Dane Maxwell, the founder of TheFoundation.com, shares his concept of empowering others and how his website helps aspiring entrepreneurs set up a successful startup and establish a business from scratch.
In this podcast:
00:57 – The appeal of startups
02:44 – A matter of mindset
04:30 – The most dangerous word in business
04:58 – The Foundation‘s success rate
07:23 – Learning the hard way
08:21 – Why James doesn’t do startups
10:59 – Find the pain
12:40 – The skill of reflection
16:11 – What things have gone wrong?
20:04 – The Foundation’s biggest success
22:01 – Profiting from compliance
23:07 – The five phases of starting up
25:44 – Are you hung up on product?
29:50 – Living in the creative spark
33:59 – The inspiration behind the Foundation
39:21 – Adjusting on the fly
42:54 – A musical spark recognized
46:35 – Get a pre-selling info pack
You can start a business with no idea, no money, no credibility. [Click To Tweet].
The most dangerous word in business is “guessing”. [Click To Tweet].
Go in and find the pain. [Click To Tweet].
Celebrate what you’ve done well. [Click To Tweet].
Sliced bread was a flop when it came out. [Click To Tweet].
Ideas come when you’re in the creative spark. [Click To Tweet].
James: James Schramko here, welcome back to SuperFastBusiness.com. Today we’re going into a new topic. Haven’t really talked about this much on SuperFastBusiness, and there’s a big reason for that. It’s not something that I typically work with.
I tend to work with the people who have gone through this phase, but it is my delight to be able to bring to the show today Dane Maxwell from The Foundation. Welcome, Dane.
Dane: Thanks, James.
James: Now Dane, you love startups. Is that right?
The Right Approach To A Startup Business
Dane: Yeah I love startups. What I love about startups is not… I love the process of people starting companies from absolutely nothing. So TheFoundation.com is just about two or three years old right now. But I envision it 10 or 20 years down the line, like an Alcoholics Anonymous for entrepreneurs starting from nothing.
You won’t even know my name, just like you don’t even know the creator of Alcoholics Anonymous. The foundation is synonymous with it’s a place where all entrepreneurs, all over the world go to when they want to start a business and they have nothing to start. So, I believe that businesses can be started regardless of any circumstance where there’s no idea, no money, no credibility and in that space of starting from nothing, a total abundance of magic can manifest if you approach it the right way.
James: OK, so just on that, this is very appealing sounding. You can start with no money, was it no idea?
Dane: Yeah, no idea. It’s best to start with no idea.
James: Right. So I think this is fascinating. A lot of people come to me with I’ve got a great idea, and they’re trying to build a business to justify their idea, which I think’s a terrible mistake. And it especially happens with things like multi-level marketing, where someone’s just observed something, and they think this would be great because they like it but then they haven’t really validated it and we’ll probably get into those sort of topics.
So I think because you’ve got such an appealing hook, you must attract a lot of people into that sort of sphere. What sort of chance of success do people have?
The Excel Question
Dane: Well, above 80? I want to say 100 percent. It’s really difficult to fail in the end doing this process. The thing that we didn’t talk about what makes The Foundation work – when you have no idea, no money, no special skills, no extra status – the thing that makes it work is our heavy emphasis on mindset, emotional processing, emotional awareness, limiting belief work and the deep inner game of entrepreneurship.
Because when people think they need an idea, or money or credibility or to be an expert, it’s typically a lot of internal stories and internal dialogues going on inside their body, like from their chest to their heart to their throat to their stomach, and that’s actually where most of the beliefs and stuff are locked. Sometimes in the mind, typically held in the body. And when we move that energy in the body, the person’s like, oh wow!
I don’t need an idea, I can just go into a business, ask them what they use Microsoft Excel for. They tell me they use Excel for tracking their financial reporting. I ask them if they like to turn that into a software application, they say yes, I ask them how much they want to pay, they pay me, then I go build them up the product.
It’s a simple conversation now I’ve just created an idea and that what one of my most successful students did last year, just by asking me Excel question. You don’t need an idea.
James: Now was that Sam, or someone else?
The Most Dangerous Word
Dane: No, that was Carl Mattiola. He worked directly under Elon Musk at Tesla and he was miserable as an employee. So he joined The Foundation and in six months he quit.
Now what you don’t know about Carl is that he reversed 28 or so limiting beliefs to get there and he had a very tumultuous journey. His father got committed into an institution, all these things happened during the six months but because he had the framework to process emotions and be with the mindset limiting beliefs and the deep inner game that comes up when you start a company, that’s why he was able to be successful.
It’s not about the idea. It’s about who you are as a person and how you run with that idea and hopefully you’re not even starting with an idea. The most dangerous word in entrepreneurship is it’s not procrastination, it’s not risk, it’s not fear, it’s not tomorrow. The most dangerous word in business is guessing.
And if you’re a Fortune 500 company or a Fortune 50 company or a mom or pop shop, if you’re guessing what product you think is going to work, you’re guessing what you think people want your product or if you’re doing any guessing at all, you’re in really dangerous territory and we don’t do any guessing ever and that’s why the success rate is… I don’t know the percentage of success rate because… well, we had 336 students in the last class, and 41 graduated with some sort of business with at least one paying customer. And of the 336 that joined, there are 210 left at the end, and of the 210, about 41, you know not everyone that buys your course is going to take action.
So our success rate is above 10 percent on all of our people but more like 20 or 30 percent on the people actually took action and for the people that, like when you actually follow the framework, it’s impossible, it’s really impossible to fail. We don’t normally believe in failure. We believe in learning and progress and so we’re not looking to build a product that no one wants.
We’re not trying to guess so we’ll ask people if they’ll buy a product before it exists, get money and then go build it if we can’t sell the idea before it exists. We’ll consider that a failure and move on to the next idea. So we’re talking about failing in like a span of a couple of days.
James: So what’s your take on someone like Samsung releasing a gold phone a week after Apple had a huge success? Is it okay to learn from your competitors, or should you be forging a new path?
Dane: I don’t know. That’s a good question. What do you think?
James: Well, you know, I come from the car industry, Mercedes-Benz in particular, and it was kind of amusing how Toyota will create a luxury brand, they’ll call it Lexus, which stands for Luxury Export USA, and they basically wait to see what comes out, and then I guess a lot of the predictability is there. You know what the market wants, it’s already been evidenced, and they’re just rapidly replicating.
I think from my point of view there’s always going to be some emulation happening, but a lot of the guesswork’s gone out of the market. It does solve a problem, they already know there’s a market for it. I think it’s kind of lame, but at the same time… So it’s not very arty, that’s all.
And I imagine there’s a lot of artists who want to express and want to create and want to make new things, and they would almost find your process challenging if they have to channel it into a systematic or scientific process of elimination, perhaps. How do the arty creatives go in your process?
Realizing What Doesn’t Work
Dane: I’m not sure, like, what I can tell you is that, I don’t know about you James, but of all the business ideas I’ve ever come up with for myself that I thought would be cool for other people, none of them worked. None of them. And like after the 5th one, I was like **** this. This is stupid.
I’m just going to ask people what they want and I’m going to give it to them. So I think people, no matter how hard you try James, the people who come to you with the idea, you can talk until you’re blue in the face but it’s not until they go out for a year, fail for a year and then realize experientially holy ****, this sucks. I have got to try a different approach.
James: Yeah, I think we’ve all been through that. I was doing things, even knowing as I was doing them that it wasn’t the right thing to do, but I just had to forge down that path and learn the hard way. People are pretty stubborn.
The interesting thing here is, the reason I don’t work with startups is by the time someone comes to me with at least $10,000 a month in sales, they’ve already been through that process, they’ve for whatever reason mentally or strategically or systems-wise, they’ve got something that works, and that’s where my skillset’s ideal, because I step in and I blow it up, turn that $10,000 into $100,000 a month. And I love that part of the process.
So interestingly, that’s one of the filters on my checklist. So I have a scientific process for finding my ideal customer who has a problem that I can solve, and it’s usually that they’ve grown to the point where they can’t take it to the next level by themselves or without some outside assistance. So you’ve done that, but from the zero point.
Dane: Yeah and the 10,000 to 100,000 is… I don’t mean to belittle what you’re doing at all but it’s a little bit easier than zero to 10,000.
James: Oh, it’s way easier. I’m not going to debate you on that. That’s why I select it. I don’t mind doing difficult work, but it takes so much energy and emotion to sit down and go through startup phases with people.
I just did this a few weeks ago with my buddy Ezra Firestone at a retreat, and we had three startups. And I had to pull out my old project stream list, I call this, and it’s from zero through to building a successful business. Because I’ve done a number of startups of my own, service businesses, coaching businesses… we do websites and traffic, etcetera. So I’d start with domains and build a multi-million dollar business from it.
To do that with other people I find energy-sapping. Obviously, you’re doing it with such a large volume and probably on… you’ve got enough data to be able to really refine the bits that work and don’t work, so I totally agree. What I do is significantly easier, which is why I do it because that’s my sweet spot, I love it, I’m good at it, and it’s easy.
Find The Pain
Dane: I kind of… there’s a part of me that envies you because there’s a part of me that wants to go down that road, yeah let’s take people from 10 to a hundred grand a month, but I see so much pain in the world and I see so many here that want to get started but they just don’t know how and it’s difficult. It’s emotionally difficult, it’s emotionally draining to help people when they’re starting from nothing. But it’s like, right now, I’m 30 and it’s just a journey that I’m… it’s like it’s a battle that I want to fight and you asked how back going to artists, how they go through the program.
It’s not like bad to come up with your own idea but it is risky and dangerous to build it unless you’ve pre-sold it. So however you get your idea whether it’s using our idea extraction process where you go in and find the pain – that’s like the three keywords: “Find the pain.” And you know you do that by asking what do you use Excel for in your business and other really good questions you can ask.
You can take people through their to-do list, take them through their calendar, take them through their email and have them go through each individual one and there’s lots of pain in the to-do list, lots of pain in emails, lots of pain in the calendars, like what’s that meeting about? What are you talking about with your web designer? How are you doing that?
You go through the whole process, you find enormous amounts of pain and potential for you to create solutions. That’s idea extraction. Now, that’s like the proven way that you can just if you want to crank out business after business after business and not to worry about failing, you just follow that approach.
But if you’re like the artsy person, you got a little bit of excitement around coming up with your own unique cool sexy thing, I mean fine, I don’t advise it. But if you’re going to do that, pre-sell the idea. Get someone to give you money before you build it.
James: I love it. So, we’re talking about the same thing. It’s exactly what I do, a gap analysis, and then you just solve the problem. And we just pick different parts of the scale.
Now let’s dig a little bit deeper into this. So we’ve covered your Why, and I love that. Your Why’s really the same as me. I see a lot of people create something amazing, and then struggling to take it to the next level.
So it’s nice that we’re being able to fit into the value chain and help people all the way from the very beginning right through to way beyond their wildest dreams. Why do you think you were successful when others fail so much?
Why Dane Is Successful
Dane: Because I failed more? And learned from the failure. Failure becomes power with the skill of reflection.
So Tom Brady was one of the best quarterbacks ever and I don’t know if the stories are true except that I never read it but a friend told me and it feels true that someone asked Tom Brady in an interview somewhere, “How do you become such a good quarterback?” and he said, “I watched all my game tapes and take notes and I reflect on what I did wrong.That’s when my whole game went to a whole new level.”
And the skill of reflection is, and I don’t do it nearly enough as an entrepreneur but when you’re starting out, reflection, 10 minutes a day. What did I learn? What can I do better? And how can I be more productive?
You know if you just write those three things down at the end of the day and like just a few notes, you’ll be amazed at the skill of reflection that comes from it. But like you said, the “Why” I believe the world can change when entrepreneurs realize that they can start companies regardless of their circumstance. So have you heard of the Institute of the Integrated Nutrition?
James: No, but I was thinking about Ayn Rand when you were saying that.
Institute Of Integrated Nutrition
Dane: Yeah. So Institute of Integrated Nutrition, they sign up like 2,000 women to their $5,000 life coaching program every 60 days. There earn like $50 million-plus a year and that’s what we’re modelling The Foundation after. And the creator of the Institute of Integrated Nutrition, his belief is that the human body can heal itself and he wants to get that message out in the world.
At The Foundation, our belief is that you can start regardless of your circumstance and we’re a Yes to you no matter what you’re at in your life. And that’s like, that’s the juice.
James: Well it sounds like you’re Samsung to the Institute’s Apple.
Dane: So to speak. Except we just heard about the Institute of Integrated Nutrition and we’re just modelling the model that they use for success but I wouldn’t consider it as creating the phone like Samsung.
James: No, no. I’m being a little bit facetious. But…
Dane: We totally copy them in that case.
James: No, the point is that… You know, when I was learning how to sell and manage, I had this idea that out there in the world, somebody was doing a way better job than me. So I would spend time thinking about what it is that they might be doing, or researching and looking for that, looking outside my industry, which is something Jay Abraham did well, to find out what’s going well, and then to move quickly towards that once you discover it.
And for the same reason I read quite a lot of books. Because you know, pretty much every idea has already been published. It’s a matter of finding it. In your reflection thing on failure, I would just like to raise a counterpoint there.
Jason Fried from the 37sIgnals talks about the concept of learning from other people’s mistakes, and eliminating failure, and that it’s not necessarily a requirement to succeed. Now I might be paraphrasing that incorrectly, but here’s another angle on reflection and I think this comes more from Dan Sullivan. It’s also worth reflecting back where you were a few years ago, and then seeing where you’re at now, and celebrating what you’ve done well, and doing more of that as well, rather than just the failures.
Because quite often if you can look for what you’ve done well or what’s working for you and you double-down or go deeper on that, you can also have significant success.
James: OK. So moving forward, I love that you’ve got a strong reason for this. What sort of things have gone wrong for you in the journey of helping startups? Have you ever felt that you went down the wrong path, or that you’ve had students who didn’t get the result they want at some point and then you’ve made corrections? I guess you’d call it a pivot?
Dane: Sort of. The first year of The Foundation was 88 students so we had three people graduate with software company so pretty decimal numbers. And we’re metric focused. So the second year, we had 336 and 41 so 3 divided by 88 is like less than 5 percent. Forty-one divided by 336 is like 10 to 12 percent.
We’ve doubled the success rate of our students. We learned and made mistakes on the first year and second year from third year I think we go from 10 to 12 percent to 20 or 30 percent because we’re custom designing a completely new way to deliver a content inside of the membership site model. We looked at Kajabi and all the platforms out there, we just weren’t happy with any of them.
So we’re about $100,000 into a kind of a gamefied, community-based, action-based learning content system to deliver content that tells people where they’re at, what they need to do next and how to get help when they’re stuck, and that’s the second year. We had a shi*** WordPress OfficeAutopilot plugin for a membership site. It was like a back-end of a blog and people were just like, this sucks.
Like, if this looks like a**, you guys are a software company and you’re giving us… like you guys teach us how to build software companies and the software you use to run a software company blows and we’re like c***! This is totally backwards. So, I love building software, I build six or seven software products and it’s so fun, so easy and so effortless.
Once you had your system down, it’s like the best business model in the world. A friend who switched from info stuff to software. One, software is already a passion of his but just look at what he’s done since he’s shifted to software and he’s applied all his brilliant marketing mind to the software. Software is just the place to be.