coaching. No one has ever achieved peak performance without a coach. Pick a friend. Pick three or four things you’re going to do more of, less of, or different, whether it’s personally or professionally, and get on this process. It’s changed me more than any other single thing I’ve ever put into place.
Stephen: This is brilliant. Let me make sure that we’re capturing this correctly here. I don’t mean to sound patronizing, I just want to make sure that we’re getting this right. Okay. So when you’re reporting that out every single day, you’re reporting out your progress on four things right?
Verne: Yeah, we pick four or five every few months. So, I remember … Look, I have to right now do something every day to move our new Scale Up Institute forward, and I have to report to Sebastian tomorrow morning for Monday, what it is that I did today. Which by the way, we just got in reviewing the new website that we’re going to be launching next Monday. Did I spend the 20 minutes debriefing with Julie and record on that or not? Did I reach out to one influencer? Right now I’m landing big $50K speeches. What did I do today? And it was very specific, I reached out to a mentor of mine, Mikki Williams, for her to make a referral to a key speaker bureau, that I need a reference given to. And so, I have to be very precise about the actionable things I did around the four or five priorities every day, that are going to move me and my company forward over the next few months.
Stephen: It’s interesting, and I don’t know if this is intentional, my guess is it’s not coincidental because when we talked about those four areas in the pre-interview chat when you said, “people, strategy, execution, and cash”, I’m seeing the intersection with those four points. Is that on purpose? I would imagine right?
Verne: Well. No. Yeah, you’re always thinking about what are you going to do in those four areas but this is pure execution.
Verne: This is after you’ve decided who are the people you need to get to, what is your strategy going forward, and obviously through all of this you want to generate some cash. This is how you hold yourself, your feet to the fire and remain accountable as the CEO of your global company every single day. You can’t do it alone.
Stephen: Love this. Okay Onward Nation, you have to get involved in peer coaching and Verne just took us really deep, many layers deep there, as to why and how peer coaching should hold you accountable and you, how you should hold your peer coach accountable and in what areas. Love it. Okay.
Verne: And by the way we also then, most Fridays at 11:00 get together, and we have a coffee and it’s not necessary to review the priorities, it’s there really to support each other and it’s important, as Keith Ferrazzi says, that you’ve got someone who’s got your back.
How Verne Overcame Losing $1,000,000 in Weeks
Stephen: Love it. So fantastic. Thank you for giving us the entire framework there, that was outstanding. So great momentum, now might seem like an odd transition that I’m going to ask you about that challenging time. That situation that could have devastated, maybe even ruined your business, but you persisted. You made the tough decisions, now that once painful memory serves more as an invaluable learning experience. Tell us that story Verne.
Verne: Yeah. You know we all have them and if you don’t, you haven’t really earned your stripes. So, I get those two non-profits launched ACE and EO, and then on the birth of our first child I thought, “Alright. It’s time for me to really start cranking the money.” So, I raised some funds and then built Gazelles. We did half million, and then a million, then two million, then four million, getting ready to do eight million. I’m going to be an Inc. 500 company and then boom! 9-11 hit. And, lost about a million bucks in eight weeks, got to let everybody go, except my part-time accountant who’s fighting off the creditors. I think we’re going to lose our home. And you know, a couple of things, one, when it goes bad you got to cut and cut immediately and make those painful decisions.
Nobody wants to go through it but you have to, and the thing I learned out of it is our EO chapter had a great forum, still have a great forum that’s there to support you. We were inviting in Richard Kiyosaki, the Rich Dad Poor Dad guy, and honestly I thought he was a get rich quick guy. I’d never read the book, but I thought out of courtesy I should read his book. And, by the way, it’s a great book, and at the end of it he mentions how his rich dads, whenever they got in financial trouble would get money flowing by making a serious, sincere donation to something. And right when the company’s failed, and I’m in massive financial trouble our church decides they’re going to do this huge capital campaign. And you know, I’d throw a little bit of money in the till every weekend but nothing to write home about.
So I come home, and I talked to Julie after I heard Richard speak, and we decided to make the largest financial pledge. We’d never given to anything, we’ve never pledged to anything. Over the next 36 months, just in a way praying that things would turn out, and sure enough. I absolutely believe that you got to give before you receive sincerely, and the 10X rule works, maybe not on your time frame but sure enough what we committed in 2002 then, came back tenfold. I was able to pay the investors back, we were back being profitable, and the company was on a tier. And, so as part of that, I made sure every day we continued to, give more every year to charities. But, more importantly to set aside a little bit of time every day, 30 minutes every day to somebody who seems to be in need, and needing help and yeah, maybe it doesn’t fit my priorities but, that’s been an important part of moving myself, and I think our initiatives forward.
Stephen: Wow, that is a phenomenal story. So, obviously in 2001 you shared that story then you made that decision. I just want to make sure I get the timeline right, you made that decision, was that in ’01? Or then ’02?
Verne: Yeah that was fall, right after 9-11. The church decides they’re going to do this capital campaign raise and I’m letting everybody go around the holidays. And we said, “Alright. Let’s have some faith here and let’s make a big financial commitment that holds our feet to the fire and puts it out before we’re receiving.” I think it absolutely worked and it’s been crazy but whatever we’ve given the year before, seems to come back tenfold. Literally the following year. I don’t want to promise it but it’s been this crazy, magical thing in a decade and a half since.
Stephen: It’s right there in scripture, brother. So, I’m not surprised that that’s been your experience but thank you for taking us so deep and sharing that story. That’s awesome! My word!
Verne: You bet.
The Most Critical Skill Business Owners Need to Master to Thrive
Stephen: Wow. Okay. So, let’s transition to critical skills because I know that obviously you have been a business owner for many years and you work with business owners, and executives, CEOs across the planet. So, given that broad base of experience, what do you think is the most critical skill business owners need to master in order to thrive today?
Verne: Yeah. You know what, this one’s easy and it’s that leaders are readers. They are learners. I played a game Stephen, it was a lot of fun. So I ran this executive program, we held at MIT for 15 years, I ran it full time. Now I just go back in kind of an honorary form, teach in the first session. And, I moved about a thousand unbelievable CEO’s through, including Ted Leonsis and Brad Feld and many of the others who’ve gone on to great fortune and fame.
And I played a game to see if I could predict who would really go on and build the most significant companies. And I came to learn, it was tied to one thing, those that were the hungriest to learn in that class. The ones that were really doing the reading assignments, that were challenging the speakers, they were going up afterwards and asking them questions. Many of them would invite them out to their company for a day and continue to suck their brains dry.
And so, when I wrote my second book, Greatest Business Decisions, we highlighted … one of those was Bill Gates’ decision to host for decades his famous, Think Week. Where he would twice a year, take his pile of books, and manuscripts, and Ph.D. thesis and White papers, and all that stuff that everybody sends you every day and every week and recommends you read, that piles up. His record being a 112 that he consumed in seven days. And, he really learned that, look, nothing creative that can come out, that wasn’t put in first. And I don’t think it’s by accident, he is the wealthiest guy on the planet, next to President Putin in Russia. That’s a joke but maybe not.
Stephen: I got it.
Verne: So if we continue, Mark Cuban who I’ve known for 30 years … Mark has had a habit since he was 20, that guy reads three hours a day and all he does is look for one idea that is going to help one of the 155 plus companies that he’s invested in. Warren Buffet, the greatest investor of our lifetime, reads on average 500 pages a day! And his partner, Charlie Munger, last year on the 50th anniversary was asked, “Alright. Charlie, you’ve been there right by Warren’s side. What is the key to his success?” And Charlie didn’t hesitate, he said, “It’s Warren’s reservation of much quiet time, so he can do reading and thinking. Even at his age today.” Mark Zuckerberg last year set aside … set a personal goal to read a book every two weeks. When Eric Schmidt was interviewed on stage, and I was there at the event, and asked, “What’s the key to his success in helping build Google?” He said, “I shut my BlackBerry off and read a book or two.”
In fact, just a few months ago our editor, Alan Murray, interviewed Larry Page, the CEO of Google now, and he asked Larry a very straight forward question, “How did you become a leader?” And Larry looked at him like, “I read a lot.” You know when they went to name Google and Alphabet he said, “I read three books on how to name something.” So, I think it’s really clear. If you’re not setting aside on average an hour a day, five or six hours a week, and if you’re not investing that in learning, whether it’s reading, or listening, or watching, or however your form of learning is, you’re never going to outlearn your competition. And that is the most critical skill. Leaders are readers.
Stephen: That is phenomenal. Wow! And so, it would have been easy Onward Nation, for Verne to make such a statement and given his past and his experience working with many business owners and being the educator that he is, and having obviously lot of credibility to say such a thing, but then being able to take it deeper and giving us five or six very tangible examples of very well known CEO and business owners who are applying this principle. And not only who are applying it, but how they’re applying it, that was masterful. Thank you Verne.
Verne: Yeah, your welcome.
The Most Influential Lesson Learned from Peer Coaching
Stephen: Wow. Okay great mentorship that you just gave us there. So now, let me turn the table on you with respect to mentorship and ask you to share with us the most influential lesson you ever learned from one of your mentors, and how that lesson helped you become the business owner that you are today.
Verne: Alright. Well if we talked about execution earlier, this I’m going to turn to the people side, and I got to take you back to 1983. So a student. Wichita State University. And I get this idea with my buddy Scott Mise, we ought to launch this global student entrepreneurship organization and I had read how Steve Jobs was being coached by the famous marketing guru, Regis McKenna. And Regis was peer coaching Andy Grove at Intel, rest his soul, Andy passed away last week as many of us know. He was peer coaching most of the luminaries in Silicon Valley and so I thought, “Look, I’m young and dumb. If Regis is good enough for Steve, he’s good enough for me.” So I cold call him. As a student, Wichita State! And I said … I gave him a great elevator pitch and long story short, he agreed to take me on as a free client. By the way it was 80,000 bucks just to sign on.
And, he taught me the most important lesson that we still teach every leader today, and that is he said, “Look, the key to success is whatever you need to accomplish, you take a piece of paper out.” As Jim Collins says, “It’s always a who question. Not a what, not a where, not a how, it’s a who.” And he was the master of what was called relationship marketing and he said, “Take a piece of paper out and I want you to write down the names of the 25 people that you need to get to support this venture.” This being the global student entrepreneurship organization. So, I take a piece of paper out and I write down first name, President Ronald Reagan. Remember I’m, young and dumb, student Wichita State. But I’m thinking if I can get the President of the United States talking about the importance of youth and entrepreneurs to our country and the world, that will be important.
And I write down Steve Jobs, who’s building a two billion dollar company at the time in his 20’s and Michael Dell who had just launched but was all over the news. And I didn’t even know who owned Ink and Bencher Magazine, but I knew I needed to get them and get their support. And then all we did was spend and hour every week working those lists. And Stephen, in 36 months, 36 months, 1986, three years after launching, I had just finished leading the first delegation in young entrepreneurs to Mainland China, we had sent Parlour fluid found in Kenko’s off to the Soviet Union to launch there.
I host one of the largest events for young entrepreneurs in L.A., Bonaventure Hotel, where we hosted Steve Jobs’ first public speech after being fired from Apple, with President Ronald Reagan sending in his best wishes, and full page ads by Arthur Lipper at Venture Magazine supporting what we’re doing. And a six page story written by Ink Magazine, and I could go on and on, but we went from startup to global in 36 months. And so, whatever it is that you need to figure out or accomplish, your first job is to take a piece of paper out and write down the list of the names. And by the way, when Steve decided he needed to launch iTunes, every time he needed to do something that was the first thing he did. He wrote down, alright who are the influencers in the music industry. He started with Don Henley, the drummer for the Eagles, invited him over to his home and said, “Look, Don. Help me think through this.” And that’s how you get anything accomplished.
Stephen: Oh my word. Okay. So aside from the planning of no longer aimlessly wandering through the wilderness because you’ve taken the time to write out the 25, that makes sense. But okay, just give us some additional context here, when you created your list of 25 you were a student at Wichita State. So you were how old?
Verne: I was 23.
Stephen: 23. Onward Nation.
Verne: Yes I was. I had just started my MBA.
Stephen: Oh my word. And so you courageously made this list to 25 as your mentor suggested that you do, and then what was the next step? I mean how did you start working that list?
Verne: Well, we found out that Arthur Lipper, the owner of Venture Magazine, was going to be keynoting a major event in Dallas, Texas. So I get in a car, my beat up Ponty ’81 Pontiac, and I drive down to Dallas, six hours from Wichita and I sit in the front row and nod a lot and then I came up to Arthur right when he came off the stage. Look, you got to have your elevator pitch, if you don’t capture these people’s attention in the first two sentences, your toast.
But I’m like, “Look. Mr. Lipper. Verne Harnish here. Want to build a global student entrepreneurship organization and I need your help.” He’s head of Venture Magazine, of course I got his attention. And I wrote an article then about how you keep that attention, but anyway, that’s how you get started. And we began to network our way to everyone.
Stephen: That is so brilliant and the reason why that I’m grateful that you gave us that additional piece is, because I want Onward Nation to be able to hear from you that building the list is the first step. And then moving yourself past the imposter syndrome, of then just getting it done and taking those next steps, those next steps, those next steps. Because it’s really easy to hear your voice and say, “Oh! Well he’s Verne Harnish! Of course, you know.” But at one point Verne Harnish was a 23 year old student going into the MBA program at Wichita State without a network, and you did it! That is amazing!
Verne: Yeah. Yeah go Shockers! Though, I thought we’d do better here in the March Madness then we did. At least into the Sweet 16, but it didn’t happen.
Stephen: Well you can’t have everything Verne.
Verne: Yeah exactly. You got it.
What Would You Change with a Magic Reset Button?
Stephen: Well, let’s talk about magic reset button. So, if there was a magic reset button as it relates to starting your business, what systems would you go back and put into place sooner rather than later and why?
Verne: You know, it’s related. One of the things I get to do at Fortune is, in my Venture column is name the top five business books every year and a year ago named John Mullins book, The Customer Funded Business. It’s the first and only book that was really written about how you should really fund a company and you absolutely … If I could reset the button I would not have gone to friends, families, and fools, in this case it was five dear friends. And raise my initial chunk of change to launch Gazelles, because the truth I absolutely wasted it. And, when I had to then restart the company in 2001, I went back and did what John suggested, he’d then wrote the book about it. Which is, I went to my customers and said, “Look. If they’re not willing to fund, then why should anybody else?” And what it really put into place … I began then getting my cash reported to me every day. I began to pay more attention to what every decision would do to impact my cash, as much as it would my profit.
And so, the system I think you’ve got to absolutely put into place, is an obsession around cash flow, and making sure that you build your business model like, by the way, Amazon did. They haven’t really made a profit for decades, but they’ve always had positive cash flow, which has allowed Jeff to continue to scale up the business with very little, if no profitability. It’s only been recently that he’s turned profitable. You know Costco, the guts to say, “Hey! We’re going to be a retail store where you’ve got to buy a membership.” I mean how crazy?
We were recently in Hawaii, we don’t have any Costco’s In Europe, so I have no idea where our Costco card is. So we show up to buy some stuff when we were in Hawaii last … you know what? There’s armed guards, I swear, out front! You can’t get in if you don’t have your membership card! Now what other retailer on the planet would have the guts to do that. Yet, two-thirds of their profitability is those membership fees. And, if you get two-thirds of your profit, and you generate enough cash every time you open up a store through membership fees, to open up your next ones, then you’re not beholden to banks, or VC’s, or Angels, or embarrassing yourself with your friends and family. So, read the book, Customer Funded Business, and get serious about cash flow.
Stephen: Love this. Let me make sure that I’m getting really clear on this point, or getting the clarity here because when you’re describing that, it made me think of the interview that you did with John Warlow, when his book, The Automatic Customer, came out. And so, are these kind of intersecting here between, The Customer Funded, and then, The Automatic Customer, as far as MRR and paying real close attention to that, because you mentioned Costco.
Verne: Yeah. Of course. Well, and obviously what really helped Amazon was the whole Amazon membership, where then you got free shipping! So they’re getting your ninety … back then what I think, when I first signed it was $70 or something else, $99 or whatever, I don’t know how much it is. But, that $100 that you’re paying is cash right upfront and because it’s sitting there, you want to buy more stuff from Amazon to take advantage of that membership. And so, yeah John’s, Warlow’s book, The Automatic Customer, is a key component of it. So there you go. Now we’ve covered execution, we’ve talked about people, make your 25 list, and now we’ve talked about cash. Both you got to give it before you receive it and you got to focus on it.
Stephen: And Onward Nation, one last point about John Warrillow’s book that Verne is mentioning here, is that Amazon Prime, that Jeff …. Jeff’s strategy behind Amazon Prime is so brilliant. Like, if you were to spin off Prime outside of Amazon and that was it, just take all of that revenue out, it’s already a billion dollar piece of Amazon. Just Prime!
Verne: Yeah. It’s awesome stuff and by the way, I named John’s book one of the top five when it came out as well, it’s that good. I’m a big fan of John’s.
Stephen: Oh. Yeah.
Verne: And he was a student of mine at the MIT program.
Verne: Yeah, yeah, yeah! Most of these guys were all students of mine.
Stephen: I didn’t know that!
Stephen: I just spent some time with John a few weeks ago. It is such a small world, I had no idea. Wow. That is fantastic. Well then no surprise. Okay. Makes total sense. Oh my goodness.
Okay so let’s talk a little bit more about strategy, if there’s maybe another tip.
The One Strategy Business Owners & Their Teams Could Apply Every Day
Stephen: And so, if you’re able to distill it into one, which I know is an impossible question, but if there was one strategy that business owners and their teams could consistently apply every day, do you think would compound into big wins for them Verne?
Verne: Well there is though. Now we’re going to deal with that fourth decision: strategy. And that is … you’ve got to decide what’s the word or two you can own in the minds of the market and then what you’ve got to do every day is make sure you get about owning that. And you become the king of, the queen of, the godfather of. So, one of my students, Anne-Marie, just did a big story on this last week and an interview. And, she was a student of mine again at the MIT program, and she today is the soap making queen! If you want to know anything about what it takes, get the ingredients, the recipes, and all that to make soap, Anne-Marie’s company, Bramble Berry, I think is the name of it, is the place that you want to go.
Tim Ferriss, you know Tim has made a fortune of owning two words: 4-Hour. Steven Covey, the late Steven Covey: 7 Habits. Google, they own one word in your mind besides Google, and that is search. And they stole it from Yahoo, and Yahoo’s never recovered since, because they don’t own any mind share. When we had our first child, Cameron and I launched Gazelles, we went from having a fun convertible in the hills of Boulder, Colorado, to my wife wanting absolutely the safest car. And you know what we bought? A Volvo. And so, most entrepreneurs never, ever, achieve this and as a result, they never really get the leverage of what is, brand. And so that is brand. Is owning a word or two.
Now, I screwed up. I own growth guy. And the way you know if you own a brand is you put in the word or two and you see if you pop up, at least locally because Google is geo specific, or Bing. So I own growth guy, the problem is nobody cares! When’s the last time somebody said, “Man, I’m looking for a growth guy.” Unless it’s Viagra related, and you know that’s not my deal. So, you got to pick a couple of words that matter.
Now I have. And we went through the kind of Google AdWord test that Tim Ferriss did, to figure out that 4-Hour would be absolutely a huge hit, before he launched. And we have now trademarked, in fact I just got the formal document in the mail last week from the U.K., we got it in the U.S., we got the U.K., now we file for the Madrid protocol to get all the bunch of the other countries, and when that happens we’re coming out big! But that’s what branding is about and then it’s making sure you publish, “you are what you publish,” as David Meerman Scott says, the great marketing guru. And you’ve got to own the words around those two words, and look Google and YouTube are the kings, and Google owns YouTube so, there you have it.
Stephen: Brilliant lesson. Thank you for sharing that. So I have a couple of questions left for you Verne. I know our time is short and I want to be respectful of your schedule here. So, a couple of questions left, so let me ask you to fast forward one year and whether you’re thinking about this in the context of Gazelles, or if you’re thinking about this in advice and recommendations or mentorship, you may offer another CEO.
But, let me ask you to look forward or look back on the hiring decisions you might be considering making now, and imagine the people you hired today exceeded your highest expectations, whatever those might be. So, what recipe or strategy did they consistently apply that delivered the most value to your business?
Verne: Well, I think it’s the stuff that we just recommended. Particularly, they knew what needed to get done every day and put in the time to get it done. From an execution standpoint, they had the access to the networks that were necessary to be able to get better decisions made. Because look, your goal is to be the dumbest one in the room because if you are, then your life is easy. If you’re the smartest one in the room, then you’re life is going to be absolutely miserable. And it’s one of the reasons why entrepreneurs get stuck, as I said 24 out of 28 million businesses, the entrepreneur’s the only employee because most think nobody else can do it as well as they can and that’s what you’ve got to get over, if you’re going to be able to move forward.
Now, what’s interesting with your question is that we are writing a book on this very specific topic. Which what makes … everybody writes about what makes a great leader but nobody writes about what makes a great employee. And Kevin Daum and myself are working on that book now, and so stay tuned, we’ll have that formula for you.
Stephen: Any thoughts as to when the book may be released? Is this a 2017 thing?
Verne: We’re going to release it preliminarily at our May Scale Up Summit that we do with Fortune Magazine in May, and it should be done by October.
Two Strategies for Business Owners to Best Ensure Their Success
Stephen: Okay, perfect. Excited. Okay. Well, Onward Nation stay tuned, when we get some details from Verne and his team then we’ll be sure to share those on with you too. So Verne here’s the last question for you. So, imagine your standing in front of a room of those brand new business owners, people just like you when you were starting out. So, they’re battling their way through their fears, and the worries, and the doubts, and the struggles to try and find some footing. So, we talked about a lot of strategy, let’s think about the two or three initial strategies that you would recommend that they focus on to best ensure success.
Verne: Yeah. Well you know what? This is just the time to summarize. So, absolutely the first step from a people standpoint, make the list of the 25 people you’ve got to get behind this. Locally, whether it’s the mayor, the editor, the local newspaper, the right four customers in the industry. Make your list and work it, that’s people.
From the strategy you’ve got to pick the two words you want to own, day one. And get on it. From an execution standpoint, then somehow in your busy 18 hour days you’ve got to find 90 minutes to work on the most important thing, every day. And then last, don’t run out of cash and so, watch it like a hawk and guard it with your entire life. Because you can get by with decent people, decent strategy, decent execution but not a day without cash. And so, those are the four you’ve got to focus on from the very beginning.
Stephen: Absolutely phenomenal. Verne, thank you so much. Before we go, before we close out and say goodbye, please tell us the best way to connect with you my friend.
Verne: You know what? Just have folks go to scalingup.com, same name as the book, Scaling Up, and we’ve got a bunch of free tools and a whole free chapter on how to do strategic planning and even a one page personal plan that my wife and I do, and we teach a lot of leaders to do for their family. So all that’s there, it’s scalingup.com and I hope folks sign up for my weekly insights. I try to put this practical stuff out every Thursday, and a little way for you to just stay connected to our world.
Stephen: And is there a special page or landing page that they need to go to in order to sign up for that?
Verne: No. It’ll pop right on up. I hope they’ll be there, once they sign up it won’t be popped up, it’s tied to our CRN system. But sign up for the weekly insights.
Stephen: Okay Onward Nation, business building strategies directly from Verne Harnish. This has been incredible but no matter how many notes you took or how often you go back and re-listen to this episode, the key is you have to take action, you have to execute on what he was kind enough to share with you today. And Verne we all have the same 86,400 seconds in a day and I’m grateful my friend that you would come on the show and share this wisdom, share these business building strategies, to be our coach, to be our mentor, to be our leader, so that we can all put these into practice, into our business. Thank you so much my friend.
Verne: Stephen thanks for the opportunity, and hope it helps somebody.
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