225 – The Pat Flynn Smart Passive Income Business Growth Story

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Pat Flynn has one of the biggest, most loyal followings in business podcasting and is a successful affiliate who has just released his own product. Listen in as he reveals his secrets and experiences in effectively creating passive income.

Pat Flynn

Podcast highlights:

01:06 – Putting yourself out there
02:01 – What a podcast can do for your following
03:21 – How often and how long?
06:40 – From affiliate marketer to product creator
09:01 – Building a sticky audience base
11:53 – How much is too much free?
14:15 – Making an integrity call
18:58 – Why public speaking?
21:03 – The rewards of live events
27:21 – Addressing fear
31:26 – Pat’s biggest success
35:43 – Planning in advance
40:04 – It’s not about more stuff
43:00 – Entering the next growth phase

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Transcription:

James: James Schramko here. Welcome back to SuperFastBusiness.com. And in our continuing interview series with other business experts, It’s my absolute pleasure to bring to the show our super guest who’s big in the podcasting space, Pat Flynn. How are you?

Pat: I’m doing excellent, James. How are you?

Pat’s Podcast
James: Very good. Now we have a lot of listeners in common. I’m sure many of them listen to Smart Passive Income, which is your amazing podcast, and they quite often talk about you in my private forum, and I think you are one of the poster children, the benchmark for getting a big sticky engaged audience. And really putting that content marketing out there, which has kind of come into vogue lately. Would you say it’s picking up?

Pat: Yeah, definitely. I think people are just trying to see what putting yourself out there is like and what it could do for your business and brand and I think the big reason for my successes also. I’m very open and honest and just I, myself, I’m very personable and people, they tell me often, at conferences, they feel like they know me which is awesome.

I mean that’s…it’s pretty incredible to have somebody come up to you and say like, things that they wouldn’t normally say to somebody they just met and you know I really feel like the bond I have with my audiences is truly one of a friendship and I’m just so thankful for that.

James: It seems that way with podcasts. When I’ve got an introductory thread, when people join my community, the first thing they usually say is, I heard you on a podcast. And I think I’ve heard you say this in your show before. That’s probably the single biggest source of your listenership. Is that how they find you, for referrals perhaps?

Pat: That is. I mean, I ran a survey on my blog. Just my blog readers. I asked them, “How did you first find out about me, or Smart Passive Income?” And the number one way was through my podcast through iTunes. There was actually 20% of them. So one out of every five people who have found my site have found me through my podcast which was a very surprising and almost ridiculous number to me.

Number two was through YouTube and number three was links and mentions from other sites. And then it was Google and Facebook and Twitter and everything else that most people typically, primarily talk about.

Yeah, and so that’s when I ramped up the frequency of the podcast earlier this year to weekly as opposed to twice a month and that was because when I went to New Media Expo, everyone was just talking about the podcast. “Hey, Pat! Dude, I love your podcast!”

Nobody would mention the blog and they would only mention the podcast. And that’s was just you know, that’s why I’ve been a big proponent and advocate of people starting their own if they have the ability to.

Podcast Frequency and Show Format
James: What are your thoughts on frequency and show format? Because a lot of podcasters approach it differently. We’ve both spoken to John Lee Dumas and he’s obviously got the high frequency thing kicking in. There’s the shows where you can interview someone else. There’s the ones where you do it by yourself. What do you think is the perfect recipe?

Pat: Well I think it depends on what would best serve your audience. That’s always sort of the primary motivator for me to do whatever it is that they want to do and that’s why I feel, you know if you go to my show, some of them are 30 minutes long and some of them are an hour and 30 minutes long.

The last one I did with Clay Collins was an hour and 30 minutes long and that’s because I didn’t want to stop talking about everything we’re talking about. And again that was with the audience in mind.

So you know as far as length of show, I think it’s really important to come out with the show consistently but as far as whether you do it solo, or interview style, it’s definitely easier.

Well, I don’t want to say it’s easy. It’s easier compared to doing it solo, to have other people, you know, on your show and just making sure you’re asking the correct questions and getting deeper as opposed to speaking the entire time which is still somewhat difficult. But as long as you know the topic, it’s almost like presenting in front of a large crowd, you’re just speaking to the microphone.

Some topics lend itself to just a solo show if I know that particular topic very well and some topics I want to discover more information about where it would make sense for me to bring an expert on.

James: Right so, yeah I’m kind of like you, a little mixed bag. I put out videos, I put out audios from this particular show. Someone would expect normally a three- to five- minute video which happens probably three times a week. And then occasionally, they’ll get a run of audio interviews like I’m pretty much interviewing three people a week at the moment.

So, I’m popping out these 30-, 40-, 50-minute discussions and I think people are… they like to have their consumption challenged a little bit in some ways. That’s probably the big topic I had with JLD was about using the same show format each time and it’s been both his strength but also causes a lot of churn.

Pat: Yeah, are you ready to ignite? Like, I know that format so well. I can just basically…

James: Well the listeners do too. But the thing that fascinates me there must be obviously on the sheer number of downloads you get, there must be a huge interest in having that consistency. So I think some people crave consistency and hang on to it. And then other people, I probably put myself in this bucket, are totally fine with change.

I recognize that change delivers opportunity because I’m a problem solver. Most of the things that I have in my business are solving problems and a lot of them are continually changing. One of the examples would be the SEO field where as you’ve seen from your Niche Site Duels and stuff, you know. Whatever worked a year or two ago really needs to be reviewed now.

Pat: Yeah, definitely. With JLD too, he has a unique opportunity because he’s been so consistent doing the same thing over and over again. The moment he does something different, everybody’s going to pay attention to it. Whatever that is, you know whether it’s a show about a product he comes out with or just something different. Something he really wants people to pay attention to. It’s going to be really easy for him to do that.

From Affiliate Marketer to Product Creator
James: Now that’s exactly why I contacted you, Pat. You did something different and it fascinated me because of all the things that I do, my strength is the strategy side of things. I’ve built up close substantial business by recognizing what’s going on out in the market making the changes and you’ve taken this big leap from primarily affiliate marketer to product creator. Would that be a fair sort of statement of what’s happened?

Pat: Yeah.

James: Until I listened to what happened when you released your product.

Pat: Well, it’s interesting, you know. I’ve been blogging for five years. And I’ve been producing free content over and over and over again and primarily earning a significant amount of income through affiliate marketing.

So sharing and promoting and recommending other people’s products and these are of course products that I’ve used myself, that I don’t mind putting my name next to, trusting them to take care of my audience for me but you know just actually July 1st of this year, 2013, I released my own product and you know I got a wide range of response from, “Thank you! Finally, I’ve been waiting so long for this” to “You’re on the dark side now. What are you doing? Why are you doing this? I can’t trust you anymore.” And it was very very interesting.

You know I always knew it was going to come because when you do something for so long, such as give away information for free and that’s all you do, when you finally create something and ask people to pay for it because you know it will provide value for them, you’re going to get some backlash from people.

So I got a little bit of a backlash and there were a few loud and outspoken people who left comments on that launch post and they’re there, you can view them now. I don’t take those things down if they’re respectful. You know they were respectful but they were strong and you know just really interesting.

But I mean, what was really cool was before I even saw those comments, I saw a string of 8-10 comments on each of those sort of negative comments from my audience who were defending me already. Which I thought was incredibly awesome.

I’m so thankful and blessed for the incredible community I have at SPI. But, you know with those negative comments, I kept them up there and they’re worth paying attention to because they are in my audience too and it’s a learning experience and this was obviously the first time I came out with a product.

And so I wanted to learn as much as I could about the process and yeah we can go, we can definitely go much deeper into that. But I knew it was coming and it’s just kind of interesting.

James: It is interesting and I think one of the key points that is fascinating about your machine is the customer engagement levels. The number of comments you have on your posts, I’d love to talk to you about some of the nitty gritty bits and pieces but what would you say a listener who has listened to this who has a blog could do to start getting that kind of customer engagement. Not necessarily the polarizing controversy side of things. I’m talking about how did you build that base in the first place?

Pat: Well I think there’s a lot of different reasons. I think I just make it really comfortable on my blog to leave comments and make this really easy to do so first. So making sure people know that they’re going to get heard. In the beginning it was really easy for me when people would leave comments to reply to each of them and I think that was a great way to train my audience over time to start commenting more.

Knowing that I was actually there reading it. Now recently, with the hundreds of comments on every posts and everything else I have going on, it’s been impossible. I mean, my wife would kill me if I reply to every single comment but I think they know that I’m there and I’m reading them and I will respond to them to the important questions and things like that.

But again, also my audience has learned to reply to other people too which is cool so it sort of turns into a forum on each and every blog post I write where people are contributing and adding more to the content. They’re answering everybody else’s questions and then continuing the conversation which I think is amazing.

I also just remind people in a lot of my posts to go ahead and leave a comment like you have my permission to do it and I’ll also tell them you know ask them for their opinion.

Really do my best to encourage the engagement and to encourage people to participate and I think over time people have just learned to do that on my site and plus I have a really big fat number with the number of comments on my posts. And so when that number is really big, a lot of people would want to contribute and add to that number you know. It’s social proof.

James: Absolutely. I agree with everything there, except for one thing. And I think that the accessibility on that free blog’s probably at the expense of 500,000 to a million dollars’ worth of forum posts behind the paywall.

Because I’ve noticed, I probably put out a little more content, have less comments and probably I’m not putting anywhere near the level of perfection to the content and I think you would say you’re a perfectionist, right?

Pat: I am, although I’ve learned recently that, you know, perfection is really just a form of procrastination and fear so you know I’ve learned to recently just go with it. I used to spend way more time editing my post and then you know I still edit my post and things like that. And I also obviously just with the experience just have gotten better over time at understanding how to craft blog posts and things like that.

James: Gotcha! So, to give you some context, we’ve got about 45,000 posts in my forum and that’s one, about a year old. The thing is, I think because people are able to really go deep, and you talked about it.

If you’re getting paid to do it then I think your wife would probably say, “Yeah, Pat! Go for it! Post in the forum” or whatever. But then, the one thing is, taking the blog out of the equation, now the member to member ratio is significantly more interactive. So, something to consider perhaps for the future.

Pat: Yeah, I can definitely see that but the product I came out with actually has a forum column in it so it kind of creates higher value in that product as well.

James: But I suspect that a lot of people don’t need it because you’ve got such an open to the public discussion facilitation there.

Pat: Correct! I guess the differentiator…

James: I’ve seen the same thing happen where they start a Facebook group or a LinkedIn group, the best way that people have killed their ability to make money from a firewall, where they can deliver more value because they paid a lot more, is to deliver a lot on the frontline there.

Pat: Right.

James: So really what the topic we’re talking about here is, I wonder how much is too much free? And I wonder if you reflected on that since your foray into the monetization. I see your business like a big flywheel and it spins fast and it has a lot of noise, a lot of action. As soon as you touch it to tap the money out of it, a lot of the people will stop, it just bogs down.

Pat: Yeah.

James: But you found your core people and those people 10% of the people who bought that product would definitely take a way more expensive product just because they would like you to solve a bigger problem and more than likely they have a bigger problem. If you’re able to solve it.

Pat: Right. I mean I think another important issue here I mean besides the free thing, is the fact that I was only making money by recommending other people’s products and so I didn’t even have complete control of my business model.

Pat’s Business Model
James: Oh absolutely! I’d love to talk about that further. Let’s use an example. I think from your income report which is both brave and a tremendous reason for why people keep coming back and following you. You published your earnings and I think one of the standout earnings is Bluehost.

Pat: Yeah, absolutely. It’s been kind of ridiculous how much that has grown.

James: So wind back about six or seven years, when I started, I had a six figure income from one product but then the product turned out to lose touch with the market and I had to make an integrity call and in the end, I switched off a $5,000-a-month profit, which it sort of dwindled down to from 10-a-month, and I switched it off because I didn’t feel that people should use that solution anymore.

In fact I suggested that they use WordPress which is you know, is predominantly free, give or take a theme. Luckily, swinging from that vine created a new opportunity for me to grab on to another vine and you know, I’ve had Clay Collins back many times on my show to talk about his products because things that complement people who have WordPress sites are quite lucrative and hosting would be one of those.

Do you feel that you could be single source dependent on the bulk of your income for a product that may be suffering a bit of a personality or publicity problem at the moment?

Pat: I would definitely not risk that and you’d obviously have to assess the situation at the company and make sure thing’s good. It would be very risky to do that.

So like I said before, I only promote and recommend products that I have used and I make sure each month I actually go into my affiliate earnings and see which products I’m earning from and just sort of ask myself and make sure I continue to promote this.

And I’ve actually dropped a lot of things that I’ve made money from in the past because they’re not things that I feel like I should be promoting anymore or you know, they’re just not working anymore and so even though I could continue to earn an income, I don’t from those and I always, like you, just shift for what’s best for my audience and I really want to commend you on that because that’s a significant amount of money that you had let go and it’s great that you’ve found this other vine and I just have to reiterate how amazing Clay’s products are, for sure.

James: Oh, yeah. Like, the guy is super. There’s no wonder you went for an hour and a half. I had him fly all the way over here and speak at my event for SuperFastBusiness community and he was like a standout presentation, they raved about it. I posted it for free on SuperFastBusiness. People thought it was the best thing they’ve ever seen. The guy is, he’s like a little Steve Jobs. I think he’s so passionate, he’s so clear on his vision.

Pat: You can hear it in his voice just how much he loves what he does.

James: He’s the real deal. That’s the thing. Now in my case, I used to promote HostGator and I personally switched all my sites. I moved 1,800 sites across from there to my new provider because they seem to have changed hands and I felt that the…well, my dedicated server went offline and they didn’t respond to me for over a day. They came back and apologized, they offered a rebate but I felt that I could no longer recommend that.

Pat: Same thing happened to me with Servant.

James: Right. Well, I think the same group is now buying up a lot of these different server companies including Bluehost. I’m really glad you’re getting into the product side of it. You’re a natural born product creator. I had a look at your podcast course and quality of it is off the charts.

You have a real knack for creating great work and I imagine that… You’ve got so much database of what people’s challenges are. You’ve been in a great position to be able to continuously pump out your own products. Do you have more of them scheduled?