Are you looking for proven small business marketing tactics that you can use to get more customers?
Do you always feel like you are just one more customer away from going from “scraping by” to “nicely profitable”?
To discover how to “pumpkin plan” your business so that you can finally start turning the profits you desire, I interview Mike Michalowicz for this episode of the Bright Ideas Podcast.
More About This Episode
The Bright Ideas podcast is the podcast for business owners and marketers who want to discover how to use online marketing and sales automation tactics to massively grow their business.
It’s designed to help marketing agencies and small business owners discover which online marketing strategies are working most effectively today – all from the mouths of expert entrepreneurs who are already making it big.
The show format is on-demand talk radio - commonly known as podcasting.
In this episode, I interview Mike Michalowicz, author of The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field.
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Transcript
An Interview with Mike MichalowiczTrent Dyrsmid: Hey there! Thank you so much for joining me to the Bright Ideas podcast. I’m your host Trent Dyrsmid and this is the podcast for business owners and marketers who want to discover how to use online marketing and sales automation tactics to massively boost their business. If you’re running a business and feel like your revenue is kinda stuck, you know you get to that plateau and you’re not exactly sure what to do to get it higher and everything you do, trying to do this, doesn’t seem to work.Well, you’re gonna love this episode because in it my guest is gonna share what he calls his pumpkin plan for collosal entrepreneurs and he’s gonna explain how he used this plan to grow his most recent business, the one he sold last, from zero to $7,500,000 in a very short period of time. Next, we all want customers. We all want more customers and we all know that getting referrals is by far the easiest way to get new customers. The problem is that asking for referrals doesn’t generally work. Well, my guest has an amazing solution for that as well. He calls it his root system referral strategy and he never ask his customers for a referral. The results however are pretty amazing, 75 new customers in a very short period of time. So please join me in welcoming a two time author, his name is Mike Michalowicz. He’s the author of The Toilet Paper Entrepreneur and The Pumpkin Plan. He’s a multi-company founder with several successful exits under his belt and he’s now on his 3rd business. All around interesting guy, very smart cookie, really enjoyable to have him on the show and I hope that you will enjoy listening to the interview as much as I did creating it. Please join me in welcoming Mike to the show.Alright everybody, hey it’s Trent here with Bright Ideas and I wanna welcome a very special guest, Mike Michalowicz to the show. Mike, thanks so much for doing this interview with me.
Mike Michalowicz: I love it brother, I appreciate it. Thank you for inviting me to be here.
T: No problem at all. So Mike, you wrote a couple of books now and as I mentioned in our pre-interview chat we had a whole lot in common. So your first book was Toilet Paper Entrepreneur. Your 2nd book was The Pumpkin Plan and all I wanna say is where were you when I was running my last business because I was growing a patch of pumpkins, not a big one.
M: Yeah I hear you. I feel the same way. I have these books behind me over there. Same thing everytime I read a book, my god, if only I had that 5 years ago, damn it.
T: Yeah.
M: So it wasn’t meant to be I guess.
T: Yeah exactly. So the reason I asked you to do this interview is because as I mentioned we both ran these technology services companies. You, obviously much smarter than me, came up with this idea of The Pumpkin Plan and you really, really killed it with your business and for folks that, we’re not gonna rehash the whole story, I’ll let Mike tell a little bit about it. So yeah I’m gonna stop talking right now and so why do people want to listen to this interview? What’s this pumpkin plan thing all about?
M: Yeah so in my 2nd, well I actually during my first business I discovered it I found through a co-business coach that pumpkin farmers held the key if you will to colossal success. And it wasn’t like the ordinary guys, the ordinary pumpkin fields like this halloween everyone’s gonna run out to buy ordinary pumpkins. It was what they called colossal pumpkin farmers. These guys grow 1 ton pumpkins. And what was fascinating was they only changed about 5% of the stuff they do and the pumpkin naturally responds with this explosive growth. Well with the help of my mentor, my own research support, I discovered the links between colossal pumpkin farming and businesses. I found that certain entrepreneurs, few unfortunately, I hope there’s more now, do the colossal method. So most entrepreneurs are stuck in the mire and write their stuff but I found the keys that 5% things that you need to change this entrepreneur and the business naturally responds with explosive revenue.
T: Alright so I think the people that are gonna get the most out of this interview, and I really hope they hang around to the very end of it, are the folks that have a business, they’re generating some revenue, they got a bunch of customers but they’re stuck. That’s pretty much who.
M: They better stick around till the end of the interview unless I suck and then I’ll get out of here.
T: Alright so.
M: So sorry I cut you off.
T: No problem. So now that people have a little bit of an idea. It’s basically how to get your concept in the pumpkin plan is how to really amp up your growth. Because anyone who’s listening to this who’s running or has run a business, you know what it’s like to get in this business and you get going and you’re like firemen Bill, I remember Jim Carey used to play firemen Bill. And you’re running around and you’re putting out fires and it’s just like this daily what can I do here, here, here, here and strategy doesn’t really fit in to that and the end result of that is that you don’t ever really make a whole lot of money. I know and that was the case with my business. I got a wage out of it, it’s a pretty good wage, everybody else got a wage but at the end of the day there wasn’t a whole lot of money left. Yeah I wasn’t growing colossal pumpkins. I was growing a patch of pumpkins. So let’s say that someone’s listening and they’re like “yeah I kinda relate to that. I got this business. I’m working 80 hours a week but this is not the dream that I signed up for.”
M: Yeah.
T: So let’s kinda go through this process of pumpkinizing, if you will for lack of a better term of their business. So I’m gonna turn it over to you and just let you talk a little bit about what it is they need to do and we’re not gonna obviously cover every chapter in the book we don’t have enough time.
M: I can give you kind of 5 major key steps and then just anyway if you want to ask me questions about that I’ll walk you through.
T: Absolutely, that’d be great.
M: Okay perfect. So what I found with pumpkin farmers was like I said earlier on there’s ordinary pumpkin farmers and colossal pumpkin farmers. And first difference I noticed as I was analyzing these two is that the ordinary pumpkin farmer when it comes to seed selection, very beginning of the pumpkin growing process, ordinary pumpkin farmers is in a quantity game Trent. He’s out there, take as many seeds as cheaply as possible so he can spread them over his massive field. The colossal pumpkin farmer is highly selective of the seed. He goes in and picks the seed with the best veinage meaning it’s a hardy looking seed that it matches the ground, the soil content, the climate around them. It’s a perfect match for his environment. So from the seeds selection a colossal pumpkin farmer is already looking big.
Now when I did the analysis with entrepreneurs I found the exact same tendency. Most entrepreneurs who struggle are in the quantity game, the easy game. Now what’s the big trend now like 10 years ago it was real estate, it was too big. Hey if you’re not running real estate you’re an idiot. And I knew just like you’re in computers and I was in computers 10 years ago I was thinking well maybe I should buy a building. You’ll make more money owning a building as a computer guy. And people entrepreneurs are going after the easy trends. Then it became like flash videos are hot. Now social media. Even their mother is like social media specialists. It’s the easy seed as a trend. Ordinary entrepreneur does that.
The colossal entrepreneur picks the seed that matches them apparently and gives the biggest opportunity for their environment. What I mean is you can kinda put the olympic symbols together, kind of hard to do it on camera, but there’s 3 components. First is what is their unique passion and what is their unique personality? So an entrepreneur, many people pursue trends, hobbies. I play guitar and if you can see it’s back there, one of my guitars.
T: Yeah.
M: I play guitar but listen, I’ll never be any Van Halen. And I want Pill Harry play guitar I think that was 5 minutes they’re out of there. The key to a hobby, the key thing that distinguishes a hobby is after a couple of hours I’m done, I’m tired. A passion is something at the end of the day, when you fall to sleep you’re energized about it. And you may be physically exhausted but your mind is stimulated going I can’t believe I’m doing this. If you are in the field of passion you constantly get growing energy. Hobbies attract passion to grow energy.
But the 2nd part of that element is the unique you. Steve Jobs is a perfect example of this coz we all know Steve Jobs. Grows his huge amazing company on his uniqueness. What it was was he didn’t like buttons. He actually had a button phobia. If you look at any pictures of him you’ll never see him wearing a shirt with buttons. Well guess what? The iphone basically no buttons. There’s one button. He hated buttons. He played his distinct characteristics in the phone where around elegant amazing design and that the company grows explosively. So part one of the perfect seed is what makes you unique, passion and your innate uniqueness.
But that’s not alone enough. The second part of the seed is customer demand. You can love what you do, some people love exposing themselves, right? No one wants it. No one’s buying that. So if there’s no demand for that passion you’re screwed. You gotta overlap your unique seed plus your passion. One other piece and this is where many entrepreneurs get lost. If many people love what they do and there’s people buying it but then they’re stuck in the time for money track. They spent all their time working to make a living. The third piece is systemization. The ability to bring systems scalability to your business. In the first stage where you love what you do, customers want to, you’re not an entrepreneur yet coz you’re doing the work. Entrepreneurs are people that built the systems so other things, another people, can do the work. So you have to bring in that systemization. And where you overlap your passion, your uniqueness with customer demand and the ability to systemize it, you can make money while you sleep, now you have a business that can grow the apple’s size or whatever you want to be is initiated.
T: Okay so what I heard from you there is it sounds to me like there’s a few elements of the good to great model. He calls it the hedgehog strategy where you’re looking for an intersection between these things.
M: Yeah right.
T: This has come up so much in conversations and interviews that I’ve done in the last few days with some folks that have gotten a lot of success in their blogs and so forth. And they have all said the same thing. Figure out really clearly who you’re target customer is and then ignore everybody else that doesn’t fit. I know you gave an example in your book. It was the guy who was I believe writing code. He has software development shop. You wanna talk a little bit about what he was doing wrong and then how he fixed it?
M: Yes so he was a friend of mine. And in the book because I wanted to protect his name I think I put Bruce or I can’t remember, not his real name. I had to change his name because I really wanna protect him coz this is true story and he’s messing up. So we’ll call him Bruce for now. What he was doing was he had all these clients and there were some marquee names there doing web development for him. And I interviewed him about his business because he was stuck. It made no sense to me with all his marquee clients until I interviewed him. He had all these employees on board doing different things. I said what are they doing? He goes one person is a pearl programmer. Another person writes C++. Another person is a UDI, user design interface person or whatever it is. All this people and I said why you have all these people and he says one marquee client needs this, the other marquee client needs that and this one needs that. He was basically a 100 million different little mini companies rolled up into one trying to service all these different people. It always boils near the end for any given client he had in several services he had a dedicated employee not because the demand was there but because there was enough hours there but there was the skill set necessary.
So one client needed very specialized programming I think like Lotus notes or something. It doesn’t even exist anymore but they still needed it. So he had a Lotus notes guy paying hiim like a $100,000 salary to do one project that makes him like $30,000 a year. He was losing $70,000 a year on Lotus notes. And he was doing this like over and over to the point where he was borrowing money from his parents who are no young chickens or you know at the very final stage of their life taking money from them to sustain the Lotus notes guy and the 10 other variants he had at that.
What we had to do was identify his core customer and then clone the best customer. He picked this one customer and he gets many replicas of them as possible so that you could then produce the overhead you have less people doing more of the same thing, not more people doing different things. I get fired up over that. My head was kinda flopping, hair flopping.
T: I wanna make sure for folks that are may be listening in their car right now. I just wanna feed that back. I wanna make sure that people really understand what you explained. Having all these marquee clients in the surface looks awesome but the problem is what they all want is so different that there was no ability to get any leverage or economies of scale so he had to manage too many moving parts, too many different technologies, too many people coz each one needed to be a specialist in this one that one and the other thing. So there was never, it would be like going to McDonald’s and McDonald’s say hey we’ll make you burgers, we’ll make you pizza, we’ll make you chicken, we’ll make you chinese, we’ll make you whatever you want just make sure you buy from us. So you can get lots of customers but you’re never really gonna get any profit because it’s just like a spaghetti fest. Am I getting it right?
M: You’re nailing it. And the customers’ never fully satisfied. Remember McDonald’s and you order chinese, if they could ever even pull that off it’s not gonna taste nearly as good as the chinese restaurant down the street who only makes chinese food. When you do one thing you become master for that. So this thing my friend was suffereing was he was diluting his expertise. He didn’t come across as the best.
T: So you gave an example, you had a company and we were talking about this before the call, and this was you really pumpkin with your business. It was just like mine, you were the computer fix it guys. And just to me you sounded you were running around for a period of time over a period of years growing revenue, getting lots of customers but not really a whole lot of profit at the bottomline.
M: Right.
T: Which is kinda like the whole point of this exercise. So what was it that you guys did and I mean I already know the answer coz I’ve read your book but people who are listening haven’t, what was it that you did that corrected that and there’s a part in that most people don’t have the stones to do in the beginning which I think you probably know what I’m leading to.
M: I think so. When you said not a lot of profit you’re right. We had a zero profit. And there was many years I was putting money into the business when I didn’t even have money. I wasn’t taking money I was putting into it.
T: Me too.
M: Yeah it’s freaking terrifying and so I’m in this fear pattern of I just need more customers, I need more customers. I need that one big client to break me up. Never happens. What I did was I hibernate. I went through my basic clients. I had maybe a 100 clients in that point. Might say a 100 of figured quotations because a 100 clients, yeah I had a 100 clients but really it’s like 30 active ones and 70 you know. That’s really what it is.
T: They call you every now and again.
M: Yeah exactly. So for those 30 clients I sorted them now by revenue and I sorted them up by most revenue to leads. The reason this was important was clients show their appreciation and need for you by paying you. It’s not by how much they pat you in the back. It’s how much they pay you. So I sorted them by revenue. Then I did a second step which was critical. I did what I called the cringe factor. I put a smiley face or a frowny face that cringe based upon the clients I didn’t like or I did like. So a couple of clients there paid me a lot but they were total pricks. I couldn’t deal with them. They were crossed out. There were a couple others that paid me well and I loved them. Just fantastic clients. Those clients, there’s like 2 or 3, I went out and interviewed. I spent maybe 4 hours with them, bought them lunch, bought them lots of martinis. Just asking them questions after questions on what they need from me. This is how I started to finding my niche.
What I found in there was a hedgefund. I saw rudely on a hedgefund to do a 100% but I really didn’t get it back then. I asked them what he does. I asked him why was he working with me up to this point coz I’m not really a hedgefund guy then I asked him every questions about the hedgefund industry, where do you go, what kind of magazines you guys read up, what other vendors you depend on. All these questions around the hedgefunds so I could focus in on them coz I wanted to get more of him. I’ve realized if 10 of my best clients, the revenue from 10, just 10 copies of that 1 client will blow away all 30 clients it would take my business 10 times up. But it’s 5 times still greater level if I get to clone my best client. So it’s first of that.
Second step and I think this is where you’re alluding to, is I fired my first client.
T: That’s exactly.
M: Goodbye to fear was that it?
T: Yes that’s sort of where I was alluding to.
M: I went to my list and I noticed that 80% of my clients were really weak and of those 80% there was a percentage that kinda bloodsuckers. Not that they were bad people but this is what I meant. They pay me very little, I mean $500 in the year from the client. And I spent like 50 hours working for them. And I said “holy cow, $500, 50 hours. That means I’m being paid $10 an hour working for these people. I could make more if I did work in McDonald’s. So what the hell am I doing? So I fired my clients. How I fired by a way I transferred them to my competition. So that’s a firing tip.
T: I remember actually having a similar discussion with my co-founders saying more or less the same thing. I didn’t win that argument and I guess I didn’t push hard enough. Yes he’s answer was “well, you know, we died down. They don’t take that much time. It’s extra revenue coming in and we need all the revenue coming in.”
M: Failed mistake.
T: And it is failed mistake.
M: Because the time you spend on a guy that it’s a little bit of time, it’s just a little bit of money. That time is time you’re not going out pursuing copies of your best client. You took these few hours a day and when you pursue your best client you bring in these best clients and your business grows explosively. Trent, I can’t tell how businesses are trapped in the, well it’s not that bad, it’s okay to bring in something, that kills businesses.
T: Yeah absolutely. So you’re not a partner in that business anymore and I guess we talked a little bit off here. But I guess sufficed to say, they’re getting some pretty phenomenal results today and they’re printing money.
M: They’re printing money. Yeah. Now I’m the guy who parted from these 2 guys but the primary guy, smart smart man. And I consider him one of my best friends. Just a smart guy and he took, when we just started developing he just focused on us exclusively. He did the next level of pumpkin plan. It wasn’t just the clients, internally he evaluated everything they were doing. And said what are the things that support our best clients, everything else gets removed. He started to focusing on the best things which we’re talking about manage services he really mastered manage services ditching all the other work. Nice take off. It just well exploded.
T: And that’s I think that was the one thing that really motivated me that I want to do this interview coz I hope that some folks listening to this it’s resonating with them coz they’re thinking of that bottom 80% that’s only doing 20% of the revenue and they hate hearing from those people and they’re not fun to be with and they don’t pay on time.
M: Right.
T: They need to give them I guess we could call them a vendor opportunity. Here’s an opportunity for your competitor.
M: That’s very nice. Politically correct way of putting it.
T: Alright so I guess in a nutshell I mean there’s a lot more in detail and I wanna give people enough here. I don’t wanna be too high level. Let’s keep pumpkin planning. So you get to the point where alright I’ve figured out who I want more of. I made the decision I’m gonna get rid of some of those other people that don’t fit that model, don’t fit my ideal customer type. Like I said there’s a lot of chapters in your book here, what’s kinda the next thing that we need to be thinking through?
M: The next thing that the pumpkin farmer does, the colossal guy is called watering frequency. Ordinary farmers that they kinda drive down country road to see his huge watering systems. They go over the fields and drop down water once a day, usually at night so it doesn’t evaporate. It’s actually not the best way to water the plant. You actually kill the plants by over saturating them. Other ones don’t get enough water they need more at the end of the day. A colossal pumpkin farmer will water way more frequently, sometimes 10 times during a single day. Smaller dosages of water but more frequently. This way the plants constantly munch. It’s taking the water in to maximize its growth.
Well guess what? Colossal entrepreneurs do the same thing. Ordinary entrepreneurs they water everywhere, one big watering, you know they run to the chamber of commerce, they hop on social media, I’m on facebook, I do this, they’re all over the place. Colossal entrepreneurs water the same spot constantly. Always dripping water in. What I did with the hedgefund industry once I learned that my best client was a hedgefund I asked them where you guys hanging out? He says “oh we go to 2 conferences a year. We go to one in Laguna beach California, out of your way.”
T: Yeah.
M: He goes “the other one is in Grange Connecticut.” Out of my way. And I’m like you guys don’t go to chamber of commerce? You’re not in social media. He’s like “f no dude. You crazy?” He goes “if I go to the east then all the major hedgefunds do.” And that was the moment I said why am I going to the stupid chamber of commerce meeting not that chambers’ are stupid, they’re great little things. But for me it was stupid. Why am I going to a chamber of commerce meeting. I gotta be in the 2 hedgefunds conferences. And I asked what magazines or stuff do you guys read? Do you read like Times or stuff and he says “yeah but we read this thing called Hedgemark. It’s a circulation only for hedgefunds. It has all the stuff that we need.” Like well I’ll become a columnist for a hedgemark so I did. And I focused there.
What happened was this thing called frequency. This is how it works, Trent. The more frequently people see your name or yourself in person the more they automatically trust. The classic example is the coca-cola commercials. You and I watched the olympics. It’s wrapped up. You see Michael Phelps doing his thing. He wins the gold, he comes out of the water and they cut for commercial. They got a coke and they got some polar bear drinking soda which is an epic bizarre but alright the polar bear drinking soda, coke logo comes up. Now coke knows Trent, you’re not gonna go running to the store and I’m not gonna go running to the store to buy a coke. But they do know the more frequently we see them they’re building frequency. This means the next time we are in the supermarket ready to buy a soda if that’s what we drink, we go down the soda isle, you see a liter of coke and you see a liter of generic soda, you buy the coke. And the cokes and the other more. Logically, we know that generic soda and the coke is exact same thing, we still buy the coke because we saw them more frequently.
Well the funny thing is you don’t need the coca cola budget. Do what I did. I only went to the hedgefund events. Guess what? After 6 months of doing this I started getting recognized. Like oh you must be the hedgefund technology guy, that was my name. It was perfect. When they didn’t have to decide price was no longer wrong. And they said I want the guy that’s always there, I want that guy Mike, he’s the hedgefund guy. And I broke out of the price game right there and started getting marquee client after marquee client. The hedgefund did this for me.
T: So that is a really important point that I wanna, maybe we’ll just hang on this one a minute because the computer services business, we don’t write any code, we don’t have any patents, we don’t have any proprietary products per se. Essentially everything that you and I did, and this applies to many many businesses I’m just using us as the guinea pigs in this discussion, essentially what we didn’t have any real differentiator. You know, you try and make your, for me I try to make my marketing better. Try and make your customer service a little bit better. But what you’re talking about is you did, you accomplished this goal of differentiation simply by positioning.
M: Yes I paved the niche. And then I learned that they had maybe 2 or 3% of things they needed differently. I learned how trading desk works, the proper way to wire that 5 cable and fiber down a trading desk. And I’m just using cap fiber coz you and I know what we’re talking about, everyone else is what the hell. Yeah I used to coax, I use the RJ45. But so we would cable trading desks properly. The second thing is I understood to have bloomberg terminal work and I understood how to reuter’s team work. And just by knowing how to wire table that talked about bloomberg and reuters when I would go into a hedgefund I would drop these 3 things. And any of my generic competitors, they’re all great computer guys I’m sure, they didn’t know what I was talking about. I was able to talk their language and do the few things differently no one else could do. And it made me stand out. I became a different shaded business just by doing that focus.
T: How much pricing power do you think that gave you?
M: I’ll tell you it went from $70-75 an hour or something but this is in ’96 to $195 an hour within a year.
T: Yeah.
M: Yeah no brainer by the way for our clients. They were thrilled.
T: Because that particular niche they want as you said earlier they want the best of the best. And for them the downtime is so costly.
M: Oh for them it’s huge yeah.
T: That $195 it’s just like a little insurance premium to avoid a massive loss.
M: Totally. There’s always a unique need in every single niche. And in any niche there’s the rich in the niche so even if you talk about some crazy like Walmart shoppers, there are certainly very rich Walmar shoppers that you can still cater to. So in the hedgefund industry not all of them had money. There were some hedgefunds that were really struggling. But the successful rich hedgefunds premiums were no question. They just wanted the best. So in every category there’s someone that wants the best. And that’s what we grabbed.
T: Obviously it worked very well. Alright so this referral strategy and this was brilliant, brilliant, brilliant.
M: Thank you.
T: So high level what is it and what do people do to have something work?
M: So yeah this was probably my favorite find in what colossal entrepreneurs were doing. It’s called the root system and just go back to the pumpkin analogy, ordinary pumpkin farmers look at the rough full leaves. They look to the leaves, the stuffs they’d measure the health of the plant. Colossal pumpkin farmers actually know the root system that’s underground is the most important part of the plant. That feeds all the water and all the nutrients into the plant. Damage the root system plant is done. Damage the foliage and stuff the plant can survive.
Well what I found in entrepreneurs is when it comes to how they generate referrals there’s this kind of foliage approach asking for the client referrals and there’s this vendor well approach that colossal entrepreneurs use. The ordinary entrepreneur does something like this. You render your service, you give your product to your client and then you say “well how was your experience with our company?” The client says “it was great.” Then you say “well if you think our service is great, do you have any friends or family that can also use our services?” And basically the customer is supposed to say yes coz it’s socially inappropriate to say no they don’t want to give you referral. And the problem here is you are saying to the client “thank you for paying me that money but your money is not enough. You have to give me more, give me some referral.” It’s greed. It’s insane.
T: Yes.
M: That’s why it doesn’t work, right? Here’s what the colossal entrepreneur does. They go to the clients, it’s their clients and say “how can we service you better?” Learn about the client then say “do you have other vendors that you utilize besides myself, not necessarily competing vendors but other vendors that provide other services to your company that you really admire?” The client will say “yeah I do have those.” And say “why do you care?” And you say “coz if I understand the other vendors you work with I maybe able to connect to them, collaborate with them and collectively we can service you better as a client.” So the client will say “absolutely.” And they will refer you to those vendors.
Then when you meet those vendors it’s a no brainer to get the meeting coz you say you have mutual client, we should meet up. And they say “yeah we should meet up.” Then you say how do I better genuinely serve this client. And then you start collaborating. And at the same time are your other clients like this client coz we could collaborate other spots. And if you do a good job with your existing relationship with that mutual client they will refer you to others.
And I went to that hedgefund of mine and asked for other vendors he turned me on to a company at this trading desk. And I met with the owner and that’s where I learned properly wiring a trading desk. Well within 2 months of working together he goes “you know we’ve got a new client we’re bringing on board. We’re looking for a computer guy. Usually when the computer guys come in we have to go fix the cabling. Since you guys are already doing it I wouldn’t mind referring you. Would you be interested?” I’m like “yeah, very interested.” And he referred me and over the next year he referred me into that 10 new hedgefunds. 10 hedgefunds like my best hedgefunds. My business started going swoosh right up the curve. I did it with the clearing house called Golden Sacks.
T: Yeah.
M: Same thing. They are vendors in hedgefunds. Learned about how to service hedgefunds. Guide them with that vendor. Got to the vendor well. Just took off. That’s how you build referrals, do the vendor well.
T: Brilliant. Whereas what I was doing I was trying to hire sales people to make more cold calls.
M: Yes right. That’s another way.
T: I went from writing $2,000 checks a month to cover the losses of just some small salaries to writing $15,000 checks a month for covering the losses for all the salaries for these knuckleheads that were not able to sell anything. So again I wish I would have known about your systems back when I was running my company.
M: I was in the same path until I started learning this exact same thing. Hired the sales guys, the sales guys suck. The only person that could sell was me and I was like why is this? And I have seen this I was writing down $15,000 checks for his salary. It was this discovery that was changing point. It’s beautiful coz it clears up the overhead. I didn’t need the sales guys anymore. The vendors were doing the sales for me. These sales guys were selling for me. This is incredible.
T: How did you come up with this plan the way this root system? I mean this whole idea that you just explained.
M: Well I really studied. Yes so I studied the colossal pumpkin farmers for about a year. I interviewed, studied, researched, watched movies about colossal pumpkin farmers and learned how it worked. In parallel I studied, I was applying it to my own business by studying other people’s businesses. I started experimenting so it was a combination of watching pumpkin farmers and then experimenting as I go there goes the match. That’s how it came about. So I guess it just worked for me. And then I’m not, I don’t think I was the first to invent the process. I observed the others and I just applied the process to my own business. I was shocked how well it worked.
T: So in other words you found people that were achieving the results that wanted to achieve. You listened to what they were doing. You paid attention and then you replicated the process that they were going through, you got a similar result.
M: Right. Is that turning into a plug? Yes. I totally nailed you down.
T: Okay alright you got me.
M: Well done.
T: People are frowning, they’re frowning in their cars right now. I’m gonna get hate mails for that.
M: Dude, they should be signing up to Trent, you’re foolish not to. You think there’s 2 ways to getting to it that means that you can do it yourself and get burned or you can leverage off the backs of other people’s burns.
T: Absolutely. Okay so if anyone wants to get in touch with you Mike, but before we sign this off what are you doing these days? Because I know there’s maybe some people who are listening to this might wanna think Mike’s a cool guy I wanna work with him. So tell us really quick what are you doing now and then how can people wanna get a hold of you.
M: So if you really wanna get flavor from me definitely check out the books. It’s Toilet Paper Entrepreneur, my first one and Pumpkin Plans what we’ve talked about today. It’s hopefully you’ll find to be fantastic books. It’s my favorite of the two. It’s on amazon, it’s on Barnes and Nobles, in airports, bookstores. I also flew on my little business card. This is the consulting group I started behind the pumpkin plan. It’s becoming so popular.
T: You need to say the name coz not everyone’s watching the video.
M: Oh it’s called provendus group. Provendusgroup.com. And the book is becoming so popular with businesses that have plateau’d or stuck on their growth that I’ve started a consulting group behind it. It brought a team of amazing consultants that go into businesses that plateau’d how to get past that. And the final thing is if you wanna check out more about me, get some free resources and stuff, my website is mikemichalowicz.com.
T: Yeah you’re gonna have to spell that one.
M: It’s called, phonetically it’s mike’s cow shit. That’s what we’re talking about earlier. That’s my highschool nickname. I wonder if you do a search for mike my cow shit you’ll find it. I should setup that domain.
T: You should.
M: I should. So it’s mike and then michalowicz is m i c h a l o w i c z.com. Just do your best to spell on google you’ll find me.
T: Okay. I mean if you just google pumpkin plan you’re gonna go to amazon. They’re gonna see how to spell your name. Trust me they will be able to get a hold of you. Let me just quickly look through my questions here and see if there’s anything else I wanted to ask. There was one other question, yeah man I should have fit this in earlier but hey we’re still going somewhere. I’ll ask you one more.
M: Alright.
T: You talked about outsourcing in your book and when I was reading that chapter of course I’m thinking that the computer business and you talked about the airplane, the seatback card, the safety card whatever it was. So really quickly just explain what you meant by the cards so that people who haven’t read the book yet know what the heck we’re talking about and then I’m gonna ask you my question.
M: Okay so it really is the ultimate, the objective of that was about systemization.
T: Yap.
M: So the airline safety card is this, when you and I, Trent, go on an airplane there’s a safety card on there that shows us how to evacuate the airplane in case there’s an emergency. To me the airline safety card is the ultimate system is written that me or you as a consumer of that can get out of the plane without having to read english, we don’t really have to know how to read, it’s all pictorial and if you think about the significance of it anyone from age like 5 to age 500 can open the door that weighs a ton. So its mechanisms that allows us to open the door and safely exit the plane. A system that is perfectly executed allows the customer or the experience of the flow through it very easily regardless of the variables that can be introduced.
So when we build our businesses we have to have that airline systems or the airline safety card system plan in our mind. We have to build systems that our customer experience is that fluid. That our team, our members, our employees can do things that easily. It takes a lot of effort for the entrepreneur to build systems and design that door that weighs a ton that can be opened with a single flip of the finger. That was hard. But now the repeated execution of it is a no brainer. That’s how we have to build our systems.
T: And the reason why this is so important is that I know I’ve been guilty of this in the past getting “why? It will only take 10 minutes. I’ll just do it.”
M: Yeah that’s right. You’re gonna do the 10 minutes 9,000 times and it’s gonna cost.
T: There’s a huge opportunity cost and that’s the whole idea of building systems is that you train someone else to do that for you. And by the way, whatever you’re thinking of is done on a computer. I’m gonna give a free resource. It’s called jing. It allows you to super easily just turn on this little camera basically that records your screen. You can talk, you can say blah blah, do flip this, do that, put this over here blah blah blah and then I just take those links and I put them in an operations manual for my VA.
M: Beautiful. I love it.
T: It’s in video. You don’t have to edit the videos, nothing. I mean it’s super super fast. But here’s my question, in the businesses that we were in, it was reasonably technical. So and we had guys like I was a Microsoft gold partner so we had microsoft certified blah blah blah you know supposedly trained according to microsoft’s standards and procedures and so forth to do all the stuff, but every company, every value added reseller we all kinda have our unique twist.
And so what I’m trying to figure for the people who are listening to this who maybe are in a similar or they might go nice stuff, so technical, I’m not sure, how did you create, you can give me an example maybe it’s installing a mail server or whatever it was that you did. How much detail did you go into in creating these documents to ensure that technician A would follow the procedure in the exact same fashion as technician B so that the hedgefund guys didn’t always say “no, I only want Mike to come.”
M: Oh god, yeah that’s right. If you have your clients say I only want a few owners name, you haven’t systemized your business. So what we did is our the end document was always one sheet. Like the airline safety card. Highly pictorial. And I’m thinking something that’s even more complexed. My second company is a computer crime investigation. That’s the one that just took off when we’ve sold to Fortune 500. Well that one we did something called acquisitions, go out and collect evidence that in the industry called bag and tag. You go out and you collect evidences off of the hard drive that dismantles stuff. Very detail oriented. The attitude is bit analysis. The CRC checks all these crazy things. But we did it pictorially. A picture really does make a thousand words.
So if you open up like an Ikea box and you can put together a desk, that is a diagram we have. But behind each one that we had a checklist of step one step two step three. So a technician could go out, goes to the cover picture and just follow along the pictures and do it. If he stumbled, mostly he or some women, if he or she stumbled at a point she can then go to the checklist and go through it. We kept on working our systems. Some of these systems took us a year or more to develop.
The point where in this one company, Patty was my personal assistant. She was a full time with us. She had an office or a desk right outside my office. We call it the patty test. Patty was technically not inclined whatsoever. Miraculously we created a system but really sucks. So if Patty can do an acquisition then anyone can. And that’s what we do. We just watch Patty. We’d go to the conference room, set the stuff and Patty would try to do it. When we finally had her doing it, we knew we had a perfect system but we knew we had something else.
We no longer had to hire experienced educated people. We didn’t need to hire the very high end professionals. My competition was hiring a forensic analyst. They were getting $80, $100, $150,000 a year. We’re taking kids out of college paying them $30,000 a year more than they can make elsewhere training in one of our system and they’re doing a better job than the pros. That’s how important the system is.
T: And thank you for sharing that because that’s such a huge concept. And I understood everything about that except the one. The one thing that I was throwing for a loop with was you said you put it all in one page. And I thought how did you get this much information on one page but that’s were your icon man, the cover page was step 1 this picture, step 2 this picture, step 3 this picture. But if you need more detail on any one of those steps it’s in a sub set within the page and I didn’t get that right out of your book. I couldn’t wrap my mind around somebody’s manuals could be, there’s no way you can fit it all in one page.
M: Right. And by the way, this is kinda how Mozart, he’s the one who cut off his ear to play piano, right? I mean basically, it was Edison who was deaf and then invented the phonograph. Basically, I don’t know if it’s true but the consummate gain here is that the more restricted we are the more innovative our approach has to be. So when we force our system to be on one page we really start thinking outside the box. Creating a 10,000 page document have to be something as easy but my technicians would never read through all that. Something like how do I get down, pictorially is what we did with the sub one check list.
T: Yap. Brilliant. And there’s probably some lessons there that I can apply even in my own business right now so thank you for that. Mike it’s been a pleasure.
M: Likewise.
T: I really enjoyed having this conversation and having you on the show. Now folks if you, I’m gonna give a plug for Mike now because I’m a big fan of the book. If you’re running a business and you’re struggling and you think incorrectly that you’re just one more big customer away from making that nice big profit and life’s gonna be easy. There’s two of us here on this call that are gonna disagree with you because we both lived it. And buy his book or listen to this interview a few times and I gotta tell you.
M: And still buy the book.
T: And still buy the book. Yeah absolutely. It’s really good stuff and it’s been a pleasure. It’s been a privilege Mike for being on the show with me. Thank you very much.
M: Thank you Trent.
T: And to my audience who has tuned in yet again thank you all very much for listening. It’s been my pleasure.
If you wanna check out the show notes for today’s podcast all you need to do is head over to BrightIdeas.co/ and then enter the number 1, the digit 1. I also wanted to mention that if you head over to BrightIdeas.co/massivetraffic and enter your email address I’m gonna couple a very special treat for you. First off you’re gonna get access to my massive traffic tool kit which I’m gonna explain right just a second. And then you’re also gonna be able to download the transcript for this and future episodes as well as the mp3 file for this and future episodes. So you’ll be able to listen to these podcasts on wherever you like, in your car, on your bike, running, walking, whatever.
Okay so what’s this massive traffic tool kit. Well as you know here on Bright Ideas I interview a lot of really smart people and several of them are really really good at getting traffic and they’ve explained to me in detail their white hat traffic strategies. So in the massive traffic tool kit that’s exactly what I’ve got. It’s really killer traffic generation strategies for you and it’s all for free. You can download the report, you can watch the videos. What you need to do is enter your email address. So check out BrightIdeas.co/massivetraffic and that’ll take you to the sign up page for that.
So this brings us to the end of this podcast. I’m your host, Trent Dyrsmid. If you really loved today’s episode or heck even if you just like to please head over to itunes and give me a 5 star rating. Take a moment and leave a comment behind. I’d really appreciate it and it gives the show extra exposure and helps attract and expand the audience. And finally be sure to become a subscriber in the way that I just described so that you’ll never miss a future episode here on Bright Ideas. So thanks very much. I look forward to seeing you in the next episode. Take care.
Here are some of the things you’ll discover in this episode:
How to Build a Remarkable Business
Why Some Pumpkin Farmers Can Grow Colossal Pumpkins When Most Cannot
Mike talks about his views on why so many business owners struggle. So many of them are unknowingly making a huge mistake.
It was a mistake that Mike was making in his own business, and he didn’t uncover what it was until he started to study what separates pumpkin farmers who grow colossal pumpkins, from all the rest that just grow average pumpkins.
You’ll hear Mike describe the first step that a business owner must take if he or she is going to reach a level of success that most don’t. Much like the Pumpkin farmers that grow massive pumpkins, the business owner who is struggling most likely just needs to change 5% of what they do to massively change their results.
Listen to the show to find out what this first step is.
Taking the Second Step
Next, Mike talks about the second step to growing colossal pumpkins. In this section, he explains how a phobia that Steve Jobs had was one of the things that led to such an extraordinary design for the iPod and iPhone.
Mike also talks about making sure that you have a really strong understanding of customer demand. Why do people buy? What makes them want to buy? Mike shares what he thinks are some of the ways to really get a handle on this.
Listen to the show to find out how Mike avoids making this mistake in his businesses.
Systematizing Will Set You Free
Mike spends quite a bit of time telling a story about a friend of his who just doesn’t get it and how this results in his having to work much harder than he should be. Moreover, he’s actually the bottle neck of his organization.
He goes into more detail and shares with us why this guy isn’t making the profits he could be, despite the fact that he’s got plenty of clients. In listening to Mike tells his friend’s story, I was reminded of how I’d been making a similar mistake in my last business and how negatively it impacted my profits.
Listen to the show to find out more about how to properly systematize your business.
How to Apply Your Pumpkin Plan
You’ll hear Mike talk about the exact process that he goes through to create his colossal pumpkin plan. Not all clients are created equal, and once you understand how client selection affects your plan, you will be equipped to make better choices about the type of client you want to attract.
To fully explain this, you’re going to hear Mike tell you how his listed all his clients in a spreadsheet, how he sorted them, and how he decided who he needed to build stronger relationships with, plus who needed to go.
Listen to the show to find out more about how to properly analyze your client roster.
The Ultimate Referral System
Hear Mike talk about his amazing referral system. I’d never heard anything like it before, and I must admit, it’s hands down the best referral strategy that I’ve ever heard. Unlike most people’s strategies, this one does not involve asking your customers for referrals.
Asking for referrals rarely works, and you are going to hear Mike explain why. They you are going to hear him explain his strategy in detail, along with the massive results he got when he put it into action. This one lesson alone is worth the entire interview.
Listen to the show to find out more about Mike’s killer referral strategy.
About Mike
Each year Americans start one million new businesses, nearly 80 percent of which fail within the first five years. Under such pressure to stay alive—let alone grow—it’s easy for entrepreneurs to get caught up in a never-ending cycle of “sell it—do it, sell it—do it” that leaves them exhausted, frustrated, and unable to get ahead no matter how hard they try.
This is the exact situation Mike Michalowicz found himself in when he was trying to grow his first company. Although the business was making steady money, there was never very much left over and he was chasing customers left and right, putting in twenty-eight-hour days, eight days a week. The punishing grind never let up. His company was alive but stunted, and he was barely breathing. That’s when he discovered an unlikely source of inspiration—pumpkin farmers.
After reading an article about a local farmer who had dedicated his life to growing giant pumpkins, Michalowicz realized the same process could apply to growing a business. He tested the Pumpkin Plan on his own company and transformed it into a remarkable, multimillion-dollar industry leader. First he did it for himself. Then for others. And now you. So what is the Pumpkin Plan?
Key Take Aways
Connect with Mike on his website
Buy the Pumpkin Plan from Amazon
Capture More Leads and Convert More Sales
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