Delegating and Automating Your Business to do More of What You Love with James Schramko

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Hello and welcome to Get Yourself Optimized. I’m your host, Stephan Spencer. Today I have with us, James Schramko. James is an incredible internet marketer and business person, and he’s a master at automation, building systems, and creating leverage. We’re going to talk a lot about that. He founded SuperFast Business nearly a decade ago. We met at Traffic and Conversion Summit. I’ve heard of him from multiple friends in the industry who are either in his Mastermind, one of my co-authors on my books Social eCommerce, Jennifer Sheahan, longtime Silver Circle member, which is his Mastermind, she had only amazing things to say about James, so when I met him in person, I was already primed to already like him.

He’s a quintessential generalist. He doesn’t get too deep on one particular topic. He likes to be across multiple areas of automation, marketing, business building, and entrepreneurship. He’s got multiple podcast shows that are quite popular. He’s got one with Ezra Firestone. He’s got one with Taki Moore. He’s got one on his own. He’s doing a lot in podcasting that’s really quite cool. He’ll tell you more about those podcasts I’m sure during the episode. He also runs his own live events. He does a yearly SuperFast Business Live, brings in some really great speakers as well as, of course, him being on stage too. He speaks at other people’s stages. He’s in demand but he only takes on a small handful of speaking gigs these days. He has spoken at Jon Benson’s Mastermind. He has spoken at Underground. He gets around, but not as … He’s picky about the speaking gigs that he takes on. He’s got a team of 43 in the Philippines. He’s got a subscription-based business model. He’s got a lot of really great stuff to share with us in this episode, so welcome James, great to have you.

Thank you. I’m exhausted listening to all the things I’m doing, but it’s not. The reality is it sounds like a lot, but when you set these things up you really can spin a few different plates and manage it all. I’m really keen to talk about anything you want today, and go for it.

Perfect, so let’s talk about how you created a lot of the automation and systems that allow you to basically not have to work round the clock, like it sounds like you have to if it was just a normal business, but you have outsmarted the systems.

A lot of people do like to grunt and hustle and I think my desire to leverage and automate and systemize really came from my career, whereas a general manager in a real business, I did a lot of study and research and reading about systems and organization, and understanding the full concept of leverage. It’s such an easy word to say, but it’s really not understood by the vast majority of the population. Even the 80/20 rule, I would say, escapes most regular people. They often do things that don’t make sense once you understand that concept. When I was running the dealership, I used to systemize things and create better ways of doing stuff on an ongoing basis. One of the examples is I was pretty heavily responsible for the sales team in particular.

My desire to leverage, automate and systemize really came from my career.

In an industry like the automotive industry, there’s an incredible amount of churn of staff turnover. People would come along, you would train them up, and then they would leave. That’s an industry problem, and what I was able to do was to significantly reduce the churn in the business by fixing up the onboarding aspect of it, making sure we only selected the right people. I made a system for that, which was basically a checklist, and then an interviewing structure and a repeatable process that we could use over and over again. Then I fixed up the onboarding. I used to have welcome packs and a training schedule of theoretical training, practical training. We did role-plays. I had a system where I would go and meet each department of the business and understand what they do.

After 2 weeks, a raw recruit could be confidently making sales, and because they are now more successful at selling a few things happened. We sold more. People tended not to leave because they were making an income and they’re happy, and our churn rate drops significantly. Over time, when the repeat cycle came in of a salesperson being able to deal with the same customer again and again, we got all these leveraged effects of having less marketing and selling having to occur to make a sale. Now it was more relationship-based. I pretty much picked up all of the systems that I developed in the car industry and recreated them in my own business.

What would be examples of systems, like for hiring, for onboarding, for, let’s say, you want to get people to help you with your travel bookings, with your customer service and email marketing, and what have you? How would you scale and systematize, document all that sort of stuff?

I think the first exercise before that is, and travel is a great example, because I do travel a fair bit, it’s to list down all the tasks that you are currently doing. This is what I call a task transfer exercise. You list down all the tasks you’re doing and you see which ones you can delay. Just start with applying the 80/20, knowing that most of them are completely useless. It’s sort of the sad truth and the harsh reality, and try and delete all the tasks that are just not important at all. I put them in the bin, literally. Then, of the one that is left that must be done, you see who you can transfer that task too. This could be inside the business or it could be external. The travel one is a good example, because in my case, I have a travel agent. Remember those people from a decade ago? Yeah, they would actually look up your flights and make the bookings for you and apply for your frequent-flyer number and make sure the connections work. You can still get travel agents to do this task, and they don’t charge you for it, and they know what they’re doing. They actually know which seat on the plane has the extra legroom because there’s no seat in front of it. They know how long you need for connections. They know which visas you need to travel to a certain place. They’re specialists at that role.

Recognizing that there’s someone else who can do a better job than I can is the first step to freedom.

For me to become a travel specialist and to book my own stuff would be fairly ineffective. Recognizing that there’s someone else who can do a better job than I can, who won’t even charge me for it, is the first step to freedom there. When I want to travel somewhere, I literally just send the hotel that I want to stay at and the dates, and that person will send me back and itinerary and I’ll just say, “Yes,” and then they book it and charge my credit card. It always works. That’s what I do. Identify all the tasks that are occurring, and then I see which ones don’t have to happen at all, and then I see, which ones can I have someone else do other than me who’s going to do a better job, and that might be external for my business. There’s probably 6 or 7 things that happen externally for my business. Then of the ones that are left, I’ll actually create a role from the tasks. Whether that’s podcast editing or transcriptions or updating my website or creating illustrations, all of these things are tasks that I really shouldn’t be doing. I’ll just create roles around those tasks, and then I will actually hire people. Where we’re at now in our business, because it’s quite mature and developed and my team members are coming up to 6 years now within the business, we even have automatic triggered events. If a team grows to a certain size, we’ll have a trigger that means that something needs to happen. An example of that would be for every 100 support tickets that we handle, we need 1 support operator. If we start to reach into the next 100 tickets, that would trigger a recruitment process and everything would happen all by itself.

Wow, that amazing. Yeah, I haven’t gotten to that level. I do have a lot of systems, checklists, and templates, and things in place, but not the full automation to that scale. That’s impressive. How do you manage a team of, I think it’s 43, correct, in the Philippines, when you’re living in Australia? I know you’re in the Philippines at the moment, while we’re recording this, but do you have to spend a lot of time in the Philippines in order to manage that size of the team or …

Initially, I didn’t, but that being said, that team is a little smaller. I started with 1. We quickly went to 2, and then 3, and then 6, and then 12, and then the next year, we went up to about 35. The next year, we ended up around 60. Initially, I was just dealing with them remotely. In fact, in the very beginning, I was so busy with other things in the business, and I hadn’t really got the hang of virtual assistance. I pretty much neglected them for quite some time and left them alone to build my blog network. When I really got more hands-on with it, the biggest step forward was when I hopped on an airplane, went over and met them. The first time I met them, I think we had about 10 or 12 people in the business, and then I’ve gone back every 3 to 6 months since. I actually visited the Philippines 14 times now. If you do have a virtual team, and if you do go and meet them face to face, you will, at a minimum, double your output. I’m not joking.

If you just eyeball your team members, sit down with them, work through some large pieces of paper or whiteboards, or if you explain and share the journey that you’re on and go through the map together, and do experiences like eating together, playing together, and bonding, it will actually really help your communication, and it will put a human to the equation, and it works both ways. I mean, every time I’m sending over their pay, every time I’m creating an opportunity, I know the person that I’m dealing with. I know they have a family. I know what they look like. I know how they laugh. I know what they like to eat. I’m really deeply invested in the team culture, and they’re deeply invested in me. They know who I am, and they know my strengths, and they know my vulnerabilities. They know that I’m a real person and that I care, and I’ve also got visions of what we can do. It makes it real. The big secret about an online business is how much of it is offline. You mentioned at the beginning of this episode that you saw me live at an event. I remember we had a little chat after I spoke.

I remember you because we physically met. It’s the personal connections that have helped me grow my business. It’s getting on that airplane and going to live events. It’s meeting the team. It’s experiencing and developing new markets. It’s no coincidence that my strongest markets are the places where I’ve visited and spoke and meet people, and continue to visit and hold meetups. I still visit London and hold a meetup for my members. I get on the airplane and visit Perth, Melbourne, Sydney, and Brisbane. I’ve done North America as well, and Dubai. These markets have all been developed because I went there and made that investment. That’s a huge tip that a lot of these keyboard warriors are probably missing out on.

Yeah, it makes sense. Now, have you thought about moving full-time to the Philippines? I would imagine you’d get even better output from your team if you were there day in, day out.

Oh, I don’t think my team would want me to be in the Philippines full time. No, it’s not an option for me. I don’t think it’s necessary. For one thing, they’re spread around the country. They’re not in one central place. There’s no office. They all work from home. They’re up north, and they’re down south, and they’re in the metro area. There’s no reason for me to be over here. I really have created a business that can be run from a mobile phone. That was the goal from about September last year, was to build my business to the point where it can be run from a phone. I can come to the Philippines for 2 or 3 weeks with just my iPhone. I’m speaking to you now from my phone with the Skype app. That is important because that’s where the population is going. They’re turning off their internet connections in the house. They’re turning off their cables, and they’re going to mobile devices. You only have to look at how Kindle replaced physical books, and how much website traffic is now turning to mobile.

You’d have to be crazy that it’s going to portable devices. I don’t need to move to the Philippines to run the business. I just need to be able to maintain a good routine for my business to run well. That means that when I’m dealing with my team, which is typically on a little daily interaction on Slack, which is an app that we use to run the business. It’s a once a week meeting with the managers for about 15 minutes. That’s really what it takes, and then there’s a 12 weekly face to face catch up, where we sit together as a group, primarily with the managers. I did, in Christmas time, I met with the entire team. We rented out an entire place. We all come together. We play games. We eat meals. We talk about stuff. You learn so much about the business, but I think that’s enough. I think sometimes, too much could ruin a good thing.

Back in 1999, I moved to New Zealand from the US. I decided I would create a production office in New Zealand, a block from the beach. I did. I had several dozen staff working for me. We had a great office in Browns Bay. It was literally a block from the beach. I’d go for runs on the beach during lunch hour. It was an incredible lifestyle. I didn’t specifically choose New Zealand because of the strength of the American dollar in comparison to the New Zealand dollar or set up a kiwi sweatshop or anything like that. I did it because I wanted the lifestyle. I wanted to live in New Zealand. I just made it work. Why did you choose the Philippines? Why didn’t you go after Australians or some other offshore location? What was it about the Philippines?

Historically, I was reading The 4-Hour Workweek and I was seeing what Tim Ferriss had written about his assistant in India, and how his assistant would do his worrying for him. I thought that was cute. I think I actually put in an application for the company that he recommended in the book, which had been swamped by the time I read it. At that same time, I was talking to a friend of mine about this, and he had a team in India and also the Philippines. At that time, I had a contract team in India helping me with my SEO fulfillment. I wasn’t really happy with where that was going. It started out quite well. They’re very nice people. They did very good work, but with my name on the brand, there were just occasions where the quality of the work wasn’t good enough, and also the communication was a bit patchy from time to time. I had this inkling that I could try a virtual assistant. I started down that Indian path, but it turned out that my friend said, “If you want to tell me what you’re looking for, I could put the word out to my team members and we could see if we can find you someone to interview.” He put the word out, and next thing you know I had 2 candidates to talk to on Skype.

I remember I was on the way to the airport. I called them up, each one of them, from the back of the car. I had a quick chat to 2 of them, one of them stood out, had a larger personality and center, to be more the sort of person I could communicate with. The other one was super, super shy, which I later found out, that’s pretty normal in this culture. In any case, I hired this one person. I didn’t really know what I’d have her do. I didn’t have a plan around that. It didn’t cost that much, relative to Western wages, so that was a bonus. Of course, the English in the Philippines is fantastic. They all speak English, all the younger people, for sure. Now I had this willing and able person on a fairly affordable wage who could understand me clearly and was on a very similar timezone. This is something that’s a real advantage for people living in Australia, is that we’re only 2 or 3 hours apart, or even the exact same timezone if you’re in the Western parts of the country.

Having someone who’s on the same timezone, that speaks great English and cultural is more American than Asian in terms of what they’re living like. They’re eating McDonald’s and watching movies in English. It just seemed to be a better fit. The problem with hiring in Australia is that apart from the wages being high, there is a high risk that someone is going to move in on your business a little bit. It’s a much higher risk than when you have a team overseas, who are really appreciative of the opportunity. They’re very talented in their own way. In the Australian market, there are some jobs where you would need to hire locally. There are some contract roles that I have done locally. I have an Australian designer. I have an Australian travel agent. I have an American programmer. I have an Australian guy who helps me with events, local events.

There are some roles that suit that country, but if you had a direct sales team or you had telephone services, it would probably make sense to consider Western countries. That being said, our largest telecommunication companies like Telstra are already using the Philippines for their phone support. I think that the Philippines is definitely the hot spot for labor. It is their biggest export. I’m not 100% certain on that, but they’re certainly geared for it. They even have a special queue at the airport for offshore workers. They are a labor machine, basically. They’ve got a lot of capacity to serve other countries and they do a good job of it.

Right, so like China is known for its factories and ability to make cheap goods in a very scalable large-scale fashion, the Philippines, is known as the hub for getting offshore workers who speak English, who understand how to be part of a larger machine. They’re more loyal, not quite as demanding as a worker who’d be in your local neighborhood.

Yeah, I think so, and they’re also very family-based culture. They’re Catholic religion predominantly. They’ve got nice ethics. They’re not super aggressive people. They’re kind of shy at first, but they’re extremely talented, and I must say, very well educated. A lot of them have university degrees because without one you’re not really going to get a job. It’s like a requirement for even a normal job like a retail store, they’re going to look for university degrees. They’re very well educated. They have extremely difficult conditions, such as transport and daily life is a little bit more difficult. They do appreciate when they get a good employer who pays well, when they can work regular day hours, that’s also an amazing advantage.

A lot of my team members use to work for American companies in the call center, working at nighttime. What they’re noticing is that some of their peer members who used to work with them in the call center at night having huge health issues from working the graveyard shifts and not eating well, not getting enough sleep, and they’re working in this air-conditioned battery hen sort of environment. Then there’s this other thing where a whole lot of them have partners who live overseas for a year at a time or 6 months. Imagine being married to someone and they live in another country. They’re just over there looking after the family and sending back money and supporting all the siblings. It’s really quite a phenomenal culture in terms of how they look after each other.

Yeah. I couldn’t imagine 6 months apart from my love one, no way. That would be a deal-breaker. I remember living in New Zealand and having to deal with the time zone differences. It wasn’t as big of the deal during part of the year, there was more overlap because we would fall back and the other hemisphere would spring forward, and so there would be less of a gap between the hours. Yeah, I recall having to get up and do a 3 am webinar here and there. It was a little bit rough. I couldn’t imagine doing this on a daily basis, being a graveyard worker because that’s where my market is. That’s not workable. Now, you mentioned some tools like Slack and you have a daily scrum with your team. Was that something that you had to teach them and they weren’t aware of, or is that just common knowledge in the Philippines?

We’ve created some great systems to be able to bring on someone with the right attitude, good English, a computer, and an internet connection.

Well, I didn’t select people who are online work savvy or experienced. Most of my team members came from outside the industry. They were working in call center, helping customers solve their accounting software challenges or helping them with their internet service provider. They didn’t understand or they didn’t have any knowledge of WordPress or search engine optimization or content marketing, none of this stuff was something they’re aware of. I’d say the only people in my business who were doing the same thing that I’ve hired them to do would be our website development team. Those guys were teaching website development in university. They were teachers. My article writers were teaching English to Koreans. There were some similarities, but for the most part, we’ve trained in-house. We’ve created some great systems to be able to bring on someone with the right attitude, good English, and a computer, and an internet connection. We can have them doing several of the different roles within our business because we’ve bodied them up with someone who’s already doing it. We have standard operating procedures for each step of the task, and we have a communication and accountability system that makes it pretty easy to guide them along the right pace.

Now, do you rely heavily on video training or checklists or training documents or combination?

It’s a combination. We have a GoToMeeting account. Often the team will just hop on that and go through screen shares with new recruits. We have a central asset register of all SOPs within the business, so whether the website developer or an SEO operator, they’ll be able to find a checklist for the thing that they’re doing, and because they’ve been doing the role for a while, I’d say a lot of it now has turned into habit. The same way that you don’t need to look for a map to find your way to go and get milk and bread at the local store, you just know how that works now. I’d say a lot of it has turned into habit and a solid routine, but initially, yes, we have had a Dropbox with videos in it. We have Google Drive with SOPs in it, and we’re more than willing to hop on and do a screen share. If I’m transferring a task, I will often wait until I visit next, and then I’ll do it live, or I will open up a screen share and just explain to someone what I’m trying to achieve.

These days, because a lot of the managers that I’m working with are really able to think and to complete things with minimal instructions, I’m usually able to just say what I want to happen in Slack in just a paragraph, and that will create an amazing results.

Right, and then are you using another kind of project management tool, something like Trello, or Asana, or Basecamp?

Different teams in our business use different tools. For website development, we use Basecamp, because each job is fairly customized, and everyone on the team can share knowledge and be up to speed with where the projects are. With our SEO business, we use Google Docs, mostly using a spreadsheet to track all of the projects. For customer-facing, we’re using Zendesk, so when we’re dealing with customers, they are using the Zendesk portal and our team are operating that. The hub of the business is our Slack app. That’s why we have separate channels and groups, newsfeeds, training sessions, and also the management group, support group, and a fun room. It pretty much replaces Skype and email. That’s why it’s so powerful.

Right. I use email a lot with my team, and I’ve been thinking about migrating over to Slack. We just haven’t done it yet. We trade so many emails back and forth. We also use Trello, which I like a lot, has card-based model to it, instead of Basecamp or Asana, which is more kind of threaded discussion type stuff than Trello. Yeah, it sounds like you’re a huge fan of Slack.

You would be too. It’s one of those things. You don’t really get it until you use it, but once you use it, you wouldn’t take it back from you. If you are using email, then it will definitely change your life. What I found too, especially with my team, because of their age and their cultural behavior, they’re not using email. Young people don’t use email anymore, only old people. The only reason a young person will use an email is if there’s no other way to do it via chat. When you have a culture that’s mostly using Viber or Skype or Direct SMSs to communicate, then Slack is just going to harness that power. In our business, when I looked at the Google Apps data, I’m the guy who sends all the emails. I’m so far number one that there’s daylight between me and second. I might send a couple of thousand emails a month. My next closest person in the team would send less than a hundred, but Slack is where it all happens. 70% of our team communications are direct messages between one person and another. That’s how they operate, is chat, chat, chat all day long. Even when they’re out on their mobile phones, they’re chatting to each other. They’re not calling each other, and they’re not crafting emails to each other. They’re chatting.

The only reason a young person will use an email is if there’s no other way to do it via chat. Click To Tweet

Let’s go back to another concept from The 4-Hour Workweek, which is mini-retirements. Have you incorporated that into your life, and if so, to what degree?

I really liked the idea that it seems weird that we would just slave away until we’re 65, and then stop, and then do nothing, and just sit around the pool with a piña colada. That makes no sense to me, so I’ve pretty much converted the whole meaning to say, my philosophy is I just want to live like I’m retired. I live now as if I’m retired. If I was retired, I think this is what I would do, is I would surf every day. I’d do a couple of calls here and there, which I would schedule in, so that the rest of the time is free. I would travel to where I want to go and do the things I want to do. I’ll make sure I get enough sleep, and that I eat well and that I have good relationships with people, and that I develop my creative pursuits and round out my experiences and live a rich and full life. I’ve don’t necessarily down tools, and switch off, and incubate like a bear and slumber, but at the same time, I’m a more passed that point in my life where I want to hustle and grind and be some kind of glorified workaholic, which is sort of the other camp there. There are 2 camps really. There are the lifestyle living types, and just on a side note, that’s another reason why I don’t think I would move to the Philippines.

I think that some people have a false economy where they move to a cheap country to get ahead financially, but I think they’re getting behind in lifestyle if they’re doing that. I think the ultimate for me is to be able to have a great business that fuels the lifestyle you want to live that’s not taxing you too much, so I set a limit on the number of hours I want to commit to the business per week, and the rest of the time is for me. I also have minimum KPIs in terms of cash flow that I would like to be arriving into my bank account. I’ve been able to use a tool to balance up the hours and the money to be able to keep score and make sure that I’m not overdoing the hours or undercooking the dollars, and that’s the effective hourly rate. That’s my metric. To answer your question, if my effective hourly rate is positive, then I am going to be able to maintain the lifestyle that I’m living now for the rest of my life.

Yup, yeah, and so do you apply a model like Focus Days, Buffer Days, and Free Days, which is from Dan Sullivan. I know Taki Moore talks about this, or do you have themed days, like a Podcast day, a video recording day, writing day, or some combination, or none of the above?

Well, Taki and I did that course together. I think we both got some insights from that, what we did like and what we didn’t like. I won’t speak fully for him, but I think both of us were already doing many of the things that they talked about. The main thing that I got from that was that course helped me start to turn off to Sundays, and then I sort of crept to Saturdays. Then I’ve put in a scheduling tool that I’ve been resisting because I thought they might be rude or not acceptable behavior. What I found was having a scheduling tool really transformed things. Probably about 2 years ago now, that was when … It was actually 2 years ago I started using a scheduling tool, and since then, I haven’t done appointments with external people on weekends or Mondays or Fridays. I have found that is what gave me my life back, more than anything else, is partitioning which parts of the week that I’m prepared to spend energy doing an external focused task. I’ve got a really solid routine now, and that is that I have got my Mastermind calls on Tuesday, and I have external calls on Wednesday and Thursday. Then the rest of the time, I’ve got this baseline of creating a piece of content every day or 2 for my podcasts and that is pretty much it. I managed an inbox zero, and that’s primarily because we’re using tools like Slack, and I’ve been ruthless with my filters on who can access my inbox.

Right, and so inbox zero, for you listeners who aren’t familiar with that terminology, it refers to always keeping your inbox at zero messages. I have applied that same philosophy myself of inbox zero, but I do it using a team of virtual assistants who all of them have access, several of them might have access to my actual email account. Not just a separate email account, but my main, primary email account, the one that even my relatives email me at. Some people will say, “Well that’s crazy. How could you let people that are not you access that private account?” Well, I even have virtual assistants who have passwords of mine, who have credit card numbers, bank log-ins. You know what? If you don’t trust people, you cannot delegate, and you can’t outsource yourself and get the leverage to the maximum ability. I just believe in trusting people. They got to earn that trust of course, but that works for me. What’s your philosophy on that?

If you don’t trust someone, don’t hire them.

Yeah. If you don’t trust someone, don’t hire them. If you want people who you can’t trust, then don’t trust them, like you’re conveying a message. It’s similar to my business … Well, I do hang on to my email because I’m really good at it. There are certain things that the team won’t have access to. They won’t have access to my primary bank account, token generator, but they do have access to my email database where they’re sending out broadcasts. They’ve got access to my server, and they’ve got access to our support systems. If someone wanted to do something terrible, they probably could, but at the same time, I really do trust them. Like I was saying earlier, I’ve met them. I know these people. I think they know me and we’re on the same page. You develop that relationship over time.

Yup, yup, for sure. You mentioned you use a scheduling tool and that has made a profound impact on your life. Is that ScheduleOnce or some other tool?

I use ScheduleOnce, but I did this one extra step of creating the redirect for an easy to remember domain name so that it’s just easy for me to refer people to that. It will pop up the schedule. I tried one tool prior to ScheduleOnce, but it had a bit of a bug where people from the eastern side of the United States, were for some reason it was confusing them with my Eastern Standard Time as well. I don’t think they realize that most countries have that Eastern Standard Time. It was not applying the right times, but ScheduleOnce seems to manage it really well. I’ve had very few issues with that.

Before we close out the topic of mini-retirements, I just want to clarify, so you haven’t taken a multi-month long sabbatical at any point?

No, the closest I’ve come is spend a few weeks in the Maldives surfing 3 times a day. I spent maybe 20 minutes a day checking my phone on those sort of trips, but I still think that I’m probably at the point where I could just leave the business for 3 months. There are parts of it that rely on me, and I’m aware of that. I think if I wanted to do that, I’d have to gear things differently. I don’t mind doing a small amount of effort on a frequent basis, because I know that keeping momentum is really the key. Like when you’re on the freeway doing 60 miles an hour and you’re just feathering the throttle rather than having to start from a standing start and really hit the gas. I like just feathering the throttle, and you can still use cruise control, but I think it’s important to keep your eyes on the road and not too far away from it. Yeah, I’m not into the mini-sabbatical mode. I’m the kind of person who’s set to be doing something. I don’t think I’d like to do absolutely nothing for several months.

It can be fun though. I did take a 6 months sabbatical at one point, about a decade ago. I was living in New Zealand, on the South Island. I unplugged from the business completely. I did do 1 or maybe 2 speaking gigs that whole time, but I was offline. I was gone. We had a nice house on a cliff, overlooking Corsair Bay. It was just magical, and I just enjoy being with my kids and thinking about other stuff. It was a nice relief. I was kind of burnout at the time thought too, so it was-

It’s more important to get a sustainable routine than to have an on/off phase.

Yeah, I think it would make sense if you’re in a pressure cooker. Most people are in a constant state of overload and lack of sleep, and that would be a very appealing idea, to just throw it all to the side. I think the important point that I want to stress is that I went from an overloaded pressure cooker for the best part of 20 years in my first part of my career, to the point now where I’ve reduced the amount of compromise in my life down the absolute minimum. That’s why I think it’s more important to get a sustainable routine than to have an on/off phase. I could be just very light on rather than … As I said, if I can surf every day, that’s the most important thing for me right now. That’s the priority. My business can fuel my living expenses. If I can have no stress from debt and I can get a good night’s sleep without any worry, for me that’s living. I’m happy with that outcome.

Yeah, and so you surf every day?

Yes, every day.

Oh, that’s great. You surf with Taki, Taki Moore quite a lot as well, right?

Well, it depends on what you say about quite a lot. He’ll come and visit me from time to time, and he’ll borrow a board and we’ll go for a surf out front. I really enjoy that. It’s good to see him doing something analog, offline, away from the computer as well. I would say, he’s still in the difficult phase. It’s really hard in the beginning because you get tired quickly and you get beaten around a bit. I’m hoping this season we’ll do a lot more surfing together.

You mention KPI is key performance indicators, I’d like to riff a bit more on that. You mentioned an effective hourly rate. How does that particular metric drive decision making for you, and what other metrics are KPIs for your life?

Well, that’s a filter, so if I’m looking at a project, I’ll just calculate the way that I want to structure it, will it work out at a reasonable effective hourly rate? I might use a benchmark of, say, a thousand dollars an hour as an effective hourly rate. In simple terms, let’s say I’m working with a client in my Mastermind. Let’s say it’s someone like Jenn Sheahan, you mentioned before. I’ve worked with lots of people behind the scenes. When they’re looking at a new opportunity, we’ll just do the exercise. We’ll say, “Okay, so let’s say you want to start a Mastermind. You want 10 members, they’ll pay $2,000 each. That’s $20,000 per month. For that $20,000 how many hours will you need to commit to that to make it work?” They might say, “Well, we’re going to do a call each week, so it might be 4 hours a month, and then maybe 10 hours of other administration. It might end up being 14 hours to make the 20,000.” Your effective hourly rate is a little over a thousand an hour, probably 1,100 or 1,200. It could be a good business model for that person compared to what else they’re working on. It doesn’t take into account asset value.

It doesn’t take into account other side effects, like does that business model feed another business model, like is it a loss leader, or is it the back end of something else? What it does do is stops you doing $7 an hour jobs and it helps you at least structure things to not be ripping yourself off. Effectively hourly rate is a huge filter for me. I’ll judge my business divisions based on that. If they fall below it, then I either have to get more leverage with the business with the time that I’m investing in it or the structure of the business to make it more profitable for the amount of time that I spend in it. It stops you from falling into a Gary Vaynerchuk trap where you just literally work 19 hours a day, 7 days a week. That’s not sustainable. To me, that’s not living. That’s like a nightmare. Then there’s the other thing where people talk about their lifestyle business and they do virtually no work, which I think, for the most part, it’s a bit of a fallacy. Let’s say it’s true. Let’s say you can do a 4-hour workweek like some people brag about, but then you might not be earning much.

In terms of business models, I really like to have something recurring.

Either you might be one of those minimalists where you’re earning 20 grand a year. You’re compromising somewhere else, maybe your kids aren’t getting proper nutrition or you’re living in a difficult environment compared to what you could provide for yourself and your family. I think there’s a nice middle zone there. An effective hourly rate is a great filter. In terms of business models, I really like to have something recurring, and I like to support another business division that I already have. I call that the chocolate wheel philosophy, where you have a customer and they have needs and if you’ve got one business model, and then you can have another business model that accesses that same customer. That’s very powerful. It’s basically leveraging that existing relationship. Your marketing costs are lower. Your infrastructure requirements are lower, but your profit is quite good. I sort of did that with my coaching business with a side business of website development, with a side business of search engine optimization, with a side unit of affiliate recommendations. Those modules all work around the same customer for the most part. I was able to just keep adding modules that enhance the value for a customer and allow me easy access to the market. Like I could literally turn on our website and my existing customers already have a relationship with me so they can see this offering and say, “Oh yes, that’s exactly what I need.” I know they need it because there are always questions about it in the coaching community.

Right, so you offer multiple aspects of the client’s needs, and then you also have a subscription business model so that you have ongoing recurring revenue that you can count on instead of just a one-off project.

Yeah, 90% of my income is recurring, so we’re very consistent cash flow, very reliable projections that allow me to be a good employer because I know that I can pay their wages each month. It also gives me less stress in my life. I don’t have to wonder about next month. That also means I don’t have to do all of the compromise marketing that you see most people doing, where they do a fire sale or they have a forgot to pay my tax emergency sale, or they’re doing their huge launch every year 10 years in a row because they don’t know a better business model. They’re the feast of famine marketers. I really think they’re missing out, and if you want evidence that subscription is the way to go, you have to look at Netflix versus Blockbuster or Amazon Prime or iTunes, iCloud. There are so many subscription models out there under our nose. We’d have to be blind to miss them. Once you realize that’s the way it’s going, look at Adobe’s turnaround from selling boxed software to cloud subscriptions. That’s what we should be doing.

Yup, and you also have … Talk about another concept I like called owning the racecourse. Can you elaborate a bit on that?

It’s just something I’ve seen people do, is they tend to build out their marketing arms on other people’s platforms, and then when that platform gets disrupted, they tend to lose out. An example might be, you have a YouTube channel and that’s where all your videos go and that’s where all your traffic comes from, and then YouTube bans your channel. You have a Facebook group or Facebook page where you’re doing all your selling and marketing and putting all your best content and then Facebook doesn’t like that particular market or they switch off the group or someone reports it. Then there’s people who rely on Facebook Ads or Google Ads, and then they get their account shut down. What my point is I think it’s important to build your own asset, and I like WordPress for that. You put your good content there and build something that you can control and where you set the rules, and then use those other places to bring people back there. That allows you to build your database. It allows you to do remarketing advertising. It allows you an asset that you could sell. You could show a buyer that it’s not dependent on you. It’s going to attract search engine optimization of course, when you have good, rich content and some comments and fast loading, mobile, responsive platform that you’re in charge of.

It’s so amazing that I built my community on a forum software on my own server, so that that’s mine. I can change the color if I want. I can change the sign-on process. I can decide what the rules are in the environment. No one else can tell me what to do because it’s my racecourse, so I ended up having this thing that lasts beyond the inevitable changes that happen out there. Imagine if you built up on Myspace or on Blogger or whatever. Some of these things go. Google Video, remember that one? A lot of these platforms will change. It’s fascinating how much they will. I think something like 70% of the multinationals disappeared over 100 years or something. You can count on change. That’s the main thing you can count on. It makes sense to have a little bit of ownership somewhere in that space where you can have your little patch of paradise that other people can’t play with.

Right, right. I have a column at The Huffington Post. If I only post that article on The Huffington Post, I don’t get maximum leverage. People link to the Huffington Post and it boosts the authority of the Huffington Post, not my site. I might have a link from that article to my site, but it’s only one out a hundred and some links versus having that article hosted on my site and on my domain and then driving links and shares and all that to a URL that is under my control.

Absolutely.

It makes a lot of sense.

Yeah, and over the long term it really pays off.

Yeah. A friend of mine, Phil Town, who’s a best-selling author, he is actually another guest on Get Yourself Optimized. He had a decade of incredible blog posts on Typepad. They were on Typepad.com, PhilTown.Typepad.com, which he doesn’t own, so then when he wants to migrate all that great content over to his own domain finally, he’s powerless to do anything about that because that’s not his asset. The content is his asset, but he either has to just delete it from the site, he can’t do a 301 redirect or otherwise pass the authority that’s been built up on Typepad. It’s a real problem.

Yeah, and I think getting the foundations early, it’s a good idea. Thinking about the business in 5 or 10 years from now, not 5 days from now, like most people say they have a marketing focus of today or next week. They’re always so desperately urgent. Think longer term. I’m always making decisions. My filter is, is this something I still can be doing in a few years from now? Does it make sense looking at the way things are going? If it doesn’t, then I’d have to change my strategy, but I want to be a little bit in front of it.

For sure. One last question and then we’ll close up the episode here. Any particular people that you follow that you look up to, or mentors that you’ve worked within the past, or Masterminds that you’re in, or were in, that had been profoundly impactful for you?

There haven’t been. I feel like a bit of a Robinson Crusoe there. I am especially good spotting the feed of clay. Most of the commonly named gurus or experts or authors or whatever, I don’t really subscribe to any of them. I feel like a bit more of an independent. I take little bits from each one, but often I will match that up into my own model.

Some of my best lessons came from early bad bosses.

I think some of my best lessons came from early bad bosses. Of course, I read a fair bit from authors who may not even still be alive, whether it’s stuff like a Robert Collier letter book from the early 1900s or business thinking by guys like Peter Drucker or Eli Goldratt. Both of those guys have passed. I think that often I’ll pick out gems from something that someone has written. I don’t necessarily follow anyone particularly famous that I can think of off the top of my head.

Okay, cool. This was an awesome episode, I’m really grateful for you to be on the show and share your wisdom and all your experiences with us. How would somebody get a hold of you if they wanted to learn more, maybe join your Silver Circle Mastermind, or attend your SuperFast Business live seminar, or have your team build out their websites or help with automating their business, where would they find you?

SuperFastBusiness.com is a good starting point. There are some free courses there, plenty of podcasts. If they wanted to get into Silver Circle, they probably have to ask someone who’s already in it for referral, because it’s been closed for a couple of years to new members, plus, people don’t leave. I just get enough referrals from the existing members. The last few members that came in were recommended by existing members. A couple of them are listed on the homepage at Silver Cirlces, yeah. If you know any of those people, that’s a good starting point.

What are the URLs for your podcast shows?

SuperFastBusiness.com is the flagship podcast, so that’s the starting point. I also have some interesting other ones. There’s FreedomOcean.com with Tim Reid. There’s ThinkActGet.com with Ezra Firestone, and the SalesMarketingProfit.com with Taki Moore. I have one other one called KickingBack.com with Joel Ozborn. Joel Ozborn is a comedian. It’s a less of a business-y show, but I find comedians fascinating just to talk to, I came up with an excuse to just hang out with a comedian regularly and to talk about all sorts of things. That’s that creative stuff I was saying I wanted to explore now that I’ve gone through the pure business mode.

Perfect. Okay, well, thank you again. For listeners, please check out the Get Yourself Optimized website for the transcript of this episode which will include a checklist, so go ahead and download that PDF. Also check out my sister podcast, Marketing Speak. I also had interviewed James on that show not too long ago, and it was a fantastic episode. We talked about a lot of really cool stuff about marketing through webinars and podcasts and all sorts of really great stuff.

Check out that episode as well, MarketingSpeak.com, and of course, GetYourselfOptimized.com, and we’ll catch you on the next episode. I’m your host, Stephan Spencer. Thanks for listening.

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About James Schramko

James Schramko is the founder of Superfastbusiness.com, host of the Super Fast Business podcast, and co-host of three other podcast shows, including Think Act Get, Sales Marketing Profit, and Freedom Ocean. He lives in Sydney, Australia.